Last week was an excellent test for the overall bull market. While data out of China pointed to decelerating growth, US equities held up surprisingly well. High oil continues to be a challenge, but except for a few key sectors like Airlines, the broad economy still seems to be humming along.
Beijing (AFP) - China's central bank on Friday unexpectedly cut benchmark interest rates for the first time in more than two years, as authorities seek to prop up flagging growth in the world's second-largest economy.
China has entertained the threat of nuclear strikes against west coast cities such as Los Angeles and Seattle, the annual 2014 congressional report from the US China Economic and Security Review Commission states.
The last time global equity markets were falling at this pace (on a growth scare) was the fall of 2011. That time, after a big push lower, November saw a mass co-ordinated easing by central banks to save the world... stock jumped, the global economy spurted into action briefly, and all was well.
Small and mid-sized firms in China have been hit harder by the weakening economy compared to large corporations. According to Shankar Sharma, India has successfully managed to retain its balance and to stimulate economy growth. Goldman Sachs downgraded its rating on Indian stocks to “underweight”. Following a six-day consecutive declines the BSE benchmark Sensex managed to erase all losses by gaining 179 points.
The holiday week saw the dollar consolidate against most of the major currencies. The yen was the main exception as its losses were extended under the aggressive signals coming from the new Japanese government.
The last 7 days have seen the unstoppable 'sure-thing' one-way bet of the decade appreciation trend of the Chinese Yuan reverse. In fact, the 0.95% sell-off is the largest since 1994 (bigger than the post-Lehman move) suggesting there is clear evidence that the PBOC is intervening.
Beijing (AFP) - Growth in Chinese manufacturing activity slowed in August, two closely watched surveys showed Monday, losing momentum as a declining property sector and waning stimulus effects weigh on the world's second-largest economy.
After noting the role of health care spending in producing the largest negative shift from first to third estimate for quarterly GDP in modern U.S. history, Jim Hamilton notes the role of falling U.S. exports as the second biggest contributor to that outcome: