2008-11-06 USER

Posted on by


[Skip to the end]

Nonfarm Productivity QoQ (3Q P)

Survey 0.7%
Actual 1.1%
Prior 4.3%
Revised 3.6%

 
Better than expected but slipping a bit.

[top][end]

Nonfarm Productivity TABLE 1 (3Q P)

[top][end]

Nonfarm Productivity TABLE 2 (3Q P)

[top][end]

Unit Labor Costs QoQ (3Q P)

Survey 3.0%
Actual 3.6%
Prior -0.5%
Revised -0.1%

 
Worse than expected but still reasonable.

[top][end]

Unit Labor Costs ALLX (3Q P)

[top][end]

Initial Jobless Claims (Nov 1)

Survey 477K
Actual 481K
Prior 479K
Revised 485K

 
About at recession levels.

[top][end]

Continuing Claims (Oct 25)

Survey 3743K
Actual 3843K
Prior 3715K
Revised 3721K

 
Also looking like recession levels.

[top][end]

Jobless Claims ALLX (Nov 1)

 
Karim writes:

  • Initial claims fall 4k to 481k, but prior week revised up 6k to 485k (4wk avg 477k)
    Real story is latest jump in continuing claims, from 3721k to 3843k (4wk avg 3754k)


  • Higher continuing claims tied to longer duration of unemployment and in turn lower wage pressures


  • Now look for payrolls to exceed -300k tomorrow; would be consistent with across the board weaker-than-expected data for past month.


[top]

Share

Re: Commentary

Posted on by


[Skip to the end]

>   
>   The banks using the ECB’s liquidity program deposited a record 160
>   billion Euros with the ECB overnight, rather than lend them to other
>   banks or market participants.
>   

Jeff, ‘lending them out’ wouldn’t have changed that number. At most it would have moved the funds from one bank’s reserve account to another. So maybe, they did ‘lend them out’. Best indication is the interbank rates, but even that’s not definitive.

>   
>   Russia is going to base missiles on EU border. That should go well. In
>   unrelated news, they are also planning to build a deep-water port in
>   Venezuela that will allow Russian warships to dock there. Hamas
>   militants pounded southern Israel today with a massive barrage of 35
>   rockets, after Israeli forces killed six gunmen. So much for the
>   five-month truce. China has so far sentenced 55 people for riots
>   against Beijing’s rule that broke out in Tibet in March. No word yet on
>   the other 147 people who stood trial. Iran has warned the US again
>   not to violate its airspace.
>   

Good luck to us!


[top]

Share

Re: France threatens to seize banks

Posted on by


[Skip to the end]

Yesterday’s news, but this kind of response is indicative of fear of a very large problem in the immediate future.

And forcing banks to lend to entities they don’t consider credit worthy only shifts private sector losses to the banks.

>   
>   On Tue, Nov 4, 2008 at 7:38 AM, Dave wrote:
>   

France threatens to seize banks, German bail-outs escalate

By Ambrose Evans-Pritchard

The French state has threatened to seize control of the country’s banks and fire top staff unless they do their part to stabilise the economy by stepping up lending to companies in need.

“The banks have got to open up credit to business: they have the means to do it,” said prime minister Francois Fillon, accusing lenders of hoarding cash. “We don’t think the banks are stepping up to task as necessary. We can withdraw the credit that we have extended to them under the state’s contract with the banks, and that will put them in difficulty. At that moment the question arises whether we should take an equity stake, change their managers, and assume control over their strategy.”

Speaking on French television, he warned: “Broadly speaking, we’ll be able to judge over the next 10 days whether they are playing the game as they should, or not.”

Under last month’s rescue deal, banks agreed to raise lending to firms and households by 3pc to 4pc in exchange for a state injection of €10bn (£8bn) in fresh capital for the six largest banks, a modest sum compared to the bail-outs in Britain, Germany, Belgium and the Netherlands.

In Germany, HSH Nordbank – 59pc owned by the city of Hamburg and state of Schleswig-Holstein – rattled the markets yesterday by revealing that it would need €30bn in guarantees from Berlin’s €500bn stabilisation fund. It warned that further sums may be need`ed to meet capital adequacy ratios in the future.

