German Economic Sentiment
Germany's economic fortunes have begun to crumble, as so many experts feared. There was very modest hope that the European Union's largest nation by gross domestic product might sail through the region's recession because of internal consumer demand and strong demand for its goods and services from outside the region. It appears that the vacuum of Europe's trouble has pulled Germany in. The new ZEW measure of Economic Sentiment for Germany fell by 4.2 points in November 2012 to a level of minus 15.7 points. According to the ZEW report:
Similar to the previous months, the indicator's negative balance shows that the surveyed experts rather expect the economy to deteriorate than to improve over the next six months. This month's decline supports this view. The negative assessment in November may be due to disappointing leading indicators. In the manufacturing sector, for instance, weak incoming orders indicate a further drop in production.
Sinofsky Leaves Microsoft
For reasons that no one understands so far, and may never be clear, the head of Microsoft Corp.'s (NASDAQ: MSFT) Windows division, the company's flagship, left suddenly without a farewell party or a proper send-off. Windows and Windows Live President Steven Sinofsky disappeared in the blink of an eye. Someone named Julie Larson-Green replaced him. There are several theories about why Sinofsky left. Two are the most likely to be true. Windows 8 sales may be well below Microsoft's expectations. The company's future hings on the success of the radical relaunch of Windows, which Microsoft claims will be a success across platforms as broad as PCs, smartphones, game consoles and tablets. Sales of Microsoft's new tablet - the Surface - already have been described by CEO Steve Ballmer as "modest." Detailed sales figures for Windows 8 will not be given to the public right away. Sinofsky may have taken the blame before any public disclosure of these. Another theory, one which is more conspiratorial, is that Sinofsky was the most likely candidate to replace Ballmer. If Windows stumbled, he was in the wings, with years of experience at the world's largest software maker, to take over. Since the board has supported Ballmer through very trying times, this would seem to be the less plausible of the two. Ballmer's comment:
"I am grateful for the many years of work that Steven has contributed to the company," Ballmer said. "The products and services we have delivered to the market in the past few months mark the launch of a new era at Microsoft. We've built an incredible foundation with new releases of Microsoft Office, Windows 8, Windows Phone 8, Microsoft Surface, Windows Server 2012 and 'Halo 4,' and great integration of services such as Bing, Skype and Xbox across all our products. To continue this success it is imperative that we continue to drive alignment across all Microsoft teams, and have more integrated and rapid development cycles for our offerings."
Another Reprieve for Greece
The most important story out of Europe today is that Greece has been given an extension to reach its austerity and budget goals. The region's finance ministers did not have any options. Greece was not going to meet earlier goals. Without an extension, default was a certainty, along with whatever fallout might accompany it. The ministers had to make a decision quickly because Greece needs the next installment of its loans to pay basic expenses and cover debt service. CNNMoney reports:
Eurozone finance ministers have agreed to give Greece two more years to meet fiscal targets attached to a second sovereign bailout, but will not release the next installment of rescue funding for at least another week.
The Eurogroup, which brings together finance ministers from the 17 eurozone nations and European Central Bank President Mario Draghi, said new austerity measures and a 2013 budget adopted by the Greek parliament within the last week demonstrated the resolve of the recession-ravaged nation to get its debt-cutting efforts back on track.
Greece was forced to seek a second bailout from the so-called troika of EU, ECB and International Monetary Fund in March as it buckled under the weight of debt now projected to hit 190% of gross domestic product next year.
But payments were suspended after months of political turmoil left Athens way off its reform and fiscal targets set by the troika.
Douglas A. McIntyre
Filed under: 24/7 Wall St. Wire, Market Open