Oct. 7 (Bloomberg) -- Asian stocks rose for a second day, led by mining companies, after prices for metals and oil advanced on speculation the world economy is recovering.
BHP Billiton Ltd., the world’s biggest mining company, gained 2.2 percent in Sydney. Newcrest Mining Ltd., Australia’s largest gold producer, surged 6.6 percent after prices for the metal climbed to a record. Hitachi Ltd., a nuclear reactor maker, added 7.7 percent in Tokyo as Mizuho Securities Co. raised its recommendation on the stock.
“What’s behind the rising commodity prices is the recovery in the global economy,” said Hiroichi Nishi, an equities manager at Nikko Cordial Securities Inc. in Tokyo.
The MSCI Asia Pacific Index gained 1 percent to 116.79 as of 10:02 a.m. in Tokyo, extending yesterday’s 1.7 percent advance. The gauge has climbed 65 percent in the past seven months amid signs the global economy is emerging from its worst slowdown since World War II.
Japan’s Nikkei 225 Stock Average increased 1.1 percent, while Australia’s S&P/ASX 200 Index rose 1.5 percent. South Korea’s Kospi Index climbed 1.1 percent and Taiwan’s Taiex Index gained 1.1 percent.
Futures on the U.S. Standard & Poor’s 500 Index were little changed. The gauge added 1.4 percent yesterday on speculation third-quarter earnings will top estimates. Alcoa Inc. is scheduled to release third-quarter results later today, the first company in the Dow Jones Industrial Average to report.
Material stocks accounted for 30 percent of the MSCI Asia Pacific Index’s advance today after gold futures climbed as much as 2.7 percent to a record $1,045 an ounce in New York, while copper increased for a second day with a 2.1 percent increase. Crude oil rose 0.7 percent.
Dollar Decline
BHP gained 2.2 percent to A$37.46, while Rio Tinto Group, the world’s third-largest mining company, climbed 3.8 percent to A$59.90. Newcrest jumped 6.6 percent to A$35.09. Inpex Corp., Japan’s largest oil explorer, rose 2.1 percent to 748,000 yen.
Raw-material prices climbed as the dollar’s decline spurred demand for commodities as a hedge against inflation. The Dollar Index, which measures the U.S. currency against six major counterparts, traded near a two-week low as speculation the Federal Reserve will trail other central banks in raising interest rates made the greenback less attractive.
The dollar weakened to as much as 88.65 yen overnight, from 88.98 at the 3 p.m. close of Tokyo stock trading yesterday.
Hitachi climbed 7.7 percent to 294 yen after Mizuho Securities raised its investment rating on the company to “strong buy” from “hold.”
Tuesday, October 6, 2009
Monday, October 5, 2009
Philippine Inflation Accelerates From Two-Decade Low
Oct. 6 (Bloomberg) -- Philippine inflation accelerated from a 22-year low last month, supporting the central bank’s decision to stop cutting interest rates as economic growth recovers.
Consumer prices rose 0.7 percent from a year earlier, after a 0.1 percent gain in August, the National Statistics Office said in Manila today. That compares with the median forecast for a 0.6 percent increase in a Bloomberg survey of 10 economists.
Bangko Sentral ng Pilipinas kept its benchmark interest rate unchanged at 4 percent last week for a second straight meeting after slashing it by 2 percentage points from December to July. Inflationary risks have increased since August as the economy picks up, Deputy Governor Diwa Guinigundo said Oct. 1.
“Headline inflation is starting to accelerate” and will rise sharply in the coming months, said Frederic Neumann, an economist at HSBC Holdings Plc in Hong Kong. “We expect the central bank to start preparing the ground for rate hikes early next year.”
The peso rose 0.4 percent to 46.53 per dollar as of 9:48 a.m. in Manila, its highest level since Jan. 7, according to Tullett Prebon Plc.
The Philippine economy expanded 1.5 percent in the second quarter from a year earlier, accelerating from a decade low as record-low borrowing costs and government stimulus helped Asian nations recover from the global recession.
‘Exit Strategy’
Bangko Sentral has “an exit strategy in place” and will “shift gradually to a different monetary stance” when it sees signs of firmer growth, Guinigundo said last week.
Fuel, electricity and water prices fell 3.4 percent from a year earlier last month, easing from a 5.4 percent decline in August. Food, beverage and tobacco costs climbed 2.2 percent.
Damage caused by tropical storms to crops and properties in the past two weeks may also fuel inflation, said Ildemarc Bautista, an economist at Metropolitan Bank & Trust Co.
“There is a potential for price increases as people purchase items to clean up and refurbish their houses,” said Bautista, who is based in Manila. “That’s a lot of people buying from the same hardware stores and groceries. It could cause a blip in inflation.”
Typhoon Parma, which hit the Philippines on Oct. 3, killed at least 16 people and brought more rain to areas still recovering from Tropical Storm Ketsana the week earlier. Ketsana dropped the most rain on Manila and nearby provinces in at least 40 years, leaving 293 dead.
