"Bad is good" still rules - but Are you sure?, and short about the deflation in Poland

hello,

Today, we showed the most important labor market data from the U.S. economy. The Wall Street continues to dominate the thinking of "bad it's good, or poor data is good, because mean that the FED will continue to buy bonds." But today's figures were really bad?

Unemployment rate in U.S: 7.2%, previous: 7.3%, forecast: 7.3% (Unemployment rate lowest since November 2008 !!!) 

Non-Farm Employment Change today showed 148k. is not enough, but the upward revision of the previous reading from 169k. to 193k. and the decline of the unemployment rate shows that the economy is doing well (a positive factor for the stock exchanges).It has just the unemployment rate is a target for the FED. However, employment growth only about 148k. consensus can maintain restrictions QE3 in March next year (the second positive factor exchanges). 

FED at the moment does not have to worry about the discrepancy reports from the labor market (employment and unemployment are two separate studies) - the December meeting will be at the disposal of both the report for October (where you will see the impact of the shutdown) and November (particularly important reflecting the possible negative impact of the shutdown).

Reuters published the Questionnaire regarding cutting of QE:

- 9 out of 15 U.S. Treasury securities dealers expect the first cut QE in March 2014

- 6 out of 15 expected such a move until the June 2014!

- NOBODY expected to start tapering in 2013.

One thing is certain: in October, the Fed did not reduce the QE. Even if the data was great (200K +, 7.2%), this decision unfair because of the uncertainty about the impact of the shutdown on the economy. In view of the weak employment data FOMC will not have a problem.

But at the moment there are no less important. That matters is what happens next :)

Employment Situation News Release - United States Department of Labor

The others today's economic data:

Monthly net capital inflow (August): -2.9 billion, previous: 56.7 billion

TIC Long-Term Purchases (August): -8.9 billion, previous: 31.1 billion, forecast: 30.9 billion

explanatory note:

This data represents the balance of domestic and foreign investment - for example, if foreigners purchased $100 billion in US stocks and bonds, and the US purchased $30 billion in foreign stocks and bonds, the net reading would be 70.0B. The market impact tends to be significant but varies from month to month;

Richmond Fed Index (October): 1 point, previous: 0 point, forecast: 0 point.

explanatory note:

Above 0 indicates improving conditions, below indicates worsening conditions. Tends to have a muted impact because there are earlier regional indicators related to manufacturing conditions;

ATTENTION !!! DEFLATION in Poland

Poland - retail sales in September: 3.9%, expected: 4.4% y/y, previous: 3.4% y/y

The unemployment rate is now 13.0%

Using GUS information we can calculate that since starting in April, July was the only month when retail prices rose an annual basis. In the remaining months, prices fell - both in total and the base (after excluding fuel and food). Thus, while consumer price inflation is still on the "safe positive territory", the CPI basket contains many components, which consumer demand does not affect or is affected little. The same can be argued that retail prices better reflect the inflationary pressures in the economy - in this case, the absolute lack of it.

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additional tiny surprise from me :)

Real Estate Market in China

China's four major cities saw record rise in new home prices in September, stoking fears of a housing bubble.

Prices in Beijing, Shanghai, Shenzhen and Guangzhou saw their biggest jump since the government changed its calculation method in January 2011.

Property remains a popular investment choice in China and prices have now risen for nine months in a row.

In the capital city of Beijing, new home prices were 16% higher in September than they were a year earlier. In Shanghai, prices rose by 17% compared to a year earlier.

The southern manufacturing-based cities of Shenzhen and Guangzhou saw prices rise by 20%.

Real Estate Market in Germany

According to the Bundesbank, the houses in Germany's biggest cities may be overvalued by as much as 20%.

Since 2010, prices in Berlin, Hamburg, Munich, Cologne, Frankfurt, Stuttgart and Dusseldorf have risen by more than 25%.

In cities outside the sevens revaluation assessed at 5-10%.

regards,
oscarjp