“Meet the new boss, (maybe not the same as the old boss)” sang the Who and I couldn’t stop singing the song in my head when I think of China’s growing global influence as now the 3rd largest economy in the world, moving to #2 at some point soon and has the finances to spend themselves and collaterally hopefully the rest of the world out of this downturn.

Chinese Feb PMI rose for a 3rd month to 49, the highest since Sept and is up 10 pts from Nov and now is just shy of the magic 50 level.

Also, Chinese Premier Wen said they will announce another stimulus plan tomorrow. Commodities are rallying in response and in a world that is trying to inflate our way out of this mess, they need to go much higher, thus its importance in where the global stock markets go from here.

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India just cut interest rates by 50 bps.
 
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ABC confidence fell 1 pt to -49. Refi’s fell 15.3% and purchases fell 5.6%, still showing no response to lower mortgage rates. ADP and ISM non-mfr’g data are key today.

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ADP said the private sector shed 697k jobs in Feb, almost 70k more than expected and Jan was revised down by 92k to a loss of 614k. The majority of the job losses continue to be at small and medium sized businesses in both goods producing and service providing sectors and ADP says that the sharp drop in employment in these size companies “clearly indicates that the recession is spreading beyond manufacturing and housing related activities.” Nothing we don’t already know.

Construction lost 114k jobs, down for a 25th straight month and the total decline in jobs in this sector off the Jan ’07 highs is now at 1mm. Friday’s Payroll figure is expected to show a decline of 650k, which does include public sector jobs.

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

26 Responses to “Meet the New Boss”

  1. Mr. Obvious says:

    FWIW, the legal sector is getting hit hard. Major firms are laying off hundreds of attorneys at a time these days. My firm just slashed 20% of the secretarial force.

    Yes…I know…a good start…but alot of these lawyers still owe tens if not hundreds of dollars in student loans….defaults are on the horizon.

  2. danm says:

    when I think of China’s growing global influence as now the 3rd largest economy in the world,
    ————————–
    Not to mention that the US has given them enough US$ to buy up a huge % of the world’s energy and resources or cozy up to the producers anyway!

    I laugh every time I see the MSM pundits chirping.

  3. ben22 says:

    Long FXI, have been buying since Nov.

    That said, a lot of the people they interview on Bloomberg Asia are pretty bearish right now, but I have to say, in that market, in the most extreme conditions like last year they were pounded so if you have a long time horizon like I do seems like a very wise investment right now, or in increments if you expect it to go lower from here.

  4. b_thunder says:

    BR always comes across as very skeptical about the reported US Gov’t economic data. I’m surprized there’s not a hint of skepticism in this posting about the China’s “official” reported data.

  5. Marcus Aurelius says:

    Never in my life did I expect to hear an American (any American) sound happy, or even relieved, that China might just save the world. Pax Americana has ended. We are in decline, having abandoned our Constitution in favor of our base human nature. This will not end well for us.

  6. philipat says:

    “India just cut interest rates by 50 bps.”

    I think you mean Indonesia but, hey, it’s one of those I’s out there somewhere!

  7. Greg0658 says:

    CNN just re-aired story on military recruitment is up … cycles go round n round ……. now what ‘ism do I wanna be in? At my age .. can be in? I guess sell your Blackwater .. (Xe).

  8. philipat says:

    So does this new respect for China explain why the US is following the socialist model?

    When Marx talked about transferring the means of production to the State, he didn’t mean the Chinese State?

  9. Marcus Aurelius Says:

    March 4th, 2009 at 10:00 am
    “Never in my life did I expect to hear an American (any American) sound happy, or even relieved, that China might just save the world. Pax Americana has ended. We are in decline, having abandoned our Constitution in favor of our base human nature. This will not end well for us.”

    Agreed.

  10. franklin411 says:

    Marcus,
    We’re in decline because we bought into Reaganism. I just reread his 1985 State of the Union, and it’s just amazing. He promises us that we can spend spend spend on Star Wars, Social Security, the military, etc… and we can cut taxes to the bone.

    What killed America was the idea that we could get rich without making any sacrifices or effort.

    The President’s new budget rejects that ideology. We’re told that we can’t have a profit without capital invested–education, infrastructure, health care, energy. And we have to pay for as much of it as we can through cash on the barrel from people who aren’t paying their fair share.

