Carlos X. Alexa...'s  Instablog

George Friedman, the Chairman of Stratfor, a geopolitical intelligence company, wrote a piece that digs deeps into the European problem, especially Portugal, because the country's condition is widely misunderstood by all the clueless talking heads that see conspiracies against their way of life everywhere they look. I share some key excerpts.

We flew into Lisbon and immediately rented a car to drive to the edge of the Earth and the beginning of the world. This edge has a name: Cabo de São Vicente. A small cape jutting into the Atlantic Ocean, it is the bitter end of Europe. Beyond this point, the world was once unknown to Europeans, becoming a realm inhabited by legends of sea monsters and fantastic civilizations. Cabo de São Vicente still makes you feel these fantasies are more than realistic. Even on a bright sunny day, the sea is forbidding and the wind howls at you, while on a gloomy day you peer into the abyss. Just 3 miles west of Cabo de São Vicente at the base of the Ponta de Sagres lies Sagres, a pleasant little town of small villas and apartments. For the most part, these are summer homes, many owned by Germans and British, judging from the flags flying. It was here in 1410 that Prince Henry the Navigator founded a school for navigators. If Cabo de São Vicente is where the Earth ended for the Europeans, Ponta de Sagres became the place where the world began.

Prince Henry was the second son of Portuguese King John I. As a member of the royal class, he had the means to finance his ambitions. Those who attended his school included Vasco da Gama, who made the first voyage from Europe to India, and Magellan, whose expedition first circumnavigated the globe. Columbus was once shipwrecked and rescued off the coast, subsequently learning many of his later nautical skills in Portugal. This school gave rise to the most extraordinary alumni association imaginable.

It is odd to be thinking of Europe's legacy while sitting here in Portugal. Only the dead leave legacies, and Europe is not dead. Yet something in it has died. The swagger and confidence of a great civilization is simply not there, at least not on the European peninsula. Instead, there is caution and fear.

There is a great deal of discussion about Europe's economic crisis and finding a way to return to the lost promise of the European Union. But what was that promise? It was a promise of comfort and security and what they called "soft power," which is power without taking risks or making anyone dislike you.

The Portuguese Empire, culpable of countless atrocities which were no different than what everyone else was doing, "was the longest-lived of the modern European colonial empires, spanning almost 600 years, from the capture of Ceuta in 1415 to the handover of Macau in 1999 and granting of sovereignty to East Timor in 2002." To bring perspective to the topic, consider that Portugal is slightly smaller than Indiana and has few resources, while it managed to establish a presence in almost every continent.

Today there's little that resembles the tenacity and vision of Henry the Navigator. What we have, left, right and center, and politically speaking, are certifiable lazy idiots and plenty of whiners that don't have the guts to explore, but carry loud, yet empty voices constantly attempting to protect a culture of entitlement. Then the political pettiness carried on by the mentally deficient, disguised as intellectuals, adds fuel to the fire without adding solutions. Why no solutions? Because it takes work and dedication, and their skills end where their mouths begin! Without a doubt, the economic damage is done and if people think that the present European condition is painful, wait until the future starts to unfold. But you can either sit on your ass, or acknowledge the errors of the last few decades and set sail into the unknown like the men of centuries past (many women would have done it if allowed), and rediscover yourselves. As it stands, you're only spoiled brats that want something for nothing.

Now French president François Hollande wants to be the smartest person in the room, and called "for a united 'economic government' in the Eurozone, with its own full-time president, budget and harmonized tax system." Yes, we all agree, political union before monetary union. Duh! But it's too late, poupée, imbécile, or whatever works.

In keeping this week on a different tone, I must add another political point because it will affect markets. Benghazi, IRS, and DOJ! Three is a charm! This is more than a coincidence, and while I do not presume that Obama directly ordered any of the above unless the facts dictate otherwise, it's a reflection of the culture, and the implied approval of any tactics to defeat political opponents reins supreme. What is appalling is that for a President that projects himself as being in charge, he certainly does not know much what transpires around him. Are you sure you live in the White House? And when Jon Stewart goes out of his way to deliver a joke that literally calls the President a liar, there's a problem. Bob Woodward, a fair and pleasant man that I met two decades ago and that has the White House's back far more often than not, didn't go as far as explicitly comparing the current scandals to Watergate. But he updated his opinion on Benghazi due to recent disclosures, placing the issue far closer to Watergate than he did only six months ago.

