NEW$ & VIEW$ (4 April 2012)

Auto   U.S. Auto Sales Sizzle

U.S. auto sales continued to surge in March as buyers crowded dealerships looking to replace their aging cars with more fuel-efficient vehicles.

All told auto makers sold 1.4 million light vehicles in March, according to researcher Autodata Corp.

Punch   Here’s the more lukewarm view from Haver Analytics:

Unit vehicle sales fell 4.8% m/m to 14.37M (AR) during March according to Autodata Corporation. That sales rate was up 10.0% versus one year earlier and remained nearly the highest since March 2008.

Auto sales fell 6.9% m/m (+12.6% y/y) to 7.64M. The decline reflected a 6.3% drop (+11.0% y/y) in domestic car sales to 5.14M and an 8.1% drop (+15.9% y/y) in imports to 2.50M. Light truck sales fell a lesser 2.4% m/m (+7.2% y/y) to 6.73M reflecting a 2.5% decline (+9.5% y/y) to 5.72M in domestic truck purchases. Sales of imported light trucks fell 1.7% (-4.4% y/y) to 1.01M.

Pointing up  The WSJ article had this interesting comment:

According to the University of Michigan’s Transportation Research Institute, vehicles purchased in February of this year were on average about 18% more fuel efficient than those bought in October 2007, and the trend has been rising sharply.

Thumbs up  Bernanke’s comments last week sparked an equity rally. It fizzled yesterday…Thumbs down


Fed Holds Fire on Stimulus

The Federal Reserve is in no hurry to launch new measures to boost economic growth, minutes from its policy meeting showed.

Ahead of the release of the meeting minutes, analysts at Goldman Sachs Group Inc. stuck by their call that the Fed would launch another round of easing in the second quarter of 2012. But after the release, they said any move would likely be made later in the quarter, at the Fed’s June meeting, rather than at the next meeting in April. “The lack of support for immediate easing among current voting members suggests that any action at the April meeting is unlikely,” Goldman analysts wrote after digesting the minutes.

Hiring at U.S. Workplaces Jumps in March


The March Job Creation Index reflects 35% of U.S. adult workers saying their employers are hiring and expanding the size of their workforces, and 17% saying their employers are letting workers go and reducing the size of the workforces. While the percentage letting go matches what Gallup found in January, the percentage hiring is at a 42-month high, last seen in September 2008.



Real retail sales declined 0.1% in the Eurozone in February, following a 1.1% jump in January. Sales volumes have declined each month since September except January, declining at a 2.4% annual rate during the period. Ex-food and fuel, February sales were unchanged after January’s 1.0% advance. Real “core” sales have declined at a 1.8% annual rate since September 2011. (Eurostat)


Storm cloud   Italy Austerity Poses Threat to Economy

Italy’s austerity measures may be backfiring by stunting activity in the euro-zone’s third-largest economy, recent budget and economic data show.

Lightning   Italy’s gross domestic product contracted 1% in the first quarter from the last three months of 2011, according to an estimate from the Confindustria business lobby.

Auto   Worries about permanent losses to Italy’s economy were underscored this week by Unrae, the foreign-car dealers’ association, which said sales in Italy of all cars had fallen 21% in the first quarter—the biggest season for such purchases—and that March unit sales had hit a 32-year low.


Storm cloud  Spanish Bond Sale Fizzles

Spain’s borrowing costs rose at its first debt sale since the government announced its budget, as growing worries over the country’s economy prompted investors to demand a higher yield.

The average yield on the 2015 bond rose to 2.89% from 2.44% at the previous auction March 15. The average yield increased to 4.319% on the 2016 bond from 3.376% at the previous tender March 1. The average yield on the 2020 bond edged up to 5.338% from 5.156% at the Sept. 15 auction.

“Yields [are] clearly sharply higher than at previous sales, but…that was ‘already priced into’ secondary markets,” said Marc Ostwald, strategist at Monument Securities.



(Chart from Liz Ann Sonders,Senior Vice President, Chief Investment Strategist, Charles Schwab & Co., Inc)

ECB leaves interest rates on hold at 1%  Decision comes amid signs the eurozone is stuck in recession


Mug   Germany’s 2 million public service workers are set for a 6.3 percent raise over two years under an agreement reached with the government, the Ver.di union said on March 31. That would be the biggest increase negotiated by the union since 1992.

That’s widening the gaps between Europe’s largest economy and its euro- area peers, making the ECB’s one-size-fits-all monetary policy less effective.

German nominal gross wages rose an average 2 percent a year between 2000 and 2009, according to Eurostat, less than half the 4.7 percent annual average gain in Spain.(Bloomberg) (Chart from Haver Analytics)

Pointing up  German officials will maintain, even increase the pressure on the ECB to fight “potential” inflation.

Smile   U.K. economy avoids recession by registering strongest quarter for a year as growth accelerates in March

imagePMI data signalled that UK economic growth picked up in March to round off the strongest quarter for a year. The robust increase in output signalled by the PMI surveys suggests that the UK economy has escaped a slide back into recession. An upturn in business confidence in both construction and service sectors bodes well for future growth, though soft underlying order books may weigh on manufacturing.

The All-Sector Output Index rose from 53.8 in February to 55.3, rounding off the strongest quarter for a year and is consistent with gross domestic product (GDP) increasing at a quarterly rate of 0.5% in the first quarter. That more than offsets the 0.3% decline seen in the final quarter of 2011

Smile   U.K. House Prices Surge Most in Almost Three Years, Halifax Says

Prices  jumped 2.2 percent from February to an average 163,803 pounds ($260,300), the mortgage unit of Lloyds Banking Group Plc said in an e-mailed statement in London today. That’s the biggest monthly increase since May 2009. From a year earlier, values were up 0.8 percent.

A separate report this week by Hometrack Ltd. showed U.K. house prices rose in March for the first time in 21 months as buyers rushed to beat the expiration of the property-tax exemption and prices in London gained.

Storm cloud   Australia Trade Deficit Rings Alarms Bells

A fall in coal exports has produced Australia’s second monthly trade deficit in a row in February. The Aussie dollar fell sharply after the news.

Exports were down 2% and imports down 4% in February, the ABS said. Crucial coal exports were off 16% as mining was hit by bad weather and strikes.

Pointing up   And also by weak Chinese demand.

Money   Chinese Premier Blasts Banks

“Let me be frank. Our banks earn profit too easily. Why? Because a small number of large banks have a monopoly,” said Mr. Wen, according to the transcript of the program on the broadcaster’s website. “To break the monopoly, we must allow private capital to flow into the finance sector.”


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