'Ya Gonna Believe?
Research for Online Investors
HSBC publishes their “Flash” PMI
(Purchasing Manager’s Index) every month a couple of weeks before the Chinese government compiles their “official”
PMI. Almost every month it seems the HSBC number is worse than the
government’s number. HSBC’s China PMI number came out overnight at 48.7
for May, down from 49.3 in April.
HSBC’s PMI numbers have shown
China’s manufacturing sector slowing their growth trajectory for the last eleven months. The Chinese government numbers have shown the manufacturing sector to be in
expansion for the last five months.
Who 'ya gonna
I’ll go with HSBC. We have covered the reasons HSBC numbers are generally lower than the government’s. The government has access to the larger state-owned companies in their
survey. These companies have access to capital from government
HSBC surveys smaller
companies. These smaller companies don’t have access to cheap government
loans to capitalize on opportunities or survive downturns. The
government steers business to the largest companies, enhancing their profitability. Europe is China’s largest export market. The credit crisis in the eurozone has ripened into a recession and slowed China’s
exports. China is trying to transition to increasing domestic demand for
their manufactured goods, but so far has been unable to replace the lost export shipments.
Keep your eye on China's economic
numbers. Europe in recession, U.S. slow growth; ok we can work through all that...but China slowing, that is
Shenanigans in Egypt’s elections are
at full tilt as candidates spread rumors that other candidates are dropping out of the race. Ahmed Shafiq is the former Air Force General, and was polling in first or second
place. He had shoes and stones thrown at him at a polling place
yesterday when he left after voting.
The Muslim Brotherhood’s candidate,
Mohammed Mursi, supporters were distributing meat, sugar, beans, lentils and oil to voters according to election
monitors. One of Shafiq’s supporters was arrested for handing out
“walking around” money to voters.
Authorities prevented fifteen women
from voting when they would not let inspectors verify their identity.
They would not lift their “niqab” (full face veil) for female inspectors to check their faces. No word on how deep
their voices were.
Al-Jazeera published an exit poll showing Mursi garnering 25% of the vote followed by Sabahi at 22%, Fotouh at 21% and
Moussa at 19% That puts the Muslim Brotherhood in first place, the
leftist candidate in second place, followed by a former MB member and the former
U.S. Initial Jobless Claims remained
static at 370,000 in the Department of Labor report this morning, but through the magic of revision you will
probably hear they dropped from last week. In what has become the “new”
new way of calculating government statistics, last week number was revised up 2,000 so this week’s number could be
classified as lower.
Continuing Claims were higher than
expected, but were better than last week’s. Surprised? It might have something to do with people hitting their 99 weeks and disappearing
from the roles. Durable Goods Orders were up 0.2% in April, better than
the contraction of 3.7% in March. Core Durable Goods (excluding
Airplanes) dropped 0.6%. Economists expected growth of
0.9%. March’s Durable Good’s numbers were revised up to -3.7% from
the initial reported drop of -3.9%
The market looks lower today on
disappointment the European Leaders dinner yesterday didn’t agree to spend money until everyone has a new car in
the garage and the banks are stuffed with money. That is evidently what
the market wants, a little inflation and money chasing every asset. This
would reassure traders that stocks would continue to go up.
Here is the dirty little
secret. When all the arguing is done and Greece has voted, the ECB will
prop up the eurozone banking system. They will offer another round of
the Long Term Refinancing Operation (LTRO), maybe only for a year rather than three years. But you can bet the money will not dry up. Maybe the ECB will just choose to expand their balance sheet buying sovereign debt
in the secondary market to suppress interest rates.
Early this afternoon, an interesting
piece of information hit the wires. Google reports the term “Bank Run”
has hit an all-time high in searches. Areas that are experiencing high
volume are Europe, China and Singapore.
Those who take the most from the table, teach contentment. Those for
whom the taxes are destined, demand sacrifice. Those who eat their fill, speak to the hungry, of wonderful times to
come. Those who lead the country into the abyss, call ruling difficult, for ordinary
Brecht (1898-1956) German dramatist, stage director, and poet