Falling German Business Sentiment
Just one day after Markit purchasing managers’ index (PMI) data about Germany showed that its economy is in trouble, Ifo reports that the problem has spread, and spread widely. According to its business climate index for Germany:
The Ifo Business Climate Index for German industry and trade fell in April. Although the majority of companies assessed their current business situation as good, they were far more cautious than last month.Their expectations regarding future business developments were also lower. The German economy is taking a breather.
Based on the tenor of the data, the conclusion “taking a breather” is much too optimistic. The deepening disaster of economic problems in virtually all other countries in the European Union almost assures that Germany’s economy will be weak for months. It has enough trade relationships in the region that its product and services relationships with other large nations, such as the United States, Japan and China, cannot offset this. And based on recent measurements, China and Japan are struggling to grow at historic rates as well.
Apple Woes Have Ripple Effect
Apple Inc.’s (NASDAQ: AAPL) problems have rippled to its Asia components suppliers. Shares in many of these fell in anticipation of weak earnings from the American consumer electronics giant. Apple’s forecast that its current quarter will be lackluster only made the outlook for these companies worse. MarketWatch says about Apple’s Asian suppliers:
Analysts at Barclays on Wednesday downgraded four key hardware stocks from Taiwan after Apple Inc.’s sales guidance for the second quarter came in below expectations.
The research firm cut its recommendation on shares of Largan Precision Co. and Cheng Uei Precision Industry Co. to equal-weight, and on Foxconn Technology Co. and Simplo Technology Co. to underweight. All four stocks were previously rated overweight. The downgrade follows similar recent downgrades for Hon Hai Precision Industry Co. and Quanta Computer Inc.
Although iPhone and iPad orders should be weak in the second quarter of 2013 from “product transitions, we believe that without a larger-size iPhone, sell-through might be uncertain for the rest of 2013 as well,” Barclays analysts led by Kirk Yang wrote in a report.
U.S. Wealth Distribution Trend
The rich have become get richer, and the middle class has become poorer. The trend continued throughout the end of the recession and into the tepid recovery. Many people expected that trend, which increases the belief that the top 1% of Americans control the lion’s share of American wealth. In Washington, that fact is a cornerstone of the debate about why the well-off should pay more taxes. A new Pew study indicates about U.S. wealth distribution:
During the first two years of the nation’s economic recovery, the mean net worth of households in the upper 7% of the wealth distribution rose by an estimated 28%, while the mean net worth of households in the lower 93% dropped by 4%, according to a Pew Research Center analysis of newly released Census Bureau data.
From 2009 to 2011, the mean wealth of the 8 million households in the more affluent group rose to an estimated $3,173,895 from an estimated $2,476,244, while the mean wealth of the 111 million households in the less affluent group fell to an estimated $133,817 from an estimated $139,896.