An Indian man was set on fire in Melbourne today, the latest victim in series of attacks and murders of Indians in the Australian city.
Today’s attack, just a week after an Indian student was stabbed to death in Melbourne, was not believed to be racially motivated, Victoria’s police department said in a statement on its Web site.
The 29-year-old man was returning to his home in Essendon, a suburb of Australia’s second-biggest city, from a dinner party with his wife about 2 a.m. when he was attacked and set on fire by four men as he got out of his car, police said. He suffered burns to 15 percent of his body.
“We are investigating all possibilities, but early indications show it was not racially motivated,” acting Senior Sergeant Neil Smith said in the statement.
Concerns about racism and the safety of Indians in Australia heightened this month after the death of 21-year- old accounting graduate Nitin Garg, who was stabbed to death on his way to work in Melbourne’s western suburbs on Jan 3., and the recent discovery of fruit picker Ranjodh Singh’s burnt body on the outskirts of Griffith, in western New South Wales.
The latest victim, now in stable condition in hospital, said he didn’t know his attackers, police said.
The safety of Indian students dominated headlines in May and June last year after several attacks in Melbourne, prompting federal and state Australian ministers to travel to New Delhi in an effort to ease concerns.
‘Urban Crime’
A majority of such attacks are “opportunist urban crime” and authorities have taken extra measures to tackle the violence, Australia High Commissioner to India Peter Varghese told reporters in New Delhi said Jan. 6.
The government in New Delhi condemned the murder of Garg and told its citizens in Australia to take security precautions.
Teaching international students is Australia’s third- biggest source of foreign income, with India the second- largest source of scholars, representing 19 percent of the 630,000 full-time enrolments at Australian universities, according to the Department of Education.
Visa applications by Indians to study in Australia fell by 46 percent between July and October from a year earlier, compared with a 23 percent decline from all countries, according to data from the Department of Immigration and Citizenship.
Saturday, January 9, 2010
Officials Hid Truth About Immigrant Deaths in Jail
Silence has long shrouded the men and women who die in the nation’s immigration jails. For years, they went uncounted and unnamed in the public record. Even in 2008, when The New York Times obtained and published a federal government list of such deaths, few facts were available about who these people were and how they died.
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Nery Romero, who died in immigration detention in 2007.
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The family of Nery Romero in Elmont, N.Y., in 2007, after he was found hanging in his detention cell.
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But behind the scenes, it is now clear, the deaths had already generated thousands of pages of government documents, including scathing investigative reports that were kept under wraps, and a trail of confidential memos and BlackBerry messages that show officials working to stymie outside inquiry.
The documents, obtained over recent months by The Times and the American Civil Liberties Union under the Freedom of Information Act, concern most of the 107 deaths in detention counted by Immigration and Customs Enforcement since October 2003, after the agency was created within the Department of Homeland Security.
The Obama administration has vowed to overhaul immigration detention, a haphazard network of privately run jails, federal centers and county cells where the government holds noncitizens while it tries to deport them.
But as the administration moves to increase oversight within the agency, the documents show how officials — some still in key positions — used their role as overseers to cover up evidence of mistreatment, deflect scrutiny by the news media or prepare exculpatory public statements after gathering facts that pointed to substandard care or abuse.
As one man lay dying of head injuries suffered in a New Jersey immigration jail in 2007, for example, a spokesman for the federal agency told The Times that he could learn nothing about the case from government authorities. In fact, the records show, the spokesman had alerted those officials to the reporter’s inquiry, and they conferred at length about sending the man back to Africa to avoid embarrassing publicity.
In another case that year, investigators from the agency’s Office of Professional Responsibility concluded that unbearable, untreated pain had been a significant factor in the suicide of a 22-year-old detainee at the Bergen County Jail in New Jersey, and that the medical unit was so poorly run that other detainees were at risk.
The investigation found that jail medical personnel had falsified a medication log to show that the detainee, a Salvadoran named Nery Romero, had been given Motrin. The fake entry was easy to detect: When the drug was supposedly administered, Mr. Romero was already dead.
Yet those findings were never disclosed to the public or to Mr. Romero’s relatives on Long Island, who had accused the jail of abruptly depriving him of his prescription painkiller for a broken leg. And an agency supervisor wrote that because other jails were “finicky” about accepting detainees with known medical problems like Mr. Romero’s, such people would continue to be placed at the Bergen jail as “a last resort.”
In a recent interview, Benjamin Feldman, a spokesman for the jail, which housed 1,503 immigration detainees last year, would not say whether any changes had been made since the death.
In February 2007, in the case of the dying African man, the immigration agency’s spokesman for the Northeast, Michael Gilhooly, rebuffed a Times reporter’s questions about the detainee, who had suffered a skull fracture at the privately run Elizabeth Detention Center in New Jersey. Mr. Gilhooly said that without a full name and alien registration number for the man, he could not check on the case.
But, records show, he had already filed a report warning top managers at the federal agency about the reporter’s interest and sharing information about the injured man, a Guinean tailor named Boubacar Bah. Mr. Bah, 52, had been left in an isolation cell without treatment for more than 13 hours before an ambulance was called.
While he lay in the hospital in a coma after emergency brain surgery, 10 agency managers in Washington and Newark conferred by telephone and e-mail about how to avoid the cost of his care and the likelihood of “increased scrutiny and/or media exposure,” according to a memo summarizing the discussion.
One option they explored was sending the dying man to Guinea, despite an e-mail message from the supervising deportation officer, who wrote, “I don’t condone removal in his present state as he has a catheter” and was unconscious. Another idea was renewing Mr. Bah’s canceled work permit in hopes of tapping into Medicaid or disability benefits.
Eventually, faced with paying $10,000 a month for nursing home care, officials settled on a third course: “humanitarian release” to cousins in New York who had protested that they had no way to care for him. But days before the planned release, Mr. Bah died.
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Nery Romero, who died in immigration detention in 2007.
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Before Deaths That Caught Public’s Eye, Others Stayed Hidden (January 10, 2010)
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Robert Stolarik for The New York Times
The family of Nery Romero in Elmont, N.Y., in 2007, after he was found hanging in his detention cell.
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But behind the scenes, it is now clear, the deaths had already generated thousands of pages of government documents, including scathing investigative reports that were kept under wraps, and a trail of confidential memos and BlackBerry messages that show officials working to stymie outside inquiry.
The documents, obtained over recent months by The Times and the American Civil Liberties Union under the Freedom of Information Act, concern most of the 107 deaths in detention counted by Immigration and Customs Enforcement since October 2003, after the agency was created within the Department of Homeland Security.
The Obama administration has vowed to overhaul immigration detention, a haphazard network of privately run jails, federal centers and county cells where the government holds noncitizens while it tries to deport them.
But as the administration moves to increase oversight within the agency, the documents show how officials — some still in key positions — used their role as overseers to cover up evidence of mistreatment, deflect scrutiny by the news media or prepare exculpatory public statements after gathering facts that pointed to substandard care or abuse.
As one man lay dying of head injuries suffered in a New Jersey immigration jail in 2007, for example, a spokesman for the federal agency told The Times that he could learn nothing about the case from government authorities. In fact, the records show, the spokesman had alerted those officials to the reporter’s inquiry, and they conferred at length about sending the man back to Africa to avoid embarrassing publicity.
In another case that year, investigators from the agency’s Office of Professional Responsibility concluded that unbearable, untreated pain had been a significant factor in the suicide of a 22-year-old detainee at the Bergen County Jail in New Jersey, and that the medical unit was so poorly run that other detainees were at risk.
The investigation found that jail medical personnel had falsified a medication log to show that the detainee, a Salvadoran named Nery Romero, had been given Motrin. The fake entry was easy to detect: When the drug was supposedly administered, Mr. Romero was already dead.
Yet those findings were never disclosed to the public or to Mr. Romero’s relatives on Long Island, who had accused the jail of abruptly depriving him of his prescription painkiller for a broken leg. And an agency supervisor wrote that because other jails were “finicky” about accepting detainees with known medical problems like Mr. Romero’s, such people would continue to be placed at the Bergen jail as “a last resort.”
In a recent interview, Benjamin Feldman, a spokesman for the jail, which housed 1,503 immigration detainees last year, would not say whether any changes had been made since the death.
In February 2007, in the case of the dying African man, the immigration agency’s spokesman for the Northeast, Michael Gilhooly, rebuffed a Times reporter’s questions about the detainee, who had suffered a skull fracture at the privately run Elizabeth Detention Center in New Jersey. Mr. Gilhooly said that without a full name and alien registration number for the man, he could not check on the case.
But, records show, he had already filed a report warning top managers at the federal agency about the reporter’s interest and sharing information about the injured man, a Guinean tailor named Boubacar Bah. Mr. Bah, 52, had been left in an isolation cell without treatment for more than 13 hours before an ambulance was called.
While he lay in the hospital in a coma after emergency brain surgery, 10 agency managers in Washington and Newark conferred by telephone and e-mail about how to avoid the cost of his care and the likelihood of “increased scrutiny and/or media exposure,” according to a memo summarizing the discussion.
One option they explored was sending the dying man to Guinea, despite an e-mail message from the supervising deportation officer, who wrote, “I don’t condone removal in his present state as he has a catheter” and was unconscious. Another idea was renewing Mr. Bah’s canceled work permit in hopes of tapping into Medicaid or disability benefits.
Eventually, faced with paying $10,000 a month for nursing home care, officials settled on a third course: “humanitarian release” to cousins in New York who had protested that they had no way to care for him. But days before the planned release, Mr. Bah died.
Karzai Drops Rejected Nominees from Second Afghan Cabinet
Afghan President Hamid Karzai sought Parliament’s approval for his new cabinet a second time today, dropping all those whose nominations were defeated by lawmakers in the first attempt a week ago.
Karzai had ordered Parliament to cancel its winter recess so it could consider the new list of ministers and end a political vacuum at the heart of government ahead of a conference on Afghanistan later this month. President Barack Obama decided in December to send a further 30,000 U.S. troops to the country to fight Taliban insurgents.
“I request that all the lawmakers think about the national interest of the country, the current situation of the country and the desires of the Afghan people and make a good decision,” Second Vice President Karim Khalili said as he read the names to Parliament.
Sixteen people were put forward today, including three women. Of those, 15 are to replace cabinet nominees rejected on Jan. 2, and one is new foreign minister-designate Zalmay Rasul, previously Karzai’s national security adviser.
Karzai didn’t indicate a replacement for Ismail Khan, a former warlord from the western Herat province and the minister of water and energy, who was earlier rejected by lawmakers. No name was submitted for the post of telecommunications minister.
Karzai, under pressure from the U.S. to reduce corruption, had already decided to keep in office the incumbent ministers of defense, interior and finance, all favored in foreign capitals.
Fraud-Hit Vote
While those three appointments were ratified by the lower house of parliament on Jan. 2, legislators rejected 17 of his 24 picks believing them either to be political cronies, under the influence of warlords or otherwise unqualified.
Most of those on today’s list “have been nominated by Karzai’s political allies,” Mahmoud Saikal, an analyst and former deputy foreign minister, said in an interview in Kabul. Parliament may again reject the nominations as many will be unable to run ministries effectively, Saikal said.
Karzai was re-elected for a second term in an August poll marred by allegations of fraud, damaging his credibility at home and overseas. His cabinet selections are being scrutinized as an early test of Karzai’s commitment to attack official corruption, as President Barack Obama has demanded that he do.
London Conference
If approved by lawmakers, Rasul is likely to play a key role at a Jan. 28 London conference on Afghanistan attended by multilateral lenders, Afghanistan’s neighbors and nations with troops among international forces based in the country.
Parliament is expected to vote on the cabinet lineup announced today within a week.
While Karzai was “unhappy” over parliament’s rejection of his initial choices, “he respects the democratic process” Waheed Omar, a spokesman for the president, told reporters on Jan. 2.
Karzai excluded Mines Minister Ibrahim Adel, the top official most prominently accused of graft, from his first list of nominees. Afghanistan is second only to Somalia as the most corrupt of 180 countries, according to the Corruption Perceptions Index published in November by the research and lobby group Transparency International.
The Washington Post and the Associated Press in November cited unidentified U.S. officials as accusing Adel of taking a bribe of at least $20 million from the Metallurgical Corp. of China for awarding it a contract to develop one of the world’s largest copper mines. Adel denies the allegation.
Obama Threat
Obama last month threatened to cut U.S. aid to parts of the Afghan government that fail to root out corrupt officials, saying graft undermines the U.S.-led fight against the Taliban and al-Qaeda.
Karzai and his attorney general, Mohammad Ishaq Aloko, have vowed to prosecute top officials for graft, and Aloko said in December those to be charged include two members of the outgoing cabinet.
Karzai had ordered Parliament to cancel its winter recess so it could consider the new list of ministers and end a political vacuum at the heart of government ahead of a conference on Afghanistan later this month. President Barack Obama decided in December to send a further 30,000 U.S. troops to the country to fight Taliban insurgents.
“I request that all the lawmakers think about the national interest of the country, the current situation of the country and the desires of the Afghan people and make a good decision,” Second Vice President Karim Khalili said as he read the names to Parliament.
Sixteen people were put forward today, including three women. Of those, 15 are to replace cabinet nominees rejected on Jan. 2, and one is new foreign minister-designate Zalmay Rasul, previously Karzai’s national security adviser.
Karzai didn’t indicate a replacement for Ismail Khan, a former warlord from the western Herat province and the minister of water and energy, who was earlier rejected by lawmakers. No name was submitted for the post of telecommunications minister.
Karzai, under pressure from the U.S. to reduce corruption, had already decided to keep in office the incumbent ministers of defense, interior and finance, all favored in foreign capitals.
Fraud-Hit Vote
While those three appointments were ratified by the lower house of parliament on Jan. 2, legislators rejected 17 of his 24 picks believing them either to be political cronies, under the influence of warlords or otherwise unqualified.
Most of those on today’s list “have been nominated by Karzai’s political allies,” Mahmoud Saikal, an analyst and former deputy foreign minister, said in an interview in Kabul. Parliament may again reject the nominations as many will be unable to run ministries effectively, Saikal said.
Karzai was re-elected for a second term in an August poll marred by allegations of fraud, damaging his credibility at home and overseas. His cabinet selections are being scrutinized as an early test of Karzai’s commitment to attack official corruption, as President Barack Obama has demanded that he do.
London Conference
If approved by lawmakers, Rasul is likely to play a key role at a Jan. 28 London conference on Afghanistan attended by multilateral lenders, Afghanistan’s neighbors and nations with troops among international forces based in the country.
Parliament is expected to vote on the cabinet lineup announced today within a week.
While Karzai was “unhappy” over parliament’s rejection of his initial choices, “he respects the democratic process” Waheed Omar, a spokesman for the president, told reporters on Jan. 2.
Karzai excluded Mines Minister Ibrahim Adel, the top official most prominently accused of graft, from his first list of nominees. Afghanistan is second only to Somalia as the most corrupt of 180 countries, according to the Corruption Perceptions Index published in November by the research and lobby group Transparency International.
The Washington Post and the Associated Press in November cited unidentified U.S. officials as accusing Adel of taking a bribe of at least $20 million from the Metallurgical Corp. of China for awarding it a contract to develop one of the world’s largest copper mines. Adel denies the allegation.
Obama Threat
Obama last month threatened to cut U.S. aid to parts of the Afghan government that fail to root out corrupt officials, saying graft undermines the U.S.-led fight against the Taliban and al-Qaeda.
Karzai and his attorney general, Mohammad Ishaq Aloko, have vowed to prosecute top officials for graft, and Aloko said in December those to be charged include two members of the outgoing cabinet.
For Top Bonuses on Wall Street, 7 Figures or 8?
Everyone on Wall Street is fixated on The Number.
The bank bonus season, that annual rite of big money and bigger egos, begins in earnest this week, and it looks as if it will be one of the largest and most controversial blowouts the industry has ever seen.
Bank executives are grappling with a question that exasperates, even infuriates, many recession-weary Americans: Just how big should their paydays be? Despite calls for restraint from Washington and a chafed public, resurgent banks are preparing to pay out bonuses that rival those of the boom years. The haul, in cash and stock, will run into many billions of dollars.
Industry executives acknowledge that the numbers being tossed around — six-, seven- and even eight-figure sums for some chief executives and top producers — will probably stun the many Americans still hurting from the financial collapse and ensuing Great Recession.
Goldman Sachs is expected to pay its employees an average of about $595,000 apiece for 2009, one of the most profitable years in its 141-year history. Workers in the investment bank of JPMorgan Chase stand to collect about $463,000 on average.
