October Begins: World Economies Show Continued Contraction – Crucial PMI Numbers Coming In WEAK!!! China, Australia, Indonesia, and UK PMI All Came In Worse Than Expected!!! Markets Are Preparing For Spain To Get Downgraded!
- Japan: Markit/JMMA Manufacturing PMI — 48.0, up from 47.7 in August
- China: HSBC Manufacturing PMI — 47.9, up from 47.6 in August
- Australia: AiG Manufacturing PMI — 44.1, down from 45.3 in August
- Netherlands: NEVI Manufacturing PMI — 50.7, up from 49.7 in August
- China: Official PMI — 49.8, up from 49.2 in August
- Taiwan: HSBC Manufacturing PMI — 45.6, down from 46.1 in August
- Vietnam: HSBC Manufacturing PMI — 49.2, up from 47.9 in August
- Indonesia: HSBC Manufacturing PMI — 50.5, down from 51.6 in August
- India: HSBC Manufacturing PMI — 52.8, unchanged from 52.8 in August
- Russia: HSBC Manufacturing PMI — 52.4, up from 51.0 in August
- Ireland: NCB Manufacturing PMI — 51.8, up from 50.9 in August
- Poland: HSBC Manufacturing PMI — 47.0, down from 48.3 in August
- Turkey: HSBC Manufacturing PMI — 52.2, up from 50.0 in August
- Spain: Markit Manufacturing PMI — 44.5, up from 44.0 in August
- Czech Republic: Manufacturing PMI — 48.0, down from 48.7 in August
- Switzerland: Manufacturing PMI — 43.6, down from 46.7 in August
- Italy: Markit/ADACI Manufacturing PMI — 45.7, up from 43.6 in August
- France: Markit Manufacturing PMI — 42.7, down from 46.0 in August
- Germany: Markit/BME Manufacturing PMI — 47.4, up from 44.7 in August
- Greece: Markit Manufacturing PMI — 42.2, up from 42.1 in August
- Eurozone Manufacturing PMI — 46.1, up from 45.1 in August
- U.K. Markit/CIPS Manufacturing PMI — 48.4 down from 49.5 in August
- Monday, 10/1, 9:00 AM: U.S. Markit U.S. PMI Final — 51.5 in August
- Tuesday 10/2: 8:00 PM: South Korea: HSBC Manufacturing PMI — 47.5 in August
Markets are bracing for a possible downgrade of Spanish government debt to ‘junk’ status.
Ratings agency Moody’s is due to release its decision after a review of Spain’s credit rating wrapped up on Friday.
Analysts widely believe a decision will be forthcoming and that the outcome is unlikely to be positive.
Spain’s credit rating currently sits one notch above ‘junk’ status.
Any downgrade would have severe consequences for the country, as some investors can’t hold non-investment grade debt.
China’s official manufacturing PMI number came in at 49.8 for September.
Economists expected it to climb to 50.1 from 49.2 in August.
Any reading below 50 signals contraction in the industry.
PMI is an index based on a survey of purchasing managers. The finding are considered to be a very reliable leading indicator of an economy.
Here’s a breakdown of the report courtesy of Fung Group.
“We don’t expect a bounce back soon from the slowdowns in these East Asian economies,” said Junko Nishioka
China’s manufacturing contraction persisted last month, Japanese industrial companies grewmore pessimistic and South Korean exports fell, signaling East Asia’s biggest economies have yet to reverse their slowdowns.
A Chinese factory index was at 49.8 for September, the first time that it has been below 50 for two straight months since 2009, a statistics bureau report showed in Beijing today. Japan’s Tankan index of large manufacturers’ confidence fell to minus 3 for the past quarter. South Korean shipments slid for a third month.
In China, measures to support growth may be stepped up after the Communist Party dealt with political issues including laying charges against ousted Politburo member Bo Xilai and setting Nov. 8 for the start of a party congress, Bank of America Corp. said today. Japan’s fiscal response may be complicated by a parliamentary stand-off over financing and an election as early as this year, with Prime Minister Yoshihiko Noda reshuffling his cabinet today to revive support.
Traders expect October to give the markets a scare, starting with news on the economy and jobs in the week ahead.
After a surprisingly good performance in the third quarter, the thinking is the stock market is ready to pull back, especially after a few choppy sessions and a new batch of data that should continue to show a slow-moving, ‘zombie like’ economy.
“I think the overarching thing is it’s the new quarter. What’s it mean? Did we experience any window dressing? It doesn’t feel like it to me,” said Art Hogan of Lazard Capital Partners. “To me, there’s more downside risk than upside risk.”
“I’m not sure what the catalyst is going to be, but we’re due,” said Hogan.
While Faber favors gold, he thinks that it too is due for a correction after staging a huge rally.
He spoke with Fox Business News on Friday:
It has a huge rally from around – the low was at $1,522 last December and we are now over $1,700 and I think we need a correction here. In fact, I am now bearish about practically all assets near term I think we’re entering a correction time where there will be some disappointments, where stock markets, from the recent times can easily drop 20%.
However, Faber’s bearish stance isn’t so bearish that he has dumped everything.
I’m not 100% in cash, for the simple reason that I could be wrong, but in general I think that people that have a heavy exposure to assets being that equities, or gold, or other commodities. I think they will face some profit taking here.
Here’s the whole interview courtesy of Fox Business News: