ABRAHAM GULKOWITZ
abe@gulkowitz.com
917-402-9039
2013 issue 11June 11 , 2013
Recovery, with a Tangle of Mixed Signals…
Lot’softantalizingtidbitsinthisissue.WehaveanewWorldCompetitivenessRankingtoreporton.AndasurpriseintheU.S.jobsreportsisalwayswelcome,eventhoughthepathofjobgrowthremainswellunderhistoricalrecoverypatterns.Withallthemassivepolicyeasingandrobustcorporaterefinancings,jobgrowthhasbeenparticularlymeager.Moreovertoomuchofthejobgrowthissubpar.Thatis,lower-paidandtemporaryworkaccountedformuchoftherecentemploymentgrowth.Andthereisariskthatsuchpart-timeworkcouldremainhighasObamacarerequirementskickin.Newjobgrowthinleisureandhospitality,retailingandtemporaryworkmadeupwellover50%ofMay’sincreaseand40percentofthe2.1millionjobsaddedtotheeconomysinceMay2012. Yettheiroverallshareoftheexistinglaborforceisgenerallyjust23percent.Bottomline,withunprecedentedgovernmentlargesseinallmajorfinancialcentersaroundtheglobe,thethroughputtojobgrowthhasbeenabysmal.Alsotherehavebeenconsistentlypoorresultsinkeyemergingeconomies,aswehighlightinthisissueofThePunchLine.MixedsignalsfromAsia,inparticular,havecaughtworldmarketsoffguard.NewChinesetrade,inflationandindustrialproductiondatasetsallundershotgeneralexpectations.Disappointingexportandimportfigureswereaparticularconcern.AnothermajorconcernisthelikelytimingofagradualchangeintheFed’seasingposture.Itisinevitable.Whatisworrisomeisthattheremayhavebeenasignificantreliance–adependency-oneasymoneythathasbuiltupinworldfinancialmarkets.Anyreversalinthishistoricexperimentingovernmentpolicyleadsusintotheunknown.
Stocks Had Advanced Despite Tepid Economic Data
Treasuries Likely to be Volatile on Stimulus Exit, BIS Warns
US funds bruised by heavy May bond losses
Sharp rise in global yields takes toll
World Competitiveness Scoreboard 2013
(page 3)
Timber!!!
The price of framing lumber onCME is barely over $300 per 1,000 board feet, down more than 20%since the beginning of April. Thelast time prices were this low wasOctober of last year.
Internet sales tax could kill small businesses
The downturn in the world's second largest economy, China, could be the mostdrawn-out since the 1997-1998 Asian Financial Crisis, with the risks heightened following a slew of weaker-than-expected economic data for May released over the weekend. The risk for growth is now predominantly on the down sideThe real estate sector - an important driver of fixed asset investment - showed weakness in May, with growth of new home starts, property transactions and land purchases falling.
US data mining revelations complicate cyber policy
Senator Mark Udall of Colorado, a member of the Senate IntelligenceCommittee, yesterday called for reopening debate on the Patriot Act, which,among other things, authorizes greatly expanded US electronic surveillanceand data mining efforts. Last week's disclosures of the scale and pervasivenessof these US intelligence community activities have caused a degree of politicalembarrassment for the White House, compromised Washington's position oncybersecurity during the June 7-8 US-China summit in California, and created acute commercial and reputational challenges for a range of US-based ITcompanies. Most of this strategic and economic damage is likely to be brief and relatively insignificant -- but a few key elements could have a morelasting effect.
An upward revision to Japanesegrowth numbers: Q1 GDP rose byan annualized 4.1%, up significantlyfrom the initial estimate of 3.5%.
Weakness of central institutions has become more evident
Japandidnotoffernewmeasurestocalmitsbondmarket,disappointingU.S.investorswhoarealsotryingtogaugethefuturedirectionofcentralbankpolicyathome.
The PunchLine...
2 June 11, 2013
In This Issue
Headlines and data appearing in The Punch Line came from widely available publications includingnational and international newspapers, trade journals, economic and industrial bulletins and news websites.
