Greek bank liquidity, credit check

So people transferred their deposits to other banks, and those other banks wouldn’t redeposit/lend those euro back to the Greek banks via the interbank market, at any rate of interest.

So instead the lost deposits were replaced by what functionally are deposits from the ECB via what’s called the ELA. What’s wrong with that? Why have an interbank market at all? Why not simply let banks have debits/deposits from the ECB as needed as long as they are deemed adequately capitalized and in good standing by that same ECB? And no other entity has the access and authority to fully regulate and supervise, qualifying it regarding the decision of providing ‘liquidity’.

The way I say it is ‘the liability side of banking is not the place for market discipline.” Hopefully they know this and don’t decide to punish privately owned ECB member banks for sins of their govt.

On Monday, ECB President Mario Draghi told European lawmakers that, so far, the bank had helped out Greek lenders to the tune of 118 billion euros ($133 billion) – about 66 percent of Greece’s overall economy. At the end of 2014, that sum was only half the current level.

Still no bounce:
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EU Industrial Production, Credit Check, Atlanta Fed

Even with increasing net exports, over all GDP isn’t benefiting all that much, as fiscal policy and structural reforms that assist exports do so by restricting incomes and domestic demand to achieve ‘competitiveness’. Additionally, negative rates and QE remove some interest income from the economy, which also restricts domestic demand to some degree. And, ironically, the subsequent current account surplus puts upward pressure on the euro until there are no net exports, obviating the efforts and sacrifices that went into achieving the competitiveness. Further note that a Greek default, for example, fundamentally removes net euro financial assets from the economy, further tightening the euro, as Greek debt is nothing more than bank deposits in the ECB system:

European Union : Industrial Production
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Highlights
The goods producing sector began the second quarter on a surprisingly soft note. A 0.1 percent monthly rise in production (ex-construction) was comfortably short of expectations and followed a steeper revised 0.4 percent decline in March. As a result, annual workday adjusted output growth dropped from 2.1 percent to 0.8 percent, its slowest pace since January.

However, April’s minimal monthly rebound would have been rather more impressive but for a 1.6 percent slide in energy. Elsewhere there were gains in intermediates (0.3 percent), capital goods (0.7 percent) and consumer durables (1.0 percent). Non-durable consumer goods were down 0.8 percent but, apart from this category, all sectors reported increases versus a year ago.

Amongst the larger member states output rose a solid 0.8 percent on the month in Germany but there were falls in France (1.0 percent), Italy (0.3 percent) and Spain (0.1 percent). Elsewhere Finland, already technically in recession, only saw output stagnate following a cumulative 2.4 percent loss since the end of last year while Greece (also back in recession) posted a hefty 2.3 percent reversal.

April’s advance leaves Eurozone industrial production just 0.1 percent above its average level in the first quarter when it increased fully 0.9 percent versus October-December. This provides early warning of a probable smaller contribution from the sector to real GDP this quarter and so underscores the need for the ECB to see out its QE programme in full.
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Portfolio selling from blind fear of QE and negative rates and Greece, etc. drove down the euro, but fundamentally inflation was falling and ‘competitiveness’ increasing so the trade surplus was pushed higher by the lower levels of the currency. Now it looks like the increasing trade flows are ‘winning’ and beginning drive the euro higher, with portfolios ‘sold out’ of euro, all of which should continue until the trade flows subside:
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Back to the US:

I see no sign of whatsoever of accelerating credit growth:
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This got some attention when the growth rate was increasing, but not anymore since it rolled over and remains well below prior cycles:
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They make point of potential growth every time one of the little wiggles bends up, but just look at how low the growth rate actually is, especially compared to prior cycles:
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Nothing happening with consumer lending:
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This shows how competitive banking is as banks compete by narrowing their spreads over their cost of funds:
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The Atlanta Fed forecast ticked up with the latest retail releases, but still remains well below mainstream forecasts and is also indicating what would be a very weak ‘bounce’ from the negative Q1 print, as the implied first half GDP growth rate would only be around .6%- very close to an ‘official’ recession. And as you’ve seen from the charts, those same releases indicated continued year over year deceleration of growth (including autos and retail sales) as well as elevated inventories, which doesn’t bode well for Q3 and Q4:
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Saudi output, Greek statement, EU pmi

