ETF Database submits: Thanks to stubbornly high unemployment and low levels of growth forecast for much of the developed world, many are now worried about the possibility of deflation rather than inflation as the global economy comes ever closer to falling into a double dip recession. With interest rates and long-term yields at record lows, there is not much left for the Fed to do in order to try to stimulate the economy in the short-run as prices stay relatively flat for a variety of goods.
Michael Fitzsimmons submits:The world’s economy is powered by oil. Although coal produces most of the world’s electricity, there are alternatives in electric power generation: nuclear, solar, natural gas, and wind. But the cars and trucks that enable personal transportation, the transport of goods, and the mining of Earth’s raw materials, are all predominately fueled by derivatives of oil – gasoline and diesel.
Previously, I’ve observed that S&P 500 revenues are highly correlated with both world industrial production and world exports. The same goes for these revenues and the CRB raw industrials spot price index. I am predicting that revenues will be up 5%-7% this year and next year.
THE Wall Street Journal reports that some high-flying commodities have gone into retreat in recent weeks:Cotton has pulled back 17% from the all-time record set in early March, and sugar is down 34% from its multidecade high in February. Lead and zinc have tumbled in recent weeks after shooting up in the second half of 2010. Copper has shed 6% this year.
Unilever (UL) is the second largest consumer goods company in the world after Procter & Gamble (PG) and manufactures everything from ice creams to shampoos. Unilever is the global leader with close to a 50% share of the grocery market and sells under well-known billion-dollar brands such as Knorr, Hellmann’s and Ragu.
Tom Malthus submits:As the old adage goes smoke before fire; historically a sharp plunge in shipping prices would be the smoke warning investors of an approaching global economic slowdown, but this time it’s not the case. The Baltic Exchanges Baltic Dry Index (BDI) has collapsed falling nearly 34% since the start of December, and nearly 66% since its 2010 peak in May. So why is it different this time and, unless you are overweight shipping stocks, more or less irrelevant?
Is the worst over for the Eurozone? That's what the ECB and heads of state said at the recent economic summit in Davos.
I offer some economic reality.
Eurozone Sales Collapse 15th Month and Wholesale Prices Soar
The Markit Eurozone Retail PMI® shows Eurozone retail sales downturn extends to fifteenth month in January
Inquiring minds are noting the expected (at least in this corner) collapse in European retail sales as measured by PMI indices.
The spotlight for this post is France, the second largest Eurozone economy following Germany.
The Markit France Retail PMI® shows French retail sales fall for ninth consecutive month.