Daily Forex Fundamentals | Written by Crown Forex | Jul 24 08 14:34 GMT |
The markets were rather steady since the morning as the dollar was able to retain its gains since yesterday and managed to take down the pound that was resilient yesterday supported by steady rates as the BoE minutes showed. Nonetheless as the famous data from the housing sector showing more than expected declines in the housing sector spreading again woes over the economy especially they followed weekly claims that shot 400 red danger zones.
The euro started to recuperate especially as its generally trading in oversold areas on various time scales. It was capable to hit the high for the day at 1.5713 as now the strong resistance that might face the euro is at 1.5756, while if it does not manage to close positive and fall again to its low set at 1.5637 especially if trading was seen solid with closings below 1.5670 the downside will extend to the following correction level which is 61.8% at 1.5584 yet the mentioned level before the 50.0% is actually solid and trading was around it with not much closing below it.
Sterling was mainly weakened by its data as the euro as it was a bad day for Europe today; sterling breached a number of strong levels ending with the 1.9820s which held the pair now aiming above trading at the strong resistance of 1.9870 to head then to 1.99 levels once more. Sterling needs upside correction now to provide further downside momentum as it's heavily saturated with selling orders.
The heavily overbought USDJPY pair defied momentum to continue aiming at 108 levels which neared as the high was set at 107.97 yet with the weak US data the pair was able to once more head lower to set its low for the day at 107.41 as the 107.30-10 are also strong support for the pair yet breaching them opens the way till 106.80 which is so might provide momentum for the pair to attempts 108 once more.
Crown Forex
disclaimer:The above may contain information for investors/traders and is not a recommendation to buy or sell currencies, gold, silver & energies, nor an offer to buy or sell currencies, gold, silver & energies. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. I am not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trading currencies, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, gold, silver &energies presented should be considered speculative with a high degree of volatility and risk.
Read more...
Thursday, July 24, 2008
US Existing Home Sales Fall More Than Expected To Record Low
Daily Forex Fundamentals | Written by DailyFX | Jul 24 08 14:31 GMT |
The National Association of Realtors (NAR) index of sales of previously owned homes fell 2.6 percent during the month of June to bring total sales down to a record low of 4.86 million. Much of the decline is due to single family home sales, which dipped 3.2 percent, as condo/co-op sales actually edged 1.7 percent higher. Furthermore, single family home inventories jumped to 11 months from 10.5 months, while condo/co-op inventories dropped to 12 months from 14.1 months. Overall, this highlights the fact that restrictive credit markets are helping deter potential homebuyers, making properties that can easily be rented out (such as condos) more attractive. Furthermore, according to the NAR, existing-home sales compose 85 percent of total home sales, highlighting just how dour overall residential real estate market conditions are.
DailyFX
Disclaimer
Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.
Read more...
The National Association of Realtors (NAR) index of sales of previously owned homes fell 2.6 percent during the month of June to bring total sales down to a record low of 4.86 million. Much of the decline is due to single family home sales, which dipped 3.2 percent, as condo/co-op sales actually edged 1.7 percent higher. Furthermore, single family home inventories jumped to 11 months from 10.5 months, while condo/co-op inventories dropped to 12 months from 14.1 months. Overall, this highlights the fact that restrictive credit markets are helping deter potential homebuyers, making properties that can easily be rented out (such as condos) more attractive. Furthermore, according to the NAR, existing-home sales compose 85 percent of total home sales, highlighting just how dour overall residential real estate market conditions are.
DailyFX
Disclaimer
Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.
Read more...
Mid-Day Report: EUR/USD Recovers Earlier Losses after US Existing Home Sales Missed Expectation
| Market Overview | Written by ActionForex.com | Jul 24 08 14:13 GMT | | |
| Euro was sent lower against dollar and yen earlier today on a string of disappointing data. Nevertheless, the common currency regains ground in early US session after existing home sales from US miss expectations. Existing home sales dropped more than expected by -2.6% mom to 4.86m annualized rate in Jun. Also, jobless claims surged back to above 400k to 406k. The Japanese yen, on the other hand, rebounds on weakness in European and US stock markets. Sentiments in Eurozone businesses continued to deteriorate. German Ifo business climate fell much more than expected from 101.2 to 97.5 in Jul, hitting the lowest level since mid 2005. Current situation component already dropped further from 108.3 to 105.7. Expectation component dropped from 94.6 to 90.0. The indices of trade & industry, construction, wholesaling and retailing are all in negative territory with manufacturing index being positive only. In addition, PMI manufacturing and services both fell more than expected to 47.5 and 48.3 respectively in Jul, remaining in contraction region below 50. The data argues that growth in the Eurozone, including in Germany, will continue to slow throughout the rest of the year and into 2009. Eurozone current account deficit also came in much wider than expected at -21.4b in May. On the other hand, Sterling was hit even hard after disappointments from retail sales report. Sales dropped more than expected by -3.9% mom in Jun, biggest fall since at least 1986. Yoy rate also dropped down from 7.9% to 2.2%. Sterling was sold off across the board as the data dampened hope for a rate hike from BoE even though minutes showed Besley surprisingly voted for a hike earlier this month. Kiwi remains pressured after RBNZ's surprised 25bps cut in OCR and issued a rather dovish statement overnight. In the accompanying statement, RBNZ noted that "economic activity is likely to remain weak over the remainder of 2008," and "provided that the outlook for inflation continues to improve and there is no excessive exchange-rate depreciation, we would expect to lower the OCR further." NZD/USD fell sharply and reaches as low as 0.7402 today, over 300 pips off this week's high of 0.7761 and near to 10% off this year's high of 0.8231. Japanese trade surplus released overnight shrank to 138.6b on strong growth in imports by 16.2% and a -1.7% drop in imports. EUR/USD Mid-Day OutlookDaily Pivots: (S1) 1.5646; (P) 1.5721; (R1) 1.5773; More EUR/USD recovers after dipping lower to 1.5638 earlier today. Nevertheless, outlook remains unchanged for the moment. Further decline cannot be ruled out at this point. But still, fall from 1.6038 is treated as a correction to rise from 1.5302 only as long as 1.5611 support holds. Above 1.5797 minor resistance will indicate that such correction could have completed and turn intraday bias back to the upside. Further break of 1.5944 resistance will bring retest of 1.6038 high. However, note that a break below 1.5611 support will indicate that rise from 1.5302 has completed and open up a few short term bearish scenarios that focuses on 1.5284/5301 support zone. In the bigger picture, medium term consolidation from 1.6019 should have completed at 1.5302 already. Decisive break of 1.6019 record high will confirm that medium term up trend has resumed and bring rise to 61.8% projection of 1.4309 to 1.6019 from 1.5284 at 1.6341 first. However, note that sustained break below 1.584/5301 support zone will argue that EUR/USD has completed a double top formation and suggest that a medium term top is in place and deeper decline should then be seen to 1.4309/4966 support zone.
| |
Economic Indicators Update
| GMT | Ccy | Events | Actual | Consensus | Previous | Revised |
|---|---|---|---|---|---|---|
| 21:00 | NZD | RBNZ rate decision Jul | 8.00% | 8.25% | 8.25% | |
| 23:50 | JPY | Japan Trade balance (jpy) Jun | 138.60B | 506.0B | 365.6B | 362.2B |
| 23:50 | JPY | Japan Export Y/Y Jun | -1.70% | N/A | 3.70% | |
| 23:50 | JPY | Japan Import Y/Y Jun | 16.20% | N/A | 4.40% | |
| 07:30 | EUR | Germany PMI service Jul | 53.3 | 51.5 | 52.1 | |
| 07:30 | EUR | Germany PMI manufacturing Jun | 50.9 | 52 | 52.6 | |
| 08:00 | EUR | Germany Ifo index Jul | 97.5 | 100 | 101.3 | 101.2 |
| 08:00 | EUR | Eurozone PMI manufacturing Jul | 47.5 | 48.7 | 49.2 | |
| 08:00 | EUR | Eurozone PMI service Jul | 48.3 | 48.8 | 49.1 | |
| 08:00 | EUR | Eurozone Current account (euro) May | -21.4B | N/A | -9.2B | -7.4B |
| 08:30 | GBP | U.K. Retail sales M/M Jun | -3.90% | -2.50% | 3.50% | 3.60% |
| 08:30 | GBP | U.K. Retail sales Y/Y Jun | 2.20% | 4.40% | 8.10% | 7.90% |
| 12:30 | USD | U.S. Jobless claims | 406K | 375K | 366K | 372K |
| 14:00 | USD | U.S. Existing home sales Jun | 4.86M | 4.94M | 4.99M | |
| 14:00 | USD | U.S. Existing home sales M/M Jun | -2.60% | -1.00% | 2.00% |
Read more...
German Optimism Falls as Europe Recession Risks Rise
By Fergal O'Brien
July 24 (Bloomberg) -- German business confidence plunged the most since the Sept. 11 terrorist attacks and European manufacturing and services shrank, increasing the risk of a recession across the euro region.
The Ifo institute's German business confidence index dropped 3.7 points from a month earlier to 97.5 in July. That was more than three times the decline forecast by economists in a Bloomberg News survey and the overall reading was the lowest in three years. Manufacturing and services across the euro area contracted for a second month and in the U.K., retail sales dropped by the most since at least 1986.
European executives are struggling to cope with surging oil prices, a stronger euro and a global slowdown sparked by the U.S. housing slump. With companies including Renault SA cutting jobs and the European Central Bank raising interest rates to fight inflation, more pain may be in store for consumers and companies.
``It may be premature to talk about recession in Europe, but the data does raise the risks,'' said Martin van Vliet, an economist at ING Group in Amsterdam. ``There's a toxic mix battering business sentiment.''
The decline in German confidence was part of a series of data today suggesting ECB President Jean-Claude Trichet may be too optimistic when he says growth will rebound later this year.
Confidence among Italian executives fell to the lowest since 2001 in July; French business sentiment was the weakest since May 2005; Spanish unemployment in the second quarter rose to the highest rate in 3 1/2 years; and Belgian business confidence this month dropped to the lowest since April.
No Immunity
European government bonds climbed after today's reports. The yield on the two-year note dropped 11 basis points to 4.46 percent and the yield on the 10-year bund, Europe's benchmark government security, slipped 6 basis points to 4.59 percent. The euro, which has increased 13 percent against the dollar in the past 12 months, fell as much as 0.4 percent to $1.5638 today.
``The abrupt falls recorded in the national business confidence indicators confirm that no country is immune to the slowdown,'' said Lavinia Santovetti, an economist at Lehman Brothers Holdings Inc.
Heidelberger Druckmaschinen AG, the world's largest printing-press maker, reported a first-quarter loss last week and said full-year sales and operating profit will decline. The company plans to cut 500 jobs.
Growth Trough
Beyond the euro area, U.K. retail sales fell 3.9 percent in June after rising 3.6 percent in May, which was the biggest increase since the data series began more than two decades ago. Economists forecast a 2.6 percent drop, the median of 30 estimates in a Bloomberg News survey showed.
Trichet said last week that Europe's economy will rebound after a ``trough'' in the second and third quarters and is refusing to give up his inflation-fighting rhetoric. At 4 percent, inflation is double the ECB's ceiling and the central bank earlier this month raised its key interest rate to a seven- year high of 4.25 percent.
``With just a bit of bad luck, any further monetary tightening could possibly push the euro zone into a brief recession,'' said Holger Schmieding, chief European economist at Bank of America in London.
While Europe may avoid its first outright recession in 15 years, economists say the ECB will have to revise its outlook for growth after its staff last month said expansion may ease to 1.5 percent in 2009 from an expected 1.8 percent this year.
Lower Forecast
``The ECB will have to acknowledge more clearly the economic downturn and will most likely trim its growth projection in September,'' said Lehman's Santovetti, who forecasts growth of 1.4 percent this year and 0.8 percent in 2009.
Crude oil, which has risen almost 70 percent in the last year, has dropped more than 10 percent this month and was at $124.15 a barrel today.
Measures of new business in Europe's manufacturing and services industry fell in July, a survey by Markit Economics showed today, while manufacturers' costs rose at the fastest pace in almost four years.
``The level of the surveys is not yet undershooting our forecast; we anticipate a stagnant GDP reading in the third quarter,'' said David Mackie, chief European economist at JPMorgan Chase & Co. in London. ``However, the rate of descent continues to suggest downside risk in the coming months.''
To contact the reporter on this story: Fergal O'Brien in Dublin at fobrien@bloomberg.net.
Read more...
July 24 (Bloomberg) -- German business confidence plunged the most since the Sept. 11 terrorist attacks and European manufacturing and services shrank, increasing the risk of a recession across the euro region.
The Ifo institute's German business confidence index dropped 3.7 points from a month earlier to 97.5 in July. That was more than three times the decline forecast by economists in a Bloomberg News survey and the overall reading was the lowest in three years. Manufacturing and services across the euro area contracted for a second month and in the U.K., retail sales dropped by the most since at least 1986.
European executives are struggling to cope with surging oil prices, a stronger euro and a global slowdown sparked by the U.S. housing slump. With companies including Renault SA cutting jobs and the European Central Bank raising interest rates to fight inflation, more pain may be in store for consumers and companies.
``It may be premature to talk about recession in Europe, but the data does raise the risks,'' said Martin van Vliet, an economist at ING Group in Amsterdam. ``There's a toxic mix battering business sentiment.''
The decline in German confidence was part of a series of data today suggesting ECB President Jean-Claude Trichet may be too optimistic when he says growth will rebound later this year.
Confidence among Italian executives fell to the lowest since 2001 in July; French business sentiment was the weakest since May 2005; Spanish unemployment in the second quarter rose to the highest rate in 3 1/2 years; and Belgian business confidence this month dropped to the lowest since April.
No Immunity
European government bonds climbed after today's reports. The yield on the two-year note dropped 11 basis points to 4.46 percent and the yield on the 10-year bund, Europe's benchmark government security, slipped 6 basis points to 4.59 percent. The euro, which has increased 13 percent against the dollar in the past 12 months, fell as much as 0.4 percent to $1.5638 today.
``The abrupt falls recorded in the national business confidence indicators confirm that no country is immune to the slowdown,'' said Lavinia Santovetti, an economist at Lehman Brothers Holdings Inc.
Heidelberger Druckmaschinen AG, the world's largest printing-press maker, reported a first-quarter loss last week and said full-year sales and operating profit will decline. The company plans to cut 500 jobs.
Growth Trough
Beyond the euro area, U.K. retail sales fell 3.9 percent in June after rising 3.6 percent in May, which was the biggest increase since the data series began more than two decades ago. Economists forecast a 2.6 percent drop, the median of 30 estimates in a Bloomberg News survey showed.
Trichet said last week that Europe's economy will rebound after a ``trough'' in the second and third quarters and is refusing to give up his inflation-fighting rhetoric. At 4 percent, inflation is double the ECB's ceiling and the central bank earlier this month raised its key interest rate to a seven- year high of 4.25 percent.
``With just a bit of bad luck, any further monetary tightening could possibly push the euro zone into a brief recession,'' said Holger Schmieding, chief European economist at Bank of America in London.
While Europe may avoid its first outright recession in 15 years, economists say the ECB will have to revise its outlook for growth after its staff last month said expansion may ease to 1.5 percent in 2009 from an expected 1.8 percent this year.
Lower Forecast
``The ECB will have to acknowledge more clearly the economic downturn and will most likely trim its growth projection in September,'' said Lehman's Santovetti, who forecasts growth of 1.4 percent this year and 0.8 percent in 2009.
Crude oil, which has risen almost 70 percent in the last year, has dropped more than 10 percent this month and was at $124.15 a barrel today.
