http://www.zerohedge.com/news/2013-01-29/spain-worlds-most-miserable-nation-worse-then-greece-venezuela-and-south-africa
Spain Is World's Most "Miserable" Nation, Worse Than Greece, Venezuela And South Africa
A quick ranking of the world's most "miserable" countries, based on the conventional measure of the Misery Index which is simply the Unemployment Rate plus Inflation, shows just why most people in Spain are, well, less than happy (and Spain is damn lucky there is no subset of the Misery index for just those aged 25 and under as we would certainly need a bigger chart). As the chart below shows, the Spanish "misery" is now the greatest in the world, at some 30%, and is worse than South Africa, Greece, Venezuela, Argentina and Egypt.
But fear not Spain: Croatia which is set to join the EU in July is forecast to have a debt/GDP ratio of 63.6% by 2017 from 29.3% in 2008 as growth stagnates. The country has one of the lowest labor participation rates in Europe at about 50 percent, the ILO says. In other words, at just 26%, it a virtual guarantee that Spain pole position is about to be eclipsed as Europe does the one thing it is truly good at: spread misery for the "common good."
http://www.zerohedge.com/news/2013-01-29/overnight-sentiment-pulled-lower-drop-carry-funding-currency-pairs
Overnight Sentiment Pulled Lower By Drop In Carry Funding Currency Pairs
- Anglo Irish
- Barclays
- Bloomberg News
- Bond
- Case-Shiller
- Central Banks
- China
- Conference Board
- Consumer Confidence
- Crude
- Dallas Fed
- European Central Bank
- Finland
- Germany
- Gilts
- Gross Domestic Product
- Netherlands
- Nikkei
- Random Walk
- Reality
- Recession
- recovery
- Switzerland
Following yet another quiet overnight session, futures have surprised many walking into work today as the traditional overnight levitation is strangely missing. The reason for that may be the lack of the traditional for 2013 lift in various funding currency pairs, with both the USDJPY and the EURUSD lower. While there was no major macro news, the former may have been dragged lower by various comments from the German BDI industry federation chief who said he is worried about the devaluation race stemming from Japan's central bank policy echoing Merkel's comparable sentiment and revealing that the EURUSD may have topped out, while the latter was pushed lower following today's 7 day ECB MRO, which saw some €124.1 billion allotted at a 0.75% yield. This was largely in line with expectations, with Barclays seeing some €135.4 billion maturing, while BNP had expected modestly more, or some €150 billion. The MRO is the first such operation, with tomorrow's 3 month refinancing operation likely to give a better glimpse of the bank's post-LTRO repayment funding needs. Whether it is this, or the market finally demanding some action out of central banks which, except for the Fed, have been in constant promise mode, or just a random walk, is unknown, but for now the carry funded nominal devaluation of risk may have topped out.
The notable datapoints about Europe were the German GfK Consumer Confidence which was in line with all other such forward looking metrics, and naturally rose from 5.6 to 5.8, above expectations of 5.7, there merely to attempt to return confidence in the German economy, which is literally on the cusp of a recession unless people believe it is doing ok, as well as the Spanish 2012 GDP which according to Montoro would fall "at least" 1.3% in 2013. We all know what that means.
Japan's Ministry of Finance released a curious datapoint in the form of a national balance sheet, revealing that while it had some 629 trillion in assets, it had 1088 trillion in liabilities, meaning some 459 trillion in excess liabilities in 2011, an increase of 41.5 trillion from the prior year.
Finally, keep an eye on brent, crude, and gasoline, all of which have been quietly creeping higher to multi-month lows, in the process adding a double whammy to consumption, in addition to the now well-known expiration of the payroll-tax cut extension. This is especially true with the two day FOMC meeting starting today, even if the final outcome is not expected to lead to any change in Fed policy.
Some more thoughts on the overnight action from Deutsche
So the longest winning streak for the S&P 500 since November 2004 officially took a breather last night as the index (-0.18%) finished lower for the first time in 9 trading days. The S&P 500 still closed marginally above the 1,500 mark though after having traded sideways throughout the day and we are still only around 1.7% away from revisiting the all-time high print. The market weakness yesterday was weighed by the relative underperformance of the Materials (-0.99%) sector. The disappointing pending home sales data (4.9% yoy v 11.5% yoy expected) was also said to have played a part in reversing sentiment after the better-thanexpected durable goods orders (4.6% v 2.0%) and the Dallas Fed print (5.5 v 4.0)
but in reality the market was probably ripe for some consolidation after the strong start to the year and the 8-day winning streak.
but in reality the market was probably ripe for some consolidation after the strong start to the year and the 8-day winning streak.
