Global Macro Perspectives
Outstanding consumer credit fell annualized 5.6% in February following a annualized 2.4% increase in January. January increase in consumer credit ended a 15 month long negative streak, February reading marked a return to falling consumer credit trend. Chart 1. Consumer Credit
Outstanding consumer credit rose annualized 2.4% in January following a annualized 2.2% decline in December. January increase in consumer credit ended a 15 month long negative streak. Table 1. Consumer Credit
As expected equity markets got a nice push up from Alcoa earnings. Looks like the earnings season will probably have similar “better than expected” flavor like the one preceding.The market looks bound to new highs.
The news flow on consumer and credit card credit continues to throw shadows on this equity rally. Consumer credit shrank for the seventh month in a row, contracting 12 billion USD in August to 2.46 trillion USD implying -5.8% annual growth rate. Credit-card debt fell for a record 11th straight month, down 9.9 billion USD. Shrinking at annualized rate of 13.1%. The credit outstanding ended at 899.4 billion USD. This could pose important set back to the recovery of U.S. economy as it shows the lenders are reluctant to extend credit to the economy and consumers are keen to reduce its debt. Consumer credit press release. I will post again the Meredith Whitney article explaining the issue in detail. WSJ story: The Credit Crunch Continues
All chips in for the Barrick Gold. The largest gold producer in the world plans to issue new equity to terminate hedging contracts. Brave. We will see if it pays off. Reuters story: Barrick to sell $3 billion in stock to buy back hedges
Major news yesterday was consumer credit decline. Reuters story: July consumer credit falls a record $21.6 billion It’s obvious that consumer credit/spending fueled recovery is not at the moment on the table.