The incident with the Associated Press, an organization that is largely behind the administration's policies, is not a surprise, and I bet that it has noting to do with leaks that compromise national security. But it has now awaken all reporters across the spectrum, because they just realized that the love affair will be terminated when they step out of bounds, and the usual chocolate covered strawberries given in exchange for looking the other way will be replaced by Taser shocks to get them back in line. Having an ideological belief is everyone's right, but when ideology interferes with journalism, also known as the pure gathering of facts, the professional becomes a fraud regardless of the political side taken. Jake Tapper, formerly with ABC News and now with CNN, brought the behavioral issue to light when Fox News was attacked, but love is blind... well, not quite when the loyal media is the target. Can you hear the kettle starting to whistle as the water reaches a boil? Like I stated last week, watch out, this sucker may be going down!

Perfection continues, and a different pattern is evolving. All indices are positive, while the dollar continues to gain. That's the difference! Where a high dollar is detrimental to large caps with an international presence, it is no longer holding equities back and the greenback is now rising in tandem with the stock market. The dollar is positive short and long-term, while the euro continues to sink toward $1.2750 and is negative short and long-term. The yen doesn't appear to find a bottom and has embraced its trip south. WTI and Brent oil are short-term positive and negative respectively, with their long-term trends holding neutral and negative. The spread widened to $8.41. Gold continued to head toward $1,350 with the immediate hard bottom about $200 below from here, and silver simply going along for the ride. Copper is short-term neutral and long-term negative, holding hope for real growth in the U.S. The 10-year Treasury rate rose to 1.95% from 1.90%. The 10-year note and the 30-year are now short and long-term negative. Next week we'll get U.S. housing data, durable goods, FOMC meeting minutes, and Bernanke's story before the Joint Economic Committee. In addition, we'll get another EU Economic Summit, and flash PMI numbers will come in.

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Retail sales increased 0.1%, and without gasoline sales rose 0.7%. March decline was revised down to -0.5%, and February was revised up to 1.1%. Business inventories were unchanged in March, while sales dropped 1.1%. Import prices declined 0.5% and export prices decreased 0.7%. CPI dropped 0.4% in April, the largest decline in over 4 years, with the core rate rising 0.1%. PPI dropped 0.7%, the largest decline in 3 years, and continuing to set the deflationary stage.

The Mortgage Bankers Association's mortgage application activity index decreased 7.3%. Refinancing decreased 8.0%, and home purchases decreased 4.0%. Freddie Mac's average 30-year mortgage rose to 3.51% from 3.42%, and the 15-year increased to 2.69% from 2.61%. Jobless claims increased 32,000 to 360,000, and the 4-week moving average increased 1,250 to 339,250. The number for seasonally adjusted insured unemployment decreased 4,000 to 3,004,000.

Housing starts plunged 16.5% in April to an annual rate of 853,000 units. Building permits jumped 14.3% to an annual rate of 1.02 million. The National Association of Home Builders/Wells Fargo Housing Market Index (HMI) rose to 44 in May from 41, but still negative.

Philly Fed manufacturing index declined to -5.2 in May from 1.3 in April. New orders declined from -1.0 to -7.9, and shipments dropped to -8.5 from 9.1. The current inventories index rose to 4.1 from -22.2 and employment declined 2 points to -8.7. The Federal Reserve Bank of New York's general economic index declined to -1.4 this month from 3.1 in April. Industrial production declined 0.5%, with manufacturing dropping 0.4%. Capacity utilization declined to 77.8% from 78.3%.

Industrial production in the Eurozone rose 1.0% in March, although on an annual basis production decreased 1.7%. Eurozone's GDP contracted 0.2% during Q1-2013, solidifying the recession and marking the longest recession (six quarters) in almost 20 years. France's GDP declined 0.2% and the recession is in, while Germany expanded by a meager 0.1%. Italy's GDP, the other major partner, dropped 0.5%.

CPI in the Eurozone was tame, registering 1.2% in April on an annual basis, and markedly down from 1.7% in February. Germany's CPI came in at 1.2% and wholesale prices declined 0.4%. France's CPI was up 0.7% on an annual basis. The ZEW Economic Sentiment for Germany rose slightly to 36.4 from 36.3. The broader ZEW Economic Sentiment for Europe increased to 27.6 from 24.9. Eurozone's trade balance registered a €22.9 billion surplus, with exports rising 2.8% and imports declining 1.0%. Italy had a trade surplus of €3.2 billion, but exports dropped 6.0% and imports plunged 10.6%.