“We are not under time pressure and will be holding in-depth discussions with our stockholders as to the strategy to pursue,” said Hans Berger, chief executive officer. The bank has had to write down €2.3bn over the last year, and suffered heavy losses from the collapse of Lehman Brothers.

Commerzbank said it would seek a combined guarantee and capital boost of €23bn, while BayernLB will seek €5.4bn. The giant property lender Hypo Real Estate is the biggest casualty so far, needing €50bn.

In Austria, a mini-crisis continued to simmer yesterday as the state stepped in “with a few hundred million” to rescue Kommunalkredit, after the public lender said it was suffering a “liqudity squeeze”. Austria’s banks have heavy exposure to the debt crisis in Ukraine, Hungary and the Balkans.

Europe’s banks are almost twice as leveraged as those in the US, according to the IMF. Many pursued a very aggressive lending strategy during the credit bubble. They account for the lion’s share of cross-border loans to Latin America, Asia and the entire $1.6 trillion pool of loans to Eastern Europe. Matt King, credit strategist at Citigroup, says they have waited too long to face up to their losses and will need to raise $400bn in fresh capital in a hostile global climate.


[top]

Share

Consumer spending falling

Posted on by


[Skip to the end]

Consumer spending hit by crisis: MasterCard

By Nicole Maestri

NEW YORK (Reuters) – U.S. consumers slashed spending in October, shunning purchases of items over $1,000, as a global financial crisis battered their savings accounts and their psyches, according to figures released on Wednesday by SpendingPulse, the retail data service of MasterCard Advisors.

“The numbers for October are very negative across the board,” said Michael McNamara, vice president at MasterCard Advisors, of sales figures tracked by SpendingPulse.

“Any area that deals with consumer durables, especially areas like furniture, electronics and appliances … that relies heavily on sales purchases that exceed $1,000 in value are under significant pressure,” he said.

SpendingPulse data is derived from aggregate sales in the MasterCard U.S. payment network, coupled with estimates on all other payments including cash and checks.


[top]

Share

Re: Steep yield curve

Posted on by


[Skip to the end]

>   
>   On Wed, Nov 5, 2008 at 7:06 AM, Morris wrote:
>   
>   COLLAPSE OF ST RATES HAS DONE SQUAT FOR LT RATES- so consumer
>   has gotten no benefit in trying to procure Long Term financing especially
>   in housing, where all mtge rates are near the high for the last 52 wks–
>   the spread between Fed Funds to Jumbo Mortgages is now 680bps–
>   has got to be a record… Great for spreads at banks…not great for
>   consumers..
>   

And banks are not allowed to take ‘gap’ risk so it doesn’t do much for them, either.

Short rates are down because of Fed funds cuts by the Fed and the unlimited lending internationally via the swap lines bringing down three month rates.

To bring long term rates down they need to stop issuing long term Treasury securities and buy back the stuff that’s outstanding. Treasury securities function as ‘interest rate support’ for their given maturity.

But even lower long term rates won’t do a lot when there is a shortage of aggregate demand because the budget deficit is too small.

And an unfriendly foreign monopolist setting crude prices can only be addressed by immediately cutting our consumption.

Warren

MOSLER’S LAW: There is no financial crisis so deep that a sufficiently large increase in public spending cannot deal with it.
(as stated by Prof. James Galbraith)


[top]

Share

2008-11-05 USER

Posted on by


[Skip to the end]

MBA Mortgage Applications (Oct 31)

Survey n/a
Actual -20.3%
Prior 16.8%
Revised n/a

[top][end]

MBA Purchasing Applications (Oct 31)

Survey n/a
Actual 260.90
Prior 303.10
Revised n/a

 
Down through the lows- looking like housing is taking a second leg down.

