By Vuyani Ndaba
JOHANNESBURG, March 29 (Reuters) - South Africa's blue-chip index will climb a further 11 percent to end this year at a record high, lifted by improving prospects for the global economy, a Reuters poll showed on Thursday.
The Johannesburg Top-40 index .JTOPI is expected to close out the year at 33,000 points, up 11 percent from Wednesday's close of 29,715.14, according to a poll of 10 traders, analysts and portfolio managers taken over the past week.
After a flat 2011, the index is up over 4 percent so far this year - and hit three-year highs in February - putting it within shooting distance of a record high of 31,393.10. The broader All-Share index .JALSH briefly touched a record high of 34,601.27 this month.
"Industrial shares will benefit out of stronger world economies especially the recovering of the U.S. economy and the low interest rate environment," said Rigardt Maartens, a portfolio manager at PSG Konsult.
Heavyweights in the index such as BHP Billiton BILJ.J and Anglo American AGLJ.J AAL.L could benefit from global demand for commodities, as well as the perception they have lagged behind the broader index.
Both BHP and Anglo are little changed so far this year.
GOLD GLOOM
Though Africa's biggest economy gained from its mainstay gold mining sector and safe-haven gold buying since the 2008 crisis erupted, in 2012 investors will likely be betting against assets such as gold, which would weigh heavily on Johannesburg's gold miners.
"With economies recovering, the need for gold as a volatility and safety hedge decreases," Maartens said.
South African stocks shed just half a percent in 2011, even as other emerging markets heavyweights such as Brazil, Russia, India and China all fell around 20 percent. [nL5E8DN2TZ]
The financials sector, dominated by Standard Bank SBKJ.J, Absa ASAJ.J, FirstRand FSRJ.J and Nedbank NEDJ.J, may underperform the index after a strong start in the first quarter.
"Financials should underperform due to lacklustre capital market performance, rising domestic interest rates in the fourth quarter and persistently high inflation cutting into asset backed credit growth," said Mike Haworth at Applied Capital Insights.
"Real household disposable income growth to slow in 2012 and National Credit Act constrains easy credit provision," he added.
All four banks have posted double-digit percentage gains so far this year, with Nedbank rising nearly 19 percent. But analysts see little room for further advancement for banks, citing heady valuations.
The four are trading at around twice their book value - making them more expensive than major global banks such as HSBC HSBA.L and Goldman Sachs GS.N.
Steven
Thursday, 29 March 2012
Wednesday, 28 March 2012
Asian Stocks Retreat as Oil, Aussie Slide
Ref : Bloomberg
"March 28 (Bloomberg) -- Asian stocks slid the most in a week and oil fell as reports showed corporate earnings are worsening in China and Federal Reserve Chairman Ben S. Bernanke said U.S. unemployment remains too high. The yen strengthened.
The MSCI Asia Pacific Index slid 0.5 percent as of 1:47 p.m. in Tokyo, after a 1.7 percent advance yesterday. Japan’s Topix Index dropped 1 percent as 78 percent of its companies traded without the right to receive a dividend. Standard & Poor’s 500 Index futures were little changed and the yen rose 0.3 percent to 82.93 per dollar. Oil fell 0.6 percent in New York and copper lost 0.7 percent.
Societe Generale SA cut its earnings growth forecast for the Hang Seng China Enterprises Index this year to zero from 5 percent, while Gome Electrical Appliances Holding Ltd. and Jiangxi Copper Company Ltd. reported falling profits. The recovery in the U.S. economy isn’t assured and policy makers don’t rule out taking further steps to boost growth, Bernanke told ABC News yesterday. Data later today may show U.S. factories received more orders for durable goods in February.
“Investors had expected earnings to be weak but they are still below expectations,” said Larry Wan, the Beijing-based head of investment at Union Life Asset Management Co., which manages the equivalent of $2.2 billion. “Shares have already risen quite a bit this year on monetary easing expectations.”
Jiangxi, Gome
Hong Kong’s Hang Seng Index slid 1 percent, the Shanghai Composite Index retreated 1.5 percent and South Korea’s Kospi Index lost 0.5 percent. The Nikkei 225 Stock Average retreated 0.7 percent following its biggest gain since September. The MSCI Asia Pacific Index has rallied 12 percent this year after falling 17 percent in 2011.
Jiangxi Copper fell 1.9 percent in Hong Kong. China’s biggest producer of the metal recorded an 18 percent decline in second-half profit as slower economic growth curbed demand. Gome, China’s second-biggest electronics retailer, lost 17 percent after 2011 profit fell 6 percent, missing analyst estimates.
Chinese Premier Wen Jiabao announced this month an economic growth target of 7.5 percent for 2012, down from an annual 8 percent over the past seven years.
Sharp Corp. shares were bid at their daily limit in Tokyo after Foxconn Technology Group and founder Terry Gou agreed to invest 133 billion yen ($1.6 billion) in the TV maker and its display unit to secure flat panels.
Japanese Stocks
Japanese stocks fell today after the Nikkei 225 yesterday erased losses since the country’s record earthquake. A 7.2 percent drop in the yen and $241 billion of reconstruction spending have pushed the index up 20 percent this year, the second-best performance among major benchmark indexes in the developed world.
The yen gained versus all of its major counterparts as investors flocked to safe-haven assets amid a decline in Asian equities. The currency also strengthened on speculation Japanese companies will repatriate overseas earnings before the March 31 end of the fiscal year.
The euro climbed 0.1 percent to $1.3331. Italian Prime Minister Mario Monti said in a speech in Tokyo today that the euro area crisis is “almost over.”
Brent oil for May settlement slid 0.5 percent to $124.90 a barrel on the London-based ICE Futures Europe exchange. U.S. crude supplies rose 3.6 million barrels last week, data from the industry-funded American Petroleum Institute show. An Energy Department report today may show inventories gained 2.6 million barrels, according to the median estimate in a Bloomberg News survey of analysts.
Natural Gas, Copper
Natural gas dropped 1 percent $2.185 per million British thermal units in New York. The contract for April delivery touched the lowest level in more than a decade yesterday on concern that a U.S. supply surplus will expand as the peak- demand season for the heating fuel draws to an end.
Copper dropped for first time in four days amid signs that demand growth in China, the world’s biggest user, is slowing. Aluminum and zinc fell at least 0.3 percent.
“Copper is still not free at all from the concern about a China slowdown,” Lelia Kim, a metals trader at Tong Yang Securities Inc. in Seoul, said today by telephone. “The tone for the broader metals market remains pretty bearish.”
Singapore is set to sell 30-year bonds for the first time today, extending the maturity of debt it will have on offer to the longest on record. The city-state will auction S$2.1 billion ($1.7 billion) of notes maturing in April 2042.
To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net ; Weiyi Lim in Singapore at wlim26@bloomberg.net
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
"March 28 (Bloomberg) -- Asian stocks slid the most in a week and oil fell as reports showed corporate earnings are worsening in China and Federal Reserve Chairman Ben S. Bernanke said U.S. unemployment remains too high. The yen strengthened.
The MSCI Asia Pacific Index slid 0.5 percent as of 1:47 p.m. in Tokyo, after a 1.7 percent advance yesterday. Japan’s Topix Index dropped 1 percent as 78 percent of its companies traded without the right to receive a dividend. Standard & Poor’s 500 Index futures were little changed and the yen rose 0.3 percent to 82.93 per dollar. Oil fell 0.6 percent in New York and copper lost 0.7 percent.
Societe Generale SA cut its earnings growth forecast for the Hang Seng China Enterprises Index this year to zero from 5 percent, while Gome Electrical Appliances Holding Ltd. and Jiangxi Copper Company Ltd. reported falling profits. The recovery in the U.S. economy isn’t assured and policy makers don’t rule out taking further steps to boost growth, Bernanke told ABC News yesterday. Data later today may show U.S. factories received more orders for durable goods in February.
“Investors had expected earnings to be weak but they are still below expectations,” said Larry Wan, the Beijing-based head of investment at Union Life Asset Management Co., which manages the equivalent of $2.2 billion. “Shares have already risen quite a bit this year on monetary easing expectations.”
Jiangxi, Gome
Hong Kong’s Hang Seng Index slid 1 percent, the Shanghai Composite Index retreated 1.5 percent and South Korea’s Kospi Index lost 0.5 percent. The Nikkei 225 Stock Average retreated 0.7 percent following its biggest gain since September. The MSCI Asia Pacific Index has rallied 12 percent this year after falling 17 percent in 2011.
Jiangxi Copper fell 1.9 percent in Hong Kong. China’s biggest producer of the metal recorded an 18 percent decline in second-half profit as slower economic growth curbed demand. Gome, China’s second-biggest electronics retailer, lost 17 percent after 2011 profit fell 6 percent, missing analyst estimates.
Chinese Premier Wen Jiabao announced this month an economic growth target of 7.5 percent for 2012, down from an annual 8 percent over the past seven years.
Sharp Corp. shares were bid at their daily limit in Tokyo after Foxconn Technology Group and founder Terry Gou agreed to invest 133 billion yen ($1.6 billion) in the TV maker and its display unit to secure flat panels.
Japanese Stocks
Japanese stocks fell today after the Nikkei 225 yesterday erased losses since the country’s record earthquake. A 7.2 percent drop in the yen and $241 billion of reconstruction spending have pushed the index up 20 percent this year, the second-best performance among major benchmark indexes in the developed world.
The yen gained versus all of its major counterparts as investors flocked to safe-haven assets amid a decline in Asian equities. The currency also strengthened on speculation Japanese companies will repatriate overseas earnings before the March 31 end of the fiscal year.
The euro climbed 0.1 percent to $1.3331. Italian Prime Minister Mario Monti said in a speech in Tokyo today that the euro area crisis is “almost over.”
Brent oil for May settlement slid 0.5 percent to $124.90 a barrel on the London-based ICE Futures Europe exchange. U.S. crude supplies rose 3.6 million barrels last week, data from the industry-funded American Petroleum Institute show. An Energy Department report today may show inventories gained 2.6 million barrels, according to the median estimate in a Bloomberg News survey of analysts.
Natural Gas, Copper
Natural gas dropped 1 percent $2.185 per million British thermal units in New York. The contract for April delivery touched the lowest level in more than a decade yesterday on concern that a U.S. supply surplus will expand as the peak- demand season for the heating fuel draws to an end.
Copper dropped for first time in four days amid signs that demand growth in China, the world’s biggest user, is slowing. Aluminum and zinc fell at least 0.3 percent.
“Copper is still not free at all from the concern about a China slowdown,” Lelia Kim, a metals trader at Tong Yang Securities Inc. in Seoul, said today by telephone. “The tone for the broader metals market remains pretty bearish.”
Singapore is set to sell 30-year bonds for the first time today, extending the maturity of debt it will have on offer to the longest on record. The city-state will auction S$2.1 billion ($1.7 billion) of notes maturing in April 2042.
To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net ; Weiyi Lim in Singapore at wlim26@bloomberg.net
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Europeans See Crisis Near End, Bernanke Warns on Recovery
REF : BLOOMBERG
"March 28 (Bloomberg) -- European leaders signaled rising confidence that their region’s crisis is near an end, while Federal Reserve Chairman Ben S. Bernanke warned that a U.S. recovery isn’t assured.
The euro area’s woes are “almost over” after a slow initial response by policy makers, Italian Prime Minister Mario Monti said in Tokyo today. German Chancellor Angela Merkel said yesterday that the crisis is ebbing and her country’s borrowing costs will probably rise as its status as a haven wanes.
Bernanke, who cited “green shoots” of recovery in the U.S. in March 2009 only to see his nation’s jobless rate climb to 10 percent seven months later, said in remarks published yesterday “it’s far too early to declare victory.” The jobless rate remains too high and policy makers don’t rule out further options to boost growth, he said in a transcript of an interview with ABC News anchor Diane Sawyer provided by the network.
“Bernanke is right to be more cautious,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. “Most of the investors think the situation will not deteriorate but we are still far from saying the crisis is over.”
Bernanke’s remarks contrasted with a series of declarations by Monti during a visit to Japan, with the Italian leader saying a solution to Greece’s challenges is almost accomplished, Spain is employing discipline and Italian actions have helped stop deterioration in Europe’s woes.
‘Almost Over’
“The euro zone has gone through a huge crisis,” Monti said in a speech today. “I believe that this crisis is now almost over.”
Stocks have risen this year on optimism the global recovery will be sustained, as Europe’s debt turmoil eased after the European Central Bank’s liquidity support reopened financial markets and European Union leaders sealed a second Greek bailout package. The MSCI Asia Pacific Index advanced 12 percent in 2012 through yesterday, headed for the biggest quarterly gain since the third quarter in 2009.
While the best six months of job growth since 2006 have boosted U.S. consumer confidence to near a one-year high, Fed officials have said more monetary accommodation may be needed to fuel the economic expansion.
World Recovering
German Finance Minister Wolfgang Schaeuble said yesterday that he sees no scenario under which the current euro-area rescue fund, the European Financial Stability Facility, will have to issue new bailouts in the next three months. Schaeuble and Merkel spoke to lawmakers from their Christian Democratic Union, according to officials who spoke on condition of anonymity because the briefing was private.
“The world economy is recovering and though there obviously are risks, on balance we’re through the worst in Europe,” said Tim Condon, chief Asia economist at ING Financial Markets in Singapore. Bernanke may be more cautious because “the Fed has a dual mandate of inflation and unemployment and while they’re doing OK on the inflation metric, they’re failing dismally on the other,” he said.
The U.S. jobless rate is at 8.3 percent and Bernanke said in the interview that “it could still be a few more years” before unemployment returns to normal levels, and “until we get faster growth than we’ve been seeing, it is probably gonna take a while still.”
Fed Policy
The Federal Open Market Committee in a March 13 meeting decided to leave policy unchanged and keep the main interest rate close to zero at least through late 2014.
Policy makers including Boston Fed President Eric Rosengren and Chicago Fed President Charles Evans have argued for more monetary accommodation if unemployment remains high. In contrast, James Bullard, president of the St. Louis Fed, and Atlanta’s Dennis Lockhart said last week that the improving U.S. economy is reducing the need for additional easing.
Bullard said today in Beijing that while the chance of a major financial meltdown in Europe is going down, risks haven’t completely disappeared. The U.S. economy is looking better this year than last year, and inflation is moderating while remaining a little above target, Bullard said to reporters.
Euro-area finance ministers are weighing their options on the EFSF, which manages rescue programs for Ireland, Portugal and Greece, and its permanent successor, the European Stability Mechanism. They may decide to increase their crisis fund to a total capacity of 692 billion euros ($922 billion) from a current limit of 500 billion euros when they meet March 30, a euro-area official said.
Bank of Japan board member Ryuzo Miyao warned today that Europe’s fiscal woes aren’t over and continue to warrant close attention.
“Europe’s debt problems haven’t been resolved,” Miyao said at a speech in Chiba, outside of Tokyo. “We need to continue to pay close attention to the risk that economic stagnation will become chronic and prolonged.”
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
"March 28 (Bloomberg) -- European leaders signaled rising confidence that their region’s crisis is near an end, while Federal Reserve Chairman Ben S. Bernanke warned that a U.S. recovery isn’t assured.
The euro area’s woes are “almost over” after a slow initial response by policy makers, Italian Prime Minister Mario Monti said in Tokyo today. German Chancellor Angela Merkel said yesterday that the crisis is ebbing and her country’s borrowing costs will probably rise as its status as a haven wanes.
Bernanke, who cited “green shoots” of recovery in the U.S. in March 2009 only to see his nation’s jobless rate climb to 10 percent seven months later, said in remarks published yesterday “it’s far too early to declare victory.” The jobless rate remains too high and policy makers don’t rule out further options to boost growth, he said in a transcript of an interview with ABC News anchor Diane Sawyer provided by the network.
“Bernanke is right to be more cautious,” said Tohru Nishihama, an economist at Dai-ichi Life Research Institute Inc. in Tokyo. “Most of the investors think the situation will not deteriorate but we are still far from saying the crisis is over.”
Bernanke’s remarks contrasted with a series of declarations by Monti during a visit to Japan, with the Italian leader saying a solution to Greece’s challenges is almost accomplished, Spain is employing discipline and Italian actions have helped stop deterioration in Europe’s woes.
