Links: 2013-10-29
Markets
Gold Fades From Investment Picture – WSJ.com
“this year the tide has turned. Because of slowing economic growth and investors’ increasing preference for assets in the developed world, these emerging-market central banks have been using cash reserves to stem economic turmoil and support their currencies. That leaves fewer dollars available to buy gold.
Central banks are on track to cut back their gold-buying by 34% in 2013, according to forecasts by metals consulting firm Thomson Reuters GFMS. The retrenchment follows two consecutive years of rising purchases, according to the IMF.
Russia sold 12,000 ounces of gold in September, the first such sale in a year, according to IMF data.
This year’s decline in gold prices has prompted cautious central banks to stick to the sidelines until the market becomes more stable, analysts and bankers say.”
JP Morgan sees ‘most extreme excess’ of global liquidity ever – Telegraph Blogs
“”The current episode of excess liquidity, which began in May 2012, appears to have been the most extreme ever in terms of its magnitude,” said the report, written by Nikolaos Panigirtzoglu and Matthew Lehmann from the bank’s global asset allocation team.
They said the latest surge is far beyond anything seen in the last three episodes of excess liquidity: 1993-1995, 2001-2006, and during the Lehman emergency response from October 2008 to September 2010, all of which set off a blistering rise in asset prices.”
NYSE Margin Debt at Record High | The Big Picture
This is not a bearish indicator. Whether it is an indicator of froth depends on other coincident indicators. Alone, this tells one nothing about the US market.
Global
Luxury goods sales accelerate – Bain | Business | The Guardian
This is obviously the result of increased income inequality.
“Consultancy says worldwide sales of personal luxury goods would rise 6% in 2013 – beating the 5% seen in 2012”
United States
U.S. consumer confidence falls sharply in October | Reuters
This is a massive decline. I suspect it is shutdown-related. Let’s see what next month says.
“The Conference Board, an industry group, said its index of consumer attitudes dropped to 71.2 in October from a revised 80.2 in September, previously reported as 79.7.
Economists had expected a reading of 75.0 in October.
The expectations index also sank, down to 71.5 in October from a revised 84.7 in September.”
U.S. reports $9.7 billion loss on General Motors bailout | Reuters
Also note that in the most recent survey of car quality by Consumer Reports, GM was a laggard but was catching up .
“The U.S. government has booked a loss of $9.7 billion on the nearly $50 billion bailout of U.S. automaker General Motors Co (GM.N), according to a quarterly report to Congress on Tuesday.”
U.S. business inventories rise in August, may support third-quarter GDP | Reuters
“The Commerce Department said on Tuesday inventories increased 0.3 percent after rising 0.4 percent in July.
August’s increase in inventories was in line with economists’ expectations.
Inventories are a key component of gross domestic product changes. Retail inventories, excluding autos – which go into the calculation of GDP – increased 0.3 percent after advancing 0.8 percent in July.”
U.S. retail sales hit by tumbling auto sales | Financial Post
“While Americans bought smart phones, they cut back on automobile purchases, with sales at auto dealers falling 2.2%, the biggest drop since October last year.
That pushed down overall retail sales, which fell 0.1% in September.”
U.S. pending home sales fall by most in more than three years in September | Reuters
Since house prices were rising at a good clip through August according to Case-Shiller data, this is probably not a bad thing.
“Contracts to purchase previously owned U.S. homes fell by the most in more than three years in September, a sign that a softer economy and a rise in mortgage rates are hurting the country’s housing market.”
When I lived in New York in the early 1990s, I also got this ‘Shopping while black’ treatment a lot. It has since waned but I remember very well that I was treated differently when I was young. The same phenomenon is apparently still at play. It’s the result of overly aggressive racial profiling.
The US has fallen out of the top 20 countries in terms of prosperity according to a recent report using the “Legatum Prosperity Index”. According to this study, the US is now in 24th place of 142 countries. China is 7th, Germany 9th. Pretty long article worth reading
US home price growth at seven-year high – FT.com
“The Standard & Poor’s/Case-Shiller index, which tracks property values in 20 metropolitan regions across the US, rose 12.8 per cent in August from the same month in 2012 – the fastest since February 2006. This beat analysts’ expectations of a 12.4 per cent rise and followed a 12.3 per cent jump in the year to July.
Monthly prices adjusted for seasonal variations rose 0.9 per cent in August, from a 0.6 per cent uptick the prior month, surpassing expectations of a 0.7 per cent increase.”
Europe
Italy recession extends into third quarter – FT.com
“Italy’s economic downturn extended into the third quarter, the head of the official statistics office said on Tuesday, dashing Treasury forecasts that the longest postwar recession was bottoming out.
