First, from Bloomberg.com, Japan’s Factory Output Surges 5.2% as Recession Eases (Update1). Beyond the info contained in the title, here's the most newsworthy part of the article:
Still, even as overseas shipments start to rise on a month-on-month basis, Japan is exporting a little more than half as much as last year and producing about a third less. That has saddled manufacturers with factories and workers they no longer need.
Nippon Steel Corp., the country’s biggest mill, is running at half capacity . . .
Next, courtesy of Calculated Risk's notice, ATA Truck Tonnage Index Fell Another 2.2 Percent in April:
ATA Chief Economist Bob Costello said truck tonnage is getting hit from both the recession and the massive inventory correction that the supply chain is currently undergoing. "While most key economic indicators are decreasing at a slower rate, the year-over-year contractions in truck tonnage accelerated because businesses are right-sizing their inventories, which means fewer truck shipments," Costello said. "The absolute dollar value of inventories has fallen, but sales have decreased as much or more, which means that inventories are still too high for the current level of sales. Until this correction is complete, freight will be tough for motor carriers." Costello added that truck freight has yet to hit bottom and it could be a few more months before this occurs. (Emph. added)
Third, from the head of Berkshire Hathaway's Mid-American Energy and HomeServices of America subsidiaries, also courtesy CR's attention, MidAmerican's Sokol sees US housing staying weak:
"As we look at the economy, I have to be honest: we're not seeing the green shoots," Sokol said . . ." (Emph added)
"We think the official statistics of 10 to 12 months' backlog is actually nearly twice that amount . . ."
"There is an enormous shadow backlog of about-to-be foreclosed homes and of individuals who need to sell but have time, and there are already six (for sale) signs on their block," he said.
Assuming the economy does not worsen, he said: "It will be be mid-2011 before we see a balancing of the existing home sales market." He defined "balanced" as a six-month backlog.
Fourth, courtesy of Mish, consider "Mr. Mortgage", who had extensive comments today on the jump up in mortgage rates due to the bear market in Treasuries, in Potential Consequences of 5.5% Mortgage Rates:
With respect to yesterday’s in the mortgage market — yes, it is as bad as you can imagine. No call can be made on the near-term, however, until we see where this settles out over the next week of so. If rates do stay in the mid 5%’s, the mortgage and housing market will encounter a sizable stumble. . .
The consequences of 5.5% rates are enormous. Because of capacity issues and the long time line to actually fund a loan in this market, very few borrowers ever got the 4.25% to 4.75% perceived to be the prevailing rate range for everyone. . .
A significant percentage of loan applications (refis particularly) in the pipeline are submitted to the lenders without a rate lock. . . Therefore, millions of refi applications presently in the pipeline, on which lenders already spent a considerably amount of time and money processing, will never fund.
DoctoRx here again. Those readers who know me know that I'm generally a cheerful guy and an optimist. I was once also in the non-fiction business of treating patients who may have had illnesses and who when ill were not guaranteed to get better no matter how hard I and the rest of the medical team tried and how much cardiac stimulus or chemo we applied. The same is true of the stock market and may be true of the economy if the doctors of the economy apply the wrong treatment, even if it is thought to be the right stuff at the time. To go back to Mr. Sokol from Berkshire Hathaway:
It took us 11 years to get into this mess where it is. (Ed. That refers to housing specifically.) We went into the emergency room last fall and by January the banking system and economy generally were in intensive care, and we'd expect it to stay there for some time," Sokol said.
How much do you trust the medical teams attending the sick, bleeding U. S. and global economies?
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