Daily Financial Market Outlook

Daily Forex Fundamentals | Written by Lloyds TSB | Jun 30 09 06:55 GMT |

Overview & economic commentary It's a busy day for data, with key releases in the US and euro zone. Ahead of tomorrow's ISM manufacturing report, the markets will be watching today's June Chicago PMI. Given the rise in the latest Philly Fed index, and the recent back-to-back increases in durable goods orders, the Chicago survey is expected to post a further improvement. There is likely to be particular interest in the survey's employment component ahead of Thursday's payroll report. Alongside the Chicago PMI, US consumer confidence and house price data are also due. Over the past month, the University of Michigan sentiment survey has improved, while the weekly ABC consumer comfort polls have trended lower. With equity markets firmer, and talk of recovery more widespread, we believe the former is more representative of underlying conditions. However, while the Conference Board report is likely to be stronger, the overhang of unsold homes suggests US house prices made little progress in April. Elsewhere, inflation and money supply figures dominate a crowded euro zone calendar. The annual CPI is forecast to have dropped into negative territory (-0.2%yoy) for the first time since the euro's inception. Annual euro zone M3 growth, meanwhile, is predicted to have slowed in May reflecting, in part, a move out of bank deposits into stronger-performing equities. Finally, in the UK, the final estimate of Q1 GDP, business investment and the Q1 current account figures are due. Given the downward revision to construction output, Q1 GDP is expected to be revised down to a fall of 2.2% compared with -1.9% previously. Currency commentary £/$ broke through 1.67 in early trade following the Nationwide report of a 0.9% jump in UK house prices in June. The increase is the 3rd in 4 months but is at odds with the still very subdued transaction and lending volume data released in recent days. Sterling managed to shrug off data from the BoE showing that overseas investors stepped up selling of gilts/bills in May. Final UK Q1 GDP data at 9.30 should not have a major impact and any profit taking on the back of a downward revision could trigger fresh sterling buying. Key resistance now runs along 1.6790. €/£ is offered around 0.8450 and £/Chf is bid above 1.80. MPC member Tucker speaks at 10:30. Euro zone annual CPI may have registered a negative result in June data at 10:00 may show, but considering the negative momentum vis-a-vis the dollar - €/$ is bid above 1.4150 - we doubt that a weaker CPI result could cause participants to sell euro crosses. EM currencies in Asia and eastern Europe are also finding good upward traction as Asian equities rally. €/Huf has broken below 275.0 while $/zloty hit an o/n low of 3.1551 Major data and events today UK Consumer confidence (GfK) (00:01) May -27 Jun (actual) -25 German retail sales (07:00) (30/6 - 5/7) Apr +0.5% Y-O-Y -0.8% May (f'cast) -0.3% Y-O-Y -2.6% Median zero Range -1.0%:+0.5% French producer prices (07:45) Apr -0.9% Y-O-Y -6.4% May (f'cast) +0.4% Y-O-Y -7.1% Median -0.2% Range -0.9%:+0.5% German unemployment (sa) (08.55) May +1K Rate 8.2% Jun (f'cast) +40K Rate 8.3% Median +45K Rate +6K:+70K EU-16 money supply, M3 (sa) (09:00) Apr Y-O-Y +4.9% May (f'cast) Y-O-Y +4.5% Median +4.6% Range +3.9%:+4.8% EU-16 CPI (10:00) (flash) May Y-O-Y zero Jun (f'cast) Y-O-Y -0.2% Median -0.3% Range -0.3%:zero Range 0.40%:0.47% UK GDP (final) Q1 (2nd estimate) -1.9% Y-O-Y -4.1% Q1 (f'cast) -2.2% Y-O-Y -4.4% Median -2.1% Range -2.2%:-1.9% UK Current account Q4 -£7.6bn Q1 (f'cast) -£6.7bn Median -£6.7bn Range -£8.1bn:-£4.1bn UK Business investment (final) Q1 (prel) -5.5% Y-O-Y -6.8% Q1 (f'cast) -5.5% Y-O-Y -6.8% Median -5.5% Range -5.8%:-5.5% Range -0.7%:+5.0% Canada GDP, monthly (13:30) Mar -0.3% Apr (f'cast) -0.1% Median -0.1% Range -0.4%:+0.1% US House prices (S&P/CaseShiller)(Apr)(14:00) Mar Y-O-Y -18.7% US Chicago PMI (14:45) May 34.9 Jun (f'cast) 38.5 Median 39.0 Range 34.0:44.0 US Consumer confidence (15:00) May 54.9 Jun (f'cast) 55.2 Median 55.1 Range 51.7:58.0 ECB member Nowotny speaks in Vienna (10:00) BoE member Tucker speaks in London (10:30) US Fed member Bullard speaks in Philadelphia (17:00) US Fed member Hoenig speaks in New York (21:00) Lloyds TSB Bank http://www.lloydstsbfinancialmarkets.com Disclaimer: Any documentation, reports, correspondence or other material or information in whatever form be it electronic, textual or otherwise is based on sources believed to be reliable, however neither the Bank nor its directors, officers or employees warrant accuracy, completeness or otherwise, or accept responsibility for any error, omission or other inaccuracy, or for any consequences arising from any reliance upon such information. The facts and data contained are not, and should under no circumstances be treated as an offer or solicitation to offer, to buy or sell any product, nor are they intended to be a substitute for commercial judgement or professional or legal advice, and you should not act in reliance upon any of the facts and data contained, without first obtaining professional advice relevant to your circumstances. Expressions of opinion may be subject to change without notice. Although warrants and/or derivative instruments can be utilised for the management of investment risk, some of these products are unsuitable for many investors. The facts and data contained are therefore not intended for the use of private customers (as defined by the FSA Handbook) of Lloyds TSB Bank plc. Lloyds TSB Bank plc is authorised and regulated by the Financial Services Authority and is a signatory to the Banking Codes, and represents only the Scottish Widows and Lloyds TSB Marketing Group for life assurance, pension and investment business.

