Financial Market Report for May 1, 2012
1) … Stocks rose today on the ISM Report
Residential REITS, REZ, and shopping center REITS, such as Simon Property Group, SPG, take Real Estate, IYR, and Small Cap Real Estate to new highs, which in turn gave some, that is a little, rise to US Stocks, VTI, and World Stocks, VT. Total Bonds, BND, traded lower.
Many stocks, although rising manifested a hammer doji in their trading pattern suggesting that today’s rise is both weak and questionable. A case in point is the rise in large cap growth, JKE; click on image to enlarge.
The ratio of small cap purv value shares relative to small cap pure growth shares is one indicator of stock market direction; a downward post suggests investors are derisking out of stocks; click on image to enlarge.
2) … In today’s news
Bespoke Investment Group reports Strongest ISM Manufacturing Since June 2011
Calculated Risk reports ISM manufacturing index indicates faster expansion in April
CS Monitor relates Fed sees more growth? Don’t count on it. Recession ahead
OfTwoMinds relates When data is spun, what data can we trust?
Institutional Risk Analyst relates The land of Lincoln is leaking
Chris Martenson relates The Europe crisis from a European perspective
MunKnee relates Spain has brought Europe to the point of no return
Bloomberg reports Spain slips back into recession in first quarter
Reuters reports Spain in recession as usterity bites deep
Vicky Short writes in WSWS Spain’s foreign minister admits economic and social crisis “of huge proportions”. Foreign Minister Jose Manuel Garcia-Margallo’s remark came as economic contraction pushed the Spanish economy officially into recession for the second time since 2009.
Lena Sokoll writes in WSWS Election in North Rhine-Westphalia: A state mired in debt. Urban decay and municipal debt are among the most pressing issues in the upcoming state election in North Rhine-Westphalia
Johannes Stern writes in WSWS Mass layoffs planned after French elections. Politicians and trade union officials in France are discussing plans for a wave of mass layoffs after the May 6 second round of the presidential elections.
Nick Beams writes in WSWS Spanish debt crisis pushing global economy to the brink Since the near-default of Greece threatened to set off a meltdown late last year, the eye of the financial storm has shifted to Spain.
Open Europe reports Sarkozy: “Europe is weakening the concept of the Nation”
In a speech last night, Nicolas Sarkozy upped his patriotic rhetoric, accusing Europe of “weakening the concept of the Nation” and stressing the “crucial importance of borders in a globalised world”. He stated “France wanted Europe, and France expects that Europe will protect European people”. On Europe 1 this morning, Socialist candidate Francois Hollande dismissed Sarkozy’s claim that borders had become the cornerstone of the 2012 election campaign, and argued that any control on entry should be determined at the European level.
The latest polls ahead of Sunday’s second round run-off show that the gap between Hollande and Sarkozy has narrowed, although the socialist frontrunner still leads on 53%, ahead of Sarkozy on 47%. Sarkozy’s rise is attributed to his success in winning over centrist Francois Bayrou voters, and Hollande’s inability to convince far-left Jean-Luc Melenchon supporters.
Le Monde Liberation Guardian Times Saturday’s Times FT Weekend Liberation FT WSJ Le Journal de Dimanche Le Monde 2
Ahead of the Greek elections, Panos Kammenos, yleader of the Independent Greeks party, currently polling at 10%, said, “The German government is trying, through economic policy, to conquer Europe…The Germans are trying to force submission on the rest of Europe and create a fourth economic Reich.” FT WSJ Saturday’s Times
US regulators have refused to alter their insurance rules to comply with the EU’s Solvency II regulations. Meanwhile, Fitch Ratings has warned that Solvency II could limit banks’ ability to securitise a wide variety of loans, and thereby hamper lending in the eurozone. FT FT 2
Writing in the WSJ, Marian Tupy of the CATO Institute argues that leaders in Central and Eastern Europe should “not ignore the rising costs of their EU membership.” WSJ: Tupy
Bloomberg reports Indian Exports Shrank in March for First Time Since 2009. Indian exports fell in March for the first time in two and a half years as Europe’s debt crisis and slower Chinese growth hurt demand. Merchandise shipments dropped 5.7 percent from a year earlier to $28.7 billion, the government said in a statement in New Delhi today. Imports rose 24.3 percent to $42.6 billion, leaving a trade deficit of $13.9 billion. Exports last shrank year-on-year in September 2009. India’s trade deficit surged to a record $184.9 billion in the fiscal year ended March 31 as elevated crude oil prices stoked import bills and a struggling global recovery hurt exports. “The fragile global economy doesn’t augur well for Indian exports,” Rupa Rege Nitsure, an economist at state-owned Bank of Baroda (BOB) in Mumbai, said before the report. “The widening trade deficit and slowing economic growth pose significant risks to India’s macroeconomic stability. (Hat Tip to Between The Hedges).
Robert Wenzel docuemnts in Economic Policy Journal the march of regionalization and regional global governance in the North American continent, as well as advances toward a one world government. The Advance of a One World Government and a North American Union, a NAU, that Cass Sunstein, is out this morning with a short essay in WSJ.
In an interdependent global economy, diverse regulations can cause trouble for companies doing business across national boundaries. Unnecessary differences in countries’ regulatory requirements can cost money, compromising economic growth and job creation. Think of divergent requirements for car headlights, or the labeling of food, or standards for container sizes.
Recognizing this, President Obama’s Jobs Council has called for U.S. agencies to better align U.S. regulations with those of our major trading partners. And today the president is issuing an executive order, “Promoting International Regulatory Cooperation,” with a simple goal: to promote exports, growth, and job creation by eliminating unnecessary regulatory differences across nations.
The order makes clear that we will not undermine American laws or compromise our national prerogatives. But it emphasizes that international cooperation and harmonization can increase trade and job creation, eliminating pointless burdens without creating a regulatory race to the bottom. From now on, an interagency working group chaired by the White House Office of Information and Regulatory Affairs [Note; Sunstein chairs this agency-RW] will be a forum for reducing this red tape.
Here’s the advancing of the North American union:
More generally, President Obama has worked closely with his Canadian and Mexican counterparts to create High-Level Regulatory Cooperation Councils with both countries. The councils are developing and implementing plans to eliminate or prevent the creation of unnecessary burdens on cross-border trade, streamline regulatory requirements, and promote greater certainty for the general public and for businesses in the regulation of food, pharmaceuticals, nanotechnology and other areas.
The U.S. and Canada have already agreed to harmonize their rules with respect to fuel economy, building on a long history of collaboration on national emission standards for new vehicles. This step will avoid divergent requirements and unnecessary costs on both automobile companies and consumers.
Here’s the advance of the One World government:
The U.S. is also working closely with the European Union to eliminate unnecessary differences in U.S.-European regulatory requirements. Last February, the Obama administration announced an agreement with the EU under which organic products certified as such in Europe or in the U.S. may be sold as “organic” in either jurisdiction. This is not just a victory for those who grow and eat organic broccoli. The trans-Atlantic partnership, involving the two largest organic food producers in the world, will help support jobs in the years to come.
Whether the issue involves chemicals or vegetables, nations can do a far better job of harmonizing regulatory requirements to make it easier for companies to do business, and without sacrificing public health, safety and the environment. We hope that today’s executive order provides a new model for eliminating red tape and promoting trade and job creation. Let’s get to work.