What’s Important in the Financial World (12/10/2012)

Turmoil in Italy

The very modest hope that government actions in Italy might stabilize its economy probably has ended. Italian Prime Minister Mario Monti will resign, which leaves the national political situation in turmoil. That in turn raises questions about whether a new government will embrace austerity measures Monti put in place in an attempt to balance the nation’s budget. Politicians who believe that Monti has gone too far may take power. Former prime minister Silvio Berlusconi is among these. So, the uncertainty about the future of Europe gets one more unstable element. Bloomberg reports:

Italy’s 10-year bond yield jumped 29 basis points to 4.81 percent, the biggest increase since Aug. 2. The cost of insuring Italy’s debt jumped the most in a year, with credit-default swaps on climbing 31 basis points to 284, the highest since Nov. 21.

Watch for these yields to go much higher if the election results favor Berlusconi and his party.

Dwindling Chinese Exports

Additional evidence indicates that global economic growth has slowed to near zero in the past month or so. China reported trade numbers. Exports were up only 2.9% in November. It may be a sign that holiday spending rates around the world will be tepid. It also will fuel the debate over whether China is in a period of recovery, which recent PMI data showed, or whether recession throughout much of the rest of the world will pull the People’s Republic under. Bloomberg writes:

China’s reliance on trade has declined as domestic consumption grows but export-driven manufacturing still employs millions of workers and any weakness raises the risk of job losses and unrest. Global demand for China’s goods is so weak that the government has said exports likely will contribute nothing to this year’s overall economic growth. Western export markets face uncertainties including the U.S. “fiscal cliff” — or impending automatic tax and spending cuts that could disrupt economic growth — and the euro area debt crisis.

Busy, Busy FedEx

FedEx Corp. (NYSE: FDX) claims today will be its busiest day of the year. The rise of e-commerce has fueled that. As in-store sales fall at bricks-and-mortar stores, firms like Amazon.com Inc. (NASDAQ: AMZN) prosper. FedEx released the data:

December 10, when 19 million packages are expected to move through the FedEx networks on what is projected to be the busiest day in company history. The 300,000 FedEx team members and approximately 20,000 seasonal personnel will have their hands full on “Busiest Day,” supporting systems that will process more than 200 packages per second.

And:

Increased e-commerce spending is directly contributing to record holiday FedEx volumes and a 10 percent year-over-year increase in volume from 2011. The majority of these shipments will enter the FedEx Ground and FedEx SmartPost networks.

At least two companies will not have their prosperity undermined this holiday season.

Douglas A. McIntyre