German factory orders slide; JP Morgan's Dimon slams socialism – as it happened
Rolling coverage of the latest economic and financial news, including another worrying drop in demand for German manufactured goods
- Dimon: America must show leadership, and resist socialism
- UK car sales fell in March
- Breaking: German factory orders fell 4.2% in February
- Orders slump 8.4% year-on-year
- Analyst: No green shoots
8.40pm BST
And finally, here's our news story about Dimon's blast at left-wing politics:
Related: Billionaire JP Morgan chief attacks socialism as 'a disaster'
4.46pm BST
Britain's FTSE 100 has closed down 16 points at 7,401, ending a five-day run of gains.
3.34pm BST
The IMF is also highlighting the perils of corruption today, saying curbing such practices could raise $1 trillion in extra taxes.....
Governments could save $1tn in taxes by curbing corruption, new IMF research says. https://t.co/8qasArVYsR pic.twitter.com/HgCLcSVU2S
3.33pm BST
A decade after the sub-prime crisis, the International Monetary Fund has issued a new warning about the American housing market.
In a report, the Fund says a growing number of homes in the US and China are teetering on the brink of a price slump; such a crash could drag their economies into recession.
Using the latest evidence from global housing markets, the Washington-based organisation said there was a clear increase in the risk of a housing price collapse in both countries after years of ultra-low interest rates and loose lending by financial institutions.
Ahead of its annual meeting next week, the IMF's research showed a strong connection between falling house prices and declines in activity across the economy between 1990 and 2017, illustrating the power of housing markets to trigger wider slumps in GDP growth.
Related: Rising risk of US and China housing slump causing recession - IMF
3.19pm BST
Rating agency Moody's reckons America will avoid a recession over the next two years, but growth will weaken....
MOODY'S: "We do not expect a recession this year or next. We do, however, expect the US economy to slow toward the end of 2019, resulting in an average of 2.5% growth for the whole year, and for growth to moderate further to 1.7% in 2020."
2.54pm BST
Concern over Germany's economy is weighing on the euro, reports Marc-Andri(C) Fongern of MAF Global Fore:
@graemewearden Europe is watching Germany with an anxious eye today. The engine sputters. Investors we spoke with over the last couple of months are preparing for more negative views, which is one of the main reasons why the EUR can't build momentum.
2.41pm BST
The number of Americans signing on for unemployment benefit has hit a new 49-year low, suggesting the labour market remains solid despite slowdown fears.
The initial jobless claims figures has fallen to just 202,000 for last week, down from 203,000, to the lowest since the end of 1969.
Chart of the Day! The US initial jobless claims fell to 202K last week, the lowest level since 1969. More importantly, it means jobless claims have not bottomed yet, meaning a #recession signal has NOT been given. pic.twitter.com/o4YWaFB4VG
2.15pm BST
Putting Jamie Dimon's musings on political science aside, investors will be interested to hear that he predicts more market volatility.
He has said the extreme volatility seen in the last few months of 2018 may be "a harbinger of things to come".
In good markets, liquidity is essentially high and is almost at the same level today as it was before the crisis. But when markets became volatile in the last several years, liquidity dropped much further and faster than it did before the crisis. It is important to remember that this happened in good times.
Therefore, it is reasonable to expect that what we have been experiencing is now the new normal of liquidity - and that we should be prepared for it to be even worse in truly difficult times.
1.43pm BST
Jamie Dimon (net worth: $1,300,000,000) also isn't a fan of socialism.
In today's letter to shareholders, the JP Morgan chief says capitalism has its faults - it needs a "strong safety net", and it shouldn't allow companies to avoid regulation.
Many countries are called social democracies, and they successfully combine market economies with strong social safety nets. This is completely different from traditional socialism. In a traditional socialist system, the government controls the means of production and decides what to produce and in what quantities, and, often, how and where the citizens work rather than leaving those decisions in the hands of the private sector.
When governments control companies, economic assets (companies, lenders and so on) over time are used to further political interests - leading to inefficient companies and markets, enormous favoritism and corruption.
As Margaret Thatcher said, "The problem with socialism is that eventually you run out of other people's money."
Socialism inevitably produces stagnation, corruption and often worse - such as authoritarian government officials who often have an increasing ability to interfere with both the economy and individual lives - which they frequently do to maintain power. This would be as much a disaster for our country as it has been in the other places it's been tried.
1.23pm BST
One of Wall Street's most senior bankers has called for America to play a more responsible role in world affairs, and to provide more leadership.
A more secure and more prosperous world is also good for the long-term security and prosperity of the United States. And America's role in building that more secure world has been and will likely continue to be indispensable.
