Tuesday, September 09, 2008
A Hurricane Is A Hurricane, But....
Over $40 off the high, and no sign of a slowing in the price collapse. Latest Ike advisory.
Car sales in China fall in August; pundits say consumers were distracted by Olympics and will begin to buy again. But in July, sales growth in China was slowing, and growth in India stopped. One of the problems is that stock markets in Asia have fallen so much; the wealth effect is not isolated to the west. Another problem is that GDP growth in both countries appears to have fallen below PPI growth.
From the last link above:
And while soaring fuel and commodities prices have powered a faster-than-expected sales increase in areas rich in resources, like Russia, Brazil and the Middle East, that has not been enough to make up for struggling demand almost everywhere else.That, my friends, is what we mean by "global recession". The Mexican government budget is using a 2009 export price for its oil of $80. The surge in oil prices and commodities is winding down, as will the economic effects.
"China is almost three times the size of the Russian car market, so for every 1 percent reduction in Chinese sales you need a Russian rise of 3 percent to offset that," said Adam Jonas, an auto analyst at Morgan Stanley.
"For now," he added, "Brazil and Russia are helping to soften the blow, but we have still revised down our global growth forecasts throughout the year."
Morgan Stanley now expects global car sales to decline 0.3 percent this year to 58.1 million vehicles after forecasting an expansion of 3.5 percent at the beginning of the year.
Not that the changes in auto sales in India and China are dramatic on a global scale. In August, Spain clocked a 41% drop in car sales, and Italy turned in a much milder 26%. German (sorry, no link) sales were down about 10% over the year. British sales were down 19%, said to be the worst August since 1966? It was a short month, but....
Probably makes you want to think—probably not…
By the way Obama, Reid, Pelosi, got that wrong and also got the surge wrong. They wanted US troops to retreat in defeat—so that they could use the defeat forever against GWB and the Republicans—don’t fool yourself!
From here on there is not tremendous support.
IC - this was a bubble and all bubbles rest on confidence, so there are a lot of factors in the decline. Threats of drilling probably played a decent part in it.
Rob - Well, for a while spot pricing was pretty high, so the refiners were paying it. Briefly, because they couldn't sell to consumers.... It's all about the enduser, and the truth is that energy prices just took out the world economy. We want to see a correction sooner rather than later, because they are still at a level which suppresses economic activity.
Links to this post: