Post-payroll press conclusion: awful. Actually, with everyone revising forecasts lower the data weren’t an earth-shattering surprise. But still, an awful summer of economic data around the world ended on a bad note. Now the real business starts – Labor Day and back to school spending, with depleted real incomes and rock-bottom consumer confidence. And decreasing confidence in the ability of ‘Emperor with no clothes’ Ben Bernanke to achieve much with further easing.
Meanwhile, over here in Europe, Merkel’s CDU got beat in her home state, adding to the sense that opposition to any solution to a deepening crisis is growing. Not good. ECB under pressure to resort to more normal methods of helping -getting ready for rate cuts, say. At least no one could say that was outside their remit. And S&P is sending thinly-veiled warnings about the rating of any ‘Eurobond’ being based on the lowest common denominator. IE, chances are it would not be a triple-A. That ought to be irrelevant but it plays straight to the views of the sceptics.
In Switzerland, the SNB has apparently been buying French and German debt. Boy oh boy they don’t want their currency to get any stronger, do they? Can’t help thinking they’d achieve more by buying BTPs – pointedly limiting themselves to ‘safer’ stuff risks making the crisis which is causing CHF strength even worse….
UK press is basically gloomy. Nothing new there. The days are getting shorter and the skies are getting darker. And A. Darling sticking knives into G. Brown, which might be the only person having a worse day than Angela… oh what fun.
Labor Day is usually pretty quiet. The market is short ‘risk’ and won’t push for ever. I’m surprised the euro hasn’t fallen to USD 1.41 yet (an alleged 1.42 sov barrier helps) , but equities doing badly and bonds doing well seems a fair bet to kick things off. If i’m true to last week’s principle – that August payrolls are August data and that it’s September which matters – I should be looking to fade any further extension of gloom, albeit pretty timidly. The fear though, is there’s nothing around to make the September data any less awful than August’s…
HSBC Global Research