‘Almost Over’
“The euro zone has gone through a huge crisis,” Monti said in a speech today. “I believe that this crisis is now almost over.”
Stocks have risen this year on optimism the global recovery will be sustained, as Europe’s debt turmoil eased after the European Central Bank’s liquidity support reopened financial markets and European Union leaders sealed a second Greek bailout package. The MSCI Asia Pacific Index advanced 12 percent in 2012 through yesterday, headed for the biggest quarterly gain since the third quarter in 2009.
While the best six months of job growth since 2006 have boosted U.S. consumer confidence to near a one-year high, Fed officials have said more monetary accommodation may be needed to fuel the economic expansion.
World Recovering
German Finance Minister Wolfgang Schaeuble said yesterday that he sees no scenario under which the current euro-area rescue fund, the European Financial Stability Facility, will have to issue new bailouts in the next three months. Schaeuble and Merkel spoke to lawmakers from their Christian Democratic Union, according to officials who spoke on condition of anonymity because the briefing was private.
“The world economy is recovering and though there obviously are risks, on balance we’re through the worst in Europe,” said Tim Condon, chief Asia economist at ING Financial Markets in Singapore. Bernanke may be more cautious because “the Fed has a dual mandate of inflation and unemployment and while they’re doing OK on the inflation metric, they’re failing dismally on the other,” he said.
The U.S. jobless rate is at 8.3 percent and Bernanke said in the interview that “it could still be a few more years” before unemployment returns to normal levels, and “until we get faster growth than we’ve been seeing, it is probably gonna take a while still.”
Fed Policy
The Federal Open Market Committee in a March 13 meeting decided to leave policy unchanged and keep the main interest rate close to zero at least through late 2014.
Policy makers including Boston Fed President Eric Rosengren and Chicago Fed President Charles Evans have argued for more monetary accommodation if unemployment remains high. In contrast, James Bullard, president of the St. Louis Fed, and Atlanta’s Dennis Lockhart said last week that the improving U.S. economy is reducing the need for additional easing.
Bullard said today in Beijing that while the chance of a major financial meltdown in Europe is going down, risks haven’t completely disappeared. The U.S. economy is looking better this year than last year, and inflation is moderating while remaining a little above target, Bullard said to reporters.
Euro-area finance ministers are weighing their options on the EFSF, which manages rescue programs for Ireland, Portugal and Greece, and its permanent successor, the European Stability Mechanism. They may decide to increase their crisis fund to a total capacity of 692 billion euros ($922 billion) from a current limit of 500 billion euros when they meet March 30, a euro-area official said.
Bank of Japan board member Ryuzo Miyao warned today that Europe’s fiscal woes aren’t over and continue to warrant close attention.
“Europe’s debt problems haven’t been resolved,” Miyao said at a speech in Chiba, outside of Tokyo. “We need to continue to pay close attention to the risk that economic stagnation will become chronic and prolonged.”
To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Asian Stocks - 28 March 2012
Asian stocks descending overnight (MSCI Asia Pacific losing 0.5%) after reports in China showed corporate earnings are worsening and the Federal Reserve Chairman said U.S. unemployment remains too high. Data today may show U.S. factories received more orders for durable goods in February. Oil slipping 0.6% and Copper also down 0.7%. Dow closing down 0.31% after SA futures close, this was caused from heavy drops from all U.S. markets in their closing periods.
Tuesday, 27 March 2012
Soft landing in China still likely to hurt mining and motor firms
TAKE NOTE !!!
REF : Bloomberg Beijing
"THE GOOD news is that China’s government will engineer a soft landing. However, the bad news is that even a soft landing is painful for industries that have become dependent on the fastest-growing major economy as their main profit engine.
Analysts at Deutsche Bank, Nomura Holdings and Daiwa Capital Markets raised forecasts this month for China’s 2012 expansion to as high as 8.6 percent, partly on anticipation of looser monetary policy. The projections, still below last year’s 9.2 percent rate, offer little comfort for Australian mining company BHP Billiton, which sees slower steel production in China, or German vehicle manufacturer Daimler, whose Mercedes dealers in the nation are giving record discounts.
“China’s still going to be growing reasonably strongly,” said Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics who wrote the 2012 book Sustaining China’s Economic Growth after the Global Financial Crisis. Even so, “the super commodity cycle that was driven by China is moderating, and exporters that have ridden the property boom over the last four or five years face a much tougher time”.
Beijing’s curbs on property sales and his plan to tilt the economy toward consumption and away from a dependence on capital spending have reduced production of steel and cement and helped push iron ore prices down more than 20 percent from last year’s high. Nevertheless, said Tim Condon, the head of Asia research at ING Financial Markets, policymakers were ready to take any action necessary to avert a steep deceleration.
“The idea that commodities are just a one-way bet as an asset class is over,” Condon said. “My baseline view is that China will still do whatever it takes to keep growth going. If it slows too much, they will stimulate.”
Copper fell to a two-week low in New York last week after a preliminary purchasing managers’ index for China from HSBC Holdings and Markit Economics dropped to 48.1 from 49.6 in February. Readings below 50 signal contraction. Nickel and lead also erased gains for the year.
BHP Billiton and Glencore International, the Swiss-based commodities and raw materials supplier, have been roiled by the slowest expansion rate in China since the global recession ended in 2009, with shares of both down more than 20 percent from a year ago.
Concerns about China and its property market would probably weaken Australia’s and Brazil’s currencies, said Stephen Jen, the managing partner at SLJ Macro Partners in London. The Australian dollar, which traded at A$0.9554 on Friday against the US dollar, might test parity within the next few weeks, while Brazil’s real might drop as low as 2.50 reais a dollar, a level not seen since 2008, he predicted. It traded at 1.8102 on Friday.
While the Chinese currency was fixed at a record high of 6.2858 yuan a dollar yesterday, the currency has been little changed this year amid slowing export growth, after a gain of 4.7 percent last year. Pressure for appreciation had declined as China’s current account and trade surpluses had fallen over the past four years, said Louis Kuijs, an economist at the Fung Global Institute in Hong Kong.
China’s government has been trying to reverse a surge in home prices, boost consumption and move away from exports and capital spending without causing a sharp reduction in growth.
The government pared this year’s expansion target to 7.5 percent from an 8 percent goal in place since 2005, Premier Wen Jiabao said at the legislature’s annual conference this month. The Shanghai Composite index fell 2.7 percent in three days on the news.
US and European stocks fell last week on concerns about Chinese growth after the country raised fuel prices by the most in two years and BHP Billiton said the country’s steel output growth had flattened.
Debate over China’s economic direction may take centre stage next week at the Boao Forum for Asia, a three-day conference for business and political leaders modelled on the World Economic Forum in Switzerland. "
Kind Regards
Steven
Mobile :+27 83 943 1858
Facsimile : 0866 712 498
E-mail : steven@global.co.za
REF : Bloomberg Beijing
"THE GOOD news is that China’s government will engineer a soft landing. However, the bad news is that even a soft landing is painful for industries that have become dependent on the fastest-growing major economy as their main profit engine.
Analysts at Deutsche Bank, Nomura Holdings and Daiwa Capital Markets raised forecasts this month for China’s 2012 expansion to as high as 8.6 percent, partly on anticipation of looser monetary policy. The projections, still below last year’s 9.2 percent rate, offer little comfort for Australian mining company BHP Billiton, which sees slower steel production in China, or German vehicle manufacturer Daimler, whose Mercedes dealers in the nation are giving record discounts.
“China’s still going to be growing reasonably strongly,” said Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics who wrote the 2012 book Sustaining China’s Economic Growth after the Global Financial Crisis. Even so, “the super commodity cycle that was driven by China is moderating, and exporters that have ridden the property boom over the last four or five years face a much tougher time”.
Beijing’s curbs on property sales and his plan to tilt the economy toward consumption and away from a dependence on capital spending have reduced production of steel and cement and helped push iron ore prices down more than 20 percent from last year’s high. Nevertheless, said Tim Condon, the head of Asia research at ING Financial Markets, policymakers were ready to take any action necessary to avert a steep deceleration.
“The idea that commodities are just a one-way bet as an asset class is over,” Condon said. “My baseline view is that China will still do whatever it takes to keep growth going. If it slows too much, they will stimulate.”
Copper fell to a two-week low in New York last week after a preliminary purchasing managers’ index for China from HSBC Holdings and Markit Economics dropped to 48.1 from 49.6 in February. Readings below 50 signal contraction. Nickel and lead also erased gains for the year.
BHP Billiton and Glencore International, the Swiss-based commodities and raw materials supplier, have been roiled by the slowest expansion rate in China since the global recession ended in 2009, with shares of both down more than 20 percent from a year ago.
Concerns about China and its property market would probably weaken Australia’s and Brazil’s currencies, said Stephen Jen, the managing partner at SLJ Macro Partners in London. The Australian dollar, which traded at A$0.9554 on Friday against the US dollar, might test parity within the next few weeks, while Brazil’s real might drop as low as 2.50 reais a dollar, a level not seen since 2008, he predicted. It traded at 1.8102 on Friday.
While the Chinese currency was fixed at a record high of 6.2858 yuan a dollar yesterday, the currency has been little changed this year amid slowing export growth, after a gain of 4.7 percent last year. Pressure for appreciation had declined as China’s current account and trade surpluses had fallen over the past four years, said Louis Kuijs, an economist at the Fung Global Institute in Hong Kong.
China’s government has been trying to reverse a surge in home prices, boost consumption and move away from exports and capital spending without causing a sharp reduction in growth.
The government pared this year’s expansion target to 7.5 percent from an 8 percent goal in place since 2005, Premier Wen Jiabao said at the legislature’s annual conference this month. The Shanghai Composite index fell 2.7 percent in three days on the news.
US and European stocks fell last week on concerns about Chinese growth after the country raised fuel prices by the most in two years and BHP Billiton said the country’s steel output growth had flattened.
Debate over China’s economic direction may take centre stage next week at the Boao Forum for Asia, a three-day conference for business and political leaders modelled on the World Economic Forum in Switzerland. "
Kind Regards
Steven
Mobile :+27 83 943 1858
Facsimile : 0866 712 498
E-mail : steven@global.co.za
Friday, 23 March 2012
Japan Stock Futures Drop as Europe Manufacturing Shrinks
Another sign :
"March 23 (Bloomberg) -- Asian stocks dropped after manufacturing contracted more than economists forecast in the euro-area, dimming the outlook for global economic growth and Asian exports.
Nintendo Co., a manufacturer of game consoles that gets a third of its sales in Europe, slid 2.5 percent in Osaka. BHP Billiton Ltd., Australia’s biggest oil producer and the world’s largest mining company, lost 1.4 percent in Sydney after metal and oil prices fell yesterday. QR National, an Australian rail freight company, sank 3.5 percent after revising its full-year earnings guidance.
The MSCI Asia Pacific Index declined 0.6 percent to 126.12 as of 9:27 a.m. in Tokyo, headed for a 1.4 percent drop for the week. Japan’s Nikkei 225 Stock Average slid 1 percent. Australia’s S&P/ASX 200 Index and South Korea’s Kospi Index slipped 0.4 percent.
To contact the reporters on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net ; Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net . "
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
"March 23 (Bloomberg) -- Asian stocks dropped after manufacturing contracted more than economists forecast in the euro-area, dimming the outlook for global economic growth and Asian exports.
Nintendo Co., a manufacturer of game consoles that gets a third of its sales in Europe, slid 2.5 percent in Osaka. BHP Billiton Ltd., Australia’s biggest oil producer and the world’s largest mining company, lost 1.4 percent in Sydney after metal and oil prices fell yesterday. QR National, an Australian rail freight company, sank 3.5 percent after revising its full-year earnings guidance.
The MSCI Asia Pacific Index declined 0.6 percent to 126.12 as of 9:27 a.m. in Tokyo, headed for a 1.4 percent drop for the week. Japan’s Nikkei 225 Stock Average slid 1 percent. Australia’s S&P/ASX 200 Index and South Korea’s Kospi Index slipped 0.4 percent.
To contact the reporters on this story: Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net ; Norie Kuboyama in Tokyo at nkuboyama@bloomberg.net . "
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Stocks, Commodities, Euro Drop on Economic Growth Concern
Worrying !!
REF: Bloomberg
"March 22 (Bloomberg) -- Stocks and commodities dropped while Treasuries rose for a third day after European and Chinese manufacturing contracted and FedEx Corp. predicted slower growth, undermining confidence in the global economy.
The Standard & Poor’s 500 Index slipped 0.7 percent, the most in two weeks, to 1,392.79 at 4 p.m. in New York and the Stoxx Europe 600 Index fell for a fourth straight day, tumbling 1.2 percent. The euro depreciated 0.2 percent to $1.3188. Ten- year Treasury yields declined two basis points to 2.28 percent and the rate on the German bund decreased seven basis points to 1.91 percent. Copper and oil sank at least 1.8 percent and nickel slid to the lowest price this year.
A gauge of European manufacturing fell to 47.7 as factory output unexpectedly shrank in Germany and France, according to London-based Markit Economics. A preliminary measure of Chinese manufacturing slipped to 48.1 in March, the lowest level in four months, based on figures from HSBC Holdings Plc and Markit Economics. FedEx, operator of the world’s largest cargo airline, predicted “below-trend” growth in coming quarters.
“Most people recognize that China growth has slowed,” said Mark Bronzo, who helps manage about $125 billion at Guggenheim Investments, in Irvington, New York. “It’s a question of: is it going to be a sharp or a mild slowdown? The data in Europe shouldn’t be a big surprise to anyone. Yet there’s enough of a reason there after the sharp run-up in stocks for the market to pull back or go sideways in the short term.”
Three-Day Drop
The S&P 500, which reached the highest level since May 2008 on March 19, retreated for a third day as concern about global growth overshadowed a drop in jobless claims to a four-year low and better-than-forecast growth in an index of leading economic indicators. Initial applications for unemployment benefits decreased by 5,000 to 348,000 in the week ended March 17, the fewest since February 2008, Labor Department figures showed today. The median forecast of 46 economists in a Bloomberg News survey projected 350,000.
The Conference Board’s gauge of the outlook for the next three to six months increased 0.7 percent after a revised 0.2 percent gain in January that was less than initially reported, the New York-based group said today. The median forecast of economists surveyed by Bloomberg News called for a 0.6 percent rise.
Commodity, industrial and financial companies helped lead losses among the 10 main groups in the S&P 500 today. FedEx tumbled after the low end of its profit forecast for the current fiscal quarter trailed analysts’ estimates amid slowing express- shipment demand. Chevron Corp., Caterpillar Inc. and Alcoa Inc. were among the biggest declines in the Dow Jones Industrial Average.
First-Quarter Rally
The S&P 500 has rallied 11 percent so far this year, poised for its best first quarter since 1998, amid growing optimism in the world’s largest economy. The MSCI All-Country World Index has also climbed 11 percent in 2012.
Global equities may have a “correction” of between 5 percent and 9 percent after the first quarter as investors sell holdings to lock in profit from recent rallies, according to Jefferies Group Inc.
Sean Darby, chief global equity strategist at New York- based Jefferies, said in a Bloomberg Television interview from Hong Kong today that Europe’s debt crisis is still “not over” because of high borrowing costs in Spain and Portugal,
The Stoxx 600 declined to the lowest level since March 12 as mining and construction companies led losses. Randgold Resources Ltd., which operates three mines in Mali, plunged 13 percent as an army officer said the West African country’s government has been overthrown. Baloise Holding AG sank 6.6 percent as Switzerland’s third-largest insurer said profit dropped 86 percent last year.
Yields Retreat
Yields on 10-year and 30-year Treasuries retreated for a third straight day after reaching the highest levels in more than four months on March 19. The 30-year bond rate decreased two basis points to 3.37 percent.
The euro fell for a third day versus the dollar. The yen gained against all 16 of its major peers, advancing 1.3 percent versus the euro and 2 percent against Australia’s currency. Japan’s exports unexpectedly exceeded imports by 32.9 billion yen ($395 million) in February, the government said. The Dollar Index rose less than 0.1 percent.
The S&P GSCI gauge of commodities declined 1.1 percent as coffee, natural gas and cocoa fell more than 3 percent to pace declines in 16 of 24 raw materials.
