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Today's Greek news, or your daily coffee, covers the omen we believe the uprisings in Greece news today portend. Greek news and US news alike include multiple Greece news stories each day that have colored the Greek financial crisis completely for the world's attention. I view the indigestion of austerity measures by the Greek population a fault of Greek government communication, but also a fault of a disconnect between the government, the EU and the people of Greece and the rest of Europe. For austerity to work, it must be accepted by all, but our daily Greek news that includes riots in Greece seems to say clearly, austerity is unacceptable to the Greek populace. Today's other Wall Street Greek News includes coverage of the day's economic reports and corporate actions in American markets.
Overseas News & Data
Greek News - Greece Unions Strike Nationwide
A nationwide strike in Greece against the government's austerity measures is illustrating for Europe why it must intervene. We expect to outline this in more detail for you in a future article, but in short, the Greek government may be biting off more than it can chew. As well intended as Greek government efforts may be, we see European bailout as the only realistic option. That said, it could be managed in a manner that allows the Greek government to repay its debt over time. We suggest Greek and European decision makers take close notice of the Greek shops and cars burning today and the fiery passion of the Greek citizenry. This is not only a show of dissatisfaction, but an omen of what worse may come.
China reported its consumer prices increased 2.7% in February, raising concerns that inflation realities loom for China and perhaps the rest of the world. Consumer prices had increased a lesser 1.5% in January. China attributed the monthly spike to weather impacted food prices. February's producer prices rose 5.4%, versus January's 4.3%, indicating that perhaps further rise in consumer prices could be coming. It usually takes a while for producer prices to find their way into retail, but once they do, there is a component that seems to become embedded or anchored there.
I believe there is real risk to China when government driven interest rate hikes are enacted. Such actions could spur a collapse in asset prices, if they are late in coming or if they are too drastic in measure. Housing prices increased 10.7% in February over the prior year level, as measured across 70 Chinese cities. I suggest China would be well-served to tap the brakes earlier rather than later. Still, the Chinese are concerned about the state of the world, and export demand, and so are not ready to raise rates yet. Look for a coming article here on trade for further detail.
Weekly Jobless Claims
Weekly Initial Jobless Claims were reported today for the period ending March 6. Investors are growing weary, as the rate of new benefits filers seems to never heal. This latest report showed 462K new benefits applications were filed, versus the prior week's revised count of 468K. The economists' consensus for this figure is almost always close to the prior week result, given the unlikely prospect of significant change week to week. Economists surveyed by Bloomberg were looking for a number of 460K this time around. The four-week moving average for claims, which best shows true trend, increased 5,000, to 475,500. Needless to say, an investment environment now weary of the same old labor market stagnation penalized stocks on the open.
International Trade Report
This morning's premarket data included the International Trade Report for January. The data indicated the trade deficit narrowed to $37.3 billion, from a revised mark of $39.9 billion in December. Both imports and exports decreased in January, with the pace of import spending dropping more significantly. Also, most all of the difference was found in the trade of goods (versus services). We cannot blame the change on oil prices this time around, as prices increased in January. Barrels of oil imported instead were the driver for petroleum, as it fell by 11.5%. The trade gap narrowed about evenly for both petroleum and non-petroleum based goods.
The change caught economists by surprise, with the consensus forecast expecting the gap to widen to $41.0 billion, according to Bloomberg's survey. December's changes were especially strong on the upside, and so January's change may simply represent a sort of settling toward mean trend. We believe the changes reflect a post inventory restocking reality that could lead to low and/or non-existent US economic growth over the next two quarters.
Foreclosure Pace Eases
Realtytrac reported today that the pace of foreclosures eased to the slowest pace in four years this February. February 2010 foreclosures were 6% above February 2009, setting that historic mark, but all comparables against last February are looking fantastic today. That's simply because we touched bottom at this time last year. Note also that foreclosure activity still increased over the prior year. The good news is that February's filings were 2% below January's. One in every 418 homes received a foreclosure filing in February, according to the foreclosure site.
Quarterly Services Survey
The Department of Commerce reported that fourth quarter 2009 Information Sector revenue increased 0.8% over the third quarter and 0.5% against the prior year period. Q3 had shown decreases against Q2, so renewed growth is good to see in Q4, especially in a sector where we have noticed generally negative data. This report goes generally unnoticed by pundits, I believe due to the breadth and disorganization of the data being captured. It's just hard to make sense of this one, even for "The Greek." It's called "information" and is supposed to cover IT, but is broken up by industries serviced, including transportation & warehousing, health & social assistance, rental & leasing, arts & entertainment and others. It's just not worth our time here to construct a summary.
HSBC (NYSE: HBC) reported today that information on 24K of its anonymous Swiss accounts had been stolen by an employee. The alleged thief, Herve Falciani, reportedly handed over the information to French tax authorities. One has to wonder whether the data was handed over, or offered in exchange for payment, considering Germany's recent public statement that it would pay for such data. One also must wonder whether the HSBC employee was a corporate spy in the first place, paid to infiltrate or paid to defy his company. This seems to us an unsavory, if not illegal means of gathering otherwise government protected information. While Switzerland agreed to share data recently, at the time of the theft, no such law was in place. UBS (NYSE: UBS) and Credit Suisse (NYSE: CS) have seen capital withdrawals as a result, and shareholders have suffered value destruction.
British Petroleum (NYSE: BP) acquired $7 billion worth of North American and South American assets from Devon Energy (NYSE: DVN) Thursday. The deal is focused on offshore reserves, where BP excels, and BP is including Devon in its Kirby oil sands project in Alberta Canada. Devon wanted to focus on its onshore projects, and has effectively raised the capital intended. Devon shares rose 1% on the news, while BP moved fractionally higher.
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