Unemployment Climbs in Germany for a Second Month

“German unemployment rose for a second month in April, adding to signs that Europe’s largest economy is struggling to recover from a slump at the end of last year.

The number of people out of work climbed a seasonally adjusted 4,000 to 2.94 million, the Nuremberg-based Federal Labor Agency said today. Economists predicted an increase of 2,000, according to the median of 29 estimates in a Bloomberg News survey. The adjusted jobless rate held at 6.9 percent, just above a two-decade low of 6.8 percent.

The International Monetary Fund predicts the German economy will expand 0.6 percent this year, even as its biggest export market, the euro area, remains mired in recession. German business and investor confidence dropped in April as Europe’s debt crisis and an unusually long winter delayed the first- quarter rebound predicted by the Bundesbank.

“Uncertainty in the euro area is back and it has taken its toll on the German labor market,” said David Milleker, chief economist at Union Investment GmbH in Frankfurt. “I wouldn’t expect a reduction of unemployment anytime soon.”

The euro was little changed after the report, trading at $1.3086 at 10:30 a.m. in Frankfurt. European stocks rose, with theStoxx Europe 600 Index (SXXP) up 0.1 percent.

Long Winter…”

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“Deutsche Bank AG (DBK) (DBK), continental Europe’s biggest bank, is raising 5 billion euros ($6.5 billion) in capital, three months after co-Chief Executive Officer Anshu Jain said a share sale wasn’t in investors’ interests.

The company issued 2.96 billion euros of stock at 32.90 euros apiece, exceeding an initial goal of 2.8 billion euros, as part of the capital increase, the Frankfurt-based lender said in a statement today. Deutsche Bank’s shares surged as much as 7.9 percent, the biggest rise since August.

Jain timed the capital increase to coincide with a report showing first-quarter earnings rose 19 percent, beating estimates. He’s boosting reserves after Standard & Poor’ (SPY)s warned of a possible credit rating downgrade. Jain said in January he was willing to take losses on asset sales rather than issue new stock, citing the level of the share price.

“We are now among the best capitalized banks in our global peer group,” Jain said on a conference call with analysts and investors today. “These measures allow us to take advantage of organic growth opportunities in a changing competitive landscape.”

Deutsche Bank’s shares climbed 6.3 percent to 34.98 euros at 9:32 a.m. in Frankfurt trading, valuing the firm at 33 billion euros. The Bloomberg Europe Banks and Financial Services Indexrose 1.3 percent.

The bank will also sell 2 billion euros of subordinated debt, Jain said on the conference call.

‘Best-Capitalized’…”

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“Euro-area inflation at a three-year low and record unemployment increased pressure on theEuropean Central Bank to cut interest rates later this week to spur lending and growth.

The annual inflation rate dipped to 1.2 percent in April, thelowest since February 2010, from 1.7 percent a month earlier, the European Union’s statistics office in Luxembourg said today. The rate has been below the ECB’s 2 percent ceiling since February. The March jobless rate advanced to 12.1 percent, the highest since the data series began in 1995.

The ECB’s Governing Council will cut its benchmark rate to a record low 0.50 percent on May 2 from 0.75 percent, according to the median of 70 economists’ estimates in a Bloomberg News survey. The Frankfurt-based central bank sees inflation at 1.6 percent this year and 1.3 percent in 2014.

“If it weren’t for the ECB’s usual reluctance to make large changes, there would be a strong case to cut by 50 basis points, and I think the likelihood is perhaps higher than the market expects,” Frederik Ducrozet, an economist at Credit Agricole SA (ACA), said by telephone from Paris. “It’s probably around 20 percent, because with inflation that low it’s really the best time to do such things and maximize the impact on the market.”

Debt Crisis….”

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“Austria is reconsidering plans to establish a separate “bad bank” to wind down delinquent loans at nationalized lender Hypo Alpe-Adria-Bank International AG, a move that could add to the nation’s debt.

The government is discussing whether separate wind-down units modeled on Germany’s FMS Wertmanagement AoeR or Austria’s KA Finanz AG would make sense for Hypo Alpe, Chancellor Werner Faymann told journalists in Vienna today. The Finance Ministry is also in talks with the European Union to allow more time for the bank to sell its viable assets, he said.

