Lots of links since I have been off for a few days. Here’s the first batch.
News links for 16 Apr 2013
“In January 2013, the Fed and OCC pulled the plug on the review for the majority of the servicers, by agreeing a $9.3bn settlement with them. This headline figure comprises $3.6bn of cash payments and the rest is to support loan modifications.
The most spectacular failures by banks, such as those which affected servicemen and women, will result in compensation of some $125,000 per affected family. However, the vast, vast majority will receive compensation in the region of $300-1,000 each.
Homeowners get a whopping $100 more if they fall under “Modification request received but no underwriting decision made” category. A mere 195,631 lost their home in that one.”
“It’s an awful catch-22: employers won’t hire you if you’ve been out of work for more than six months”
“The ZEW German economic sentiment indicator — a gauge of investor confidence — fell more than expected in April to 36.3 from 46.5 a month earlier, the Mannheim-based Center for European Economic Research, or ZEW, said Tuesday. The index, which measures investors’ expectations for the upcoming six months, was forecast to fall to 43.0. The ZEW current conditions index fell to 9.2 from a March reading of 13.6. “The decline in economic sentiment is consistent with the release of economic data that fell short of expectations,” said ZEW President Clemens Fuest.”
“I do expect that once the forced sellers at this level are spent, we will see a bounce. I think this starts tonight or tomorrow. Once the bounce plays out it would be a good time, IMO, for trapped longs to exit and those who share my thesis to re-establish shorts.
I think the Great Unwind of the over-accumulation of “real assets”—especially precious metals—has a long, long way to play out. Remember, this was only the first day that retail even had a chance to sell since they stopped buying last week, whereas the accumulation was years in the making.”
“Dish Network Corp, the No. 2 U.S. satellite television provider, on Monday offered to buy wireless service provider Sprint Nextel Corp for $25.5 billion in cash and stock, a move that could inspire other telecommunications or video companies to consider their own prospects of combining.”
“The struggling PC market is forecast to go from bad to worse, as one analyst believes a number of market factors will push gross margins even lower in the already-cutthroat business.”
““We have completed two thirds of the fiscal adjustment and three quarters of the adjustment of the economy’s competitiveness,” he said.”
“Greece will see a gradual recovery of its economy over the next 12 to 18 months, the head of the International Monetary Fund’s representation in the troika, Poul Thomsen, told a conference in Athens on Monday.
“Next year will be better,” Thomsen said at the Economist conference, where he said that Greece’s fiscal adjustment had been “exceptional”.”
“The structural-reform measures are the “third arrow” of Mr. Abe’s strategy to revitalize the Japanese economy.
The first two “arrows,” already in the pipeline, have been robust fiscal spending and monetary easing. Those were considerably easier to implement. And while they have already had a big impact in lifting the stock market, economists say that rally can’t be sustained without the still-awaited structural changes.”
“European Central Bank survey shows that households in northern Europe have a much lower net wealth than those in southern Europe. Average German net assets per household are just under €200,000, while they are €300,000 in Spain and €670,000 in Cyprus. No, this not a typo.
German newspapers screamed that poor Germans are bailing out rich Cypriots. This interpretation is wrong but the truth behind these counter-intuitive findings is even more disturbing. What the survey shows is not wealth differentials but the de facto exchange rates between the eurozone economies. They are not measures of net wealth but of imbalances. And they are enormous.”
“A jarring look at how quickly the U.S. got fat between 1985 and 2010. To put things in perspective, see this visual tour of how the world eats.”
“Lending to first-time buyers increased by 3% in February, making it the busiest start to a year since 2008, according to the latest industry data. However the increase in activity in that sector of the market was tempered by falls in the number of mortgages granted to people moving house and to those switching to another lender.”
“”The pressure now upon the likes of Mr. Paulson and others who are hugely net long of gold in various manners must be intense indeed. Their margin clerks cannot be amused and must indeed be wholly and utterly dismayed.
“We fear that when NY opens hours from now, and when the public sees the damage done to their accounts, there will be one more violent sum of selling that hopefully shall clear the decks. However, we cannot be certain that that is true and the “true believers” in gold are clearly under duress.”
“Although the White House doesn’t advertise this fact in the six-page budget overview it put out this morning, the new budget eliminates nearly all of the cuts that sequestration imposes on the Pentagon. Instead of $500 billion in cuts, Obama proposes only $100 billion, and you have to look closely to spot it (“$200 billion in additional discretionary savings, with equal amounts from defense and nondefense programs”).
Along with the well-advertised cuts to Medicare and Social Security benefits, this is something that should appeal to the GOP.”