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FX Technical Analysis

Daily Forex Technicals | Written by Mizuho Corporate Bank | Jun 30 09 06:37 GMT |

EURUSD Comment: Rallying slowly from retracement support and looking set to move a little higher again today. Only a weekly close above 1.4200 will really get things going and another big round of short-covering. Hopefully a whole host of other currencies will join in with this move adding momentum. Strategy: Attempt longs at 1.4100, adding to 1.4000; stop below 1.3800. Short term target 1.4135, then 1.4300/1.4339. Direction of Trade: →↗ Chart Levels: Support Resistance 1.4071 " 1.4132/1.4139 1.3982 1.4178 1.39 1.42 1.3872 1.423 1.3800* 1.4339** GBPUSD Comment: Breaking higher, as expected, and should squeeze to the next area of resistance around 1.7000. A weekly close above 1.6600 is needed to take bullish momentum back up to the very strong levels of early June. Strategy: Attempt small longs at 1.6700, adding to 1.6600; stop below 1.6400. First target 1.6800, then 1.7000. Direction of Trade: →↗ Chart Levels: Support Resistance 1.6547 " 1.6715 1.645 1.68 1.625 1.6835 1.6187* 1.69 1.612 1.695 USDJPY Comment: Dipping below the lower edge of the relatively large Ichimoku 'cloud' and above the 'neckline' and moving averages suggest a short position. Maybe this week, certainly some time in July, we favour a test of the pivotal 94.00 area (and an eventual break below here). Strategy: Sell at 95.85/96.00; stop well above 96.65. First target 95.00/94.88 then 94.00 Direction of Trade: →↘ Chart Levels: Support Resistance 95.66 " 95.59 95.16/95.00* 96.05 94.88 96.58* 94.28 97.27* 94.00* 97.65 EURJPY Comment: Squeezing suddenly to a higher price not seen in days, yet forming a potential 'spike high'. This should probably lead to a drift slowly lower over the rest of this week. Strategy: Possibly attempt shorts at 135.00; stop above 136.00. Short term target 133.00, then 132.00 Direction of Trade: → Chart Levels: Support Resistance 133.42 " 135.2 133 135.95* 132.35 137 131.8 137.35 131.41* 138.35 Mizuho Corporate Bank Disclaimer The information contained in this paper is based on or derived from information generally available to the public from sources believed to be reliable. No representation or warranty is made or implied that it is accurate or complete. Any opinions expressed in this paper are subject to change without notice. This paper has been prepared solely for information purposes and if so decided, for private circulation and does not constitute any solicitation to buy or sell any instrument, or to engage in any trading strategy.

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Technical Analysis for Crosses

Daily Forex Technicals | Written by ecPulse.com | Jun 30 09 06:31 GMT |

GBP/JPY The pair has inclined, respecting our detected short term bullishness-check it here-. Now, the classical head & shoulders top pattern came back into focus as seen on the above chart while it's forming a shooting star candlestick pattern around 61.8%. Hence a bearish action will be in favor on the intraday basis, activating the mentioned pattern. RSI 14 is trending downwards while AROON also started to show a negative sign supporting our expectation. Trading range for today is among key support at 154.70 and key resistance at 162.75. The general trend is to the downside as far as 167.45 remains intact with target at 116.00. Support: 158.90, 158.00, 157.30, 156.55, 155.80 Resistance: 159.35, 160.00, 160.75, 161.50, 162.25 Recommendation: According to our analysis, sell the pair at 159.30 with targets at 156.60 and stop loss at 161.50. EUR/JPY The European currency vs. Japanese yen has respected our previous explained bullish scenario which pushed it towards our detected target around 61.8% Fibonacci, whereas the pair started to form a reversal signal represented by a shooting star candlestick formation which was confirmed by a long black candle. Therefore we think that the pair is to move downwards on the intraday basis before resuming the major direction towards the technical target of the structure around 137.35 zones. Trading range for today is among key support at 132.50 and key resistance now at 138.25. The general trend is to the downside as far as 141.44 remains intact with targets at 100.00 followed by 88.97 levels. Support: 134.80, 134.15, 133.75, 133.15, 132.50 Resistance: 135.30, 136.00, 136.30, 137.35, 138.20 Recommendation: According to our analysis, sell the pair at 135.30 with targets at 133.15 and stop loss at 137.20. EUR/GBP In addition to our yesterday's explained hourly harmonic formation, the market is forming an inverted four-hour head & shoulders pattern as seen on the above chart. Therefore we keep our intraday outlook to the upside for the royal pair targeting the areas of the neckline around 0.8580 zones, while being supported by the oversold sign appears on RSI and the positive signal appears on AROON oscillator. Note that the right shoulder might be completed around 0.8440-0.8420 zones. Trading range is among the key support at 0.8300 and key resistance now at 0.8630. The general trend is to the upside as far as 0.8020 area remains intact with targets at 1.0000 followed by 1.0400 levels. Support: 0.8450, 0.8420, 0.8400, 0.8370, 0.8350 Resistance: 0.8500, 0.8520, 0.8590, 0.8635, 0.8660 Recommendation: According to our analysis, buy the pair at 0.8450 with targets at 0.8560 and stop loss at 0.8360. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, 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, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk

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New Zealand Businesses Were More Optimistic in June

By Tracy Withers

June 30 (Bloomberg) -- New Zealand businesses were more optimistic in June amid a drop in borrowing costs and signs of a global recovery that may bolster exports.

A net 8.3 percent of companies surveyed expect sales and profit will rise over the next 12 months compared with 5.5 percent in May, according to a report released by ANZ National Bank Ltd. in Wellington today. The net figure subtracts the number of pessimists from optimists.

More businesses say exports will improve while profit expectations are up among retailers and manufacturers, adding to signs the economy may recover later this year from the worst recession in more than three decades. Reserve Bank Governor Alan Bollard said on June 11 he expects to keep the benchmark interest rate at a record low of 2.5 percent until late 2010.

“The economy continues to contract, but the positive spin is that the pace of contraction is occurring at a slower rate,” said Cameron Bagrie, chief economist at ANZ National Bank.

A net 5.5 percent of the 402 companies surveyed expect the broader economy will improve compared with 1.9 percent in the April survey.

Eleven percent of firms say exports will pickup compared with 5.8 percent in April amid signs of a recovery in global markets. Japan’s industrial production climbed 5.9 percent in May, matching a gain in April that was the fastest since 1953, a report yesterday showed.

Still, New Zealand firms remain pessimistic about profits, investment and the labor market, today’s survey showed.

Seventeen percent of companies plan to fire workers this year, compared with 16 percent in May. The ratio of companies expecting reduced profits was unchanged at 24 percent. A net 5.6 percent expect to cut investment over the next year.

ANZ said its composite growth indicator based on profit, hiring and investment intentions remains negative and the labor market outlook is “particularly poor.”

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

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U.K. Consumer Confidence Increased to 14-Month High in June

By Jennifer Ryan

June 30 (Bloomberg) -- U.K. consumer confidence increased to the highest level in 14 months in June as shoppers became more optimistic that the recession is past its worst, GfK NOP said.

An index of sentiment rose 2 points to minus 25, the strongest result since April 2008, the market researcher said in an e-mailed statement today in London. The gauge of confidence about the economic outlook for the next year climbed 8 points to minus 8.