The soft-ish tone in risky assets didn’t help stop the further rise in US Treasury yields though with the 10-year briefly touching 2% at one point yesterday. The last time the 10-year traded above 2% was in April last year. The benchmark managed to recover and close only 1bp higher at 1.961%. Indeed the steady rise of core rates in Developed Markets has been one of the main themes this year as 10-year Gilts, Bunds and Treasuries are now 28bps, 38bps and 22bps higher since the end of last year, respectively. The impact is also being felt at the front-end with Germany’s 1-year bill sale yesterday witnessing its first positive yield since June last year. In fact looking through the 2-year bucket in Europe, Switzerland is the only country currently with a negative nominal yield now (-0.056%). The list has shrunk rapidly as there were six of them (Switzerland, Denmark, Germany, Finland, Austria, and the Netherlands) in negative territory around the middle of last month.
Moving on to overnight markets most Asian bourses are maintaining their positive biases with the Nikkei (+0.7%), China CSI (+0.4%), and the KOSPI (+0.8%) trading higher as we type. Optimism around the cyclical recovery of the Chinese economy and the policy focus around the urbanisation have helped the Shanghai Composite reach virtually bull market territory with a recent trough to peak gain of around 20%. Asian markets are probably also being supported by Yahoo’s strong after market results as the company’s shares rallied over 3% in extended hours trading.
Staying on earnings Caterpillar’s report was a major focus yesterday as the company offered a relatively upbeat assessment on the second half outlook. The company expects sales and earnings growth in 2013 will come in the second half on the back of improvements in the US and China. The company expects 2013 earnings to range between $7-9/share and revenue to range between $60-68bn. These compare with average Bloomberg poll estimates of an EPS of $8.54/share and revenue of $65.2bn. Continuing on earnings, 5 out of the 8 US companies reporting yesterday beat analysts’ EPS and revenue estimates.
In other news, ECB policy makers have rejected an Irish government plan designed to fund the rescue of the former Anglo Irish Bank Corp for at least the next 15 years (Bloomberg news). Under the proposal, the Irish central bank would have signed a contract guaranteeing to hold for at least a decade and a half a long-term bond issue to replace about EU30bn of the promissory notes issued in 2010. Policymakers are said to be in favour of the government taking another loan from the ESM or raising funds in the financial markets. Separately, the EU is mulling a one-year delay (to 1 Jan 2016) of the Basel III requirement which asks banks to disclose whether they will be in compliance of a leverage ratio requirement.
As far as data flow is concerned today we have German and French consumer confidence readings as well as Spanish retail sales in Europe. Merkel will speak at a CEO event in Berlin later this evening. In the US, the Conference Board Consumer Confidence and the Case-Shiller Home Prices are the notable releases as the FOMC begins the first of its two-day policy meeting today.
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_29/01/2013_480989
Ministry says 175 firms filed for creditor protection from Nov 2011 to Dec 2012
The government has said it plans to make changes to Article 99, which allows faltering companies to appeal to courts for protection from creditors. |
http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_29/01/2013_481002
Tsipras backs farmers' protest, renews call for elections
“There is no other choice but to fight for just causes,” Tsipras told the farmers, whose main objection is the change in the way they are taxed. The farmers are also due to meet PASOK leader Evangelos Venizelos on Tuesday. Protesters have parked tractors along the side of highways in several parts of Greece. The Nikaia junction on the Athens-Thessaloniki national road is the main gathering point for Thessaly farmers. In an interview on NET TV late on Monday, Tsipras repeated his call for general elections, insisting they should take before Germans vote in the fall. The SYRIZA leader also defended last week’s trip to the USA, where he held talks with International Monetary Fund officials. “I would deal with the devil if it proves to be in the interest of the Greek people,” he said. |
http://www.guardian.co.uk/business/2013/jan/29/eurozone-crisis-spain-austerity-retail-sales
MPs hear perils of QE
Over in the UK, MPs are quizzing pensions experts about the Bank of England's quantitative-easing (QE) programme.
