NEW$ & VIEW$ (5 MARCH 2013)

Eurozone retail sales rise in January but beware February. Europe car sales plummet. Eurozone fiscal rules: firm but flexible. Sentiment watch. Watch corporate bonds.


Sales volumes rose 1.2% in one of the slowest month of the year after declining 0.8% in December. Nevertheless, the 3 month growth of 0.6% (2.5% a.r.) sure beats the previous 3 month 1.6% drop (-6.6% a.r.).  Core sales did even better with a 2.0% gain in January after 4 consecutive declines totaling 3.0%.




High five  That said, Markit’s latest retail PMI for the Eurozone signaled a sharp decline in February, as reported in my Feb. 28 New$ & View$:

Markit’s Eurozone retail PMI® data for February signalled a record year-on-year fall in retail sales revenues in the single currency area. Sales were also down sharply compared with January, as signalled by a PMI reading of 44.5, down from 45.9.

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Retail PMI data by country signalled a broad-based downturn in sales revenues in February. Germany registered a fourth decline in sales in the past seven months, while French retail sales fell for a survey-record eleventh consecutive month and at the fastest pace since last August. Italy continued to show the strongest overall decline, albeit the weakest since last September.

Auto  Lightning  German car sales plunge as Europe’s auto crisis deepens

New car sales in Germany fell by more than 10 percent year-on-year in February, signaling the crisis for Europe’s auto makers is deepening as recession-hit consumers curb spending.

The data, which comes as executives gather for Wednesday’s opening of the Geneva Car Show, follows an 8.5 percent decline in new car registrations in Europe’s largest economy in January. (…)

Pointing up   Germany continues to outperform markets such as France and Italy, where car registrations tumbled 12 percent and 17 percent respectively in February.(…)

German car sales fell 2.9 percent in 2012, including a 16 percent drop in December.



EU Opens Way for Easier Budgets After Backlash


European finance ministers opened the way for looser budget policies after a backlash against austerity thrust Italy into political limbo and shattered months of relative stability in European markets.

Italy’s deadlocked election, France’s refusal to make deeper budget cuts and protests against the shrinking of the welfare state across southern Europe escalated the rebellion against the German-led prescription for fighting the debt crisis.

Economic strains “may also justify in a certain number of cases reviewing deadlines for the correction of excessive deficits,” European Union Economic and Monetary Commissioner Olli Rehn told reporters late yesterday after a meeting of euro- area finance ministers in Brussels.

In the same FT: good news…
Shares rebound as China sticks to targets
Sentiment improves as investors bet on further easing


(…) But the SCI has recovered by 2.3 per cent after Beijing maintained its economic growth target at 7.5 per cent while lowering its inflation goal to 3.5 per cent as the National People’s Congress opened on Tuesday.

…not so good news:
Wen issues China growth warning
Outgoing premier says 7.5% GDP target will be ‘hard to attain’


Warning signs for US corporate bonds

Debt looks expensive and borrowers are paying higher premiums

Could the bond boom be turning? Warning signs are flashing as investors demand higher yields even on US bonds issued by the world’s largest and safest corporate borrowers.

In recent weeks, big investment grade bond issues by the likes of Philip Morris International and UnitedHealth Group have been sold at higher yields than the levels their older bonds were trading at in the secondary market.

Returns on IG bonds taper off after 2012 peak


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