REF : Bloomberg :
"June 29 (Bloomberg) -- Euro-area leaders agreed to ease repayment rules for emergency loans to Spanish banks and relax conditions on possible help for Italy as an outflanked German Chancellor Angela Merkel gave in on expanded steps to stem the debt crisis.
After 13 1/2 hours of talks ending at 4:30 a.m. in Brussels today, leaders of the 17 euro countries dropped the requirement that governments get preferred creditor status on crisis loans to Spain’s blighted banks and opened the door to recapitalizing banks directly with bailout funds once Europe sets up a single banking supervisor.
The leaders also discussed ways to reduce the market pressure on Italy and Spain, where surging borrowing costs stoked concern among investors and global policy makers that the currency union threatened to splinter and risk damaging the global economy. They would be allowed access to rescue loans without relinquishing control of their economies.
“We agreed on short-term measures that should apply to Spain and Italy,” said Luxembourg Prime Minister Jean-Claude Juncker, who heads the group of euro finance ministers. “We will keep all options open to do the interventions that need to be done to calm the situation. There is a whole array of possible interventions and measures.”
Make-or-Break
The gathering marked at least the fourth time in the past year that the guardians of the euro faced a make-or-break summit to restore confidence in their 17-nation bloc. They have struggled so far in vain to contain the financial crisis that began in Greece in 2009. The turmoil claimed its fifth victim this week when Cyprus sought a bailout.
The euro strengthened the most in eight months, increasing 1.1 percent to $1.2579 at 1:06 p.m. in Tokyo to head for the biggest gain since Oct. 27. Futures on the Standard & Poor’s 500 Index advanced 1 percent, and those on the FTSE 100 Index gained 1.7 percent. Finance ministers will enact today’s deal at a meeting on July 9, European Union President Herman Van Rompuy said, calling the accord a “breakthrough.”
It was the first policy-making summit that Merkel faced without France’s Nicolas Sarkozy as her crisis-fighting partner. New French President Francois Hollande led a rebellion against her austerity-first prescriptions with calls for immediate relief for hard-hit countries.
Countering Germany
He put French backing of a German-inspired deficit-control treaty on hold, and Italy and Spain withheld approval of a 120 billion-euro ($149 billion) growth-boosting package until Germany authorized steps to calm their bond markets.
Italian Prime Minister Mario Monti welcomed the result, saying the agreement to consider short-term steps to ease borrowing costs “could be useful to Italy and many other states too.” Hollande said there was “no blackmail, no pressure” from Italy and Spain.
Monti didn’t get everything he wanted, Dutch Prime Minister Mark Rutte told reporters. Italy “wanted direct bond buying by the aid funds in the secondary market,” he said. “That’s not going to happen. They wanted an interest-rate cap.That’s not going to happen either”
Germany had balked at changing the order of seniority on as much as 100 billion euros in emergency loans to Spanish banks and at committing to direct sovereign-debt buying through the euro-area bailout funds, saying on June 21 that such a move is “not up for debate.”
‘Flexible’ Funds
At the summit, euro-area leaders agreed to use the rescue funds “in a flexible and efficient manner in order to stabilize markets for member states” that respect rules including budget- deficit limits and sign a memorandum of understanding, according to an EU statement issued in Brussels.
Even so, the EU’s two rescue funds may only amount to about 20 percent of the outstanding debt of Italy and Spain, limiting its ability to lower the nations’ borrowing costs.
The rescue mechanisms, the European Financial Stability Facility and the yet-to-start ESM, may have 500 billion euros ($621 billion) available for purchases. Italy and Spain have about 2.4 trillion euros combined of outstanding bonds, bills and loans, according to data compiled by Bloomberg.
Pooling of euro-area debt, a tool sought by Spain and Italy that Merkel called “wrong and counterproductive” in a speech to Germany lawmakers a day before the summit, wasn’t mentioned in the statement. Merkel will explain the deal to the German parliament upon her return to Berlin today before a vote on new EU budget rules and authorizing the ESM.
‘Vicious Circle’
Euro-area leaders are determined to “break the vicious circle between banks and sovereigns” in the debt crisis and will present proposals for joint bank supervision “shortly,” according to the statement.
Once an “effective” system is set up, the ESM could, “following a regular decision, have the possibility to recapitalize banks directly,” according to the statement.
Spain’s Mariano Rajoy sought that condition to avoid taking on additional sovereign debt. He also wanted his official creditors to give up their preferred creditor status in case of default, a step resisted by Germany that helped send Spanish yields higher.
Spain’s 10-year yields exceeded 7 percent yesterday and Italy auctioned 10-year notes at 6.19 percent, the highest yield since December. Germany borrows at 1.5 percent for the same time period.
Relief may not be quick as joint EU banking supervision, seen as a way to make oversight more independent of national regulators, will take time. The EU will consider proposals “by the end of 2012,” according to the statement.
‘Medium Term’
“If you think in terms of, not the short term, of days and weeks, but in terms of sustainability over the medium term, then this will achieve the desired effect,” Thomas Wieser, head of the group that prepares meetings of euro-area finance ministers and that drafted the summit statement, told reporters.
Merkel left the summit, which continues at 10 a.m., without addressing specifics of the agreements. She said there were decisions on “future measures within the framework of our methods that we will have through” Europe’s two rescue funds. “I think we will have a successful conclusion.”
To contact the reporters on this story: Tony Czuczka in Berlin at aczuczka@bloomberg.net ; James G. Neuger in Brussels at jneuger@bloomberg.net "
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Website: www.stevenmorris.co.za
Friday, 29 June 2012
Thursday, 28 June 2012
J.P. Morgan 'London Whale' loss may hit $9B:report
REF : SPI
"The credit-derivative trading loss that J.P. Morgan
JPM +3.00% initially estimated at $2 billion may have ballooned to as much as $9 billion, according to a New York Times report. The report, citing sources described as having been briefed on the situation, said that J.P. Morgan has already exited more than half of the soured position, having previously stated that it aimed to clear the position by early 2013. The trade was executed by the bank's chief investment office in London -- whose top executive, Ina Drew, was brought down by the incident -- and first came to light May 10. CEO Jamie Dimon was called to testify before the U.S. Congress on the matter earlier this month. "
"The credit-derivative trading loss that J.P. Morgan
JPM +3.00% initially estimated at $2 billion may have ballooned to as much as $9 billion, according to a New York Times report. The report, citing sources described as having been briefed on the situation, said that J.P. Morgan has already exited more than half of the soured position, having previously stated that it aimed to clear the position by early 2013. The trade was executed by the bank's chief investment office in London -- whose top executive, Ina Drew, was brought down by the incident -- and first came to light May 10. CEO Jamie Dimon was called to testify before the U.S. Congress on the matter earlier this month. "
Wednesday, 27 June 2012
Stocks Rise on China Stimulus Speculation
"June 27 (Bloomberg) -- Stocks rose for a second day amid speculation China will add to economic stimulus. Natural gas climbed to a five-month high, while corn snapped a three-day rally that drove prices up 13 percent.
The MSCI All-Country World Index advanced 0.4 percent as of 8:30 a.m. in London, adding to yesterday’s 0.2 percent gain. The Stoxx Europe 600 Index gained 0.4 percent. Standard & Poor’s 500 Index futures were little changed. Natural-gas futures gained 1.1 percent, rising for a fifth day in New York. Corn slid 0.5 percent after surging the previous three days amid dry weather that curbed U.S. production.
The China Securities Journal said the country may introduce “more proactive” policies to ensure stable growth in the world’s second-largest economy, while the Xinhua News Agency said China plans to boost Hong Kong’s integration with mainland financial markets. Italy today is scheduled to auction 9 billion euros ($11 billion) of 185-day bills on the eve of Europe’s 19th summit to tackle the debt crisis.
“Most people think nothing has happened over the last 18 summits, so what can you expect from the 19th,” said Khiem Do, the Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management (Asia) Ltd., which oversees about $8 billion. “China still has a lot of tools available to it. Policy makers think, yes, the economy is slowing but it’s not a hard landing. They’re going to implement their policies gradually, not aggressively.”
State Council
The MSCI Asia Pacific Index added 0.7 percent, after a four-day, 3 percent slump. The gauge has tumbled about 11 percent from its peak this year on Feb. 29 amid concern global growth is slowing as Europe’s debt crisis worsens.
Japan’s Nikkei 225 Stock Average advanced 0.8 percent, while benchmark gauges in the Philippines and Indonesia climbed more than 1 percent.
The Hang Seng Index rose 0.9 percent, the most in more than a week, after Xinhua cited a statement from China’s State Council as saying the nation will allow financial institutions in Hong Kong to set up consumer-financing companies in Guangdong province, among other measures to boost cooperation. President Hu Jintao visits Hong Kong June 29 to July 1 for the 15th anniversary of the city’s return to Chinese rule.
Japan Tobacco Inc., Asia’s largest cigarette maker by market value, climbed 3.7 percent in Tokyo as investors sought shares of companies whose sales are least affected by an economic slump. Hopewell Holdings Ltd. surged 9 percent in Hong Kong after agreeing to pay the city’s government about $480 million to develop a hotel project.
China Stimulus
China may stabilize foreign trade, expand infrastructure investment, fine-tune monetary policies and reduce taxes, according to a commentary on the front page of the China Securities Journal. The central bank may lower reserve requirements for banks next month for the fourth time since November, the Shanghai Securities News reported.
Natural-gas futures climbed to $2.799 per million British thermal units, poised for the highest close since January as forecasts for hot weather signaled increased demand for the power-plant fuel.
The yield on Japanese 10-year bonds fell 1 basis point and the cost of insuring the nation’s bonds against default dropped after Prime Minister Yoshihiko Noda yesterday pushed a bill to double a sales tax through parliament’s lower house. The Markit iTraxx Japan index eased 1.5 basis points to 186.5 basis points, Deutsche Bank AG prices show. The benchmark rose 34.4 basis points this quarter through yesterday, according to CMA.
To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net "
The MSCI All-Country World Index advanced 0.4 percent as of 8:30 a.m. in London, adding to yesterday’s 0.2 percent gain. The Stoxx Europe 600 Index gained 0.4 percent. Standard & Poor’s 500 Index futures were little changed. Natural-gas futures gained 1.1 percent, rising for a fifth day in New York. Corn slid 0.5 percent after surging the previous three days amid dry weather that curbed U.S. production.
The China Securities Journal said the country may introduce “more proactive” policies to ensure stable growth in the world’s second-largest economy, while the Xinhua News Agency said China plans to boost Hong Kong’s integration with mainland financial markets. Italy today is scheduled to auction 9 billion euros ($11 billion) of 185-day bills on the eve of Europe’s 19th summit to tackle the debt crisis.
“Most people think nothing has happened over the last 18 summits, so what can you expect from the 19th,” said Khiem Do, the Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management (Asia) Ltd., which oversees about $8 billion. “China still has a lot of tools available to it. Policy makers think, yes, the economy is slowing but it’s not a hard landing. They’re going to implement their policies gradually, not aggressively.”
State Council
The MSCI Asia Pacific Index added 0.7 percent, after a four-day, 3 percent slump. The gauge has tumbled about 11 percent from its peak this year on Feb. 29 amid concern global growth is slowing as Europe’s debt crisis worsens.
Japan’s Nikkei 225 Stock Average advanced 0.8 percent, while benchmark gauges in the Philippines and Indonesia climbed more than 1 percent.
The Hang Seng Index rose 0.9 percent, the most in more than a week, after Xinhua cited a statement from China’s State Council as saying the nation will allow financial institutions in Hong Kong to set up consumer-financing companies in Guangdong province, among other measures to boost cooperation. President Hu Jintao visits Hong Kong June 29 to July 1 for the 15th anniversary of the city’s return to Chinese rule.
Japan Tobacco Inc., Asia’s largest cigarette maker by market value, climbed 3.7 percent in Tokyo as investors sought shares of companies whose sales are least affected by an economic slump. Hopewell Holdings Ltd. surged 9 percent in Hong Kong after agreeing to pay the city’s government about $480 million to develop a hotel project.
China Stimulus
China may stabilize foreign trade, expand infrastructure investment, fine-tune monetary policies and reduce taxes, according to a commentary on the front page of the China Securities Journal. The central bank may lower reserve requirements for banks next month for the fourth time since November, the Shanghai Securities News reported.
Natural-gas futures climbed to $2.799 per million British thermal units, poised for the highest close since January as forecasts for hot weather signaled increased demand for the power-plant fuel.
The yield on Japanese 10-year bonds fell 1 basis point and the cost of insuring the nation’s bonds against default dropped after Prime Minister Yoshihiko Noda yesterday pushed a bill to double a sales tax through parliament’s lower house. The Markit iTraxx Japan index eased 1.5 basis points to 186.5 basis points, Deutsche Bank AG prices show. The benchmark rose 34.4 basis points this quarter through yesterday, according to CMA.
To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net "
Qatar Hlding Seeks Higher Xstrata Price by Glencore
Now the battle in the board room's begin
"June 27 (Bloomberg) -- Qatar Holding LLC, the second- largest holder of Xstrata Plc’s shares, said Glencore International Plc should raise its takeover offer 16 percent, increasing the value of the mining company to $46.2 billion.
“An exchange ratio of 3.25 new Glencore shares for every one existing Xstrata share would provide a more appropriate distribution of benefits of the merger whilst properly recognizing the intrinsic stand-alone value of Xstrata,” Qatar Holding, the foreign investment arm of the country’s sovereign wealth fund, said in a statement yesterday.
Glencore, based in Baar, Switzerland, agreed to buy Xstrata in February to create the world’s fourth-largest mining company. The all-stock transaction would give Xstrata holders 2.8 shares in Glencore for each share they own, valuing the company at about 25.4 billion pounds ($39.8 billion). A 3.25 exchange ratio would value Xstrata at 29.5 billion pounds, based on Glencore’s closing price in London yesterday and the total amount of Xstrata shares outstanding.
Glencore will probably raise its offer to save the deal, said Sachin Shah, a Jersey City, New Jersey-based special situations and merger arbitrage strategist at Tullett Prebon Plc.
“The bottom line at this point is that if they want to salvage the deal then the number has to start with a 3,” Shah said of the share-exchange ratio in a telephone interview yesterday. The companies also will revise multimillion-pound retention payments to Xstrata executives, which have drawn shareholder ire, he said.
Claire Divver, a spokeswoman for Zug, Switzerland-based Xstrata, declined to comment. Simon Buerk, a Glencore spokesman, didn’t return a voicemail and e-mail seeking comment after normal buiness hours.
Shareholder Vote
Qatar Holding owned about 10 percent of Xstrata’s shares, second only to Glencore’s stake as of June 13, according to data compiled by Bloomberg. It’s being advised by Lazard, according to the statement.
Xstrata shareholders are scheduled to vote July 12 on the merger and proposed retention payments of as much as 172.8 million pounds to keep 73 Xstrata executives at the merged company. A decision going against either proposal would block the deal.
Glencore and Xstrata were considering changing the proposed retention payments, people with knowledge of the situation said. Changes may include tying the payments more closely to the future performance of the combined company, said the people, who asked not to be identified because the talks are private.
Price Pressure
Glencore, the world’s largest publicly traded commodities supplier, is barred by the U.K.’s takeover code from voting its 34 percent stake in Xstrata. That means Xstrata investors with a joint 31.75 percent stake would be able to block the payment plan and holders with 16.5 percent could vote down the merger.
The Qatar Holding statement could put pressure on Glencore’s share price, Tony Robson, an analyst at BMO Capital Markets in Toronto, said in a note yesterday.
The 3.25 ratio request is in line with BMO’s previous estimates that Glencore could “realistically” increase the ratio to 3.2 as an equitable outcome to all sides, Robson said.
Glencore fell to the lowest relative to Xstrata shares since the offer on June 25, signaling a heightened risk of the bid failing. It slid to a low of 2.58 times that of Xstrata, a 7.9 percent discount to the agreed ratio of 2.8.
To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net "
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Website: www.stevenmorris.co.za
"June 27 (Bloomberg) -- Qatar Holding LLC, the second- largest holder of Xstrata Plc’s shares, said Glencore International Plc should raise its takeover offer 16 percent, increasing the value of the mining company to $46.2 billion.
“An exchange ratio of 3.25 new Glencore shares for every one existing Xstrata share would provide a more appropriate distribution of benefits of the merger whilst properly recognizing the intrinsic stand-alone value of Xstrata,” Qatar Holding, the foreign investment arm of the country’s sovereign wealth fund, said in a statement yesterday.
Glencore, based in Baar, Switzerland, agreed to buy Xstrata in February to create the world’s fourth-largest mining company. The all-stock transaction would give Xstrata holders 2.8 shares in Glencore for each share they own, valuing the company at about 25.4 billion pounds ($39.8 billion). A 3.25 exchange ratio would value Xstrata at 29.5 billion pounds, based on Glencore’s closing price in London yesterday and the total amount of Xstrata shares outstanding.
Glencore will probably raise its offer to save the deal, said Sachin Shah, a Jersey City, New Jersey-based special situations and merger arbitrage strategist at Tullett Prebon Plc.
“The bottom line at this point is that if they want to salvage the deal then the number has to start with a 3,” Shah said of the share-exchange ratio in a telephone interview yesterday. The companies also will revise multimillion-pound retention payments to Xstrata executives, which have drawn shareholder ire, he said.
Claire Divver, a spokeswoman for Zug, Switzerland-based Xstrata, declined to comment. Simon Buerk, a Glencore spokesman, didn’t return a voicemail and e-mail seeking comment after normal buiness hours.
Shareholder Vote
Qatar Holding owned about 10 percent of Xstrata’s shares, second only to Glencore’s stake as of June 13, according to data compiled by Bloomberg. It’s being advised by Lazard, according to the statement.