On an annual basis, China's industrial output increased 9.3% in April, and retail sales rose 12.8%. Fixed-asset investment increased 20.6%. Japanese Preliminary machine tool orders dropped 24.1% on an annual basis, accelerating from the previous month's decline of 21.5%. Japan's core private-sector machinery orders, jumped 14.2% in March, although there were temporary large orders that will not repeat. Japan's GDP advanced 0.9%, or a 3.5% annual rate, although capital expenditures declined 0.7%.

After a very long wait, one can now buy one yen with one penny and get change back, although headlines prefer to use ¥100 to $1. The euro had been flat between $1.30 and $1.32 for about one month, and then broke below the range on Friday, with the dollar becoming the fiat paper of choice.

There's a murmur in European political circles, and the political saviors of yesteryear are finding that talking and doing are unrelated, and while Europe's condition continues to deteriorate, the people are getting fed up with the fiscal tactics. Yet, the mentality is well captured by the following quote, showing that "entitlement" is what the population grew up with.

Now we are all very disappointed. All the promises - especially to stop companies laying off workers - have not been met.

Short of a dictatorship, how can any government stop layoffs in the private sector? Then we have the bright minds of yesteryear dimming right before our eyes, and when a select few told them that they were certified idiots by pursuing the euro project, they charged forward anyway. Now they have become turncoats, shamelessly seeking redemption, and Mr Lafontaine said he backed EMU but no longer believes it is sustainable. Seriously?

Oskar Lafontaine, the German finance minister who launched the euro, has called for a break-up of the single currency to let southern Europe recover, warning that the current course is "leading to disaster".

Then the never invisible IMF, and it should be, advanced through Christine Lagarde that "for European banking union to succeed, all EU member countries need to be in agreement," referring to the banking union. Good luck Christine! Meanwhile, the so called banking union must contend with facts like "bad loans at Italian banks rose by 21.7 percent in March compared with a growth rate of 18.6 percent in February." However reports surfaced that "the European Central Bank could soon be buying bad loans from struggling southern European nations in an effort to spur lending to businesses… to allow banks to pass on some of the credit risk to other investors." as I continue to state, there's no free lunch and someone is always on the hook.

Now that the flood is in, everyone is reaching for sand bags which are useless when the water has settled. Austerity continues to be the culprit of the day, and "French Finance Minister Pierre Moscovici declared the era of austerity over after his German counterpart offered flexibility on deficit cutting amid renewed bickering between Europe's two biggest economies," while Paul Krugman issued a "call to arms against austerity." Sadly, Krugman doesn't get it!

We already had the Cyprus experience and the possibility that Spain will follow in its foot steps is highlighted in the article "Spain is officially insolvent: get your money out while you still can."

Spain is holding off further recapitalization of its banks in anticipation of the arrival of Europe's banking union, which it hopes will do the job instead. But if the Cypriot precedent is anything to go by, a heavy price will be demanded by way of recompense. Bank creditors will be widely bailed in. Confiscation of deposits looks all too possible.

As economic weakness spreads to other parts of the world, Australia's Federal Treasury "downgraded its economic growth forecast for this year and next by a quarter of a percentage point, predicting a slowdown that would dent tax revenue and make it even harder to deliver a budget surplus," while suspicious economic data pours out of China. Then the Reserve Bank of Australia reduced interest rates by 0.25% to 2.75%, and while the ECB and India had already made their moves, South Korea followed suit by lowering rates by 0.25% to 2.50%.

I mentioned North Korea in the article "China's 15 Minutes Of Fame Are Up" and advanced that "although not much is said about it, politics are no longer the driver, but rather economics, and the heavy dependence on exports to developed markets has forced China to revisit its relationship with its much cherished neighbor." Interestingly, a report this week indicated that "The Foreign Trade Bank of North Korea, the country's main foreign-exchange bank, was notified that its account was closed, Beijing-based Bank of China said in a brief statement, without offering any details." Without a doubt, economic pressure is on!

