Thursday, May 12, 2011
Chickens -> Home -> Roost
The whole cool-down, clean-up process is going to take a tad longer than recently announced. But, on the bright side, they made it inside the reactor building to fix the gauge, which is how they know there's no water on the fuel rod assembly. There are other problems also. Chubu Electric is supposed to start shutting down its Hamaoka reactors at the end of this week. Japan's electricity shortage will get worse.
And then, we have initial claims to look forward to in a few short hours.
Maybe it would be best if we could get a lot of the bad news out of the way and then start looking for good news, but there is so much deferred bad news to confront!
After a lovely sea of red ink in Asia, Europe opens down. This will shock you intensely, but for some reason, silver is selling off in overnight trading. And copper, but mostly silver. And corn, and wheat, and stuff like that. There appears to be some nervousness about the Euro.
Draghi gets the ECB on All Hallow's Eve. Draghi is the one who has to deal with Greek, Irish and Portuguese default.
Eh. PPI kind of nasty: 12 month change in Finished Goods = 6.8%; Intermediate Goods 9.4%; Crude Goods 23.7%. On the month: Finished Total 0.8%; Finished ex food and energy: 0.3%. Annualized that would be about 10% and 3.6%, respectively. Cumulative increase YTD for Finished Goods is about 4.1%, Finished Foods about 4.3%, Finished Energy about 11.7%. Multiply by 3 for approximate annual pace! I'd say that the Fed has managed to exceed its four percent limit. Of course it does not take any responsibility for events, and it is not in control of them either.
There is no way businesses can absorb these increases without passing them on. But, as evidenced by the retail report for April, it appears that consumers cannot pay the price increases:
Total SA April sales: 389,355Game over, the increase in initial claims is explained as more discretionary types of spending get curtailed.
Total SA March sales: 387,371
Nominal Increase: 1,984
Gasoline Increase: 1,211
Grocery Increase: 615
And what were initial claims this week? The four week moving average was 436,750 and the week's number was 434,000. We just reached parameter limits.
PS: Nor is it just us: March European industrial production fell by 0.2/0.3 (EU27). The big news however, is that industrial production of non-durable consumer goods fell by 0.7/0.8, i.e., consumers crumpling. This is hardly surprising, because retail trade dropped 1% in March, as earlier noted on this blog.
Although US news is not good, currency fluctuations are driving some of the pricing as people shift money from one currency to the other ASAP. So the relatively bad retail news drops the dollar and increases commodities slightly. We have a long, slow drive down to the real growth zone. I can hardly see it from here.
inflation fueled growth
the restaurants die
I also spent a while this morning contemplating rising initial unemployment claims at the same time that an increasing number of people are losing unemployment benefits.
The 4-week initial claims average is 436,750, which is very definitely above February levels even excluding temp factors.
It's a classic pattern of fall-off of discretionary spending.
“ The government and Tepco have consistently appeared to be underestimating the severity of the situation.”
On the bright side--an ancient reactor design had a worst-case meltdown, but there was no steam explosion and no China Syndrome. Nasty local contamination, and the reactor site will be contaminated far longer than that, but all in all not the end of the world.
Newer designs should be good enough to hold us until we come up with something better.
Over on DU they are speculating on planet-wide extinctions, but then they also seem to think initial claims are favorable, so....
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