The MSCI Emerging Markets Index fell 0.7 percent, heading for its sixth straight decline. The Micex Index slid 1.4 percent in Moscow and the FTSE/JSE Africa All Shares Index retreated 1 percent in Johannesburg. The BSE India Sensitive Index fell 2.3 percent. The Hang Seng China Enterprises Index lost 0.1 percent, its seventh straight drop and its longest losing streak since June.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net ; Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net ; Rita Nazareth in New York at rnazareth@bloomberg.net"
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
REF: Bloomberg
"March 22 (Bloomberg) -- Stocks and commodities dropped while Treasuries rose for a third day after European and Chinese manufacturing contracted and FedEx Corp. predicted slower growth, undermining confidence in the global economy.
The Standard & Poor’s 500 Index slipped 0.7 percent, the most in two weeks, to 1,392.79 at 4 p.m. in New York and the Stoxx Europe 600 Index fell for a fourth straight day, tumbling 1.2 percent. The euro depreciated 0.2 percent to $1.3188. Ten- year Treasury yields declined two basis points to 2.28 percent and the rate on the German bund decreased seven basis points to 1.91 percent. Copper and oil sank at least 1.8 percent and nickel slid to the lowest price this year.
A gauge of European manufacturing fell to 47.7 as factory output unexpectedly shrank in Germany and France, according to London-based Markit Economics. A preliminary measure of Chinese manufacturing slipped to 48.1 in March, the lowest level in four months, based on figures from HSBC Holdings Plc and Markit Economics. FedEx, operator of the world’s largest cargo airline, predicted “below-trend” growth in coming quarters.
“Most people recognize that China growth has slowed,” said Mark Bronzo, who helps manage about $125 billion at Guggenheim Investments, in Irvington, New York. “It’s a question of: is it going to be a sharp or a mild slowdown? The data in Europe shouldn’t be a big surprise to anyone. Yet there’s enough of a reason there after the sharp run-up in stocks for the market to pull back or go sideways in the short term.”
Three-Day Drop
The S&P 500, which reached the highest level since May 2008 on March 19, retreated for a third day as concern about global growth overshadowed a drop in jobless claims to a four-year low and better-than-forecast growth in an index of leading economic indicators. Initial applications for unemployment benefits decreased by 5,000 to 348,000 in the week ended March 17, the fewest since February 2008, Labor Department figures showed today. The median forecast of 46 economists in a Bloomberg News survey projected 350,000.
The Conference Board’s gauge of the outlook for the next three to six months increased 0.7 percent after a revised 0.2 percent gain in January that was less than initially reported, the New York-based group said today. The median forecast of economists surveyed by Bloomberg News called for a 0.6 percent rise.
Commodity, industrial and financial companies helped lead losses among the 10 main groups in the S&P 500 today. FedEx tumbled after the low end of its profit forecast for the current fiscal quarter trailed analysts’ estimates amid slowing express- shipment demand. Chevron Corp., Caterpillar Inc. and Alcoa Inc. were among the biggest declines in the Dow Jones Industrial Average.
First-Quarter Rally
The S&P 500 has rallied 11 percent so far this year, poised for its best first quarter since 1998, amid growing optimism in the world’s largest economy. The MSCI All-Country World Index has also climbed 11 percent in 2012.
Global equities may have a “correction” of between 5 percent and 9 percent after the first quarter as investors sell holdings to lock in profit from recent rallies, according to Jefferies Group Inc.
Sean Darby, chief global equity strategist at New York- based Jefferies, said in a Bloomberg Television interview from Hong Kong today that Europe’s debt crisis is still “not over” because of high borrowing costs in Spain and Portugal,
The Stoxx 600 declined to the lowest level since March 12 as mining and construction companies led losses. Randgold Resources Ltd., which operates three mines in Mali, plunged 13 percent as an army officer said the West African country’s government has been overthrown. Baloise Holding AG sank 6.6 percent as Switzerland’s third-largest insurer said profit dropped 86 percent last year.
Yields Retreat
Yields on 10-year and 30-year Treasuries retreated for a third straight day after reaching the highest levels in more than four months on March 19. The 30-year bond rate decreased two basis points to 3.37 percent.
The euro fell for a third day versus the dollar. The yen gained against all 16 of its major peers, advancing 1.3 percent versus the euro and 2 percent against Australia’s currency. Japan’s exports unexpectedly exceeded imports by 32.9 billion yen ($395 million) in February, the government said. The Dollar Index rose less than 0.1 percent.
The S&P GSCI gauge of commodities declined 1.1 percent as coffee, natural gas and cocoa fell more than 3 percent to pace declines in 16 of 24 raw materials.
The MSCI Emerging Markets Index fell 0.7 percent, heading for its sixth straight decline. The Micex Index slid 1.4 percent in Moscow and the FTSE/JSE Africa All Shares Index retreated 1 percent in Johannesburg. The BSE India Sensitive Index fell 2.3 percent. The Hang Seng China Enterprises Index lost 0.1 percent, its seventh straight drop and its longest losing streak since June.
To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net ; Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net ; Rita Nazareth in New York at rnazareth@bloomberg.net"
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Thursday, 22 March 2012
China Manufacturing Contraction May Worsen, Data Show
Will Chinesse grow go from 7.5 to 7 ???
Read below :
"March 22 (Bloomberg) -- A Chinese manufacturing index indicated a worse contraction this month, bolstering the case for Premier Wen Jiabao to add measures to sustain growth even as he prolongs a campaign to cool property prices.
The preliminary 48.1 reading in a purchasing managers’ index from HSBC Holdings Plc and Markit Economics today is the lowest since November and compares with a final 49.6 in February. A result below 50 indicates a contraction.
Asian stocks pared gains and oil and copper fell as the report added to concerns about a deeper slowdown in the world’s second-biggest economy. Wen this month pledged pre-emptive fine- tuning of fiscal and monetary policies to support growth after increases in gross domestic product slowed in 2011.
“Growth momentum could slow down further amid a combination of sluggish export new orders and softening domestic demand, and this calls for further easing steps,” said Qu Hongbin, Hong Kong-based chief economist for China at HSBC.
The MSCI Asia Pacific Index of stocks was up 0.4 percent at 11:45 a.m. Tokyo time after climbing as much as 0.8 percent. The Shanghai Composite Index extended losses, dropping 0.4 percent at 11:15 a.m. local time.
The reading points to a fifth straight monthly contraction, the longest period since the global financial crisis, when the gauge stayed below 50 for eight months ending in March 2009.
Odds of Reduction
Goldman Sachs Group Inc. said in a research note after the report that the odds of an interest-rate reduction have “significantly increased recently.”
Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB, is forecasting a system-wide reserve-requirement ratio cut this month or in early April following China’s decision yesterday to boost rural credit by cutting ratios for more branches of Agricultural Bank of China Ltd., the nation’s third-biggest lender by market value.
China’s economy may bottom in the first to second quarter and the country has already passed through the tightest credit conditions in this cycle, Ba Shusong, a researcher at the Development Research Center of the State Council, said today in Shanghai.
400 Companies
The preliminary reading, called the Flash PMI, is from 85 percent to 90 percent of responses to a survey of more than 400 companies. A separate PMI from China’s logistics federation and the National Bureau of Statistics, which has a different sample and methodology, showed an expansion for a third month in February.
Joy Yang, chief China economist at Mirae Asset Securities (HK) Ltd., said the HSBC survey is more concentrated on small- and medium-sized companies than the official measure, which has more large enterprises and thus more predictive power.
Wen, in his annual state-of-the-nation address this month, pledged to complete more affordable homes and ensure funding for key investment projects while extending his campaign to cool property prices.
China’s economic growth slowed throughout last year to 8.9 percent in the fourth quarter, prompting the central bank to add liquidity via open-market operations and reduce banks’ reserve requirements twice since November. The government last lowered benchmark interest rates in 2008.
Confidence Improving
Even so, confidence in China’s economy is recovering, according to two central bank surveys of bankers and company executives released this week. Respondents’ expectations improved for market demand and export orders, while more bankers said monetary policy will tend to be looser next quarter, the central bank said.
The global economy is in better shape than three months ago even as vulnerabilities still need to be addressed, International Monetary Fund Managing Director Christine Lagarde said this week at a conference in New Delhi. At the same time, Lagarde said later at a press briefing that it shouldn’t be assumed the period of crisis is over.
Improving prospects for China’s exports have prompted economists from Nomura Holdings Inc. and Deutsche Bank AG to raise their 2012 growth forecasts. Nomura increased its estimate to 8.2 percent from 7.9 percent and Deutsche Bank boosted its projection to 8.6 percent from 8.3 percent.
Wen set a 7.5 percent growth target for 2012, lower than the 8 percent annual goal in place since 2005, as he aims to tilt the nation’s growth toward consumption from capital spending and exports.
Sany Slowing
Sany Group Co., owner of China’s biggest machinery maker, may see sales growth slow by about half to 25 percent this year as the economy decelerates, Xiang Wenbo, a board member and president of the company’s Shanghai-listed unit, said in Beijing March 10.
“The industry’s extraordinary growth, brought about by the government’s stimulus package, is not sustainable,” said Xiang, whose company is based in Changsha, Hunan province. “Still, the Chinese market will be the best in the world,” he said. "
To contact Bloomberg News staff for this story: Li Yanping in Beijing at yli16@bloomberg.net
===
Sent from Bloomberg
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Monday, 19 March 2012
Dollar Bulls Beat Bears in Futures for Longest Since 1999
Is the Market getting over Heated ??
March 19 (Bloomberg) --
"Not since 1999 have currency traders been bullish on the dollar for so long, a sign that the market sees the U.S. resuming its role as the engine of global economic growth.
Futures anticipating a stronger dollar against its developed-market peers have outnumbered those predicting a drop for 26 consecutive weeks through the five days ended March 13, according to Commodity Futures Trading Commission data. That’s the longest streak since the start of a three-year rally in the world’s reserve currency 13 years ago.
While much of the 2.4 percent gain in the Dollar Index since 2009 has come from investors seeking safety from European debt turmoil and the global financial crisis, analysts now say expansion is trumping fear as a reason for buying U.S. assets. Growth in retail sales and jobs in the world’s biggest economy has damped expectations for more Federal Reserve stimulus that might debase the currency.
“The key message is that it’s not a flash-in-the-pan shift in sentiment, this seems to be something more structural,” Gareth Berry, a foreign-exchange strategist at UBS AG in Singapore said in a March 13 telephone interview. “The psychology around the dollar does appear to be changing and I’m confident that dollar strength will probably continue.”
Expectations for U.S. growth have diverged from the Group of 10 nations since December. America’s gross domestic product will expand 2.2 percent this year, according to the median forecast of 91 economists in a Bloomberg News survey, while developed nations increase 1.2 percent. The G-10 prediction is down from 2.5 percent in July, while the U.S. figure has stabilized near 2 percent.
Dollar Index
“There’s substantial scope going forward for the dollar to recover a lot more,” Derek Halpenny, European head of currency research at Bank of Tokyo-Mitsubishi UFJ Ltd., said in a March 14 interview on Bloomberg Television’s “Surveillance Midday” with Tom Keene. “One of the stories is this very, very significant dichotomy between the fundamentals in the U.S. and the fundamentals in Europe.”
IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six major U.S. trade partners, fell 0.3 percent to 79.786 last week.
After the Australian dollar and the British pound, the U.S. currency is up the most in the past six months against its nine developed-nation counterparts, according to data compiled by Bloomberg. It has gained 1.5 percent, compared with the yen’s 9.3 percent drop and the euro’s 2.4 percent decline.
Increased Forecasts
The dollar traded at $1.3168 per euro as of 12:32 p.m. in Tokyo from $1.3175 on March 16, and bought 83.47 yen from 83.43.
Berry expects the dollar to appreciate to $1.30 per euro in the next month and to $1.25 in three months, and the euro to trade at 106 yen by the end of the second quarter, UBS says.
Currency strategists have increased forecasts for the dollar against the euro and yen this year. The greenback will trade at $1.30 per euro, down from expectations of $1.45 in September, according to a Bloomberg News survey of 53 analysts. The dollar will trade at 87 yen next year, up from 83 yen forecast earlier this year.
Treasury bonds with yields higher than their German counterparts are luring foreign investors to U.S. debt. Two-year Treasuries yield 0.36 percent, 3 basis points more than similar- maturity German bunds. Six months ago, bunds were yielding 34 basis points more than Treasuries.
‘More Comfortable’
China, the largest foreign U.S. creditor, increased its holdings of U.S. government securities in January for the first time in six months, boosting them by 0.7 percent to $1.16 trillion, Treasury data released March 15 show.
Organization of Petroleum Exporting Country members boosted net purchases of government debt by $43.3 billion, or 20 percent, in the 12 months ended Jan. 31, compared to a 13 percent rise for non-OPEC foreign holdings.
“Market players feel more comfortable holding U.S. dollars,” said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp., the world’s largest custodial bank, with more than $26 trillion in assets.
Traders’ positions reflect the shift. The difference in the number of wagers by all commercial futures traders on a gain in the dollar versus the euro, yen, pound, Swiss franc and the Canadian, Australian and New Zealand dollars -- so-called net longs -- was 143,884 on March 13, according to CFTC data compiled by Bloomberg. Net shorts, or bets the currency will fall, totaled 387,327 a year ago.
Matching 1999
There have been more positive than negative contracts every week since Sept. 20, matching the stretch ending in July 27, 1999, which was seven months after the introduction of the euro. The Dollar Index rose 8.2 percent that year, 7.6 percent in 2000 and 6.6 percent the next year.
Another sign that the dollar is rising in reaction to a strengthening economy is that the typical relationship between the currency and stocks is breaking down.
During September 2008, as Lehman Brothers Holdings Inc. collapsed in the largest U.S. bankruptcy, the Dollar Index gained 6 percent and the Dow Jones Industrial Average slumped 34 percent as investors sought the currency to buy safe Treasuries. The next year stocks rallied 19 percent on optimism about an economic recovery while the currency gauge fell by 4.2 percent and Treasuries lost 3.72 percent as measured by Bank of America Merrill Lynch indexes.
The negative relationship between the dollar and stocks, intact since October 2008, is now breaking down, with the 60-day percent-change correlation rising to minus 43 percent last week from as low as minus 85 percent in December. A reading of minus 100 percent means that the two assets always move in the opposite direction.
‘Significant Development’
The dollar has gained 1.3 percent this month and is down 0.5 percent so far this year, and the Dow Jones Industrial Average rose to 13,289 March 16, the highest level since December 2007, and gained 8.3 percent in 2012.
“Typically when we see the Dow up, the dollar is down and that hasn’t happened,” said Woolfolk of Bank of New York Mellon. “That is a very significant development that’s happened rarely since the Lehman crisis.”
Stronger economic data this year damped market expectations of further monetary stimulus after the Fed bought $2.3 trillion of Treasuries and mortgage-backed bonds in two rounds of purchases known as quantitative easing from December 2008 to June 2011. During the second program, which started in November 2010, the Dollar Index fell 3.9 percent.
‘Downside Risks’
Sixty-one percent of respondents in a March 9-12 Bloomberg News survey of economists said Bernanke would refrain from any action to expand the Fed’s $2.89 trillion balance sheet this year. In January, 50 percent predicted more bond buying.
With unemployment at 8.3 percent, above the 10-year average of 6.6 percent, the Fed isn’t ruling out further moves. Strains in financial markets pose “significant downside risks” central bankers said in a statement after the March 13 meeting.
Possible further stimulus, as well as the Fed’s forecast of rates at zero to 0.25 percent through late 2014, will limit dollar gains, according to Jens Nordvig, a managing director of currency research in New York at Nomura Holdings Inc.
“In order to have a real pronounced dollar move we need to have an actual hiking cycle” for interest rates, Nordvig said in a March 14 telephone interview. “As long as we’re in an adjustment phase where U.S. growth expectations are being revised higher, the dollar can gain further in conjunction with risk assets doing OK.”
Strengthening Recovery
The currency has moved higher as U.S. economic data show a strengthening recovery. Employers in February added 227,000 jobs following a revised 284,000 gain in January and the jobless rate remained at a three-year low. Retail sales in February rose by 1.1 percent, the most since September.
