We've talked much over the months about zero or near-zero interest rates rolled out by global central bankers. China, the Big Bopper of global demand, cut interest rates six times year over year to date and judging from its recent PMI numbers, if anyone really knows for sure what they are, it's economy remains in a funk. Not good news.
China's manufacturing PMI sits at a three year low and, despite some recent stimulation packages many expect to soon favorably impact the picture, there's plenty of gloom around. Enter stage left, emerging markets, the Big Boppers of supply, and it's a scene unlikely to provoke much joy in Mudville.
The Wall Street Journal Tuesday reports that businesses are not stepping up to the spending plate either.
Companies appear reluctant to step up spending on the basic building blocks of the economy, such as machines, computers and new buildings. The broadest measure of U.S. business investment advanced 2.2% from a year earlier in the third quarter, the Commerce Department said last week, marking one of the worse performances of the six-year-old economic expansion.
Other measures show an even gloomier picture. A gauge of capital expenditures—orders for nondefense capital goods excluding aircraft—declined 3.8% through the first 10 months of the year compared with the same period in 2014, according to government estimates.
And then there's the looming U.S.interest rate hike, an already hefty U.S. dollar and a hoard of apparently reluctant consumers more hell bent on raising their savings rate than collecting piles future junk for their garages. If the strong dollar was designed to make the U.S the buyer of last resort, it's failed so far.
Asian shares were solidly higher on Tuesday, shrugging off a Chinese factory survey that did little to ease concerns about cooling growth and taking some comfort from a private survey showing a glimmer of stabilisation.
MSCI's
broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS
extended early gains and was up 1.6 percent, while Japan's Nikkei .N225 was 0.9 percent higher.
Wall Street lost ground overnight, though major U.S. indexes still gained for the second straight month and U.S. stock futures ESc1 added 0.6 percent in Asian trade.
China's official Purchasing Managers' Index (PMI) stood at a three-year low of 49.6 in November, compared with the previous month's reading of 49.8 and below both forecasts for a reading of 49.8 as well as the 50-point mark that separates growth from contraction.
But the private Caixin/Markit China Manufacturing PMI showed factory activity contracted at a slower pace than in October, fueling hopes the economy may be slowly levelling out in response to a series of government support measures.
"This indicates that pressure on economic growth has eased and fiscal policy has had a strong effect," said He Fan, chief economist at Caixin Insight Group.
We shall see.
Wall Street lost ground overnight, though major U.S. indexes still gained for the second straight month and U.S. stock futures ESc1 added 0.6 percent in Asian trade.
China's official Purchasing Managers' Index (PMI) stood at a three-year low of 49.6 in November, compared with the previous month's reading of 49.8 and below both forecasts for a reading of 49.8 as well as the 50-point mark that separates growth from contraction.
But the private Caixin/Markit China Manufacturing PMI showed factory activity contracted at a slower pace than in October, fueling hopes the economy may be slowly levelling out in response to a series of government support measures.
"This indicates that pressure on economic growth has eased and fiscal policy has had a strong effect," said He Fan, chief economist at Caixin Insight Group.
We shall see.
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