European stocks fall after grim industrial data

European stocks fall after grim industrial data
European markets fall after grim industrial data, ahead of expected subdued US open

http://finance.yahoo.com/news/European-stocks-fall-after-apf-15509211.html?sec=topStories&pos=3&asset=&ccode=

Germany's DAX fell 23.89 points, or 0.5 percent, to 5,083.37 and the CAC-40 in France was 2.65 points, or 0.1 percent, lower at 3,332.29.

The European Union's statistics office Eurostat revealed that industrial production in the 16 countries that use the euro slumped by 1.9 percent in April from the previous month. That was way more than the 1 percent decline expected in the markets and stoked worries that the recession in the euro zone may not yet have bottomed out, as some had hoped.

"April's euro-zone industrial production figures provide few signs that the negative effects from destocking and the collapse in global trade are waning," said Ben May, European economist at Capital Economics.

Industrial production plays a particularly important role in the European economy and its recovery, whenever it comes, will provide a clear indication that the worst of the recession is over.

Sharply lower industrial output was blamed for the massive 2.5 percent quarterly fall in the euro zone's first quarter gross domestic product. The recession in Germany, the euro zone's biggest economy, was even greater as demand for its high-value exports, such as cars and heavy machinery, slumped amid the collapse in global trade.

Meanwhile, the FTSE 100 index of leading British shares was down 12.57 points, or 0.3 percent, at 4,449.30 with Barclays PLC down around 3 percent after it confirmed the sale of its global investment unit to U.S. fund manager BlackRock Inc. for $13.5 billion.

Russia's ailing economy. Red square blues

Russia's ailing economy. Red square blues
Russia’s failure to diversify away from oil should worry the Kremlin

(Source Economist.com)
NOT long ago, Russia proudly counted itself as one of the BRICs—with Brazil, India and China, the four emerging-market giants that were outgrowing the rich world. Yet it now makes more sense to talk of the BICs. With GDP shrinking by almost 10% in the year to the first quarter, Russia is in deep recession.

This is upsetting and worrying for the country’s political masters in the Kremlin. Upsetting because, as late as last autumn, they dismissed the economic crisis as a Western problem that would leave Russia unscathed. But the collapse in the oil markets has shown just how much Russia still depends on getting a good price for its natural resources. Neither President Vladimir Putin in 2000-08 nor (since last May) President Dmitry Medvedev has done anything like enough to diversify the economy—indeed, it depends more on oil and gas now than it did. The government has utterly failed to create a legal and political infrastructure to support business and enterprise.

The Kremlin may not care much about either of these shortcomings, especially now that oil once again costs $70 a barrel. Yet even at this price it must worry, for it can no longer honour its side of Mr Putin’s original bargain: that, in return for a guaranteed rise in living standards, ordinary Russians would accept curbs on the media, rigged elections and a slide into autocracy. The Russians are now lumbered with the second part of this deal without gaining the benefits of the first. Not since Mr Putin came to power have high inflation and shrinking GDP caused such a fall in real incomes (see article).
http://www.economist.com/opinion/displayStory.cfm?story_id=13782988&source=hptextfeature

UP AND DOWN WALL STREET DAILY The Market's Formula: A Square-Root Rally

UP AND DOWN WALL STREET DAILY
The Market's Formula: A Square-Root Rally

(Source BARRONS)By RANDALL W. FORSYTH
After nailing a 40% surge since early March, Doug Kass sees "potholes" in the road ahead.
LONG-TIME SHORT-SELLER Doug Kass shocked many of his followers by turning bullish at the beginning of March -- just before the stock market took off on a 40% tear.

Now, with the major averages up sharply from what he called at the time "generational lows," the skipper of Seabreeze Partners sees the road ahead to higher ground strewn with potholes.
Speaking at a conference presented by Barry Ritholtz, the money manager and author of the popular Big Picture blog, Kass recalled that when he made his bullish call in early March, stocks had been through their second-worst bear market ever in terms of price and multiple compression.
Price-earnings multiples had fallen to levels consistent with 6% inflation, while 46% of the Standard & Poor's 500 stocks paid dividend yields exceeding the Treasury 10-year note. Other valuation measures also were rock-bottom; stocks traded at 90% of replacement value while the market's capitalization was just 78% of gross-domestic product. Read Article...
http://online.barrons.com/article/SB124404271987981539.html

U.S. GDP decreased at an annual rate of 3.8 percent in the fourth quarter of 2008

Latest Measure of the Nation's Economy, Q4 GDP down 3.8 percent, biggest drop since 1982

Gross Domestic Product (GDP) measures the market value of the entire nation’s goods and services produced by labor and property in the United States. (Gross Domestic Product News Release)
GROSS DOMESTIC PRODUCT: FOURTH QUARTER 2008 (ADVANCE)

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 3.8 percent in the fourth quarter of 2008, (that is, from the third quarter to the fourth quarter), according to advance estimates released by the Bureau of Economic Analysis. In the third quarter, real GDP decreased 0.5 percent.