I'm in a rotten mood this morning, I've been working too hard lately (I can't complain, at least the work is there) and the links to my last CAPS post didn't work so I had to post a lot of it again, so here comes a rant. [more]
I have a couple of links that I wanted to share with my CAPS friends this morning. They all are great reads: [more]
When I saw the headline, I had to read it twice because it was so impressive that I almost couldn't believe it:
China Car Sales Jump 48% on Support, Most Since 2006
Passenger vehicle sales in China exploded in June, up nearly 50% year-over-year. Wow.
As a result of the surge in sales, the China Association of Automobile Manufacturers increased its full-year vehicle sales forecast to over 11 million units, from its previous estimate of 10.2 million. As a point of reference, the U.S. market will struggle to hit 10 million units in 2009. For the first half of '09 vehicle sales in China rose 18%
The country's surge in auto sales is a great economic indicator. It means that the Chinese economy is in pretty good shape and it could lead to an increase in the price of many metals and in the price of oil as Chinese demand for gasoline rises.
While the country's robust auto sales say good things about the economy, it isn't doing much for automakers profits there. The intense competition in the Chinese auto market has crimped the profit of these companies. The Combined profit at China's 19 largest automakers fell 9.9% through the first five months of 2009. Welcome to the auto industry China. U.S. automakers have been unprofitable for years. The auto industry is only second to airlines in terms of a terrible sector to invest in. Competition in the industry is always tough and it forces companies to cut prices (often through high incentives) to compete.
I've been off-line for a couple of days, so I am going to backtrack and post a link to a great article that the WSJ ran on its front page on Thursday. The piece confirms what I have been saying for months now, that U.S. auto sales have bottomed and they will not fall below 9.5 to 10 million units in 2009 and they will very slowly begin to recover in 2010 and beyond. [more]
Here's an interesting piece of news that I came across on Bloomberg this morning: [more]
I'm fairly busy today, but I promised that I'd report back with a quick comment about the June's U.S. auto sales. All things considered, such as the fact that we're in the midst of a terrible recession, June was a solid month for auto sales. I don't know how to make that wavy equal sign that means about, but I have heard that sales for the month were around 860,000 units. [more]
I don't have sound on this computer so I haven't heard Beaker's crazy rant yet. I wonder if it's anything like the one that got the almost as annoying Jeff Mackie tossed off of Fast Money. I'll have to check it out tonight. [more]
China’s Purchasing Managers’ Index rose for a fourth consecutive month to a seasonally adjusted 53.2 in June from 53.1 in May. Any reading over 50 is considered to be economic expansion. The export-order index increased for the second consecutive month to 51.4 in June from 50.1 in May, expanding for a second month. This is a very important metric for such an export dependent economy. Chinese output and employment indexes also rose.
A separate purchasing managers index published by CLSA Asia-Pacific Markets also showed expansion.
On the numbers, B of A economist Lu Ting said the following, “China’s recovery is gathering further momentum. It has been recovering faster than the market had expected.”
The economic recovery is going much better in China than it is in Japan. I was listening to Bloomberg radio at 7:00 last night while cleaning out my basement and I heard the live release of Japan's tankan index. When I heard the commentators talking about it it sounded like they were saying the "Ton-Ton" index and I thought to myself wow they must be big Star Wars fans in Japan for them to name an index after a creature from the movie ;). Anyhow, the index showed that sentiment among large Japanese manufacturers rose less than economists analysts had forecast June. Many are interpreting this to mean that Japan's economic recovery is happening more slowly than expected.
A number of the guests on Bloomberg, including several gentlemen from High Frequency Economics and RDQ were very pessimistic about the future of Japan. The country's aging population and massive national debt will likely serve as significant headwinds going forward.
China’s Manufacturing Expands a Fourth Month as Economy Revives