Euro zone economies contracted 0.3 percent in the fourth quarter, while Japan shrunk 0.7 percent and the U.K fell 0.2 percent, according to government data.
Policy makers are trying to restore stability and ignite growth by flooding their financial systems with cash. European banks got 529.5 billion euros ($705 billion) in a second round of three-year loans from the European Central Bank on Feb. 29.
The yen has been the worst performing major currency this year, losing 8.5 percent against the dollar, as Bank of Japan Governor Masaaki Shirakawa indicated last week the central bank will keep using monetary policy as a tool to tackle deflation. The BOJ unexpectedly added 10 trillion yen ($128 billion) to its asset-purchase program on Feb. 14.
‘Different Situation’
Foreign demand for U.S. assets and the increasing use of the euro as a funding currency for so-called carry trades have also helped support the dollar. Net buying of long-term equities, notes and bonds rose to $101 billion in January from $19.2 billion in December, the Treasury said March 15.
“Better U.S. data has helped the dollar versus the euro, sterling and yen,” Brian Kim, a currency strategist in Stamford, Connecticut, at Royal Bank of Scotland Group Plc said in a March 9 telephone interview. “It makes sense that it would be strengthening against those currencies because their central banks are in a bit of a different situation, their economic growth profile and outlook is in a different situation, so we see some advantage for the dollar against them.”
REF : Bloomberg
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
March 19 (Bloomberg) --
"Not since 1999 have currency traders been bullish on the dollar for so long, a sign that the market sees the U.S. resuming its role as the engine of global economic growth.
Futures anticipating a stronger dollar against its developed-market peers have outnumbered those predicting a drop for 26 consecutive weeks through the five days ended March 13, according to Commodity Futures Trading Commission data. That’s the longest streak since the start of a three-year rally in the world’s reserve currency 13 years ago.
While much of the 2.4 percent gain in the Dollar Index since 2009 has come from investors seeking safety from European debt turmoil and the global financial crisis, analysts now say expansion is trumping fear as a reason for buying U.S. assets. Growth in retail sales and jobs in the world’s biggest economy has damped expectations for more Federal Reserve stimulus that might debase the currency.
“The key message is that it’s not a flash-in-the-pan shift in sentiment, this seems to be something more structural,” Gareth Berry, a foreign-exchange strategist at UBS AG in Singapore said in a March 13 telephone interview. “The psychology around the dollar does appear to be changing and I’m confident that dollar strength will probably continue.”
Expectations for U.S. growth have diverged from the Group of 10 nations since December. America’s gross domestic product will expand 2.2 percent this year, according to the median forecast of 91 economists in a Bloomberg News survey, while developed nations increase 1.2 percent. The G-10 prediction is down from 2.5 percent in July, while the U.S. figure has stabilized near 2 percent.
Dollar Index
“There’s substantial scope going forward for the dollar to recover a lot more,” Derek Halpenny, European head of currency research at Bank of Tokyo-Mitsubishi UFJ Ltd., said in a March 14 interview on Bloomberg Television’s “Surveillance Midday” with Tom Keene. “One of the stories is this very, very significant dichotomy between the fundamentals in the U.S. and the fundamentals in Europe.”
IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six major U.S. trade partners, fell 0.3 percent to 79.786 last week.
After the Australian dollar and the British pound, the U.S. currency is up the most in the past six months against its nine developed-nation counterparts, according to data compiled by Bloomberg. It has gained 1.5 percent, compared with the yen’s 9.3 percent drop and the euro’s 2.4 percent decline.
Increased Forecasts
The dollar traded at $1.3168 per euro as of 12:32 p.m. in Tokyo from $1.3175 on March 16, and bought 83.47 yen from 83.43.
Berry expects the dollar to appreciate to $1.30 per euro in the next month and to $1.25 in three months, and the euro to trade at 106 yen by the end of the second quarter, UBS says.
Currency strategists have increased forecasts for the dollar against the euro and yen this year. The greenback will trade at $1.30 per euro, down from expectations of $1.45 in September, according to a Bloomberg News survey of 53 analysts. The dollar will trade at 87 yen next year, up from 83 yen forecast earlier this year.
Treasury bonds with yields higher than their German counterparts are luring foreign investors to U.S. debt. Two-year Treasuries yield 0.36 percent, 3 basis points more than similar- maturity German bunds. Six months ago, bunds were yielding 34 basis points more than Treasuries.
‘More Comfortable’
China, the largest foreign U.S. creditor, increased its holdings of U.S. government securities in January for the first time in six months, boosting them by 0.7 percent to $1.16 trillion, Treasury data released March 15 show.
Organization of Petroleum Exporting Country members boosted net purchases of government debt by $43.3 billion, or 20 percent, in the 12 months ended Jan. 31, compared to a 13 percent rise for non-OPEC foreign holdings.
“Market players feel more comfortable holding U.S. dollars,” said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp., the world’s largest custodial bank, with more than $26 trillion in assets.
Traders’ positions reflect the shift. The difference in the number of wagers by all commercial futures traders on a gain in the dollar versus the euro, yen, pound, Swiss franc and the Canadian, Australian and New Zealand dollars -- so-called net longs -- was 143,884 on March 13, according to CFTC data compiled by Bloomberg. Net shorts, or bets the currency will fall, totaled 387,327 a year ago.
Matching 1999
There have been more positive than negative contracts every week since Sept. 20, matching the stretch ending in July 27, 1999, which was seven months after the introduction of the euro. The Dollar Index rose 8.2 percent that year, 7.6 percent in 2000 and 6.6 percent the next year.
Another sign that the dollar is rising in reaction to a strengthening economy is that the typical relationship between the currency and stocks is breaking down.
During September 2008, as Lehman Brothers Holdings Inc. collapsed in the largest U.S. bankruptcy, the Dollar Index gained 6 percent and the Dow Jones Industrial Average slumped 34 percent as investors sought the currency to buy safe Treasuries. The next year stocks rallied 19 percent on optimism about an economic recovery while the currency gauge fell by 4.2 percent and Treasuries lost 3.72 percent as measured by Bank of America Merrill Lynch indexes.
The negative relationship between the dollar and stocks, intact since October 2008, is now breaking down, with the 60-day percent-change correlation rising to minus 43 percent last week from as low as minus 85 percent in December. A reading of minus 100 percent means that the two assets always move in the opposite direction.
‘Significant Development’
The dollar has gained 1.3 percent this month and is down 0.5 percent so far this year, and the Dow Jones Industrial Average rose to 13,289 March 16, the highest level since December 2007, and gained 8.3 percent in 2012.
“Typically when we see the Dow up, the dollar is down and that hasn’t happened,” said Woolfolk of Bank of New York Mellon. “That is a very significant development that’s happened rarely since the Lehman crisis.”
Stronger economic data this year damped market expectations of further monetary stimulus after the Fed bought $2.3 trillion of Treasuries and mortgage-backed bonds in two rounds of purchases known as quantitative easing from December 2008 to June 2011. During the second program, which started in November 2010, the Dollar Index fell 3.9 percent.
‘Downside Risks’
Sixty-one percent of respondents in a March 9-12 Bloomberg News survey of economists said Bernanke would refrain from any action to expand the Fed’s $2.89 trillion balance sheet this year. In January, 50 percent predicted more bond buying.
With unemployment at 8.3 percent, above the 10-year average of 6.6 percent, the Fed isn’t ruling out further moves. Strains in financial markets pose “significant downside risks” central bankers said in a statement after the March 13 meeting.
Possible further stimulus, as well as the Fed’s forecast of rates at zero to 0.25 percent through late 2014, will limit dollar gains, according to Jens Nordvig, a managing director of currency research in New York at Nomura Holdings Inc.
“In order to have a real pronounced dollar move we need to have an actual hiking cycle” for interest rates, Nordvig said in a March 14 telephone interview. “As long as we’re in an adjustment phase where U.S. growth expectations are being revised higher, the dollar can gain further in conjunction with risk assets doing OK.”
Strengthening Recovery
The currency has moved higher as U.S. economic data show a strengthening recovery. Employers in February added 227,000 jobs following a revised 284,000 gain in January and the jobless rate remained at a three-year low. Retail sales in February rose by 1.1 percent, the most since September.
Euro zone economies contracted 0.3 percent in the fourth quarter, while Japan shrunk 0.7 percent and the U.K fell 0.2 percent, according to government data.
Policy makers are trying to restore stability and ignite growth by flooding their financial systems with cash. European banks got 529.5 billion euros ($705 billion) in a second round of three-year loans from the European Central Bank on Feb. 29.
The yen has been the worst performing major currency this year, losing 8.5 percent against the dollar, as Bank of Japan Governor Masaaki Shirakawa indicated last week the central bank will keep using monetary policy as a tool to tackle deflation. The BOJ unexpectedly added 10 trillion yen ($128 billion) to its asset-purchase program on Feb. 14.
‘Different Situation’
Foreign demand for U.S. assets and the increasing use of the euro as a funding currency for so-called carry trades have also helped support the dollar. Net buying of long-term equities, notes and bonds rose to $101 billion in January from $19.2 billion in December, the Treasury said March 15.
“Better U.S. data has helped the dollar versus the euro, sterling and yen,” Brian Kim, a currency strategist in Stamford, Connecticut, at Royal Bank of Scotland Group Plc said in a March 9 telephone interview. “It makes sense that it would be strengthening against those currencies because their central banks are in a bit of a different situation, their economic growth profile and outlook is in a different situation, so we see some advantage for the dollar against them.”
REF : Bloomberg
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Four Dead, One Injured in Shooting at Jewish School in France
March 19 (Bloomberg) -- Four people were killed and one seriously injured in a shooting in front of a Jewish school in a residential neighborhood of Toulouse, the French prosecutor’s office said.
The shooter, who escaped on a scooter, had two weapons, Le Figaro reported, citing the prosecutor, who’s at the school. A teacher of religion and three children were shot dead.
“It was terrible,” Charles Ben Semoun, the father of a child at the school, said on i-tele television. “It felt like it lasted a long time.”
Today's killings come after attacks left three soldiers of North African descent dead last week in Toulouse and nearby Montauban. A fourth soldier is in critical condition.
French President Nicolas Sarkozy will be at the school, Ozar Hathora, at 11:30 a.m., a statement from his office said. French Interior Minister Claude Gueant will be heading to Toulouse, and the ministry is reinforcing security at Jewish schools, Agence France-Presse said.
Sarkozy will be accompanied by Education Minister Luc Chatel and Richard Prasquier, president of the council of Jewish institutions of France. Socialist presidential candidate Francois Hollande and the Israeli ambassador to France also are heading to Toulouse.
“We are profoundly shocked at the killing of innocent children,” Sammy Ravel, an official from the embassy, said on i-tele.
The French news service cited Patrick Rouimi, a spokesman for the school’s parents’ association, as saying that the man on the scooter had opened fire at about 8 a.m. today on people waiting near the student pick-up point.
The shooter, who escaped on a scooter, had two weapons, Le Figaro reported, citing the prosecutor, who’s at the school. A teacher of religion and three children were shot dead.
“It was terrible,” Charles Ben Semoun, the father of a child at the school, said on i-tele television. “It felt like it lasted a long time.”
Today's killings come after attacks left three soldiers of North African descent dead last week in Toulouse and nearby Montauban. A fourth soldier is in critical condition.
French President Nicolas Sarkozy will be at the school, Ozar Hathora, at 11:30 a.m., a statement from his office said. French Interior Minister Claude Gueant will be heading to Toulouse, and the ministry is reinforcing security at Jewish schools, Agence France-Presse said.
Sarkozy will be accompanied by Education Minister Luc Chatel and Richard Prasquier, president of the council of Jewish institutions of France. Socialist presidential candidate Francois Hollande and the Israeli ambassador to France also are heading to Toulouse.
“We are profoundly shocked at the killing of innocent children,” Sammy Ravel, an official from the embassy, said on i-tele.
The French news service cited Patrick Rouimi, a spokesman for the school’s parents’ association, as saying that the man on the scooter had opened fire at about 8 a.m. today on people waiting near the student pick-up point.
Goldman Sachs Board Must Act on Smith Op-Ed, Ex-Partner Writes
As I said when the first story broke, where there is smoke there is Fire !!
Another take on the Grey Smith story from another side.
"March 18 (Bloomberg) -- Goldman Sachs Group Inc.’s directors must investigate a former employee’s allegations about a change in the firm’s culture, Jacki Zehner, who was a partner when she left the firm in 2002, wrote on her blog.
Zehner said she doesn’t know Greg Smith, the derivatives salesman whose New York Times op-ed piece blamed Chief Executive Officer Lloyd C. Blankfein and President Gary D. Cohn for fostering a “toxic and destructive” environment, causing Smith to quit last week. Zehner, who worked at Goldman Sachs for 14 years, wrote that she’s heard from “many people” in the past few years that the firm is emphasizing profits over character.
“These are very serious accusations from a credible person in my view and I hope it does indeed provide a ‘wake-up’ call to the board of directors,” wrote Zehner, who was the first female trader promoted to partner and is married to a former partner. She is now CEO and president of Women Moving Millions, a non- profit supporting the advancement of women and girls worldwide.
“It is the board that is accountable to shareholders and before they take another paycheck I hope they ask a heck of a lot of questions and get honest answers,” Zehner, 47, wrote in her March 16 commentary.
Blankfein, 57, and Cohn, 51, who have held their current roles since 2006, responded to Smith’s op-ed with a memo expressing disappointment with his assertions and cited a survey of employees that found most disagree. Still, “if an individual expresses issues, we examine them carefully and we will be doing so in this case.”
‘Verbal Hand Grenade’
David Wells, a spokesman at Goldman Sachs, declined to comment beyond the contents of the memo.
Janet Tiebout Hanson, who left Goldman Sachs after almost 14 years in 1993 and in 1997 founded the women’s networking firm 85 Broads, wrote her own blog response to Smith’s op-ed piece, calling it a “cowardly act.”
“By tossing a verbal hand grenade on his way out the door, he sullied the reputations of the vast majority of the people at the firm who work and live by the highest possible professional standards every single day,” wrote Hanson, who was the first woman at Goldman Sachs to be promoted into sales management. “He is just a quitter who never gave management an opportunity to respond before he verbally strafed the entire firm in print.”
Seek Some Answers
Hanson, 59, said she was “delighted” to become a Goldman Sachs client when she started an asset-management firm, Milestone Capital, in 1995. Milestone Capital had an “awesome relationship” with the fixed-income trading desks at Goldman Sachs, which she said was partly responsible for its growth the next five years.
“Greg Smith got his 15 minutes of lame fame, which is all it is,” she added.
In Zehner’s blog post, she said the board should decide how to respond to Smith’s accusations after they get some answers.
“If those answers are that the kind of behavior reported by Mr. Smith is not the norm, then they would have done their job, this story will fade and Goldman will go about its business for another 143 years,” she wrote. “If the answers are the opposite, heads should roll.” "
To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net
===
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Another take on the Grey Smith story from another side.
"March 18 (Bloomberg) -- Goldman Sachs Group Inc.’s directors must investigate a former employee’s allegations about a change in the firm’s culture, Jacki Zehner, who was a partner when she left the firm in 2002, wrote on her blog.
Zehner said she doesn’t know Greg Smith, the derivatives salesman whose New York Times op-ed piece blamed Chief Executive Officer Lloyd C. Blankfein and President Gary D. Cohn for fostering a “toxic and destructive” environment, causing Smith to quit last week. Zehner, who worked at Goldman Sachs for 14 years, wrote that she’s heard from “many people” in the past few years that the firm is emphasizing profits over character.
“These are very serious accusations from a credible person in my view and I hope it does indeed provide a ‘wake-up’ call to the board of directors,” wrote Zehner, who was the first female trader promoted to partner and is married to a former partner. She is now CEO and president of Women Moving Millions, a non- profit supporting the advancement of women and girls worldwide.
“It is the board that is accountable to shareholders and before they take another paycheck I hope they ask a heck of a lot of questions and get honest answers,” Zehner, 47, wrote in her March 16 commentary.
Blankfein, 57, and Cohn, 51, who have held their current roles since 2006, responded to Smith’s op-ed with a memo expressing disappointment with his assertions and cited a survey of employees that found most disagree. Still, “if an individual expresses issues, we examine them carefully and we will be doing so in this case.”
