Walmart is even worse than you think

Almost 30 years ago, as the U.S. was bleeding jobs, Walmart launched a "Buy America" program and started hanging "Made in America" signs in its 750 stores.  It was a marketing success, cementing the retailer's popularity in the country's struggling, blue-collar heartland.  A few years later, NBC's Dateline revealed the program to be a sham.  Sure, Walmart was willing to buy U.S.-made goods — so long as they were as cheap as imports, which, of course, they weren't.  Dateline found that Walmart's sourcing was in fact rapidly shifting to Asia.

This year, Walmart is back with a new "Buy America" program.  In January, the company announced that it would purchase an additional $50 billion worth of domestic goods over the next decade.  This week, Walmart is convening several hundred suppliers, along with a handful of governors, for a summit on U.S. manufacturing .

This sounds pretty substantial, but in fact it's just a more sophisticated and media savvy version of Walmart's hollow 1980s Buy America campaign.  For starters, $50 billion over a decade may sound huge at first, but measured against Walmart's galactic size, it's not.  An additional $5 billion a year amounts to only 1.5 percent of what Walmart currently spends on inventory. Read more >>

Gold flows from Britain to Switzerland surge in H1-Macquarie

Britain's gold exports to Switzerland surged in the first half of this year, Australian bank Macquarie said on Monday, suggesting bullion being sold out of exchange-traded funds may be heading for Swiss refineries before being sold on in Asia.

The UK exported 240 tonnes of gold to Switzerland in May alone, while its exports over the first half of this year totalled 797 tonnes, Macquarie said in a note.

In contrast, Britain exported just 92 tonnes of bullion to Switzerland in the whole of last year, it said.

"The UK does not have gold mines, so where has it all come from? The obvious source is the gold exchange-traded funds (ETFs), most of which hold their gold holdings in London vaults, and which saw huge outflows in 1H 2013," Macquarie said.

"And why is it going to Switzerland? Two explanations make sense. One would be that investors have decided to switch their gold investments from ETFs to allocated deposit accounts, which are often held in Switzerland." Read more >>

The Effect of Cell Phone Coverage and Political Violence in Africa

Cell phone use in Africa has increased significantly in recent years; its nearly 649 million mobile users in 2011 made it the second-largest market for mobile phones in the world after Asia.

Furthermore, the continent has the fastest-growing cell phone market in the world, maintaining an annual growth rate of almost 20% since 2007. This has substantially contributed to economic development within the continent as a result of various innovations and improvements, from mobile banking to faster communications between merchants and customers, as the World Bank notes.

In Kenya, the success of the mobile banking system M-pesa has opened the door for a multitude of mobile phone tech startups, prompting some to refer to the country as the “Silicon Savannah.” (It should be noted, however, that mobile phone technology in Africa frequently does not afford robust Internet access, with all its innovation potential.)

The benefits of mobile technology in other regions are widely hailed. The availability of cell phones and use of social media is often credited with playing a key role in the Arab Spring, which toppled dictatorships in Egypt and Tunisia, and sparked protest movements throughout the Middle East and North Africa. Read more >>

Gold, Silver In Asian Liquidation Mode

Spot Gold $1426 (from $1564 highs Friday)

As Asia opens to the bloodbath that occurred in precious metals on Friday in the US, it would appear that more than a few traders got the 'tap on the shoulder'. Shanghai futures are limit-down and spot gold and silver prices are plunging once again as we suspect forced margin-calls and the raising of cash (to cover extreme variation margin - or capital reserves) needed in JGB positions, as we explained here.

Liquidation is certainly the theme of the evening - investors are selling JGBs (6th day in a row of multiple-sigma moves in long-dated Japanese bonds 30Y +56bps off its post-BoJ lows at 1.60%!), selling Japanese stocks (Nikkei -128 pts, second biggest down day post-BoJ), selling US Treasuries (futures down), selling gold and silver (gold spot down over $100 from Friday's highs), and despite selling JPY early (retracing 30% of the weakness post-BoJ), JPY is practically unchanged (jerking lower only on the US futures open and Asian equity open) - it seems Mrs.Watanabe is struggling and unwinding some her excessively short JPY and long NKY positions. Read more >>

Scenes from Tokyo's Skid Row

You’ve probably never heard of Sanya. The Tokyo City Government doesn’t acknowledge its existence, and you won’t find it on any official maps. Sanya is more or less Tokyo’s skid row, where people, mostly men, end up when the other parts of this immense, gleaming city have stopped offering comfort and opportunity.