Measures of new business in Europe's manufacturing and services industry fell in July, a survey by Markit Economics showed today, while manufacturers' costs rose at the fastest pace in almost four years.
``The level of the surveys is not yet undershooting our forecast; we anticipate a stagnant GDP reading in the third quarter,'' said David Mackie, chief European economist at JPMorgan Chase & Co. in London. ``However, the rate of descent continues to suggest downside risk in the coming months.''
To contact the reporter on this story: Fergal O'Brien in Dublin at fobrien@bloomberg.net.
Read more...
U.S. Initial Jobless Claims Rose to 406,000 Last Week
By Shobhana Chandra
July 24 (Bloomberg) -- The number of Americans filing first-time claims for unemployment benefits rose last week to the highest in almost four months, a sign the slowing economy is weakening the labor market.
Initial jobless claims increased by 34,000 to 406,000 in the week ended July 19, from a revised 372,000 the prior week, the Labor Department said today in Washington. The filings exceeded economists' forecast and were the most since 406,000 in the week ended March 29.
U.S. employers are reducing workers as surging fuel costs, a three-year housing slump and a crisis in credit markets restrains demand. Rising joblessness reinforces concern that consumers will pull back on spending, which accounts for more than two-thirds of the economy.
``The underlying picture is one of a labor market that is weak,'' said David Sloan, senior economist at 4Cast Inc. in New York, whose forecast of 410,000 was the closest to the actual number in a Bloomberg News survey of 44 economists. ``The economy is growing slowly so you tend to see job losses rising. The weakness could increase further in coming months.''
Treasuries were higher, pushing yields down. The benchmark 10-year note yielded 4.09 percent as of 8:50 a.m. in New York, down 3 basis points from yesterday.
Near 2005 High
The last time weekly claims exceeded last week's total was in September 2005, just after two hurricanes on the U.S. Gulf Coast threw thousands out of work.
Initial claims were estimated to increase to 380,000 from 366,000 initially reported for the prior week, according to the median projection of 44 economists in a Bloomberg News survey. Estimates ranged from 365,000 to 440,000.
Weekly jobless claims figures can be difficult to interpret in July, the month automakers temporarily trim staff to upgrade factories in preparation for new car models. Affected auto workers who are not eligible for vacation pay can apply for jobless benefits.
The four-week moving average, a less volatile measure, increased to 382,500 from 378,000, today's report showed.
Continuing Claims
The number of people continuing to collect jobless benefits fell to 3.107 million in the week ended July 12, from 3.116 million the prior week. The unemployment rate among people eligible for benefits, which tends to track the nation's jobless rate, stayed at 2.3 percent. These data are reported with a one- week lag.
Thirty-seven states and territories reported an increase in new claims, while 16 reported a decrease.
Initial jobless claims reflect weekly firings and tend to rise as job growth -- measured by the monthly non-farm payrolls report -- slows.
Weekly claims have averaged 364,100 so far this year, compared with an average 321,000 in 2007, when the economy generated 91,000 new jobs on average each month.
Previous Downturns
The government's claims figures have so far not matched the losses seen in previous economic downturns. During the last recession, in 2001, about 415,000 workers on average filed jobless claims each week.
Job losses may rise as growth deteriorates. The economic expansion may slow to the weakest pace in six years in the fourth quarter, after the impact of federal tax rebates fades, according to a monthly Bloomberg News survey. The unemployment rate will rise to 5.8 percent by the end of 2008, it showed.
The Labor Department's monthly payrolls report, due next week, may show the economy lost jobs for the seventh straight month in July, according to the Bloomberg survey median.
Companies continue to pare jobs. Pilgrim's Pride Corp. on July 15 said it will shut the tray-pack chicken business at its El Dorado, Arkansas, processing plant and consolidate the work into six other facilities, eliminating about 600 jobs.
Also last week, Monaco Coach Corp., a recreational-vehicle maker, announced plans to close operations in three Indiana towns, trimming about 1,400 jobs and half its production capacity for large motor homes because of declining sales.
To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net
Read more...
July 24 (Bloomberg) -- The number of Americans filing first-time claims for unemployment benefits rose last week to the highest in almost four months, a sign the slowing economy is weakening the labor market.
Initial jobless claims increased by 34,000 to 406,000 in the week ended July 19, from a revised 372,000 the prior week, the Labor Department said today in Washington. The filings exceeded economists' forecast and were the most since 406,000 in the week ended March 29.
U.S. employers are reducing workers as surging fuel costs, a three-year housing slump and a crisis in credit markets restrains demand. Rising joblessness reinforces concern that consumers will pull back on spending, which accounts for more than two-thirds of the economy.
``The underlying picture is one of a labor market that is weak,'' said David Sloan, senior economist at 4Cast Inc. in New York, whose forecast of 410,000 was the closest to the actual number in a Bloomberg News survey of 44 economists. ``The economy is growing slowly so you tend to see job losses rising. The weakness could increase further in coming months.''
Treasuries were higher, pushing yields down. The benchmark 10-year note yielded 4.09 percent as of 8:50 a.m. in New York, down 3 basis points from yesterday.
Near 2005 High
The last time weekly claims exceeded last week's total was in September 2005, just after two hurricanes on the U.S. Gulf Coast threw thousands out of work.
Initial claims were estimated to increase to 380,000 from 366,000 initially reported for the prior week, according to the median projection of 44 economists in a Bloomberg News survey. Estimates ranged from 365,000 to 440,000.
Weekly jobless claims figures can be difficult to interpret in July, the month automakers temporarily trim staff to upgrade factories in preparation for new car models. Affected auto workers who are not eligible for vacation pay can apply for jobless benefits.
The four-week moving average, a less volatile measure, increased to 382,500 from 378,000, today's report showed.
Continuing Claims
The number of people continuing to collect jobless benefits fell to 3.107 million in the week ended July 12, from 3.116 million the prior week. The unemployment rate among people eligible for benefits, which tends to track the nation's jobless rate, stayed at 2.3 percent. These data are reported with a one- week lag.
Thirty-seven states and territories reported an increase in new claims, while 16 reported a decrease.
Initial jobless claims reflect weekly firings and tend to rise as job growth -- measured by the monthly non-farm payrolls report -- slows.
Weekly claims have averaged 364,100 so far this year, compared with an average 321,000 in 2007, when the economy generated 91,000 new jobs on average each month.
Previous Downturns
The government's claims figures have so far not matched the losses seen in previous economic downturns. During the last recession, in 2001, about 415,000 workers on average filed jobless claims each week.
Job losses may rise as growth deteriorates. The economic expansion may slow to the weakest pace in six years in the fourth quarter, after the impact of federal tax rebates fades, according to a monthly Bloomberg News survey. The unemployment rate will rise to 5.8 percent by the end of 2008, it showed.
The Labor Department's monthly payrolls report, due next week, may show the economy lost jobs for the seventh straight month in July, according to the Bloomberg survey median.
Companies continue to pare jobs. Pilgrim's Pride Corp. on July 15 said it will shut the tray-pack chicken business at its El Dorado, Arkansas, processing plant and consolidate the work into six other facilities, eliminating about 600 jobs.
Also last week, Monaco Coach Corp., a recreational-vehicle maker, announced plans to close operations in three Indiana towns, trimming about 1,400 jobs and half its production capacity for large motor homes because of declining sales.
To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net
Read more...
East European Currencies: Zloty Has Biggest Gain in Two Years
By Ewa Krukowska
July 24 (Bloomberg) -- Poland's zloty rose the most since July 2006 against the euro, snapping a three-day decline and trading near a record, on bets the central bank will raise interest rates to contain inflation. The Czech koruna advanced.
Some policy makers say more rate increases may be necessary to curb inflation, while others argue they might lead to ``excessive'' appreciation of the zloty, the minutes of the central bank's June meeting showed today. The zloty has gained 11 percent against the euro and 17 percent against the dollar this year as the central bank boosted its main interest rate to a three-year high of 6 percent. The rate was raised by a quarter- point last month.
``Fast money is returning to emerging markets after the big sell-off earlier this week and the zloty is benefiting most, especially given the belief the rate-tightening cycle is not over yet,'' said Elisabeth Gruie, a currency strategist in London at BNP Paribas SA, France's biggest bank. ``It's keeping the currency in demand and it's likely to continue.''
The zloty climbed as much as 1.4 percent to 3.2182 against Europe's common currency, and was at 3.2264 by 3:29 p.m. in Warsaw. It rose to a record 3.2085 per euro on July 17.
The currency may gain further in the next few days, possibly strengthening beyond 3.20 versus the euro, Gruie said.
The zloty has recovered most of the losses sustained at the beginning of the week after comments by Czech central bank Governor Zdenek Tuma on July 22 dented appetite for currencies in central Europe. He said the Prague-based bank may cut interest rates as soon as next month because the koruna's strength threatens to ``damage'' the economy.
Timing Key
``The question is more about the timing of rate hikes, not about rate cuts,'' said Ulrich Leuchtmann, an analyst in Frankfurt at Commerzbank AG, Germany's second-biggest bank. ``We regard the zloty as the most attractive currency among the three central European economies.''
Futures trading suggests investors expect borrowing costs to rise at least once more this year. The forward-rate agreement, used to gauge bets for the three-month Warsaw Interbank Offered Rate beginning three months from now, traded at 6.72 percent. The Wibor was at 6.58 percent, with the gap between two indicating the size of the expected rate increase.
The central bank raised its main rate by 2 percentage points since April last year to curb inflation, which accelerated to 4.6 percent in June. The bank's target for inflation is 2.5 percent.
In other trading, the Czech koruna rose against the euro as some investors judged the currency's exchange rate was attractive following two days of declines.
Koruna Rate
The currency gained as much as 1.3 percent to 23.499 per euro, and was at 23.597, from 23.594 yesterday. It declined earlier to 23.865, the weakest level since July 4.
``Some investors probably decided to take profits,'' said Jon Harrison, a currency strategist at Dresdner Kleinwort in London. ``Fundamentally, Tuma's comments significantly reduce chances for a rate hike, removing support for the currency.''
The koruna has gained 11 percent against the euro and 17 percent versus the dollar this year, making it the best performer of the emerging markets.
It may drop to 24.1 against the euro at the end of this month, Harrison said, adding that he didn't see room for a rate increase as long as the koruna trades between 23 and 25.
The central bank has raised its two-week repurchase rate eight times in the past three years, to 3.75 percent, to stem inflation. The euro-region's benchmark rate is 4.25 percent. The Prague-based central bank meets Aug. 7 to set interest rates.
The Romanian leu advanced 0.1 percent to 3.5734 per euro and the Hungarian forint advanced 0.9 percent to 232.13 against Europe's common currency.
Hungarian retail sales fell an annual 1.6 percent in May, a report by the Budapest-based statistics office said today. The median forecast of five economists in a Bloomberg survey was for a 2.1 percent decline.
The Slovak koruna, which will be replaced by the euro at the start of next year, was little changed at 30.375 against Europe's single currency. The Turkish lira was at 1.2032, from 1.2036 yesterday.
To contact the reporter on this story: Ewa Krukowska in Warsaw at ekrukowska@bloomberg.net
Read more...
July 24 (Bloomberg) -- Poland's zloty rose the most since July 2006 against the euro, snapping a three-day decline and trading near a record, on bets the central bank will raise interest rates to contain inflation. The Czech koruna advanced.
Some policy makers say more rate increases may be necessary to curb inflation, while others argue they might lead to ``excessive'' appreciation of the zloty, the minutes of the central bank's June meeting showed today. The zloty has gained 11 percent against the euro and 17 percent against the dollar this year as the central bank boosted its main interest rate to a three-year high of 6 percent. The rate was raised by a quarter- point last month.
``Fast money is returning to emerging markets after the big sell-off earlier this week and the zloty is benefiting most, especially given the belief the rate-tightening cycle is not over yet,'' said Elisabeth Gruie, a currency strategist in London at BNP Paribas SA, France's biggest bank. ``It's keeping the currency in demand and it's likely to continue.''
The zloty climbed as much as 1.4 percent to 3.2182 against Europe's common currency, and was at 3.2264 by 3:29 p.m. in Warsaw. It rose to a record 3.2085 per euro on July 17.
The currency may gain further in the next few days, possibly strengthening beyond 3.20 versus the euro, Gruie said.
The zloty has recovered most of the losses sustained at the beginning of the week after comments by Czech central bank Governor Zdenek Tuma on July 22 dented appetite for currencies in central Europe. He said the Prague-based bank may cut interest rates as soon as next month because the koruna's strength threatens to ``damage'' the economy.
Timing Key
``The question is more about the timing of rate hikes, not about rate cuts,'' said Ulrich Leuchtmann, an analyst in Frankfurt at Commerzbank AG, Germany's second-biggest bank. ``We regard the zloty as the most attractive currency among the three central European economies.''
Futures trading suggests investors expect borrowing costs to rise at least once more this year. The forward-rate agreement, used to gauge bets for the three-month Warsaw Interbank Offered Rate beginning three months from now, traded at 6.72 percent. The Wibor was at 6.58 percent, with the gap between two indicating the size of the expected rate increase.
The central bank raised its main rate by 2 percentage points since April last year to curb inflation, which accelerated to 4.6 percent in June. The bank's target for inflation is 2.5 percent.
In other trading, the Czech koruna rose against the euro as some investors judged the currency's exchange rate was attractive following two days of declines.
Koruna Rate
The currency gained as much as 1.3 percent to 23.499 per euro, and was at 23.597, from 23.594 yesterday. It declined earlier to 23.865, the weakest level since July 4.
``Some investors probably decided to take profits,'' said Jon Harrison, a currency strategist at Dresdner Kleinwort in London. ``Fundamentally, Tuma's comments significantly reduce chances for a rate hike, removing support for the currency.''
The koruna has gained 11 percent against the euro and 17 percent versus the dollar this year, making it the best performer of the emerging markets.
It may drop to 24.1 against the euro at the end of this month, Harrison said, adding that he didn't see room for a rate increase as long as the koruna trades between 23 and 25.
The central bank has raised its two-week repurchase rate eight times in the past three years, to 3.75 percent, to stem inflation. The euro-region's benchmark rate is 4.25 percent. The Prague-based central bank meets Aug. 7 to set interest rates.
The Romanian leu advanced 0.1 percent to 3.5734 per euro and the Hungarian forint advanced 0.9 percent to 232.13 against Europe's common currency.
Hungarian retail sales fell an annual 1.6 percent in May, a report by the Budapest-based statistics office said today. The median forecast of five economists in a Bloomberg survey was for a 2.1 percent decline.
The Slovak koruna, which will be replaced by the euro at the start of next year, was little changed at 30.375 against Europe's single currency. The Turkish lira was at 1.2032, from 1.2036 yesterday.
To contact the reporter on this story: Ewa Krukowska in Warsaw at ekrukowska@bloomberg.net
Read more...
U.K. Pound Drops, Gilts Rise on Record Decline in Retail Sales
By Agnes Lovasz
July 24 (Bloomberg) -- The U.K. pound extended declines against the euro and dollar as a record drop in retail sales fueled speculation Europe's second-largest economy is heading into a recession. Government bonds rallied.
The pound weakened from the highest level against the euro in seven weeks after a government report today showed British retail sales dropped in June by the most since at least 1986 as accelerating inflation prompted consumers to cut spending. Traders scaled back bets on higher interest rates by the Bank of England, futures trading showed.
``We're moderately negative on the pound,'' said Adam Cole, head of global currency strategy in London at Royal Bank of Canada. ``The market still has a residual expectation of a rate hike and we don't think they can possibly deliver that. That taken out, there's some downside for sterling from here.''
The pound fell to 78.91 pence per euro by 11:40 a.m. in London, from 78.50 pence yesterday, when it reached the strongest since June 2. It was at $1.9863, from $1.9995. The U.K. currency has dropped 6.6 percent versus Europe's common currency this year and gained 0.4 percent against the dollar.
