By Fabio Alves and Michael Tsang
Aug. 25 (Bloomberg) -- Just because consumer stocks are staging the biggest rally in five years doesn't mean the economy is about to recover.
As Lowe's Cos., Wendy's International Inc. and Starwood Hotels & Resorts Worldwide Inc. led a 7.6 percent advance in consumer stocks this month, the extra yield bond investors demanded to own the industry's debt rose to 2.5 percentage points over U.S. Treasuries. Every time bondholders sought that much compensation to guard against default, shares of retailers, restaurants, and hotels slumped an average 16 percent, according to data compiled by Bloomberg.
Standard Life Investments, Harvard University's endowment and hedge fund Appaloosa Management LP, which manage almost $300 billion, are avoiding the shares as Americans rein in spending to cope with the highest unemployment rate in four years and faster inflation. Profits at consumer discretionary companies are forecast to be the worst since 2001, Bloomberg data show.
``It's a rally that we think will inevitably roll over,'' said Andrew Milligan, the Edinburgh-based head of global strategy at Standard Life Investments, which oversees about $242 billion. ``Investor confidence has started to ease back and earnings numbers have generally been negative. The credit side just reinforces our downbeat views.''
Stocks Versus Bonds
Consumer shares have risen almost four times as fast as the Standard & Poor's 500 Index in August, sending the S&P 500 Consumer Discretionary Index toward its biggest monthly advance since an 8.9 percent increase in October 2003. A 22 percent drop in oil since its July peak and speculation the Federal Reserve will hold off raising interest rates after seven cuts in the past year improved prospects Americans will spend more. Consumer stocks in the MSCI World Index are up 1.4 percent this month.
The gains coincided with an increase in the difference between yields of U.S. retailers' bonds and those of government debt to 2.47 percentage points as investors demanded more protection against the likelihood of default, according to data from New York-based Merrill Lynch & Co.
When the gap exceeded 245 basis points in 2000, 2002, 2005 and March of this year, the consumer discretionary gauge lost an average of 16 percent over the same span, the data show. A basis point is equal to 0.01 percentage point.
Shares of Mooresville, North Carolina-based Lowe's, the world's second-largest home-improvement retailer, surged 22 percent this month as the extra yield investors demanded to own the company's 5.6 percent bond due in 2012 widened 23 basis points over U.S. Treasuries.
`Voting With Bondholders'
That's more than three times the average increase of A-rated corporate bonds over the same period, Merrill's data show.
The premium on Wendy's 7 percent bond due in 2025 climbed as much as 33 basis points above U.S. government debt this month, almost triple the gain in spreads of similar BB-rated debt. The Dublin, Ohio-based hamburger chain's stock added 16 percent.
The disparity between the stock and bond markets comes as analysts are forecasting the industry's biggest full-year profit decline since the last recession in 2001. Earnings at S&P 500 consumer-discretionary companies will drop 22.9 percent this year, data compiled by Bloomberg show.
``I would be inclined to vote with the bondholders,'' said Jack Ablin, who oversees $65 billion as chief investment officer at Harris Private Bank in Chicago. ``They're sensing there's still credit deterioration going on in the group.''
Earnings Plummet
Lowe's, Wendy's and Starwood, the White Plains, New York- based company that runs the Westin, St. Regis and W hotels, all reported lower earnings for the second quarter. Industry profits have dropped 54 percent on average, the highest on record for Bloomberg data that started in 2001.
LPL Financial's Jeffrey Kleintop expects consumer stocks will continue to do well as profits decline less than analysts estimate. More than 91 percent of the S&P 500 retailers that have reported second-quarter results so far topped Wall Street's consensus forecast, data compiled by Bloomberg show.
``The outlook isn't rosy, but certainly better than what had been priced into those stocks,'' Kleintop, the Boston-based chief market strategist at LPL, which oversees $273 billion, said in a Bloomberg Television interview.
