By Greg Robb, MarketWatch
Last update: 8:57 a.m. EDT July 8, 2008
WASHINGTON (MarketWatch) - Federal Reserve Chairman Ben Bernanke said Tuesday that the Fed should have additional powers to prevent and limit financial market turmoil.
Congress should consider giving the Fed power to set standards for capital liquidity holdings and risk management for investment banks, Bernanke said.
In the past, the Securities and Exchange Commission has been the primary regulator of broker dealers.
In addition, Congress might give the Fed broad power to promote financial market stability, Bernanke said.
If Congress makes this choice, "I do not think the Fed could fully meet these objectives without the authority to directly examine banks and other financial institutions that are subject to prudential regulation," Bernanke said.
Bernanke spoke at a conference on lending to low- and middle-income borrowers, sponsored by the Federal Deposit Insurance Corp. Bernanke did not discuss the economic outlook in his remarks.
Loans to brokers may be extended
In addition, Bernanke said the Fed is considering extending its emergency loans to broker-dealers beyond 2008, Bernanke said.
"We are currently monitoring developments in financial markets closely and considering several options, including extending the duration of our facilities for primary dealers beyond year-end," Bernanke said.
In March, as market conditions worsened, the Fed established two lending facilities for brokerages. One allows them to swap a range of illiquid assets for Treasury securities. The other facility provides cash to broker dealers in a system that is similar to its discount window for banks.
Turf battle
Increased power for one agency typically comes at the expense of other agencies that have their own strong alliances with powerful members of Congress.
Although Treasury Secretary Henry Paulson has said that he would like to see Congress give the Fed more power to ease the fallout of financial market turmoil on the economy, it is another matter for an agency to be seen as seeking power for itself.
As a result, Bernanke bent over backwards to suggest, rather than demand, that the Fed get broad new regulatory responsibilities.
But it was clear from his remarks that the Fed wants new powers.
"This is the first time I ever recall the Fed coming out and arguing that it needs to have expanded oversight and responsibilities," said former Fed official Robert Eisenbeis in comments to Bloomberg television.
"The Fed is seeking broad oversight responsibilities that have been rejected in the past," Eisenbeis said.
It is a wide open question what Congress will ultimately decide to do about the glaring inadequacies of the regulatory system that have come to light in the financial market crisis that began last summer.
Lobbyists for the financial market industries have made careers provoking, easing and maneuvering around battles over regulatory turf.
Under previous Fed chief Alan Greenspan, the Fed was an aggressive agency in terms of regulatory authority, perfectly willing to use sharp elbows against other regulators. As a result, some ill feeling lingers.
The Fed would like greater authority to get detailed information about money markets and the activities of borrowers and lenders in those markets, Bernanke said.
The surprising freeze-up of money markets last August was one of the first signs of trouble for financial markets.
Bernanke said that "a strong case" could be made for granting the Fed explicit oversight authority over systemically important payment and settlement systems. End of Story
Greg Robb is a senior reporter for MarketWatch in Washington.
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Tuesday, July 8, 2008
U.S. stock futures flatten out as oil futures slip
By Steve Goldstein, MarketWatch
Last update: 8:36 a.m. EDT July 8, 2008
LONDON (MarketWatch) - U.S. stock futures moved off lows on Tuesday as the open neared, with a decline in oil helping to compensate for a resurgence in credit-market jitters and nervousness about second-quarter earnings season ahead of a report from Alcoa.
S&P 500 futures rose a fraction of a point to 1,252.60 and Nasdaq 100 futures were up 1.75 points to 1,834.00. Dow industrial futures added 4 points.
U.S. stocks ended lower on Monday, reversing early gains on the back of an oil price retreat and renewed speculation that Microsoft may buy Yahoo. Worries over the capital that Fannie Mae and Freddie Mac may have to raise as well as a report that Lehman Brothers was temporarily barred from trading oil contracts reignited financial sector worries ahead of second-quarter earnings season.
The Dow industrials dropped 56 points, the Nasdaq Composite lost 2 points and the S&P 500 fell 10 points.
Federal Reserve Chairman Ben Bernanke in a speech on Tuesday said Congress would have to give the Fed new powers if it wanted to give the central bank the job to limit the impact of financial market turmoil on the economy.
In a major development on another topic, Bernanke said the Fed was considering extending its emergency loans to broker-dealers beyond 2008 to help stabilize the market. The Fed's emergency primary dealer credit facility is now set to expire in mid-September.
There's also a speech from Richmond Fed President Jeffrey Lacker on the economic outlook, pending home sales data for May as well as wholesale inventories data for May.
Oil futures dropped sharply for a second session, falling $2.70 to $138.67 a barrel. The dollar was roughly flat against the Japanese yen, exchanging hands at 107.15 yen.
Alcoa warned second-quarter North American same-store retail sales dropped 10%. Pepsi Bottling Group edged past earnings estimates for the second quarter but cut its revenue outlook for the year.
LCD TV maker Syntax Brillian sold some assets to TCV Group and filed for protection from creditors under Chapter 11 bankruptcy rules. It expects the common shares to have no value after the filing and reorganization.
International stocks saw heavy pressure, with the Nikkei 225 losing 2.4% in Tokyo. The FTSE 100 lost 0.8% in London, though that was well off session lows. End of Story
Steve Goldstein is MarketWatch's London bureau chief.
Read more...
Last update: 8:36 a.m. EDT July 8, 2008
LONDON (MarketWatch) - U.S. stock futures moved off lows on Tuesday as the open neared, with a decline in oil helping to compensate for a resurgence in credit-market jitters and nervousness about second-quarter earnings season ahead of a report from Alcoa.
S&P 500 futures rose a fraction of a point to 1,252.60 and Nasdaq 100 futures were up 1.75 points to 1,834.00. Dow industrial futures added 4 points.
U.S. stocks ended lower on Monday, reversing early gains on the back of an oil price retreat and renewed speculation that Microsoft may buy Yahoo. Worries over the capital that Fannie Mae and Freddie Mac may have to raise as well as a report that Lehman Brothers was temporarily barred from trading oil contracts reignited financial sector worries ahead of second-quarter earnings season.
The Dow industrials dropped 56 points, the Nasdaq Composite lost 2 points and the S&P 500 fell 10 points.
Federal Reserve Chairman Ben Bernanke in a speech on Tuesday said Congress would have to give the Fed new powers if it wanted to give the central bank the job to limit the impact of financial market turmoil on the economy.
In a major development on another topic, Bernanke said the Fed was considering extending its emergency loans to broker-dealers beyond 2008 to help stabilize the market. The Fed's emergency primary dealer credit facility is now set to expire in mid-September.
There's also a speech from Richmond Fed President Jeffrey Lacker on the economic outlook, pending home sales data for May as well as wholesale inventories data for May.
Oil futures dropped sharply for a second session, falling $2.70 to $138.67 a barrel. The dollar was roughly flat against the Japanese yen, exchanging hands at 107.15 yen.
Alcoa warned second-quarter North American same-store retail sales dropped 10%. Pepsi Bottling Group edged past earnings estimates for the second quarter but cut its revenue outlook for the year.
LCD TV maker Syntax Brillian sold some assets to TCV Group and filed for protection from creditors under Chapter 11 bankruptcy rules. It expects the common shares to have no value after the filing and reorganization.
International stocks saw heavy pressure, with the Nikkei 225 losing 2.4% in Tokyo. The FTSE 100 lost 0.8% in London, though that was well off session lows. End of Story
Steve Goldstein is MarketWatch's London bureau chief.
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Hong Kong plunges, financials front region's retreat
By V. Phani Kumar, MarketWatch
Last update: 12:33 a.m. EDT July 8, 2008
HONG KONG (MarketWatch) -- Hong Kong-listed stocks suffered steep losses Tuesday, with market heavyweight HSBC Holdings declining on worries about global credit markets, while Hong Kong Exchanges & Clearing tumbled on concerns lower trading volumes recently that could hurt the exchange operator's earnings.
Financial stocks also fell sharply elsewhere, led by Mitsubishi UFJ Financial Group in Tokyo and Kookmin Bank in Seoul.
"After the drop on Wall Street, people are wary about further write-downs related to subprime mortgages," said Francis Lun, general manager at Fulbright Securities in Hong Kong.
In Hong Kong, the Hang Seng Index skidded 3.3% to 21,200.16 and the Hang Seng China Enterprises Index tumbled 3.7% to 11,275.49, giving up gains from the previous session.
Lun said Monday's rally in Chinese shares in Hong Kong and in Shanghai came on speculation that the mainland government might announce measures aimed at supporting the market. There was "nothing substantial" in those rumors, he added.
China's benchmark Shanghai Composite has lost nearly 47% of its value so far in 2008. After surging 4.6% on Monday, the Shanghai Composite recently rose 0.3% to 2,800.41, but was off the day's high at 2,843.43.
The Nikkei 225 Average lost 1.8% to 13,121.86, giving up more than the 0.9% it added during the previous session to snap out of a 12-session losing streak -- its longest in 54 years. The broader Topix index fell 2.1% to 1,284.47.
Elsewhere in the region, Australia's S&P/ASX 200 slipped 0.5% to 4,978.40, giving up early gains, and New Zealand's NZX 50 index gained 1.1% to 3,154.44. South Korea's Kospi slumped 2.8% to 1,534.55 and Taiwan's Weighted index fell 1.9% to 7,198.64.
In a note to client, Taifook Securities analyst Wilson Wong wrote investors were likely to keenly watch U.S. companies' second quarter reporting season beginning Tuesday. "Market focus will undoubtedly be on the banks and brokerages, which have been severely hurt by the ongoing credit crunch," he added.
Regional detail
Financials fell hard after U.S. banking stocks dropped overnight on worries about credit-related losses. Mitsubishi UFJ dipped 3% and Nomura Holdings Inc. skidded 4.4% in Tokyo and Kookmin Bank tumbled 6.8% in Seoul.
In Hong Kong, market heavyweight HSBC Holdings lost 1.6%, while DBS Group Holdings shed 1.4% in Singapore.
Shares of HKEx tumbled 6% in Hong Kong trading on worries about declining trading volumes over the past few weeks.
Japanese exporters also declined on a strengthened yen, with Sony Corp. losing 3% and Tokyo Electron dropping 1.5%.
In Asian currency trading, the U.S. dollar bought 107.07 yen, compared with 107.58 yen late Monday.
Energy producers and traders also lost ground after crude-oil prices dropped sharply overnight, with shares of Marubeni Corp. gave up 1.9%, while Woodside Petroleum slid 0.8%.
August crude-oil futures, which lost $3.92 to $141.37 a barrel Monday on the New York Mercantile Exchange, recently rose 46 cents to $141.83 in electronic trading, reversing early declines.
Shares of NTT DoCoMo Inc. rose 0.6% in spite of the broad market weakness in Tokyo, on buying a day after the company said it will start selling Blackberry smartphones to individual users in Japan from Aug. 1.
On Wall Street, the Dow Jones Industrial Average lost 56.58 points to 11,231.96 and the Nasdaq Composite gave up 2.06 points to 2,243.32, while the S&P 500 index dropped 10.59 points to 1,252.31. End of Story
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.
Read more...
Last update: 12:33 a.m. EDT July 8, 2008
HONG KONG (MarketWatch) -- Hong Kong-listed stocks suffered steep losses Tuesday, with market heavyweight HSBC Holdings declining on worries about global credit markets, while Hong Kong Exchanges & Clearing tumbled on concerns lower trading volumes recently that could hurt the exchange operator's earnings.
Financial stocks also fell sharply elsewhere, led by Mitsubishi UFJ Financial Group in Tokyo and Kookmin Bank in Seoul.
"After the drop on Wall Street, people are wary about further write-downs related to subprime mortgages," said Francis Lun, general manager at Fulbright Securities in Hong Kong.
In Hong Kong, the Hang Seng Index skidded 3.3% to 21,200.16 and the Hang Seng China Enterprises Index tumbled 3.7% to 11,275.49, giving up gains from the previous session.
Lun said Monday's rally in Chinese shares in Hong Kong and in Shanghai came on speculation that the mainland government might announce measures aimed at supporting the market. There was "nothing substantial" in those rumors, he added.
China's benchmark Shanghai Composite has lost nearly 47% of its value so far in 2008. After surging 4.6% on Monday, the Shanghai Composite recently rose 0.3% to 2,800.41, but was off the day's high at 2,843.43.
The Nikkei 225 Average lost 1.8% to 13,121.86, giving up more than the 0.9% it added during the previous session to snap out of a 12-session losing streak -- its longest in 54 years. The broader Topix index fell 2.1% to 1,284.47.
Elsewhere in the region, Australia's S&P/ASX 200 slipped 0.5% to 4,978.40, giving up early gains, and New Zealand's NZX 50 index gained 1.1% to 3,154.44. South Korea's Kospi slumped 2.8% to 1,534.55 and Taiwan's Weighted index fell 1.9% to 7,198.64.
In a note to client, Taifook Securities analyst Wilson Wong wrote investors were likely to keenly watch U.S. companies' second quarter reporting season beginning Tuesday. "Market focus will undoubtedly be on the banks and brokerages, which have been severely hurt by the ongoing credit crunch," he added.
Regional detail
Financials fell hard after U.S. banking stocks dropped overnight on worries about credit-related losses. Mitsubishi UFJ dipped 3% and Nomura Holdings Inc. skidded 4.4% in Tokyo and Kookmin Bank tumbled 6.8% in Seoul.
In Hong Kong, market heavyweight HSBC Holdings lost 1.6%, while DBS Group Holdings shed 1.4% in Singapore.
Shares of HKEx tumbled 6% in Hong Kong trading on worries about declining trading volumes over the past few weeks.
Japanese exporters also declined on a strengthened yen, with Sony Corp. losing 3% and Tokyo Electron dropping 1.5%.
In Asian currency trading, the U.S. dollar bought 107.07 yen, compared with 107.58 yen late Monday.
Energy producers and traders also lost ground after crude-oil prices dropped sharply overnight, with shares of Marubeni Corp. gave up 1.9%, while Woodside Petroleum slid 0.8%.
August crude-oil futures, which lost $3.92 to $141.37 a barrel Monday on the New York Mercantile Exchange, recently rose 46 cents to $141.83 in electronic trading, reversing early declines.
Shares of NTT DoCoMo Inc. rose 0.6% in spite of the broad market weakness in Tokyo, on buying a day after the company said it will start selling Blackberry smartphones to individual users in Japan from Aug. 1.
On Wall Street, the Dow Jones Industrial Average lost 56.58 points to 11,231.96 and the Nasdaq Composite gave up 2.06 points to 2,243.32, while the S&P 500 index dropped 10.59 points to 1,252.31. End of Story
Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.
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European shares drop sharply in early trading. Banks drop as capital worries resurface, automakers, airlines also fall
By Sarah Turner, MarketWatch
Last update: 3:50 a.m. EDT July 8, 2008
LONDON (MarketWatch) - Stocks in Europe fell sharply in a broad-based decline on Tuesday morning as investors worried over financial-sector health and about how a slowing global economy will impact demand and feed through into corporate profits.
The pan-European Dow Jones Stoxx 600 index fell 1.9% to 277.94, with every sector index dropping, taking the index back to mid-2005 levels.
The declines came after shares of mortgage giants Fannie Mae fell sharply on Monday, dragging broader U.S. stock markets into the red, after Lehman Brothers analysts raised the possibility that accounting-rule changes in the works could require both companies to raise billions of dollars in capital. See full story.
