What's Important in the Financial World (1/14/2013)

Factory output across Europe continued to collapse in November, which will cause economists to extend the period during which they expect most nations in the region to stay in recession, as well as raise the question of whether austerity can improve the long-term financial situations of troubled nations.

According to EuroStat:

In November 2012 compared with October 2012, seasonally adjusted industrial production fell by 0.3% in both the euro area (EA17) and the EU272. In October production decreased by 1.0% and 0.8% respectively.

In November 2012 compared with November 2011, industrial production dropped by 3.7% in the euro area and by 3.3% in the EU27.

Spain, with its unemployment rate at about 25%, was among those countries that took the worst of it:

Among the Member States for which data are available, industrial production fell in fourteen and rose in seven. The largest decreases were registered in Slovenia (-4.0%), Portugal (-3.4%) and Spain (-2.5%), and the highest increases in Estonia (+4.7%), Latvia and the Netherlands (both +1.0%).

Chicago Fed President’s Pessimism

Chicago Fed President Charles Evans voiced pessimism about the prospects of the America economy this year, which he believes will grow only 2.5% this year as measured by gross domestic product. Evans gave the usual reasons of high household debt, high national debt and high unemployment. As he spoke at the Asian Financial Forum in Hong Kong, he said, according to BusinessWeek:

[H]e expects interest rates to stay low until 2015. If the U.S. adds 200,000 jobs per month for several months, that would be an indicator that the Fed could end asset purchases in line with its pledge to continue until it sees “substantial improvement” in labor markets, he said.

“That would be consistent with substantial improvement.That’s going to be on the order of 1 million to 1.5 million jobs over the next six months to a year. That would be indicative that we could stop.”

Jamie Dimon’s Report Card

J.P. Morgan Chase & Co. (NYSE: JPM) CEO Jamie Dimon’s problems with a trade in the bank’s London office that cause a $6 billion loss may be about to get worse. His board has nearly finished a report about the debacle that make him look bad. According to Bloomberg:

The final report, which builds on a preliminary analysis released in July, is critical of senior managers including Dimon, 56, former Chief Financial Officer Doug Braunstein, 51, and ex-Chief Investment Officer Ina Drew, 56, for inadequately supervising traders in a U.K. unit that amassed an illiquid position in credit derivatives last year

The report, which isn’t complete, will be presented to the board when it meets tomorrow. The directors will then vote on whether to disclose it when the bank announces fourth-quarter results the following day, said the people, who asked not to be named because the report isn’t yet public.