Many executives are bracing for more scrutiny of pay from Washington, as well as from officials like Andrew M. Cuomo, the attorney general of New York, who last year demanded that banks disclose details about their bonus payments. Some bankers worry that the United States, like Britain, might create an extra tax on bank bonuses, and Representative Dennis J. Kucinich, Democrat of Ohio, is proposing legislation to do so.
Those worries aside, few banks are taking immediate steps to reduce bonuses substantially. Instead, Wall Street is confronting a dilemma of riches: How to wrap its eye-popping paychecks in a mantle of moderation. Because of the potential blowback, some major banks are adjusting their pay practices, paring or even eliminating some cash bonuses in favor of stock awards and reducing the portion of their revenue earmarked for pay.
Some bank executives contend that financial institutions are beginning to recognize that they must recalibrate pay for a post-bailout world.
“The debate has shifted in the last nine months or so from just ‘less cash, more stock’ to ‘what’s the overall number?’ ” said Robert P. Kelly, the chairman and chief executive of the Bank of New York Mellon. Like many other bank chiefs, Mr. Kelly favors rewarding employees with more long-term stock and less cash to tether their fortunes to the success of their companies.
Though Wall Street bankers and traders earn six-figure base salaries, they generally receive most of their pay as a bonus based on the previous year’s performance. While average bonuses are expected to hover around half a million dollars, they will not be evenly distributed. Senior banking executives and top Wall Street producers expect to reap millions. Last year, the big winners were bond and currency traders, as well as investment bankers specializing in health care.
Even some industry veterans warn that such paydays could further tarnish the financial industry’s sullied reputation. John S. Reed, a founder of Citigroup, said Wall Street would not fully regain the public’s trust until banks scaled back bonuses for good — something that, to many, seems a distant prospect.
“There is nothing I’ve seen that gives me the slightest feeling that these people have learned anything from the crisis,” Mr. Reed said. “They just don’t get it. They are off in a different world.”
The power that the federal government once had over banker pay has waned in recent months as most big banks have started repaying the billions of dollars in federal aid that propped them up during the crisis. All have benefited from an array of federal programs and low interest rate policies that enabled the industry to roar back in profitability in 2009.
This year, compensation will again eat up much of Wall Street’s revenue. During the first nine months of 2009, five of the largest banks that received federal aid — Citigroup, Bank of America, Goldman Sachs, JPMorgan Chase and Morgan Stanley — together set aside about $90 billion for compensation. That figure includes salaries, benefits and bonuses, but at several companies, bonuses make up more than half of compensation.
Goldman broke with its peers in December and announced that its top 30 executives would be paid only in stock. Nearly everyone on Wall Street is waiting to see how much stock is awarded to Lloyd C. Blankfein, Goldman’s chairman and chief executive, who is a lightning rod for criticism over executive pay. In 2007, Mr. Blankfein was paid $68 million, a Wall Street record. He did not receive a bonus in 2008.
Goldman put aside $16.7 billion for compensation during the first nine months of 2009.
Responding to criticism over its pay practices, Goldman has already begun decreasing the percentage of revenue that it pays to employees. The bank set aside 50 percent in the first quarter, but that figure fell to 48 percent and then to 43 percent in the next two quarters.
JPMorgan executives and board members have also been wrestling with how much pay is appropriate.
“There are legitimate conflicts between the firm feeling like it is performing well and the public’s prevailing view that the Street was bailed out,” said one senior JPMorgan executive who was not authorized to speak for the company.
JPMorgan’s investment bank, which employs about 25,000 people, has already reduced the share of revenue going to the compensation pool, from 40 percent in the first quarter to 37 percent in the third quarter.
At Bank of America, traders and bankers are wondering how much Brian T. Moynihan, the bank’s new chief, will be awarded for 2010. Bank of America, which is still absorbing Merrill Lynch, is expected to pay large bonuses, given the bank’s sizable trading profits.
Bank of America has also introduced provisions that would enable it to reclaim employees’ pay in the event that the bank’s business sours, and it is increasing the percentage of bonuses paid in the form of stock.
“We’re paying for results, and there were some areas of the company that had terrific results, and they will be compensated for that,” said Bob Stickler, a Bank of America spokesman.
At Morgan Stanley, which has had weaker trading revenue than the other banks, managers are focusing on how to pay stars in line with the industry. The bank created a pay program this year for its top 25 workers, tying a fifth of their deferred pay to metrics based on the company’s later performance.
A company spokesman, Mark Lake, said: “Morgan Stanley’s board and management clearly understands the extraordinary environment in which we operate and, as a result, have made a series of changes to the firm’s compensation practices.”
The top 25 executives will be paid mostly in stock and deferred cash payments. John J. Mack, the chairman, is forgoing a bonus. He retired as chief executive at the end of 2009.
At Citigroup, whose sprawling consumer banking business is still ailing, some managers were disappointed in recent weeks by the preliminary estimates of their bonus pools, according to people familiar with the matter. Citigroup’s overall 2009 bonus pool is expected to be about $5.3 billion, about the same as it was for 2008, although the bank has far fewer employees.
The highest bonus awarded to a Citigroup executive is already known: The bank said in a regulatory filing last week that the head of its investment bank, John Havens, would receive $9 million in stock. But the bank’s chief executive, Vikram S. Pandit, is forgoing a bonus and taking a salary of just $1.
The bank bonus season, that annual rite of big money and bigger egos, begins in earnest this week, and it looks as if it will be one of the largest and most controversial blowouts the industry has ever seen.
Bank executives are grappling with a question that exasperates, even infuriates, many recession-weary Americans: Just how big should their paydays be? Despite calls for restraint from Washington and a chafed public, resurgent banks are preparing to pay out bonuses that rival those of the boom years. The haul, in cash and stock, will run into many billions of dollars.
Industry executives acknowledge that the numbers being tossed around — six-, seven- and even eight-figure sums for some chief executives and top producers — will probably stun the many Americans still hurting from the financial collapse and ensuing Great Recession.
Goldman Sachs is expected to pay its employees an average of about $595,000 apiece for 2009, one of the most profitable years in its 141-year history. Workers in the investment bank of JPMorgan Chase stand to collect about $463,000 on average.
Many executives are bracing for more scrutiny of pay from Washington, as well as from officials like Andrew M. Cuomo, the attorney general of New York, who last year demanded that banks disclose details about their bonus payments. Some bankers worry that the United States, like Britain, might create an extra tax on bank bonuses, and Representative Dennis J. Kucinich, Democrat of Ohio, is proposing legislation to do so.
Those worries aside, few banks are taking immediate steps to reduce bonuses substantially. Instead, Wall Street is confronting a dilemma of riches: How to wrap its eye-popping paychecks in a mantle of moderation. Because of the potential blowback, some major banks are adjusting their pay practices, paring or even eliminating some cash bonuses in favor of stock awards and reducing the portion of their revenue earmarked for pay.
Some bank executives contend that financial institutions are beginning to recognize that they must recalibrate pay for a post-bailout world.
“The debate has shifted in the last nine months or so from just ‘less cash, more stock’ to ‘what’s the overall number?’ ” said Robert P. Kelly, the chairman and chief executive of the Bank of New York Mellon. Like many other bank chiefs, Mr. Kelly favors rewarding employees with more long-term stock and less cash to tether their fortunes to the success of their companies.
Though Wall Street bankers and traders earn six-figure base salaries, they generally receive most of their pay as a bonus based on the previous year’s performance. While average bonuses are expected to hover around half a million dollars, they will not be evenly distributed. Senior banking executives and top Wall Street producers expect to reap millions. Last year, the big winners were bond and currency traders, as well as investment bankers specializing in health care.
Even some industry veterans warn that such paydays could further tarnish the financial industry’s sullied reputation. John S. Reed, a founder of Citigroup, said Wall Street would not fully regain the public’s trust until banks scaled back bonuses for good — something that, to many, seems a distant prospect.
“There is nothing I’ve seen that gives me the slightest feeling that these people have learned anything from the crisis,” Mr. Reed said. “They just don’t get it. They are off in a different world.”
The power that the federal government once had over banker pay has waned in recent months as most big banks have started repaying the billions of dollars in federal aid that propped them up during the crisis. All have benefited from an array of federal programs and low interest rate policies that enabled the industry to roar back in profitability in 2009.
This year, compensation will again eat up much of Wall Street’s revenue. During the first nine months of 2009, five of the largest banks that received federal aid — Citigroup, Bank of America, Goldman Sachs, JPMorgan Chase and Morgan Stanley — together set aside about $90 billion for compensation. That figure includes salaries, benefits and bonuses, but at several companies, bonuses make up more than half of compensation.
Goldman broke with its peers in December and announced that its top 30 executives would be paid only in stock. Nearly everyone on Wall Street is waiting to see how much stock is awarded to Lloyd C. Blankfein, Goldman’s chairman and chief executive, who is a lightning rod for criticism over executive pay. In 2007, Mr. Blankfein was paid $68 million, a Wall Street record. He did not receive a bonus in 2008.
Goldman put aside $16.7 billion for compensation during the first nine months of 2009.
Responding to criticism over its pay practices, Goldman has already begun decreasing the percentage of revenue that it pays to employees. The bank set aside 50 percent in the first quarter, but that figure fell to 48 percent and then to 43 percent in the next two quarters.
JPMorgan executives and board members have also been wrestling with how much pay is appropriate.
“There are legitimate conflicts between the firm feeling like it is performing well and the public’s prevailing view that the Street was bailed out,” said one senior JPMorgan executive who was not authorized to speak for the company.
JPMorgan’s investment bank, which employs about 25,000 people, has already reduced the share of revenue going to the compensation pool, from 40 percent in the first quarter to 37 percent in the third quarter.
At Bank of America, traders and bankers are wondering how much Brian T. Moynihan, the bank’s new chief, will be awarded for 2010. Bank of America, which is still absorbing Merrill Lynch, is expected to pay large bonuses, given the bank’s sizable trading profits.
Bank of America has also introduced provisions that would enable it to reclaim employees’ pay in the event that the bank’s business sours, and it is increasing the percentage of bonuses paid in the form of stock.
“We’re paying for results, and there were some areas of the company that had terrific results, and they will be compensated for that,” said Bob Stickler, a Bank of America spokesman.
At Morgan Stanley, which has had weaker trading revenue than the other banks, managers are focusing on how to pay stars in line with the industry. The bank created a pay program this year for its top 25 workers, tying a fifth of their deferred pay to metrics based on the company’s later performance.
A company spokesman, Mark Lake, said: “Morgan Stanley’s board and management clearly understands the extraordinary environment in which we operate and, as a result, have made a series of changes to the firm’s compensation practices.”
The top 25 executives will be paid mostly in stock and deferred cash payments. John J. Mack, the chairman, is forgoing a bonus. He retired as chief executive at the end of 2009.
At Citigroup, whose sprawling consumer banking business is still ailing, some managers were disappointed in recent weeks by the preliminary estimates of their bonus pools, according to people familiar with the matter. Citigroup’s overall 2009 bonus pool is expected to be about $5.3 billion, about the same as it was for 2008, although the bank has far fewer employees.
The highest bonus awarded to a Citigroup executive is already known: The bank said in a regulatory filing last week that the head of its investment bank, John Havens, would receive $9 million in stock. But the bank’s chief executive, Vikram S. Pandit, is forgoing a bonus and taking a salary of just $1.
Friday, January 8, 2010
Finance Ministry, Bank Said to Favor JAL Bankruptcy
Jan. 9 (Bloomberg) -- The Japanese Ministry of Finance and the state-owned Development Bank of Japan support bankruptcy for Japan Airlines Corp., two people familiar with the matter said.
A court-led restructuring is favored over negotiations with creditors, said the people, who declined to be identified because they aren’t authorized to release the information. The government will decide between the options next week, said one of the people.
A JAL spokeswoman, Sze Hunn Yap, declined to comment on whether the Tokyo-based carrier would apply for bankruptcy. Calls to the media relations office of the Ministry of Finance, which oversees Development Bank, went unanswered outside regular office hours.
Finance Minister Naoto Kan declined yesterday to rule out bankruptcy. “We need to carefully consider how to rehabilitate JAL, including those issues,” Kan said when asked about the possible negative consequences of JAL seeking court protection.
Japan Air is seeking new investors and turnaround funds as it works to restructure after posting three losses in four years. Further talks on JAL’s future will take place as soon as Jan. 12, Transport Minister Seiji Maehara told reporters yesterday in Tokyo after meeting with Prime Minister Yukio Hatoyama. Jan. 11 is a national holiday in Japan.
The government has decided that the carrier should pursue a legal bankruptcy, Nikkei said yesterday, without citing anyone. Plans for JAL will be completed as early as Jan. 12, and the carrier may file a bankruptcy petition on Jan. 19, the Nikkei said.
Shares Slump
JAL slumped 12 percent yesterday, the third straight decline, to 67 yen in Tokyo trading. The yield on JAL’s 10 billion yen in 2.94 percent notes due in 2013 jumped to a record 52.2 percent yesterday from 15.8 percent on Jan. 4, according to Japan Securities Dealers Association prices on Bloomberg. The notes yielded about 9 percent a year ago.
Delta Air Lines Inc. and American Airlines have made competing bids to buy a stake in JAL to gain access to its routes in Japan and China. Delta wants to entice JAL into the SkyTeam alliance from American’s Oneworld.
AMR Corp.’s American and partner TPG have offered to invest $1.1 billion in JAL. They are considering boosting the bid by several hundred million dollars to keep the Asian carrier in Oneworld, a person familiar with the matter said this week.
Delta and SkyTeam have proposed a $1 billion package, including buying an equity stake and financing.
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A court-led restructuring is favored over negotiations with creditors, said the people, who declined to be identified because they aren’t authorized to release the information. The government will decide between the options next week, said one of the people.
A JAL spokeswoman, Sze Hunn Yap, declined to comment on whether the Tokyo-based carrier would apply for bankruptcy. Calls to the media relations office of the Ministry of Finance, which oversees Development Bank, went unanswered outside regular office hours.
Finance Minister Naoto Kan declined yesterday to rule out bankruptcy. “We need to carefully consider how to rehabilitate JAL, including those issues,” Kan said when asked about the possible negative consequences of JAL seeking court protection.
Japan Air is seeking new investors and turnaround funds as it works to restructure after posting three losses in four years. Further talks on JAL’s future will take place as soon as Jan. 12, Transport Minister Seiji Maehara told reporters yesterday in Tokyo after meeting with Prime Minister Yukio Hatoyama. Jan. 11 is a national holiday in Japan.
The government has decided that the carrier should pursue a legal bankruptcy, Nikkei said yesterday, without citing anyone. Plans for JAL will be completed as early as Jan. 12, and the carrier may file a bankruptcy petition on Jan. 19, the Nikkei said.
Shares Slump
JAL slumped 12 percent yesterday, the third straight decline, to 67 yen in Tokyo trading. The yield on JAL’s 10 billion yen in 2.94 percent notes due in 2013 jumped to a record 52.2 percent yesterday from 15.8 percent on Jan. 4, according to Japan Securities Dealers Association prices on Bloomberg. The notes yielded about 9 percent a year ago.
Delta Air Lines Inc. and American Airlines have made competing bids to buy a stake in JAL to gain access to its routes in Japan and China. Delta wants to entice JAL into the SkyTeam alliance from American’s Oneworld.
AMR Corp.’s American and partner TPG have offered to invest $1.1 billion in JAL. They are considering boosting the bid by several hundred million dollars to keep the Asian carrier in Oneworld, a person familiar with the matter said this week.
Delta and SkyTeam have proposed a $1 billion package, including buying an equity stake and financing.
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Asian Currencies Climb, Led by Won, on Growth, Rate Outlooks
Jan. 9 (Bloomberg) -- Asian currencies rose this week, led by the South Korean won and Indian rupee, as the outlook for economic growth and interest-rate increases in 2010 attracted overseas funds to the region’s assets.
The Bloomberg-JPMorgan Asia Dollar Index started the new year with its best weekly performance since May, as reports in Indonesia and Taiwan showed exports are rebounding. China data due in coming days may show overseas sales increased last month for the first time since October 2008, according to a Bloomberg News survey. Emerging-market stock and bond funds extended 2009’s record increase in inflows, EPFR Global said.
“The bullish outlook for Asian currencies remains in place and we continue to favor the likes of the won, Indonesian rupiah and the rupee but we would also caution at getting too carried away,” Mitul Kotecha, head of global foreign-exchange strategy at Calyon in Hong Kong, wrote in a research note yesterday.