Xstrata shareholders are scheduled to vote July 12 on the merger and proposed retention payments of as much as 172.8 million pounds to keep 73 Xstrata executives at the merged company. A decision going against either proposal would block the deal.
Glencore and Xstrata were considering changing the proposed retention payments, people with knowledge of the situation said. Changes may include tying the payments more closely to the future performance of the combined company, said the people, who asked not to be identified because the talks are private.
Price Pressure
Glencore, the world’s largest publicly traded commodities supplier, is barred by the U.K.’s takeover code from voting its 34 percent stake in Xstrata. That means Xstrata investors with a joint 31.75 percent stake would be able to block the payment plan and holders with 16.5 percent could vote down the merger.
The Qatar Holding statement could put pressure on Glencore’s share price, Tony Robson, an analyst at BMO Capital Markets in Toronto, said in a note yesterday.
The 3.25 ratio request is in line with BMO’s previous estimates that Glencore could “realistically” increase the ratio to 3.2 as an equitable outcome to all sides, Robson said.
Glencore fell to the lowest relative to Xstrata shares since the offer on June 25, signaling a heightened risk of the bid failing. It slid to a low of 2.58 times that of Xstrata, a 7.9 percent discount to the agreed ratio of 2.8.
To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net "
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Website: www.stevenmorris.co.za
Tuesday, 26 June 2012
Breaking: Qataris turn against Glencore-Xstrata
The $65bn merger between commodities trader Glencore and miner Xstrata was hanging in the balance on Tuesday night with people close to the deal voicing doubts it could win approval from shareholders unless key terms of the deal are changed
http://www.ft.com/cms/s/0/fec6352e-bfb1-11e1-bb88-00144feabdc0.html#ixzz1yvmICNW2
REF : FT.com
"The unexpected announcement by Qatar Holding, which has a near 11 per cent stake in Xstrata, means that more than 25 per cent of shareholders are against the deal’s current terms
Qatar said that it saw merit in a combination of the two companies, but was “seeking improved merger terms”. Glencore is offering 2.8 of its shares for each of the miner’s but Qatar said an exchange ratio of 3.25 per share “would provide a more appropriate distribution of benefits of the merger”.
The Qatari move came after people close to the deal voiced doubts that it would win approval from shareholders unless key terms were changed.
Xtrata is considering bowing to investor pressure over multimillion-pound windfalls proposed for its senior executives, in a late effort to save the merger, according to people familiar with the discussions. Mick Davis, Xstrata’s chief executive, and his counterpart at Glencore, Ivan Glasenberg, met in London on Monday and discussed the shareholder revolt against the merger.
With just over two weeks until Xstrata shareholders are set to vote on the deal, both companies now concede that it is unlikely that the deal will go through in its current form. “The deal is not looking positive,” said one person close to the merger talks.
Sir John Bond, Xstrata’s chairman, and David Rough, senior independent director, have started to draft alternative packages for Xstrata executives “in line with shareholder feedback”, according to the person familiar with the deal. Xstrata could seek to reopen discussions over the merger ratio, which Glencore is likely to resist.
Shareholders have expressed anger at the proposed retention payments for Xstrata’s senior management, including £29m over three years to Mr Davis, which do not include performance targets. As part of the merger, Xstrata non-executive directors had insisted on retention packages, which totalled £173m for 73 senior employees, believing it crucial to keep the miner’s core team in place.
Investors warned they wanted significant changes to the package, rather than tweaks. “A lot of investors are very unhappy. The companies will have to make some far-reaching changes before they win over investors,” said a top-20 shareholder.
The proposed payouts ignited a fresh round of shareholder activism weeks after investor rebellions forced out a number of UK business leaders, including the heads of insurer Aviva and publishing group Trinity Mirror."
By Javier Blas and Helen Thomas in London and Camilla Hall in Abu Dhabi
http://www.ft.com/cms/s/0/fec6352e-bfb1-11e1-bb88-00144feabdc0.html#ixzz1yvmICNW2
REF : FT.com
"The unexpected announcement by Qatar Holding, which has a near 11 per cent stake in Xstrata, means that more than 25 per cent of shareholders are against the deal’s current terms
Qatar said that it saw merit in a combination of the two companies, but was “seeking improved merger terms”. Glencore is offering 2.8 of its shares for each of the miner’s but Qatar said an exchange ratio of 3.25 per share “would provide a more appropriate distribution of benefits of the merger”.
The Qatari move came after people close to the deal voiced doubts that it would win approval from shareholders unless key terms were changed.
Xtrata is considering bowing to investor pressure over multimillion-pound windfalls proposed for its senior executives, in a late effort to save the merger, according to people familiar with the discussions. Mick Davis, Xstrata’s chief executive, and his counterpart at Glencore, Ivan Glasenberg, met in London on Monday and discussed the shareholder revolt against the merger.
With just over two weeks until Xstrata shareholders are set to vote on the deal, both companies now concede that it is unlikely that the deal will go through in its current form. “The deal is not looking positive,” said one person close to the merger talks.
Sir John Bond, Xstrata’s chairman, and David Rough, senior independent director, have started to draft alternative packages for Xstrata executives “in line with shareholder feedback”, according to the person familiar with the deal. Xstrata could seek to reopen discussions over the merger ratio, which Glencore is likely to resist.
Shareholders have expressed anger at the proposed retention payments for Xstrata’s senior management, including £29m over three years to Mr Davis, which do not include performance targets. As part of the merger, Xstrata non-executive directors had insisted on retention packages, which totalled £173m for 73 senior employees, believing it crucial to keep the miner’s core team in place.
Investors warned they wanted significant changes to the package, rather than tweaks. “A lot of investors are very unhappy. The companies will have to make some far-reaching changes before they win over investors,” said a top-20 shareholder.
The proposed payouts ignited a fresh round of shareholder activism weeks after investor rebellions forced out a number of UK business leaders, including the heads of insurer Aviva and publishing group Trinity Mirror."
By Javier Blas and Helen Thomas in London and Camilla Hall in Abu Dhabi
Nigeria losing $1bn a month to oil theft
FT.COM
"The Nigerian state and oil companies are losing a billion dollars or more a month to oil theft by criminal networks whose activities have expanded rapidly under the government of President Goodluck Jonathan.
According to Ngozi Okonjo-Iweala, the finance minister, the trade in stolen oil led to a 17 per cent fall in official oil sales in April, or about 400,000 barrels per day (bd). At average April prices of $121 per barrel, this results in a loss of $1.2bn.
This is a higher estimate than that given earlier by SPDC, Royal Dutch Shell’s Nigerian subsidiary, which put theft at between 150,000 and 180,000bd. "
"The Nigerian state and oil companies are losing a billion dollars or more a month to oil theft by criminal networks whose activities have expanded rapidly under the government of President Goodluck Jonathan.
According to Ngozi Okonjo-Iweala, the finance minister, the trade in stolen oil led to a 17 per cent fall in official oil sales in April, or about 400,000 barrels per day (bd). At average April prices of $121 per barrel, this results in a loss of $1.2bn.
This is a higher estimate than that given earlier by SPDC, Royal Dutch Shell’s Nigerian subsidiary, which put theft at between 150,000 and 180,000bd. "
Monday, 25 June 2012
Breaking News - Cyprus requests eurozone bailout
FT.com
"Cyprus has become the latest eurozone country to seek a bailout amid mounting economic problems and fresh challenges for its banks after a credit rating agency downgrade.
Bowing to eurozone pressure, the government of President Demetris Christofias said it had asked for help, just days before a deadline to recapitalise one of the country’s largest banks.
Cyprus is seeking financial help from the European Financial Stability Facility or its successor, the European Stability Mechanism, a government statement said on Monday. “The purpose of the required assistance is to contain the risks to the Cypriot economy, notably those arising from the negative spillover effects through its financial sector, due to its large exposure in the Greek economy,” the government said."
"Cyprus has become the latest eurozone country to seek a bailout amid mounting economic problems and fresh challenges for its banks after a credit rating agency downgrade.
Bowing to eurozone pressure, the government of President Demetris Christofias said it had asked for help, just days before a deadline to recapitalise one of the country’s largest banks.
Cyprus is seeking financial help from the European Financial Stability Facility or its successor, the European Stability Mechanism, a government statement said on Monday. “The purpose of the required assistance is to contain the risks to the Cypriot economy, notably those arising from the negative spillover effects through its financial sector, due to its large exposure in the Greek economy,” the government said."
How to design a banking union that will save the eurozone
FT.com
"The idea of a banking union makes sense because it addresses the feedback loop between sovereign weakness and banking weakness.
The concept has been endorsed by several eurozone governments (including France, which used to be lukewarm about it), by the European Central Bank and the European Commission, by the UK (provided it is not asked to take part) and by the International Monetary Fund.
Germany has reservations, but they do not seem to be absolute.
There is, however, distance from concept to realisation."
"The idea of a banking union makes sense because it addresses the feedback loop between sovereign weakness and banking weakness.
The concept has been endorsed by several eurozone governments (including France, which used to be lukewarm about it), by the European Central Bank and the European Commission, by the UK (provided it is not asked to take part) and by the International Monetary Fund.
Germany has reservations, but they do not seem to be absolute.
There is, however, distance from concept to realisation."
Friday, 22 June 2012
Mo the Monkey !!
As discussed earlier this week, Market Sentiment is like Mo the Monkey story.
Each day investors are grasping at stuff.
Last week it was Greece - That story was finally sorted out for now.
Now it is Spain & Italy - Are there going to be problems on that side.
Never ending and just one drama after another !!
Be waited for Benanke to give us Stimulus !!
He gave but the Market was not happy that he did not give enough !!
We will see what the next week brings !!
As I said earlier this year we in an Election year in the US and the Markets always rise in an election year !!
Till next week another instalment.
Steven
Steven Morris Chartered Accountant (SA)
3 Bickley Road
Sea Point
Cape Town
8005
Mobile :+27 83 943 1858
Facsimile : 0866 712 498
E-mail : steven@global.co.za
Website : http://www.stevenmorris.co.za/
Each day investors are grasping at stuff.
Last week it was Greece - That story was finally sorted out for now.
Now it is Spain & Italy - Are there going to be problems on that side.
Never ending and just one drama after another !!
Be waited for Benanke to give us Stimulus !!
He gave but the Market was not happy that he did not give enough !!
We will see what the next week brings !!
As I said earlier this year we in an Election year in the US and the Markets always rise in an election year !!
Till next week another instalment.
Steven
Steven Morris Chartered Accountant (SA)
3 Bickley Road
Sea Point
Cape Town
8005
Mobile :+27 83 943 1858
Facsimile : 0866 712 498
E-mail : steven@global.co.za
Website : http://www.stevenmorris.co.za/
Asian Close 22 June & USA close 21 June
Asian stocks fall on US data (MSCI Asia Pacific declined 1%) almost erasing this week's gain.
The Philadelphia Fed Index signaled the worst contraction in manufacturing in nearly a year.
European finance ministers continue to battle over the Euro debt crisis.
Both the Dow and the S&P were down around 1.3%
The Philadelphia Fed Index signaled the worst contraction in manufacturing in nearly a year.
European finance ministers continue to battle over the Euro debt crisis.
Both the Dow and the S&P were down around 1.3%
Breaking News : Moody's downgrades biggest global banks
FT.com
Breaking News
Moody's downgrades biggest global banks
"Fifteen of the biggest global banks were downgraded by Moody’s Investors Service on Thursday, adding to pressure on their borrowing costs and triggering multi-billion dollar collateral calls.
Morgan Stanley, seen as the most vulnerable, escaped the three-notch downgrade that Moody’s had threatened but saw its rating cut from A2 to Baa1, three notches above “junk”.
Stock markets fell as anticipation of the downgrades, which came after US markets closed, added to fears over the global economy. Shares in Bank of America, Citigroup and RBS fell by more than 3 per cent by the closing bell. The S& P 500 closed down 2.2 per cent at 1,325.51."
Breaking News
Moody's downgrades biggest global banks
"Fifteen of the biggest global banks were downgraded by Moody’s Investors Service on Thursday, adding to pressure on their borrowing costs and triggering multi-billion dollar collateral calls.
Morgan Stanley, seen as the most vulnerable, escaped the three-notch downgrade that Moody’s had threatened but saw its rating cut from A2 to Baa1, three notches above “junk”.
Stock markets fell as anticipation of the downgrades, which came after US markets closed, added to fears over the global economy. Shares in Bank of America, Citigroup and RBS fell by more than 3 per cent by the closing bell. The S& P 500 closed down 2.2 per cent at 1,325.51."
IMF challenges Berlin’s crisis response
FT.com
"The International Monetary Fund on Thursday challenged Berlin’s game plan for pulling the eurozone out of its crisis by advocating a series of short-term fixes that the German government has resisted.
Christine Lagarde, the IMF chief, said eurozone leaders needed to prevent the single currency from deteriorating further by considering the resumption of bond buying by the European Central Bank and pumping bailout money directly into teetering banks."
"The International Monetary Fund on Thursday challenged Berlin’s game plan for pulling the eurozone out of its crisis by advocating a series of short-term fixes that the German government has resisted.
Christine Lagarde, the IMF chief, said eurozone leaders needed to prevent the single currency from deteriorating further by considering the resumption of bond buying by the European Central Bank and pumping bailout money directly into teetering banks."
Thursday, 21 June 2012
ECB to relax loan rules for spanish banks
FT.com :
"The European Central Bank is expected to give Spanish banks a much-needed boost with a significant loosening of rules on collateral required to obtain its liquidity, which could be followed by steps to reduce the role of credit-rating agencies.
The concession, which could be announced as early as Friday, would allow Spanish banks to make greater use of asset-backed securities when drawing ECB funds. The move – coming as European authorities and Madrid draw up plans to recapitalise the country’s banks – will help to offset a possible liquidity squeeze caused by downgrades by credit rating agencies.
The decision by the ECB’s 22-strong governing council is part of a review of collateral rules aimed at ensuring liquidity continues to flow to sound eurozone banks – and to reduce its reliance on external bodies such as Standard & Poor’s and Moody’s.
"The European Central Bank is expected to give Spanish banks a much-needed boost with a significant loosening of rules on collateral required to obtain its liquidity, which could be followed by steps to reduce the role of credit-rating agencies.
The concession, which could be announced as early as Friday, would allow Spanish banks to make greater use of asset-backed securities when drawing ECB funds. The move – coming as European authorities and Madrid draw up plans to recapitalise the country’s banks – will help to offset a possible liquidity squeeze caused by downgrades by credit rating agencies.
The decision by the ECB’s 22-strong governing council is part of a review of collateral rules aimed at ensuring liquidity continues to flow to sound eurozone banks – and to reduce its reliance on external bodies such as Standard & Poor’s and Moody’s.
First blood to Obama in the presidential battle
Barack Obama and his campaign have cleverly recognised that Mitt Romney’s slow-footedness
and lack of imagination present an opportunity for them to shine in contrast.
They have reversed the usual dynamic of re-election campaigns,
highlighting the challenger’s stodginess while making
Mr Obama a nimble incumbent.
and lack of imagination present an opportunity for them to shine in contrast.
They have reversed the usual dynamic of re-election campaigns,
highlighting the challenger’s stodginess while making
Mr Obama a nimble incumbent.
Wednesday, 20 June 2012
Bailout fund should buy Euro Debt
A top European Central Bank policymaker has publicly backed the
rapid use of the eurozone’s bailout fund to buy stressed sovereign
bonds on the open market, saying such action could ease the
“very severe strain” being felt by Spain and Italy
rapid use of the eurozone’s bailout fund to buy stressed sovereign
bonds on the open market, saying such action could ease the
“very severe strain” being felt by Spain and Italy
Breaking News !! Greek government agreed
"The leaders of three Greek political parties committed to keeping the country in the euro and pushing ahead with its €174bn bailout have agreed to form a coalition government.
Antonis Samaras, whose centre-right New Democracy party narrowly claimed first place in Sunday’s election, is expected to become prime minister.
After two days of talks with the leaders of the PanHellenic Socialist Movement and the Democratic Left splinter group, Mr Samaras was due to meet the Greek president on Wednesday afternoon to tell him he had secured a deal to form a government. "
Antonis Samaras, whose centre-right New Democracy party narrowly claimed first place in Sunday’s election, is expected to become prime minister.
After two days of talks with the leaders of the PanHellenic Socialist Movement and the Democratic Left splinter group, Mr Samaras was due to meet the Greek president on Wednesday afternoon to tell him he had secured a deal to form a government. "
Asia Stocks, Won Gain as Japan Trade Rises; Euro Slips
"June 20 (Bloomberg) -- Asian stocks rose to a one-month high and the won strengthened for a sixth day after data showed Japanese imports soared last month and before the Federal Reserve announces whether it will take new steps to boost the economy.
The euro and oil declined.
The MSCI Asia Pacific Index rose 0.8 percent at 12:33 p.m. in Tokyo, while Standard & Poor’s 500 Index futures dropped 0.2 percent. South Korea’s currency gained 0.3 percent to 1,153.45 per dollar in its longest rally since January. The euro fell 0.2 percent to 99.95 yen and New Zealand’s dollar lost 0.4 percent to 79.52 U.S. cents. Oil dipped 0.1 percent to $83.91 a barrel.
Japan’s need for energy imports climbed in May after the world’s third-biggest economy shut nuclear plants following last year’s record earthquake and meltdowns at a facility in Fukushima. The U.S. central bank is expected to announce added stimulus measures as soon as this week’s meeting, according to 12 of the 21 primary dealers who trade with the Fed. The euro’s weakness comes before Spanish bond auctions tomorrow, which may cast doubt over the country’s funding capabilities.
