It appears that the deal has not been sealed, much less finalized, and the Brazilian Defense Minister is saying that the Gripen and Super-Hornet. “could be still allowed to “redefine” their offers for the FX-2 contract.”
My guess is that deal was 98% done at the time of the initial announcement, and the Brazil is angling for more support, either technically or via purchase, for their C-390 transport.
Background here.
They decided to sell to Magna, whose bid had been anointed by Merkel and the CDU party.
I’m not sure that Merkel can lose now.
Of course, with the SDP categorically refusing to form a coalition with the Left Party, we’re likely to end up with the status quo after elections anyway: The SDP gets the most seats and votes, but by refusing to ally with the Left Party, it means that the CDU-FDP coalition has more seats than the SDP-Green coalition, and the SDP is once again forced to be a junior coalition member.
This may have been “responsible” in 2005, when the last elections happened, but in 2009, after pretty much every single complaint of the LP about the excesses of capitalism have proved true, it’s just stupid.
So, Dassault has finally gotten an export sale of its Rafale fighter, to Brazil. (Official announcement in Portuguese on a very poorly configured web server)
There were a number of things that helped with this:
This breaks the logjam for Rafale, but the customer, which has a significant aerospace industry with indigenous design capabilities and extensive existing ties, is fairly unique.
That being said, we also have this report (Google Translation from Portuguese) saying that the deal may not be completely nailed down yet.
H/t ELP Defens(c)e Blog for the tip/vid that the Rafale has already been launched from, and landed on the Foch, which was sold to the Brazilians and rechristened NAe São Paulo.
Retail Employment Courtesy of Calculated Risk
Temp hire numbers courtesy Bloomberg
Click for full size pic
So, let’s start with employment today, shall we?
We have Manpower’s latest survey of hiring intentions for US companies, which are best described as “sluggish,” with the seasonally adjusted employment outlook for the US being the weakest since Manpower began its survey, in 1962.
On the other side it appears that retail hiring is showing some signs of picking up, but holiday retail employment was pretty beaten down in 2008 anyway. (See top picture)
Also, it appears that US companies are still cutting temporary employees from their payrolls, (bottom pic) and temps tend to be both the first in the door, and the first out the door.*
On Europe, we are getting conflicting signals, with consumer confidence in the U.K. hitting its highest level since May, 2008, but German industrial output falling in July, production rose 0.8% in June, but fell 0.9% in July, against a consensus estimate of a gain of 1.6%….Ouch.
The intersection of banking and consumers in the US ain’t doing well, with U.S. consumer credit falling at a 10% annual rate, or $21.6 billion, and Standard & Poor’s noting that despite a slight improvement in July, it expects credit card write-offs to continue to increase.
Meanwhile if you follow the stock market, perhaps you should listen to Warren Buffett:
Mr. Buffett declined to predict the short-run course of the stock market. But corporate data from Berkshire shows his company was selling more stocks than it was buying by the end of the second quarter, according to Bloomberg News. Its spending on stocks fell to the lowest level in more than five years, although the company is still deftly picking up shares in some companies and buying corporate and government debt.
(emphasis mine)
So he is moving out of stock, and getting completely out of Moody’s. (more on that in another post.)
Meanwhile, we have some gold bug news, with gold topping $1000.00/oz (troy).
In related news, the value of the dollar and gold tend to be inversely related, the dollar fell to its lowest level vs. the Euro this year, $1.4491:€1.0000.
We also saw this pushing up the price of oil today, up 4.5% to $71.10/bbl.
*Something I am all too familiar with, having done contract technical work for the past 17 years.
The Russians are looking at buying a Mistral Class amphibious assault ship.
It’s roughly equivalent to the Tarawa class of LHA, it’s a through-deck helicopter carrier with a well deck, and the possibility of carrying some STOVL aircraft, and can carry, and act as a command center for, amphibious assaults.
This is a capability that was never really the focus of the Russian navy, nor of the Soviet navy before it, which would explain why they want to purchase this capability from a 3rd country.
I’m not entirely sure why they feel that they need this capability though. The only 2 applications that I see are in multinational peace-keeping operations, and for invading Georgia, though issues with both the Turks and the Ukrainians would make the latter application difficult.
