News Links: European and Chinese Manufacturing Stalls, as US Advances
- ISM – ISM Report – November 2011 Manufacturing ISM Report On Business®
"The PMI registered 52.7 percent, an increase of 1.9 percentage points from October’s reading of 50.8 percent, indicating expansion in the manufacturing sector for the 28th consecutive month. The New Orders Index increased 4.3 percentage points from October to 56.7 percent, reflecting the second month of growth after three months of contraction. While the Prices Index, at 45 percent, increased 4 percentage points from the October reading of 41 percent, prices of raw materials continued to decrease (registering below 50 percent) for the second consecutive month. Respondents cite continuing concerns about the general economic environment, government regulations and European financial conditions, but are cautiously more optimistic about the next few months based on lower raw materials pricing and favorable levels of new orders."
- "The moral superiority of the Germans" – Marginal Revolution
I believe we need to be exposed to this moral perspective, and this intellectual Turing test, as a bracing slap in the face, as a wake-up call, and I see our unwillingness to do anything with this perspective, other than summarily dismiss it as a kind of tragic juvenile moralizing, as a sign of our own decline, right here in the USofA.
- Simon Johnson: The Huntsman Alternative – NYTimes.com
Every opportunity should be taken to make the megabanks smaller, and plenty of tools are available, including hard size caps and a punitive tax on excessive size and leverage (with any proceeds from this tax used to reduce the tax burden on the nonfinancial sector, which will otherwise be crushed by the big banks’ continued dangerous behavior). The goal is simple, as Mr. Huntsman said in his recent Wall Street Journal opinion piece: make the banks small enough and simple enough to fail.
- Four Hundred Dow Points Aren’t What They Used to Be Amid Record Volatility – Bloomberg
"We had the worst Thanksgiving week since the ’30s and then you turn around, you have a 8 percent rally in three days,” William Nichols, senior managing director in equity trading at Cantor Fitzgerald LP in New York, said in a phone interview today. ”Everything is great in terms of this nice move, but you look year-to-date, the Dow is up 3 percent, the S&P is still down and the U.S. is outperforming other markets.” Investors who ignore the swings and focus on record corporate earnings may be better off, David Kelly, who helps oversee $394 billion as chief market strategist for JPMorgan Funds in New York, said in a phone interview.
- Factories stall worldwide, U.S. jobless claims rise | Reuters
Manufacturing activity is contracting across Europe and most of Asia, data showed on Thursday, and a Chinese official declared that the world economy faces a worse situation than in 2008 when Lehman Brothers collapsed.
- Greeks strike against budget – The Irish Times
Greek unions are holding a 24-hour general strike today in an attempt test the resolve of a new national unity government.
- ECB hints at EU action | Investing | Financial Post
The new head of the European Central Bank signalled on Thursday it was ready to take stronger action to fight Europe’s debt crisis if political leaders agree next week on much tighter budget controls in the 17-nation eurozone.
- Eurozone manufacturing could prompt ECB rate cut – Telegraph
The European Central Bank is likely to cut eurozone interest rates next week after a report from the region’s manufacturing sector showed a sharper fall in activity, economists said.
- The terrible toll of recession: 47,000 Irish firms closed – Irish, Business – Independent.ie
FIVE companies went to the wall every day in Ireland in 2011, shocking new figures showed today. In the first 11 months of this year, over 1,800 companies closed, leaving behind €1.15bn in debts, business intelligence analyst Vision-net revealed.
- UK manufacturing fall stokes recession fears – Telegraph
The outlook for British manufacturing darkened in November as falling output and rising job losses heightened fears that the economy is in store for another recession.
- The World from Berlin: ‘Central Banks’ Coordinated Move Has Solved Nothing’ – SPIEGEL ONLINE – News – International
Global stock markets on Wednesday were euphoric after the major central banks around the world made it easier for banks to access dollars. But the euro-zone debt crisis rages on nonetheless. At the most, say German commentators, Wednesday’s move merely buys some time — but not much.