    It remains to be seen whether Americans have the cojones and the foresight to sacrifice now for prosperity later. If not…well, start learning how to say “Yes master” in Chinese.

  11. Andy Tabbo says:

    Yeah Baby. China’s going to save the world economy! It’s time to buy stocks…the coast is clear….(snarky comment).

    Beware of market rallies that begin on “positive news.”

  12. franklin411 Says:

    March 4th, 2009 at 10:19 am
    Marcus,
    We’re in decline because we bought into Reaganism. I just reread his 1985 State of the Union, and it’s just amazing. He promises us that we can spend spend spend on Star Wars, Social Security, the military, etc… and we can cut taxes to the bone.

    What killed America was the idea that we could get rich without making any sacrifices or effort.

    The President’s new budget rejects that ideology. We’re told that we can’t have a profit without capital invested–education, infrastructure, health care, energy. And we have to pay for as much of it as we can through cash on the barrel from people who aren’t paying their fair share.

    Reply:

    Now the straw man that Obama will save us from is Reaganism? Never mind Clintonism in between? It must be nice to have a world so neatly divided into its black/white, good/bad, liberal/conservative, etc., spheres. Silly me, I thought it a bit more complicated than that.

  13. Bruce N Tennessee says:

    Yes, the ADP numbers were again worse than expected…politics may be local, but so is business…

    The GM dealership in the largest town between Nashville and Knoxville announced over the weekend they are closing this month.

    I talked with an older woman yesterday in the salt mine who laughed and told me,” I was born during the depression, and looks like I will die in one too…”

    Time to get to work..

  14. austincompany says:

    Franklin411 says:

    “The President’s new budget rejects that ideology. We’re told that we can’t have a profit without capital invested–education, infrastructure, health care, energy. And we have to pay for as much of it as we can through cash on the barrel from people who aren’t paying their fair share.”

    My God, what rabbit hole have we fallen into? President Pelosi’s, oops, Obama’s budget is filled with special interests goodies and all manner of historically Democratic favorites. In addition, much of it is not paid for at all, but must be financed through debt. Obama’s budget will not only be the largest in history but will be the most in the “red” starting out. And don’t forget that it is based on economic assumptions that would make Soviet economists happy.

    And lastly, the last sentence, “..from people who aren’t paying their fair share.” is nothing more than class warfare. The top 1% already pay over 30% of all taxes with half the working population in the U.S. (50%) who pay no income taxes at all! “Fair share”? By who’s definition? It is becoming obvious to me that the Democrats will not be happy until tax rates reach what they were before President Reagan – over 70%. And at that point you can start comparing the U.S, to countries like Venezuela, Argentina and Cuba.

  15. Marcus Aurelius says:

    Curmudg:

    To me the only difference is the ROI for money spent (our fiat currency system and inflationary nature being what it is). Want to spend more? Fine. Just make sure you don’t borrow that money – levy taxes, straight up. Spend the money as any enterprising capitalist would – on education, public health, infrastructure, and other capital improvements. Not on the enrichment of entrenched faux-capitalist cronies. Eisenhower and Goldwater warned us of what was coming, but we were easily distracted by pseudo-tribalism (gays, abortion, religion, globalization and its attendant perpetual strife, and the “self inflicted” plight of the poor).

    I want to see something good for all of this spending.

  16. call me ahab says:

    @ franklin411

    would you drop it already- geez loweez- Reagan has been dead awhile last I checked. And when you say pay their fair share that means that the people who already pay all the taxes will now pay more so I guess that makes it even fairer- right? And all this talk about investing in health care and education- give me a break already. The Dept of Education has been around since 1979- please tell me one positive thing they have accomplished for education- how about nothing. Last I checked we are 50 states comprising the United States and each state is responsible for their citizens education and welfare. And where would be had Carter won the 1980 election- what a hand wringer he was- I was in the US Navy at the time and we would have much preferred to have accomplished something rather than floating around in the Indian Ocean for months on end while “hand wringer in chief” fretted on what to do during the Iranian Hostage Crisis.

  17. “I want to see something good for all of this spending.”

