sâmbătă, 26 aprilie 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Number of New Mortgage Loans in Spain Down 33% From Year Ago

Posted: 26 Apr 2014 02:38 PM PDT

Those who think the Spanish economy is poised to turn around need only take one look at mortgage loans to see reality.

Via translation from La Vanguardia please consider New Mortgages Drop 33% in February, 46 Consecutive Months of Declines

New mortgages for home purchases fell in February by 33% over the same month in 2013. This marks 46 months of declines according to data released today by the National Statistics Institute (INE).

The average amount of these loans reached 102,443 euros, 0.8% less than in January and only up 1.1% from a year earlier.

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

Ukraine PM Accuses Russia of Wanting WWIII; Kiev Forces Block Rebel Town; Russia Issues Downbeat Economic Statement

Posted: 26 Apr 2014 08:56 AM PDT

Ukraine and Russia remain in the spotlight this weekend. Here are the top stories.

  1. Russia hiked interest rates 50 basis points on Friday accompanied with a warning about inflation and a sluggish economy.
  2. Russian Markets Have Worst Week Since Crimea.
  3. Ukraine's acting prime minister accused Russia of wanting to start WWII.
  4. Ukraine forces barricade the rebel stronghold of Slavyansk

Russia Issues Downbeat Economic Statement

The World Politics Journal notes Russia's central bank issues a downbeat statement on the Russian economy.
On Friday, April 25th, Russia's central bank raised its benchmark interest rate by 50 basis points to 7.5 per cent, giving higher inflation risks as a reason behind its decision.

'The probability of inflation exceeding the 5% target at the end of 2014 has increased substantially', the Russian central bank said in a statement.

Annual inflation stood at 7.2 per cent as of Monday, April 21st. However, the central bank estimates that inflation would not exceed 6 per cent by the end of 2014.

The Russian economy expanded 1.3 per cent in 2013, the slowest pace of growth since a 2009 recession. For comparison, the economy grew by 3.4% in 2012. The Bank of Russia said in a downbeat statement on the economy: 'Labour productivity growth is sluggish, while fixed capital investment continues to contract because of declining profits in the real sector, limited access to long-term financing in both international and domestic markets, as well as low producer and consumer confidence.

The Russian central bank predicts that the country 'will continue to witness a downward trend in economic growth' in 2014, adding 'Amid economic uncertainty and declining producer confidence there is a strong probability of a reduction in fixed capital investment. Combination of slower growth in real wages and a decline in household lending growth rates will have a dampening effect on consumer activity'.

Russian Markets Have Worst Week Since Crimea as S&P Cuts Rating

Bloomberg reports Russian Markets Have Worst Week Since Crimea as S&P Cuts Rating.
Russian bonds and stocks suffered their worst weekly rout since mid-March as the truce forged to ease tension in eastern Ukraine unraveled, fueling concern that President Vladimir Putin faces stiffer international sanctions.

Benchmark ruble bond yields climbed to the highest since March 14, prompting the Finance Ministry to abort plans to return to the local debt market on April 23, two days before Standard & Poor's cut Russia's credit rating to one level above junk. The central bank's surprise half-point interest-rate increase yesterday failed to stem the ruble's weekly retreat, the biggest among 24 emerging markets after South Africa's rand.

"The past few days have been particularly painful for Russian fixed income," Benoit Anne, the London-based head of emerging-market strategy at Societe Generale SA, said by e-mail yesterday. The failed debt auction "badly damaged investor confidence. In addition, the geo-political situation continues to deteriorate with a war of words and a tougher rhetoric employed between various parties," he said.

The Micex Index (INDEXCF) dropped 5.6 percent for the week, the most since the period ended March 14, the last trading day before the Crimean referendum that paved the way for Putin to annex the Black Sea peninsula. The yield on government bonds due February 2027 jumped 29 basis points yesterday to 9.65 percent, extending the weekly increase to 65 basis points, following the central bank's move to raise its key rate to 7.5 percent.