So, we are now hearing the inevitable stories about how rich hedge fund type folks are fleeing the UK because they don’t like the plans to raise the marginal tax rate. (paid subscription required)
Seriously, let them go.
When all is said and done, when the people at the very top of the pyramid leave, and stop bidding up the prices of essential commodities, like shelter, you end up with a more livable city with a real middle class.
If you have concerns about the tax base, just implement a Tobin tax on financial transactions, and you get the money, with the bonus that you reduce speculative arbitrage.
The financial “masters of the world” do not create wealth, they extract it from the rest of us through fees on our 401(k)s and retirement funds.
The expansion of financial services in the past 30+ years have been parasitism, not improved productivity.
Consumer confidence is at a 4 month low for August, Reuters/University of Michigan Surveys of Consumers, which compares with the Conference Board’s reading, which was up a few days back.
Both results are consistent in that they beat expectations, but this confuses the hell out of me. I think that future sentiment has a bigger role in the Conference Board’s survey, which may explain the difference.
We saw consumer spending rise by 0.2% in July, though income was flat, but this should be taken with a grain of salt, as the increase was entirely a consequence of the “Cash for Clunkers” program.
Meanwhile, in banking, the Federal Reserve is reducing the size of its Term Auction Facility (TAF) cash for sh$#pile auctions to banks, largely on the basis of reduced demand for them:
Banks are increasing lending to buyers of high-yield company loans and mortgage bonds at what may be the fastest pace since the credit-market debacle began in 2007.
……
“I am surprised by how quickly the market has become receptive to leverage again,” said Bob Franz, the co-head of syndicated loans in New York at Credit Suisse. The Swiss bank has seen increasing investor demand for financing to buy loans in the past two months, he said.
I’m not surprised. Modern investment banking is about making big bucks by scamming rubes like the one pictured on the right.
Unfortunately, said rube has the power to make every American taxpayer pay for his decisions.
Meanwhile, on the other side of both ponds, we have record unemployment and record deflation, while businesses in the UK cut investment spending at a record rate, so there is not much in the way of green shoots there.
In currency, the dollar fell, and more significantly, the “cost of borrowing dollars for three months slipped below the rate on similar loans in yen for the first time since 1993,” which implies that in the event of a flight to safety, that money will go toward Japan, where returns are now marginally higher.
In energy, oil rose slightly.
I’ve been following the tussle between the Swiss Bank UBS and the IRS over account for information for some time, and the fact that there is now a settlement which involves handing over account information for about 4500 people, and that prosecutors are working on over 150 criminal tax evasion cases is a very good thing.
Even better is the fact that there is an amnesty deadline in September, and neither UBS nor the Feds are revealing which accounts have turned over, which is having the rich pig tax evaders running around like chickens with their heads cut off, wondering whether or not they are among those accounts turned over.
One of the effects of the tax amnesty program is that about a dozen more banks have now been fingered as having aided clients in evading taxes.
Let’s be clear, for this to have a meaningful effect, there need to be dozens of prosecutions, and a significant number of people both imprisoned and made paupers by this process.
That is the only way that repeat fraud will be deterred.
But was he guilty in the first place?
Normally, I’d put this sort of question firmly into the tinfoil hat category, but a number of people believe Libya was not the perpetrator of the bombing, with Iran and the PFLP-GC being the most frequently cited alternative, and it appears this release was a quid pro quo for his dropping his appeal of his conviction. (See also here)
My guess is that the reality is somewhere in between, that al-Megrahi is the one who done it, but that the prosecution was handled by a bunch of PR glory boys, who screwed up various parts of the trial, and there was a very real worry that he would embarrass the British courts on appeal, so they cut a deal.
That’s my guess anyway.
So it looks like the quirky cars are going to be around for a while (see here and here).
There is still the matter of financing, but this is pretty close to a done deal.
Koenigsegg is a serious (the body is completely carbon fiber, it weighs less than 1300 kg, and it does 0 to 100 km/h in under 3 seconds) supercar manufacturer (see pic), which implies that they will be doing more than just milking the brand name, and will actually look to keeping the Saab product line fairly cutting edge, perhaps migrating some of their existing tech down to Saab, which is good news.
In other Swedish car news, it looks like Ford is making some progress in selling Volvo automobile, with reports that a consortium named Konsortium Jakob AB, Volvo Trucks, and the Chinese auto companies Geely, Dongfeng, Beijing Auto, and Chongqing Changan, are all rumored to be bidding on the deal.
