We start the day with the S&P futures basically kissing its 200 day moving average of 1369, thus making the action from here a key focus of every technician. The theme of European economic weakness and our own fiscal issues at the same time US earnings are no longer growing for now remains intact. We did get signs however of economic stabilization in China overnight. Oct IP, retail sales and fixed asset investment all were slightly above estimates but the growth rates are only just off recent lows. CPI rose 1.7% y/o/y, less than the estimate of 1.9% and that’s the slowest rate of gain since Jan ’10. PPI fell 2.8% y/o/y. While this would seem to give the PBOC room for more stimulus, the bottoming for now in the economic data may prevent it and the Chinese are very fearful of reigniting their property market with cheaper rates. The Shanghai index may think the same as it fell for a 5th straight day but after rallying 4 of 5 days last week. After Indonesia and Malaysia did yesterday, South Korea left interest rates unchanged as expected. In Europe, after seeing weak IP from Germany yesterday for Sept, French IP fell 2.5% y/o/y, the 9th month in the past 10 with declines and Italian IP fell 4.8% y/o/y, contracting for the 14th month in the past 15.

Category: MacroNotes

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