Consumer prices rose 0.7 percent from a year earlier, after a 0.1 percent gain in August, the National Statistics Office said in Manila today. That compares with the median forecast for a 0.6 percent increase in a Bloomberg survey of 10 economists.
Bangko Sentral ng Pilipinas kept its benchmark interest rate unchanged at 4 percent last week for a second straight meeting after slashing it by 2 percentage points from December to July. Inflationary risks have increased since August as the economy picks up, Deputy Governor Diwa Guinigundo said Oct. 1.
“Headline inflation is starting to accelerate” and will rise sharply in the coming months, said Frederic Neumann, an economist at HSBC Holdings Plc in Hong Kong. “We expect the central bank to start preparing the ground for rate hikes early next year.”
The peso rose 0.4 percent to 46.53 per dollar as of 9:48 a.m. in Manila, its highest level since Jan. 7, according to Tullett Prebon Plc.
The Philippine economy expanded 1.5 percent in the second quarter from a year earlier, accelerating from a decade low as record-low borrowing costs and government stimulus helped Asian nations recover from the global recession.
‘Exit Strategy’
Bangko Sentral has “an exit strategy in place” and will “shift gradually to a different monetary stance” when it sees signs of firmer growth, Guinigundo said last week.
Fuel, electricity and water prices fell 3.4 percent from a year earlier last month, easing from a 5.4 percent decline in August. Food, beverage and tobacco costs climbed 2.2 percent.
Damage caused by tropical storms to crops and properties in the past two weeks may also fuel inflation, said Ildemarc Bautista, an economist at Metropolitan Bank & Trust Co.
“There is a potential for price increases as people purchase items to clean up and refurbish their houses,” said Bautista, who is based in Manila. “That’s a lot of people buying from the same hardware stores and groceries. It could cause a blip in inflation.”
Typhoon Parma, which hit the Philippines on Oct. 3, killed at least 16 people and brought more rain to areas still recovering from Tropical Storm Ketsana the week earlier. Ketsana dropped the most rain on Manila and nearby provinces in at least 40 years, leaving 293 dead.
Asian Stocks Advance on U.S. Service Report; Mazda, Rio Gain
Oct. 6 (Bloomberg) -- Asian stocks rose for the first time in four days, led by companies reliant on overseas sales, after U.S. service industries returned to growth following 11 months of contraction and commodity prices gained.
Nissan Motor Co., which got 34 percent of sales from North America last year, gained 2.5 percent. Mazda Motor Corp., Japan’s No. 4 carmaker, jumped 6 percent after narrowing its full-year loss forecast. Rio Tinto Ltd., the world’s third- biggest mining company, climbed 2 percent in Sydney.
“There’ve been a few numbers in the last week or two that were a little bit more disappointing,” said Philip Schwartz, who manages $1.2 billion as head of international investting in New York at ING Investment Management. “But unless the numbers are really disappointing I don’t think there’s a lot of risk to the markets. Weaker economic numbers mean that policy around the world will continue to be very stimulative.”
The MSCI Asia Pacific Index climbed 0.6 percent to 114.36 as of 10:28 a.m. in Tokyo. The gauge has rallied 62 percent from a five-year low on March 9 amid better-than-estimated economic data and earnings reports.
Japan’s Nikkei 225 Stock Average added 0.1 percent in Tokyo, while New Zealand’s NZX 50 Index rose 0.4 percent. South Korea’s Kospi Index increased 0.1 percent.
Australia’s S&P/ASX 200 Index gained 0.6 percent. The nation’s central bank is scheduled to announce its decision on interest rates at 2:30 p.m. Sydney time. The bank will probably leave rates unchanged at 3 percent, according to 19 of 20 economists surveyed by Bloomberg News.
Supply Management
Futures on the Standard & Poor’s 500 Index were little changed. The gauge rose 1.5 percent in New York yesterday, breaking a four-day losing streak. The Institute for Supply Management said its index of non-manufacturing businesses climbed to 50.9 in September, exceeding the dividing line between expansion and contraction for the first time in a year.
Nissan, Japan’s No. 3 automaker, rose 2.5 percent to 606 yen in Tokyo. Honda Motor Co., which makes 45 percent of its revenue in North America, added 1.5 percent to 2,635 yen. James Hardie Industries NV, the biggest seller of home siding in the U.S., advanced 3.5 percent to A$7.46 in Sydney.
Mazda jumped 6 percent to 196 yen. The company narrowed its full-year loss forecast by 48 percent, citing increasing sales and cost cuts. Separately, Mazda said it will sell as many as 363 million new shares and 96.8 million existing shares it held to raise 96 billion yen ($1.1 billion).