The pound will slide to 81.50 pence per euro by the end of September and recover to 80 pence by year-end, Cole forecast.
Retail sales fell 3.9 percent after rising 3.6 percent in May, which was the biggest increase since the data series began more than two decades ago, the Office for National Statistics said in London. Economists had forecast a 2.6 percent drop, the median of 30 estimates in a Bloomberg News survey showed.
Policy makers cited weaker retail sales surveys as a signal of slowing economic growth, the minutes of their meeting this month, released yesterday, showed. The fastest inflation in at least a decade prevents the central bank from cutting the main interest rate from the current 5 percent.
Rate Futures
Gilts rose, with the yield on the 10-year government note declining 4 basis points to 4.99 percent, after rising 5 basis points yesterday. The price of the 5 percent security due March 2018 climbed 0.34, or 3.4 pounds per 1,000 pound ($1,986) face amount, to 100.01. The two-year note yield dropped 10 basis points to 4.98 percent. Yields move inversely to bond prices.
The U.K. sold 1.05 billion pounds more of its inflation- protected securities due 2027 today. The returns of the security are linked to the U.K. retail price index.
On the secondary market, the yield on the bonds increased 5 basis points to 1.08 percent, after rising 4 basis points yesterday.
Traders pared bets on higher interest rates, with the implied yield on the December short-sterling futures contract slipping 10 basis points to 5.82 percent. It rose 5 basis points yesterday.
`Peaked'
``Against a backdrop of a weakening economic outlook, we continue to expect a slowdown in retail-sales growth,'' said Grant Lewis, the London-based head of fixed-income research at Daiwa Securities SMBC Europe Ltd. and a former U.K. Treasury official. ``We expect the Monetary Policy Committee to be in a position to cut rates come the fourth quarter, once the slowdown is confirmed by the actual data and inflation has peaked.''
The pound was supported and gilts fell yesterday after the minutes of this month's meeting showed one MPC member voted for the first time in a year to boost interest rates to curb accelerating inflation.
Central bank policy maker Timothy Besley voted to lift rates July 10, saying the fastest inflation in a decade put the central bank's credibility at risk. Seven of his colleagues kept the rate unchanged and David Blanchflower wanted a cut, citing the risk of a sharp slowdown.
U.K. policy makers left the nation's key interest rate unchanged this month after cutting it three times since November in a bid to stave off a recession in the face of accelerating inflation.
To contact the reporter on this story: Agnes Lovasz in London at alovasz@bloomberg.net
Read more...
July 24 (Bloomberg) -- The U.K. pound extended declines against the euro and dollar as a record drop in retail sales fueled speculation Europe's second-largest economy is heading into a recession. Government bonds rallied.
The pound weakened from the highest level against the euro in seven weeks after a government report today showed British retail sales dropped in June by the most since at least 1986 as accelerating inflation prompted consumers to cut spending. Traders scaled back bets on higher interest rates by the Bank of England, futures trading showed.
``We're moderately negative on the pound,'' said Adam Cole, head of global currency strategy in London at Royal Bank of Canada. ``The market still has a residual expectation of a rate hike and we don't think they can possibly deliver that. That taken out, there's some downside for sterling from here.''
The pound fell to 78.91 pence per euro by 11:40 a.m. in London, from 78.50 pence yesterday, when it reached the strongest since June 2. It was at $1.9863, from $1.9995. The U.K. currency has dropped 6.6 percent versus Europe's common currency this year and gained 0.4 percent against the dollar.
The pound will slide to 81.50 pence per euro by the end of September and recover to 80 pence by year-end, Cole forecast.
Retail sales fell 3.9 percent after rising 3.6 percent in May, which was the biggest increase since the data series began more than two decades ago, the Office for National Statistics said in London. Economists had forecast a 2.6 percent drop, the median of 30 estimates in a Bloomberg News survey showed.
Policy makers cited weaker retail sales surveys as a signal of slowing economic growth, the minutes of their meeting this month, released yesterday, showed. The fastest inflation in at least a decade prevents the central bank from cutting the main interest rate from the current 5 percent.
Rate Futures
Gilts rose, with the yield on the 10-year government note declining 4 basis points to 4.99 percent, after rising 5 basis points yesterday. The price of the 5 percent security due March 2018 climbed 0.34, or 3.4 pounds per 1,000 pound ($1,986) face amount, to 100.01. The two-year note yield dropped 10 basis points to 4.98 percent. Yields move inversely to bond prices.
The U.K. sold 1.05 billion pounds more of its inflation- protected securities due 2027 today. The returns of the security are linked to the U.K. retail price index.
On the secondary market, the yield on the bonds increased 5 basis points to 1.08 percent, after rising 4 basis points yesterday.
Traders pared bets on higher interest rates, with the implied yield on the December short-sterling futures contract slipping 10 basis points to 5.82 percent. It rose 5 basis points yesterday.
`Peaked'
``Against a backdrop of a weakening economic outlook, we continue to expect a slowdown in retail-sales growth,'' said Grant Lewis, the London-based head of fixed-income research at Daiwa Securities SMBC Europe Ltd. and a former U.K. Treasury official. ``We expect the Monetary Policy Committee to be in a position to cut rates come the fourth quarter, once the slowdown is confirmed by the actual data and inflation has peaked.''
The pound was supported and gilts fell yesterday after the minutes of this month's meeting showed one MPC member voted for the first time in a year to boost interest rates to curb accelerating inflation.
Central bank policy maker Timothy Besley voted to lift rates July 10, saying the fastest inflation in a decade put the central bank's credibility at risk. Seven of his colleagues kept the rate unchanged and David Blanchflower wanted a cut, citing the risk of a sharp slowdown.
U.K. policy makers left the nation's key interest rate unchanged this month after cutting it three times since November in a bid to stave off a recession in the face of accelerating inflation.
To contact the reporter on this story: Agnes Lovasz in London at alovasz@bloomberg.net
Read more...
South African Bonds, Rand Advance on Easing Inflation Concern
By Garth Theunissen
July 24 (Bloomberg) -- South African government bonds rose and the rand traded within eight euro cents of a seven-week high against the common European currency as easing oil prices reduced concern that inflation will keep accelerating.
The gains drove the yield on the benchmark 2015 note 13 basis points lower, the biggest drop in more than a week, after the Bond Exchange of South Africa said foreign investors were net buyers of 1.4 billion rand ($185 million) of the nation's debt yesterday. The rand also advanced against 10 of the 16 most-actively traded currencies monitored by Bloomberg as oil stayed near $125 a barrel for a second day.
``South African yields are particularly high and that is helping the rand,'' said Tolga Ediz an emerging-market currency strategist in London at Lehman Brothers Holdings Inc. ``South Africa's bond market has done quite well due to the moderating oil price. That helps calm inflation fears, and encourages foreign purchases.''
The yield on the 13.5 percent security due September 2015 dropped to 9.75 percent as of 1:41 p.m. Johannesburg, from 9.88 percent yesterday. The yield was at 10.85 percent at the start of July. South Africa's 13 percent note due August 2010, which is more sensitive to interest-rate expectations, fell 13 basis points to 10.67 percent. Yields move inversely to bond prices.
The rand strengthened after JPMorgan Chase & Co. raised South African equities to ``overweight'' from ``neutral.'' The FTSE/JSE Africa All Share Index climbed as much as 0.9 percent, its second day of gains.
Rate Increase
The South African currency gained as much as 0.6 percent to 11.8160 per euro, before trading at 11.8605. It rose to 11.7829 yesterday, the highest level since May 30. The rand was little changed at 7.5737 per dollar, from 7.5687 yesterday, when it rallied to 7.4650 per dollar, the strongest since May 30.
Bond yields and the rand have climbed since June 12, when the South African Reserve Bank raised the key interest rate by a half-point to 12 percent. Policy makers lifted the rate 10 times since June 2006 to curb inflation that has exceeded its 3 percent to 6 percent target range for 14 months.
Price growth quickened to an annual 10.9 percent in May, the fastest since November 2002, partly as oil surged. South Africa relies on imports for about two-thirds of its oil needs.
Crude, little changed at $124.77 a barrel in New York today, has declined 13 percent since reaching a record $147.27 July 11.
Carry-Trade Returns
The rand has offered the best carry-trade return against the dollar, euro and yen since June 12, according to data compiled by Bloomberg. It had the sixth-best carry trade return against the euro today.
``There is a carry-trade story that has helped emerging markets decouple somewhat from global risk sentiment,'' Ediz said.
In carry trades, investors borrow a currency at a low interest rate and convert the proceeds into one they can lend out for a higher return, earning the spread between the two. They take the risk currency moves will erase their profit. South Africa's main interest rate is 1,050 basis points above Japan's and 925 basis points higher than Switzerland's.
The rand is ``ripe for a correction'' against the U.S. dollar given accelerating inflation and a slowing economy, Bank of America Corp.'s New York-based senior trading strategist Lawrence Goodman said in an interview yesterday.
The currency is the worst performer of its 16 most-traded counterparts monitored by Bloomberg this year, falling 8.8 percent versus the dollar and more than 15 percent against the euro.
To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net.
Read more...
July 24 (Bloomberg) -- South African government bonds rose and the rand traded within eight euro cents of a seven-week high against the common European currency as easing oil prices reduced concern that inflation will keep accelerating.
The gains drove the yield on the benchmark 2015 note 13 basis points lower, the biggest drop in more than a week, after the Bond Exchange of South Africa said foreign investors were net buyers of 1.4 billion rand ($185 million) of the nation's debt yesterday. The rand also advanced against 10 of the 16 most-actively traded currencies monitored by Bloomberg as oil stayed near $125 a barrel for a second day.
``South African yields are particularly high and that is helping the rand,'' said Tolga Ediz an emerging-market currency strategist in London at Lehman Brothers Holdings Inc. ``South Africa's bond market has done quite well due to the moderating oil price. That helps calm inflation fears, and encourages foreign purchases.''
The yield on the 13.5 percent security due September 2015 dropped to 9.75 percent as of 1:41 p.m. Johannesburg, from 9.88 percent yesterday. The yield was at 10.85 percent at the start of July. South Africa's 13 percent note due August 2010, which is more sensitive to interest-rate expectations, fell 13 basis points to 10.67 percent. Yields move inversely to bond prices.
The rand strengthened after JPMorgan Chase & Co. raised South African equities to ``overweight'' from ``neutral.'' The FTSE/JSE Africa All Share Index climbed as much as 0.9 percent, its second day of gains.
Rate Increase
The South African currency gained as much as 0.6 percent to 11.8160 per euro, before trading at 11.8605. It rose to 11.7829 yesterday, the highest level since May 30. The rand was little changed at 7.5737 per dollar, from 7.5687 yesterday, when it rallied to 7.4650 per dollar, the strongest since May 30.
Bond yields and the rand have climbed since June 12, when the South African Reserve Bank raised the key interest rate by a half-point to 12 percent. Policy makers lifted the rate 10 times since June 2006 to curb inflation that has exceeded its 3 percent to 6 percent target range for 14 months.
Price growth quickened to an annual 10.9 percent in May, the fastest since November 2002, partly as oil surged. South Africa relies on imports for about two-thirds of its oil needs.
Crude, little changed at $124.77 a barrel in New York today, has declined 13 percent since reaching a record $147.27 July 11.
Carry-Trade Returns
The rand has offered the best carry-trade return against the dollar, euro and yen since June 12, according to data compiled by Bloomberg. It had the sixth-best carry trade return against the euro today.
``There is a carry-trade story that has helped emerging markets decouple somewhat from global risk sentiment,'' Ediz said.
In carry trades, investors borrow a currency at a low interest rate and convert the proceeds into one they can lend out for a higher return, earning the spread between the two. They take the risk currency moves will erase their profit. South Africa's main interest rate is 1,050 basis points above Japan's and 925 basis points higher than Switzerland's.
The rand is ``ripe for a correction'' against the U.S. dollar given accelerating inflation and a slowing economy, Bank of America Corp.'s New York-based senior trading strategist Lawrence Goodman said in an interview yesterday.
The currency is the worst performer of its 16 most-traded counterparts monitored by Bloomberg this year, falling 8.8 percent versus the dollar and more than 15 percent against the euro.
To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net.
Read more...
German Stocks Fall on Lower Business Confidence; Daimler Slips
By Henrietta Rumberger
July 24 (Bloomberg) -- Germany's benchmark DAX index ended its six-day advance as the country's business confidence fell the most since the Sept. 11 terrorist attacks in 2001 and Daimler AG cut its forecast for earnings this year.
Daimler, the world's second-largest luxury carmaker, tumbled the most since Sept. 2001. Infineon Technologies AG, Europe's second-largest maker of semiconductors, declined after Die Welt reported its cost-cutting plans face resistance. Siemens AG dropped as ABB Ltd., the world's biggest builder of electricity grids, reported earnings that missed analysts' estimates. TUI AG also fell.
The benchmark DAX Index decreased 82.79, or 1.3 percent, to 6,453.3 as of 1:16 p.m. in Frankfurt. DAX futures expiring in September lost 87.5, or 1.3 percent, to 6,498. The HDAX Index of the country's 110 biggest companies slipped 1.3 percent to 3,284.19.
``The Ifo index weighs on the market as it brings investors back into reality, showing that the economic problems are still there, they haven't disappeared,'' said Tilmann Galler, a client portfolio manager at JPMorgan Asset Management in Frankfurt, who helps oversee about $25 billion.
The Munich-based Ifo institute said its business climate index slipped to 97.5 from 101.2 in June as record oil prices and higher interest rates dimmed the outlook for growth, signaling growth is faltering in Europe's biggest economy. That's the weakest reading since September 2005. Economists expected a decline to 100.1, according to the median of 40 forecasts in a Bloomberg News survey.
Daimler
Daimler plunged 3.79 euros, or 8.9 percent, to 38.77 euros. Bayerische Motoren Werke AG, the world's biggest luxury carmaker, lost 1.25 euros, or 3.9 percent, to 30.62. Volkswagen AG, Europe's largest carmaker, retreated 4.42 euros, or 2.1 percent, to 205.13.
Daimler cut its forecast for earnings this year after second-quarter profit declined 25 percent. Net income dropped to 1.395 billion euros ($2.19 billion), or 1.40 per share, from 1.85 billion euros, or 1.74 euros per share, a year earlier, the automaker said today. Six analysts surveyed by Bloomberg News had forecast profit of 1.38 billion euros.
Profit before earnings and taxes will be above 7 billion euros, compared with an earlier forecast of ``well above'' 7.7 billion euros because of slowing growth, rising costs for steel and energy and the dollar's decline, Daimler said.
``Daimler's earnings show that the weakening of the global economy cannot be compensated and this weighs on the entire sector today,'' said Folker Hellmeyer, chief analyst at Bremer Landesbank Kreditanstalt.
Infineon
Infineon fell for a third day this week, losing 12 cents, or 2.4 percent, to 4.96 euros. Its cost-cutting plans face resistance from the company's supervisory board, Die Welt reported, citing employee representative and supervisory board member Wigand Cramer.
Separately, Infineon's memory-chip unit Qimonda AG plans to report fiscal third-quarter results after the official close of the U.S. markets.
Siemens, Europe's largest engineering company, declined 1.16 euros, or 1.6 percent, to 72.67 euros. ABB reported profit that missed estimates for the first time in three years.
TUI retreated 19 cents, or 1.2 percent, to 15.32 euros. The tour operator received insufficiently high bids for its Hapag- Lloyd shipping line, and the unit won't be sold for less than 4 billion euros ($6.3 billion), Die Welt reported today, citing unidentified people close to the auction.
