The Big Picture |
- Discuss: Average Tax Rates for the Highest-Income Taxpayers
- 10 Monday PM Reads
- Fusion Research – Equity Market Review
- Europe/Asia
- Michael Belkin Predicts 40% Stock Market Drop
- Nobel Winners in Economics: Geographic Dispersion
- Felix Baumgartner’s Supersonic Freefall
- A Look at Financial Services Ad Spending & Marketing
- Sept retail sales better, Oct NY mfr’g worse
- Better Chinese data
| Discuss: Average Tax Rates for the Highest-Income Taxpayers Posted: 15 Oct 2012 04:30 PM PDT Average Tax Rates for the Highest-Income Taxpayers, 1945-2009 > Source: |
| Posted: 15 Oct 2012 01:30 PM PDT My afternoon train reading:
What are you reading?
Strong Sales of Electronics and Appliance Retailers |
| Fusion Research – Equity Market Review Posted: 15 Oct 2012 01:00 PM PDT |
| Posted: 15 Oct 2012 12:55 PM PDT Speaking in Singapore over the weekend, the German Finance Minister Schaeuble said that Greece will not go bankrupt. The comment is somewhat semantic as they already defaulted on private sector debt but the newly issued bonds are rallying to new highs as Schaeuble himself wants to get paid back. The issue maturing in 2023 is at .32 on the euro up from .18-.19 after the debt exchange. The lack of a possible ‘Greek event’ with the troika debating the next tranche has European markets trading better but Spain is still leaving everyone hanging and its bonds are lower. The Shanghai index traded down and commodities are flat notwithstanding a 9.9% increase in Sept exports, almost twice what was expected even though imports were up 2.4% only in line with estimates. Exports specifically to Europe, China’s largest trading partner, fell 10.7%, down for a 4th month but were more than offset by strong exports to Asia. CPI was up 1.9% y/o/y but PPI fell 3.6% with both in line. China’s FX reserves rose to a 3 month high at $3.29T and M2 growth was 14.8% y/o/y, the most since June ’11. Due to an administrative increase in retail diesel prices to reduce their budget deficit, wholesale inflation in India rose to the highest since Nov ’11 at 7.8% y/o/y. -Peter Boockvar |
| Michael Belkin Predicts 40% Stock Market Drop Posted: 15 Oct 2012 12:53 PM PDT Hedge Fund Consultant Michael Belkin spoke at The Big Picture conference, predicting a 40% stock market drop in the coming 12-15 months. Belkin joins Sam Mamudi to discuss his case for a market drop.
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| Nobel Winners in Economics: Geographic Dispersion Posted: 15 Oct 2012 11:30 AM PDT
The Sveriges Riksbank Prize in Economic (2012 Nobel Prize in Economic Sciences) was awarded to Alvin E. Roth and Lloyd S. Shapley today for their work on matching supply and demand for everything from single men and women to organ donors and their recipients. Americans have won 68% percent of all Nobel winners for economics, while the U.S. accounts for about 21.6% of global GDP. The U.K. ranks second with 11.8% (3.5% world output). Euro nations have provided 8.8% of Laureates. Sixty nine people, with an average age of 62, won the 43 prizes between 1969 and 2011.
See also: All Nobel Prizes organized by country |
| Felix Baumgartner’s Supersonic Freefall Posted: 15 Oct 2012 09:00 AM PDT After flying to an altitude of 39,045 meters (128,100 feet) in a helium-filled balloon, Felix Baumgartner completed a record breaking jump for the ages from the edge of space, exactly 65 years after Chuck Yeager first broke the sound barrier flying in an experimental rocket-powered airplane. Felix reached a maximum of speed of 1,342.8 km/h (833mph) through the near vacuum of the stratosphere before being slowed by the atmosphere later during his 4:20 minute long freefall. The 43-year-old Austrian skydiving expert also broke two other world records (highest freefall, highest manned balloon flight), leaving the one for the longest freefall to project mentor Col. Joe Kittinger. Short version ~~~ Longer version |
| A Look at Financial Services Ad Spending & Marketing Posted: 15 Oct 2012 08:37 AM PDT Fascinating set of data-rich charts and tables (and a worthwhile longer read) in this Ad Age report covering Biggest Ad Spenders, Fading of TV Ads, Gross Market Share, and how companies are banking on the Web. A few select charts & tables:
click for ginormous graphics
Source: Download the full PDF here: |
| Sept retail sales better, Oct NY mfr’g worse Posted: 15 Oct 2012 08:02 AM PDT Retail Sales in Sept were better than expected headline and down to the core rate. Sales rose 1.1% m/o/m headline, 9% ex auto’s and gasoline and .9% ex auto’s, gasoline and building materials vs estimates of up .8%, .4% and .4% respectively. Also, Aug was revised up slightly. Sales were up almost across the board with only a .2% drop in department stores. Motor vehicles/parts were up 1.3% and electronics were higher by 4.5%. Building materials were up for a 3rd month and clothing sales rose for a 5th straight month. Bottom line, with personal spending being most of the US economy, this data point is obviously important and the better results will lead to an uptick to Q3 GDP estimates, all else equal, from the current median of 1.8%. Separately, the 1st Oct industrial figure, the NY mfr’g survey, was -6.2, 2.2 pts worse than expected but up from -10.4 in Sept. It is the 3rd month in a row of contraction with New Orders negative for a 4th month at -9.0. Backlogs fell to the weakest since Nov’ 10 and Employment went negative for the 1st time since Nov ’11 at -1.1. The Avg Workweek fell 3 pts to -4.3. Prices Paid and Received fell a touch. The overall Business Conditions 6 month outlook fell to 19.4 from 27.2 in Sept which jumped from 15.2 in Aug. Bottom line, ISM rose back above 50 in Sept but today’s NY reading, if followed by other regionals, imply it may not stay or at best be barely above. |
