by Calculated Risk on 6/27/2011 09:57:00 PM

From the BBC: Greece general strike: Unions act amid cuts debate

Trade unions in Greece have begun a 48-hour general strike, hours after PM George Papandreou urged parliament to back an austerity package.

Huge crowds of protesters are expected on the streets of Athens, while public transport is set to grind to a halt.
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More than 5,000 police officers are due to be deployed in the centre of Athens on Tuesday morning, when tens of thousands of striking workers are expected to march towards parliament at 1000 (0700 GMT).
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Airports will be shut for hours at a time, with air traffic controllers walking out between 0800 and 1200 (0500-0900 GMT) and 1800 and 2200 (1500-1900 GMT). Ferries, buses and trains will also stop running.

We will probably wake up to images of the strike in Greece. The austerity votes are scheduled for Wednesday and Thursday.

Note: Case-Shiller house prices will be released at 9 AM ET tomorrow.

by Calculated Risk on 6/27/2011 05:51:00 PM

From the WSJ: European Bankers Tackle Greece Debt Plan

The efforts to get a meaningful private-sector contribution to the bailout, as demanded by Germany and other governments, face a tight deadline. Finance ministers of Greece's fellow members of the 17-nation euro zone will meet to discuss a new rescue on Sunday ...

The ECB has taken a hard-line public stance against any private-sector participation that would result in a default rating for Greece.

They are trying to find a way for the private-sector to participate without it being called a default. Not easy ... and of course all of this is contingent on Greece passing the new austerity plan.

Looks like next Sunday will be interesting ...

The yield for Greek 2 year bonds is up to 29.4%, and the 10 year yield are down to 16.8%. Portuguese and Irish 10 year yields are up to new record highs (12.1% for Ireland, 11.7% for Portugal).

Here are the links for bond yields for several countries (source: Bloomberg):

Greece	2 Year	5 Year	10 Year
Portugal	2 Year	5 Year	10 Year
Ireland	2 Year	5 Year	10 Year
Spain	2 Year	5 Year	10 Year
Italy	2 Year	5 Year	10 Year
Belgium	2 Year	5 Year	10 Year
France	2 Year	5 Year	10 Year
Germany	2 Year	5 Year	10 Year

by Calculated Risk on 6/27/2011 01:05:00 PM

From ATA Trucking: ATA Truck Tonnage Index Fell 2.3% in May

The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index decreased 2.3% in May after decreasing a revised 0.6% in April 2011. April’s drop was slightly less than the 0.7% ATA reported on May 25, 2011.
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Compared with May 2010, SA tonnage climbed 2.7%, although this was the smallest year-over-year gain since February 2010. In April, the tonnage index was 4.8% above a year earlier.

“Truck tonnage over the last four months shows that the economy definitely hit a soft patch this spring,” ATA Chief Economist Bob Costello said. “With our index falling in three of the last four months totaling 3.7%, it is clear why there is some renewed anxiety over the economic recovery.”

However, Costello added that he is cautiously optimistic that freight volumes will improve in the second half of the year along with economic activity.

“With oil prices falling and some of the Japan-related auto supply problems ending, I believe this was a soft patch and not a slide back into recession, and we should see better, but not great, economic activity in the months ahead,” he said.

Click on graph for larger image in graph gallery.

Here is a long term graph that shows ATA's Fore-Hire Truck Tonnage index.

The dashed line is the current level of the index. From ATA:

Trucking serves as a barometer of the U.S. economy, representing 67.2% of tonnage carried by all modes of domestic freight transportation, including manufactured and retail goods. Trucks hauled 9 billion tons of freight in 2010. Motor carriers collected $563.4 billion, or 81.2% of total revenue earned by all transport modes.

Obviously economic activity was weak in May as the Personal Income and Outlays report indicated this morning. Some of the weakness was due to supply chain issues and the sharp decline in auto sales - and some of the weakness was probably due to high oil and gasoline prices.

by Calculated Risk on 6/27/2011 10:30:00 AM

From the Dallas Fed: Texas Manufacturing Activity Rises but at a Slower Pace

Texas factory activity expanded in June, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, remained positive but fell from 12.7 to 5.6, suggesting output growth slowed this month.

Other measures of current manufacturing conditions indicated flat activity, while new orders picked up. ... The new orders index rose from 1.1 in May to 6.4 in June, its eighth consecutive month in positive territory. ... Labor market indicators reflected slower growth in labor demand. The employment index came in at 5.3, with 14 percent of manufacturers reporting hiring new workers compared with 9 percent reporting layoffs. ... Price and wage pressures moderated this month.

There are two more regional manufacturing surveys that will be released this week (Richmond and Kansas City), and those surveys will probably show weakness similar to the Philly and Empire State surveys. So far the regional surveys suggest the ISM index will be in the low 50s in June - and might show contraction (below 50) for the first time since July 2009.

by Calculated Risk on 6/27/2011 08:30:00 AM

Note: sorry for typos.

The BEA released the Personal Income and Outlays report for May:

Personal income increased $36.2 billion, or 0.3 percent ... Personal consumption expenditures (PCE) increased $4.6 billion, or less than 0.1 percent.
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Real PCE decreased 0.1 percent, the same decrease as in April.

The following graph shows real Personal Consumption Expenditures (PCE) through April (2005 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image in graph gallery.

PCE increased less than 0.1% in May, but real PCE decreased 0.1% as the price index for PCE increased 0.2 percent in May. The graph shows that real PCE declined in the first two month of Q2.

Note: The PCE price index, excluding food and energy, increased 0.3 percent.

The personal saving rate was at 5.0% in May.

Personal saving -- DPI less personal outlays -- was $591.1 billion in May, compared with $568.0 billion in April. Personal saving as a percentage of disposable personal income was 5.0 percent in May, compared with 4.9 percent in April.

This graph shows the saving rate starting in 1959 (using a three month trailing average for smoothing) through the May Personal Income report.

The saving rate has declined recently even as growth for real personal consumption expenditures has slowed. Part of this is due to higher overall inflation and higher oil / gasoline prices.

This would have been the first monthly decline in real PCE since January 2010 - except April was revised down too. This puts real PCE growth in Q2 on pace for only about 1% (an average of Q2 over Q1) - the slowest pace since Q4 2009.