The following stocks also rose or fell in German markets. Symbols are in parentheses.
Amadeus Fire AG (AAD GY) jumped 94 cents, or 8.2 percent, to 12.40 euros. The temporary-employment agency said operating profit in the first six months rose to 7.6 million euros from 6.4 million euros in the year-before period.
Comdirect Bank AG (COM GY) sank 37 cents, or 5 percent, to 7.05 euros, the lowest in six months. HSBC Holdings Plc lowered its price estimate on shares of Germany's biggest online broker 9.1 percent to 11 euros.
Deutsche Bank AG (DBK GY), Germany's largest bank, rose for a second day, gaining 92 cents, or 1.5 percent, to 61.32 euros.
Credit Suisse Group AG, Switzerland's second-biggest bank, said second-quarter earnings dropped 62 percent, less than analysts estimated as the investment banking unit returned to profit.
Deutsche Postbank AG (DPB GY) slipped 50 cents, or 1 percent, to 48.08 euros, the third decline this week. Lehman Brothers Holdings Inc. cut its share-price estimate for Germany's biggest consumer bank by clients 2.1 percent to 46 euros.
Merck KGaA (MRK GY) jumped 3.20 euros, or 4.3 percent, to 78.30. Deutsche Bank AG and Dresdner Kleinwort both raised their recommendations for the maker of the Erbitux cancer drug to ``buy'' from ``hold.''
``Especially in a recessionary period, we view Merck as a defensive value play with decent visibility for double-digit earnings growth,'' Deutsche Bank analyst Holger Blum in Frankfurt wrote in a note to investors today.
Puma AG (PUM GY) climbed 8.22 euros, or 4.1 percent, to 209.18 euros. Sales of Europe's second-largest sporting goods maker climbed 6.3 percent to 576.8 million euros, according to PPR SA, which controls the German athletic-shoe and sportswear maker.
SGL Group (SGL GY) jumped 2.44 euros, or 5.8 percent, to 44.74, the fourth gain in a row. Dresdner Kleinwort upgraded shares in the world's largest maker of carbon graphite products to ``buy'' from ``hold.''
To contact the reporter on this story: Henrietta Rumberger in Frankfurt at hrumberger@bloomberg.net.
Read more...
July 24 (Bloomberg) -- Germany's benchmark DAX index ended its six-day advance as the country's business confidence fell the most since the Sept. 11 terrorist attacks in 2001 and Daimler AG cut its forecast for earnings this year.
Daimler, the world's second-largest luxury carmaker, tumbled the most since Sept. 2001. Infineon Technologies AG, Europe's second-largest maker of semiconductors, declined after Die Welt reported its cost-cutting plans face resistance. Siemens AG dropped as ABB Ltd., the world's biggest builder of electricity grids, reported earnings that missed analysts' estimates. TUI AG also fell.
The benchmark DAX Index decreased 82.79, or 1.3 percent, to 6,453.3 as of 1:16 p.m. in Frankfurt. DAX futures expiring in September lost 87.5, or 1.3 percent, to 6,498. The HDAX Index of the country's 110 biggest companies slipped 1.3 percent to 3,284.19.
``The Ifo index weighs on the market as it brings investors back into reality, showing that the economic problems are still there, they haven't disappeared,'' said Tilmann Galler, a client portfolio manager at JPMorgan Asset Management in Frankfurt, who helps oversee about $25 billion.
The Munich-based Ifo institute said its business climate index slipped to 97.5 from 101.2 in June as record oil prices and higher interest rates dimmed the outlook for growth, signaling growth is faltering in Europe's biggest economy. That's the weakest reading since September 2005. Economists expected a decline to 100.1, according to the median of 40 forecasts in a Bloomberg News survey.
Daimler
Daimler plunged 3.79 euros, or 8.9 percent, to 38.77 euros. Bayerische Motoren Werke AG, the world's biggest luxury carmaker, lost 1.25 euros, or 3.9 percent, to 30.62. Volkswagen AG, Europe's largest carmaker, retreated 4.42 euros, or 2.1 percent, to 205.13.
Daimler cut its forecast for earnings this year after second-quarter profit declined 25 percent. Net income dropped to 1.395 billion euros ($2.19 billion), or 1.40 per share, from 1.85 billion euros, or 1.74 euros per share, a year earlier, the automaker said today. Six analysts surveyed by Bloomberg News had forecast profit of 1.38 billion euros.
Profit before earnings and taxes will be above 7 billion euros, compared with an earlier forecast of ``well above'' 7.7 billion euros because of slowing growth, rising costs for steel and energy and the dollar's decline, Daimler said.
``Daimler's earnings show that the weakening of the global economy cannot be compensated and this weighs on the entire sector today,'' said Folker Hellmeyer, chief analyst at Bremer Landesbank Kreditanstalt.
Infineon
Infineon fell for a third day this week, losing 12 cents, or 2.4 percent, to 4.96 euros. Its cost-cutting plans face resistance from the company's supervisory board, Die Welt reported, citing employee representative and supervisory board member Wigand Cramer.
Separately, Infineon's memory-chip unit Qimonda AG plans to report fiscal third-quarter results after the official close of the U.S. markets.
Siemens, Europe's largest engineering company, declined 1.16 euros, or 1.6 percent, to 72.67 euros. ABB reported profit that missed estimates for the first time in three years.
TUI retreated 19 cents, or 1.2 percent, to 15.32 euros. The tour operator received insufficiently high bids for its Hapag- Lloyd shipping line, and the unit won't be sold for less than 4 billion euros ($6.3 billion), Die Welt reported today, citing unidentified people close to the auction.
The following stocks also rose or fell in German markets. Symbols are in parentheses.
Amadeus Fire AG (AAD GY) jumped 94 cents, or 8.2 percent, to 12.40 euros. The temporary-employment agency said operating profit in the first six months rose to 7.6 million euros from 6.4 million euros in the year-before period.
Comdirect Bank AG (COM GY) sank 37 cents, or 5 percent, to 7.05 euros, the lowest in six months. HSBC Holdings Plc lowered its price estimate on shares of Germany's biggest online broker 9.1 percent to 11 euros.
Deutsche Bank AG (DBK GY), Germany's largest bank, rose for a second day, gaining 92 cents, or 1.5 percent, to 61.32 euros.
Credit Suisse Group AG, Switzerland's second-biggest bank, said second-quarter earnings dropped 62 percent, less than analysts estimated as the investment banking unit returned to profit.
Deutsche Postbank AG (DPB GY) slipped 50 cents, or 1 percent, to 48.08 euros, the third decline this week. Lehman Brothers Holdings Inc. cut its share-price estimate for Germany's biggest consumer bank by clients 2.1 percent to 46 euros.
Merck KGaA (MRK GY) jumped 3.20 euros, or 4.3 percent, to 78.30. Deutsche Bank AG and Dresdner Kleinwort both raised their recommendations for the maker of the Erbitux cancer drug to ``buy'' from ``hold.''
``Especially in a recessionary period, we view Merck as a defensive value play with decent visibility for double-digit earnings growth,'' Deutsche Bank analyst Holger Blum in Frankfurt wrote in a note to investors today.
Puma AG (PUM GY) climbed 8.22 euros, or 4.1 percent, to 209.18 euros. Sales of Europe's second-largest sporting goods maker climbed 6.3 percent to 576.8 million euros, according to PPR SA, which controls the German athletic-shoe and sportswear maker.
SGL Group (SGL GY) jumped 2.44 euros, or 5.8 percent, to 44.74, the fourth gain in a row. Dresdner Kleinwort upgraded shares in the world's largest maker of carbon graphite products to ``buy'' from ``hold.''
To contact the reporter on this story: Henrietta Rumberger in Frankfurt at hrumberger@bloomberg.net.
Read more...
U.K. Stocks Fall, Led by Shell, Energy Stocks; EasyJet Drops
By Adam Haigh
July 24 (Bloomberg) -- U.K. stocks fell, led by energy shares, as oil traded near a seven-week low and metal prices retreated.
Royal Dutch Shell Plc and BP Plc, which account for more than 10 percent of the benchmark FTSE 100 Index, led the drop. BG Group Plc slid on speculation investors were reducing holdings in the company to benefit from recent share price gains. EasyJet Plc declined after Europe's second-biggest discount airline said fiscal-year pretax profit will fall as much as 46 percent because of higher fuel expenses.
The FTSE 100 dropped 36.7, or 0.7 percent, to 5,413.2 at 12:48 p.m. in London. The FTSE All-Share Index lost 0.7 percent and Ireland's ISEQ Index fell 1.8 percent.
``People are closing out their long oil and commodities trades to lock in profits,'' said Gregor Smith, a London-based fund manager at Daiwa Asset Management who helps manage $1 billion. ``They are getting incredibly nervous and just want to lock in gains as the oil price drops.''
Shell, Europe's biggest oil company, slid 0.8 percent to 1,827 pence. BP, the second largest, eased 1.1 percent to 516 pence and
Yesterday, oil dropped $3.98, or 3.1 percent, to settle at $124.44 a barrel, the lowest close since June 4.
BHP Billiton Ltd., the world's largest mining company, lost 1 percent to 1,599 pence. Rio Tinto Group, the third biggest, slid 1 percent to 5,047 pence. Copper, lead, tin and nickel fell in London.
BG Group, the U.K.'s third-largest oil and gas producer, slipped 4.7 percent to 1,086 pence despite saying earnings surged 59 percent to a record in the second quarter. BG shares had risen 8.6 percent from a four-month low on July 16 before today.
EasyJet Falls
``Profit-taking is possible despite the record numbers'' as oil prices slip from recent highs, said Jason Kenney, an analyst at ING Wholesale Banking in Edinburgh.
EasyJet lost 8.7 percent, to 338 pence. Pretax earnings for the year through Sept. 30 will be 110 million pounds ($220 million) to 120 million pounds, the company said. Record oil prices will add 185 million pounds in additional costs during the year, the airline said.
British Airways Plc, Europe's third-largest airline, slid 6.3 percent to 246.75 pence.
Scottish & Southern Energy Plc tumbled 6 percent to 1,359 pence, the lowest since 2000, after the U.K.'s second-biggest energy supplier forecast a ``modest'' increase in full year profit.
The following stocks also rose or fell in the U.K. market. Stock symbols are in parentheses.
ARM Holdings Plc (ARM LN), which designs semiconductors for Intel Corp., fell 5.25 pence, or 5.5 percent, to 90.25 pence after saying pretax profit dropped 6 percent to 21.2 million pounds.
Panmure Gordon & Co. cut its recommendation for the company to ``sell'' from ``hold'' and slashed its price estimate 30 percent.
Kingfisher Plc (KGF LN), the U.K.'s largest home-improvement retailer, surged 9.2 pence, or 7.9 percent, to 125.9. Sales at its B&Q unit rose in the last 10 weeks as improved U.K. weather conditions encouraged Britons to buy garden furniture and barbecues.
London Stock Exchange Group Plc (LSE LN) added 48 pence, or 5.8 percent, to 872.5 pence. Morgan Stanley upgraded the shares to ``equal-weight'' from ``underweight'' citing the recent share price declines. The stock has fallen 55 percent from the start of the year.
Rolls-Royce Group Plc (RR/ LN), the world's second-biggest maker of aircraft engines, gained 6.25 pence, or 1.7 percent, to 375. First-half profit earnings increased as it sold more propulsion systems and won maintenance contracts.
Yell Group Plc (YELL LN) climbed 9 pence, or 13 percent, to 80. The publisher of Britain's Yellow Pages phone directory reported a higher fiscal first-quarter profit helped by its expanding Internet business and higher sales.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
Read more...
July 24 (Bloomberg) -- U.K. stocks fell, led by energy shares, as oil traded near a seven-week low and metal prices retreated.
Royal Dutch Shell Plc and BP Plc, which account for more than 10 percent of the benchmark FTSE 100 Index, led the drop. BG Group Plc slid on speculation investors were reducing holdings in the company to benefit from recent share price gains. EasyJet Plc declined after Europe's second-biggest discount airline said fiscal-year pretax profit will fall as much as 46 percent because of higher fuel expenses.
The FTSE 100 dropped 36.7, or 0.7 percent, to 5,413.2 at 12:48 p.m. in London. The FTSE All-Share Index lost 0.7 percent and Ireland's ISEQ Index fell 1.8 percent.
``People are closing out their long oil and commodities trades to lock in profits,'' said Gregor Smith, a London-based fund manager at Daiwa Asset Management who helps manage $1 billion. ``They are getting incredibly nervous and just want to lock in gains as the oil price drops.''
Shell, Europe's biggest oil company, slid 0.8 percent to 1,827 pence. BP, the second largest, eased 1.1 percent to 516 pence and
Yesterday, oil dropped $3.98, or 3.1 percent, to settle at $124.44 a barrel, the lowest close since June 4.
BHP Billiton Ltd., the world's largest mining company, lost 1 percent to 1,599 pence. Rio Tinto Group, the third biggest, slid 1 percent to 5,047 pence. Copper, lead, tin and nickel fell in London.
BG Group, the U.K.'s third-largest oil and gas producer, slipped 4.7 percent to 1,086 pence despite saying earnings surged 59 percent to a record in the second quarter. BG shares had risen 8.6 percent from a four-month low on July 16 before today.
EasyJet Falls
``Profit-taking is possible despite the record numbers'' as oil prices slip from recent highs, said Jason Kenney, an analyst at ING Wholesale Banking in Edinburgh.
EasyJet lost 8.7 percent, to 338 pence. Pretax earnings for the year through Sept. 30 will be 110 million pounds ($220 million) to 120 million pounds, the company said. Record oil prices will add 185 million pounds in additional costs during the year, the airline said.
British Airways Plc, Europe's third-largest airline, slid 6.3 percent to 246.75 pence.
Scottish & Southern Energy Plc tumbled 6 percent to 1,359 pence, the lowest since 2000, after the U.K.'s second-biggest energy supplier forecast a ``modest'' increase in full year profit.
The following stocks also rose or fell in the U.K. market. Stock symbols are in parentheses.
ARM Holdings Plc (ARM LN), which designs semiconductors for Intel Corp., fell 5.25 pence, or 5.5 percent, to 90.25 pence after saying pretax profit dropped 6 percent to 21.2 million pounds.
Panmure Gordon & Co. cut its recommendation for the company to ``sell'' from ``hold'' and slashed its price estimate 30 percent.
Kingfisher Plc (KGF LN), the U.K.'s largest home-improvement retailer, surged 9.2 pence, or 7.9 percent, to 125.9. Sales at its B&Q unit rose in the last 10 weeks as improved U.K. weather conditions encouraged Britons to buy garden furniture and barbecues.
London Stock Exchange Group Plc (LSE LN) added 48 pence, or 5.8 percent, to 872.5 pence. Morgan Stanley upgraded the shares to ``equal-weight'' from ``underweight'' citing the recent share price declines. The stock has fallen 55 percent from the start of the year.
Rolls-Royce Group Plc (RR/ LN), the world's second-biggest maker of aircraft engines, gained 6.25 pence, or 1.7 percent, to 375. First-half profit earnings increased as it sold more propulsion systems and won maintenance contracts.
Yell Group Plc (YELL LN) climbed 9 pence, or 13 percent, to 80. The publisher of Britain's Yellow Pages phone directory reported a higher fiscal first-quarter profit helped by its expanding Internet business and higher sales.
To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net
Read more...
Wall Street Shrinks From Competing With Fannie Mae, Freddie Mac
By Kathleen M. Howley and Bryan Keogh
July 24 (Bloomberg) -- Bobby Joe Cooper says she ``kicks herself every day'' for not using a Fannie Mae or Freddie Mac mortgage when she refinanced her Terre Haute, Indiana, home three years ago.
