The data, the worse since 2014, shows the impact of the consumption tax increase and the impact of the coronavirus.
German industrial output drop
German industrial orders fell by 2.1% resulting in a year-on-year decline of 8.6% the worst reading for over 10 years. Industrial production also fell 3.5%.
Apple is now valued more than the DAX
Apple was in the doldrums when Steve Jobs returned back to the company that he founded in 1997. It was then valued at $3bn less than 10% of Siemens. Today it is valued at over $1tn matching the value of the German stock market top 30 companies.
Inflation falls
Inflation has fallen to its lowest level in almost 3 years. The new energy price gap has led to a drop in gas and electricity prices. The consumer prices index came in at 1.5 per cent in October, from 1.7 per cent the previous month, according to the Office for National Statistics.
ISM falls to 47.8
The Institute for Supply Management (ISM) index of manufacturing activity fell last month to its lowest since June 2009, when the economy was just emerging from the Great Recession. It now stands at 47.8, which is below the 50 mark that separates growth from contraction. |
Pushing on a string
The FED has cut rates by 0.25% to 1.75%-2%. The ECB cut its deposit rate by 0.1% to a negative 0.5% and restarted QE at €20bn per month. Now it’s the turn of the governments to step up to the plate.
PMIs at 7 year low
Increased Brexit uncertainty and escalating global trade tensions knocked British manufacturers in August. The purchasing managers’ index fell to 47.4 from 48 in July, its lowest reading since July 2012.
Chinese yuan
Today the Chinese yuan (CNY) finally broke through to the downside to the psychologically important level of 7.0 to the US dollar. 7.0 was a clear line in the sand defended by monetary authorities in Beijing since late 2016. While we are not currency experts, we would not be surprised to see the yuan weaken further now that 7.0 has finally been breached.
US increases sanctions against Russia
The US has announced a fresh round of sanctions against Russia, effective from the 26th August. These restrictions represent the 2nd round of sanctions in line with the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991 (CBW Act). The announced sanctions include US opposition to the financial or technical assistance to Russia provided by international financial institutions, restrictions to exports of dual-use chemical and biological items and, most importantly: the prohibition of US financial institutions to participate in FX-denominated financing of the Russian government.
US Increases China Trade Tariff
President Trump has revealed plans to intensify his trade war with China by imposing tariffs on another $300 billion of its exports. Oil prices fell after the latest escalation in the dispute between the world’s two largest economies.