Daily: Slew of economic data suggests global growth is slowing somewhat less rapidly
Short commentary today because I think the articles and data below speak for themselves. I have a ton of data from various economies around the world: the US, UK, Germany, Indonesia, Australia, South Korea, Mexico and more. And the data prints here are mixed. You have countries like Ireland with good ISM manufacturing data, telling us their economy is on the mend. But then you have very poor readings from Japan and Australia, making one concerned about how robust growth in Asia will be. Germany seems to be trending down, especially regarding unemployment.
My overall view is that the global growth slowdown is continuing but at a less rapid clip downward. I continue to believe that the fiscal cliff outcome in the US will be the catalyst that turns these issues into either a mid-cycle correction that we can overcome or something much more severe. Therefore, it pays to watch how the US solves its political impasse.
Japan October manufacturing PMI hits 18-month low on weak exports | South China Morning Post
“Japanese manufacturing activity in October contracted at its fastest pace in 18 months, a survey showed on Wednesday, as falling exports and slowing domestic demand weighed on output.
The Markit/JMMA Japan Manufacturing Purchasing Managers Index (PMI) fell to a seasonally adjusted 46.9 in October from 48.0 in September.
The index remained below the 50 threshold that separates contraction from expansion for a fifth consecutive month.
“Latest survey data are consistent with manufacturing production contracting at a quarterly rate of just over 3 per cent,” said Paul Smith, senior economist at Markit.”
German joblessness rises as euro zone crisis bites | Reuters
“German joblessness rose for a seventh month in a row in October, highlighting the vulnerability of Europe’s biggest economy to the euro zone crisis.”
Mexico Q3 growth: slower | beyondbrics
“The most recent figures from the finance ministry showed that third-quarter annual growth stood at 3.3 per cent, slower that the 4.1 per cent year-on-year increase of the second quarter and the 4.5 per cent in the first.
The problem, the ministry said, was largely external . The domestic economy remains in good shape: “Growth in consumption and private-sector investment was based on expansion in formal employment and lending,” it added.”
Guindos afirma que la economía caerá en 2012 menos del 1,5% previsto | Economía | EL PAÍS
The Spanish economy will shrink less than the previously forecasted 1.5% in 2012, according to Finance Minister Luis de Guindos. This is good news in terms of Spain’s debt deflation struggles. But it is just a forecast. SO we will have to see what it means regarding data on the ground, which have been terrible.
October Ireland Manufacturing PMI – Business Insider
““On closer examination of the data we note that New Orders (52.7) are in positive territory for a ninth month running, with survey respondents citing support from new product launches and stronger demand from export markets during October. The strength in New Orders is presumably a key factor behind the improvement in Employment (51.9), which has grown for eight consecutive months now. There was a welcome pick-up in New Export Orders (51.8), which returned to growth after falling into negative territory for the first time in seven months in September.””
October Australia Manufacturing PMI – Business Insider
“”The contraction in manufacturing new orders also extended into an eighth month, reflecting weak global demand and a soft Australian economy,” wrote the Australian Industry Group. “After falling significantly in September, the new orders sub-index dropped a further 0.4 points to 43.9 in October.” .
Australia’s economy boomed as its huge mining industry benefited from surging growth in the emerging markets.
But with those growth economies slowing, Australia is getting slammed.”
UK house prices rebound 0.6% after 0.4% fall last month | Money | guardian.co.uk
“Nationwide’s chief economist, Robert Gardner, said while monthly figures had failed to show any strong trend, with three months of rises and three months of falls since May, the annual rate of change showed “a picture of relative stability”.
However, Gardner said that while the UK had exited recession this month, continued problems in the eurozone and the US would hold back exports, meaning a sudden rise in house prices was unlikely.
“Although the UK economy has been adding jobs in recent quarters, even in the midst of recession, conditions remain very difficult for households,” he said.
“Wage growth is still not keeping up with the cost of living and unemployment is still well above normal levels. This helps to explain why housing market activity has remained subdued, with the number of mortgage approvals still running at little more than half their long-run average.””
UK house prices rise by 0.6% in October – Media Centre – Articles – Nationwide
“UK house prices increased by 0.6% in October, more than offsetting the 0.4% decline recorded the previous month. Monthly price changes have failed to establish a strong trend in either direction over the past six months, with three months of increases and three months of price declines since May 2012.
“The annual pace of change continues to display a picture of relative stability, with house prices down just 0.9% compared to October 2011. This maintains the pattern that has been evident since late 2010, with annual price growth remaining in a narrow band between +1.5% and -1.5% on all but two occasions over the past two years.””
Indonesia September exports down 9.4pc | South China Morning Post
“Indonesia’s exports fell 9.35 per cent in September from a year earlier, better than forecast, while imports rose and the country had a small trade surplus.
Annual inflation rose to 4.61 per cent in October, compared with 4.31 per cent in September and the forecast of 4.57 per cent in a Reuters poll.
