Welcome to DU!
The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards.
Join the community:
Create a free account
Support DU (and get rid of ads!):
Become a Star Member
Latest Breaking News
General Discussion
The DU Lounge
All Forums
Issue Forums
Culture Forums
Alliance Forums
Region Forums
Support Forums
Help & Search
Economy
In reply to the discussion: STOCK MARKET WATCH -- Monday, 17 September 2012 [View all]Demeter
(85,373 posts)6. Policy euphoria makes way for humdrum data
http://news.yahoo.com/policy-euphoria-makes-way-humdrum-data-192554311--business.html
The world's top two central banks have administered extra-strong monetary painkillers, but the global economy will still need a lot more time to recover from its thumping debt hangover...Financial markets were euphoric after the Federal Reserve surpassed expectations and promised on Thursday to keep the money taps fully open until the U.S. labor market makes a sustained recovery. The European Central Bank had already impressed investors a week earlier by pre-announcing unlimited, albeit conditional, secondary-market purchases to bring down sky-high yields on bonds issued by struggling euro zone members such as Spain.
Now it's time to come down to earth.
Surveys due this week are likely to show why, in the words of Stephen Cecchetti, the chief economist of the Bank for International Settlements, there are no grounds for complacency. Global financial reforms are not yet complete. Southern Europe has not solved its fiscal problems and lack of competitiveness. And the world economy is listless, he said.
Exhibit No. 1 underlining that weakness will be Thursday's advance September poll of purchasing managers across the euro zone. It is likely to show the 17-country area mired in recession. Economists polled by Reuters expect the index derived from the survey to edge up to 45.5, from 45.1 in August, but that would still be well below the 50 mark delineating contraction from expansion.
ASIA WATCH
Exhibit No. 2, from Japan, will be the Reuters Tankan survey for September due on Wednesday, which is likely to point to challenging conditions for manufacturers, according to economists at Daiwa Capital Markets. The Japanese government last week lowered its growth outlook for the second month in a row, putting pressure on the central bank to ease monetary policy afresh, not least to weaken the yen. The Bank of Japan ends a two-day meeting on Wednesday. However, Daiwa expects the central bank to stand pat until next month.
Exhibit No. 3 a day later will be September's survey of Chinese purchasing managers. With no obvious pick-up in activity, Goldman Sachs is looking for more weakness after August's reading of 47.5. Many investors have been surprised that China has not acted more forcefully to cushion this year's slowdown in growth.
Cecchetti with the Basel-based BIS said the moderation in developing nations could have the welcome effect of putting their growth on a more sustained footing. "But, even so, it means that the emerging market economies won't support global growth as much as they have in recent years," he said.
Which means waiting for the Fed's and the ECB's monetary medicine to kick in.
MORE ENTRAILS READINGS
The world's top two central banks have administered extra-strong monetary painkillers, but the global economy will still need a lot more time to recover from its thumping debt hangover...Financial markets were euphoric after the Federal Reserve surpassed expectations and promised on Thursday to keep the money taps fully open until the U.S. labor market makes a sustained recovery. The European Central Bank had already impressed investors a week earlier by pre-announcing unlimited, albeit conditional, secondary-market purchases to bring down sky-high yields on bonds issued by struggling euro zone members such as Spain.
Now it's time to come down to earth.
Surveys due this week are likely to show why, in the words of Stephen Cecchetti, the chief economist of the Bank for International Settlements, there are no grounds for complacency. Global financial reforms are not yet complete. Southern Europe has not solved its fiscal problems and lack of competitiveness. And the world economy is listless, he said.
"The pace of the recovery in the advanced economies remains disappointing. There are also signs of lower economic growth in emerging market countries," Cecchetti said on a conference call.
Exhibit No. 1 underlining that weakness will be Thursday's advance September poll of purchasing managers across the euro zone. It is likely to show the 17-country area mired in recession. Economists polled by Reuters expect the index derived from the survey to edge up to 45.5, from 45.1 in August, but that would still be well below the 50 mark delineating contraction from expansion.
"A lot of very difficult steps need to be taken sooner rather than later for the sovereign debt crisis to be resolved and, until then, the economy will likely remain sluggish at best," said Bert Colijn, an economist at The Conference Board research group.
ASIA WATCH
Exhibit No. 2, from Japan, will be the Reuters Tankan survey for September due on Wednesday, which is likely to point to challenging conditions for manufacturers, according to economists at Daiwa Capital Markets. The Japanese government last week lowered its growth outlook for the second month in a row, putting pressure on the central bank to ease monetary policy afresh, not least to weaken the yen. The Bank of Japan ends a two-day meeting on Wednesday. However, Daiwa expects the central bank to stand pat until next month.
Exhibit No. 3 a day later will be September's survey of Chinese purchasing managers. With no obvious pick-up in activity, Goldman Sachs is looking for more weakness after August's reading of 47.5. Many investors have been surprised that China has not acted more forcefully to cushion this year's slowdown in growth.
Cecchetti with the Basel-based BIS said the moderation in developing nations could have the welcome effect of putting their growth on a more sustained footing. "But, even so, it means that the emerging market economies won't support global growth as much as they have in recent years," he said.
Which means waiting for the Fed's and the ECB's monetary medicine to kick in.
MORE ENTRAILS READINGS
Edit history
Please sign in to view edit histories.
87 replies
= new reply since forum marked as read
Highlight:
NoneDon't highlight anything
5 newestHighlight 5 most recent replies
RecommendedHighlight replies with 5 or more recommendations
Greeks work the longest hours in the EU; and other facts about the Greek labor markets
Demeter
Sep 2012
#12
You keep busy. Me I spend too much time only observing. I was just now photographing my neighbor
Ghost Dog
Sep 2012
#64
A Totally Different Way to Think About Economics — with Visionary Charles Eisenstein
xchrom
Sep 2012
#16
This Buyout Boom Is an Inside Job:Companies Swapping One Private-Equity Owner for Another
Demeter
Sep 2012
#17
Back to the Future: What's at Stake for the Economy in the Obama-Romney Contest
Demeter
Sep 2012
#27
Hundreds Of Billions Of Dollars Expected To Be Withdrawn From Swiss Banks Amid Tax Evasion Crackdown
xchrom
Sep 2012
#32
LEAP/E2020 Global economy sucked into a black hole and world geopolitics heated to white-hot
Ghost Dog
Sep 2012
#58