Finance Matters

Archive for the ‘Commercial Finance’ Category

We said it Friday, and then reiterated it Monday, and now Former European Commission President Romano Prodi is saying it, so it must be true.

The Greek crisis is over.

In addition, according to Bloomberg, Prodi told Italian TV: “I don’t see any other case now in Europe. I don’t think there is any reason to think the euro system will collapse or will suffer greatly because of Greece.”

Now, participate in our poll.

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See Also:

• The Greek Crisis Is Over! (For Now)
• The Greek Crisis Comes To A Close
• The Greek Debt Crisis Was Resolved By A Confidence Game

The US gets its share of mixed data, leading to furious debates about whether it’s contracting or expanding, but no country it seems as volatile and hard to read right now as the UK. Some think it’s fine; some think it’s the next Iceland.

The latest bit of data pushes it closer to the latter.

Bloomberg:

U.K. factory production unexpectedly fell in January for the first time in five months, a sign manufacturing is struggling to shake off the recession.

Factory output dropped 0.9 percent from December, the Office for National Statistics said today in London. Economists predicted a 0.2 percent increase, according to the median of 26 forecasts in a Bloomberg News survey. Manufacturing expanded 0.2 percent from a year earlier, the first gain in almost two years.

We’re certainly not going to give you any bonus points for guessing what the pound is doing today.

That’s right, it’s puking, as this only ratchets up the great competitive devaluation war, Nothing makes a nation want to print more of its own currency than a drop in factory output.

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See Also:

• Goldman: Forget Pound Doom And Gloom, The UK Is In Much Better Shape Than You Think
• Fitch: US Vulnerable To Interest Rate Shocks, UK In Desperate Need Of Spending Cuts
• Hung Parliament Watch: New Poll Shows UK Conservatives Crumbling

Economist surveyed by Blue Chip Economic Indicators have cut their U.S. 2011 GDP forecasts to 3%, down from 3.1% previously.

Yet government stimulus is causing them to hike forecasts for this year. Economists from the survey now expect 3.1% GDP growth for 2010.

Reuters:

The consensus also expects inventories to continue adding to GDP over the next several quarters but see the size of those contributions become increasingly smaller.

“By Q1 2011, the contribution to GDP from business inventories is expected to become trivial,” the survey said.

Thing is, 3% GDP growth isn’t all that bad considering what the U.S. has gone through. If these forecasts prove correct, we’ll take the 3% growth and be happy. We bet markets would be as well. Especially if 2012 can deliver another 3%, since medium term U.S. growth is a key uncertainty right now. Read more here >

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See Also:

• Treasury’s Smart, But Not Totally Reassuring Answer To The US Sovereign Debt Question
• Michael Wolff’s Opus Doesn’t Tell Us Much About The Real David Cameron
• US Futures Slip, Euro Headed Lower

Chinese trade data annihilated analyst expectations for February. Exports grew by a whopping 46% while imports soared 45%.

China Daily:

The export gain in February was more than the 38.3 percent median estimate in a Bloomberg News survey of 28 economists. Imports topped a 38 percent estimate and the trade surplus was in line with forecasts.

…

Central bank Governor Zhou Xiaochuan said on March 6 that policy makers must be “very cautious” in timing an exit as a world recovery isn’t yet solid. Commerce Minister Chen Deming said the same day that it was too early to say that exports had recovered from the global financial crisis, and that the trade surplus for the past two months combined had contracted by 50 percent.

While this will only strengthen the case that China’s economic stimulus might be excessive, it’s important to note that China’s trade surplus contracted substantially recently, thus the nation has some political cover to keep the yuan pegged to the dollar as it is. China could easily hike the yuan at any time, but to us this data doesn’t really increase the urgency to do so.

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See Also:

• It Begins: China Cracks Down On The Shadow Banking System That Is Inflating Its Real Estate Bubble
• Cisco’s New Router Could Let Everyone In China Make A Video Call At Once
• China’s Challenge

The spread between dollar-denominated Asian bond yields and U.S. treasury yields has collapsed to 2.44% vs. 7.62% in December 2008, as per J.P. Morgan.

It appears that trouble in the west is making strong Asian corporates look like relative safe havens. Thus investors can earn yields above treasuries while investing in the perceived safety of companies residing within the world’s most promising economic growth region.

At the same time, Asian corporates get to cash in on dirt cheap financing thanks to ultra-low U.S. interest rates. It’s another example of Western liquidity overflowing into Asia.

Bloomberg:

“It’s one of the cheapest times to borrow in U.S. dollars, and at the same time, there’s a lot of cash floating around,” said Rajeev de Mello, head of Asian investment for Western Asset Management Co., which oversees $506 billion. U.S. and European pension funds “want a slice of the action,” De Mello, who is based in Singapore, said in a phone interview.

Read more here >

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See Also:

• Morgan Stanley: Ignore Absurdly Low Treasury Yields Because Bond Markets Never See Inflation Until It’s Too Late
• It Begins: China Cracks Down On The Shadow Banking System That Is Inflating Its Real Estate Bubble
• Heroic Greek Parliament Just Passed Austerity Measure While Riots Erupt In Athens