Here Comes The Double Dip Pt. 3

[Daniel_Plainview]

Meanwhile, in the Eurozone's biggest economy ...



German Industrial Output Rose Three Times More Than Forecast

German industrial output rose more than three times as much as economists forecast in March, adding to signs Europe's largest economy may have avoided recession.

Production jumped 2.8 percent from February, when it dropped 0.3 percent, the Economy Ministry in Berlin said today. February output was revised up from a 1.3 percent decline. Economists forecast a March gain of 0.8 percent, the median of 38 estimates in a Bloomberg News survey shows. In the year, production advanced 1.6 percent when adjusted for working days.

[...]

German Factory Orders Rose More Than Forecast in March

German factory orders rose more than economists forecast in March as demand from outside the euro area helped Europe’s largest economy weather the debt crisis.

Factory orders, adjusted for seasonal swings and inflation, jumped 2.2 percent from February, when they gained a revised 0.6 percent, the Economy Ministry in Berlin said today. Economists surveyed by Bloomberg News predicted a 0.5 percent increase, according to the median of 37 estimates. From a year ago, orders dropped 1.3 percent when adjusted for work days.

German companies are tapping faster-growing emerging markets as the sovereign debt crisis curbs demand in the euro region. Business confidence climbed to a nine-month high last month and investor sentiment unexpectedly rose to a two-year high. Still, economic growth will slow to 0.6 percent this year from 3 percent in 2011, according to the Bundesbank, as fellow euro-area members drop back into recessions.

Today’s data are “a very positive surprise,” said Klaus Baader, senior economist at Societe Generale SA in Hong Kong. “The numbers show that despite the crisis in the euro area, Germany is growing and benefiting from a revival in international trade.”

[...]

And from a couple weeks ago ...

German Business Confidence Unexpectedly Rose to 9-Month High

German business confidence unexpectedly increased to a nine-month high in April, adding to evidence that Europe's largest economy can weather the resurgent sovereign debt crisis.

The Munich-based Ifo institute said today its business climate index, based on a survey of 7,000 executives, rose for a sixth straight month to 109.9 from 109.8 in March. Economists predicted a drop to 109.5, according to the median of 40 economists in a Bloomberg News survey. The index has beaten forecasts every month since September.

The German economy, which contracted in the final quarter of last year as the debt crisis damped demand for its goods in Europe, may have avoided a recession. Companies have increased sales to faster-growing markets in Asia, and unemployment at a two-decade low is bolstering consumption at home. Investor confidence unexpectedly rose to a two-year high this month.

[...]

Oh, this is EXCELLENT ... this is a watershed moment where OF2 has finally seen the light; namely, that there are important economies OTHER THAN THE US ... and that the Eurozone is critically important to the US ...



And he posts not one, not two, but THREE articles about a Eurozone country!

It's been like pulling teeth, but it's finally happened ... he's seen the light, at last ... !!!

[OilFinder2]

And, back at home ...



Job Openings in U.S. Increased to Three-Year High in March

Job openings in the U.S. rose in March to the highest level in more than three years, a sign employers may be looking to take on more staff as the economy grows.

The number of positions waiting to be filled increased by 172,000 to 3.74 million, the most since July 2008, from a revised 3.57 million the prior month that was larger than previously estimated, the Labor Department said today in a statement posted on its website. Hiring slowed and firings were little changed.

Improving prospects may lure more workers into the labor market and help the world's largest economy cut into the 5 million-job deficit that remains as a result of the recession that ended in June 2009. Faster hiring and the accompanying wage gains are needed to sustain consumer spending, which grew in the first quarter at the fastest pace in more than a year.

[...]

NFIB small-business index at post-recession high

A measure of small-business optimism in April matched the best post-recession reading, a trade group said Tuesday. The National Federation of Independent Business said its small-business optimism index rose 2 points to 94.5, led by an 11-point jump in earnings trends. That takes the gauge to the same level as in February 2011. Gains for components measuring plans to increase employment, plans to increase capital outlays, those that expect the economy to improve and expected credit conditions also buoyed the index. The report is based on the responses of 1,817 randomly sampled small businesses in NFIB's membership.

[OilFinder2]

Oh, this is EXCELLENT ... this is a watershed moment where OF2 has finally seen the light; namely, that there are important economies OTHER THAN THE US ... and that the Eurozone is critically important to the US ...

Right. And you need to learn that there are other important economies in the Eurozone aside from Greece, Spain and Portugal.

