THE U.S. ECONOMY GETS MORE HELP FROM CONSUMERS
The annualized pace of sales climbed last month to 15.1 million vehicles, according to Autodata Corp., a level the industry hasn’t seen since February 2008, before the start of the financial meltdown and subsequent recession. All told, auto makers sold 1,149,396 cars and light trucks last month, up 15.7% from a year ago, Autodata said. (Chart from Modeled Behavior)
Dealers also reported they saw sales intensifying toward the end of the month suggesting the industry could score another robust month in March.
Retailers turned in solid sales for February as warmer weather brought out shoppers for spring wear and clearance sales.
The 18 retailers that report same-store sales, or sales at stores open more than a year, showed 6.4% growth in February, when 4.8% was expected, according to Thomson Reuters. The figure compares with 4.7% a year ago.
Drop raises hopes of energy independence
Imports as a share of US oil consumption dropped to 44.8 per cent, the lowest proportion since 1995, down from a peak of 60.3 per cent in 2005.
Canada’s economy loses steam in fourth quarter The Canadian economy grew at an annual rate of 1.8% in the final quarter; third-quarter growth revised up to 4.2%
EUROPE: BACK TO SQUARE ONE!
The very same day the “pact” was signed, challenges pop up.
European Union leaders signed the region’s new fiscal pact, adopting strict new rules on deficits and debts, even as some members warned a tougher economic environment is challenging their fiscal commitments.
Mr. Van Rompuy urged EU leaders to move quickly to persuade national parliaments—and voters—to ratify the deal.
Ireland announced earlier this week it would hold a referendum on the issue. The pact calls for countries to write into their constitutions balanced-budget provisions and allows for swifter sanctions against countries that breach the fiscal rules.
Any country that fails to ratify the treaty would be blocked off from the region’s bailout funds in spring 2013.
Here we go: Spain and the Netherlands indicated they would miss budget targets this year without fresh austerity measures.
Rajoy government sets ‘reasonable’ target of 5.8% of GDP
Speaking in Brussels, Mr Rajoy insisted that the decision to exceed the EU target was “sensible, reasonable”. Asked whether it met EU requirements, he added: “Is it within the norm? I say yes … We are going to make a very big effort.” (…)
He said he had not told his European counterparts about the deficit target because that was not required until April. “This is a sovereign decision made by Spaniards,” he said.
Meeting EU deficit targets seen as ‘suicide’
The budget shortfall fell to 3.9 percent of gross domestic product from 4.6 percent in 2010, Rome-based national statistics office Istat said today.(…)
Even though the deficit narrowed in 2011, the government’s debt rose to 120.1 percent of GDP, the highest since 1996, from 118.7 percent in 2010, Istat said today.
The 1.6% January decrease followed a 0.1% increase in December. German retail sales are volatile and often revised.
China PMIs were kind of mixed but new orders remain weakish as this ISI chart shows. Europe is clearly hurting China.
And this on housing:
Revenues from land sales in China’s major cities dropped nearly fifty percent in the first two months of this year, as the real estate market correction deepens with dropping prices and continuing government restrictions, industry statistics showed Friday.
ISI has a lengthy piece on China housing that truly surprised me.
We expect China’s ‘commodity’ (conventional) housing starts to fall from 15 1 mln in 2011 to 5 mln in 2012; and only at 6 mln in 2013. Starts ballooned in the last 18 months in a speculative fever which we see breaking now. The starts run-up, tight credit and a near buyer’s strike have jointly created a pipeline of units that need to be completed and sold before more new units are started. This process will take years, not months or quarters, to unwind.
Government extends tax on foreign borrowings
Brazil has declared a fresh “currency war” on the US and Europe, extending a tax on foreign borrowings and threatening further capital controls in an effort to protect the country’s struggling manufacturers.
Individuals have been net sellers throughout the bull market and they keep selling in spite of the increasing media frenzy around equities.
The poor fellows are jumping into bonds. Buy high, sell low!
According to mutual-fund flow tracker EPFR Global, individual investors have pulled $8.3 billion out of U.S. stock funds since the beginning of the year and sunk almost $10.6 billion into bond funds.
NEW EQUITY BUYERS
Israel to Begin Investing Reserves in U.S Equities Today (Yesterday, my emphasis)
The Bank of Israel will begin today a pilot program to invest a portion of its foreign currency reserves in U.S. equities.
The investment, which in the initial phase will amount to 2 percent of the $77 billion reserves, or about $1.5 billion, will be made through UBS AG and BlackRock Inc. (BLK), Bank of Israel spokesman Yossi Saadon said in a telephone interview today. At a later stage, the investment is expected to increase to 10 percent of the reserves.
A small number of central banks have started investing part of their reserves in equities. About 9 percent of the foreign- exchange reserves of Switzerland’s central bank were invested in shares at the end of the third quarter, the Swiss bank said on its website.
The investment will be made in equity index trackers and will include between 1,500 to 2,000 shares, among them stocks like Apple Inc. (AAPL), Saadon said.
The central bank decided to add equities to its investment portfolio in order to diversify, reduce risk and give better performance, Barry Topf, senior adviser to Governor Stanley Fischer, said in a Dec. 1 interview.