Confidence is lacking

The Walt Disney Company, famous for film productions such as Oswald the Lucky Rabbit and Anaganaga O Dheerudu, has agreed to buy the Star Wars franchise for $4bn. So what chance of Piglet joining Eeyore on the dark side?  Or Pooh, Skywalker getting the Christmas number one with When I wish upon a Death Star?

They're no more implausible than Spain signing up for a bailout by then, even though the country reported yesterday a fifth quarter of negative growth in Q3. Depressingly, analysts believe the -0.3% contraction was made to look better than it really was by people bringing forward purchases to avoid a VAT increase in September. That logic would explain why Spanish retail sales for the month were down by -10.9% having fallen by only -2.0% in August. The Spanish inflation figure came in at 3.5%, a number too high for comfort when the economy is shrinking.

Germany's report of an uptick in unemployment to 6.9% paled into insignificance at the side of Spain's 25% unemployment rate but it was the first time in three years that the German number had gone up. On the broader front the "official" data for Euroland consumer and business confidence both failed to meet meagre expectations. It is more than five years since the measure of consumer confidence was above zero.

It was not all bad news from the euro area though. Italy was able to raise €7bn through the sale of five- and ten-year bonds. It had to pay 4.92% for the ten-year money, the lowest rate since May last year. There was positive news from Britain too. The CBI's Distributive Trades Survey, a barometer of retail sales, registered 30%, its second best reading since the beginning of last year. Less good was Gfk's index of UK consumer confidence, announced at midnight; it was down by two points at -30. Like the Euroland measure, UK consumer confidence has been negative for more than five years.

Australian figures released this morning showed another strong month for building permits in September. Housing starts in Japan looked perky too, up by 15.5% on the month. There are no UK data today and only a thin helping from Euroland, which announces inflation and unemployment numbers. After lunch, Canada publishes the gross domestic product (GDP) figures for the year to August and the Chicago purchasing managers' index comes out an hour and a quarter later.

In the aftermath of hurricane Sandy it is worth considering the impact it will have on the US economy. The loss of two - or however many - days' production will detract from GDP in this quarter but the loss and destruction of property will not. Instead, the rebuilding of houses and the replacement of motor vehicles and other durable goods will add to GDP in the next few months. The storm could also have improved President Obama's chance of re-election, with all that implies for a continued supply of cheap money. Whether that would be good for the dollar is doubtful but it ought to be good for the commodity currencies.

P.S. Currency movements on Tuesday were minimal. The biggest change was sterling's half-yen rise. The euro, the franc, the commodity dollars and the northern Scandinavian crowns all start this morning unchanged on the day against the pound.