Death Star Economics



All things considered, Mexico seems to be the place to go

The revised UK GDP for Q2 came in the morning, and it’s really just a parade of negative numbers. The good news first: it fell less than expected. Overall GDP was at -0.4% (instead of -0.5%), with the main drag coming from the construction sector, which was down 3%. Industrials and services came in at -0.7% and -0.1% respectively, household spending declined 0.2% and exports shrunk by 1.1%.

The final read on US Q2 GDP is published tomorrowExpectations are … managed.

The Street projects GDP this year will run at 1.9%. The first quarter came in at 2%, and the final read on the second quarter tomorrow is expected to come in at 1.7%. You can extrapolate from there what the next two quarters will look like, and it’s not pretty. For every decent data point, like, say, a rise in home prices, there’s at least one that counters the optimism.

In addition to that, earnings don’t look so good and a survey of American executives shows that Congress’ inability to deal with the fiscal cliff and the uncertainty around future tax policies is making it impossible for corporates to plan strategies and investments. Of course, that feeds right into the stalling activity everywhere you look. read article

Over the past three days, the People’s Bank of China has injected RMB365bn ($58bn) into the economy, one for each day of sluggish growth. read article

In other Asia news, the US has loosened its trade restrictions with Myanmar, following the release of political prisoners and reforms of the country’s political and economic system over the past 18 months. The European Union has also abolished many of its sanctions. The president of the Myanmar Federated Chamber of Commerce called on developed nations to “help us prevent the ‘miscarriage’ of our democracy in its embryonic stage.” read article

Santander floated 25% of its Mexican division yesterday, raisng $4.13bn. That makes it the largest IPO Mexico has ever seen and also the third biggest of the year, behind Facebook and Japan Airlines. In the first six months of 2012, Santander Mexico accounted for 12.4% of the company’s overall profits, while only representing 4% of the bank’s assets. read article

Meanwhile, both Spain and Greece are drowning in protests and riots. The Spanish budget will be announced at 1pm BST. It is likely to include the launch of a new tax supervisory authority, as suggested by the EU, limiting early retirement, new emission taxes and transaction taxes for stocks, while getting rid of some exemptions. It is a package that won’t please voters, but will please Brussels and pave the way to Spain’s bailout. Rajoy, a man of the people, is not in Spain today. He is attending the UN General Assembly in New York. read article

So long.


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