Mish's Global Economic Trend Analysis

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• German Exports Decline Significantly and "Unexpectedly"
• Civil War Brewing in Egypt? Muslim Brotherhood Calls for Uprising After 51 Supporters of Morsi were Killed by Security Forces
• Trends in Full and Part-Time Employment; Obamacare Job Double Counting and Other Economic Distortions

German Exports Decline Significantly and "Unexpectedly" Posted: 08 Jul 2013 12:23 PM PDT Given that all of Europe is in a major recession and it is nearly impossible for the German export machine to keep cranking in such circumstances, the only real surprise is how long it took for German exports to the rest of the eurozone to plunge. Nonetheless most economists were surprised by the news Germany's Recovery in Question as Exports Decline Significantly. German exports declined in May at their fastest pace since 2009 because of the slowdown in key European and China markets, adding to worries that the country's recovery was losing momentum. The Federal Statistical Office said that exports declined by 2.4% in calendar-adjusted terms from the previous month to €90.4bn ($116bn/£78bn). Economists expected a 0.1% increase in exports. Germany's trade surplus declined to €13.1bn from €18bn in Apil. The surplus in the current account, a measure of all trade including services, was €11.2bn in June, down from €16.7bn. On a year-on-year basis, exports declined by 4.8%, primarily due to a 9.6% decline in demand from other countries in the euro area. Imports declined by 2.6% from the year-ago month. Exports to the eurozone, where Germany sends 40% of its shipments, declined by 9.6% from the year-ago month, and exports to the European Union (EU) fell by 7.1%. Export demand from countries outside the EU declined by 1.6%, with the slowdown in China have an impact on trade. With the slowdown in the EU, many German manufacturers had looked at China, the second largest economy, as an alternative. The economy returned to modest growth of 0.1% in the first quarter and is expected to pick up further. The eurozone contracted in the first quarter of 2013, a sixth consecutive quarterly fall. Summary German exports overall down 4.8% from a year ago German exports to eurozone down 9.6% from a year ago German exports to EU down 7.1% from a year ago German exports outside the EU down 1.6% from a year ago Recovery? What Recovery? For some inexplicable reason economists expect the German economy to "pick up further". I expect Germany to sink back into recession (not that it really ever left recession). 0.1% growth is a rounding error, not "growth". Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Civil War Brewing in Egypt? Muslim Brotherhood Calls for Uprising After 51 Supporters of Morsi were Killed by Security Forces Posted: 08 Jul 2013 10:57 AM PDT The Financial Times reports Muslim Brotherhood calls for uprising after Cairo violence The political crisis in Egypt deepened on Monday when the Muslim Brotherhood called for an uprising against those who want to "steal the revolution" after at least 51 people were killed and 435 injured at a Cairo rally in support of the nation's ousted president, Mohamed Morsi. Adli Mansour, the interim president, ordered the creation of a judicial committee to investigate the violence while an administration spokesman, told Reuters the violence "will not stop steps to form a government or a road map". The interim administration earlier expressed "deep regret" for the victims, saying in a statement that the incident was caused by an attempt to storm a Republican Guard barracks. It urged protesters not to approach military facilities or other "vital installations". The Freedom and Justice party, the Brotherhood's political wing, said on its Facebook page that Egyptians should "rise up against those who want to steal their revolution with tanks and armoured vehicles, even over the dead bodies of the people". Monday's clashes immediately sparked fresh uncertainty over the make-up of any new government when the hardline Islamist Nour party – which backed the ousting of Mr Morsi – pulled out of negotiation as a response to what a spokesman called "the massacre of the Republican Guard". Civil War Brewing? The Guardian reports Muslim Brotherhood decries killing of Morsi supporters in Cairo 'massacre' The army said an "armed terrorist group" attempted to break into the Republican Guard headquarters and attacked security forces. One officer died and 40 soldiers were injured, seven of whom were in a critical condition, according to al-Ahram, Egypt's leading pro-government newspaper. The army said it had arrested at least 200 people who had large quantities of firearms, ammunition and Molotov cocktails. The conservative Salafi al-Nour party withdrew from talks about a transitional government after the latest violence. "We wanted to avoid bloodshed, but now blood has been spilled. So now we want to announce that we will end all negotiations with the new authorities," it said. Abdel Moneim Aboul Fotouh, a moderate Islamist who left the Brotherhood last year, called on Mansour to step down and told al-Jazeera that the incident was "a horrible