[ralfy]

"Report highlights systemic jobs crisis in US"

http://www.wsws.org/articles/2012/may20 ... -m05.shtml

with gains in low-paying sectors. Also,

"European Growth Dynamo Getting Dim - March German Manufacturing Orders Plunge, Kill Any Possibility Of ECB Rate Hike"

http://www.zerohedge.com/article/europe ... ny-possibi

[OilFinder2]

In fact, if we're going to post news about other nations important to the US economy, why stop at the Eurozone? After all, our biggest trading partners are Canada and Mexico.



Canadian Manufacturing PMI hits 2012 high in April

The pace of growth in Canadian manufacturing advanced at its strongest rate of the year in April as business conditions improved for a third straight month, reflecting a slow but steady recovery in the export-reliant sector.

The RBC Canadian Manufacturing Purchasing Managers' Index, released on Tuesday, rose to a reading of 53.3 in April versus 52.4 in March, above the 50 no-change mark that separates expansion from contraction.

"As the economy south of the border strengthens, we expect the Canadian manufacturing sector will continue to reap the benefits of increasing U.S. demand for key Canadian exports such as autos, machinery and lumber," Craig Wright, chief economist at Royal Bank of Canada, said in a statement, noting a strengthening in both output and in growth in new export orders.

The new export orders component of the index rose to its most robust level since April 2011.

[...]

[OilFinder2]

Job Openings in U.S. Increased to Three-Year High in March

Job openings in the U.S. rose in March to the highest level in more than three years, a sign employers may be looking to take on more staff as the economy grows.

The number of positions waiting to be filled increased by 172,000 to 3.74 million, the most since July 2008, from a revised 3.57 million the prior month that was larger than previously estimated, the Labor Department said today in a statement posted on its website. Hiring slowed and firings were little changed.
[...]

A bit more color from that same report ...

There's One Part Of The Job Market That's Surging Like Crazy

[ralfy]

Very likely, various "surges" will be reported, perhaps based on low-paying jobs or no longer counting people who don't receive unemployment benefits, and likely no different from the manner by which other information has been manipulated (such as stocks and high-frequency trading) or seen in various ways to make it appear that the situation has improved significantly (such as counting consumer spending as part of economic growth, even with four decades of trade deficits), all to make the sheeple happy and encourage them to continue spending. It's not an illogical activity as the country has been heavily dependent on borrowing and spending the past few decades.

But it will not matter, as the first dip took place even amid record highs in terms of borrowing, spending, and financial speculation. It's likely because the very indicators that are supposed to be part of good news is what ironically led to that dip.

Finally, one has to keep in mind that the 2008 collapse, from which there has hardly been any recovery, was driven by only a fraction of over a quadrillion dollars in unregulated derivatives.

[Daniel_Plainview]

Spanish bonds exceed 6% whilst Spanish CDS's soar past 512 bps

May 9 (Reuters) - Spanish 10-year government bond yields rose back above 6 percent on Wednesday on fresh concerns about the country after finanical sources said its ailing banks could be forced to raise new money to cover property loans.

Spain will demand banks set aside another 35 billion euros ($45 billion) against loans to builders, the sources said, as it battles to rebuild confidence in a sector where huge losses have raised fears the country may need an international bailout.

Spanish 10-year yields rose 16 basis points to 6.03 percent, rising back above the 6 percent mark that could see the rise in yields accelerate if the break is sustained. "We've spent a lot of time consolidating in this region and a break of (the top of the recent range)at 6.16 (percent)is the next one to watch," a trader said.

Spanish credit default swaps rose 19 basis points to 512 bps, according to provider Markit. Equivalent Italian yields and CDS were also higher, with political uncertainty in Greece helping to undermine sentiment in peripheral euro zone debt.

Spain 10-year bond yield rockets above 6%

FRANKFURT (MarketWatch) -- Spanish government bonds came under renewed pressure Wednesday, sending the 10-year yield ES:10YR_ESP +3.41% back above the 6% threshold. The yield on 10-year bonds rose 0.20 percentage point to 6.04%, according to electronic trading platform Tradeweb, while yields on safe-haven German bunds DE:10YR_GER -1.53% continued to set record lows. The yield premium demanded by investors to hold 10-year Spanish bonds over German debt widened 0.23 percentage point to 4.49 percentage points, according to Tradeweb. A political impasse in Greece and concerns about Spain's banking sector continue to weigh on Spanish bonds, strategists said.

[OilFinder2]

Huge demand forces Jeep plant to skip summer break

Sales of Jeep Grand Cherokee and Dodge Durango SUVs are so strong that their factory will stay open through the normal two-week summer shutdown.

