(…) the manufacturing composite declined sharply from last month’s interim high of 14. Because of the highly volatile nature of this index, I like to include a 3-month moving average to facilitate the identification of trends, now at 1.0, which is close to no growth.
U.S. Home Prices Climb U.S. home prices rose by their fastest pace in more than seven years during July, though there were some signs of a moderation in some regions, according to a widely watched index released Tuesday.
Prices in 20 major U.S. cities increased 12.4% in July compared to the same month last year, according to the Standard & Poor’s/Case-Shiller index. (…)
Tuesday’s report hinted at a possible slowdown in the rate at which prices are going up. While all 20 cities tracked by the Case-Shiller index gained in July, the pace at which prices rose slowed in 15 cities. (…)
Home prices rose 1.8% in July from June. While that was slower than the month-over-month increases in the previous three months, prices tend to rise fastest in the spring, and they typically peak in June. July’s gain was still the largest for that month since the Case-Shiller index began its count in 2000.
Remember the CS index is a 3-m m.a.
REAL WORLD, USA:
- U.S.: Transmission of monetary policy hits a snag (NBF Financial)
The transmission of U.S. monetary policy seems to have hit a snag recently: since early July, commercial & industrial loans and closed end
residential loans of U.S. commercial banks have been either flat (C&I) or contracting (residential). For both categories, as today’s Hot Chart shows, this is the worst picture in three years.
In our view, the performance of C&I loans is disturbing because it suggests tepid investment by small and medium-sized businesses, which tend to be the main contributors to job creation. In other words, businesses seem somewhat concerned about the outlook. The first uncertainty that comes to mind, of course, is the folly of U.S. politicians threatening once again to shut down the government. Forecasts that called for an acceleration of U.S. economic growth in the final quarter of the year now seem at risk.
Weekly Chain Store sales stay weak
Data is up to last weekend. Sales are showing no signs of a meaningful upturn
Less positive signals suggest economy continues to struggle
CHINESE CONFUSION: China Beige Book Shows Slowdown, Opposite Official Data
China’s economy slowed this quarter as growth in manufacturing and transportation weakened in contrast with official signs of an expansion pickup, a private survey showed.
Increases in business-investment and real estate revenue also slowed, while service industries picked up and employees became tougher to find, the survey from New York-based China Beige Book International said yesterday. The report is based on responses from 2,000 people from Aug. 12 to Sept. 4 as well as 32 in-depth interviews conducted later in September.
The quarterly report, which began last year and is modeled on the U.S. Federal Reserve’s Beige Book business survey, diverges from government figures showing faster factory-output gains in July and August that have spurred analysts from Citigroup Inc. to Deutsche Bank AG to raise expansion estimates. Nomura Holdings Inc. is among banks skeptical that any rebound will be sustained next year.
The results “show the conventional wisdom of a renewed, strong economic expansion in China to be seriously flawed,” China Beige Book President Leland Miller and Craig Charney, research and polling director, said in a statement.
The data “reveal weakening gains in profits, revenues, wages, employment and prices, all showing slipping growth on-quarter — no disaster, but certainly not the powerful expansion suggested by the consensus narrative.” (…)
The first China Beige Book, from the second quarter of 2012, said the economy was picking up, a few months ahead of official data indicating a rebound. This year’s second-quarter report showed expansion slowing across the country and a decline in companies taking out loans.
The latest survey said 47 percent of manufacturers reported revenue gains, down 6 percentage points from the second-quarter survey. Growth in export orders was “stable” for the U.S. and Europe and “off a bit” in Asia and developing nations outside of Asia.
In transportation, including shippers, 51 percent of respondents said revenue rose, down 18 percentage points. Fifty-three percent of a broader sample of businesses said investment rose, a 4-point decline. Service revenue rose for 57 percent of respondents, up 3 points.
The survey said bank-loan gains ebbed and borrowing costs declined while companies used non-bank channels more often. Forty-six percent of bankers said loans rose, down 14 percentage points from the prior survey, and there was a 20-point drop in the share expecting credit availability to ease in six months. The mean interest rate on all new loans fell 47 basis points to 6.63 percent, China Beige Book said.
So-called shadow lenders’ share of financing rose to 29 percent of loans in the third quarter, up 5 percentage points, the survey said.
Not all the China data showing a rebound have come from government sources. A report Sept. 23 from HSBC Holdings Plc and Markit Economics showed manufacturing strengthened more than estimated this month, mirroring an August increase in a similar government-produced index. (…)
US not ready to taper, says Fed official Dudley’s comments fuel uncertainty about central bank’s intentions
The leader of the Federal Reserve Bank of New York on Tuesday said it remains possible the central bank will trim the pace of bond buying before the year is done.
