Tuesday, February 2, 2010

The Globaliser 02.02.10

Economics and Currencies
The UK's manufacturing bounce

'UK manufacturing output is recovery sharply', trumpets Economist Michael Saunders, 'helped by the low pound, stronger global growth and in turn the inventory cycle… on news that the manufacturing PMI rose to 56.7 in January, the highest level since October 1994… at the same time, there were mixed reports on monetary conditions… deposits held by households and businesses rose in December, but there was a sharp dive in headline M4 growth, although that was concentrated in severe weakness in deposits held by non-bank financial companies, both
financial intermediaries and other non-bank financial firms (e.g. hedge funds, private equity firms)'.

Australia's rate surprise

'Australia's central bank has put the cat amongst the pigeons', quips Economist Josh Williamson, 'with a surprise decision to keep the cash rate target at 3.75%... this despite a two-month break since the previous board meeting and the majority of domestic data showing the economy gathering more momentum… recent global developments appear to be one of the deciding issues… the recent fall in housing finance could also be playing a part… at this stage, we retain our call for no increase in March, which would see the year end cash rate at 5%, rather than 5.25%'.

Top Down Analysis

Strategy Japan's nice equity upside

'Japanese equities deliver top-class relative performance', gushes Strategist
Tsutomu Fujita, 'outperforming global share prices by 10.4% since bottoming in
late November... as net buying by foreigners reached record high levels...
importantly, we see this outperformance continuing... given low valuations and
improving supply/demand conditions with the market now past the fundraising
peak... helped by environmental and energy-saving technologies - areas of
strength for many Japanese companies - likely becoming global themes... also
keep in mind, whereas our 1,100 end-'10 TOPIX fair value estimate implies 21.2%
growth from end-09 levels, our US strategist anticipates gains of ~5% on the
S&P500 to 1,175... and, European strategists see 15-20% gains for Europe'.

Read Full Report HERE

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