European releases overnight:

February                                          Forecast   Actual
German Industrial Production   (MoM)    - 0.4%   +0.4%
German Industrial Production    (YoY)    +5.3%   +6.1%

April
Euro-zone Sentix Investor Confidence      +0.2      +4.1

While some figures out of Germany are tending to warn against over-optimism (as opposed to pessimism) the industrial production numbers were pretty damn solid. This was largely down to the construction sector so may be a one-off. However, the fact that Euro-zone investors have recovered some of their nerves as shown in the Sentix confidence numbers does help.

ECB officials have retained a very focused and persistent line of confidence while clearly acknowledging the downside risk. It does sometimes strike me that half of the problem is confidence and mainly down to consumers. As I have often said, lose the confidence of the consumer and the economy will follow the States.

For now though the overall numbers emanating from Europe are of a mild but gentle pullback and this is likely to remain the status quo unless there is some other price shock.

States releases overnight:

February                             Forecast   Actual 
U.S. Consumer Credit  USD     5.5bn    5.16bn

Consumer credit down and now we appear to be getting calls for a second fiscal package before the first has even hit the streets. The White House quickly poured dry ice over that suggestion saying that it is well too early.

The U.S. administration and the Fed have attempted to follow the same tack as the ECB in constantly voicing confidence over the economy and have only redirected the comments when external analysts have forced them to by sheer weight of argument derived from economic statistics.

The NBER head, Feldstein, not only announced his belief that the U.S. is in recession but backed it to extend to more than two quarters. He has a point. Very clearly the first half is looking like a dead duck and it will be touch and go whether the fiscal stimulus package will be able to drag the economy out of the mess in one quarter.

Interesting comments from Europe’s Juncker who declared that he will be sitting down with President Bush, no doubt with a cup of tea and a cake, to discuss the volatility in the Forex market – mainly about the excessive weakness in the Dollar.

Doesn’t sound that surprising ahead of the G7 meeting but additional comments highlight some confusion. He rules out concerted intervention and also said that unilateral action would be “doomed to failure.”

The first inconsistency is that the IMF has said once again that the Dollar is over valued, but Juncker insists that current rates do not reflect fundamentals.

Given the current global economic background what Juncker wants is a bit like a 6 year old child asking Santa Claus for a Porsche in his Christmas stocking… It just ain’t gonna happen… Unless of course the market begins to feel more confident about holding Dollars. If there is one market in the world that cannot be manipulated then Forex is that market. It is almost pure in its reflection of demand and supply.

And a little pointer of what is to come at this coming weekend’s G7 meeting the U.K. Financial Minister Darling is urging for more coordination on credit, repeating the call by the IMF. “G7 should lead the international response to these events” he declared.

He wrote in a letter, “It is essential that we have a clear plan of action... We should also consider the full range of policy options to ease current market conditions.”

The market continues to be suffering from exhaustion, confused by the bearish sentiment that just isn’t following-through, the outcome of Thursday’s ECB and BOE rate decisions and the G7 meeting at the weekend.

There is argument, counter argument and a double-back-flip argument, a 360 degree horizontal twist and failed slam dunks. But at the end of the day the market actually remains bearish – and seems lost as to know why…

More later once the daily analysis has been done…

There following releases are due from Asia due today:

Australia                                        Prior
March NAB Business Confidence        - 2.0
March NAB Business Conditions         11.0

Japan                                             Prior
March Bankruptcies            (YoY)       8.3%
March Eco Watchers Survey: Current    33.6
March Eco Watchers Survey: Outlook   39.5

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