Rio Tinto climbed 2 percent to A$57.98. BHP Billiton Ltd. the world’s biggest mining company, rose 1.4 percent to A$36.83. A gauge of six metals in London added 0.2 percent, ending two days of declines . Oil rose 0.7 percent to $70.41 a barrel in New York yesterday.
The MSCI Asia Pacific Index fell 3.8 percent last week, the most since the period ended Aug. 21, on concern its seven-month rally had outpaced the prospects for a revival in the global economy. The average price of companies in the gauge climbed to 1.6 times book value on Sept. 17, up from 1 at the March low. The measure now trades at 1.5 times book.
Nissan Motor Co., which got 34 percent of sales from North America last year, gained 2.5 percent. Mazda Motor Corp., Japan’s No. 4 carmaker, jumped 6 percent after narrowing its full-year loss forecast. Rio Tinto Ltd., the world’s third- biggest mining company, climbed 2 percent in Sydney.
“There’ve been a few numbers in the last week or two that were a little bit more disappointing,” said Philip Schwartz, who manages $1.2 billion as head of international investting in New York at ING Investment Management. “But unless the numbers are really disappointing I don’t think there’s a lot of risk to the markets. Weaker economic numbers mean that policy around the world will continue to be very stimulative.”
The MSCI Asia Pacific Index climbed 0.6 percent to 114.36 as of 10:28 a.m. in Tokyo. The gauge has rallied 62 percent from a five-year low on March 9 amid better-than-estimated economic data and earnings reports.
Japan’s Nikkei 225 Stock Average added 0.1 percent in Tokyo, while New Zealand’s NZX 50 Index rose 0.4 percent. South Korea’s Kospi Index increased 0.1 percent.
Australia’s S&P/ASX 200 Index gained 0.6 percent. The nation’s central bank is scheduled to announce its decision on interest rates at 2:30 p.m. Sydney time. The bank will probably leave rates unchanged at 3 percent, according to 19 of 20 economists surveyed by Bloomberg News.
Supply Management
Futures on the Standard & Poor’s 500 Index were little changed. The gauge rose 1.5 percent in New York yesterday, breaking a four-day losing streak. The Institute for Supply Management said its index of non-manufacturing businesses climbed to 50.9 in September, exceeding the dividing line between expansion and contraction for the first time in a year.
Nissan, Japan’s No. 3 automaker, rose 2.5 percent to 606 yen in Tokyo. Honda Motor Co., which makes 45 percent of its revenue in North America, added 1.5 percent to 2,635 yen. James Hardie Industries NV, the biggest seller of home siding in the U.S., advanced 3.5 percent to A$7.46 in Sydney.
Mazda jumped 6 percent to 196 yen. The company narrowed its full-year loss forecast by 48 percent, citing increasing sales and cost cuts. Separately, Mazda said it will sell as many as 363 million new shares and 96.8 million existing shares it held to raise 96 billion yen ($1.1 billion).
Rio Tinto climbed 2 percent to A$57.98. BHP Billiton Ltd. the world’s biggest mining company, rose 1.4 percent to A$36.83. A gauge of six metals in London added 0.2 percent, ending two days of declines . Oil rose 0.7 percent to $70.41 a barrel in New York yesterday.
The MSCI Asia Pacific Index fell 3.8 percent last week, the most since the period ended Aug. 21, on concern its seven-month rally had outpaced the prospects for a revival in the global economy. The average price of companies in the gauge climbed to 1.6 times book value on Sept. 17, up from 1 at the March low. The measure now trades at 1.5 times book.
New Zealand Business Confidence Jumps to 10-Year High
Oct. 6 (Bloomberg) -- New Zealand business confidence jumped to a 10-year high as the domestic recession ended and signs emerged of a recovery in the world’s largest economies.
A net 36 percent of companies surveyed last quarter expect the economy will improve over the next six months, the New Zealand Institute of Economic Research said today in Wellington. That compares with 25 percent that forecast a deterioration in the second quarter. The net is calculated by subtracting the pessimists from optimists.
New Zealand’s economy expanded 0.1 percent in the three months to June, the first growth in six quarters, ending the worst recession in three decades. Reserve Bank Governor Alan Bollard last month said he will keep borrowing costs at a record low until late 2010 to help stimulate spending and investment.
“The worst of the recession is over,” Shamubeel Eaqub, principal economist at the institute, told reporters today. “The steepness of the recovery path is still very uncertain.”
The International Monetary Fund last week said New Zealand’s economy will shrink 2.2 percent this year and grow 2.2 percent in 2010. Finance Minister Bill English yesterday said the economy could contract again if the global recovery falters.
Bollard has kept the benchmark interest rate at a record low 2.5 percent since April. Eleven of 12 economists surveyed by Bloomberg News expect the rate will be unchanged until at least March 31. One predicts a quarter-point increase in the first quarter.
Profit Outlook
New Zealand businesses reported a decline in sales in the third quarter, but expect earnings will increase in the fourth quarter, according to today’s survey.