IndyMac Bancorp said late Monday that regulators have told the lender it isn't "well capitalized" after failing to raise new capital. The company said it has agreed to a new business plan with regulators, which includes halting new mortgages to shrink its balance sheet and improve capital ratios. It will also cut 3,800 jobs, bringing staff levels to roughly 3,400. See full story.
In Europe, shares of the Bank of Ireland fell 6.4% after it said that slowing economic growth in its main markets, together with global market dislocation, continues to adversely impact earnings.
Other financials dropping included HSBC Holdings down 2.1%; Dexia , down 4.6%; and UBS down 4%.
Of national indexes, the U.K. FTSE 100 index fell 2.3% to 5,387.40, the German DAX 30 index dropped 2.2% to 6,253.60 and the French CAC-40 index slumped 2.3% to 4,243.23.
Light sweet crude prices ticked higher on Tuesday, adding additional pressure to auto and airline stocks already suffering from perceptions that demand will drop.
Shares of BMW fell 3.1%, while shares in Renault dropped 4.9%.
Airlines also fell sharply, with British Airways down 3.5% and Air Berlin down 8.3%.
Still, shares of cosmetics group Clarins rocketed 26.5% to 55.32 euros in the first day of trade since the company's supervisory board recommended a 55.50 euros a share bid from the controlling family owners. End of Story
Sarah Turner is a markets reporter for MarketWatch in London.
Read more...
Last update: 3:50 a.m. EDT July 8, 2008
LONDON (MarketWatch) - Stocks in Europe fell sharply in a broad-based decline on Tuesday morning as investors worried over financial-sector health and about how a slowing global economy will impact demand and feed through into corporate profits.
The pan-European Dow Jones Stoxx 600 index fell 1.9% to 277.94, with every sector index dropping, taking the index back to mid-2005 levels.
The declines came after shares of mortgage giants Fannie Mae fell sharply on Monday, dragging broader U.S. stock markets into the red, after Lehman Brothers analysts raised the possibility that accounting-rule changes in the works could require both companies to raise billions of dollars in capital. See full story.
IndyMac Bancorp said late Monday that regulators have told the lender it isn't "well capitalized" after failing to raise new capital. The company said it has agreed to a new business plan with regulators, which includes halting new mortgages to shrink its balance sheet and improve capital ratios. It will also cut 3,800 jobs, bringing staff levels to roughly 3,400. See full story.
In Europe, shares of the Bank of Ireland fell 6.4% after it said that slowing economic growth in its main markets, together with global market dislocation, continues to adversely impact earnings.
Other financials dropping included HSBC Holdings down 2.1%; Dexia , down 4.6%; and UBS down 4%.
Of national indexes, the U.K. FTSE 100 index fell 2.3% to 5,387.40, the German DAX 30 index dropped 2.2% to 6,253.60 and the French CAC-40 index slumped 2.3% to 4,243.23.
Light sweet crude prices ticked higher on Tuesday, adding additional pressure to auto and airline stocks already suffering from perceptions that demand will drop.
Shares of BMW fell 3.1%, while shares in Renault dropped 4.9%.
Airlines also fell sharply, with British Airways down 3.5% and Air Berlin down 8.3%.
Still, shares of cosmetics group Clarins rocketed 26.5% to 55.32 euros in the first day of trade since the company's supervisory board recommended a 55.50 euros a share bid from the controlling family owners. End of Story
Sarah Turner is a markets reporter for MarketWatch in London.
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Daily Report: Dollar Reversed, Yen Boosted by Falling Stocks
Market Overview | Written by ActionForex.com | Jul 08 08 07:21 GMT |
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After the sharp reversal triggered by weakness in the equity markets, dollar regains some ground today but is still held in range against most currencies. The focus of the market now is on carry trades as seen in the broad based rally in the Japanese yen, in particular against Sterling and Aussie as Asia stocks follow US. There are renewed concern on the credit crisis after Lehman Brothers said yesterday Fannie Mae and Freddie Mac, the two largest U.S. mortgage financers, may have to raise $75 billion in capital.
Note that the picture is rather mixed for the moment as on the one hand, renewed weakness could be seen in the greenback in case of further stock market losses today. On the other hand, weakness in yen crosses provided added pressure to major currencies like Euro, Sterling and Aussie and in turn trigger selling in respective dollar pairs. Having said that, the safer bet is on more downside for commodity yen crosses.
In a document posted on Japan Foreign Ministry's website, G8 leaders expressed "strong concern" on elevated commodity prices, in particular oil and food. The rising costs of oil and food is posing risks to the global economy and the called on energy exporting nations to invest more in production. The three days annual summit is still in progress in Japan.
The Aussie was additionally pressured after data showed business conditions deteriorated sharply in June. The National Australia Bank's index of overall business conditions shed 7 points in June to 0, the worst reading since late 2001. Business confidence dropped further from -4 to -9.
UK DCLG house price index, US pending homes sales and whole sales inventories will be released later today. But focus should mainly be on speeches from Fed Bernanke and Lacker as well as additional communications from G8, in addition to development in the stock markets.
GBP/JPY Daily Outlook
Daily Pivots: (S1) 211.03; (P) 211.73; (R1) 212.48; More
GBP/JPY's sharp fall today and break of our the congested consolidation pattern suggests that corrective rise from 209.39 should have completed. Intraday bias is now mildly on the downside. As mentioned before, failure to sustain above 213.48 key medium term resistance argues that at least a short term top is possibly in place. Below 209.39 will indicate that such decline from 213.91 has resumed for 203.96 support first. On the upside, above 212.32 will encourage a retest of 231.91 high. Nevertheless, firm break above 213.91 is needed to revive short term bullishness. Otherwise, risk remains mildly on the downside.
In the bigger picture, a medium term bottom is in place at 192.60. At this moment, there is no confirmation of completion of the rebound from there yet. Though, break of the mentioned short term trend line support will be the first signal that rally from 192.60 has finished. Further break of 199.78 support confirm such case, and focus will be back to 192.60 low. On the upside, above 213.91 will confirm the such rebound is still in progress towards 221.25 medium term support turned resistance.
Economic Indicators Update
| GMT | Ccy | Events | Actual | Consensus | Previous | Revised |
|---|---|---|---|---|---|---|
| 1:30 | AUD | Australia NAB business confidence Jun | -9 | N/A | -4 | |
| 5:00 | JPY | Japan Economic watch DI Jun | 29.5 | 31 | 32.1 | |
| 8:30 | GBP | U.K. DCLG house prices Y/Y May | 3.30% | 4.90% | ||
| 12:00 | USD | Fed's Bernanke Speaks | ||||
| 14:00 | USD | U.S. Pending home sales M/M May | -2.50% | 6.30% | ||
| 14:00 | USD | U.S. Wholesale inventories May | 0.70% | 1.30% | ||
| 16:30 | USD | Fed's Lacker Speaks |
Read more...
Daily Forex Analysis
Daily Forex Technicals | Written by FOREXYARD | Jul 08 08 08:39 GMT |
Headlines
* Volatile Trading Leads to Major Sell-Off for the USD.
Economic News
USD
The USD saw a bearish trading session yesterday. Although no economic data was released with an impact, the USD was mostly affected by speculations. Impacting the greenback was the wary economic outlook from a Federal Reserve official and the possibility of more financial troubles of the Federal National Mortgage Association commonly known as Fannie Mae and Freddie Mac - the largest corporate funder in Washington. The USD lost value against its major crosses, most notably vs. the EUR as the pair was once again being at just above 1.57.
As stated previously, no economic data was released yesterday; however there was plenty of volatility in USD trading. Traders noted that the Crude Oil prices dropped quite dramatically to around $141 a barrel, however the USD did not strengthen. The main reason for the greenback's weakness was San Francisco Federal Reserve Bank President's speech regarding U.S. Interest Rate policy, in which she noted that since the worse-case scenarios for growth have been skirted by the Fed's aggressive string of rate cuts, the Interest Rate policy is 'nearing a crossroads'. She also said that the headline inflation is likely to run much higher than desired for the next few quarters. Further hurting the USD was Lehman Brothers analysts' assessments that Fannie Mae and Freddie Mac may need to raise more capital as the credit crisis continues.
A batch of economic releases and announcements are expected for the USD today. The day will start with a speech by Fed Chariman Bernake regarding financial regulation and stability at the Federal Deposit Insurance Corporation's Forum on Mortgage Lending. Volatility will continue after Bernake's speech as Pending Home Sales are forecasted to be released at a negative rate and hurt the USD. Wholesale Inventories are expected to slim down, which should help the USD as companies are more likely to purchase goods when they have depleted inventories, but then Consumer Credit is expected to decrease and once again depreciate the USD. Overall, traders might expect the USD to further devalue against its top currency rivals with a weak economic data releases expected today.
EUR
After going through a bearish trading trend last week, the EUR is starting off strongly this week as it gained strength yesterday against its main currency crosses. In terms of economic data releases, the only two new releases yesterday were actually disappointing. The EUR took advantage of its currency rivals' bearishness and assuring comments by Euro-Zone finance ministers. Against the USD, the EUR rebounded back above the 1.57 range and traded in the mid 0.79's against the GBP. The Sentix Investor Confidence, which measures investor confidence towards the Euro-zone economy, was released with a negative value while it was forecasted to be positive. The German Industrial Production experienced the exact same type of disappointment and was released at -2.4%. On the other hand, EUR traders regained confidence with its rivals' weaknesses, the hawkish notes coming out of the meeting between the EU finance ministers, and ECB president Trichet. Juncker said the Euro-Zone must 'avoid second-round effects that could lead to an inflationary spiral,' and that the ECB's decision to hike therefore 'was not criticized.'
No economic data releases are expected today from the Euro-Zone. All eyes should be on Bernake's speech and the Pending Home Sales, as both will cause volatility for the USD and the EUR will be affected accordingly. The other wildcard will be the Crude Oil prices which have decreased by nearly $4 yesterday.
JPY
After a slow start, the JPY finished yesterday's trading session versus most of its currency pairs. The Yen's bullishness was ignited by the yerly M2+CD Money Supply release. The JPY gained strength from this data as it beat the forecast, which triggered the commonly held theory that elevated currency levels spur growth and have an inflationary effect, leading to higher interest rates. The decrease in Crude Oil prices also helped the Japanese economy and as both the EUR and GBP had disappointing economic data releases, traders looked to the JPY for bullishness. For this trend to continue, the Economy Watchers Current Index which is expected to be released at 5:00 GMT has to beat its negative forecast.
On tap for the JPY today will be the monthly Core Machinery Orders. Compared to the previous value of 5.5%, this month is forecasted to decrease to 1.1%, which indicates that the manufacturers have slower their purchasing of machinery and the manufacturing industry is in a slower expansion phase. Japanese Yen traders should also keep an eye on the Crude Oil prices as the Yen will get support from a decrease in the prices. It seems like the JPY will see bearishness today as the most impactful event will be the Core Machinery Orders which is predicted to decrease.
Crude Oil
Oil eased to near $141 a barrel yesterday. However, its losses were limited by concerns over Iran's dispute with the West over its nuclear program. Iran on Saturday vowed to pursue its enrichment program, stating that it had no intention of discussing its 'right to enriching uranium'. Such a statement indeed keeps political tensions alive further adding to supply worries.
Geopolitical concerns are still supporting oil prices and apart from Iran, oil prices very much dependent on the U.S. dollar movements and the U.S. equity markets levels. As low as the USD stays low, the Crude Oil depreciating scenario is highly unlikely.
Technical News
EUR/USD
The pair began to appreciate after last week's devaluation. On the 4 hour and daily charts the indicators are giving mixed signal. However, the Slow Stochastic on the hourlies shows a bullish momentum. Going long with tight stops could be a good strategy today.
GBP/USD
The bearish trend continues with plenty of steam.On the daily chart the bearish momentum is still intact as the cable now floats in the middle of it. The hourlies also support that notion, however the RSI implies that in the near future the ongoing bearish correction might run out of steam. Traders are advised to take advantage of the cable bears.
USD/JPY
The sharp bullish channel on the daily chart continues with no signs of a stop. The Slow Stochastic is showing a triple top formation with a positive slope, which indicates the possible continuation of the trend. Going long appears to be the right move today.
USD/CHF
The float within the narrowing bearish channel on the daily chart continues, as no significant breach has been made. The negative slope on the 4 hour chart's Slow Stochastic indicates the continuation of the bearish movement within the channel. Going short with tight stops appears to be the preferable strategy.
The Wild Card
Silver
On the daily chart all indicators are showing a bearish movement. The Slow Stochastic of the hourlies is showing that silver still has plenty of steam in this move. Forex traders have a great opportunity to join and enjoy the rest of the bearish momentum.
FOREXYARD
Read more...
Headlines
* Volatile Trading Leads to Major Sell-Off for the USD.
Economic News
USD
The USD saw a bearish trading session yesterday. Although no economic data was released with an impact, the USD was mostly affected by speculations. Impacting the greenback was the wary economic outlook from a Federal Reserve official and the possibility of more financial troubles of the Federal National Mortgage Association commonly known as Fannie Mae and Freddie Mac - the largest corporate funder in Washington. The USD lost value against its major crosses, most notably vs. the EUR as the pair was once again being at just above 1.57.
As stated previously, no economic data was released yesterday; however there was plenty of volatility in USD trading. Traders noted that the Crude Oil prices dropped quite dramatically to around $141 a barrel, however the USD did not strengthen. The main reason for the greenback's weakness was San Francisco Federal Reserve Bank President's speech regarding U.S. Interest Rate policy, in which she noted that since the worse-case scenarios for growth have been skirted by the Fed's aggressive string of rate cuts, the Interest Rate policy is 'nearing a crossroads'. She also said that the headline inflation is likely to run much higher than desired for the next few quarters. Further hurting the USD was Lehman Brothers analysts' assessments that Fannie Mae and Freddie Mac may need to raise more capital as the credit crisis continues.
A batch of economic releases and announcements are expected for the USD today. The day will start with a speech by Fed Chariman Bernake regarding financial regulation and stability at the Federal Deposit Insurance Corporation's Forum on Mortgage Lending. Volatility will continue after Bernake's speech as Pending Home Sales are forecasted to be released at a negative rate and hurt the USD. Wholesale Inventories are expected to slim down, which should help the USD as companies are more likely to purchase goods when they have depleted inventories, but then Consumer Credit is expected to decrease and once again depreciate the USD. Overall, traders might expect the USD to further devalue against its top currency rivals with a weak economic data releases expected today.
EUR
After going through a bearish trading trend last week, the EUR is starting off strongly this week as it gained strength yesterday against its main currency crosses. In terms of economic data releases, the only two new releases yesterday were actually disappointing. The EUR took advantage of its currency rivals' bearishness and assuring comments by Euro-Zone finance ministers. Against the USD, the EUR rebounded back above the 1.57 range and traded in the mid 0.79's against the GBP. The Sentix Investor Confidence, which measures investor confidence towards the Euro-zone economy, was released with a negative value while it was forecasted to be positive. The German Industrial Production experienced the exact same type of disappointment and was released at -2.4%. On the other hand, EUR traders regained confidence with its rivals' weaknesses, the hawkish notes coming out of the meeting between the EU finance ministers, and ECB president Trichet. Juncker said the Euro-Zone must 'avoid second-round effects that could lead to an inflationary spiral,' and that the ECB's decision to hike therefore 'was not criticized.'
No economic data releases are expected today from the Euro-Zone. All eyes should be on Bernake's speech and the Pending Home Sales, as both will cause volatility for the USD and the EUR will be affected accordingly. The other wildcard will be the Crude Oil prices which have decreased by nearly $4 yesterday.
