GSS: A hiring spree for investment bankers, an increase in the use of corporate jets and a $3,600 bottle of Cognac. These feel like fertile times for Greenshootists. It is becoming less unusual to see what sound like shouting indicators of recovery. Likewise, it is becoming commonplace to hear authoritative voices declare that the worst is past.
The difficulty for the botanists is that there is still an abundance of really ugly newsflow around. The credit-rating agencies continue to downgrade banks in the US and Europe. Much of the data on the US housing market remain scary.
As the equity markets have come off their recent high, so too has Breakingviews.com’s Green Shoots Spotter, an index of financial and economic newsflow. This week it managed 2.4 out of 5 – indicating that the economy is approaching stability. The previous week saw a series high of 2.5. The GSS seeks to assess the direction of the economy by classifying economic, corporate and financial news from 1 ("still in real trouble") to 5 ("rapid recovery"). The basket included 37 news items.
Still in real trouble (1 on the GSS scale)
1. Moody’s downgraded the senior unsecured debt and deposit ratings of 25 Spanish banks (June 15)
2. Siemens CEO does not see end to economic crisis (June 15)
3. US credit-card defaults rise to record in May (June 15)
4. Homebuilder confidence in US unexpectedly declined (June 15)
5. IMF’s Strauss-Kahn says world economy had yet to weather the worst of a recession (June 16)
6. Ten per cent of investors in private equity are likely to default on commitments to invest funds in the next two years (June 16)
7. As many as 10,000 lawyers could be out of work in the UK in the next two years as the legal business faces its worst slump in decades (June 16)
8. JPMorgan said prices on more expensive US homes would bottom in 2012, and ultimately result in peak-to-trough declines in excess of 60 per cent (June 16)
9. Eurozone banks face $283 billion of further losses this year and next, the ECB warned (June 16)
10. Eurozone lost a record 1.22m jobs in Q1. Employment during Q1 fell 1.2 per cent year-on-year (June 16)
11. US industrial production decreased 1.1 per cent in May after having fallen a downward-revised 0.7% in April (June 17)
12. S&P downgraded 18 US Banks (June 17)
13.Rents across the UK’s high streets and shopping centres are set to drop by almost a fifth warned consultancy Colliers CRE (June 18)
14. Willie Walsh, CEO of British Airways, warned that the worst of the recession was “still ahead” for airlines (June 18)
15. Simon Halabi’s real estate companies defaulted on $1.9billion of bonds backed by nine London office buildings (June 19)
Getting less bad (2 on the GSS scale)
1. European car sales in May fell at the slowest rate this year as government-backed incentives helped reverse declines (June 17)
2. UK jobless rose to 2.26 million in three months to April, highest since November 1996, but rate of increase slowed (June 17)
3. US jobless figures for those continuing to claim benefit unexpectedly fell for the first time since January 3, but first-time claimants rise (June 18)
4. Bank of England governor Mervyn King reported “signs that the pace of decline in the economy is levelling off” (June 19)
Not just stabilising but stable (3 on the GSS scale)
1. G8 finance ministers signalled cautious optimism that the worst of the global financial crisis might be over (June 15)
2. The recession will be shorter and less severe than previously expected, according to the CBI (June 15)
3. US housing starts were up 17.2 per cent to 532,000 in May rebounding from their all time record low in April (June 16)
4. Spain's premier said worst of Spanish economic crisis was over (June 17)
5. Hedge fund liquidations fell by 50 per cent in the first quarter from the record levels set in the previous quarter as the industry grew for the first time in 10 months (June 17)
6. FedEx CEO Fred Smith said that the "worse of the recession is likely behind us" (June 17)
7. JPMorgan and nine other banks repay TARP money (June 17)
8. Travel on all US roads and streets was up 0.6 per cent for April 2009 as compared with April 2008 (June 19)
Slow growth (4 on the GSS scale)
1. London City Airport recorded a 44 per cent increase in passengers travelling by private jet last month, the biggest monthly rise in more than four years (June 15)
2. German investor confidence rises to three-year high (June 16)
3. Former head of Deutsche Bank AG’s global arbitrage business will launch a hedge fund with $1 billion (June 16)
4. Job openings in London’s financial-services industry rose in May, says Morgan McKinley. (June 18)
5. World Bank says China’s economy will expand 7.2 per cent in 2009 from a year earlier (June 18)
6. Deutsche Bank plans to hire more investment bankers in the Americas (June 18)
7. IMF raises forecast for US economy, saying it will contract 2.5 per cent this year and expand 0.75 per cent in 2010 (June 18)
8. The IMF is likely to revise up its 2010 growth forecast for the world economy, senior fund official tell Reuters (June 19)
Rapid recovery (5 on the GSS scale)
1. Pernod Ricard’s Martell says its $3,600 cognac sells out (June 18)