Page 3 of 5 CREDIT BUBBLE BULLETIN The Uppers
Commentary and market watch by Doug Noland
January, according to Barclays ... In oil, open interest has fallen to its
lowest in more than a year and a half. Analysts and traders say the reduction
in liquidity has been brought about by financial institutions deleveraging -
particularly among cash-squeezed Wall Street banks ... "
July 30 - Financial Times (Hal Weitzman): "Profits at Tyson, one of the US's
biggest meat producers, were almost wiped out in the past quarter by the high
cost of animal feed and unprofitable cattle price-hedging bets. The company
warned that it is bracing itself to
be hit even harder in the coming three months as consumer price rises lag
behind increases in feed costs."
July 29 - Financial Times (Elizabeth Rigby): "Kraft Foods raised its full-year
earnings and sales forecast on Monday as the largest food maker in the US
reported a rise in profits for the quarter after price increases helped it
offset big rises in the price of commodities like wheat."
Gold dropped 1.6% to $910, while Silver added 0.7% to $17.50. September Crude
recovered $1.94 to $125.20. September Gasoline gained 1.5% (up 24.6% y-t-d),
and September Natural Gas rose 2.9% (up 25.5% y-t-d). September Copper slipped
0.7%. September Wheat declined 2.1%, and August Corn fell 2.1%. The CRB index
gained 0.9% (up 16% y-t-d). The Goldman Sachs Commodities Index (GSCI) added
0.5% (up 25% y-t-d and 51.5% y-o-y).
China Watch
July 29 - Bloomberg (Wang Ying): "China, the world's second-biggest energy
consumer, is facing a deepening summer power crisis that may persist into the
winter months, the nation's dominant electricity distributor said. State Grid
Corp of China, which more than 1 billion people rely on for power, said
electricity shortages have worsened because of inadequate coal supplies.
Forty-six percent of the power stations connected to the distributor's grid
have coal stockpiles below the 'caution line,' or seven days of consumption ...
China, facing its sixth year of electricity shortages ... "
July 28 - People's Daily: "The per-capita salary for employees at urban
state-owned enterprises was 13,800 yuan, up 17%, and that for workers at
private entities, 12,610 yuan, up 19.2% ... The per-capita disposable income of
urbanites rose 14.4% ... Farmers' per-capita cash income stood at 2,528 yuan in
first half, up 19.8%, or 10.3% adjusted for inflation."
India Watch
July 28 - Wall Street Journal (Jackie Range): "India's slowing economy is
beginning to show another big crack: A growing government deficit that could
hurt much-needed investment in India's ramshackle infrastructure, boost
inflation and undermine growth. A hefty list of expenditures is at the root of
India's fiscal woes, especially a once-a-decade salary increase that S&P's
estimates could mean pay increases of as much as 40% for 2.9 million central
government employees. Were the government to approve the full amount, the
ratings agency figures it could cost as much as the equivalent of 2.4% of gross
domestic product. State governments are likely to follow suit ... Overall,
Morgan Stanley predicts, India's fiscal deficit - including central, state and
so-called 'off-budget' items - will rise to 11.4% of GDP in the fiscal year
ending March 31, up from an estimated 7.7% in the previous year."
August 1 - Bloomberg (Anil Varma): "Money supply in India grew 20% in the two
weeks ended July 18 from a year earlier, compared with 20.5% in the prior two
weeks ... "
July 31 - Bloomberg (Subramaniam Sharma): "India's inflation was below 12% in
the week ended July 19, the Business Standard newspaper reported ... "
July 29 - Bloomberg (Cherian Thomas): "India's central bank increased its
benchmark interest rate by a half point ... and forecast slowing economic
growth as inflation at a 13-year high erodes spending by consumers and
companies. The Reserve Bank of India raised its repurchase rate to 9% ... the
third increase in two months ... "
Asia Bubble Watch
August 1 - Bloomberg (William Sim): "South Korea's inflation accelerated faster
than expected in July to the highest in almost 10 years ... Consumer prices
jumped 5.9% from a year earlier ... "
August 1 - Bloomberg (Suttinee Yuvejwattana): "Thailand's inflation accelerated
to the fastest pace in a decade in July ... Consumer prices gained 9.2% from a
year earlier ... "
August 1 - Bloomberg (Naila Firdausi and Arijit Ghosh): "Indonesia's inflation
accelerated more than estimated to a 22-month high in July ... Consumer prices
jumped 11.9% from a year earlier ... "
Latin America Watch
July 29 - Bloomberg (Joshua Goodman): "Brazil's Planning and Budget Minister
Paulo Bernardo said the country's inflation rate should end the year 'around'
6.5%. 'Brazil is one of the few countries in the world that still has a chance
of reaching this level ... Many countries have already exceeded their target
and also their margin of error. Here in Brazil, things aren't as bad as they
are elsewhere.'"
August 1 - Dow Jones: "Bank lending to Mexico's private sector increased 15%
year-on-year at the end of June, led by commercial lending, according to the
Bank of Mexico."
