China’s economy continues to show signs of stabilizing as the private sector weighted HSBC flash mfr’g PMI rose to 50.4 in Nov from 49.5 in Oct. It’s the 1st time since Oct ’11 above 50 but the Shanghai index is actually down a touch over the past two days with the number reported Wed night. Taiwan’s stock market though rallied 3.1% as their Finance Minister was quoted as saying that funds either fully or partially owned by the state should buy stocks. While closed today, the Nikkei yesterday rallied another 1.5%, taking its 7 day move to up 8.1% to the best close since early May on the weaker yen theme.

In Europe yesterday, the mfr’g and services composite index for the region stabilized at near the lowest level since June ’09 at 45.8 in Nov vs 45.7 in Oct. Today, the German IFO business confidence # unexpectedly rose to 101.4 vs 100 in Oct and was better than the estimate of 99.5. It is now back to where it was in Sept and the euro is at a 3 week high vs the US$ in response. French business confidence also improved to 88 from 85 which was the weakest since Aug ’09. On Greece, talks will continue into next week.

Back home, the WSJ is quoting voting member Williams that he’ll basically be voting for QE4 as he thinks the market expects it and if they didn’t, “it would push rates up and cause financial conditions to be a little less supportive of growth.” Based on this thought, we may go to QE10. The Fed also seems to want to wait until after inflation gets above their target to reevaluate its policy and ECB member Weidmann said this today, “flirt with inflation and you’ll end up married to it.”

Category: MacroNotes

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