Archive for the ‘China’ Category

U.S. vs. China

Friday, October 19th, 2012

As China has emerged as a world power, it has increasingly been a case of Us (as in U.S.) vs. Them.  Not in military combat, fortunately, but in day-to-day trade battle and all-out currency competition.

So which country currently holds the edge?

Master of Finance.org compared the two on many different levels – with some interesting results.  Overall, the U.S. retains its top position as THE world superpower.  But China is closing in.

Some of the figures used are outdated, but consider just a few of the comparisons given:

GDP.  The U.S. gross domestic product (GDP) is nearly twice as large as China’s — $15.29 trillion vs. $7.298 trillion, but U.S. GDP is growing at 1.7% annually vs. 9.28%.

Government spending.  U.S.  government expenditures are a whopping $3.599 trillion for a population of 313 million, while China’s government expenditures are $1.729 trillion for a population of 1.343 billion.  The deficit in the U.S. is 8.6% of GDP compared with 1.1% in China.

Poverty and employment.  The U.S., with a labor force of 153 million, has an unemployment rate of 9% and a poverty level of 15.1%.  China, with a labor force of 795 million, has an unemployment rate of 6.5% and a poverty level of 13.4% (of course, it’s all relative).

Freedom.  For economic freedom, the U.S. ranks 4th, while China ranges 118th.  However, the U.S. ranks first for incarceration, with 730 of every 100,000 people in jail, while Chine ranks 124th with 121 of every 100,000 people in jail.

The results, which we found on zerohedge.com, are interesting, but we are very happy to be living in the United States instead of China.

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The S&P 500 Comes Up Short

Friday, June 22nd, 2012

The S&P 500 fell more than 2% yesterday, recording its worst one-day drop since December.  Was it disappointment with The Fed?  A sudden realization that the market shouldn’t rise when the economy is sinking?  A “fat finger” computer glitch?

There were plenty of reasons for the fall – and collectively they do not bode well for the U.S. economy:

  •  The Philadelphia Fed Survey fell unexpectedly to -16.6 for June, registering its worst reading since August 2011.  New orders, shipments and average work hours were negative this month, suggesting an overall decline in manufacturing business.  The decline was the second in a row, as the reading was -5.8 in May.

  • The HSBC China Manufacturing Purchasing Managers’ Index fell to 48.1 in June, down from 48.4 in May.  It was the eighth consecutive reading below 50.  A reading below 50 indicates contraction.  A continuing economic slowdown in China would slow orders from china’s trading partners.

  • Moody’s Investors Services downgraded 15 global investment banks after the market’s close.  Dick Bove, Vice President of Equity Research at Rochdale Securities called the downgrade “absurd,” arguing that the American banking industry’s balance sheets have improved “dramatically” over the past four years.  He noted that liquidity as a percentage of assets is at a 30-year high, bad loans are down and reserves against them are up.
  • Goldman Sachs recommended shorting the S&P 500, with a price target of 1285, which is about 5% below where it was when Goldman Sachs made the recommendation.
  • The S&P GSCI, a commodities index dropped to its lowest level since 2010.  It’s down 22 percent from a February peak.
  • The U.S. Labor Department reported that the four-week average of applications for unemployment benefits was at its highest level since September.

That’s a lot of bad news for one day.  No wonder traders followed Goldman Sachs’ advice.

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Posted in China, Philadelphia Fed Survey, S&P 500, Stock Market, The Economy | No Comments »