[top][end]

MBA Refinancing Applications (Oct 31)

Survey n/a
Actual 1075.40
Prior 1489.40
Revised n/a

[top][end]

MBA TABLE 1 (Oct 31)

[top][end]

MBA TABLE 2 (Oct 31)

[top][end]

MBA TABLE 3 (Oct 31)

[top][end]

MBA TABLE 4 (Oct 31)

[top][end]

Challenger Job Cuts YoY (Oct)

Survey n/a
Actual 78.9%
Prior 32.6%
Revised n/a

 
Trending higher along with other employment indicators.

[top][end]

Challenger Job Cuts TABLE 1 (Oct)

[top][end]

Challenger Job Cuts TABLE 2 (Oct)

[top][end]

Challenger Job Cuts TABLE 3 (Oct)

[top][end]

Challenger Job Cuts TABLE 4 (Oct)

[top][end]

ISM Non Manufacturing Composite (Oct)

Survey 47.0
Actual 44.4
Prior 50.2
Revised n/a


[top]

Share

Opec output

Posted on by


[Skip to the end]

Not much demand destruction showing up here. Saudis set price and let quantity adjust to world demand. Can take a few months to show up due to the ‘supply chain’ that can expand and contract.

OPEC’s Oil Output fell 0.2% in October, Survey Shows

New York, Nov. 3 (Bloomberg) — Crude-oil production from the 13 OPEC
members in October declined 70,000 barrels a day from September, the latest
Bloomberg survey of producers, oil companies and industry analysts shows.
Figures are in the thousands of barrels a day.

Opec Production
October 2008

Opec Country October Est. Sept. Monthly Output Nov. 1 Change Est. vs. Target Est. Target Est. Cap. (@)
Algeria 1,400 1,400 0 1,286 114 1,450
Angola 1,875 1,800 75 1,801 74 2,000r
Ecuador 500 500 0 493 7 500
Indonesia* 850 865 -15 a’ a’ 900
Iran 3,900 3,950 -50 3,618 282 4,100
Iraq* 2,235 2,165r 70 — — 2,500
Kuwait# 2,600 2,580r 20 2,399 201 2,650
Libya 1,750 1,720 30 1,623 127 1,800r
Nigeria 1,920 1,940r -20 2,050 -130 2,500r
Qatar 870 870r 0 785 85 900
Saudi Arabia# 9,350 9,450 -100 8,477 873 10,800
U.A.E 2,580 2,650 -70 2,433 147 2,800
Venezuela 2,350 2,360 -10 2,341 9 2,500
Total OPEC-13 32,180 32,250r -70 — — 35,400r
Total OPEC-11* 29,095 29,220r -125 27,308 1,787 32,000r

*Quotas effective Nov. 1, 2008. OPEC agreed at its Oct. 24 meeting to cut
its quota target by 1.5 million barrels a day, to 27.308 million barrels
daily from Nov. 1. The new target excludes Iraq, which has no formal quota,
and Indonesia who leaves OPEC at year-end.


[top]

Share

Hong Kong and deflation

Posted on by


[Skip to the end]

The Hong Kong currency board arrangement means net Hong Kong financial assets (AKA money supply) can grow only via net exports (and/or external debt).

This means market forces work to sustain net exports ‘at any cost’.

The usual result is a deflationary mess, until ‘competitiveness’ is achieved to the extent net exports are sufficient for funding the domestic desire for net financial assets.

See ‘Exchange rate policy and full employment’ at www.mosler.org for more details of this process.

Yes, the monetary authority can intervene and give up its reserves to a ‘savings hungry’ domestic market, but at the risk of quickly running out of reserves needed to facilitate convertibility of Hong Kong dollars on demand.

Best I can tell, currency boards were originally instruments of colonial exploitation, designed to force net exports to the mother country.

Today, that’s an enormous price to pay for ‘currency stability’.

Hong Kong Home Sales Post Biggest Drop Since 1999

By Kelvin Wong and Nipa Piboontanasawat

Nov. 4 (Bloomberg) — Hong Kong’s home sales posted the biggest drop by volume in almost nine years, as local lenders tightened mortgage lending amid a slowdown in the economy.

The number of residential units that changed hands in the city last month slumped 58.1 percent to 4,719, according to a Land Registry statement today. That’s the largest drop since November 1999 and the fourth straight month of declines.

