What We Read Today 08 May 2014

May 8th, 2014
in econ_news, syndication

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

  • Trade data relieve pressure on Beijing (Lucy Hornby, Financial Times) China's exports returned to modest year-over-year growth in April after a disastrous 6.6% decline in March. In the most recent month both imports and exports grew from April a year earlier by nearly 1%. The balance of trade was positive at $18.45 billion. See balance of trade graph from Trading Economics after the Read more >> jump. after

Follow up:


The year-over-year comparisons for exports have been problematic so far in 2014 because for January through April 2013 there were rampant faked exports on the books for the purpose of effecting hot money transfers into China. Starting with May the comparisons to 2013 will have more meaning.

  • US slams China over Vietnamese vessels dispute in South China Sea (Demetri Sevastopulo and Geoff Dyer, Financial Times) The Obama administration condemned China's placement of an oil rig in waters near Vietnam claimed by China. Vietnam also claims that Chinese vessels have rammed its vessels in waters near the Paracel Islands which China has occupied and is building a cruise ship port and resort. The Philippines have reported captured a Chinese fishing vessel in Philippine waters. For background see China Reaching for Control of Oil (GEI News, 11 June 2011) and China's Expanding Border Causing Alarm (GEI News, 30 March 2013) which include maps, including the 1947 Chinese map (with the famous eleven dashes) which is used as a unilateral claim for Chinese ownership of the entire South China Sea which borders Vietnam, Malaysia and the Philippines.
  • The declining dollar: Why everyone got it wrong (Sara Eisen, CNBC) The dollar has been declining in 2014, the year virtually everyone predicted would see a rising dollar. One reason is weaker than expected economic data (1Q GDP near zero) and a second is a stronger than predicted treasury market. The surprising strength of government securities markets in Europe (discussed 'behind the wall' yesterday) as well as the U.S. has put pressure on both the euro and the dollar. Eisen concludes her article:

Fundamentally speaking, strategists say it will take a much stronger economy, and therefore higher interest rates, to move the dollar higher-which, at least at the moment, doesn't appear to be imminent. Until then the dollar could continue its weakening ways.

Short-term risks for dollar bears include any mention of higher interest rates or enthusiasm for the economy from Yellen in testimony on Capitol Hill Wednesday and Thursday or easier policy from the European Central Bank on Thursday.

  • German Stocks Little Changed After Factory Orders Miss (Trista Kelly, Bloomberg) Hat tip to Pedro de la Costa. This is a confusing story. Keely writes that manufacturing orders fell unexpectedly (-2.8%) in March because economists had forecast a 0.3% gain. A negative print for March should not have been out of the question since March PMI (Purchasing Mangers' Index) for private sector manufacturing fell sharply to a five month low of 53.0. It was above 50 but it was down sharply from 55.9 in February. With a rebound to 54.7 in April it is likely that factory orders increased significantly in April. It is no wonder that German stocks were little changed. There really was not much new here.
  • Why the Financial Media and Housing Pundits Got It Wrong (Logan Mohtashami) This good article did not make the ten article discussion on U.S. housing 'behind the wall' yesterday. The author points out that the weakness in housing is primarily due to labor market factors (too many still not employed and for those that are, too many low paying jobs). He also says housing market internals are weak (too high percentage pay cash and first time home buyers are missing). Lending standards are very loose, he says, and that is not the cause of market weakness. He says the following graphic shows the relationships he has cited:


Today there are 14 articles discussed 'behind the wall'.

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