Two Fed officials sounded doubtful about cutting back on the central bank’s $85 billion-a-month bond-buying program at their next policy meeting next month.
GOOD READ: WAKING UP IRAN AND EGYPT
Very interesting op-ed by Thomas Friedman in the International Herald Tribune.
(…) Two huge new forces have muscled their way into the center of both Egyptian and Iranian politics, and they will bust open their old tired duopolies.
The first newcomer is Mother Nature. Do not mess with Mother Nature. Iran’s population in 1979 when the Islamic Revolution occurred was 37 million; today it’s 75 million. Egypt’s was 40 million; today it’s 85 million. The stresses from more people, climate change and decades of environmental abuse in both countries can no longer be ignored or bought off.
On July 9, Iran’s former agriculture minister, Issa Kalantari, an adviser to Iran’s new president, Hassan Rouhani, spoke to this reality in the Ghanoon newspaper: “Our main problem that threatens us, that is more dangerous than Israel, America or political fighting, is the issue of living in Iran,” said Kalantari. “It is that the Iranian plateau is becoming uninhabitable. … Groundwater has decreased and a negative water balance is widespread, and no one is thinking about this.”
He continued: “I am deeply worried about the future generations. … If this situation is not reformed, in 30 years Iran will be a ghost town. Even if there is precipitation in the desert, there will be no yield, because the area for groundwater will be dried and water will remain at ground level and evaporate.” Kalantari added: “All the bodies of natural water in Iran are drying up: Lake Urumieh, Bakhtegan, Tashak, Parishan and others.” Kalantari concluded that the “deserts in Iran are spreading, and I am warning you that South Alborz and East Zagros will be uninhabitable and people will have to migrate. But where? Easily I can say that of the 75 million people in Iran, 45 million will have uncertain circumstances. … If we start this very day to address this, it will take 12 to 15 years to balance.”
In Egypt, soil compaction and rising sea levels have already led to saltwater intrusion in the Nile Delta; overfishing and overdevelopment are threatening the Red Sea ecosystem, and unregulated and unsustainable agricultural practices in poorer districts, plus more extreme temperatures, are contributing to erosion and desertification. The World Bank estimates that environmental degradation is costing Egypt 5 percent of gross domestic product annually.
But just as Mother Nature is demanding better governance from above in both countries, an emergent and empowered middle class, which first reared its head with the 2009 Green revolution in Iran and the 2011 Tahrir revolution in Egypt, is doing so from below. A government that just provides “order” alone in either country simply won’t cut it anymore. Order, drift and decay were tolerable when populations were smaller, the environment not so degraded, the climate less volatile, and citizens less technologically empowered and connected.
Both countries today need “order-plus” — an order that enables dynamism and resilience, and that can be built only on the rule of law, innovation, political and religious pluralism, and greater freedoms. It requires political and economic institutions that are inclusive and “sustainable,” in both senses of that word. Neither country can afford the old line that Hosni Mubarak used for so many years when addressing American leaders: “After me comes the flood, so you’d better put up with my stale, plodding but stable leadership, otherwise you’ll get the Muslim Brotherhood.”
That is so 1970s. As Karim Sadjadpour, an Iran expert at the Carnegie Endowment, puts it: In the Middle East today “it’s no longer ‘After me, the flood’ — Après moi, le déluge — but ‘After me, the drought.’ ” Syria’s revolution came on the heels of the worst drought in its modern history, to which the government failed to respond.
Iran’s Islamic leadership seems to realize that it cannot keep asking its people to put up with crushing economic sanctions to preserve a nuclear weapons option. Mother Nature and Iran’s emergent middle classes require much better governance, integrated with the world. That’s why Iran is seeking a nuclear deal now with Washington.
And that’s why two of the most interesting leaders to watch today are President Rouhani of Iran and Egypt’s new military strongman, Gen. Abdul Fattah el-Sisi. Both men rose up in the old order, but both men were brought into the top leadership by the will of their emergent middle classes and newly empowered citizens, and neither man will be able to maintain order without reforming the systems that produced them — making them more sustainable and inclusive. They have no choice: too many people, too little oil, too little soil.
And pay attention: What Mother Nature and these newly empowered citizens have in common is that they can both set off a wave — a tsunami — that can overwhelm their systems at any moment, and you’ll never see it coming.