NEW$ & VIEW$ (22 March 2012)

Very poor stats from China and Europe PMIs today. How long can the U.S. hold?

Smile   Initial Unemployment Claims in U.S. Decline to Lowest Level in Four Years

Jobless claims decreased by 5,000 to 348,000 in the week ended March 17, the fewest since February 2008. The Labor Department revised the previous week’s figure up to 353,000 from an initially reported 351,000. The four-week moving average, a less volatile measure than the weekly figures, declined to 355,000 last week from 356,250.


The quarter isn’t over yet, but it’s clear that Q1 is poised to register another increase in bank credit. With this fourth consecutive quarterly increase, total loans and leases are set to rise to around US$7 trillion, the highest since mid-2009. And as today’s Hot Chart shows, for the first time in years, the quarterly increase in loans and leases is being driven by real estate loans. (NBF)



From a WSJ article (Housing Shows Signs of Life):

(…) For years, Home Depot executives have seen demand from customers seeking to remodel and repair their homes. But in recent months, the retailer saw a 3% jump in transactions of $900 or more, compared with a 1.3% rise in purchases totaling $50 or less. That suggests consumers are spending more on bigger items and could be outfitting homes with an eye to sell.

Real-estate agents say one problem with today’s housing market is a lack of inventory. The number of homes listed for sale is down sharply from one year ago in much of the country. (…)


(…) last year we reported better job and wage and salary growth numbers than the BLS and BEA. This year, the BLS and BEA are reporting better numbers than we are. And at some point in the future we fully expect them to again revise their numbers downwards closer to ours.


High five    I do not know to what extent Trimtabs’ analysis rests on California data. If it is, be careful given that Trimtabs (and Mike Shedlock) did not care to offer one explanation given by California State Controller John Chiang:


If Californians are filing taxes early or making a shift from paper to electronic filing, this shortfall could be offset in the coming months. While this month’s totals appear lackluster, February is typically a poor indicator of tax receipts collected later in the fiscal year.

On sales tax revenues, Chiang wrote:

Though they exceeded expectations, sales tax revenues are well below last year due to a lower statewide tax rate.

However, he also noted that

Personal income and corporate taxes came in below the Governor’s estimates.

Winking smile   What the controller is not saying is that California has the highest personal income taxes  and the fourth highest sales tax rate in the U.S. Like everywhere else, if you raise taxes high enough, people will find ways to pay less of them.


Reuters’ post:

FedEx Corp reported higher quarterly profit that beat estimates, citing higher revenue per package and record holiday shipping, and forecast further advances in the current quarter. A lower tax rate and mild winter weather as well as fuel surcharges also drove profit up, the world’s second-largest parcel delivery company said.

FedEx said on Thursday that net earnings in the third quarter ended February 29 rose to $521 million, or $1.65 per share, from $231 million, or 73 cents a share, a year earlier. Excluding one-time items, profit rose to $1.55 per share from 81 cents a year ago.

(…) “We expect our solid performance to continue in our fourth quarter, capping off a strong fiscal year.”

Pointing up   Storm cloud   But Bloomberg had the more significant stuff:

Earnings in the three months ending in May, FedEx’s fourth quarter, will be $1.75 to $2 a share, compared with $1.75 a year earlier, the Memphis, Tennessee-based company said today in a statement. Analysts estimated $1.98, the average of 22 projections compiled by Bloomberg.

FedEx’s Express unit, its largest by revenue, posted a 4 percent drop in domestic shipments while international priority shipments of small packages slid 1 percent. Executives said on a conference call the company projects “below-trend” growth in coming quarters.

Japan Tempers the Optimism

“The Japanese economy is still picking up slowly, while difficulties continue to prevail due to the Great East Japan Earthquake,” the government said Wednesday in its monthly economic report. It marked the fifth straight month of no change to the overall judgment on the world’s third-largest economy.

But the government slightly raised its assessment of short-term prospects, saying “a picking-up trend in the Japanese economy is expected to take hold.”


Storm cloud   U.K. Retail Sales Fall

Sales including fuel fell 0.8 percent from January, the most in nine months, the Office for National Statistics said today in London. . The increase in January was revised to 0.3 percent from 0.9 percent. Excluding fuel, retail sales fell 0.8 percent in February from January and increased 1 percent from a year earlier.

U.K. Cuts Taxes on Rich, Businesses

One of the tax cuts—a reduction of the top personal-income tax rate to 45% from 50% on incomes over £150,000 ($238,000) in April 2013—comes with political risk for Mr. Osborne’s Conservative Party, which is frequently accused of catering to the wealthy. Mr. Osborne attempted to balance that move by raising taxes on the purchase of the most expensive homes, promising to reduce avoidance of property taxes and by exempting two million more people at the lower end of the income scale from paying any income tax.

The government also cut corporate tax rates to 24% from 26%. That rate, which had already been set to fall to 25%, will be cut again in the next two years to 22%—”a headline rate that is not just lower than our competitors, but dramatically lower,” the chancellor told Parliament.


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