Daily Archives: April 30, 2009 @ 9:56 am (Thursday)

Re: financial market outlook

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>   
>   On Thu, Apr 30, 2009 at 7:01 AM, Joshua wrote:
>   
>   The 82-83 Reagan rally was good for roughly 70% to the upside from trough to
>   peak. I clearly have been too pessimistic.
>   
>   At this point, are you looking for substantial upside in equities from here in light of
>   7% deficit/GDP? My concern has been that the decimation in non-bank lending
>   (roughly 75% of prior total lending) would be more than enough to offset the
>   positive effects of deficit.
>   

That caused the economy to weaken/inventory liquidation to intensify until the deficit got high enough to reverse that effect. And now proactive deficit spending is kicking in.

>   
>   Are Bernanke’s programs really reinvigorating securitization markets? Clearly
>   something is working for them.
>   

It’s mainly the increased deficit spending that’s turning the tide. Yes, the Fed did a few things that helped some, but overlooked what they could have done (and should still do) to ‘normalize banking’.

Also, we can get a V shaped financial market recovery as it was pricing oblivion, while the real economy looks more L shaped.

And we are also always subject to external shocks like swine flu, wars, supply shocks, etc.


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China allowing state enterprise to invest in Taiwan

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Cheaper to buy Taiwan than to invade?

China Makes First Taiwan Investment as Relations Thaw

by Tim Culpan and Janet Ong

Apr 30 (Bloomberg) — China Mobile Ltd. agreed to buy 12 percent of Far EasTone Telecommunications Co., the first investment by a Chinese state-owned company in Taiwan since a civil war ended six decades ago.

Taiwan’s benchmark Taiex index surged 5.7 percent, the biggest gain since Oct. 30, today on speculation more Chinese companies will invest on the island. The NT$17.8 billion ($529 million) purchase, announced by China Mobile yesterday, underscores how warming political relations between the two sides are leading to closer economic ties.

“This is a landmark deal. China Mobile will lead the way for other Chinese companies that have been waiting to invest in Taiwan but were hesitating,” said C.Y. Huang, vice chairman of Polaris Securities in Taipei. “This will open the floodgates for more Chinese investments into Taiwan.”

The Chinese government said this week it would end a ban on investments in the island on May 1 following an agreement to open cross-border operations for financial-services companies, expand direct flights and cooperate in fighting crime.

China Mobile agreed to pay NT$40 a share, or 14 percent higher than Far EasTone’s closing price yesterday, for the stake in Taiwan’s third-largest phone company. China Mobile will get a seat on the Taipei-based company’s board and become its second- largest shareholder, Far EasTone spokeswoman Alison Kao said. The deal is subject to approval from regulators and shareholders.


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Japan industrial output up more than expected

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The Great Mike Masters Global Inventory Liquidation pretty much ran its course by year end, and now depleted inventories are beginning to be replaced as high and rising government deficits support incomes and savings:

Japan’s Factory Output Rises as Twice Predicted Pace

by Jason Clenfield

Apr 30 (Bloomberg) — Japan’s industrial output rose for the first time in six months, twice the pace predicted by economists, adding to evidence the worst of the recession may be over.

Factory production climbed 1.6 percent from February, when it dropped 9.4 percent, the Trade Ministry said today in Tokyo. The median estimate of 33 economists surveyed by Bloomberg News was for a 0.8 percent gain.

Companies plan to increase production in April and May to replenish inventories that fell 3.3 percent last month, the report showed. Stocks rose after yesterday’s U.S. gross domestic product figures showed consumer spending jumped the most in two years in the first quarter.


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2009-04-30 USER

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Karim writes:

  • Initial claims -13k to 631k; continuing claims up another 133k (up every week this year) to 6271k
  • Suggests another 650-700k drop in payrolls and rise in ue rate from 8.5% to 9% for April employment report
  • Those numbers will in turn cause the data we received today on incomes and wages for March, to worsen from already historically weak levels.
  • Personal income -0.3% m/m and +0.3% y/y
  • Wage and salary component of income -0.5% m/m and -1.2% y/y (prior all-time low was -0.3% y/y)
  • Personal spending -0.2%. Q1 profile for real personal spending= +0.9% in Jan, +0.1% in Feb, and -0.2% in Mar. This will create a challenge for the PCE component of GDP for Q2.
  • ECI up 0.3% q/q and 2.1% y/y in Q1, both all-time lows
  • Chicago PMI for April up from 31.4 to 40.1
  • Looks like national ISM should bounce to about 39-40 tomorrow after 36.3
  • Fed comments yesterday seem to echo what I heard from ECB/BOE: Recent bounce in PMIs seem unrelated to prospects for recovery in late 2009/early 2010.

Personal Income MoM (Mar)

Survey -0.2%
Actual -0.3%
Prior -0.2%
Revised n/a

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Personal Income YoY (Mar)

Survey n/a
Actual 0.3%
Prior 1.0%
Revised n/a

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Personal Income ALLX (Mar)

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Personal Spending (Mar)

Survey -0.1%
Actual -0.2%
Prior 0.2%
Revised 0.4%

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PCE Deflator YoY (Mar)

Survey 0.7%
Actual 0.6%
Prior 1.0%
Revised 0.9%

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PCE Core MoM (Mar)

Survey 0.1%
Actual 0.2%
Prior 0.2%
Revised n/a

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PCE Core YoY (Mar)

Survey 1.8%
Actual 1.8%
Prior 1.8%
Revised n/a

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Employment Cost Index (1Q)

Survey 0.5%
Actual 0.3%
Prior 0.5%
Revised 0.6%

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Employment Cost Index ALLX (1Q)

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Initial Jobless Claims (Apr 25)

Survey 640K
Actual 631K
Prior 640K
Revised 645K

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Continuing Claims (Apr 18)

Survey 6200K
Actual 6271K
Prior 6137K
Revised 6138K

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Jobless Claims ALLX (Apr 25)

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Chicago Purchasing Manager (Apr)

Survey 35.0
Actual 40.1
Prior 31.4
Revised n/a

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NAPM Milwaukee (Apr)

Survey n/a
Actual 39.0
Prior 30.0
Revised n/a


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