German consumer sentiment holds up

Perhaps it should be no surprise, what with getting free money for their dodgy cars, but German consumer sentiment is holding up OK at the moment. It’s pretty important for the rest of Europe that it’s biggest economy shows some resilience:

 

The GfK market research group said its forward-looking consumer sentiment index, based on a survey of 2,000 Germans, was unchanged at 2.5 in May after being revised up from an originally reported 2.4 in April.

The latest figure beat the mid-range forecast of a poll of analysts last week for a reading of 2.3 , but economists said consumer sentiment would soon weaken as unemployment rises.

 

“Looking ahead, we still expect private consumption to be the bright spot for the German economy and to cushion the collapse of German industry,” said Carsten Brzeski, an economist at ING Financial Markets.

Source: The Guardian

OK - so maybe their not THAT happy...

China: Its not so bad really

The communist captialist People’s Republic of China is not doing so badly… according to them. Chinese Premier Wen Jiabao is happy that China’s stimulus package is working, the country has sufficient capital, a solid banking industry and heaps of labour resources (ok, so we all knew that last one). And if China is going to pull out of this, hopefully they can pull the rest of us with them.

Wen (or his translator) puts it pretty well:

“Confidence is more important than currency or gold. Today, I want to say that hope is also important. It’s like a beacon.”

Source: WSJ

Pwning the recession

Want some bang for your recession buck? Try some video games. For $50-60 the hours of entertainment that a single game can provide (let’s ignore the console purchase up front…) it has most other forms of entertainment beat in a dollar-per-hour equation. And consumers are putting their dollars behind this value proposition:

 

As people cut back on travel and going out, they are turning more to home entertainment, providing a boost to the videogame industry that is under pressure to keep gamers amused and beat the recession.

“Videogame sales have been impacted the least from the global recession and there are no real signs of it slowing,” said Michael Cai, vice president of videogame research at Interpret.

Last fall, as the effects of the economic downturn were being felt, videogame sales rose internationally. In the United States alone, sales increased 19 percent over 2007, topping $21.3 billion, according to The NPD Group.

 

Source: Reuters

This trend is keeping these guys pretty happy…

 

I just love any excuse to use this...

“Courage and strength in times of danger.”

Apparently a motto for March according to William Morris is:

“Courage and strength in times of danger.” 

Source: World of Quotes

I’ll take it for today anyway… world stock markets are likely to post their best month in years.
Source: The Washington Post via Reuters 

Don’t worry about March, how about the year of the Ox? China has posted it’s best start to the year since 2000.
Source: Bloomberg

Cash for trash

The German government program to give cash handouts for trading in your clapped out jalopy for a new car looks like it will be extended. And if they can afford it – why not? The plan was successful in pumping up sales by 21% in February, and I’d argue it’s better than cash handouts to go into slot machines in most states of Australia.

The programme, also called the “environmental bonus,” offers Germans €2,500 to junk their old car and buy a new one. Worth €1.5 billion, it was included in the country’s second stimulus package passed earlier this year.

Car sales have reportedly increased significantly since the scrapping bonus came into effect on February 20, and now there is “department-wide agreement” that is should be extended

Source: The Local / Rheinische Post

Cheap hotel rooms

Good news if you can still afford to go on a holiday… the world’s most expensive hotels have become a lot cheaper thanks to crashing demand. Another nice Economist pic tells the story… NY down 16%, Paris down 8%… Delhi down 21%. 

Source: The Economist

 

An opportunity to upgrade perhaps?

Biggest one-day gain since October

So as predicted by world markets yesterday, the Dow powered up 6.84%. Perhaps even better than expected.

Has the bottom now been hit???

Source: Wall Street Journal

Geithner’s stocks have also been on the rise. Even the WSJ are giving him a tentative tick of approval for now:

The best news about the new Treasury bad bank asset purchase plan is that Secretary Timothy Geithner has finally settled on a strategy. The uncertainty was getting almost as toxic as those securities. Now all Mr. Geithner has to do is find private investors willing to “partner” with the feds (Congress!) to bid for those rotten assets, coax the banks to sell them at a loss, and hope that the economy doesn’t keep falling lest taxpayers lose big on their new loan guarantees.

Source: Wall Street Journal

Yeah… so it is not going to be easy but hopefully we are finally on the way.

Plan for toxic assets boosts market further…

Some, including Paul Krugman, might be saying otherwise, but the markets are giving Obama’s a thumbs up. Nikkei – six week high. Hang Seng -five week high. Australia -six week high. FTSE up 2% as of writing on top of 6% for last week.  And the Dow is currently looking good:

U.S. stock futures rallied early Monday, as investors expressed optimism about the Obama administration’s plan to seek the help of private investors as it attempts to rid banks of possibly as much as $1 trillion in bad assets.

At 5:16 a.m. ET, Dow, S&P 500 and Nasdaq 100 futures were sharply higher. 

Source: CNN Money

Well now let’s wait and see what this plan ends up being…

It prints money!

So Ben Bernanke is feeling positive about the economy. Whether that is true or not, he did his best today to give the US economy another boost by buying up $300billion in treasuries and another $750billion in mortgage backed securities. A trillion dollars sure isn’t what it used to be.

He’s hoping that this injection of liquidity into the market will start to get get credit flowing, and by buying mortgage securities, lower the cost of 30-year home loans. (A bit hard to just drop interest rates when there is nowhere left to go) The stock markets sure did like it though, keeping this current rally ticking along nicely.

Source: Everywhere, but check out CNN Money.

I believe the term du jour for this is ‘quantitative easing’. They used to call it printing money back before money turned into a concept reflected on a computer screen.

Instead of buying up treasuries, maybe Benny B should have borrowed Iwata-san’s Wii?

Fed Reserve Chairman is upbeat

Ben Bernanke felt the need to get a bit of 60 Minutes action recently and took the opportunity to be a little upbeat:

 

The U.S. appears to have averted an economic depression and there are some positive signs, or “green shoots,” in some markets where the Fed is active. And we’ve seen some improvement in…the banks, as well, certainly in some key cases.

Big banks are solvent… and they won’t be allowed to fail.

 

Hmmmm… this whole not being ALLOWED to fail thing still doesn’t sit right with me personally. Hopefully at least the US Government can reprivatise/refloat its equity stakes in all these companies when times get better. Anyhoo… I’ll take the positive news Ben!

Source: WSJ.com

 

Benny B on Day 1.It might have seemed an easier gig back in '07 to impress the old boss.