Mark Hyde-Harrison of the National Association of Pension Funds warned parliament the decision to buy €375bn of UK government bonds with newly created electronic money had pummeled the pension industry.
He said QE had pushed up the deficits across defined benefit schemes by about £90bn. That is because the value of gilts has risen (as the Bank was there as a willing buyer) driving down the yield (or rate of return) for holding them.
That, he explained, meant pension funds looked weaker (as measured by the current rules) as the assets they retain are less lucrative.
Hyde Harrison added:
The argument we have is not particularly with quantitative easing, it's more about the way that once that £90bn deficit has been created, the regulations require companies to fill it.We don't believe we're flexible enough to cope with the environment we are now in.
According to Hyde-Harrison, companies are having to contribute to their schemes (and not invest elsewhere) which negates the impact of QE.
Dr Ros Altmann, pensions expert and director-general of the Saga Group, was also critical of the impact of QE. She said that such loose monetary policy has backfired by devaluing pensioners' income and making them less willing to spend:
Altmann added:
Quantitative easing and ultra-low interest rates have hampered the spending power of those in the economy who were not over-indebted and who would otherwise have spent money.
German consumer confidence growing
In other economic news, German consumer confidence has risen for the first time in four months, indicating that the eurozone's largest economy expects a stronger year. No relief in France, however.
The research firm GfK said German consumers were "more confident again" having watched the recent stock market rally:
Currently there are few negative reports relating to the sovereign debt crisis in the press so Germans are once again focusing on the generally pleasing domestic state of affairs.
GfK revised up its reading of German consumer sentiment to 5.7 on its index, from 5.6, and reported a further rise to 5.8 this month.
In France consumer sentiment remained unchanged. The country's statistics body reported overall confidence at 86 in January (100 is average), the same as December 2012.
Greek finance minister: Recovery begins soon
Greece's finance minister has declared there's almost no chance of the country leaving the eurozone, and the recovery will begin at the end of this year.
In an interview with the BBC broadcast overnight, Yannis Stournaras said the economic position was tough, with further wage and pensions cuts hitting Greeks this year.
However, there was "much more optimism" in the markets that the worst was over. Asked if the fear of Greece leaving the euro had vanished, Stournaras said:
The probability of this happening is very, very small. We have managed to turn the economy around, yes. So I'm very optimistic that we have avoided the risk of Grexit.Stournaras also predicted the Greek economy would end its long slump this year, with recovery beginning in the final quarter.I feel absolutely sure, 100%, that this is the last year of the Greek recession.As for Britain's future in the European Union, Stournaras warned:Britain belongs to Europe politically, financially..... All in all, I believe it would be a grave mistake if Britain decides to get out of Europe.He rejected the idea that Britain could reshape its relationship with the EU, warning that every other country would also want a new deal, heralding 'the end of Europe'....An unmerry Christmas in Spain
Good morning, and welcome to our rolling coverage of the eurozone financial crisis and other key events in the world economy.First up, the latest economic news from Spain shows that many families suffered serious belt-tightening in the Christmas season.Spanish retail sales tumbled by 10.7% year-on-year last month – worse than the 7.8% decline recorded in November, and close to the all-time record fall of 11% recorded in September.Retail sales in Spain have fallen for 30 successive months, and accelerated since PM Mariano Rajoy implemented austerity measuresintended to bring its budget into line. But with Spain's recession accelerating, Brussels officials may realise a change is needed.Olli Rehn, the EU’s economic and monetary affairs commissioner, hinted as much last night. He told reporters in Madrid:If there has been a serious deterioration in the economy, we can propose an extension of a country’s adjustment path...That’s what we did last year in the case of Spain.Spain is understood to have flunked its target of cutting its deficit to 6.3% of GDP in 2012, which makes it much harder to hit 2013's goal of 4.5%. Rehn may be making the groundwork for another relaxation.Last week's appalling jobless data – showing 60% of young Spanish people out of work – even sent alarm bells ringing at Davos last week, with Angela Merkel calling for help from businesses to reverse the trend.Rajoy, too, may recognise that fiscal consolidation alone isn't the answer. His officials have leaked news that next month's state of the nation speech will include measures to stimulate growth such as tax breaks for young entrepreneurs.
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