“Gold – unlike bank deposits, equity or bonds, or even banknotes – it’s separate from the real economy; it’s what you invest in when you want to take a breather from what’s happening in the real economy. That’s actually only a sensible thing to do in pretty extreme circumstances. Gold returns are utterly crushed by equity markets in the long term – to a really astonishing degree for those economies where we have continuous equity markets. Compared with shares in pre-revolutionary China or pre-war Poland, gold returns look pretty good.”
“Wealthy households would face new taxes on property and other assets under German plans to prop up the struggling eurozone.”
“Job prospects are grim, health and education are in crisis and, with more austerity to come, emigration is increasingly the only solution”
“Suppliers in Apple’s supply chain reportedly believe that the company plans to simultaneously announce both a low-cost iPhone along with a premium “iPhone 5S” this June, setting the stage for a July launch.”
“While general developments in the world’s largest economies seem encouraging, there may be several reasons to be concerned lurking just beneath the surface.
Let’s go to the charts”
“There was plenty of lively controversy– consternation and even angry shouting at a midtown New York restaurant last night as two hedge fund mavens, two immensely successful internet investment services, a closely-followed fixed income adviser and two journalists met to hash over the economic and market controversies of our day.”
“Portugal’s leading elder statesman has called on the country to copy Argentina and default on its debt to avert economic collapse, a move that would lead to near certain ejection from the euro.”
“Facebook Home arrived in the Google Play store as planned. What wasn’t planned however, was the surprisingly good experience and well designed software. Here’s my first look and impressions.”
“The yuan reached a record high yesterday as the central bank fixed its midpoint against the US dollar at the strongest level ever.
That sparked anticipation of further appreciation this year and stoked inflationary pressure on the mainland and Hong Kong.
The People’s Bank of China set the midpoint at 6.2506 yuan per US dollar – up from the fixing of 6.2578 on Thursday – ahead of a visit by US Secretary of State John Kerry to Asia. The yuan jumped to 79.775 Hong Kong dollars per 100 yuan, just near the record of 79.729 on Wednesday.”
This is all good but the recent data show that the hit to spending is in fact still in the pipeline. Q1 was OK, yes. Q2 will be weaker.
“Gross domestic product probably climbed at a 3 percent annualized rate from January through March, according to the median forecast in a Bloomberg survey of 69 economists from April 5 to April 9. That’s up from the 2 percent gain projected last month and 1.6 percent in December.
Consumers overcame a 2 percentage-point increase in the payroll tax and higher gasoline prices to spend at the fastest pace in two years, the survey shows. The pickup, combined with sustained gains in housing and business investment, will help propel the expansion through the worst of the automatic government cuts that are projected to take effect this quarter.”
“Irish 10-year bond yields dropped 16 basis points, or 0.16 percentage point, in the week to 3.89 percent at 4:55 p.m. in London yesterday. It fell to 3.88 percent on April 11, the lowest since Dec. 22, 2006. The price of the 3.9 percent security maturing in March 2023 rose 1.28, or 12.80 per 1,000- euro face amount, to 100.05.
The rate on Portuguese two-year notes dropped six basis points to 2.91 percent, taking its run of weekly gains to the longest since January 2001.”
“this jump from piddly Internet speeds to gigabit-class service is not just about people wanting to download movies faster; it’s a sea change in what the Internet is capable of, and the world is craving bandwidth.”
“the reason why the rescue costs are shooting up is because the Troika has finally recognised that its treatment of Cyprus is pushing the economy over a cliff. The depressionary spiral itself is causing the numbers to spike.
So Cyprus is very far from being solved, and so is Portugal. A fresh Troika leak, this time to the Pink Sheet, has confirmed what anybody following Portugal already suspected. The country is stuck in a debt-compound trap. The economic slump is proving much deeper than forecast. The deficit has been rising not falling, in spite of austerity cuts.”
“The Foreign Service is being relegated to a secondary status: staff support to political elites who set and manage policy.”
“The Dutch government is to postpone some austerity measures, in a significant break away from EU policy that risks angering Germany.”
“After Germany’s reunification, factories across former East Germany shut down, fracturing communities and falling into disrepair. A new photo book details the abandoned workshops of a planned economy cut loose.”
“Gas futures are up about 36 percent since mid-February,lifted by cold late-winter weather that put a huge dent in inventories, above-average nuclear power plant outages and stronger price expectations.”
“U.S. retail sales contracted in March for the second time in three months and consumer confidence tumbled in April, a sign that tax hikes early this year have stolen momentum from the American economy.”