2008-04-24 China News Highlights

Posted on April 24, 2008 @ 9:07 am (Thursday) by WARREN MOSLER

Interesting statements here. China can’t afford politically to allow growth to slow sufficiently to cut employment growth, inflation not withstanding. This stance ultimately weakens the currency, one way or another:

(Bloomberg) China should stick with its tight monetary policy unless the economy’s expansion slows to below 9 percent, a National Bureau of Statistics official said. “Below 9 percent, it means the tightening is overdone and needs to be loosened,” Zheng Jingping, the bureau’s chief engineer, said at a seminar in Beijing today. The economy expanded by 10.6 percent in the first quarter. Premier Wen Jiabao is balancing the risk of a slump in the world’s fastest-growing major economy against the threat from inflation that is close to an 11-year high. A 1 percentage point slowdown in the U.S. economy will take 5 percentage points off China’s export growth, the Chinese Academy of Social Sciences said in a report today. “A reasonable combination for this year is 4.8 percent inflation and 9.7 percent GDP growth,” said Zheng. Inflation may be between 4.5 percent and 5.5 percent, he added. The government aims to cap price gains at 4.8 percent.

Highlights:

Shanghai Stock Index Surges 9.3%, Most in Six Years, After China Cuts Tax (Bloomberg)

China Economic Growth Must Stay Above 9 Percent, Statistics Official Says (Bloomberg)

Yuan Declines as Chinese Export Growth May Slow Further, Dollar Rebounding (Bloomberg)

China to Expand Oil Refining Capacity by 24% by 2010, Sinopec Group Says (Bloomberg)

Diversity in action

Posted on April 24, 2008 @ 9:02 am (Thursday) by WARREN MOSLER

News Headline:

Credit Suisse Writes Down $5.26 Billion

Over the last few years, I’ve been saying that with diversity risk is pretty well spread out.

Seems to have been the case – risk seems to have been well diversified.

Losses seem to be spread around more evenly than in the past with no one major US company failing as of yet due to losses per se.

But that also meant that in the adjustment process total losses would build to higher levels before the ‘cycle’ reversed and might be higher than in previous cycles.

2008-04-24 US Economic Releases

Posted on April 24, 2008 @ 8:57 am (Thursday) by WARREN MOSLER

Durable Goods Orders (Released 8:30AM EST)
Initial Jobless Claims (Released 8:30AM EST)
Continuing Claims (Released 8:30AM EST)
Help Wanted Index (Released 10AM EST)
New Home Sales (Released 10AM EST)

From Karim:

Initial claims down from 375k (revised from 372k) to 342k

Continuing claims down from 2999k (revised from 2984k) to 2934k

DGO ex-aircraft and defense unchanged and down -2% and -1% in Jan/Feb

Claims have been volatile lately due to seasonals, but if they were to somehow stabilize at these levels, would still be in line with 0 employment growth

Q1 business capex component of GDP likely to be negative (has never been a recession where business capex did not also contract)

IFO down from 104.8 to 102.4 and retail component down from -0.9 to -10.0

ECB Member Bonello returns fire to Weber:

On the basis of the data we have at hand and the ECB’s rationale for monetary policy strategy it is very difficult to make an argument for higher interest rates.

Durable Goods Orders (Mar)

Survey	0.1%
Actual	-0.3%
Prior	-1.7%
Revised	-0.9%

Durable Goods Orders YoY (Mar)

Survey	n/a
Actual	-4.2%
Prior	5.5%
Revised	n/a

Durables Ex Transportation (Mar)

Survey	0.5%
Actual	1.5%
Prior	-2.6%
Revised	-2.1%

Durable Goods TABLE

Not all that bad. Two month total above expectations as Feb revised to a smaller drop.

Not at recession levels, yet.

And fiscal package kicking in soon.

Initial Jobless Claims (Apr 19)

Survey	375K
Actual	342K
Prior	372K
Revised	375K

As suspected, from the jobless recovery to the full-employment recession.

Labor numbers soft but not all that bad. No where near recession levels, particularly population adjusted.

Continuing Claims (Apr 12)

Survey	2990K
Actual	2934K
Prior	2984K
Revised	2999K

A lagging indicator, now following initial claims lower.

Help Wanted Index (Mar)

Survey	20
Actual	19
Prior	21
Revised	n/a

Still going south, but a lagging indicator.

New Home Sales (Mar)

Survey	580K
Actual	526K
Prior	590K
Revised	575K

Sales still heading south.
Might be because production and inventories are down, and also subject to revisions next month.

New Home Sales MoM (Mar)

Survey	-1.7%
Actual	-8.5%
Prior	-1.8%
Revised	-5.3%

Number of New Homes for Sale (Mar)

Survey	n/a
Actual	468K
Prior	473K
Revised	n/a

Actual inventories are down substantially, and remaining inventory is probably not highly desirable.

Looking for regional shortages in the spring/summer buying season to drive up prices.

New Home Sales Median Price (Mar)

Survey	n/a
Actual	$227.6K
Prior	$244.2K
Revised	n/a

[comments]

New Home Sales Average Price (Mar)

Survey	n/a
Actual	$292.2K
Prior	$302.9K
Revised	n/a