JPY
After a slow start, the JPY finished yesterday's trading session versus most of its currency pairs. The Yen's bullishness was ignited by the yerly M2+CD Money Supply release. The JPY gained strength from this data as it beat the forecast, which triggered the commonly held theory that elevated currency levels spur growth and have an inflationary effect, leading to higher interest rates. The decrease in Crude Oil prices also helped the Japanese economy and as both the EUR and GBP had disappointing economic data releases, traders looked to the JPY for bullishness. For this trend to continue, the Economy Watchers Current Index which is expected to be released at 5:00 GMT has to beat its negative forecast.
On tap for the JPY today will be the monthly Core Machinery Orders. Compared to the previous value of 5.5%, this month is forecasted to decrease to 1.1%, which indicates that the manufacturers have slower their purchasing of machinery and the manufacturing industry is in a slower expansion phase. Japanese Yen traders should also keep an eye on the Crude Oil prices as the Yen will get support from a decrease in the prices. It seems like the JPY will see bearishness today as the most impactful event will be the Core Machinery Orders which is predicted to decrease.
Crude Oil
Oil eased to near $141 a barrel yesterday. However, its losses were limited by concerns over Iran's dispute with the West over its nuclear program. Iran on Saturday vowed to pursue its enrichment program, stating that it had no intention of discussing its 'right to enriching uranium'. Such a statement indeed keeps political tensions alive further adding to supply worries.
Geopolitical concerns are still supporting oil prices and apart from Iran, oil prices very much dependent on the U.S. dollar movements and the U.S. equity markets levels. As low as the USD stays low, the Crude Oil depreciating scenario is highly unlikely.
Technical News
EUR/USD
The pair began to appreciate after last week's devaluation. On the 4 hour and daily charts the indicators are giving mixed signal. However, the Slow Stochastic on the hourlies shows a bullish momentum. Going long with tight stops could be a good strategy today.
GBP/USD
The bearish trend continues with plenty of steam.On the daily chart the bearish momentum is still intact as the cable now floats in the middle of it. The hourlies also support that notion, however the RSI implies that in the near future the ongoing bearish correction might run out of steam. Traders are advised to take advantage of the cable bears.
USD/JPY
The sharp bullish channel on the daily chart continues with no signs of a stop. The Slow Stochastic is showing a triple top formation with a positive slope, which indicates the possible continuation of the trend. Going long appears to be the right move today.
USD/CHF
The float within the narrowing bearish channel on the daily chart continues, as no significant breach has been made. The negative slope on the 4 hour chart's Slow Stochastic indicates the continuation of the bearish movement within the channel. Going short with tight stops appears to be the preferable strategy.
The Wild Card
Silver
On the daily chart all indicators are showing a bearish movement. The Slow Stochastic of the hourlies is showing that silver still has plenty of steam in this move. Forex traders have a great opportunity to join and enjoy the rest of the bearish momentum.
FOREXYARD
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Daily FX Forecast
Daily Forex Technicals | Written by FX Dream | Jul 08 08 08:11 GMT |
EUR/USD
Resistance levels: 1.5750/1.5840/1.5900
Support levels: 1.5640/1.5600/1.5530
EUR/USD has dropped sharply below 1.5700 on Thursday and then down to 1.5610 lows over the last trading sessions after ECB Comments Today focus will be on Bernanke Speech at 12:30 GMT. As long as price trades below 1.5740-50 first important Resistance area the bias remains bearish for retest of 1.5610-00 region and 1.5530 in mid term First Minor Support comes at 1.5640 On the upside, dovish Bernanke Comments later today may boots price up to 1.5750 Resistance Beyond resumes the upmove towards 1.5840 and 1.5900 previous highs in mid term
Strategy-neutral
GBP/USD
Resistance levels: 1.9790/1.9830/1.9900
Support levels: 1.9650/1.9580/1.9510
GBP/USD has fallen down to 1.9800 on Thursday and then 1.9650 bottom yesterday. Now the bias remains bearish as long as price holds below 1.9790 key Resistance for retest of 1.9650 bottom Below eases price further down to 1.9585-80 area. On the upside, above 1.9790 crucial Resisatnce moves price up higher to 1.9830 later today and 1.9900 in mid term
Strategy-neutral.
USD/JPY
Resistance levels: 107.20/107.80/108.40
Support levels: 106.60/106.00/105.20
USD/JPY has risen up to 107.20 and towards 107.80 our up targets over the last trading sessions exactly as it was suggested We have booked 65 pip over the first part and 115 pip over the rest of our Long position Now there is key Support at 106.70-60 area Below turns price down to 106.00 later today and 105.20 over today and tomorrow. On the upside, above 107.20 is needed for resuming the uptrend towards 107.80
Holding USD/JPY Long at 106.45,Stop-loss-106.00, Take profit-107.10( 107.60)
USD/CHF
Resistance levels: 1.0280/1.0350/1.0400
Support levels: 1.0240/1.0170/1.0120
USD/CHF has risen up to 1.0280 our up target on Thursday as it was suggested and then towards 1.0350 next Resistance yesterday Now price meets important Support at 1.0240 Below turns price back towards 1.0170 later today and 1.0120-10 bottom levels over today and tomorrow On the upside, above 1.0280 first Resistance moves price up towards 1.0350 last days highs
Strategy-neutral.
EUR/JPY
Resistance levels: 168.00/168.60/169.00/169.50
Support levels: 167.30/166.50/166.00
The Cross has fallen back below 167.30 over the last trading days on the break below 168.40 and 168.00 previous key Support levels Now 168.00 previous Support has turned into important Resistance Above moves price up towards 168.60 later today and 169.00 in mid term On downside, as long as price trades below 168.00 the downtrend remains intact with next targets at 166.50 and 166.00
Strategy-neutral.
FXDream
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EUR/USD
Resistance levels: 1.5750/1.5840/1.5900
Support levels: 1.5640/1.5600/1.5530
EUR/USD has dropped sharply below 1.5700 on Thursday and then down to 1.5610 lows over the last trading sessions after ECB Comments Today focus will be on Bernanke Speech at 12:30 GMT. As long as price trades below 1.5740-50 first important Resistance area the bias remains bearish for retest of 1.5610-00 region and 1.5530 in mid term First Minor Support comes at 1.5640 On the upside, dovish Bernanke Comments later today may boots price up to 1.5750 Resistance Beyond resumes the upmove towards 1.5840 and 1.5900 previous highs in mid term
Strategy-neutral
GBP/USD
Resistance levels: 1.9790/1.9830/1.9900
Support levels: 1.9650/1.9580/1.9510
GBP/USD has fallen down to 1.9800 on Thursday and then 1.9650 bottom yesterday. Now the bias remains bearish as long as price holds below 1.9790 key Resistance for retest of 1.9650 bottom Below eases price further down to 1.9585-80 area. On the upside, above 1.9790 crucial Resisatnce moves price up higher to 1.9830 later today and 1.9900 in mid term
Strategy-neutral.
USD/JPY
Resistance levels: 107.20/107.80/108.40
Support levels: 106.60/106.00/105.20
USD/JPY has risen up to 107.20 and towards 107.80 our up targets over the last trading sessions exactly as it was suggested We have booked 65 pip over the first part and 115 pip over the rest of our Long position Now there is key Support at 106.70-60 area Below turns price down to 106.00 later today and 105.20 over today and tomorrow. On the upside, above 107.20 is needed for resuming the uptrend towards 107.80
Holding USD/JPY Long at 106.45,Stop-loss-106.00, Take profit-107.10( 107.60)
USD/CHF
Resistance levels: 1.0280/1.0350/1.0400
Support levels: 1.0240/1.0170/1.0120
USD/CHF has risen up to 1.0280 our up target on Thursday as it was suggested and then towards 1.0350 next Resistance yesterday Now price meets important Support at 1.0240 Below turns price back towards 1.0170 later today and 1.0120-10 bottom levels over today and tomorrow On the upside, above 1.0280 first Resistance moves price up towards 1.0350 last days highs
Strategy-neutral.
EUR/JPY
Resistance levels: 168.00/168.60/169.00/169.50
Support levels: 167.30/166.50/166.00
The Cross has fallen back below 167.30 over the last trading days on the break below 168.40 and 168.00 previous key Support levels Now 168.00 previous Support has turned into important Resistance Above moves price up towards 168.60 later today and 169.00 in mid term On downside, as long as price trades below 168.00 the downtrend remains intact with next targets at 166.50 and 166.00
Strategy-neutral.
FXDream
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Today's Market Outlook
Daily Forex Technicals | Written by Windsor Brokers Ltd | Jul 08 08 07:31 GMT |
EURUSD
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EURUSD
09:00 (GMT+3) Has fallen to a low of 1.5611 Monday, near 50% of 1.5303/1.5910 upleg before staging modest rebound. Immediate recovery may stretch towards 1.5778, 50/61.8% retrace of 1.5910/1.5611 downleg where a swing top may emerge before next downside attempt as last Thursday's engulfing candle looms. Below 1.5611/00 opens 1.5537, 25 June, near 61.8% retrace.
Res: 1.5754, 1.5778, 1.5796, 1.5827
Sup: 1.5669, 1.5645, 1.5621, 1.5511
09:00 (GMT+3) Has risen to the top of a 6-day rising channel resistance at 107.75 before easing to highlight a possible 3-legged structure off 104.99 low, 30 June. Pullback thus far finds support over last Friday's 106.60 while reclaiming 107.75 is needed to reinstate bulls back at the congestive 108.59/62 tops. Losing 106.60 however warns a minimum 106.05/00, 61.8% - 104.99/107.75.
Res: 107.41, 107.59, 108.75, 108.00
Sup: 106.88, 106.55, 106.47, 106.20
09:00 (GMT+3) Headed for 61.8% retracement of 1.9409/2.0008 upleg at 1.9638 but interrupted by Monday's rebound off 1.9649 low to 1.9790 high. Hourly RSI negative reversal emerges from this upswing to warn of impending fall to 1.9630 zone but above 1.9828/49 will negate this call. Exercise caution when losses approach 1.9580/85, 19/23 June lows as 14-day RSI positive reversal hints of a base.
Res: 1.9777, 1.9790, 1.9800, 1.9828
Sup: 1.9712, 1.9691, 1.9668, 1.9649
09:00 (GMT+3) Crested for a minor double-top on the hourly chart at 1.0344 high Monday, near 61.8% retrace of 1.0494/1.0112 fall before an ensuing sharp pullback. A swing low is sought above 1.0200/1.0196, 61.8% of 1.0112/1.0344 rise prior to next upleg as last Thursday's towering bullish candle bolsters recovery. Beyond 1.0344 favors 1.0391, 26 June high.
Res: 1.0304, 1.0331, 1.0344, 1.0358
Sup: 1.0226, 1.0196, 1.0166, 1.0149
Windsor Brokers Ltd
http://www.windsorbrokers.biz
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Asia to Meet `Perfect Storm' of Costs, Slow Exports, Citi Says
By Kyung Bok Cho
July 8 (Bloomberg) -- Asian companies outside Japan will face a ``perfect storm'' of rising commodities costs and slowing growth in export volumes, triggering earnings-estimate downgrades by analysts, Citigroup Inc. said.
Materials and industrials stocks, such as Hong Kong-listed Angang Steel Co. and Oil & Natural Gas Corp. of India, have ``lofty'' valuations and should be avoided, analysts led by Markus Rosgen said. Investors should favor technology and bank shares, and markets such as South Korea and Taiwan that have already priced in potential earnings declines, the brokerage said.
Analysts on average estimate that earnings will increase 6.7 percent this year even though the gap between Asian companies' costs and export prices is at ``a record high,'' Citigroup said.
``To assume rising earnings seems totally unrealistic,'' the analysts said in a report released today. ``Above-average valuations and negative revisions to earnings do not make for a happy stock market.''
The MSCI Asia-Pacific Index lost 13 percent in the first six months of the year, the worst first half since 1992, on concern profits will shrink as commodity costs surged and global economies slowed, damping demand.
To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net.
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July 8 (Bloomberg) -- Asian companies outside Japan will face a ``perfect storm'' of rising commodities costs and slowing growth in export volumes, triggering earnings-estimate downgrades by analysts, Citigroup Inc. said.
Materials and industrials stocks, such as Hong Kong-listed Angang Steel Co. and Oil & Natural Gas Corp. of India, have ``lofty'' valuations and should be avoided, analysts led by Markus Rosgen said. Investors should favor technology and bank shares, and markets such as South Korea and Taiwan that have already priced in potential earnings declines, the brokerage said.
Analysts on average estimate that earnings will increase 6.7 percent this year even though the gap between Asian companies' costs and export prices is at ``a record high,'' Citigroup said.
``To assume rising earnings seems totally unrealistic,'' the analysts said in a report released today. ``Above-average valuations and negative revisions to earnings do not make for a happy stock market.''
The MSCI Asia-Pacific Index lost 13 percent in the first six months of the year, the worst first half since 1992, on concern profits will shrink as commodity costs surged and global economies slowed, damping demand.
To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net.
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Today's Key Points
Daily Forex Fundamentals | Written by Danske Bank | Jul 08 08 07:05 GMT |
* Fed's Yellen destroys positive equity sentiment - S&P500 drops 0.8%
* Largest US mortgage finance companies, Fannie Mae and Freddie Mac, fall to lowest in 13 years
* Today, US tier 2 data should attract most attention in a light data calendar
Markets Overnight
The US equity market begun the week on a positive note, but started dropping in the middle of the session as sentiment again shifted to negative. Financial companies led the decline and the S&P500 Financials Index fell to a five-year low. Info-tech companies advanced the most, but not enough to reverse the negative trend. The total index lost 0.8%.
The turnaround in sentiment could largely be attributed to Fed's Yellen (non-voter, dove), who gave a rather gloomy speech on the prospects for the US economy as she attached little confidence in a near-by end to the housing market crisis. She further said that things could worsen further before improving. Perhaps not her best day.
Freddie Mac and Fannie Mae fell to the lowest level in 13 years as concerns grew that the two largest US mortgage finance companies may need to raise more capital to overcome writedowns and satisfy new accounting rules. Freddie Mac fell 18% while Fannie Mae dropped 16% after a report yesterday indicated that an accounting change may force them to raise a combined USD 75bn.
But it is an ill wind that blows nobody any good, and oil prices fell to around USD 142 per barrel. The price dipped even below USD 140 per barrel for a short while. The decline in crude oil prices should be seen in relation to a larger drop in all commodities, led by grain futures. In fact, prices are falling at a speed not seen since March. It is the outlook of a good harvest in the US Midwest that keeps commodity prices in check.
Treasuries fell slightly yesterday, with yields now near a one-month low. The yield on the 2Y note dropped around 10bp while the yield on the 10Y note retracted 7bp. Investors have increased confidence in a Fed on hold for a longer while. The market-implied probability for unchanged rates at the next two meetings has risen above 50%.
FX markets have been rather calm overnight with only minor movements. EUR/USD has drifted a little downwards, now trading just around 1.57. GBP, which came under pressure after yesterday's industrial production data, opens up at 0.7950 against EUR. Scandies are bouncing due to thinner markets, but the pairs are in wellknown territory with EUR/SEK at 9.42 and EUR/NOK at 7.99.