Instead, the 29-year-old mother of three borrowed $55,000 at 5 percent, a point lower than a so-called conforming loan guaranteed by the nation's two biggest mortgage-finance companies. Cooper, the manager of Courtesy Cleaning Center on the city's south side, said she didn't understand it was a subprime mortgage, reserved for borrowers with poor credit histories, and that its rate would triple within two years.
When Cooper realized her monthly payment would rise 78 percent, ``I cried myself to sleep because I knew I wasn't going to be able to keep up.'' Cooper refinanced her home again last year, this time with a loan acceptable to Fannie and Freddie.
The two government-sponsored companies, chartered to make it easier for lenders to support home buying, have been accused of crooked accounting and criticized by Warren Buffett and Alan Greenspan for speculating, while a bank lobbying campaign sought to end the implicit U.S. guarantee of their debt. And yet, yesterday the House of Representatives voted to rescue them from losses on subprime loans with an unlimited equity infusion.
Fannie and Freddie have proved indispensable. The government and the banks that tried to rein them in now rely on the companies to pull the housing market out of its worst slump since the Great Depression and keep the global financial system from collapsing. The combination of falling U.S. home prices and the evaporation of the market for subprime mortgages has left banks and brokers with $467 billion of losses and the inability to extend credit.
`Provide Capital'
``It is absolutely right for Fannie Mae and Freddie Mac to extend their balance sheets for now,'' Jamie Dimon, chief executive officer of JPMorgan Chase & Co., said in a July 8 speech in Arlington, Virginia. ``That will provide capital directly where it is needed in the mortgage markets today.''
Congress gave Washington-based Fannie and McLean, Virginia- based Freddie the ability this year to buy ``jumbo'' loans for the first time. The mortgages for more than $417,000 made up almost a third of the U.S. market last year, according to the Mortgage Bankers Association.
As their shares dropped as much as 76 percent the past month, Treasury Secretary Henry Paulson proposed injecting capital into the companies and extending more credit should the need arise. This week U.S. lawmakers reached agreement on a modified version of the plan, which Paulson said is essential for safeguarding U.S. financial markets.
Bailout Package
The legislation passed yesterday by the House would authorize Paulson to bail out Fannie and Freddie while placing few restrictions on them. Lawmakers said they expected the Senate to approve the measure later this week, and the White House said President George W. Bush would sign it into law.
The government-sponsored companies, which buy home loans from banks and hold them or package them for sale to investors, accounted for more than 80 percent of the mortgage securities created in the first quarter, double the level of a year earlier, based on data compiled by Bloomberg. They own or guarantee almost half of the $12 trillion in U.S. home loans, and their purchases provide banks funds to offer more credit.
Fannie and Freddie increased their support for lenders at the same time that demand for bonds backed by subprime mortgages evaporated. Sales of so-called private-label bonds dropped to $46 billion this year from $707 billion in 2007 and $1.1 trillion a year earlier, according to Inside Mortgage Finance and Mortgage Bankers Association data.
Low-Cost Debt
Fannie, founded in 1938 as part of President Franklin Delano Roosevelt's New Deal, and Freddie, created in 1970 during the Vietnam War, are ``the only guys in town who are buying'' mortgages, said Josh Rosner, managing director at New York-based investment research firm Graham Fisher & Co. ``The demise of the private-label securitization market means lenders have to either hold mortgages or sell them to Freddie or Fannie.''
The newfound appreciation follows almost a decade of criticism by banks and Wall Street firms that complained the publicly traded government-sponsored companies enjoyed a competitive advantage from the implied U.S. backing of their debt. Fannie and Freddie can borrow at rates below those of mortgage competitors and other companies with top AAA ratings.
Investors demanded an average of 26 basis points to own notes issued by Fannie or Freddie instead of Treasuries two years ago, compared with 61 basis points for companies with AAA ratings and 82 basis points for banks, according to data compiled by Merrill Lynch & Co. A basis point is a hundredth of a percent.
Lobbying Group
A group of Fannie and Freddie competitors formed a lobbying group in 1999 to press for tighter regulation. FM Watch included Wells Fargo & Co. Chief Executive Officer Richard Kovacevich; Maurice ``Hank'' Greenberg, the CEO of C.V. Starr & Co. and former chief executive of American International Group Inc.; and William Harrison, head of JPMorgan before Dimon. The group has been renamed FM Policy Focus, and Kovacevich, Greenberg and Harrison are no longer members.
Fannie and Freddie started using their funding advantage to boost profits by increasing purchases of mortgages in the 1990s. Instead of insuring home loans and turning them into securities, the companies kept mortgages and some of the bonds as investments. Their holdings doubled in the five years through 2003 to $1.57 billion. The investments grew more than 10-fold since 1990.
Profits at the companies grew with their investments. Fannie Mae's net income of $8.08 billion in 2003 was more than double its total in 1999. The company earned more than New York-based Merrill Lynch & Co., the biggest U.S. brokerage firm, every year from 2000 through 2005.
The growth made some investors concerned that the two were taking too many risks, making them more like hedge funds than companies linked to the government.
No `Credible Purpose'
In August 2002, Fannie's so-called duration gap, a measure of interest rate risk, widened to minus 14 months, more than twice its maximum target at the time of plus or minus six months. The gap indicated that the average maturity of the company's mortgage assets was 14 months less than its outstanding debt.
``It would not be the end of the world at all if Fannie and Freddie no longer had new portfolio purchases,'' Buffett, the chairman of Berkshire Hathaway Inc., said in April 2005. Buffett sold almost all of his 8.5 percent stake in Freddie in 2000, citing a changing ``risk profile'' that made him ``uncomfortable,'' according to Berkshire's annual report.
Greenspan, the former chairman of the Federal Reserve, joined the critics as his 18-year tenure approached its end in January 2006.
``The Federal Reserve has been unable to find any credible purpose for the huge balance sheets built by Fannie and Freddie other than the creation of profit through the exploitation of the market-granted subsidy,'' Greenspan, now 82, said in a May 2005 speech.
`Cookie Jar' Accounting
The rising investments led Fannie and Freddie to increase their use of derivatives to hedge interest-rate risks. Derivatives are financial instruments linked to stocks, bonds, loans, currencies and commodities, or to specific events such as changes in interest rates or weather.
Freddie restated earnings from 2000 through 2002 after it replaced long-time auditor Arthur Andersen and discovered errors related to derivatives. Fannie was forced by regulators to follow suit.
A federal investigation resulted in fines from regulators who said that the companies used ``cookie jar'' reserves and accounting gimmicks to manipulate earnings. Freddie ousted Chief Executive Leland Brendsel in June 2003 and Fannie's Franklin Raines left in December 2004.
Tantalizing Profit
The profits from repackaging home loans into securities proved irresistible to Wall Street. Fees from turning mortgages, auto loans, aircraft leases and credit-card receivables into bonds almost tripled from 2002 through 2007, reaching $5.6 billion, Bank of America Corp. analyst Michael Hecht estimated five months before credit markets seized up a year ago.
Fannie and Freddie could buy or guarantee only mortgages that met their underwriting criteria and fell below a limit adjusted annually by regulators -- $322,700 in 2002.
Investment banks faced no such restraints. Bear Stearns Cos. and Lehman Brothers Holdings Inc. led in packaging $1.2 trillion of subprime mortgages into bonds in 2005 and 2006 to feed investors demanding securities that yielded as much as 10 percentage points more than mortgage bonds guaranteed by Fannie Mae and Freddie Mac.
Investor hunger encouraged lenders to issue $2.4 trillion of subprime mortgages from 2001 to 2006. The increased credit allowed more Americans to buy houses and helped push up prices 59 percent from 2000 to 2005, according to the National Association of Realtors.
House of Cards
When the economy's growth slowed in 2007, home prices declined and borrowers began to default because they couldn't pay the higher interest on their adjustable mortgages.
The rate of foreclosures rose to the highest level in at least three decades, the Mortgage Bankers Association said in a June report. One in every 501 households was in a stage of foreclosure in June, and bank seizures rose 171 percent since January, 2005, according to RealtyTrac Inc., an Irvine, California-based company that sells data on defaults.
Some of the biggest providers of mortgages collapsed or were acquired. New Century Financial Corp. of Irvine, California, failed. Calabasas, California-based Countrywide Financial Corp. was bought by Bank of America Corp. IndyMac Bancorp, in Pasadena, California, was seized by bank regulators.
The financial bloodletting since last summer stripped $2.6 trillion from the value of stocks in the Standard & Poor's 500 Index since Oct. 12, 2007, when it reached a record 1561.80.
Shares Tumble
Fannie and Freddie haven't escaped the carnage. The companies' combined losses over the past three quarters reached more than $11 billion. The total will probably climb to $48 billion by the end of next year, according to a July 18 report by JPMorgan Chase & Co. analyst Matthew Jozoff in New York.
Fannie fell as low as $6.68 on July 11 in New York Stock Exchange trading, and Freddie reached $3.89 the same day. While Fannie rebounded to $15 and Freddie reached $10.80 yesterday after Congress started approving Paulson's plan, both were trading above $60 a year ago.
When Fannie sold $3 billion of two-year notes on July 9, investors demanded an extra 74 basis points of yield to own the debt rather than Treasuries of similar maturity, more than in past offerings. Freddie paid a spread of 88 basis points to sell $3 billion of two-year notes on July 17, the widest in at least five years.
Debt issued by Fannie and Freddie is held by banks, insurance companies, pension funds and foreign governments. Led by China and Japan, non-U.S. investors own more than $1.3 trillion of their bonds, according to the Treasury's most recent ``Report on Foreign Portfolio Holdings of U.S. Securities.''
`Disastrous Consequences'
``The obligations they have outstanding, something in the order of $5 trillion, are so large that there would be a worldwide financial catastrophe should they default,'' said former St. Louis Federal Reserve President William Poole in an interview. ``The financial system would seize up.''
Fannie and Freddie would cost U.S. taxpayers an estimated $25 billion over two years under Paulson's plan if a bailout was necessary, the Congressional Budget Office said July 22.
While there is probably a ``better than 50 percent'' chance taxpayer funds won't be needed, the CBO said, ``many analysts and traders believe that there is a significant likelihood that conditions in the housing and financial markets could deteriorate more than already reflected'' in the companies' finances.
`Stupid Question'
``Such continuing problems would increase the probability that this new authority would have to be used,'' said the CBO, a nonpartisan agency in Washington that provides economic and budget analysis for lawmakers, in its report.
As Terre Haute's Cooper discovered, the housing boom was fueled by lenders that moved away from the fixed-rate loans and 10 to 20 percent down payments that Fannie Mae and Freddie Mac prefer. Instead, the mortgage companies offered adjustable-rate loans with initially low teaser rates, no money down and even cash back after the deal was completed to thousands of buyers of limited means.
When Cooper's interest rate jumped to 13 percent, her payments climbed to $800 from $450 a month. She started missing installments, and subprime loan servicers began calling her at work and asking why, Cooper said.
``I told them, I can't pay because you jacked up my interest rate to a level that no normal person could handle,'' the manager of the dry cleaner said. ``I thought it was kind of a stupid question.''
To contact the reporters on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net; Bryan Keogh in New York at bkeogh4@bloomberg.net
Read more...
Cyrela, Petrobras, Telmex Internacional: Latin Equity Preview
By Alexander Ragir and William Freebairn
July 24 (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 fell 0.5 percent to 4,290.95 yesterday. In Brazil, preferred shares are the most commonly traded class of stock.
Brazil
Rate-sensitive stocks: Brazilian policy makers raised the overnight interest rate by three quarters of a percentage point to 13 percent last night, higher than the 12.75 percent estimate of thirty-one of the 45 economists surveyed by Bloomberg News. Cyrela Brazil Realty SA Empreendimentos e Participacoes (CYRE3 BS), Brazil's biggest hombebuilder rose 5.6 percent to 22.80 reais yesterday. Gafisa SA (GFSA3 BS), the second biggest, gained 5.5 percent to 26.75 reais. Lojas Americanas SA (LAME4 BS), Brazil's biggest discount retailer, rose 1.8 percent to 11.20 reais.
B2W Cia. Global do Varejo (BTOW3 BS): Brazil's largest online retailer increased the amount of bonds it plans to sell in the local market to 364.4 million reais ($230.2 million), according to a statement posted yesterday on the securities regulator's Web site. The Osasco, Brazil-based company said on June 18 that it planned to raise as much as 350 million reais. It didn't give more details on the fundraising plan. B2W dropped 0.4 percent to 57.32 reais.
Natura Cosmeticos SA (NATU3 BS): Brazil's biggest cosmetics company said second-quarter profit rose 13 percent on rising sales of new cosmetics lines. Net income increased to 146.7 million reais from 129 million reais a year earlier, Natura said yesterday in a statement. That's in line with the 144.8 million reais median estimate of five analysts surveyed by Bloomberg News. Natura fell 1.4 percent to 17.95 reais
Parana Banco SA (PRBC4 BS): The Brazilian bank specializing in payroll loans was downgraded to ``neutral'' from ``buy'' at UBS AG by analyst Bruno Pereira. Parana Banco rose 0.2 percent to 9.01 reais.
Petroleo Brasileiro SA (PETR4 BS): Brazil's state- controlled oil company is increasing the number of exploratory wells it is drilling in the Santos Basin off the coast of the country to assess more accurately the size of its pre-salt oil find, Estado de S. Paulo reported yesterday. Petrobras is drilling six wells more than 6,000 meters (19,686 feet) deep, Estado said, citing the Brazillian petroleum regulatory agency known as ANP. Petrobras fell 3.6 percent to 36.10 reais.
Colombia
Textiles Fabricato Tejicondor SA (FABRI CB): Colombia's exports rose 26 percent in May, the government statistics agency said. Exports increased to $3.4 billion from $2.7 billion in the same month a year earlier, the agency said yesterday in an e- mailed statement. Fabricato, the country's biggest textiles exporter, rose 0.4 percent to 25.70 pesos.
Mexico
Consorcio Ara SAB (ARA* MM), Mexico's fourth-biggest homebuilder, was downgraded to ``underperform'' from ``neutral'' at Merrill Lynch & Co. A ``sluggish permitting process'' and ``rising raw material costs'' weighed on margins, analysts led by Mexico City-based Carlos Peyrelongue wrote in a note to clients dated yesterday. Ara rose 0.4 percent to 8.59 reais.
Gruma SAB (GRUMAB MM): The world's largest maker of corn flour said second-quarter net income jumped 56 percent to 689 million pesos ($68.8 million) on higher prices in Venezuela. Sales rose 13 percent to 10.1 billion pesos, the company said in a statement sent yesterday by e-mail. Gruma rose 2.8 percent to 26.94 pesos.
Telmex Internacional SAB (TELINTL MM): The cable-TV and long-distance phone company controlled by billionaire Carlos Slim said second-quarter net income fell 24 percent to 1.19 billion pesos, lagging the 1.86 billion pesos in profit expected by Morgan Stanley Group. Sales increased 11 percent to 18.5 billion pesos. Telmex Internacional fell 2.6 percent to 7.19 pesos.
To contact the reporters on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net;
Read more...
July 24 (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 fell 0.5 percent to 4,290.95 yesterday. In Brazil, preferred shares are the most commonly traded class of stock.
Brazil
Rate-sensitive stocks: Brazilian policy makers raised the overnight interest rate by three quarters of a percentage point to 13 percent last night, higher than the 12.75 percent estimate of thirty-one of the 45 economists surveyed by Bloomberg News. Cyrela Brazil Realty SA Empreendimentos e Participacoes (CYRE3 BS), Brazil's biggest hombebuilder rose 5.6 percent to 22.80 reais yesterday. Gafisa SA (GFSA3 BS), the second biggest, gained 5.5 percent to 26.75 reais. Lojas Americanas SA (LAME4 BS), Brazil's biggest discount retailer, rose 1.8 percent to 11.20 reais.