August 1 - Bloomberg (Matthew Walter and Daniel Cancel): "Venezuelan President
Hugo Chavez is set to tighten his government's grip on the economy by taking
over his first bank, the local unit of Spain's Banco Santander SA. Plans to
nationalize the country's third-largest bank ... will give the state access to
Banco de Venezuela SA Grupo Universal's 285 offices and $9.46 billion in
deposits."
Unbalanced Global Economy Watch
July 30 - Dow Jones (Natasha Brereton): "UK net mortgage lending could drop by
almost half in 2008 as falling house prices and the lower availability of
credit stem consumer demand, a senior official at the British Bankers'
Association says."
July 29 - Bloomberg (Jennifer Ryan): "UK mortgage approvals fell to the lowest
since at least 1999 in June as financial institutions curbed lending, deepening
the housing slump. "
July 31 - Bloomberg (Brian Swint and Svenja O'Donnell): "UK house prices
declined the most in almost two decades in July and consumer confidence fell to
a record low as the economy edged closer to a recession. The average value of a
home dropped 8.1% from a year earlier, the biggest decline since at least 1991
... "
July 29 - Bloomberg (Brian Swint): "An index of UK retail sales dropped in July
to the lowest level in a quarter-century as record oil costs forced shoppers to
curb spending, the Confederation of British Industry said."
August 1 - Bloomberg (Svenja O'Donnell): "UK manufacturing contracted by the
most in a decade in July and inflation in the industry was the strongest since
at least 1999, sharpening the Bank of England's dilemma as it tries to steer
Britain clear of a recession."
July 31 - Bloomberg (Ian Guider): "Ireland's economy will grow at the slowest
pace in more than two decades this year as a 17% slump in construction pushes
up unemployment, the country's central bank said ... "
July 31 - Bloomberg (Fergal O'Brien): "Inflation in Europe accelerated to the
fastest pace in more than 16 years in July ... The inflation rate for the
15-nation euro region rose to 4.1% from 4% in June ... "
July 30 - Bloomberg (Fergal O'Brien): "Europeans' confidence in the outlook for
the economy dropped the most since the Sept.11 terrorist attacks as soaring
energy costs and the euro's advance against the dollar rattled consumers and
executives."
July 29 - Bloomberg (Simone Meier): "The inflation rate in Germany, Europe's
largest economy, held at a 12-year high in July ... Consumer prices rose 3.4%
from a year earlier ... "
July 28 - Bloomberg (Christian Vits): "German consumer confidence dropped to
the lowest in more than five years as soaring energy prices sapped purchasing
power and the economic outlook deteriorated."
July 29 - Bloomberg (Helene Fouquet): "Consumer confidence in France fell to a
record low in July as inflation accelerated to the fastest pace in 12 years,
eroding households' purchasing power."
July 30 - Bloomberg (Tasneem Brogger): "Danish house prices fell an annual 3.9%
in the three months through June, declining for a second consecutive quarter,
as rising borrowing costs sapped demand."
July 31 - Bloomberg (Ben Sills): "Spanish inflation accelerated to the fastest
pace since at least 1997 in July after oil prices surged. Consumer prices rose
5.3% from a year earlier after increasing 5.1% in June ... "
July 28 - Bloomberg (Sharon Smyth): "Home sales in Spain plunged in May,
confirming that the nation's property market is heading for a slump after a
decade-long boom. The number of homes sold dropped 34.3% from a year earlier
... "
July 29 - Bloomberg (Tasneem Brogger): "Norwegian banks continued to tighten
lending conditions to non-financial corporations and households in the second
quarter, the central bank said. Commercial banks reported a 'considerable'
tightening of lending conditions to the real-estate industry compared with the
first quarter, and said there was a 'marginal' tightening of lending conditions
to households ... "
July 31 - Bloomberg (Tasneem Brogger): "Norway's domestic credit growth slowed
to 13.3% in June, indicating interest rates at a 5 1/2-year high are deterring
consumers and corporations from taking on more debt."
July 31 - Bloomberg (Johan Carlstrom): "Swedish consumer confidence fell to its
lowest level since 1995 in July on the back of rising unemployment, the fastest
inflation in 15 years and the prospect of higher interest rates."
July 28 - Bloomberg (Kati Pohjanpalo and Juho Erkheikki): "Finnish consumer
confidence fell to the lowest in seven years in July, while retail sales grew
at the second-slowest pace in two years in June as inflation accelerated,
interest rates rose and economic growth cooled."
July 30 - Bloomberg (Maria Levitov): "Russian inflation was 9.3% in the year
through July 28 ... "
July 28 - Bloomberg (Mark Bentley and Ali Berat Meric): "Turkish central bank
Governor Durmus Yilmaz increased his forecast for year-end inflation to 10.6%
... Yilmaz ... raised the forecast from 9.3% three months earlier."
July 29 - Bloomberg (Mark Bentley): "Turkish mortgage lending by banks fell
about 20% in the first half of the year as compared with the same period in
2007, Dunya newspaper reported, citing Ismet Erdem, chief of Yapi & Kredi
Bankasi ... "
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