Automakers typically close plants around the July 4 holiday to update cars and trucks for the new model year and maintain the machinery.

But the Jefferson North factory in Detroit that makes the SUVs will stay open all summer, Chrysler spokeswoman Jodi Tinson said Monday. Plant employees already are working overtime and the factory is staying open for two shifts on two out of every three Saturdays. Normally a plant is closed on weekends.

Chrysler sold nearly 38,000 Grand Cherokees from January through March, up 44 percent from a year earlier. Durango sales jumped 33 percent to just over 11,000.

The Grand Cherokee, which was redesigned for the 2011 model year, is Chrysler's second-best selling vehicle after the Dodge Ram pickup. The Durango, also redesigned as a 2011 model, ranks 12th in company sales.

Tinson said Chrysler can make changes for the next model year while the plant is running.

------------


Sales spur Ford to halve factories’ summer shutdowns

Rising car and truck sales have prompted Ford Motor Co. to add a week of production at 13 North American factories so the company can make another 40,000 vehicles this year.

Ford said Tuesday that it would cut in half the normal two-week summer shutdown at six assembly plants and seven engine and parts plants. Auto plants normally close for two weeks around the July 4 holiday as they switch over to making vehicles for the next model year.

The Ford Stamping plant in the Town of Hamburg won’t be affected, a company spokesperson said.

Through April, U.S. auto sales ran at an annual rate of more than 14 million, substantially higher than last year’s 12.8 million. Ford sales were up 5 percent. Total U.S. car and truck sales rose 10.3 percent through April to 4.65 million vehicles, according to Autodata Corp.

Many analysts are forecasting sales of about 15 million new vehicles in 2013.

At Ford, most factories have been running at capacity, and the company is adding third shifts at three plants just this month to meet higher demand, said Jim Tetreault, vice president of North American manufacturing for the company.

[...]

[OilFinder2]

2nd week in a row in the 360K's. Looks like that blip up to the 380K's was just that: a blip.

Jobless Claims in U.S. Fell 1,000 Last Week to 367,000

First-time claims for jobless benefits fell last week to a one-month low, helping allay concern that the labor market may suffer an extended setback.

Jobless claims dropped by 1,000 to 367,000 in the period ended May 5, in line with the median forecast in a Bloomberg News survey and the lowest since the end of March, the Labor Department said today in Washington. The number of people on unemployment benefit rolls was the smallest since July 2008.

The data indicate the surge in claims in the first three weeks of April was probably tied to the timing of the Easter holiday rather than a deterioration in employment. Further declines in dismissals would point to ongoing improvement in the job market, helping sustain household purchases after payrolls cooled last month.

[...]

[Daniel_Plainview]

John Michael Greer: The descent into stasis

* * * America’s “empire of time,” its once-immense energy resource base, has been drawn down at breakneck rates for more than a century and a half. Recent handwaving around shale gas reserves has served mostly to pump up the price of drilling company stocks, and enabled a certain number of rich men in influential positions to get away with another round of looting; we’ve all heard the strident claims that the United States will become an energy exporter sometime very soon, but the numbers don’t even begin to add up, and it’s a safe bet that a few years down the road shale gas will have gone the way of ethanol and all the other energy sources that were allegedly going to replace petroleum and keep the industrial age running smoothly ahead. The American economy is utterly dependent on very large quantities of petroleum; so is the American military; drastic changes, going far beyond the baby steps involved in manufacturing a few electric cars or running a naval vessel or two on biodiesel, would have to get started well in advance to cushion the end of either dependency, and those changes are not taking place.

The consequences of the end of these two empires can’t be dealt with on the battlefield, as the long debate over the shape of America’s human ecology was, and it can’t be dealt with by jerry-rigging a set of temporary expedients to overcome the mismatch between real wealth and a dysfunctional financial system, as the crisis of the Great Depression was. It will require massive changes in every aspect of American life, starting with a steep decline in standards of living and the forced abandonment of privileges most Americans think of as theirs by right. That would be an immense crisis at the best of times, and these are not the best of times; our political system has spent the last thirty years trying to evade exactly these issues, while sinking further and further into stasis, and it’s our luck that the crisis seems to be arriving just as American politics freeze up completely.

That might result in the kind of systemic shock that brings another long-shot candidate with a radical following into the White House, and catalyzes immense natonal changes. It might also result in the more extreme form of systemic shock that shatters a nation into fragments. In the weeks to come we’ll be discussing both those possibilities, and others.

My apologies to John Michael Greer for offering only a snippet of his wisdom.

