May 23, 2011

Weak Manufacturing Data from China

May 23, 2011

Equity futures are down almost 1% this morning after a very weak close in the last hour of trading on Friday. The big concern this morning is coming from Europe the IMF announces plans to stabilize Portugal with a 26 billion Euro loan. Additionally, concerns abound about the stability of both Italy and Spain as bond yields for both countries jumped. The Euro is weak this morning, hitting a record low versus the Swiss franc.

Commodities are extremely weak this morning on concerns global growth is slowing as a result of a weaker than expected manufacturing number out of China. Copper is down almost 4% this morning and oil is down 3%. The dollar and Yen are both up. Bonds in Germany are up as the rate on the bund fell 5bps to 3.01%.

A tornado ripped through Joplin, MO yesterday, killing 89 and leaving a massive wake of devastation. The tornado was ¾ of a mile wide, and debris has been found up to 60 miles away.

APAC markets were down hard last night as Chinese stocks slid 2.9% on concerns about slowing manufacturing growth. The Nikkei fell 1.5%, ASX 1.9%, Kospi 2.6%, Taiex 1%, Hang Seng 2.1%, and SET 1.8%.

RealtyTrac reported that US lenders now own 872K foreclosed homes, double the level of three years ago. The NY Times reported that prices are still falling as the spring selling season begins. On the positive side, foreclosure filings last month were 219K, a 34% decline from the prior year.

The city of Duluth, MN, sued online travel agency Expedia for sales tax revenues that Expedia doesn’t feel obliged to pay the city. While the city may win the suit, they could lose the war as Expedia has reportedly “blacklisted” cities attempting to collect the taxes by lowering destinations in those cities in search results on the Expedia site.

Negotiations in the Middle East have taken a turn, although at this point it’s difficult to say which whether the turn will be for the better or worse. President Obama has suggested beginning the negotiations between the Palestinians and Israel by resetting to the pre-1967 borders. Israel has said this is a non-starter. Remember that the borders were reset after Israel won the Six-Day War in 1967 and took over the Gaza Strip, Sinai Peninsula, West bank, East Jerusalem, and the Golan Heights.

As far as I can tell the world didn’t end on Saturday as expected by a number of, well, let’s just say interesting forecasters.

In a case of “are you kidding me”, the Washington Post reported that the Justice Department and SEC both routinely allow companies suspected of paying overseas bribes to conduct their own investigation. The companies are then required to share their findings with the government. Really?

Have a great day


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