Now that the impact of the ‘no taper’ decision by the FOMC has begun to dilute into the global equity markets a sense of new-order, in amongst the ensuing panic, has prevailed. There was a rash of high impact news events published on Thursday that ensured that the momentum caused by the FOMC didn’t fall back, European markets enjoyed a rally, whilst the key USA indices; such as the DJIA, the SPX and the NASDAQ, continued to reach, or breach record highs, although towards the close any gains were wiped off the USA indices in favour of moderate falls, or the markets ending the day flat…
Despite the poor print from the UK concerning the retail sector, the UK figure unexpectedly falling by 0.9% month on month versus the expectation of a 0.4% rise, the UK FTSE was unmoved in terms of its bullish direction. Sterling did pause for breath, but still remained up despite the negative print. The UK feel good factor, which looked to have been derailed by the retail numbers, was somewhat restored by the positive expectations of the UK CBI industrial trends survey. This survey takes the pulse of approximately 400 leading businesses in the UK to publish a sentiment index. Criticized in the past for being too selective the survey is, however, a better trend predictor than many analysts give it credit. In its latest findings it has suggested that;
- 28% of firms reported that total order books were above normal in September and 19% said they were below, giving a balance of 9%, the highest figure since August 2007 (+9%)
- 23% reported that export order books were above normal in September and 18% that they were below. The resulting of balance of +6% is the strongest since February 2011 (+11%)
- The volume of output in the three months to September rose at its fastest rate since August 2011 (+19%). 39% of firms said it rose, 21% said it fell, giving a balance of +18%, which was stronger than expected (+10%)
- Firms expect to increase output at an even faster pace in the next three months: 44% expect to raise output, 11% expect to reduce output, giving a balance of +33%, the strongest expectation since March 1995 (+34%)
- Stock levels of finished goods dropped to their lowest level in September (+5%) since November 2012 (+5%), while average prices in the next three months are expected to remain stable (+3%).
Existing-home sales increased in the USA in August to reach the highest level in six-and-a-half years, while the median price shows nine consecutive months of double-digit year-over-year increases, according to the National Association of Realtors. Total existing-home sales, which are completed transactions that include single-family homes, town-homes, condominiums and co-ops, rose 1.7 percent to a seasonally adjusted annual rate of 5.48 million in August from 5.39 million in July, and are 13.2 percent higher than the 4.84 million-unit level in August 2012. Sales are at the highest pace since February 2007.
On first inspection the unemployment claims in the USA, produced by the BLS each week, appeared favourable. However, on closer inspection it appeared that the states of California and Nevada, who failed to furnish numbers last week due to their computer systems being ‘off grid’, repeated the same problem this week. Therefore the positive print this week, as it was last week, can be rendered redundant in terms of impact. The official numbers were; week ending September 14th, the advance figure for seasonally adjusted initial claims was 309,000, an increase of 15,000 from the previous week’s revised figure of 294,000. But it’s safer to presume that the numbers forecast by the Bloomberg panel of pollsters is the more accurate measurement, a figure of 331K being the median level predicted.
If the unemployment claim numbers were a surprise, to then be rendered redundant, the Philly Fed manufacturing numbers provided the biggest ‘outlier’ result of the day. The print came in at an outstanding 22.3, from the previous month 9.3, with an expectation of 10.2. Try as hard as we can, given the fact that the print has blasted through the prediction, we just can’t find the devil in the detail. The print was driven by a jump in both new orders and shipments, both printing at 21.2, a jump in Inventories to -1.8 from -11.3. Number of employees and the average employee workweek, soared from low single digits and negative, to over 10 each. The only negative in the report is that while prices paid jumped to 25.3, prices received barely budged.