Housing Starts, Courtesy Calculated RiskI guess that it’s time to rejoice, because the IMF’s chief economist is saying that the global recession is over…Seeing as how they handled things like the Asian Financial Crisis of the 1990s, I’m inclined to believe that they are not a reliable source.
I would also note that he has a huge caveat in this, “we may not go back to the old growth path … potential output may be lower than it was before the crisis,” which to my mind sounds like a permanent decline in economic activity, and thus the recession might be over because normalcy is being redefined.
That being said, we are seeing signs of either a recovery, or a pause in the path downward, with credit card defaults moderating somewhat, so, for example, BoA’s charge-off rate dropped to 13.81% last month, down 0.05% from the level in June.
Basically, the numbers are still pretty horrible, but they aren’t getting any worse…yet.
We also have a stronger consumer confidence level in August, with the Investor’s Business Daily and TechnoMetrica Market Intelligence (IBD/TIPP) Economic Optimism Index rising to 50.3 in August from 46.3 last month, and this is a real positive number as 50 is the dividing line between optimism and pessimism.
In inflation, producer prices fell by -0.9% from the previous month, and the year over year price decline was -6.8%, beating the predictions of -0.3% and -5.9% respectively.
Meanwhile, in the UK, consumer inflation remained steady at 1.8%, but it had been predicted to drop to 1.5%.
Real estate is confusing, or at least the reporting of it is.
The data came out today, and the coverage is interesting, with Bloomberg noting that single-family housing starts rose for the 5th straight month, but CNN noting that housing starts and building permits declined with only single family housing starts showing an improvement, and that the year over year numbers are way down.
I’d go with CNN here, because:
Then again, YMMV, and I always see the economic glass as half empty.
Oil was briefly back above $70/bbl before settling at $69.19, largely on a report that US crude inventories have dropped, and the dollar and Yen both fell against the Euro, largely on more optimistic business sentiment in Germany.
Airbus has released pictures of its carbon fiber fuselage proof of concept models, and it looks like they are going “whole hog” on this:
“The extensive use of carbon-fibre is a significant advance: the panels, frames, window frames, clips, and door are all made from it, with a hybrid door frame structure consisting of carbon-fibre and titanium being used for the first time,” Airbus adds. The barrel also contains some metallic components in the floor and in the highly loaded “test load introduction area”.
Hopefully, they will avoid Boeing’s problems with composite structures.
My apologies, but the city of Amsterdam gives us a righteous take-down of Bill O’Reilly and His Evil Minions’&trade talking points on legalized weed in the Netherlands.
H/t Boing Boing.
BTW, in the comments there, you can find this ditty, Netherlands to close prisons for lack of criminals….Some hellhole, huh.
Scary Picture of the DayToday is the official unemployment numbers, and they are worse than expected. Non-Farm payroll fell by 467K, and unemployment (U-3) rose to 9.5%.
For those of you following the more expansive, and to my mind, more accurate, U-6, it rose to 16.6%.
Unemployment is hitting new highs in the Euro zone too, which is why the ECB is keeping its rates at 1%.
It’s no wonder that a CNN/Opinion Research Corporation survey showed that people are getting more pessimistic about the economy.
We do have a bit of good news, with factory orders rising in May, and
mortgage rates falling this week.
In energy, both crude oil and wholesale gasoline prices fell, on the weak employment numbers and expanding inventory.
The investor flight to safety has strengthened the dollar.
Case-Shiller data vs. the Stress Test Assumptions 
Default rates on mortgages, Also
H/T Calculated Risk
Uh-oh, consumer confidence fell in June, largely based on job concerns.
The reporter interviews an analyst who is surprised about this, because of , “the fact that the S&P 500 is close to 40 percent off its March lows.”
The fact is that the general public is better at recognizing a dead cat bounce than this analyst, because they are concerned about jobs, which are still being lost.
Meanwhile in the world of real estate, or perhaps we should call it unreal estate, the
Case-Shiller index posted an 18.1% year over year drop, and delinquencies on prime mortgages going off the charts.
We also got GDP numbers for the 1st quarter from the UK, and we have their economy falling off a cliff, down 2.4% for the quarter, and 4.9% year over year.
