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Market roundup | SBI index shows industry turnaround yet to happen

LiveMint logoLiveMint 28-08-2017 Livemint

A composite index on the manufacturing industry compiled by State Bank of India (SBI) shows that the industry is still to recover. The yearly index, although at a 12-month high, is at 50.9 and the lender dubs the reading an indicator of low growth.

“Based on the SBI Composite Index, we believe that the industrial growth (Index of Industrial Production new series) may be in the positive territory in July and August 2017 albeit marginally,” the bank said in a research note.

The monthly composite index showed a reading of 49.9 for August, indicating that industrial output is still in a phase of contraction.

Central bankers defend post-crisis reforms

Leaders of the world’s most powerful central banks defended post-crisis reforms at their annual retreat in Jackson Hole, Wyoming, while discussing the causes and consequences of populist waves that have reshuffled the political order in the US and Europe. Monetary policy wasn’t a major focus during the three-day gathering. When it was discussed, the messages from the US Federal Reserve and European Central Bank stressed their gradual approaches to unwinding emergency-era stimulus as global growth picks up.

Policymakers instead pored over the pros and cons of free trade and made a full-throated defence of the safety net created since the 2008 financial meltdown. Top officials came out swinging against populist rhetoric. Federal Reserve chair Janet Yellen gave her strongest defence yet of embattled financial rules, while her euro-area counterpart Mario Draghi warned of protectionism’s perils. Economists chewed over how to mitigate globalization’s distributional problems in a way that doesn’t subtract from already-tempered global growth. Bloomberg

The market to watch amid US funding drama

There’s a new sheriff in town and it’s stocks. So says Strategas Research Partners Llc, which argues that equities have supplanted bonds as the market to watch as drama builds around funding the US government. The New York-based advisory firm outlined the theory in a note titled Equity Market as Vigilante: the Risk of a Correction in September.

Historically, it was the bond market whose convulsions worried policymakers when traders decided they were putting US finances at risk—so the legend went. But according to Strategas co-founder Jason Trennert, the signal from fixed income has gone dead after nearly a decade of financial stimulus. Stocks are all that’s left with enough volatility to react. They’re arguably more influential, too, with President Donald Trump taking credit for the bull market.

On the verge of quitting the White House, Gary Cohn, chief economic adviser to Trump, looked at the swooning equity market before deciding to stay, according to The New York Times. Bloomberg

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