Saudi output up a bit. As they post prices and let their refiners buy all they want at those prices, this shows demand is up a bit, likely because of a supply disruption elsewhere, like Libya, for example:
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As suggested all along:

In an interview with Realnews newspaper published on Saturday, Economy Minister George Stathakis said Athens had no alternative plan.

“The idea of a Plan B doesn’t exist. Our country needs to stay in the eurozone but on a better organized aid program,” he said.

Stathakis was confident a deal will be reached. “Otherwise, mainly Greece but the European Union as well will step into unchartered waters and no-one wants that.

Note the improvement in exports, with the current account surplus already strong. This is the opposite of the US, and caused by the liquidation of euro reserves by foreign central banks, whose selling drove the euro down to the point the current account surplus expanded to absorb it. As the selling subsides the CA surplus will continue until the euro goes high enough to eliminate it:

European Union : PMI Manufacturing Index
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Highlights
The final manufacturing PMI for May showed a minimal 0.1 point downward revision to its flash estimate to 52.2. This matched the 10-month high registered in March and was 0.2 points firmer than the final April print.

Manufacturing production expanded again, albeit at a slightly slower rate than last time, and both overall new orders and new export business improved suggesting that growth should be sustained over coming months. Increased demand was reflected in a rise in backlogs and also contributed to a ninth consecutive gain in the sector’s headcount.

macro update

At the beginning of 2013 the US let the FICA tax reduction and some of the Bush tax cuts expire and then in April the sequesters kicked totally some $250 billion of proactive deficit reduction. This cut 2013 growth from what might have been 4% to just over half that, peaking in Q3 and then declining to negative growth in Q1, due to the extremely cold winter. Forecasts were for higher growth in 2014 as the ‘fiscal headwinds’ subsided. GDP did resume after the weather improved, though not enough for 2014 to look much different from 2013. And with the fall in the price of oil in Q4 2014, forecasts for Q1 2015 were raised to about 4% based on the ‘boost to consumers’ from the lower oil prices. Instead, Q1 GDP was -.7%. The winter was on the cold side and the consumer had been saving instead of spending the savings from lower gas prices. And the forecasts for Q2 were for about 4% growth based on a bounce back and consumers now spending their gas savings. Most recently Q2 forecasts have been reduced with the release of Q2 data.

My narrative is that we learned the extent of capex chasing $90 in Q4 after the price fell in half. It seemed to me then that it had been that capex that kept 2013 growth as high as it was and was responsible for the bounce from Q1 2014 as well as the continued positive growth during 2014 up to the time the price of oil dropped and the high priced oil related capex came to a sudden end.

By identity if any agent spend less than his income another must have spent more than his income or the output would not have been sold. So for 2012 the output was sold with govt deficit spending where it had been, and when it was cut by some $250 billion in 2013 some other agent had to increase it’s ‘deficit spending’ (which can be via new debt or via depleting savings) or the output would have been reduced by that amount. Turns out the increase in oil capex was maybe $150 billion for 2013 and again in 2014, best I can tell, and this was sufficient to keep the modest growth going while it lasted. And when it ended in Q4 that spending (plus multipliers) ended as well, as evidenced by the sudden decline in GDP growth. And so far the Q2 numbers don’t look like they’ve increased much, if any, since Q1. And to do so will take an increase in ‘borrowing to spend’ that I can’t detect. Of course, I missed the surge in oil capex last year, so there could be something this year I’m missing as well.

