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Perspective is better than panic

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  • Chinese exports fell in February, spreading alarm and despondency amongst some investors. This seems an overreaction given a) lunar new year and b) over-invoicing last year. Adjusting for distortions exports seem to be growing around 5% yoy, which is reasonable.
  • The Bank of Japan start their two day meeting with markets speculating about the need for more help for Abenomics. Q4 GDP data was revised lower on weaker capital spending (Japanese companies choosing to invest outside Japan means Abenomics stimulus is leaking out).
  • Greek CPI inflation is due, and expected to be negative (but not really a deflation threat to the Euro area as a whole). The inflation rate that matters for international competitiveness is not CPI but unit labour costs, but weak CPI is indicative of labour cost deflation.
  • French and Italian industrial production data are due and both are forecast to be positive. The negative sentiment data that has hit both economies in recent months has not translated directly into negative economic activity.

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