“This is one of those big, long-term shifts” in Japan, said Robert Sinche, global head of currency strategy at Royal Bank of Scotland Plc. “It was coming anyway because of the aging population and the outsourcing of production, but it’s really been accelerated by their nuclear accident and the need to now import fossil fuels.”
More than two stocks rose for every one that fell on the MSCI’s Asian index, which is set to close at the highest level since May 15. South Korea’s Kospi index rose 0.3 percent.
Hong Kong’s Hang Seng Index increased 0.4 percent and China’s Shanghai Composite Index lost 0.1 percent. Japan’s Nikkei 225 Stock Average gained 0.8 percent, and the Topix Index rose 1.3 percent, with all 33 industry groups in the measure climbing.
Trade Deficit
Japan’s trade deficit was 907.3 billion yen ($11.5 billion) in May, the finance ministry said today. The median economists estimate in a Bloomberg News survey was for a 544.4 billion yen shortfall. Exports rose 10 percent from a year earlier, while imports climbed 9.3 percent, both wider than economists had estimated.
Sumitomo Mitsui Trust Holdings Inc., Japan’s fourth-biggest bank by market value, gained 4.3 percent in Tokyo after a company official said it plans to expand overseas loans by 32 percent this year.
Sony Corp., Japan’s biggest consumer electronics maker, jumped 2.4 percent. Renesas Electronics Corp., the world’s largest maker of microcontrollers used in cars, added 2.2 percent after saying its partnership with Taiwan Semiconductor Manufacturing Co. will help it boost market share.
The MSCI Asia Pacific Index lost 10 percent through yesterday from this year’s highest level in February, leaving the gauge trading at 1.1 times book value, compared with 2.1 times for the S&P 500 and 1.4 times for the Stoxx 600, according to data compiled by Bloomberg. A number below one means companies can be bought for less than value of their assets.
VIX Decline
The largest drop in the Chicago Board Options Exchange Volatility Index since August brought the gauge to its cheapest level of the year, a sign of increasing confidence among traders that the Fed will take action again to spur growth.
The central bank, which began a two-day meeting yesterday, will extend its so-called Operation Twist program, according to JPMorgan Chase & Co. and Jefferies & Co. It involves selling short-term debt and buying longer-term bonds. A more aggressive response could be warranted if the Fed sees high costs in an economic slowdown.
“I don’t think there will be another round of quantitative easing, but I think they’ll extend Operation Twist,” said Yoshihisa Okamoto, who helps oversee the equivalent of $34 billion at Mizuho Asset Management Co. “China has shifted toward an easing posture except in the real estate sector.”
China’s fiscal policy should be “really proactive” and macroeconomic policies readjusted in the following months to sustain faster growth, the China Daily cited a proposal from the Standing Committee of the Chinese People’s Political Consultative Conference National Committee as saying.
Spain Bonds
Spain is due to sell tomorrow debt maturing in 2014, 2015 and 2017. While the nation’s 10-year yields eased yesterday, they remain above the 7 percent level that pushed Greece, Ireland and Portugal to seek rescue packages.
The so-called kiwi declined after a report today by Statistics New Zealand showed the nation’s current-account shortfall in the three months through March widened to 4.8 percent of gross domestic product, up from a revised 4.2 percent in the previous quarter.
The cost of insuring Asia-Pacific corporate and sovereign bonds from non-payment decreased, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped 4 basis points to 176 basis points as of 8:24 a.m. in Hong Kong, according to Credit Agricole SA. The gauge is set for its lowest close since May 8, according to data provider CMA.
Corn in Chicago fell 0.4 percent to $5.61 a bushel after jumping 11 percent in the previous two days on concern that hot, dry weather will curb yields in U.S. growing areas. Gold for immediate delivery rose 0.1 percent to $1,620.38 an ounce. "
To contact Bloomberg News staff for this story: Chua Baizhen in Beijing at bchua14@bloomberg.net
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Website: www.stevenmorris.co.za
ASIA CLOSE 20 JUNE 2012
Asian stocks climbing overnight (MSCI Asia Pacific up 1%) after data released from Japan signalled stronger demand and before the Fed announces whether it will take new steps to boost the economy.
Commodities a mixed bag but seeing Copper lose 0.3%.
Spain due to sell debt in 2014, 2015 and 2017 tomorrow.
Dow closing down 0.12% and the S&P unchanged after SA futures close.
Commodities a mixed bag but seeing Copper lose 0.3%.
Spain due to sell debt in 2014, 2015 and 2017 tomorrow.
Dow closing down 0.12% and the S&P unchanged after SA futures close.
Tuesday, 19 June 2012
Expect a feeble future for the G20
Expect a feeble future for the G20
Leaders of 19 countries plus the European Union are still gathered at the Mexican resort of Los Cabos with a long list of things to do. Do not expect there to be much consensus in the conclusion, says Ian Bremmer, president of the Eurasia Group.
Leaders of 19 countries plus the European Union are still gathered at the Mexican resort of Los Cabos with a long list of things to do. Do not expect there to be much consensus in the conclusion, says Ian Bremmer, president of the Eurasia Group.
ASIA 19 JUNE 2012
Asian stocks dropping overnight (MSCI Asia Pacific declining 0.4%) before Fed policy makers begin a two day meeting today focusing their response to Europe's financial turmoil and discuss projections for U.S.
growth.
EM nations lead by China formalized funding pledges to the IMF, helping to almost double its lending to protect the global economy from Europe's debt crisis.
Dow closing virtually unchanged and the S&P up 0.28% after SA futures close.
growth.
EM nations lead by China formalized funding pledges to the IMF, helping to almost double its lending to protect the global economy from Europe's debt crisis.
Dow closing virtually unchanged and the S&P up 0.28% after SA futures close.
Monday, 18 June 2012
Samaras’ victory offers relief but no answers
"So, huge sighs of relief all round. Greece’s New Democracy party, led by Antonis Samaras, managed in Sunday’s elections to head off growing support for the radical left wing Syriza alliance.
Mr Samaras looks set to become Greece’s next Prime Minister.
The Athens ATMs won’t run dry, there will be no sudden reintroduction of drachmas and Greece will happily be able to persuade itself that it remains firmly held in the bosom of Europe. The euro lives to fight another day,"
writes Stephen King, HSBC Group’s chief economist.
Mr Samaras looks set to become Greece’s next Prime Minister.
The Athens ATMs won’t run dry, there will be no sudden reintroduction of drachmas and Greece will happily be able to persuade itself that it remains firmly held in the bosom of Europe. The euro lives to fight another day,"
writes Stephen King, HSBC Group’s chief economist.
Asia 18 June 2012
Asian stocks jumping overnight (MSCI Asia Pacific increasing 1.7%) as gains by pro-bailout parties in Greek elections eased concern the nation would leave the Euro.
Stocks also climbing as China's central bank predicted the nation will rebound in the next quarter.
Commodities on the up seeing Oil gain 1.9% and Copper add 1.4%.
"June 18 (Bloomberg) -- Asian stocks and the euro rose to the highest levels in a month as gains by pro-bailout parties in Greek elections eased concern the nation would be forced out of the 17-member currency bloc. Commodities advanced while bond risk in Asia declined.
The MSCI Asia Pacific Index climbed 1.7 percent to the highest since May 16 at 12:39 p.m. in Tokyo. The euro strengthened 0.5 percent to the highest since May 22, and the yen fell against most of its major counterparts. The Standard & Poor’s GSCI Index of 24 commodities gained 0.8 percent while bond risk in Asia dropped to the lowest since May 8. S&P 500 Index futures added 0.5 percent.
The New Democracy and Pasok parties won enough seats to form a majority in the 300-member parliament, according to an official projection, easing concern that Greece would reject austerity measures needed to qualify for international aid. Stocks also rose as China’s central bank predicted the world’s second biggest economy will rebound next quarter and President Hu Jintao told Mexico’s Reforma newspaper that the nation would maintain “stable” growth.
“The market will breathe a sigh of relief,” Todd Lowenstein, who helps oversee about $17 billion for Highmark Capital Management Inc. in Los Angeles, said in a phone interview. “The results of the Greek election took a negative off the table versus this being a big positive. At the end of the day, there are still structural issues and imbalances that need to be corrected and dealt with.”
G-20 Meets
The vote forced Greeks, in a fifth year of recession, to choose open-ended austerity to stay in the euro or reject the terms of a bailout and risk the turmoil of exiting the 17-nation currency. European governments indicated a willingness to relent on Greece’s austerity measures. The new government must emerge “swiftly” from the contest, euro finance ministers said in a statement on June 17.
Greece’s international monitors will “return to Athens as soon as a new government is in place to exchange views with the new government on the way forward,” euro-area finance ministers said in the e-mailed statement.
Leaders from the Group of 20 nations will boost the $430 billion firewall the International Monetary Fund announced in April, host President Felipe Calderon said.
Trillions Lost
More than $5 trillion has been erased from stock prices around the world since March, with benchmark indexes in Brazil, Russia and Italy falling into bear markets, or losses of 20 percent or more from recent peaks.
The MSCI Asia-Pacific Index has lost 11 percent from this year’s highest level in February. About seven shares rose for each that fell in the gauge. Hong Kong Exchanges & Clearing Ltd., the world’s second-largest bourse operator, slipped 3 percent after agreeing to pay 1.39 billion pounds ($2.18 billion) for the London Metal Exchange.
Lynas Corp. surged 9.9 percent in Sydney after Malaysia rejected an appeal by local residents to cancel the Australian miner’s license to run a rare-earths refining facility in the Southeast Asian nation. Fairfax Media Ltd., Australia’s second- largest newspaper publisher, jumped 7.9 percent as it plans to cut 22 percent of its workforce, close printing sites and introduce digital subscriptions to halt sliding sales.
The Shanghai Composite Index rose 0.7 percent. China’s economy will bottom out this quarter and rebound in the following three months as government measures to stabilize a slowdown take effect, an academic adviser to the nation’s central bank said at a June 16 forum in Beijing.
Fed Meeting
The MSCI All-Country World Index rose 1.7 last week, gaining for a second straight week, amid speculation central banks will increase measures to stimulate growth in economies threatened by Europe’s debt crisis.
“There’s a short-term sigh of relief,” said Belinda Allen, Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “The medium term is still challenging. And we’ve got the Federal Reserve meeting this week. Markets will turn their attention to what the Fed is going to say. They’ve certainly been suggesting that they can do more. Whether or not they’re willing to do it now is the big question.”
Reports on U.S. industrial production, jobless claims and consumer confidence last week trailed projections, fueling expectations that the central bank will take more steps to boost the economy when it meets for two days from June 19.
Commodities Gain
The S&P GSCI index rose for a third day as oil in New York advanced as much as 1.9 percent to $85.60 a barrel, the highest intraday price since June 11, while copper in London gained as much as 1.4 percent to the highest in more than two weeks. Gold fell 0.3 percent to $1,622 an ounce as demand for haven assets diminished.
The cost of insuring Asian corporate and sovereign bonds from default decreased with the Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan losing 6.5 basis points to 173.5 basis points as of 8:53 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The index is headed for its lowest close since May 8, according to CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
The euro extended last week’s 1 percent jump against the dollar as Greek election winner Antonis Samaras begins his second bid to form a coalition government after a May 6 election left politicians deadlocked. The crisis escalated on June 9 when Spain asked for a bailout of as much as 100 billion-euro ($127 billion) to prop up its banks.
The Australian dollar touched a one-month high as Australia’s Treasurer said mineral exploration spending in the nation rose to a record in March. New Zealand’s dollar reached the strongest in six weeks as data showed the country’s services industries grew last month. "
To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net ; Rita Nazareth in New York at rnazareth@bloomberg.net
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Website: www.stevenmorris.co.za
Greece Races as Cash Dwindles With Europe Seeking Austerity
"June 18 (Bloomberg) -- Greece’s two traditional political rivals are in a race to forge an unprecedented coalition as the state’s cash dwindles, bank deposits flee and Europe demands renewed austerity pledges before releasing more emergency aid.
Greece will run out of money in mid-July, the Syriza party, which placed second in yesterday’s election, said on June 13 after being briefed by Acting Finance Minister Giorgios Zanias. Caretaker Labor and Social Security Minister Antonis Roupakiotis refused to offer assurances pensions will be paid in August, Athens News Agency reported the same day.
“There’s no time to lose or leeway for small party games,” Antonis Samaras, leader of New Democracy, said in Athens yesterday after placing first in a rerun vote that leaves him needing the support of third-place Pasok party to rule. “The country must be governed.”
Two months of political limbo threaten to cut off the quarterly disbursement of euro-area and International Monetary Fund loans that have kept the country afloat since 2010. Greece, in its fifth year of recession, would face having to abandon the 17-nation euro and reintroduce the drachma were the flow of rescue funds to stop.
Political leaders in Europe insist Greece enact spending cuts promised in return for 240 billion euros ($305 billion) in rescue packages since 2010 while holding out the possibility of granting extra time to meet targets for narrowing the budget deficit.
‘Stand by Greece’
“We will continue to stand by Greece,” European Union President Herman Van Rompuy said in a statement following the vote. The Group of Seven industrialized nations said in a statement that it’s in “all our interests for Greece to remain in the euro area while respecting its commitments.”
After an inconclusive May 6 election that led to the June 17 rerun, European and IMF budget experts canceled a mission to review Greece’s eligibility for the next aid installment and now intend to carry out the assessment around the end of June. That plan assumes a new Greek government is in place by then.
“There’s not even a day to lose,” said Evangelos Venizelos, leader of Pasok.
Coalition Majority
New Democracy won 130 seats in the 300-seat parliament, according to Interior Ministry projections with almost 90 percent of the vote counted. Pasok, which has alternated in power with New Democracy over the past four decades, won 33 seats, enough to forge a coalition that backs the creditors’ austerity demands.
The euro reached a four-week high and stocks rallied. The currency advanced 0.5 percent to $1.27 as of 12:27 p.m. in Tokyo. The MSCI Asia Pacific Index rose 1.6 percent.
Syriza matched its second-place ranking of last month by stepping up demands to abandon the fiscal-tightening program.
Alexis Tsipras, the head of eight-year-old Syriza, had vowed to keep Greece in the euro while winning concessions on the rescue terms from European leaders including German Chancellor Angela Merkel. He said New Democracy and Pasok, which united last year to back further fiscal tightening by a caretaker government, had “lowered the Greek flag and surrendered it to Angela Merkel.”
Syriza Opposition
Tsipras signaled yesterday that Syriza won’t join a government with New Democracy and Pasok, saying his faction “will be present in all developments as the main voice of the anti-bailout vote in Greece.”
Euro-area finance ministers said Greece’s economic recovery requires “continued fiscal and structural reforms.” In a statement yesterday, the European ministers urged the “swift formation of a new Greek government that will take ownership of the adjustment program.”
Greece must pursue budget cuts with “determination” to win the release of further aid, the European Commission said on May 30. The country faces a cumulative fiscal gap in 2013-2014 of 5.5 percent of gross domestic product, according to the commission, the 27-nation EU’s executive arm.
A lack of progress in bolstering tax collection, improving public procurement and selling state-owned assets has left Greece struggling to meet targets for narrowing a budget deficit that in 2009 was more than five times the EU limit.
Rescuer Demands
European and IMF demands for an economic overhaul underpin an initial 110 billion-euro rescue in May 2010 and a second 130 billion-euro loan package that, along with the world’s biggest writedown of privately held debt, followed this year. The latest package is due to last through 2014.
The Greek budget-policy shortcomings have increased skepticism in euro nations such as Germany, the Netherlands and Finland about offering aid, while the worst recession in Greece during peacetime has made domestic voters critical of the fiscal-austerity demands. Syriza’s electoral success last month sparked concerns across Europe about a possible Greek exit from the euro area.
Greek deposit outflows accelerated before the June 17 election, two bankers familiar with the situation said, on concern the nation may move closer to abandoning the euro. Daily withdrawals had increased to as much as 500 million euros this month, one banker said, asking not to be identified because the figures aren’t public.
Greece narrowed its deficit from more than 15 percent of GDP in 2009 to 9.1 percent in 2011. The country’s spending gap is due to fall to around 7 percent of GDP this year.
With Greece’s financial troubles still festering more than two years after sparking Europe’s debt crisis, Italy at risk of joining the Greek, Irish, Portuguese and Spanish governments in seeking emergency aid and European leaders split over deeper fiscal integration, the onus to calm any renewed volatility on financial markets may fall on central banks.
Central banks “are the only actors who can react swiftly,” Joachim Fels, chief economist at Morgan Stanley in London, said in a June 17 report. "
To contact the reporter on this story: Jonathan Stearns in Athens at jstearns2@bloomberg.net
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Website: www.stevenmorris.co.za
Greece will run out of money in mid-July, the Syriza party, which placed second in yesterday’s election, said on June 13 after being briefed by Acting Finance Minister Giorgios Zanias. Caretaker Labor and Social Security Minister Antonis Roupakiotis refused to offer assurances pensions will be paid in August, Athens News Agency reported the same day.
“There’s no time to lose or leeway for small party games,” Antonis Samaras, leader of New Democracy, said in Athens yesterday after placing first in a rerun vote that leaves him needing the support of third-place Pasok party to rule. “The country must be governed.”
Two months of political limbo threaten to cut off the quarterly disbursement of euro-area and International Monetary Fund loans that have kept the country afloat since 2010. Greece, in its fifth year of recession, would face having to abandon the 17-nation euro and reintroduce the drachma were the flow of rescue funds to stop.
Political leaders in Europe insist Greece enact spending cuts promised in return for 240 billion euros ($305 billion) in rescue packages since 2010 while holding out the possibility of granting extra time to meet targets for narrowing the budget deficit.
