Pre NFP
The economic calendar continues to roll on this week providing plenty of vol to keep traders busy. One of the best indicators will be out Thursday morning in Canada, the Ivey PMI. The chart below shows a rebound since March and expansion since May.
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Sound familiar? See the chart below which overlays the Ivey PMI to the Dow Jones. Exactly why the Ivey PMI is one of my favorites. For those that haven't paid too close attention to the PMI it tends to oscillate in wider ranges than the EU PMI or the US ISM figures. Bottom line, It's a better leading indicator than its peers.
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Yesterday I focused on the job losses over the last 2 years but the underlying trend is improving. Remember that 490k is the Neural line in jobless claims and we should easily clear that line heading into 2010 setting up for a big year of job creation. Which is good for consumer spending and the stock market...
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Sobering thoughts. UK industrial production. Scary bad. As we've seen this week from the RBA its not what's happening domestically, it's what's happening globally and the central banks around the world won't be hiking much further unless the weakest link in the chain gains strength. Right now that weak link is the UK.
Chart is courtesy of the UK Office for National Statistics.
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Trade balance figures out of Australia on Thursday. Conventional thinking is that trade deficits necessitate weaker currencies. Not so fast my friend. Trade deficits are due to globalization and economic growth. In this case the larger the deficit the stronger the currency. That said, if the deficit were to narrow in the months ahead the RBA will not be hiking much longer.
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As we pointed out yesterday its been a tough decade for job creation and obviously wealth management. Does this decade remind us of the '30s & '40s or the '60s & '70s? For now you decide but we'll continue to track the correlation.
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