The won climbed 2.9 percent to 1,130.75 per dollar at the 3 p.m. close in Seoul from a week ago, the biggest gain in eight months, according to data compiled by Bloomberg. The rupee rose 1.8 percent to 45.7652 and the rupiah appreciated 1.9 percent to 9,215. The Asia Dollar Index rose 1.0 percent, adding to last year’s 3 percent rally.
Developing-nation equity funds received $2.2 billion in the week to Jan. 6, while those investing in high-yield and emerging-market fixed-income securities drew $560 million, according to U.S.-based research company EPFR.
Korea Rate Outlook
Korea’s won advanced toward its highest level in almost 16 months as the central bank flagged plans to raise interest rates.
Bank of Korea Governor Lee Seong Tae said borrowing costs should be normalized to reflect the economy’s recovery from a slump, after he kept the seven-day repurchase rate at a record- low 2 percent yesterday. South Korea is “closely” monitoring the movement of the nation’s currency, Ahn Byung Chan, director general of the Bank of Korea’s international bureau, said in Seoul.
“We think we’ll see 50 basis points of hikes in the first quarter, which means the BOK can be a little more comfortable with Korean won strength because that can also tighten monetary conditions,” said David Mann, senior strategist at Standard Chartered Plc in Hong Kong. “They’ll continue to be cautious about any moves that are large on any one particular day.”
The currency may rise 3.7 percent to 1,090 per dollar by the end of the year, while the central bank may increase the benchmark rate by a full percentage point, according to surveys by Bloomberg.
Thai Rate Decision
Bank Indonesia this week also opted to keep borrowing costs unchanged at 6.5 percent, a yield premium that made the country’s stocks and bonds among the best performers in the region last year. The rupiah had its biggest weekly gain in three months and may climb to 9,000 by Dec. 31, Bloomberg surveys show.
Indonesia’s economy is forecast to expand by as much as 5.5 percent this year, Finance Minister Sri Mulyani Indrawati said on Dec. 8. Gross domestic product increased 4.3 percent last year, the central bank said on Jan. 6, after keeping rates on hold.
Thailand’s central bank meets on interest rates on Jan. 13, with policy makers forecast to keep the benchmark at 1.25 percent, according to all 15 economists in a Bloomberg survey.
The baht traded near a three-week high after Finance Minister Korn Chatikavanij said on Jan. 7 the government will spend as much as 5 percent of gross domestic product in 2010 to boost an economic recovery. The baht rose 0.6 percent this week to 33.16 per dollar in Bangkok.
Asian Inflows
“It should not be surprising at all that the baht should see some moves this week,” said Gundy Cahyadi, an economist at IDEAglobal in Singapore. “This week, Asian currencies have been gaining, the reason being that there is a surge in appetite early in the year. Inflows are coming into Asian bourses as growth normalizes across the world.”
Overseas investors added to holdings of regional stocks this week, with Japan, Taiwan and Korea attracting the biggest inflows. The MSCI Asia-Pacific Index of shares climbed 3.1 percent this week, and reached the highest level since August 2008.
Yuan forwards rose to the highest level in more than a month on speculation the central bank will resume appreciation in the currency this year as China’s exports rebound from a slump.
China Exports
China signaled on Jan. 7 that it may start to unwind monetary stimulus measures to curb asset-price inflation, after the central bank sold three-month bills at higher interest rates for the first time in 19 weeks. A government report, due Jan. 10-14, may show exports rose 5 percent in December, the first gain in 14 months, according to a Bloomberg News survey.
“The market probably read the central bank’s moves as positive, showing the authorities are a little bit more comfortable with a recovery,” said Emmanuel Ng, a currency strategist at Oversea-Chinese Banking Corp. in Singapore.
Twelve-month non-deliverable yuan forwards rose 0.6 percent this week to 6.6274 per dollar in Hong Kong, indicating brokerages are betting the currency will advance 3 percent from the spot rate of 6.8281 in a year. The contracts touched 6.6205 yesterday, the strongest level since Dec. 4.
Elsewhere in Asian trading, the Philippine peso climbed 0.9 percent this week to 45.81, Taiwan’s dollar rose 0.5 percent to NT$31.88 and Malaysia’s ringgit climbed 0.8 percent to 3.3775.
The Bloomberg-JPMorgan Asia Dollar Index started the new year with its best weekly performance since May, as reports in Indonesia and Taiwan showed exports are rebounding. China data due in coming days may show overseas sales increased last month for the first time since October 2008, according to a Bloomberg News survey. Emerging-market stock and bond funds extended 2009’s record increase in inflows, EPFR Global said.
“The bullish outlook for Asian currencies remains in place and we continue to favor the likes of the won, Indonesian rupiah and the rupee but we would also caution at getting too carried away,” Mitul Kotecha, head of global foreign-exchange strategy at Calyon in Hong Kong, wrote in a research note yesterday.
The won climbed 2.9 percent to 1,130.75 per dollar at the 3 p.m. close in Seoul from a week ago, the biggest gain in eight months, according to data compiled by Bloomberg. The rupee rose 1.8 percent to 45.7652 and the rupiah appreciated 1.9 percent to 9,215. The Asia Dollar Index rose 1.0 percent, adding to last year’s 3 percent rally.
Developing-nation equity funds received $2.2 billion in the week to Jan. 6, while those investing in high-yield and emerging-market fixed-income securities drew $560 million, according to U.S.-based research company EPFR.
Korea Rate Outlook
Korea’s won advanced toward its highest level in almost 16 months as the central bank flagged plans to raise interest rates.
Bank of Korea Governor Lee Seong Tae said borrowing costs should be normalized to reflect the economy’s recovery from a slump, after he kept the seven-day repurchase rate at a record- low 2 percent yesterday. South Korea is “closely” monitoring the movement of the nation’s currency, Ahn Byung Chan, director general of the Bank of Korea’s international bureau, said in Seoul.
“We think we’ll see 50 basis points of hikes in the first quarter, which means the BOK can be a little more comfortable with Korean won strength because that can also tighten monetary conditions,” said David Mann, senior strategist at Standard Chartered Plc in Hong Kong. “They’ll continue to be cautious about any moves that are large on any one particular day.”
The currency may rise 3.7 percent to 1,090 per dollar by the end of the year, while the central bank may increase the benchmark rate by a full percentage point, according to surveys by Bloomberg.
Thai Rate Decision
Bank Indonesia this week also opted to keep borrowing costs unchanged at 6.5 percent, a yield premium that made the country’s stocks and bonds among the best performers in the region last year. The rupiah had its biggest weekly gain in three months and may climb to 9,000 by Dec. 31, Bloomberg surveys show.
Indonesia’s economy is forecast to expand by as much as 5.5 percent this year, Finance Minister Sri Mulyani Indrawati said on Dec. 8. Gross domestic product increased 4.3 percent last year, the central bank said on Jan. 6, after keeping rates on hold.
Thailand’s central bank meets on interest rates on Jan. 13, with policy makers forecast to keep the benchmark at 1.25 percent, according to all 15 economists in a Bloomberg survey.
The baht traded near a three-week high after Finance Minister Korn Chatikavanij said on Jan. 7 the government will spend as much as 5 percent of gross domestic product in 2010 to boost an economic recovery. The baht rose 0.6 percent this week to 33.16 per dollar in Bangkok.
Asian Inflows
“It should not be surprising at all that the baht should see some moves this week,” said Gundy Cahyadi, an economist at IDEAglobal in Singapore. “This week, Asian currencies have been gaining, the reason being that there is a surge in appetite early in the year. Inflows are coming into Asian bourses as growth normalizes across the world.”
Overseas investors added to holdings of regional stocks this week, with Japan, Taiwan and Korea attracting the biggest inflows. The MSCI Asia-Pacific Index of shares climbed 3.1 percent this week, and reached the highest level since August 2008.
Yuan forwards rose to the highest level in more than a month on speculation the central bank will resume appreciation in the currency this year as China’s exports rebound from a slump.
China Exports
China signaled on Jan. 7 that it may start to unwind monetary stimulus measures to curb asset-price inflation, after the central bank sold three-month bills at higher interest rates for the first time in 19 weeks. A government report, due Jan. 10-14, may show exports rose 5 percent in December, the first gain in 14 months, according to a Bloomberg News survey.
“The market probably read the central bank’s moves as positive, showing the authorities are a little bit more comfortable with a recovery,” said Emmanuel Ng, a currency strategist at Oversea-Chinese Banking Corp. in Singapore.
Twelve-month non-deliverable yuan forwards rose 0.6 percent this week to 6.6274 per dollar in Hong Kong, indicating brokerages are betting the currency will advance 3 percent from the spot rate of 6.8281 in a year. The contracts touched 6.6205 yesterday, the strongest level since Dec. 4.
Elsewhere in Asian trading, the Philippine peso climbed 0.9 percent this week to 45.81, Taiwan’s dollar rose 0.5 percent to NT$31.88 and Malaysia’s ringgit climbed 0.8 percent to 3.3775.
Thursday, January 7, 2010
Intel, Alcoa to Lead Biggest Profit Gain Since 1993 on Cuts
Jan. 8 (Bloomberg) -- Bank of America Corp.,Alcoa Inc., and Intel Corp. will lead companies worldwide to the biggest earning gains since 1993 as industries hardest hit by the recession benefit from job cuts and cheaper loans.
Profits of S&P 500 Index companies rose 60 percent in the three months ended Dec. 31, the first quarterly gain after nine quarters of declines, according to analysts’ estimates compiled by Standard & Poor’s and Bloomberg. In 2010, financial, semiconductor, auto, energy and consumer goods companies will probably be the best performers, paving the way for a 25 percent rise in full-year earnings.
Globally, companies eliminated more than 2 million jobs in 2009 as real-estate losses forced banks to rein in lending, hurting industries from cars to consumer electronics. The cutbacks should help earnings at S&P 500 Index companies rise by 28 percent in the current quarter. Still, a global recovery in 2010 could be in danger as central banks and governments start unwinding crisis measures implemented last year.
“Companies adapted very quickly to lower demand, and they are leaner and meaner than before,” said Henk Potts, a fund manager at Barclays Wealth in London, which oversees about 134 billion pounds ($213 billion). “The low interest-rate environment should also create an easier environment for companies and make equities look very attractive compared to other asset classes.”
Easy Comparisons
Alcoa, based in New York, is the first member of the Dow Jones Industrial Average to report fourth-quarter earnings on Jan. 11. The largest U.S. aluminum producer may report earnings per share, excluding some items, of 6 cents, compared with a loss of 28 cents.
Fourth-quarter gains of many companies will be marked by easy comparisons to a year earlier, when credit markets seized and banks stopped lending. U.S. gross domestic product shrank 5.4 percent in the fourth quarter of 2008 and consumer spending stalled.
Bank of America, the largest U.S. bank by assets, may rebound in 2010 as losses from its home loan and credit card businesses peak, said Jaime Peters, an analyst in Chicago at Morningstar Inc.
“Now that they’ve repaid the U.S. government, Bank of America is much better positioned to maneuver the way they want,” Peters said. “Bank of America has been the worst performer of the big banks in credit cards, so they have the most to gain when the tide turns.”
Growing U.S. Economy
The Charlotte, North Carolina-based bank is predicted to report on Jan. 20 a fourth-quarter loss of 53 cents a share and a full-year loss of 16 cents a share, the first annual loss in more than 25 years, according to a Bloomberg analyst survey. Buoyed by a growing U.S. economy and fewer defaults by consumers, the bank’s profit is predicted to rebound to 78 cents a share in 2010.
Deutsche Bank AG, based in Frankfurt and Germany’s biggest bank, and Zurich-based Credit Suisse Group AG, Switzerland’s largest bank by market value, may report lower earnings in 2010 than for the previous year, when they benefited from higher margins in investment banking while some competitors recovered from subprime losses.
“Overall the financial sector might not be doing hugely different to the market, but within the sector we will see huge spreads and differentiation,” said Raimund Saxinger, a fund manager at Frankfurt-Trust Investment GmbH, which manages about 18 billion euros ($26 billion). “Because of the after-effect of the crisis, it will become clearer and clearer that some have survived the crisis in better shape than others.”
Higher Funding Costs
European banks may also be facing higher funding costs as central banks withdraw 875 billion euros in liquidity support, according to Barclays Capital. Consumer banks may have better prospects than companies that rely more on securities businesses as the economy improves, they said.
Costs cuts and an improving economy will help carmakers to increase profits this year, analysts say.
Daimler AG, the maker of Mercedes-Benz cars and trucks, may record a 3.67 billion-euro swing in fortunes in 2010, according to a Bloomberg survey. Daimler is likely to post net income of 1.76 billion euros this year after a projected loss of 1.91 billion euros in 2009, according to the median of 17 estimates.
The Stuttgart, Germany-based company, the world’s largest truck manufacturer and the No. 2 luxury-car maker, targets as much as 5 billion euros in spending cuts for 2009 by reducing pay and work hours.
Still, European car sales may fall 8 percent to 15 million vehicles in 2010 after the end of government incentives to reverse car-market declines, according to researcher IHS Global Insight.
Price Cuts
Volkswagen AG, PSA Peugeot Citroen and Bayerische Motoren Werke AG will struggle to increase revenue this year if they cut prices to keep their share of a shrinking market, said Mike Tyndall, an automotive analyst at Nomura Securities in London.
“In the fourth quarter of 2009, you’ll see a much healthier level of profitability compared with last year, when factories were closed for at least a month,” said Tyndall. “The question is how sustainable are these margins.”
U.S. carmakers and their suppliers will see earnings more than quintupling in 2010 after enduring the worst year for U.S. auto sales since 1982, according to Bloomberg data.
Earnings will also get a boost from deep cost cutting at automakers and suppliers following the bankruptcies at Detroit- based General Motors Co. and Auburn Hills, Michigan-based Chrysler Group LLC in 2009. U.S. auto sales will rise 20 percent this year, according to the Center for Automotive Research.
‘Greater Discipline’
Rising car sales will help steelmakers’ earnings in 2010. Luxembourg-based ArcelorMittal, the world’s biggest steelmaker, may post a $3.9 billion net income in 2010, according to the median of 15 analyst estimates compiled by Bloomberg. That compares with a predicted loss of $394.5 million for last year.
“The major steel producers are demonstrating much greater production discipline during this downturn than in previous ones,” said Gavin Wood, an analyst at Nomura Holdings Inc. in London, who has a “buy” recommendation on ArcelorMittal.
ArcelorMittal on Feb. 10 may post a fourth-quarter net income of $546 million, according to the median of four analyst estimates. The company posted a $2.6 billion loss a year earlier, after taking one-off charges of $4.4 billion that included writedowns on inventories and raw-material contracts as steel prices plunged.
Struggling Airlines
In contrast to carmakers, airlines will probably struggle to bolster earnings as a slump in demand for business travel persists.
British Airways Plc, which last month blocked a 12-day strike by its cabin crew over the Christmas holiday period, may report a second straight annual loss for the year ending March 31. Air France-KLM Group, Europe’s biggest airline, is also projected to have its second consecutive annual loss.
Boeing Co., the world’s largest aerospace company, in 2009 may have its largest profit decline since 2002 after charges for delays to its two new-plane programs, the composite-plastic 787 Dreamliner and the 747-8 expanded jumbo jet. Analysts project that earnings at the Chicago-based company probably improved in the fourth quarter from a year earlier, when the company was shut down by a two-month strike.
‘Modest Recovery’
“I don’t get the feeling, looking at the year ahead, that things are going to be much better for airlines,” said Gert Zonneveld, an analyst at Panmure Gordon. “The economic recovery is still fairly modest.”
Analysts also predict industrial companies to have lower earnings growth in 2010 compared with other businesses as clients in the automotive and factory machine industries hold back investments in new equipment.
Siemens AG, Europe’s largest engineering company, on Jan. 26 may report lower earnings and sales for the fiscal first quarter that ended Dec. 31 as orders fell. The Munich-based company has said sales in all its three divisions, industry, energy, and healthcare, will fall in the current fiscal year.
General Electric Co., the world’s biggest maker of jet engines, power-plant turbines and medical-imaging equipment, on Jan. 22 may post a decline of almost 50 percent in fourth- quarter profit. Profit excluding some items at the Fairfield, Connecticut-based company may decline to 26 cents a share, according to the average estimate of 13 analysts surveyed by Bloomberg.
Oil producers are poised to benefit from crude prices that were on average 29 percent higher in the final three months of 2009 than the previous year. Crude-oil futures rose the most in a decade, finishing 2009 at $79.36 a barrel, more than double the year’s low of $32.70, set in January.
Oil Demand
Analysts predict that profits at Exxon Mobil Corp.,Chevron Corp. and ConocoPhillips, the three largest U.S. energy companies, will also rise in 2010 as a recovering economy further drives up demand for oil and the fuels made from it.