B2W Cia. Global do Varejo (BTOW3 BS): Brazil's largest online retailer increased the amount of bonds it plans to sell in the local market to 364.4 million reais ($230.2 million), according to a statement posted yesterday on the securities regulator's Web site. The Osasco, Brazil-based company said on June 18 that it planned to raise as much as 350 million reais. It didn't give more details on the fundraising plan. B2W dropped 0.4 percent to 57.32 reais.
Natura Cosmeticos SA (NATU3 BS): Brazil's biggest cosmetics company said second-quarter profit rose 13 percent on rising sales of new cosmetics lines. Net income increased to 146.7 million reais from 129 million reais a year earlier, Natura said yesterday in a statement. That's in line with the 144.8 million reais median estimate of five analysts surveyed by Bloomberg News. Natura fell 1.4 percent to 17.95 reais
Parana Banco SA (PRBC4 BS): The Brazilian bank specializing in payroll loans was downgraded to ``neutral'' from ``buy'' at UBS AG by analyst Bruno Pereira. Parana Banco rose 0.2 percent to 9.01 reais.
Petroleo Brasileiro SA (PETR4 BS): Brazil's state- controlled oil company is increasing the number of exploratory wells it is drilling in the Santos Basin off the coast of the country to assess more accurately the size of its pre-salt oil find, Estado de S. Paulo reported yesterday. Petrobras is drilling six wells more than 6,000 meters (19,686 feet) deep, Estado said, citing the Brazillian petroleum regulatory agency known as ANP. Petrobras fell 3.6 percent to 36.10 reais.
Colombia
Textiles Fabricato Tejicondor SA (FABRI CB): Colombia's exports rose 26 percent in May, the government statistics agency said. Exports increased to $3.4 billion from $2.7 billion in the same month a year earlier, the agency said yesterday in an e- mailed statement. Fabricato, the country's biggest textiles exporter, rose 0.4 percent to 25.70 pesos.
Mexico
Consorcio Ara SAB (ARA* MM), Mexico's fourth-biggest homebuilder, was downgraded to ``underperform'' from ``neutral'' at Merrill Lynch & Co. A ``sluggish permitting process'' and ``rising raw material costs'' weighed on margins, analysts led by Mexico City-based Carlos Peyrelongue wrote in a note to clients dated yesterday. Ara rose 0.4 percent to 8.59 reais.
Gruma SAB (GRUMAB MM): The world's largest maker of corn flour said second-quarter net income jumped 56 percent to 689 million pesos ($68.8 million) on higher prices in Venezuela. Sales rose 13 percent to 10.1 billion pesos, the company said in a statement sent yesterday by e-mail. Gruma rose 2.8 percent to 26.94 pesos.
Telmex Internacional SAB (TELINTL MM): The cable-TV and long-distance phone company controlled by billionaire Carlos Slim said second-quarter net income fell 24 percent to 1.19 billion pesos, lagging the 1.86 billion pesos in profit expected by Morgan Stanley Group. Sales increased 11 percent to 18.5 billion pesos. Telmex Internacional fell 2.6 percent to 7.19 pesos.
To contact the reporters on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net;
Read more...
EnCana, Kinross, Petro-Canada, Potash: Canadian Equity Preview
By Katherine Greene
July 24 (Bloomberg) -- The following companies may have unusual price changes in Canadian trading. Stock symbols are in parentheses, and share prices are as of the last close.
The Standard & Poor's/TSX Composite Index fell the most in a week, dropping 1 percent to 13,512.66.
Agnico-Eagle Mines Ltd. (AEM CN): The gold miner boosting output fivefold in three years said second-quarter profit dropped 78 percent, trailing analysts' estimates, because of lower prices and production for zinc from its LaRonde mine. The shares fell 5.6 percent to C$64.80.
EnCana Corp. (ECA CN): Canada's largest natural-gas producer said second-quarter profit fell 16 percent on lower values for contracts used to lock in commodity prices. The shares fell 5.1 percent to C$73.21.
Husky Energy Inc. (HSE CN): The Canadian oil company controlled by Hong Kong billionaire Li Ka-shing said second- quarter net income rose 75 percent on higher crude and natural- gas prices. The shares fell 2 percent to C$40.51.
Kinross Gold Corp. (K CN): Canada's third-largest gold producer said it has agreed to buy Aurelian Resources Inc. (ARU CN) for C$1.2 billion ($1.19 billion) in stock, giving it control of Ecuador's largest gold deposit. The shares fell 8 percent to C$20.84.
Petro-Canada (PCA CN): The country's second-largest refiner said second-quarter profit surged 77 percent on higher oil and natural-gas prices. The shares dropped 4.1 percent to C$46.60.
Potash Corp. of Saskatchewan Inc. (POT CN): The world's largest producer of crop nutrients said second-quarter profit more than tripled to a record as rising global demand for crops lifted fertilizer prices. The shares slid 7.1 percent to C$202.23.
Suncor Energy Inc. (SU CN): The world's second-largest oil- sands producer said second-quarter profit increased 12 percent as higher oil and natural-gas prices blunted a decline in output from planned repairs. The shares fell for a second day, dropping 2.1 percent to C$53.65.
Teck Cominco Ltd. (TCK/B CN): Canada's largest diversified mining company said second-quarter profit rose 2.5 percent because of higher copper and coal sales. The shares fell 2.3 percent to C$39.18.
WestJet Airlines Ltd. (WJA CN): Canada's second-biggest carrier said it won't let passengers use credit cards to check in at airport kiosks after reports of fraudulent use of travelers' personal data. The company said the measure is precautionary and it isn't aware of any confirmed fraud cases. The shares rose 7.8 percent to C$15.69.
To contact the reporter on this story: Katherine Greene in New York at kgreene8@bloomberg.net.
Read more...
July 24 (Bloomberg) -- The following companies may have unusual price changes in Canadian trading. Stock symbols are in parentheses, and share prices are as of the last close.
The Standard & Poor's/TSX Composite Index fell the most in a week, dropping 1 percent to 13,512.66.
Agnico-Eagle Mines Ltd. (AEM CN): The gold miner boosting output fivefold in three years said second-quarter profit dropped 78 percent, trailing analysts' estimates, because of lower prices and production for zinc from its LaRonde mine. The shares fell 5.6 percent to C$64.80.
EnCana Corp. (ECA CN): Canada's largest natural-gas producer said second-quarter profit fell 16 percent on lower values for contracts used to lock in commodity prices. The shares fell 5.1 percent to C$73.21.
Husky Energy Inc. (HSE CN): The Canadian oil company controlled by Hong Kong billionaire Li Ka-shing said second- quarter net income rose 75 percent on higher crude and natural- gas prices. The shares fell 2 percent to C$40.51.
Kinross Gold Corp. (K CN): Canada's third-largest gold producer said it has agreed to buy Aurelian Resources Inc. (ARU CN) for C$1.2 billion ($1.19 billion) in stock, giving it control of Ecuador's largest gold deposit. The shares fell 8 percent to C$20.84.
Petro-Canada (PCA CN): The country's second-largest refiner said second-quarter profit surged 77 percent on higher oil and natural-gas prices. The shares dropped 4.1 percent to C$46.60.
Potash Corp. of Saskatchewan Inc. (POT CN): The world's largest producer of crop nutrients said second-quarter profit more than tripled to a record as rising global demand for crops lifted fertilizer prices. The shares slid 7.1 percent to C$202.23.
Suncor Energy Inc. (SU CN): The world's second-largest oil- sands producer said second-quarter profit increased 12 percent as higher oil and natural-gas prices blunted a decline in output from planned repairs. The shares fell for a second day, dropping 2.1 percent to C$53.65.
Teck Cominco Ltd. (TCK/B CN): Canada's largest diversified mining company said second-quarter profit rose 2.5 percent because of higher copper and coal sales. The shares fell 2.3 percent to C$39.18.
WestJet Airlines Ltd. (WJA CN): Canada's second-biggest carrier said it won't let passengers use credit cards to check in at airport kiosks after reports of fraudulent use of travelers' personal data. The company said the measure is precautionary and it isn't aware of any confirmed fraud cases. The shares rose 7.8 percent to C$15.69.
To contact the reporter on this story: Katherine Greene in New York at kgreene8@bloomberg.net.
Read more...
Amazon, Bunge, Ford, Goodrich, LSI, MEMC: U.S. Equity Preview
By Elizabeth Stanton
July 24 (Bloomberg) -- The following companies may have unusual price changes in U.S. trading. Stock symbols are in parentheses, and share prices are as of 8:30 a.m. in New York unless stated otherwise.
Amazon.com Inc. (AMZN US) rose 8.2 percent to $76.30. The world's largest Internet retailer reported second-quarter profit that rose more than analysts estimated as customers bought flat- panel TVs and jewelry and the dollar's decline boosted overseas sales.
Baidu.com Inc. American depositary receipts (BIDU US) rose 12 percent to $323.95. China's most-used Internet search engine posted an 87 percent jump in second-quarter profit, beating analysts' estimates. Chief Executive Officer Robin Li added to Baidu's lead over Google Inc. (GOOG US) in China by introducing services such as online games from Shanda Interactive Entertainment Ltd. (SNDA US) and anti-virus software from Kingsoft Corp. (3888 HK).
Bunge Ltd. (BG US) rose 1.7 percent to $101. The world's biggest oilseed processor said second-quarter profit rose fourfold as record agricultural prices boosted demand for crop nutrients and grain-handling. Earnings of $4.73 a share were more than double the average analyst estimate in a Bloomberg survey.
Chipotle Mexican Grill Inc. (CMG US) fell 12 percent to $73.89. The fast-food chain McDonald's Corp. sold to the public in 2006 reported 0.9 percent less second-quarter profit than analysts estimated, according to Bloomberg data.
Daimler AG American depositary receipts (DAI US) fell 9.4 percent to $60.35. The world's second-biggest luxury carmaker said lower U.S. sales dragged down profit and the company cut its earnings forecast.
F5 Networks Inc. (FFIV US) fell 5.1 percent to $29.46. The maker of programs that manage companies' computer networks said third-quarter profit fell 12 percent on higher costs for sales and marketing and for research and development.
Ford Motor Co. (F US) fell 6.3 percent to $5.65. The world's third-largest automaker posted a second-quarter loss of $8.7 billion and said it will convert three truck factories to produce small cars as rising gasoline prices sap U.S. truck sales.
Gardner Denver Inc. (GDI US) fell 16 percent to $46.67. The maker of Oberdorfer pumps and Champion air compressors said demand for some products is slowing in the U.S. and U.K. Chief Executive Officer Barry Pennypacker said the outlook remains ``cautious'' for the second half.
Goodrich Corp. (GR US) rose 12 percent to $52. The largest supplier of aircraft landing gear beat analysts' estimates with a 50 percent jump in second-quarter earnings as it sold more parts to planemakers amid higher demand for new jets that use less fuel.
LSI Corp. (LSI US) rose 12 percent to $7.66. The maker of semiconductors for International Business Machines Corp. and Seagate Technology reported 38 percent more second-quarter profit than analysts estimated, according to Bloomberg data.
MEMC Electronic Materials Inc. (WFR US) fell 18 percent to $43.90. The maker of silicon wafers estimated as little as $4 a share in profit this year. Analysts expect $4.28, the average forecast in a Bloomberg survey.
Omniture Inc. (OMTR US) fell 13 percent to $18.20 in extended trading yesterday. The maker of business software used by Wal-Mart Stores Inc. and Vodafone Group Plc predicted full- year sales that trailed analysts' estimates.
Qualcomm Inc. (QCOM US) rose 19 percent to $53.50. The world's biggest maker of mobile-phone chips increased its 2008 sales and profit targets and settling a patent dispute with handset maker Nokia Oyj (NOK US). Nokia American depositary receipts added 2.8 percent to $27.46.
To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net
Read more...
July 24 (Bloomberg) -- The following companies may have unusual price changes in U.S. trading. Stock symbols are in parentheses, and share prices are as of 8:30 a.m. in New York unless stated otherwise.
Amazon.com Inc. (AMZN US) rose 8.2 percent to $76.30. The world's largest Internet retailer reported second-quarter profit that rose more than analysts estimated as customers bought flat- panel TVs and jewelry and the dollar's decline boosted overseas sales.
Baidu.com Inc. American depositary receipts (BIDU US) rose 12 percent to $323.95. China's most-used Internet search engine posted an 87 percent jump in second-quarter profit, beating analysts' estimates. Chief Executive Officer Robin Li added to Baidu's lead over Google Inc. (GOOG US) in China by introducing services such as online games from Shanda Interactive Entertainment Ltd. (SNDA US) and anti-virus software from Kingsoft Corp. (3888 HK).
Bunge Ltd. (BG US) rose 1.7 percent to $101. The world's biggest oilseed processor said second-quarter profit rose fourfold as record agricultural prices boosted demand for crop nutrients and grain-handling. Earnings of $4.73 a share were more than double the average analyst estimate in a Bloomberg survey.
Chipotle Mexican Grill Inc. (CMG US) fell 12 percent to $73.89. The fast-food chain McDonald's Corp. sold to the public in 2006 reported 0.9 percent less second-quarter profit than analysts estimated, according to Bloomberg data.
Daimler AG American depositary receipts (DAI US) fell 9.4 percent to $60.35. The world's second-biggest luxury carmaker said lower U.S. sales dragged down profit and the company cut its earnings forecast.
F5 Networks Inc. (FFIV US) fell 5.1 percent to $29.46. The maker of programs that manage companies' computer networks said third-quarter profit fell 12 percent on higher costs for sales and marketing and for research and development.
Ford Motor Co. (F US) fell 6.3 percent to $5.65. The world's third-largest automaker posted a second-quarter loss of $8.7 billion and said it will convert three truck factories to produce small cars as rising gasoline prices sap U.S. truck sales.
Gardner Denver Inc. (GDI US) fell 16 percent to $46.67. The maker of Oberdorfer pumps and Champion air compressors said demand for some products is slowing in the U.S. and U.K. Chief Executive Officer Barry Pennypacker said the outlook remains ``cautious'' for the second half.
Goodrich Corp. (GR US) rose 12 percent to $52. The largest supplier of aircraft landing gear beat analysts' estimates with a 50 percent jump in second-quarter earnings as it sold more parts to planemakers amid higher demand for new jets that use less fuel.
LSI Corp. (LSI US) rose 12 percent to $7.66. The maker of semiconductors for International Business Machines Corp. and Seagate Technology reported 38 percent more second-quarter profit than analysts estimated, according to Bloomberg data.
MEMC Electronic Materials Inc. (WFR US) fell 18 percent to $43.90. The maker of silicon wafers estimated as little as $4 a share in profit this year. Analysts expect $4.28, the average forecast in a Bloomberg survey.
Omniture Inc. (OMTR US) fell 13 percent to $18.20 in extended trading yesterday. The maker of business software used by Wal-Mart Stores Inc. and Vodafone Group Plc predicted full- year sales that trailed analysts' estimates.
Qualcomm Inc. (QCOM US) rose 19 percent to $53.50. The world's biggest maker of mobile-phone chips increased its 2008 sales and profit targets and settling a patent dispute with handset maker Nokia Oyj (NOK US). Nokia American depositary receipts added 2.8 percent to $27.46.
To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net
Read more...
Euro Falls Against Yen as German Business Confidence Slumps
By Ye Xie and Kim-Mai Cutler
July 24 (Bloomberg) -- The euro fell the most against the yen in more than a week as a drop in business confidence in Germany reduced speculation that the European Central Bank will raise interest rates again this year.
