viernes, 26 de abril de 2013

viernes, abril 26, 2013

World factory orders flash warning signals despite booming markets

A rash of weak manufacturing data from America, Europe and Asia has cast serious doubts on the strength of the global economy and was starkly at odds with surging stock markets in the West.

By Ambrose Evans-Pritchard

8:17PM BST 23 Apr 2013
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A view showing the dashboard being fitted on the production line of the Nissan Leaf electric car at the Nissan Plant, Sunderland
Germany’s 'composite' PMI index for services and manufacturing fell into the contraction zone again in April Photo: PA

Markit’s PMI factory index for the US suffered the biggest one-month fall in almost three years as the most sudden fiscal tightening since 1946 starts to bite.
 
While the gauge remains above the expansion line 50 at 53.6, there was a sharp drop in new order growth and an ominous rise in inventories.
 
“The picture has already begun to darken again. The fall raises concerns that the manufacturing expansion is losing momentum rapidly,” said Markit’s Chris Williamson.
 
But the markets were dancing to an entirely different tune. Wall Street brushed aside Tuesday’s data, focusing instead on bumper earnings from the cable network Netflix and news that US house prices have risen 7.1pc over the past year. The S&P 500 index jumped 16 points to 1,579 in early trading.
 
The FTSE 100 in London closed at 6406, up 2pc, and there were similar rises in European bourses as investors bet that more evidence that the Continent is mired in recession will force the European Central Bank to cut rates.

Germany’scomposite PMI index for services and manufacturing fell into the contraction zone again in April, and there was a nasty fall in new orders that is hard to reconcile with claims by Berlin that recovery is gaining strength.

Howard Archer, from IHS Global Insight, said the fresh slide in eurozone factory orders implied a seventh consecutive quarter of recession.

If the long-awaited recovery fails to materialise this spring, it will play havoc with public finances and push debt levels in southern Europe further into the danger zone. Eurostat data this week showed that public debt ratios jumped from 108pc of GDP to 124pc in Portugal last year despite austerity cuts, with a rise from 69pc to 84pc in Spain. The slump itself is driving the rise in debt.

Asia is still above water, but momentum is fading. China’s PMI factory gauge slipped back from 51.6 to 50.5 in April, led by a fall in export orders. This confounded widespread expectations for a pick-up in growth.

Bellwether data from Taiwan have been flashing warnings for weeks, with industrial output down 3.3pc in March from a year before. Taiwan is worth watching closely as an early indicator of the Asian business cycle, and so is Singapore. We think Asia has got off to a very soft start this year,” Julian Callow, from Barclays, said.

Zhiwei Zhang, from Nomura, said the Chinese economy was weakening by the month and would “trend down” from 7.7pc in the first quarter to 7.2pc by the end of the year despite efforts by Beijing to keep the ship afloat. “The effectiveness of policy easing has been diminished by aggressive stimulus over the last five years,” he said. Credit has risen from around 120pc of GDP to 200pc over the past four years to $23 trillion (£15 trillion), including the shadow banking system, leaving an overhang of unstable debts.

The Shanghai bourse fell 2.2pc on Tuesday and has given up almost of half the 20pc gain since Beijing turned on the spigot again last autumn with fresh loans and a spending spree on the railways. It is down by three quarters in real terms since its pre-Lehman peak.

Analysts at EPFR Global said foreign investors have pulled money out of the offshore China Equity Fund for the past eight weeks in a row as they discount a “new normal” of much lower growth.

This is a mirror image of inflows over the winter. A further $477m was withdrawn last week. TrimTabs in New York says iShare’s China ETF has the biggestshortposition since June 2007, with 3.2pc of total shares sold short.

Such “crowding” on one of the trades can be a buy signal. Europe’s stock markets also rallied on reports that Italy may have found a saviour in Matteo Renzi, the mayor of Florence. Mr Renzi has won the support of the Democrat Party and is tipped to take charge of a caretaker government. Yields on Italian 10-year bonds fell below 4pc, touching pre-crisis lows.

The populist comedian Beppo Grillohead of the Five Star movement – said nobody can rescue Italy, predicting statebankruptcy” by October as the treasury runs out of money.

Hopes that the ECB might cut rates or take direct action to alleviate the credit crunch for small business were lifted this week when board members Vitor Constancio and Benoit Coeuré both signalled that lack of recovery had become a worry.

Mr Callow said markets were ignoring the economic fundamentals because they were awash with money. “They are being pushed higher by the “high voltage QE” of central banks. There are powerful spill-overs from the Bank of Japan’s stimulus, as well as from the Fed. The money is looking for yield and the bad news is not bad enough,” he said.

The sugar rush of easy money will not last forever. America’s M3 money supply has flattened over the past three months. It is no longer signalling robust growth 12 months ahead.

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