A net 20 percent of companies said trading fell in the three months ended Sept. 30. The net figure, which is seasonally adjusted, is calculated by subtracting those reporting an increase in activity from those recording a drop.
A net 17 percent expect trading will increase in the fourth quarter. A net 3 percent say profits will decline.
“There is a considerable disparity between expectations and reality,” said Eaqub. “While firms are more confident about the economic outlook, their recent performance has been weak and they remain cautious about hiring more staff or lifting investment.”
A net 8 percent for firms expect to invest less in plant and machinery, down from 23 percent in the previous survey.
A net 25 percent of companies said it is easier to find skilled workers, today’s survey showed. Those expecting to fire workers in the next three months equaled those expecting to hire.
Capacity utilization, a measure of factory usage, declined to 88.4 percent in the third quarter from 90.7 percent in the previous three months.
A net 36 percent of companies surveyed last quarter expect the economy will improve over the next six months, the New Zealand Institute of Economic Research said today in Wellington. That compares with 25 percent that forecast a deterioration in the second quarter. The net is calculated by subtracting the pessimists from optimists.
New Zealand’s economy expanded 0.1 percent in the three months to June, the first growth in six quarters, ending the worst recession in three decades. Reserve Bank Governor Alan Bollard last month said he will keep borrowing costs at a record low until late 2010 to help stimulate spending and investment.
“The worst of the recession is over,” Shamubeel Eaqub, principal economist at the institute, told reporters today. “The steepness of the recovery path is still very uncertain.”
The International Monetary Fund last week said New Zealand’s economy will shrink 2.2 percent this year and grow 2.2 percent in 2010. Finance Minister Bill English yesterday said the economy could contract again if the global recovery falters.
Bollard has kept the benchmark interest rate at a record low 2.5 percent since April. Eleven of 12 economists surveyed by Bloomberg News expect the rate will be unchanged until at least March 31. One predicts a quarter-point increase in the first quarter.
Profit Outlook
New Zealand businesses reported a decline in sales in the third quarter, but expect earnings will increase in the fourth quarter, according to today’s survey.
A net 20 percent of companies said trading fell in the three months ended Sept. 30. The net figure, which is seasonally adjusted, is calculated by subtracting those reporting an increase in activity from those recording a drop.
A net 17 percent expect trading will increase in the fourth quarter. A net 3 percent say profits will decline.
“There is a considerable disparity between expectations and reality,” said Eaqub. “While firms are more confident about the economic outlook, their recent performance has been weak and they remain cautious about hiring more staff or lifting investment.”
A net 8 percent for firms expect to invest less in plant and machinery, down from 23 percent in the previous survey.
A net 25 percent of companies said it is easier to find skilled workers, today’s survey showed. Those expecting to fire workers in the next three months equaled those expecting to hire.
Capacity utilization, a measure of factory usage, declined to 88.4 percent in the third quarter from 90.7 percent in the previous three months.
Saturday, October 3, 2009
Service Industries Probably Stabilized: U.S. Economy Preview
Oct. 4 (Bloomberg) -- Service industries in the U.S., the largest share of the economy, probably stabilized in September after contracting for almost a year, economists said before a report this week.
The Institute for Supply Management’s index of non- manufacturing businesses, which reflects almost 90 percent of the economy, rose to 50, according to the median of 64 forecasts in a Bloomberg News survey ahead of figures tomorrow. Fifty is the dividing line between expansion and contraction.
The emerging recovery in manufacturing and housing spurred by government measures such as “cash-for-clunkers” and a tax credit for first-time homebuyers started spreading to the broader economy. Nonetheless, last week’s jobs report showing payroll cuts accelerated in September is a reminder that gains in sales may not be sustained as incentives expire.
“The economy is in a recovery but the recovery in the labor market has lost some steam,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. “The service sector, while on a sustainable path of growth, is only improving very gradually.”
The projected reading for the Tempe, Arizona-based ISM’s services gauge would be the first break-even point since September 2008, when Lehman Brothers Holdings Inc. filed for bankruptcy. The measure was 48.4 in August.
ISM’s factory index on Oct. 1 showed manufacturing, which accounts for about 12 percent of the economy, expanded less than economists anticipated. The measure fell to 52.6 in September, the first drop this year, from 52.9 in August.
More Job Losses
Job losses accelerated last month and the unemployment rate climbed to the highest level since 1983, Labor Department data showed on Oct. 2. Payrolls fell by 263,000 following a 201,000 decline the prior month, while the jobless rate rose to 9.8 percent from 9.7 percent. The U.S. has lost 7.2 million jobs since the recession began in December 2007.
U.S. stocks fell on Oct. 2, capping the market’s first back-to-back weekly declines since July, as the bigger-than- estimated loss of jobs spurred concern the economy is struggling to recover. The Standard & Poor’s 500 Index retreated 0.5 percent to close at 1,025.21 in New York.