“There are intensive consultations about whether there could be ‘bad-bank’ parts like the German or the previous Austrian model,” Faymann said after the weekly government meeting. “The goal is to manage as many assets as possible as beneficial as possible.”

Austria is under pressure by EU Competition Commissioner Joaquin Almunia, who is reviewing state aid of as much as 2.2 billion euros ($2.9 billion) the country has provided to the lender since 2008. A firesale of the bank’s assets by the end of the year may cause as much as 14 billion euros of additional losses for Austrian taxpayers, according to a central bank document cited by Profil magazine April 27….”

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“The pound headed for its biggest monthly gain versus the dollar since September as a report showed British banks granted more loans for homes in March than analysts predicted, adding to signs the economy is improving.

Sterling was set for its first monthly advance against the euro since July even as a report showed U.K. consumer confidence unexpectedly declined in April. Futures traders decreased their bets that the pound will weaken against the dollar, figures from the Washington-based Commodity Futures Trading Commission showed last week. U.K. government bonds were little changed as the Debt Management Office sold 50-year inflation-linked gilts at a record-low yield.

“If you look at speculative positions, accounts are still fairly short the pound,” said Kasper Kirkegaard, a senior currency strategist at Danske Bank A/S (DANSKE) in Copenhagen, referring to a bet that the price of an asset will fall. “That’s been gradually scaled back and we can see potential for it to go even higher in the short term.”

The pound was little changed at $1.5479 at 12:38 p.m. London time after climbing to $1.5546 yesterday, the most since Feb. 15. The U.K. currency has gained 1.9 percent this month. Sterling traded at 84.47 pence per euro after appreciating to 83.98 pence on April 26, the strongest since Jan. 24. It has risen 2 percent against the common currency in April.

Britain’s currency may weaken to $1.43 and 88 pence per euro in six months’ time, Danske Bank’s Kirkegaard said. The median predictions in Bloomberg surveys of economists and strategists is for the British currency to end the year at $1.49 and 85 pence per euro.

Mortgage Approvals…”

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“European government bonds rose, pushing French yields to a record low, and the euro weakened as slowing inflation boosted the prospect of more central bank stimulus. Futures on the Standard & Poor’s 500 Index (SPX) were little changed after the gauge closed at an all-time high yesterday.

French 10-year bond yields fell as low as 1.70 percent as of 7:25 a.m. New York time, while the euro weakened against all but two of its 16 major peers. The MSCI All-Country World Index of shares added 0.2 percent, extending the highest level since June 2008. European stocksheaded for an 11th month of gains, and corn for July delivery advanced 0.8 percent to $6.65 a bushel in Chicago. Treasuries rose…”

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“The Australian dollar rose to the highest in almost two weeks against its U.S. counterpart before the Federal Reserve opens a two-day meeting amid speculation it will maintain bond purchases for the foreseeable future.

The so-called Aussie rose against most of its major peers as Asian stocks gained and data showed private sector credit increased in March. Demand for New Zealand’s dollar was limited after the nation’s building approvals unexpectedly declined, easing pressure on the Reserve Bank to tighten monetary policy.

“There could be more reserve diversification flowing into currencies like the Australian dollar,” said Jonathan Cavenagh, a strategist at Westpac Banking Corp. (WBC) in Singapore. “The general consensus is that the Fed is going to remain fairly dovish. The question is not whether or not quantitative easing is going to be maintained, but if it’s going to be stepped up, and that’s played a part in the U.S. dollar’s recent selloff.”

The Australian dollar touched $1.0372, the highest level since April 17, before trading 0.1 percent higher than yesterday at $1.0358 as of 5:08 p.m. in Sydney, trimming its monthly slide to 0.6 percent. The currency rose 0.2 percent to NZ$1.2105. New Zealand’s dollar slid 0.1 percent to 85.57 U.S. cents.

Australian government bonds rose, with the yield on 10-year debt falling one basis point, or 0.01 percentage point, to 3.09 percent, after touching 3.077 percent, matching the lowest since Nov. 19. The three-year rate dropped as low as 2.57 percent, a level unseen since Dec. 3.

The MSCI Asia Pacific Index of stocks climbed 0.8 percent, following a 0.7 percent gain in the MSCI World Index yesterday.

