U Shaped Recovery…

Well, from Tuesday’s post prandial plunge anyway. It never ceases to amaze me the credence the market affords Consumer Confidence numbers, and yesterday was another example of that. It’s a survey of 5000 households, a decent chunk of whom, don’t actually respond and in general it simply moves with the stock market. Now maybe, given the week that’s in it, with Non Farms tomorrow, the market focused on the negative responses to the employment questions in the Confidence survey and extrapolated that into what could be come Thursday?

It didn’t last long however and in less than 24 hours, we’re back at pre CC levels, thanks largely to a decent performance in China (better PMI) and Korea (another bounce in exports). The Tankan in Japan came in slightly lighter and saw NKY sell off 1.5% to end small down on the day.

This is the nature of the market at the moment however; with such light volumes (75% today) and equally light conviction levels, the Tape is easily pushed around. I don’t believe it deserved to fall as it did post the figures yesterday and given the numbers since have been ok, both in Asia and here in Europe with German and UK PMI coming in ahead of expectations too (although still below 50, hence contracting), it doesn’t surprise me to see the market has rallied back. Interesting to see the miners better on the China data (as you would expect) yet commodity currencies have fallen. Well NZD and AUD have, CAD has rallied small. Australian retail sales were even up too, 1% vs 0.5% est. Not so much the building approvals though, -12.5% mom vs 3% est so that’s probably taking the shine off AUD.

Anyway, with the highlight of the week, the NFPs, coming tomorrow and the prelude, today, in the form of the ADP, the U shape of the past 24 hours, could very easily morph into a J, a W or a Y come tomorrow.