· Economic shocks are no longer concentrated in Europe or Asia, but in the US, where industry, labour markets and consumer data all disappointed this week. Financial institutions outside the Eurozone have had time to tiptoe away from a Euro banking melee – companies and households much less so. As it develops, the Euro crisis will emerge as an economic problem as much as a financial crisis for the rest of the world.
· China's strong May trade data (exports up 15.3% yoy) could be a game-changer: in particular, the recovering strength of inter-Asian trade tells us Asia's inter-connected production base has not given up on world demand.
· Falling commodity prices are setting the pace for disinflation, and pit-propping margins. This showed up in producer price disinflation in US, Germany and Korea, and it was there also in improvement in international terms of trade for US and Korea. For now, input prices are falling faster than output prices, and the reduced pressure on margins slightly offsets the anticipated fall in asset turns. Disinflation also makes more room for policymakers – room used when China cut interest rates this week.
I am experimenting with a four-page weekly analysis/commentary on the week's shocks and surprises. Whilst it is under development, it needs all the advice, criticism and commentary it can get. If it is worth doing, it must be the most direct, useful and time-efficient production of its kind available anywhere - and for that I need your input. If you feel you could spare the time to look over this product-in-development and contribute your criticism, please let me know. Thanks in advance.