Germany’s economy took a step closer to recession. The government announced that its GDP grew at 3%, which was less that posted earlier. The economy contracted 0.25% in the final quarter of 2011. Export levels were mostly to blame. That is due primarily to demand within the EU. That demand likely will fall further as austerity takes stimulus money out of circulation within Germany’s neighbors. Persistently high unemployment in Greece, Spain and several other nations in the region also undermine demand for German exports. That leaves developing markets, China, the U.S. and Japan to absorb the goods and services that Germany sends abroad. But data shows that even the Chinese expansion has slowed. Germany has begun to run out of robust trade partners.
More Trouble in Iran
The price of oil continues to rise. On most days recently, it is as likely to rise as not. The latest reason that Brent crude moved over $113 a barrel is an explosion in Iran. A nuclear scientist apparently was killed by a car bomb. Iran’s political system may be less stable than it was a few months ago. Western governments have largely agreed to sanctions. The U.S. has lobbied China to participate, but that lobbying may have no effect. Iran continues to threaten to shut the Strait of Hormuz and cut the supply of as much as one-fifth of the world’s oil.
Lenovo Goes With Intel
Intel (NASDAQ: INTC) struck a blow in its battle with Qualcomm (NASDAQ: QCOM) to provide processors for smartphones. The world’s largest chip company announced at the Consumer Electronics Show that Lenovo and Motorola (NYSE: MMI) will use the Intel product. The announcement is actually a disappointment. Motorola recently reported its phone sales were weak last quarter. Lenovo is barely in the smartphone business at all. If Intel is to show any real advance in the sector, it will have to sign with a more powerful player like Samsung.
Prius c Launches
Toyota (NYSE: TM) launched it tiny Prius c hybrid at the Detroit auto show. The five-door car will get as much as 53 MPG in city driving. That is enough of an advantage over most small cars to give the Prius c an edge. The new vehicle will sell for $19,000, which is little enough to attract even budget-conscious buyers. Analysts will argue that the Prius c has to compete with new clean diesel, electric and standard engines that get better MPG than their predecessors. But the Prius brand is powerful and long lived. Toyota says it has sold more than two million Prius units since the car was first introduced.
Douglas A. McIntyre