“The price of oil is a key component,” said Barry James, who manages $2 billion in assets at James Investment Research in Xenia, Ohio. “You’ve seen Exxon and some of the others move out of refining and marketing so that they can focus more clearly on getting it out of the ground and making a profit in that arena.”
Fourth-quarter results at BP Plc may outshine larger rival Royal Dutch Shell Plc after the London-based producer ramped up output in the Gulf of Mexico and restored operations at U.S. refineries. PetroChina Co., the world’s biggest company by market value, is projected to post a 46 percent increase in fourth-quarter profit.
China’s growth may accelerate to 9.4 percent this year from an estimated 8.5 percent in 2009 as the government sustains stimulus measures and the world recovers from the financial crisis, economists forecast.
Electronic Gadgets
Improving consumer confidence and demand for flat-screen television sets, gaming consoles and so-called smartphones, which allow users to surf the Web, will also boost earnings of consumer electronics companies this year.
Sony Corp., based in Tokyo, is projected to recover next fiscal year from its first back-to-back annual losses since its 1958 listing after Chief Executive Officer Howard Stringer eliminated about 20,000 jobs, cut 300 billion yen ($3.3 billion) in costs and 500 billion yen of inventory.
The maker of Bravia televisions may post net income of 92 billion yen in the 12 months to March 2011 after a projected 66 billion-yen loss in the year-earlier period. “Demand for consumer electronics has started to come back and year-end business was robust,” said Kota Ezawa, a Citigroup analyst in Tokyo.
Rising PC Demand
Global TV shipments will likely increase 6 percent this year, compared with 0.4 percent growth in 2009, according to December estimates at Daiwa Securities Capital Markets Co. Worldwide shipments of personal computers will rise 13 percent and those of mobile phones will gain 9 percent, according to Daiwa.
Samsung Electronics Co., based in Suwon, South Korea, and Asia’s largest maker of chips, flat-screens and mobile-phones, is projected to post record net income of 12.4 trillion won ($10.8 billion) in 2010, up 28 percent.
Intel, the world’s largest chipmaker, has forecast sales of $9.7 billion to $10.5 billion for the fourth quarter of 2009. Even the low end of that range would represent the first revenue growth in a year for the Santa Clara, California-based company. Analysts estimate sales growth of 23 percent to $10.1 billion, up from a drop of 23 percent a year earlier.
Memory-chip prices are expected to remain stable in the first half of this year after more than tripling in 2009 as demand for personal computers recovers, according to James Song, an analyst at Daewoo Securities Co. in Seoul.
Holiday Sales
Apple Inc., based in Cupertino, California, will likely surpass earnings estimates for the three months ended in December, lifted by holiday sales of new models, said Shaw Wu, an analyst with Kaufman Bros. in San Francisco. Analysts surveyed by Bloomberg anticipate sales of $11.9 billion and profit of $2.05 a share.
Espoo, Finland-based Nokia Oyj, the world’s largest maker of mobile phones, may say fourth-quarter net income gained 1 percent to 582.1 million euros, snapping six quarters of declines, according to the estimates of 18 analysts. Jason Willey, an equity analyst with Standard & Poor’s, predicts global handset sales to rise by 11 percent in 2010.
“Businesses will continue to spend on chips and software,” said John Lynch, chief market analyst for Evergreen Investments, which manages $155.5 billion. At the same time, “businesses are going to be hesitant to commit to employee growth, to payroll growth, just yet, until they see how the economy performs with less government intervention,” he said.
Toys, Clothes
Retailers and makers of clothes and toys will also have benefited from higher Christmas sales, analysts say.
Wal-Mart Stores Inc., the world’s largest retailer, is projected to increase adjusted fourth-quarter profit by 8.7 percent to $1.12 a share. A year earlier, adjusted profit of $1.03 excluded a litigation charge of 7 cents.
Macy’s Inc., the second-largest U.S. department store company, may post a 7 percent increase in adjusted per-share profit for the three months through January, after a 36 percent slump a year ago. The improvement comes after the Cincinnati- based retailer cut inventories, reducing the need for profit- eroding discounts.
Margin Push
“The combination of better-than-expected sales and aligned inventories should drive healthy margins in the fourth quarter,” Bill Dreher, an analyst with Deutsche Bank in New York, wrote in a Dec. 29 report about U.S. department store chains.
European drugmakers are likely to lead global pharmaceutical earnings as government orders for swine-flu vaccines shored up fourth-quarter sales at GlaxoSmithKline Plc, Novartis AG and Sanofi-Aventis SA.
Based on a Bloomberg survey of six analysts, London-based Glaxo is likely to say on Feb. 4 that earnings per share excluding some items increased 25 percent to 33.4 pence. Basel, Switzerland-based Novartis and Paris-based Sanofi are also likely to report a boost in earnings.
Earnings in the health-care industry are likely to be sustained throughout 2010, helped by higher-margin sales of vaccines, growth in emerging markets and a slew of new products hitting the market, Matrix Corporate Capital analyst Navid Malik said in an interview.
Analysts predict rising earnings for almost all industry groups in the S&P 500 Index this year with overall profits increasing by 25 percent. That compares with an expected decline of 12 percent in 2009.
“We’ve gone through the heart of the recession and now it’s more business as normal, but with lower growth,” said Barclays Wealth’s Potts. “The government has mortgaged the future to pay for the present, so some of the stimulus is going to fade away.”
-- With assistance from Adam Satariano in San Francisco, Francesca Cinelli in Milan, David Mildenberg in Charlotte, Keith Naughton in Southfield, Cotten Timberlake in Washington DC, Ian King and Connie Guglielmo in San Francisco, Chris Burritt in Greensboro, Edmond Lococo in Boston, Jim Polson, Lynn Thomasson, Jack Kaskey and James Langford in New York, Rob Delaney in Toronto, Sarah Shannon, Trista Kelley, Adam Haigh, Eduard Gismatullin, Steve Rothwell, Simon Casey and Thomas Biesheuvel in London, Chris Reiter in Berlin, Elena Logutenkova and Antonio Ligi in Zurich, Wing-Gar Cheng, John Duce in Hong Kong, Kiyori Ueno, Mariko Yasu and Bret Okeson in Tokyo, Seonjin Cha and Kevin Cho in Seoul, Archana Chaudhary in Mumbai, Susanna Ray and Dina Bass in Seattle and Edmond Lococo in Boston. Editors: Simon Thiel, Andrew Noel
Profits of S&P 500 Index companies rose 60 percent in the three months ended Dec. 31, the first quarterly gain after nine quarters of declines, according to analysts’ estimates compiled by Standard & Poor’s and Bloomberg. In 2010, financial, semiconductor, auto, energy and consumer goods companies will probably be the best performers, paving the way for a 25 percent rise in full-year earnings.
Globally, companies eliminated more than 2 million jobs in 2009 as real-estate losses forced banks to rein in lending, hurting industries from cars to consumer electronics. The cutbacks should help earnings at S&P 500 Index companies rise by 28 percent in the current quarter. Still, a global recovery in 2010 could be in danger as central banks and governments start unwinding crisis measures implemented last year.
“Companies adapted very quickly to lower demand, and they are leaner and meaner than before,” said Henk Potts, a fund manager at Barclays Wealth in London, which oversees about 134 billion pounds ($213 billion). “The low interest-rate environment should also create an easier environment for companies and make equities look very attractive compared to other asset classes.”
Easy Comparisons
Alcoa, based in New York, is the first member of the Dow Jones Industrial Average to report fourth-quarter earnings on Jan. 11. The largest U.S. aluminum producer may report earnings per share, excluding some items, of 6 cents, compared with a loss of 28 cents.
Fourth-quarter gains of many companies will be marked by easy comparisons to a year earlier, when credit markets seized and banks stopped lending. U.S. gross domestic product shrank 5.4 percent in the fourth quarter of 2008 and consumer spending stalled.
Bank of America, the largest U.S. bank by assets, may rebound in 2010 as losses from its home loan and credit card businesses peak, said Jaime Peters, an analyst in Chicago at Morningstar Inc.
“Now that they’ve repaid the U.S. government, Bank of America is much better positioned to maneuver the way they want,” Peters said. “Bank of America has been the worst performer of the big banks in credit cards, so they have the most to gain when the tide turns.”
Growing U.S. Economy
The Charlotte, North Carolina-based bank is predicted to report on Jan. 20 a fourth-quarter loss of 53 cents a share and a full-year loss of 16 cents a share, the first annual loss in more than 25 years, according to a Bloomberg analyst survey. Buoyed by a growing U.S. economy and fewer defaults by consumers, the bank’s profit is predicted to rebound to 78 cents a share in 2010.
Deutsche Bank AG, based in Frankfurt and Germany’s biggest bank, and Zurich-based Credit Suisse Group AG, Switzerland’s largest bank by market value, may report lower earnings in 2010 than for the previous year, when they benefited from higher margins in investment banking while some competitors recovered from subprime losses.
“Overall the financial sector might not be doing hugely different to the market, but within the sector we will see huge spreads and differentiation,” said Raimund Saxinger, a fund manager at Frankfurt-Trust Investment GmbH, which manages about 18 billion euros ($26 billion). “Because of the after-effect of the crisis, it will become clearer and clearer that some have survived the crisis in better shape than others.”
Higher Funding Costs
European banks may also be facing higher funding costs as central banks withdraw 875 billion euros in liquidity support, according to Barclays Capital. Consumer banks may have better prospects than companies that rely more on securities businesses as the economy improves, they said.
Costs cuts and an improving economy will help carmakers to increase profits this year, analysts say.
Daimler AG, the maker of Mercedes-Benz cars and trucks, may record a 3.67 billion-euro swing in fortunes in 2010, according to a Bloomberg survey. Daimler is likely to post net income of 1.76 billion euros this year after a projected loss of 1.91 billion euros in 2009, according to the median of 17 estimates.
The Stuttgart, Germany-based company, the world’s largest truck manufacturer and the No. 2 luxury-car maker, targets as much as 5 billion euros in spending cuts for 2009 by reducing pay and work hours.
Still, European car sales may fall 8 percent to 15 million vehicles in 2010 after the end of government incentives to reverse car-market declines, according to researcher IHS Global Insight.
Price Cuts
Volkswagen AG, PSA Peugeot Citroen and Bayerische Motoren Werke AG will struggle to increase revenue this year if they cut prices to keep their share of a shrinking market, said Mike Tyndall, an automotive analyst at Nomura Securities in London.
“In the fourth quarter of 2009, you’ll see a much healthier level of profitability compared with last year, when factories were closed for at least a month,” said Tyndall. “The question is how sustainable are these margins.”
U.S. carmakers and their suppliers will see earnings more than quintupling in 2010 after enduring the worst year for U.S. auto sales since 1982, according to Bloomberg data.
Earnings will also get a boost from deep cost cutting at automakers and suppliers following the bankruptcies at Detroit- based General Motors Co. and Auburn Hills, Michigan-based Chrysler Group LLC in 2009. U.S. auto sales will rise 20 percent this year, according to the Center for Automotive Research.
‘Greater Discipline’
Rising car sales will help steelmakers’ earnings in 2010. Luxembourg-based ArcelorMittal, the world’s biggest steelmaker, may post a $3.9 billion net income in 2010, according to the median of 15 analyst estimates compiled by Bloomberg. That compares with a predicted loss of $394.5 million for last year.
“The major steel producers are demonstrating much greater production discipline during this downturn than in previous ones,” said Gavin Wood, an analyst at Nomura Holdings Inc. in London, who has a “buy” recommendation on ArcelorMittal.
ArcelorMittal on Feb. 10 may post a fourth-quarter net income of $546 million, according to the median of four analyst estimates. The company posted a $2.6 billion loss a year earlier, after taking one-off charges of $4.4 billion that included writedowns on inventories and raw-material contracts as steel prices plunged.
Struggling Airlines
In contrast to carmakers, airlines will probably struggle to bolster earnings as a slump in demand for business travel persists.
British Airways Plc, which last month blocked a 12-day strike by its cabin crew over the Christmas holiday period, may report a second straight annual loss for the year ending March 31. Air France-KLM Group, Europe’s biggest airline, is also projected to have its second consecutive annual loss.
Boeing Co., the world’s largest aerospace company, in 2009 may have its largest profit decline since 2002 after charges for delays to its two new-plane programs, the composite-plastic 787 Dreamliner and the 747-8 expanded jumbo jet. Analysts project that earnings at the Chicago-based company probably improved in the fourth quarter from a year earlier, when the company was shut down by a two-month strike.
‘Modest Recovery’
“I don’t get the feeling, looking at the year ahead, that things are going to be much better for airlines,” said Gert Zonneveld, an analyst at Panmure Gordon. “The economic recovery is still fairly modest.”
Analysts also predict industrial companies to have lower earnings growth in 2010 compared with other businesses as clients in the automotive and factory machine industries hold back investments in new equipment.
Siemens AG, Europe’s largest engineering company, on Jan. 26 may report lower earnings and sales for the fiscal first quarter that ended Dec. 31 as orders fell. The Munich-based company has said sales in all its three divisions, industry, energy, and healthcare, will fall in the current fiscal year.
General Electric Co., the world’s biggest maker of jet engines, power-plant turbines and medical-imaging equipment, on Jan. 22 may post a decline of almost 50 percent in fourth- quarter profit. Profit excluding some items at the Fairfield, Connecticut-based company may decline to 26 cents a share, according to the average estimate of 13 analysts surveyed by Bloomberg.
Oil producers are poised to benefit from crude prices that were on average 29 percent higher in the final three months of 2009 than the previous year. Crude-oil futures rose the most in a decade, finishing 2009 at $79.36 a barrel, more than double the year’s low of $32.70, set in January.
Oil Demand
Analysts predict that profits at Exxon Mobil Corp.,Chevron Corp. and ConocoPhillips, the three largest U.S. energy companies, will also rise in 2010 as a recovering economy further drives up demand for oil and the fuels made from it.
“The price of oil is a key component,” said Barry James, who manages $2 billion in assets at James Investment Research in Xenia, Ohio. “You’ve seen Exxon and some of the others move out of refining and marketing so that they can focus more clearly on getting it out of the ground and making a profit in that arena.”
Fourth-quarter results at BP Plc may outshine larger rival Royal Dutch Shell Plc after the London-based producer ramped up output in the Gulf of Mexico and restored operations at U.S. refineries. PetroChina Co., the world’s biggest company by market value, is projected to post a 46 percent increase in fourth-quarter profit.
China’s growth may accelerate to 9.4 percent this year from an estimated 8.5 percent in 2009 as the government sustains stimulus measures and the world recovers from the financial crisis, economists forecast.
Electronic Gadgets
Improving consumer confidence and demand for flat-screen television sets, gaming consoles and so-called smartphones, which allow users to surf the Web, will also boost earnings of consumer electronics companies this year.
Sony Corp., based in Tokyo, is projected to recover next fiscal year from its first back-to-back annual losses since its 1958 listing after Chief Executive Officer Howard Stringer eliminated about 20,000 jobs, cut 300 billion yen ($3.3 billion) in costs and 500 billion yen of inventory.
The maker of Bravia televisions may post net income of 92 billion yen in the 12 months to March 2011 after a projected 66 billion-yen loss in the year-earlier period. “Demand for consumer electronics has started to come back and year-end business was robust,” said Kota Ezawa, a Citigroup analyst in Tokyo.
Rising PC Demand
Global TV shipments will likely increase 6 percent this year, compared with 0.4 percent growth in 2009, according to December estimates at Daiwa Securities Capital Markets Co. Worldwide shipments of personal computers will rise 13 percent and those of mobile phones will gain 9 percent, according to Daiwa.
Samsung Electronics Co., based in Suwon, South Korea, and Asia’s largest maker of chips, flat-screens and mobile-phones, is projected to post record net income of 12.4 trillion won ($10.8 billion) in 2010, up 28 percent.
Intel, the world’s largest chipmaker, has forecast sales of $9.7 billion to $10.5 billion for the fourth quarter of 2009. Even the low end of that range would represent the first revenue growth in a year for the Santa Clara, California-based company. Analysts estimate sales growth of 23 percent to $10.1 billion, up from a drop of 23 percent a year earlier.
Memory-chip prices are expected to remain stable in the first half of this year after more than tripling in 2009 as demand for personal computers recovers, according to James Song, an analyst at Daewoo Securities Co. in Seoul.
Holiday Sales
Apple Inc., based in Cupertino, California, will likely surpass earnings estimates for the three months ended in December, lifted by holiday sales of new models, said Shaw Wu, an analyst with Kaufman Bros. in San Francisco. Analysts surveyed by Bloomberg anticipate sales of $11.9 billion and profit of $2.05 a share.