The ruble suffered its steepest weekly retreat against the dollar since the five days ended March 9, depreciating 1.2 percent to 36.0450 by 9:08 p.m. in Moscow yesterday. The currency, whose three-month implied volatility rose to an almost six-week high, slumped 8.8 percent this year, the most for an emerging-market currency after Argentina's peso.
Ukraine PM Accuses Russia of Wanting WWIII

The Financial Times reports Kiev Forces Blockade Rebel Town as Rhetoric Rises
Ukraine pursued its operation to flush out separatists in the east for a second day on Friday, surrounding the rebel stronghold of Slavyansk, as the interim prime minister accused Russia of "wanting to start a third world war".

Serhiy Pashynsky, acting head of Ukraine's presidential administration, said a decision had been made to blockade Slavyansk – which on Friday was still in the control of the pro-Russian "people's mayor" Vyacheslav Ponomarev – by positioning its security forces around the town.

A Ukrainian military transport helicopter, parked at an airport in nearby Kramatorsk where separatists are barricaded inside the town hall, exploded in a fireball on Friday after being hit by a sniper bullet, dealing a symbolic blow to Kiev's campaign to clear cities of rebels.

Ukraine's interior minister said law enforcement officials were taking a cautious approach in the crackdown, which continued amid fears of an imminent Russian military intervention . "The key principle in the antiterrorist operation . . . is minimising risk for the peaceful population," Arsen Avakov said.

Ukrainian officials described their crackdown as the "second stage" of an operation that began on Thursday. Their deliberation suggests Kiev is trying to avoid casualties that might provoke Russia to retaliate.

However, officials engaged in fiery rhetoric, capping a week that saw tensions between Moscow and Kiev rise to perhaps their highest level since Russia annexed Crimea in March.

"The world has not forgotten [the] second world war," Arseniy Yatseniuk, Ukraine's acting prime minister, said on Friday. "Russia wants to start a third world war."
Ukraine Handling Situation Well

Recent polls support the notion the regions want more political autonomy not outright independence.  If that's what the majority want, who I am I to judge differently? I would say the same thing if the regions wanted to rejoin Russia. Simply put, it is not my place or the US's place to judge what is in the best interest of people thousands of miles away, in a place most US citizens could not even find on a map.

For now, it appears Ukraine is handing the situation well.

A blockade may take a while to work, but anything that acts to reduce tensions is welcome.

Talk of World War III, is likely just that, talk. At least let's hope so.

Finally, with the Russian economy crumbling, rash escalation of sanctions may be counterproductive.
Russia may easily decide to shut off gas to Europe if pressured enough.

Instead, this may quietly blow away by November in the absence of serious policy mistakes by one side or another. In that regard, excessive US pressure is unlikely to help.

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

Damn Cool Pics

Damn Cool Pics


This Is How You Celebrate 420 The Right Way

Posted: 25 Apr 2014 07:54 PM PDT

Every year 4/20 is a huge holiday for pot smokers so if you're going to party on 4/20 you better make sure you do it right.














Congress Needs to Act on Minimum Wage

 
Here's what's going on at the White House today.
 
 
 
 
 
  Featured

Weekly Address: Congress Needs to Act on Minimum Wage

In this week's address, the President highlights small business owners across the country acting to raise wages for their workers, and calls on Congress to give America a raise so more hard-working Americans have the opportunity to get ahead.

Click here to watch this week's Weekly Address.

Watch: President Obama delivers the weekly address


 
 
  Top Stories

The Eggs They Are A-Rollin'

Sports were played, books were read, and eggs were rolled on Monday as the President and the First Lady welcomed more than 30,000 guests to the South Lawn of the White House for the 136th White House Easter Egg Roll.

Video player: The 2014 White House Easter Egg Roll

See more from the Easter Egg Roll, and make sure to check out President Obama's inspired reading of "Where the Wild Things Are."

READ MORE

540,000 Veterans and Military Spouses Hired

The First Lady and Dr. Biden visited Fort Campbell in Kentucky earlier this week for the Veterans Jobs Summit and Career Forum — and made some big announcements while they were there. First:

Video player: The 2014 White House Easter Egg Roll

On top of the more than half a million veterans and military spouses hired, FLOTUS and Dr. Biden announced a brand new online tool to help servicemembers and veterans find new careers.