When oil prices dropped I pointed out three things-

1. Income saved by buyers of oil equaled income lost by sellers, so the benefit to total spending was likely to be small and could be negative, depending on propensities to save and to spend on imports. And yes, some of the sellers of oil were ‘non residents’, but that was likely to reduce US exports, and cuts in global capex could reduce US exports as well.

2. Lost capex was a direct loss of GDP, plus multipliers, both domestically and globally.

3. Deflation in general is highly problematic for lenders, and tends to reduce private sector credit expansion in general.

To me this meant the drop in oil prices was an unambiguous negative. And in the face of universal expectations (including the Fed) that it was a positive, which can be further problematic.

Euro Zone

Forecasts are for modestly improving growth largely due to the weak euro driving exports. However, the euro is down from massive foreign CB selling, probably due to fears of ECB policy and the Greek saga. This technical selling drove the euro down and the euro area 19 member current account surplus up, absorbing the euro the portfolios were selling. Once the portfolio selling subsides- which it will as euro reserves are depleted and short positions reach maximums- the trade flows continue, which then drives the euro up until those trade flows reverse. In other words, the euro appreciates until net exports decline and the anticipated GDP growth fades. And there is nothing the ECB can do to stop it, as rate cuts and QE works only to the extent it frightens portfolio managers into selling, etc.

Also, ironically, a Greek default would fundamentally strengthen the euro as Greek bonds are nothing more than euro balances in the ECB system, and a default is a de facto ‘tax’ that reduces the holdings of euro net financial assets in the economy, making euro that much ‘harder to get’ etc.

CPI

Today’s markets reacted entirely to the .3 increase in core CPI which was actually 0.26 which rounded to 0.3. This, for example, caused the dollar to gap up for the day vs the euro, as traders and portfolio managers acted on the beliefs that it made a Fed hike more likely to come earlier, and that higher rates would fundamentally support the dollar.

However, fundamentally, inflation is in fact a redefinition of a currency downward, as the same number of $ buy less. Likewise, higher domestic costs are a force that reduces exports and higher domestic incomes increases imports, both contributing to trade flows that weaken the currency in line with the loss of value due to inflation. And with floating exchange rates, changes in rates alter the difference between spot and forward price, but not the ‘general level’ of the currency. But no matter, in the near term technicals rule over potential longer term changes to trade flows and the dollar went up.
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Consumer Price Index
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Highlights
Pull forward that rate hike is what some of the hawks are thinking after reading today’s consumer price report where a benign looking headline, up only 0.1 percent in April, masks rising pressure through many components.

Excluding food and energy, core prices rose 0.3 percent which doesn’t seem that much but is outside Econoday’s high-end forecast for 0.2 percent. It is also the highest since January 2013. The year-on-year rate for the core is plus 1.8 percent which, after dipping to 1.6 percent earlier in the year, is closing in on the Fed’s general inflation target of 2.0 percent.

Readings showing pressure are outside energy including medical costs (up a very steep 0.7 percent in the month) and education costs (up 0.5 percent). Shelter costs, reflecting rising rents, came in at plus 0.3 percent for the 3rd time in 4 months which is the hottest streak for this reading since way back in late 2006 and early 2007. Also standing out are gains in furniture (up 1.3 percent) and used cars (up 0.6 percent).

Oil prices have been on the rise but not energy costs, at least in the April report which fell a heavy 1.3 percent. Gasoline fell 1.7 percent in the month. Two other readings also showed downward pressure: airfares (minus 1.3 percent) and apparel (minus 0.3 percent). Food costs were flat.

The headline CPI is down 0.2 percent year-on-year which looks downright deflationary. But the lack of pressure is due entirely to energy which is down a very deflationary 19.4 percent year-on-year. Energy prices are bound to firm given the recent move in oil from the high $40s for WTI to $60. That and emerging price pressures through the bulk of the consumer economy raise the risk that inflation may be brewing after all.
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Atlanta Fed, LA port traffic, EU trade surplus, German ZEW, housing starts, redbook retail sales

No positive change here yet:
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This was supposed to rebound:

LA area Port Traffic Decreased in April

By Bill McBride

May 18 (Calculated Risk) — Note: LA area ports were impacted by labor negotiations that were settled on February 21st. Port traffic surged in March as the waiting ships were unloaded (the trade deficit increased in March too), and port traffic declined in April.

