The Market Is Tumbling Again: The Entire World Economy Is Starting To Go Bad – Slowdown In The U.S., Europe, And China Is Getting Worse And Morgan Stanley Results Reveal Critical Problems For Wall Street
Slowdown in the U.S., Europe, and China.
Here’s a quick look at some key data emerging from around the world:
- Housing, which has been a huge part of the economic recovery, is also showing signs of stalling. Building permits are down, homebuilder confidence is down, foreclosure starts are up, and capacity constraints among mortgage lenders are also impacting the recovery.
- America’s manufacturing Renaissance also looks to be a way off. The Empire Fed manufacturing survey fell to 3.05 in April, missing expectations. This morning we saw the April Philly Fed fall to 1.3, with the unemployment sub-index falling to -6.8.
- Retail sales unexpectedly fell 0.4% in March. Nomura pointed out that the downward revisions to sales in the last two months showed that “consumer adjustment to lower disposable income at the start of the year has begun.” Consumer confidence also missed expectations and fell to 72.3 in April, from 78.6 in March.
- And of course there is the jobs report, which showed that only 88,000 new jobs were created in March, very shy of expectations for 190,000. The unemployment rate fell to 7.6% but this was because of a decline in the labor force participation rate.
- On top of all this, there’s the sequester, which has only just gotten going.
- Germany has seen some positive data, but economic sentiment tumbled to 42.
- In the United Kingdom, joblessness climbed by 70,000 to 2.56 million from December through February. The unemployment rate climbed to 7.9%. Moreover, Retail sales, including fuels, fell 0.7% on the month in March, and 0.5% on the year. And next week’s GDP data will tell us if the U.K. has entered a triple-dip recession.
- Chinese GDP slowed to 7.7% in Q1, missing expectations of 8% growth. Industrial production, manufacturing (as represented through PMI) and exports also missed expectations.
- The government’s crackdown on corruption by way of ‘gift giving’ has impacted retail sales, especially the catering industry.
- Latest data also showed that Chinese home prices were up in 68 of 70 cities surveyed. First-tier cities posted a huge rise in home prices. Policymakers are likely to continue with tightening measures to limit a rebound in property prices and shadow banking.
Commentary: Morgan Stanley results reveal critical problems for Street
With stock market surging — and now receding slightly — you’d expect Wall Street’s biggest firms to benefit from increased trading revenue.
They’re not though. The latest evidence: Morgan Stanley’s MS -4.38% results announced Thursday. The investment bank beat analysts expectations, it’s trading in fixed-income, commodities and currency (which usually benefit from a shift of investor assets) tumbled 42% from a year ago.
The bad news helped send Morgan Stanley shares down nearly 4%.
Lost trading revenue isn’t just a Morgan Stanley problem. Nomura analyst Glenn Schorr wrote Thursday that industry-wide trading revenues were down 9% from the same period a year ago.
The number of Americans filing new claims for unemployment benefits rose last week and factory activity in the nation’s Mid-Atlantic region cooled in April, further signs of a moderation in economic growth.
Underscoring the softening growth outlook, another report on Thursday showed a gauge of future economic activity fell in March for the first time in seven months. They were the latest data to indicate a step-back in the economy after a brisk start to the year as tighter fiscal policy began to weigh.
“The evidence is mounting that the economy lost momentum in March and that has carried to April,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania….
A measure of the U.S. economy’s health over the next six months declined slightly in March from February, a sign that growth may slow this spring.
Apple Inc.’s slowing sales are rippling through a supplier network that has long benefited from the company’s ability to churn out iPhones and iPads.
Cirrus Logic Inc., a maker of audio chips that gets 91 percent of its sales from Apple, this week reported an inventory glut that suggested slowing iPhone sales, and forecast fiscal first-quarter revenue below analysts’ estimates. Hon Hai Precision Industry Co., Apple’s top supplier, this month posted its biggest revenue decline in at least 13 years, indicating slower sales of smartphones, tablets and computers.
Apple’s breakneck growth to $156.5 billion in revenue last year, from $24.6 billion in 2007 when the iPhone debuted, supports an ecosystem of at least 247 suppliers across the globe. They relied on Apple to deliver $30.1 billion in orders in the latest reported quarter, according to supply-chain data compiled by Bloomberg. As a result, many are now vulnerable after building up inventory in anticipation of continued growth, according to Michael Hasler, a lecturer at the University of Texas in Austin.