Espoo, Finland-based Nokia Oyj, the world’s largest maker of mobile phones, may say fourth-quarter net income gained 1 percent to 582.1 million euros, snapping six quarters of declines, according to the estimates of 18 analysts. Jason Willey, an equity analyst with Standard & Poor’s, predicts global handset sales to rise by 11 percent in 2010.
“Businesses will continue to spend on chips and software,” said John Lynch, chief market analyst for Evergreen Investments, which manages $155.5 billion. At the same time, “businesses are going to be hesitant to commit to employee growth, to payroll growth, just yet, until they see how the economy performs with less government intervention,” he said.
Toys, Clothes
Retailers and makers of clothes and toys will also have benefited from higher Christmas sales, analysts say.
Wal-Mart Stores Inc., the world’s largest retailer, is projected to increase adjusted fourth-quarter profit by 8.7 percent to $1.12 a share. A year earlier, adjusted profit of $1.03 excluded a litigation charge of 7 cents.
Macy’s Inc., the second-largest U.S. department store company, may post a 7 percent increase in adjusted per-share profit for the three months through January, after a 36 percent slump a year ago. The improvement comes after the Cincinnati- based retailer cut inventories, reducing the need for profit- eroding discounts.
Margin Push
“The combination of better-than-expected sales and aligned inventories should drive healthy margins in the fourth quarter,” Bill Dreher, an analyst with Deutsche Bank in New York, wrote in a Dec. 29 report about U.S. department store chains.
European drugmakers are likely to lead global pharmaceutical earnings as government orders for swine-flu vaccines shored up fourth-quarter sales at GlaxoSmithKline Plc, Novartis AG and Sanofi-Aventis SA.
Based on a Bloomberg survey of six analysts, London-based Glaxo is likely to say on Feb. 4 that earnings per share excluding some items increased 25 percent to 33.4 pence. Basel, Switzerland-based Novartis and Paris-based Sanofi are also likely to report a boost in earnings.
Earnings in the health-care industry are likely to be sustained throughout 2010, helped by higher-margin sales of vaccines, growth in emerging markets and a slew of new products hitting the market, Matrix Corporate Capital analyst Navid Malik said in an interview.
Analysts predict rising earnings for almost all industry groups in the S&P 500 Index this year with overall profits increasing by 25 percent. That compares with an expected decline of 12 percent in 2009.
“We’ve gone through the heart of the recession and now it’s more business as normal, but with lower growth,” said Barclays Wealth’s Potts. “The government has mortgaged the future to pay for the present, so some of the stimulus is going to fade away.”
-- With assistance from Adam Satariano in San Francisco, Francesca Cinelli in Milan, David Mildenberg in Charlotte, Keith Naughton in Southfield, Cotten Timberlake in Washington DC, Ian King and Connie Guglielmo in San Francisco, Chris Burritt in Greensboro, Edmond Lococo in Boston, Jim Polson, Lynn Thomasson, Jack Kaskey and James Langford in New York, Rob Delaney in Toronto, Sarah Shannon, Trista Kelley, Adam Haigh, Eduard Gismatullin, Steve Rothwell, Simon Casey and Thomas Biesheuvel in London, Chris Reiter in Berlin, Elena Logutenkova and Antonio Ligi in Zurich, Wing-Gar Cheng, John Duce in Hong Kong, Kiyori Ueno, Mariko Yasu and Bret Okeson in Tokyo, Seonjin Cha and Kevin Cho in Seoul, Archana Chaudhary in Mumbai, Susanna Ray and Dina Bass in Seattle and Edmond Lococo in Boston. Editors: Simon Thiel, Andrew Noel
Thai Rates Shouldn’t Rise Yet to Counter Inflation, Korn Says
an. 8 (Bloomberg) -- Thailand’s interest rates shouldn’t rise just yet because inflation hasn’t accelerated enough and there’s no sign of an asset bubble, Finance Minister Korn Chatikavanij said.
“We are likely to see some pickup in inflation, but at this stage it’s not sufficient for interest rates to rise,” Korn said in an interview with Bloomberg Television in London yesterday. “A large part of that is because the oil price is roughly about double where it was a year ago. It’s not a reflection of a recovery in demand. The central bank is an independent body and it’s their decision.”
The Bank of Thailand, which kept its benchmark interest rate unchanged last month at a five-year low of 1.25 percent, will take its next decision on Jan. 13. Thailand’s inflation accelerated to a 14-month high in December, adding to signs the nation is emerging from its yearlong recession.
“One of the reasons why I don’t believe there is an argument for a pickup in interest rates is that there is no evidence of an asset bubble,” Korn said. “The fact that our foreign reserves have been rising is almost entirely a result of the current-account surplus that we’ve been running rather than hot money coming in for speculation purposes.”
The Bank of Thailand cut its interest rate by a total of 2.5 percentage points from December 2008 to April last year. Deputy Governor Bandid Nijathaworn said Dec. 25 that the bank will consider exiting monetary stimulus when the economy recovers as it seeks to balance between spurring growth and taming inflation.
Yen, Dollar Bonds
Thailand’s inflation has accelerated after food and commodity costs increased. An index of consumer prices rose 3.5 percent from a year earlier in December after climbing 1.9 percent, according to Commerce Ministry’s data on Jan. 4. That marks the third month of gains.
The government may consider selling yen or dollar- denominated bonds to finance the budget deficit and show investors the country has regained its “economic strength,” Korn said.
Thailand, which sold yen-denominated debt in 2008, may “do the same this year,” he said, adding that issuing dollar- denominated bonds may also be “interesting.” Korn said the government may spend as much as 5 percent of the nation’s gross domestic product in 2010 to boost the economy.
“We can mostly fund this domestically,” Korn said. “Nevertheless, we haven’t shut the door.” Selling bonds in the international market “would have a potential side benefit of showing the world that Thailand is back where it belongs in terms of its economic strength,” he said.
Baht Strength
The last time the Thai government issued bonds in dollars was in February 2006, according to Bloomberg data. It also sold 55 billion yen ($590 million) of so-called samurai bonds to Japanese investors in May 2008.
The baht has risen against the dollar because of capital flows into the region. That may hurt exports, he said.
“The surplus is about a billion dollars a month, which is having a natural impact on the strengthening currency,” Korn said. “It’s a concern because we are reliant on exports as a major growth driver.”
Korn said he wants China to allow its currency to appreciate, declining to specify when it should happen.
“We have to accept the fact that we need, the world needs, the Chinese economy to keep humming,” he said. “In order to do that China has to keep their currency relatively weak. But the side effect of that is that it’s making economies such as Thailand, Indonesia, and Vietnam less competitive against China. Eventually we’d like all currencies to be moving along according to market conditions.”
The baht gained 4 percent against the dollar last year. Against the euro, it rose 2.35 percent.
“We are likely to see some pickup in inflation, but at this stage it’s not sufficient for interest rates to rise,” Korn said in an interview with Bloomberg Television in London yesterday. “A large part of that is because the oil price is roughly about double where it was a year ago. It’s not a reflection of a recovery in demand. The central bank is an independent body and it’s their decision.”
The Bank of Thailand, which kept its benchmark interest rate unchanged last month at a five-year low of 1.25 percent, will take its next decision on Jan. 13. Thailand’s inflation accelerated to a 14-month high in December, adding to signs the nation is emerging from its yearlong recession.
“One of the reasons why I don’t believe there is an argument for a pickup in interest rates is that there is no evidence of an asset bubble,” Korn said. “The fact that our foreign reserves have been rising is almost entirely a result of the current-account surplus that we’ve been running rather than hot money coming in for speculation purposes.”
The Bank of Thailand cut its interest rate by a total of 2.5 percentage points from December 2008 to April last year. Deputy Governor Bandid Nijathaworn said Dec. 25 that the bank will consider exiting monetary stimulus when the economy recovers as it seeks to balance between spurring growth and taming inflation.
Yen, Dollar Bonds
Thailand’s inflation has accelerated after food and commodity costs increased. An index of consumer prices rose 3.5 percent from a year earlier in December after climbing 1.9 percent, according to Commerce Ministry’s data on Jan. 4. That marks the third month of gains.
The government may consider selling yen or dollar- denominated bonds to finance the budget deficit and show investors the country has regained its “economic strength,” Korn said.
Thailand, which sold yen-denominated debt in 2008, may “do the same this year,” he said, adding that issuing dollar- denominated bonds may also be “interesting.” Korn said the government may spend as much as 5 percent of the nation’s gross domestic product in 2010 to boost the economy.
“We can mostly fund this domestically,” Korn said. “Nevertheless, we haven’t shut the door.” Selling bonds in the international market “would have a potential side benefit of showing the world that Thailand is back where it belongs in terms of its economic strength,” he said.
Baht Strength
The last time the Thai government issued bonds in dollars was in February 2006, according to Bloomberg data. It also sold 55 billion yen ($590 million) of so-called samurai bonds to Japanese investors in May 2008.
The baht has risen against the dollar because of capital flows into the region. That may hurt exports, he said.
“The surplus is about a billion dollars a month, which is having a natural impact on the strengthening currency,” Korn said. “It’s a concern because we are reliant on exports as a major growth driver.”
Korn said he wants China to allow its currency to appreciate, declining to specify when it should happen.
“We have to accept the fact that we need, the world needs, the Chinese economy to keep humming,” he said. “In order to do that China has to keep their currency relatively weak. But the side effect of that is that it’s making economies such as Thailand, Indonesia, and Vietnam less competitive against China. Eventually we’d like all currencies to be moving along according to market conditions.”
The baht gained 4 percent against the dollar last year. Against the euro, it rose 2.35 percent.
Wednesday, January 6, 2010
Yen, Dollar Fall on Signs Global Recovery Gathering Momentum
Jan. 7 (Bloomberg) -- The yen and the dollar fell versus the euro as signs that the global economic recovery is gathering momentum boosted demand for higher-yielding assets.
Japan’s currency dropped to a 15-month low against the Australian dollar after a government report showed Australian retail sales rose in November at more than four times the pace expected by economists. The U.S. dollar approached its lowest level in three weeks against the euro on speculation the Federal Reserve will keep interest rates near zero.
“The optimistic global backdrop is fueling risk-taking appetite,” said Danica Hampton, senior strategist of markets at Bank of New Zealand Ltd. in Wellington. “This is encouraging players to buy growth-sensitive currencies like the Australian and New Zealand dollars, particularly against the yen and the greenback.”
The yen declined to 133.24 per euro as of 10:01 a.m. in Tokyo from 133.01 in New York yesterday. Japan’s currency slid to 85.39 versus Australia’s dollar from 84.91, after earlier reaching 85.55, the weakest level since September 2008.
The dollar dropped to $1.4421 per euro from $1.4408 in New York. It declined to $1.4484 per euro on Jan. 5, the lowest level since Dec. 17. The U.S. currency was at C$1.0317 from $1.0324 after sliding to $1.0297, the weakest since Oct. 20.
Australian Retail Sales
Japan’s currency slipped for a second day versus the Australian dollar as the nation’s retail sales rose in November by the most in eight months. Sales climbed 1.4 percent from October, when they gained a revised 0.4 percent, the Bureau of Statistics said in Sydney today. The median forecast of 12 economists surveyed by Bloomberg News was for a 0.3 percent gain.
“The surprisingly strong Australian data dispelled concerns about prospects for higher-yielding currencies,” said Toshiya Yamauchi, manager of foreign-exchange margin trading at Ueda Harlow Ltd. in Tokyo. “With speculation waning about an early exit from credit easing in the U.S., carry trades may resurface, funded in the dollar and the yen.”
Carry trades involve the purchase of higher-yielding assets with amounts borrowed in nations with low interest rates. The benchmarks of 0.1 percent in Japan and zero to 0.25 percent in the U.S. have made the yen and dollar popular for funding such transactions.
Japan’s currency dropped to a 15-month low against the Australian dollar after a government report showed Australian retail sales rose in November at more than four times the pace expected by economists. The U.S. dollar approached its lowest level in three weeks against the euro on speculation the Federal Reserve will keep interest rates near zero.
“The optimistic global backdrop is fueling risk-taking appetite,” said Danica Hampton, senior strategist of markets at Bank of New Zealand Ltd. in Wellington. “This is encouraging players to buy growth-sensitive currencies like the Australian and New Zealand dollars, particularly against the yen and the greenback.”
The yen declined to 133.24 per euro as of 10:01 a.m. in Tokyo from 133.01 in New York yesterday. Japan’s currency slid to 85.39 versus Australia’s dollar from 84.91, after earlier reaching 85.55, the weakest level since September 2008.
The dollar dropped to $1.4421 per euro from $1.4408 in New York. It declined to $1.4484 per euro on Jan. 5, the lowest level since Dec. 17. The U.S. currency was at C$1.0317 from $1.0324 after sliding to $1.0297, the weakest since Oct. 20.
Australian Retail Sales
Japan’s currency slipped for a second day versus the Australian dollar as the nation’s retail sales rose in November by the most in eight months. Sales climbed 1.4 percent from October, when they gained a revised 0.4 percent, the Bureau of Statistics said in Sydney today. The median forecast of 12 economists surveyed by Bloomberg News was for a 0.3 percent gain.
“The surprisingly strong Australian data dispelled concerns about prospects for higher-yielding currencies,” said Toshiya Yamauchi, manager of foreign-exchange margin trading at Ueda Harlow Ltd. in Tokyo. “With speculation waning about an early exit from credit easing in the U.S., carry trades may resurface, funded in the dollar and the yen.”
Carry trades involve the purchase of higher-yielding assets with amounts borrowed in nations with low interest rates. The benchmarks of 0.1 percent in Japan and zero to 0.25 percent in the U.S. have made the yen and dollar popular for funding such transactions.
Kan Tasked With Averting Japan Recession, Debt Crisis
Jan. 7 (Bloomberg) -- Naoto Kan became Japan’s sixth finance minister in 18 months, tasked with preventing a relapse into the nation’s worst postwar recession as deflation threatens to erode companies’ earnings.
Kan, the 63-year-old deputy prime minister, was named by premier Yukio Hatoyama yesterday in Tokyo to replace Hirohisa Fujii, 77. Fujii stepped down over ill health after battling colleagues to prevent a rise in bond issuance by the world’s biggest sovereign debtor.
Kan is seeking to succeed where his predecessors failed: to reverse a contraction in Japan’s economy that’s left gross domestic product, unadjusted for prices, at the smallest since 1991. Any move to ease fiscal restraint and inject greater stimulus runs the risk of unsettling investors and endangering the nation’s credit rating.
“If the economy slows down, we may get a revised budget or additional spending -- we’ll have to see if Kan can handle these issues without losing fiscal discipline,” said Masaaki Kanno, chief economist at JPMorgan Securities Japan Co. in Tokyo, who used to work at the Bank of Japan.
Kan will remain deputy prime minister, Hatoyama told reporters late yesterday. The statement ended days of speculation over the future of Fujii who was hospitalized Dec. 28 for high blood pressure and exhaustion.
Stocks Rise
Investors shrugged off signs of Fujii’s departure, with the Nikkei 225 Stock Average gaining 0.5 percent to 10,731.45 at the close yesterday. Yields on benchmark 10-year notes advanced 1 basis point to 1.335 percent. Nikkei futures expiring in March closed at 10,770 in Chicago yesterday; trading opens today in Singapore at 8:45 a.m. Tokyo time.
Kan’s stature rose as health minister in the 1990s, when he exposed that agency’s role in allowing up to 5,000 Japanese to contract HIV through contaminated blood products. A co-founder of the Democratic Party of Japan, he was later tarnished by revelations he failed to pay his full pension contribution, forcing him to step down as DPJ leader in 2004.
Fujii was the first Cabinet member to depart after the DPJ gained power in September by unseating the Liberal Democratic Party, which dominated the nation’s political landscape for half a century. Hatoyama had asked Fujii, who headed the Finance Ministry in 1993, to postpone retirement and run in the August lower-house election.
Debt Issuance
In the run-up to the Dec. 25 budget unveiling, Fujii had insisted on keeping new bond sales for the next fiscal year around 44 trillion yen ($480 billion), the same as the previous government budgeted for the year ending in March. Takahide Kiuchi, chief economist at Nomura Securities Co. in Tokyo, said it’s unclear whether Kan will hew to such a stance.
“Kan may shift to the fiscal and economic policies that focus more on the economy, compared with Fujii who tends to put more focus on fiscal discipline,” said Kiuchi, who was ranked the nation’s top economist by Nikkei Research Inc. in March.