‘Stand by Greece’
“We will continue to stand by Greece,” European Union President Herman Van Rompuy said in a statement following the vote. The Group of Seven industrialized nations said in a statement that it’s in “all our interests for Greece to remain in the euro area while respecting its commitments.”
After an inconclusive May 6 election that led to the June 17 rerun, European and IMF budget experts canceled a mission to review Greece’s eligibility for the next aid installment and now intend to carry out the assessment around the end of June. That plan assumes a new Greek government is in place by then.
“There’s not even a day to lose,” said Evangelos Venizelos, leader of Pasok.
Coalition Majority
New Democracy won 130 seats in the 300-seat parliament, according to Interior Ministry projections with almost 90 percent of the vote counted. Pasok, which has alternated in power with New Democracy over the past four decades, won 33 seats, enough to forge a coalition that backs the creditors’ austerity demands.
The euro reached a four-week high and stocks rallied. The currency advanced 0.5 percent to $1.27 as of 12:27 p.m. in Tokyo. The MSCI Asia Pacific Index rose 1.6 percent.
Syriza matched its second-place ranking of last month by stepping up demands to abandon the fiscal-tightening program.
Alexis Tsipras, the head of eight-year-old Syriza, had vowed to keep Greece in the euro while winning concessions on the rescue terms from European leaders including German Chancellor Angela Merkel. He said New Democracy and Pasok, which united last year to back further fiscal tightening by a caretaker government, had “lowered the Greek flag and surrendered it to Angela Merkel.”
Syriza Opposition
Tsipras signaled yesterday that Syriza won’t join a government with New Democracy and Pasok, saying his faction “will be present in all developments as the main voice of the anti-bailout vote in Greece.”
Euro-area finance ministers said Greece’s economic recovery requires “continued fiscal and structural reforms.” In a statement yesterday, the European ministers urged the “swift formation of a new Greek government that will take ownership of the adjustment program.”
Greece must pursue budget cuts with “determination” to win the release of further aid, the European Commission said on May 30. The country faces a cumulative fiscal gap in 2013-2014 of 5.5 percent of gross domestic product, according to the commission, the 27-nation EU’s executive arm.
A lack of progress in bolstering tax collection, improving public procurement and selling state-owned assets has left Greece struggling to meet targets for narrowing a budget deficit that in 2009 was more than five times the EU limit.
Rescuer Demands
European and IMF demands for an economic overhaul underpin an initial 110 billion-euro rescue in May 2010 and a second 130 billion-euro loan package that, along with the world’s biggest writedown of privately held debt, followed this year. The latest package is due to last through 2014.
The Greek budget-policy shortcomings have increased skepticism in euro nations such as Germany, the Netherlands and Finland about offering aid, while the worst recession in Greece during peacetime has made domestic voters critical of the fiscal-austerity demands. Syriza’s electoral success last month sparked concerns across Europe about a possible Greek exit from the euro area.
Greek deposit outflows accelerated before the June 17 election, two bankers familiar with the situation said, on concern the nation may move closer to abandoning the euro. Daily withdrawals had increased to as much as 500 million euros this month, one banker said, asking not to be identified because the figures aren’t public.
Greece narrowed its deficit from more than 15 percent of GDP in 2009 to 9.1 percent in 2011. The country’s spending gap is due to fall to around 7 percent of GDP this year.
With Greece’s financial troubles still festering more than two years after sparking Europe’s debt crisis, Italy at risk of joining the Greek, Irish, Portuguese and Spanish governments in seeking emergency aid and European leaders split over deeper fiscal integration, the onus to calm any renewed volatility on financial markets may fall on central banks.
Central banks “are the only actors who can react swiftly,” Joachim Fels, chief economist at Morgan Stanley in London, said in a June 17 report. "
To contact the reporter on this story: Jonathan Stearns in Athens at jstearns2@bloomberg.net
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Website: www.stevenmorris.co.za
Sunday, 17 June 2012
Greek exit will be an economic and political nightmare
Exit from the euro by Greece, or by any other member state, has become a fashionable topic for academics, commentators and market participants. The analysis is most often conducted on the basis of the economic costs and benefits, and the possible social and political consequences of such an exit for Greece and for the rest of the euro area. Most recognise that, under prevailing circumstances, the costs are too high.
It is generally taken for granted, including by Mr Tsipras, that Greece can exit the euro if it decided to do so and adopted a new currency. It is, however, not that simple.
It is generally taken for granted, including by Mr Tsipras, that Greece can exit the euro if it decided to do so and adopted a new currency. It is, however, not that simple.
Global recovery stalls
The global economic recovery is stalling, according to Tracking Indices for the Global Economic Recovery, the Brookings Institution-Financial Times index of the world economy
Friday, 15 June 2012
Asian Stocks, Commodities Gain on Stimulus Bets; Dollar Declines
"June 15 (Bloomberg) -- Asian stocks rose, poised for the biggest weekly gain in five months, and commodities climbed for a second day on expectations that central banks may increase measures to boost economies as Europe’s debt crisis hurts growth. Credit risk in the region fell and the dollar declined.
The MSCI Asia Pacific Index added 0.6 percent at 12:04 p.m. in Hong Kong, where the Hang Seng Index rallied 1.3 percent. Standard & Poor’s 500 Index futures advanced 0.1 percent after the gauge surged 1.1 percent yesterday. The S&P GSCI index of commodities climbed 0.7 percent to the highest level in a week. Asian bond risk dropped for a fifth day in the longest run since March 19. The Dollar Index lost 0.3 percent.
U.S. stocks were buoyed yesterday after jobless claims and inflation data supported the case for more stimulus by the Federal Reserve, which meets for two days from June 19. Data today may show U.S. industrial production slowed and consumer confidence fell. Greek elections on June 17 may determine if the country upholds austerity conditions attached to international aid, and could lead to the first ouster from the euro bloc.
“We’re likely to see increasing talk from governments about how they can encourage the growth agenda,” said Angus Gluskie, who helps manages more than $350 million at White Funds Management in Sydney. “There’s plenty of uncertainties out there. We may still see investors continue to be nervous about Spain and Italy in the aftermath of Greece’s election.”
Monetary policy makers from the U.K. to Japan and Canada stepped up warnings about the threat to world financial markets should Europe fail to contain its debt crisis. Bank of England Governor Mervyn King said the central bank will activate a sterling liquidity facility to aid banks, and plans to have a form of credit easing operating to boost lending as the case for looser policy “is growing.”
Oil Gains
Crude in New York climbed 0.9 percent to $84.64 a barrel, extending yesterday’s 1.6 percent jump as the Organization of Petroleum Exporting Countries kept its output quota unchanged amid calls for members to reduce production to comply with current targets. Copper futures advanced 0.9 percent in London, set for its first weekly increase in seven. Gold for immediate delivery added 0.1 percent in its sixth consecutive advance.
“It would appear the weaker U.S. dollar and rallying U.S. equity markets in response to speculation that global leaders would intervene after this weekend’s election in Greece, were supportive,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd., wrote in a note.
China, the biggest consumer of most commodities including steel and aluminum, can further cut its reserve requirement ratio as M2 growth is “relatively slow” this year, according to a report by researchers at the Chinese Academy of Social Sciences published in the People’s Daily.
Chinese Yuan
The People’s Bank of China raised its daily yuan fixing by 0.16 percent, the most since May 2, to 6.3089 per dollar today. That’s 0.97 percent stronger than yesterday’s closing spot in Shanghai and the currency is allowed to trade as much as 1 percent on either side of the fixing.
The yuan strengthened 0.07 percent to 6.3657 per dollar in Shanghai, heading for the first weekly gain in six weeks, according to the China Foreign Exchange Trade System.
Seven stocks rose in the MSCI Asia Pacific Index for every three that fell. China Railway Group Ltd. advanced 3 percent in Hong Kong after the Economic Information Daily said the Chinese government plans to build six coal transport railways. DeNA Co., Japan’s biggest social-gaming operator, surged 13 percent on a stock buy-back plan.
BOJ Decision
South Korea’s Kospi Index sank 0.6 percent, the most in Asia. Samsung Electronics Co. slumped 2.9 percent after production lines at its display unit were temporarily halted yesterday. SK Hynix Inc. declined 1.7 percent after Woori Bank sold the company’s shares at a discount.
The yen gained 0.4 percent against the dollar after the Bank of Japan refrained from adding to stimulus measures after the conclusion of a policy meeting today. Australia’s currency traded above parity with its U.S. counterpart, poised for a weekly gain.
The cost of insuring Asia-Pacific corporate and sovereign bonds from non-payment decreased, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined 4 basis points to 183 basis points, Credit Agricole SA prices show. The gauge is headed for the biggest weekly drop since the week ended March 16, according to data provider CMA.
To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net ; Jonathan Burgos in Singapore at jburgos4@bloomberg.net "
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Website: www.stevenmorris.co.za
The MSCI Asia Pacific Index added 0.6 percent at 12:04 p.m. in Hong Kong, where the Hang Seng Index rallied 1.3 percent. Standard & Poor’s 500 Index futures advanced 0.1 percent after the gauge surged 1.1 percent yesterday. The S&P GSCI index of commodities climbed 0.7 percent to the highest level in a week. Asian bond risk dropped for a fifth day in the longest run since March 19. The Dollar Index lost 0.3 percent.
U.S. stocks were buoyed yesterday after jobless claims and inflation data supported the case for more stimulus by the Federal Reserve, which meets for two days from June 19. Data today may show U.S. industrial production slowed and consumer confidence fell. Greek elections on June 17 may determine if the country upholds austerity conditions attached to international aid, and could lead to the first ouster from the euro bloc.
“We’re likely to see increasing talk from governments about how they can encourage the growth agenda,” said Angus Gluskie, who helps manages more than $350 million at White Funds Management in Sydney. “There’s plenty of uncertainties out there. We may still see investors continue to be nervous about Spain and Italy in the aftermath of Greece’s election.”
Monetary policy makers from the U.K. to Japan and Canada stepped up warnings about the threat to world financial markets should Europe fail to contain its debt crisis. Bank of England Governor Mervyn King said the central bank will activate a sterling liquidity facility to aid banks, and plans to have a form of credit easing operating to boost lending as the case for looser policy “is growing.”
Oil Gains
Crude in New York climbed 0.9 percent to $84.64 a barrel, extending yesterday’s 1.6 percent jump as the Organization of Petroleum Exporting Countries kept its output quota unchanged amid calls for members to reduce production to comply with current targets. Copper futures advanced 0.9 percent in London, set for its first weekly increase in seven. Gold for immediate delivery added 0.1 percent in its sixth consecutive advance.
“It would appear the weaker U.S. dollar and rallying U.S. equity markets in response to speculation that global leaders would intervene after this weekend’s election in Greece, were supportive,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd., wrote in a note.
China, the biggest consumer of most commodities including steel and aluminum, can further cut its reserve requirement ratio as M2 growth is “relatively slow” this year, according to a report by researchers at the Chinese Academy of Social Sciences published in the People’s Daily.
Chinese Yuan
The People’s Bank of China raised its daily yuan fixing by 0.16 percent, the most since May 2, to 6.3089 per dollar today. That’s 0.97 percent stronger than yesterday’s closing spot in Shanghai and the currency is allowed to trade as much as 1 percent on either side of the fixing.
The yuan strengthened 0.07 percent to 6.3657 per dollar in Shanghai, heading for the first weekly gain in six weeks, according to the China Foreign Exchange Trade System.
Seven stocks rose in the MSCI Asia Pacific Index for every three that fell. China Railway Group Ltd. advanced 3 percent in Hong Kong after the Economic Information Daily said the Chinese government plans to build six coal transport railways. DeNA Co., Japan’s biggest social-gaming operator, surged 13 percent on a stock buy-back plan.
BOJ Decision
South Korea’s Kospi Index sank 0.6 percent, the most in Asia. Samsung Electronics Co. slumped 2.9 percent after production lines at its display unit were temporarily halted yesterday. SK Hynix Inc. declined 1.7 percent after Woori Bank sold the company’s shares at a discount.
The yen gained 0.4 percent against the dollar after the Bank of Japan refrained from adding to stimulus measures after the conclusion of a policy meeting today. Australia’s currency traded above parity with its U.S. counterpart, poised for a weekly gain.
The cost of insuring Asia-Pacific corporate and sovereign bonds from non-payment decreased, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined 4 basis points to 183 basis points, Credit Agricole SA prices show. The gauge is headed for the biggest weekly drop since the week ended March 16, according to data provider CMA.
To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net ; Jonathan Burgos in Singapore at jburgos4@bloomberg.net "
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Website: www.stevenmorris.co.za
Thursday, 14 June 2012
Asian Stocks Drop on Spanish Downgrade, Europe Concern
"June 14 (Bloomberg) -- Asian stocks dropped for the second time in three days after Spain’s credit rating was cut to one level above junk and investment banks lowered forecasts for Chinese economic growth. Australian bonds and the New Zealand dollar advanced.
The MSCI Asia Pacific Index slid 0.3 percent at 1:37 p.m. in Tokyo as the Nikkei 225 Stock Average retreated 0.2 percent and the Shanghai Composite Index lost 0.3 percent. The dollar fell for a third day against the euro before U.S. inflation data that may support the case for further stimulus, while Standard & Poor’s 500 Index futures climbed.
Spain’s credit rating was cut three steps to Baa3 by Moody’s Investors Service yesterday. Credit Suisse Group AG lowered China’s growth forecast for 2012 to 7.7 percent from 8 percent and Deutsche Bank AG trimmed its estimate to 7.9 percent from 8.2 percent on concern the debt crisis in Europe, China’s largest export market, will worsen.
“Europe is sliding further into a recession and the global and U.S. economies are still slowing down,” said Shane Oliver, the Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “It’s still time for caution on the short-term view.”
About two shares fell for every one that rose on the Asian benchmark index. Hutchison Whampoa Ltd., which operates ports in Germany and Spain, slid 1 percent in Hong Kong. Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp. paced declines for Chinese lenders on concern slowing growth will sap demand for loans. A “meaningful” investment rebound is unlikely in the foreseeable future, Tao Dong, Credit Suisse’s chief China economist, wrote in a note to clients.
Italy Auction
Italy holds a bond auction today amid rising borrowing costs, its first since Spain’s 100 billion-euro ($126 billion) bank rescue. Spain is on review for a further downgrade, said Moody’s, which also lowered Cyprus’s bond rating. A U.S. official said the Group of 20 nations probably won’t announce significant progress on Europe’s crisis ahead of a meeting in Los Cabos, Mexico, on June 18 to June 19.
The euro held gains against the yen and dollar as Alexis Tsipras, whose Syriza party is vying for first place in Greek polls before a June 17 election, said he expects the European Union will do all it can to keep the nation in the euro even if he wins and carries out his promise to repeal austerity measures. The region’s currency rose 0.2 percent at $1.2583.
“No one is going to take big positions in the market with the Greek elections looming over the weekend,” Kelvin Tay, the Singapore-based chief investment officer for the southern Asia Pacific region at UBS AG’s wealth management unit, said in a Bloomberg television interview today.
Australia Bonds
Australia’s bonds jumped the most in two weeks after the Australian newspaper reported Germany’s central bank may buy assets in the South Pacific nation. Gains in the 10-year security sent its yield down by as much as 13 basis points, or 0.13 percentage point, to 2.93 percent, set for the steepest daily drop since May 31.
New Zealand’s dollar rose against all 16 major peers after the central bank signaled no change in rates until mid-2013. Commodities reversed declines as forecasts for lower inflation increased speculation the U.S. Federal Reserve will take more steps to boost the economy. The Fed is scheduled to hold a two- day policy meeting starting June 19.
Oil rebounded from the lowest close in eight months and gold advanced for a fifth day in the longest rally since April. The Fed bought $2.3 trillion of bonds in two rounds of quantitative easing from 2008 through 2011 to stimulate the economy, helping to almost double gold prices in that period.
To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net ; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net "
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Website: www.stevenmorris.co.za
The MSCI Asia Pacific Index slid 0.3 percent at 1:37 p.m. in Tokyo as the Nikkei 225 Stock Average retreated 0.2 percent and the Shanghai Composite Index lost 0.3 percent. The dollar fell for a third day against the euro before U.S. inflation data that may support the case for further stimulus, while Standard & Poor’s 500 Index futures climbed.
Spain’s credit rating was cut three steps to Baa3 by Moody’s Investors Service yesterday. Credit Suisse Group AG lowered China’s growth forecast for 2012 to 7.7 percent from 8 percent and Deutsche Bank AG trimmed its estimate to 7.9 percent from 8.2 percent on concern the debt crisis in Europe, China’s largest export market, will worsen.
“Europe is sliding further into a recession and the global and U.S. economies are still slowing down,” said Shane Oliver, the Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “It’s still time for caution on the short-term view.”
About two shares fell for every one that rose on the Asian benchmark index. Hutchison Whampoa Ltd., which operates ports in Germany and Spain, slid 1 percent in Hong Kong. Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp. paced declines for Chinese lenders on concern slowing growth will sap demand for loans. A “meaningful” investment rebound is unlikely in the foreseeable future, Tao Dong, Credit Suisse’s chief China economist, wrote in a note to clients.
Italy Auction
Italy holds a bond auction today amid rising borrowing costs, its first since Spain’s 100 billion-euro ($126 billion) bank rescue. Spain is on review for a further downgrade, said Moody’s, which also lowered Cyprus’s bond rating. A U.S. official said the Group of 20 nations probably won’t announce significant progress on Europe’s crisis ahead of a meeting in Los Cabos, Mexico, on June 18 to June 19.
The euro held gains against the yen and dollar as Alexis Tsipras, whose Syriza party is vying for first place in Greek polls before a June 17 election, said he expects the European Union will do all it can to keep the nation in the euro even if he wins and carries out his promise to repeal austerity measures. The region’s currency rose 0.2 percent at $1.2583.