Economic growth next year probably won’t be strong enough to “substantially” bring down the jobless rate, which may remain above 9 percent at the end of 2010, Fed Chairman Ben S. Bernanke told lawmakers on Oct. 1.
Growth Rebound
Recent data signal the economy began growing in the third quarter. Consumer spending, about 70 percent of the economy, jumped in August by the most since October 2001, as the government’s $3 billion cash-for-clunkers incentive to trade in older, less fuel-efficient cars helped auto sales.
Homebuilding, which is included in ISM’s services index, may no longer be a drag on growth as rising sales help trim the glut of properties on the market. The number of contracts to buy previously owned homes rose in August for the seventh straight month, lifted by tax credits for first-time buyers, a report from the National Association of Realtors showed last week.
Service companies seeing a pickup include Carnival Corp., the biggest cruise-line operator. The Miami-based company raised its full-year profit forecast because of better-than- expected ticket bookings.
“Throughout the summer, booking volumes have continued to be quite strong which has enabled us to achieve higher last- minute prices,” Howard Frank, chief operating officer of Carnival, said on a Sept. 22 conference call.
Bigger Trade Gap
A report from the Commerce Department on Oct. 9 may show the trade deficit widened in August to $33 billion from $32 billion in July, the Bloomberg survey shows. Both imports and exports are likely to rise as demand worldwide picks up. Imports may have seen a bigger boost in August as American companies replenished depleted inventories, economists said.
The world economy will expand 3.1 percent next year, the International Monetary Fund said last week, exceeding its July forecast of 2.5 percent. The lender raised the outlook for China, and said developing Asia will grow at more than twice the pace of advanced economies including the U.S., Germany and Japan.
Among other data this week, a Fed report on Oct. 7 may show consumers are borrowing less. Credit fell by $10 billion in August following a record $21.6 billion drop the prior month, according to the Bloomberg survey median.
Bloomberg Survey
===============================================================
Release Period Prior Median
Indicator Date Value Forecast
===============================================================
ISM NonManu Index 10/5 Sept. 48.4 50.0
Federal Budget $ Blns 10/7 Sept. 45.7 -80.7
Cons. Credit $ Blns 10/7 Aug. -21.6 -10.0
Initial Claims ,000’s 10/8 26-Sep 551 540
Cont. Claims ,000’s 10/8 19-Sep 6090 6120
Whlsale Inv. MOM% 10/8 Aug. -1.4% -1.0%
ICSC Chain Store Sales 10/8 Sept. -2.0% -1.5%
Trade Balance $ Blns 10/9 Aug. -32.0 -33.0
===============================================================
The Institute for Supply Management’s index of non- manufacturing businesses, which reflects almost 90 percent of the economy, rose to 50, according to the median of 64 forecasts in a Bloomberg News survey ahead of figures tomorrow. Fifty is the dividing line between expansion and contraction.
The emerging recovery in manufacturing and housing spurred by government measures such as “cash-for-clunkers” and a tax credit for first-time homebuyers started spreading to the broader economy. Nonetheless, last week’s jobs report showing payroll cuts accelerated in September is a reminder that gains in sales may not be sustained as incentives expire.
“The economy is in a recovery but the recovery in the labor market has lost some steam,” said Zach Pandl, an economist at Nomura Securities International Inc. in New York. “The service sector, while on a sustainable path of growth, is only improving very gradually.”
The projected reading for the Tempe, Arizona-based ISM’s services gauge would be the first break-even point since September 2008, when Lehman Brothers Holdings Inc. filed for bankruptcy. The measure was 48.4 in August.
ISM’s factory index on Oct. 1 showed manufacturing, which accounts for about 12 percent of the economy, expanded less than economists anticipated. The measure fell to 52.6 in September, the first drop this year, from 52.9 in August.
More Job Losses
Job losses accelerated last month and the unemployment rate climbed to the highest level since 1983, Labor Department data showed on Oct. 2. Payrolls fell by 263,000 following a 201,000 decline the prior month, while the jobless rate rose to 9.8 percent from 9.7 percent. The U.S. has lost 7.2 million jobs since the recession began in December 2007.
U.S. stocks fell on Oct. 2, capping the market’s first back-to-back weekly declines since July, as the bigger-than- estimated loss of jobs spurred concern the economy is struggling to recover. The Standard & Poor’s 500 Index retreated 0.5 percent to close at 1,025.21 in New York.
Economic growth next year probably won’t be strong enough to “substantially” bring down the jobless rate, which may remain above 9 percent at the end of 2010, Fed Chairman Ben S. Bernanke told lawmakers on Oct. 1.
Growth Rebound
Recent data signal the economy began growing in the third quarter. Consumer spending, about 70 percent of the economy, jumped in August by the most since October 2001, as the government’s $3 billion cash-for-clunkers incentive to trade in older, less fuel-efficient cars helped auto sales.