•
New Directions…
(pg 7)
•
The New Geography of Business
(pg 8)
•
U.S. Breakout Potential…
(pg 9)
•
The Return to Normal…
(pg 10)
•
Credit Matters…
(pg 11)
•
The Likelihood of Unlikely Events...
(pg 12)
•
A Closer Look …
(pg 13)
•
Data Detective
(pg 14)
•
PumpingIron…
(pg 15)
•
DealorNoDealinEurope…
(pg 16)
•
The DNA of Business…
(pg 17)
•
Tech and the Business Cycle…
(pg 18)
•
Real Estate and Construction…
(pg 19)
•
More Construction Views…
(pg 20)
•
Will Life Ever be the Same?
(pg 21)
•
Recovery, with a Tangle of Mixed Signals…
Lot’softantalizingtidbitsinthisissue.WehaveanewWorldCompetitivenessRankingtoreporton.AndasurpriseintheU.S.jobsreportsisalwayswelcome,eventhoughthepathofjobgrowthremainswellunderhistoricalrecoverypatterns.Withallthemassivepolicyeasingandrobustcorporaterefinancings,jobgrowthhasbeenparticularlymeager.Moreovertoomuchofthejobgrowthissubpar.Thatis,lower-paidandtemporaryworkaccountedformuchoftherecentemploymentgrowth.Andthereisariskthatsuchpart-timeworkcouldremainhighasObamacarerequirementskickin.Newjobgrowthinleisureandhospitality,retailingandtemporaryworkmadeupwellover50%ofMay’sincreaseand40percentofthe2.1millionjobsaddedtotheeconomysinceMay2012.Yettheiroverallshareoftheexistinglaborforceisgenerallyjust23percent.Bottomline,withunprecedentedgovernmentlargesseinallmajorfinancialcentersaroundtheglobe,thethroughputtojobgrowthhasbeenabysmal.Alsotherehavebeenconsistentlypoorresultsinkeyemergingeconomies,aswehighlightinthisissueofThePunchLine.MixedsignalsfromAsia,inparticular,havecaughtworldmarketsoffguard.NewChinesetrade,inflationandindustrialproductiondatasetsallundershotgeneralexpectations.Disappointingexportandimportfigureswereaparticularconcern.AnothermajorconcernisthelikelytimingofagradualchangeintheFed’seasingposture.Itisinevitable.Whatisworrisomeisthattheremayhavebeenasignificantreliance–adependency-oneasymoneythathasbuiltupinworldfinancialmarkets.Anyreversalinthishistoricexperimentingovernmentpolicyleadsusintotheunknown.
(pg 1)
•
InThisIssue
(pg 2)
•
NewWorldRankingData…
(pg 3)
•
You Can’t Handle the Truth…
(pg 4)
•
Engines of Growth
There will be far-reaching repercussions from this ongoing subpar growthtrajectory, and one should worry about the likely contours of the recovery path asmassive easing is tempered. And let’s not forget that it’s clearly an internationalaffair, rife with politics… and therefore difficult to resolve…
(pg 5)
•
Households?
Lot’s of recovery signals but far off the normal recovery path. Numerousquestions remain for a once free-spending sector whose housing and mortgagefinance machinery have not just collapsed but are severely damaged…Theprevious boom cannot and should not be recreated…But the world aches for avibrant U.S. consumer… with healthy job growth…
(pg 6)
Contact information:
Abraham Gulkowitz
phone: 917-402-9039
email:
abe@gulkowitz.com
The PunchLine...