Global Daily
Today we will see data releases that will surely paint a gloomy picture of prevailing economic conditions. In the US, pending home sales data and consumer confidence data are out, and we will also see consumer confidence data in the UK along with house price statistics. A reminder of the state of the housing market in the US and the UK in combination with renewed focus on hardship among mortgage providers is likely to be bullish for yields, and thus offer support to our bullish basic outlook for the bond market. The spring bear market may prove to have been ‘false start', and we maintain our case that a continued deterioration of the economy and a persistent financial crisis should keep the Fed from hiking rates any time soon.
Fed chairman Bernanke speaks at FDIC Forum on financial regulation and mortgage lending while Fed's Lacker speaks on the economic outlook in Washington.
The data calendar for Europe is very thin today.
Danske Bank
http://www.danskebank.com/danskeresearch
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* Fed's Yellen destroys positive equity sentiment - S&P500 drops 0.8%
* Largest US mortgage finance companies, Fannie Mae and Freddie Mac, fall to lowest in 13 years
* Today, US tier 2 data should attract most attention in a light data calendar
Markets Overnight
The US equity market begun the week on a positive note, but started dropping in the middle of the session as sentiment again shifted to negative. Financial companies led the decline and the S&P500 Financials Index fell to a five-year low. Info-tech companies advanced the most, but not enough to reverse the negative trend. The total index lost 0.8%.
The turnaround in sentiment could largely be attributed to Fed's Yellen (non-voter, dove), who gave a rather gloomy speech on the prospects for the US economy as she attached little confidence in a near-by end to the housing market crisis. She further said that things could worsen further before improving. Perhaps not her best day.
Freddie Mac and Fannie Mae fell to the lowest level in 13 years as concerns grew that the two largest US mortgage finance companies may need to raise more capital to overcome writedowns and satisfy new accounting rules. Freddie Mac fell 18% while Fannie Mae dropped 16% after a report yesterday indicated that an accounting change may force them to raise a combined USD 75bn.
But it is an ill wind that blows nobody any good, and oil prices fell to around USD 142 per barrel. The price dipped even below USD 140 per barrel for a short while. The decline in crude oil prices should be seen in relation to a larger drop in all commodities, led by grain futures. In fact, prices are falling at a speed not seen since March. It is the outlook of a good harvest in the US Midwest that keeps commodity prices in check.
Treasuries fell slightly yesterday, with yields now near a one-month low. The yield on the 2Y note dropped around 10bp while the yield on the 10Y note retracted 7bp. Investors have increased confidence in a Fed on hold for a longer while. The market-implied probability for unchanged rates at the next two meetings has risen above 50%.
FX markets have been rather calm overnight with only minor movements. EUR/USD has drifted a little downwards, now trading just around 1.57. GBP, which came under pressure after yesterday's industrial production data, opens up at 0.7950 against EUR. Scandies are bouncing due to thinner markets, but the pairs are in wellknown territory with EUR/SEK at 9.42 and EUR/NOK at 7.99.
Global Daily
Today we will see data releases that will surely paint a gloomy picture of prevailing economic conditions. In the US, pending home sales data and consumer confidence data are out, and we will also see consumer confidence data in the UK along with house price statistics. A reminder of the state of the housing market in the US and the UK in combination with renewed focus on hardship among mortgage providers is likely to be bullish for yields, and thus offer support to our bullish basic outlook for the bond market. The spring bear market may prove to have been ‘false start', and we maintain our case that a continued deterioration of the economy and a persistent financial crisis should keep the Fed from hiking rates any time soon.
Fed chairman Bernanke speaks at FDIC Forum on financial regulation and mortgage lending while Fed's Lacker speaks on the economic outlook in Washington.
The data calendar for Europe is very thin today.
Danske Bank
http://www.danskebank.com/danskeresearch
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G-8 Says Oil, Food Prices Pose Risk to World Economy
By Toko Sekiguchi and Theophilos Argitis
July 8 (Bloomberg) -- Group of Eight leaders said rising oil and food costs pose a ``serious challenge'' to the global economy, indicating inflation has become their primary concern.
``We have strong concerns about the sharp rise in oil prices,'' the group said in a statement issued today in Toyako, Japan, where the leaders are holding their annual summit. ``The world economy is now facing uncertainty and downside risks persist.''
Leaders from the U.S., Japan, Germany, Italy, Britain, France, Canada and Russia proposed holding a forum to encourage dialogue between energy producers and consumers, focusing on energy efficiency. ``Production and refining capacities should be increased in the short-term,'' they said.
``They have clearly signaled that public enemy number one is inflation,'' said John Kirton, director of the G-8 Research Group at the University of Toronto. The comments suggest spiraling prices are replacing credit-market losses as their biggest economic priority, he said.
Crude oil doubled since last year's G-8 summit in Germany, increasing the threat to global growth. Record corn, wheat and rice prices have also contributed to accelerating inflation, prompting the Bank of International Settlements to recommend the world's central banks raise interest rates.
Central banks in the U.S., Canada, U.K. and Japan haven't tightened monetary policy since financial markets seized up last August. The European Central Bank increased its benchmark rate by a quarter point to 4.25 percent last week.
`Remain Positive'
The G-8 leaders said they ``remain positive'' about the long-term outlook for their economies and pledged to take ``appropriate actions'' to ensure stability.
``We express our strong concern about elevated commodity prices, especially of oil and food, since they pose a serious challenge to stable growth worldwide, have serious implications for the most vulnerable, and increase global inflationary pressure,'' the statement said.
The leaders called on energy-producing nations to increase short-term capacity and invest more in production to bolster supply in the ``medium-term''. They also called on oil-consuming countries to increase energy efficiency.
``The summit recognizes quite clearly how serious to the global economy'' are high oil prices, International Energy Association Executive Director Nobuo Tanaka said in an interview before the statement was released.
The leaders also said some emerging market countries with growing current account surpluses needed to allow their currencies to adjust. No specific reference to the U.S. dollar or other currencies was made in the statement.
Corn surged 26 percent last month and soybeans jumped 15 percent as the worst Midwest floods since 1993 ravaged parts of the U.S. Oil climbed to a record $145.85 a barrel on July 3 amid heightened speculation that a conflict between Israel and Iran would disrupt Middle East petroleum shipments.
To contact the reporters on this story: Toko Sekiguchi in Toyako, Japan, at tsekiguchi3@bloomberg.net
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Fed's Loans to Wall Street May Prevent Raising Rates This Year
By Scott Lanman
July 8 (Bloomberg) -- The Federal Reserve may hold off on its first interest-rate increase since 2006 until policy makers judge that financial markets are stable enough to allow the central bank to withdraw its lending backstop for Wall Street.
Raising rates while at the same time removing securities dealers' access to direct loans from the central bank would be a double hit to markets that officials probably want to avoid, Fed watchers said. The Fed also may have a hard time justifying higher borrowing costs before it has a plan for ending emergency lending to nonbanks.
The timing difficulty, along with continued strains in credit markets, means traders may be mistaken in estimating the odds of a rate boost by year-end at 74 percent.
``We think they'll wait until 2009,'' said Brian Sack, who used to head the Fed's monetary and financial market analysis group before he joined Macroeconomic Advisers LLC as senior economist in Washington. Successfully dealing with an end to the Primary Dealer Credit Facility is ``a hurdle for credit markets to get past before the Fed will likely start tightening,'' he said.
Bernanke, who spurred expectations for a rate increase when he said last month the Fed would ``strongly resist'' a jump in inflation expectations, speaks today on financial stability and regulation. His remarks to a Federal Deposit Insurance Corp. forum are scheduled for 8 a.m. in Arlington, Virginia. Treasury Secretary Henry Paulson also speaks.
Fed Powers
The Fed started the PDCF in March, invoking its powers under ``unusual and exigent circumstances'' to forestall a collapse in confidence after the near-bankruptcy of Bear Stearns Cos.
New York Fed President Timothy Geithner, who spearheaded the central bank's rescue of Bear Stearns, said June 9 that the Fed's emergency measures would be in place as long as markets remained distressed. Persistent credit strains may leave officials unwilling to end the PDCF in September, after they said March 16 it would last for ``at least'' six months.
Credit-default swaps on Lehman Brothers Holdings Inc., Merrill Lynch & Co. and Morgan Stanley debt are trading close to their highest since March. The contracts let investors bet on the risk that a company will default on its bonds.
Another gauge of financial stress watched by the Fed has also remained elevated. The difference between the overnight indexed swap rate, a measure of what traders expect for the Fed's benchmark rate, and three-month interbank loans in dollars was 0.78 percentage point yesterday, about the same as the start of May.
`Severe Stranglehold'
In addition, commercial-bank loans outstanding have dropped to their lowest level since March, Fed statistics show. That will ``put a severe stranglehold on economic growth,'' said former Fed governor Lyle Gramley.
Raising rates in such an environment ``would be a very risky strategy,'' said Gramley, now senior economic adviser at Stanford Group Co. in Washington. ``I don't think they're going to do that, and I think markets have been premature in jumping to that conclusion.''
The Federal Open Market Committee on June 25 kept its target rate for overnight loans between banks at 2 percent, ending a series of seven reductions since September.
Futures prices on the Chicago Board of Trade indicate investors place 47 percent odds the Fed will raise the benchmark rate to at least 2.25 percent at or before the Sept. 16 meeting. That probability is 74 percent for the end of the Dec. 16 FOMC gathering.
One at a Time
``They're going to pick one instrument at a time to tighten policy,'' predicted New York-based Merrill Lynch economist Drew Matus, who used to work at the New York Fed.
While nothing would prevent the Fed from taking such action, increasing the cost of credit while at the same time lending to Wall Street may spur criticism the central bank is misusing its emergency authority.
The Fed is only supposed to lend to nonbanks under emergency circumstances when no other ``adequate'' credit is available. The PDCF and the Fed loans to secure Bear Stearns's takeover by JPMorgan Chase & Co. were the first extension of funds to nonbanks since the 1930s.
Richmond Fed President Jeffrey Lacker and Philadelphia Fed chief Charles Plosser have already criticized the PDCF for raising the danger of future financial crises by increasing incentives for firms to take on more risk.
The PDCF was one of three tools the Fed introduced since December to combat the credit crisis. The central bank has a $200 billion program of lending Treasuries to the primary dealers in U.S. government bonds. The Fed also auctions $75 billion of cash loans to commercial banks every two weeks.
``If those tools work, then monetary policy can go back to addressing what it should be addressing, which is inflation,'' John Ryding, the founding partner of RDQ Economics in New York who used to work as an economist at Bear Stearns and at the Bank of England, said in an interview with Bloomberg Radio. ``The problem is, I think it's clear, that there's still a lot of fragility in the system.''
To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net
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Japan Merchant Sentiment Falls as Inflation Weighs on Consumers
By Toru Fujioka
July 8 (Bloomberg) -- Sentiment among Japanese merchants fell to a six-year low in June as higher food and oil prices discouraged consumers from spending.
The Economy Watchers index, a survey of barbers, taxi drivers and others who deal with consumers, dropped to 29.5 from 32.1 in May, the Cabinet Office said today in Tokyo. An index of conditions in two to three months slid to 32.1, the worst since September 2001, from 35.1.
More than half of the nation's consumers plan to pare spending this year because of rising prices, a central bank survey showed last week. The Bank of Japan lowered its assessment of consumption, which makes up more than half of the economy, in all nine areas of the country in a quarterly report yesterday because of higher costs.
``Rising prices of daily necessities are a strong headwind for consumers,'' said Yoshiki Shinke, a senior economist at Dai- Ichi Life Research Institute in Tokyo. ``Consumer spending might not be able to keep supporting the economy and that's bad because foreign demand is also weakening.''
A record 88.9 percent of people expect prices to climb in the next 12 months and an unprecedented 58.7 percent said they will cut spending, last week's Bank of Japan survey showed.
Wages rose 0.2 percent in May, the slowest pace this year, while the prices of frequently purchased goods grew 2.4 percent. Consumer sentiment is at a six-year low and people are cutting back on non-essential spending to make up for higher costs.
JTB Corp., a travel agency, said summer travel will probably fall at the fastest pace in 15 years this season.
``Travelers are being very cautious about spending given rising oil prices and the uncertain outlook for the economy,'' said Yasoji Kato, spokesman at JTB. Some 25 percent of people planning trips are still undecided on their destination, an ``unusually'' high proportion, he said, because higher energy prices are limiting their options.
Hiromichi Shimizu, a taxi driver, has decided to scale down his summer trip with wife and four children.
``I gave up traveling far away and staying at a hotel because of the crazy gasoline prices,'' Shimizu, 32, said. ``We're going camping somewhere close this year to save money.''
To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net
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July 8 (Bloomberg) -- Sentiment among Japanese merchants fell to a six-year low in June as higher food and oil prices discouraged consumers from spending.
The Economy Watchers index, a survey of barbers, taxi drivers and others who deal with consumers, dropped to 29.5 from 32.1 in May, the Cabinet Office said today in Tokyo. An index of conditions in two to three months slid to 32.1, the worst since September 2001, from 35.1.
More than half of the nation's consumers plan to pare spending this year because of rising prices, a central bank survey showed last week. The Bank of Japan lowered its assessment of consumption, which makes up more than half of the economy, in all nine areas of the country in a quarterly report yesterday because of higher costs.
``Rising prices of daily necessities are a strong headwind for consumers,'' said Yoshiki Shinke, a senior economist at Dai- Ichi Life Research Institute in Tokyo. ``Consumer spending might not be able to keep supporting the economy and that's bad because foreign demand is also weakening.''
A record 88.9 percent of people expect prices to climb in the next 12 months and an unprecedented 58.7 percent said they will cut spending, last week's Bank of Japan survey showed.
Wages rose 0.2 percent in May, the slowest pace this year, while the prices of frequently purchased goods grew 2.4 percent. Consumer sentiment is at a six-year low and people are cutting back on non-essential spending to make up for higher costs.
JTB Corp., a travel agency, said summer travel will probably fall at the fastest pace in 15 years this season.
``Travelers are being very cautious about spending given rising oil prices and the uncertain outlook for the economy,'' said Yasoji Kato, spokesman at JTB. Some 25 percent of people planning trips are still undecided on their destination, an ``unusually'' high proportion, he said, because higher energy prices are limiting their options.
Hiromichi Shimizu, a taxi driver, has decided to scale down his summer trip with wife and four children.
``I gave up traveling far away and staying at a hotel because of the crazy gasoline prices,'' Shimizu, 32, said. ``We're going camping somewhere close this year to save money.''
To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net
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Korea Won Rises to 2-Week High; Speculation Central Bank Buying
By Judy Chen and William Sim
July 8 (Bloomberg) -- South Korea's won climbed to a two- week high on speculation the central bank is intervening to strengthen the currency and slow inflation at a decade-high.
The won is up 2 percent this week, its biggest two-day gain in three months, after the Ministry of Finance and Bank of Korea said yesterday they will use the country's $258 billion foreign- exchange reserves to support the won. President Lee Myung Bak yesterday sacked Vice Finance Minister Choi Joong Kyung, in charge of currency policy, after its 9.6 percent slide this year.
``It seems that there was an intervention this morning,'' said Jung Chan Ho, a currency dealer in Seoul at Shinhan Bank, a unit of South Korea's second-biggest financial group. ``The intervention could be $1 billion or more.''
Korea's currency advanced 1.2 percent to 1,030.3 against the dollar as of 11:39 a.m. in Seoul, from 1,043 yesterday, according to Seoul Money Brokerage Services Ltd. The won is the world's best performing major currency in the past two days, and is up the most since March 24-25, according to data compiled by Bloomberg.
