*first there is improvement, then there is record job losses worldwide, mortgages defaulting, commercial real estate a mess, markets reeling, so what to believe? Get out of the stock market unless you know what you are doing, like, HEDGE!
More economic indicators show improvement worldwide
Evidence is piling up that a global economic recovery is coming faster than economists predicted only a few months ago. A survey of U.S. purchasing managers indicates expanding factory output for the first time since January 2008. Growing manufacturing activity in Asia and Europe provides further evidence of a significant upturn. "We had been looking for improvement, but the speed at which it's come and the magnitude with which it has come is surprising," said Bruce Kasman, an economist at JPMorgan Chase. The Wall Street Journal (02 Sep.)
August’s ADP Report estimates nonfarm private employment in the service-providing sector fell by 146,000. Employment in the goods-producing sector declined 152,000, with employment in the manufacturing sector dropping 74,000, its smallest monthly decline since July of 2008. Large businesses, defined as those with 500 or more workers, saw employment decline by 60,000, while medium-size businesses with between 50 and 499 workers declined 116,000. Employment among small-size businesses, defined as those with fewer than 50 workers, declined 122,000. Since reaching peak employment in January 2008, small-size businesses have shed nearly 2.5 million jobs. In August, construction employment dropped 73,000. This was its thirty-first consecutive monthly decline, and brings the total decline in construction jobs since the peak in January 2007 to 1,562,000. Employment in the financial services sector dropped 19,000, the twenty-first consecutive monthly decline.
Rising mortgage defaults in Europe hinder RMBS market
The number of mortgages across Europe in arrears continues to increase, indicating more looming defaults, according to data from Fitch Ratings on transactions of residential mortgage-backed securities. Rising defaults are resulting in deterioration in the RMBS market right as European governments are striving to revive it. According to the European Securitization Forum, outstanding RMBS in Europe reached €1 trillion in the first quarter of 2009. The Fitch report indicates that the RMBS market started to deteriorate in the next quarter. The Wall Street Journal (02 Sep.)
Analysts see tougher times ahead for commercial real estate
Distress being endured by commercial real estate is only the beginning of a much deeper crisis, analysts said. "We are between the first and second inning," said Richard Parkus, who directs research on commercial mortgage-backed securities for Deutsche Bank. "We're going to have to get through a very difficult period." The New York Times (01 Sep.)
Most Asian markets drop, while China sees gains
Most Asian share markets followed Wall Street's decline to end lower Wednesday, although shares in China advanced. Japan's Nikkei 225 dropped 2.4%, Australia's S&P/ASX 200 gave up 1.7% and South Korea's Kospi Composite slid 0.6%. New Zealand's NZX 50 dropped 0.3%, Singapore's Straits Times Index lost 1.1% and Hong Kong's Hang Seng Index fell 1.8%. Meanwhile, China's Shanghai Composite climbed 1.2%, and Taiwan's Taiex gained 0.3%. The Wall Street Journal (02 Sep.)
*somebody's not going to be happy
Benmosche strives to halve fees to take AIG units public
Robert Benmosche, CEO of American International Group, told employees at a staff meeting that he wants to substantially cut back on fees the company pays to investment banks for launching initial public offerings of its divisions. "I went into one presentation, and they said, 'Well, the investment-banking deal will be in the range of 2% and 2.5%,'" Benmosche said. "I said, 'How about 1%?' So then everybody's face turned red, and I said, 'So change it.' So we're talking about 1%, not 2% to 2.5%." Bloomberg (9/2)