Good Morning: The Long & the Short of it and The Bigger Picture - 15 May 2019 - ADM ISI
08:59 (17 minutes ago)
- Digesting poor China activity data, sluggish but as expected Australia
Wages, in line German Q1 GDP, strong CEE Q1 GDP; awaiting US Retail Sales,
Industrial Production, NY Fed survey and NAHB Housing index; smattering
of Fed and ECB speak, German 30-yr sale, plenty of corporate earnings
- China: March optimism prove to be unfounded, when will huge Q1 stimulus
get some traction
- Europe Q1 GDP: German rebound as expected, likely to slow in Q2; CEE
readings all beat forecasts, awaiting strong Poland reading
- US Retail Sales set to post consecutive gains for first month in six,
Manufacturing Output likely no better than flat m/m
If markets want some genuine 'macro' distractions from their obsessive compulsion to react to any and every bit of China/US Trade negotiations news, then today affords them a veritable feast of top level data in Asia, Europe and North America. It will be accompanied by a smattering of Fed and ECB speak, an expected no change rate decision in Poland, a goodly volume of corporate earnings, and an as ever small 30-yr German Bund auction. Statistically there are the array of monthly activity data in China, Australia Wages, Korean Unemployment, provisional German Q1 GDP to digest, with plenty of other Eurozone & EU Q1 GDP readings also due; ahead lie US Retail Sales, Industrial Production and NAHB Housing Market Index, while Canada looks to CPI.
** China - Apr Industrial Production, Retail Sales, FAI **
- The key question was whether this week's data run wop3333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333uld confirm that the better than expected Q1 GDP & March activity data were a signal that the authorities' stimulus efforts of the past 6 months are getting some traction, and the answer is a very clear 'no', with no redeeming features in today's run. Retail Sales slowed sharply to a 16-yr low of just 7.2% y/y against forecasts of 8.6%, with weakness broad based, though Food, Apparel, Furniture, Autos and Petol were especially weak. Industrial Production slowed to just 5.4% vs. expected 6.5% y/y, and March 8.5% y/y, with weakness also broad based, though textiles (-1.0% y/y), Metal Products 3.3% vs. prior 14.6%, Railways/Shipping and Machineries were especially soft. Fixed Asset Investment di continue to benefit from govt infrastructure spending, but missed at 6.1% vs. forecast 6.4% y/y from 6.3%, with public Sector FAI accelerating to.7.8% y/y, offsetting a a further slowdown in Private Sector FAI to 5.5% from 6.4%. The only marginal positive was a drop in the Surveyed Unemployment Rate, which dropped to 5.0% from 5.2% in March, having spiked up from 4.8% in November to 5.3% in February. Per se it is not surprising that markets are hoping for more stimulus measures, even if the obvious question is more about when the huge 9.0 ppt of GDP increase in Q1 Total Social Financing is going to provide a boost.
** Germany EU/Eurozone - Q1 GDP **
- German Q1 GDP was bang in line with forecasts at 0.4% q/q, paced by strength in Construction and Services, but continuing to be hobbled by ongoing weakness in Manufacturing, which appears likely to persist into some, if not all of Q2. By contrast Visegrad group and Romania readings have beaten expectations thus far - Hungary 1.5% q/q vs. forecast 1.4%, Czech Republic 0.5% q/q vs. forecast 0.4%, Slovakia 3.7% y/y vs. forecast 3.76% and Romania 1.3% q/q vs. expected 0.3%, which leaves the focus on Poland which is forecast to post a very robust 1.2% q/q 4.4% y/y.
** U.S.A. - April Retail Sales, Industrial Production & NAHB Housing Index **
- Retail Sales inevitably get top billing in today's run, with 0.2% m/m headline expected, following on from March's 1.2% m/m (strongest gain in 18 months), with weak Auto Sales a drag as reflected in forecasts of 0.7% m/m ex-Autos, while core measures are seen up 0.3% m/m after a jump of 0.9%/1.0% in March, thus pointing to a price boost from gasoline sales. Overall it would represent a break from the sharp swings seen in the prior four months, and suggest that Q2 Personal Consumption should be a good deal more robust than the rather tepid 1.2% SAAR seen in Q1. If the array of manufacturing surveys and Orders data are any guide, then Industrial Production is unlikely to better an expected flat m/m following March's 0.1% m/m, with the NY Fed May manufacturing surveys seen at the lower end of recent ranges at 8.0. By contrast the NAHB survey is forecast to post a further small gain to 64 from 63.
** Canada - April CPI **
- This is likely to see another energy led 0.4% m/m gain to edge the y/y back up to 2.0%, while core measures also seen around the BoC's 2.0% target, where they have been for the past 15 months.