Home Prices Post Biggest Drop in 21 Years
The S&P/Case-Shiller U.S. National Home Price Index plunged 18.2% during the final quarter of 2008, the biggest annual decline in the closely watched index's 21-year history. The most severe declines were in Phoenix, Las Vegas, and San Francisco, which all dropped by more than 30% in December compared with December 2007.
Showing posts with label bubble. Show all posts
Showing posts with label bubble. Show all posts
Thursday, February 26, 2009
China consumer markets are shrinking
China Taxes Reveal Spending Slowdown, Goldman Says
By Chua Kong Ho and Paul Panckhurst
Feb. 26 (Bloomberg) -- China investors should be “defensively positioned” as a decline in the nation’s tax receipts signals a steeper slowdown in spending than retail sales figures show, according to Goldman Sachs Group Inc.
“Tax data show much sharper deceleration in income and consumption in the past few months than suggested by official retail sales or income growth figures,” Goldman Sachs analysts Joshua Lu, Caroline Li and Fiona Lau wrote in a note today.
Value-added tax has “de-linked sharply” from retail sales figures, the analysts wrote. VAT rose 1 percent in the fourth quarter from a year earlier, while retail sales gained 21 percent, according to the note.
China is trying to boost domestic spending to shore up its economy as recessions in the U.S. and Europe smother demand for its exports. The nation’s growth has slowed for six straight quarters, while outbound shipments slumped 17.5 percent in January, the most in almost 13 years, customs bureau data showed this month.
Growth in China’s individual income-tax receipts “slowed down significantly” in the second half and shrank in December and January, the Goldman Sachs analysts wrote. This compares with nominal wage growth of 21 percent in the third quarter, the report said.
“We think the government’s fiscal stimulus package announced so far may help create jobs, but may not necessarily help boost wages which, in our view, is the key driver of consumption growth,” the note said. “As such we are not hopeful that China’s consumption slowdown will bottom out soon.”
Saturday, February 21, 2009
China equity market set to crash ( even further)
US mutual funds cannot invest in short positions. They must invest in long positions. But where in the world can they place their funds?
Like a flock of birds fund managers seem to have decided in 2008 that a safe place to land (for now) is in China. As long as more and more mutual fund managers keep putting more and more funds into China equities the equity markets defy gravity and don't fall. Lol! It's a repeat of mutual funds flocking into commodity equities in 2007--which crashed in 2008.
Where in China is the good news? China’s exports are falling and, due to rising unemployment, domestic demand will be difficult to stimulate. How long until the mutual funds fly away and the flock follows?
China Stock Gains to End as Profit Drops, Xie Says
(Bloomberg) -- China’s stocks rally, having turned the Shanghai Composite Index into the world’s best performer this year, will falter as profits are “non-existent,” said Andy Xie, former chief Asian economist at Morgan Stanley.
The Shanghai measure has gained 22 percent this year, the most among 90 global stock gauges tracked by Bloomberg. The index is valued at 17.4 times earnings, the most expensive among the so-called BRIC markets of Brazil, Russia, India and China.
The rally will run out of steam as “profits are non- existent and valuations are still expensive,” Xie, who is now an independent economist, said in an interview yesterday.
Investors opened 427,460 new accounts to trade stocks last week, according to data posted on the Web site of China Securities Depository & Clearing Corp. yesterday, almost double the number in the previous week and the most since the five days to March 28.
"This is your captain speaking, everyone remain calm, everything is under control. "
Cheers
Like a flock of birds fund managers seem to have decided in 2008 that a safe place to land (for now) is in China. As long as more and more mutual fund managers keep putting more and more funds into China equities the equity markets defy gravity and don't fall. Lol! It's a repeat of mutual funds flocking into commodity equities in 2007--which crashed in 2008.
Where in China is the good news? China’s exports are falling and, due to rising unemployment, domestic demand will be difficult to stimulate. How long until the mutual funds fly away and the flock follows?
China Stock Gains to End as Profit Drops, Xie Says
(Bloomberg) -- China’s stocks rally, having turned the Shanghai Composite Index into the world’s best performer this year, will falter as profits are “non-existent,” said Andy Xie, former chief Asian economist at Morgan Stanley.
The Shanghai measure has gained 22 percent this year, the most among 90 global stock gauges tracked by Bloomberg. The index is valued at 17.4 times earnings, the most expensive among the so-called BRIC markets of Brazil, Russia, India and China.
