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By HaleStewart June 28, 2014 9:18 am
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International Week in Review: The US' Big 1Q Whiff Edition

     US news dominated releases this week, with the biggest news being the 1Q GDP contraction of 2.9%.  While there was a fair amount of political posturing as a result of this number, an in-depth look at the report’s internals shows this was most likely a one-off caused by the extreme weather.  Other news from the US pointed to a better 2Q.  The real estate market rebounded from the winter and early spring doldrums with a big increase in new home sales (+18.6%) and existing home sales (+4.9%).  Finally, the Case/Shiller home price index increased 10.8% Y/Y.  The Markit manufacturing PMI also increased from 56.4 to 57.5 while the services PMI was up from 58.1 to 61.2.  On the negative side there was a drop of 1% in the durable goods orders, which have been trending in a range for about a year now:

Michigan consumer confidence increased from 81.2 to 82.5.  However, this data series has been printing at very low rates for the duration of this expansion.  And finally, real personal consumption expenditures decreased .1% M/M.

     The news from Japan was light.  We learned that prices continue their upward trajectory with the CSPI increasing 3.6% Y/Y and the national CPI up 3.7%. 

Finally, manufacturing appears to be rebounding from the post sales tax increase drop with a printing of 51.1.

     The UK printed their final 1Q GDP number, with a Y/Y increase of 3%.  This is a strong number, indicating the UK is back into expansionary mode.

     Markit released both manufacturing and service numbers for the EU, which were 51.9 and 52.8, respectively.  Both are above the 50 line delineating between expansion and contraction and both were decreases.  Finally, we learned the business climate is stable, but depressed relative to previous expansions:

     There was no news the changed any perceptions or interpretations of the general economic direction of any big 7 country. 

  • Abenomics is still increasing inflation in Japan
  • the US's winter was terrible but it appears to be rebounding. 
  • The UK's growth rate is accelerating, and
  • The EU is still more or less in a recession.

Hale Stewart is a former bond broker who has been writing about economics and financial markets since 2006 on the Bonddad Blog.  He is also a tax attorney with a domestic and international practice while also forming and managing captive insurance companies for US companies.   You can follow him on twitter at:@captivelawyer 

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