Chinese money market rates fell last night as the People's Bank
of China chose to inject $2.13 billion in cash into the banking
system. In the prior eight days the PBoC had neglected to do so,
and rates had risen as a result.
The Bank of Japan upgraded its assessment of the Japanese economy
by raising 2014 GDP and 2013 CPI forecasts. It also reiterated its
commitment to increasing prices to a 2% annual rate by April 2015.
Japanese stocks viewed these developments negatively because it
brought forward the potential for the Bank of Japan to stop
increasing the money supply.
European economic activity continued to slow in October. German
retail sales fell 0.4% from the prior month, below expectations.
Additionally, the October eurozone consumer price index fell to a
0.7% annual rate from 1.1% in the month prior. This was the lowest
reading in four years. The drop prompted speculation that the ECB
would cut its main interest rate at its November or December
meeting. Previously, economists had believed that a rate cut may
not be necessary. The euro fell 1.2% versus the dollar. Lastly,
eurozone unemployment rose to 12.2% from the prior month's initial
report of 12%.
US equity markets continued to trade lower overnight after
yesterday's drop. Stocks traded higher in the opening minutes, but
turned sharply lower when the Chicago regional purchasing managers
survey showed an explosive level of growth. The Chicago PMI rose to
65.9 from 55.7 in September, led by massive upticks in new orders
and production activity. Due to Chicago's heavy correlation to auto
manufacturing activity, it is very likely the record new car
production that automaker CEOs had predicted is coming to fruition.
Jobless claims fell to 340,000 from last week's 352,000.
) fell to $46.38, 20% below its after-hours high on Wednesday.
Traders were spooked after the company announced on its conference
call that young teenagers were leaving the service. However, the
stock made up some of the ground during the day and finished in the
Tomorrow's Financial Outlook
Tomorrow the US will report October motor vehicle sales. If today's
Chicago manufacturing survey is any indication, it is very likely
we will see a sharp increase in sales or indications that sales may
pick up in the coming months. The national ISM manufacturing index
is due out in the morning. Economists estimate that the index will
fall to 55.0 from last month's 56.2.
Manufacturing data is also due out from other countries around the
world. China and the UK will release their purchasing manager
indices before the US markets open.
Notable earnings reports tomorrow morning include
Madison Square Garden