By value, sales of residential units dropped 63 percent from a year earlier to HK$16.3 billion ($2.1 billion).

The economic outlook, coupled with declines in the Hong Kong stock market, have curbed demand for real estate and led potential buyers to expect cheaper prices. The Hang Seng Index has dropped 48 percent this year.

Home prices on Hong Kong island, which houses some of the world’s most expensive apartments, had their biggest weekly drop in the week ended Oct. 19, according to figures compiled by Centaline Property Agency Ltd.


“We’ll probably see even worse figures for the following month,” said Wong Leung-sing, an associate director of research at Centaline. “Then things should improve slightly as many
people may try to buy at low prices.”

Hong Kong’s bank lending rose 13 percent in September, the slowest pace in 13 months, and almost half the 24 percent increase in August.


[top]

Share

Rush to join the euro

Posted on by


[Skip to the end]

As the Belgian bank giant Fortis collapses, citizens of that country appreciate the bonheur of belonging to the eurozone. Had it not been for the euro, Belgium would have devalued and sharply increased interest rates — just as Iceland was forced to do. The banking and financial crisis is quickly changing perceptions. Across Europe, there is a bit of a scramble to join the euro. Politicians from Scandinavia to Eastern Europe, fearful of the abyss, are re-evaluating the wisdom of going it alone (Denmark, Sweden, Norway) or postponing structural reform (Hungary, Poland). Brazil and Mexico have secured a swap line from the Federal Reserve Bank. When it comes to liquidity conditions, size seems to matter after all.

‘Had it not been for the euro, Belgium would have devalued and sharply increased interest rates — just as Iceland was forced to do.’

Yes, but only because they don’t understand what other options are, like sustaining output and growth via fiscal measures, setting interest rates where they want them for further public purpose (including the option of a zero rate policy), and letting private corps with external currency debt problems default on them and convert them to equity in bankruptcy while sustaining the ongoing business as desired for further public purpose (keeping the banks open while they are legally getting reorganized) etc etc.

It’s the blind leading the blind.


[top]

Share

Re: Eurozone to stick to their budget rules

Posted on by


[Skip to the end]

This will keep a lid on euro aggregate demand in the eurozone for a while as budget deficits grow due to falling revenues and increasing transfer payments.

Larger national deficits are needed to sustain output and employment, but also add systemic risk due to their peculiar institutional structure.

Eurozone to honour budget rules as econ faces stall

By Dave Graham and Anna Willard

BRUSSELS, Nov 3 (Reuters) – Euro zone finance ministers pledged on Monday to stick to European Union budget rules even though economic growth is seen halting next year, in a deal the European Commission hailed as needed policy cooperation.

“This is not the time to let the deficits rip,” said Jean-Claude Juncker, chairman of monthly talks among the finance ministers of the 15-country currency area.

“We don’t want to indulge in an orgy of spending and indebtedness — in essence, mortgaging future generations,” he told a news conference after their Monday talks.

The ministers backed European Commission forecasts that the aggregate budget gap of the euro countries would rise to 1.8 percent of gross domestic product in 2009 from 1.3 percent seen this year and to 2.0 percent in 2010, unless policies change.

They also supported the Commission’s estimate that euro zone economic growth would slow to a mere 0.1 percent next year from 1.2 percent expected in 2008 in the wake of the financial crisis.

EU Economic and Monetary Affairs Commissioner Joaquin Almunia said the widening of the deficit, mainly as a result of a natural fall in revenues and a rise in expenditure, already constituted a significant fiscal stimulus for the euro zone.

>   
>   On Mon, Nov 3, 2008 at 11:18 PM, James K. wrote:
>   
>   sad, sad.
>   
>   ”This is not the time to let the deficits rip,” said Jean-Claude Juncker,
>   chairman of monthly talks among the finance ministers of the
>   15-country currency area.
>   

Their loss, our gain, if we play our cards right and accommodate their desire for export driven growth- preferably with their exports going to us.

Might happen if we have the right fiscal package and trade policy to support imports.


[top]

Share