No Bounce From Draghi's Rescue Package; Spanish Data Continues To Shock
Macro and Cheese | Sep 27, 2012 06:09AM ET
- China soars: Japan +.41%, China +2.60%, HK +1.14%, SoKo +.42%
- Australia job vacancies +4.2% QoQ vs -5.4% previous
- China industrial profits YTD -3.1% YoY vs -2.7% previous
- China lowers currency fixing amid stimulus expectations
- China's largest listed steel company suspends production at one plant
- Europe improving: Eurostoxx +.17%, Dax +.28%, FTSE +.17%
- EC CDS improving slightly following yesterday's big selloff
- Spain housing permits -37.1% YoY vs -49.7% prior
- German unemployment change 9k vs 11k previous; unemployment 6.8%
- UK GDP -0.5% YoY, as expected, unchanged
Markets are bouncing overnight following a resumption of stimulus expectations on the part of the Chinese government. China racked up material gains, though not enough to overcome the year's bearish score, with Shanghai down 6.51% year to date.
Still, markets are stable and quiet following Tuesday's trouncing, which is good news of sorts.
Economic data remains mixed at best from Europe. Above is a chart of EC economic sentiment, and though the exact timing of the survey is unclear, what is clear is that there is no bounce from Draghi's rescue package--in fact, the reading came out a full point lower than expected (red is actual, blue is the expectation). Spanish data continues to shock, this time in the housing market, with permits down more than 1/3 compared to this time last year.
We have our work cut out for us: The next big events in terms of market speculation are Chinese stimulus, and Spain's acceptance of EC financial aid. China will probably disappoint--there's not much they can do, really--but Spain will probably lead to a decent market bounce, the typical pattern of the drama queen market. Call them a wash. In the meantime, I continue to favor small size and patience.
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