What are the Swiss doing selling dollars? I don’t have an answer to this question. But, I thought I would posit it because a reader tipped me off to a development via the Blog Alea:
Happy Groundhog Day. By the way, the word on the street is that Germans who came over to Pennsylvania wanted to use hedgehogs in this mythical are-we-going-to-have -six-more-weeks-of-winter ritual. But, because there are no hedgehogs, they used groundhogs. This could be totally made-up rubbish, but that’s my contribution.
By, the way Punxatawney Phil saw his damn shadow. Winter is in full effect, as Londoners will attest.
The ISM Manufacturing Survey came out. The PMI index was 35.6, up from 32.4 in December. It was bad (50 is the tipping point between recession and growth), but it’s not all bad. There were two industries with growth: textiles and petroleum. Moreover, the declines in new orders, productions, backlogs, etc. were not accelerating the way they were last month. Perhaps a bottom is forming here – especially on pricing.
The statistics coming out of Japan have been truly awful of late. In my last post, you saw a small video connecting reduced spending in the U.S. to Japan. However, I need to be more explicit about how things are unraveling in Japan. The industrial production number that was released this past Friday was a wake-up call that Depression has arrived, at least in Japan. Industrial production fell a stunning 9.6%, the most since statistics began in 1953. This is a figure that translates into a GDP of 10% — and this in the world’s second largest economy.
U.S. consumer spending contracted more than anticipated in December 2008, declining by 1.0%. However, this number is a look into the past and does little to help predict how spending will trend going forward.
Everyone should be concerned about the increasing tone of trade friction in the global economy. While Chinese Premier Wen and U.K. Prime Minister Gordon Brown are setting a positive tone in London today regarding bilateral trade agreements, the U.S. is doing its best to put off trading partners. In fact, in Canada, there seems to be a lot of rancor regarding the ‘Buy America’ provision now being attached to the U.S. stimulus package.
A survey in China has determined that job losses amongst migrant workers are three times worse than had been reported. In fact, 20 million workers in China have already lost employment.
In 2008, the FDIC successfully shut down 25 banks. This year it has already been six. To date, the FDIC had generally been able to find a buyer of one of the failed banks’ deposits. After all, outside of IndyMac, the large majority of the failed banks had assets under $1 billion. However, the FDIC failed to find a bank to take over the assets of MagnetBank, one of three FDIC seizures this past Friday.
Politicians in Washington D.c. have cooked up a nice way to re-create the mistakes of the Great Depression by attaching a ‘Buy American’ provision onto the stimulus bill making its way through Congress. Apparently the Canadians and Europeans have already voiced their concerns, with the Europeans threatening to retaliate.
This is pretty funny actually (Hat tip Michael Turk).
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Evidence that companies think that much of the downdraft in the economy represents a structural shift to a lower revenue base instead of a cyclical shift comes from the enormous goodwill writedowns companies are taking. Case and point is the $34 billion writedown by ConocoPhilips which I highlighted (Note of disclosure: I am fairly bullish on energy socks). If companies […]