Container traffic gives us an idea about the volume of goods being exported and imported – and usually some hints about the trade report since LA area ports handle about 40% of the nation’s container port traffic.

The following graphs are for inbound and outbound traffic at the ports of Los Angeles and Long Beach in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container).

To remove the strong seasonal component for inbound traffic, the first graph shows the rolling 12 month average.

On a rolling 12 month basis, inbound traffic was down 0.2% compared to the rolling 12 months ending in March. Outbound traffic was down 1.1% compared to 12 months ending in March.

Inbound traffic had been increasing, and outbound traffic had been moving down recently. The recent downturn in exports might be due to the strong dollar and weakness in China.

The 2nd graph is the monthly data (with a strong seasonal pattern for imports).

LA Area Port TrafficUsually imports peak in the July to October period as retailers import goods for the Christmas holiday, and then decline sharply and bottom in February or March (depending on the timing of the Chinese New Year).

Imports were down 2% year-over-year in April; exports were down 11% year-over-year.

The labor issues are now resolved – the ships have disappeared from the outer harbor – and the distortions from the labor issues are behind us. This data suggests a smaller trade deficit in April.
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Strong number.

Currencies with trade surplus don’t ordinarily go down…
;)

European Union : Merchandise Trade
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A bit on the weak side, to say the least, and even with negative rates and QE…
;)

Germany : ZEW Survey
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Solid improvement here. First good number in quite a while.
The 5 month average is almost back to where it was in November…

United States : Housing Starts
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Highlights
There were hardly any indications before today, but the spring housing surge is here. Today’s housing starts & permits report is one of the very strongest on record with starts soaring 20.2 percent in April to a much higher-than-expected annual rate of 1.135 million with permits up 10.1 percent to a much higher-than-expected 1.143 million. Both readings easily top the Econoday high-end forecast of 1.120 million for each. The gain for starts is the best in 7-1/2 years with the gain in permits the best in 7 years. Today’s report is an eye-opener and will re-establish expectations for building strength in housing, a sector held down badly in the first quarter by severe weather.
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Half way through May and this one isn’t bouncing back:

United States : Redbook
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Railcar traffic, Draghi statement, NY manufacturing survey, Industrial production, Consumer confidence

Rail Week Ending 09 May 2015: Data Still Not Pretty. Rail Softness Continues.

(Econintersect) — Week 18 of 2015 shows same week total rail traffic (from same week one year ago) declined according to the Association of American Railroads (AAR) traffic data. Intermodal traffic improved, which accounts for half of movements – but weekly railcar counts goes deeper into contraction.

This analysis is looking for clues in the rail data to show the direction of economic activity – and is not necessarily looking for clues of profitability of the railroads. The weekly data is fairly noisy, and the best way to view it is to look at the rolling averages which generally are in a weak growth cycle.

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A summary of the data from the AAR:

The Association of American Railroads (AAR) today reported U.S. rail traffic for the week ending May 9, 2015.

For this week, total U.S. weekly rail traffic was 551,034 carloads and intermodal units, down 2.3 percent compared with the same week last year.

Total carloads for the week ending May 9, 2015 were 273,433 carloads, down 7.9 percent compared with the same week in 2014, while U.S. weekly intermodal volume was 277,601 containers and trailers, up 3.8 percent compared to 2014.

