Despite so much pent up hope that Japan would post a 0.4% annualized growth (and a 0.1% rise Q/Q) in its Q4 GDP, finally exiting that pesky triple dip recession it has been stuck in for the past five years, moments ago the Cabinet Office reported that contrary to optimistic expectations, in the 4th quarter the economy again contracted for the third straight quarter, this time by 0.4% annualized, and 0.1% on a Q/Q basis. This was driven by a whopping 14% SAAR implosion in exports, which should not come as a surprise to those who have been tracking the ongoing destruction of Japan’s trade balance (and current account surplus). “Japan’s economy may show some weakness for the time being. But it is likely to resume a moderate recovery thereafter due to the Bank of Japan’s monetary easing, the effect of an emergency economic package, as well as an expected moderate recovery in the global economy,” Economics Minister Akira Amari said in a statement. True: there is hope. And there is the reality that all the BOJ is doing is desperately trying to offset the loss of the Chinese export market, which courtesy of the ever escalating foreign relations snafu involving a few islands close to a massive gas field, remains as shut as ever. And as long as China refuses to assist Japan in its trade and current account deficit predicament, Amari can hope, and hope, and hope.
The story of the day is: Weak GDP numbers everywhere.
It started in Japan, where GDP came in at -0.1%, vs expectations of 0.1% growth.
Meanwhile, GDP numbers across Europe are lower as well.
Specifically, Germany saw economic contraction of 0.6%, while France saw contraction of 0.3% in Q4, according to MarketWatch.
Italian GDP fell by 0.9%, also worse than expected.
Eurozone GDP fell 0.6% vs. expectations of a 0.4% decline.
Numbers out of Greece and Portugal are also awful.
Another GDP miss, which is a theme around the world today.
MADRID (MarketWatch) — German and French economic growth contracted by more than economists had expected in the fourth quarter, according to official data released on Thursday. German gross domestic product fell by 0.6% in the fourth quarter of 2012 on a seasonally adjusted basis, after growth of 0.2% in the prior quarter. Economists polled by FactSet Research were expecting a a fall of 0.5%. In France, meanwhile, GDP fell 0.3% in the fourth quarter from a prior 0.1% climb in the third quarter. Economists had been forecasting a drop of 0.2%.
It started overnight in Japan, where Q4 GDP posted a surprising and disappointing 3rd quarter of declines, then quickly spread to France, whose Q4 GDP declined -0.3% Q/Q missing expectations of a -0.2% drop, down from a +0.1% increase, then Germany, whose GDP also missed expectations of a -0.5% drop, declining from a +0.2% increase to a -0.6% drop, then on to Italy (-0.9% vs Exp. -0.6%, last -0.2%), Portugal (-1.8%, Exp. -1.0%, last -0.9%), Greece (down -6.0%, previously -6.7%), Hungary (-0.9%, Exp. -0.3%), Austria (-0.2%, down from 0.1%), Cyprus (-3.1%, last -2.0%), and so on.
FTSE 100 /quotes/zigman/3173262 6,330 -29 0.46%
DAX /quotes/zigman/2380246 7,639 -73 0.95%
CAC 40 /quotes/zigman/3173214 3,682 -17 0.45%
FTSE MIB /quotes/zigman/1482176 16,565 -144 0.86%
IBEX 35 /quotes/zigman/2759620 8,195 -110 1.33%
Stoxx 600 /quotes/zigman/2380150 288 -0 0.09%
Investors await weekly jobless claims, with sentiment hurt by weak growth data out of Europe and continued worries about a currency war. |
Losses accelerated for U.S. stock index futures on Thursday ahead of weekly jobless claims, with sentiment hurt by weak growth data out of Europe and continued worries over a so-called currency war.
Futures for the Dow Jones Industrial Average (CBE:DJH3) fell 67 points, or 0.5%, to 13,891, while those for the Standard & Poor’s 500 index (GLC:SPH3) fell 5.7 points, or 0.4%, to 1,511.50.
Futures for the Nasdaq 100 index (CME:NDH3) fell 11.5 points, or 0.4%, to 2,758.75.
After a sharp New Year’s run-up, major U.S. stock indexes have stalled at significant resistance levels and multiple fundamental and technical indicators suggest that perhaps there is now nowhere for equities to go but down.
Over the last couple of weeks, we’ve all read a steady stream of overly-bullish headlines and listened to media commentators celebrating Dow 14,000 and the possibility of a new, eternal bull market. However, overhyped headlines and a series of fundamental and technical factors point to the possibility that, as usual, such enthusiasm tends to mark market tops rather than bottoms.
Starting with technical indicators, a chart of the S&P 500 dating back to 1998 demonstrates how the index has established a triple-top over the period from 1998 through the present. This is an enormous resistance level and one that will need to be convincingly broken before one can declare eternal life for the bulls.
Dow futures. . .-71.00
Dollar Index 80.550
I always love this video at times like this. . .