Sanya is where  the Japanese outcasts, food animal butchers, leather tanners, and other professions considered “unclean” by Japan’s traditionally Buddhist ruling class, aka the burakumin, or dowa, plied their trades for centuries. These tradesmen may mostly be gone, and the smell of the blood they spilled long-since drifted away, but the stigma of what Sanya once was remains, and it clings to the many of the people who live and work here. Read more >>

U.S. warns health officials to be alert for deadly new virus

The Centers for Disease Control and Prevention (CDC) on Thursday warned state and local health officials about potential infections from a deadly virus previously unseen in humans that has now sickened 14 people and killed 8.

Most of the infections have occurred in the Middle East, but a new analysis of three confirmed infections in Britain suggests the virus can pass from person to person rather than from animal to humans, the CDC said in its Weekly Morbidity and Mortality Report on Thursday.

The virus is a coronavirus, part of the same family of viruses as the common cold and the deadly outbreak of Severe Acute Respiratory Syndrome (SARS) that first emerged in Asia in 2003. The new virus is not the same as SARS, but like the SARS virus, it is similar to those found in bats. So far, no cases have been reported in the United States. Read more >>

The electric car is Dead

Recent moves by Japan's two largest automakers suggest that the electric car, after more than 100 years of development and several brief revivals, still is not ready for prime time - and may never be.

In the meantime, the attention of automotive executives in Asia, Europe and North America is beginning to swing toward an unusual but promising new alternate power source: hydrogen.

The reality is that consumers continue to show little interest in electric vehicles, or EVs, which dominated U.S. streets in the first decade of the 20th century before being displaced by gasoline-powered cars.

Despite the promise of "green" transportation - and despite billions of dollars in investment, most recently by Nissan Motor Co - EVs continue to be plagued by many of the problems that eventually scuttled electrics in the 1910s and more recently in the 1990s. Those include high cost, short driving range and lack of charging stations.

The public's lack of appetite for battery-powered cars persuaded the Obama administration last week to back away from its aggressive goal to put 1 million electric cars on U.S. roads by 2015. Read more >>

World food price surge to spell disaster for poorest

Next year will prove to be a very difficult one for the hungry. World food stocks have fallen to dangerously low levels.

The UN estimates there will be 5.5% less wheat on the world market in 2013.
If the world experiences another shock, such as the droughts experienced in the US and Russia this year, 2013 could prove to be catastrophic for those who already struggle to feed themselves and their families.

The world's poorest people spend between 50% and 90% of their income on food, compared with just 10%-15% in developed countries.

Even a small price increase will mean families are forced to take their children out of school, sell possessions, or go without vital medicines in order to put food on the table.

Putting a stop to the pending food price crisis requires a radical new approach to the way we grow and manage food. Read more >>

People will want to eat "smaller" in 2013

The big food makers face a serious challenge for 2013: Consumers will want to eat even "smaller."

Not smaller as in less, but smaller as in locally grown, inspired by street vendors and loaded with fresh, veggie concoctions. So says a 2013 food trends report by the research firm Culinary Visions, scheduled to be released on Tuesday.

"This will challenge big food sellers and manufacturers," says Sharon Olson, executive director of the Culinary Visions panel, which surveyed more than 3,000 consumers nationally and interviewed dozens of food experts. "It's not a simple switch."

Among 2013's key food trends:

-- Street markets rule. Say goodbye to the notion of fine-dining trends eventually trickling down to the rest of us. In 2013, it will increasingly be trickle-up. "All of the inspiration will come from street markets," says Olson.

Much is coming from street markets of Asia, for example, which recently influenced Chipotle to open the Asian-themed ShopHouse chain. "It's a reverse thinking on the way companies look at identifying food trends," she says.

-- "Pure" food sells. Consumers want the food that they buy demystified. They want to be able to pronounce the names of all the product ingredients. And they want to know where it comes from — ideally, locally, says Olson. "Nothing sells like pure and simple," Olson says.