Four of the 10 carload commodity groups posted increases compared with the same week in 2014. They include: motor vehicles and parts, up 8.9 percent to 18,997 carloads; petroleum and petroleum products, up 6.1 percent to 15,464 carloads; and miscellaneous carloads, up 3.6 percent to 9,220 carloads. Commodity groups that saw decreases during this one week included: coal, down 16.1 percent to 93,691 carloads; metallic ores and metals, down 12.1 percent to 23,572 carloads; and grain, down 11.2 percent to 17,959 carloads.

For the first 18 weeks of 2015, U.S. railroads reported cumulative volume of 5,043,559 carloads, down 1.8 percent from the same point last year; and 4,679,513 intermodal units, up 1.7 percent from last year. Total combined U.S. traffic for the first 18 weeks of 2015 was 9,723,072 carloads and intermodal units, a decrease of 0.1 percent compared to last year.

North American rail volume for the week ending May 9, 2015 on 13 reporting U.S., Canadian and Mexican railroads totaled 368,931 carloads, down 7.5 percent compared with the same week last year, and 350,845 intermodal units, up 3.2 percent compared with last year. Total combined weekly rail traffic in North America was 719,776 carloads and intermodal units, down 2.6 percent. North American rail volume for the first 18 weeks of 2015 was 12,681,610 carloads and intermodal units, up 1 percent compared with 2014.

Here we go. This kind of thing previously had caused the euro to fall vs the dollar. If it doesn’t happen this time there’s a serious problem brewing. And right now the euro is up on the day…

Draghi helps stocks

Aside from individual stocks, sentiment received a boost from the ECB on Friday. Draghi said Thursday that the central bank will “implement in full” its bond-buying program and it will stay in place “as long as needed.”

“While we have already seen a substantial effect of our measures on asset prices and economic confidence, what ultimately matters is that we see an equivalent effect on investment, consumption and inflation,” Draghi said, according to the text of a speech delivered in Washington.

“To that effect, we will implement in full our purchase program as announced and, in any case, until we see a sustained adjustment in the path of inflation.”
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Empire State Mfg Survey
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Highlights
The first indication on May conditions in the manufacturing sector is soft, as indications have been all year. The Empire State index came in at 3.09, below what were already weak Econoday expectations for 5.00. Shipments look respectable at 14.94 but are way ahead of new orders, at only 3.85, and even further ahead of backlog orders which are in deep contraction at minus 11.46. Employment growth is down as is the 6-month outlook, both pointing to a lack of optimism.

Price readings in this report stand out, pointing to even less pressure than in April with input cost inflation very subdued, down nearly 10 points to 9.38, and with virtually no price traction at all for finished goods, at only 1.04.

The manufacturing sector, hurt in part by weak exports, looks to be more and more of a drag at a time when economic growth is supposed to be on a springtime rebound. Next indication on the May manufacturing sector will be next Thursday with the Philly Fed report. Later this morning the industrial production report will offer the first definitive data on the April manufacturing sector.

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This is bad too:

Industrial Production
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Highlights
Industrial production is stalling, down 0.3 percent in April for a 5th straight monthly contraction. Factories are cutting back with capacity utilization down 4 tenths to 78.2 percent. And the manufacturing component, which has been flat to negative all year, is unchanged. All these readings are at or near the Econoday low-side forecasts.

Among manufacturing subcomponents, consumer goods output fell 0.3 percent with business goods down 0.4 percent. Construction supplies rose only fractionally but at 0.1 percent the reading is the best all year (this a reminder of how weak construction and housing has been). A positive is a second strong month for auto output, up 1.3 percent on top of March’s 4.3 percent surge, but whether output increases further will depend on auto sales which, in yesterday’s retail sales report, turned lower in April.

The two other main components in today’s report show even greater weakness with mining, hurt by oil & gas, at minus 0.8 percent for the 6th contraction in 7 months and utilities at minus 1.3 percent for a 2nd straight decline.