Consumer stocks in the U.S., where the Federal Reserve cut its benchmark interest rate to 2 percent from 5.25 percent in the past year, are outperforming the rest of the world. The MSCI Brazil Consumer Discretionary Index lost 9.8 percent in August, while retailers, automakers and electronics makers in the MSCI Asia Pacific Index fell 4.7 percent.
Unemployment, Inflation
To maintain the advantage, U.S. retailers will have to defy an unemployment rate that rose to 5.7 percent last month and the fastest inflation in 17 years. The economy, buffeted by the biggest U.S. housing slump since the Great Depression and more than $500 billion in bank losses, may grow 0.45 percent next quarter, or about a third the annual rate of 1.2 percent forecast this quarter, according to data compiled by Bloomberg.
``You only have so many dollars or francs or euros in your pocket,'' said Robert Weissenstein, who helps oversee $1.3 trillion as chief investment officer at Credit Suisse Private Bank. It's difficult to turn bullish ``as long as you get mixed to negatively biased jobs data,'' he said from Tucson, Arizona.
Harvard's $34.9 billion endowment, the biggest of any university, sold its holdings in 79 of 92 consumer companies including Lowe's, Wendy's and Starwood, during the second quarter, the Boston-based college fund's filing with the U.S. Securities and Exchange Commission compiled by Bloomberg show.
Appaloosa, the Chatham, New Jersey-based hedge-fund firm run by former Goldman Sachs Group Inc. bond trader David Tepper, held 10.4 percent less in consumer stocks at the end of the second quarter, partly after selling its 175,000 share stake in Starwood, filings compiled by Bloomberg show. Appaloosa, which owned equities valued at $3.1 billion as of June 30 and also invests in bonds, has posted average annual returns of about 25 percent in its Palomino Fund since the beginning of 1995.
``The corporate bond market has sold off first, fastest, and then equities follow after,'' said Standard Life's Milligan. ``What the credit markets are telling us is that we need to still be cautious.''
To contact the reporters on this story: Fabio Alves in New York at falves3@bloomberg.net; Michael Tsang in New York at mtsang1@bloomberg.net.
Read more...
Monday, August 25, 2008
Cervus LP, MI Developments, Magna: Canadian Equity Preview
By John Kipphoff
Aug. 25 (Bloomberg) -- The following companies may have unusual price changes in Canadian trading on Aug. 25. Stock symbols are in parentheses, and share prices are from the previous close.
The Standard & Poor's/TSX Composite Index fell 0.7 percent to 13,447.29.
Cervus LP (CVL-U CN): The manager of John Deere farm equipment dealerships in Western Canada was rated ``buy'' in new coverage by Richard Stuart at Leede Financial Markets Inc. The Vancouver-based analyst set a 12-month share-price target of C$25. The shares fell 8.4 percent to C$18.50.
MI Developments Inc. (MIM/A CN): The owner of properties used by Magna International Inc.(MG/A CN), North America's biggest car-parts maker, said it hired GMP Capital Corp. (GMP-U CN) to advise it on a potential reorganization and consider alternatives with regard to its controlling stake in money- losing racetrack owner Magna Entertainment Corp. (MEC/A CN).
Canadian Frank Stronach is the founder and chairman of MI Developments, Magna Entertainment and Magna International. MI Developments added 1.4 percent to C$20.97. Magna Entertainment, which hasn't reported an annual profit since 2001, according to Bloomberg data, was unchanged at C$7.54. Magna International rose 1.1 percent to C$61.68.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
Read more...
Aug. 25 (Bloomberg) -- The following companies may have unusual price changes in Canadian trading on Aug. 25. Stock symbols are in parentheses, and share prices are from the previous close.
The Standard & Poor's/TSX Composite Index fell 0.7 percent to 13,447.29.