Unemployment claims rose less than economists forecast in May, and business surveys have indicated that the economic slump is starting to abate. Bank of England officials say that the credit squeeze threatens to delay a recovery and data yesterday showed net mortgage lending rose at the slowest pace since records began in 1993.

“Confidence still remains fragile as uncertainty about the strength of any recovery and an increase in unemployment all mean that consumers remain wary,” Rachael Joy, an analyst at GfK, said in the statement.

Four out of five indexes used to compile the confidence report rose on the month, including measures reviewing and predicting personal finances and the general economic situation. The only decline was on the gauge showing the climate for major purchases, which fell four points to minus 26. GfK questioned 2001 people from June 12 to June 21.

Unemployment Claims

Claims for jobless benefits rose in May by 39,300, a third less than economists forecast, the smallest increase since July last year. The broader unemployment measure using International Labor Organization standards increased to the highest since November 1996 in the three months through April.

The Bank of England kept the key interest rate at a record low of 0.5 percent this month and reiterated its program to stoke economic growth by buying 125 billion pounds ($207 billion) of bonds with newly created money. Deputy Governor Charles Bean told lawmakers that the worst of the economic contraction may be past and consumer spending has been “more resilient than one might have expected.”

At the same time, Governor Mervyn King said he feels “more uncertain now than ever” on the strength of the economic recovery as officials work to resolve problems in the banking system. He affirmed forecasts that the economy won’t return to growth on an annual basis until the second half of 2010.

To contact the reporter on this story: Jennifer Ryan in London at Jryan13@bloomberg.net

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Sterling Crisis Looms as U.K. Unraveling Points to Budget Cuts

By William Green

June 30 (Bloomberg) -- The state of the U.K. economy fills British financial historian Niall Ferguson with foreboding.

“The probability of a real sterling crisis is around one in three, and the probability of major tax hikes and cuts in public spending is roughly one in one,” the Harvard University professor says.

Ferguson’s concern stems from the deterioration in the U.K.’s public finances, which prompted Standard & Poor’s to warn on May 21 that the country could lose its AAA debt rating. The firm estimated the cost of propping up Britain’s banks at 100 billion pounds ($166 billion) to 145 billion pounds and said government debts could double to almost 100 percent of gross domestic product by 2013.

Chancellor of the Exchequer Alistair Darling said on April 22 that this year’s government deficit would hit 12.4 percent of GDP. Alan Clarke, a London-based economist at BNP Paribas SA, expects it to reach 17 percent of GDP in 2010.

“We’re not Iceland or Ireland, but we’re closer to them than we are to the U.S.,” says Ferguson, author of “The Ascent of Money: A Financial History of the World” (Penguin, 2008). Iceland had to borrow from the International Monetary Fund to avoid default after its banks collapsed in October; Ireland this year may have the steepest economic contraction of any industrialized nation since the Great Depression.

Britons can expect to face spending cuts in coming years in all areas, including social security and health care, says Nigel Lawson, who was chancellor of the Exchequer under Margaret Thatcher from 1983 to 1989.

Expenses Scandal

Political chaos is complicating the financial crisis. In May, the Daily Telegraph reported that lawmakers had been reimbursed for expenses such as moat cleaning and massage chairs, leading at least 15 to say they won’t stand for reelection. With his popularity plunging, Labour Prime Minister Gordon Brown then suffered the indignity of six cabinet ministers quitting in one week in early June, including two caught up in the expenses scandal.

Brown now trails Conservative leader David Cameron by 8 to 22 points, according to 21 polls in May and June. By law, Brown must call an election no later than June 2010.

“Our public finances are easily the worst we’ve ever had in peacetime,” Lawson, 77, says. “The amount of borrowing the government will have to do as a result of the deficit is very worrying.” He says yields on U.K. debt will have to climb to attract buyers.

The government must sell about 900 billion pounds of gilts over five years, Clarke says. He estimates that the Bank of England will buy a third of these gilts to pump money into an economy mired in its worst recession since World War II. The government may struggle to find buyers for the rest, he says.

Warning Signal

Ferguson cites as a warning signal the rise in the yield on 10-year gilts, which was 3.6 percent yesterday, up from 2.9 percent in March. “Bond investors have real doubts about the fiscal stability of the U.K., and they want some kind of risk premium,” he says.

Andrew Bosomworth, a fund manager in Munich at Pacific Investment Management Co., agrees with Ferguson that a weakening of the pound is likely. “In a worst-case scenario, there could be a run on the currency,” he says.

The U.K.’s expansionary fiscal and monetary policy -- it is simultaneously boosting spending and buying its own debt -- bothers Bosomworth. So does the possibility the government will have to help pay for further bank losses. “I’m not panicking, but those are real material risks,” he says. “It’s a very fragile situation.”

Not a Safe Haven

Ferguson takes no solace from the pound’s recent rally against the dollar. While it climbed to $1.66 yesterday from $1.37 in March, it’s still down 22 percent since November 2007.

“The big difference between the two countries is that the U.S. issues the world’s No. 1 currency and is regarded, partly for that reason, as a safe haven,” Ferguson says. “The U.K. used to be, but we’re not anymore. That means we have much more currency risk here.”

The U.S. is one of the 18 countries that S&P rates AAA. The U.K. is the only country on that list with a negative outlook from the firm.

Bad as it is, the fiscal mess is unlikely to end in disaster, says Ben Broadbent, U.K. economist at Goldman Sachs Group Inc. “We had debt of over 200 percent of GDP after World War II and we didn’t default,” he says. “I don’t look at the public borrowing numbers alone and think there’s a big risk of default or a currency crisis.”

Broadbent is less concerned about looming bank losses than about the recession’s impact on government tax receipts, particularly from the battered financial and housing industries.

Debasing the Currency

The price of credit-default swaps on U.K. sovereign debt has surged as investors try to protect against a deterioration in creditworthiness. The cost of the five-year contract rose to 81 cents per $100 of insured debt on June 26 from 14 cents a year earlier.

“I don’t think the U.K. is going to default,” Ferguson says. Still, debasing the currency has some of the same effects as defaulting on interest payments, he says, because it erodes the value of the money the government uses to repay its creditors.

The current crisis has stirred memories of 1976, when sterling collapsed and the U.K. had to borrow from the IMF. Meghnad Desai, emeritus professor at the London School of Economics and a Labour member of the House of Lords, says the situation is far less perilous this time because many other countries have heavy debts and face similar recessions.

‘Policy Vacuum’

“In the 1970s, the British economy was out of kilter with other economies,” Desai says. Given the size of the U.S. fiscal deficit, he says the dollar could prove more vulnerable than the pound.