-- Kids get coddled. Forget the crayons, toys and prizes. In 2013, the way to appeal to both parents and kids will be to offer healthier but affordable food options; pay attention to food allergies, and train staff to be extra kid-friendly, says Olson. Read more >>

Japan Exports Tumble 10%

Japan’s exports fell the most since the aftermath of last year’s earthquake as a global slowdown, the yen’s strength and a dispute with China increase the odds of a contraction in the world’s third-largest economy.

Shipments slid 10.3 percent in September from a year earlier, leaving a trade deficit of 558.6 billion yen ($7 billion), the Finance Ministry said in Tokyo today. The median forecast in a Bloomberg News survey of analysts was for a 9.9 percent export decline. Imports rose 4.1 percent.

Economy Minister Seiji Maehara pressed the Bank of Japan for more action yesterday, saying the nation is “falling behind” in monetary stimulus and is at risk of another credit- rating downgrade. The BOJ today cut its view of eight out of nine regional economies while Taiwanese unemployment rose to a one-year high, underscoring weakness across Asia after China’s third-quarter growth was the slowest since 2009. Read more >>

China sends 1,000 boats armada to disputed island chain

Around 1,000 fishing boats have been mobilised by China to sail to an island chain controlled by Japan, as the quarrel between the two countries fuelled a seventh day of protests.

Chinese fishing boats, which often seem suspiciously well-drilled and organised, have clashed with the Japanese coastguard over the Diaoyu, or Senkaku, islands before, but never in such numbers. They were expected to arrive on Monday night, according to the state-run China News Service, and may also be joined by six Chinese maritime patrol ships, which briefly entered Japanese waters last Friday in a show of defiance.

The spat over the islands, which has been rumbling for decades, intensified last week after Japan announced it had bought some of the archipelago for the nation from a private Japanese family. Read more >>

Chief financial officers' pessimism about economy grows

The latest CFO survey from Duke University and CFO magazine finds little positive feeling as executives look ahead to the last quarter of the year. Even cuts in interest rates would likely have little effect, CFOs say. The "Optimism Index" Of U.S. CFOs fell to 52 from 56 in the summer quarter, based on a scale of 0-100. In the spring, the index was 59.

Twice the percentage of CFOs (44 percent) have "become more pessimistic" than are more optimistic, the survey found. That's not good news, warned one of the executives overseeing the survey. As a result, little improvement is expected on the jobs front.

CFOs expect to increase hiring by 1.5 percent and capital spending by 3.7 percent while earnings are forecast to grow by 6 percent. All those percentages fell from the previous quarter. “The drop in optimism is worrisome for the U.S. because historically it foretells slower economic activity over the next year,” said Kate O’Sullivan, editorial director at CFO Magazine. “Optimism is also falling in Asia and Europe.” Read more >>

80% Of The World Is Now In Contraction

With the US closed today, the rest of the world is enjoying a moderate rise in risk for the same old irrational reason we have all grown to loathe in the New Normal: expectations of more easing, or "bad news if great news", this time from China, which over the weekend reported the first official sub-50 PMI print declining from the magical 50.1 to 49.2, as now even the official RAND() Chinese data has joined the HSBC PMI indicator in the contraction space for the first time since November. Sadly, following today's manufacturing PMI update, we find that the rest of the world is not doing any better, and in fact of the 22 countries we track, 80% are now in contraction territory. Read more >>

China Confronts Mounting Piles of Unsold Goods

After three decades of torrid growth, China is encountering an unfamiliar problem with its newly struggling economy: a huge buildup of unsold goods that is cluttering shop floors, clogging car dealerships and filling factory warehouses.

The glut of everything from steel and household appliances to cars and apartments is hampering China’s efforts to emerge from a sharp economic slowdown. It has also produced a series of price wars and has led manufacturers to redouble efforts to export what they cannot sell at home.

The severity of China’s inventory overhang has been carefully masked by the blocking or adjusting of economic data by the Chinese government — all part of an effort to prop up confidence in the economy among business managers and investors. Read more >>

Oil Tanker Rates Drop to Lowest in 15 Years

Aframaxes, already this year’s worst- performing oil tankers, are poised for the lowest annual rates in at least 15 years as Europe’s economic stagnation curbs demand, the region’s most-accurate shipping analysts said.

The vessels are struggling to win cargoes on all sides of the Atlantic, with European oil demand contracting for a sixth year at a time when the U.S. push for energy independence is driving down crude imports to the lowest since 1999. That’s drawing more South American and West African supply to Asia on routes favoring very large crude carriers, displacing smaller Suezmaxes which in turn are competing with Aframaxes.

