- German Industrial Production Decreased in May. German industrial production (GRIPIMOM) dropped more than economists predicted in May, adding to signs that Europe’s sovereign debt crisis is weakening a recovery in the region’s largest economy. Production fell 1 percent from April, when it gained a revised 2 percent, the Economy Ministry in Berlin said today. That’s the first decline since January. Economists forecast a drop of 0.5 percent, according to the median of 38 estimates in a Bloomberg News survey. From a year earlier, production decreased 1 percent when adjusted for working days. German exports unexpectedly fell in May, the Federal Statistics Office said today, and factory orders dropped for a second month as the 17-nation euro region struggles to emerge from the longest recession since the introduction of the single currency in 1999. German manufacturing output fell 0.7 percent in May, with production of investment goods down 2.3 percent, today’s report showed. Construction slumped 2.6 percent, while energy output dropped 1.5 percent.
- Peugeot First-Half Sales Drop 9.8% on European Decline. PSA Peugeot Citroen (UG), Europe’s second-biggest carmaker, reported a 9.8 percent drop in first-half vehicle sales because of slumping demand in its home region and the end of component-kit deliveries to Iran.
- European Stocks Rise as Portugal Reaches Coalition Deal. European stocks rose, rebounding from their biggest decline in almost two weeks, amid speculation that economic data will improve and as Portugal’s politicians reached an agreement to hold the governing coalition together. The Stoxx Europe 600 Index added 1.4 percent to 292.37 at the close.
- China’s Ordos Struggles to Repay Debt: Xinhua Magazine. A Chinese city known for its empty skyscrapers is struggling to repay debt and has resorted to borrowing from companies to pay workers, a magazine published by the official Xinhua News Agency reported. Some district governments of Ordos, Inner Mongolia, had to borrow money from companies to pay salaries of municipal employees, Economy & Nation Weekly said in a July 5 report on its website. Ordos local-government entities have amassed 240 billion yuan ($39 billion) of debt, while the city had 37.5 billion yuan of revenue last year, the publication said without specifying annual interest costs.
- Paulson’s PFR Gold Fund Fell 23% in June, 65% This Year. John Paulson, the billionaire hedge-fund manager seeking to rebound from losses tied to bullion, posted a 23 percent decline in his PFR Gold Fund last month, according to a letter to investors. The drop brings losses in the strategy, formerly known as the Paulson Gold Fund, to 65 percent since the start of the year, the firm said in the July 3 letter, a copy of which was obtained by Bloomberg News.
Fox News:
CNBC:
- Why Underemployment May Be Worse Than It Looks. The level of underemployed workers looks bad on its face but even worse when it's not the government doing the counting.
- Rising Mortgage Rates Swing Housing Sentiment. Just as America's homeowners were finally coming up for air, they are suddenly turning more negative on the housing market. Fewer people think now is a good time to buy or to sell a house, according to a monthly survey in June from Fannie Mae. Those numbers had just hit a survey high in May, thanks to rising home prices and record low mortgage rates. Now mortgage rates have soared well over a full percentage point in the past two months, and 57 percent of respondents to the survey expect them to go even higher. That's the highest level in the survey's three-year history.
- Europe's Cleanest Dirty Shirt Sees Exports Collapse & Production Plunge. (graphs) Just when the jawboning from Europe is reaching its climax that Portugal is fixed again, Greece is fixed, and the core is showing green shoots from the near-depression, Germany (the corest of the core) comes out with its worst exports data since 2009. While imports remained stable - suggesting domestic demand is sustained for now - YoY export growth collapsed 3.2%, the worst tumble since November 2009 "illustrating that Germany's economy still has difficulties shifting into higher gear."
- Q2 2013 Earnings Week 1 Cheatsheet. (graph)
New York Times:
- In Brazil, a Reminder of Emerging-Market Risks. THE protests in Brazil last month were the latest vivid reminder of the perils of investing in emerging markets. Tens of thousands of demonstrators thronged the streets of São Paulo, Rio de Janeiro and other cities, incited partly by a rising cost of living and a slowing economy. Cars burned. Tear gas billowed. And the Brazilian stock market sank.
Reuters:
- China govt agencies told to cut expenditures by 5% this year. China's Finance Ministry has told central government agencies to cut expenditures by 5 per cent this year, a move the official Xinhua news agency said was part of an austerity campaign launched by the country's new leaders. A ministry circular ordered spending cuts in a range of areas, including the building and renovation of government offices, meetings, domestic and overseas trips, vehicles and official receptions, Xinhua reported on Sunday. The planned cuts come at a time when China is facing potentially its worst economic downturn in at least 14 years. Analysts say the economy is backsliding into another downturn but top leaders are reluctant to take policy steps to stimulate growth.
