Last Effort to Avert Greek Election Do-over in June

May 15, 2012

Released European data overnight were mixed.  The United States releases many economic indicators as well today.  German Chancellor Merkel and French President Hollande meet today, and there is a meeting too of EU finance ministers.

The dollar has lost 0.3% against the Australian dollar, 0.2% versus the loonie and 0.1% against the yuan, euro and Swiss franc.  The dollar gained 0.3% against sterling, 0.2% relative to the kiwi and 0.1% versus the yen.

Share prices fell 0.8% in Japan and South Korea, 0.7% in Australia and 0.6% in New Zealand but firmed 0.7% in India, 0.4% in Singapore, 0.3% in Taiwan, and 0.1% in China. In Europe, the Paris Cac, German Dax and British Ftse have recouped 1.0%, 0.5%, and 0.3%.

The 10-year British gilt and German bund yields are up three basis points apiece, while the 10-year Japanese JGB is steady.

Gold and oil prices edged down 0.2% and 0.1% to $1558.50 per ounce and $94.69 per barrel.

First-quarter GDP data for many European countries were released.

  • Euroland GDP was unchanged on quarter as well as versus the first quarter of 1Q11.  Drops of 0.2% had been anticipated.
  • German GDP advanced 0.5%, much more than assumed after a 0.2% drop in 4Q11.  GDP was also 1.2% higher than in 1Q11.
  • Portuguese GDP fell for a sixth straight quarter but only by 0.1%.  In on-year terms, GDP contracted 2.2% in Portugal.
  • The rate of Dutch contraction also slowed.  GDP fell 0.2% following declines of 0.4% in 3Q11 and 0.7% in 4Q11.  GDP was 1.3% lower than in 1Q11.
  • The French economy stagnated.  GDP was unchanged from 4Q11 and posted a smaller 0.3% on-year advance after climbing 1.2% between 4Q10 and 4Q11.
  • GDP in the first quarter rose by 1.3% in Finland (2.9% on year) and 1.1% in Latvia (5.5% on year).  GDP rose 0.8% in Slavakia and Lithuania.
  • But GDP plunged 1.3% in Hungary and 1.0% in the Czech Republic.  These drops far exceeded expectations.
  • Italian GDP sank 0.8% in 1Q after a 0.7% drop in 4Q11 and and a 0.2% dip in 3Q11.  GDP was 1.3% weaker than in the first quarter of 2011.
  • Spanish GDP fell 0.3% on quarter and 0.4% on year.
  • GDP in Greece posted an eighth straight on-year decline, decreasing 6.2% between 1Q11 and 1Q12.
  • GDP was unchanged last quarter in Bulgaria and off 0.1% in Romania.  Romania’s report confirmed a recession, being the second drop in a row.
  • British GDP (minus 0.2% on quarter and unchanged on year) also confirmed the onset of recession.
  • Belgian GDP posted positive growth of 0.3% from 4Q11 and 0.5% from a year earlier.
  • Finnish GDP increased by 1.3% on quarter and 2.9% on year, but GDP in Cyprus slid 0.3% from 4Q11 and by 1.4% from 1Q11.

Whereas German GDP performed better than projected, the ZEW index of investor sentiment toward Germany and the euro area as a whole produced greater deterioration in May than expected.  The German expectations index retreated to a reading of 10.8 from 23.4 in April, while Euroland scored a negative 2.4 after readings of 11.0 in March and 13.1 in April.  The euro area current situation index also worsened, scoring negative 60.2 after minus 49.0 in April, while the German index for current conditions rose 3.4 points to 44.1.

The British merchandise trade deficit of GBP 8.56 billion in March was similar to February’s GBP 8.59 billion shortfall.  The goods and services deficit narrowed, however, to GBP 2.74 billion from GBP 2.95 billion.  Britain’s index of leading economic indicators rose 1% in March, but the coincident index edged only 0.1% higher.

French consumer prices on a harmonized basis rose 0.2% in April and 2.4% from a year earlier.  Core inflation was only 1.4%.  Danish producer prices increased 0.2% on month and 2.2% on year in April.  Norway’s trade surplus in April of NOK 38.4 billion was 17.3% narrower than in March.  The Dutch March trade surplus of EUR 4.1 billion was 43% bigger than in February.  Despite a 0.6% monthly increase, Hungarian industrial production was 1.6% smaller in March than a year earlier.

Japanese consumer confidence posted a 40.1 reading last month, same as in March but up from 33.4 in April 2011.  Chinese foreign direct investment was 2.4% smaller in January-April than a year earlier.

Retail sales in Singapore posted advances in March of 1.6% from February and 9.1% from a year earlier, easily surpassing street expectations.  South Korean import prices fell 1.0% in April (+1.7% on year), while export prices went up 0.6% on month and 2.0% on year.

New Zealand retail sales were 2.5% lower last quarter than a year before.  Australian new motor vehicle sales dropped 0.7% in April but posted stronger on-year growth of 7.3%.  Minutes from the Reserve Bank of Australia’s May 1 meeting identified many economic depressants as justification for the larger-than-expected 50-basis point cut made in the Official Cash Rate.  Some of these were the elevated Aussie dollar, which has retreated since that action, fiscal cutbacks, fragile world financial markets, and a soft domestic housing market.

The U.S. has a busy day ahead.  Besides the usual weekly chain store sales figures, there will be releases of retail sales, consumer prices, the Empire State manufacturing index, business inventories, the National Association of Home Builders index, and the Treasury Department’s capital flow figures.  Treasury Secretary Geithner speaks, and Republican primaries are taking place in Oregon and Nebraska.

Copyright 2012, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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