World News!

Afghanistan

• A bicycle bomb killed nine people in Faryab.

China

• In an effort to get a larger piece of the lucrative (and large) Chinese market, Ford plans to double production in the country by 2015.  The car maker anticipates sales will reach 30 million vehicles by 2020, approximately double their U.S. sales.
• China has denied claims that it attempted to assassinate the Dalai Lama by sending female agents to kill him with poisoned hair and scarves[1].  Chinese foreign ministry spokesman Hong Lei said "his sensational allegations are not even worth refuting".

Greece

• Yet another failed round of efforts to form a coalition government has led to increased fears of a Greek default, followed by Greece leaving the Euro zone.  the country could run out of funds by June, and currently has no government in place to negotiate the next aid loan from the European Union.

Syria

• Raising increasing questions about the effectiveness of the UN-brokered cease fire, 23 Syrian soldiers were killed in fighting near Rastan

United States

• Ina Drew, chief investment officer of J.P. Morgan Chase, is expected to resign this week in the wake of $2 billion in realized losses from credit default swaps[2] (with the promise of another $1 billion in losses as the company tries to wind the positions down).
• Brazilian-born Facebook co-founder Eduardo Saverin has renounced his US citizenship to become a resident of Singapore.  Some estimates are that this will allow him to avoid some $600 million in taxes.  An analysis by Forbes magazine disputes this, however.

[1]  The said nothing about other methods they may have employed, however.

[2]  You remember credit default swaps, don't you?  The things that tried to destroy the market a few years back?  Sure you do.

Producer Price Index News Release

 

Bureau of Labor Statistics

The latest Producer Price Index news release has been posted on the BLS website at http://www.bls.gov/news.release/pdf/ppi.pdf and also archived at http://www.bls.gov/news.release/archives/ppi_05112012.pdf. Highlights are below. The Producer Price Index for finished goods falls 0.2% in April; finished core rises 0.2% 05/11/2012 The Producer Price Index for finished goods fell 0.2 percent in April. Prices for finished goods were unchanged in March and increased 0.4 percent in February. The index for finished goods less foods and energy rose 0.2 percent. HTML | PDF

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FW: World News!

Pakistan

• Following the beheading of a British nurse, the International Committee of the Red Cross has suspended humanitarian activities in Peshawar and Karachi.

South Korea

• In "eeeewww" news, South Korea is stepping up customs inspections in an effort to crack down on the trade in powdered human flesh.

Syria

• A car bomb exploded near an office of the Palestine Branch (one of the 20 Syrian secret police organizations) in Damascus, killing 55 and wounding 372.  The Syrian government blames "terrorists", and the opposition says the government set the bombs off to discredit them.

 

United States

• James Anaya, the UN special Rapporteur on the Rights of Indigenous Peoples, called on the United States to return some of the land stolen from American Indian tribes as part of a program of ending "systemic and also specific instances of ongoing discrimination".
• In "maybe there is a such thing as bad publicity" news, ten alleged members of the white supremacist group "The American Front" were arrested near Disney World.
• The Florida Supreme Court is set to hear oral arguments in Roman Pino v Bank of New York Mellon.  The case revolves around "robo-signing" - the process of banks hiring low-wage workers to sign legal documents without checking them for accuracy - and could result in tens of thousands of mortgages becoming unenforceable.

International Trade

International Trade is the shorthand for the U.S. International Trade Deficit[1], a measure of how much we import vs. how much we export.  If the number is positive, that means we're exporting more than we're importing.  If it's negative, then it's the other way around.  The report is lagging, looking at the balance from two months in the past.

 

This metric is huge, mostly because it directly influences that biggest of all economic big dogs, Gross Domestic Product.  GDP is, by definition, private consumption plus private sector investments plus government spending plus (exports minus imports).  So, if we're exporting more than we're importing, that's a boost for the economy.

 

Again, we haven't had a trade surplus since 1975. So our trade balance has been a drain on the U.S. economy for 37 years.  By definition.

 

February saw a trade balance level of $-46.0 billion.  The Econoday-surveyed analysts are bearish for March, expecting to see the trade deficit expand to $-49.5 billion.  And to find out if they are right, we turn to the US Census Bureau.

