Page 3 of 4 CREDIT BUBBLE BULLETIN Just the facts
Market watch by Doug Noland
Gasoline gained 1.8% (up 41% y-t-d), and July Natural Gas added 0.6% (up 76%
y-t-d). July Copper gained 1.2%. July Wheat rose 3.3% and Corn 4.4%. The CRB
index increased 2.0% to a new record high (up 29.5% y-t-d). The Goldman Sachs
Commodities Index (GSCI) jumped 2.8% to a new record (up 42% y-t-d and 77%
y-o-y).
China Watch
June 27 - Bloomberg (Li Yanping): "Chinese industrial companies' profits
grew at half the pace of a year earlier on record oil and coal prices,
increasing the likelihood that economic growth will continue to slow. Combined
net income rose 20.9% to 1.09 trillion yuan ($160bn) through May. That
was less than the
42.1% gain in the first five months of last year."
June 23 - China Knowledge: "China's domestic automobile sales may
increase 15% to 10 million vehicles this year, mainly on the back of strong
demand for passenger cars, said a senior official of the China Association of
Automobile Manufacturers."
June 25 - Bloomberg (Chia-Peck Wong): "Hong Kong's new mortgages rose
21% in May as lower interest rates fueled demand for loans."
Japan Watch
June 27 - Bloomberg (Mayumi Otsuma): "Japan's consumer prices rose at
the fastest pace in a decade in May, hurting household budgets and complicating
policy for the central bank as economic growth slows. Core prices, which
exclude fruit, fish and vegetables, climbed 1.5% from a year earlier."
India Watch
June 26 - Bloomberg (Sumit Sharma): "India's five-year property boom is
coming to an end as the supply of housing increases, borrowing costs rise and a
stock market rout erodes buying power, according to executives at two mortgage
lenders. Prices across India may drop as much as 15% in the coming months, said
Keki Mistry, vice chairman of Housing Development Finance Corp., India's
largest provider of home loans. Gagan Banga, chief executive of Indiabulls
Financial Services Ltd., said prices may fall as much as 20%."
June 24 - Bloomberg (Anil Varma and Cherian Thomas): "India's central
bank raised interest rates for the second time this month. The Reserve
Bank of India increased the repurchase rate to 8.5 percent from 8%..."
Asia Bubble Watch
June 25 - Bloomberg (William Sim): "South Korea's consumer confidence
slumped to the lowest level in more than seven years as spiraling food and
energy costs sapped people's spending power."
Latin America Watch
June 24 - Bloomberg (Katia Cortes): "Brazilian bank lending expanded 2.6% in
May from the previous month on higher demand from consumers to buy cars and
home appliances on credit� Lending climbed 32.4% from the same month
last year."
June 23 - Bloomberg (Katia Cortes and Heloiza Canassa): "Brazil's central bank
now forecasts a higher current account deficit for this year as faster economic
growth spurs companies' remittances of profits. The bank changed its
2008 forecast for the current account to a deficit of $21 billion, from
a previous forecast of $12 billion deficit. It also changed its 2008 foreign
direct investment forecast to $35 billion, from $32 billion previously. 'The
higher forecast is not worrying because it will be fully financed by the rising
foreign direct investment,' [said] Altamir Lopes, head of the central bank's
economic research department."
Unbalanced Global Economy Watch
June 25 - MarketNews International (Vicki Schmelzer): "Merrill Lynch's
annual World Wealth Report noted that global High Net Worth Individual wealth
totalled $40.7 trillion in 2007, up 9.4% from 2006. To be considered a HNWI
individual, you must have at least $1 million in financial assets. There were
10.1 million such individuals in 2007, an increase of 6.0% over the prior
year. 'HNWI population gains were higher in the Middle East, Eastern
Europe, and Latin America, expanding by 15.6%, 14.3% and 12.2% respectively,'
Merrill said. The largest regional gains were seen in Latin America and the
Middle East, where HNWI wealth grew by 20.4% and 17.5% respectively."
June 26 - MarketNews International): "Contrary to most forecasts, eurozone M3
money supply growth did not slow in May after a pick-up to 10.5% in April,
remaining at a rapid double-digit annual pace for the 18th month in a
row. Growth of loans to the private sector slowed for the fifth-straight
month to 10.4% while remaining over 10% for the last two years. Lending
to corporations slowed for the second month in a row to an annual rate of 14.2%
from 14.9%... growth in loans to households slowed as well, posting an annual
rise of 4.9% in May after 5.2% in April."
June 27 - Bloomberg (Fergal O'Brien): "European confidence dropped more than
economists forecast this month and retail sales plunged, signaling that
economic growth is continuing to cool. An index measuring sentiment in
the euro area fell to 94.9, the lowest since May 2005."
June 24 - Bloomberg (Fergal O'Brien): "Ireland's economy will fall into a
recession this year for the first time in more than two decades, the Economic
and Social Research Institute said, slashing its forecasts for construction,
exports and consumer spending."
June 26 - Bloomberg (Jurjen van de Pol and Meera Louis): "Inflation in Belgium
accelerated to the fastest in more than 23 years in June on surging energy
prices. The inflation rate rose to 5.8%..."
June 25 - Bloomberg (Tasneem Brogger): "Denmark's consumer confidence index
slumped more than economists expected to the lowest since 1999 this month as
inflation accelerated and borrowing costs rose."
June 27 - Bloomberg (Ben Sills): "Spanish inflation accelerated to the fastest
pace on record in June as oil and food prices surged. Consumer prices rose 5.1%
from a year ago after increasing 4.7% in May."
June 26 - Bloomberg (Tasneem Brogger): "Iceland's inflation rate rose to 12.7%
in June, more than five times the central bank's target, after a slump in the
krona sent import prices surging, maintaining pressure on the central bank to
raise interest rates. Inflation accelerated from 12.3% the month
before."
June 23 - Bloomberg (Alex Nicholson): "Russian retail sales growth unexpectedly
accelerated to 14.6% in May from the slowest pace in almost a year and a half
the month before."
June 26 - AFP: "Nigeria's inflation rate rose in May to 9.7% from 8.2% in
April, driven by increases in the cost of food and household items."
June 24 - Bloomberg (Jason McLure): "Ethiopia's annual inflation rate surged to
39.1% in May as food and fuel costs increased, the Central Statistical Agency
said. Inflation accelerated from 29.6% in April."
June 25 - Bloomberg (Nasreen Seria and Mike Cohen): "South African inflation
accelerated to an annual 10.9% in May."
Bursting Bubble Economy Watch
June 24 - Bloomberg (Kevin Orland): "Dow Chemical Co., the largest
US chemical maker, said surging costs for energy and raw materials to
make Styrofoam, pesticides and plastics are forcing the company to raise prices
by as much as 25% in July. In addition to the price increases, freight
surcharges of $300 per truck shipment and $600 per rail shipment will become
effective Aug. 1. Chief Executive Officer Andrew Liveris last month raised prices
for June by 20%, the biggest boost in the company's 111-year history.
The additional increases were needed because of a 'relentless' rise in the cost
of energy and hydrocarbon materials, Dow said. 'The staggering increase in our
costs over the past few months have forced us to take these further measures in
order to restore our margins,' Liveris said."
June 25 - Bloomberg (Erik Holm): "American Express Co., the biggest US
credit-card company by purchases and cash
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