The dollar rose to the highest level against the euro in more than two weeks as the U.S. Senate considered a bill that allows Treasury Secretary Henry Paulson to bail out Fannie Mae and Freddie Mac. The pound dropped to the lowest in more than a week against the dollar as U.K. retail sales fell in June by the most since at least 1986.
``The focus in the foreign-exchange market at the moment is on the building evidence of a global slowdown,'' said Derek Halpenny, head of currency research in London at Bank of Tokyo- Mitsubishi, in an interview on Bloomberg Radio. ``That is certainly a plus for the dollar in the longer term.''
The euro declined 0.3 percent to 168.84 yen at 8:43 a.m. in New York, from 169.36 yesterday, when it reached a record high of 169.96. The currency dropped 0.2 percent to $1.5671, from $1.5698 yesterday, and touched $1.5638, the weakest since July 8. The dollar decreased 0.2 percent to 107.72 yen, from 107.90 yesterday. It earlier reached 107.99, the highest since June 26.
Sterling weakened from the highest level against the euro in seven weeks after British retail sales dropped in June by 3.9 percent as accelerating inflation prompted consumers to cut spending. The pound fell to $1.9863, from $2.9995, and 78.92 pence per euro, from 78.50 pence.
New Zealand Dollar
The New Zealand dollar fell against all of the other major currencies after the central bank cut its benchmark interest rate by a quarter-percentage point to 8 percent in the first reduction in five years. The currency fell 1.2 percent to 74.14 U.S. cents after touching 74.04, the lowest since Jan. 22. Central Bank Governor Alan Bollard said he may reduce rates again if inflation eases.
The 15-nation euro dropped for a third day versus the dollar after the Ifo institute said its German business climate index, based on a survey of 7,000 executives, dropped to 97.5 from 101.2 in June. The median forecast of 40 economists surveyed by Bloomberg News was for a decrease to 100.1 from a previously reported 101.3.
``The upside to the euro-dollar now seems limited given weakening economic numbers out of the euro zone,'' said Antje Praefcke, a currency strategist in Frankfurt for Commerzbank AG, Germany's second-biggest lender. The euro may trade at about $1.58 and break above 170 yen in the ``near term,'' she said.
ECB Rate
Traders pared bets the ECB will increase interest rates a second time this year, with the implied yield on the December Euribor futures contract falling 8 basis points to 5.13 percent. The Frankfurt-based central bank raised its main refinancing rate to a seven-year high of 4.25 percent on July 3.
The House of Representatives approved a rescue package yesterday that gives Paulson authority to buy shares in and lend funds to Fannie Mae and Freddie Mac and provides for a federal agency to insure refinanced home loans. The bill still has to pass through the Senate.
The dollar fell to a record $1.6038 per euro on July 15 as traders speculated that Fannie and Freddie, which own or guarantee almost half of the $12 trillion in outstanding U.S. home loans, would be forced to seek a bailout.
Futures traded on the Chicago Board of Trade showed a 49 percent chance the Fed will increase its 2 percent target rate for overnight lending between banks by at least a quarter- percentage point by Sept. 16, up from 34 percent odds a week ago. Policy makers next meet Aug. 5.
U.S. Housing
The National Association of Realtors will say today that sales of previously owned homes fell to a 4.94 million annual pace in June, from 4.99 million in May, a Bloomberg survey of economists showed. The Commerce Department will report tomorrow that sales of new houses dropped to an annual pace of 503,000 from 512,000 in May, a separate survey shows.
The dollar briefly pared its gain versus the euro as the Labor Department said initial jobless claims increased to 406,000 in the week ended July 19, from a revised 372,000 the prior week. The filings exceeded economists' forecast and were the most since 406,000 in the week ended March 29.
To contact the reporters on this story: Ye Xie in New York at Yxie6@bloomberg.net; Kim-Mai Cutler in London at kcutler@bloomberg.net.
Read more...
July 24 (Bloomberg) -- The euro fell the most against the yen in more than a week as a drop in business confidence in Germany reduced speculation that the European Central Bank will raise interest rates again this year.
The dollar rose to the highest level against the euro in more than two weeks as the U.S. Senate considered a bill that allows Treasury Secretary Henry Paulson to bail out Fannie Mae and Freddie Mac. The pound dropped to the lowest in more than a week against the dollar as U.K. retail sales fell in June by the most since at least 1986.
``The focus in the foreign-exchange market at the moment is on the building evidence of a global slowdown,'' said Derek Halpenny, head of currency research in London at Bank of Tokyo- Mitsubishi, in an interview on Bloomberg Radio. ``That is certainly a plus for the dollar in the longer term.''
The euro declined 0.3 percent to 168.84 yen at 8:43 a.m. in New York, from 169.36 yesterday, when it reached a record high of 169.96. The currency dropped 0.2 percent to $1.5671, from $1.5698 yesterday, and touched $1.5638, the weakest since July 8. The dollar decreased 0.2 percent to 107.72 yen, from 107.90 yesterday. It earlier reached 107.99, the highest since June 26.
Sterling weakened from the highest level against the euro in seven weeks after British retail sales dropped in June by 3.9 percent as accelerating inflation prompted consumers to cut spending. The pound fell to $1.9863, from $2.9995, and 78.92 pence per euro, from 78.50 pence.
New Zealand Dollar
The New Zealand dollar fell against all of the other major currencies after the central bank cut its benchmark interest rate by a quarter-percentage point to 8 percent in the first reduction in five years. The currency fell 1.2 percent to 74.14 U.S. cents after touching 74.04, the lowest since Jan. 22. Central Bank Governor Alan Bollard said he may reduce rates again if inflation eases.
The 15-nation euro dropped for a third day versus the dollar after the Ifo institute said its German business climate index, based on a survey of 7,000 executives, dropped to 97.5 from 101.2 in June. The median forecast of 40 economists surveyed by Bloomberg News was for a decrease to 100.1 from a previously reported 101.3.
``The upside to the euro-dollar now seems limited given weakening economic numbers out of the euro zone,'' said Antje Praefcke, a currency strategist in Frankfurt for Commerzbank AG, Germany's second-biggest lender. The euro may trade at about $1.58 and break above 170 yen in the ``near term,'' she said.
ECB Rate
Traders pared bets the ECB will increase interest rates a second time this year, with the implied yield on the December Euribor futures contract falling 8 basis points to 5.13 percent. The Frankfurt-based central bank raised its main refinancing rate to a seven-year high of 4.25 percent on July 3.
The House of Representatives approved a rescue package yesterday that gives Paulson authority to buy shares in and lend funds to Fannie Mae and Freddie Mac and provides for a federal agency to insure refinanced home loans. The bill still has to pass through the Senate.
The dollar fell to a record $1.6038 per euro on July 15 as traders speculated that Fannie and Freddie, which own or guarantee almost half of the $12 trillion in outstanding U.S. home loans, would be forced to seek a bailout.
Futures traded on the Chicago Board of Trade showed a 49 percent chance the Fed will increase its 2 percent target rate for overnight lending between banks by at least a quarter- percentage point by Sept. 16, up from 34 percent odds a week ago. Policy makers next meet Aug. 5.
U.S. Housing
The National Association of Realtors will say today that sales of previously owned homes fell to a 4.94 million annual pace in June, from 4.99 million in May, a Bloomberg survey of economists showed. The Commerce Department will report tomorrow that sales of new houses dropped to an annual pace of 503,000 from 512,000 in May, a separate survey shows.
The dollar briefly pared its gain versus the euro as the Labor Department said initial jobless claims increased to 406,000 in the week ended July 19, from a revised 372,000 the prior week. The filings exceeded economists' forecast and were the most since 406,000 in the week ended March 29.
To contact the reporters on this story: Ye Xie in New York at Yxie6@bloomberg.net; Kim-Mai Cutler in London at kcutler@bloomberg.net.
Read more...
European Stocks Fall, Led by BHP, Daimler; U.S. Futures Drop
By Adria Cimino
July 24 (Bloomberg) -- European stocks fell after German business confidence sank the most since September 2001 and lower commodity prices hurt mining and energy shares. U.S. index futures retreated, while Asian shares advanced.
BHP Billiton Ltd., the world's biggest mining company, fell to a three-month low. Total SA, Europe largest oil refiner, slipped for the first time this week. ABB Ltd. slumped the most in four months as the world's biggest builder of electricity grids posted earnings that missed analysts' estimates. Daimler AG tumbled 10 percent after the carmaker cut its profit forecast, while Ford Motor Co. fell in German trading after its earnings disappointed. EasyJet Plc led airlines lower, saying earnings will slide as much as 46 percent.
Europe's Dow Jones Stoxx 600 Index lost 0.9 percent to 284.24 at 1:35 p.m. in London. The index closed yesterday at the highest this month.
``The market had been getting ahead of itself in the last couple of days,'' said Peter Jarvis, the London-based director of European equities at F&C Asset Management, which oversees about $200 billion. ``Daimler was disappointing, and it's made people reassess'' results, he said.
Futures on the Standard & Poor's 500 Index slipped 0.2 percent. The MSCI Asia Pacific Index rose 1.4 percent as Sony Corp. advanced.
The Stoxx 600 has dropped as much as 26 percent this year on concern accelerating inflation and more than $460 billion in credit-related losses worldwide will stifle economic and profit growth. Better-than-expected earnings by companies from Volkswagen AG to Nokia Oyj sparked a rebound from a three-year low on July 15 that has trimmed declines in the pan-European benchmark index to 22 percent.
Jobless Claims
Stocks extended declines after a report showing the number of Americans filing first-time claims for unemployment benefits rose last week to the highest in almost four months, a sign the slowing economy is weakening the labor market.
Analysts estimate earnings for companies in the Stoxx 600 will drop 2.4 percent in 2008, Bloomberg data show. That's down from 11 percent growth predicted at the start of the year.
``We expect things to deteriorate over the next six months,'' said Gonzalo Lardies, a fund manager in Madrid at LCF Rothschild Group, which oversees $145 billion worldwide.
National benchmark indexes fell in all of the 18 western European markets except Iceland and Luxembourg. The U.K.'s FTSE 100 slipped 0.7 percent with Rio Tinto Group and BP Plc declining. France's CAC 40 also decreased 0.7 percent, and Germany's DAX lost 0.9 percent. Credit Suisse Group AG led an advance in Switzerland after reporting earnings that topped estimates.
Confidence Slumps
Business confidence in Germany, Europe's largest economy, slipped the most since the Sept. 11 terrorist attacks in 2001, signaling growth is faltering. The Ifo institute said its business climate index fell to 97.5 from 101.2 in June. Economists expected a drop to 100.1, based on a Bloomberg survey.
``Today's data confirmed that global economic growth is slowing down, which adds to investors' uncertainty,'' said Robert Halver, head of research at Baader Bank in Frankfurt.
BHP sank 1.2 percent to 1,597 pence. Rio Tinto, the world's third-biggest mining company, fell 1 percent to 5,047 pence.
Gold traded at its lowest in more than two weeks in Asia after the U.S. dollar rallied to a two-week high against the euro, paring demand for the metal as hedge against inflation.
Total lost 2.2 percent to 47.98 euros. BP, Europe's second- biggest oil company, slid 1.8 percent to 512.25 pence.
Oil rebounded from a seven-week low as traders viewed this week's 3 percent decline as an opportunity to buy futures contracts.
ABB, Daimler
ABB fell 5.4 percent to 28.6 francs. Second-quarter profit rose 34 percent to $975 million as nations from the U.S. to China invested in power networks. Analysts in a Bloomberg survey estimated earnings of $982 million.
Daimler fell 10 percent to 38.23 euros. The world's second- biggest luxury carmaker cut its full-year forecast for earnings before interest and taxes. The company said second-quarter profit fell 25 percent to 1.395 billion euros because of charges related to former unit Chrysler. Six analysts surveyed by Bloomberg News had forecast profit of 1.38 billion euros.
Ford dropped 54 cents to $5.49 in Germany. The world's third- largest automaker posted a wider-than-expected second-quarter loss and said it will convert three truck factories to produce small cars as rising gasoline prices sap U.S. truck sales.
``I personally wouldn't buy auto stocks,'' said Andy Brough, a fund manager at Schroder Investment Management in London, which has about $12.7 billion. ``Even if oil goes to $100 a barrel, the outlook for profits in the oil companies is a lot more favorable than the outlook for autos.''
Renault, EasyJet
Renault SA lost 3.7 percent to 55.73 euros. France's second- largest carmaker slashed its 2009 unit-sales target and pledged cuts in production costs and jobs to meet profit goals, amid soaring raw material prices and flagging European auto markets.
EasyJet, Europe's second-biggest discount airline, fell 8.9 percent to 337 pence after saying fiscal-year pretax profit will slump as much as 46 percent because of higher fuel expenses. Pretax earnings for the year through Sept. 30 will be 110 million pounds ($220 million) to 120 million pounds.
Ryanair Holdings Plc, Europe's largest discount carrier, slipped 3.2 percent to 3.28 euros. Air France-KLM Group, the region's biggest airline, sank 4.1 percent to 16.20 euros.
McDonald's Corp., the biggest restaurant company, lost 92 cents to $58.74 in Germany. Deutsche Bank analysts led by Jason West lowered their recommendation on the shares to ``hold'' from ``buy,'' writing that higher beef costs and fewer customer visits may reduce profitability.
Amazon, Baidu
Amazon.com Inc., the world's largest Internet retailer, reported second-quarter profit more than doubled as customers bought more toys and electronics overseas. Full-year sales may exceed its previous forecast, the company said in a statement. Amazon shares climbed $5.06 to $75.60 in Germany.
Baidu.com Inc. gained $41.99 to $330.69 in Germany after China's most-used search Web site reported an 87 percent increase in second-quarter profit, beating analysts' estimates.
Sony, the maker of the Playstation 3 game machine, gained 3.9 percent to 4,550 yen.
Stora Enso Oyj slipped 9 percent to 5.85 euros. Europe's largest paper company said second-quarter profit fell 84 percent, missing estimates, on higher wood costs and weaker demand for lumber.
Credit Suisse Group AG climbed 5.2 percent to 52.5 francs. Second-quarter earnings dropped less than analysts estimated as the investment banking unit returned to profit. Net income fell to 1.22 billion Swiss francs ($1.18 billion). That beat the 617 million-franc median estimate of 14 analysts surveyed by Bloomberg.
Rising Costs
Svenska Cellulosa AB plunged 7.6 percent to 72.75 kronor. Europe's biggest tissue maker said second-quarter profit fell 12 percent to 1.38 billion kronor ($229 million) as an economic slowdown in the U.S. and parts of Europe prevented it from passing on rising energy, fiber and chemical costs.
Metso Oyj sank 15 percent to 23.67 euros. The world's biggest maker of rock crushers and paper mills cut its full-year sales growth forecast to the range of 5 percent to 10 percent. Second-quarter pretax profit was 145 million euros, missing analysts' estimates.
Yell Group Plc surged 16 percent to 82.5 pence. The publisher of the U.K.'s Yellow Pages phone directory said fiscal first-quarter profit rose 5.5 percent to 36.2 million pounds after it expanded its Internet business and cut costs.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
Read more...
July 24 (Bloomberg) -- European stocks fell after German business confidence sank the most since September 2001 and lower commodity prices hurt mining and energy shares. U.S. index futures retreated, while Asian shares advanced.
BHP Billiton Ltd., the world's biggest mining company, fell to a three-month low. Total SA, Europe largest oil refiner, slipped for the first time this week. ABB Ltd. slumped the most in four months as the world's biggest builder of electricity grids posted earnings that missed analysts' estimates. Daimler AG tumbled 10 percent after the carmaker cut its profit forecast, while Ford Motor Co. fell in German trading after its earnings disappointed. EasyJet Plc led airlines lower, saying earnings will slide as much as 46 percent.
