SCOREBOARD: Delicate health

Stocks were hit again overnight on Wall Street as some disappointing earnings added to the recent commodity price rout to weigh on the market. Earnings from UnitedHealth, IBM, Ebay and Morgan Stanley were on the disappointing side and these stocks all fell. However, by sector it was tech, consumer services and health that underperformed.

Energy stocks in contrast managed to push higher following some savage falls as the price of crude retraced some losses: crude itself was up 1.8 per cent for the session to $88.3. Commodities elsewhere seem to be in a holding pattern, with gold up $5 to $1387 and copper rising 0.4 per cent, although silver fell another 0.7 per cent.

Outside of that tough there wasn’t much. We saw some economic data in the US that was mixed – jobless claims are great, rising slightly to 352,000 in the week to April 13, so stuck at a low level. On the downside though the Philly Fed index slipped to 1.3 from 2. Now, that is a bit below average (just below 4) and not a great sign in itself. It is extremely volatile though and so I’m not too worried by any messages that come out of it.

Europe-wise, price moves were actually a little more modest – flat to negative mainly but moves were small. So the Dax was down 0.4 per cent, the CaC was flat and the FTSE was basically flat as well (-0.1 per cent). The main thing to watch here are Spanish and Italian yields and those little babies have fallen sharply over the last month, with the Italian 10-year down 58 bps form the peak to 4.2 per cent and the Spanish down about the same to 4.65 per cent.

Other than that though there was little in terms of the price action. For forex we saw the Australian dollar unchanged at 1.0298 and the euro also little changed at 1.3046 (1.30695 at the high), while the British pound was up about 30 pips to 1.5279.

It was a similar situation on the rates front – very little action, with the US 10-year yield pretty much unchanged at 1.69 per cent, the 5-year at 0.69 per cent and the 2-year at 0.22 per cent.

So to other news flow then, it looks as though the Federal Reserve and the Bank of England are out on a new PR mission: disinflation this time. Ahhh, that old chestnut! All becomes clear now. The IMF suggests that inflation won’t be a problem if expectations can be anchored. They effectively talk of a new ‘Great Moderation’. Then, in what had been admonition to central banks (and still is really), gold plummets.

Some key PR people: Paul Krugman and the like start asking, 'Wherefore the inflation?', and Martin Wolf suggests everyone who said there would be hyperinflation has been wrong. Not that anyone was actually talking about hyperinflation; rather, people said that there would be no deflation as Krugman and Wolf et al were worrying over. Nor disinflation – instead, inflation would rise, and that is exactly what happened. That’s it’s not hyperinflation doesn’t change the fact that the incessant talk of deflation and the like was always a laughable absurdity.

Then overnight we see central bankers from the Bank of England and the Federal Reserve warn about disinflation or state that they see inflation moderating – which is hilarious, especially in the case of the UK where inflation is firmly stuck above target.

Anyway, three Fed presidents were out and about last night suggesting that disinflation pressure in the US (of which there is none) means the Fed may have to print more – a similar line to the Bank of England (although Richmond Fed president Jeffrey Lacker said he didn’t see disinflation yet). The Bank of England's Martin Weale actually said that the better inflation outlook (?!) means more stimulus may indeed be forthcoming, despite the fact that the bank has been consistently wrong on its inflation forecasts.

This is the new PR spin, people. We’re back to the deflation-disinflation bogeyman, and it’s going to be used to justify more money printing. Anything will be used to justify it really, and there is no shortage of people willing to do the PR behind it. Deflation-disinflation has already been proven a joke. I can’t believe we are back here.

Moving on, what will the day have in store? Well, the SPI suggests our market will be off 0.2 per cent. As for data we can look forward to a Chinese business sentiment indicator, German producer prices and the eurozone current account. Not much in the way of US data for a change.

Hope you have an enjoyable weekend…

Adam Carr is a leading market economist.

Follow @AdamCarrEcon on Twitter.