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Daily Briefing – Monday, October 2, 2017


82% of Catalans voted for independence on Sunday (although most nay-sayers simply did not vote), throwing the Spanish government into disarray and pressuring the Euro down after riots broke out with federal law-keepers. Catalonia accounts for the lion’s share (20%) of the nation’s 3% GDP growth. Inflation in the Eurozone increased by a target-missing 1.5% in September. On Friday, European equities performed recorded their best month in the past year, pushed primarily by the banking sector. German retail sales in August receded 0.4% and unemployment in September dropped to 5.6%. In the UK business investments increased 2.5% YoY and consumer credit came in at a better-than expected £1.58bn, while mortgage approvals in August dropped to 66.58K



China on Saturday lowered its reserve requirement ratio for retail banks by 50 points from its current 17% – still intact for major banks – for the first time in a year and a half, in an attempt to boost SME growth. The cut only applies to banks for whom at least 10% of loans are to designated clients. Reserve requirements for those with a higher-than-10% loan rate could be cut by up to 150 points. Australia led gains throughout Asian markets with an 0.84 increase. The entire region was bolstered by strong industrial activity in China – the PMI up a point to 52.4 – and 10-year record highs in Japanese business confidence, where Tankan measured manufacturing at 22 in Q3 (up from 17) and outlook at 19 (up from 15). This morning’s Nikkei PMI was also up 3/10 to 52.9. Australia also recorded a surprising increase in its manufacturing PMI – 52.4 in September.



US indexes rose on Friday, led by the Nasdaq at 0.66%. The Chicago Fed PMI on Friday soared to a 3-year high from 58.9 to 65.2 for September as personal spending continued to weaken in August (1.3%) despite a slight rise in income. And the CAD lost value against the USD as July’s GDP came in flat.



Oil over the weekend continued to lose steam as the US oil rig count rose by a 30month record to 750. And, ignoring the attempted Chinese crackdown and other doomsayers, Bitcoin has once again erased losses and is above 4400, having climbed $200 in overnight trading in Asia alone!



Earnings season appears on the horizon on Wednesday with reports from PepsiCo and Monsanto followed by Costco and Yum China Holdings on Thursday.


Today’s Events

9 AM GMT EU Unemployment
1:45 PM GMT US: Markit Manufacturing PMI, followed at 2 by ISM Prices & PMI
3:30 AM GMT (+1) Australia: RBA  Interest Rate

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