Central Perk: 16 feb. 2014

duminică, 16 februarie 2014

Mish's Global Economic Trend Analysis

Japanese GDP and Exports Seriously Underperform Expectations

Posted: 16 Feb 2014 05:53 PM PST

The huge string of unexpectedly sour economic data continues to pour in. Add Japan to the spotlight. The BBC reports Japan's Quarterly Growth Disappoints Ahead of Sales Tax Hike.

Japan's economy grew less than expected last year, despite forecasts it would benefit from a jump in spending ahead of a sales tax increase in April.

Gross domestic product rose by 1% on an annualized basis in the three-month period to December, compared to market estimates of a 2.8% expansion.

This was due to weaker private consumption and capital spending, as well as lower export figures.

Mr Abe also pushed through a controversial sales tax increase last year, in an attempt to raise funds to reduce the country's large public debt.

However, Japan's GDP is forecast to shrink in the April-to-June period because of the increase in the consumption tax to 8% from 5%.

The global economy is seriously slowing just as Abe pushed through a massive income tax hike. Yet people still sing the praises of Abenomics.

I fully expect Abe to step up to the plate with further measures to sink the yen in still more futile efforts to boost exports.

For other "unexpected" news, please see ...

The unexpected decline in industrial production (the most since May of 2009)
Followed the unexpected decline in retail sales which in turn followed
The unexpectedly weak jobs report in February
Which followed a Huge Miss in ISM; Largest Decline in New Orders in 4 Years
Which followed a Big Miss: Nonfarm Payrolls +74,000 vs. 205,000 Expected in January

The unexpected now hits Japan. Is Japan having bad weather too?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Two-Week Price Inflation in Argentina hits 30%, US Products Lead the Way; Currency Devaluations Hit P&G Earnings

Posted: 16 Feb 2014 08:27 AM PST

Prices of many goods in Argentina soared in the past two weeks. US brands are at the forefront of the action. Via translation from Lanacion, In two weeks, Warehouse Prices Rose 30%, with mayonnaise, cookies, and coffee leading the way. Officially, prices are up 3.3%. In reality, prices are up 30%.

According to official data, the price of food and beverages was up 3.3%. A tour of various supermarkets in the city of Buenos Aires, found escalating inflation is much higher in stock products, perfumery and milk.

Here are some price increases from the article. Please use relative price increases. They use the $ symbol for pesos.

Hellmann's mayonnaise in late January was on the shelves at $10.40 is now $13.55.
A can of peaches last month cost about $20 and yesterday were above $26.
Coffee 500g [about 1.1 pounds] rose 16% from $33.69 to $38.99.
Express cookies went from $15.39 to $20.39.
Hamburger buns increased from $13.06 to $14.19.
Sancor yogurt went from $15.25 to $ 17.99
La Serenissima Long life milk went from $10.7 to $11.59.
Shampoo went from $15.77 to $19.
Colgate Triple Action toothpaste 180 grams [6.3 ounces], went from $15.70 to $19.96.
Two-liter bottles of water rose from $8.25 to $9.43

Currency Devaluations Hit P&G Earnings

Inquiring minds may be wondering how this affects earnings of US multinational corporations.

Forbes explains Venezuela, Argentina Currency Devaluations Hit P&G Expected Sales And Earnings.

Retail investors aren't the only ones suffering from the woes of the emerging markets: Procter & Gamble PG +2.06% is feeling the pain of foreign currencies, too. Due to devaluations in currencies like the Venezuelan bolivar, Argentine peso and Turkish lira, to name a few, the consumer product giant said that it is lowering its outlook for its full-year 2014 sales and earnings.

P&G, which in January announced second quarter earnings results that were already feeling the ill effects of foreign exchange rates, said Tuesday afternoon that it would incur a charge between $230 million and $280 million, or 8 cents to 10 cents per share, a one-time charge resulting from revaluing its Venezuelan balance sheet in the wake of a change in the way the Venezuelan bolivar is valuated. Venezuela uses a de-facto dual-exchange rate system, but policy changes recently enacted by the Venezuelan government are affecting the way that certain imports — i.e, certain P&G products — are exchanged.

Specifically, the policy changes dictate that the state-run currency rate between the bolivare and the dollar is now 11.4 bolivares per one U.S. dollar; P&G, meanwhile, had calculated the value of its foreign transactions using the other, 6.3-bolivare-per-USD rate, thus the near-$300 million charge P&G now expects to incur on its third quarter balance sheet.

In reevaluating its outlook, P&G also took into consideration the recent devaluation of the Argentine peso, Turkish lira, South African rand, Russian ruble, Ukrainian hryvnia and Brazilian real. Of the group, the Argentine peso has proven the biggest problem, declining 20% to 8 pesos per dollar.

All told, P&G's full-year sales growth forecast is 2%, down from a prior range of 3% to 4% for fiscal year 2014. The company also lowered its earnings-per-share growth forecast to 3% to 5%, down from prior guidance of 5% to 7% growth.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Seth's Blog : I'm an elitist

I'm an elitist

(You might be as well).

The market isn't always right. It's merely the market.

Mass appeal is not always better than doing something that matters.

Increasing shareholder value is not the primary purpose of a corporation.

News with a lot of clicks isn't always important news.

Selling out to get popular is selling yourself short.

Lowering the price at the expense of sustainability is a fool's game.

Only producing tools that don't need an instruction manual takes power away from those prepared to learn how to use it. And it's okay to write a book that some people won't finish, or a video that some don't understand.

Giving people what they want isn't always what they want.

Curators create value. We need more curators, and not from the usual places.

Creating and reinforcing cultural standards and institutions that elevate us is more urgent than ever.

We write history about people who were brave enough to lead, not those that figured out how to pander to the crowd.

Elites aren't defined by birth or wealth, they are people with a project, individuals who want to do work they believe in, folks seeking to make an impact. Averaging down everything we do so that it becomes cheap and ubiquitous and palatable to all is a hollow goal.