NEW$ & VIEW$ (3 JANUARY 2013)

Gift with a bow  U.S. CHRISTMAS SALES OK

Based on the weekly chain store sales data, Christmas sales were good, being up 2.9% Y/Y for the 4 weeks ended Dec. 29. Nothing to write home about but good enough to avoid a huge inventory overhang in the new year and keep margins decent.

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With the fiscal drag limited to about $250 billion or 1.5% of GDP, the worst has been avoided, or postponed rather. While consumer spending will likely suffer in Q1 and Q2, the economic momentum of recent months could help mitigate the hit to the overall economy. The recent spike in WTI is worrisome however:

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Charting Tax Increases in Fiscal Cliff Deal

 

 

Smile  Planned layoffs fall in December: Challenger

Planned layoffs at U.S. firms fell in December for the first time in four months, while the overall job-cut total in 2012 was the lowest since 1997, a report showed on Thursday.

Employers announced 32,556 job cuts last month, the second lowest monthly total of 2012 and down 43 percent from 57,081 in November, according to the report from consultants Challenger, Gray & Christmas, Inc. In 2012, the only month with a lower job-cuts tally was August, with 32,239.

December’s job cuts were also down 22 percent from the 41,785 seen a year ago.

Consumers paying down debt despite obstacles: ABA

Consumers continued to pay down debt in the third quarter of 2012, but slow job growth and the expiration of a tax cut could mean it will become more difficult to repay loans, the American Bankers Association said on Thursday.

Delinquencies on bank card payments fell to an 18-year low during the quarter, and a composite ratio covering late payments in eight loan categories also fell, the group said. (…)

The composite ratio’s delinquency rate fell to 2.16 percent of all accounts in the third quarter from 2.24 percent in the second quarter, the ABA said.

Bank card delinquencies, which are not part of the composite, fell to 2.75 percent during the quarter, the lowest level since 1994, the group said.

U.S. Construction Spending Is Depressed by Hurricane Sandy

Construction activity suffered in the wake of Hurricane Sandy. The value of construction put-in-place fell 0.3% during November after a downwardly revised 0.7% October increase.  A lower level of private nonresidential construction led the drop with a 0.7% (+8.2% y/y) fall. Offsetting these declines was a 0.4% rise (19.0% y/y) in residential spending. That was led by a 1.3% jump (29.4% y/y) in new single-family home building. Multi-family building rose 0.5% and nearly doubled y/y, but spending on improvements fell 0.7% (+5.8% y/y).  

In the public sector, building activity fell 0.4% m/m (-2.6% y/y). Office construction declined 5.7% and was off by nearly one quarter y/y. Public safety spending fell 2.6% (-6.2% y/y). To the upside, spending on highways & streets, which is 29% of total public construction spending, rose 0.5% (-6.0% y/y). Transportation spending, which is 10% of total public, gained 0.4% (25.6% y/y).

Pointing up  It is worth nothing that private construction has been rising at an 8.7% annualized rate in the 3 months to November (+13.3% Y/Y). Meanwhile, public spending has been declining at a 2.4% annualized rate (-2.6% Y/Y).

Manhattan Apartment Listings Plunge in Sign Sale Prices to Climb  Manhattan’s inventory of homes for sale plunged to the lowest in at least 12 years, a sign that prices may rise in 2013 if buyer demand intensifies.

There were 4,749 apartments on the market at the end of December, a 34 percent decline from a year earlier and the lowest number since Miller Samuel Inc. began tracking the data in 2000, the appraiser said today in a report with Douglas Elliman Real Estate. Fourth-quarter sales surged 29 percent to 2,598, the highest for the period since at least 1987, as buyers rushed to finish deals before expected tax increases this year.

“Inventory has fallen precipitously to the point where there’s only one way for pricing to go, and that is to see an upward trend in 2013,” Jonathan Miller, president of New York- based Miller Samuel, said in an interview. (…)

StreetEasy reported a 14 percent decline in inventory for the fourth quarter compared with a year earlier, and a 10 percent increase in the median price of all sales to $819,000.

Money  BofA raises lending after cuts
Chief seeks ‘more aggressive’ loans to companies

 

Bank of America is ramping up mortgage and corporate lending after two years of focusing on capital levels and cost-cutting under chief executive Brian Moynihan.

