Words ought to be a little wild, for they are the assault of thoughts on the unthinking
- J.M. Keynes

Thursday, 24 January 2013

Is the Hopium running out?

The day started with a great Chinese PMI number. Then the Eurozone manufacturing PMI beat expectations. True, the debt bomb which must not be named disappointed with its PMI reading but it was still 2-1 in favour of the bulls. Data from peripherals are not counted for the score as it would tilt the playing field too much in favour of the bears. Therefore unemployment in Spain (new record at 26.02%) and retail sales in Italy (down 0.4% month-on-month versus expectations of being down 0.1%) were discounted.

Then the afternoon saw US claims falling to a 5-year low, manufacturing PMI coming out higher than expected and leading indicators pleasantly surprising. Final score 5-1. So the following market performance is a bit strange to say the least:

China linked assets disappointed
Shanghai (SSE Composite): Down 0.79%
Hong Kong (Hang Seng): Down 0.15%
AUD/USD: Down 0.64%
Copper: Down 0.18%

US linked assets disappointed
S&P500: Flat
EUR/USD: Up 0.44% (dollar weaker)
Treasuries: Up

Not something one would expect unless the hopium has been metabolised by the system. However, no prognosis can be made based on one day's worth of data. In any case hopium is still coursing through where it matters: ye old continent.

FTSE100: Up 1.09%
EuroStoxx50: Up 0.54%
DAX: Up 0.53%
CAC40: Up 0.70%
EUR/USD: Up 0.44%

And the clincher: Madrid funds its entire year's budget in one day. No change in hopium levels here. Buy on.

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