- Mexico's auto output, exports fall in June -AMIA. Mexico's auto production and
exports both fell slightly in June from a year earlier, the
Mexican Auto Industry Association said on Monday.
Automobile output for the month dropped 0.8 percent to 266,351 vehicles, while exports slid 1.5 percent to 225,753, AMIA said. Cars are a key component of Mexico's manufacturing sector.
June shipments to Latin America were down 15.5 percent to 26,342 vehicles, while exports to the United States edged up by 1 percent to 151,803.
- Russian car sales slide 11 pct in June - AEB. Sales of cars in Russia fell for the fourth straight month, down 11 percent year-on-year in June, the Association of European Businesses (AEB) said on Monday. Car sales have been sliding as Russia's $2 trillion economy has faltered, causing the AEB to recently slash its forecast for the full year to a fall of 5 percent.
- Death toll rises in clashes Monday in Egypt. Top Egyptian security officials defended army and police actions in the clashes Monday in Cairo that led to the deaths of more than 50 people, saying they were defending the Republican Guard headquarters against attackers. Health Ministry official Khaled al-Khatib put the number of fatalities at 51 and said 435 others were wounded when Egyptian security forces clashed with supporters of deposed President Mohamed Morsy and the Muslim Brotherhood outside the headquarters. Witnesses said the military and police fired as protesters took a break from holding a vigil at the Republican Guard headquarters to perform their dawn prayers. Morsy was reportedly detained in the building after his arrest Wednesday.
- Markets Insight: China faces a difficult credit bubble workout. Markets Insight: China faces a difficult credit bubble workout. The financial shock which has recently hit the emerging markets stemmed in part from a period of severe stress in the Chinese money markets, which has now been brought under control. But the challenges facing China are chronic, not acute. And since the country is much more than “first among equals” in the Brics, a prolonged slowdown in its economy would keep all emerging market assets under pressure for a long while.
- German exports suffer amid eurozone weakness. German exports suffered their steepest month-on-month decline in more than 18 months in May, as continued weakness in the eurozone and other key markets held back growth. Exports, the traditional driver of growth in Europe's biggest economy, fell 6.5pc to €88.2bn (£76bn) in May, from €94.3bn in April, according to Destatis, Germany's statistics office. This was the biggest drop since December 2011. On an annual basis, total exports fell 4.8pc, driven by a 9.6pc drop in exports to the eurozone.
- DIHK Sees Eastern German Growth at Zero. Economic growth in Germany's eastern states will be at zero this year vs. .5% in 2012, citing Martin Wansleben, managing director of the DIHK national industry and trade chambers. 56% of eastern cos. sees a risk to their business due to energy, commodity prices vs 48% in western Germany.
Echoing fears that
European policymakers remain in a state of cognitive dissonance –
recognizing the need for root-and-branch overhaul of peripheral banks,
but backtracking on joint liability plans – Christopher Flowers, the
legendary FIG investor who now runs the £2.3 billion ($3.5 billion)
private equity group JC Flowers, sounded the alarm over the negative
sovereign-bank feedback loop.
In a shot across the bows of market bulls, who cite the return of
capital flows to weaker eurozone states, Flowers issued a stark warning:
"There is a scenario where we have a Lehman-type event: we wake up some
Thursday and a big country is in trouble.
"And the ECB will have to decide to support banks x, y, z. And then the
ECB will, in fact, decide to own bank x, y, z.
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- RBI wants curb on rupee forecast by bankers. RBI has been concerned because the rupee has weakened by 12% since the start of this financial year. Whether by communicating or by curtailing communication, the Reserve Bank of India (RBI) is taking all unconventional steps to arrest the fall in the rupee. In its latest move, RBI has told treasury officials of banks to not give rupee forecasts against the dollar - particularly to the media, analysts and in their reports. It affects market sentiments to a larger extent, particularly in a situation when rupee trading is volatile, it says.
- Vale to Limit Investment as Emerging Markets Slow. Vale plans to curb capital investment over next few years because of slower economic growth in emerging markets, citing interview with CEO Murilo Ferreira.
Xinhua:
- China's Li Says East China Ports Face Downward Pressure. China Premier Li Keqiang inspected import and export situation at a port today in southern Chinese province of Guangxi.
- China's Erdos Govt Faces 'Severe' Debt Pressure. Some district governments of the city of Erdos in northern China had to borrow money from companies to pay salaries of government employees, according to a report posted on July 5. Erdos city government has debt of 240b yuan, report cites a person close to the city government as saying. Fiscal revenue of Erdos city government was 37.5b yuan last year, the report said. Economy & Nation Weekly is a publication controlled by the official Xinhua News Agency.
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