Japan is poised this year to lose its title as world’s second-largest economy, with China projected by the International Monetary Fund to slot behind the U.S. The country, with a shrinking population and trenchant deflation that’s seen 13 years of price declines since 1994, may face a jump in its debt to 246 percent of GDP by 2014, according to the IMF.
Sony Corp. Vice Chairman Ryoji Chubachi warned this week that deflation, squeezing companies’ earnings, may cause a “double-dip” recession this year.
Deflation Fight
The deputy prime minister has been vocal in recent months in discussing the nation’s economic challenges, pressing the Bank of Japan to step up its efforts to end deflation, and favoring a retreat in the yen’s exchange rate that threatened exporters.
On Dec. 17, he said that a weaker Japanese currency was “favorable” and that he was glad that it had fallen from the previous month’s 14-year peak.
Fujii roiled traders after taking office in September by indicating he favored a stronger yen, as part of the DPJ-led government’s campaign to bolster households’ spending power. He said in September it’s “absurd” that a lower exchange rate helps exporters, and that market interventions can “destroy a free economy.” After the yen soared, he warned in November that Japan was ready to act to stem “abnormal” currency movements.
“Kan is likely to continue the shift from strong to weak yen policy,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi in London. “On balance we believe Kan’s appointment will be at the margin yen-negative -- through raising political and fiscal uncertainty.”
Yen Trading
Japan’s currency dropped 0.8 percent to 92.45 per dollar as of noon in London, about 9 percent lower than its 14-year high of 84.83 reached on Nov. 27. The Finance Ministry, through the Bank of Japan, is in charge of deciding on yen purchases or sales, and officials haven’t intervened since 2004.
One of Hatoyama’s campaign pledges was to lessen the power of bureaucrats and give elected politicians greater sway over policymaking. Fujii, a veteran Finance Ministry budget examiner, had been perceived as a less combative pick for that post. By contrast, Kan took on bureaucrats as health minister in 1996, forcing them to surrender documents on the blood scandal.
The new finance chief was born in Yamaguchi, western Japan, and went to high school in Tokyo. He earned a bachelor’s degree in applied physics at the Tokyo Institute of Technology, and became a patent attorney before entering politics.
DPJ Co-Founder
Kan and Hatoyama helped found the DPJ in 1998. Kan told reporters in July 1996 that he was seeking “to work with politicians who will control the executive branch with the backing of the people.”
Remaining as deputy premier risks stretching Kan’s portfolio too far, Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo, said before the appointment.
Hatoyama earlier yesterday urged ailing Fujii to stay in his post. He later told reporters that “given concerns over his health, there was nothing else to be done. I had to accept his resignation.”
“It goes without saying that Finance Minister Fujii was the primary person in formulating the budget, but Deputy Prime Minister Kan was closest in giving support,” Hatoyama said. “I have no worries in Kan being able to do this.”
The personnel reshuffle comes as Hatoyama’s popularity falls. His Cabinet had an approval rating of 50 percent in a Dec. 25-27 poll by Nikkei Inc. and TV Tokyo Corp., down from 75 percent backing in mid-September.
The Diet is scheduled to convene later this month, when Kan will face lawmakers’ questions over the proposed budget. Finance ministers and central bank governors from the Group of Seven industrial nations are scheduled to gather in Canada next month.
Kan told reporters yesterday he will tackle “various issues aggressively,” and pledged to make sure the proposed 92.3 trillion yen 2010 budget is passed by the Diet.
Kan, the 63-year-old deputy prime minister, was named by premier Yukio Hatoyama yesterday in Tokyo to replace Hirohisa Fujii, 77. Fujii stepped down over ill health after battling colleagues to prevent a rise in bond issuance by the world’s biggest sovereign debtor.
Kan is seeking to succeed where his predecessors failed: to reverse a contraction in Japan’s economy that’s left gross domestic product, unadjusted for prices, at the smallest since 1991. Any move to ease fiscal restraint and inject greater stimulus runs the risk of unsettling investors and endangering the nation’s credit rating.
“If the economy slows down, we may get a revised budget or additional spending -- we’ll have to see if Kan can handle these issues without losing fiscal discipline,” said Masaaki Kanno, chief economist at JPMorgan Securities Japan Co. in Tokyo, who used to work at the Bank of Japan.
Kan will remain deputy prime minister, Hatoyama told reporters late yesterday. The statement ended days of speculation over the future of Fujii who was hospitalized Dec. 28 for high blood pressure and exhaustion.
Stocks Rise
Investors shrugged off signs of Fujii’s departure, with the Nikkei 225 Stock Average gaining 0.5 percent to 10,731.45 at the close yesterday. Yields on benchmark 10-year notes advanced 1 basis point to 1.335 percent. Nikkei futures expiring in March closed at 10,770 in Chicago yesterday; trading opens today in Singapore at 8:45 a.m. Tokyo time.
Kan’s stature rose as health minister in the 1990s, when he exposed that agency’s role in allowing up to 5,000 Japanese to contract HIV through contaminated blood products. A co-founder of the Democratic Party of Japan, he was later tarnished by revelations he failed to pay his full pension contribution, forcing him to step down as DPJ leader in 2004.
Fujii was the first Cabinet member to depart after the DPJ gained power in September by unseating the Liberal Democratic Party, which dominated the nation’s political landscape for half a century. Hatoyama had asked Fujii, who headed the Finance Ministry in 1993, to postpone retirement and run in the August lower-house election.
Debt Issuance
In the run-up to the Dec. 25 budget unveiling, Fujii had insisted on keeping new bond sales for the next fiscal year around 44 trillion yen ($480 billion), the same as the previous government budgeted for the year ending in March. Takahide Kiuchi, chief economist at Nomura Securities Co. in Tokyo, said it’s unclear whether Kan will hew to such a stance.
“Kan may shift to the fiscal and economic policies that focus more on the economy, compared with Fujii who tends to put more focus on fiscal discipline,” said Kiuchi, who was ranked the nation’s top economist by Nikkei Research Inc. in March.
Japan is poised this year to lose its title as world’s second-largest economy, with China projected by the International Monetary Fund to slot behind the U.S. The country, with a shrinking population and trenchant deflation that’s seen 13 years of price declines since 1994, may face a jump in its debt to 246 percent of GDP by 2014, according to the IMF.
Sony Corp. Vice Chairman Ryoji Chubachi warned this week that deflation, squeezing companies’ earnings, may cause a “double-dip” recession this year.
Deflation Fight
The deputy prime minister has been vocal in recent months in discussing the nation’s economic challenges, pressing the Bank of Japan to step up its efforts to end deflation, and favoring a retreat in the yen’s exchange rate that threatened exporters.
On Dec. 17, he said that a weaker Japanese currency was “favorable” and that he was glad that it had fallen from the previous month’s 14-year peak.
Fujii roiled traders after taking office in September by indicating he favored a stronger yen, as part of the DPJ-led government’s campaign to bolster households’ spending power. He said in September it’s “absurd” that a lower exchange rate helps exporters, and that market interventions can “destroy a free economy.” After the yen soared, he warned in November that Japan was ready to act to stem “abnormal” currency movements.
“Kan is likely to continue the shift from strong to weak yen policy,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi in London. “On balance we believe Kan’s appointment will be at the margin yen-negative -- through raising political and fiscal uncertainty.”
Yen Trading
Japan’s currency dropped 0.8 percent to 92.45 per dollar as of noon in London, about 9 percent lower than its 14-year high of 84.83 reached on Nov. 27. The Finance Ministry, through the Bank of Japan, is in charge of deciding on yen purchases or sales, and officials haven’t intervened since 2004.
One of Hatoyama’s campaign pledges was to lessen the power of bureaucrats and give elected politicians greater sway over policymaking. Fujii, a veteran Finance Ministry budget examiner, had been perceived as a less combative pick for that post. By contrast, Kan took on bureaucrats as health minister in 1996, forcing them to surrender documents on the blood scandal.
The new finance chief was born in Yamaguchi, western Japan, and went to high school in Tokyo. He earned a bachelor’s degree in applied physics at the Tokyo Institute of Technology, and became a patent attorney before entering politics.
DPJ Co-Founder
Kan and Hatoyama helped found the DPJ in 1998. Kan told reporters in July 1996 that he was seeking “to work with politicians who will control the executive branch with the backing of the people.”
Remaining as deputy premier risks stretching Kan’s portfolio too far, Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo, said before the appointment.
Hatoyama earlier yesterday urged ailing Fujii to stay in his post. He later told reporters that “given concerns over his health, there was nothing else to be done. I had to accept his resignation.”
“It goes without saying that Finance Minister Fujii was the primary person in formulating the budget, but Deputy Prime Minister Kan was closest in giving support,” Hatoyama said. “I have no worries in Kan being able to do this.”
The personnel reshuffle comes as Hatoyama’s popularity falls. His Cabinet had an approval rating of 50 percent in a Dec. 25-27 poll by Nikkei Inc. and TV Tokyo Corp., down from 75 percent backing in mid-September.
The Diet is scheduled to convene later this month, when Kan will face lawmakers’ questions over the proposed budget. Finance ministers and central bank governors from the Group of Seven industrial nations are scheduled to gather in Canada next month.
Kan told reporters yesterday he will tackle “various issues aggressively,” and pledged to make sure the proposed 92.3 trillion yen 2010 budget is passed by the Diet.
Tuesday, January 5, 2010
Buffett Reins In Kraft Over Cadbury Deal, Recalls Coke's Quaker Oats Offer • Greece Faces Budget Credibility Test as EU's Officials Sw
Jan. 6 (Bloomberg) -- U.K. consumer confidence fell in December by the most in more than a year as expectations for the economy deteriorated, Nationwide Building Society said.
The index of consumer sentiment declined five points from the previous month to 69, the biggest drop since November 2008, the customer-owned lender said in an e-mailed statement today. A measure of consumers’ economic expectations in the next six months fell eight points to 101.
With December marking the annual Christmas season peak for shopping, the report may signal a setback for retail spending as consumers brace for higher taxes to curb Britain’s record budget deficit. Prime Minister Gordon Brown is trying to revive the economy and restore support among voters in time for an election due by June.
“An element of caution may have begun to creep back into the minds of consumers,” Nationwide Chief Economist Martin Gahbauer said in the statement. “Lower expectations may foreshadow a more sluggish consumer outlook in 2010 as stimulus measures are withdrawn.”
A gauge of whether consumers think it’s a good time to make big purchases dropped to 106 last month from 107 in November, Nationwide said.
Chancellor of the Exchequer Alistair Darling said last month he will require higher tax contributions next year. This month, value-added tax returned to 17.5 percent from 15 percent, reversing a year-old measure. The Conservative opposition had a 10 percentage-point lead over Brown’s Labour Party in a YouGov Plc poll released Jan. 1.
Tax Impact
“The looming VAT hike and other tax changes announced in the pre-budget report may have impacted on confidence in December, forcing people to review their expectations for the future,” Gahbauer said.
Unemployment growth is still slowing as the economy revives. A separate report today by KPMG and the Recruitment and Employment Federation showed that a measure of hiring for permanent jobs grew at the fastest pace since July 2007 in December, rising to 62.8 from 61.7 the previous month.
Meanwhile, prices of goods in U.K. shops advanced 2.2 percent in December from a year earlier after a 0.2 percent increase the previous month, the British Retail Consortium said in a separate report today. Food prices rose an annual 3.7 percent while non-food prices gained 1.4 percent.
The Bank of England will maintain its program of purchasing bonds with newly-created money at 200 billion pounds on Jan. 7, according to all 35 economists in a Bloomberg News survey. Policy makers will also keep the benchmark interest rate at a record low of 0.5 percent, 53 economists said.
To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net.
Last Updated: January 5, 2010 19:01 EST
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* Yahoo! Buzz Jan. 6 (Bloomberg) -- U.K. consumer confidence fell in December by the most in more than a year as expectations for the economy deteriorated, Nationwide Building Society said.
The index of consumer sentiment declined five points from the previous month to 69, the biggest drop since November 2008, the customer-owned lender said in an e-mailed statement today. A measure of consumers’ economic expectations in the next six months fell eight points to 101.
With December marking the annual Christmas season peak for shopping, the report may signal a setback for retail spending as consumers brace for higher taxes to curb Britain’s record budget deficit. Prime Minister Gordon Brown is trying to revive the economy and restore support among voters in time for an election due by June.
“An element of caution may have begun to creep back into the minds of consumers,” Nationwide Chief Economist Martin Gahbauer said in the statement. “Lower expectations may foreshadow a more sluggish consumer outlook in 2010 as stimulus measures are withdrawn.”
A gauge of whether consumers think it’s a good time to make big purchases dropped to 106 last month from 107 in November, Nationwide said.
Chancellor of the Exchequer Alistair Darling said last month he will require higher tax contributions next year. This month, value-added tax returned to 17.5 percent from 15 percent, reversing a year-old measure. The Conservative opposition had a 10 percentage-point lead over Brown’s Labour Party in a YouGov Plc poll released Jan. 1.
Tax Impact
“The looming VAT hike and other tax changes announced in the pre-budget report may have impacted on confidence in December, forcing people to review their expectations for the future,” Gahbauer said.
Unemployment growth is still slowing as the economy revives. A separate report today by KPMG and the Recruitment and Employment Federation showed that a measure of hiring for permanent jobs grew at the fastest pace since July 2007 in December, rising to 62.8 from 61.7 the previous month.
Meanwhile, prices of goods in U.K. shops advanced 2.2 percent in December from a year earlier after a 0.2 percent increase the previous month, the British Retail Consortium said in a separate report today. Food prices rose an annual 3.7 percent while non-food prices gained 1.4 percent.
The Bank of England will maintain its program of purchasing bonds with newly-created money at 200 billion pounds on Jan. 7, according to all 35 economists in a Bloomberg News survey. Policy makers will also keep the benchmark interest rate at a record low of 0.5 percent, 53 economists said.
The index of consumer sentiment declined five points from the previous month to 69, the biggest drop since November 2008, the customer-owned lender said in an e-mailed statement today. A measure of consumers’ economic expectations in the next six months fell eight points to 101.
With December marking the annual Christmas season peak for shopping, the report may signal a setback for retail spending as consumers brace for higher taxes to curb Britain’s record budget deficit. Prime Minister Gordon Brown is trying to revive the economy and restore support among voters in time for an election due by June.
“An element of caution may have begun to creep back into the minds of consumers,” Nationwide Chief Economist Martin Gahbauer said in the statement. “Lower expectations may foreshadow a more sluggish consumer outlook in 2010 as stimulus measures are withdrawn.”
A gauge of whether consumers think it’s a good time to make big purchases dropped to 106 last month from 107 in November, Nationwide said.
Chancellor of the Exchequer Alistair Darling said last month he will require higher tax contributions next year. This month, value-added tax returned to 17.5 percent from 15 percent, reversing a year-old measure. The Conservative opposition had a 10 percentage-point lead over Brown’s Labour Party in a YouGov Plc poll released Jan. 1.
Tax Impact
“The looming VAT hike and other tax changes announced in the pre-budget report may have impacted on confidence in December, forcing people to review their expectations for the future,” Gahbauer said.
Unemployment growth is still slowing as the economy revives. A separate report today by KPMG and the Recruitment and Employment Federation showed that a measure of hiring for permanent jobs grew at the fastest pace since July 2007 in December, rising to 62.8 from 61.7 the previous month.
Meanwhile, prices of goods in U.K. shops advanced 2.2 percent in December from a year earlier after a 0.2 percent increase the previous month, the British Retail Consortium said in a separate report today. Food prices rose an annual 3.7 percent while non-food prices gained 1.4 percent.
The Bank of England will maintain its program of purchasing bonds with newly-created money at 200 billion pounds on Jan. 7, according to all 35 economists in a Bloomberg News survey. Policy makers will also keep the benchmark interest rate at a record low of 0.5 percent, 53 economists said.
To contact the reporter on this story: Svenja O’Donnell in London at sodonnell@bloomberg.net.
Last Updated: January 5, 2010 19:01 EST
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* Yahoo! Buzz Jan. 6 (Bloomberg) -- U.K. consumer confidence fell in December by the most in more than a year as expectations for the economy deteriorated, Nationwide Building Society said.
The index of consumer sentiment declined five points from the previous month to 69, the biggest drop since November 2008, the customer-owned lender said in an e-mailed statement today. A measure of consumers’ economic expectations in the next six months fell eight points to 101.
With December marking the annual Christmas season peak for shopping, the report may signal a setback for retail spending as consumers brace for higher taxes to curb Britain’s record budget deficit. Prime Minister Gordon Brown is trying to revive the economy and restore support among voters in time for an election due by June.
