Equities ignore eco-data in US & Europe

US

Despite ‘victory’ on all trade-war fronts, US data continues to cooperate on jobs and trade balance. Data last week ended shows a less-than expected contraction of the latter to $50.8 bn, and an increase in jobless claims, a decrease in productivity, labour costs and earnings, a flat participation rate, and a middling 75K increase in nonfarm payrolls.

The dollar index plunged 70 cents on the dollar, but the Nasdaq is up 130 points, leading a green horizon in indexes across the board with a 1.66% increase.

North of the border, Canadian unemployment dropped 3 ticks to 5.4% in May – a 43-year record low. While to the south, the Peso is up after the US delayed tariffs on illegal border crossings and Mexico’s agreement to buy agricultural materials from the US.

Europe

European data as the week ended also showed a slight discrepancy between indexes – up 1.62% in France, the rest of the Union following – despite harsh industrial numbers from Germany, where production doubled its YoY contraction in April to -1.8%, the nation’s trade surplus plunging from €20 bn in March to €17.0 bn in April on diminishing exports (-3/7%).

France’s trade deficit fell ½ a billion Euros, but not as far as hoped. Only in the UK did we see some green, Hallifax’s house price index increasing at a 2-year record pace of 5.2% in May for the prior 3-month period YoY. And retail sales YoY in Italy increased by 4.2%, after March’s 3.3% contraction.

Asia

Japanese data last night shows a 2.2% annualized GDP for Q1, but a 982 bn Yen deficit in balance-of-payment based trade balance. Overall Household Spending in April was down YoY to 1.3% from 2.1% the month before.

Bank of Japan Governor Haruhiko Kuroda this morning stimulated Bloomberg viewers by saying that his bank could conceivably increase monetary stimulus if the 2% inflation target is lost. Options include deepening negative interest rates, lowering 10-year bond yields and boosting asset prices.

Chinese data this morning, on the other hand, shows a pleasing $52.65bn trade balance increase in May, an increase in exports, but an 8.5% decrease in imports – signifying perhaps a massive contraction in consumption.

The Times this morning reports that Chinese officials have summoned foreign tech company heads to warn them of “dire consequences” were they to cooperate with the US ban on Huawei. Last week, Bloomberg reported that China was establishing a blacklist of “unreliable” entities that damage the interests of Chinese companies.

Commodities

Oil on Friday stemmed its month-long decline after the Baker Hughes company reported a reduction of 11 active oil rigs in the US. Backwind was provided Friday after Saudi spokesman said OPEC+ were close to agreeing on a production cut extension.

Gold opened trading Sunday with a $7 bear gap, recovering somewhat during the session, but beginning the week with a clear downward incline. And Bitcoin has completed a month-long Head-&-Shoulders pattern, hitting what seems to be resistance at 7535 early this morning.

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