90 seconds at 9 am: Factories slow

90 seconds at 9 am: Eurozone factory output contracting; growth slows in China and US; US new home sales rise; Indonesia booming; S&P warns Australia; NZ$1 = US$0.841, TWI = 77.9

24th Apr 13, 8:16am by David Chaston

Here's my summary of the key news overnight in 90 seconds at 9 am, including news of more factory weakness worldwide, but it is being ignored by equity markets.

Overnight the Eurozone 'flash' PMI came in at 46.5, unchanged from the previous month. Germany's reading was 48.8, down from 50.6 in March and the lowest for six months. There was a slight glimmer of hope for France, where the PMI rose to 44.2 from 41.9. However, this is still in deep contraction territory and optimists on the French economy are few and far between.

Earlier PMI data on China was little better. The HSBC Flash China Manufacturing PMI came in at 50.5, down from last month and lower than expectations. China's growth slowed in the first-quarter and many expect that trend to continue over the rest of the year.

Investors seem to believe that this weak data will push the ECB to cut interest rates next week, and stocks are higher in mid-day trade.

In the US, sales of new homes rose in March completing their strongest quarter since 2008. And the latest factory data out shows manufactring growth slowing.

Closer to home, money is gushing into Indonesia while their two Asian rivals, China and India, have seen their investment inflows slow or decline recently. Indonesia is in the middle of a boom.

Standard & Poor’s has warned Australia that it’s AAA rating could be vulnerable if it doubts the government’s commitment to restoring the surplus, if the Aussie national debt keeps rising and their economy fails to self-correct. Australia is one of only eight countries still with a AAA rating.

In a few minutes, the RBNZ will announce the results of its OCR review. No change is expected but the tone of their statement will be of interest.

The Kiwi dollar starts today unchanged overnight at 84.1 USc, 82.0 AUc, and our TWI is at 77.9.

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12 Comments

by Christov | 24th Apr 13, 9:07am 1366751269

Absolutely Ostrich.....Wheedler will peer over the top of his glasses, the look will be a mix of concern with resolve....the mouth will start moving emiting a monotonic drone on more of the same...interrupted occassionaly by chairs being shuffled to gain some kind of relief from the diatribe.... then just as the journo's think their ass can't take anymore, it's question time

Yay......The old " I'll let you take that" kicks in, as the 2iC begins to straighten up in his chair, the royal we is now invoked to all responses... after a few obvious questions on cooling the housing market ( which he'll tell you is coming off as demand slows, John boy said so), what if anything can be done about the exchange rate ( which he'll tell you looks to be self correcting over the next 24 months as the Euro slides..John Boy said so)

Becoming weary at this juncture, Wheedler's attention wanders to the post match Cuppa, did they remember to cancel the ladyfingers and lamingtons and serve the more austere SAO and gingernut ..? the things a Governor has to consider inthe interests of taxpayer perceptions....

It's Groundhog day again.

by waymad | 24th Apr 13, 10:53am 1366757583

Lol, Christov, but the moral of Groundhog Day was that Phil Connors, by becoming a better person each time round, eventually freed himself from the loop.

Don't expect That of our pollies and financial systems.....

by Christov | 24th Apr 13, 11:28am 1366759698

True that waymad, but funnily enough, I never think of the Governor as Phill Connors nor his ( the Governor's ) predecessor...I always think of either as the reluctant groundhog.....wondering what the hell they have to come out for.....?

As the gathered townsfolk gear up in anticipation...Punxsutawney Phil....probably post a good hard prod, mooches on out to announce the weather realizing there's a ladyfinger in for him if he gets it right.

by dh | 24th Apr 13, 8:41am 1366749701

The Associated Press Twitter account was hacked and put out a tweet that the White House had been the victim of an explosion and that President Obama had been injured. HFT algorithms read the tweet and the Dow Jones Industrial Average dropped 143 points, recovering most of it fairly quickly.

I'd say, given this briefly wiped out $136.5 billion of the S&P 500 index's value, look to organised crime to trigger more such events for profit.

by Stephen Hulme | 24th Apr 13, 8:48am 1366750122

I am more wary of organised state intervention.

Horrible News Is Great News, Lifting Stocks To Just Shy Of All Time Highs

If sliding Chinese and German PMI data don't send the S&P to new all time highs, nothing will

by Boatman | 24th Apr 13, 9:08am 1366751319

RE S&P on Australia........ NZ has precisely the same problems , rising national debt , and big questions about getting back to surplus, although there is committment to it by Govt .

by Stephen Hulme | 24th Apr 13, 9:20am 1366752056

Has done for forty years or more - witness current account deficit.

by powerdownkiwi | 24th Apr 13, 9:21am 1366752068

Ah, the latest straw-clutch. China hasn't got the 'growth coming out of it' that our smiling leader asserted. Next magic elixir; Indonesia. Or maybe the hydrogen economy. Or adding tarot-readings to GDP. Or......

Don't know if I've told this story here, but we used to design/manufacture/sell area-measuring equipment for tanneries (and other things). Went to an Indonesian tannery to install one. Measured fine empty - asked for the standard template. (In the industry, this is a circular square-foot, they work in tenths of a sq/ft too!). Threw it on the table: 0.9, 0.9, 0.9, sq/ft everywhere.

Dad looked at the template "looks a little small to me" did some quick maths, cut a cardboard circle of a square foot, t'was bigger.... 1.0, 1,0, 1.0. everywhere. The manager came back from lunch, Dad explained the problem.

"Ah", said the manager, light dawning in his eyes, "you measure Export Feet".

Not a place I'd 'invest' in.

by Wolly | 24th Apr 13, 10:06am 1366754784

Dig deeper and what do we find..US housing is supported by the FED QE feed bag

"The median sales price fell 6.8% in March from February -- the largest drop since February 2011"

http://inagist.com/all/326697992000258049/

So what happens when Bernanke is history and rates rise?

by waymad | 24th Apr 13, 10:49am 1366757347

Time to re-read Dmitry Orlov, p'raps, folks?

by powerdownkiwi | 24th Apr 13, 11:21am 1366759291

Chuckle. Or Kunstler. Or bypass Go completely:

dieoff.org/

by Andrewj | 24th Apr 13, 12:08pm 1366762084

Boston

http://21stcenturywire.com/2013/04/22/the-official-tsarnaev-story-makes-no-sense/

http://21stcenturywire.com/2013/04/23/who-is-uncle-ruslan/