| Posted: 15 Oct 2012 07:10 AM PDT Governor Stevens of the Australian Central Bank, the RBA, states that he has room to “adjust” interest rates to respond to a slowing global economy. In other words, rates will be reduced further. You could argue that the RBA has been behind the curve in cutting interest rates – certainly my view. Furthermore, the government is talking about balancing its budget, which seems pretty silly, gven the weaker economic conditions GDP – must have had too much testosterone. The A$ is flat to marginally lower today; Inflation in China came in at +1.9% in September Y/Y, in line with estimates and below August’s 2.0%. Producer prices declined by -3.6% Y/Y, the seventh consecutive monthly decline and the most since 2009. However, consumer prices are expected to increase in coming months as food prices rise, causing additional problems for policy makers. The Xinhua news agency (the mouthpiece of the administration) reports that the country has a “relatively large room” to use monetary and fiscal policies as compared with other countries ie stimulus is coming boys and girls;
China’s growth of forex reserves is slowing – reserves rose marginally to US$3.29tr at the end of September, from US$3.24tr at the end of June. I would expect that China’s forex reserves have neared a peak and will start to decline (slowly) in a few Q’s time. The slowing growth of reserves will help reduce the pressure to appreciate the Yuan; Chinese September M2 came in higher than expected at +14.8% and importantly has been on a steady increase throughout the year. New loans came in weaker than the Yuan 700bn expected at Yuan 623bn (Yuan 6.7tr YTD), though the target of Yuan 8.5tr for the current year looks achievable (Yuan 7.5tr last year); September Chinese exports came in +9.9% Y/Y, while imports were +2.4% higher. However, the larger than expected increase in exports was due to shipments being made ahead of the week long holiday. Chinese manufacturers/exporters are still facing significant problems; Inflation in India remains a problem, increasing to 7.81% in September (a 10 month high) and higher than forecasts of 7.70% and 7.55% in August. A rise in diesel prices, due to the reduction in subsidies, was the main reason for the increase. Cant see the RBI cutting rates at the next meeting on 30th October, though the RBI will continue to provide liquidity to the markets; President Putin’s United Russia party won all 5 races for governors and 6 local legislative elections in a low voter turnout election. Well, what else would you expect. However, there does not seem to be the same allegations of widespread vote rigging this time around, though its early days; Greek press reports suggest that the Troika and Greek officials remain in active talks over the E13.5bn of austerity cuts demanded by the Troika. Basically all talk, but little action. The Greeks want to conclude the deal ahead of the EU Heads of State Summit on the 18/19th October – extremely unlikely – probably in November. However, will the “deal” be implemented by the Greeks?. Reports suggest that the Troika has concluded that Greece needs 2 more years to complete its reforms, which will involve a further E30bn to be provided by its creditors. A 3rd bail out package – cloud cuckoo land, boys and girls. I continue to believe that Greece will default and will exit the Euro. Can’t see any alternative; Portugal is set to announce its 2013 budget today. The country has been imposing austerity measures in earnest, though its budget targets (unlike Ireland) had to be revised higher – to 5.0% from 4.5% for this year, but it looks as if the country will not make the higher target. However, Portugal’s current account deficit should decline to 3.0% this year, from around 10% some 2 years ago. In addition, exports are rising by around 10% per annum, with unit labour costs falling by 3.75% this year. However, in spite of raising taxes, tax revenue is down -2.4% in the year to August. Its the effect of that negative fiscal multiplier, that the IMF has raised and which the EZ still has not figured out. The country is slowly on the mend, but talk of further austerity (likely, though silly) is certain to create social tensions and civil disorder, unlike previously, when the country “accepted” the need for cuts. A national strike has been called for November 14th. GDP is expected to decline by -3.0% this year and by at least 1.0% (likely higher) next. Debt to GDP will rise to around 125%; US retail sales rose by +1.1% in September, higher than the +0.8% expected, though lower than Augusts upwardly revised +1.2%. Ex autos retail sales rose by +1.1%, the highest since January and above the +0.7% forecast; Manufacturing contracted in in New York region in October for the 3rd straight month. The Empire State manufacturing index came in at -6.16, worse than the -4.0 expected. The employment index came in at -1.08, as opposed to 4.26 in September. New orders declined by less at -8.98, as opposed to -14.03 previously. Prices paid were 17.20, as opposed to 19.15. The data is in line with other regions;
Outlook Asian markets closed mainly higher, ex China. European markets are happier today – they are up some +0.5%+. Chinese 3rd Q GDP numbers are to be released on Thursday, which will be closely watched. US markets have opened some +0.2% higher. The Euro, well it’s trading at US$1.2960. Gold is US$1743, with oil (November Brent) at US$114.61. Huge number of comments on my weekends piece. Will respond next weekend. Flying back to Ireland tonight, after a great trip to New York. Just want to thank all my friends for giving me such a great time over here. Finally, the outlook looks gloomy, but I’m not at all ready to throw the towel in yet. Still believe there will be positive policy action in China, in coming months and, quite probably in the EZ, as well, though I always have to remind myself that they are the EZ, after all. Kiron Sarkar 15th October 2012 |
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