“No one is going to take big positions in the market with the Greek elections looming over the weekend,” Kelvin Tay, the Singapore-based chief investment officer for the southern Asia Pacific region at UBS AG’s wealth management unit, said in a Bloomberg television interview today.
Australia Bonds
Australia’s bonds jumped the most in two weeks after the Australian newspaper reported Germany’s central bank may buy assets in the South Pacific nation. Gains in the 10-year security sent its yield down by as much as 13 basis points, or 0.13 percentage point, to 2.93 percent, set for the steepest daily drop since May 31.
New Zealand’s dollar rose against all 16 major peers after the central bank signaled no change in rates until mid-2013. Commodities reversed declines as forecasts for lower inflation increased speculation the U.S. Federal Reserve will take more steps to boost the economy. The Fed is scheduled to hold a two- day policy meeting starting June 19.
Oil rebounded from the lowest close in eight months and gold advanced for a fifth day in the longest rally since April. The Fed bought $2.3 trillion of bonds in two rounds of quantitative easing from 2008 through 2011 to stimulate the economy, helping to almost double gold prices in that period.
To contact the reporters on this story: Glenys Sim in Singapore at gsim4@bloomberg.net ; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net "
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Website: www.stevenmorris.co.za
ASIA SUMMARY 14 June 2012
Asian stocks declined overnight (MSCI Asia Pacific losing 0.3%) after Moody's cut Spain's credit rating by three steps from A3 to Baa3, just one level above junk. Moody's also cutting Cyprus' bond rating to Ba3 from Ba1. Investment banks lowered forecasts for Chinese economic growth in concern the debt crisis in Europe, China's biggest export market, will worsen. The S&P closed down 0.68% and the Dow lost 0.58% after SA futures.
Wednesday, 13 June 2012
Asia Summary - 13 June 2012
Asian stocks swinging between gains and losses (MSCI Asia Pacific up 0.3%)
as Italy look to sell 6.5 billion euros of debt today before elections on June 17th that may determine Greece's Euro future.
Reports today showed that Japanese machinery orders beat estimates and South Korean unemployment fell.
Dow closing up 0.32% and the S&P up 0.34% after SA futures close.
as Italy look to sell 6.5 billion euros of debt today before elections on June 17th that may determine Greece's Euro future.
Reports today showed that Japanese machinery orders beat estimates and South Korean unemployment fell.
Dow closing up 0.32% and the S&P up 0.34% after SA futures close.
U.S. Stocks Rise on Stimulus Bets While Spain Yields Jump
"June 12 (Bloomberg) -- Stocks rebounded from yesterday’s slump amid speculation policy makers will do more to stimulate the economy and protect European banks. Spain’s 10-year bond yield touched a euro-era record high as Fitch Ratings downgraded some Spanish lenders.
The Standard & Poor’s 500 Index added 1.2 percent to 1,324.18 at 4 p.m. in New York after tumbling 1.3 percent yesterday. The Stoxx Europe 600 Index rose 0.6 percent. The 10- year Spanish yield increased as much as 33 basis points to 6.83 percent, before trimming gains and trading at 6.71 percent. The S&P GSCI Index of commodities lost 0.2 percent as wheat and corn tumbled more than 2 percent. Ten-year Treasury yields rose eight basis points to 1.66 percent.
Gains in stocks followed remarks by Federal Reserve Bank of Chicago President Charles Evans that he would support more stimulus. The European Central Bank backed European Commission proposals for a banking union based on three pillars: Strengthening euro-area supervision of lenders, establishing a deposit guarantee program and “minimizing the risks for taxpayers” through contributions from the financial industry.
“It has been a bit schizophrenic,” said Mark Luschini, chief investment strategist for Philadelphia-based Janney Montgomery Scott LLC, which manages about $54 billion. “What’s taking place in the Spanish bond market is troubling. Yet pessimism is so high that the prospect of any relief would be enough to jump-start a rally in equities.”
Market Leaders
Commodity, financial and industrial shares rose at least 1.6 percent to lead gains in all 10 of the main industries in the S&P 500. Boeing Co. jumped 3.5 percent as Sanford C. Bernstein & Co. raised its rating and the company was poised to win the first order by a lessor for its 737 MAX jets. Textron Inc. rallied 4 in New York and Bombardier Inc. surged 6 percent in Toronto as Warren Buffett’s Berkshire Hathaway Inc. agreed to buy planes from the companies.
Boeing led gains in the Dow Jones Industrial Average, followed by advances of at least 2.5 percent in JPMorgan Chase & Co., Bank of America Corp. and DuPont Co. The Dow surged 162.57 points to 12,573.80. JPMorgan advanced before Chief Executive Officer Jamie Dimon is scheduled to testify before Congress tomorrow about his firm’s $2 billion trading loss.
The S&P 500 erased an early rally yesterday and ended the session with its biggest decline in more than a week as early investor optimism over Spain’s request for bailout funds to help its banks was met with skepticism that the rescue will tame the crisis.
‘Downward Pressure’
Fitch said today that euro-area countries face lower ratings because policy makers are failing to demonstrate they can bring the debt crisis under control and predicted Spain will miss budget-deficit targets. Bond ratings in the euro currency bloc are under “strong downward pressure,” Fitch Managing Director Ed Parker said in Oslo today.
The Fed is scheduled to meet next week and announce its rate decision on June 20.
“I’ve been in favor of pretty much any accommodative policy I’ve heard about,” Evans said in an interview on Bloomberg Television’s “In the Loop” with Betty Liu airing today. “Extending the Twist would be useful,” he said, referring to a plan expiring this month that lengthens the average duration of bonds in the Fed’s portfolio.
Commodities Retreat
All but seven of 24 commodities tracked by the S&P GSCI Index declined. Corn fell the most in two weeks, dropping 1.4 percent, as the U.S. Department of Agriculture forecast global inventories will rise to the highest level in 11 years. Wheat slid 2.3 percent after the USDA said stockpiles will be larger than analysts expected. Oil rose 0.8 percent to $83.32 a barrel, rebounding from an eight-month low.
The dollar weakened against 12 of 16 major peers, with the currencies of Australia and New Zealand appreciating about 1 percent to lead gains. The euro climbed 0.2 percent to $1.2505, reversing a 0.3 percent slump in the morning.
Optimism among global asset allocators “collapsed” this month as Europe’s debt crisis prompted money managers to sell equities and hoard cash to the highest level since 2008, a Bank of America Corp. survey showed.
Hoarding Cash
Respondents, who together manage $522 billion, reduced their holdings in stocks to underweight for the first time in seven months, meaning they now own less than are represented in indexes. Cash balances surged to 5.3 percent in June, the third- highest level on record, while an index of risk and liquidity sank to 30, the lowest level since September 2011.
The Stoxx 600 climbed even as three shares retreated for every two that rose in the regional benchmark.
TomTom NV rallied 16 percent after Apple Inc. agreed to use its digital maps. Lafarge SA rose more than 2 percent after announcing plans to increase earnings by 54 percent by 2015. Lagardere SCA retreated 2.4 percent after the company lowered its advertising-revenue target.
Spain’s 10-year bond yield and the cost of insuring against a default by the nation each rose for a third day, with credit- default swaps increasing 12 basis points to 607. The price was at a record 613.5 basis points on June 1.
Italy’s 10-year yield increased 14 basis points to 6.17 percent after reaching 6.30 percent, the highest since January. Germany’s 10-year bund yield climbed 12 basis points to 1.42 percent, with France’s yield rising 17 basis points to 2.73 percent.
‘Final Outcome’
“We’re going to just keep playing this game until there’s some final outcome of what’s going to happen with the euro,” Tom Wirth, who helps manage $1.5 billion as senior investment officer for Chemung Canal Trust Co., based in Elmira, New York, said in phone interview. “Europe is a total disaster.”
The European Financial Stability Facility plans to raise at least 1 billion euros through a sale of bonds due April 2037 as banks in Norway and Germany sell relatively safe covered bonds after yesterday’s surge in non-financial deals.
Italy plans to auction at least 9.5 billion euros ($11.9 billion) of debt this week as yields climb for Europe’s most- indebted countries following Spain’s request for a bailout. Greece holds elections June 17 that may determine the country’s future in the euro.
The MSCI Emerging Markets Index slipped 0.2 percent, after closing yesterday at the highest level since May 29. The Shanghai Composite Index, South Korea’s Kospi and Taiwan’s Taiex Index slid at least 0.7 percent. The ISE National 100 Index advanced 1.2 percent as Tupras Turkiye Petrol Rafinerileri AS jumped 2.7 percent after the U.S. said Turkey was among nations that would be exempt from sanctions for buying Iranian oil. Poland’s WIG20 Index and India’s Sensex Index climbed more than 1 percent.
To contact the reporters on this story: Michael P. Regan in New York at mregan12@bloomberg.net ; Rita Nazareth in New York at rnazareth@bloomberg.net "
===
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
The Standard & Poor’s 500 Index added 1.2 percent to 1,324.18 at 4 p.m. in New York after tumbling 1.3 percent yesterday. The Stoxx Europe 600 Index rose 0.6 percent. The 10- year Spanish yield increased as much as 33 basis points to 6.83 percent, before trimming gains and trading at 6.71 percent. The S&P GSCI Index of commodities lost 0.2 percent as wheat and corn tumbled more than 2 percent. Ten-year Treasury yields rose eight basis points to 1.66 percent.
Gains in stocks followed remarks by Federal Reserve Bank of Chicago President Charles Evans that he would support more stimulus. The European Central Bank backed European Commission proposals for a banking union based on three pillars: Strengthening euro-area supervision of lenders, establishing a deposit guarantee program and “minimizing the risks for taxpayers” through contributions from the financial industry.
“It has been a bit schizophrenic,” said Mark Luschini, chief investment strategist for Philadelphia-based Janney Montgomery Scott LLC, which manages about $54 billion. “What’s taking place in the Spanish bond market is troubling. Yet pessimism is so high that the prospect of any relief would be enough to jump-start a rally in equities.”
Market Leaders
Commodity, financial and industrial shares rose at least 1.6 percent to lead gains in all 10 of the main industries in the S&P 500. Boeing Co. jumped 3.5 percent as Sanford C. Bernstein & Co. raised its rating and the company was poised to win the first order by a lessor for its 737 MAX jets. Textron Inc. rallied 4 in New York and Bombardier Inc. surged 6 percent in Toronto as Warren Buffett’s Berkshire Hathaway Inc. agreed to buy planes from the companies.
Boeing led gains in the Dow Jones Industrial Average, followed by advances of at least 2.5 percent in JPMorgan Chase & Co., Bank of America Corp. and DuPont Co. The Dow surged 162.57 points to 12,573.80. JPMorgan advanced before Chief Executive Officer Jamie Dimon is scheduled to testify before Congress tomorrow about his firm’s $2 billion trading loss.
The S&P 500 erased an early rally yesterday and ended the session with its biggest decline in more than a week as early investor optimism over Spain’s request for bailout funds to help its banks was met with skepticism that the rescue will tame the crisis.
‘Downward Pressure’
Fitch said today that euro-area countries face lower ratings because policy makers are failing to demonstrate they can bring the debt crisis under control and predicted Spain will miss budget-deficit targets. Bond ratings in the euro currency bloc are under “strong downward pressure,” Fitch Managing Director Ed Parker said in Oslo today.
The Fed is scheduled to meet next week and announce its rate decision on June 20.
“I’ve been in favor of pretty much any accommodative policy I’ve heard about,” Evans said in an interview on Bloomberg Television’s “In the Loop” with Betty Liu airing today. “Extending the Twist would be useful,” he said, referring to a plan expiring this month that lengthens the average duration of bonds in the Fed’s portfolio.
Commodities Retreat
All but seven of 24 commodities tracked by the S&P GSCI Index declined. Corn fell the most in two weeks, dropping 1.4 percent, as the U.S. Department of Agriculture forecast global inventories will rise to the highest level in 11 years. Wheat slid 2.3 percent after the USDA said stockpiles will be larger than analysts expected. Oil rose 0.8 percent to $83.32 a barrel, rebounding from an eight-month low.
The dollar weakened against 12 of 16 major peers, with the currencies of Australia and New Zealand appreciating about 1 percent to lead gains. The euro climbed 0.2 percent to $1.2505, reversing a 0.3 percent slump in the morning.
Optimism among global asset allocators “collapsed” this month as Europe’s debt crisis prompted money managers to sell equities and hoard cash to the highest level since 2008, a Bank of America Corp. survey showed.
Hoarding Cash
Respondents, who together manage $522 billion, reduced their holdings in stocks to underweight for the first time in seven months, meaning they now own less than are represented in indexes. Cash balances surged to 5.3 percent in June, the third- highest level on record, while an index of risk and liquidity sank to 30, the lowest level since September 2011.
The Stoxx 600 climbed even as three shares retreated for every two that rose in the regional benchmark.
TomTom NV rallied 16 percent after Apple Inc. agreed to use its digital maps. Lafarge SA rose more than 2 percent after announcing plans to increase earnings by 54 percent by 2015. Lagardere SCA retreated 2.4 percent after the company lowered its advertising-revenue target.
Spain’s 10-year bond yield and the cost of insuring against a default by the nation each rose for a third day, with credit- default swaps increasing 12 basis points to 607. The price was at a record 613.5 basis points on June 1.
Italy’s 10-year yield increased 14 basis points to 6.17 percent after reaching 6.30 percent, the highest since January. Germany’s 10-year bund yield climbed 12 basis points to 1.42 percent, with France’s yield rising 17 basis points to 2.73 percent.
‘Final Outcome’
“We’re going to just keep playing this game until there’s some final outcome of what’s going to happen with the euro,” Tom Wirth, who helps manage $1.5 billion as senior investment officer for Chemung Canal Trust Co., based in Elmira, New York, said in phone interview. “Europe is a total disaster.”
The European Financial Stability Facility plans to raise at least 1 billion euros through a sale of bonds due April 2037 as banks in Norway and Germany sell relatively safe covered bonds after yesterday’s surge in non-financial deals.
Italy plans to auction at least 9.5 billion euros ($11.9 billion) of debt this week as yields climb for Europe’s most- indebted countries following Spain’s request for a bailout. Greece holds elections June 17 that may determine the country’s future in the euro.
The MSCI Emerging Markets Index slipped 0.2 percent, after closing yesterday at the highest level since May 29. The Shanghai Composite Index, South Korea’s Kospi and Taiwan’s Taiex Index slid at least 0.7 percent. The ISE National 100 Index advanced 1.2 percent as Tupras Turkiye Petrol Rafinerileri AS jumped 2.7 percent after the U.S. said Turkey was among nations that would be exempt from sanctions for buying Iranian oil. Poland’s WIG20 Index and India’s Sensex Index climbed more than 1 percent.
To contact the reporters on this story: Michael P. Regan in New York at mregan12@bloomberg.net ; Rita Nazareth in New York at rnazareth@bloomberg.net "
===
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Tuesday, 12 June 2012
Asia Summary 12 June 2012
Asian stocks falling overnight (MSCI Asia Pacific down 0.8%) amid doubt that the Spanish bailout of 100 billion Euro's may not be enough to halt the debt crisis.
Commodities following the decline as Copper futures fell 0.7% and Oil down 2% of which BHP Billiton lost 0.8%.
Dow closing down 0.78% and the S&P down almost a percent after SA futures close.
Commodities following the decline as Copper futures fell 0.7% and Oil down 2% of which BHP Billiton lost 0.8%.
Dow closing down 0.78% and the S&P down almost a percent after SA futures close.
Monday, 11 June 2012
The One Commodity to Own Before 2013
The One Commodity to Own Before 2013
"By Keith Kohl
Saturday, June 9th, 2012
“If you're not bullish on natural gas,” he said, “you must be blind... You should be seeing this transition coming from a mile away.”
My colleague Christian DeHaemer hit a bull's-eye earlier this morning.
While most investors are looking for a quick buck, few of them realize how valuable these opportunities can be over the long run.
And natural gas is no exception.
Today I'll give you two reasons why he's right.
The Bullish Case for Gas
The first reason will be more obvious to readers who have been following the natural gas story since 2006.
Believe me, the upcoming U.S. LNG exports destined to leave Gulf ports don't have us nearly as excited as what we plan to do with the fuel on our own turf does...
We've mentioned before how natural gas is single-handedly taking on coal to meet our electricity demand. According to the EIA, it has become even more pronounced.
Natural gas usage in U.S. power plants increased by 40% last March compared to the previous year. Meanwhile, coal's contribution to the mix dropped by 20%.
The EIA has stated it expects electrical generation from coal to fall as much as 15% during 2012, while natural gas's share will rise 22%.
Natural gas supplanting coal as our leading source for electricity is just one reason to stay bullish.
The second has much more lucrative rewards for investors...
The Holy Grail in Energy
Slowly but surely, we're seeing the signs: First, it's a headline buried in a local paper. Then a few bigger stories pop up — a new vehicle fleet being converted to natural gas, or plans to build LNG plants and filling stations...
Shell recently announced plans to invest $250 million to build a string of LNG fuel stations across Western Canada. The move will drastically cut fuel bills to run their truck fleets.
So why do alternative transport fuels hold so much potential?"
"By Keith Kohl
Saturday, June 9th, 2012
“If you're not bullish on natural gas,” he said, “you must be blind... You should be seeing this transition coming from a mile away.”
My colleague Christian DeHaemer hit a bull's-eye earlier this morning.
While most investors are looking for a quick buck, few of them realize how valuable these opportunities can be over the long run.
And natural gas is no exception.
Today I'll give you two reasons why he's right.
The Bullish Case for Gas
The first reason will be more obvious to readers who have been following the natural gas story since 2006.
