Time For Some Signal

Enough of the noise, it’s time for some signal. Earnings season kicked off last night, and the results were less than compelling for the “risk on” crowd. Sure, Bed Bath and Beyond (BBBY) beat the consensus, but you can only go so far on a recovery fronted by smelly candles and Epsom salts. More tangently for global activity, Alcoa (AA) disappointed…sending Spoos lower overnight.

This came a day after equities were sent lower by a Morgan Stanley (MS) report going underweight European equities. Macro Man despairs that markets continue to adjust prices on the basis of research reports, but there you go. In any event, the fact that the MS report had a reasonable impact on stocks certainly begs the question of whether the bull run has had its day, at least for the time being.

To be sure, economic recovery bulls are still highlighting the “green shoots” with a magnifying glass: yesterday’s story du jour was a rumour that Chinese loan growth in March would reach Dr. Evil-esque proportions.

Of course, many of the China bulls were trumpteting the Baltic Index a month or two ago, yet have fallen strangely silent. Perhaps thats’s because the index has once again turned around and is heading lower?

In fairness, Macro Man pooh-poohed the significance of the BDIY on the way up, and to be honest he’s not particularly enthused about the significance of the relapse. But one thing he is fairly sure of, however, is that he trusts the data of people who sell to China more than he trusts Chinese data itself. And in that regard, the news is slightly less rosy.

Korea recently released trade data for March, wherein exports to China fell to a new low after a modest post-New Year’s bounce in February. If Chinese growth really is gearing up, it must be very selective indeed.

And so Macro Man is not particularly surprised to see some of the recent corrections in Asia turn tail. USD/MYR, after falling sharply last week, has bounced equally sharply and has broken a resistance line.

So, too, has USD/TWD; the CBC must be so proud, given that they blithely ignored the G20 and have continued to buy USD to curtail TWD strength.

If only they’d have a word with the SNB, perhaps one of Macro Man’s most painful flamingos would take flight….

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