The industrial economy remains flat and is holding down what is supposed to be the economy’s springtime bounce. The news from the factory sector, including this morning’s Empire State report, won’t be pulling forward expectations for the Fed’s first rate hike.
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Even this has suddenly broken:

Consumer Sentiment
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Highlights
Consumer confidence had been holding, as the FOMC assured us just a couple of weeks ago, at high levels, but perhaps less so now with the consumer sentiment index at 88.6 which is nearly 5 points below Econoday’s low-side forecast. Both components show weakness with current conditions down 7.2 points to 99.8 and expectations down 7.3 points to 81.5. These are the lowest readings since October and November of last year.

At the same time that confidence is going down, inflation expectations, reflecting rising gasoline prices, are going up. Expectations 1-year out are up 3 tenths to 2.9 percent while expectations 5-years out are up 2 tenths to 2.8 percent. Despite the turn higher, however, these are still low levels.

The drop in current conditions hints at softness in this month’s jobs market while the drop in expectations is a downgrade for the outlook on jobs. The hawks at the Fed have been anticipating, perhaps over anticipating, that strong consumer confidence levels would eventually translate to gains for retail sales. Retail sales have been flat along and now consumer confidence, based at least on today’s consumer sentiment report, is moving backwards.
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Of the nearly 1.6 million loan originations in Q1, 471,822 were purchase loan originations, down 25% from the prior quarter and up less than 1% from a year ago. There were 1,080,043 refinance originations in Q1, an increase of 6% from the prior quarter and 27% from a year ago.

claims, producer prices, euro comments, public sector jobs

Just a reminder, claims measure those losing jobs who file for benefits, not new hires:

Jobless Claims
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The euro has been moving higher vs the dollar, as CB selling winds down as they reach the lower limits of their reserve targets along with fundamental support from a large and growing EU current account surplus that’s drained those euro sold by those CB’s and other sellers from global markets. This may have left the short sellers and others needing to recover euro allocations subject to a dramatic short squeeze for as long as the current account surplus continues. And this poses an extreme risk to the EU. Growth forecasts have been largely based on ‘weak euro’ and as it moves higher that growth never materializes, and instead the economy deteriorates/unemployment goes higher, etc. etc. and, making matters worse, the ECB is left ideologically bankrupt, having seen negative rates and QE do nothing more than exacerbate the deflation they were trying to reverse. All they can do is try more of the same, which will be a very depressing environment for those who have been suffering under the failed policies. All of which has the potential to accelerate the already growing support for the various anti euro forces.
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Yes, President Obama wins the Tea Party trophy for downsizing government:
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Euro update and anecdotal econ news

This gives you a pretty good idea of the magnitude of euro selling by central banks. The question is when are they finished, and perhaps, when foreign exporters again pressure their cb’s to increase holdings to target the euro zone for exports, which is the reason the cb’s originally bought the euro.

And note that the current account surpluses indicate the EU may be through the ‘j curve’ as net exports continue to move higher with the foreign cb induced currency depreciation.

Of course QE and negative rates continue to work to strengthen the euro, as the does the current account surplus, so it’s just a matter of time before the fundamentals overtake CB selling. The problem is timing… ;)

Euro’s Reserve Status Jeopardized as Central Banks Dump Holdings

By Kevin Buckland David Goodman

April 10 (Bloomberg) — Quantitative easing may be helping Europe achieve its economic targets, but it’s also undermining the long-term viability of the euro by tarnishing its allure as a global reserve currency.

Central banks cut their euro holdings by the most on record last year in anticipation of losses tied to unprecedented stimulus. The euro now accounts for just 22 percent of worldwide reserves, down from 28 percent before the region’s debt crisis five years ago, while dollar and yen holdings have both climbed, the latest data from the International Monetary Fund show.

“As a reserve currency, the euro is falling apart,” said Daniel Fermon, a strategist at Societe Generale SA in Paris. “As long as you have full quantitative easing, there’s no need to invest. The problem for the moment is we don’t see a floor for the currency. Money’s flowing out.”