The rally will run out of steam as “profits are non- existent and valuations are still expensive,” Xie, who is now an independent economist, said in an interview yesterday.
Investors opened 427,460 new accounts to trade stocks last week, according to data posted on the Web site of China Securities Depository & Clearing Corp. yesterday, almost double the number in the previous week and the most since the five days to March 28.
"This is your captain speaking, everyone remain calm, everything is under control. "
Cheers
Friday, February 13, 2009
Asia in trouble
Recent news from Asia:
Think "domestic demand" will be easy to stimulate in China? I doubt it. China has huge unemployment problems. Unemployed people just don't have money to spend. Want more evidence that domestic demand will be difficult to stimulate? Then please read this:
http://globaleconomicanalysis.blogspot.com/2009/02/inside-china-sculptors-view.html
Comments:
1. To the extent that imports are necessary inputs to Asia & China's production process then falling imports may be a leading indicator of even greater declines in production and exports.
2. Falling imports may also be an indicator of much greater unemployment than is being reported--unemployed people don't buy imports.
3. If unemployment is under-reported or accelerates it becomes doubtful that domestic demand can be stimulated and domestic demand may actually fall.
Implications:
- China's exports seem destined to fall and domestic demand will be difficult to stimulate.
- China's economy appears to be a bubble about to pop.
- If/when the China bubble bursts, China's equity markets will crash.
China Stock Gains to End as Profit Drops, Xie Says
(Bloomberg) -- China’s stocks rally, having turned the Shanghai Composite Index into the world’s best performer this year, will falter as profits are “non-existent,” said Andy Xie, former chief Asian economist at Morgan Stanley.
"This is your captain speaking, everyone remain calm, everything is under control. "
Cheers
- Japanese exports fell 35 percent in December from a year earlier. Industrial production plunged a record 9.6 percent, month on month, in December.
- Chinese exports declined for the third consecutive month in January, falling 17.5 percent from a year earlier, after a 2.8 percent decline in December. Imports plunged even further—43.1 percent, twice as much as December's 21.3 percent year-on-year drop.
- More than 20 million Chinese migrant workers have lost their jobs so far, with some analysts warning of 50 million more job losses if the economy deteriorates further.
- India exports fell 24 percent in January. According to official data, one million Indian workers in the export sector have lost their jobs since September. Another half a million workers are expected to lose their jobs by March.
- New Delhi's public debt stands at 75 percent of its GDP, compared to just 18.5 percent in China, leaving less room for large stimulus packages.
- South Korea's exports, the main driving force of the economy, plunged 32.8 percent in January. Finance minister Yoon Jeung-hyun warned on Tuesday that the fourth largest economy in Asia would shrink by about 2 percent this year. Credit Suisse has projected as much as a 7 percent contraction.
- Taiwan, the sixth largest Asian economy, saw its exports fall 44.1 percent in January from a year earlier—the biggest fall since records began in 1972. Imports plunged 56.5 percent in the same month. For an economy where exports account for 70 percent of GDP, the impact is devastating.
- http://mpettis.com/2009/02/more-terrible-trade-numbers-from-china/
- http://blogs.cfr.org/setser/2009/02/13/a-truely-global-slump/
Think "domestic demand" will be easy to stimulate in China? I doubt it. China has huge unemployment problems. Unemployed people just don't have money to spend. Want more evidence that domestic demand will be difficult to stimulate? Then please read this:
http://globaleconomicanalysis.blogspot.com/2009/02/inside-china-sculptors-view.html
Comments:
1. To the extent that imports are necessary inputs to Asia & China's production process then falling imports may be a leading indicator of even greater declines in production and exports.
2. Falling imports may also be an indicator of much greater unemployment than is being reported--unemployed people don't buy imports.
3. If unemployment is under-reported or accelerates it becomes doubtful that domestic demand can be stimulated and domestic demand may actually fall.
Implications:
- China's exports seem destined to fall and domestic demand will be difficult to stimulate.
- China's economy appears to be a bubble about to pop.
- If/when the China bubble bursts, China's equity markets will crash.
China Stock Gains to End as Profit Drops, Xie Says
(Bloomberg) -- China’s stocks rally, having turned the Shanghai Composite Index into the world’s best performer this year, will falter as profits are “non-existent,” said Andy Xie, former chief Asian economist at Morgan Stanley.
"This is your captain speaking, everyone remain calm, everything is under control. "
Cheers
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