The Economic Outlook

Maybe not so good:

And those global PMI reports!  Just awful, no way to spin ‘em, chooch.
First we heard from BHP Billiton, the massive mining concern, about weak mineral demand in China.  This was followed by an HSBC Flash PMI reading of 48.1 – the fifth consecutive reading under the all-important 50 level (which indicates contraction as opposed to expansion).  It’s important to remember that HSBC’s PMI survey looks mainly at small and mid-sized enterprises.  This as opposed to the official PMI numbers from the government which cover larger firms that have bigger global trade involvement and better access to bank capital.  Those official stats come out on April 1st and they are usually market-moving, FYI.  The bottom line on China is that anything below 48 implies less than 8% growth – which is a death sentence for all the countries who were hoping to sell into that region.
And worse than China was what we heard out of Germany.  As Randall Forsyth so perfectly puts it in Barron’s this weekend, Germany had finally diversified away from selling to its weakling neighbors in Europe and moved on to exporting more into China – just in time for China to begin rolling over.  The Euro recession is worsening as is China, this is important because of how highly correlated global GDPs are.  Also from the Barron’s piece by Forsyth, a killer quote from RBC’s economists:

“Lest we think the U.S. has the ability to avoid any of the negative reverberations from weak growth outside its borders, remember that the rolling five-year correlation of 32 countries’ GDPs have been on the rise and presently stand at over 90%.”

Bad China news will probably weigh heavily on grain prices down the road.  On the plus side (about the only thing on the plus side), oil prices should decrease.