‘Verbal Hand Grenade’
David Wells, a spokesman at Goldman Sachs, declined to comment beyond the contents of the memo.
Janet Tiebout Hanson, who left Goldman Sachs after almost 14 years in 1993 and in 1997 founded the women’s networking firm 85 Broads, wrote her own blog response to Smith’s op-ed piece, calling it a “cowardly act.”
“By tossing a verbal hand grenade on his way out the door, he sullied the reputations of the vast majority of the people at the firm who work and live by the highest possible professional standards every single day,” wrote Hanson, who was the first woman at Goldman Sachs to be promoted into sales management. “He is just a quitter who never gave management an opportunity to respond before he verbally strafed the entire firm in print.”
Seek Some Answers
Hanson, 59, said she was “delighted” to become a Goldman Sachs client when she started an asset-management firm, Milestone Capital, in 1995. Milestone Capital had an “awesome relationship” with the fixed-income trading desks at Goldman Sachs, which she said was partly responsible for its growth the next five years.
“Greg Smith got his 15 minutes of lame fame, which is all it is,” she added.
In Zehner’s blog post, she said the board should decide how to respond to Smith’s accusations after they get some answers.
“If those answers are that the kind of behavior reported by Mr. Smith is not the norm, then they would have done their job, this story will fade and Goldman will go about its business for another 143 years,” she wrote. “If the answers are the opposite, heads should roll.” "
To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net
===
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Asia Closing Monday 19 March 2012
Asian stocks climbing overnight (MSCI Asia Pacific up 0.3%) on speculation the global economy is strengthening. Chinese stocks slid as the nation’s home prices had the worst performance in a year. Credit-default swaps dealers will hold an auction to settle as much as $3.2 billion of Greek bond insurance triggered by a debt restructuring.
Breaking News - UPS agrees to buy TNT Express for €5bn
UPS, the US package delivery company, has agreed a deal to buy its European rival TNT Express in a takeover that is likely to value the Dutch delivery company at about €5bn, people familiar with the talks said.
The agreement, which was reached late on Sunday, could be announced as soon as Monday, with UPS likely to be offering about €9.5 a share for TNT Express, the people said.
The agreement, which was reached late on Sunday, could be announced as soon as Monday, with UPS likely to be offering about €9.5 a share for TNT Express, the people said.
Thursday, 15 March 2012
Take Note : Chinese Economy Already in ‘Hard Landing,’ JPMorgan Says
I feel we need to Take Note.
Ref Bloomberg.com
"March 15 (Bloomberg) -- China’s economy is already in a so- called “hard landing,” according to Adrian Mowat, JPMorgan Chase & Co.’s chief Asian and emerging-market strategist.
“If you look at the Chinese data, you should stop debating about a hard landing,” Mowat, who is based in Hong Kong, said at a conference in Singapore yesterday. “China is in a hard landing. Car sales are down, cement production is down, steel production is down, construction stocks are down. It’s not a debate anymore, it’s a fact.” His team was a runner-up for best Asian equity strategists in a 2011 Institutional Investor magazine poll.
The Shanghai Composite Index fell 2.6 percent yesterday, the most since Nov. 30, after Premier Wen Jiabao said home prices are still “far from a reasonable level.” His comments fueled concern the government will maintain restrictions on the property market for an extended period even as the curbs threaten to slow economic growth.
Wen announced at the beginning of a national lawmakers’ congress on March 5 an economic growth target of 7.5 percent for this year, down from 8 percent over the past seven years. Data last week showed China’s factory output in the first two months of the year rose the least since 2009, while retail sales increased less than economists predicted and inflation eased to the slowest pace in 20 months.
Mowat said in May the risk of a hard landing was building in China as fixed-asset investment in real estate had increased even as property demand remained weak. That meant residential inventories will increase and lead to a contraction in construction activity, the strategist said in a May 17 interview.
Excessive Decline
“One should be concerned about what’s happening in the China property market,” Mowat said at yesterday’s conference. “People are too complacent that the government can turn what’s going on in this market.”
The slump in Chinese stocks to Wen’s speech yesterday was “overdone” as his comments on property were only a reiteration and don’t reflect consensus in the government, Jason Todd, global head of equity strategy at Religare Capital Markets Ltd., wrote in a report. The Shanghai Composite gained 0.2 percent as of 9:32 a.m. local time today.
Wen, set to leave office next year after a decade in power, also said yesterday his nation must adopt political change to support an economic transformation that has produced rapid development at the cost of a widening wealth gap.
‘Vastly Overblown’
Gary Shilling, president of A. Gary Shilling & Co., a Springfield, New Jersey-based consultancy firm, said on Feb. 2 that China’s economy is headed for a “hard landing” this year as weaker demand overseas chokes off exports. Shilling, who correctly forecast the U.S. recession that began in December 2007, defines a hard landing as a growth rate below 6 percent.
Shilling and Mowat’s views are in contrast with Yale University Professor Stephen Roach, a former non-executive chairman for Morgan Stanley in Asia, who said on March 8 that concerns China will enter a hard landing are “vastly overblown.”
“I don’t think the banking system will collapse and the property bubble will burst,” Roach said at a conference in Shanghai. “These are all exaggerations.”
China is easing restrictions on lending capacity at three of the nation’s four biggest banks after new loans dropped to a four-year low, officials at the banks with knowledge of the matter said. The government’s two-year effort to control the property market helped spur a 25 percent drop in home sales in the first two months of the year after surging 26 percent in January and February of 2011.
“What you can look forward to is to see a pickup in property demand that will clear up the inventory; that doesn’t appear likely,” Mowat said in an interview after the conference yesterday. “I don’t see any evidence of a policy move that will cause the economy to reaccelerate.”
To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net
Enjoy this info.
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Dollar Rises to 11-Month High, Asia Government Bonds Drop
Living in Interesting times !!
Tread slowly !!
REF : Bloomberg
"March 15 (Bloomberg) -- The dollar rose to an 11-month high against the yen and Treasuries fell for a seventh day before data that may show U.S. manufacturing expanded and fewer Americans filed for unemployment benefits. Asian bonds dropped, while mining shares and copper prices retreated.
The dollar climbed 0.3 percent to 84.01 yen as of 11:33 a.m. in Tokyo. Treasury five-year notes had the longest losing streak in almost a year, spurring declines in government bonds in Japan and South Korea. The MSCI Asia Pacific Index slipped 0.3 percent and Standard & Poor’s 500 Index futures were little changed. Copper fell 0.4 percent.
“The U.S. economy is undoubtedly getting better,” said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $71 billion in Tokyo. “The bond market is likely to remain weak.”
The world’s largest economy may expand 2.2 percent in 2012, accelerating from 1.7 percent last year, according to economists surveyed by Bloomberg News. By contrast, Premier Wen Jiabao is targeting slower growth for China’s economy and said yesterday that the relaxation of curbs on the property market would lead to “chaos.”
Yen Weakens
The greenback was near the highest level in four weeks against the euro amid reduced bets the Federal Reserve will begin a third round of bond purchases, or quantitative easing, which could debase the currency. The yen declined against most its major counterparts.
The Nikkei 225 Stock Average advanced 0.3 percent, poised to close at the highest level since July, on speculation a weaker yen will boost earnings of exporters. Toyota Motor Corp. and Honda Motor Co., Japan’s largest automakers, rose at least 1.5 percent. Sharp Corp. slid 3.4 percent after forecasting a record annual loss. The Shanghai Composite Index gained 0.2 percent. South Korea’s Kospi Index slipped 0.2 percent.
The Dow Jones Industrial Average has risen for the past six days, its longest rally in more than a year. The Federal Reserve Bank of New York’s general economic index probably slid to 17.5 this month from 19.5 in February, according to a Bloomberg survey of economists. Readings greater than zero signal expansion in the so-called Empire State Index. A gauge of manufacturing in the Philadelphia region may have increased to 12 in March, the highest since April.
Jobless Claims
Data later today may also show the number of Americans applying for jobless benefits fell by 5,000 to 357,000 in the week ended March 10, projections show. Unemployment in the U.S. will “decline gradually” and the inflation outlook is “subdued,” the Fed said in a statement on March 13.
“Should U.S. economic data continue to come in firm, it will support the market’s view that the Fed doesn’t need” further monetary easing, said Junichi Ishikawa, an analyst in Tokyo at IG Markets Securities Ltd.
Five-year Treasury yields added three basis points to 1.13 percent, the highest since October. South Korea’s bonds fell for a second day as the slump in Treasuries narrowed their interest- rate advantage. The yield on 2017 bonds climbed four basis points to 3.66 percent. Japan’s similar rate rose three basis points to 34.5 basis points.
Asia Default Swaps
The cost of insuring bonds against non-payment dropped in Asia, according to credit-default swap traders. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined two basis points, Royal Bank of Scotland Group Plc prices show. That puts it on track for its lowest close since Aug. 17, according to data provider CMA.
Copper in London dropped 0.3 percent to $8,438, falling for the second day. Nickel declined 1.1 percent. Australia’s S&P/ASX 200 Index slipped 0.5 percent. Newcrest Mining Ltd., Australia’s largest gold mining company, fell 4.1 percent. BHP Billiton Ltd., the world’s biggest mining company, lost 2 percent. "
To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net ; Monami Yui in Tokyo at myui1@bloomberg.net
===
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Tread slowly !!
REF : Bloomberg
"March 15 (Bloomberg) -- The dollar rose to an 11-month high against the yen and Treasuries fell for a seventh day before data that may show U.S. manufacturing expanded and fewer Americans filed for unemployment benefits. Asian bonds dropped, while mining shares and copper prices retreated.
The dollar climbed 0.3 percent to 84.01 yen as of 11:33 a.m. in Tokyo. Treasury five-year notes had the longest losing streak in almost a year, spurring declines in government bonds in Japan and South Korea. The MSCI Asia Pacific Index slipped 0.3 percent and Standard & Poor’s 500 Index futures were little changed. Copper fell 0.4 percent.
“The U.S. economy is undoubtedly getting better,” said Kiyoshi Ishigane, a senior strategist at Mitsubishi UFJ Asset Management Co., which oversees about $71 billion in Tokyo. “The bond market is likely to remain weak.”
The world’s largest economy may expand 2.2 percent in 2012, accelerating from 1.7 percent last year, according to economists surveyed by Bloomberg News. By contrast, Premier Wen Jiabao is targeting slower growth for China’s economy and said yesterday that the relaxation of curbs on the property market would lead to “chaos.”
Yen Weakens
The greenback was near the highest level in four weeks against the euro amid reduced bets the Federal Reserve will begin a third round of bond purchases, or quantitative easing, which could debase the currency. The yen declined against most its major counterparts.
The Nikkei 225 Stock Average advanced 0.3 percent, poised to close at the highest level since July, on speculation a weaker yen will boost earnings of exporters. Toyota Motor Corp. and Honda Motor Co., Japan’s largest automakers, rose at least 1.5 percent. Sharp Corp. slid 3.4 percent after forecasting a record annual loss. The Shanghai Composite Index gained 0.2 percent. South Korea’s Kospi Index slipped 0.2 percent.
The Dow Jones Industrial Average has risen for the past six days, its longest rally in more than a year. The Federal Reserve Bank of New York’s general economic index probably slid to 17.5 this month from 19.5 in February, according to a Bloomberg survey of economists. Readings greater than zero signal expansion in the so-called Empire State Index. A gauge of manufacturing in the Philadelphia region may have increased to 12 in March, the highest since April.
Jobless Claims
Data later today may also show the number of Americans applying for jobless benefits fell by 5,000 to 357,000 in the week ended March 10, projections show. Unemployment in the U.S. will “decline gradually” and the inflation outlook is “subdued,” the Fed said in a statement on March 13.
“Should U.S. economic data continue to come in firm, it will support the market’s view that the Fed doesn’t need” further monetary easing, said Junichi Ishikawa, an analyst in Tokyo at IG Markets Securities Ltd.
Five-year Treasury yields added three basis points to 1.13 percent, the highest since October. South Korea’s bonds fell for a second day as the slump in Treasuries narrowed their interest- rate advantage. The yield on 2017 bonds climbed four basis points to 3.66 percent. Japan’s similar rate rose three basis points to 34.5 basis points.
Asia Default Swaps
The cost of insuring bonds against non-payment dropped in Asia, according to credit-default swap traders. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined two basis points, Royal Bank of Scotland Group Plc prices show. That puts it on track for its lowest close since Aug. 17, according to data provider CMA.
Copper in London dropped 0.3 percent to $8,438, falling for the second day. Nickel declined 1.1 percent. Australia’s S&P/ASX 200 Index slipped 0.5 percent. Newcrest Mining Ltd., Australia’s largest gold mining company, fell 4.1 percent. BHP Billiton Ltd., the world’s biggest mining company, lost 2 percent. "
To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net ; Monami Yui in Tokyo at myui1@bloomberg.net
===
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Breaking News : China Gas Valuation Tempts Richer Takeover Bid: Real M&A
Interesting story of going from a fashion retailer to a major supplier of GAS.
"March 15 (Bloomberg) -- Investors are betting that a takeover offer for China Gas Holdings Ltd., already the most expensive in the pipeline and gas distribution industries since the 2006 buyout boom, will need to get even richer to succeed.
China Gas, a one-time fashion retailer that delivers gas in the world’s second-largest economy, is trading 10 percent above the HK$3.50 a share bid from ENN Energy Holdings Ltd. and China Petroleum & Chemical Corp., known as Sinopec. That’s the most for any deal of more than $100 million in Asia’s developed markets, according to data compiled by Bloomberg. Including net debt, the HK$25.5-billion ($3.3 billion) offer values Hong Kong- based China Gas at 11.3 times earnings, the highest since 2006 for a cash acquisition of a pipeline or gas distributor.
While many traders are wagering ENN and Sinopec will raise their bid, CIMB Group Holdings Bhd. and Nomura Holdings Inc. are advising shareholders to sell China Gas. Boosting the offer would be a mistake for Sinopec with the purchase likely to add less than half a percent to its earnings, according to Sanford C. Bernstein & Co. Meanwhile, ENN is facing a downgrade to junk status over a potential increase in its debt from the deal.
“I am negative on this deal,” Alick Wong, a research analyst at Louis Capital Markets in Hong Kong who specializes in merger arbitrage, said in a telephone interview. “It’s too risky. If they are going to raise their offer, the increase may be small. If they don’t raise their offer, then the deal will collapse.”
China Gas fell as much as 1.6 percent today, and was down 4 cents to HK$3.81 per share as of 3:38 p.m. in Hong Kong. ENN and Sinopec were both down 0.6 percent.
Fashion Retailer
The offer price represents a “fair valuation” for China Gas, an external spokesman for the bidders wrote in an e-mailed response to questions. A spokesman for China Gas didn’t return calls seeking comment.
China Gas evolved out of a fashion retailer called eBiz.com Ltd., which was renamed Hai Xia Holdings Ltd. in 2001 and then China Gas the following year when it began to acquire natural- gas projects in China.
The company now sells gas to 6.6 million residential customers and about 42,000 industrial and commercial users, and owns 112 natural gas refilling stations, according to its results for the six months through September. In that period China Gas generated about 43 percent of its revenue from sales of piped natural gas, and another 39 percent from liquefied petroleum gas that is sold in canisters.
Highest Multiple
With China Gas’s market capitalization down 25 percent to HK$12.3 billion in the twelve months before its shares were halted on Dec. 7, ENN and Sinopec offered to pay HK$14.6 billion for 95 percent of the company, saying a combination would increase ENN’s share of the natural gas distribution market and allow Sinopec to “expand its businesses.” Sinopec already owns 5 percent of China Gas.
While a deal would give Sinopec increased market access, buying China Gas jointly with ENN, “will make it difficult to restructure the company and derive some of the cost savings that would be required to make this acquisition more attractive,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein, wrote in an e-mailed reply to questions. “At the current valuation, we see this as value dilutive.”
Including net debt, the HK$3.50 bid values China Gas at 11.3 times its earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg. That’s the highest multiple for any all-cash acquisition of a pipeline or gas distribution company worth more than $1 billion since a group led by Richard Kinder offered to buy Houston-based Kinder Morgan Inc. in May 2006 for 27.4 times Ebitda in a $27 billion deal, data compiled by Bloomberg show.
