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Harsh weather likely to skew economic data again

After months of subpar economic data that has been blamed at least partially on the brutal winter weather, investors may still struggle to discern the real picture of the economy next week. The closely watched monthly jobs report due on Friday is expected show that employers stepped up hiring a bit in February, but there is a greater-than-unusual amount of uncertainty around forecasts given that the weather remained unseasonable. In addition, questions over whether Russia could be drawn into the conflict in Ukraine will likely weigh on investor sentiment. March futures on the CBOE Volatility index, Wall Street’s so-called fear gauge, shot up nearly a percent even as the S&P 500 closed at another record high on Friday. "It will be interesting to see the action on S&P futures on Sunday night based on the kind of developments we see in Ukraine. There are definitely […]

Posted On : Published By : Tom Whipple
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Euro Zone Inflation Stays Low; Joblessness Remains High

PARIS — Inflation in the euro zone remained stuck at a very low level in February, while the jobless rate was unchanged in January, official reports showed Friday, providing the European Central Bank with crucial data before its monetary policy meeting next week. Consumer prices in the 18-nation euro zone rose 0.8 percent in February, unchanged from the revised figure for January, Eurostat, the statistical agency of the European Union reported from Luxembourg. The “core” inflation rate, which excludes energy and food prices, ticked up to 1.0 percent from 0.8 percent in January. The January jobless rate for the euro zone remained at 12 percent, Eurostat reported. For the full European Union, made up of 28 nations, the jobless rate stood at 10.8 percent, also unchanged. The numbers were largely in line with market expectations, and financial markets reacted calmly. The Euro Stoxx 50 index slipped about 0.1 percent […]

Posted On : Published By : Tom Whipple
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Can the World Feed China?

Overnight, China has become a leading world grain importer, set to buy a staggering 22 million tons in the 2013–14 trade year, according to the latest U.S. Department of Agriculture projections. As recently as 2006—just eight years ago—China had a grain surplus and was exporting 10 million tons. What caused this dramatic shift? It wasn’t until 20 years ago, after I wrote an article entitled “Who Will Feed China?”, that I began to fully appreciate what a sensitive political issue food security was to the Chinese. The country’s leaders were all survivors of the Great Famine of 1959–61, when some 36 million people starved to death. Yet while the Chinese government was publicly critical of my questioning the country’s ability to feed itself, it began quietly reforming its agriculture. Among other things, Beijing adopted a policy of grain self-sufficiency, an initiative that is now faltering. Since 2006, China’s grain […]

Posted On : Published By : Tom Whipple
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China gives big state firms more influence in strategic sectors of economy.

Beijing When China’s leaders wanted to give a boost to the domestic semiconductor industry last year, a big state-owned electronics company scooped up smaller privately owned chip-design and chip-making firms. Beijing followed the same script to get control of the sprawling, polluting rare-earths industry: A big state-owned company purchased nine firms in December that mine the minerals used in such strategic industries as defense and telecommunications. Expect China’s leaders to insist on a big state role in sectors they deem strategic when the officials lay out their economic plans for the coming year at a session of the country’s largely toothless legislature. On the one hand, China has pledged to dismantle some state-owned monopolies so they operate by market principles and pay more dividends to fund social spending. But on the other, China specialists say the state may actually end up with more influence over the economy in coming […]

Posted On : Published By : Tom Whipple
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With Stable Gas Prices, Who Still Cares About Fuel Economy?

As the WSJ reports today, President Obama has announced the next phase in his administration’s push to improve fuel efficiency on U.S. roads: stricter economy rules for the nation’s fleet of medium- and heavy-duty trucks. That’s a big deal for overall U.S. fuel consumption, because while big trucks make up fewer than 5% of the vehicles on the road, they account for about a quarter of all greenhouse-gas emissions from the transport sector.  The move comes after the government introduced ambitious fuel-economy standards for passenger vehicles  back in 2012, which aim to cut U.S. oil consumption by two million barrels a day by 2025. But there’s one big challenge in promoting fuel-efficient vehicles: without rising gas prices, it’s getting harder to convince consumers to buy small, economic cars.   There’s precedent for what happens to fuel economy when pump prices aren’t part of the […]

