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Disappointing data for China fuels global economic fears

Published: Wednesday 14 August 2019

  • Poor Chinese data deepens global slowdown gloom
  • German Gross Domestic Product contraction mirrors UK’s

Disappointing data for China fuels global economic fears

A poor set of Chinese data overnight has added to the global economic woes and weakened the currencies of China’s supplier nations. Industrial production growth fell back to 4.8% - a 17 year low, their unemployment rate rose to 5.3%, retail sales slipped and investment slipped as well. The markets have clearly become used to declining Chinese data because there was little reaction.

Overnight news also included a recovery in consumer sentiment in Australia, according to the Westpac index.

Euro weakens on poor Gross Domestic Product data

The Euro is a tad weaker this morning after German Gross Domestic Product (GDP) contracted by 0.1% in Q2 after 0.4% growth in Q1. This almost mirrors the UK’s data and is probably attributable to the same stockpiling ahead of Brexit, plus some changes in the timing of public holidays. No doubt the continuing slowdown in China will have impacted exports to that behemoth of an economy. We have also seen consumer price deflation in France taking more of the shine off the Euro. The markets are expecting Q2 GDP growth to remain around 1.1% on the year for the Eurozone but, as Germany is such a major component of the Eurozone’s GDP, the actual figure may well disappoint. Be ready for that.

Positive economic data for UK today, but can it help the Pound?

Sterling still failed to strengthen significantly on positive consumer inflation data, even after a small uptick in the unemployment rate reported yesterday. Sterling was saved by the rise in wages growth yesterday, though. At 3.9% per annum, that wage growth, alongside such strong employment numbers, will boost the prospects for the consumer end of the UK economy as long as inflation remains around 2.0% or slightly lower. Today’s figure of 2.1% is positive, but may not be enough to boost Sterling much, thanks to Brexit fears, but it can’t hurt the Pound. Maybe a rise in Producer Price inflation will help, up from 1.6% in June to 1.8% in July.

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US trade data expected today

This afternoon’s US data is confined to import and export numbers. That is unlikely to shift USD sentiment. With much larger factors in play, like the China and Middle East situations, we need political change to get any kind of USD change.

Have a great hump day everyone.

Vatican Trip ( a long joke – I’m sorry)

A woman was at her hairdresser's getting her hair styled for a trip to Rome with her husband. She mentioned the trip to the hairdresser, who responded, "Rome? Why would anyone want to go there? It's crowded and dirty. You're crazy to go to Rome. How are you getting there?"
"We're flying with Italair," was the reply. "We got a great rate, so we upgraded to business class."
"Italair?" exclaimed the hairdresser. "That's a terrible airline. Their planes are old, their flight attendants are all overweight, and they're pretty much always late. Never mind, where are you staying in Rome?"

"We'll be at this exclusive little place over on Rome's Tiber River called Teste."
"Don't go any further. I know that place. Everybody thinks it's gonna be something special  because their website is so great but it's a dump, the worst hotel in the city! The rooms are small, the service is surly, and they're overpriced. Never mind, so are you seeing all the sights when you get there?"
"We're going to go to see the Vatican and we hope to see the Pope."
"How funny," laughed the hairdresser. "You and a million other people are trying to see him. He'll look the size of an ant. Boy, good luck on this wishful trip of yours. You're going to need it."

A month later, the woman again came in for a cut and blow dry. The hairdresser asked her about her trip to Rome. "It was wonderful," explained the woman, "not only were we on time in one of Continental's brand new planes, but it was overbooked and they bumped us up to first class. The food and wine were wonderful, and I had a handsome 28-year-old steward who waited on me hand and foot. And the hotel was great! They'd just finished a multi-million Euro refit and now it's considered the finest hotel in the city. When they realised it was a very special trip for us, they bumped us up to the Presidential Suite. It was fabulous.”

"Well," spluttered the hairdresser, "that's all well and good, but I bet you didn't get to see the Pope."
"Actually, we were quite lucky, because as we toured the Vatican, a Swiss Guard tapped me on the shoulder, and explained that the Pope likes to meet some of the visitors, and if I'd be so kind as to step into his private room and wait, the Pope would personally greet me. Sure enough, five minutes later, the Pope walked through the door and shook my hand, I knelt down and kissed his ring and he spoke a few words to me."
"Oh, really! What did he say?"

"He said, ‘Who the hell butchered your hair?'"
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