What's Important in the Financial World (3/27/2012) German Gas Prices, Case-Shiller Home Prices

German consumer activity is being undermined by high gasoline prices. That is the conclusion of Germany’s premier economic survey firm GfK Group. The firm published its comments in its “Consumer Climate Study for Germany for March 2012.” At the core of its conclusions about effects of current economic conditions on near-term behavior, GfK reported:

Following a value of 6.0 points in March, the overall indicator is forecasting 5.9 points for April 2012. The upward trend of the consumer climate over the last six months has therefore ceased, for now at least.

Germans believe that their purchasing power has been undermined by energy costs. Until now, Germany’s economy has continued to expand and business confidence has remained relatively good, based on recent data from the German Ifo business-climate index. That means that the only nations of any size in the European Union with growing economies are Germany and France. The importance of the trend cannot be overstated, because these are the two largest nations in the region, based on gross domestic product. Now, the growth of GDPs in Germany and France are threatened for the same reason as in the U.S. Oil and gas prices are becoming overwhelming.

U.S. Gas Prices

Gasoline prices in the U.S. continue a relentless move higher as each day passes. The carefully watched AAA Fuel Gauge put the average cost of a regular gallon of gas in America at $3.898, up from $3.897 yesterday and $3.688 a month ago. In the largest states by population, the price for a gallon of regular is much higher — $4.330 in California, $4.256 in Illinois and $4.053 in New York.

Tim Cook in China

Tim Cook, Apple’s (NASDAQ: AAPL) new CEO, has gone to China because he hopes to find resolutions to several problems that have dogged the world’s largest company based on market capitalization. Among these are that the market share of the iPhone is relatively small, despite the importance of China’s huge smartphone market. Samsung, Apple’s biggest global rival, is the leader in Chinese smartphone sales. Cook needs stronger relationships with the nation’s premier carriers. Cook also must contend with a lawsuit by Proview over the iPad trademark. And, probably the most visible trouble Apple has in the People’s Republic is its relationship with Chinese manufacturers like Foxconn that have been accused of mistreating workers.

Case-Shiller Index

The S&P/Case-Shiller index of property values in 20 cities will be released today. It is one of the critical barometers of home prices and is usually a fairly good basis on which to forecast near-term trends. The index has continued to drop most months since the advent of the housing crisis. But the data could surprise on the upside. Builder confidence is up, although that does not directly influence home prices. Real estate professionals have begun to show some optimism about the movement of inventory, if National Association of Realtors data is a fair indication. The Case-Shiller information also is important psychologically. Stock and bond markets will watch it as a signal of the direction home prices are likely to take over the next several months.

Douglas A. McIntyre