READ MORE

The VP Heads to Ukraine

Vice President Biden traveled to Ukraine earlier this week for meetings with government leaders and to speak at the U.S. Embassy in Kyiv.

Video player: The 2014 White House Easter Egg Roll

"I came here to Kyiv, to let you know...that the United States stands with you," said the Vice President at the Embassy.

READ MORE

As always, to see even more of this week's events, watch this week's episode of West Wing Week:

Video player: West Wing Week

WATCH NOW


 

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vineri, 25 aprilie 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Top Tier Chinese Cities Discounting Property; Beijing Prices and Volume Down 11 Straight weeks

Posted: 25 Apr 2014 02:03 PM PDT

The Australia Macro Business Blog notes Tier 1 Chinese Cities Discounting Property
Prices and volumes are falling in Beijing and real estate agents are started to drum up sales by delisting homes listed at high prices. Lots of homes listed online now show price cuts, and volumes have picked up recently from depressed levels. Total listings are down about 50% in some parts of Beijing due to listings being removed.

Online Prices Falling Everywhere; Real Estate Agents Cut Prices 30% (网上随处可见降价房 北京中介三成房源进入降价通道)
"Two weeks ago the price fell 200,000 yuan," "6 hours ago the price fell 100,000 yuan," …… Yesterday, the sites of real estate companies show homes in the east, south and west Third Ring large area, about thirty percent of listings are marked with The green arrow indicates the listings with price cuts have almost quadrupled since the period before Spring Festival. Such a situation from two weeks since the beginning of April, the city is currently at this largest second-hand housing sales real estate agent are starting to tell homeowners who ask for high listing prices, "no." Every home exceeding the average price for the area is being persuaded one by one to cut their asking price, otherwise they will be removed from the website, "off the shelf."

Reporter survey found that many hot spots in the district, real estate agencies have taken as much as 40% of the properties off the market, resulting in an eyeful of lower prices online.
In Guangzhou, developers only paid a premium of 1.4% on the "star plots" at a recent government land auction. In Beijing, prices and volume have been sliding for 11 straight weeks.
Hugh Pavletich posted the following links as comments to the above article.

Housing projects in China in limbo due to debt-ridden developers

Does China's Q1 GDP Figure Rule Out A Hard Landing?

New Zealand's Bubble Economy Is Vulnerable

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

Reader Question on Shadow Banking and Gold Buying in China

Posted: 25 Apr 2014 11:28 AM PDT

Reader Jason pinged me with a MarketWatch article Will China Drop Gold Next? by writer Craig Stephen.

Stephen notes that for the first time, Chinese demand topped 1,000 tonnes, reaching 1,176 tonnes after a 41% year-on-year gain, not including central-bank buying and that "investors have done well in the past with a simple strategy of buying what China was buying."

Stephen also cautioned about a "worrying explanation" that "a big chunk of China's gold demand is the spectacular growth in China's shadow banking, for which that the government is now trying to apply the brakes."

If so, Stephen claims that "raises the possibility of a gold crunch, depending on how the People's Bank of China flushes out the yuan carry trade by orchestrating a weakening in the Chinese currency."

Does the Story Make Any Sense?

Reader Jason wonders "if the story makes any sense."

The answer is "Yes" and "No".

Given what happened with copper, no one should be surprised if shadow banking operations in China used gold for the same purpose. But does that mean or imply a "possibility of a gold crunch"?

For that, the answer is no.

Shadow Banking Demand Story a Big "So What?"

Here are comments from Pater Tenebrarum at Acting Man, via email
This story is a big 'so what'?

That China buys a few hundred tons more or less is completely irrelevant to the gold price. People continue to make the fundamental mistake of confusing gold with an industrial commodity. You can see it already in the very first sentences: "Investors have done well in the past with a simple strategy of buying what China was buying. So earlier this year, things were looking up for gold when it was revealed that China had swept past India to become the world's biggest buyer in 2013."

