PMI weakness delayed by stocks scramble

• An indicated April rise in global manufacturing PMI new orders appears to reflect accelerated stockbuilding in anticipation of war disruption (see charts).
• Weak Eurozone economic news suggests a shift in ECB bias from tightening to neutral (see charts).
• A model of the Fed’s historical behaviour has moved further into the tightening zone but incoming Chair Warsh is trying to shift the debate (see charts).
• US retail sales rose solidly in March but six-month real growth remains weak (see charts).
• Falling Chinese money rates could presage an official interest rate reduction (see charts).
• Japanese annual core CPI inflation remains sub-2% (see charts).
• UK annual core CPI inflation – still distorted upwards by policy effects – eased slightly (see charts).
• A fall in UK unemployment reflected a rebound in inactivity, with other labour market data soft (see charts).
• The Dow Transports reversed sharply, with its recent new high as yet unconfirmed by the Industrials (see charts).

DM flash results suggest a solid April rise in global manufacturing PMI new orders but a further fall in services new business:

The manufacturing new orders increase appears to have been driven by accelerated stockbuilding in anticipation of war disruption:

The scramble to secure supplies has exacerbated delivery delays and upward pressure on prices:

Output expectations weakened further in manufacturing as well as services:

Eurozone PMI results diverged negatively, reflecting a services slump:

Consumer confidence fell more sharply than in the UK:

Eurozone job postings continue to trend lower, in contrast to recent US / UK stability:

Suggestion: ECB to shift from tightening bias to neutral.

A model of the Fed’s historical behaviour has moved further into the tightening zone, partly reflecting a rise in annual core PCE inflation (expected at 3.2% in March):

However, incoming Fed Chair Warsh wants to emphasise trimmed mean / median measures, which have continued to trend lower:

US retail sales rose solidly in March but six-month real growth remains weak:

Chinese money rates have fallen to new lows, suggesting that the PBoC has shifted easier, in which case official rates could be cut soon:

Japanese annual core CPI inflation remains sub-2% even stripping out subsidy effects:

UK annual core CPI inflation eased slightly, with an upward distortion from policy effects set to drop out next month:

A fall in UK unemployment reflected a rebound in inactivity, with other data (payrolls, vacancies) soft:

Annual growth of private regular earnings fell further, while wage growth expectations were reassuringly stable in the latest BoE Decision Maker Panel survey:

The equal-weighted version of MSCI World has yet to confirm the new high in the standard index:

US YTD performance has caught up with EAFE, with EM ex. China surging back to a new high, driven by Korea / Taiwan:

The Dow Transports reversed sharply, having made a new high as yet unconfirmed by the Industrials:

According to Dow Theory, a sell signal requires 1) a new high in one index unconfirmed by the other and 2) both indices then to fall below their most recent lows.