Credit Crisis
That takeover was completed during the 2005 to 2007 leveraged buyout spree, when about $1.6 trillion in LBOs were completed, according to Preqin Ltd., a London-based research firm. Dealmaking then ground to a halt as the collapse of subprime mortgages and Lehman Brothers Holdings Inc.’s 2008 bankruptcy froze credit markets and spurred the worst financial crisis since the Great Depression.
Excluding net debt, the offer from ENN and Sinopec valued China Gas at 24.5 times net income. That’s more expensive than every publicly traded utility network in Hong Kong with a market capitalization of more than $500 million except for Hong Kong & China Gas Co., data compiled by Bloomberg show. Those nine companies generated an average profit margin of 23 percent in the past year, compared with 5.3 percent for China Gas.
“China Gas’s fundamentals do not support such a high price,” said Shi Yan, a Shanghai-based analyst at UOB-Kay Hian Ltd. “A higher offer from ENN and Sinopec looks more and more unrealistic with the price at current levels.”
ENN, Sinopec
ENN, which supplies customers with fuel via a 17,000- kilometer gas pipeline network, will fund 55 percent of the deal, while Beijing-based Sinopec would finance the rest, the companies said. ENN, based in Hebei province in northern China, and Sinopec plan to leave 25 percent of China Gas in public investors’ hands to maintain its listing in Hong Kong, and may sell back some shares after the purchase to do so.
China Gas on Dec. 14 rebuffed the bid from ENN and Sinopec and last month said almost 4,000 employees signed letters opposing the offer. The workers are concerned the takeover may hurt the operations of the company and the development of the gas industry in China, according to a Feb. 3 filing to Hong Kong’s stock exchange.
Fortune Oil
The company’s shares closed above HK$3.50 on Dec. 20, and rose another 11 percent to reach a fifteen-month high of HK$3.88 on March 5. Purchases by China Gas’s largest shareholders, including former managing director Liu Ming Hui, who was removed from the company’s board last April after being detained by Shenzhen police the year before, have contributed to the recent surge in China Gas shares, according to Bank of China International Ltd. analyst Wang Pei.
Some speculators are betting on a higher price in part because of the buying by Liu and London-listed Fortune Oil Plc, which invests in Chinese infrastructure, according to CIMB analyst Mike Yip.
As of March 13, Liu and Fortune, and an entity controlled by a Fortune director, held a combined stake of about 14 percent in China Gas, up from about 10 percent at the start of 2012, according to filings with Hong Kong’s Securities and Futures Commission.
The parties, which have together bought more than 160 million shares of China Gas this year, haven’t publicly cited a reason for their purchases. Only one purchase, of 500,000 shares on Jan. 19, was for less than HK$3.50, the filings show.
Tee Kiam Poon, Fortune Oil’s chief executive officer, didn’t return calls to his office in Hong Kong. Calls and e- mails to China Gas’s Eric Leung outside of normal business hours requesting to speak with Liu weren’t immediately returned.
‘Price Comes Right’
“They want to increase the price,” said CIMB’s Yip. “If the price comes right they can tender their shares, if not they’ll stay the largest shareholders.”
Yip has an underperform rating and a HK$2.04 price estimate for China Gas, which he says reflects the dim prospects for its LPG business with the Chinese government championing sales of the safer and cleaner burning natural gas.
While ENN had 5.7 billion yuan ($899 million) in cash and equivalents at the end of June, its shares suffered a four-day, 14-percent slump after the bid as Moody’s Investors Services put the company’s debt on review for a downgrade to below investment grade. Moody’s cited the likelihood that the offer would “significantly increase” ENN’s debt position, while adding only a “minimal amount of cash flow.”
“Our fear is any increase in offer price will definitely mean higher gearing, and potential rights issues or placement of shares,” said Nicholas Yeo, the Hong Kong-based head of China and Hong Kong at Aberdeen Asset Management Plc, which sold its 14 million shares in ENN after news of the bid. Aberdeen oversees about $265 billion in assets globally.
‘No Discipline’
“Investors want to see discipline in pricing in all acquisitions,” Yeo said. “If there’s no discipline, then that’s going to be very negative for ENN.”
The acquisition requires approval from ENN’s shareholders, which will be difficult to get if the price is raised too high, according to Nomura Holdings.
“We advise investors to take profit” in China Gas, Nomura said in a Feb. 28 research note. It has a price estimate of HK$3.32 on China Gas, 14 percent below yesterday’s close.
Even if ENN can’t afford to pay more, Sinopec, with a market value of $102 billion, may be able to take a larger share of the bid, according to BOCI’s Wang.
“ENN may have to settle for a minority share in the sweetened offer since ENN cannot afford to raise its debt level too high,” said Wang, who has a price estimate of HK$3.42 on China Gas.
‘Impossible’
ENN plans to send shareholders details of the offer by March 31, a month later than the initial proposal indicated. On March 6, ENN’s Chairman Wang Yusuo told reporters in Beijing a higher bid was “impossible.”
The next day, ENN and Sinopec said Wang’s comments reflected his own opinion and the bidders weren’t bound by his words. China’s Ministry of Commerce has started to review the proposal for clearance under anti-monopoly laws, ENN and Sinopec said in a statement.
The risk for traders now is that the bid won’t be raised enough to spur China Gas’s shareholders into accepting, said UOB-Kay Hian’s Shi, who has a price estimate of HK$3.80 for the shares. A breakdown of the deal would “wipe out any gains investors have made” as the stock falls back to pre-deal levels, she said.
“There may be a chance for the offer to be sweetened up a bit, but the downside risk is too high,” Shi said.
To contact the reporters on this story: James Paton in Sydney at jpaton4@bloomberg.net ; Guo Aibing in Hong Kong at aguo10@bloomberg.net ; Angus Whitley in Sydney at awhitley1@bloomberg.net . "
"March 15 (Bloomberg) -- Investors are betting that a takeover offer for China Gas Holdings Ltd., already the most expensive in the pipeline and gas distribution industries since the 2006 buyout boom, will need to get even richer to succeed.
China Gas, a one-time fashion retailer that delivers gas in the world’s second-largest economy, is trading 10 percent above the HK$3.50 a share bid from ENN Energy Holdings Ltd. and China Petroleum & Chemical Corp., known as Sinopec. That’s the most for any deal of more than $100 million in Asia’s developed markets, according to data compiled by Bloomberg. Including net debt, the HK$25.5-billion ($3.3 billion) offer values Hong Kong- based China Gas at 11.3 times earnings, the highest since 2006 for a cash acquisition of a pipeline or gas distributor.
While many traders are wagering ENN and Sinopec will raise their bid, CIMB Group Holdings Bhd. and Nomura Holdings Inc. are advising shareholders to sell China Gas. Boosting the offer would be a mistake for Sinopec with the purchase likely to add less than half a percent to its earnings, according to Sanford C. Bernstein & Co. Meanwhile, ENN is facing a downgrade to junk status over a potential increase in its debt from the deal.
“I am negative on this deal,” Alick Wong, a research analyst at Louis Capital Markets in Hong Kong who specializes in merger arbitrage, said in a telephone interview. “It’s too risky. If they are going to raise their offer, the increase may be small. If they don’t raise their offer, then the deal will collapse.”
China Gas fell as much as 1.6 percent today, and was down 4 cents to HK$3.81 per share as of 3:38 p.m. in Hong Kong. ENN and Sinopec were both down 0.6 percent.
Fashion Retailer
The offer price represents a “fair valuation” for China Gas, an external spokesman for the bidders wrote in an e-mailed response to questions. A spokesman for China Gas didn’t return calls seeking comment.
China Gas evolved out of a fashion retailer called eBiz.com Ltd., which was renamed Hai Xia Holdings Ltd. in 2001 and then China Gas the following year when it began to acquire natural- gas projects in China.
The company now sells gas to 6.6 million residential customers and about 42,000 industrial and commercial users, and owns 112 natural gas refilling stations, according to its results for the six months through September. In that period China Gas generated about 43 percent of its revenue from sales of piped natural gas, and another 39 percent from liquefied petroleum gas that is sold in canisters.
Highest Multiple
With China Gas’s market capitalization down 25 percent to HK$12.3 billion in the twelve months before its shares were halted on Dec. 7, ENN and Sinopec offered to pay HK$14.6 billion for 95 percent of the company, saying a combination would increase ENN’s share of the natural gas distribution market and allow Sinopec to “expand its businesses.” Sinopec already owns 5 percent of China Gas.
While a deal would give Sinopec increased market access, buying China Gas jointly with ENN, “will make it difficult to restructure the company and derive some of the cost savings that would be required to make this acquisition more attractive,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein, wrote in an e-mailed reply to questions. “At the current valuation, we see this as value dilutive.”
Including net debt, the HK$3.50 bid values China Gas at 11.3 times its earnings before interest, taxes, depreciation and amortization, according to data compiled by Bloomberg. That’s the highest multiple for any all-cash acquisition of a pipeline or gas distribution company worth more than $1 billion since a group led by Richard Kinder offered to buy Houston-based Kinder Morgan Inc. in May 2006 for 27.4 times Ebitda in a $27 billion deal, data compiled by Bloomberg show.
Credit Crisis
That takeover was completed during the 2005 to 2007 leveraged buyout spree, when about $1.6 trillion in LBOs were completed, according to Preqin Ltd., a London-based research firm. Dealmaking then ground to a halt as the collapse of subprime mortgages and Lehman Brothers Holdings Inc.’s 2008 bankruptcy froze credit markets and spurred the worst financial crisis since the Great Depression.
Excluding net debt, the offer from ENN and Sinopec valued China Gas at 24.5 times net income. That’s more expensive than every publicly traded utility network in Hong Kong with a market capitalization of more than $500 million except for Hong Kong & China Gas Co., data compiled by Bloomberg show. Those nine companies generated an average profit margin of 23 percent in the past year, compared with 5.3 percent for China Gas.
“China Gas’s fundamentals do not support such a high price,” said Shi Yan, a Shanghai-based analyst at UOB-Kay Hian Ltd. “A higher offer from ENN and Sinopec looks more and more unrealistic with the price at current levels.”
ENN, Sinopec
ENN, which supplies customers with fuel via a 17,000- kilometer gas pipeline network, will fund 55 percent of the deal, while Beijing-based Sinopec would finance the rest, the companies said. ENN, based in Hebei province in northern China, and Sinopec plan to leave 25 percent of China Gas in public investors’ hands to maintain its listing in Hong Kong, and may sell back some shares after the purchase to do so.
China Gas on Dec. 14 rebuffed the bid from ENN and Sinopec and last month said almost 4,000 employees signed letters opposing the offer. The workers are concerned the takeover may hurt the operations of the company and the development of the gas industry in China, according to a Feb. 3 filing to Hong Kong’s stock exchange.
Fortune Oil
The company’s shares closed above HK$3.50 on Dec. 20, and rose another 11 percent to reach a fifteen-month high of HK$3.88 on March 5. Purchases by China Gas’s largest shareholders, including former managing director Liu Ming Hui, who was removed from the company’s board last April after being detained by Shenzhen police the year before, have contributed to the recent surge in China Gas shares, according to Bank of China International Ltd. analyst Wang Pei.
Some speculators are betting on a higher price in part because of the buying by Liu and London-listed Fortune Oil Plc, which invests in Chinese infrastructure, according to CIMB analyst Mike Yip.
As of March 13, Liu and Fortune, and an entity controlled by a Fortune director, held a combined stake of about 14 percent in China Gas, up from about 10 percent at the start of 2012, according to filings with Hong Kong’s Securities and Futures Commission.
The parties, which have together bought more than 160 million shares of China Gas this year, haven’t publicly cited a reason for their purchases. Only one purchase, of 500,000 shares on Jan. 19, was for less than HK$3.50, the filings show.
Tee Kiam Poon, Fortune Oil’s chief executive officer, didn’t return calls to his office in Hong Kong. Calls and e- mails to China Gas’s Eric Leung outside of normal business hours requesting to speak with Liu weren’t immediately returned.
‘Price Comes Right’
“They want to increase the price,” said CIMB’s Yip. “If the price comes right they can tender their shares, if not they’ll stay the largest shareholders.”
Yip has an underperform rating and a HK$2.04 price estimate for China Gas, which he says reflects the dim prospects for its LPG business with the Chinese government championing sales of the safer and cleaner burning natural gas.
While ENN had 5.7 billion yuan ($899 million) in cash and equivalents at the end of June, its shares suffered a four-day, 14-percent slump after the bid as Moody’s Investors Services put the company’s debt on review for a downgrade to below investment grade. Moody’s cited the likelihood that the offer would “significantly increase” ENN’s debt position, while adding only a “minimal amount of cash flow.”
“Our fear is any increase in offer price will definitely mean higher gearing, and potential rights issues or placement of shares,” said Nicholas Yeo, the Hong Kong-based head of China and Hong Kong at Aberdeen Asset Management Plc, which sold its 14 million shares in ENN after news of the bid. Aberdeen oversees about $265 billion in assets globally.
‘No Discipline’
“Investors want to see discipline in pricing in all acquisitions,” Yeo said. “If there’s no discipline, then that’s going to be very negative for ENN.”
The acquisition requires approval from ENN’s shareholders, which will be difficult to get if the price is raised too high, according to Nomura Holdings.
“We advise investors to take profit” in China Gas, Nomura said in a Feb. 28 research note. It has a price estimate of HK$3.32 on China Gas, 14 percent below yesterday’s close.
Even if ENN can’t afford to pay more, Sinopec, with a market value of $102 billion, may be able to take a larger share of the bid, according to BOCI’s Wang.
“ENN may have to settle for a minority share in the sweetened offer since ENN cannot afford to raise its debt level too high,” said Wang, who has a price estimate of HK$3.42 on China Gas.
‘Impossible’
ENN plans to send shareholders details of the offer by March 31, a month later than the initial proposal indicated. On March 6, ENN’s Chairman Wang Yusuo told reporters in Beijing a higher bid was “impossible.”
The next day, ENN and Sinopec said Wang’s comments reflected his own opinion and the bidders weren’t bound by his words. China’s Ministry of Commerce has started to review the proposal for clearance under anti-monopoly laws, ENN and Sinopec said in a statement.
The risk for traders now is that the bid won’t be raised enough to spur China Gas’s shareholders into accepting, said UOB-Kay Hian’s Shi, who has a price estimate of HK$3.80 for the shares. A breakdown of the deal would “wipe out any gains investors have made” as the stock falls back to pre-deal levels, she said.
“There may be a chance for the offer to be sweetened up a bit, but the downside risk is too high,” Shi said.
To contact the reporters on this story: James Paton in Sydney at jpaton4@bloomberg.net ; Guo Aibing in Hong Kong at aguo10@bloomberg.net ; Angus Whitley in Sydney at awhitley1@bloomberg.net . "
Lorenzo Bini Smaghi - Has Europe learnt from Greek debt crisis mistakes? - NOPE
REF FT.com
"The markets seem to have coped relatively well with “the biggest sovereign restructuring ever” last week. But they are already focusing on the next possible victim: Portugal’s bond yields have soared to levels close to those on Greek bonds a few months ago. European authorities have declared that Greece was unique and that there will be no more debt restructuring. Undoubtedly, though, they will be tested in the coming months."
I feel we have not heard the end of the "Greek Crisis", still a lot to play out in the EURO zone !!
"The markets seem to have coped relatively well with “the biggest sovereign restructuring ever” last week. But they are already focusing on the next possible victim: Portugal’s bond yields have soared to levels close to those on Greek bonds a few months ago. European authorities have declared that Greece was unique and that there will be no more debt restructuring. Undoubtedly, though, they will be tested in the coming months."
I feel we have not heard the end of the "Greek Crisis", still a lot to play out in the EURO zone !!
Copy of the Employee Letter published !!
A copy of the letter published in NY Times
REF NY TIMES
"Why I Am Leaving Goldman Sachs
By GREG SMITH
Published: March 14, 2012
TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.
To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.
It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.
But this was not always the case. For more than a decade I recruited and mentored candidates through our grueling interview process. I was selected as one of 10 people (out of a firm of more than 30,000) to appear on our recruiting video, which is played on every college campus we visit around the world. In 2006 I managed the summer intern program in sales and trading in New York for the 80 college students who made the cut, out of the thousands who applied.