While there are many legitimate complaints about international organizations (the North Atlantic Treaty Organization, the World Trade Organization and the United Nations), the world is better off with these institutions. America should engage and exercise its power and influence cautiously and judiciously. We should all understand that global laws, standards and norms will be established whether or not our nation participates in setting them. It is certain that we will be happier with the evolution of global standards if we help craft and implement them. We should not abdicate this role. To the contrary, it is critical that America help develop the best global standards in trade, immigration, corporate governance and many other important issues.
At JPMorgan Chase, we are strengthening our public policy teams to take our advocacy and ideas to the next level....
It's not enough just for companies to meet the letter and the spirit of the law. They can also aggressively work to improve society.
12.51pm BST
Despite all the gloomy talk today, Germany's stock market has now shaken off its losses, and is up slightly on the day.
That's thanks to carmakers - BMW, Volkswagen and Daimler are among the top risers this morning, helped by hopes of a breakthrough in the US-China trade talks.
12.42pm BST
There's some speculation that Donald Trump could announce plans for a summit with China's president Xi later today.
Trump is due to meet vice premier Liu He at the White House at around 4.30pm East Coast time. If the talks between Liu and US officials have gone well, Trump may conclude that a trade deal is close.
An announcement of a summit date is "likely" to come while Trump meets with the Chinese leader's special envoy, Vice Premier Liu He, at the White House on Thursday, according to an administration official, but discussions remain fluid and those plans could change.
This afternoon, Pres meets again with Chinese Vice Premier Liu He, back in DC for another round of US/China trade talks. Progress in the talks could be enough for @POTUS to announce a date for a meeting with Pres Xi Jinping. Pres last met with Liu in February. pic.twitter.com/AM9Tu1sXzC
12.18pm BST
The fall in German factory orders in February shows Europe's largest economy is suffering from increased uncertainty and slowing global growth, say analysts at Oxford Economics.
They've crunched today's report (showing orders down 4.2% month-on-month, and 8.4% year-on-year), and concluded that this "horrendous" report bodes badly for growth prospects.
Overall, today's report is clearly negative and represents a clear threat to the short-term outlook for German industry until global growth remerges from the present weakness and the Brexit saga reaches a conclusion.
At face value, tomorrow's industrial production data is likely to disappoint our and the market's expectations of a moderate rise. If it does, a revision of our Q1 GDP growth forecast from 0.5% to 0.3% is likely.
11.59am BST
Here's our news story on the latest drop in UK car sales:
Related: Sales of new cars fall as UK consumers continue to shun diesel
11.26am BST
Back in the City, shares in Saga - the over-50s insurance and travel specialist - have slumped by a third after a disappointing profits warning.
Much of the company's problem stem from its insurance arm. Retail broking profits slumped by 19.1% in 2018, hit by tough competition.
Brexit is putting a clear dampener on customers' willingness to commit to holidays in 2019.
Related: Shares in travel firm Saga slump as it warns Brexit will hit profits
10.56am BST
In another blow to eurozone spirits, Bloomberg is reporting that the Italian government plans to slash its growth forecast for 2019, from 1% to 0.1%.
10.42am BST
The slide in German factory orders continues to worry economists and investors. Here's some more reaction:
In #Germany, can't be worse!Depressed manufacturing outlook.
-Factory orders plunged y/y by the most since late 2009.
-Foreign demand is behind the drop (lowest since 2015).
Key to rebalance growth drivers from exports (uncertainty) to domestic demand and #Germany can do it. pic.twitter.com/RJNaVG1Jih
In case you missed it earlier.
German factory orders data for February missed forecast by a country mile and fell by as much -8.40% in the YoY measure.
The chart below (from Trading Economics) shows the monthly data versus manufacturing PMIs.
Hmmmm pic.twitter.com/iDdJwe87yh
Wow - German Factory Orders plunge 8.4% Y/Y. The estimate was for a decline of just 3.1%.
Germany is not bottoming. pic.twitter.com/IC5JIwdWTw
10.24am BST
Speaking of cars.... Tesla's shares have slumped 7% in pre-market trading in New York, after its latest delivery figures missed expectations.
Lower deliveries were expected this quarter, since export of Model 3s to China and Europe meant more vehicles would inevitably finish the quarter in transit. However, the actual number is worse than the market had hoped for, particularly for the more premium Model S and Model X.
Our concern is that demand for Tesla's premium models has been permanently affected by the cut in subsidies in the US and that sales are being potentially cannibalised by the cheaper Model 3. With the $35,000 Model 3 variant only just hitting the market, the potential for Tesla to undercut its own products is only growing. In theory premium sales could be offset by high volume, low margin Model 3 sales, but Model 3 production has increased only slightly quarter-on-quarter - hardly the ramp up in production some had been expecting.