A quick political point. The Benghazi hearings could turn out to be much about nothing, some have said, but that is not my impression. The strong possibility exists that Congressional democrats will run for the hills as the story continues to unfold, and in addition to a weak economy, we'll have a political crisis in our hands that will paralyze the administration. Fox News has been the engineer driving a train without media passengers, but ABC News just jumped on board. Watch out! This sucker may be going down! Nothing may ever be proven, but to think that all the editing was done without authorization from the top, is extremely naïve. The sad aspect of this story is that if the administration had been truthful about the attack, even with the security shortcomings, the people would have rallied around the President, because we cannot guard against every possible threat. But intelligence is never abundant in political circles.

We're humming along with all indices in positive territory, short and long-term, and even a slight and healthy pullback is being denied. It's too perfect! The dollar turned positive short and long-term and the euro broke the $1.30 level, turning negative all around. The yen tried to make another comeback but plunged on Friday, retaining its short and long term negative trends intact. One aspect that is being closely watched is whether the dollar and equities will start rising and falling in tandem, which would be due to foreigners pilling onto, and out of, stocks, especially since a high dollar is detrimental to every Dow component's earnings. Short-term, WTI and Brent oil are positive and neutral respectively, and WTI is neutral long-term, with Brent still negative. The spread narrowed further to $7.09 from last week's $8.56, and before long WTI will be selling at a premium to Brent, again. Gold broke down on Friday, and while its long-term negative trend hasn't changed since December 2012, its short-term trend turned negative from neutral. Silver simply follows along, and it's getting to the point that isn't even worth talking about it. Copper managed to stay positive short-term but below $3.50, while the long-term is still negative. The 10-year Treasury rate jumped to 1.90% from 1.75%. The 10-year note and the 30-year are now short-term negative and long-term neutral. Next week we'll get U.S. retail sales, CPI, PPI, housing data and consumer sentiment. Europe will give us preliminary GDP and CPI, with China adding fixed asset investment and industrial production.

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The IBD/TIPP Economic Optimism Index decreased in May to 45.1 from 46.2 in April, and is now slightly above the 44.4 reading in December of 2007 and when the economy entered the recession. Consumer credit increased $7.97 billion in March after rising $18.6 billion the previous month. The slowdown was due to a reduction in credit card debt, while student loans keep charging forward. Wholesale sales dropped 1.6%, the largest drop since 2009, while inventories rose 0.4%. The inventories/sales ratio was 1.21, and higher than 1.17 one year ago, indicating plenty of stuff to move off the shelves.

The Mortgage Bankers Association's mortgage application activity index increased 7.0%. Refinancing increased 8.0%, and home purchases increased 2.0%. Freddie Mac's average 30-year mortgage rose to 3.41% from 3.35%, and the 15-year increased to 2.61% from 2.56%. Jobless claims decreased 4,000 to 323,000, and the 4-week moving average decreased 6,250 to 336,750. The number for seasonally adjusted insured unemployment decreased 27,000 to 3,005,000.

The Mortgage Bankers Association stated that "the delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 7.25 percent of all loans outstanding at the end of the first quarter of 2013, an increase of 16 basis points from the previous quarter, but down 15 basis points from one year ago." More in a few weeks on the distorted housing market. The Treasury budget delivered a surplus of $112.9 billion in April because "the impact of large individual tax deposits resulted in budget receipts of $406.7 billion," or $90 billion more than in April of 2012.

Eurozone services PMI rose to 47.0 in April from 46.6, slowing down the decline, with Spain's PMI dropping to 44.4 from 45.3, and Italian PMI rising to 47.0 from 45.5. Eurozone retail sales declined 0.1% in March on a monthly basis, and dropped 2.4% year-over-year. German factory orders rose 2.2% in March, after a February increase of 2.2%, and industrial production rose 1.2%. France manufacturing output decreased 1.0% in March, and industrial production declined 0.9%. UK manufacturing production rose 1.1% and industrial production increased 0.7%. Italian industrial production declined 0.8% in March, after a decline of 0.9% in February.

German trade balance registered a surplus of €18.8 billion, while exports decreased 4.2% and imports declined 6.9%. The UK trade balance had a deficit of £3.1 billion, with exports increasing 3.5% and imports rising 2.6%. UK Retail sales dropped 2.2% in April on an annual basis, and Spanish unemployment got some relief, with the jobless ranks decreasing by 46,500 persons.