[Plantagenet]

it’s a safe bet that a few years down the road shale gas will have gone the way of ethanol and all the other energy sources that were allegedly going to replace petroleum and keep the industrial age running smoothly ahead.

Why is that a safe bet?

Ethanol was a government subsidized boondoggle that never made economic sense. Turn off the government subsidies and it will struggle to survive. Shale is quite different----it requires no subsidy and scientific studies show there is a 100-200 year supply at current US rates of consumption. There is a heck of a lot of gas out there and who can doubt it will all be produced as peak oil drives prices energy higher and higher.

Mr. Greer is a great polemicist, but for him to try to lump corn ethanol with shale gas doesn't make sense IMHO. They are very different things with very different economics. In particular, there is ZERO chance shale gas will be gone "in a few years" as Mr. Greer claims

[Lore]

Why is that a safe bet?

For the following reasons.

Shale gas reserve estimates of recoverable gas have been overstated.

The use of of NG has not yet been fully exploited, at which time prices will be commensurate with other fossil fuel energy sources.

The technology requires the expense of several millions of dollars per well, only to see those wells decline in a years time to 30% of their original output.

Not all wells are equal in output. Once the more productive wells are tapped it will be more costly to justify drilling for what's left.

NG, like oil, is traded in a world market and the price of the commodity will depend on the highest bidder which can be expected to increase with demand.

[Plantagenet]

Shale gas reserve estimates of recoverable gas have been overstated.

Sorry, but you don't have any expertise in evaluating geologic data. The corporate and university and USGS scientists (and President Obama) all say we've got a 100-200 years of supply at current rates of use. Believe what you want, but those are the scientific facts.

The use of of NG has not yet been fully exploited, at which time prices will be commensurate with other fossil fuel energy sources.

Of course. Thats how supply and demand works. We've currently got excess supply in the USA so the prices are low. If the price for NG goes up that will just encourage more expiration and development of shale gas.

The technology requires the expense of several millions of dollars per well, only to see those wells decline in a years time to 30% of their original output.

Not all NG wells decline to 30% in a years time. You just don't know what you are talking about.

NG, like oil, is traded in a world market.

You just don't know very much about this topic. Natural gas is NOT traded in a world market and there is no global price for NG. For instance, the price of NG in the central US today is a fraction of what NG costs today in Europe.

[Lore]

Sorry, but you don't have any expertise in evaluating geologic data. The corporate and university and USGS scientists (and President Obama) all say we've got a 100-200 years of supply at current rates of use. Believe what you want, but those are the scientific facts.

Obviously either does the U.S. Energy Dept.

U.S. Cuts Estimate for Marcellus Shale Gas Reserves by 66%
http://www.bloomberg.com/news/2012-01-2 ... -data.html

Of course. Thats how supply and demand works. We've currently got excess supply in the USA so the prices are low. If the price for NG goes up that will just encourage more expiration and development of shale gas.

What that means is the price of NG will eventually be competitive with the price of other fossil fuels. Which means, high, and we're back to square one again with a limited resource.

Not all NG wells decline to 30% in a years time. You just don't know what you are talking about.

Berman: Some of them never produced to begin with. No one talks about dry holes in shale plays, but there are bona fide dry holes-maybe 5 or 6 or 7 percent that are operational failures for some reason. So that’s included. There are wells that, let’s just call them inactive; they produced, and now they’re inactive, which means they are no longer producing to sales. They are effectively either shut-in or plugged. Combined, that’s probably less than 10 percent of the total wells. But then there are all the wells that are producing a preposterously low amount of gas; my cut-off is 1 million cubic feet a month, which is only 30,000 cubic feet per day. Yet those volumes, at today’s gas prices, don’t even cover your lease/operating expenses. I say that from personal experience. I work in a little tiny company that has nowhere near the overhead of Chesapeake Energy or a Devon Energy. I do all the geology and all the geophysics and there’s four or five other people, and if we’ve got a well that’s making a million a month, we’re going to plug it because we’re losing money; it’s costing us more to run it than we’re getting in revenue.

So why do they keep producing these things? Well, that’s part of the whole syndrome. It’s all about production numbers. They call these things asset plays or resource plays; that reflects where many are coming from, because they’re not profit plays. The interest is more in how big are the reserves, how much are we growing production, and that’s what the market rewards. If you’re growing production, that’s good-the market likes that. The fact that you’re growing production and creating a monstrous surplus that’s causing the price of gas to go through the floor, which makes everybody effectively lose money….apparently the market doesn’t care about that. So that’s the goal: to show that they have this huge level of production, and that production is growing.