Mr Moynihan said the company should overtake JPMorgan Chase in direct-to-consumer mortgage lending in the next six months and he had directed bankers to be “more aggressive” in lending to companies.

UK credit conditions ease ‘significantly’
BoE survey finds access to mortgages is improving

Lenders polled by the BoE for its quarterly Credit Conditions Survey said the availability of credit secured on property had risen “significantly” in the three months to mid-December, in part because of the central bank’s Funding for Lending scheme – the flagship initiative by the government to spur lending to UK households. Mortgages also became cheaper, according to the lenders surveyed.

German Jobless Number Rises

The number of people seeking work increased by 3,000 in the final month of last year, the Agency for Labor reported Thursday, a smaller rise than November’s 5,000 claims.

Spain Registered Unemployment Falls for 1st Month in Five  Spain’s registered unemployment fell for the first time in five months in December as service industries boosted hiring over the holiday season.

The number of people registering for jobless benefits fell by 59,094 from November to 4.8 million, the Labor Ministry in Madrid said today. That’s the best result on record for December. (…)

The number of service-sector workers registered as jobless fell by 49,438. At the same time, 4,325 more construction workers and 2,794 more manufacturing workers were unemployed.

High five  Markit’s Spanish PMI suggests more pain for Spain:

imageThe health of the Spanish manufacturing sector deteriorated again in December, continuing a trend seen in each month since May 2011. Production decreased at an accelerated pace, while the rate of job cuts also intensified.

New orders decreased for the twentieth successive month in December. Although the rate of contraction slowed to the weakest since June 2011, it was still marked.

In contrast to total new business, new export orders increased in December. Respondents indicated that they had concentrated marketing efforts on external markets.

Smile  Asian Economies Show Strength

Surveys released Wednesday of purchasing managers in South Korea, Taiwan and India, following similar releases from China earlier in the week, suggest manufacturing in Asia is gaining steam after a subdued 2012. (…)

HSBC’s PMI for South Korea was at a seasonally adjusted 50.1 in December—its highest point since May—up from 48.2 in November and 47.4 in October.

Taiwan’s HSBC PMI reading for December was 50.6, moving into the expansionary zone from November’s 47.4. The India HSBC PMI reading rose to 54.7 in December from 53.7 in November.

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HSBC’s Asian electronics lead indicator for December posted its highest reading since last March, suggesting that the electronics manufacturing cycle is on the mend. That is a significant development for countries such as South Korea and Taiwan, and was reflected in HSBC’s December Purchasing Managers’ Index for those countries, with the surveys indicating expansion for the first time since May.

Non-manufacturing sector continues to improve The Purchasing Managers Index of China’s non-manufacturing sector was 56.1 percent in December, up 0.5 percentage points from November.

Hong Kong Luxury Sales Rebound on Confidence in China’s Recovery

Sales of goods including jewelry and watches jumped 13.7 percent in November from a year earlier after a 2.9 percent fall in October.

Overall, retail sales rose 9.5 percent from a year earlier, the biggest gain in five months and more than any of seven analysts forecast in a Bloomberg News survey with a median of 4.2 percent.

Russian Oil Output Keeps Rising

Oil production rose just over 1% to 10.375 million barrels per day, from the previous high of 10.27 million barrels reached last year. news agency Interfax reported, citing the ministry’s statistical arm. In tons, Russia’s crude production rose to about 518 million, from 511.4 million tons in 2011.

Mohamed El-Erian:

(…) there is an important serious silver lining to what, otherwise, should be regarded as one of the most uninspiring and wasteful Congressional dramas of all times. And this has to do with the social dimension.

For many years now, the rich have done very well in America while the middle class has stagnated and a growing number of poor Americans have fallen through the country’s stretched safety nets. Even in the aftermath of a global financial crisis triggered by irresponsible risk taking and excessive concessions to powerful lobbies, the bulk of state support has gone to the better off segments of society.

Pointing up  The fiscal cliff compromise is the first meaningful attempt to redress this multi-year phenomenon.

By increasing tax rates on better off segments and by maintaining redistribution mechanisms, an effort is being made to stop years of steady deterioration in income and wealth inequalities. Yet the benefits will only prove durable and meaningful if the nation’s overall economic context is addressed in a more comprehensive manner that improves economic growth and creates jobs. For that, we need a much more visionary, responsible and functional Congress.

 
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