Posted On : Published By : Tom Whipple
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15 Reasons Why Your Food Prices Are About To Start Soaring

Did you know that the U.S. state that produces the most vegetables is going through the worst drought it has ever experienced and that the size of the total U.S. cattle herd is now the smallest that it has been since 1951?  Just the other day, a CBS News article boldly declared that “ food prices soar as incomes stand still “, but the truth is that this is only just the beginning.  If the drought that has been devastating farmers and ranchers out west continues, we are going to see prices for meat, fruits and vegetables soar into the stratosphere.  Already, the federal government has declared  portions of 11 states to be “disaster areas”, and California farmers are going to leave half a million acres sitting idle this year because of the extremely dry conditions. Sadly, experts are telling us that things […]

Posted On : Published By : Tom Whipple
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North America Should Look to Nafta on Oil Boom, Pemex CEO says

North America will become the world’s cheapest source of energy if Canada, Mexico and the U.S. pool their resources to reduce costs and generate industrial growth across the continent, the chief executive of Mexico’s state-owned oil producer said in an interview. The call for greater collaboration to leverage North American’s oil and natural gas boom comes as leaders of the three nations prepare to gather in Toluca, Mexico, for a summit on Feb. 19. Mexico, the U.S. and Canada should work together on matters such as regulation and infrastructure to make the most efficient use of the continent’s growing energy production that’s reshaping global markets, said Emilio Lozoya, the CEO of Petroleos Mexicanos , or Pemex. “More than a counterbalance” to the market influence of the Organization of Petroleum Exporting Countries, or OPEC, “I see it as our own strength,” Lozoya said in a telephone interview with Bloomberg News […]

Posted On : Published By : Tom Whipple
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China Hard Landing War-Gamed for World Economy

A hard landing in China would hobble global growth and buoy the dollar, says Societe Generale SA in a study that war-games the international implications of a steep decline in China’s expansion. A plunge to 2 percent from more than 10 percent in 2010 would be enough to slash 1.5 percentage points from worldwide economic growth in the first year as China’s troubles are transmitted through trade, banking and financial market channels, the French bank said in a Feb. 11 report. Among the reasons to expect such reverberations from what the authors called the “worst reasonable case:” China’s imports are equivalent to 30 percent of its gross domestic product. Asian and commodity-producing nations would be the hardest hit, according to Michala Marcussen, global head of economics research in London . The impact could be aggravated by China’s bias toward investment, which accounts for half of its GDP. Less worrisome […]

Posted On : Published By : Tom Whipple
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Eurozone economic recovery gains traction on back of improved GDP

The eurozone’s recovery gained a little traction in the final quarter of 2013, with the currency bloc’s economy expanding by 0.3 per cent on the back of stronger-than-expected growth in the region’s two largest economies. Eurostat, the commission’s statistics bureau, on Friday published figures showing growth had edged up from 0.1 per cent in the third quarter by slightly more than the 0.2 per cent expected by economists. The figures will boost hopes that economic conditions in the bloc are steadily improving after the region became engulfed by a sovereign debt and banking crisis. The Eurostat figures were published hours after it emerged that Germany, the bloc’s economic powerhouse, had expanded 0.4 per cent, beating forecasts of 0.3 per cent growth. The German data, published by the Federal Statistics Office, were up from 0.3 per cent in the previous quarter and ahead of its preliminary estimate published last month […]

Posted On : Published By : Tom Whipple
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Japan seen posting record trade deficit in January as import bill soars

Japan is expected to post a record trade deficit in January as a weak yen pushes up the cost of imports and as export demand slows in a cautionary note about the economic outlook, a Reuters poll showed. The trade deficit, which is forecast to swell to 2.5 trillion yen ($24.5 billion), would provide further evidence that a weak yen alone cannot boost exports as many Japanese manufacturers have shifted factories overseas. A record trade deficit would also suggest that overseas demand may not be strong enough to offset the negative impact of a scheduled sales tax increase in April, meaning policy makers may have to consider other ways to stimulate the economy. "The trade deficit may not expand further, but Japan’s terms of trade are likely to continue to deteriorate, so you can’t say things will start to get better," economists at Mitsubishi UFJ Morgan […]

Posted On : Published By : Tom Whipple