The government, which previously advocated a weaker won, has changed its stance as record oil prices push up import costs and widened the current-account deficit.
Central banks intervene in currency markets by buying or selling foreign exchange. The financial authorities bought about $7 billion of won since the end of May to help boost the currency, JoongAng Ilbo newspaper reported July 1. The government doesn't disclose its actions in the currency market.
Export Growth Slowing
South Korea's export growth cooled to 17 percent in June amid a drop in shipments to Europe and after a trucker strike, sparked by rising prices, crippled transport. Global funds sold more local shares than they bought for the past 22 days as President Lee Myung Bak said on July 6 he may lower his economic growth target for the next two years.
Consumer prices surged 5.5 percent in June from a year earlier, the biggest increase since 1998, as crude oil touched a record $145.85 per barrel on July 3. Korea imports almost all of its energy needs. A weakening currency boosts the costs of imports.
``We are still underweight on the won due to oil prices, slowing growth and the current account deficit,'' said Thomas Harr, a senior currency strategist at Standard Chartered Plc in Singapore. ``We will have to monitor the foreign exchange intervention as they could get quite aggressive.''
`Top Priority'
The won will drop 14 percent to 1,200 per dollar this year because ``of the vulnerability of the balance of payments to rising energy prices,'' Peter Redward, head of research for emerging Asia at Barclays Capital Inc., said yesterday. Korea will fail to halt the currency drop with intervention because its economy is slowing and trade deficit widening, Morgan Stanley said the same day.
``The government has set top priority on stabilizing inflation and we will have to manage the foreign-exchange market to meet that goal,'' Choi Jong Ku, head of the ministry's international finance bureau, said yesterday. ``We will use foreign-exchange reserves again if necessary'' to curb the won's decline, he said.
Asia's policy makers have accumulated foreign-exchange reserves since countries in Asia spent most of their reserves to support their currencies in the region's 1997 crisis.
To contact the reporters on this story: Judy Chen in Shanghai at xchen45@bloomberg.net; William Sim in Seoul at wsim2@bloomberg.net.
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Dollar May Rise to 108.58 Yen on Charts, Daiwa's Kinouchi Says
By Kosuke Goto
July 8 (Bloomberg) -- The dollar may strengthen to 108.58 yen, said Eiji Kinouchi, chief technical analyst at Daiwa Institute of Research, citing charts traders use to predict price movements.
The U.S. currency's 13-week moving average against the yen last week rose above the 26-week moving average, a pattern called a ``golden cross,'' which is a bullish signal, Tokyo- based Kinouchi said. The 13-week moving average is currently at 104.89 yen and the 26-week moving average is at 104.64, according to data compiled by Bloomberg. The target of 108.58 yen will match a four-month high the dollar set on June 16.
``Technically, that's a sign of dollar-buying,'' said Kinouchi at the unit of Japan's second-largest brokerage. ``The dollar is likely to head higher against the yen.''
The dollar traded at 107.14 yen as of 11:09 a.m. in Tokyo from 107.18 yen in New York yesterday, when it rose to 107.75, the highest level since June 26.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast price changes in a security, commodity, currency or index.
To contact the reporter on this story: Kosuke Goto in Tokyo at kgoto2@bloomberg.net.
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July 8 (Bloomberg) -- The dollar may strengthen to 108.58 yen, said Eiji Kinouchi, chief technical analyst at Daiwa Institute of Research, citing charts traders use to predict price movements.
The U.S. currency's 13-week moving average against the yen last week rose above the 26-week moving average, a pattern called a ``golden cross,'' which is a bullish signal, Tokyo- based Kinouchi said. The 13-week moving average is currently at 104.89 yen and the 26-week moving average is at 104.64, according to data compiled by Bloomberg. The target of 108.58 yen will match a four-month high the dollar set on June 16.
``Technically, that's a sign of dollar-buying,'' said Kinouchi at the unit of Japan's second-largest brokerage. ``The dollar is likely to head higher against the yen.''
The dollar traded at 107.14 yen as of 11:09 a.m. in Tokyo from 107.18 yen in New York yesterday, when it rose to 107.75, the highest level since June 26.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast price changes in a security, commodity, currency or index.
To contact the reporter on this story: Kosuke Goto in Tokyo at kgoto2@bloomberg.net.
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Bradford & Bingley Fees Could Be 55 Million Pounds, Times Says
By Kari Lundgren
July 8 (Bloomberg) -- Bradford & Bingley Plc may have to pay as much as 55 million pounds ($108.7 million) in fees to complete a 400 million-pound rights offer, the London-based Times said.
The cost of legal and other advice is increasing as raising capital for the lender becomes more complex, the newspaper said, citing unidentified sources close to the agreement. Bradford & Bingley will face costs of about 13 percent of the total amount it hopes to raise, the Times said, citing a circular sent to shareholders Monday.
To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net
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July 8 (Bloomberg) -- Bradford & Bingley Plc may have to pay as much as 55 million pounds ($108.7 million) in fees to complete a 400 million-pound rights offer, the London-based Times said.
The cost of legal and other advice is increasing as raising capital for the lender becomes more complex, the newspaper said, citing unidentified sources close to the agreement. Bradford & Bingley will face costs of about 13 percent of the total amount it hopes to raise, the Times said, citing a circular sent to shareholders Monday.
To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net
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Vietnam Dong Black Market Rate Gains, Narrowing Gap
By Patricia Lui and Jason Folkmanis
July 8 (Bloomberg) -- The Vietnamese dong rate in the black market has strengthened towards the official level after the government released more dollars into the economy and cracked down on state banks' currency transactions.
The dong, allowed to trade 2 percent either side of a daily reference rate set by the central bank, traded at 16,849 per dollar at 10:34 a.m. in Hanoi. The black market rate is now about 2 percent away from the allowable range, according to JPMorgan Chase & Co. The gap was as wide as 10 percent in June.
``Their measures have been more aggressive in bringing the two markets in line,'' said Matthew Hildebrandt, an economist at JPMorgan in Singapore in an interview today.
Vietnam's financial markets tumbled this year after the central bank raised its benchmark interest rate three times to 14 percent to tame inflation that accelerated to a 16-year high of 26.8 percent in June. The gap between the twin rates also narrowed as the State Bank of Vietnam widened the dong's daily trading band from 1 percent on June 27 and allowed the currency to drop almost 5 percent this year.
``Now people have a bit more confidence,'' Michael Pease, chairman of the American Chamber of Commerce and general director of Ford Vietnam Ltd. said in an interview on July 2. ``A manager from a local company was telling me the other day that all his employees are complaining that every time they need to pay a bill, they have to change their dollars into dong because all their savings are in dollars.''
Converging Rates
The black market rate commonly refers to the rate offered by street money changers, while state banks use so-called parallel rates by adding fees or conducting multiple currency exchanges. The central bank threatened to fine banks and money changers which violate regulations.
Black-market demand won't dry up for now, Hildebrandt said.
``These two rates won't converge until confidence returns,'' Hildebrandt said. ``They need to use more market- based measures like providing sufficient amounts liquidity to the market instead of relying on administrative measures.''
Morgan Stanley wrote in a report this week that intervention by Vietnam, India and South Korea to strengthen their currencies will fail. It estimates Vietnam's currency reserves to be $27 billion.
The dong will decline to 17,500 to the dollar by the end of the year, said Thomas Harr, a Singapore-based currency strategist at Standard Chartered Bank.
``We remain bearish on the Vietnamese dong due to the high inflation, the very wide trade deficit and the government's preference for a weaker currency,'' Harr said.
Trade Deficit
The trade deficit in the first six months widened to $14.8 billion, up from $5.2 billion a year earlier.
Imports have slowed due to a package of measures including interest-rate increases, according to a report dated yesterday from Moody's Economy.com, a unit of New York-based Moody's Corp. Vietnam imported $6.8 billion of goods in June, according to preliminary government figures, from $7.9 billion in May.
Forward Contracts
Traders are pricing in an 18 percent decline in the dong in the coming year to 20,500 per dollar, according to offshore 12- month non-deliverable forwards. On June 18, the rate was as high as 24,900. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars.
The dong's unofficial rate gained to 17,500 by the end of June, compared with 19,400 in the middle of the month, according to Dragon Capital, a Ho Chi Minh City-based investment fund.
``The dong was at all times well above the very dubious non-deliverable-forward rates that investment banks have been so focused on,'' Bill Stoops, head of research at Dragon, wrote in a note to investors dated July 4.
To contact the reporter on this story: Patricia Lui Singapore at plui4@bloomberg.netJason Folkmanis in Berkeley, California at folkmanis@bloomberg.net
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Australian, N.Z. Dollars Weaken Against Yen as Stocks Decline
By Ron Harui and Candice Zachariahs
July 8 (Bloomberg) -- The Australian and New Zealand dollars fell against the yen as slumping equity markets eroded demand for higher-yielding assets funded in Japan's currency.
The two currencies ended two days of gains versus the yen as Fannie Mae and Freddie Mac, the largest U.S. providers of home-mortgage financing, slid to the lowest in more than 13 years on concern they will be forced to raise more capital. Australia's dollar declined the most in a week as the difference in yield, or spread, between two-year Australian and Japanese bonds narrowed to the least in six weeks.``Rising risk aversion with volatility and losses on the U.S. stock market hit the Aussie quite hard,'' said Tony Morriss, a senior currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney.
The Australian dollar declined 0.7 percent to 102.24 yen as of 1:58 p.m. in Sydney, from 102.91 yen late in Asian trading yesterday. It slipped 0.3 percent versus the U.S. dollar to 95.48 U.S. cents.
New Zealand's dollar fell 0.7 percent to 80.50 yen, and weakened 0.3 percent to 75.20 U.S. cents. It touched 75.03 U.S. cents, the lowest level since June 16.
The Standard & Poor's 500 Index dropped 0.8 percent yesterday, extending its plunge from an October record to more than 20 percent. The VIX volatility index, a Chicago Board Options Exchange gauge reflecting expectations for stock market price changes and a barometer of risk aversion, reached 26.91, the highest level since March 24.
Benchmark Rates
Benchmark interest rates are 7.25 percent in Australia and 8.25 percent in New Zealand, compared with 2 percent in the U.S. and 0.5 percent in Japan, making the Australian and New Zealand dollars popular targets for so-called carry trades.
In a carry trade, investors get funds in a country with low borrowing costs and invest in another with higher interest rates, earning the spread between the borrowing and lending rate. The risk is currency market moves erase those profits.
``Worsening investor-risk appetite appeared to weigh on the Australian dollar, as investors trimmed carry trades,'' John Kyriakopoulos, a currency strategist at National Australia Bank Ltd. in Sydney, wrote in a note to clients.
The Australian dollar declined for a third day against the U.S. currency as an industry report showed business confidence fell to the lowest level in seven years as cooling domestic demand and rising raw-material costs eroded corporate profits.
The confidence index dropped to minus 9 points in June from minus 4 in May, according to a National Australia Bank survey of 335 companies. The reading was the lowest since the Sept. 11, 2001, U.S. terrorist attacks.
Three-Week Low
The New Zealand dollar traded near the lowest level in three weeks against the U.S. currency after an industry report showed profit expectations declined to the least in 25 years.
The currency also fell for a third day versus the U.S. dollar as the report from the New Zealand Institute of Economic Research backed speculation the economy has slipped into a recession after shrinking in the first quarter. The New Zealand dollar fell against 10 of the 16 most-traded currencies as traders added to bets the central bank will cut interest rates from a record high in coming months.
The report ``is consistent with the idea that New Zealand is stepping into a period of slow growth and possibly a recession,'' said ANZ's Morriss. ``It has put the kiwi back under pressure,'' he said, referring to the local currency by its nickname.
Twenty-three percent of firms surveyed said domestic trading will decline over the next three months compared with 10 percent in the previous poll, the Institute said in Wellington. A net 40 percent of 923 businesses surveyed last month said profits will fall, the most since December 1982.
Rate Cut `Likely'
Reserve Bank of New Zealand Governor Alan Bollard said last month it is ``likely'' he will cut the official cash rate from 8.25 percent, the highest of any nation with an Aaa credit rating. Two of 13 economists surveyed by Bloomberg News expect a reduction to 8 percent at the next meeting on July 24.
Traders are betting the RBNZ will cut borrowing costs by 1.33 percentage points in the next 12 months, according to a Credit Suisse Group index based on interest-rate swaps. That compares with 1.25 percentage points yesterday.
Australian government bonds rose. The 10-year yield fell 2 basis points to 6.33 percent, according to data compiled by Bloomberg. The price of the 5.25 percent bond due March 2019 gained 0.113, or A$1.13 per A$1,000 face amount, to 91.677.
New Zealand government bonds also advanced, with the yield of the 10-year note falling 2 basis points to 6.29 percent.
To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net; Candice Zachariahs in New York at czachariahs1@bloomberg.net.
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Asian Currencies: Won Leads Gains, Ringgit Rises on Oil Retreat
By David Yong and Judy Chen
July 8 (Bloomberg) -- South Korea's won rose, leading gains in the region, on speculation the government is intervening to strengthen the currency to help slow inflation from the fastest in a decade.
The Ministry of Finance and Bank of Korea yesterday said they may use the nation's $258 billion of foreign-exchange reserves to support the won. The currency has slipped 11 percent in the past year, costing Vice Finance Minister Choi Joong Kyung his job yesterday. Malaysia's ringgit gained as oil prices retreated from a record.
``Interventions are possible this week,'' said Kim Sung Soon, a currency dealer with Industrial Bank of Korea in Seoul, the country's largest lender to small and medium-sized companies. ``But the interventions cannot change the market trend as there's huge demand for the dollar.''
Korea's currency advanced 1.2 percent to 1,030 against the dollar as of 12:33 p.m. in Seoul, from 1,043 yesterday, according to Seoul Money Brokerage Services Ltd. The ringgit rose for a fourth day, adding 0.1 percent to 3.2630 per dollar.
South Korea reversed its weaker-won policy as record oil prices pushed up import costs and widened the current-account deficit. The government may lower its growth target for the next two years, President Lee Myung Bak said in an interview with the British Broadcasting Corp. Seoul on July 6.
Central banks intervene in currency markets by buying or selling foreign exchange. South Korea has bought about $7 billion of won since the end of May to support its currency, JoongAng Ilbo newspaper reported July 1.
`Temporary Reprieve'
Malaysia's ringgit was the third-biggest gaining currency among the 10 most-traded in Asia outside Japan after crude oil declined yesterday by the most in more than two weeks, easing concern that inflation will worsen.
``Lower oil prices will be a reprieve for Asian economies and currencies,'' said Yahya Mohd Nor, head of currency trading at Affin Bank Bhd. in Kuala Lumpur. The ringgit may strengthen to 3.25 in the weeks ahead, Yahya said.
Crude oil for August delivery traded at $142.05 a barrel in after-hours trading on the New York Mercantile Exchange. It fell as much as 4 percent yesterday.
Malaysia raised gasoline prices by 41 percent and diesel by 63 percent on June 5, a move that may push June's inflation to a nine-year high of 5 percent, Bank Negara Malaysia said last month. The government subsidizes fuel prices to make them affordable to consumers.
Rupiah Yields
Indonesia's rupiah rose 0.1 percent to 9,206 per dollar for a second day of gains on speculation the central bank will keep raising borrowing costs to quell inflation, boosting demand for the nation's higher-yielding assets.
Bank Indonesia on July 3 lifted its benchmark interest rate for the third straight month to 8.75 percent, increasing the rate advantage to 6.75 percentage points over the U.S. benchmark rate, the widest since 2006.
