Construction stopped…

3-9 февраля 2024

Big news. After two active weeks there was a lull – it is difficult to understand what news can be considered as the main one. There is complete calm, order and peace in the world in the economic sphere.

Note that this does not mean that the situation in the global economy has become positive: negative information continues to come. But since we are talking about a structural crisis, the picture repeats the previous weeks so much that there is no need to talk about any surprises in the regular data.

In (relatively) economic news, we can note the surprising protest activity of farmers almost throughout the European Union. There are no obvious economic reasons for such unity (not for protests!) and therefore we have to bring in non-economic explanations.

In our opinion, the problem is that the development of the budget situation requires an increase in taxes. The most natural object for this is land and real estate. But for the owners of the land, the old landed aristocracy, the situation becomes critical, the very possibility of preserving its main asset for centuries is closed. And, since this elite group has a focal point (the Vatican), it began to become politically active.

Of course, this is a hypothesis, but most likely in the coming months we will receive data that will either confirm or refute it. Because having said “A”, you need to tell “B” what it is, confirm your political activity with new initiatives. So let’s take a look at the events in this area.

Macroeconomics. Industrial output in Germany -1.6% per month, the 8th month in a row with a minus or zero:

And -3.0% per year, the 7th consecutive month of decline:

In Italy, industrial production is -2.1% per year, the 11th minus in a row:

In Argentina, industry is collapsing, -12.8% per year, for at least 3.5 years:

Japan’s Economic Observers Index (50.2) is the worst for the year:

Construction PMI (expert index of the state of the industry; its value below 50 means stagnation and decline) of the eurozone 41.3, excluding the spring of 2020, this is a record low in 11 years of data collection:

Moreover, things are especially bad in the leading countries of the region. In France 39.6:

In Germany it’s 36.3:

Building permits in Australia -9.5% per month and -24% per year (27th minus in a row):

And their levels returned to the values of 10-15 years ago:

China’s CPI -0.8% per year, the weakest value since the fall of 2009:

Credit in China +10.4% per year, a record minimum for all 26 years of statistics:

Let us note that when credit growth significantly exceeds the rate of economic growth, this always gives rise to thought… China has long had questions about growth rates; credit there, of course, is decreasing, but it is quite obvious that attempts to “promote” the economy are taking place. And this is the threat of inflation.

Household expenses in Japan -0.9% per month, 3rd minus in a row:

And -2.5% per year, the 10th minus in a row:

Retail sales in Australia -2.7% per month, excluding Covid, this is the worst performance since 2000:

Eurozone retail -1.1% per month, minimum for the year:

And -0.8% per year, the 15th minus in a row:

We can only note that if the rate of decline in sales remains the same as in January, then the year will be more than 10%… This is already a financial disaster.

The Central Bank of Australia left its monetary policy unchanged, as did the Central Bank of India and the Central Bank of Mexico.

Main conclusions. According to the annual chart of construction PMI in Germany, the situation is continuously getting worse. Since this index speaks more about the direction of changes than about their scale, for now we can only state that most experts believe that things are getting worse. And it can be stated that the structural crisis in the European Union has crept into the construction sector.

In the US, in the construction industry, in which falsification is difficult (there are too many independent observers in this industry), the crisis has been going on for a long time. But in the banking sector, the situation seemed to last for several months. But, apparently, the problems have returned.

Shares of New York Community Bank, $NYCB, the bank that acquired failed Signature Bank, fell another 25% today. NYCB shares are now down 61% in 2024 to their lowest level since June 2000. Approximately 40% of NYCB’s assets are not FDIC (Deposit Insurance Corporation) insured. The stock’s decline accelerated after the bank posted a surprise loss of $260 million in the fourth quarter of 2023.

So it is possible that in the coming weeks we will have to re-examine the problems of the US banking system. However, not for the first time.

Well, we can note the colossal increase in prices for cocoa, they broke through the peak of 1977 and set a new historical record ($6000 per ton)!

So we wish our readers to finish off the cheap cocoa left at home over the weekend and hope that the work week will be as calm as the last!