Believe me, the upcoming U.S. LNG exports destined to leave Gulf ports don't have us nearly as excited as what we plan to do with the fuel on our own turf does...
We've mentioned before how natural gas is single-handedly taking on coal to meet our electricity demand. According to the EIA, it has become even more pronounced.
Natural gas usage in U.S. power plants increased by 40% last March compared to the previous year. Meanwhile, coal's contribution to the mix dropped by 20%.
The EIA has stated it expects electrical generation from coal to fall as much as 15% during 2012, while natural gas's share will rise 22%.
Natural gas supplanting coal as our leading source for electricity is just one reason to stay bullish.
The second has much more lucrative rewards for investors...
The Holy Grail in Energy
Slowly but surely, we're seeing the signs: First, it's a headline buried in a local paper. Then a few bigger stories pop up — a new vehicle fleet being converted to natural gas, or plans to build LNG plants and filling stations...
Shell recently announced plans to invest $250 million to build a string of LNG fuel stations across Western Canada. The move will drastically cut fuel bills to run their truck fleets.
So why do alternative transport fuels hold so much potential?"
Value in Europe!
Another good article from PSG.
There is a lot of bad noise surrounding Europe right now and when that happens, contrarian value managers start to smell blood in the water. The valuations of many great companies are at near-record levels which would normally be an indicator that it’s time to buy. Let’s take a look at some of the evidence.
A few interesting charts crossed our desk over the past week.
The first points out that Dutch bond yields are now at 500 year lows (Figure 1).
The second (Figure 2) is telling us that Europe has underperformed the US by over 3 standard deviations when measured over the past 20 year timeframe.
The pervasive fear enveloping Europe has opened up some interesting anomalies.
The market capitalisation of all Greek Equities is now the same as just one South African company - our own Aspen Pharma ($4.8bn). Aspen is around the 25th largest in our South African screening universe.
Across the pond, US bond yields also made 220 year lows during the week, a record that was set in November 1945. Truly interesting times.
Given the clearly Armageddon-like headlines emanating from the European region, these charts will likely surprise few people. What they might indicate however is the extreme pessimism that is currently being reflected in current market valuations.
History has taught us that stock markets are often very good at pricing the news headlines of the day. As Albert Edwards, a man often described as being a “perma-bear” points out, the macro environment always looks awful when the market is cheap. On the subject of bears, we listened with interest this last week to a thought provoking interview with financial historian Russell Napier titled “Uber-Bear sees Value in Europe”. To see this interview, please click here or go to video.ft.com/v/16559325 38001/Uber-bear-sees-value-in-Europe.
Napier, a self confessed bear himself, has recently become a European bull and points out that Europe is now close to the 1982 Cyclically Adjusted Price Earnings (CAPE or Shiller P/E) ratio lows which marked the start of the last great bull market (see Figure 3 below).
The chart below was struck in March of this year – updating the chart with the recent sell-off will show that we are moving even closer to those 30 year lows.
We agree with the view that valuation metrics do not give us an indication on the timing of the bottom of the market, although they do highlight where value might be found for above average future returns. They also highlight areas to look for potential significant margin of safety.
Please click here to read my colleague, Paul Bosman’s recent PSG Angle which gives a good example of a stock at the front line of this current pitched battle.
At PSG Asset Management we look to invest in great companies with excellent management and which are trading at very attractive valuations. Benjamin Graham, the “father” of value investing taught us that the time to buy is when there is blood in the streets. We at PSG Asset Management wonder whether, if we look back 5 years from now, that the current extreme conditions reflected in European equity markets might just have provided a great opportunity to buy some quality companies.
REF : written by Greg Hopkins PSG Asset Management
"The PSG Angle is an electronic newsletter of PSG Asset Management. "
There is a lot of bad noise surrounding Europe right now and when that happens, contrarian value managers start to smell blood in the water. The valuations of many great companies are at near-record levels which would normally be an indicator that it’s time to buy. Let’s take a look at some of the evidence.
A few interesting charts crossed our desk over the past week.
The first points out that Dutch bond yields are now at 500 year lows (Figure 1).
The second (Figure 2) is telling us that Europe has underperformed the US by over 3 standard deviations when measured over the past 20 year timeframe.
The pervasive fear enveloping Europe has opened up some interesting anomalies.
The market capitalisation of all Greek Equities is now the same as just one South African company - our own Aspen Pharma ($4.8bn). Aspen is around the 25th largest in our South African screening universe.
Across the pond, US bond yields also made 220 year lows during the week, a record that was set in November 1945. Truly interesting times.
Given the clearly Armageddon-like headlines emanating from the European region, these charts will likely surprise few people. What they might indicate however is the extreme pessimism that is currently being reflected in current market valuations.
History has taught us that stock markets are often very good at pricing the news headlines of the day. As Albert Edwards, a man often described as being a “perma-bear” points out, the macro environment always looks awful when the market is cheap. On the subject of bears, we listened with interest this last week to a thought provoking interview with financial historian Russell Napier titled “Uber-Bear sees Value in Europe”. To see this interview, please click here or go to video.ft.com/v/16559325 38001/Uber-bear-sees-value-in-Europe.
Napier, a self confessed bear himself, has recently become a European bull and points out that Europe is now close to the 1982 Cyclically Adjusted Price Earnings (CAPE or Shiller P/E) ratio lows which marked the start of the last great bull market (see Figure 3 below).
The chart below was struck in March of this year – updating the chart with the recent sell-off will show that we are moving even closer to those 30 year lows.
We agree with the view that valuation metrics do not give us an indication on the timing of the bottom of the market, although they do highlight where value might be found for above average future returns. They also highlight areas to look for potential significant margin of safety.
Please click here to read my colleague, Paul Bosman’s recent PSG Angle which gives a good example of a stock at the front line of this current pitched battle.
At PSG Asset Management we look to invest in great companies with excellent management and which are trading at very attractive valuations. Benjamin Graham, the “father” of value investing taught us that the time to buy is when there is blood in the streets. We at PSG Asset Management wonder whether, if we look back 5 years from now, that the current extreme conditions reflected in European equity markets might just have provided a great opportunity to buy some quality companies.
REF : written by Greg Hopkins PSG Asset Management
"The PSG Angle is an electronic newsletter of PSG Asset Management. "
Asia close - 11 June 2012
Asian stocks rally (MSCI Asia Pacific gaining 1.8%) after China's exports beat estimates and Spain sought a 100 billion Euro bailout for its banks showing Europe is tackling the crisis that's has effected global markets. Commodities climbing also seeing Oil for July rise 3% and Copper futures adding 2.5%.
Friday, 8 June 2012
Asian Stocks, Oil Fall as Bernanke Overshadows China Cut
"June 8 (Bloomberg) -- Asian stocks fell, paring their first weekly advance since April, the euro weakened and oil headed for the longest losing streak in 13 years as comments by Federal Reserve Chairman Ben S. Bernanke overshadowed China’s first interest-rate cut since 2008. U.S. Treasuries and the yen rallied amid demand for refuge assets.
The MSCI Asia Pacific Index sank 1 percent at 12:37 p.m. in Tokyo, trimming its weekly gain to 0.5 percent. Japan’s Nikkei 225 Stock Average slid 1.6 percent. Standard & Poor’s 500 Index futures lost 0.4 percent and the euro slid 0.3 percent. Oil tumbled 2.1 percent in New York, poised to complete a sixth week of declines. The S&P GSCI gauge of commodities fell 1.3 percent.
Global stocks rallied this week as speculation mounted that policy makers would act to spur growth. Bernanke said the Fed will need to assess conditions before deciding if more measures are required to stoke an economy threatened by Europe’s debt crisis and U.S. budget cuts. China’s reduction in lending and deposit rates comes a day before the nation is due to report inflation, investment and output figures. Data due today may show German exports fell in April.
“The key issue really is around European sovereign debt and having some permanent resolution,” said Donald Williams, chief investment officer at Platypus Asset Management Ltd. that manages about $1 billion. “Even though China’s rate cut was unexpected, people are selling because it confirms in their minds that the growth outlook is problematic.”
Bernanke Testimony
In his prepared comments, the Fed chairman didn’t call for consideration of additional stimulus, a contrast with a speech earlier this week in which Vice Chairman Janet Yellen said the economy “remains vulnerable to setbacks” and may warrant more accommodation.
Sony Corp., Japan’s No. 1 exporter of consumer electronics, slid 4.1 percent as the yen climbed while South Korean rival Samsung Electronics Co. lost 0.9 percent. BHP Billiton Ltd., the world’s largest mining company, gained 1.3 percent in Sydney. Anhui Conch Cement Co. slumped 2.7 percent in Hong Kong after saying first-half profit may drop “considerably.”
Today’s losses come after the MSCI Asia Pacific Index climbed 1.6 percent this week through yesterday. The gauge plunged 14 percent from a six-month high in February through last week as U.S. economic data trailed estimates and concern grew about Greece’s future in the euro and Spain’s deteriorating national finances.
Central Bank Rates
Policy makers are being pressed into action to shore up a global economy that is suffering its steepest slowdown since the recession ended in 2009.
The People’s Bank of China said overnight it will lower its benchmark lending and deposit rates from today. The decision follows an Australian interest-rate cut on June 5. European Central Bank President Mario Draghi left the door open at a June 6 press conference to a rate cut, while highlighting the limitations of the ECB’s tools in countering the region’s financial turmoil.
The Bank of Korea held off from altering borrowing costs for a 12th-straight month today, as predicted by all 15 economists surveyed by Bloomberg News.
The global economy will grow 1.7 percent this quarter and 2 percent next, after expanding at an annual pace of 2.5 percent in the final quarter of 2011, economists at JPMorgan Chase & Co. in New York said in a June 1 report. The result is “an extended soft patch as weak as anything experienced in the past two decades outside the Great Recession,” they wrote.
China, Germany
Industrial output in China, the world’s biggest producer of steel and cement, probably rose 9.8 percent last month from a year earlier, close to the slowest pace in three years, according to the median estimate in a Bloomberg News survey of economists before the report due tomorrow.
German exports, adjusted for work days and seasonal changes, probably decreased 0.7 percent in April from March, when they rose a revised 0.8 percent, according to a Bloomberg survey.
The euro dropped 0.3 percent to $1.2526. The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, rose 0.4 percent to 82.406. The yen gained 0.5 percent to 99.54 per euro and added 0.2 percent to 79.44 per dollar.
U.S. Treasuries rose, with the 10-year yield sliding two basis points, or 0.02 percentage point, to 1.62 percent. Japan’s 10-year rate declined 2 1/2 basis points to 0.855 percent.
Japan’s gross domestic product grew an annualized 4.7 percent in the three months ended March 31, the Cabinet Office said today, compared with a preliminary estimate for a 4.1 percent expansion. The median forecast of 18 economists surveyed by Bloomberg News was for 4.5 percent growth.
OPEC Meeting
Copper fell 1.7 percent, zinc tumbled 1.2 percent and nickel slid 1.5 percent. Oil fell to $83.06. Global crude supply is sufficient, Youcef Yousfi, Algeria’s energy minister, said yesterday before the Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world’s crude, meets next week in Vienna to review output targets.
The Markit iTraxx Japan index increased 4 basis points to 191 basis points, Citigroup Inc. prices show. The benchmark is headed for the biggest one-day gain since June 1, according to data provider CMA. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 2 basis points to 194.5 basis points, Standard Chartered Plc prices show.
Credit-default swap indexes are benchmarks for protecting bonds against default and traders use them to speculate on credit quality. A drop signals improving perceptions of creditworthiness, while an increase suggests the opposite.
To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net ; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net "
===
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
The MSCI Asia Pacific Index sank 1 percent at 12:37 p.m. in Tokyo, trimming its weekly gain to 0.5 percent. Japan’s Nikkei 225 Stock Average slid 1.6 percent. Standard & Poor’s 500 Index futures lost 0.4 percent and the euro slid 0.3 percent. Oil tumbled 2.1 percent in New York, poised to complete a sixth week of declines. The S&P GSCI gauge of commodities fell 1.3 percent.
Global stocks rallied this week as speculation mounted that policy makers would act to spur growth. Bernanke said the Fed will need to assess conditions before deciding if more measures are required to stoke an economy threatened by Europe’s debt crisis and U.S. budget cuts. China’s reduction in lending and deposit rates comes a day before the nation is due to report inflation, investment and output figures. Data due today may show German exports fell in April.
“The key issue really is around European sovereign debt and having some permanent resolution,” said Donald Williams, chief investment officer at Platypus Asset Management Ltd. that manages about $1 billion. “Even though China’s rate cut was unexpected, people are selling because it confirms in their minds that the growth outlook is problematic.”
Bernanke Testimony
In his prepared comments, the Fed chairman didn’t call for consideration of additional stimulus, a contrast with a speech earlier this week in which Vice Chairman Janet Yellen said the economy “remains vulnerable to setbacks” and may warrant more accommodation.
Sony Corp., Japan’s No. 1 exporter of consumer electronics, slid 4.1 percent as the yen climbed while South Korean rival Samsung Electronics Co. lost 0.9 percent. BHP Billiton Ltd., the world’s largest mining company, gained 1.3 percent in Sydney. Anhui Conch Cement Co. slumped 2.7 percent in Hong Kong after saying first-half profit may drop “considerably.”
Today’s losses come after the MSCI Asia Pacific Index climbed 1.6 percent this week through yesterday. The gauge plunged 14 percent from a six-month high in February through last week as U.S. economic data trailed estimates and concern grew about Greece’s future in the euro and Spain’s deteriorating national finances.
Central Bank Rates
Policy makers are being pressed into action to shore up a global economy that is suffering its steepest slowdown since the recession ended in 2009.
The People’s Bank of China said overnight it will lower its benchmark lending and deposit rates from today. The decision follows an Australian interest-rate cut on June 5. European Central Bank President Mario Draghi left the door open at a June 6 press conference to a rate cut, while highlighting the limitations of the ECB’s tools in countering the region’s financial turmoil.
The Bank of Korea held off from altering borrowing costs for a 12th-straight month today, as predicted by all 15 economists surveyed by Bloomberg News.
The global economy will grow 1.7 percent this quarter and 2 percent next, after expanding at an annual pace of 2.5 percent in the final quarter of 2011, economists at JPMorgan Chase & Co. in New York said in a June 1 report. The result is “an extended soft patch as weak as anything experienced in the past two decades outside the Great Recession,” they wrote.
China, Germany
Industrial output in China, the world’s biggest producer of steel and cement, probably rose 9.8 percent last month from a year earlier, close to the slowest pace in three years, according to the median estimate in a Bloomberg News survey of economists before the report due tomorrow.
German exports, adjusted for work days and seasonal changes, probably decreased 0.7 percent in April from March, when they rose a revised 0.8 percent, according to a Bloomberg survey.
The euro dropped 0.3 percent to $1.2526. The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, rose 0.4 percent to 82.406. The yen gained 0.5 percent to 99.54 per euro and added 0.2 percent to 79.44 per dollar.
U.S. Treasuries rose, with the 10-year yield sliding two basis points, or 0.02 percentage point, to 1.62 percent. Japan’s 10-year rate declined 2 1/2 basis points to 0.855 percent.
Japan’s gross domestic product grew an annualized 4.7 percent in the three months ended March 31, the Cabinet Office said today, compared with a preliminary estimate for a 4.1 percent expansion. The median forecast of 18 economists surveyed by Bloomberg News was for 4.5 percent growth.
OPEC Meeting
Copper fell 1.7 percent, zinc tumbled 1.2 percent and nickel slid 1.5 percent. Oil fell to $83.06. Global crude supply is sufficient, Youcef Yousfi, Algeria’s energy minister, said yesterday before the Organization of Petroleum Exporting Countries, which supplies about 40 percent of the world’s crude, meets next week in Vienna to review output targets.
The Markit iTraxx Japan index increased 4 basis points to 191 basis points, Citigroup Inc. prices show. The benchmark is headed for the biggest one-day gain since June 1, according to data provider CMA. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed 2 basis points to 194.5 basis points, Standard Chartered Plc prices show.
Credit-default swap indexes are benchmarks for protecting bonds against default and traders use them to speculate on credit quality. A drop signals improving perceptions of creditworthiness, while an increase suggests the opposite.
To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net ; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net "
===
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Steepest Global Slide Since Recession Pushes Rate Cuts
June 8 (Bloomberg) -- Monetary-policy makers from around the world are being pressed into action to shore up a global economy that is suffering its steepest slowdown since the recession ended in 2009.
On the heels of a June 5 interest-rate cut by Australia, China yesterday unveiled its first reduction in borrowing costs in more than three years to counter what Premier Wen Jiabao has called increasing downward economic pressure.
European Central Bank President Mario Draghi left the door open at a June 6 press conference to a rate cut, while highlighting the limitations of the ECB’s tools in countering the region’s financial turmoil.
And Federal Reserve Chairman Ben S. Bernanke told a Congressional committee yesterday that policy makers will discuss later this month whether to do more to spur growth, though he said the steps they could take may have “diminishing returns.”
“Across the board, we’re seeing the central banks being galvanized into action by weak growth around the world,” said Nariman Behravesh, chief economist in Lexington, Massachusetts, at IHS Inc.
The global economy will grow 1.7 percent this quarter and 2 percent next, after expanding at an annual pace of 2.5 percent in the final quarter of 2011, economists at JPMorgan Chase & Co. in New York said in a June 1 report. The result is “an extended soft patch as weak as anything experienced in the past two decades outside the Great Recession,” they wrote.
Pump Growth
Stock markets have climbed this week on mounting anticipation that policy makers will act to pump up growth, although those gains were trimmed yesterday after Bernanke refrained from explicitly pledging further steps in testimony before the Joint Economic Committee in Washington.
