China's Manufacturing PMI disappoints again with levels below 50

A widely followed indicator as to the health of the Chinese economy, the manufacturing PMI came in this morning much to the expectancy of remaining underneath the all important 50 level which would indicate that the production sector continues to contract as policymakers battle to contain the damage being done while following a path of transition from a manufacturing to a consuming economy.

Actual numbers came in slightly below expectations which was enough to suggest that the outlook remains bleak for the time being however much of the attention was drawn on the private survey conducted by Caixin which showed that production had indeed shrunk but at a much slower rate than the previous month as well coming in stronger than expected.

The fact that the market placed more weighting on the private survey as opposed to official numbers does raise doubts about whether the trust between the market and government has been eroded following allegations of "number fixing" to suit the markets favour and conceal the true conditions of the economy.

Although the Caixin survey still suggests that the Chinese production sector remains in contraction, it showed glimpses of possible green shoots in the sense that the rate of decline has slowed down indicating that government's effort may start to be finding their way where they matter the most as perhaps a bottom could be found in the interim.

China Jan official manufacturing PMI at 49.4 vs 49.7 in December https://t.co/FZ4ilGAYn7

— China Babble (@chinababble) February 1, 2016

OPEC feeling the pinch as Saudi Arabia readies itself for intervention

Last month I wrote a piece on Russia being dragged into the possibility of co-operating with OPEC in cut back the production of oil given the dramatic fall we've witnessed over the past year or so. However one gets the feeling that it won't simply be a case of turning off the tapes and waiting for the price to rise as Iran has entered the fray after having sanctions imposed against it finally lifted.

The situations doesn't improve when you consider the tension being experienced between Saudi Arabia and Iran where the former executed a prominent Shiite cleric to which the Saudi Arabian embassy in Tehran was torched in protest.

Reports over the weekend now suggest Saudi is ready to intervene but only if conditions are met one being "everybody must cooperate".

Saudi Arabia ready to manage oil market but all must cooperate: Al Hayat newspaper https://t.co/Lw7duMSGsI @Reuters pic.twitter.com/2Pw62z57Q3

— Dan Popescu (@PopescuCo) February 1, 2016