Europe's Dow Jones Stoxx 600 Index lost 0.9 percent to 284.24 at 1:35 p.m. in London. The index closed yesterday at the highest this month.
``The market had been getting ahead of itself in the last couple of days,'' said Peter Jarvis, the London-based director of European equities at F&C Asset Management, which oversees about $200 billion. ``Daimler was disappointing, and it's made people reassess'' results, he said.
Futures on the Standard & Poor's 500 Index slipped 0.2 percent. The MSCI Asia Pacific Index rose 1.4 percent as Sony Corp. advanced.
The Stoxx 600 has dropped as much as 26 percent this year on concern accelerating inflation and more than $460 billion in credit-related losses worldwide will stifle economic and profit growth. Better-than-expected earnings by companies from Volkswagen AG to Nokia Oyj sparked a rebound from a three-year low on July 15 that has trimmed declines in the pan-European benchmark index to 22 percent.
Jobless Claims
Stocks extended declines after a report showing the number of Americans filing first-time claims for unemployment benefits rose last week to the highest in almost four months, a sign the slowing economy is weakening the labor market.
Analysts estimate earnings for companies in the Stoxx 600 will drop 2.4 percent in 2008, Bloomberg data show. That's down from 11 percent growth predicted at the start of the year.
``We expect things to deteriorate over the next six months,'' said Gonzalo Lardies, a fund manager in Madrid at LCF Rothschild Group, which oversees $145 billion worldwide.
National benchmark indexes fell in all of the 18 western European markets except Iceland and Luxembourg. The U.K.'s FTSE 100 slipped 0.7 percent with Rio Tinto Group and BP Plc declining. France's CAC 40 also decreased 0.7 percent, and Germany's DAX lost 0.9 percent. Credit Suisse Group AG led an advance in Switzerland after reporting earnings that topped estimates.
Confidence Slumps
Business confidence in Germany, Europe's largest economy, slipped the most since the Sept. 11 terrorist attacks in 2001, signaling growth is faltering. The Ifo institute said its business climate index fell to 97.5 from 101.2 in June. Economists expected a drop to 100.1, based on a Bloomberg survey.
``Today's data confirmed that global economic growth is slowing down, which adds to investors' uncertainty,'' said Robert Halver, head of research at Baader Bank in Frankfurt.
BHP sank 1.2 percent to 1,597 pence. Rio Tinto, the world's third-biggest mining company, fell 1 percent to 5,047 pence.
Gold traded at its lowest in more than two weeks in Asia after the U.S. dollar rallied to a two-week high against the euro, paring demand for the metal as hedge against inflation.
Total lost 2.2 percent to 47.98 euros. BP, Europe's second- biggest oil company, slid 1.8 percent to 512.25 pence.
Oil rebounded from a seven-week low as traders viewed this week's 3 percent decline as an opportunity to buy futures contracts.
ABB, Daimler
ABB fell 5.4 percent to 28.6 francs. Second-quarter profit rose 34 percent to $975 million as nations from the U.S. to China invested in power networks. Analysts in a Bloomberg survey estimated earnings of $982 million.
Daimler fell 10 percent to 38.23 euros. The world's second- biggest luxury carmaker cut its full-year forecast for earnings before interest and taxes. The company said second-quarter profit fell 25 percent to 1.395 billion euros because of charges related to former unit Chrysler. Six analysts surveyed by Bloomberg News had forecast profit of 1.38 billion euros.
Ford dropped 54 cents to $5.49 in Germany. The world's third- largest automaker posted a wider-than-expected second-quarter loss and said it will convert three truck factories to produce small cars as rising gasoline prices sap U.S. truck sales.
``I personally wouldn't buy auto stocks,'' said Andy Brough, a fund manager at Schroder Investment Management in London, which has about $12.7 billion. ``Even if oil goes to $100 a barrel, the outlook for profits in the oil companies is a lot more favorable than the outlook for autos.''
Renault, EasyJet
Renault SA lost 3.7 percent to 55.73 euros. France's second- largest carmaker slashed its 2009 unit-sales target and pledged cuts in production costs and jobs to meet profit goals, amid soaring raw material prices and flagging European auto markets.
EasyJet, Europe's second-biggest discount airline, fell 8.9 percent to 337 pence after saying fiscal-year pretax profit will slump as much as 46 percent because of higher fuel expenses. Pretax earnings for the year through Sept. 30 will be 110 million pounds ($220 million) to 120 million pounds.
Ryanair Holdings Plc, Europe's largest discount carrier, slipped 3.2 percent to 3.28 euros. Air France-KLM Group, the region's biggest airline, sank 4.1 percent to 16.20 euros.
McDonald's Corp., the biggest restaurant company, lost 92 cents to $58.74 in Germany. Deutsche Bank analysts led by Jason West lowered their recommendation on the shares to ``hold'' from ``buy,'' writing that higher beef costs and fewer customer visits may reduce profitability.
Amazon, Baidu
Amazon.com Inc., the world's largest Internet retailer, reported second-quarter profit more than doubled as customers bought more toys and electronics overseas. Full-year sales may exceed its previous forecast, the company said in a statement. Amazon shares climbed $5.06 to $75.60 in Germany.
Baidu.com Inc. gained $41.99 to $330.69 in Germany after China's most-used search Web site reported an 87 percent increase in second-quarter profit, beating analysts' estimates.
Sony, the maker of the Playstation 3 game machine, gained 3.9 percent to 4,550 yen.
Stora Enso Oyj slipped 9 percent to 5.85 euros. Europe's largest paper company said second-quarter profit fell 84 percent, missing estimates, on higher wood costs and weaker demand for lumber.
Credit Suisse Group AG climbed 5.2 percent to 52.5 francs. Second-quarter earnings dropped less than analysts estimated as the investment banking unit returned to profit. Net income fell to 1.22 billion Swiss francs ($1.18 billion). That beat the 617 million-franc median estimate of 14 analysts surveyed by Bloomberg.
Rising Costs
Svenska Cellulosa AB plunged 7.6 percent to 72.75 kronor. Europe's biggest tissue maker said second-quarter profit fell 12 percent to 1.38 billion kronor ($229 million) as an economic slowdown in the U.S. and parts of Europe prevented it from passing on rising energy, fiber and chemical costs.
Metso Oyj sank 15 percent to 23.67 euros. The world's biggest maker of rock crushers and paper mills cut its full-year sales growth forecast to the range of 5 percent to 10 percent. Second-quarter pretax profit was 145 million euros, missing analysts' estimates.
Yell Group Plc surged 16 percent to 82.5 pence. The publisher of the U.K.'s Yellow Pages phone directory said fiscal first-quarter profit rose 5.5 percent to 36.2 million pounds after it expanded its Internet business and cut costs.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
Read more...
U.S. Stock-Index Futures Drop; Ford, McDonald's Shares Fall
By Michael Patterson and Lynn Thomasson
Read more...
July 24 (Bloomberg) -- U.S. stock-index futures declined as worse-than-estimated results from Ford Motor Co. and Dow Chemical Co. overshadowed growing confidence lawmakers will pass a bill to shore up the mortgage industry.
Ford, the world's third-largest automaker, dropped after reporting a loss twice as big as analysts estimated. Dow Chemical retreated as surging raw-materials costs dragged down earnings 27 percent. McDonald's Corp., the biggest restaurant company, fell after Deutsche Bank AG cut its recommendation on the shares. Fannie Mae and Freddie Mac climbed following the approval of legislation from the House of Representatives to bolster the mortgage-finance companies.
``You are starting to see a lot of the problems in the financial area drifting over into more of the real economy,'' Tobias Levkovich, the chief U.S. equity strategist at Citigroup Inc. in New York, said in an interview on Bloomberg Television. ``We're going to settle a little bit'' after the rally in stocks over the past week, he said.
Futures on the Standard & Poor's 500 Index expiring in September lost 3.2 points, or 0.3 percent, to 1,279.2 at 8:44 a.m. in New York as a higher-than-forecast increase in jobless claims also weighed on stocks. Dow Jones Industrial Average futures slipped 28 to 11,585. Nasdaq-100 Index futures added 6 to 1,855 after income at Amazon.com Inc. doubled. European shares dropped as German business confidence sank, while Asian shares advanced.
Advance Pared
Futures indicated the S&P 500 may pare a 5.5 percent rebound from an almost three-year low on July 15. Companies outside the financial industry have posted second-quarter earnings that topped analysts' estimates by an average of 3.1 percent, according to data compiled by Bloomberg. The measure is still 18 percent below its October record.
The S&P 500's rally in the past week was led by bank shares after lenders including JPMorgan Chase & Co. and Citigroup Inc. posted better-than-estimated results and lawmakers moved closer to approving a rescue plan for Fannie Mae and Freddie Mac.
The 28 percent jump in the S&P 500 Financials Index during the five trading days ended July 22 was the biggest one-week advance for any of the S&P 500's 10 industry groups since daily calculations on the indexes began in 1989, according to Harrison, New York-based research firm Bespoke Investment Group LLC.
An almost 16 percent retreat in oil from its July 11 record helped fuel gains in consumer, industrial and technology shares.
Ford dropped 4.6 percent to $5.75. Excluding costs the company considers one-time expenses, the loss was $1.38 billion, or 62 cents a share. On that basis, Ford was expected to report a loss of 28 cents a share, the average estimate of 12 analysts surveyed by Bloomberg.
Dow Chemical, McDonald's
Dow Chemical slipped 0.5 percent to $34.08. Net income dropped to 81 cents a share from $1.07 a year earlier as energy and raw-materials costs surged. Profit was expected to be 85 cents a share, the average estimate of 15 analysts in a Bloomberg survey.
McDonald's, the biggest restaurant company, lost 26 cents to $59.40. Deutsche Bank analysts led by Jason West cut their recommendation on the shares to ``hold'' from ``buy,'' writing that higher beef costs and fewer customer visits may reduce profitability.
Fannie Mae gained 6.7 percent to $16 and Freddie Mac added 6.2 percent to $11.47. House members voted 272-152 in favor of the measure that gives Treasury Secretary Henry Paulson power to inject capital into Fannie Mae and Freddie Mac and provides for a federal agency to insure refinanced home loans.
Amazon.com
Amazon.com added 8 percent to $76.17. Second-quarter profit topped analysts' estimates after Chief Executive Officer Jeff Bezos promoted free shipping and lower prices to entice U.S. customers. Full-year sales may rise to as much as $20.1 billion, compared with an earlier forecast of as much as $20 billion, the company said.
Sales of previously owned U.S. homes probably fell in June, approaching a record low and signaling tumbling real-estate values and consumer confidence are hurting demand, economists said ahead of a private report today. Resales dropped 1 percent to a 4.94 million annual rate last month, according to the median forecast of 77 economists surveyed by Bloomberg News. The report is due at 10 a.m. New York time.
U.S. equity index futures also declined after a government report showed the number of Americans filing first-time claims for unemployment benefits rose last week to the highest in almost four months, a sign the slowing economy is weakening the labor market. Initial jobless claims increased by 34,000 to 406,000 in the week ended July 19 and exceeded the average estimate predicted by economists in a Bloomberg survey.
To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net; Lynn Thomasson in New York at lthomasson@bloomberg.net.
Read more...
Technical Market View
| Daily Forex Technicals | Written by FX Greece | Jul 24 08 13:42 GMT | | |
AUD/USDThe retracement below 0,9650-70 cancels for now our high-er targets from the break and a pullback towards 0,9500 is possible. A downward break at 0,9500 would indicate the upward trend reversal... If the area of 0,9650-00 is turned into a resistance, the re-versal will be confirmed ...
EUR/CHFThe tops at 1,5250 were breached and the move continued until 1,6300 area. Next resis-tance is found at 1,6370-80, but a corrective move formation is considered very possible...
EUR/GBPThe triangle formation was broken down-wards as we can see in the chart, and the base of 0,7830 was tested. The break will be confirmed, if the area of 0,7930 is turned into a resistance. A move above those levels indicates that the ranges of the sideways formation are between 0,7830-50 and 0,8030-50...
EUR/JPYThe candles at the tops of 169,50-170,00 give a negative outlook. The formation of a downward move and a retracement to 166,50-167,00, would be the most possible scenario ...
GBP/JPYThe break of the important resistance at 214,00-50 was not followed by breaks in the other yen pairs. A daily close with a formation of a reversal candle, would indicate a false break, and a retracement to 210,00 would be possible...
USD/CADVolatility within the wider triangle formation continues. The area of 1,0270-00 may be reached again...
GoldImportant support levels are being reached. The area of 910,00-915,00 should not be breached easily. We will wait for a reaction to 940-45 area...
SilverSimilar picture for silver. First support is found at 16,90-17,10, followed by 16,30-50... A reaction is expected at those levels...
Crude OilThe ranges for the recent decline are reached. A reaction towards 128,50-00 or even 132,00-133,00 seems possible...
DOW JONESDow has reached important resis-tance levels. A corrective move until 11380-00 area is possible...
DISCLAIMER
| |
Read more...
Dollar Rally Pushing Limits of Bearish Case
| Daily Forex Technicals | Written by DailyFX | Jul 24 08 13:26 GMT | | |
| The EURUSD decline is getting awfully deep for a correction; which has us thinking that it may not be a correction. 1.5611 still remains key for bulls. We've proposed an alternate count that has very bearish implications.
EUR/USDThe preferred count that we have been tracking is in black and is valid as long as price is above 1.5611 (red horizontal line). BUT, given the extended weakness from 1.5944 (well beyond where the decline would equal the 1.6039-1.5783 drop), presentation of an alternate count is warranted. While the preferred still treats wave IV as a triangle (complete at 1.5468), the alternate (in red) treats the correction from 1.6018 as a flat. Wave C of the flat would be underway now and would not end until below 1.5283. Near term resistance is 1.5700/36. STRATEGY: Bullish, against 1.5611, EXIT AT 1.57 (if given the chance) and FLIP to Bearish against 1.5797
USD/JPYWe put forth a possibility yesterday for the USDJPY, mentioning that a triangle could be unfolding in the X wave position from 108.57 (this means that the rally from 95.72-108.57 is wave W). If a triangle is unfolding, then the pair should decline in wave c soon. Range trading would dominate for the next few weeks before a bullish break.
GBP/USDThe drop below 1.99 negates the short term bullish bias. The GBPUSD is currently testing the trendline drawn off of the 6/13, 7/7, and 7/8 lows. A clean break of this line would confirm that wave D of the larger triangle is underway towards 1.9550/1.96. Look for resistance near 1.99 (former support).
USD/CHFIt is looking now as though the 3 wave rally from .9647 was wave W in a complex correction. The choppy decline from above 1.06 serves as wave X and wave Y is underway now and will end above 1.0624. Near term support is at 1.0350.
USD/CADWave E may be complete. The USDCAD has formed a base from the 7/15 low and a bullish bias is warranted against .9818. This is to prepare for the breakout above 1.0378 that is expected in the coming weeks. STRATEGY: Bullish, against .9818, target above 1.0378
AUD/USDThe drop below .9677 may be a C wave of an A-B-C decline from .9849. If so, then the AUDUSD is near a low and .9849 will be exceeded. Similar to the EURUSD though, the decline is getting a bit deep for a c wave so probability is increasing that a major top is in place. We’ll look to identify safe bearish entry points going forward.
NZD/USDWe wrote yesterday that "the NZDUSD continues to fall and is likely in a 3rd wave down. A break of .7445 would confirm that speculation." The pair broke the level and is headed much lower in the coming weeks. Targets are at .7280 and .6990 (the long term target is not until below .5927). Resistance is in the .7450/.7500 zone.
Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources. | |
Read more...
Subscribe to:
Posts (Atom)
Posts
