After my Thursday piece where I discussed how the social environment in China might threaten the Communist Party’s rule, I received this comment:
“Amazing, how we see other systems potential weakness and vulnerability but not our own here and now 'rot and ruin'”
Switzerland’s central bank may have to consider resuming its battle with currency markets after the franc surged against the euro within two weeks of policy makers ending attempts to counter gains, economists and investors say. (Bloomberg)
Swissie on a tear for sure against the US dollar…hesitating at the 61.8% retrace from Nov ’09 low today, as speculators take the SNB seriously it seems, especially after this move…
Go Google news on “China labor strikes” and you’ll find plenty of recent articles about the latest worker strikes throughout the country (notably at the Honda plants).
We’ve talked about the threat that social discontent could prove to be to China’s economy – should China fail to realize double-digit growth then sustaining their economic model would grow increasingly difficult primarily because its citizens might become worried that the recent thrust towards prosperity is waning.
Three drivers of yesterday’s big sell off seem to be:
1) European Central Bank refunding operations (tender) for banks, i.e. how much demand from banks and can the ECB provide the liquidity needed?
2) Concern that Chinese growth is slowing based upon a Conference Board leading indicator number
3) Sharp decline in US consumer confidence
Typically when Goldilocks emerges from her bunker, sees her shadow, and returns to the bunker, we can expect six more weeks of recession. But I’d suggest she re-stock her canned foods supply – she could be in there a while.
Catching a glimpse of Goldilocks yesterday gave me a bit of hope. US consumer spending increased again, though slightly slower than the previous month. Personal income rose; disposable income rose; and savings as a percentage of disposable income rose.