I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.
When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.
Over the course of my career I have had the privilege of advising two of the largest hedge funds on the planet, five of the largest asset managers in the United States, and three of the most prominent sovereign wealth funds in the Middle East and Asia. My clients have a total asset base of more than a trillion dollars. I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs. Another sign that it was time to leave.
How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.
What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.
Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.
It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.
It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.
These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.
When I was a first-year analyst I didn’t know where the bathroom was, or how to tie my shoelaces. I was taught to be concerned with learning the ropes, finding out what a derivative was, understanding finance, getting to know our clients and what motivated them, learning how they defined success and what we could do to help them get there.
My proudest moments in life — getting a full scholarship to go from South Africa to Stanford University, being selected as a Rhodes Scholar national finalist, winning a bronze medal for table tennis at the Maccabiah Games in Israel, known as the Jewish Olympics — have all come through hard work, with no shortcuts. Goldman Sachs today has become too much about shortcuts and not enough about achievement. It just doesn’t feel right to me anymore.
I hope this can be a wake-up call to the board of directors. Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.
Greg Smith is resigning today as a Goldman Sachs executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa. "
You decide !!
Kind Regards
Steven
E-mail : steven@global.co.za
REF NY TIMES
"Why I Am Leaving Goldman Sachs
By GREG SMITH
Published: March 14, 2012
TODAY is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.
To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.
It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.
But this was not always the case. For more than a decade I recruited and mentored candidates through our grueling interview process. I was selected as one of 10 people (out of a firm of more than 30,000) to appear on our recruiting video, which is played on every college campus we visit around the world. In 2006 I managed the summer intern program in sales and trading in New York for the 80 college students who made the cut, out of the thousands who applied.
I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.
When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.
Over the course of my career I have had the privilege of advising two of the largest hedge funds on the planet, five of the largest asset managers in the United States, and three of the most prominent sovereign wealth funds in the Middle East and Asia. My clients have a total asset base of more than a trillion dollars. I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs. Another sign that it was time to leave.
How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.
What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.
Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.
It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.
It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.
These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.
When I was a first-year analyst I didn’t know where the bathroom was, or how to tie my shoelaces. I was taught to be concerned with learning the ropes, finding out what a derivative was, understanding finance, getting to know our clients and what motivated them, learning how they defined success and what we could do to help them get there.
My proudest moments in life — getting a full scholarship to go from South Africa to Stanford University, being selected as a Rhodes Scholar national finalist, winning a bronze medal for table tennis at the Maccabiah Games in Israel, known as the Jewish Olympics — have all come through hard work, with no shortcuts. Goldman Sachs today has become too much about shortcuts and not enough about achievement. It just doesn’t feel right to me anymore.
I hope this can be a wake-up call to the board of directors. Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.
Greg Smith is resigning today as a Goldman Sachs executive director and head of the firm’s United States equity derivatives business in Europe, the Middle East and Africa. "
You decide !!
Kind Regards
Steven
E-mail : steven@global.co.za
Response by Goldman Sachs top brass in Wall Street Journal
FROM Wall Street Journal - response by GS !!
You decide !! for me where there is smoke there is FIRE !!
Our Response to Today’s New York Times Op-Ed:
"By now, many of you have read the submission in today’s New York Times by a former employee of the firm. Needless to say, we were disappointed to read the assertions made by this individual that do not reflect our values, our culture and how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients.
In a company of our size, it is not shocking that some people could feel disgruntled. But that does not and should not represent our firm of more than 30,000 people. Everyone is entitled to his or her opinion. But, it is unfortunate that an individual opinion about Goldman Sachs is amplified in a newspaper and speaks louder than the regular, detailed and intensive feedback you have provided the firm and independent, public surveys of workplace environments.
While I expect you find the words you read today foreign from your own day-to-day experiences, we wanted to remind you what we, as a firm – individually and collectively – think about Goldman Sachs and our client-driven culture.
First, 85 percent of the firm responded to our recent People Survey, which provides the most detailed and comprehensive review to determine how our people feel about Goldman Sachs and the work they do.
And, what do our people think about how we interact with our clients? Across the firm at all levels, 89 percent of you said that that the firm provides exceptional service to them. For the group of nearly 12,000 vice presidents, of which the author of today’s commentary was, that number was similarly high.
Anyone who feels otherwise has available to him or her a mechanism for anonymously expressing their concerns. We are not aware that the writer of the opinion piece expressed misgivings through this avenue, however, if an individual expresses issues, we examine them carefully and we will be doing so in this case.
Our firm has had its share of challenges during and after the financial crisis, but your pride in Goldman Sachs is clear. You’ve not only told us, you have told external surveys.
Just two weeks ago, Goldman Sachs was named one of the best places to work in the United Kingdom, where this employee resides. The firm was the highest placed financial services company for the third consecutive year and was the only one in its peer group to make the top 25.
We are far from perfect, but where the firm has seen a problem, we’ve responded to it seriously and substantively. And we have demonstrated that fact.
It is unfortunate that all of you who worked so hard through a difficult environment over the last few years now have to respond to this. But, our response is best demonstrated in how we really work with and help our clients through our commitment to their long-term interests. That priority has distinguished us in the past, through the financial crisis and today.
Thank you.
Lloyd C. Blankfein Gary D. Cohn "
Ref: Wall Street Journal
Kind Regards
Steven
Steven Morris Chartered Accountant (SA)
Mobile :+27 83 943 1858
Facsimile : 0866 712 498
E-mail : steven@global.co.za
You decide !! for me where there is smoke there is FIRE !!
Our Response to Today’s New York Times Op-Ed:
"By now, many of you have read the submission in today’s New York Times by a former employee of the firm. Needless to say, we were disappointed to read the assertions made by this individual that do not reflect our values, our culture and how the vast majority of people at Goldman Sachs think about the firm and the work it does on behalf of our clients.
In a company of our size, it is not shocking that some people could feel disgruntled. But that does not and should not represent our firm of more than 30,000 people. Everyone is entitled to his or her opinion. But, it is unfortunate that an individual opinion about Goldman Sachs is amplified in a newspaper and speaks louder than the regular, detailed and intensive feedback you have provided the firm and independent, public surveys of workplace environments.
While I expect you find the words you read today foreign from your own day-to-day experiences, we wanted to remind you what we, as a firm – individually and collectively – think about Goldman Sachs and our client-driven culture.
First, 85 percent of the firm responded to our recent People Survey, which provides the most detailed and comprehensive review to determine how our people feel about Goldman Sachs and the work they do.
And, what do our people think about how we interact with our clients? Across the firm at all levels, 89 percent of you said that that the firm provides exceptional service to them. For the group of nearly 12,000 vice presidents, of which the author of today’s commentary was, that number was similarly high.
Anyone who feels otherwise has available to him or her a mechanism for anonymously expressing their concerns. We are not aware that the writer of the opinion piece expressed misgivings through this avenue, however, if an individual expresses issues, we examine them carefully and we will be doing so in this case.
Our firm has had its share of challenges during and after the financial crisis, but your pride in Goldman Sachs is clear. You’ve not only told us, you have told external surveys.
Just two weeks ago, Goldman Sachs was named one of the best places to work in the United Kingdom, where this employee resides. The firm was the highest placed financial services company for the third consecutive year and was the only one in its peer group to make the top 25.
We are far from perfect, but where the firm has seen a problem, we’ve responded to it seriously and substantively. And we have demonstrated that fact.
It is unfortunate that all of you who worked so hard through a difficult environment over the last few years now have to respond to this. But, our response is best demonstrated in how we really work with and help our clients through our commitment to their long-term interests. That priority has distinguished us in the past, through the financial crisis and today.
Thank you.
Lloyd C. Blankfein Gary D. Cohn "
Ref: Wall Street Journal
Kind Regards
Steven
Steven Morris Chartered Accountant (SA)
Mobile :+27 83 943 1858
Facsimile : 0866 712 498
E-mail : steven@global.co.za
Goldman Employee Criticizes Firm for Ripping Off Clients
Where there is SMOKE there is FIRE !! - Kermit & Miss Piggy as being stood up for finally !!
REF: BLOOMBERG.COM
"March 14 (Bloomberg) -- A departing Goldman Sachs Group Inc. employee mounted an unprecedented public attack on its “toxic and destructive” culture in a New York Times opinion piece, becoming the first serving insider to openly criticize the firm.
Greg Smith, identified by the newspaper as an executive director and head of the firm’s U.S. equity derivatives business in Europe, will leave the firm after 12 years, blaming Chief Executive Officer Lloyd Blankfein and President Gary Cohn for losing hold over the firm’s culture. Executive directors are junior to managing directors and partners, the most senior rank.
“I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients,” Smith, a Stanford University graduate, wrote in the New York Times. “It’s purely about how we can make the most possible money off of them.”
The attack adds to criticism from politicians and protesters who blame the company for triggering the financial crisis and profiting at clients’ expense. Goldman Sachs has already faced congressional hearings probing its role in the financial crisis and paid $550 million in 2010 to settle a lawsuit accusing it of misleading investors in a collateralized debt obligation.
‘Heartfelt Piece’
“This will certainly be damaging for the firm,” said John Purcell, founder of London-based executive search firm Purcell & Co. “It’s obviously a very heartfelt piece. Maybe he’s made a sufficient amount of money in his life that he isn’t particularly bothered if he isn’t employed in financial services again and works in a completely different world like teaching.”
Goldman Sachs fell $3.02, or 2.4 percent, to $121.52 in New York trading at 10:51 a.m.
A call to Smith’s mobile phone in London wasn’t immediately answered. Goldman Sachs said it disagreed with his criticism.
“In our view, we will only be successful if our clients are successful,” the firm said in a statement. “This fundamental truth lies at the heart of how we conduct ourselves.”
“It makes me ill how callously people talk about ripping their clients off,” Smith wrote. “‘Over the last 12 months I have seen five different managing directors refer to their own clients as ‘‘muppets,’’ sometimes over internal e-mail.’’
Trusting Firm
Smith blamed the company’s management for promoting employees who made money for the firm, often by getting customers to buy products that Goldman Sachs was trying to get rid of. If clients can’t trust the firm, they will stop doing business with it, however smart its employees, Smith wrote in the Times.
‘‘Culture was always a vital part of Goldman Sachs’s success,” he wrote in the New York Times. “It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients,” he said. “It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm.”
Goldman Sachs’s score was among the lowest in a recent study of corporate reputations, according to a Feb. 13 statement from Harris Interactive Inc., a market research firm.
To contact the reporters on this story: Ambereen Choudhury in London at achoudhury@bloomberg.net
===
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
REF: BLOOMBERG.COM
"March 14 (Bloomberg) -- A departing Goldman Sachs Group Inc. employee mounted an unprecedented public attack on its “toxic and destructive” culture in a New York Times opinion piece, becoming the first serving insider to openly criticize the firm.
Greg Smith, identified by the newspaper as an executive director and head of the firm’s U.S. equity derivatives business in Europe, will leave the firm after 12 years, blaming Chief Executive Officer Lloyd Blankfein and President Gary Cohn for losing hold over the firm’s culture. Executive directors are junior to managing directors and partners, the most senior rank.
“I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients,” Smith, a Stanford University graduate, wrote in the New York Times. “It’s purely about how we can make the most possible money off of them.”
The attack adds to criticism from politicians and protesters who blame the company for triggering the financial crisis and profiting at clients’ expense. Goldman Sachs has already faced congressional hearings probing its role in the financial crisis and paid $550 million in 2010 to settle a lawsuit accusing it of misleading investors in a collateralized debt obligation.
‘Heartfelt Piece’
“This will certainly be damaging for the firm,” said John Purcell, founder of London-based executive search firm Purcell & Co. “It’s obviously a very heartfelt piece. Maybe he’s made a sufficient amount of money in his life that he isn’t particularly bothered if he isn’t employed in financial services again and works in a completely different world like teaching.”
Goldman Sachs fell $3.02, or 2.4 percent, to $121.52 in New York trading at 10:51 a.m.
A call to Smith’s mobile phone in London wasn’t immediately answered. Goldman Sachs said it disagreed with his criticism.
“In our view, we will only be successful if our clients are successful,” the firm said in a statement. “This fundamental truth lies at the heart of how we conduct ourselves.”
“It makes me ill how callously people talk about ripping their clients off,” Smith wrote. “‘Over the last 12 months I have seen five different managing directors refer to their own clients as ‘‘muppets,’’ sometimes over internal e-mail.’’
Trusting Firm
Smith blamed the company’s management for promoting employees who made money for the firm, often by getting customers to buy products that Goldman Sachs was trying to get rid of. If clients can’t trust the firm, they will stop doing business with it, however smart its employees, Smith wrote in the Times.
‘‘Culture was always a vital part of Goldman Sachs’s success,” he wrote in the New York Times. “It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients,” he said. “It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm.”
Goldman Sachs’s score was among the lowest in a recent study of corporate reputations, according to a Feb. 13 statement from Harris Interactive Inc., a market research firm.
To contact the reporters on this story: Ambereen Choudhury in London at achoudhury@bloomberg.net
===
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Treasuries Retreat as Dollar Gains, U.S. Stocks Fluctuate
Are the Bull's slowing !!
REF : BLOOMBERG.com
"March 14 (Bloomberg) -- Treasuries slid, sending 10-year yields to a four-month high, while the dollar rose and gold tumbled as the Federal Reserve’s improved economic assessment caused investors to reduce bets on more monetary easing. Most U.S. stocks fell a day after the best rally of 2012.
The U.S. 10-year yield increased nine basis points to 2.22 percent as of 11:33 a.m. in New York and the dollar strengthened versus all 16 major peers. The Standard & Poor’s 500 Index slipped less than 0.2 percent after yesterday closing at its highest level since June 2008. The cost of insuring European company debt declined to the lowest in more than seven months. Gold extended its three-day drop to almost 4 percent.
The Fed said yesterday that strains in global financial markets have eased and the labor market is gathering strength. In a separate statement, the central bank said 15 of the nation’s largest 19 banks may keep adequate capital levels even in a recession. European industrial output rose 0.2 percent in January from the previous month. Chinese Premier Wen Jiabao said relaxing property curbs could cause “chaos” in the market.
“Some worry that with the Fed’s upgrade of the economic environment, they may not do a bond purchase program on the long end,” said Ira Jersey, an interest-rate strategist at Credit Suisse Group AG in New York, one of 21 primary dealers that are required to bid at the auctions.
The yield on the 30-year U.S. Treasury climbed nine basis points to 3.36 percent before the government sells $13 billion of the securities, the last of three auctions this week totaling $66 billion. Two-year yields increased two basis points to 0.37 percent.
U.S. Equities
About five stocks retreated for every two that rose on U.S. exchanges. Banks and transportation companies led losses among 24 industry groups in the S&P 500. Apple Inc. climbed for a sixth straight day, rising 2.5 percent to a record $582.55. Ford Motor Co. rallied as much as 1.6 percent.
The Dow Jones Industrial Average closed at the highest level since 2007 yesterday and financial shares in the S&P 500 rallied 3.9 percent, the biggest gain of the year, to close at the highest level since July. The Fed said that it expects “moderate economic growth” and predicted the unemployment rate “will decline gradually.”
JPMorgan Chase & Co. and Wells Fargo joined banks raising dividends and authorizing share repurchases after passing the stress tests. The results of the Fed’s tests showed that almost three years of economic expansion have helped U.S. banks raise profits, rebuild capital and increase liquidity after the collapse of Lehman Brothers Holdings Inc. in 2008.
Stress Tests
Citigroup Inc., the lender that took the most government aid during the financial crisis, said it will resubmit its capital plan to regulators after failing to meet some minimum standards in the tests. Citigroup has repaid $45 billion in TARP money. Chief Executive Officer Vikram Pandit said in a memo to employees today that the bank still plans a “meaningful” payout to shareholders.
“I was expecting all of the banks to pass, but when you look at the terms, the stress tests were so onerous that a modest miss really isn’t all that discouraging,” said William Fitzpatrick, a Milwaukee-based financial-services analyst at Manulife Asset Management, whose team oversees $800 million.
