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Monday, June 04, 2012

That Wasn't Very Good

The headline on factory orders is -0.6 for April, but March was revised down to -2.1. With unfilled orders, -1.5.

Shipments - 0.3; ex-transportation -0.8. All this is, of course, unexpected. 

Further note: This is more serious than it would at first appear, because this data is for April, and the general downshift in May manufacturing surveys combined with the very poor May Chicago PMI implies that May's report will show further weakness. Weak May auto sales don't generate a lot of optimism either.

I'm reading Q2 projections above 2% for GDP, and I'll be darned if I can figure out where they're coming from. Even presuming strong contribution from consumer spending, it's hard to see how we can make it into the 2s. 

Shipments in autos/light trucks were very strong in April, but as we know sales aren't quite keeping pace. Heavy trucks shipments were down in March and April.

Further, further note: BIS quarterly report is out; cross border lending is contracting pretty hard, and it looks a lot like 2008. See page 4 in this release Whole quarterly review here. For most people, it is an infallible cure for insomnia.This covers Q4 2011:
During the fourth quarter of 2011, BIS reporting banks recorded their largest fall in aggregate cross-border claims since the drop following the Lehman Brothers collapse three years earlier. The decline was worldwide, although it was driven by the deleveraging of banks headquartered in the euro area. 

Cross-border lending to non-banks also fell, but the drop in claims on banks was sharper. Cross-border lending fell around the globe. BIS reporters' cross-border claims on both banks and non-banks in developed economies shrank by $630 billion. Euro area banks accounted for most of this decline. Cross-border claims on emerging market economies fell by $75 billion, or 2.4%. The decline was concentrated on Asia-Pacific in general and on banks in China in particular. For China, this was the first overall decrease since the opening quarter of 2009. Among all developing countries, only those in Latin America and the Caribbean saw an increase in cross-border claims.

The notional amount of outstanding over-the-counter (OTC) derivatives fell by 8% in the second half of 2011, while a rise in price volatility drove up the market value by 40%. Gross credit exposures rose 32%. After accounting for netting and posted collateral and adjusting for the double-counting of collateral in the industry data, the BIS estimates that credit exposures between counterparties in the bilateral OTC derivatives market increased slightly, to at least $2.1 trillion.

Well, I've been saving this one for the right day, and this is the right day:
Europe, The Final Countdown:

I've been amazed by their ability to stretch out the count.
Shipments - 0.3; ex-transportation -0.8. All this is, of course, unexpected.

Nobody Expects the Ex-Transportation
John, it is a consensual delusion. No one wants this to happen.

Mark, the mass delusion that high energy prices lead to economic growth won't survive this round of Reality Economics.
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