But are you making any money? The answer to that is…no. Most of these companies are operating at 200 to 300 to 400 percent of cash flow; capital expenditures are significantly higher than their cash flows. So they’re not making money. Why the market supports those kinds of activities…we can have all sorts of philosophical discussions about it but we know that’s the way it works sometimes. And if you look at the shareholder value in some of these companies, there is either very little, none, or negative. If you take the companies’ asset values and you subtract their huge debts, many companies have negative shareholder value. So that’s the bottom line on my story. I’m not wishing that shale plays go away, I’m not against them, I’m not disputing their importance. I’m just saying that they haven’t demonstrated any sustainable value yet.
http://www.theoildrum.com/node/6785

You just don't know very much about this topic. Natural gas is NOT traded in a world market and there is no global price for NG. For instance, the price of NG in the central US today is a fraction of what NG costs today in Europe.

Different markets affect each other's prices for the commodity, just like oil, and with LNG even more so. You do know that NG is a commodity don't you?

[dorlomin]

Companies must raise £28 trillion to finance 'wall' of debt

Hmmm a touch sensationalist but it seems clear enough. The rolling over of outstanding debt is going to be a huge issue in the coming years.

Lack of growth is going to weigh like a rock around the neck.

[Plantagenet]

Lack of growth is going to weigh like a rock around the neck.

Yup.

Colin Campbell predicted that high oil prices would hurt the poorest countries first because they wouldn't be able to afford high priced oil. Its rather a surprise that high energy prices are dampening down growth and wiping out the economies of the wealthiest set of countries in the world----the EU.


A double dip recession is hitting the EU

[SeaGypsy]

There are not many of us writing here who have spent time in Asia during the boom. Campbell was wrong and it was obvious to me, should have been to everyone. I think inward looking America prefers to continue to believe it is the engine of the world and if it runs poorly so slows down the world. What has become obvious, is that the engine for the global economy is not where the mass of activity (still USA/ Europe/ 1st world Asia), but where the mass of growth. The surprising thing to those not familiar with Asia, is the cultural influence on frugality and capability to make more with less. This is a truly key aspect of Asian culture and thinking. One main reason this will continue to be the Asian century.

[OilFinder2]

Isn't it odd how certain doomers, who, prior to me posting this a month ago, had never said a single thing about shale gas/oil in this thread? Funny how I point out all the jobs and economic activity these things are creating, and will create, and - suddenly! - someone gets the idea that it's something to be attacked in this thread! One would think aforementioned person(s) had difficulties with original thinking, and only got ideas when someone else mentioned it first!

So, along that same line, here's another one of those!



-- Dow Chemical to build $1.7 billion ethlylene cracker plant in Freeport, Texas, as part of $4 billion plan to expand four Houston-area facilities which will create thousands of construction jobs and hundreds of permanent jobs
-- Huge expansion of rail facilities in south Texas to accomodate surge in railcars carrying everything from petroleum to fracking sand to NGL's to pipes and other construction materials
-- Chevron-Phillips to build world's largest 1-hexane processing plant in Baytown, TX
-- 105-mile oil pipeline project in south Texas
-- 150,000 bpd capacity additions coming to Mont Belivieu, Texas NGL fractionators. Same company also adding 173 miles of NGL pipeline
-- $240 million investment in 200 miles of pipeline and a cryogenic processing plant in Bee County, Texas
-- $350 million fractionator coming to Mont Belvieu, Texas to process 100,000 bpd of NGL's
-- 65-mile addition to south Texas pipeline

That's just the beginning. You can find pages of Eagle Ford midstream infrastructure news here.

And this out today:

Eagle Ford impact pegged at $25 billion in 2011

The Eagle Ford Shale has been touted as a modern-day Spindletop, and a study released Wednesday underscored that view.

The vast oil and gas play in South Texas contributed $25 billion in total economic output to a 20-county South Texas region last year and provided 47,097 full-time jobs, according to a study prepared by the Center for Community and Business Research at the University of Texas at San Antonio's Institute for Economic Development.

In a single year — 2011 — the shale development added more economic oomph to South Texas than an earlier UTSA study predicted would occur over nearly a decade.

That earlier projection estimated that the Eagle Ford would account directly and indirectly for almost $21.5 billion in economic output by 2020.

The new study estimates that the shale will create 117,000 jobs by 2021, more than 11/2 times the 68,000 full-time jobs the earlier study had projected.

[...]

[ralfy]

"51 Months After The Start Of The Recession, Here Is The Report Card"

http://www.zerohedge.com/news/51-months ... eport-card