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BusinessDesk: "The overall [US] economy lacks oomph and is having trouble creating jobs. Manufacturing is one of the few bright spots"

Posted in Currencies

Manufacturing numbers from the US, China and Germany bettered expectations, renewing optimism for the global economic outlook and encouraging investors to take on risk.

In early afternoon trading in New York, the Dow Jones Industrial Average rose 1.16 percent, the Standard & Poor's 500 Index gained 1.24 percent and the Nasdaq Composite Index climbed 1.32 percent.

In Europe, the Stoxx 600 Index ended the session with a 2 percent increase. The euro also gained, strengthening 0.8 percent to US$1.3194 and 0.7 percent to 100.52 yen.

An index of the US manufacturing sector rose in January to its highest level since June, while China's factory sector unexpectedly expanded. In Europe, Germany posted its first increase in manufacturing output in four months while a UK manufacturing gauge climbed to an eight-month high.

"Manufacturing numbers are what the market is jumping on," John Manley, chief equity strategist at Wells Fargo Funds Management in New York, told Reuters.

Some strategists are updating their bearish forecasts to reflect a better-than-expected start to 2012.

Just two weeks after saying that investors should “remain cautious,” Larry Hatheway, the chief economist at UBS, raised his recommendations on global shares and high-yield bonds in a January 23 note to customers entitled, “Wrong, but not too late,” Bloomberg News reported. Royal Bank of Scotland Group, and Benoit Anne, the global head of emerging-markets strategy at Societe Generale said their estimates for developing nations were proven wrong.

Financial shares were among the leading gainers including Morgan Stanley which rose nearly 7 percent amid talk that Facebook will choose the firm to take the lead on its planned initial public offering. More details are expected later today.

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The latest round of US earnings included solid numbers for Whirlpool as its upbeat outlook for the full year lifted its stock more than 15 percent.

It wasn't all good news, however. Shares of Amazon tanked, dropping more than 9 percent a day after the online retailer warned of a possible first-quarter loss.

And the latest data on the jobs front in the US fell short of expectations, as the private sector added 170,000 jobs in January, according to the ADP National Employment Report. Economists' had called for a gain of 185,000 jobs, according to Reuters.

Investors will eye the US government labour market report due on Friday for further clues. It's expected to show the economy created 150,000 jobs, and a gain in private payrolls of 170,000, according to Reuters data.

"The overall economy lacks oomph and is having trouble creating jobs. Manufacturing is one of the few bright spots in an otherwise disappointing story," Cary Leahey, managing director at Decision Economics, told Reuters.

(BusinessDesk)

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4 Comments

I just ran the NZD through a

I just ran the NZD through a few studies and apart from RSI on a daily there doesn't look like there is much to slow down its strong trend. Looks like it will take some pretty bad news to reverse it.

Is this why the numbers look

Is this why the numbers look good on paper, but when you scratch behind the headline the foundation looks pretty shaky.
 
"The January-end number represents 89 days supply, but more importantly the recent spike in restocking, which was seen with all other major car dealers, explains the ongoing "expansion" in the US economy as measured by indices such as the ISM."

The hard task is to identify

The hard task is to identify the information of value...to separate out the utter shite.
The best 'off the cuff' guide is to scan the media to determine the flow of shite...if it increases with bursts of enthusiastic garbage about recovery and growth...then it's time to head for safety.
Any effort to educate the idiots is pointless.
Take it as written that the piigs EU euro debt farce wrapped in ECB lying and filthy printing...will lead to a severe recession/depression across Europe. We will not escape the splattering.
Take it as the truth that the usa is utterly buggered as a nation and as an economy....it is set for collapse and decline.....the only question is will it happen quickly or be a long cancerous death.
Don't dismiss the comments about China heading for deep property debt trouble.
The price of wool is falling. The price of lambs falling. The prospects for oil costing more is high. The NZ economy is a bubble of credit.....Bollard is escaping from the approaching storm.

Zero Hedge long ago gave up

Zero Hedge long ago gave up discussing corporate fundamentals due to our long-held tenet that currently the only relevant pieces of financial information are contained in the Fed's H.4.1, H.3 statements." This capitulation in light of the advent of the Central Planner of Last Resort juggernaut was predicated by our belief that ever since 2008, the only thing that would keep the world from keeling over and succumbing to the $20+ trillion in excess debt (excess to a global debt/GDP ratio of 180%, not like even that is sustainable!) would be relentless central bank dilution of monetary intermediaries, read, legacy currencies, all to the benefit of hard currencies such as gold. Needless to say gold back then was just over $1000. Slowly but surely, following several additional central bank intervention attempts, the world is once again starting to realize that everything else is noise, and the only thing that matters is what the Fed, the ECB, the BOE, the SNB, the PBOC and the BOJ will do.