FOMC Meeting…”

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“Taiwan’s economy expanded at a slower pace than economists estimated in the first quarter as a faltering global recovery hurt exports, increasing pressure on the central bank to extend an interest-rate pause to aid growth.

Gross domestic product rose 1.54 percent in the three months through March from a year earlier, after increasing 3.72 percent in the fourth quarter, the statistics bureau said in a preliminary report in Taipei today. The gain was less than all estimates in a Bloomberg Newssurvey of 17 economists, where the median was 3.1 percent.

The island’s growth slowdown adds to signs of a cooling global economy after China and the U.S. expanded less than analysts estimated last quarter. Taiwan’s export orders and industrial output for March unexpectedly fell, while Japanese and South Korean production missed forecasts as faltering demand limitsAsia’s recovery.

“Taiwan’s GDP is a reflection of a sluggish global recovery and the decline of global demand, notably from China (CNGDPYOY),” said Raymond Yeung, a Hong Kong-based senior economist at Australia & New Zealand Banking Group Ltd. The data suggests the monetary policy stance will be maintained, “unless there is a significant contraction of the regional economies from unforeseeable risks, including avian flu.”

The benchmark Taiex stock index gained 0.8 percent at 9:53 a.m. in Taipei. The Taiwan dollar climbed 0.3 percent to NT$29.464 against its U.S. counterpart, according to Taipei Forex Inc. It has declined about 1 percent this year.

Lowest Profit….”

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World Markets

Currencies

Commodities

USD Libor

Euribor

Yields for Italy, Spain, France,  and Germany …

“When one conspires to violate federal law, it helps to have a government agency or two as one’s co-conspirators when law enforcement comes poking around, as telecom giant AT&T and others learned recently when the Defense Department (DOD) and theDepartment of Homeland Security (DHS) successfully pressured the Justice Department(DOJ) to agree secretly not to prosecute blatantly illegal wiretaps conducted by AT&T and other Internet service providers at the request of the agencies.

Although some press reports have termed this an authorization of activity that would otherwise be illegal, this is a misnomer. The executive branch lacks the power to retroactively declare criminal conduct to be lawful, but it can choose to ignore it by waiving prosecution pursuant to “prosecutorial discretion.”

Although the secret DOJ prosecution waiver initially applied to a cyber-security pilot project—the DIB Cyber Pilot—that allowed the military to monitor defense contractors’ Internet links, the program has since been renamed Enhanced Cybersecurity Services and is being expanded by President Obama to allow the government to snoop on the private networks of all companies operating in “critical infrastructure sectors,” including energy, healthcare, and finance starting June 12.

“The Justice Department is helping private companies evade federal wiretap laws,” warned Marc Rotenberg, executive director of the Electronic Privacy Information Center, which obtained more than 1,000 pages of government documents relating to the issue via a Freedom of Information Act request. “Alarm bells should be going off.” …”

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“A truck carrying drill cuttings from a fracking site set off a radiation alarm at a landfill in Pennsylvania. Emitting gamma radiation ten times higher than the permitted level, the waste was rejected by the landfill.

After the alarm went off, the MAX Environmental Technologies truck was immediately quarantined and sent back to the Marcellus Shale fracking site it had come from in Greene County, Va. The 159-acre Pennsylvania landfill site accepts residual and hazardous waste, but the cuttings were too radioactive for the site to safely dispose.

The Pennsylvania landfill, located in South Huntingdon, rejects waste that emits more than 10 microerm per hour of radiation. The fracking materials were found to emit 96 microerm per hour of Radium 226 – a rate that is 84 times higher than the Environmental Protection Agency’s air-pollution standard and ten times higher than the landfill’s permitted level, Forbes reports.

Exposure to the materials taken from the fracking site can have serious health consequences, including the risk of developing cancer. The high level of radiation emitted by the materials serves as alarming news for environmentalists and residents located near hydraulic fracturing sites across the US.

“Long-term exposure to radium increases the risk of developing several diseases,” the EPA writes. “Inhaled or ingested radium increases the risk of developing such diseases as lymphoma, bone cancer and diseases that affect the formation of blood, such as leukemia and aplastic anemia… External exposure to radium’s gamma radiation increases the risk of cancer to varying degrees in all tissues and organs.”

