Howzat for a Month!

The afternoon session has been far more eventful today than the morning one. When a cricket match is faster paced than the market, you know things are slow, but that is what we had for the first few hours today. Now that sort of stuff just isn’t becoming of a market which is up c8.5% this month and c17% from the Mon 13th lows! Volumes themselves were pretty healthy mind you, tracking around 100% of the 20 day average but interest levels were not as the focus was always going to be on the afternoon’s GDP number.

And this wasn’t an ordinary GDP number either, as it was going to include a benchmark revision of the national income and product accounts. So basically, they were changing some of the definitions and methods etc. As was expected, these led to revisions down in previous numbers. The savings rate advanced and in general, it complicated the market’s reading of a headline good print on the Q2 number. Inventories printed -$140bn and should provide scope for the H2 growth pickup as the pace of inventory decline lessens and then restocking occurs.

Deflation though seems to be the theme of the data with Eurozone CPI coming in lower, as did the US GDP price index, core PCE and personal consumption with savings increasing. All this has led to the $ selling off in spite of equities having a mini waver. Bonds have caught a bid too on the back of this with the short end in particular rallying hard.
It’s left everything feeling a bit muddled and correlations breaking down and after what’s been an impressive and exhausting month for markets and participants respectively, it wouldn’t surprise me if people want to prolong making their decisions until after the weekend, instead maybe just engaging in a bit of book tidying this afternoon.

Next week sees another glut of earnings and promises to be no less punishing on the info intake front…and if yesterday’s little stat is anything to go by, we could see the end of the rally. Or if you want something with a bit more track record, Bob Janjuah of RBS has a cautionary piece out, reiterating that the next month or so will be where the wheels could fall off. He’s called things well, to say the least. Now that would really shake things up a bit. In the meantime, back to the cricket…

Ps for anyone in the US, England are playing Australia in cricket today (and until the end of time, it seems)