A new week has started off with some red results via data. China has missed expectations via its Industrial Production, Retail Sales, and New Loans figures. Germany has put in weaker than expected Trade Balance results already today. And French Industrial Production followed up with a very lackluster outcome of minus -1.2% shortly after.
While the U.S. will be quiet with data today, on Friday the Non-Farm Employment Change came in with an outcome of 236K jobs added compared to the estimate of 162K, but a closer look at the numbers shows that what is happening is that Americans are still losing full-time jobs and being ‘forced’ to take part-time salaries. Wall Street did not go off to the races on Friday and in fact remained somewhat calm under the shadow of the ‘glorious’ jobs report.
The JPY continues to trade weakly under a sincere attempt at manipulation by the Japanese government. The Nikkei has continued to add value to its index too. However, on a closer look when you calculate the amount of depreciation of the JPY into the gains made via the Nikkei what you are left with are results that are not so much better than other global bourses which have also been inspired to lofty heights via central bank meddling.
The EUR, GBP, and AUD have all traded lower too. The USD has gained but expect ranges to begin to show resistance with the USD sooner rather than later. Risk appetite is certainly on the table and it appears that some financial institutions are choosing to expose themselves to equities again (or are they being pushed? This as their competitors have gone into the markets and have gained short-term).
The scenario is starting to become a profound game of who (whom – for our grammatically astute friends) do you trust? Data from the States on Friday was held up far and wide as a sign that the American economy is starting to come back and add jobs. Its Official Unemployment Rate is now 7.7%, which translates into an attractive number when compared to the Europeans certainly. But as mentioned before a closer inspection of the numbers indicates that the job gains have not exactly been born from the best of conditions.
In the short-term Wall Street is powering to new highs and other bourses are following suit, but many interesting questions remain. Spanish bonds have done better, Italian bonds were doing better up until this morning when a new downgrade was published, and investors have seemingly decided that it is OK to jump into the deep end of the pool.
But our point is this, while speculation and investment are drivers of capitalism, there are also venues that are spurred along by governments that are seeking to make sure that their domestic economies are stable and do this with little regard for other ‘players’ and long-term implications. So while investors take a chance swimming in the deep end there is a question about who the life guards are exactly. And are the life guards telling everyone it is OK to swim when they know full well dangers are near? Currency manipulation is being seen within the markets via the Japanese and certainly via the U.S. Fed’s monetary policy. No doubt that the central banks will deny the stigma of manipulation via their ‘Sherpas’, who will say when asked that they have taken actions to only safe guard the integrity of economic conditions. But who is fooling who?
Gold as of this writing is in a seemingly self-contained consolidated value near 1578.00 USD. Crude Oil is trading near its lows also. Be wary of consolidation folks. Tomorrow the U.K. will publish Manufacturing Production figures and on Wednesday the U.S. will bring forth Retail Sales numbers.