The drill cuttings have been sent back to the well pad where they were extracted. The production company, Rice Energy, must now apply to have the waste discarded at other landfill sites that accept materials with higher levels of radiation….”

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Well perhaps ghost money is not really your money….but the fun is there indeud!

“April 29 (Reuters) – Tens of millions of U.S. dollars in cash were delivered by the CIA in suitcases, backpacks and plastic shopping bags to the office of Afghanistan President Hamid Karzai for more than a decade, the New York Times says, citing current and former advisers to the Afghan leader.

The so-called “ghost money” was meant to buy influence for the Central Intelligence Agency (CIA) but instead fuelled corruption and empowered warlords, undermining Washington’s exit strategy from Afghanistan, the newspaper quoted U.S. officials as saying.

“The biggest source of corruption in Afghanistan”, one American official said, “was the United States.”

The CIA declined to comment on the report and the U.S. State Department did not immediately comment. The New York Times did not publish any comment from Karzai or his office.

“We called it ‘ghost money’,” Khalil Roman, who served as Karzai’s chief of staff from 2002 until 2005, told the New York Times. “It came in secret and it left in secret.”

There was no evidence that Karzai personally received any of the money, Afghan officials told the newspaper. The cash was handled by his National Security Council, it added.

In response to the report, Karzai told reporters in Helsinki after a meeting with Finnish leaders that the office of the National Security Council had been receiving support from the U.S. government for the past 10 years. He said the amounts had been “not big” and the funds were used for various purposes including assistance for the wounded….”

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“We’re getting deeper and deeper into the experiment now known as “Abenomics” in Japan.  Ultimately, the plan is designed to defeat the decades of deflationary pressures in the Japanese economy.  They’ve announced a massive fiscal plan, an official 2% inflation “target” a doubling of the BOJ’s balance sheet and as a result the Yen has declined 30% in a matter of months and the Japanese stock market has surged over 60%.  By the looks of the market reaction you’d think that something had not just changed, but that we’d be looking at a new economy entirely.

But the latest CPI report shows that the deflation is actually WORSENING.   The Statistics Bureau in Japan reported that Japan’s National Core CPI fell to -0.5% in march, down from -0.3%.  This was worse than expectations of -0.4%.  The headline rate fell to -0.9% versus expectations of -0.8%.

The latest reading is the worst reading since 2010.  In fact, it’s the worst reading this year and down almost 1% from when the aggressive Japanese easing was first announced.  In other words, if Abenomics is inflating prices it certainly isn’t working in the real economy and appears to only be “working” where gamblers are placing bets that it will eventually show itself….”

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“Google’s mobile OS Android continues to power ahead as the world’s most popular smartphone platform, according to figures out today from Kantar Worldpanel Comtech, the WPP-owned market research company that tracks sales of handsets across key markets on a 12-week rolling cycle. In the nine markets surveyed by Kantar — Australia, China, France, Germany, Italy, Japan, Spain, UK and the U.S., all detailed in the table below — Android on average accounted for 64.2% of all handset sales in the 12 weeks that ended March 31.

The only market where Android did not dominate was Japan, where Apple’s iOS just about eked out a lead against it (49.2% versus 45.8% of sales) for the three months ending March 31. Elsewhere, the figures indicate that regardless of whether the market is developed (U.S., UK, Germany) or emerging (China) or struggling financially (Spain), collectively, Android handset makers are winning them all, with sales figures for the platform reaching their high point in Spain, at 93.5% of all smartphone sales.

As you can see below, when it comes to smartphone penetration of actual devices in use, Android is leading everywhere.

Kantar — which bases its figures on (as samples) 240,000 interviews annually in the U.S. and some 1 million across Europe — believes that Android’s lead will only grow more in the months ahead, with the ongoing roll out of two new Android handsets, the Galaxy S4 from Samsung and the HTC One, driving sales of the platform.

“We expect to see a further spike in [Android’s] share in the coming months, as sales from the HTC One start coming through and the Samsung Galaxy S4 is launched,” writes Dominic Sunnebo, global consumer insight director at Kantar Worldpanel ComTech. “This will pile pressure on Apple, BlackBerry and Nokia to keep their products front of consumers’ minds in the midst of a Samsung and HTC marketing blitz.” …”

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“Today at Disrupt NY 2013, Benchmark partner Bill Gurley shared an interesting fact aboutUber. “Uber is growing faster than eBay did,” Gurley said. In 1997, Benchmark invested $6.7 million in eBay. It was worth more than $5 billion less than two years later. Benchmark is also an investor in Uber.