September was the sixth month in a row in which exports were lower than a year earlier. But the decline was less than forecast, and add to indications that Asia’s economic performance is improving co m pared with recent months.”
Taiwan’s 10-Year Yield at Record Low After Growth Forecast Cut – Bloomberg
“The yield on Taiwan’s benchmark 10- year bonds reached a record low after the government slashed its economic growth forecasts. The local dollar weakened, snapping a three-day advance.
Gross domestic product will increase 1.05 percent this year, compared with an earlier estimate of 1.66 percent, the statistics bureau said yesterday. The economy will expand 3.09 percent in 2013, less than a previous prediction of 3.67 percent, it said. GDP rose 1.02 percent in the third quarter, compared with the 1.50 percent projection in a Bloomberg survey, official data showed yesterday.
“The cuts in growth forecasts confirmed investors’ pessimistic outlook and show Taiwan’s industries are really struggling,” said James Wang, a fixed-income trader at Yuanta Securities Co. in Taipei. “Yields will continue to go down.””
Fed Sees Rising Demand for Auto and Mortgage Loans – Bloomberg
“The central bank described the share of banks reporting increased demand as “significant.” Demand for most other loan types was “about unchanged,” the Fed said today in Washington in its quarterly survey of senior loan officers.
The report provides further evidence that sales of cars and homes, bolstered by record-low interest rates from the central bank, are helping to fuel the U.S. economic recovery. The gains are helping to shield the world’s largest economy from a decline in exports and cooling business investment.”
Manufacturing in U.S. Expands at Faster Pace in October – Bloomberg
“The Institute for Supply Management’s factory index rose to a five-month high of 51.7 in October from 51.5, the Tempe, Arizona, group reported today. The Conference Board’s sentiment index increased to 72.2, the highest since February 2008. Applications for jobless benefits fell by 9,000 to 363,000 in the week ended Oct. 27, the Labor Department said in Washington.
“We’re getting a sense of stabilization, we’re no longer slipping,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. “This should ease concerns that we were feeling two or three months ago about the state of the economy.””
BBC News – South Korean exports rise after four months of decline
“South Korea, an export-led economy, has seen global demand for its cars, electronics and ships slump in recent months.
Analysts, however, were cautious that the numbers heralded a recovery while the global economy was still struggling.
“Until the US overcomes the risk of a possible fiscal cliff [higher taxes coupled with spending cuts] and China decides to partake in more easing policy, trade will tread water,” said Park Hyung-jung from Meritz Securities.”
Companies
Berkshire Extends Housing Bet With Brookfield Venture – Businessweek
“Warren Buffett’s Berkshire Hathaway Inc. (A) is extending its bet on the U.S. housing market by forming a venture with Brookfield Asset Management Inc. (BAM/A) as low interest rates, inventory and prices spur a real-estate rebound.
Berkshire’s HomeServices of America Inc. unit will be the majority owner of the venture to manage a U.S. residential real- estate affiliate network, according to a statement on the new company’s website. The firms plan to offer a new franchise brand, Berkshire Hathaway Home Services, starting next year. Brookfield’s network has operated under the Prudential Real Estate and Real Living Real Estate brands.”
General Motors espera pérdidas de 1.380 millones este año en Europa | Economía | EL PAÍS
General Motors is hemorrhaging losses in its European operations, based around Germany’s Opel manufacturing unit. During the crisis, it was thought Opel could be shuttered given GM’s difficulties. In truth, GM is one of the lesser competitors in a market that suffers overcapacity. Companies like Ford are doing relatively better. Companies like GM or Citroen/Peugot or Fiat are doing worse. I expect this overcapacity problem to be solved via job losses in the auto sector over the coming years.
Starbucks raises 2013 forecast, defies industry trend | Reuters
Starbucks is increasingly becoming a bellwether stock in its sector like McDonald’s, due to its ubiquity. The fact that Starbucks is raising guidance is a good sign even though it could be company specific. US data is generally better than it is in Europe.
Technology
“This isn’t just an Apple tablet made to a budget. This isn’t just a shrunken-down iPad. This is, in many ways, Apple’s best tablet yet, an incredibly thin, remarkably light, obviously well-constructed device that offers phenomenal battery life. No, the performance doesn’t match Apple’s latest and yes, that display is a little lacking in resolution, but nothing else here will leave you wanting. At $329, this has a lot to offer over even Apple’s more expensive tablets.
Those comparing this to the Kindle Fire HD will have a hard time, as that’s a tablet manufactured to a fixed cost and designed to sell you content. This is very much more. Similarly, the hardware here — the materials, the lightness, the build quality, the overall package as it sits in your hand — is much nicer than the Nexus 7 and it offers access to the comprehensively more tablet-friendly App Store, but whether that’s worth the extra cost depends entirely on the size of your budget — and your proclivity toward Android.”
“Professionally-minded social network LinkedIn once again beat Wall Street analysts’ expectations this afternoon when it announced the financial results for the third quarter of 2012.