European Central Bank President Mario Draghi has in the past welcomed the drop-off in reserve managers’ holdings because a weaker exchange rate makes the continent more competitive. Yet firms including Mizuho Bank Ltd. warn the currency’s waning popularity reflects a more lasting loss of confidence in an economy that shrank in two of the past three years.

Sinking Economically

The decline in euro reserves suggests other central banks consider the ECB’s 1.1 trillion euros ($1.2 trillion) of QE bond purchases, which started a month ago, to be the biggest threat to the currency’s global status since its 1999 debut.

Greece’s debt woes aren’t helping, either. The ECB ramped up the emergency funding available to Greek banks Thursday to alleviate the country’s worsening liquidity issues amid drawn-out negotiations over its bailout.

Outright Sales

National Australia Bank Ltd. estimates reserve managers sold at least $100 billion-worth of euros in the fourth quarter of 2014.

“Most of the fall in the euro share represented outright selling of euros” rather than simply reflecting declines in the exchange rate, said Ray Attrill, the bank’s global co-head of currency strategy in Sydney.

Of the $6.1 trillion of reserves for which central banks specify a currency, the proportion of euros fell in every quarter of 2014, IMF data show. Last year was also the first time euro holdings fell in cash terms.

Euro Weakening

Yen holdings increased in three of the four quarters and make up 4 percent of the total, up from as low as 2.8 percent in early 2009. Dollars account for the biggest proportion at 63 percent after reserve managers increased their holdings in the final six months of last year. That’s down from as much as 73 percent in 2001.

The changes came as the yen and euro each sank 12 percent versus the greenback last year. The euro has tumbled about the same amount since then, which should further shrink its presence in central banks’ war chests.

The euro’s also falling against its broader peers, dropping more than 7 percent this year among a basket of its Group of 10 nations tracked by Bloomberg Correlation-Weighted Indexes, the biggest decline in the group. The dollar climbed almost 7 percent on the prospect of higher U.S. interest rates, beating a gain of about 6 percent in the yen.

EU current account:
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wholesale-originations

NACM’s Credit Managers Index Drops Even Further in March

The March report of the Credit Managers’ Index (CMI) from the National Association of Credit Management (NACM) fell further this month indicating that some serious financial stress is manifesting in the data.

“We now know that the readings of last month were not a fluke or some temporary aberration that could be marked off as something related to the weather,” said NACM Economist Chris Kuehl. “These readings are as low as they have been since the recession started and to see everything start to get back on track would take a substantial reversal at this stage.”

The combined score of 51.2 is moving dangerously close to contraction zone. The index of favorable factors dropped to 55.4 while the unfavorable factors drastically fell to 48.5–a place this index has not seen since after the end of the recession. “The signal this sends is that many companies are not nearly as healthy as it has been assumed and that there is considerably less resilience in the business sector than assumed,” said Kuehl.

Most categories showed decreases this month, but the real damage occurred in the unfavorable changes categories. According to Kuehl, the most disturbing drop happened in the rejection of credit applications category, which fell from 48.1 to an even weaker 42.9. The accounts placed for collection fell to 49.8, disputes improved slightly to 49, dollar amount beyond terms fell to 45.5, and dollar amount of customer deductions dropped to 48.7.

Rail Week Ending 04 April 2015: Weakness Continues

(Econintersect) — Week 13 of 2015 shows same week total rail traffic (from same week one year ago) again declined according to the Association of American Railroads (AAR) traffic data. Intermodal traffic, which accounts for half of movements, is growing year-over-year – but weekly railcar counts remain in contraction. Rail traffic remains surprisingly weak.

Baltic Dry Index is Now Below the Great Recession Low

By: John O’Donnell

April 11 (Econintersect) — The Baltic Dry Index is considered a coincident and leading indicator for global economic growth. It tracks the cost of shipping bulk commodities around the world. The BDI is now below the level reached during the Great Recession.
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