3 June 11, 2013
New World Competitiveness Rankings
The
World Competitiveness Scoreboard
presents the 2013 overall rankingsfor the 60 economies covered. The economies are ranked from the most to theleast competitive
The competitiveness ranking is an annual survey compiled by the IMDinstitute's World Competitiveness Center. For its 2013 ranking, it looked intothe economies of the world's 60 most industrialized countries. IMD has based its ranking on 333 criteria, of which about two-thirds are statistics and theremaining third gathered from opinion polls.
http://www.imd.org/news/World-Competitiveness-2013.cfm
New World Competitiveness Rankings –Select Country Records
Source: Institute of Management Development, Switzerland; Competitiveness of 59 economies, based on over 330 criteria
Country20132012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1990 1980--------------------------------------------------------------------------------------------------------------------------------------USA 121 3 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 3 2SWITZERLAND23 5 4 4 4 6 8 8 14 9Sweden45 4 6 6 9 9 14 14 11 12 12 11 14 14 16 19 14 12 9 ----Canada76 7 7 8 8 10 7 5 3 6 7 9 8 10 8 6 12 13 20 ---- Australia1615 9 5 7 7 12 6 9 4 7 10 12 11 11 12 15 21 16 16 ----Germany99 10 16 13 16 16 26 23 21 20 17 13 13 12 15 16 10 6 6 4 4Taiwan1176 8 23 13 18 18 11 12 17 20 16 17 15 14 18 18 14 22 ----U.K.1818 20 22 21 21 20 21 22 22 19 16 17 15 19 13 9 19 15 14 ----France2829 29 24 28 25 28 35 30 30 23 25 25 22 23 22 22 20 19 13 ----Japan2427 26 27 17 22 24 17 21 23 25 27 23 21 26 20 17 4 4 3 1 1Korea2222 22 23 27 31 29 38 29 35 37 29 29 29 41 36 30 27 26 ------China2123 19 18 20 17 15 19 31 24 29 28 26 24 29 21 27 26 31 34 ----
- - -- - - - - -- - - - - - - -- - - - - -- - - - - - - -- - - - - -- - - - - - - -- - - - - -- - - - - - - -- - - - - -- - - - - - - -- - - - - -- - - - - - - -- - - - - -- - - - - - - -- - - - - -- - - - - - - -- - - - - -- - - - - - - -- - - - -
IMD ANALYSIS:
The United States was back as the world's most competitive country, ahead of Switzerland which had moved up one place and Hong Kong, the frontrunner in2012, the Swiss Institute forManagement Development (IMD) announced .The world's biggest economy regained the top sport due to the recovery in itsfinancial sector, more technological innovations and and a wide range of successful companies.Germany was ranked in ninth place, alongside Switzerland and Sweden one of justthreeEuropeancountries which madeit intothe top10.
Winners since 1997(+ 5ormoreranks):
China, Germany, Israel,Korea, Mexico, Poland, Sweden, Switzerland,Taiwan
Loserssince 1997(
‐
5ormoreranks):
Argentina, Brazil, Chile, Finland, France, Greece, Hungary, Iceland, Ireland,Italy, Japan, Luxembourg, Netherlands, New Zealand, Philippines, Portugal,SouthAfrica, Spain, United Kingdom andVenezuela.
US
competitiveness and performance remains a key to global recovery… Noothernation can exercise suchastrong‘pull effect’ onthe world.In Europe, the most competitive nations include
Switzerland (2),Sweden (4)
and
Germany (9
), whose success relies upon export
‐
oriented manufacturing,diversified economies, strong small and medium enterprises (SMEs) andfiscal discipline. Like last year, the rest of Europe is heavily constrained byausterity programs that are delaying recovery and calling into question thetimeliness ofthe measuresproposed.The
BRICS
economies have enjoyed mixed fortunes.
China (21)
and
Russia(42)
rose in the rankings, while
India (40), Brazil (51) and South Africa (53)
all fell. Emerging economies in general remain highly dependent on theglobaleconomic recovery, which seems tobe delayed.In Latin America,
Mexico (32)
has seen a small revival in its competitivenessthat now needs to be confirmed over time and by the continuousimplementation ofstructuralreforms.
BOTTOM 20
40 India41 Latvia42 Russia43 Peru44 Italy45 Spain46Portugal47Slovak Rep48 Colombia49 Ukraine50 Hungary51 Brazil52 Slovenia53 S Africa54 Greece55 Romania56 Jordan57 Bulgaria58 Croatia59 Argentina60 Venezuela
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