Homebuilding, which is included in ISM’s services index, may no longer be a drag on growth as rising sales help trim the glut of properties on the market. The number of contracts to buy previously owned homes rose in August for the seventh straight month, lifted by tax credits for first-time buyers, a report from the National Association of Realtors showed last week.
Service companies seeing a pickup include Carnival Corp., the biggest cruise-line operator. The Miami-based company raised its full-year profit forecast because of better-than- expected ticket bookings.
“Throughout the summer, booking volumes have continued to be quite strong which has enabled us to achieve higher last- minute prices,” Howard Frank, chief operating officer of Carnival, said on a Sept. 22 conference call.
Bigger Trade Gap
A report from the Commerce Department on Oct. 9 may show the trade deficit widened in August to $33 billion from $32 billion in July, the Bloomberg survey shows. Both imports and exports are likely to rise as demand worldwide picks up. Imports may have seen a bigger boost in August as American companies replenished depleted inventories, economists said.
The world economy will expand 3.1 percent next year, the International Monetary Fund said last week, exceeding its July forecast of 2.5 percent. The lender raised the outlook for China, and said developing Asia will grow at more than twice the pace of advanced economies including the U.S., Germany and Japan.
Among other data this week, a Fed report on Oct. 7 may show consumers are borrowing less. Credit fell by $10 billion in August following a record $21.6 billion drop the prior month, according to the Bloomberg survey median.
Bloomberg Survey
===============================================================
Release Period Prior Median
Indicator Date Value Forecast
===============================================================
ISM NonManu Index 10/5 Sept. 48.4 50.0
Federal Budget $ Blns 10/7 Sept. 45.7 -80.7
Cons. Credit $ Blns 10/7 Aug. -21.6 -10.0
Initial Claims ,000’s 10/8 26-Sep 551 540
Cont. Claims ,000’s 10/8 19-Sep 6090 6120
Whlsale Inv. MOM% 10/8 Aug. -1.4% -1.0%
ICSC Chain Store Sales 10/8 Sept. -2.0% -1.5%
Trade Balance $ Blns 10/9 Aug. -32.0 -33.0
===============================================================
Australia’s Swan Says Jobless Will Continue to Rise
Oct. 4 (Bloomberg) -- Australia’s unemployment rate is expected to keep rising as the global recession dampens growth in the local economy, Treasurer Wayne Swan said.
The nation’s jobless rate will peak at 7 percent in 2010, lower than the 9.4 percent rate forecast for major advanced economies, Swan said today in his weekly economic note sent by e-mail, citing the International Monetary Fund.
That’s “still too many jobs lost as unemployment continues to rise,” Swan said. “Even with the IMF last week downgrading its forecast for peak unemployment in Australia, the unemployment rate is expected to continue to rise as the impacts of the global recession continue to wash though our economy.”
Australian employment fell in August by almost twice as much as economists estimated, the statistics bureau said on Sept. 10, while the unemployment rate was at 5.8 percent. The nation’s jobless rate would be as much as 1.9 percentage points higher in 2010 without government stimulus to consumers and infrastructure spending, the Organization for Economic Cooperation and Development said last month.
“The federal government still has its foot on the accelerator, but will the Reserve Bank of Australia hit the brakes at the same time?” Robert Olivier, from recruitment company the Olivier Group said in an e-mailed release today.
Australian labor force figures will be released this week and its central bank will make a decision on interest rates. The Reserve Bank of Australia will keep its overnight cash rate target unchanged at 3 percent on Oct. 6, according to 19 of 20 economists surveyed by Bloomberg News.
‘Significant Fall’
“The significant fall in the number of hours worked in Australia shows the sacrifice being made by many thousands of Australians to save those jobs,” Swan said in the note. “While Australia has outperformed every advanced economy throughout this global recession, now is not the time for victory laps or for ripping out the stimulus.”
Australia’s economy will grow 0.7 percent this year and 2 percent in 2010, the IMF said on Oct. 1, compared with its April forecast for a 1.4 percent contraction and 0.6 percent expansion respectively. The global economy is forecast to contract by 1.1 percent in 2009, versus a previous estimate of 1.4 percent, before expanding at 3.1 percent in 2010, up from 2.5 percent forecast previously, Swan said in his note, citing the IMF.
“Despite these improved forecasts the recovery in the global economy is far from assured,” Swan said.
The nation’s jobless rate will peak at 7 percent in 2010, lower than the 9.4 percent rate forecast for major advanced economies, Swan said today in his weekly economic note sent by e-mail, citing the International Monetary Fund.
That’s “still too many jobs lost as unemployment continues to rise,” Swan said. “Even with the IMF last week downgrading its forecast for peak unemployment in Australia, the unemployment rate is expected to continue to rise as the impacts of the global recession continue to wash though our economy.”
