When Less Bad is Good Enough No More

A fall for equities yesterday, but it was nothing to write home about and SPX held above its 200 day. This morning’s newsflow was not so positive with warnings from SSAB and Sandvik and the market began to drift after hour 1. Interesting on Sandvik, they issued a veiled warning last week at a JPM conference and the market largely ignored it. Not so today. I think this is indicative of the mood change the market has undergone. Typically, it is the miners, cyclical and financials leading the way down. I even saw a lesser spotted negative headline on China!! RTRS-CHINESE ECONOMIC RECOVERY NOT YET ON SOLID FOOTING-XINHUA. Although looking on the Xinhua website I couldn’t actually find the piece. Perhaps The Ministry of Truth got its hands on it? Or maybe it’s just a misquote? Or else I just missed it.

The UK employment data was better than expectations although the earnings continued to decline. GBP has taken a beating post this, I’m not sure why, wage deflation continuing and curbing interest rate hike expectations potentially? In any case, a cursory amount of digging unearthed talk that Citi had sold a big chunk of Cable at 1.643 on the initial uptick and took out all the stops.

Spoos are perched right on the 200 day at the moment so all eyes will be on whether they can hold that level. Volumes are healthy enough today, running c100% but that’s not enough to see real conviction in this sell off. My guess is that the market is waiting for more clarity and conviction, with the real sellers being lower down.
The CPI and Leading indicators provide the excitement for the afternoon although after the PPI yesterday, expectations will be for another tame number. Interesting to note the increase shown in housing starts number yesterday was deemed as positive. Sure it would be ordinarily but there is plenty of supply out there already. More houses being built, not sure that’s not going to aid any recovery in prices. In any case, perhaps the market is more willing to look through these numbers. We saw a better ZEW and “better” Housing Starts yesterday and we still went down. I can’t help believing that a few weeks ago; those numbers would have been greeted with much optimism. Less bad does not really cut the mustard at the moment, the market is looking for more, and I’m sceptical as to whether that search will be successful.