That may be little consolation for Brown. The Labour leader is loath to make himself more unpopular by cutting spending and raising taxes to tackle the deficit, says George Magnus, senior economic adviser at UBS AG. “This government has got itself into a policy vacuum until the next election,” Magnus says. “I don’t expect them to do anything of significance to stabilize public finances.”

Lawson, who expects Cameron to succeed Brown, urges Britain’s next leaders to make deep cuts. “It’s essential they take very tough action straight away,” says Lawson, who slashed spending in the 1980s. “The question is: How tough are they prepared to be? How much initial unpopularity are they prepared to ride through?”

Historian Ferguson sees no alternative to such stringency. “It has to happen,” he says. “This kind of red ink implies both spending cuts and tax hikes that could make the 1980s look like a teddy bear’s picnic.”

To contact the reporter on this story: William Green in London at wgreen6@bloomberg.net.

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Vietnam Growth Probably Accelerated in Second Quarter

By Shamim Adam

June 30 (Bloomberg) -- Vietnam, the first country in Asia to release second-quarter growth numbers, will probably say its economic expansion accelerated in the period, foreshadowing likely recoveries in the rest of the region.

The economy grew 3.9 percent in the first half from a year earlier, according to the Ministry of Planning & Investment. That implies second-quarter growth of 4.5 percent, from 3.1 percent in the first three months, according to Australia & New Zealand Banking Group. The General Statistics Office, which compiles official economic data, is expected to release gross domestic product figures this week.

Vietnam’s economy is benefiting from an increase in construction as a government loan subsidy program spur credit growth. Other economies in the region, including Japan and Singapore, are forecast to report better second-quarter figures as some $2.2 trillion in stimulus worldwide help stabilize overseas sales for companies from Japan’s Nissan Motor Co. to South Korea’s Kia Motors Corp.

“The worst has likely passed for Vietnam as well as the rest of the region,” said Paul Gruenwald, chief economist for Asia at ANZ in Singapore. “The focus now should be on assessing the strength of the recovery and how long it will take to return to potential growth. A full recovery requires a resumption of foreign demand.”

OECD Forecast

The Organization for Economic Cooperation and Development on June 24 raised its forecast for its 30 member nations for the first time in two years as the global recession shows signs of abating. The International Monetary Fund last week boosted its outlook for Australia for this year and next.

Japan’s economy will expand at an annual 2.3 percent pace in the second quarter, according to a Bloomberg News survey, after contracting a record 14.2 percent in the first. South Korea’s finance ministry last week forecast GDP will increase almost 2 percent in the second quarter from the previous three months, when it expanded 0.1 percent.

The MSCI Asia Pacific Index of the region’s stocks climbed 47 percent since March 9, when it fell to the lowest in more than five years, as the outlook for corporate earnings improved. Vietnam’s benchmark VN Index has gained 60 percent this quarter. It lost 2.6 percent today.

Worst Over

“Most countries have passed the depths of the crisis and those with strong domestic growth drivers will benefit more and recover faster,” said Alvin Liew, an economist at Standard Chartered Bank in Singapore. “The economy is well supported by pro-growth government policies.”

Vietnam, Indonesia, China and India, where growth remained positive amid the global slowdown, are examples of economies that have shown more resilience than other export-dependent nations because of domestic consumption, Liew said.

“The pickup in growth in the second quarter in Vietnam was domestic based” helped by the fuels, transport and garment industries, said Gruenwald of ANZ. “Output from the state sector seems to be growing faster than the rest of the economy as well. GDP growth should rise during the rest of 2009 as the fiscal stimulus plan continues.”

Vietnam’s government is aiming for 5 percent growth this year, down from a previous target of 6.5 percent. The economy grew 6.2 percent last year, the least since 1999.

Slowest Growth

Growth in the first quarter was the slowest pace on record as overseas companies trimmed investment plans and manufacturing weakened amid the worst global recession since the Great Depression. Pledges of foreign investment into Vietnam and planned capital increases for existing projects fell 77 percent in the first half from a year earlier.

Fitch Ratings downgraded Vietnam’s long-term, local- currency credit rating today by one grade to BB-, citing a “steady deterioration” in the country’s finances. The nation relies too much on oil-related revenue and an economic recovery won’t stop the fiscal deficit from ballooning, Fitch said.

The State Bank of Vietnam said yesterday it will keep interest rates unchanged this year to support economic growth. It is also focused on keeping consumer price gains under control after the National Assembly this month set an inflation ceiling of 10 percent for 2009.

Credit Suisse Group AG last week raised its growth forecast for Vietnam, predicting the economy will expand 4 percent this year, from an earlier estimate of 2 percent.

“Poor foreign direct investment and exports will weigh on fixed investment this year, but we are revising up our 2009 GDP forecast on signs of early global demand stabilization,” said Joseph Lau, a Hong Kong-based economist at Credit Suisse Group AG. Last quarter, the economy “probably hit its low point, but growth recovery will likely be relatively moderate.”

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net

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South Korean Exports Will Grow From October, Lee Says

By Seyoon Kim

June 30 (Bloomberg) -- South Korea’s exports are likely to return to growth from October as the won’s drop helps companies win market share and global demand recovers, a government official said.

“Exports will narrow their declines in July to September, and post positive growth in October,” Lee Dong Geun, deputy minister for trade and investment policy at the Ministry of Knowledge Economy, said in an interview yesterday in Gwacheon. “A weaker won benefited us, and we tried to diversify our markets as well as our export products.”

A pickup in overseas shipments, which are equivalent to about half of gross domestic product, will revive an economy that has been supported by government spending and record interest-rate cuts. LG Display Co., the world’s second-biggest maker of liquid-crystal displays, said last week it can’t keep up with demand for its screens as orders surge.

“Our export outlook looks bright,” Lee, 52, said from his sixth-floor office at the ministry on the outskirts of Seoul.

Overseas shipments probably fell 18.7 percent in June from a year earlier, easing from May’s 28.5 percent drop, according to the median estimate in a Bloomberg News survey of eight economists. Export declined a record 34.5 percent in January.

The Ministry of Knowledge Economy is scheduled to release the June trade report at 10 a.m. local time tomorrow.

Shares Rise

The Kospi stock index is headed for its best quarter since the three months ended June 2007 amid optimism of a global recovery. The index has risen 16 percent this quarter, extending this year’s gain to 24 percent after tumbling 41 percent in 2008.

South Korea’s trade surplus may exceed the government’s forecast this year as export declines moderate and cheaper oil costs reduce the nation’s import bill, Lee also said. In its semiannual outlook last week, the finance ministry predicted a 2009 trade surplus of $26 billion.