“Uber is probably the fastest growing company that we’ve ever had,” Gurley said. He insisted a lot on the quality of the product. If a company builds a good product, it will grow organically.

Benchmark took part in Uber’s Series A and Series B rounds of respectively $11 million and $37 million. Gurley seemed very satisfied with this investment and only had good things to say about the car company.

“The product is so good, there is no one spending hundreds of thousands of dollars on marketing,” Gurley said. eBay and Uber are both consumer companies that have reached a lot of customers in a very short time….”

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“DETROITChrysler says its first-quarter net profit fell 65 percent as it shipped fewer older vehicles in preparation for several key product launches.

The company earned $166 million in the January-March quarter, compared with $473 million a year ago. Revenue fell 6 percent to $15.4 billion….”

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“PLANO, TEXASJ.C. Penney (JCP) is confirming that Goldman Sachs (GS) will provide it with $1.75 billion in financing, sending shares up 3 percent in trading.

Rumors about the financing had begun to circulate Friday. J.C. Penney shares were up 2.2 percent, to $17.38, in morning trade, although that remains well below the stock’s 52-week high of $36.89….”

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“The Dallas Fed’s monthly survey of regional manufacturing activity is out.

The headline index plunged to -15.6. Economists expected +5.0 after last month’s +7.4 reading.

Below is the full text from the release….”

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“Slowing inflation is giving central bankers scope to provide the world economy with more liquidity and lower interest rates for longer, all in the name of price stability.

European Central Bank President Mario Draghi may cut his benchmark rate to a record low as soon as this week as ebbing price pressures let him deliver more stimulus to the euro area’s recession-riddled economy. Federal Reserve Chairman Ben S. Bernanke at a policy meeting that starts Tuesday might have more room to press on with asset purchases as the argument against that strategy is undercut by waning inflation risks. Their counterparts from New Zealand to Canada also have more reason to keep policy loose.

The odds of disinflation are mounting as the world economy slows anew and commodity prices slide, defying forecasts that easy money would trigger an acceleration of prices. More than half of the world economy, including the U.S. and the euro area, instead confronts inflation below the central banks’ desired levels, according to Ethan Harris, co-head of global economics research at Bank of America Corp. in New York.

“There is a developing inflation problem: undesirably low inflation,” said Harris, a former Federal Reserve Bank of New York economist. “For central banks, this increases the pressure to maintain super-easy monetary policy.”

Deflation Danger…”

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“In 2007 a small number of French hedge funds imploded over sudden losses stemming from highly leveraged bets made on the unstoppable subprime mortgage market. At the time, a few saw the writing on the wall; but many simply wrote it off as just another over-levered hedge fund and the subprime mortgage market was ‘fine’. Fast forward six years and as we have discussed numerous times (most recently here and here) there is a bubble, potentially far bigger than subprime, in student loan debt. As one of the last remaining outlets for state-sanction credit creation, this is a big deal; but, of course, the popping of the bubble (or even a slight leak) is eschewed since there is so much ‘reach for yield’ and the Fed’s got your back. That is until this week. As WSJ reports, Sallie Mae (SLM), the nation’s largest non-government student lender just cancelled a $225 million debt offering as investors  decided they simply were not getting paid enough for risk – amid rising student loan defaults. Simply put, there’s a limit to what investors will tolerate.

SLM was offering a stunningly low 3.5% interest on the deal and investors snubbed it, “There are certain limits that can’t, or shouldn’t, be crossed if you’re an investor,” adding that, “we’re beginning to see what the tolerances are.” This is a significant shift since SLM and other issuers of debt backed by student loans sold $7.8 billion worth of securities this year through last week, up from $5.7 billion in the same period of 2012. With the portion of student borrowers who are late on their debt payments by 90 days or more climbing to 31% in 2012, from 24% in 2008; we wonder if this is the tipping point for the student debt in 2013 that was generally ignored in subprime in 2007, until it was too late.

Via WSJ….”

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