Australian employment fell in August by almost twice as much as economists estimated, the statistics bureau said on Sept. 10, while the unemployment rate was at 5.8 percent. The nation’s jobless rate would be as much as 1.9 percentage points higher in 2010 without government stimulus to consumers and infrastructure spending, the Organization for Economic Cooperation and Development said last month.
“The federal government still has its foot on the accelerator, but will the Reserve Bank of Australia hit the brakes at the same time?” Robert Olivier, from recruitment company the Olivier Group said in an e-mailed release today.
Australian labor force figures will be released this week and its central bank will make a decision on interest rates. The Reserve Bank of Australia will keep its overnight cash rate target unchanged at 3 percent on Oct. 6, according to 19 of 20 economists surveyed by Bloomberg News.
‘Significant Fall’
“The significant fall in the number of hours worked in Australia shows the sacrifice being made by many thousands of Australians to save those jobs,” Swan said in the note. “While Australia has outperformed every advanced economy throughout this global recession, now is not the time for victory laps or for ripping out the stimulus.”
Australia’s economy will grow 0.7 percent this year and 2 percent in 2010, the IMF said on Oct. 1, compared with its April forecast for a 1.4 percent contraction and 0.6 percent expansion respectively. The global economy is forecast to contract by 1.1 percent in 2009, versus a previous estimate of 1.4 percent, before expanding at 3.1 percent in 2010, up from 2.5 percent forecast previously, Swan said in his note, citing the IMF.
“Despite these improved forecasts the recovery in the global economy is far from assured,” Swan said.
Recession, You Look Familiar
AFTER the financial markets melted down last year, there was some great political theater in Washington. Alan Greenspan, the former Federal Reserve chairman, told the House Government Oversight and Reform Committee that he couldn’t believe what had happened. “We are in the once-in-a-century credit tsunami,” he said.
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Economix: Financial Ignorance and Arrogance (September 30, 2009)
Times Topics: Credit Crisis — The Essentials
Richard S. Fuld Jr., the last chief executive of the bankrupt Lehman Brothers, lamented that he, too, had been blindsided. No one, he assured the committee, “was prepared for this one.”
Such performances were gripping, in their way. But they may take on a level of absurdity after reading “This Time Is Different: Eight Centuries of Financial Folly” (Princeton University Press) by two economics professors, Carmen M. Reinhart of the University of Maryland and Kenneth S. Rogoff of Harvard.
The authors use copious amounts of data — well, actually, numbing amounts — to make the compelling case that any well-informed person should have seen the Great Recession coming. The essence of their book is that while financial crises come in different varieties, they are not mysteriously born of undersea earthquakes, but frequently occurring events that can be spotted and even controlled if politicians and regulators know what to look for.
“Our basis message is simple: We have been here before,” the authors write. “No matter how different the latest financial frenzy or crisis always appears, there are usually remarkable similarities with past experience from other countries and from history. Recognizing these analogies and precedents is an essential step toward improving our global financial system, both to reduce the risk of future crises and to better handle catastrophes when they happen.”
These academics have found the same disturbing patterns in economic data from more than 66 countries: A nation’s political leaders loosen regulations governing the financial system. Banks use the new freedom to borrow money and earn juicy returns. Soon, these sovereign states are awash with money from foreign investors. But beware these torrents of outside wealth. They are accompanied by bubbles in stocks, commodities and real estate.
Often, policy makers and business leaders step forward and say that nobody should be fearful. Yes, bubbles have burst before — but now, they say, investors are safe because the old dangers no longer lurk.
As the authors note, this was said about Latin America and Africa in the 1970s, Asia in the 1990s and, of course, the United States in the last decade.
Bubbles, however, inevitably go splat. And what happens next isn’t pretty. Countries like Mexico, Argentina, Brazil and Nigeria defaulted on debt in the 1980s. In the late ’90s, Ms. Reinhart and Mr. Rogoff note, “Korea, Indonesia and Thailand, among others, were forced to go to the International Monetary Fund for gigantic bailout packages, but even this was not enough to stave off deep recessions and huge currency depreciations.”
And, of course, we all know what happened in the United States. The authors point out that Mr. Greenspan and his successor, Ben S. Bernanke, “argued vigorously that the Federal Reserve should not pay excessive attention to housing prices, except to the extent that they might affect the central bank’s primary goals of growth and price stability.” Famous last words.
Some of the book’s findings are obvious. Bubbles are dangerous? Gee, you don’t say. But others are revelatory. Americans have every reason to be ashamed of the real estate boom. Many of us believed that we had earned the instant wealth we accrued as housing prices spiked. But people worldwide suffered when this easy money disappeared.
It turns out that the United States isn’t the only nation where a banking crisis was preceded or accompanied by a real estate bubble. The authors found that over the last 100 years, this has happened in tandem with 21 major banking crises. No wonder they suggest the International Monetary Fund keep a close eye on property values.