“There’s a possibility the trade surplus may top $30 billion,” Lee said. “It may be more than that if oil prices stabilize at below $70 per barrel.”

South Korea buys almost all its fuel overseas, making it the world’s fifth-biggest importer. The price of Dubai crude, a regional benchmark, has fallen by half in the past 12 months to about $69 a barrel.

The currency’s declines helped boost price competitiveness for Korean-made goods, Lee said. “A weaker currency helped, while our companies have strengthened technology and competitiveness.”

The won has drop 27 percent against the dollar since the beginning of 2008.

Developing Nations

South Korea sells about 69 percent of its exports developing nations, more than twice the amount destined for developed countries. That has cushioned the nation against fallout from the global financial crisis which has been more severe on industrialized economies, the deputy minister said.

China buys about 22 percent of South Korea’s exports, while the U.S. takes about 11 percent, Japan receives 6.7 percent of shipments and the Middle East 6.3 percent, according to government data.

Industrial output advanced a more-than-expected 1.6 percent in May from April, the fifth straight gain, as exporters ramped up production to meet increased orders, the government reported today.

Export Demand

Hyundai Heavy Industries Co., the world’s largest shipbuilder, said last week that sales climbed about 9 percent in May as it built vessels at higher prices. Samsung Electronics Co., the world’s second-largest maker of mobile phones, said today the global handset market in the second half of 2009 should be better than in the first six months.

South Korea’s government last week raised its GDP forecast for 2009, saying the economy will shrink 1.5 percent this year, less than a previous prediction of a 2 percent decline. It expects growth of 4 percent next year.

Overseas shipments will fall 18 percent in the three months ending Sept. 30, moderating from a 25 percent drop in the first quarter and an estimated 22 percent fall in the second quarter, the state-run Export-Import Bank of Korea said in a report today.

To contact the reporter on this story: Seyoon Kim in Seoul at skim7@bloomberg.net

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Home Prices in Major U.S. Cities Probably Fell on Foreclosures

By Bob Wills

June 30 (Bloomberg) -- Home prices in 20 major metropolitan areas probably fell in April at about the same pace as in prior months as foreclosures climbed, economists said ahead of a report today.

The S&P/Case-Shiller home-price index fell 18.6 percent from a year earlier following an 18.7 percent drop in March, according to the median of 33 forecasts in a Bloomberg News survey. Another report may show consumer confidence rose to a nine-month high in June.

The highest jobless rate in 25 years is contributing to record foreclosures, which are likely to depress values for months to come even as home sales steady. The loss of wealth associated with the decline in property prices is one reason Americans are saving more, leading to a slowdown in spending that will restrain an economic recovery.

“The market will likely remain out of balance for some time given the flood of foreclosures,” said Michelle Meyer, an economist at Barclays Capital Inc. in New York. “Home prices are likely to continue to fall, albeit at a slowing pace, even after the economy technically emerges from the recession.”

The S&P/Case-Shiller gauge is due at 9 a.m. New York time. Estimates in the Bloomberg survey ranged from drops of 17.7 percent to 19.4 percent. The index dropped 19 percent in the year ended in January, the most since records began in 2001.

Gaining Confidence

At 10 a.m., a report from the New York-based Conference Board may show its index of consumer confidence rose to 55.3, the highest since September, from 54.9 in May, according to the Bloomberg survey. Estimates ranged from 60 to 51.5. The measure set a record low in February.

The home-price index figures aren’t adjusted for seasonal effects so economists prefer to focus on year-over-year changes instead of month-to-month.

Foreclosure filings, including default and auction notices as well as property seizures, climbed 18 percent in May from a year earlier, according to Irvine, California-based RealtyTrac Inc. The number topped 300,000 for the third consecutive month, with an estimated one in every 398 homes in some stage of foreclosure.

The drop in prices caused by the seizures is helping stabilize home sales. Home resales climbed 2.4 percent in May to an annual pace of 4.77 million as the median sales prices slumped 17 percent, the third-largest decrease on record, the National Association of Realtors reported last week.

Distressed Areas

About 73 percent of all existing houses and condos sold in the Las Vegas-Paradise area were foreclosures last month, up from 56 percent a year earlier, according to figures from San Diego-based MDA DataQuick. Such sales accounted for 51 percent of all existing-home transactions in California, up from 40 percent a year ago, the research company said last week.

Declines in home values and stock prices destroyed a record $13.9 trillion in household wealth since late 2007, according to figures from the Federal Reserve.

The need to repair the damage will cause consumers to remain frugal, signaling the biggest part of the economy will be slow to recover. The savings rate climbed to a 15-year high of 6.9 percent last month, after reaching zero as recently as April of last year.

While the rise in foreclosures is likely to keep hurting prices, some companies are seeing signs demand is stabilizing.

More Sales

Lennar Corp., the third-largest U.S. homebuilder, said last week that home deliveries and new orders rose 47 percent and 67 percent, respectively, in the second quarter from the previous three months. Chief Executive Officer Stuart Miller said the housing market “experienced an uptick in sales” in the quarter while not yet recovering from the slump.

“While we are sensing pent-up demand in the market, rising unemployment, increased foreclosures and tighter credit standards continue to present challenges for the industry,” Miller said in a June 25 statement. “This combined with a recent spike in mortgage rates has made it difficult to predict when the market will ultimately turn the corner.”

Concern about rising mortgage rates has caused builder shares to surrender almost half of a rally that took place from March to May. Through yesterday, the Standard & Poor’s builder supercomposite index was down 52 points since May 4. The gauge climbed 114 points from March 6 to May 4 as borrowing costs reached record lows.

