Spain's Growth Slows
Spain has cut its growth forecasts again (or rather, experts have), which means it will ask for more time to solve its problems. And its path to a bailout from its neighbors and bond purchases by the European Central Bank become more complex. As each month passes, and the recession in Spain worsens and unemployment rises, the government of Prime Minister Mariano Rajoy is later and later in publicly admitting its problems. Newspaper El Pais reports that Spain's gross domestic product will tick down sharply next year, and that its budget deficit will be 6% rather than the 4.5% most recently forecast. Reuters reports:
El Pais reported that the Commission forecast a 1.5 percent decline in Spanish gross domestic product in 2013, scarcely any better than a 1.6 percent drop this year. Next year's Commission forecast is in line with the consensus in a Reuters poll of economists taken a fortnight ago.
However, both are significantly worse than the 0.5 percent contraction expected by the Spanish government in 2013.
Another Taste of Sandy
If Hurricane Sandy hurt retail sales and closed businesses through the Mid-Atlantic and Northeast, the problem is about to repeat itself as another storm, albeit a smaller one, approaches. Some economist have said Sandy's harm will lower gross domestic product by a fraction of a percentage point in the current quarter. That can be added to any slowdown created by the fiscal cliff. In sum, the two could knock growth well below 2%. The Weather Channel reports:
Energy from the Midwest is pivoting eastward across the South and will spawn a surface low off the Southeast coast by Tuesday. This low will then make the turn northward up the Mid-Atlantic and Northeast coast while intensifying. We will be dealing with a very windy, rainy and cold Wednesday into Thursday along the Northeast I-95 corridor. The strength and duration of the winds would be dictated by the exact track and strength of the low. The winds will kick up high surf along the coast that could lead to additional coastal flooding. Across the interior Northeast or New England, there may be enough cold air for snow to go along with the windy conditions, particularly from the Poconos to the Catskills, Upstate New York and interior New England.
Audi Dreams Big
One more luxury car maker has made fantastic claims about future growth. BMW, Mercedes, Lexus, Infiniti, Acura and Porsche all believe their sales will skyrocket between now and the end of the decade. Either the global luxury car market will grow by high double digits between now and 2020, or some of the companies are wrong. Audi is the latest of these manufacturers to make aggressive claims. Its chances are as good as those of any of its competitors. In the United States, Audi sales have outpaced most other luxury cars. New designs and a fleet of cars, all of which have all-wheel-drive, have appealed to the American market. Audi also believes it has growing demand in the extremely crowded Chinese car market, now the largest in the world. According to Reuters:
Volkswagen unit Audi's chief executive said on Tuesday he aims for the premium brand to sell more than 2 million vehicles a year by 2020.
Rupert Stadler wants to make Audi, which delivered about 1.3 million Audi-branded cars in 2011, the world's largest maker of premium cars no later than 2020, overtaking BMW.
Douglas A. McIntyre
Filed under: 24/7 Wall St. Wire, Market Open