The HSBC services PMI for China declined to 51.1 in April from 54.3 in March. New orders was the slowest in over 1-1/2 years, and employment dropped for the first time since 2009. While everyone is suspicious of the data, China's trade surplus was $18.2 billion, with imports rising 16.8% and exports jumping 14.7%. China's CPI rose to 2.4% on an annual basis, while the PPI dropped 2.6% showing ongoing overcapacity. China's new loans registered 729 billion yuan in April, with the money supply rising 16.1% from one year ago. Japan's current account surplus declined 4.3% in March, with the total standing at ¥1.25 trillion ($12.5 billion).

As austerity continues to provide social discomfort, with Greece approving another 15,000 job cuts to satisfy the Troika, there is growing sentiment against the strategy of cutting spending. The problem here is that the wrong decisions were made in the past, akin to a pizza parlor, which can operate efficiently with 5 employees, hiring 25 people because all the family members needed a job. At some point the arrangement becomes unsustainable, and as hard as it is, someone will have to suffer the consequences. The new Italian prime minister already spoke.

Enrico Letta, Italy's new centre-left prime minister leading an unprecedented grand coalition, cancelled planned tax rises worth up to €6bn in a clear break with the policies of his technocrat predecessors.

Slovakia's prime minister, Robert Fico, also joined the parade, and soon enough others will follow, despite the fact that someone has to fund the spending and service the debt. Not easy, I know!

Slovakia's prime minister has called for an end to "completely counter-productive" austerity policies and for governments to focus instead on reigniting growth, as his small but very open economy is pummeled by the slump in the Eurozone.

While the austerity debate will gather steam, the European Commission reminded everyone that conditions on the ground are getting worse, with "EU economies to breach deficit limits as economic picture darkens."

Three of the Eurozone's five largest economies will bust through EU-mandated deficit limits this year as the bloc's recession continues to deepen, according to highly anticipated European Commission forecasts published on Friday. In addition to the anticipated breaches by France, Spain and the Netherlands, the currency union's third-largest economy, Italy, will come within a hair's breadth of missing the limit of 3 per cent of economic output, with a 2013 deficit forecasted at 2.9 per cent.

However, one way to collect much needed tax revenue is to target the underground economy, but in addition to those that do not play by the rules, underground economies flourish when taxation is high, and that is only one reason why Socialism is self defeating.

The Fed delivered a mixed message, stating that "it could increase or decrease bond buying" depending on economic data. Let's not forget that the markets have been fueled by the Fed, and pulling the rug from under the markets' feet driven by the false assumption that the economy is on good footing, will have dire consequences. However, with unemployment down to 7.5%, or 12.0% as we measure it, the incentive for more QE is disappearing.

But the surprise came courtesy of the European Central Bank (ECB), when in addition to the expected cut of 25 basis points, the ECB's chief, Mario Draghi, confided that negative rates are an option. What exactly is the ECB trying to accomplish? Growth or an incentive for much needed capital to leave the Eurozone? It cannot be the former, and the export business requires that willing buyers at the other end actually exist, which is not the case! Low rates, especially close to zero, reinforce the public's perception that the economy is not in good shape, and has a negative influence on sentiment. It never works, yet central banks insist on doing it, only because they're clueless. Lastly, margin debt has aided the stock market, and the current number of almost $380 billion hasn't quite surpassed the previous high that took place in July of 2007. We all know what happened after.

Finally the Dow broke 15,000 and the S&P 500 closed above 1,600, despite negative data for two days in a row, not to mention all week. We're now in pleasure town while surprises lurk in the shadows, and the bait has been set for the last humans to join the party. Long-term positive trends are now in place for all indices, and the short-term is positive all around, yet weak. The dollar bounced back but kept its short-term negative trend, while its long-term is neutral. The euro has been attached to the $1.31 mark and despite wild swings, it is neutral all around. The yen tried to mount a comeback and is still negative short and long-term. WTI and Brent oil are now long-term neutral and negative respectively, while the short-term has WTI in positive territory, and Brent is weaker and neutral. The spread has narrowed further to $8.56 from to $9.85 last week. Gold stayed within a $50 band, and is short-term neutral and long-term negative. Silver is weaker, and is still negative short and long-term. Copper jumped 20 cents on Friday, turning positive short-term but keeping its well defined long-term negative trend. The 10-year Treasury rate increased to 1.75% from 1.66%. The 10-year note and the 30-year are now short-term neutral and negative respectively, but both still hold their long-term positive trends. Next week we'll get U.S. consumer credit, and Fed speeches at the end of the week. The G7 meets again, several European service PMIs will be released, and China's CPI, PPI and new loans will be delivered.