                        Bloomberg Survey

========================================================
                          Chicago  Case Shil Consumer
                               PM    Monthly     Conf
                            Index       YOY%    Index
========================================================

Date of Release              06/30    06/30    06/30
Observation Period            June    April     June
--------------------------------------------------------
Median                        39.0   -18.6%     55.3
Average                       39.0   -18.7%     55.3
High Forecast                 44.0   -17.7%     60.0
Low Forecast                  32.5   -19.4%     51.5
Number of Participants          57       33       69
Previous                      34.9   -18.7%     54.9
--------------------------------------------------------
4CAST Ltd.                    44.0   -19.1%     57.0
Action Economics              39.0   -19.1%     57.0
AIG Investments               42.0   -18.6%     57.0
Aletti Gestielle SGR          39.0     ---      53.0
Ameriprise Financial Inc      38.0     ---      55.5
Argus Research Corp.          40.0     ---      57.0
Banesto                       38.5   -18.6%     56.5
Bank of Tokyo- Mitsubishi     40.2     ---      54.8
Bantleon Bank AG              40.0     ---      53.0
Barclays Capital              40.0   -18.6%     56.0
BBVA                          34.8   -18.1%     54.3
BMO Capital Markets           39.0   -19.1%     59.0
BNP Paribas                   32.5     ---      53.0
Briefing.com                  38.5     ---      56.0
C I T I C Securities          37.0   -19.3%     54.0
Capital Economics             38.5   -19.3%     60.0
CIBC World Markets            39.0     ---      56.0
Citi                          37.5     ---      52.0
ClearView Economics           40.0   -19.4%     ---
Commerzbank AG                39.0   -18.6%     53.0
Credit Suisse                 40.0     ---      55.0
Daiwa Securities America      ---      ---      57.0
Danske Bank                   42.9     ---      54.0
DekaBank                      38.8     ---      56.0
Desjardins Group              40.0   -18.6%     53.5
Deutsche Bank Securities      37.0     ---      57.0
Deutsche Postbank AG          ---      ---      55.3
DZ Bank                       37.0   -18.2%     54.0
Exane                         40.0     ---      ---
First Trust Advisors          41.9     ---      53.0
Fortis                        42.0   -18.9%     60.0
Goldman, Sachs & Co.          40.0     ---      55.0
Herrmann Forecasting          40.0   -18.6%     57.5
High Frequency Economics      40.0   -18.6%     54.9
Horizon Investments           40.0     ---      57.0
HSBC Markets                  40.0   -18.5%     54.5
IDEAglobal                    38.0   -18.6%     57.0
IHS Global Insight            ---      ---      53.5
Informa Global Markets        37.5     ---      56.5
ING Financial Markets         39.0   -19.0%     52.0
Insight Economics             37.5   -18.0%     57.5
Intesa-SanPaulo               40.0     ---      54.0
J.P. Morgan Chase             ---    -19.0%     57.0
Johnson Illington Advisor     38.0     ---      53.5
Landesbank BW                 36.0   -18.3%     53.0
Maria Fiorini Ramirez Inc     34.9   -18.7%     54.9
Merrill Lynch                 34.0   -19.2%     52.0
MFC Global Investment Man     ---      ---      56.0
Moody’s Economy.com           38.0     ---      55.0
Morgan Stanley & Co.          ---      ---      55.0
National Bank Financial       ---      ---      55.3
Natixis                       ---    -18.9%     55.0
Nomura Securities Intl.       42.0     ---      ---
RBS Securities Inc.           ---      ---      59.0
Ried, Thunberg & Co.          ---      ---      55.0
Schneider Foreign Exchang     ---      ---      55.2
Scotia Capital                ---    -19.3%     55.5
Societe Generale              43.0     ---      56.0
Standard Chartered            39.0   -18.5%     55.0
Stone & McCarthy Research     35.4     ---      52.0
TD Securities                 39.0   -19.2%     56.0
Thomson Reuters/IFR           ---      ---      57.2
Tullett Prebon                38.0     ---      55.4
UBS Securities LLC            42.0   -17.7%     53.0
Unicredit MIB                 ---    -18.5%     56.0
University of Maryland        38.5   -18.6%     57.0
Wachovia Corp.                ---      ---      51.5
Wells Fargo & Co.             39.0     ---      57.0
WestLB AG                     38.5   -19.0%     55.4
Westpac Banking Co.           39.0     ---      56.0
Woodley Park Research         42.8   -18.5%     53.8
Wrightson Associates          37.0     ---      55.0
========================================================

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

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Japan’s Jobless Rate Rises to Five-Year High of 5.2%

By Toru Fujioka

June 30 (Bloomberg) -- Japan’s unemployment rate rose to a five-year high in May, while household spending unexpectedly advanced as the government distributed cash to help lift the economy out of its worst postwar recession.

The jobless rate rose to 5.2 percent from 5 percent in April, the statistics bureau said today in Tokyo, matching the median estimate of economists surveyed. Household spending rose 0.3 percent, the first gain in 15 months, a separate report showed. Economists expected outlays to fall 1.5 percent.

The world’s second-largest economy will probably expand for the first time in more than a year this quarter, boosted by Prime Minister Taro Aso’s stimulus measures. NEC Electronics Corp.’s President Junshi Yamaguchi said the “worst is over” and the Nikkei 225 Stock Average rose as much as 2.2 percent today, extending its gains since March 31 to 23 percent.

“We’re seeing the effects of the policy stimulus. Even though the unemployment rate is rising, production is recovering and so is consumer sentiment,” said Takuji Aida, senior Japan economist at UBS AG in Tokyo. Still, “the stimulus package will only have a large effect in the April-June quarter.”

The yen traded at 95.96 per dollar at 11:15 a.m. in Tokyo from 96.19 before the report was published. The Nikkei rose 1.9 percent to 9,968.04.

NEC’s Yamaguchi said in an interview yesterday that semiconductor orders for next quarter will jump “several percent” thanks to increased demand.

Cash Handouts

The government has given cash handouts of at least 12,000 yen ($125) to each resident, as well as tax breaks for fuel- efficient cars and incentives for buying eco-friendly televisions, refrigerators and air conditioners. The measures have helped lift consumer confidence to a 14-month high. Sales of electronics are up 18 percent since the government introduced incentives to buy energy-efficient goods, according to Tokyo- based researcher Gfk Marketing Service Japan Ltd.

The increased spending hasn’t been enough to revive business at all retailers. Takashimaya Co., Japan’s third- largest department-store chain, began its summer sales 10 days earlier than usual in a bid to spur demand. The Osaka-based company is reducing part-time workers, Hirofumi Hisasue, a senior operating officer, said after the company reported a third straight quarterly profit decline last week.

“The pressure to cut jobs is strong,” Jun Saito, chief economist at the Cabinet Office, said last week. Weak global demand means exports may not be strong enough to make up for the deteriorating job market at home, he said in an interview.

25-Year High

In the U.S., the unemployment rate rose to a 25-year high of 9.4 percent in May and is likely to climb to 10 percent by the end of the year, according to economists. The euro zone’s jobless rate reached 9.4 percent in May, the highest in a decade, economists predict a report will show this week.

Another key gauge of Japan’s labor market showed job prospects are the worst ever. The ratio of positions available to each applicant dropped to 0.44, the lowest since the survey began in 1963, the Labor Ministry said. Data yesterday showed retail sales dropped 2.8 percent in May from a year earlier, the ninth monthly decline.