Maybe the good news is that there U.K. house prices rose in June, following May’s increase, up 0.9%, though it’s still down 9.3% year over year.
Until I see year over year numbers below 2%, I don’t see any green shoots, just the 2nd derivative of price going positive.
In any case, the crappy consumer confidence report drove oil down and the dollar up, as there are concerns about reduced demand for oil, and a flight to safety in dollars.
The Philadelphia Bank of the Federal Reserve has released its “state coincident indicators”, and 49 of 50 states showed contraction during the past quarter.
And another day, another S&P downgrades of residential mortgage backed securities. They review 101, and downgraded 93 of them.
Meanwhile, May existing home roes, but the year over number is still down, and median home prices have declined 16.7% year over year, so there is no incication that prices are falling.
Distressed home sales, foreclosures, short sales, etc., declined to only 33% (!) of sales from 45% (!!!) in April, so we are still well in vulture territory.
There looks to be downward pressure on interest rates, as treasurys have risen, pushing the yield down.
Not much in the way of “green shoots” in Europe, with both consumer spending in France and the a purchasing managers’ index in Germany falling.
Of course everyone is holding their breath about what the Federal Open Market Committee will do tomorrow, though the consensus is that they will not raise rates, which pushed the dollar lower.
The falling dollar, and unrest in Nigeria, drove oil up today/a>, it finished the session at just below $70/bbl.
This is across the pond, where the there has been a £1.15 billion default on bonds for 9 office buildings in downtown London.
The value of the properties has declined 50% from peak.
We will see a lot more of this in commercial real estate, particularly since most of the loans are relatively short term, typically about 5 years, and the note will come due, and there will be no opportunity to refinance, because the value of the property has fallen.
H/t Calculated Risk
The Swedes have a society that I envy in a number of ways.
A social safety net, a policy of making contraception to teens 15 and above, and the latest case, the requirement that, “Sex education should form part of the curriculum for all adults attending Swedish for Immigrants (SFI) classes,” according to an official report given to the Minister for Health and Social Affairs.
This is a good policy. The idea of teaching people who may have come from very sexually repressive societies things like human sexuality, that clitoridectomy is wrong, and that homosexuality isn’t wrong, that women have the right to refuse sex to their husbands, contraception, etc.
Here is the part that had me spewing at my screen, though:
Milton said he thought it would be unnecessary for people from functioning democracies to sit through classes on sex education. He added however that finding a practical solution did not fall under his remit.
“Clearly people from the UK, US or Canada, for example, know these things already. But it can be sorted out on a case by case basis. It’s something that can be worked out locally,” he said.
While I cannot speak to the sexuality and sexual mores of either the Canadians or British, notwithstanding the, “no sex please, we’re British,” jokes, I find the idea that the United States, with the highest incidence of teen pregnancy, partner murder, etc. is somehow sexually enlightened as a society to be completely unsupported by reality.
Just ask Briston Palin.
Were US sexual mores more honest, and less punitive, we would be a far better place to live.
Well, if you are looking for “green shoots”, the New York Fed Empire State Manufacturing Survey is not one of them, they got worse (see picture).
Additionally, the NAHB Builder Confidence fell a bit in June, from 16 to 15, with 50 being neutral, so that remains awful.
When one considers that delinquencies on commercial mortgage backed securities broke 2%, this is a state of mind that accurately reflects the reality out there.
Still, another measure of consumer confidence, this one from the University of Michigan, , which is marginally better, but still well below the 10 year average of 88.2.
We also have two relatively well known business have filed for bankruptcy reorganization, Six Flags amusement parks and the Extended Stay hotel chain.
Meanwhile, in Ireland, deflation has hit an annual rate of -4.7%, which is not surprising. There are a lot fewer dollars (Euros) chasing goods there, now that their bubble has popped.
Still, it appears that foreign investors are more confident about the future on a global level, as they have cut back on purchases of long term US securities, as the flight to safety slowed/reversed.
Meanwhile, we are starting to see some inflation from the recovery in oil prices, with import prices rising 1.3%, largely on oil, though they are down by 17.6% (!) year over year.
This has driven the price of retail gasoline up again, and are now up 63% for the year, though crude oil fell today.
The dollar was up, largely on statements by Russia that it should remain the world’s reserve currency.