 The key economic event to start the week was the release of the August manufacturing PMIs.  The reports largely confirmed what investors already knew, though will be some tweaks in the understanding of the macro picture.Â
  Here are the five takeaways:
1. Following the dismal household spending and soft industrial output reports last week, Japan followed up with some mixed economic data.  The August PMI rose to 52.2 from 50.5 in July. Capex was weaker than assumed in Q2, rising only 3.0% rather than more than 4.0%, and auto sales fell 5% year-over-year last month after a 0.6% rise in July. The BOJ meets this week, but not change its stance is expected. Given the soft economic backdrop into the July-Sept quarter, a debate over whether the BOJ should do more may intensify. Â
Midweek, Prime Minister Abe will announce the details of a cabinet shuffle.  Finance Minister Aso and  Economic Minister Amari will remain in their posts, according to local press reports. The purpose of the reshuffle is to strengthen the Abe government.  This fall will see the Diet debate controversial bills about expanding the Special-Defense Forces (SDF). Abe is likely to boost the number of women represented in his cabinet from the current two.  Watch Yuko Obuchi, daughter of the late Prime Minister. She could be the next LDP Secretary General, which is a very senior post.  Ishiba, the current Secretary General, and potential challenger to Abe at the next party conference, may be given new post (to bolster regional economies) after turning down a position that tied him to the expansion of the SDF. Â
2. China’s manufacturing softened in August.  The HSBC measure slipped to 50.2 from the 50.3 flash reading, while the official version fell to 51.1 from 51.7 in July, which was an 18-month high. The softness of recent reports and the dramatic fall in lending have spurred talk of additional stimulative measures. This has been one of factors underpinning the recent outperformance of Chinese equities. Â