“The job-to-applicant ratio was really eye catching -- the data was horrible,” said Mari Iwashita, chief market economist at Daiwa Securities SMBC Co. in Tokyo. “The jump in household consumption is only a frontloading of spending.”

A separate report today showed that wages tumbled 2.9 percent, extending the longest losing streak in five years. Summer bonuses at Japan’s largest companies will slide a record 18.3 percent this year, according to a survey published last week by Keidanren, the country’s biggest business lobby.

Salary Cut

Panasonic Corp., the world’s largest maker of plasma televisions, last week said it will cut the annual salaries of its 10,000 managers this year.

“The economy remains at a very low level even though the worst is over,” said Yasukazu Shimizu, senior market economist at Mizuho Securities Co. in Tokyo. “Companies are still seeking ways to cut costs.”

The Organization for Economic Cooperation and Development last week forecast Japan’s jobless rate will rise to an unprecedented 5.8 percent in 2010.

“The jobless rate will approach 6 percent,” said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management. “Given the deterioration in profits, more companies will feel that they have excess labor.”

To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net

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U.K. House Prices Unexpectedly Rose in June, Nationwide Says

By Brian Swint

June 30 (Bloomberg) -- U.K. house prices unexpectedly increased for a second month in June on Nationwide Building Society’s measure, adding to signs that the worst of the property slump is over.

The average cost of a home climbed 0.9 percent to 156,442 pounds ($259,000) after rising 1.3 percent in May, the mortgage lender said in a statement today. Economists predicted a 0.5 percent drop, according to the median of 16 forecasts in a Bloomberg News survey. From a year earlier, prices fell 9.3 percent, the smallest annual drop since July 2008.

Consumer confidence also rose this month in further evidence the economy is easing out of its worst slump in a generation. Bank of England Governor Mervyn King said last week that the road to recovery may be a “long, hard slog” as the lending squeeze chokes economic growth.

“The stabilization of house prices is a welcome surprise,” Martin Gahbauer, Nationwide’s chief economist, said in the statement. “However, there are still considerable headwinds facing the demand side and until we see a more robust recovery in house purchase activity, it is too early to be confident about a full-scale recovery of prices.”

GfK NOP’s consumer confidence rose to minus 25 from minus 27, the highest in more than a year. The measure on the economic outlook rose 8 points to minus 8, the report showed.

GDP Report

Signs of a pickup follow the steepest economic contraction since 1979. The statistics office will probably revise down its estimate for first-quarter gross domestic product to show a 2.1 percent drop, compared with a previous report of 1.9 percent, the median of 28 economists in a Bloomberg News survey shows. The report is due at 9:30 a.m. today in London.

Rising unemployment has crimped demand for houses. U.K. home-loan approvals climbed less than economists forecast in May and net mortgage lending increased 324 million pounds, the least since records began in 1993, the Bank of England said yesterday.

“Alongside the low level of mortgage approvals, however, there continues to be a relentless drop in the stock of property available for sale,” said Nationwide’s Gahbauer. “As a result, prices have been able to stabilize even in the face of very low demand. There are still many obstacles in the way of a genuine and sustainable price recovery.”

The Bank of England this month kept the benchmark interest rate at a record low of 0.5 percent and maintained the program to stoke economic growth by buying 125 billion pounds of bonds with newly created money. King said last week he feels “more uncertain now than ever” on the strength of future expansion and reiterated that the economy won’t return to growth on annual basis until the second half of 2010.

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net.

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Swiss Franc Falls for Second Day Versus Euro to Trade at 1.5260

By Gavin Finch

June 30 (Bloomberg) -- The Swiss franc slid for a second day against the euro.

The franc fell 0.1 percent to 1.5260 per euro as of 6:17 a.m. in London. It rose 0.1 percent to 1.0811 per dollar.

To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net

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U.S. June Auto-Sales Rate May Top 10 Million in First for 2009

By Mike Ramsey

June 30 (Bloomberg) -- The U.S. auto-sales slide may have slowed in June, with an annual rate of more than 10 million for the first time this year as consumers gain confidence and shrug off bankruptcies at General Motors Corp. and Chrysler LLC.

The annual sales rate for June was 10.1 million cars and light trucks, based on 7 analyst estimates in a Bloomberg survey. That would be down 26 percent from 13.6 million a year earlier. Monthly sales, announced tomorrow, may have slid 36 percent at Chrysler, 30 percent at GM and 17 percent at Ford Motor Co., according to the average of five analyst forecasts.

A seasonally adjusted industrywide rate at that level may signal a second-half rebound, after a drop in the first six months that was the steepest since at least 1976, according to Bloomberg data. Consumer sentiment is turning more optimistic, and the rise in the jobless rate may be slowing.

“With the noise from GM and Chrysler bankruptcies diminished, improving confidence and still-low auto interest rates, we believe we are seeing a genuine stabilization in sales rates that sets the stage for a material uptick” in the second half, Patrick Archambault, an analyst at Goldman Sachs Group Inc. in New York, said in a June 26 note to investors.

Chrysler’s government-backed reorganization ended June 10, after just 42 days, and Detroit-based GM, which filed for court protection June 1, is on a similar path that may be finished by the end of July.

Chrysler’s retail sales, those to individual consumers rather than to fleet customers such as rental companies, outperformed the industry in May, indicating consumers weren’t put off by the bankruptcy process. Industywide sales fell 34 percent in May and 37 percent for the year’s first five months.

Positive Indicators

An improvement in auto sales would add to positive economic indicators such as a slowing in new jobless claims and improving consumer confidence. The U.S. recession began in December 2007.

“There are reasons to be optimistic in a cautious sense” for autos, said Jeff Schuster, executive director of forecasting at J.D. Power & Associates Inc. in Troy, Michigan. “There has been a true strengthening in retail sales.”

Rebounding to a 10 million annual sales pace would help GM and Auburn Hills, Michigan-based Chrysler, which have tried to adjust their costs to break even at that rate. U.S. deliveries totaled 13.2 million last year and averaged 16.8 million from 2000 through 2007.

Ford, the only U.S. automaker that hasn’t taken a federal bailout, said yesterday that its domestic market share rose in June.

“The worst is behind us,” George Pipas, sales analyst for the Dearborn, Michigan-based company, told reporters. “We may see economic growth in the second half and a higher level of auto sales.”

Topping Toyota

Ford, which was passed by Toyota Motor Corp. in annual U.S. sales in 2007, has outsold the Toyota City, Japan-based company for the past two months. Toyota’s June sales probably declined 32 percent, the average of three analysts’ estimates.

Sales may have dropped 35 percent for Honda Motor Co. and 28 percent for Nissan Motor Co., according to those analysts. Both companies are based in Tokyo.