Cervus LP (CVL-U CN): The manager of John Deere farm equipment dealerships in Western Canada was rated ``buy'' in new coverage by Richard Stuart at Leede Financial Markets Inc. The Vancouver-based analyst set a 12-month share-price target of C$25. The shares fell 8.4 percent to C$18.50.
MI Developments Inc. (MIM/A CN): The owner of properties used by Magna International Inc.(MG/A CN), North America's biggest car-parts maker, said it hired GMP Capital Corp. (GMP-U CN) to advise it on a potential reorganization and consider alternatives with regard to its controlling stake in money- losing racetrack owner Magna Entertainment Corp. (MEC/A CN).
Canadian Frank Stronach is the founder and chairman of MI Developments, Magna Entertainment and Magna International. MI Developments added 1.4 percent to C$20.97. Magna Entertainment, which hasn't reported an annual profit since 2001, according to Bloomberg data, was unchanged at C$7.54. Magna International rose 1.1 percent to C$61.68.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
Read more...
Bancolombia, Cemex, Cresud, Molinos, Tim: Latin Equity Preview
By James Attwood and [bn:PRSN=1] William Freebairn []
Aug. 25 (Bloomberg) -- The following companies may have unusual price changes in Latin America trading. Stock symbols are in parentheses, and share prices are from the previous close. Preferred shares are usually the most-traded class of stock in Brazil.
The MSCI Latin America Index was little changed at 4,026.80.
Brazil
Tim Participacoes SA (TCSL3 BS): Brazil's second-biggest mobile-phone company denied that it's in talks to be taken over by rival Vivo Participacoes SA. ``The rumors circulating in the market lack any fundamentals,'' according to a Tim statement e-mailed to Bloomberg Aug. 22. Tim voting shares jumped 5.1 percent to 5.83 reais after Banif Invetimentos said Vivo may buy Tim.
Colombia
Bancolombia SA (BCOLO CB): Colombia's biggest lender plans to sell 191 billion pesos ($102 million) in mortgage loans to Titularizadora Colombiana SA. The loans will be secured by Titularizadora through the issuance of local mortgage-backed securities, the Medellin-based bank wrote in a statement distributed by PR Newswire on Aug. 22. Bancolombia rose 1.6 percent to 15,040 pesos.
Molinos Rio de la Plata SA (MOLI AF) and Cresud SACIF y A (CRES AF): A prolonged drought in Argentina, the world's second- largest corn exporter and third-largest for soybeans, has eroded field conditions as farmers prepare to sow new crops, the Buenos Aires Cereals Exchange said. The northern and western areas of the Pampas agricultural zone are experiencing a ``severe drought,'' with scant rainfall and rising temperatures, the exchange said Aug. 22 in an e-mailed report. Molinos, which makes soybean oil and other food products, gained 2 percent to 7.54 pesos. Cresud, which farms soybeans and other crops, rose 1.8 percent to 3.46 pesos.
Mexico
Cemex SAB (CEMEXCP MM): The largest cement maker in the Americas will resume talks Aug. 25 with Venezuela's government to negotiate compensation over the nationalization of its local unit, Vice President Ramon Carrizalez said Aug. 22 in a televised comment. Venezuela seized Cemex's local unit last week as part of a plan to nationalize key industries. Mexico City-based Cemex fell 1.8 percent to 20.93 pesos.
Peru
Sociedad Minera El Brocal SAA (SMB PE): Peru's second- largest zinc producer will boost capacity at its Huaraucaca copper facility as part of a $160 million investment plan, El Brocal said in a filing with Peruvian regulators Aug. 22. El Brocal rose 4.3 percent to 24.50 pesos when it last traded Aug. 21.
To contact the reporters on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; James Attwood in Santiago at jattwood3@bloomberg.net.
Read more...
Aug. 25 (Bloomberg) -- The following companies may have unusual price changes in Latin America trading. Stock symbols are in parentheses, and share prices are from the previous close. Preferred shares are usually the most-traded class of stock in Brazil.
The MSCI Latin America Index was little changed at 4,026.80.
