With the S&P 500 back over 1280, the bears have had their 1 day of candy stomped on, as the "first day of the week" rally followed by the "first day of the month" rally back to back, simply is a force too difficult to fight. Hence my caution late last week on making bets against the broader market despite the first break of support in months.
As for the economic data, I think U.S. bulls had a "no lose" situation in China - if the Chinese Purchasing Managers Index was strong we would clap that "China is impossible to stop" and if the PMI was weak, we would clap that "China is doing a great job slowing down their economy to contain inflation". It's a David Tepper viewpoint - we can't lose no matter what the data. As always, there are actually 2 figures one private (via HSBC) and one public (via the
With the Chinese New Year starting up soon, the data next month will be not as useful.
(over 50 = expansion, below 50 = contraction)
- China's manufacturing boom eased further in January as authorities tightened controls on credit, though inflationary pressures continued to rise, according to data released Tuesday. The state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index, or PMI, dipped to 52.9 last month, from 53.9 in December and 55.2 in November.
- A second, competing survey issued Tuesday, the HSBC China Manufacturing Purchasing Managers Index, edged up in January to 54.5 from a three-month low of 54.4 in December.
- The HSBC survey covers 400 companies, while the federation's monthly reports measure data from 820 companies across a range of industries and is an indicator of future trends.
- Inflation measures within the purchasing managers index reflected strong increases, especially for energy, raw materials and food-related commodities, the report said.
- The government-sponsored survey showed steady demand for imports and strong purchasing by manufacturers. But indicators for new export orders, production and inventories fell, it said, suggesting caution among many manufacturers over prospects for future demand.
- The HSBC survey appeared, however, to show more robust support for continued strong growth, suggesting further room for credit tightening.
- Goldman Sachs Group Inc. said the divergence between the studies may reflect sampling differences and said the government-backed PMI shows seasonal effects even after “supposed” seasonal adjustment. (note the quotation marks around supposed - i.e. even Goldman is chuckling at the government data) Barclays Capital said the HSBC PMI was “a more reliable seasonally adjusted series.”
Over in Europe we have a nice bounce in economic data that counteracts some of the slowdown seen in other reports from the region the past 2 months. Germany continues to be a superstar, with unemployment now down to its lowest levels since 1992, as government, corporation, and worker band together for the greater good. (what a concept) [Oct 1, 2010: German Unemployment Rate Down to 7.2% after Peaking at 8.7%; Can We Learn Anything?]
- European manufacturing growth was stronger than initially estimated in January, accelerating to the fastest pace in nine months on stronger output in Germany. A gauge of manufacturing in the euro region rose to 57.3 from 57.1 in December, London-based Markit Economics said. That’s the highest since April. In Germany, output growth hit 60.5.
- A gauge of services advanced to 55.2 in January from 54.2 in December. A composite index of manufacturing and services rose to 56.3 from 55.5. A sub-indicator of new orders remained at the highest in eight months, today’s report showed.
- European manufacturers have helped bolster the region’s economic expansion as export growth countered the impact of austerity measures on consumer demand.
- In Germany, Europe's largest economy, business confidence jumped to a record last month.
- German unemployment has fallen to second lowest among the Group of Seven nations after Japan. According to OECD data, Germany’s jobless rate was 6.7 percent in November. The equivalent rate in France was 9.8 percent, the U.S. rate was 9.8 percent and the Group of Seven average was 8.2 percent.
[Jan 13, 2011: Germany Puts Finishing Touches on Impressive 2010]
[Jan 6, 2010: China Passes Germany as World's Largest Exporter]
[Jun 30, 2009: Will Germany Transform Itself? Does it Want to?]
[Jun 16, 2009: As Euro Zone Unemployment Spikes; Job Saving Measures Emerge - Completely UnAmerican]