As the chart above illustrates, China’s “recovery” was short-lived. The index has reentered contractionary territory after a few months of tepid growth. The culprit is weakening global demand led by the usual suspects in Europe. The U.S. is managing some growth, but this will not be enough to revive Chinese economic prospects all by itself.
The chart above should dispel all of the housing hopiness fluttering around the mainstream media, but it won’t. The msm narrative is that the U.S. is in a housing recovery; however, the pace of new home sales indicates a market that has been scraping along the bottom since the crash. The recent trend is upward, but unless there is a massive revival in employment in the U.S. do not expect the pace rise much higher.
Check this out:
The euro area’s 18-month recession will end in the second quarter, as the economy stagnates before returning to growth in the following three months, according to a Bloomberg News survey of economists. The economy contracted 0.2 percent in the first quarter.
I cannot tell you what data these economists are using to conclude that Eurozone GDP will cease contracting this quarter and begin growing the next. The chart above indicates that the continent remains well within contractionary territory. In order for the survey to be correct, Europe requires strong growth through the rest of May and June to wipe out the losses earlier in the quarter. The Eurocrisis is still here. Get used to it.
South Africa has issues. The commodity boom has ended suppressing economic growth in the raw materials dependent economy. Unemployment is rising, and workers are striking. Yet, inflation remains stubbornly high precluding an interest rate cut. On the plus side, the weakness in Rand should stimulate economic activity.
When jobless remain under 300k per week, the labor market will be considered healthy. We’re almost there, but this recovery is different from prior versions. Comparing claims versus the unemployment rate, we note that the rate of the latter has not fallen as quickly as the rate of the former. While there are less people being laid-off, those people are still finding it difficult to obtain new jobs.
Anticipation of faster U.S. economic expansion best explains why stock prices have risen for months as bonds drop, according to Andrew Burkly, Oppenheimer & Co.’s head of institutional portfolio strategy.
I think what best explains the simultaneous rise in stock and bond prices is four years and counting of low interest rates and central bank money printing. Of course, I am not an equities salesperson. If I was, I would probably interpret every statistic as a reason to purchase stock.
Any investor who purchases assets from Sareb deserves whatever happens to him. Spain’s property bubble is still not done bursting, which means the country has not yet reached the bottom no matter what the mainstream media tells you. When NPLs stop rising and real estate prices stop falling, that will be the time to jump in. Essentially, the supply of estate currently outstrips its demand in the Spanish market, and the economic growth and unemployment numbers reveals that this situation will persist for quite some time.