Confirming that Italy remains the laggard among the main eurozone economies in the week that Spain said its own recession was over, Antonio Golini, acting head of Istat, told parliament that Italy’s gross domestic product fell a “limited” amount in the July-September quarter, but was expected to show a “weak” recovery in the final three months.
Underlining the depths of the double-dip recession, Istat said the number of Italians defined as living in poverty had doubled to 4.8m between 2007 and 2012. Industrial output is more than 25 per cent below its pre-recession peak.”
IMF urges Slovenia to recapitalise banks | World news | The Guardian
“Slovenia is struggling to avoid becoming the next eurozone state to take an international bailout under the weight of 7.9 billion euros ($10.9bn) of bad loans in the mostly state-owned banking sector.”
House prices rising in every region in England – Land Registry | Business | The Guardian
“Official data showing house prices have increased 3.4% in a year on average reignites fears of housing bubble”
Nokia Reports Net Sales Of €5.66B, €118M Profit, And 8.8M Lumias Sold In Q3 | TechCrunch
“The Finnish phone maker (for now, anyway) reported net sales of €5.66 billion (or $7.79 billion) in the quarter ending September, along with a surprise profit of €118 million ($162 million).
To put it mildly, those are big, big gains over Nokia’s past performance — the company posted a €115 million loss last quarter, and a whopping €564 million loss this time last year. Meanwhile, analysts expected the Finnish phone maker to report earnings of zero cents per share (which happens to be in line the figure Nokia put up last quarter) and €5.9 million in revenue in the days leading up to the release.
There’s been a considerable amount of movement on the smartphone front as well, as Nokia reported selling 8.8 million Lumia devices in Q3, up from the 7.4 million sold last quarter and the comparatively dismal 2.9 million back in the year-ago quarter.”
Weltbank-Report : Südeuropa ist wieder attraktiv für Unternehmen – Nachrichten Wirtschaft – DIE WELT
The World Bank’s “Doing Business” report for 2013 says that Southern Europe is making progress in terms of business attractiveness. The ranking is led by Singapore, Hong Kong, New Zealand, the US, and Denmark. Spain, Italy and Greece are all way down on the list. Portugal is higher.
Euro-Zone : Banken türmen faule Kredite in Rekordhöhe auf – Nachrichten Wirtschaft – DIE WELT
According to Ernst and Young, Euro zone banks have a record amount of bad debt on their books, making up 7.8% of all credit. This is the equivalent of 940 billion euro of bad debt or 120 billion MORE than in 2012. And remember here that the European banks are ALREADY undercapitalized without recognizing the hidden losses from this. So clearly, European banks are hiding a big bomb on balance sheets that is waiting to explode. The situation is worst in Spain and Italy with NPLs of 12 and 11.5% of outstanding credit respectively. This is why mortgage lending in those countries has collapsed. By contrast, German banks are looking at NPLs of only 3.2% of credit.
Große Koalition: Union und SPD verständigen sich auf Finanztransaktionssteuer | ZEIT ONLINE
Apparently the grand coalition partners in Germany have come to an agreement in principal on the planned financial transactions tax (opposed by the UK on an EU wide basis). The grand coalition looks ever more likely to happen.
UK mortgage rates fall to record low as approvals continue to climb – Telegraph
“Average UK mortgage rates fall to lowest level since records began, as approvals climb to five-and-a-half year high and business lending rises “
Asia
Überhitzter Immobilienmarkt: Steuer treibt Pekinger in die Scheidung – n-tv.de
This German article points to an overheated residential property market in China. One sign that the market is overheated is the marked increase in divorces in Beijing this year, which have all come about ONLY to avoid an inheritance tax that is set to come due on housing. 41% more people are divorcing this year than last.
Las hipotecas marcan un nuevo mínimo tras desplomarse un 41,7% en agosto | Economía | EL PAÍS
Mortgage lending in Spain is plummeting just as it is in Italy. Mortgage lending is down in 2013 by 41.7% with respect to 2012. And interest rates are up, with the average residential mortgage rate at 4.50% from 4.23% in 2012. Spain has not and will not benefit from the same upswing that the UK and Ireland have on the mortgage front. This will make adjustments more difficult.
El Eurogrupo quiere reformas a cambio de cesiones en el déficit | Economía | EL PAÍS
As head of the Eurogroup, Jeroen Dijsselbloem has asked Spain to press ahead and implement more structural reforms for the labour market that make it easier to lay off workers, ostensibly making it also easier to hire workers as well, though I have serious doubts that this is true.