It is completely irrelevant if Chinese gold imports 'swept past India's'. The most relevant factor in gold pricing are macroeconomic drivers and reservation demand. The total gold supply amounts to something close to 180,000 tons by now - which means that the total global gold demand is also for 180,000 tons.

In what way does a few hundred tons here or there matter? The answer is "it doesn't".
I have covered this type of question before. Please see Plague of Gold Bears Now Say "Gold Unsafe at Any Price"; What's the Real Long-Term Driver for Gold?.

Also read I suggest an interview on Gold Switzerland with Robert Blumen: "What's really key for the price formation of gold?"

Time and time again, you hear talk of demand in India or China going up or down as if it is meaningful. It isn't. You also hear about the price of physical gold vs. paper gold. I suggest you ignore that talk as well.

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

Merkel Tiptoes Through the Tulips; Russia Debt Cut to One Notch Above Junk; Is Anyone in Control?

Posted: 25 Apr 2014 09:52 AM PDT

Citing the tense geopolitical situation between Russia and Ukraine, the S&P Cut Russia Debt Rating to Step Above Junk and warned further downgrades may come.
S&P cut Russia's rating one step to BBB-, it said in a statement today. The grade, on par with Brazil and Azerbaijan, has a negative outlook. S&P last downgraded Russia in December 2008. Russia's currency and bonds fell.

"The tense geopolitical situation between Russia and Ukraine could see additional significant outflows of both foreign and domestic capital from the Russian economy and hence further undermine already weakening growth prospects," S&P said in the statement.

The downgrade was expected by investors and won't significantly change their behavior, Russian Economy Minister Alexei Ulyukayev told reporters today.

Russian President Vladimir Putin told reporters in St. Petersburg yesterday that "sanctions are not effective in the contemporary world and are not bringing the desired outcome."

"The decision is partially expected -- Russia is almost in recession, even without sanctions," Dmitry Dorofeev, a money manager at BCS Financial group, said by phone.

S&P said it may lower the rating further "if tighter sanctions were to be imposed on Russia and further significantly weaken the country's net external position."
Threats of More Sanctions

The Financial Times reports Angela Merkel Warns Russia it Faces Further Sanctions.
"I spoke to the Russian president this morning and made clear again that on the one hand Ukraine has taken a whole series of steps to implement the Geneva accord but on the other side I see no Russian backing for the accord which would of course have an effect on the separatists in Ukraine," Ms Merkel said.

The German chancellor made it clear that any additional measures would be an extension of the current financial sanctions, not the introduction of full-blown trade sanction, which include energy.
Merkel Tiptoes Through the Tulips

By making it clear the threats do not involve full-blown trade sanctions, Merkel effectively chose meaningless tiptoe steps that cannot possibly accomplish much. Then again, a full blown trade war will not accomplish much either, except perhaps quickly sink Europe back into recession.

If Russia shuts off gas to Europe, everyone loses. Merkel knows that, so does UK Prime minister David Cameron.

The only person who doesn't know or doesn't care is president Obama.

Is Russia in Control of the Separatists?

Merkel stated "Russia has the power, or could have the power, to bring the separatists on to a peaceful path of discussions about the constitution and preparations for elections".

Is that necessarily true? One can make a case that Russia spawned these uprisings. Some claim Russia even supplied the weapons.

But does that mean Russia is in control of the situation?

Recall that Denis Pushilin, the head of the self-declared Donetsk People's Republic, told journalists in regards to the now broken peace accord, that "Russian foreign minister Sergei Lavrov did not sign anything for us, he signed on behalf of the Russian Federation."

The only thing Russia clearly has control over, is whether or not to invade if Ukraine responds with more force.

And if Russia does invade, the Ukrainian army will be no match. Let's hope it does not come to that.

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

Damn Cool Pics

Damn Cool Pics


Epic Pictures Of Wins And Fails At The Beach

Posted: 25 Apr 2014 10:39 AM PDT

You always hope that a trip to the beach is going to be a good time, but unfortunately, that's not always the case.