Against the Grain

The Dragon roars on, overnight confirmed another strong economic start to the year for the Chinese economy. In Jan – Feb industrial production jumped 20.7% yoy (Dec +18.5%); retail sales up 17.9% with Feb rising 22.1%; urban fixed investment increased 26.6%; Feb financial institution lending was 700.1 billion yuan (Jan 1.39 trillion yuan) – almost mind boggling; Feb PPI +5.4% (Jan +4.3%) and CPI increased 2.7% (+1.5%) with food prices posting a 6.2% gain. This is on top of the car sales, export and import data of the past few days. Yet markets were remarkably subdued as caution rises of China further reigning in its stimulus package and tighten monetary policy at a time when the rest of the world is yet to show real signs of recovery. Back in 2007 China acted on its own to slow its rampant growth but caught out by the collapse of the West. This time they appear to be housekeeping in anticipation of any world recovery.

Regarding the late banana skin y/day we see an oil report that put it down to “moments of algorithmic madness”, expect to hear this more and more. Select volumes were better in Asian but not outstanding and prices just watch the data. Early London trading was not much better again al hardly traded in Asian then volumes picked up rapidly in London. In Feb Chinese refined cu output rose 4.1% to 358 kt.  Except for sn all the LME metals saw stocks decline without any impact on the price. By 09:30 the metals had reverted to keying off the US$. By 14:00 it was unchanged on the day then a reported 7.2 aftershock in Chile at 14:30 sent cu scampering higher, 7480 up nearly US$ 100 in 30 minutes (just as the new President Pinera was being inaugurated). By 16:00 further support from the directions of the DJI and US$.

Other data saw Japanese Q4 GDP revised down to 3.8% from 4.6%. In Australia Feb unemployment rose to 5.3% (5.2%). There was nothing of note out of Europe. In Malaysia Jan industrial production rose 12.7% yoy (Dec +7.5%).

The US weekly jobless claims 462 k (468 k) and the Jan trade deficit US$ 37.3 billion (Dec -40.2 billion). After that the focus came back to the US$ and equities.