“An element of caution may have begun to creep back into the minds of consumers,” Nationwide Chief Economist Martin Gahbauer said in the statement. “Lower expectations may foreshadow a more sluggish consumer outlook in 2010 as stimulus measures are withdrawn.”
A gauge of whether consumers think it’s a good time to make big purchases dropped to 106 last month from 107 in November, Nationwide said.
Chancellor of the Exchequer Alistair Darling said last month he will require higher tax contributions next year. This month, value-added tax returned to 17.5 percent from 15 percent, reversing a year-old measure. The Conservative opposition had a 10 percentage-point lead over Brown’s Labour Party in a YouGov Plc poll released Jan. 1.
Tax Impact
“The looming VAT hike and other tax changes announced in the pre-budget report may have impacted on confidence in December, forcing people to review their expectations for the future,” Gahbauer said.
Unemployment growth is still slowing as the economy revives. A separate report today by KPMG and the Recruitment and Employment Federation showed that a measure of hiring for permanent jobs grew at the fastest pace since July 2007 in December, rising to 62.8 from 61.7 the previous month.
Meanwhile, prices of goods in U.K. shops advanced 2.2 percent in December from a year earlier after a 0.2 percent increase the previous month, the British Retail Consortium said in a separate report today. Food prices rose an annual 3.7 percent while non-food prices gained 1.4 percent.
The Bank of England will maintain its program of purchasing bonds with newly-created money at 200 billion pounds on Jan. 7, according to all 35 economists in a Bloomberg News survey. Policy makers will also keep the benchmark interest rate at a record low of 0.5 percent, 53 economists said.
Australian December Services Industry Stalls on Rate Increases
Jan. 6 (Bloomberg) -- Australia’s services industry stalled in December as companies reported a slump in new orders and suppliers cut deliveries.
The performance of services index fell 2.5 points to 50 from November, when it dropped 2.3 points, Commonwealth Bank of Australia and the Australian Industry Group said in Sydney today. A figure below 50 indicates the industry is shrinking.
Weakening demand for services follows central bank Governor Glenn Stevens’s decision to raise the benchmark lending rate on Dec. 1 for an unprecedented third straight month. Specialty Fashion Group Ltd., an Australian clothing retailer, said today that trading over the Christmas to New Year holiday period was “tough.”
Today’s report “confirms that the recent improvement in the services sector lacks traction and adds weight to arguments for a pause to interest rates,” said Australian Industry Group Chief Executive Heather Ridout.
The index rose in October to the highest level in 19 months before falling in November and last month.
“The business environment remains a challenge for many firms, particularly those in the consumer-related sectors of retail trade,” Ridout said.
Rising retail sales in the first 10 months of last year helped the nation’s economy skirt the global recession after the government distributed more than A$20 billion ($18 billion) in cash to households and the central bank slashed borrowing costs to a half-century low of 3 percent in April. Most of the handouts were completed in the first half of 2009.
Rate Increases
The Reserve Bank began the first of three straight monthly interest-rate increases in October, taking the benchmark rate to 3.75 percent last month.
“Christmas 2009 trading was more challenging than in 2008, with the discounting in the market being more aggressive than we have seen for many years,” Gary Perlstein, chief executive officer at Specialty Fashion, said in a statement today.
“This may be the first indication that there will be more difficult trading conditions” in the first half of 2010, “when consumers will not be receiving government handouts and interest rates are on the rise.”
Investors are betting there is a 48 percent chance of a quarter-point increase in the benchmark lending rate to 4 percent at the central bank’s next meeting on Feb. 2, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 7:28 a.m. Chances of a quarter-point move in March are at 92 percent.
Today’s report, which is based on a poll of about 200 companies, is similar to the U.S. non-manufacturing ISM index.
The report measures sales, new orders, deliveries, inventories and employment for companies such as banks, real estate agents, insurers, restaurants, transport firms and retailers to compile the overall performance of services index.
The performance of services index fell 2.5 points to 50 from November, when it dropped 2.3 points, Commonwealth Bank of Australia and the Australian Industry Group said in Sydney today. A figure below 50 indicates the industry is shrinking.
Weakening demand for services follows central bank Governor Glenn Stevens’s decision to raise the benchmark lending rate on Dec. 1 for an unprecedented third straight month. Specialty Fashion Group Ltd., an Australian clothing retailer, said today that trading over the Christmas to New Year holiday period was “tough.”
Today’s report “confirms that the recent improvement in the services sector lacks traction and adds weight to arguments for a pause to interest rates,” said Australian Industry Group Chief Executive Heather Ridout.
The index rose in October to the highest level in 19 months before falling in November and last month.
“The business environment remains a challenge for many firms, particularly those in the consumer-related sectors of retail trade,” Ridout said.
Rising retail sales in the first 10 months of last year helped the nation’s economy skirt the global recession after the government distributed more than A$20 billion ($18 billion) in cash to households and the central bank slashed borrowing costs to a half-century low of 3 percent in April. Most of the handouts were completed in the first half of 2009.
Rate Increases
The Reserve Bank began the first of three straight monthly interest-rate increases in October, taking the benchmark rate to 3.75 percent last month.
“Christmas 2009 trading was more challenging than in 2008, with the discounting in the market being more aggressive than we have seen for many years,” Gary Perlstein, chief executive officer at Specialty Fashion, said in a statement today.
“This may be the first indication that there will be more difficult trading conditions” in the first half of 2010, “when consumers will not be receiving government handouts and interest rates are on the rise.”
Investors are betting there is a 48 percent chance of a quarter-point increase in the benchmark lending rate to 4 percent at the central bank’s next meeting on Feb. 2, according to Bloomberg calculations based on interbank futures on the Sydney Futures Exchange at 7:28 a.m. Chances of a quarter-point move in March are at 92 percent.
Today’s report, which is based on a poll of about 200 companies, is similar to the U.S. non-manufacturing ISM index.
The report measures sales, new orders, deliveries, inventories and employment for companies such as banks, real estate agents, insurers, restaurants, transport firms and retailers to compile the overall performance of services index.
Monday, January 4, 2010
Asian Stocks Gain on U.S. Manufacturing Report, Commodities
Jan. 5 (Bloomberg) -- Asian stocks rose, led by electronics and mining companies, after U.S. manufacturing expanded at the fastest pace in more than three years and commodity prices advanced.
Sony Corp., Japan’s biggest exporter of televisions, rose 1.3 percent. Mitsubishi Corp., a Japanese trading company that gets 39 percent of its sales from commodities, added 3.1 percent on higher oil and metal prices. STX Pan Ocean Co., South Korea’s biggest bulk carrier, climbed 3.1 percent after a gauge of shipping rates advanced.
“We can see from the positive U.S. economic data and rising commodity prices that there is a strong anticipation of a global self-sustaining recovery,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co.
The MSCI Asia Pacific Index advanced 0.7 percent to 122.87 as of 9:58 a.m. in Tokyo. The gauge climbed 34 percent last year as lower interest rates and stimulus measures shored up the global economy.
Japan’s Nikkei 225 Stock Average added 0.8 percent, while the S&P/ASX 200 Index gained 1 percent in Sydney.
Futures on the S&P 500 fell 0.1 percent. The gauge rose 1.6 percent in New York yesterday, the most since Nov. 9, after the Institute for Supply Management said its factory index rose to 55.9, the highest level since April 2006. The median estimate by economists was 54.3. Readings greater than 50 signal expansion.
Stocks around the world rallied last year on signs economies were recovering from the credit crisis. The MSCI Asia Pacific Index’s 2009 advance outpaced gains of 23 percent by the Standard & Poor’s 500 Index and 28 percent for Europe’s Dow Jones Stoxx 600 Index. Stocks in the gauge are valued at an average of 20 times estimated earnings, compared with 18 times for the S&P and 13 for the Stoxx.
Raw-material producers and energy companies accounted for 22 percent of the MSCI Asia Pacific Index’s advance today, with Mitsubishi gaining 3.1 percent to 2,390 yen.
Crude oil for February delivery rose 2.7 percent to $81.51 a barrel in New York yesterday, the highest settlement since October 2008, as freezing weather and improving global economies bolstered the outlook for fuel demand. Gold prices surged the most in two months, or 2 percent, and copper futures for March delivery climbed 1.8 percent.
In Seoul, STX Pan Ocean climbed 3.1 percent to 11,650 won after the Baltic Dry Index, a measure of shipping costs for commodities, jumped 4.5 percent in London yesterday, the first gain since Dec. 4.
Sony Corp., Japan’s biggest exporter of televisions, rose 1.3 percent. Mitsubishi Corp., a Japanese trading company that gets 39 percent of its sales from commodities, added 3.1 percent on higher oil and metal prices. STX Pan Ocean Co., South Korea’s biggest bulk carrier, climbed 3.1 percent after a gauge of shipping rates advanced.
“We can see from the positive U.S. economic data and rising commodity prices that there is a strong anticipation of a global self-sustaining recovery,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co.
The MSCI Asia Pacific Index advanced 0.7 percent to 122.87 as of 9:58 a.m. in Tokyo. The gauge climbed 34 percent last year as lower interest rates and stimulus measures shored up the global economy.
Japan’s Nikkei 225 Stock Average added 0.8 percent, while the S&P/ASX 200 Index gained 1 percent in Sydney.
Futures on the S&P 500 fell 0.1 percent. The gauge rose 1.6 percent in New York yesterday, the most since Nov. 9, after the Institute for Supply Management said its factory index rose to 55.9, the highest level since April 2006. The median estimate by economists was 54.3. Readings greater than 50 signal expansion.
Stocks around the world rallied last year on signs economies were recovering from the credit crisis. The MSCI Asia Pacific Index’s 2009 advance outpaced gains of 23 percent by the Standard & Poor’s 500 Index and 28 percent for Europe’s Dow Jones Stoxx 600 Index. Stocks in the gauge are valued at an average of 20 times estimated earnings, compared with 18 times for the S&P and 13 for the Stoxx.
Raw-material producers and energy companies accounted for 22 percent of the MSCI Asia Pacific Index’s advance today, with Mitsubishi gaining 3.1 percent to 2,390 yen.
Crude oil for February delivery rose 2.7 percent to $81.51 a barrel in New York yesterday, the highest settlement since October 2008, as freezing weather and improving global economies bolstered the outlook for fuel demand. Gold prices surged the most in two months, or 2 percent, and copper futures for March delivery climbed 1.8 percent.
In Seoul, STX Pan Ocean climbed 3.1 percent to 11,650 won after the Baltic Dry Index, a measure of shipping costs for commodities, jumped 4.5 percent in London yesterday, the first gain since Dec. 4.
Japanese Stocks Advance on U.S. Manufacturing, Commodity Prices
Jan. 5 (Bloomberg) -- Japanese stocks rose for a second day, led by electronics makers and commodities traders after U.S. manufacturing climbed more than estimated and prices of oil and metals gained.
Sony Corp., Japan’s biggest exporter of televisions, added 1.6 percent. Mitsubishi Corp., the nation’s biggest trading company, climbed 3.1 percent, and Inpex Corp., its largest oil explorer, added 2.2 percent. Nippon Yusen K.K., Japan’s biggest shipping line, climbed 2.5 percent after a measure of cargo rates gained for the first time in a month.
“We can see from the positive U.S. economic data and rising commodity prices that there is a strong anticipation of a global self-sustaining recovery,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co.
Japan’s Nikkei 225 rose 0.8 percent to 10,743.72 as of 9:31 a.m. in Tokyo, headed for its highest close since October 2008. The broader Topix index climbed 1 percent to 925.30, with about four stocks rising for each that fell.
The Topix climbed 5.6 percent last year, the lowest return among benchmark indexes for the world’s 40 largest stock markets. Stocks in the gauge are valued at an average of 36 times estimated earnings, compared with 18 times for the Standard & Poor’s 500 Index in the U.S. and 13 times for the Dow Jones Stoxx 600 Index in Europe.
The S&P 500 added 1.6 percent in New York yesterday after the Tempe, Arizona-based Institute for Supply Management said its factory index, a measure of U.S. manufacturing, rose to 55.9, the highest level since April 2006. The median forecast by economists was 54.3. Readings greater than 50 signal expansion.
Electronics, Commodities
Sony climbed 1.6 percent to 2,775 yen. Hitachi Ltd., a maker of industrial equipment which receives more than 40 percent of its revenue overseas, rose 0.7 percent to 288 yen.
Crude oil for February delivery rose 2.7 percent in New York yesterday, the highest close in more than 14 months, as freezing weather and improving global economies bolstered the outlook for fuel demand. Gold prices surged the most in two months, or 2 percent, and copper futures for March delivery climbed 1.8 percent to a 16-month high.
Inpex gained 2.2 percent to 731,000 yen. Mitsubishi Corp. jumped 3.1 percent to 2,389 yen and was the biggest contributor to the Topix’s advance. Itochu Corp., Japan’s No. 4 trading company by market value, added 3.3 percent to 717 yen.
Shipping lines gained the most among the 33 industry groups in the Topix after the Baltic Dry Index, a benchmark for commodity cargo rates, added 4.5 percent yesterday in London, the first increase since Dec. 4. Nippon Yusen climbed 2.5 percent to 293 yen. Mitsui O.S.K. Lines Ltd., the operator of the world’s largest merchant fleet, added 2.6 percent to 505 yen. Kawasaki Kisen Kaisha Ltd. advanced 3 percent to 277 yen.
Sony Corp., Japan’s biggest exporter of televisions, added 1.6 percent. Mitsubishi Corp., the nation’s biggest trading company, climbed 3.1 percent, and Inpex Corp., its largest oil explorer, added 2.2 percent. Nippon Yusen K.K., Japan’s biggest shipping line, climbed 2.5 percent after a measure of cargo rates gained for the first time in a month.
“We can see from the positive U.S. economic data and rising commodity prices that there is a strong anticipation of a global self-sustaining recovery,” said Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co.
Japan’s Nikkei 225 rose 0.8 percent to 10,743.72 as of 9:31 a.m. in Tokyo, headed for its highest close since October 2008. The broader Topix index climbed 1 percent to 925.30, with about four stocks rising for each that fell.
The Topix climbed 5.6 percent last year, the lowest return among benchmark indexes for the world’s 40 largest stock markets. Stocks in the gauge are valued at an average of 36 times estimated earnings, compared with 18 times for the Standard & Poor’s 500 Index in the U.S. and 13 times for the Dow Jones Stoxx 600 Index in Europe.
The S&P 500 added 1.6 percent in New York yesterday after the Tempe, Arizona-based Institute for Supply Management said its factory index, a measure of U.S. manufacturing, rose to 55.9, the highest level since April 2006. The median forecast by economists was 54.3. Readings greater than 50 signal expansion.
Electronics, Commodities
Sony climbed 1.6 percent to 2,775 yen. Hitachi Ltd., a maker of industrial equipment which receives more than 40 percent of its revenue overseas, rose 0.7 percent to 288 yen.
Crude oil for February delivery rose 2.7 percent in New York yesterday, the highest close in more than 14 months, as freezing weather and improving global economies bolstered the outlook for fuel demand. Gold prices surged the most in two months, or 2 percent, and copper futures for March delivery climbed 1.8 percent to a 16-month high.
Inpex gained 2.2 percent to 731,000 yen. Mitsubishi Corp. jumped 3.1 percent to 2,389 yen and was the biggest contributor to the Topix’s advance. Itochu Corp., Japan’s No. 4 trading company by market value, added 3.3 percent to 717 yen.
Shipping lines gained the most among the 33 industry groups in the Topix after the Baltic Dry Index, a benchmark for commodity cargo rates, added 4.5 percent yesterday in London, the first increase since Dec. 4. Nippon Yusen climbed 2.5 percent to 293 yen. Mitsui O.S.K. Lines Ltd., the operator of the world’s largest merchant fleet, added 2.6 percent to 505 yen. Kawasaki Kisen Kaisha Ltd. advanced 3 percent to 277 yen.
Sunday, January 3, 2010
U.S., U.K. Close Yemen Embassies; Brown Cites ‘Failing State’
Jan. 4 (Bloomberg) -- The U.S. and U.K. closed their embassies in Yemen, citing threats of attacks, as officials voiced concern over al-Qaeda’s presence in what British Prime Minister Gordon Brown called a “failing state.”
White House counterterrorism chief John Brennan said intelligence indicated that al-Qaeda plans attacks in Sana’a, the capital, “possibly against our embassy, possibly against U.S. personnel.” Shutting the embassy “was the prudent thing to do,” Brennan said yesterday on ABC’s “This Week” program.