The Standard & Poor’s 500 Index erased a rally of as much as 1.1 percent to close little changed yesterday. The gauge is up 2.9 percent on the week. The MSCI Asia Pacific Index is poised to snap a five-week losing streak.
David Hensley, director of global economics at JPMorgan in New York, looks for a “loosely coordinated round of global policy easing,” with the Fed moving at its June 19-20 meeting, followed by an ECB rate cut in July and further steps by the Bank of Japan and the Bank of England to boost growth.
He predicts the Fed will extend its pledge to keep its benchmark rate at “exceptionally low levels” into 2015 and will continue its Operation Twist program to bring down long- term rates beyond the scheduled completion this month.
Record Low
The Fed has held the target for the federal funds rate at a record low between zero and 0.25 percent since December 2008. The ECB returned its benchmark rate to a record low in December.
Emerging markets probably will join in, with both Brazil and India reducing rates further in the coming months, according to Behravesh. Brazil has cut borrowing costs by four percentage points to a record low 8.5 percent since August. India’s monetary authority reduced its repurchase rate by 50 basis points to 8 percent in April and has trimmed its reserve ratio by 125 basis points this year to 4.75 percent.
China coupled its rate cut -- it lowered the benchmark one- year lending rate to 6.31 percent from 6.56 percent -- with moves to give banks extra freedom to set the amounts they pay on deposits and charge for loans.
“This is a very positive pro-market move that is quite bullish,” Donald Straszheim, senior managing director of New York-based ISI Group, said in a note to clients.
Rate-Cut Cycle
Shen Jianguang, a Hong Kong-based economist with Mizuho Securities Asia Ltd. who has worked for the ECB, said China’s move is “the beginning of a rate-cut cycle” and predicted “at least one more reduction this year.
Wen called for steps to stabilize growth and offset downward pressure on the economy in a speech last month in the southern Chinese province of Hunan, according to the Hunan Daily newspaper.
Industrial output in China, the world’s biggest producer of steel and cement, probably rose 9.8 percent last month from a year earlier, close to the slowest pace in three years, according to the median estimate in a Bloomberg News survey of 27 economists ahead of a report due June 9.
Fixed-asset investment may have grown at a slower pace in the first five months, with Caterpillar Inc., the world’s largest maker of construction and mining equipment, among companies reporting a slowdown in sales.
Reflate Bubble
In spite of decelerating growth, China had held off from cutting rates because it was worried that such steps would push inflation back up and reflate a housing bubble, Hensley said.
South Korea today kept its benchmark unchanged, citing elevated inflation expectations even while flagging that risks to growth are increasing. Bank of Korea Governor Kim Choong Soo told reporters in Seoul that China’s move will have an “indirect” impact on his nation’s economy, Asia’s fourth largest.
The ECB also has been reticent about taking further action to tackle a spreading recession and financial-market instability in the 17-nation euro area. Having already cut its benchmark rate to 1 percent and injected more than 1 trillion euros ($1.3 trillion) of three-year loans into the banking system, the ECB is reluctant to do more heavy lifting as governments procrastinate over the reforms it deems necessary to put the monetary union on a sustainable footing.
Draghi said the ECB stands “ready to act” should the sovereign-debt crisis damp the euro-area economy further, and “a few” Governing Council members pushed for a rate reduction at the June 6 policy meeting.
’Limited’ Impact
Still, “we have to be aware that the context is one where you have liquidity constraints and tensions in financial markets,” he said after keeping rates on hold. “Price signals in this situation have a relatively limited immediate effect.”
Draghi also cast doubt on the impact of further longer-term refinancing operations, or LTROs, saying the full effects of previous loans have yet to be felt.
Former U.S. Treasury Secretary Lawrence Summers said the ECB and the region’s governments must do more to restore confidence amid the euro-area debt crisis.
“A central bank wants to bend over backwards to be reassuring, to reassure people that liquidity is there,” the Harvard University professor told Bloomberg Television on June 6. “The overwhelming imperative of the situation is to instill more confidence than there is today.”
Record Unemployment
While the euro area narrowly avoided falling into a recession in the first quarter, unemployment was a record 11 percent in March and April and economic confidence is at the lowest since 2009. Behravesh said the mounting gloom will push the ECB into cutting interest rates next month.
In the U.S., Fed officials are divided over whether the central bank should take additional steps to support an economy that is being buffeted by the financial strains coming out of Europe. The next meeting of the policy-making Federal Open Market Committee will come just days after Greece holds elections on June 17. The results could hand power to parties that oppose the terms of the nation’s rescue package, precipitating its exit from the monetary union.
More easing isn’t necessary, regional Fed Presidents Richard Fisher in Dallas and James Bullard in St. Louis said in separate speeches June 5. Additional stimulus would be “pushing on a string,” Fisher said, while Bullard said there’s time to assess the economy and no need to change policy now. Neither is currently a voting member of the FOMC.
Debate at Fed
Three of their colleagues, led by Fed Vice Chairman Janet Yellen, suggested on June 6 that conditions may warrant some action.
“Scope remains for the FOMC to provide further policy accommodation,” Yellen said in a Boston speech. “It may well be appropriate to insure against adverse shocks that could push the economy into territory where a self-reinforcing downward spiral of economic weakness would be difficult to arrest.”
Bernanke, for his part, didn’t tip his hand during his testimony yesterday. Instead, he outlined the course of discussion he foresees at the next meeting of the FOMC.
“The main question we have to address has to do with the likely strength of the economy,” Bernanke said. “Will there be enough growth going forward to make material progress on the unemployment rate?”
U.S. employers added 69,000 workers last month, the fewest in a year, while the jobless rate rose to 8.2 percent from 8.1 percent in April.
AT&T Inc. Chief Executive Officer Randall Stephenson said June 1 that smaller companies have reduced hiring as business conditions get “tighter and tighter,” cutting demand for the largest U.S. phone company’s services.
With growth slowing around the world, “the central banks are in motion,” Hensley said. “Some of the motion is action. Some of it is rhetoric.”
To contact the reporter on this story: Rich Miller in Washington at rmiller28@bloomberg.net "
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
On the heels of a June 5 interest-rate cut by Australia, China yesterday unveiled its first reduction in borrowing costs in more than three years to counter what Premier Wen Jiabao has called increasing downward economic pressure.
European Central Bank President Mario Draghi left the door open at a June 6 press conference to a rate cut, while highlighting the limitations of the ECB’s tools in countering the region’s financial turmoil.
And Federal Reserve Chairman Ben S. Bernanke told a Congressional committee yesterday that policy makers will discuss later this month whether to do more to spur growth, though he said the steps they could take may have “diminishing returns.”
“Across the board, we’re seeing the central banks being galvanized into action by weak growth around the world,” said Nariman Behravesh, chief economist in Lexington, Massachusetts, at IHS Inc.
The global economy will grow 1.7 percent this quarter and 2 percent next, after expanding at an annual pace of 2.5 percent in the final quarter of 2011, economists at JPMorgan Chase & Co. in New York said in a June 1 report. The result is “an extended soft patch as weak as anything experienced in the past two decades outside the Great Recession,” they wrote.
Pump Growth
Stock markets have climbed this week on mounting anticipation that policy makers will act to pump up growth, although those gains were trimmed yesterday after Bernanke refrained from explicitly pledging further steps in testimony before the Joint Economic Committee in Washington.
The Standard & Poor’s 500 Index erased a rally of as much as 1.1 percent to close little changed yesterday. The gauge is up 2.9 percent on the week. The MSCI Asia Pacific Index is poised to snap a five-week losing streak.
David Hensley, director of global economics at JPMorgan in New York, looks for a “loosely coordinated round of global policy easing,” with the Fed moving at its June 19-20 meeting, followed by an ECB rate cut in July and further steps by the Bank of Japan and the Bank of England to boost growth.
He predicts the Fed will extend its pledge to keep its benchmark rate at “exceptionally low levels” into 2015 and will continue its Operation Twist program to bring down long- term rates beyond the scheduled completion this month.
Record Low
The Fed has held the target for the federal funds rate at a record low between zero and 0.25 percent since December 2008. The ECB returned its benchmark rate to a record low in December.
Emerging markets probably will join in, with both Brazil and India reducing rates further in the coming months, according to Behravesh. Brazil has cut borrowing costs by four percentage points to a record low 8.5 percent since August. India’s monetary authority reduced its repurchase rate by 50 basis points to 8 percent in April and has trimmed its reserve ratio by 125 basis points this year to 4.75 percent.
China coupled its rate cut -- it lowered the benchmark one- year lending rate to 6.31 percent from 6.56 percent -- with moves to give banks extra freedom to set the amounts they pay on deposits and charge for loans.
“This is a very positive pro-market move that is quite bullish,” Donald Straszheim, senior managing director of New York-based ISI Group, said in a note to clients.
Rate-Cut Cycle
Shen Jianguang, a Hong Kong-based economist with Mizuho Securities Asia Ltd. who has worked for the ECB, said China’s move is “the beginning of a rate-cut cycle” and predicted “at least one more reduction this year.
Wen called for steps to stabilize growth and offset downward pressure on the economy in a speech last month in the southern Chinese province of Hunan, according to the Hunan Daily newspaper.
Industrial output in China, the world’s biggest producer of steel and cement, probably rose 9.8 percent last month from a year earlier, close to the slowest pace in three years, according to the median estimate in a Bloomberg News survey of 27 economists ahead of a report due June 9.
Fixed-asset investment may have grown at a slower pace in the first five months, with Caterpillar Inc., the world’s largest maker of construction and mining equipment, among companies reporting a slowdown in sales.
Reflate Bubble
In spite of decelerating growth, China had held off from cutting rates because it was worried that such steps would push inflation back up and reflate a housing bubble, Hensley said.
South Korea today kept its benchmark unchanged, citing elevated inflation expectations even while flagging that risks to growth are increasing. Bank of Korea Governor Kim Choong Soo told reporters in Seoul that China’s move will have an “indirect” impact on his nation’s economy, Asia’s fourth largest.
The ECB also has been reticent about taking further action to tackle a spreading recession and financial-market instability in the 17-nation euro area. Having already cut its benchmark rate to 1 percent and injected more than 1 trillion euros ($1.3 trillion) of three-year loans into the banking system, the ECB is reluctant to do more heavy lifting as governments procrastinate over the reforms it deems necessary to put the monetary union on a sustainable footing.
Draghi said the ECB stands “ready to act” should the sovereign-debt crisis damp the euro-area economy further, and “a few” Governing Council members pushed for a rate reduction at the June 6 policy meeting.
’Limited’ Impact
Still, “we have to be aware that the context is one where you have liquidity constraints and tensions in financial markets,” he said after keeping rates on hold. “Price signals in this situation have a relatively limited immediate effect.”
Draghi also cast doubt on the impact of further longer-term refinancing operations, or LTROs, saying the full effects of previous loans have yet to be felt.
Former U.S. Treasury Secretary Lawrence Summers said the ECB and the region’s governments must do more to restore confidence amid the euro-area debt crisis.
“A central bank wants to bend over backwards to be reassuring, to reassure people that liquidity is there,” the Harvard University professor told Bloomberg Television on June 6. “The overwhelming imperative of the situation is to instill more confidence than there is today.”
Record Unemployment
While the euro area narrowly avoided falling into a recession in the first quarter, unemployment was a record 11 percent in March and April and economic confidence is at the lowest since 2009. Behravesh said the mounting gloom will push the ECB into cutting interest rates next month.
In the U.S., Fed officials are divided over whether the central bank should take additional steps to support an economy that is being buffeted by the financial strains coming out of Europe. The next meeting of the policy-making Federal Open Market Committee will come just days after Greece holds elections on June 17. The results could hand power to parties that oppose the terms of the nation’s rescue package, precipitating its exit from the monetary union.
More easing isn’t necessary, regional Fed Presidents Richard Fisher in Dallas and James Bullard in St. Louis said in separate speeches June 5. Additional stimulus would be “pushing on a string,” Fisher said, while Bullard said there’s time to assess the economy and no need to change policy now. Neither is currently a voting member of the FOMC.
Debate at Fed
Three of their colleagues, led by Fed Vice Chairman Janet Yellen, suggested on June 6 that conditions may warrant some action.
“Scope remains for the FOMC to provide further policy accommodation,” Yellen said in a Boston speech. “It may well be appropriate to insure against adverse shocks that could push the economy into territory where a self-reinforcing downward spiral of economic weakness would be difficult to arrest.”
Bernanke, for his part, didn’t tip his hand during his testimony yesterday. Instead, he outlined the course of discussion he foresees at the next meeting of the FOMC.
“The main question we have to address has to do with the likely strength of the economy,” Bernanke said. “Will there be enough growth going forward to make material progress on the unemployment rate?”
U.S. employers added 69,000 workers last month, the fewest in a year, while the jobless rate rose to 8.2 percent from 8.1 percent in April.
AT&T Inc. Chief Executive Officer Randall Stephenson said June 1 that smaller companies have reduced hiring as business conditions get “tighter and tighter,” cutting demand for the largest U.S. phone company’s services.
With growth slowing around the world, “the central banks are in motion,” Hensley said. “Some of the motion is action. Some of it is rhetoric.”
To contact the reporter on this story: Rich Miller in Washington at rmiller28@bloomberg.net "
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Thursday, 7 June 2012
Breaking News : China cuts main interest rate 0.25%
Breaking News : China cuts main interest rate 0.25%
China has cut interest rates by 25 basis points, its strongest move yet to prop up the economy as growth weakens.
The benchmark one-year lending rate is now 6.31 per cent, while the one-year deposit rate is 3.25 per cent.
It is the first time that the Chinese central bank has reduced rates since 2008. Just a couple of months ago, few analysts had forecast that Beijing would cut rates, believing that China was on track for a ‘soft landing’.
But after growth slowed to 8.1 per cent in the first quarter, recent data showed the economy was on track for a sharper deceleration.
China has cut interest rates by 25 basis points, its strongest move yet to prop up the economy as growth weakens.
The benchmark one-year lending rate is now 6.31 per cent, while the one-year deposit rate is 3.25 per cent.
It is the first time that the Chinese central bank has reduced rates since 2008. Just a couple of months ago, few analysts had forecast that Beijing would cut rates, believing that China was on track for a ‘soft landing’.
But after growth slowed to 8.1 per cent in the first quarter, recent data showed the economy was on track for a sharper deceleration.
Australian Employers Add 38,900 Jobs as Currency Jumps
"June 7 (Bloomberg) -- Australia unexpectedly added workers last month, capping the best January-to-May period of hiring in five years and prompting traders to pare bets on interest-rate cuts as the local dollar stages its strongest rally this year.
The number of people employed rose by 38,900 in May, after a revised 7,000 gain in April that was lower than previously reported, the statistics bureau said in Sydney today. The median estimate was for no change in employment in a Bloomberg News survey of 23 economists. The jobless rate rose to 5.1 percent from a revised 5 percent in April as participation increased.
The local currency jumped 2.5 percent this week as the jobs data and a gross domestic product report showing the economy expanded 1.3 percent last quarter, more than twice the level forecast, underscore the nation’s resource-fueled growth. Reserve Bank Governor Glenn Stevens cut interest rates by 75 basis points in the past two meetings, to 3.5 percent, to shore up the economy as the outlook in Europe and China deteriorates.
“Despite the moderate uptick in unemployment, this is a stellar jobs report and paints a very healthy picture of the labor market,” said Katrina Ell, an economist at Moody’s Analytics in Sydney. “Coupled with strong first quarter GDP growth, the RBA will likely sit on their hands and keep rates steady for the next couple of months.”
Traders are pricing in a 23 percent chance the central bank will keep rates unchanged next month, up from none before today’s jobs data, according to swaps data compiled by Bloomberg. Prior to yesterday’s GDP report they saw a 50 percent chance of a half-point reduction.
Dollar Rallies
The Australian dollar bought 99.51 U.S. cents at 2:07 p.m. in Sydney compared with 98.92 cents before the data, while the S&P/ASX 200 Index of stocks was 1.4 percent higher.
The number of full-time jobs advanced by 46,100 last month, the biggest increase in almost a year, and part-time employment fell by 7,200, today’s report showed. Australia’s participation rate, a measure of the working-age population, gained to 65.5 percent in May from 65.2 percent a month earlier, it showed. That was the highest since November.
The nation’s economy is being powered by an estimated A$500 billion pipeline of resource projects that is spurring hiring by companies including BHP Billiton Ltd. to meet Chinese demand.
Elsewhere in Asia, South Korea said its economy grew 0.9 percent in the first quarter from the previous three-month period, unchanged from an April estimate.
Japan, Taiwan
Japan’s Cabinet Office may say today its leading economic indicator fell in April, while Taiwan’s exports are forecast to have dropped for a third month in May, according to Bloomberg surveys.
Asian stocks advanced for a third day as oil and copper climbed on speculation policy makers around the world will take steps to revive the slowing economy. The MSCI Asia Pacific Index was 1.5 percent higher at 1:02 p.m. in Tokyo.
The Bank of England will probably keep its benchmark rate at a record-low 0.5 percent and maintain its asset purchase target at 325 billion pounds ($503 billion), Bloomberg surveys showed. A U.K. purchasing managers’ index probably showed the services industry grew the least in six months in May, according to a separate survey. Greece will also release its unemployment rate for March today.
The U.S. Labor Department may say initial jobless claims fell to 378,000 in the week ended June 2 from 383,000 in the previous period, economists surveyed by Bloomberg predicted. The Federal Reserve may report U.S. consumer borrowing rose at a slower pace in April compared with March.
Mining Jobs
In Australia, Rio Tinto Group said in April that it has begun a four-month recruitment drive to hire 6,000 workers for A$22 billion of projects in Western Australia state, the Northern Territory, Queensland and New South Wales.