    Indeed. And even more, I think it would be prudent to match the terms of our liabilities to the expected life/s of the asset/s it is used to purchase. Like any good business, we shouldn’t borrow for thirty years to buy something that lasts three months. Juicing consumer spending with borrowed money (like Bush tried in ’08) is borrowing long to buy short. Stupid.

  18. Marcus Aurelius says:

    ahab:

    Your comments on Carter and the Iranian hostage crisis do not accurately reflect what was taking place – conveniently ignoring the hand Reagan had in thwarting Carter’s efforts at a solution. The iran-Contra scandal was in full force, as was illegal tampering in foreign policy/diplomacy arenas by Reagan, prior to his election. There is a word for this kind of chicanery.

    As for economics during the Carter era, he inherited (as did Ford, before him), the results of Nixon’s depegging of the dollar from the gold standard. Carter’s choice of Volker as Fed chairman (a choice Reagan dared not mess with) resulted in the only policy solution to the rampant inflation caused by Nixon’s decision/policy. Had Reagan not gone a deficit spending spree (emulated by Bush), we might still be dealing with 17% mortgage interest rates.

    In the final analysis, Clinton seemed to be the only one capable of dealing with the economy he inherited – but, alas, he got a BJ, and had to be impeached.

  19. call me ahab says:

    @ Marcus

    I will stick by my statement that Carter was a “hand wringer” and could not make a decision because of the moral anguish it caused him. He would have made a good church pastor- but POTUS was not his calling.

  20. Greg0658 says:

    ahab
    I was in the Army then .. let me refresh your in theatre memory a bit .. remember the sand storm rescue attempt that downed some choppers and loss of troops

    and Marcus thanks for remembering that scandal and the one hokey (timely) transfer of the hostages

    and imo I think the Hollywood cartel should have treated Ronny better for all our unions sakes

  21. SanFranHobo says:

    Can we get back on to the substance of the original post. Im sure the author is interested in hearing our take on what he has to say.

  22. call me ahab says:

    @Greg0658

    I do remember- a complete failure- just as I would expect from Carter- I was off the coast of Iran on the USS Constellation.

  23. call me ahab says:

    @ SanFranhobo-

    good point- sorry for the segue :o(

  24. Jlvngstn says:

    So if the stress test they are using for the banks have a degree of accuracy regarding unemployment being at 10%, we can fully expect 500-700k monthly job loss for at least 10 months. What effect does that type of employment loss have on the economy? I would think in an 80% service economy that comparing job loss in ’81 and ’74 (which I believe we have surpassed from a percentage loss at this point) that we are entering a Great Recession and a free fall come October when the net effect of job loss combined with depletion of personal reserves hits. When does an emergency in the job market become a national crisis? I think we know all too well the consequences of failing to act in a timely manner to crises, yet job creation seems to be a live wire politically.

    Does market stabilization have an appreciable effect on employment?

  25. willid3 says:

    not sure why any body expects the Chinese (or Indians or Japanese) to rescue them. of these, one doesn’t have a domestic consumer to speak of. another has a declining population that might end up with nobody in that country in a few years, a first. The other only has %3 of its population that could be considered as consumers. of much of any thing. and while we might fight over politics (or economic views) we tend to be more pragmatic and expect competency and results from our government. when they fail to deliver we decide to change them. some times in mass. unlike a lot of countries, we try not to bang out heads against a wall, and expect different results when doing the same thing. the latter tends to be symptom of a medical problem if nothing else.
    not that we won’t at times do both of those too. until it shoots right between the eyes.

  26. This is classic:

    call me ahab Says:

    March 4th, 2009 at 11:22 am
    @ franklin411

    would you drop it already- geez loweez- Reagan has been dead awhile last I checked. And when you say pay their fair share that means that the people who already pay all the taxes will now pay more so I guess that makes it even fairer- right? And all this talk about investing in health care and education- give me a break already. The Dept of Education has been around since 1979- please tell me one positive thing they have accomplished for education- how about nothing. Last I checked we are 50 states comprising the United States and each state is responsible for their citizens education and welfare. And where would be had Carter won the 1980 election- what a hand wringer he was- I was in the US Navy at the time and we would have much preferred to have accomplished something rather than floating around in the Indian Ocean for months on end while “hand wringer in chief” fretted on what to do during the Iranian Hostage Crisis.

    not a reply–to simple fact, rationally laid out– in sight, from our newfound font of partisan BS