- Wall Street Pushed Fed on Europe – WSJ.com
Wall Street executives, in a private meeting with a top Federal Reserve official in late September, recommended a coordinated effort by central banks to remedy the European financial crisis, according to Fed documents received in an open-records request. The meeting, led by Louis Bacon, founder of hedge fund Moore Capital Management, preceded a joint action Wednesday by the world’s major central banks, which banded together to provide liquidity to the markets through cheap U.S. dollar loans.
- French and Spanish bonds rally in auction – Stocks & Markets, Business – Independent.ie
FRENCH and Spanish bonds rallied today as did the euro after the governments of both countries sold debt. The yield, or interest rate, on Spain’s five-year bonds fell to 5.58pc while the yield on France’s 10-year bonds fell to 3.18pc. Spain raised €3.75bn in the auction while France raised €1.57bn.
- The Truant Muse | Why Now? Why Did Central Banks Bail Out European Banks?
the ECB was planning to end that dollar-lending program – the one that started in May 2010 – as soon as next Wednesday. Next Wednesday! When this week everyone is talking about a potential breakup of the Eurozone! Can you imagine what a disaster it would have been for the ECB to stop lending in dollars just as things were getting really, truly ugly for European banks? The scheduled end of the ECB’s dollar-lending program may not be the complete answer to why the central banks moved when they did – but it would make an enormous amount of sense that it played a part.
- American Airlines – Learning From Its Rivals’ Mistakes – Deal Journal – WSJ
Bankruptcy advisers have a perennial complaint about troubled companies: They wait until they have run out of money to seek Chapter 11 protection, putting them at the mercy of lenders and harming their chances of a successful reorganization.
- China vice finmin warns crisis worse than 2008 | Reuters
Global crisis worse than in 2008, vice finance minister says. Governments today have limited policy room compared with 2008
- Moral hazard will result from ECB bond buying – FT.com
In providing advances to the banking system to stay a panic, a central bank should follow two rules. "First, that these loans should only be made at a very high rate of interest. This will operate as a heavy fine on unreasonable timidity and will prevent the greatest number of applications by persons who do not require it . . . "Secondly, that at this rate these advances should be made on all good banking securities and as largely as the public ask for them."
- Stocks Soar in Biggest Rally Since March 2009 – MarketBeat – WSJ
Today was the kind of day that made or ruined the month for a lot of portfolio managers. Anybody who was short the market had their day/week/month ruined today. Anybody who was long suddenly looks like a genius.
- FT Alphaville » More on the dollar crunch and the liquidity drop
By no means does this address all of the issues facing markets (and we remain worried EU policymakers drop the ball) but it removes one roadblock and signals that perhaps more help is on the way. It is also, from a very high level stand point, a vote of confidence by the Fed that they view a euro breakup risk as low because an sort of increase in the FX line usage will result in more Fed exposure to Europe.
- Europe’s shrinking money supply flashes slump warning – Telegraph
All key measures of the money supply in the eurozone contracted in October with drastic falls across parts of southern Europe, raising the risk of severe recession over coming months.
- Fed saves Europe’s banks as ECB stands pat – Telegraph
Stripped to essentials, America is once again having to rescue Europe from itself.
- Britain has entered second credit crunch, confirms Downing Street – Telegraph
Britain has entered a second credit crunch, Downing Street said on Wednesday night, as America was forced to intervene to stop the eurozone crisis leading to a global financial collapse.
- BBC News – Canada exports drive GDP growth to 3.5%
Canada’s annualized GDP grew by 3.5% in the third quarter of 2011, exceeding growth expectations. The gain was the biggest quarterly growth since 2004, but both domestic demand and personal and government spending grew at a slower pace.
- Save the euro in 10 days or see the EU disintegrate, ministers are warned | Business | The Guardian
Olli Rehn, EU economic affairs commissioner, says the choice is between deeper integration and Europe falling apart
- Central bank action: stunning move highlights sense of desperation | Business | The Guardian
European governments are desperately seeking a lender of last resort as sovereign debt exposure fears grow