Seoul-based Hyundai Motor Corp., South Korea’s largest automaker, may report an 18 percent slide, according to Edmunds.com, a market-research firm in Santa Monica, California.

Auto sales in the second half may benefit from the “cash- for-clunkers” legislation signed into law June 24 by President Barack Obama. It gives new-car buyers as much as $4,500 toward a new vehicle if they trade in an eligible older vehicle for a model with better fuel economy. That subsidy may be available by August, after a 30-day period to set the rules.

The program may increase new-vehicles sales 10 percent through year-end at AutoNation Inc., the biggest publicly traded U.S. car retailer, Chief Executive Officer Mike Jackson said in an interview last week.

Unemployment, Consumer Confidence

Consumers also may be more willing to purchase vehicles as the rise in the jobless rate slows. The U.S. unemployment rate probably climbed 0.2 percentage points in June to 9.6 percent, according to the median of 58 estimates in a Bloomberg survey. The increase would be the smallest since November.

The economists in the Bloomberg survey also predict that consumer confidence this month rose to its highest level since September. That would follow a May jump in the Conference Board’s consumer sentiment index that was biggest in six years.

Ford rose 17 cents to $5.78 at 4:15 p.m. yesterday in New York Stock Exchange composite trading. The shares have more than doubled this year.

Ford’s 7.45 percent bonds due in July 2031 gained 1.5 cents to 57.5 cents on the dollar, yielding 13.5 percent, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority.

     The following table provides estimates for car and light-
truck sales in the U.S. Estimates for companies are a percentage
change from June 2008. Forecasts for the seasonally adjusted
annual rate, or SAAR, are in millions of vehicles.
    The SAAR average is based on forecasts from 7 analysts. The
estimates are based on daily selling rates. June had 25 selling
days, one more than last year.

                        GM        Ford      Chrysler       SAAR

Joseph Barker            N/A       N/A       N/A            10.3
(CSM Worldwide)
Christopher Ceraso       -31%      -15%      -39%           10.2
(Credit Suisse)
Gary Dilts               N/A       N/A       N/A            10.3
(J.D. Power)
Rod Lache                -26%      -14%      -33%           10.2
(Deutsche Bank)
Jesse Toprak             -32%      -19%      -32%           10.1
(Edmunds)
John Wolkonowicz         -N/A%     -N/A%     -N/A%          9.5
(Global Insight)
Patrick Archambault      -31%      -17%      -35%           10.0
(Goldman Sachs)
John Sousanis            -30%      -19%      -42%           N/A
(Ward’s Automotive)

Analysts’ average        -30%      -17%      -36%           10.1

To contact the reporters on this story: Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net

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Bernanke’s ‘Green Shoots’ Take Over the Lexicon, If Not U.S.

By Matthew Benjamin

June 30 (Bloomberg) -- The current recession has created at least one growth industry: use of the phrase “green shoots.”

Since Federal Reserve Chairman Ben S. Bernanke first uttered the words almost four months ago to describe signs of a thaw in frozen credit markets, instances of the botanical metaphor in the press have climbed sevenfold. A Google search for “green shoots” returns 4.86 million hits.

“These may be the two most overused and annoying words of my investment career,” said John Mauldin, president of Millennium Wave Advisors LLC in Arlington, Texas. “Every possible sign of a recovery is anointed with the phrase.”

Declining interest rates on mortgages and business loans led Bernanke to say on the March 15 CBS News program “60 Minutes” that he detected “green shoots” in some financial markets where the Fed had acted to restart lending. The locution appeared 3,123 times in news articles last month, up from 436 in February, according to research by Japanese brokerage Nomura Holdings Inc.

Both bears and bulls have pressed the phrase into service.

Jim O’Neill, the chief economist at Goldman Sachs Group Inc., said April 27 that the green shoots of global economic recovery are “turning into daffodils,” when he upgraded his forecast for 2010 world growth to 3.2 percent from 2.8 percent.

‘It’s Moss’

“Housing is still a drag on the economy,” David Coard, head of fixed-income trading in New York at Williams Capital Group, a brokerage for institutional investors, said May 26. “It may be green shoots, but they are growing slowly. It’s moss.”

Billionaire investor Warren Buffett joked June 24 that he had yet to see any green shoots, adding that his eyesight may be to blame.

“We’re not seeing them,” Buffett said on CNBC. “I had a cataract operation in my left eye about a month ago and I thought, maybe now I’ll be able to see some green shoots.”

Bernanke’s tendrils of economic hope have been compared with trees and mold. They have been said to be on the verge of blossoming, as well as in danger of withering, browning and succumbing to frost.

Nouriel Roubini, the New York University economist referred to as Dr. Doom for predicting the current crisis, enlisted the phrase to temper budding optimism about the economy.

“People talk a lot about these green shoots,” Roubini said June 22 in Paris. Yet looking at the economic data, he said, “I see more yellow weeds than green shoots.” Instead, he predicted the recession in the advanced economies would last another six to nine months.

Beyond Economy

The phrase has also spilled over into non-economic realms.

In a June 28 column on the Israeli-Palestinian conflict, Washington Post writer Jim Hoagland said, “Green shoots of peace are glimpsed in some quarters.” A June 21 entry on the Daily Kos blog about Iranian demonstrations carried the title “The Green Shoots of New Peace.”

While Bernanke may be identified with the phrase, he isn’t the first to use it. During the early 1990s recession, Britain’s former Chancellor of the Exchequer Norman Lamont declared that “the green shoots of economic spring are appearing once again.” That comment came back to haunt Lamont when growth failed to appear for months.

Accurate or not, Bernanke’s resurrection of the expression may have done some good this time around. Consumer and business confidence measures improved as it proliferated in the media, according to data compiled by Bloomberg.

‘Grip on the Public’

As “catch-phrases go, I can’t recall another business- related one that has had such a grip on the public,” said Bernie McSherry, a senior vice president at Cuttone & Co., one of the largest floor brokerages at the New York Stock Exchange. “Since green shoots don’t remain mere shoots forever, it’s time to retire the phrase and replace it with something indicative of where the economy is today.”

The term is “overused, not to mention overrated,” said David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates in Toronto. “It is more a comment on the human condition and the innate need for optimism” than an accurate description of the economy and markets, he said.

A substitute phrase may also be needed if the U.S. economy slows down again later this year, said Rosenberg, the former chief North American economist at Merrill Lynch & Co.

“We will not very likely see ‘brown manure’ as the catchy horticultural replacement to green shoots,” he said.

To contact the reporter on this story: Matthew Benjamin in Washington at mbenjamin2@bloomberg.net.

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