Related: Tesla: production slows amid rocky start to the new year
9.48am BST
Among the major car makers, Ford sales were down 18.5% in March year-on-year.
BMW sales fell 4%, Honda lost 15%, and Toyota fell 17%.
9.35am BST
Sue Robinson, director of the National Franchised Dealers Association (NFDA), also blames UK political uncertainty for the drop in car sales last month:
The new car market declined -3.4% in March reflecting continued political uncertainty. Whilst there is demand for new cars, consumer decisions are being delayed due to Brexit.
We call on the government to produce a deal with the EU that protects motor retailing, a crucial industry for the UK economy.
9.13am BST
Newsflash: UK car sales fell by 3.4% last month.
Industry body the SMMT blames Brexit uncertainty, and ongoing concerns about diesel cars, for the decline.
March is a key barometer for the new car market, so this fall is of clear concern. While manufacturers continue to invest in exciting models and cutting-edge tech, for the UK to reap the full benefits of these advances, we need a strong market that encourages the adoption of new technology.
That means supportive policies, not least on vehicle taxation and incentives, to give buyers the confidence to invest in the new car that best meets their driving needs. Above all, we urgently need an end to the political and economic uncertainty by removing permanently the threat of a 'no deal' Brexit and agreeing a future relationship that avoids any additional friction that would increase costs and hence prices.
9.00am BST
Here's Associated Press's take:
German factory orders dropped sharply in February, erasing hopes of an industrial rebound in Europe's largest economy as concerns over Brexit and international trade conflicts grow.
The Federal Statistical Office reported Thursday industrial orders dropped 4.2% in February, following a revised 2.1% drop in January from December, according to seasonally and calendar adjusted figures.
8.58am BST
#FactoryOrders in #Germany for February "Terrible; a mini-review of the horror-show in 2008" @ClausVistesen #PantheonMacro
8.41am BST
Germany's economy ministry has warned that:
In the coming months, a subdued industrial economy is to be expected, especially because of a lack of foreign demand.
8.34am BST
European stock markets have opened lower, as the drop in German factory orders disappoints traders.
European markets are trading lower due to the dreadful economic reading out of Germany. The factory order data plunged during the month of February, it fell 4.2% m/m while the estimates were for a 0.3% increase.
The European Central bank really needs to wake up. It needs to start paying attention to these feeble economic reading.
8.16am BST
The slump in German factory orders in February was "simply awful", bemoans Carsten Brzeski of Dutch bank ING.
He blames "Brexit woes and continued global uncertainties" for the 7.9% tumble in orders from non-eurozone companies in February.
Devastating new orders data just undermined any hopes for an industrial rebound....
While it looked as if the trend of order book deflation in the German industry had come to a halt at the end of last year, it now looks as if the halt was simply a mere pause before the next landslide. Remember that new orders dropped by more than 1% month-on-month on average every single month in the first half of 2018 and then increased by a monthly average of 0.2% between August 2018 and January 2019.
8.08am BST
Economist Fred Ducrozet of Swiss bank Pictet has dug into the data, to show how German factories have suffered from global trade conflicts:
Yes, German new orders and IP series are volatile. Yes, the manufacturing sector has been hit by a series of shocks (cars; Rhine; you name it). But the main reason is that Germany remains over-exposed to global trade - see the trend in 'core orders'. pic.twitter.com/mF4DJmyDBd
This is also evident in the boom-burst pattern in foreign orders, back to their 2016 levels. Domestic demand has gone through a soft patch, but nothing dramatic. pic.twitter.com/h8mph5lB08
8.04am BST
The sharp fall in German factory orders has alarmed the City.
*GERMAN FEB. FACTORY ORDERS FALL 4.2% M/M; EST 0.3% INCREASE -BBG #EURUSD ... Morale has absolutely plummeted.
German Factory Orders -4.2%
1- 4th monthly decline in a row
2- biggest monthly decline since 2017
3- Longest decline since 2009 #Recession #Germany #EU
7.45am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Domestic orders decreased by 1.6% and foreign orders fell by 6.0% in February 2019 on the previous month.
New orders from the euro area were down 2.9%, and new orders from other countries decreased 7.9% compared to January 2019.
#Manufacturing in February 2019: New orders -4.2% seasonally adjusted on the previous month. https://t.co/ks7CI2OYuz pic.twitter.com/sn95MJIU9D
Ouch! More disappointing data from the German economy today. Factory orders fell 4.2% m/m in Feb., with expectations for a 0.3% increase
White House says President Trump will meet with Chinese Vice Premier Liu He at 4:30p on Thurs. A trade deal imminent? pic.twitter.com/7HP2t7Tua6
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