``Bank Indonesia has the intention to keep increasing the rate,'' said Lindawati Susanto, head of currency trading at Bank Resona Perdania PT in Jakarta. ``The rupiah will be interesting'' for investors.
Indonesia is looking for ways to lessen its fuel subsidy burden without having to raise pump prices, President Susilo Bambang Yudhoyono said yesterday.
Elsewhere, China's yuan rose for the first time in three days, gaining 0.2 percent to 6.8575 in Shanghai. It was the second-best performer in Asia behind the won.
The Philippine peso fell 0.2 percent to 45.795 per dollar while Singapore's dollar was little changed at S$1.3634. Thailand's baht fell for a third day to 33.69 against the U.S. currency and Taiwan's dollar was little changed at NT$30.39.
To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net.
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July 8 (Bloomberg) -- South Korea's won rose, leading gains in the region, on speculation the government is intervening to strengthen the currency to help slow inflation from the fastest in a decade.
The Ministry of Finance and Bank of Korea yesterday said they may use the nation's $258 billion of foreign-exchange reserves to support the won. The currency has slipped 11 percent in the past year, costing Vice Finance Minister Choi Joong Kyung his job yesterday. Malaysia's ringgit gained as oil prices retreated from a record.
``Interventions are possible this week,'' said Kim Sung Soon, a currency dealer with Industrial Bank of Korea in Seoul, the country's largest lender to small and medium-sized companies. ``But the interventions cannot change the market trend as there's huge demand for the dollar.''
Korea's currency advanced 1.2 percent to 1,030 against the dollar as of 12:33 p.m. in Seoul, from 1,043 yesterday, according to Seoul Money Brokerage Services Ltd. The ringgit rose for a fourth day, adding 0.1 percent to 3.2630 per dollar.
South Korea reversed its weaker-won policy as record oil prices pushed up import costs and widened the current-account deficit. The government may lower its growth target for the next two years, President Lee Myung Bak said in an interview with the British Broadcasting Corp. Seoul on July 6.
Central banks intervene in currency markets by buying or selling foreign exchange. South Korea has bought about $7 billion of won since the end of May to support its currency, JoongAng Ilbo newspaper reported July 1.
`Temporary Reprieve'
Malaysia's ringgit was the third-biggest gaining currency among the 10 most-traded in Asia outside Japan after crude oil declined yesterday by the most in more than two weeks, easing concern that inflation will worsen.
``Lower oil prices will be a reprieve for Asian economies and currencies,'' said Yahya Mohd Nor, head of currency trading at Affin Bank Bhd. in Kuala Lumpur. The ringgit may strengthen to 3.25 in the weeks ahead, Yahya said.
Crude oil for August delivery traded at $142.05 a barrel in after-hours trading on the New York Mercantile Exchange. It fell as much as 4 percent yesterday.
Malaysia raised gasoline prices by 41 percent and diesel by 63 percent on June 5, a move that may push June's inflation to a nine-year high of 5 percent, Bank Negara Malaysia said last month. The government subsidizes fuel prices to make them affordable to consumers.
Rupiah Yields
Indonesia's rupiah rose 0.1 percent to 9,206 per dollar for a second day of gains on speculation the central bank will keep raising borrowing costs to quell inflation, boosting demand for the nation's higher-yielding assets.
Bank Indonesia on July 3 lifted its benchmark interest rate for the third straight month to 8.75 percent, increasing the rate advantage to 6.75 percentage points over the U.S. benchmark rate, the widest since 2006.
``Bank Indonesia has the intention to keep increasing the rate,'' said Lindawati Susanto, head of currency trading at Bank Resona Perdania PT in Jakarta. ``The rupiah will be interesting'' for investors.
Indonesia is looking for ways to lessen its fuel subsidy burden without having to raise pump prices, President Susilo Bambang Yudhoyono said yesterday.
Elsewhere, China's yuan rose for the first time in three days, gaining 0.2 percent to 6.8575 in Shanghai. It was the second-best performer in Asia behind the won.
The Philippine peso fell 0.2 percent to 45.795 per dollar while Singapore's dollar was little changed at S$1.3634. Thailand's baht fell for a third day to 33.69 against the U.S. currency and Taiwan's dollar was little changed at NT$30.39.
To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net.
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Oil Rises as Mexican Field Output Falls, Hurricane Strengthens
By Christian Schmollinger
July 8 (Bloomberg) -- Crude oil rose in New York after production at Mexico's biggest field declined and the first hurricane formed in the Atlantic Ocean this year, raising concern output may be disrupted.
Petroleos Mexicanos, Mexico's state-owned oil company, reduced the amount of crude oil it supplies to Texas refineries operated by Royal Dutch Shell Plc and Valero Energy Corp. as falling production curbs exports. In the Atlantic, Bertha has intensified into a ``major'' Category 3 storm with winds of 120 miles per hour, the U.S. National Hurricane Centre said.
``It's not necessarily Bertha that's scaring people but we had two very weak hurricane seasons following 2005 so everyone is waking up and saying this could be a factor again,'' said Jonathan Kornafel, a director for Asia at Hudson Capital Energy in Singapore. ``Cutting exports is a reaction to the fact that Mexican production is deteriorating so quickly.''
Crude oil for August delivery rose as much as $1.07, or 0.8 percent, to $142.44 a barrel on the New York Mercantile Exchange. It was at $142.38 a barrel at 1:38 p.m. Singapore time. Oil yesterday settled down $3.92, or 2.7 percent, at $141.37 a barrel. It reached a record $145.85 on July 3. Prices have surged 97 percent in the past year.
Tropical cyclones Katrina and Rita closed fields and refineries along the U.S. coast of the Gulf of Mexico in 2005.
Commodities Tumble
Crude oil's decline was part of larger drop in all commodities, which fell the most since March, led by grain futures. The Reuters/Jefferies CRB Index dropped 2.8 percent to 460.23, the biggest since March 19. Corn, soybeans, wheat and cotton plummeted the maximum allowed by U.S. exchanges.
``You had some short-term longs getting out of the market yesterday, some profit-taking,'' said Hudson Capital's Kornafel. ``Now we're seeing a lot of money coming back into the market for second half of the year and a bounce back off the $140 level.''
Output at Mexico's Cantarell field dropped 34 percent in May from a year earlier, the biggest decline since October 1995, according to data compiled by the government and Bloomberg. That was when Hurricane Roxanne's 131 miles-per-hour (114-knot) winds shut offshore wells for a week.
Falling production is curbing exports to the U.S., which buys about 80 percent of the oil Mexico sells abroad. Sales to the U.S. declined to 1.07 million barrels a day in May, the lowest since November 1995.
Mexico Cuts
The guaranteed amount of Mayan oil for a Deer Park, Texas, refinery jointly operated with Shell, Europe's biggest oil company, was cut by 15 percent, the Mexico City-based company said in a regulatory filing. Pemex also lowered oil supplies by 5.8 percent to the Port Arthur, Texas, refinery of Valero, the largest U.S. refiner.
Brent crude oil for August settlement gained as much as $1.09, or 0.7 percent, to $142.96 a barrel on London's ICE Futures Europe exchange at 1:37 p.m. Singapore time. Futures reached a record $146.69 on July 3.
Bertha intensified to a maximum sustained wind speed of 120 miles per hour (195 kilometers per hour) at 11 p.m. Miami time, the U.S. National Hurricane Center said in an advisory on its Web site. A tropical storm becomes a hurricane when sustained winds reach 74 miles per hour.
If the storm moves as current computer models predict, it could threaten Bermuda, about 670 miles east of the North Carolina coast, by July 12.
The eye of the hurricane was about 695 miles east-northeast of the northern Leeward Islands, which include Antigua and St. Kitts, and 1,085 miles southeast of Bermuda, the hurricane center said. The storm was moving west-northwest at 12 miles per hour, the center said.
Oil Inventories
U.S. crude-oil supplies probably fell last week as imports declined, according to a Bloomberg News survey of analysts.
Supplies fell 2.1 million barrels in the week ended July 4 from 299.8 million barrels, according to the median of responses by five analysts before an Energy Department report July 9. Supplies dropped 1.98 million barrels in last week's report after analysts forecast a gain.
Gasoline supplies probably gained 700,000 barrels from 210.9 million barrels the week before, the survey showed. Inventories of distillate fuel, including heating oil and diesel, probably rose 1.6 million barrels from 120.7 million the week before.
Refineries probably operated at 89.2 percent of capacity, unchanged from the week before, the survey showed.
To contact the reporter on this story: Christian Schmollinger in Singapore at Christian.s@bloomberg.net
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July 8 (Bloomberg) -- Crude oil rose in New York after production at Mexico's biggest field declined and the first hurricane formed in the Atlantic Ocean this year, raising concern output may be disrupted.
Petroleos Mexicanos, Mexico's state-owned oil company, reduced the amount of crude oil it supplies to Texas refineries operated by Royal Dutch Shell Plc and Valero Energy Corp. as falling production curbs exports. In the Atlantic, Bertha has intensified into a ``major'' Category 3 storm with winds of 120 miles per hour, the U.S. National Hurricane Centre said.
``It's not necessarily Bertha that's scaring people but we had two very weak hurricane seasons following 2005 so everyone is waking up and saying this could be a factor again,'' said Jonathan Kornafel, a director for Asia at Hudson Capital Energy in Singapore. ``Cutting exports is a reaction to the fact that Mexican production is deteriorating so quickly.''
Crude oil for August delivery rose as much as $1.07, or 0.8 percent, to $142.44 a barrel on the New York Mercantile Exchange. It was at $142.38 a barrel at 1:38 p.m. Singapore time. Oil yesterday settled down $3.92, or 2.7 percent, at $141.37 a barrel. It reached a record $145.85 on July 3. Prices have surged 97 percent in the past year.
Tropical cyclones Katrina and Rita closed fields and refineries along the U.S. coast of the Gulf of Mexico in 2005.
Commodities Tumble
Crude oil's decline was part of larger drop in all commodities, which fell the most since March, led by grain futures. The Reuters/Jefferies CRB Index dropped 2.8 percent to 460.23, the biggest since March 19. Corn, soybeans, wheat and cotton plummeted the maximum allowed by U.S. exchanges.
``You had some short-term longs getting out of the market yesterday, some profit-taking,'' said Hudson Capital's Kornafel. ``Now we're seeing a lot of money coming back into the market for second half of the year and a bounce back off the $140 level.''
Output at Mexico's Cantarell field dropped 34 percent in May from a year earlier, the biggest decline since October 1995, according to data compiled by the government and Bloomberg. That was when Hurricane Roxanne's 131 miles-per-hour (114-knot) winds shut offshore wells for a week.
Falling production is curbing exports to the U.S., which buys about 80 percent of the oil Mexico sells abroad. Sales to the U.S. declined to 1.07 million barrels a day in May, the lowest since November 1995.
Mexico Cuts
The guaranteed amount of Mayan oil for a Deer Park, Texas, refinery jointly operated with Shell, Europe's biggest oil company, was cut by 15 percent, the Mexico City-based company said in a regulatory filing. Pemex also lowered oil supplies by 5.8 percent to the Port Arthur, Texas, refinery of Valero, the largest U.S. refiner.
Brent crude oil for August settlement gained as much as $1.09, or 0.7 percent, to $142.96 a barrel on London's ICE Futures Europe exchange at 1:37 p.m. Singapore time. Futures reached a record $146.69 on July 3.
Bertha intensified to a maximum sustained wind speed of 120 miles per hour (195 kilometers per hour) at 11 p.m. Miami time, the U.S. National Hurricane Center said in an advisory on its Web site. A tropical storm becomes a hurricane when sustained winds reach 74 miles per hour.
If the storm moves as current computer models predict, it could threaten Bermuda, about 670 miles east of the North Carolina coast, by July 12.
The eye of the hurricane was about 695 miles east-northeast of the northern Leeward Islands, which include Antigua and St. Kitts, and 1,085 miles southeast of Bermuda, the hurricane center said. The storm was moving west-northwest at 12 miles per hour, the center said.
Oil Inventories
U.S. crude-oil supplies probably fell last week as imports declined, according to a Bloomberg News survey of analysts.
Supplies fell 2.1 million barrels in the week ended July 4 from 299.8 million barrels, according to the median of responses by five analysts before an Energy Department report July 9. Supplies dropped 1.98 million barrels in last week's report after analysts forecast a gain.
Gasoline supplies probably gained 700,000 barrels from 210.9 million barrels the week before, the survey showed. Inventories of distillate fuel, including heating oil and diesel, probably rose 1.6 million barrels from 120.7 million the week before.
Refineries probably operated at 89.2 percent of capacity, unchanged from the week before, the survey showed.
To contact the reporter on this story: Christian Schmollinger in Singapore at Christian.s@bloomberg.net
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Corn, Soybeans Extend Losses After Leading Commodities Sell-Off
By Jae Hur
July 8 (Bloomberg) -- Corn and soybeans fell after grains drove the biggest decline in commodities in more than three months yesterday as drier and warmer weather improved the condition of crops in the U.S. Midwest.
Corn dropped as much as 2.7 percent and soybeans 1.4 percent after tumbling the maximum allowed yesterday when the Reuters/Jefferies CRB Index lost 2.8 percent, the largest decline since March 19. Zinc fell while gold was little changed after sliding 2 percent in the previous three days.
``Supply concerns and speculation have been pushing commodities to records this year,'' Hiroyuki Kikukawa, general manager of research at IDO Securities Co., said today from Tokyo. ``The question is whether there is still buying interest or real demand at these record price levels.''
Corn for December delivery fell 18.5 cents, or 2.5 percent, to $7.285 a bushel at 11:36 a.m. Singapore time after touching $7.265 in after-hours trading on the Chicago Board of Trade.
Soybeans for November delivery dropped 15.25 cents, or 1 percent, to $15.4575 a bushel after dipping to $15.40, while wheat for September delivery added 0.2 percent to $8.3775 a bushel after losing 5.8 percent yesterday. Cotton plunged by the daily limit yesterday and copper, cocoa and coffee also dropped as supply concerns dwindled.
Corn surged 26 percent last month and soybeans jumped 15 percent as the worst Midwest floods since 1993 ravaged Missouri, Indiana, the eastern half of Iowa and south-central Illinois. Oil climbed to a record $145.85 a barrel on July 3 amid heightened speculation that a conflict between Israel and Iran would disrupt Middle East petroleum shipments.
Index Declines
Seventeen of the 19 commodities in the CRB Index declined yesterday. The gauge climbed to a record 473.97 on July 3.
Crude oil for August delivery added 0.4 percent to $141.95 a barrel at 12:02 p.m. in Singapore, after falling as much as 4 percent yesterday as the dollar rose amid speculation leaders from the Group of Eight industrialized nations may address high energy prices and signal support for the currency.
The dollar rose against the euro today on speculation Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson will reiterate their support for a strong currency.
Bernanke speaks on financial regulation and stability at a forum in Arlington, Virginia today. Bernanke said on June 3 that he's ``attentive'' to the effect of the dollar's decline on inflation. Paulson and Bernanke are scheduled to testify before Congress on July 10.
`Accelerate Gains'
``U.S. officials' comments may accelerate gains in the dollar,'' said Hiroshi Yoshida, foreign-exchange trader in Tokyo at Shinkin Central Bank, Japan's fifth-largest publicly traded lender by assets. ``We can't rule out the possibility that Bernanke will be hawkish on inflation and Paulson will be supportive of the dollar.''