“This Time Is Different” seems unlikely to be a best seller. The authors have chosen to present their findings rather dryly, with numbers and tables, instead of enlivening them with colorful observations and anecdotes that might seduce non-academics into digesting such complex subject matter.
“We trust that our visual, quantitative history of financial crises is no less compelling than the earlier narrative approach,” the authors write.
They devote far too many pages to legalistic definitions and charts that are barely distinguishable from the ones of the page before. A little more color would have helped immensely.
Still, you have to admire them for being so dogged. They say up front that they hope to influence economy policy, and they may succeed. They make a predictable call for more oversight and advocate the creation of a new “international financial regulatory institution” to look for danger signs like rising property values so it can prod countries to dampen their overheated economies before they blow up.
That last proposal may be wishful thinking. But it is not too much to ask officials at existing regulatory agencies to do a better job. They, of all people, should read this book. It may be a bit too much for average readers, but everything they need to spot the next recession is in there.
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Economix: Financial Ignorance and Arrogance (September 30, 2009)
Times Topics: Credit Crisis — The Essentials
Richard S. Fuld Jr., the last chief executive of the bankrupt Lehman Brothers, lamented that he, too, had been blindsided. No one, he assured the committee, “was prepared for this one.”
Such performances were gripping, in their way. But they may take on a level of absurdity after reading “This Time Is Different: Eight Centuries of Financial Folly” (Princeton University Press) by two economics professors, Carmen M. Reinhart of the University of Maryland and Kenneth S. Rogoff of Harvard.
The authors use copious amounts of data — well, actually, numbing amounts — to make the compelling case that any well-informed person should have seen the Great Recession coming. The essence of their book is that while financial crises come in different varieties, they are not mysteriously born of undersea earthquakes, but frequently occurring events that can be spotted and even controlled if politicians and regulators know what to look for.
“Our basis message is simple: We have been here before,” the authors write. “No matter how different the latest financial frenzy or crisis always appears, there are usually remarkable similarities with past experience from other countries and from history. Recognizing these analogies and precedents is an essential step toward improving our global financial system, both to reduce the risk of future crises and to better handle catastrophes when they happen.”
These academics have found the same disturbing patterns in economic data from more than 66 countries: A nation’s political leaders loosen regulations governing the financial system. Banks use the new freedom to borrow money and earn juicy returns. Soon, these sovereign states are awash with money from foreign investors. But beware these torrents of outside wealth. They are accompanied by bubbles in stocks, commodities and real estate.
Often, policy makers and business leaders step forward and say that nobody should be fearful. Yes, bubbles have burst before — but now, they say, investors are safe because the old dangers no longer lurk.
As the authors note, this was said about Latin America and Africa in the 1970s, Asia in the 1990s and, of course, the United States in the last decade.
Bubbles, however, inevitably go splat. And what happens next isn’t pretty. Countries like Mexico, Argentina, Brazil and Nigeria defaulted on debt in the 1980s. In the late ’90s, Ms. Reinhart and Mr. Rogoff note, “Korea, Indonesia and Thailand, among others, were forced to go to the International Monetary Fund for gigantic bailout packages, but even this was not enough to stave off deep recessions and huge currency depreciations.”
And, of course, we all know what happened in the United States. The authors point out that Mr. Greenspan and his successor, Ben S. Bernanke, “argued vigorously that the Federal Reserve should not pay excessive attention to housing prices, except to the extent that they might affect the central bank’s primary goals of growth and price stability.” Famous last words.
Some of the book’s findings are obvious. Bubbles are dangerous? Gee, you don’t say. But others are revelatory. Americans have every reason to be ashamed of the real estate boom. Many of us believed that we had earned the instant wealth we accrued as housing prices spiked. But people worldwide suffered when this easy money disappeared.
It turns out that the United States isn’t the only nation where a banking crisis was preceded or accompanied by a real estate bubble. The authors found that over the last 100 years, this has happened in tandem with 21 major banking crises. No wonder they suggest the International Monetary Fund keep a close eye on property values.
“This Time Is Different” seems unlikely to be a best seller. The authors have chosen to present their findings rather dryly, with numbers and tables, instead of enlivening them with colorful observations and anecdotes that might seduce non-academics into digesting such complex subject matter.
“We trust that our visual, quantitative history of financial crises is no less compelling than the earlier narrative approach,” the authors write.
They devote far too many pages to legalistic definitions and charts that are barely distinguishable from the ones of the page before. A little more color would have helped immensely.
Still, you have to admire them for being so dogged. They say up front that they hope to influence economy policy, and they may succeed. They make a predictable call for more oversight and advocate the creation of a new “international financial regulatory institution” to look for danger signs like rising property values so it can prod countries to dampen their overheated economies before they blow up.
That last proposal may be wishful thinking. But it is not too much to ask officials at existing regulatory agencies to do a better job. They, of all people, should read this book. It may be a bit too much for average readers, but everything they need to spot the next recession is in there.
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