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Consumer spending increased 0.2% in March, and personal income rose 0.2%, while the savings rate was unchanged at 2.7%. PCE inflation was unchanged, with the core rate rising only 1.1% on an annual basis. Not only did spending slow, but so did income growth! The Employment Cost Index rose 0.3% in Q1-2013, with benefits increasing 0.1%, the slowest rate in 14 years.

The Mortgage Bankers Association's mortgage application activity index increased 1.8%. Refinancing increased 3.0%, and home purchases decreased 1.4%. Freddie Mac's average 30-year mortgage declined again to 3.35% from 3.40%, and the 15-year decreased to 2.56% from 2.61%, a new record low. Jobless claims decreased 18,000 to 324,000, and the 4-week moving average decreased 16,000 to 342,250. The number for seasonally adjusted insured unemployment increased 12,000 to 3,073,500.

Pending sales of homes increased 1.5% in March, and February was revised down to a loss of 1.0% vs. the initial decrease of 0.4%. Hardly a strong showing. The S&P/Case-Shiller 20-city composite index increased rose 0.3% in February, and registered an increase of 9.3% on an annual basis. An improvement, but we're still 30% below the peak. The Conference Board's consumer confidence index increased to 68.1 from 61.9 in March, which is overall extremely weak considering market performance.

Chicago PMI turned negative for only the second time since October 2009, declining to 49 from 52.4. The final Markit U.S. Manufacturing Purchasing Managers' Index (PMI) declined to 52.1 in April from 54.6 in March, the weakest in 6 months. Meanwhile, the Institute for Supply Management's PMI decreased to 50.7 from 51.3, and there is consistency across the board. Furthermore, the ISM's service PMI decreased in April to 53.1 from 54.4. Factory orders dropped 4.0% after a downward revised 1.9% gain the previous month. Construction spending declined 1.7% in March, with residential rising 0.7%, but non-residential dropping 2.9%. February's number was revised up to 1.5% vs. 1.2%. Total vehicle sales dropped to an annual rate of 14.9 million units from 15.3 million.

The trade deficit sunk to $38.8 billion from $43.6 billion and showing the weakness that keeps spreading. The unemployment rate declined to 7.5% from 7.6%, while 165,000 new jobs were created. March and February were revised up for a net gain of 114,000 jobs, and still extremely weak. Productivity during Q1-2013 increased 0.7% after a 1.7% decline during Q4-2012. Labor costs increased only 0.5%, slowing down considerably from a 4.4% gain in Q4-2012.

Eurozone retail PMI, as measured by Markit, increased to 44.2 from 43.7, staying negative for 18 months running. Eurozone's final PMI remained negative and rose slightly to 46.7 from 46.5, while Spanish PMI rose 0.5 to 44.7 and Italian PMI increased 1 point to 45.5.

Eurozone inflation dropped to 1.2% from 1.7%, and the lowest in 3 years. Germany's CPI is on track to rise only 1.2% annually, while a decrease of 0.5% took place in March. Eurozone PPI declined 0.2%, and registered a 0.7% gain on an annual basis. Unemployment hit a new record of 12.1% with no end in sight. Italian unemployment was unchanged after the previous month was revised down to 11.5% from 11.6%, while in Germany the jobless rate held at 6.9% with 4,000 people joining the unemployed ranks. German retail sales dropped 1.4% on an annual basis, and French household consumption rose 1.3% in March, although a decline of 0.4% was registered for Q1-2013.

Japan's PMI increased to 51.1 in April from 50.4, and unemployment declined to 4.1% from 4.3%. Preliminary industrial production was up 0.6%, and household spending jumped 5.2% on an annual basis, while retail sales registered the third consecutive drop, declining 0.3%. China's official PMI declined to 50.6 from 50.9, with exports going negative. The HSBC Purchasing Managers' Index (PMI) decreased to 50.4 from 51.6 and China's April Non-Manufacturing PMI dropped to 54.5 from 55.6. The Australian PMI, a country heavily dependent on China, slumped to 36.7 from 44.4, the lowest reading since the depth of the crisis in 2009. In addition, Taiwan's GDP for Q1-2013 increased only 1.54% on an annual basis, far short from the government estimate of 3.26%.