The euro may average $1.50 in the fourth quarter, according to the median of 38 analysts surveyed by Bloomberg. The euro fell to $1.5704 today.
Aluminum prices fell after touching a record above $3,300 a ton in London as a power shortage forced smelters in the north of China, the world's largest producer of the metal, to cut output.
Investments linked to commodity markets totaled $235 billion through mid-April, according to Lehman Brothers Holdings Inc. The pace of investment will slow as the dollar rebounds through the end of the year, according to William O'Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey.
Investors should be ``cautious'' on commodities following the ``significant rise'' in raw materials in the first half of the year, Andrew Popper, the chief investment officer at SG Hambros in London, said yesterday in an interview on Bloomberg Television. He helps manage about $13.7 billion.
To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net
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Gold Little Changed After Declining as Energy, Food Costs Drop
By Jae Hur
July 8 (Bloomberg) -- Gold was little changed after falling yesterday as a decline in energy costs and food prices, including corn and soybeans, eroded the appeal of the precious metals as a hedge against inflation.
Gold fell 0.8 percent yesterday as commodities plunged the most since March, led by tumbling U.S. grain futures on the improved crop weather prospect. Crude oil lost 2.7 percent yesterday amid short-lived gains in the dollar and signs economic growth is slowing across Europe, which may curtail energy demand.
``Gold took a pause today after a broad-based decline in commodities yesterday,'' said Shuji Sugata, research manager at Mitsubishi Corp. Futures & Securities Ltd. in Tokyo. Bullion may take a cue from the currency and crude oil markets, Sugata said.
Bullion for immediate delivery was up 0.1 percent at $926.90 an ounce at 10:06 a.m. in Singapore after trading between $924.24 and $928.30. Silver was up 0.2 percent at $17.81 an ounce after losing 1.7 percent.
Crude oil for August delivery rose 43 cents, or 0.3 percent, to $141.80 a barrel at 10:19 a.m. Singapore time on the New York Mercantile Exchange. Yesterday, oil fell as much as 4 percent before closing at $141.37 as the dollar rose amid speculation that leaders from the Group of Eight industrialized nations may signal support for the currency and address high energy prices.
The Reuters/Jefferies CRB Index fell 2.8 percent to 460.23, the biggest drop since March 19. Corn, soybeans, wheat and cotton plunged the maximum allowed by U.S. exchanges. Crude oil dropped 2.7 percent amid signs economic growth is slowing across Europe.
Gold for August delivery was 0.1 percent lower at $928 an ounce in after-hours electronic trading on Comex at 10:09 a.m. Singapore time.
Gold for June 2009 delivery was up 2 yen at 3,222 yen a gram ($935 an ounce) on the Tokyo Commodity Exchange at the 11 a.m. local time midday break, while gold for December delivery traded in Shanghai was up 0.1 percent at 205.01 yuan a gram ($930 an ounce) at 10:13 a.m. local time.
To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net
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July 8 (Bloomberg) -- Gold was little changed after falling yesterday as a decline in energy costs and food prices, including corn and soybeans, eroded the appeal of the precious metals as a hedge against inflation.
Gold fell 0.8 percent yesterday as commodities plunged the most since March, led by tumbling U.S. grain futures on the improved crop weather prospect. Crude oil lost 2.7 percent yesterday amid short-lived gains in the dollar and signs economic growth is slowing across Europe, which may curtail energy demand.
``Gold took a pause today after a broad-based decline in commodities yesterday,'' said Shuji Sugata, research manager at Mitsubishi Corp. Futures & Securities Ltd. in Tokyo. Bullion may take a cue from the currency and crude oil markets, Sugata said.
Bullion for immediate delivery was up 0.1 percent at $926.90 an ounce at 10:06 a.m. in Singapore after trading between $924.24 and $928.30. Silver was up 0.2 percent at $17.81 an ounce after losing 1.7 percent.
Crude oil for August delivery rose 43 cents, or 0.3 percent, to $141.80 a barrel at 10:19 a.m. Singapore time on the New York Mercantile Exchange. Yesterday, oil fell as much as 4 percent before closing at $141.37 as the dollar rose amid speculation that leaders from the Group of Eight industrialized nations may signal support for the currency and address high energy prices.
The Reuters/Jefferies CRB Index fell 2.8 percent to 460.23, the biggest drop since March 19. Corn, soybeans, wheat and cotton plunged the maximum allowed by U.S. exchanges. Crude oil dropped 2.7 percent amid signs economic growth is slowing across Europe.
Gold for August delivery was 0.1 percent lower at $928 an ounce in after-hours electronic trading on Comex at 10:09 a.m. Singapore time.
Gold for June 2009 delivery was up 2 yen at 3,222 yen a gram ($935 an ounce) on the Tokyo Commodity Exchange at the 11 a.m. local time midday break, while gold for December delivery traded in Shanghai was up 0.1 percent at 205.01 yuan a gram ($930 an ounce) at 10:13 a.m. local time.
To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net
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Aluminum Falls From Record After Surge on China Supply Concern
By Li Xiaowei
July 8 (Bloomberg) -- Aluminum declined from a record in Asian trade after it jumped yesterday on reduced output from China, the world's largest producer, because of power shortages.
The metal, used in construction and cars, advanced as much as 5.3 percent to a record of $3,327 a metric ton in London yesterday as Aluminum Corp. of China Ltd. halted output at a venture in Shanxi province because of an electricity shortfall.
``Investors are becoming increasingly bullish on aluminum because of expected power issues around the world,'' Yang Bo, a trader at Minmetals Starfutures Co., said today by phone from Shenzhen. Still, ``Shanghai prices are quite reluctant to chase the London gains due to lackluster demand, and this may curb further gains in London.''
Aluminum for delivery in three months on the London Metal Exchange declined as much as 0.5 percent to $3,290 a metric ton and traded at $3,290.75 at 9:13 a.m. in Shanghai.
The contract has rallied 37 percent this year after power shortages in China and South Africa curbed output. Power accounts for between 30 and 40 percent of operating costs for aluminum smelters.
September-delivery aluminum on the Shanghai Futures Exchange rose as much as 1.1 percent to 19,920 yuan ($2,903) a ton, and traded at 19,845 yuan. The metal has gained 11 percent since the start of the year.
The government in northern Shanxi ordered smelters to pare capacity to ensure power supply for farming, Wang Suomin, a manager at the Shanxi Huaze Aluminum & Power Co., said yesterday. The venture has an annual capacity of 280,000 metric tons.
Among other LME-traded metals, copper rose 0.6 percent to $8,460.25 a ton, zinc fell 0.5 percent to $1,825 and lead was down 0.6 percent at $1,620. Nickel and tin were untraded in Asia after settling at $20,925 and $22,750 yesterday.
To contact the reporter for this story: Li Xiaowei in Shanghai at Xli12@bloomberg.net
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July 8 (Bloomberg) -- Aluminum declined from a record in Asian trade after it jumped yesterday on reduced output from China, the world's largest producer, because of power shortages.
The metal, used in construction and cars, advanced as much as 5.3 percent to a record of $3,327 a metric ton in London yesterday as Aluminum Corp. of China Ltd. halted output at a venture in Shanxi province because of an electricity shortfall.
``Investors are becoming increasingly bullish on aluminum because of expected power issues around the world,'' Yang Bo, a trader at Minmetals Starfutures Co., said today by phone from Shenzhen. Still, ``Shanghai prices are quite reluctant to chase the London gains due to lackluster demand, and this may curb further gains in London.''
Aluminum for delivery in three months on the London Metal Exchange declined as much as 0.5 percent to $3,290 a metric ton and traded at $3,290.75 at 9:13 a.m. in Shanghai.
The contract has rallied 37 percent this year after power shortages in China and South Africa curbed output. Power accounts for between 30 and 40 percent of operating costs for aluminum smelters.
September-delivery aluminum on the Shanghai Futures Exchange rose as much as 1.1 percent to 19,920 yuan ($2,903) a ton, and traded at 19,845 yuan. The metal has gained 11 percent since the start of the year.
The government in northern Shanxi ordered smelters to pare capacity to ensure power supply for farming, Wang Suomin, a manager at the Shanxi Huaze Aluminum & Power Co., said yesterday. The venture has an annual capacity of 280,000 metric tons.
Among other LME-traded metals, copper rose 0.6 percent to $8,460.25 a ton, zinc fell 0.5 percent to $1,825 and lead was down 0.6 percent at $1,620. Nickel and tin were untraded in Asia after settling at $20,925 and $22,750 yesterday.
To contact the reporter for this story: Li Xiaowei in Shanghai at Xli12@bloomberg.net
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West Australia May Produce Less Wheat Than Forecast
By Madelene Pearson
July 8 (Bloomberg) -- Western Australia, the nation's biggest grain grower, may produce less wheat and canola than previously forecast because of dry weather in June, the government said.
Wheat output may be 6.4 million metric tons, the state's department of agriculture and food said in an e-mailed report today. That compares to last month's forecast of 6.73 million tons. Canola production may be 16 percent lower than previously forecast at 501,320 tons, it said.
Most of the state's agricultural regions had below-average rainfall last month, the department said. Rain is critical to bolster yields ahead of the harvest starting about October in Australia, the world's sixth-largest wheat exporter.
``Hopes for a bumper state crop were dashed during June with only light rainfall events being recovered,'' the department said in the report. ``Most areas are looking for early July rainfall to consolidate the crop that has been planted.''
The state's total production of all grains may be about 10 million tons, the department said. It last month estimated output at 10 million to 12 million tons.
To contact the reporter on this story: Madelene Pearson in Perth on mpearson1@bloomberg.net
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July 8 (Bloomberg) -- Western Australia, the nation's biggest grain grower, may produce less wheat and canola than previously forecast because of dry weather in June, the government said.
Wheat output may be 6.4 million metric tons, the state's department of agriculture and food said in an e-mailed report today. That compares to last month's forecast of 6.73 million tons. Canola production may be 16 percent lower than previously forecast at 501,320 tons, it said.
Most of the state's agricultural regions had below-average rainfall last month, the department said. Rain is critical to bolster yields ahead of the harvest starting about October in Australia, the world's sixth-largest wheat exporter.
``Hopes for a bumper state crop were dashed during June with only light rainfall events being recovered,'' the department said in the report. ``Most areas are looking for early July rainfall to consolidate the crop that has been planted.''
The state's total production of all grains may be about 10 million tons, the department said. It last month estimated output at 10 million to 12 million tons.
To contact the reporter on this story: Madelene Pearson in Perth on mpearson1@bloomberg.net
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Platinum Gains in Asia on Concern South African Output May Fall
By Dave McCombs
July 8 (Bloomberg) -- Platinum gained in Asian trading for the first time in five days amid concern that a power shortage and other mining restrictions in South Africa, the world's biggest producer of the metal, will limit supply.
Lonmin Plc, the world's third-biggest platinum producer, yesterday said output of the metal would be cut by between 5,000 and 10,000 ounces after a water leak forced it to temporarily close a smelter June 30. Normal operations resumed yesterday.
``The market's sensitivity to mine production issues in South Africa remains very much in place,'' Darran Grabham, an analyst at Standard Bank Group Ltd. in Johannesburg, wrote in a report e-mailed today. `` Although this relates to electricity supplies, further evidence of fragility has emerged over recent days with news of the closure of Lonmin's troubled number one furnace.''
Platinum for immediate delivery gained $20.85 to $1,995 an ounce, at 12:26 p.m. in Tokyo, 1.1 percent higher than yesterday in New York. Platinum has gained 31 percent this year and touched a record $2,301.50 an ounce March 4.
Platinum for June delivery in Tokyo gained 23 yen, or 0.3 percent, to 6,762 yen a gram ($1,963 an ounce) at the 11 a.m. break on the Tokyo Commodity Exchange.
Platinum production fell short of demand in eight of the past nine years, according to Johnson Matthey Plc, maker of one- third of catalysts used in pollution-control parts for engines. The deficit will be about 260,000 ounces this year, London-based Blue Oar Securities Plc said in a report in May.
To contact the reporter for this story: Dave McCombs in Tokyo at dmccombs@bloomberg.net
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July 8 (Bloomberg) -- Platinum gained in Asian trading for the first time in five days amid concern that a power shortage and other mining restrictions in South Africa, the world's biggest producer of the metal, will limit supply.
Lonmin Plc, the world's third-biggest platinum producer, yesterday said output of the metal would be cut by between 5,000 and 10,000 ounces after a water leak forced it to temporarily close a smelter June 30. Normal operations resumed yesterday.
``The market's sensitivity to mine production issues in South Africa remains very much in place,'' Darran Grabham, an analyst at Standard Bank Group Ltd. in Johannesburg, wrote in a report e-mailed today. `` Although this relates to electricity supplies, further evidence of fragility has emerged over recent days with news of the closure of Lonmin's troubled number one furnace.''
Platinum for immediate delivery gained $20.85 to $1,995 an ounce, at 12:26 p.m. in Tokyo, 1.1 percent higher than yesterday in New York. Platinum has gained 31 percent this year and touched a record $2,301.50 an ounce March 4.
Platinum for June delivery in Tokyo gained 23 yen, or 0.3 percent, to 6,762 yen a gram ($1,963 an ounce) at the 11 a.m. break on the Tokyo Commodity Exchange.
Platinum production fell short of demand in eight of the past nine years, according to Johnson Matthey Plc, maker of one- third of catalysts used in pollution-control parts for engines. The deficit will be about 260,000 ounces this year, London-based Blue Oar Securities Plc said in a report in May.
To contact the reporter for this story: Dave McCombs in Tokyo at dmccombs@bloomberg.net
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America Movil, Famsa, OdontoPrev and Tam: Latin Equity Preview
By William Freebairn
July 8 (Bloomberg) -- The following stocks may have significant gains or losses in Latin American markets. Symbols are in parentheses after company names, and stock prices are from the last session.
The MSCI index of Latin American shares rose 0.2 percent to 4,384.82 yesterday. In Brazil, preferred shares are the most commonly traded class of stock.
Brazil
OdontoPrev SA (ODPV3 BS): The Brazilian dental care company may buy Prontodente Odontologia Integral Ltda. for 10 million reais ($6.2 million), OdontoPrev said in a filing posted on Brazil's securities regulator Web site yesterday. OdontoPrev paid 1 million reais for an option to buy 100 percent of Prontodente, according to the filing. OdontoPrev fell 0.6 percent to 35.49 reais.
Tam SA (TAMM4 BS): Brazil's largest airline said its June domestic market share was 49 percent. The international market share was 75 percent, Tam said in a statement sent via PR Newswire yesterday. Tam fell 1.4 percent to 24.25 reais.
Mexico
America Movil SAB (AMXL MM): Latin America's largest mobile-phone company will sell Apple Inc.'s newest iPhone in Mexico for as little as 773 pesos ($74.83) with a two-year contract. The price applies to the 8GB version of the device with a plan of 799 pesos monthly that includes 400 minutes of calling and 200 megabytes of data downloads, America Movil said on its Web site yesterday. America Movil rose 0.2 percent to 26.48 pesos.
Grupo Famsa SAB (GFAMSAA MM): Investors in the Mexican retailer with stores in the U.S. should ``be cautious in the very short term,'' Credit Suisse Group analysts including Tufic Salem wrote in a research note e-mailed yesterday. High food prices, low consumer confidence and tighter credit may affect sales in the second quarter, the analysts wrote. Famsa fell 2.2 percent to 35.78 pesos.
