Daily Agenda: European GDP Reveals Growing Divide

Italian GDP declines; Thailand weathers terror attacks; Chinese economic data disappoints.


Marc Hill

GDP data for the second quarter released today by major European economies painted a picture of diverging fortunes. Figures released by Germany’s Federal Statistics Office revealed economic activity in the country expanded by 0.4 percent during the three-month period to beat consensus forecasts; while Italy’s economy failed to grow at all during the period despite ECB stimulus measures. Aggregate growth for the euro zone registered at 0.3 percent for the period, in line with expectations. After a downgrade in estimates for the Italian economy by the International Monetary Fund, concerns over the future of the EU — exacerbated by the departure referendum results from the U.K. — hang like storm clouds over for allocators.

Terror attacks in Thailand. A series of improvised explosive device were detonated in tourist destinations in Thailand on late yesterday and early today. No known terrorist group has yet claimed responsibility according to authorities in the nation, but resentment towards the military’s influence over the Thai government has become a simmering political issue following the coup. The Thai baht did not slide significantly versus the U.S. dollar in the aftermath of the news and later rebounded.

J.P. Morgan closes Japanese fund. J.P. Morgan Chase & Co. today announced that the Japan Market Neutral Fund overseen by the bank’s asset management division would be shuttered because of heavy client withdrawals. The fund, created in 2011, has declined by more than 15 percent U.S. dollar basis during its tenure. Other money managers have seen pullbacks by investors from hedge, mutual and exchange-traded funds focused on Japanese equities in recent months as more investors question the Bank of Japan’s ability to achieved its inflationary goals.

Chinese data disappoints. Economic data released by China’s National Bureau of Statistics indicated that the stimulus measures unleashed by the People’s Bank of China have not yet hit targets. July retail sales, industrial production— and critically — fixed-investment indexes fell short of consensus economist forecasts.

SunEdison shareholders lack voice reorganization discussions.In a ruling filed today, the Southern District of New York court concluded that equity owners of SunEdison Inc. will have no say in the bankruptcy proceedings because of company debts that outweigh assets by more than $1 billion. Bonds issued by the solar technology firm currently trade as low as 6 cents on the dollar.