The U.K. and U.S. are offering more security aid for Yemen, an impoverished Arabian Peninsula nation which is emerging as a base for al-Qaeda attacks as the terrorist group comes under pressure in Pakistan and Afghanistan.
U.K. Prime Minister Brown, who called Yemen a “failing state” in an interview with the British Broadcasting Corp. yesterday, will convene a Jan. 28 aid conference on Yemen in London at which the U.K. will seek to enlist support from oil- rich Gulf nations.
The Yemen branch of al-Qaeda claimed responsibility for the Dec. 25 attack, in which Nigerian Umar Farouk Abdulmutallab was charged with trying to blow up a Northwest Airlines flight with 278 passengers.
The failed attack prompted the U.S. Transportation Security Administration to issue new rules yesterday calling for “enhanced screening” of U.S.-bound air travelers who have passed through “countries of interest,” as well as requiring random checks on other international flights.
Other Attacks Feared
Brennan, President Barack Obama’s assistant for homeland security and counterterrorism, said there are “probably several hundred” al-Qaeda members in Yemen and the U.S. worries they may be training other operatives for attacks in the U.S. and elsewhere similar to the one attempted by Abdulmutallab.
“We’re not going to take any chances with the lives of our diplomats and others” at the American embassy, Brennan said on “Fox News Sunday,” one of four Sunday news shows on which he appeared.
Asked if American troops might be sent to Yemen, Brennan said: “We’re not talking about that at this point at all.”
“The Yemeni government has demonstrated their willingness to take the fight to al-Qaeda,” Brennan said. “They’re willing to accept our support. We’re providing them everything that they’ve asked for.”
The embassy closures came a day after the top U.S. general in the region, David Petraeus, paid an unannounced visit to Yemen and pledged more assistance in combating terrorism.
Doubling U.S. Aid
Petraeus, in talks Jan. 2 in Sana’a with President Ali Abdullah Saleh, reaffirmed the U.S. commitment to support anti- terrorism efforts in Yemen, the Yemeni presidency said in a statement on its Web site. Petraeus told reporters in Baghdad on Jan. 1 that the U.S. in fiscal 2010 will almost double last year’s $70 million in security aid for Yemen.
“The Yemeni president and parliament take this threat very seriously,” Petraeus, the top U.S. commander in the Middle East and Central Asia, said in Baghdad. “And that is of enormous significance, especially in a country facing such challenges.”
The London conference should concentrate on Yemen’s $11 billion development needs as well as anti-terrorism assistance, Deputy Minister for Planning and International Cooperation Hisham Sharaf said by phone from Sana’a yesterday.
A November 2006 donors’ conference in London led to pledges of $5.7 billion in aid for Yemen, almost half from Gulf nations, of which only $415 million has been received, Sharaf said.
“What is needed is a long-term aid strategy,” said Mustafa Alani, a regional security expert from the Dubai-based Gulf Research Center. “It would be wrong to focus only on security and counterterrorism.”
Other Challenges
Yemen is also struggling to subdue both an insurgency by northern Shiite Muslim rebels that has drawn in neighboring Saudi Arabia, a key U.S. ally, and a secessionist movement in the south. It is the poorest Arab nation and the government expects oil reserves that fund 70 percent of the budget to run out over the next decade.
Obama and Brown agreed to fund a police unit in Yemen to target terrorism and will support coast guard operations in the Arabian Peninsula nation, according to an e-mailed statement from the two governments yesterday.
Yemen said Dec. 24 it had foiled an al-Qaeda attack on the U.K. embassy a week earlier modeled on a twin suicide car bombing on the U.S. embassy in September 2008 that killed 17 people, including seven security guards and seven attackers.
Al-Qaeda Base
Yemen has become an increasingly important base for al- Qaeda, Yemeni Foreign Minister Abu Bakr al-Qirbi said on Dec. 29.
Abdulmutallab, a 23-year-old, spent about three months in Yemen before leaving the country in early December. He told U.S. investigators that in Yemen he received training and the bomb- making materials he used in his attempt to blow up the airliner.
Brennan said U.S. intelligence agencies had “snippets” of information that were recognized “in hindsight” to be related to the failed attack. There was a “failure to integrate and piece together those bits of information,” he said.
The top Republican on the Senate Intelligence Committee, Kit Bond of Missouri, said the U.S. national security system failed.
“With all of the leads dangling out there, somebody screwed up by not reporting it,” said Bond. In addition, the airport screening “was a disaster,” he said.
The Intelligence Committee, one of several congressional panels planning investigations of the incident, will hold a hearing Jan. 21. Bond, appearing yesterday on Fox, said there are no grounds at this point to fire Homeland Security Secretary Janet Napolitano, National Intelligence Director Dennis Blair or Leon Panetta, head of the Central Intelligence Agency.
Other Criticism
Other Republicans criticized the Democratic Obama administration’s anti-terrorism efforts.
“What we had in this case was a failure to act on a very credible report from the terrorist’s father that should, at the very least, have caused the State Department to revoke his visa,” Senator Susan Collins, a Maine Republican, said on “This Week.” Abdulmutallab’s father warned officials at the U.S. embassy in Nigeria that he was worried about his son’s extremist views, U.S. authorities said.
“Why wasn’t this individual’s visa revoked once we had such a credible report that he posed a threat?” Collins said.
She said it is “unacceptable” that there is no screening system in place to detect the explosive used in the Christmas Day incident, even eight years after would-be shoe-bomber Richard Reid used “the exact same explosive.”
Enemy Combatant
Senator Jim DeMint, a South Carolina Republican, said the U.S. “probably lost valuable information” by not viewing the attempted airline bombing as an act of war and the suspect as an enemy combatant.
“If we had treated this Christmas Day bomber as a terrorist, he would have immediately been interrogated military- style, rather than given the rights of an American and lawyers,” DeMint said on CNN.
Democratic Senator Claire McCaskill of Missouri, also appearing on CNN, said it is “unfair and, frankly, political to take pot shots at the president as we respond to this failure in our systems that we’ve got to get fixed.”
White House counterterrorism chief John Brennan said intelligence indicated that al-Qaeda plans attacks in Sana’a, the capital, “possibly against our embassy, possibly against U.S. personnel.” Shutting the embassy “was the prudent thing to do,” Brennan said yesterday on ABC’s “This Week” program.
The U.K. and U.S. are offering more security aid for Yemen, an impoverished Arabian Peninsula nation which is emerging as a base for al-Qaeda attacks as the terrorist group comes under pressure in Pakistan and Afghanistan.
U.K. Prime Minister Brown, who called Yemen a “failing state” in an interview with the British Broadcasting Corp. yesterday, will convene a Jan. 28 aid conference on Yemen in London at which the U.K. will seek to enlist support from oil- rich Gulf nations.
The Yemen branch of al-Qaeda claimed responsibility for the Dec. 25 attack, in which Nigerian Umar Farouk Abdulmutallab was charged with trying to blow up a Northwest Airlines flight with 278 passengers.
The failed attack prompted the U.S. Transportation Security Administration to issue new rules yesterday calling for “enhanced screening” of U.S.-bound air travelers who have passed through “countries of interest,” as well as requiring random checks on other international flights.
Other Attacks Feared
Brennan, President Barack Obama’s assistant for homeland security and counterterrorism, said there are “probably several hundred” al-Qaeda members in Yemen and the U.S. worries they may be training other operatives for attacks in the U.S. and elsewhere similar to the one attempted by Abdulmutallab.
“We’re not going to take any chances with the lives of our diplomats and others” at the American embassy, Brennan said on “Fox News Sunday,” one of four Sunday news shows on which he appeared.
Asked if American troops might be sent to Yemen, Brennan said: “We’re not talking about that at this point at all.”
“The Yemeni government has demonstrated their willingness to take the fight to al-Qaeda,” Brennan said. “They’re willing to accept our support. We’re providing them everything that they’ve asked for.”
The embassy closures came a day after the top U.S. general in the region, David Petraeus, paid an unannounced visit to Yemen and pledged more assistance in combating terrorism.
Doubling U.S. Aid
Petraeus, in talks Jan. 2 in Sana’a with President Ali Abdullah Saleh, reaffirmed the U.S. commitment to support anti- terrorism efforts in Yemen, the Yemeni presidency said in a statement on its Web site. Petraeus told reporters in Baghdad on Jan. 1 that the U.S. in fiscal 2010 will almost double last year’s $70 million in security aid for Yemen.
“The Yemeni president and parliament take this threat very seriously,” Petraeus, the top U.S. commander in the Middle East and Central Asia, said in Baghdad. “And that is of enormous significance, especially in a country facing such challenges.”
The London conference should concentrate on Yemen’s $11 billion development needs as well as anti-terrorism assistance, Deputy Minister for Planning and International Cooperation Hisham Sharaf said by phone from Sana’a yesterday.
A November 2006 donors’ conference in London led to pledges of $5.7 billion in aid for Yemen, almost half from Gulf nations, of which only $415 million has been received, Sharaf said.
“What is needed is a long-term aid strategy,” said Mustafa Alani, a regional security expert from the Dubai-based Gulf Research Center. “It would be wrong to focus only on security and counterterrorism.”
Other Challenges
Yemen is also struggling to subdue both an insurgency by northern Shiite Muslim rebels that has drawn in neighboring Saudi Arabia, a key U.S. ally, and a secessionist movement in the south. It is the poorest Arab nation and the government expects oil reserves that fund 70 percent of the budget to run out over the next decade.
Obama and Brown agreed to fund a police unit in Yemen to target terrorism and will support coast guard operations in the Arabian Peninsula nation, according to an e-mailed statement from the two governments yesterday.
Yemen said Dec. 24 it had foiled an al-Qaeda attack on the U.K. embassy a week earlier modeled on a twin suicide car bombing on the U.S. embassy in September 2008 that killed 17 people, including seven security guards and seven attackers.
Al-Qaeda Base
Yemen has become an increasingly important base for al- Qaeda, Yemeni Foreign Minister Abu Bakr al-Qirbi said on Dec. 29.
Abdulmutallab, a 23-year-old, spent about three months in Yemen before leaving the country in early December. He told U.S. investigators that in Yemen he received training and the bomb- making materials he used in his attempt to blow up the airliner.
Brennan said U.S. intelligence agencies had “snippets” of information that were recognized “in hindsight” to be related to the failed attack. There was a “failure to integrate and piece together those bits of information,” he said.
The top Republican on the Senate Intelligence Committee, Kit Bond of Missouri, said the U.S. national security system failed.
“With all of the leads dangling out there, somebody screwed up by not reporting it,” said Bond. In addition, the airport screening “was a disaster,” he said.
The Intelligence Committee, one of several congressional panels planning investigations of the incident, will hold a hearing Jan. 21. Bond, appearing yesterday on Fox, said there are no grounds at this point to fire Homeland Security Secretary Janet Napolitano, National Intelligence Director Dennis Blair or Leon Panetta, head of the Central Intelligence Agency.
Other Criticism
Other Republicans criticized the Democratic Obama administration’s anti-terrorism efforts.
“What we had in this case was a failure to act on a very credible report from the terrorist’s father that should, at the very least, have caused the State Department to revoke his visa,” Senator Susan Collins, a Maine Republican, said on “This Week.” Abdulmutallab’s father warned officials at the U.S. embassy in Nigeria that he was worried about his son’s extremist views, U.S. authorities said.
“Why wasn’t this individual’s visa revoked once we had such a credible report that he posed a threat?” Collins said.
She said it is “unacceptable” that there is no screening system in place to detect the explosive used in the Christmas Day incident, even eight years after would-be shoe-bomber Richard Reid used “the exact same explosive.”
Enemy Combatant
Senator Jim DeMint, a South Carolina Republican, said the U.S. “probably lost valuable information” by not viewing the attempted airline bombing as an act of war and the suspect as an enemy combatant.
“If we had treated this Christmas Day bomber as a terrorist, he would have immediately been interrogated military- style, rather than given the rights of an American and lawyers,” DeMint said on CNN.
Democratic Senator Claire McCaskill of Missouri, also appearing on CNN, said it is “unfair and, frankly, political to take pot shots at the president as we respond to this failure in our systems that we’ve got to get fixed.”
Asia Stocks Advance on China Manufacturing, Stronger Dollar
Jan. 4 (Bloomberg) -- Asian stocks rose after Chinese manufacturing expanded in December and a stronger dollar boosted the earnings outlook for Japanese car and electronics manufacturers.
Nippon Yusen K.K., Japan’s biggest shipping line, added 1.4 percent in Tokyo on optimism trade with China will rise. Honda Motor Co., which gets 42 percent of its revenue from North America, gained 1.9 percent. Japan Airlines Corp. soared 31 percent after the government said the Development Bank of Japan will double the amount of credit it will provide for the carrier.
The MSCI Asia Pacific Index rose 0.5 percent to 121.08 as of 10:51 a.m. in Tokyo. The gauge advanced 34 percent last year, the steepest annual climb since 2003 as lower interest rates and stimulus packages helped drag the global economy out of the worst slowdown since World War II.
“Asia is expected to remain the engine of growth for the world’s economy,” said Hiroshi Morikawa, a senior strategist at MU Investments Co., which manages the equivalent of $13 billion in Tokyo. “The first trading day of a year is often seen as a predictor of the year’s market climate. People are hoping this year will be better than last year and become more responsive to good news.”
The Nikkei 225 Stock Average rose 1.3 percent in Tokyo after a four-day recess. Australia’s S&P/ASX 200 Index added 0.2 percent even as a manufacturing index shrank in December for the first time in five months.
Futures on the Standard & Poor’s 500 Index added 0.5 percent. The gauge fell 1 percent on Dec. 31 as falling jobless claims raised speculation the economy was improving enough to allow the central bank to reduce stimulus measures. Government figures showed initial jobless claims in the week ended Dec. 26 fell to the lowest level since July 2008.
Last year’s jump boosted the price-book value ratio of the MSCI Asia Pacific Index to 1.61 times, the highest level since September 2008, data compiled by Bloomberg show.
China’s Purchasing Managers’ Index climbed to a seasonally adjusted 56.6, the Federation of Logistics and Purchasing said on Jan. 1. It was the fastest expansion in 20 months. South Korean exports increased 33.7 percent in December from a year earlier, the fastest pace in 17 months, the Ministry of Knowledge Economy said on Jan. 1. That exceeded the 27.9 percent gain projected by economists.
The yen weakened to as much as 93.15 per dollar on Dec. 31, a level not seen since Sept. 7, and traded at 92.88 today. A weaker yen increases the value of overseas sales at Japanese companies when converted into their home currency.
Nippon Yusen K.K., Japan’s biggest shipping line, added 1.4 percent in Tokyo on optimism trade with China will rise. Honda Motor Co., which gets 42 percent of its revenue from North America, gained 1.9 percent. Japan Airlines Corp. soared 31 percent after the government said the Development Bank of Japan will double the amount of credit it will provide for the carrier.
The MSCI Asia Pacific Index rose 0.5 percent to 121.08 as of 10:51 a.m. in Tokyo. The gauge advanced 34 percent last year, the steepest annual climb since 2003 as lower interest rates and stimulus packages helped drag the global economy out of the worst slowdown since World War II.
“Asia is expected to remain the engine of growth for the world’s economy,” said Hiroshi Morikawa, a senior strategist at MU Investments Co., which manages the equivalent of $13 billion in Tokyo. “The first trading day of a year is often seen as a predictor of the year’s market climate. People are hoping this year will be better than last year and become more responsive to good news.”
The Nikkei 225 Stock Average rose 1.3 percent in Tokyo after a four-day recess. Australia’s S&P/ASX 200 Index added 0.2 percent even as a manufacturing index shrank in December for the first time in five months.
Futures on the Standard & Poor’s 500 Index added 0.5 percent. The gauge fell 1 percent on Dec. 31 as falling jobless claims raised speculation the economy was improving enough to allow the central bank to reduce stimulus measures. Government figures showed initial jobless claims in the week ended Dec. 26 fell to the lowest level since July 2008.
Last year’s jump boosted the price-book value ratio of the MSCI Asia Pacific Index to 1.61 times, the highest level since September 2008, data compiled by Bloomberg show.
China’s Purchasing Managers’ Index climbed to a seasonally adjusted 56.6, the Federation of Logistics and Purchasing said on Jan. 1. It was the fastest expansion in 20 months. South Korean exports increased 33.7 percent in December from a year earlier, the fastest pace in 17 months, the Ministry of Knowledge Economy said on Jan. 1. That exceeded the 27.9 percent gain projected by economists.
The yen weakened to as much as 93.15 per dollar on Dec. 31, a level not seen since Sept. 7, and traded at 92.88 today. A weaker yen increases the value of overseas sales at Japanese companies when converted into their home currency.
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