“With the situation in Europe, the picture for Aframaxes is just abysmal,” said Erik Nikolai Stavseth, an Oslo-based analyst at Arctic Securities ASA who anticipates an annual average of $10,000. Read more>>

Factory Orders in U.S. Decline for Second Month

Orders to U.S. factories unexpectedly fell in April for a second month, pointing to a deceleration in manufacturing as the global economy cools.

Bookings dropped 0.6 percent after a revised 2.1 percent decrease in March, the first back-to-back declines in more than three years, figures from the Commerce Department showed today in Washington. Economists projected a 0.2 percent gain, according to the median forecast in a Bloomberg News survey.

Slowdowns in Europe and parts of Asia combined with a cooling in business spending in the U.S. following a reduction in a government tax credit may limit manufacturing this year. A falloff in hiring may also be causing American households to curb spending on big-ticket items like autos, eliminating another source of strength. Read more >>

Shanghai Homeowners Smash Showroom in Protest Over Falling Prices

Image by Getty Images via @daylifeA weekend scuffle in Shanghai over a drop in apartment prices adds to increasing evidence that China’s efforts to tame a surging property market are having an impact – even as it offers a hint of what could happen if the measures go too far.

A group of around 400 homeowners in Shanghai demonstrated publicly and damaged a showroom operated by their property developer after the company said it cut prices. Home buyers had wanted to speak with the developer to refund or cancel their contracts but were unsuccessful, according to local media. One report said the price cuts exceeded 25% per square meter.

The local media reports said an unspecified number of people were injured. The property developer, a unit of China Overseas Holdings Ltd., didn’t respond to requests for comment. Photos of the event showed broken glass in the sales office, homeowners marching with banners and a phalanx of police watching over. More...

Millionaires shrug off the downturn

Image by Getty Images via @daylifeMillionaires across the world are now richer than they were before the financial crisis, the latest sign that the wealthy have weathered the downturn far better than other groups.

Global wealth among individuals with $1m of investable assets or more rose to $42,700bn in 2010, up from $40,700bn in 2007, according to the Merrill Lynch Cap Gemini World Wealth Report.

Rising equity markets and Asian growth helped expand the fortunes of the global elite, with the number of Asian millionaires now exceeding that of Europe.

There were 3.3m millionaires in Asia-Pacific at the end of 2010, compared to 3.4m in the US and just 3.1m in Europe, the report found. There were 3m millionaires in both Europe and Asia at the end of 2009. More...

Japan to experience long term drop in tourism and product ownership

Image via WikipediaJack Barnes
In the future, Japanese products will have to undergo extreme levels of product safety inspections. The radiation is not biased in what it infects. That is, it could be from a sub assembly part shipped out of the area, or it could be from airborne fallout contaminating a shipping container for example.

The reality is that Japan is going to experience both a long term drop in tourism, but also a long term drop in the public ownership of Japanese produced products. There will be a long term stigma to the events of March 11th, which have not been baked into the global supply chain yet. Customer choices is one that has not been touched on yet, but lets be honest. Do you want to buy a car that has a real chance of residual radiation? Even if it was only a 1-5% chance?

Over the medium term, I expect to see Japan export its business with employees, to seismically safe locations. The need for major rolling black outs this summer is going to hit home to the businesses that need a stable supply of electricity.

When you consider the true level of importance of the Kanto region on the Japanese economy, the implications sink in. The impact to the nation is going to be larger than most expected. The Kanto region was still an important bread basket for Japan. In a nutshell, 1 out of 3 Japanese lived in this area. More...

India’s inflation accelerates; food costs increase

India’s inflation accelerated as food costs increased, adding pressure on the central bank to extend last year’s fastest round of monetary tightening in Asia.

The benchmark wholesale-price index rose 8.43 percent in December from a year earlier after a 7.48 percent gain in November, according to a commerce ministry statement in New Delhi today. The median forecast of 30 economists in a Bloomberg News survey was for an 8.4 percent increase.

“Inflation is worrying and is a potential constraint on the economy’s growth potential,” Robert Prior-Wandesforde, the Singapore-based head of India and Southeast Asia economics at Credit Suisse Group AG, said before the release. “The central bank is likely to step in and hike rates.” Read more...