What you may have missed over the last week

[solarbird]

Good morning.

On Friday, the Baltic Dry Index measurement of shipping activity fell to 715; to get historical numbers that low, you have to go back to July of 1986. Japanese stocks are down on news that 2008 domestic auto sales will fall to levels not seen since 1974.

I'd comment on the sharp improvement in H.3 data but sadly I instead have to comment that banks are utilising new bailout/swap instruments which no longer are counted as "borrowed" moneys and are applying those towards their "nonborrowed reserves" number. Or so I am told. With no transparency and a clear, demonstrated, and continuing systematic pathology towards lying throughout these bailout operations (and indeed throughout this administration), I find this report entirely plausible, and one more tool to observe the underlying reality is gone.

Last week's stock rally was substantial, but major investors were selling into the rise. (This chart may update, so have a partial, here.) Meanwhile, the US prepares to "flood [the] world with more dollars." Meredith Whitney is even more bearish than she has been, and supports the liquidity flood.

But consumer spending is keeling over dead. "The holiday season is over. The reason? It just never got started," said Marshal Cohen, chief industry analyst at NPD Group, a market research firm. According to a named source in the article, stores are now actively expecting deflation, which means inventory loses price as it's held, which means inventory is unacceptable. "...what normally happens after Christmas is taking place this weekend, [Liquidation.com's Bill Angrick] said. "This is about survival. This is not about muddling through the holiday season." Sales were "at best in line with [stores'] low expectations." Consumer spending was already flooring before this weekend, and sales fell outright the week before Thanksgiving. January is going to be brutal.

Brad Setser has a long post on China's manufacturing sector, which includes a pointer to more reading. Mish reports that you're seeing outright panic in parts of China over the imploding economy.

Much more worryingly, Mish also reports that Chesapeake Energy is having to sell stock to raise cash for operations. They're the largest US producer of natural gas.

Finance minister Flaherty is out of his fucking mind if he thinks Canada is not going to have a recession.

Hugh Hendry, chief investment officer at hedge fund Eclectica Asset Management, thinks all significant US financial institutions will be nationalised within a year. All of them. CNBC video at the link, but also text.

In "rage" news, Citibank board member and former Treasury secretary says it's not his fault Citigroup fell over. Here's a breakdown on the US$7.7 Trillion in bailout pledges. And another US$800B on top of that. Mish:

By my count the government has now pledged $8.5 trillion in lending facilities with $5.55 trillion of that coming from the Fed, allowing $250 billion for the Citigroup Bailout Agreement. Taking into consideration Treasury Secretary Henry Paulson's statement that $200 billion is just the “starting point” for the TALF asset-backed securities program, there is really no upper limit on pledges.

Good luck this week.

Comments

[l-l-u-w-d.livejournal.com]

Want to hear something interesting about CitiBank? As of 30 Nov 2008, they are the new, and only, issuers of DoD Travel Charge Cards. They took over from Bank of America. And, yes, that is gospel truth, and not some rumor overheard over gedunk.

[llachglin.livejournal.com]

Robert Rubin is and has always been part of the problem. I'm really hoping that the Obama economic appointees (many of whom are close to Rubin) are willing to show some independence from his record.

[denelian.livejournal.com]

this drives me nuts - according to pandagon, the problem isn't that holiday spendin is DOWN, but that it did not grow as much from last year as had been hoped.
so, they say say spending DID grow just not as much as it could have.

part of the problem that i see (and i admit it is both andecdote and may only be local) is that places are trying to soooooooooo hard to encourage more spending that they are shooting themselves. take the mall which houses the store my boyfriend manages. it's normally himself and 3 employees, 1 full time and 2 part time, for a total of 120 labor hours a week.
the mall is EXTENDING SHOPPING HOURS EVERY DAY UNTIL XMAS. they are opening 2 hours early, closing 3 hours late, adding AT LEAST 35 more labor hours PER STORE. this makes no sense, as the MALL doesn't benifit from extended hours, and all the shops are losing money!

[solarbird]

ShopperTrak's early data is often a bit shaky. ComScore is better, but only does online sales. (This may be why it's better.) However, for the last many years, online sales have been growing much faster than physical-store sales, and ComScore reports Black Friday up only 1%, and season so far actually down outright. This implies ShopperTrak's data is overly optimistic.

Throw in inflation - remember, there was still inflation a lot of the year - and all these numbers are flat or negative.

[denelian.livejournal.com]

hrm... inflation makes my head hurt. because my understanding is that in most cases, while yes there is inflaation, there are also price increases that keep up with inflation?

[solarbird]

Price inflation (which is the common usage, and is as opposed to monetary inflation) is defined by price increases. When you hear things like the Consumer Price Index and the Inflation Rate, they're talking about exactly that: price inflation.

[denelian.livejournal.com]

ooooooooooooh...
why is it i can understand internation trade economics, but not the economics of my own country? and the more i read, the less i feel i know.'

thank you for that clarification; it helps