Turkey’s own Cash for Clunkers program ended last month and the numbers are in. Apparently, the same exact thing that happened in the U.S. happened here: a huge boost in sales followed by a sharp decline:
RBS: Excitement with improved manufacturing PMIs should clearly be couched by realisation that these numbers are being flattered by “pimp up your ride”, aka cash for clunkers, schemes which have been rolled out globally. As our very own Bob n’ Kevin noted yesterday watch for the cold Turkey. Talking Turkey, the country reported auto sales data for October this week, which showed a 75% mum drop as its own car scrap scheme ended last month.
To put this into perspective Turks bought over 87,000 cars in September, a record monthly high, but then sales fell off the proverbial cliff in October to just 20,000 in October, an 8-year low, and are likely to stay at low levels to year end. All this is probably reflected in PMIs which have been sagging in Turkey since they peaked over the summer, the manufacturing PMI hence dipped to 52.8 in October, marking 3 strait months now of declines, a trend which is also being repeated across Emerging Europe. Realisation that the PMIs are flattering to deceive, plus less supportive market technicals as we approach year end, probably explains the muted market reaction to better PMIs out of the US and Western Europe yesterday, as the wall of money story is competing with a desire to book early year profits amid still considerable global unknowns.