- that Chinese manufacturing is slowing at a time when shipping rates apparently are very low (see article on Chinese container traffic referenced later in this Newsletter); and,
- this can be argued to imply that European and U.S. consumers are paying prices at retail that are lower than they would be in more buoyant markets – yet when viewed from 20,000 feet those prices seem not to be enticing retail consumers to buy. This, of course, assumes that the Walmarts of the world pass shipping cost savings on to customers – which may be an aggressive assumption.
Topical Reference:
World shipping crisis threatens German dominance as Greeks win long game, from
The Telegraph, August 13, 2012 – reading time 2 minutes.
Eurozone >> Spain: Spain: where there is smoke, usually there is fire
Why read: Because October is coming closer, and Spain is said to then face debt repayments of over 30 billion euros.
Commentary: I suggest you focus on denials made Friday by a representative of Spain’s Government, who is reported as confirming there are no on-going negotiations for any ‘bailout program’ related to Spain other than the 100 billion euro Spanish banking rescue loan from the eurozone.
My comments:
- it is interesting that anyone bothered to make such a denial, particularly when the same spokesperson is reported as conceding that ‘political and technical talks over the crisis were going on all the time with Spain’ – the question of course left hanging is whether the crisis referred to is the broader Eurozone crisis, or the crisis as it applies specifically to Spain; and,
- why make the effort to deny negotiations are ongoing. Whether or not discussions are characterized as ‘negotiations’, I can’t imagine it being credible to suggest that the Spanish Government and the governments of Germany and other Eurozone countries are not in ongoing discussions with respect to the financial difficulties that currently plague the Eurozone. That clearly includes Spain’s ongoing financial and banking issues. If they are not in such discussions in my view that would be cause for serious head-shaking given what appears to be the ongoing sand flowing through the Eurozone’s hourglass.
I suggest you read the referenced article and reach your own conclusion as to credibility of this denial.
Topical Reference:
Spain denies negotiations on sovereign rescue, from
The Globe and Mail, from Agence France-Presse, August 24, 2012 – reading time 2 minutes.
Financial Markets: Are hedge funds holding historic cash amounts?
An article late last week suggests that hedge funds (or at least some hedge funds – the article lacks clarity) currently are holding historic levels of cash in circumstances where they:
- are concerned that the ‘big three’ current world economic issues (my words) – the Eurozone debt crisis, the so-called U.S. fiscal cliff, and China’s slowdown – will cause a “2008-like reaction around the globe”; and,
- continue to collect 2% annual fees on that cash being held – generating on the cash portion of their portfolio holdings what is likely to be a negative annual return for those invested in a fund holding significant cash.
While this is interesting, and worth noting if you trade or invest in the financial markets, the article unfortunately does not go to the ‘next step’ and attempt to quantify what percentage or ‘range of percentages’ of total amounts under administration that the hedge funds currently are holding in cash. If the number is, say, 5% that is ‘no big deal’. On the other hand if the number is 50% that would be ‘a huge deal’ – and a very clear indicator of current financial markets distrust on the part of the hedge funds. At least as I see things.
I have been unable to find any (what I consider to be) meaningful study or studies that purport to quantify the amount of cash currently being held by hedge funds. If you are aware of any such study please forward the URL to me at
info@stockresearchportal.com.
Topical Reference:
Hedge funds are betting on disaster, from
CNNMoney, Maureen Farrell, August 23, 2012 – reading time 3 minutes.
Brief Commentaries prompted by world headlines (collective reading time 2 minutes)
World >> Depression: Will it come to America, and will every country follow?
Read a report on the views of Richard Duncan, former World Bank economist and predicative author of:
- The Dollar Crisis (2002) where he is said to have predicted the 2008 financial crisis; and,
- The New Depression (2012).
Even though depression is not something any thinking person should want to have to deal with, that is not to say that it ought to be simply put in a dark corner and be disregarded as one possible economic outcome in America, some Eurozone countries, or for that matter the world. This article is simple, to the point, and you ought to read and think about it.
You might also consider
buying Mr. Duncan’s latest book, and think about the ideas he expresses there.
Topical Reference:
If U.S. enters depression, ‘world will follow’, former World Bank economist warns, from
The Financial Post, John Greenwood, August 27, 2012 – reading time 3 minutes.
Asia >> China >> Japan: Acceleration of decelerating economic news?
You might want to read two articles from Reuters this morning:
- the first deals with BASF, the world’s largest chemical company, reporting order slowdowns in China; and,
- the second discusses the Japanese view of what it sees as global economic slowdown.
Importantly, it strikes me as I review today’s articles that there seems to be an acceleration in the number of articles reporting economic problems and slowdowns. That could, of course, be influenced by this being Tuesday – where I have noticed journalists seem to be far less prolific Saturday’s and Sunday’s than they are on weekdays.
I also suggest you read a ‘feet on the street’ report on container traffic that appeared in The (UK) Telegraph late yesterday. This article includes what I consider to be some very interesting statistics on container traffic. In that regard, consider that today’s Chinese container traffic holds December’s American and European Christmas presents.
Topical References:
BASF says Chinese customers cutting inventories, from
Reuters, Nigel Davies, August 28, 2012 – reading time 2 minutes;
Japan cuts economic assessment as global slowdown bites, from
Reuters, Tetsushi Kajimoto and Leika Kihara, August 28, 2012 – reading time 3 minutes; and
Port in a financial storm: China’s export hub hit, from
The Telegraph, Malcolom Moore, August 27, 2012 – reading time 3 minutes.
Eurozone >> Spain: Spain’s 2010 and 2011 economic results worse than previously thought, July bank deposits down
If you read this Newsletter you will know that I identified Spain as a major economic concern earlier than many, and have consistently said that I am concerned the Spanish Government and civil servants don’t have a good ‘quantification handle’ on what Spain has to deal with. For me, the referenced articles adds to my concern but does little else. I am looking for confirmation of my concern when the ongoing Spanish bank audits are reported in September. That assumes, of course, that those reports will not be further delayed.
Topical Referencse:
Spain’s economy did worse in 2010, 2011 than previously thought, from
The Financial Post, from Reuters, Nigel Davies, August 27, 2012 – reading time 3 minutes; and
Spanish Bank Deposits Fall in July, Despite Bailout, from
Fox Business, from Dow Jones Newswires, Todd Buell, August 28, 2012 – reading time 1 minute.
Important Snippets From Today’s Commentaries
Snippet #1: Even though depression is not something any thinking person should want to have to deal with, that is not to say that it ought to be simply put in a dark corner and be disregarded as one possible economic outcome in America, some Eurozone countries, or for that matter the world.
Snippet #2: It strikes me as I review today’s articles that there seems to be an acceleration in the number of articles reporting economic problems and slowdowns.
Snippet #3: I am looking for confirmation of my concern that Spain’s Government and civil servants are ‘behind the knowledge curve’ when the ongoing Spanish bank audits are reported in September. That assumes, of course, that those reports will not be further delayed.