The Stoxx 600 advanced for a second day as three shares gained for every one that declined. Barclays Plc and Credit Suisse Group AG climbed more than 4 percent to lead a rally in bank stocks. EON AG, Germany’s largest utility, jumped 6.2 percent as earnings exceeded analysts’ estimates. Legal & General Group Plc surged 5.6 percent after the fourth-biggest U.K. insurer by market value boosted its dividend as full-year profit rose.
Default Swaps
The Markit iTraxx Europe Index of credit-default swaps on 12 companies with investment-grade ratings fell 4 basis points to 125.75 basis points, the lowest since Aug. 2.
The dollar advanced 0.2 percent against the euro and 0.9 percent versus the yen. The Dollar Index, a gauge of the currency against six major peers, increased 0.3 percent.
The pound strengthened versus 13 of 16 major peers and the yield on the 10-year gilt jumped 15 basis points to 2.32 percent. Britain is proposing to revive “perpetual gilts,” first used in the wake of the 1720 South Sea Bubble crisis, to allow the government to borrow for as long as possible at record-low rates, according to two people familiar with budget discussions. Chancellor of the Exchequer George Osborne will use his March 21 budget to announce a consultation on introducing bonds of up to 100 years and reviving debt with no fixed maturity.
The two-year Italian yield slipped four basis points to 2.00 percent as the government sold 6 billion euros ($7.8 billion) of bonds today, with borrowing costs on its three-year debt falling to the lowest since October 2010.
Emerging Markets
The MSCI Emerging Markets Index advanced 0.1 percent, set for the highest close since March 2. Benchmark indexes in Turkey, Poland, Hungary and South Korea gained at least 1 percent. Russia’s Micex Index added 1.2 percent. The FTSE/JSE Africa All Shares Index rose 1 percent in Johannesburg.
China’s Shanghai Composite Index sank 2.6 percent, the biggest drop since Nov. 30. A gauge tracking Chinese property stocks in Shanghai slid 3.7 percent. Anhui Conch Cement Co., the nation’s biggest maker of the building material, fell 3.3 percent, and Poly Real Estate Group Co., China’s second-largest developer by market value, slumped 3 percent.
Copper lost 1.1 percent. Gold for immediate delivery declined 1.5 percent to $1,648.70 an ounce after falling 1.6 percent yesterday. Oil retreated 0.3 percent to $106.39 a barrel.
To contact the reporters on this story: Susanne Walker in New York at swalker33@bloomberg.net ; Rita Nazareth in New York at rnazareth@bloomberg.net
===
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Wednesday, 14 March 2012
Apple Drives Record $1.24 Trillion of Company Cash, Moody’s Says
From the most Valuable bussiness in the world !!
REF : Bloomberg
"March 14 (Bloomberg) -- Apple Inc., the world’s most valuable business, led U.S. corporations in amassing a record $1.24 trillion of cash last year as memories of the 2008 credit crisis linger, according to Moody’s Investors Service.
Excluding Apple, with $97.6 billion of cash and no outstanding debt, the figure was relatively unchanged at $1.15 trillion, even as revenue and cash flow from operations rose to a record, Moody’s analysts led by Richard Lane said in a report yesterday. Investment-grade companies graded A3 or higher by Moody’s hold $594.3 billion, or 54 percent, Moody’s said in the report, which tracked cash and liquid investments for non- financials.
“Treasurers have distinct memories of capital markets closing very quickly, and I think companies in general are more focused on controlling their fate from a funding standpoint and part of that means being able to internally fund your investment needs,” Lane said in a telephone interview. Still, “there’s a large and growing use of the cash that these companies generated over the last handful of years.”
The biggest U.S. nonfinancial corporations maintained fortress balance sheets last year as the U.S. economic recovery wavered and European policy makers struggled to contain the sovereign-debt crisis. Companies increased capital expenditures, dividend payments, share buybacks and acquisition spending, even after posting record revenue of $10.4 trillion and cash flow from operations of $1.3 trillion, according to Moody’s.
Record-Low Costs
Companies, including financial borrowers, sold $1.1 trillion of U.S. dollar-denominated debt last year, enticed by record-low borrowing costs spurred by the Federal Reserve leaving interest rates in a target range of zero to 0.25 percent, according to data compiled by Bloomberg.
“Companies have availed themselves of the low interest rates this year or last year to either refinance debt or bring debt into their capital structure for the first time,” Lane said. “Taken together with the economic environment modest as it was, even with increasing levels of cash outlays for research and development, capex, dividends, buybacks and acquisitions, it still resulted in companies growing aggregate levels of cash.”
Moody’s, which tracked those figures through the third quarter of 2011, excluded Cupertino, California-based Apple, Qualcomm Inc. and EMC Corp. from the cash flow data and net debt figures to avoid skewing results, Lane said.
Dividend Payments
Capital expenditures, or funds used for activities from repairing a roof to building a new factory, rose to $714 billion, the highest since 2008, accounting for the biggest use of cash from operations, the analysts said in the report. Acquisition spending followed with $329 billion, while dividend payments rose to $284 billion and share buybacks increased to $194 billion.
Spending is likely to be about the same this year, as Moody’s anticipates growth of 2.9 percent in G-20 economies from 3.1 percent last year, according to the report.
Moody’s estimates that companies hold almost $700 billion of the cash, or 57 percent, overseas and are unlikely to pay hefty taxes to repatriate it.
The increased liquidity on company balance sheets is good for credit, because it protects corporations if capital markets are disrupted, according to the report. "
To contact the reporter on this story: Sapna Maheshwari in New York at sapnam@bloomberg.net
===
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
European Stock Futures Climb; Metals, Chinese Stocks Fall
Interestig time we in !!
Is a pull back immenent or we in a BULL RUN !!!
REF : Bloomberg
"March 14 (Bloomberg) -- European stocks rose, extending the biggest gain in six weeks, and the dollar strengthened after the Federal Reserve bolstered confidence in the U.S. banking system and raised its economic assessment. Commodities fell as Premier Wen Jiabao said home prices were far from reasonable levels.
The Stoxx Europe 600 Index climbed 0.6 percent as of 8:22 a.m. in London, adding to a 1.8 percent rally yesterday. Standard & Poor’s 500 Index futures slipped 0.1 percent. The yen reached an 11-month low and the dollar rose against most major peers. Yields on German 10-year bonds climbed six basis points to 1.88 percent. Treasury 10-year yields advanced to the highest level this year. The S&P GSCI Index of raw materials retreated 0.4 percent.
The Fed said yesterday that strains in global financial markets have eased and the labor market is gathering strength. In a separate statement, the U.S. central bank said 15 of the nation’s largest 19 banks could maintain adequate capital levels even in a recession scenario. Wen said relaxing China’s property curbs could cause “chaos” in the market.
“It is just a continued pattern of relatively strong U.S. economic data,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which oversees about $100 billion. The stress tests are “a fairly positive sign for the U.S. financial sector, banks in particular. It shows how much things have turned around from the situation three years ago,” he said.
Asian Stocks
The Shanghai Composite Index tumbled 2.6 percent, the biggest drop in more than three months. Hong Kong’s Hang Seng Index slipped 0.2 percent, erasing an early gain of as much as 1.4 percent, as banks and real-estate developers slumped.
The Nikkei 225 Stock Average gained 1.5 percent as exporters advanced on speculation that declines in the yen will boost overseas earnings. The BSE India Sensitive Index, or Sensex, climbed 0.6 percent.
Samsung Electronics Co., South Korea’s biggest consumer electronics exporter, rose 2.4 percent in Seoul after iSuppli said the company will supply the touch screen for Apple Inc.’s new iPad. United Co. Rusal, an aluminum producer, fell 4.1 percent in Hong Kong after its chairman quit because of disputes with controlling shareholder Oleg Deripaska about dividends and asset sales.
The Dow Jones Industrial Average closed yesterday at the highest level since 2007. The Fed said that it expects “moderate economic growth” and predicted the unemployment rate “will decline gradually.” In their last statement in January, policy makers said growth would be “modest” and unemployment “will decline only gradually.”
Stress Tests
Financial stocks rose 0.7 percent in the MSCI Asia-Pacific gauge, the third-biggest advance among 10 industries. The results of the U.S. central bank’s stress tests show that almost three years of economic expansion have helped U.S. banks raise profits, rebuild capital, and increase liquidity after the collapse of Lehman Brothers Holdings Inc. in 2008.
Citigroup Inc. slumped 3.3 percent after the close of regular trading in New York as it failed to meet the Federal Reserve’s minimum requirements in a stress test.
“I was expecting all of the banks to pass, but when you look at the terms the stress tests were so onerous that a modest miss really isn’t all that discouraging to me,” said William Fitzpatrick, a Milwaukee-based financial-services analyst at Manulife Asset Management, whose team oversees $800 million.
Breakeven Rate
A gauge of inflation expectations based on Treasury yields climbed to a seven-month high before U.S. data today that may show import prices rose the most in three months. The 10-year breakeven rate, derived from the difference between yields on conventional and index-linked bonds, rose as high as 2.38 percentage points, a level unseen since Aug. 2. The benchmark 10-year note yield rose three basis points to 2.16 percent, the highest level since Dec. 2.
The cost of insuring Asian bonds against non-payment dropped, according to credit-default swap traders. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 5 basis points to 147 basis points, Barclays Plc prices show. The gauge is poised to close at its lowest level since Sept. 1, according to data provider CMA.
The dollar rose 0.3 percent to 83.22 yen, after reaching 83.32, the strongest level since April. The yen has lost 5.4 percent in the past month, the worst performer among the 10 developed-market currencies tracked by Bloomberg Correlation- Weighted Indexes.
Copper for delivery in three months fell as much as 1 percent to $8,474.50 a metric ton in London.
Platinum prices climbed above gold for a third day, after trading at a discount since September, on speculation that demand will increase with stronger global economic growth as output in South Africa, the world’s largest producer, declines. Spot platinum, this year’s best-performing precious metal, traded at $1,689.25 an ounce. Spot gold was at $1,668.35 an ounce. "
To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net ; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net .
===
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Is a pull back immenent or we in a BULL RUN !!!
REF : Bloomberg
"March 14 (Bloomberg) -- European stocks rose, extending the biggest gain in six weeks, and the dollar strengthened after the Federal Reserve bolstered confidence in the U.S. banking system and raised its economic assessment. Commodities fell as Premier Wen Jiabao said home prices were far from reasonable levels.
The Stoxx Europe 600 Index climbed 0.6 percent as of 8:22 a.m. in London, adding to a 1.8 percent rally yesterday. Standard & Poor’s 500 Index futures slipped 0.1 percent. The yen reached an 11-month low and the dollar rose against most major peers. Yields on German 10-year bonds climbed six basis points to 1.88 percent. Treasury 10-year yields advanced to the highest level this year. The S&P GSCI Index of raw materials retreated 0.4 percent.
The Fed said yesterday that strains in global financial markets have eased and the labor market is gathering strength. In a separate statement, the U.S. central bank said 15 of the nation’s largest 19 banks could maintain adequate capital levels even in a recession scenario. Wen said relaxing China’s property curbs could cause “chaos” in the market.
“It is just a continued pattern of relatively strong U.S. economic data,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which oversees about $100 billion. The stress tests are “a fairly positive sign for the U.S. financial sector, banks in particular. It shows how much things have turned around from the situation three years ago,” he said.
Asian Stocks
The Shanghai Composite Index tumbled 2.6 percent, the biggest drop in more than three months. Hong Kong’s Hang Seng Index slipped 0.2 percent, erasing an early gain of as much as 1.4 percent, as banks and real-estate developers slumped.
The Nikkei 225 Stock Average gained 1.5 percent as exporters advanced on speculation that declines in the yen will boost overseas earnings. The BSE India Sensitive Index, or Sensex, climbed 0.6 percent.
Samsung Electronics Co., South Korea’s biggest consumer electronics exporter, rose 2.4 percent in Seoul after iSuppli said the company will supply the touch screen for Apple Inc.’s new iPad. United Co. Rusal, an aluminum producer, fell 4.1 percent in Hong Kong after its chairman quit because of disputes with controlling shareholder Oleg Deripaska about dividends and asset sales.
The Dow Jones Industrial Average closed yesterday at the highest level since 2007. The Fed said that it expects “moderate economic growth” and predicted the unemployment rate “will decline gradually.” In their last statement in January, policy makers said growth would be “modest” and unemployment “will decline only gradually.”
Stress Tests
Financial stocks rose 0.7 percent in the MSCI Asia-Pacific gauge, the third-biggest advance among 10 industries. The results of the U.S. central bank’s stress tests show that almost three years of economic expansion have helped U.S. banks raise profits, rebuild capital, and increase liquidity after the collapse of Lehman Brothers Holdings Inc. in 2008.
Citigroup Inc. slumped 3.3 percent after the close of regular trading in New York as it failed to meet the Federal Reserve’s minimum requirements in a stress test.
“I was expecting all of the banks to pass, but when you look at the terms the stress tests were so onerous that a modest miss really isn’t all that discouraging to me,” said William Fitzpatrick, a Milwaukee-based financial-services analyst at Manulife Asset Management, whose team oversees $800 million.
Breakeven Rate
A gauge of inflation expectations based on Treasury yields climbed to a seven-month high before U.S. data today that may show import prices rose the most in three months. The 10-year breakeven rate, derived from the difference between yields on conventional and index-linked bonds, rose as high as 2.38 percentage points, a level unseen since Aug. 2. The benchmark 10-year note yield rose three basis points to 2.16 percent, the highest level since Dec. 2.
The cost of insuring Asian bonds against non-payment dropped, according to credit-default swap traders. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 5 basis points to 147 basis points, Barclays Plc prices show. The gauge is poised to close at its lowest level since Sept. 1, according to data provider CMA.
The dollar rose 0.3 percent to 83.22 yen, after reaching 83.32, the strongest level since April. The yen has lost 5.4 percent in the past month, the worst performer among the 10 developed-market currencies tracked by Bloomberg Correlation- Weighted Indexes.
Copper for delivery in three months fell as much as 1 percent to $8,474.50 a metric ton in London.
Platinum prices climbed above gold for a third day, after trading at a discount since September, on speculation that demand will increase with stronger global economic growth as output in South Africa, the world’s largest producer, declines. Spot platinum, this year’s best-performing precious metal, traded at $1,689.25 an ounce. Spot gold was at $1,668.35 an ounce. "
To contact the reporters on this story: Lynn Thomasson in Hong Kong at lthomasson@bloomberg.net ; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net .
===
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Tuesday, 13 March 2012
Platinum briefly tops gold, first time since Sept
Has gold had its Run !!
13-Mar-2012 12:28
LONDON, March 13 (Reuters) - The spot platinum price briefly traded above that of gold for the first time since early September on Tuesday, bringing an end to six consecutive months of outperformance by the bullion price.
Spot platinum XPT=, which touched a session high of $1,698.50 an ounce, was quoted at $1,694.99 an ounce by 1021 GMT, up 0.5 percent on the day, while gold held at $1,697.40 an ounce, down 0.1 percent.
Platinum has gained more than 20 percent so far in 2012, after supply disruptions starting in January in top producer South Africa removed nearly 200,000 ounces of supply from the market, helping to erode an overhang of metal while demand in key sectors such as the European car industry remains patchy.
(Reporting by Amanda Cooper; Editing by Alison Birrane) ((amanda.cooper@thomsonreuters.com)(+44 2075423424)(Reuters Messaging: amanda.cooper.thomsonreuters.com@reuters.net))
13-Mar-2012 12:28
LONDON, March 13 (Reuters) - The spot platinum price briefly traded above that of gold for the first time since early September on Tuesday, bringing an end to six consecutive months of outperformance by the bullion price.
Spot platinum XPT=, which touched a session high of $1,698.50 an ounce, was quoted at $1,694.99 an ounce by 1021 GMT, up 0.5 percent on the day, while gold held at $1,697.40 an ounce, down 0.1 percent.
Platinum has gained more than 20 percent so far in 2012, after supply disruptions starting in January in top producer South Africa removed nearly 200,000 ounces of supply from the market, helping to erode an overhang of metal while demand in key sectors such as the European car industry remains patchy.
(Reporting by Amanda Cooper; Editing by Alison Birrane) ((amanda.cooper@thomsonreuters.com)(+44 2075423424)(Reuters Messaging: amanda.cooper.thomsonreuters.com@reuters.net))
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