 

The title of the article, Goods and services Deficit Increases in March 2012 is, at best, an inauspicious beginning.  But hey, the analysts were expecting that.  What they weren't expecting was for the trade deficit to increase to not $-49.5 billion but to $-51.8 billion.  We did see a $5.3 billion increase in overall exports (which is good), driven primarily by exports of industrial supplies and materials ($2.4 billion increase) and capital goods ($1.2 billion increase).  Imports increased by $11.7 billion, driven by capital goods ($3.5 billion increase), consumer goods ($3.3 billion increase), and industrial supplies and materials ($2.5 billion).

 

[1]  Technically, that should be U.S. International Trade Balance.  But we haven't had a trade surplus since 1975.

Unemployment Insurance Weekly Claims Report

It is, of course, Thursday.  And if it's Thursday, it's time for unemployment!

 

If you recall from last week, we had an advance figure for seasonally adjusted initial claims for the week of April 28 come in at 365,000, beating expectations.  The advance figure for seasonally adjusted insured unemployment also declined to 3,276,000.  Even the unadjusted numbers were good:  the advance figure for actual initial claims came in at 330,476, and the total number of people claiming benefits in all programs (as of April 14) was 6,597,492.

 

For the week ending May 5, the Econoday-surveyed analysts are bearish.  But they're so mildly bearish that it hardly counts, expecting the new claims level to rise to 366,000.  Are they right?  Only the Department of Labor knows for sure.

 

Speaking of the DoL, let's have a look at the Unemployment Insurance Weekly Claims Report for May 5.  The advance figure for seasonally adjusted initial claims came in at 367,000.  Technically, that misses expectations.  But it missed by so little that I think we can give it to them;  it certainly won't crush anybody's spirits.  The initial claims figure for April 28 was also adjusted upwards to 368,000;  again, not as bad as it could have been.

 

The advance figure for for seasonally adjusted insured unemployment comes in at 3,229,000, a decline from last week.  Even if you ignore the upward revision of last week's level to 3,290,500.

 

Looking at unadjusted numbers, the actual initial claims for May 5 came in at 338,418 and the total number of people claiming benefits in all programs for the week ending April 21 came in at 6,423,383.

 

So, overall, a week that met expectations.

U.S. Import and Export Price Indexes News Release

 

Bureau of Labor Statistics

The latest U.S. Import and Export Price Indexes news release has been posted on the BLS website at http://www.bls.gov/news.release/pdf/ximpim.pdf and also archived at http://www.bls.gov/news.release/archives/ximpim_05102012.pdf. Highlights are below. U.S. import prices fall 0.5 percent in April while export prices rise 0.4 percent 05/10/2012 U.S. import prices declined 0.5 percent in April, following a 1.5 percent increase in March. The April decrease was driven by lower fuel prices which more than offset a small increase in nonfuel prices. The price index for overall exports rose 0.4 percent in April after a 0.8 percent increase... HTML | PDF

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Import and Export Prices

Import and Export Prices is exactly what it looks like.  A measure of the change in the prices we receive for exporting goods and services, and and a measure in the change in prices for goods and services we import.  It's a separate report from International Trade (go figure), and it is a one month lagging indicator.

 

March saw a 0.8% increase in export prices, and a 1.3% increase in import prices.  The Econoday-surveyed analysts are mildly bullish on this one, expecting a 0.2% increase in export prices for April, and a 0.2% decrease in import prices.  But are they right?  Let's go check the Bureau of Labor Statistics and find out.

 

Looking at the U.S. Import and Export Price Indexes - April 2012 report, it actually turns out they weren't bearish enough.  U.S. import prices declined 0.5% in April, and export prices increased 0.4%.  That's good news for domestic companies, at least[1].

 

The decline in import costs was led by a 2.1% drop in fuel import prices, which breaks down to a 1.8% decline in imported petroleum prices and a 14.1% decline in imported natural gas prices.    The increase in export costs was driven by a 2.0% increase in agricultural prices, led by a 7.4% increase in soybean prices.

 

[1]  The ones that don't import everything from overseas to resell in the US markets, that is.