El déficit conjunto del Estado y la Seguridad Social iguala al de 2012 | Economía | EL PAÍS
For the period to September, the Federal part of the Spanish government budget deficit came to 3.38% of GDP, which is just slightly MORE than in 2012. Adding in social security gets one to 4.8%. The big adjustment must come from the state and local governments. Overall, on deficits, Spain has a long, long way to go.
Curse of euro lands ECB in tricky dilemma – FT.com
“ECB council members see the euro in line with historical averages. Its real effective, or price-adjusted, appreciation is also less impressive. Eurozone countries have survived past episodes of currency strength; conservative policy makers see it as spurring structural reforms. But the ECB will not want the eurozone recovery blown off course.
On the second, the ECB may regard the pressures driving the euro higher as impossible to counter. It could make another offer of long-term liquidity, on even better terms than before. But take-up might be embarrassingly low. Or the ECB could cut its interest rates further. The last cut in the main policy rate, to 0.5 per cent in May, did not stop the euro’s appreciation, however. “
Technology
How to Fix OS X Mavericks’ Biggest Annoyances
Mac OS X 10.9 Mavericks review | The Verge
In my own usage of Mavericks, I am happy. For me, after leaving Windows for the Mac last year, I didn’t notice anything that much better about being on the Mac. But Mavericks is a better experience. This article says there is nothing new but for me, the OS is much faster.
OS X Mavericks: Hands-On With New Features & Changes [Review]
“Global shipments of smartphones are continuing to increase, growing 45% to hit a record 251 million units in Q3 2013, from 172.8 million units a year ago, according to the latest report from Strategy Analytics. “
I upgraded to Mavericks last week and it is sparkling fast. I love it.
“Oppenheimer’s statements during the call indicate that future versions of OS X will also be free. This, along with iWork updates and free copies for each purchaser of Mac and iOS hardware, would contribute to a $900 million sequential increase in net revenue deferred for software upgrade rights and non-software services in the December quarter.”
Apple’s Rebound Quarter In Charts | TechCrunch
“After three quarters in a row of slowing sales growth, Apple’s September quarter — reported this afternoon — shows a modest re-acceleration. “
Apple’s results disappoint ahead of holiday quarter | Reuters
“Apple Inc’s profit and margins slid despite selling 33.8 million iPhones in its September quarter, and greater China revenue climbed just 6 percent even though two smartphone models hit store shelves in its second-largest market last month.”
“For a quarter marked by the debut of two new smartphones from Apple — a first for the company — the numbers were slightly better than expected. It reported earnings results of $37.5 billion in revenue, profits of $7.5 billion and earnings per share of $8.67.”
Civil Liberties
FYI. This is from August.
“Reuters on Monday detailed how the Special Operative Division – a unit within the DEA comprising representatives of two dozen agencies including the FBI, CIA, NSA, Internal Revenue Service and the Department of Homeland Security – passes tips from wiretaps, informants and a database of telephone records to field agents to investigate and arrest criminals. Reuters reports that, although such cases rarely involve national security issues, the DEA agents using the tips are trained to “recreate” the source of the criminal investigation to conceal its true origin from defence lawyers, prosecutors and judges.
The revelations, which follow the Guardian’s recent disclosures of the National Security Agency’s wholescale collection of US phone data, have raised concerns among judges, prosecutors and civil rights lawyers over a lack of transparency. Many said the SOD practice violates a defendant’s constitutional right to a fair trial.”
“With General Alexander calling for NSA reporting to be halted, US and UK credibility as guardians of press freedom is crushed”
Vice President Dick Cheney Calls Edward Snowden a Traitor on CNN | TIME.com
“Former Vice President Dick Cheney called Edward Snowden a traitor for leaking top-secret documents from the National Security Agency, in an interview that aired Monday afternoon on CNN.
Cheney added that he hopes the U.S. is eventually able to catch Snowden who was granted a one-year asylum in Russia in August, and hopes he receives “the justice he deserves.””
Senator Dianne Feinstein condemns US spying on Chancellor Merkel, orders investigation | The Verge
“this condemnation isn’t really good for overall privacy rights. But it isn’t necessarily ideologically inconsistent, either: FISA supporters have argued that no collected data is examined without suspicion of wrongdoing, whereas Merkel appears to be specifically targeted for surveillance for reasons that have nothing to do with anti-terrorism.”
Senator changes tune, now is “totally opposed” to foreign leader surveillance | Ars Technica
““Let me state unequivocally: I am totally opposed,” Feinstein said. “Unlike NSA’s collection of phone records under a court order, it is clear to me that certain surveillance activities have been in effect for more than a decade and that the Senate Intelligence Committee was not satisfactorily informed. Therefore our oversight needs to be strengthened and increased.””
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