To contact the reporter on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net
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July 8 (Bloomberg) -- The following stocks may have significant gains or losses in Latin American markets. Symbols are in parentheses after company names, and stock prices are from the last session.
The MSCI index of Latin American shares rose 0.2 percent to 4,384.82 yesterday. In Brazil, preferred shares are the most commonly traded class of stock.
Brazil
OdontoPrev SA (ODPV3 BS): The Brazilian dental care company may buy Prontodente Odontologia Integral Ltda. for 10 million reais ($6.2 million), OdontoPrev said in a filing posted on Brazil's securities regulator Web site yesterday. OdontoPrev paid 1 million reais for an option to buy 100 percent of Prontodente, according to the filing. OdontoPrev fell 0.6 percent to 35.49 reais.
Tam SA (TAMM4 BS): Brazil's largest airline said its June domestic market share was 49 percent. The international market share was 75 percent, Tam said in a statement sent via PR Newswire yesterday. Tam fell 1.4 percent to 24.25 reais.
Mexico
America Movil SAB (AMXL MM): Latin America's largest mobile-phone company will sell Apple Inc.'s newest iPhone in Mexico for as little as 773 pesos ($74.83) with a two-year contract. The price applies to the 8GB version of the device with a plan of 799 pesos monthly that includes 400 minutes of calling and 200 megabytes of data downloads, America Movil said on its Web site yesterday. America Movil rose 0.2 percent to 26.48 pesos.
Grupo Famsa SAB (GFAMSAA MM): Investors in the Mexican retailer with stores in the U.S. should ``be cautious in the very short term,'' Credit Suisse Group analysts including Tufic Salem wrote in a research note e-mailed yesterday. High food prices, low consumer confidence and tighter credit may affect sales in the second quarter, the analysts wrote. Famsa fell 2.2 percent to 35.78 pesos.
To contact the reporter on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net
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Brightpoint, IndyMac, Medivation, Janus: U.S. Equity Preview
By Lynn Thomasson
July 7 (Bloomberg) -- The following companies may have unusual price changes in U.S. markets tomorrow. Stock symbols are in parentheses after company names, and prices are as of 5:30 p.m. in New York, unless stated otherwise.
Brightpoint Inc. (CELL US): The provider of distribution services to communications industry said it may cut as many as 250 jobs from its European operations, in addition to the employee reductions reported June 30. The stock dropped 2.9 percent to $6.78 in regular trading.
Goodrich Petroleum Corp. (GDP US) dropped 3.3 percent to $68.38 in after-hours trading. The oil and natural gas explorer said it would sell 3 million shares and use a portion of the proceeds to repay debt. The sale of more stock may dilute earnings per share.
IndyMac Bancorp Inc. (IMB US) fell 30 percent to 50 cents. The mortgage company will cut more than half its workforce and said it's been unable to raise new capital as losses mount. Regulators have advised the company that it's no longer ``well capitalized,'' IndyMac said.
Medivation Inc. (MDVN US) gained 6.2 percent to $12.81 in extended trading. The drugmaker said a study showed its Dimebon medicine ``significantly'' improved cognitive function in people with mild-to-moderate Huntington's disease.
Janus Capital Group Inc. (JNS US): The money manager of more than $180 billion in assets agreed to purchase an additional 50 percent stake in Perkins, Wolf, McDonnell and Co. LLC, a Chicago- based money-management firm, for $90 million. Janus shares dropped 2.5 percent to $24.03 in regular trading.
To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net.
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July 7 (Bloomberg) -- The following companies may have unusual price changes in U.S. markets tomorrow. Stock symbols are in parentheses after company names, and prices are as of 5:30 p.m. in New York, unless stated otherwise.
Brightpoint Inc. (CELL US): The provider of distribution services to communications industry said it may cut as many as 250 jobs from its European operations, in addition to the employee reductions reported June 30. The stock dropped 2.9 percent to $6.78 in regular trading.
Goodrich Petroleum Corp. (GDP US) dropped 3.3 percent to $68.38 in after-hours trading. The oil and natural gas explorer said it would sell 3 million shares and use a portion of the proceeds to repay debt. The sale of more stock may dilute earnings per share.
IndyMac Bancorp Inc. (IMB US) fell 30 percent to 50 cents. The mortgage company will cut more than half its workforce and said it's been unable to raise new capital as losses mount. Regulators have advised the company that it's no longer ``well capitalized,'' IndyMac said.
Medivation Inc. (MDVN US) gained 6.2 percent to $12.81 in extended trading. The drugmaker said a study showed its Dimebon medicine ``significantly'' improved cognitive function in people with mild-to-moderate Huntington's disease.
Janus Capital Group Inc. (JNS US): The money manager of more than $180 billion in assets agreed to purchase an additional 50 percent stake in Perkins, Wolf, McDonnell and Co. LLC, a Chicago- based money-management firm, for $90 million. Janus shares dropped 2.5 percent to $24.03 in regular trading.
To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net.
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Jean Coutu, Sandvine, Whitemud Resources: Canada Equity Preview
By John Kipphoff
July 7 (Bloomberg) -- The following companies may have unusual price changes in Canadian trading tomorrow. Stock symbols are in parentheses, and share prices are from the last close in Toronto.
The Standard & Poor's/TSX Composite Index fell 2.1 percent to 13,712.80.
Jean Coutu Group Inc. (PJC/A CN): The Canadian pharmacy chain that sold its U.S. stores to Rite Aid Corp. (RAD US) last year may report second-quarter earnings before one-time items of 14 cents a share, the average estimate of four analysts in a Bloomberg survey. The shares dropped 5.3 percent to C$7.94.
Sandvine Corp. (SVC CN): The developer of broadband-network gear may say that fiscal fourth-quarter profit before items was 3 cents a share, the average estimate of six analysts polled by Bloomberg. Sandvine fell 5.8 percent to C$1.45.
Whitemud Resources Inc. (WMK CN): The developer of kaolin deposits in Canada was rated ``buy'' in new coverage by Pierre Lacroix at Desjardins Securities. The Montreal-based analyst set a share-price target of C$11.50. Whitemud rose 0.7 percent to C$6.95.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
Read more...
July 7 (Bloomberg) -- The following companies may have unusual price changes in Canadian trading tomorrow. Stock symbols are in parentheses, and share prices are from the last close in Toronto.
The Standard & Poor's/TSX Composite Index fell 2.1 percent to 13,712.80.
Jean Coutu Group Inc. (PJC/A CN): The Canadian pharmacy chain that sold its U.S. stores to Rite Aid Corp. (RAD US) last year may report second-quarter earnings before one-time items of 14 cents a share, the average estimate of four analysts in a Bloomberg survey. The shares dropped 5.3 percent to C$7.94.
Sandvine Corp. (SVC CN): The developer of broadband-network gear may say that fiscal fourth-quarter profit before items was 3 cents a share, the average estimate of six analysts polled by Bloomberg. Sandvine fell 5.8 percent to C$1.45.
Whitemud Resources Inc. (WMK CN): The developer of kaolin deposits in Canada was rated ``buy'' in new coverage by Pierre Lacroix at Desjardins Securities. The Montreal-based analyst set a share-price target of C$11.50. Whitemud rose 0.7 percent to C$6.95.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
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Axis, Gaz de France, Mobistar, Peugeot: European Equity Preview
By Nadja Brandt
July 8 (Bloomberg) -- The following companies may have unusual price changes in European trading. Stock symbols are in parentheses, and share prices are from the previous close.
The Dow Jones Stoxx 600 climbed 1.3 percent to 283.17. The Dow Jones Stoxx 50 Index added 1.1 percent to 2,869. The Euro Stoxx 50 Index, a benchmark for the nations using the euro, increased 1.8 percent to 3,332.66.
Axis Communications AB (AXIS SS): The Swedish maker of surveillance equipment may say second-quarter net income was 65.2 million kronor ($11 million) on sales of 504.8 million kronor, the average analyst estimates compiled by Bloomberg. The stock gained 9.4 percent to 70 kronor.
Gaz de France SA (GAZ FP): The operator of Europe's largest natural-gas network said it plans a storage joint venture with Gas Plus in Italy. The shares rose 1.9 euros, or 4.9 percent, to 40.81 euros.
Mobistar SA (MOBB BB): Belgium's second-largest mobile-phone operator is scheduled to announce the date of the introduction of Apple Inc.'s (AAPL US) iPhone in the country at a 3 p.m. press conference that was postponed from July 4. Mobistar rose 1.34 euros, or 2.7 percent, to 51.11.
PSA Peugeot Citroen (UG FP): Europe's second-largest carmaker reports first-half sales before the market opens in Paris. The shares dropped 20 cents, or 0.6 percent, to 31.95 euros.
Royal Dutch Shell Plc (RDSA NA): Chief Financial Officer Peter Voser dropped out of the race to replace Chief Executive Officer Jeroen van der Veer because he may take a senior post at UBS AG (UBSN VX), Dow Jones Newswires reported in an article on the Wall Street Journal Web site, citing people familiar with the matter. Shell climbed 76.5 cents, or 3.1 percent, to 25.64 euros in Amsterdam.
Valeo SA (FR FP): France's second-largest car-parts maker won a contract from PSA Peugeot Citroen to equip more than one million vehicles with its Stop-Start technology by 2011. The shares gained 45 cents, or 2.3 percent, to 19.67 euros.
To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net
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July 8 (Bloomberg) -- The following companies may have unusual price changes in European trading. Stock symbols are in parentheses, and share prices are from the previous close.
The Dow Jones Stoxx 600 climbed 1.3 percent to 283.17. The Dow Jones Stoxx 50 Index added 1.1 percent to 2,869. The Euro Stoxx 50 Index, a benchmark for the nations using the euro, increased 1.8 percent to 3,332.66.
Axis Communications AB (AXIS SS): The Swedish maker of surveillance equipment may say second-quarter net income was 65.2 million kronor ($11 million) on sales of 504.8 million kronor, the average analyst estimates compiled by Bloomberg. The stock gained 9.4 percent to 70 kronor.
Gaz de France SA (GAZ FP): The operator of Europe's largest natural-gas network said it plans a storage joint venture with Gas Plus in Italy. The shares rose 1.9 euros, or 4.9 percent, to 40.81 euros.
Mobistar SA (MOBB BB): Belgium's second-largest mobile-phone operator is scheduled to announce the date of the introduction of Apple Inc.'s (AAPL US) iPhone in the country at a 3 p.m. press conference that was postponed from July 4. Mobistar rose 1.34 euros, or 2.7 percent, to 51.11.
PSA Peugeot Citroen (UG FP): Europe's second-largest carmaker reports first-half sales before the market opens in Paris. The shares dropped 20 cents, or 0.6 percent, to 31.95 euros.
Royal Dutch Shell Plc (RDSA NA): Chief Financial Officer Peter Voser dropped out of the race to replace Chief Executive Officer Jeroen van der Veer because he may take a senior post at UBS AG (UBSN VX), Dow Jones Newswires reported in an article on the Wall Street Journal Web site, citing people familiar with the matter. Shell climbed 76.5 cents, or 3.1 percent, to 25.64 euros in Amsterdam.
Valeo SA (FR FP): France's second-largest car-parts maker won a contract from PSA Peugeot Citroen to equip more than one million vehicles with its Stop-Start technology by 2011. The shares gained 45 cents, or 2.3 percent, to 19.67 euros.
To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net
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CBS, News Corp. Stock Slump May Top Allen Agenda, Not Deals
By Andy Fixmer and Greg Miles
July 8 (Bloomberg) -- Media executives Sumner Redstone and Rupert Murdoch may find deal-making overshadowed by falling share prices at this year's Allen & Co. conference as they meet with investors who have lost a third of their money or more.
Viacom Inc. and CBS Corp., both controlled by Redstone, have declined 35 percent this year, more than twice the drop in the Standard & Poor's 500 Index. Murdoch's News Corp. is down 30 percent.
The share slump will put the economy and an advertising sales slowdown at the top of the agenda when the Sun Valley, Idaho, sessions start tomorrow, said David Joyce, an analyst at Miller Tabak & Co. in New York.
``This year's Sun Valley conference is going to be marked by concerns about the macro effects on their stocks,'' Joyce said. ``And it's really not going to be a very happy event.''
Since the first Allen conference, started by the New York- based investment bank in 1983, chief executive officers of the largest media and technology companies, including Time Warner Inc. and Walt Disney Co., have used the summer getaway to hatch deals, among them Disney's $19 billion purchase of Capital Cities/ABC Inc. in 1996.
CBS's $1.8 billion acquisition of Cnet Inc., completed last week, took root last year when the companies' CEOs met for the first time over dinner, Leslie Moonves, head of New York-based CBS, said in a July 2 interview. The meeting with Cnet's Neil Ashe was arranged by Quincy Smith, a former Allen & Co. banker who now leads CBS's Web businesses.
CBS, Cnet Deal
``It was more personal than business,'' Moonves said. ``Quincy had been telling us a lot about Cnet, a company he already knew very well. He set up dinner and I liked Neil immediately.'' San Francisco-based Cnet provides technology information and reviews online.
Based on previous attendance, investors going to this year's conference may include billionaire Warren Buffett; Mario Gabelli, CEO of Gamco Investors Inc.; Capital Research & Management Co. fund manager Gordon Crawford; and Bill Miller, chairman of Legg Mason Funds Management Inc.
Stockholders want the CEOs to repurchase their shares or find other ways to boost the lagging prices, Gamco fund manager Larry Haverty said in an interview.
``The message I think these people are going to hear at Sun Valley is `Look Mr. Media Executive, your stocks have been bad,''' said Haverty, who is based in Rye, New York. ``The market's sending you a message.''
Falling Shares
Viacom, the New York-based parent of the MTV and Nickelodeon cable-television channels, triggered investor concern on May 28, when CEO Philippe Dauman cut his second- quarter projection for advertising sales growth to 3 percent to 4 percent, citing weaker spending by automakers.
The shares fell almost 7 percent over the next two days.
On May 29, Moonves told an investor conference falling auto sales were hurting New York-based CBS's local television stations. The stock tumbled almost 5 percent over three days.
Viacom and CBS shares are lower than they were in January 2006, when Redstone split his media empire into two separately publicly traded companies.
Viacom spokeswoman Kelly McAndrew didn't respond to an e- mail seeking comment. News Corp. spokeswoman Teri Everett declined to comment.
Jerry Yang, CEO of Yahoo! Inc., who was at last year's Sun Valley event, may feel investor ire after he rejected Microsoft Corp.'s $47.5 billion offer to buy the Internet company. Microsoft CEO Steve Ballmer also attended previous conferences.
Proxy Fight
Carl Icahn, a Yahoo investor, moved to oust the company's board after talks with Microsoft broke down last month. Yang says Sunnyvale, California-based Yahoo is worth more than Microsoft offered. Microsoft said today it may revive the takeover talks if investors oust the board and Yang.
``He's going to get an earful, pure and simple,'' Haverty said of Yang. ``And I think he deserves it.''
Yahoo spokeswoman Tracy Schmaler and Microsoft spokesman Frank Shaw didn't immediately respond to phone messages requesting comment.
Yahoo rose $2.56, or 12 percent, to $23.91 yesterday in Nasdaq Stock Market trading, the most since Feb. 1. It has gained 2.8 percent this year. Redmond, Washington-based Microsoft gained 5 cents to $26.03 and is down 27 percent.
To contact the reporters on this story: Andy Fixmer in Los Angeles at afixmer@bloomberg.net; Greg Miles in New York at gmiles1@bloomberg.net
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