LinkedIn announced that it made $252 million in revenue during the third quarter, up 10 percent sequentially from its Q2 revenue of $228.2 million and up 81 percent year-over-year from its Q3 2011 revenues of $140 million.
At the bottom line, LinkedIn posted GAAP earnings per share (EPS) of two cents per share, down from its second quarter GAAP earnings of 3 cents per share and its net loss of 2 cents per share in Q3 2011. On a non-GAAP basis, which is where analysts generally focus when evaluating LinkedIn’s performance, the company’s EPS was 22 cents, up from Q2′s non-GAAP EPS of 16 cents and Q3 2011′s non-GAAP EPS of 6 cents per share.”
Apple expected to sell up to 1.5M iPad minis over launch weekend
“The iPad mini is forecast to get off to a strong but modest start this weekend with sales of up to 1.5 million units, but over time Apple’s 7.9-inch tablet is expected to gain popularity.”
Apple willing to pay $1 per iPhone to Motorola for patents | Electronista
“Apple is willing to pay Motorola Mobility up to $1 per iPhone for the rights to standards-essential wireless patents, the company’s lawyers have told the US District Court for the Western District of Wisconsin. If the court sets a FRAND (fair, reasonable and non-discriminatory) licensing rate over the $1 mark however, Apple says it will appeal the decision and fight with all options available. The notice comes in response to a Motorola motion for clarification, and five days ahead of a scheduled trial.”
Facebook’s Next Money Maker? Its Version Of AdWords In Its New App Center Search | TechCrunch
“Facebook added a search box to its App Center today, but what it might do next is more interesting. Facebook could soon let developers pay to buy search keyword ads in the App Center search typeahead, similar to the specific name ads in its site-wide search typeahead. And if App Center goes beyond the typeahead and launches a search results page, it could host full-blown AdWords-style search ads.”
“CloudFlare, the San Francisco-based service that makes websites faster and helps to keep them secure, just announced a new partnership with trust service provider GlobalSign that will make GlobalSign the fastest SSL provider in the world. While more companies than ever use SSL to keep their sites secure, there is typically a significant performance penalty involved as most of these services don’t pay as much attention to performance as they could. Starting today, GlobalSign’s SSL customers will see up to six times faster load times for their secure websites.”
Apple’s Samsung statement reprimanded by court of appeal | Technology | guardian.co.uk
“Judges say article on iPad ruling is ‘non-compliant’ and order tech giant to put up an amended version within 48 hours”
iPad Mini Teardown Reveals Samsung Display And Yes, Stereo Speakers | TechCrunch
“The diminutive tablet gave up its secrets to iFixit’s expert disassembly staff, revealing its complex inner workings to the camera. A lot of the parts are familiar, coming from either the iPhone 5 or MacBook Air, and Samsung makes a somewhat surprising appearance as an LCD panel supplier, something some early reports suggested Samsung would not be involved in supplying this component for this device.”
FTC staff recommends Google be sued over patents: source | Reuters
“A Federal Trade Commission staff report has recommended that the government sue Google for violating U.S. antitrust law because it asked courts to stop the sale of some products that infringe its essential patents, a source told Reuters Thursday.”
Europe
Storm over ‘Lagarde list’ intensifies – FT.com
“Greece’s parliament has been asked to investigate why two former finance ministers did not pursue possible tax evaders on the so-called “Lagarde list” of 2,000 Greeks with Swiss bank accounts.
George Papaconstantinou and his successor Evangelos Venizelos, who held the finance portfolio from September 2009 until June this year, could face charges of criminal negligence if parliament referred them for trial, according to legal experts.”
El Gobierno quiere evitar que los funcionarios se jubilen antes de tiempo – ABC.es
Spain is gradually raising the retirement age from 65 to 67. As one first step, public sector employees have been restricted in their ability to retire early. All of this is a part of the austerity and structural reform process Spain is undergoing as a part of its desire to keep deficits down.
Banks
Wells expands in investment banking as others retreat | Reuters
“The growth worries some investors who want the notoriously conservative bank to stick to its knitting, but Wells Fargo believes that now is a good time to hire.”
Banking may lose its allure for the best and brightest – FT.com
“there may be a silver lining for policy makers. In those postwar years, when finance was more of a utility and offered fewer ultra-well paid jobs, the brightest students flocked into other fields, such as manufacturing or medicine. That has not quite occurred in the US yet; surveys suggest that many business school students still dream of working on Wall Street. But with every new retrenchment, perceptions are changing. If that continues, the next decade could make the western economy a touch more balanced; or, at least, a place where finance finally starts to look more “normal”, compared to everything else.”
Vier Banken sind die gefährlichsten der Welt – Banken – derStandard.at › Wirtschaft
The financial stability board has deemed four international banks to be the most dangerous in the world. They are Deutsche Bank, Citibanl, JPMorgan Chase and HSBC. These four must therefore carry an extra capital buffer of 2.5%that other banks do not have to have, putting there capital requirement at 9.5%.
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