crime against humanity and all Egyptians". The Brotherhood's Freedom and Justice party (FJP) said it was calling "on the great Egyptian people to rise up against those who want to steal their revolution with tanks and armoured vehicles, even over the dead bodies of the people". But a spokesman clarified later that the appeal was for a "peaceful uprising". Hamdeen Sabahi, a former presidential candidate and leftist opposition leader, said: "It is very bad news. Very painful. The troops have the duty to guard this building and deal with any attackers. But the result puts us in a bad situation." The only beneficiaries were the Muslim Brotherhood and others who sought to polarise the situation and drive Egypt into civil war, he said. Let's hope that cooler head prevail, but the radical Muslim Brotherhood may not give up so easily having been forced out of power by the military. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Trends in Full and Part-Time Employment; Obamacare Job Double Counting and Other Economic Distortions Posted: 08 Jul 2013 01:36 AM PDT Reader Tim Wallace provided another excellent series of charts on the employment situation. These charts compare June employment in 2013 to June in prior years. click on any chart for sharper image June Employment June Full-Time Employment June Part-Time Employment Wallace writes "Hello Mish. The full-time job loss since June of 2007 now tops five million. The overall job loss is still 2 million, in spite of the fact the US now has a working-age population that is 14 million higher than in June 2007." Snapshot 2007 vs. 2013 Year Total Employed Full-Time Part-Time 2007 146,958,000 123,554,000 23,404,000 2013 144,841,000 118,470,000 26,371,000 Difference -2,117,000 -5,084,000 +2,967,000 Snapshot vs. Prior Year Year Employment vs. Prior Year Full-Time vs. Prior Year Part-Time vs. Prior Year 2007 1,742,000 1,205,000 537,000 2009 (5,823) -8,715,000 2,892,000 2010 -944,000 355,000 -1,299,000 2011 247,000 -132,000 379,000 2012 3,073,000 3,118,000 -45,000 2013 1,639,000 1,316,000 323,000 By this comparison only 2012 looks anything close to a normal recovery year. Some of the jump in 2012 is due to revisions from 2010 and 2011 that were not as bad as originally reported. In the last year, the economy gained 1.316 million full-time jobs, about 110,000 a month. Overall jobs rose by 1.639 million, about 137,000 a month, a number just above what it should take to hold the unemployment rate flat. Month-Over-Month Month-over-month distortions abound. As noted on Friday, Part-Time Jobs Increased by 486,000 with 326,000 Full-Time Jobs Lost. Seasonally Adjusted Part-Time Employment Wallace charts show non-adjusted numbers vs. the same month in prior years, and that is a valid statistical comparison. Let's also look at seasonally adjusted numbers vs. the prior month, also a valid comparison. The trend towards part-time employment since 2010 is volatile, yet unmistakable. Part-Time Employment vs. Prior Month Year Part-Time Employment 2012-09-01 27692 2012-10-01 27869 2012-11-01 27517 2012-12-01 27502 2013-01-01 27467 2013-02-01 27569 2013-03-01 27442 2013-04-01 27549 2013-05-01 27699 2013-06-01 28059 Obamacare Job Double Counting The above part-time numbers do not show the trend one might expect. Moreover, establishment survey numbers show a fair amount of hiring (+195,000 in the latest report), with recent months revised higher. Here's the problem: The establishment survey double counts jobs when someone takes an extra part-time job, whereas someone working two part-time jobs is counted as employed just once in the household survey. For example: Thanks to Obamacare, someone who used to work 35 hours a week for Olive Garden now works 22 hours for Olive Garden and 12 for Applebees. And Someone who worked 35 hours for Applebees now works 22 for Applebees and 12 for Olive Garden. The establishment survey sees two additional jobs created when precisely zero jobs were created. Since this is happening en masse, I expect downward revisions in the future over Obamacare Double Counting. The Obamcare effect is real. The distortions are complicated, numerous, and not widely understood. Obamacare Economic Distortion Synopsis October 10, 2012: Prepping for Obamacare, Olive Garden and Red Lobster Cut Workers' Hours; Are Other Companies Doing the same? October 20, 2012: Mish Obamacare Mailbag: Expect More Part-Time Jobs February 02, 2013: Obamacare in Action: Retail Workweek Hits 3-Year Low February 19, 2013: Opting Out of Obamacare (the Unaffordable Health Care Act); Not Even Labor Unions Want It May 3, 2013: Obamacare Affects Part-Time Employment Yet Again; Nullification Bill Passes South Carolina House; Analysis of Healthcare Penalty Rates May 20, 2013: Obamacare Premiums 47% Higher But Deductibles 27% Lower Than Grandfathered Health Plans; Obamacare Lies June 21, 2013: Obamacare Effects Hit Local Governments, Small Businesses, Temp Staffing Agencies; Chicago Dumps Retirees Into Obamacare For more on Obamacare Economic Distortions, please peruse the above links to your heart's content. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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