Yesterday’s GDP report showed that compared with a year earlier, the economy expanded 4.3 percent in the first quarter, the fastest annual pace since the third quarter of 2007.
Australia has added 123,300 jobs in the first five months of this year, the biggest gain since 132,700 were added from January through May of 2007, according to government statistics compiled by Bloomberg.
Today’s report showed New South Wales, the nation’s most populous state, added 30,300 jobs and Victoria, the center of the nation’s struggling manufacturing industry, 13,500 positions. The unemployment rate in Western Australia, the heart of the mining investment boom, was 3.8 percent last month.
With GDP that’s about one-tenth the size of the U.S., Australia last month added more than half the number of jobs that the world’s largest economy did. Australia’s unemployment rate is less than half the 11 percent level in the euro area.
Chalk, Cheese
“Comparing the job market in Australia with markets in Europe or the U.S. is like comparing chalk and cheese,” said Craig James, a senior economist at Commonwealth Bank of Australia, the nation’s biggest lender. “Australia’s job market remains healthy, supporting growth in the broader economy.”
The local dollar, the world’s fifth-most traded currency, has gained about 40 percent against the U.S. dollar since the start of 2009 and reached $1.1081 on July 27, the highest level since it was floated in 1983.
It retreated in recent weeks as signs mount that Europe’s debt crisis will sap global growth. The currency dropped 6.7 percent last month, when the central bank unexpectedly cut its benchmark interest rate by half a percentage point and as data from China, Australia’s biggest trading partner, indicated a slowing economy. The RBA cut rates by another quarter point this week.
Yesterday’s GDP report showed household spending rose 1.6 percent in the first quarter, adding 0.9 percentage point to growth. Non-dwelling construction soared 12.6 percent, adding 1 point to growth, it showed. Exports dropped 1.3 percent, shaving 0.2 point from the expansion.
The GDP report showed new engineering construction soared 19.7 percent in the first quarter from the final three months of last year, and 53 percent from a year earlier as the mining bonanza intensifies. In contrast, housing construction dropped 2.1 percent from the fourth quarter as the industry struggles.
To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net "
Regards
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
The number of people employed rose by 38,900 in May, after a revised 7,000 gain in April that was lower than previously reported, the statistics bureau said in Sydney today. The median estimate was for no change in employment in a Bloomberg News survey of 23 economists. The jobless rate rose to 5.1 percent from a revised 5 percent in April as participation increased.
The local currency jumped 2.5 percent this week as the jobs data and a gross domestic product report showing the economy expanded 1.3 percent last quarter, more than twice the level forecast, underscore the nation’s resource-fueled growth. Reserve Bank Governor Glenn Stevens cut interest rates by 75 basis points in the past two meetings, to 3.5 percent, to shore up the economy as the outlook in Europe and China deteriorates.
“Despite the moderate uptick in unemployment, this is a stellar jobs report and paints a very healthy picture of the labor market,” said Katrina Ell, an economist at Moody’s Analytics in Sydney. “Coupled with strong first quarter GDP growth, the RBA will likely sit on their hands and keep rates steady for the next couple of months.”
Traders are pricing in a 23 percent chance the central bank will keep rates unchanged next month, up from none before today’s jobs data, according to swaps data compiled by Bloomberg. Prior to yesterday’s GDP report they saw a 50 percent chance of a half-point reduction.
Dollar Rallies
The Australian dollar bought 99.51 U.S. cents at 2:07 p.m. in Sydney compared with 98.92 cents before the data, while the S&P/ASX 200 Index of stocks was 1.4 percent higher.
The number of full-time jobs advanced by 46,100 last month, the biggest increase in almost a year, and part-time employment fell by 7,200, today’s report showed. Australia’s participation rate, a measure of the working-age population, gained to 65.5 percent in May from 65.2 percent a month earlier, it showed. That was the highest since November.
The nation’s economy is being powered by an estimated A$500 billion pipeline of resource projects that is spurring hiring by companies including BHP Billiton Ltd. to meet Chinese demand.
Elsewhere in Asia, South Korea said its economy grew 0.9 percent in the first quarter from the previous three-month period, unchanged from an April estimate.
Japan, Taiwan
Japan’s Cabinet Office may say today its leading economic indicator fell in April, while Taiwan’s exports are forecast to have dropped for a third month in May, according to Bloomberg surveys.
Asian stocks advanced for a third day as oil and copper climbed on speculation policy makers around the world will take steps to revive the slowing economy. The MSCI Asia Pacific Index was 1.5 percent higher at 1:02 p.m. in Tokyo.
The Bank of England will probably keep its benchmark rate at a record-low 0.5 percent and maintain its asset purchase target at 325 billion pounds ($503 billion), Bloomberg surveys showed. A U.K. purchasing managers’ index probably showed the services industry grew the least in six months in May, according to a separate survey. Greece will also release its unemployment rate for March today.
The U.S. Labor Department may say initial jobless claims fell to 378,000 in the week ended June 2 from 383,000 in the previous period, economists surveyed by Bloomberg predicted. The Federal Reserve may report U.S. consumer borrowing rose at a slower pace in April compared with March.
Mining Jobs
In Australia, Rio Tinto Group said in April that it has begun a four-month recruitment drive to hire 6,000 workers for A$22 billion of projects in Western Australia state, the Northern Territory, Queensland and New South Wales.
Yesterday’s GDP report showed that compared with a year earlier, the economy expanded 4.3 percent in the first quarter, the fastest annual pace since the third quarter of 2007.
Australia has added 123,300 jobs in the first five months of this year, the biggest gain since 132,700 were added from January through May of 2007, according to government statistics compiled by Bloomberg.
Today’s report showed New South Wales, the nation’s most populous state, added 30,300 jobs and Victoria, the center of the nation’s struggling manufacturing industry, 13,500 positions. The unemployment rate in Western Australia, the heart of the mining investment boom, was 3.8 percent last month.
With GDP that’s about one-tenth the size of the U.S., Australia last month added more than half the number of jobs that the world’s largest economy did. Australia’s unemployment rate is less than half the 11 percent level in the euro area.
Chalk, Cheese
“Comparing the job market in Australia with markets in Europe or the U.S. is like comparing chalk and cheese,” said Craig James, a senior economist at Commonwealth Bank of Australia, the nation’s biggest lender. “Australia’s job market remains healthy, supporting growth in the broader economy.”
The local dollar, the world’s fifth-most traded currency, has gained about 40 percent against the U.S. dollar since the start of 2009 and reached $1.1081 on July 27, the highest level since it was floated in 1983.
It retreated in recent weeks as signs mount that Europe’s debt crisis will sap global growth. The currency dropped 6.7 percent last month, when the central bank unexpectedly cut its benchmark interest rate by half a percentage point and as data from China, Australia’s biggest trading partner, indicated a slowing economy. The RBA cut rates by another quarter point this week.
Yesterday’s GDP report showed household spending rose 1.6 percent in the first quarter, adding 0.9 percentage point to growth. Non-dwelling construction soared 12.6 percent, adding 1 point to growth, it showed. Exports dropped 1.3 percent, shaving 0.2 point from the expansion.
The GDP report showed new engineering construction soared 19.7 percent in the first quarter from the final three months of last year, and 53 percent from a year earlier as the mining bonanza intensifies. In contrast, housing construction dropped 2.1 percent from the fourth quarter as the industry struggles.
To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net "
Regards
Steven
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
Asian Stocks Extend Rally on Stimulus Optimism; Oil Gains
"June 7 (Bloomberg) -- Asian stocks advanced the most in more than two months as oil and copper climbed on speculation policy makers around the world will take steps to revive the slowing economy. The Australian dollar rose to a three-week high after employers unexpectedly added jobs in May.
The MSCI Asia Pacific Index increased 1.5 percent by 1:06 p.m. in Tokyo, rising for a third day and heading for its biggest gain since March 27. The Nikkei 225 Stock Average added 1 percent, while Standard & Poor’s 500 Index futures rose 0.3 percent. Oil gained 0.6 percent in New York and copper rallied 0.6 percent. The Aussie strengthened 0.2 percent against the U.S. currency, while the cost of insuring Australian corporate bonds from default declined the most since Feb. 1.
European Central Bank President Mario Draghi said officials stand ready to act as the euro region’s growth outlook worsens. Federal Reserve Vice Chairman Janet Yellen said the U.S. economy “remains vulnerable to setbacks” and may warrant additional monetary stimulus. Indian Prime Minister Manmohan Singh pledged to revive growth in Asia’s third-largest economy through infrastructure spending. The number of people employed in Australia rose by 38,900 last month, the statistics bureau said.
“Any time central bankers give us a promise that they’re going to inject some more liquidity into the markets, risk assets start to rally, and that’s precisely what’s happened,” Arjuna Mahendran, the Singapore-based head of Asia investment strategy at HSBC Private Bank, which manages about $556 billion in client assets, said in a Bloomberg TV interview. “We could have a risk rally going on for a while.”
Bernanke Speech
The MSCI All-Country World Index climbed 2.1 percent yesterday, the biggest gain since Dec. 20, and the S&P 500 jumped 2.3 percent. Two regional Fed bank presidents who vote on policy this year, San Francisco’s John Williams and Atlanta’s Dennis Lockhart, said yesterday the central bank should be prepared to take action if the economy deteriorates further.
Fed Chairman Ben S. Bernanke is scheduled to testify on the outlook for the economy in Congress today. The policy-setting Federal Open Market Committee meets June 19 to June 20 to consider whether to add to its record easing after the economy created the fewest jobs in a year in May.
India yesterday outlined port projects worth an equivalent of $6.3 billion for the financial year through March 2013, an investment target of $3.6 billion for Mumbai’s elevated rail corridor and plans to add airports. “In these difficult times we must do everything possible to revive business and investor sentiment,” Singh said in New Delhi.
Greece, Spain
About eight stocks rose for each one that fell on the MSCI Asia Pacific Index. The gauge plunged 15 percent from a six- month high in February through June 4 as U.S. economic data trailed estimates and concern grew about Greece’s future in the euro and Spain’s deteriorating national finances.
South Korea’s Kospi index rallied 2.8 percent as the market reopened after a public holiday, while its currency strengthened 0.8 percent from its June 5 close to 1,171 per dollar. Samsung Electronics Co. climbed 4.2 percent even as Apple Inc. sought to block sales of Samsung’s latest Galaxy smartphones in the U.S.
BHP Billiton Ltd., the world’s largest mining company, jumped 1.8 percent in Sydney, pacing gains among Australian stocks, as the country’s resources boom drove the increase in hiring. HTC Corp. slumped to the lowest level in almost two years in Taipei trading after the company cut its second-quarter revenue forecast and Apple filed a new action seeking to stop the sale of HTC’s latest handsets in the U.S.
Nuclear Inspections
Oil rose to $85.50 a barrel in a fourth day of gains, the longest winning streak since April. Prices may rebound on policy measures, Goldman Sachs Group Inc. said. Crude gained after Iran pulled back from a deal to allow expanded nuclear inspections before a third round of talks with Western nations this month.
Copper advanced 0.6 percent to $7,457.75 a metric ton on the London Metal Exchange.
The Australian dollar strengthened to 99.50 U.S. cents, heading for its highest close since May 14. The increase in employment compares with the median estimate for no change in a Bloomberg survey of 23 economists. The jobless rate rose to 5.1 percent from a revised 5 percent in April.
The data underscore the strength of the world’s 13th- largest economy, which expanded 1.3 percent last quarter as resource investment surged, more than twice the level forecast by economists.
Bank Downgrades
The Markit iTraxx Australia index of default swap contracts fell 6.5 basis points to 195.5 basis points, according to Deutsche Bank AG. The gauge is set for its biggest daily drop since Feb. 1 and lowest close since May 29, CMA data show. The Markit iTraxx Japan index tumbled 7 basis points to 189, Citigroup Inc. prices show. The gauge is headed for the biggest drop and lowest close since May 28, according to CMA.
Germany’s credit-default swaps rose yesterday to exceed those on Japan’s bonds for the first time in three years as downgrades of banks in the European nation by Moody’s Investors Service highlighted the risk of debt contagion in the region.
Default swaps protecting bunds for five years rose to 104.94 basis points yesterday while Japan’s slid to 103.79, the first time Germany’s were more expensive since May 29, 2009, according to CMA prices compiled by Bloomberg.
Commerzbank AG, Germany’s second-largest bank, was among seven lenders in the nation downgraded by Moody’s yesterday, which cited “the increased risk of further shocks emanating from the euro area debt crisis.”
To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net ; Adam Haigh in Sydney at ahaigh1@bloomberg.net "
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
The MSCI Asia Pacific Index increased 1.5 percent by 1:06 p.m. in Tokyo, rising for a third day and heading for its biggest gain since March 27. The Nikkei 225 Stock Average added 1 percent, while Standard & Poor’s 500 Index futures rose 0.3 percent. Oil gained 0.6 percent in New York and copper rallied 0.6 percent. The Aussie strengthened 0.2 percent against the U.S. currency, while the cost of insuring Australian corporate bonds from default declined the most since Feb. 1.
European Central Bank President Mario Draghi said officials stand ready to act as the euro region’s growth outlook worsens. Federal Reserve Vice Chairman Janet Yellen said the U.S. economy “remains vulnerable to setbacks” and may warrant additional monetary stimulus. Indian Prime Minister Manmohan Singh pledged to revive growth in Asia’s third-largest economy through infrastructure spending. The number of people employed in Australia rose by 38,900 last month, the statistics bureau said.
“Any time central bankers give us a promise that they’re going to inject some more liquidity into the markets, risk assets start to rally, and that’s precisely what’s happened,” Arjuna Mahendran, the Singapore-based head of Asia investment strategy at HSBC Private Bank, which manages about $556 billion in client assets, said in a Bloomberg TV interview. “We could have a risk rally going on for a while.”
Bernanke Speech
The MSCI All-Country World Index climbed 2.1 percent yesterday, the biggest gain since Dec. 20, and the S&P 500 jumped 2.3 percent. Two regional Fed bank presidents who vote on policy this year, San Francisco’s John Williams and Atlanta’s Dennis Lockhart, said yesterday the central bank should be prepared to take action if the economy deteriorates further.
Fed Chairman Ben S. Bernanke is scheduled to testify on the outlook for the economy in Congress today. The policy-setting Federal Open Market Committee meets June 19 to June 20 to consider whether to add to its record easing after the economy created the fewest jobs in a year in May.
India yesterday outlined port projects worth an equivalent of $6.3 billion for the financial year through March 2013, an investment target of $3.6 billion for Mumbai’s elevated rail corridor and plans to add airports. “In these difficult times we must do everything possible to revive business and investor sentiment,” Singh said in New Delhi.
Greece, Spain
About eight stocks rose for each one that fell on the MSCI Asia Pacific Index. The gauge plunged 15 percent from a six- month high in February through June 4 as U.S. economic data trailed estimates and concern grew about Greece’s future in the euro and Spain’s deteriorating national finances.
South Korea’s Kospi index rallied 2.8 percent as the market reopened after a public holiday, while its currency strengthened 0.8 percent from its June 5 close to 1,171 per dollar. Samsung Electronics Co. climbed 4.2 percent even as Apple Inc. sought to block sales of Samsung’s latest Galaxy smartphones in the U.S.
BHP Billiton Ltd., the world’s largest mining company, jumped 1.8 percent in Sydney, pacing gains among Australian stocks, as the country’s resources boom drove the increase in hiring. HTC Corp. slumped to the lowest level in almost two years in Taipei trading after the company cut its second-quarter revenue forecast and Apple filed a new action seeking to stop the sale of HTC’s latest handsets in the U.S.
Nuclear Inspections
Oil rose to $85.50 a barrel in a fourth day of gains, the longest winning streak since April. Prices may rebound on policy measures, Goldman Sachs Group Inc. said. Crude gained after Iran pulled back from a deal to allow expanded nuclear inspections before a third round of talks with Western nations this month.
Copper advanced 0.6 percent to $7,457.75 a metric ton on the London Metal Exchange.
The Australian dollar strengthened to 99.50 U.S. cents, heading for its highest close since May 14. The increase in employment compares with the median estimate for no change in a Bloomberg survey of 23 economists. The jobless rate rose to 5.1 percent from a revised 5 percent in April.
The data underscore the strength of the world’s 13th- largest economy, which expanded 1.3 percent last quarter as resource investment surged, more than twice the level forecast by economists.
Bank Downgrades
The Markit iTraxx Australia index of default swap contracts fell 6.5 basis points to 195.5 basis points, according to Deutsche Bank AG. The gauge is set for its biggest daily drop since Feb. 1 and lowest close since May 29, CMA data show. The Markit iTraxx Japan index tumbled 7 basis points to 189, Citigroup Inc. prices show. The gauge is headed for the biggest drop and lowest close since May 28, according to CMA.
Germany’s credit-default swaps rose yesterday to exceed those on Japan’s bonds for the first time in three years as downgrades of banks in the European nation by Moody’s Investors Service highlighted the risk of debt contagion in the region.
Default swaps protecting bunds for five years rose to 104.94 basis points yesterday while Japan’s slid to 103.79, the first time Germany’s were more expensive since May 29, 2009, according to CMA prices compiled by Bloomberg.
Commerzbank AG, Germany’s second-largest bank, was among seven lenders in the nation downgraded by Moody’s yesterday, which cited “the increased risk of further shocks emanating from the euro area debt crisis.”
To contact the reporters on this story: Richard Frost in Hong Kong at rfrost4@bloomberg.net ; Adam Haigh in Sydney at ahaigh1@bloomberg.net "
Steven Morris CA (SA)
Mobie : 083 943 1858
Fax: 086 671 2498
E-Mail: steven@global.co.za
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