Brazil
Tim Participacoes SA (TCSL3 BS): Brazil's second-biggest mobile-phone company denied that it's in talks to be taken over by rival Vivo Participacoes SA. ``The rumors circulating in the market lack any fundamentals,'' according to a Tim statement e-mailed to Bloomberg Aug. 22. Tim voting shares jumped 5.1 percent to 5.83 reais after Banif Invetimentos said Vivo may buy Tim.
Colombia
Bancolombia SA (BCOLO CB): Colombia's biggest lender plans to sell 191 billion pesos ($102 million) in mortgage loans to Titularizadora Colombiana SA. The loans will be secured by Titularizadora through the issuance of local mortgage-backed securities, the Medellin-based bank wrote in a statement distributed by PR Newswire on Aug. 22. Bancolombia rose 1.6 percent to 15,040 pesos.
Molinos Rio de la Plata SA (MOLI AF) and Cresud SACIF y A (CRES AF): A prolonged drought in Argentina, the world's second- largest corn exporter and third-largest for soybeans, has eroded field conditions as farmers prepare to sow new crops, the Buenos Aires Cereals Exchange said. The northern and western areas of the Pampas agricultural zone are experiencing a ``severe drought,'' with scant rainfall and rising temperatures, the exchange said Aug. 22 in an e-mailed report. Molinos, which makes soybean oil and other food products, gained 2 percent to 7.54 pesos. Cresud, which farms soybeans and other crops, rose 1.8 percent to 3.46 pesos.
Mexico
Cemex SAB (CEMEXCP MM): The largest cement maker in the Americas will resume talks Aug. 25 with Venezuela's government to negotiate compensation over the nationalization of its local unit, Vice President Ramon Carrizalez said Aug. 22 in a televised comment. Venezuela seized Cemex's local unit last week as part of a plan to nationalize key industries. Mexico City-based Cemex fell 1.8 percent to 20.93 pesos.
Peru
Sociedad Minera El Brocal SAA (SMB PE): Peru's second- largest zinc producer will boost capacity at its Huaraucaca copper facility as part of a $160 million investment plan, El Brocal said in a filing with Peruvian regulators Aug. 22. El Brocal rose 4.3 percent to 24.50 pesos when it last traded Aug. 21.
To contact the reporters on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; James Attwood in Santiago at jattwood3@bloomberg.net.
Read more...
UK Out of the Markets
Daily Forex Fundamentals | Written by Crown Forex | Aug 25 08 07:00 GMT |
And again the European currency breached the upside channel that was created in the past week, plunging down to 1.4720 levels after it after reaching a high of 1.4894. With our calendar lacking any major fundamentals for today the Euro will be facing a support at 1.4695 levels but it reverses back its movement the Euro has a slight to escalate higher against the Us dollar though the playground is open for the bears today.
Today the Britons are taking a break, with the summer bank holiday and the bank are all closed, taking a break from the hectic movement taking place in the markets, and according the gloomy outlook the Royal currency plunged heavily to 1.8430 levels, as according to technical indicators the pair falls in an extremely oversold area.
Finally USD/JPY pair retrieved back its strength surging higher to 110.00 levels, supported by expectation that the plunging oil prices will be boosting the manufacturing sector in the States, the pair remains to face 110.66 levels as if breached more confirmation will be obvious that the US dollar will beat the Yen reaching above to 111 levels and higher.
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...
And again the European currency breached the upside channel that was created in the past week, plunging down to 1.4720 levels after it after reaching a high of 1.4894. With our calendar lacking any major fundamentals for today the Euro will be facing a support at 1.4695 levels but it reverses back its movement the Euro has a slight to escalate higher against the Us dollar though the playground is open for the bears today.
Today the Britons are taking a break, with the summer bank holiday and the bank are all closed, taking a break from the hectic movement taking place in the markets, and according the gloomy outlook the Royal currency plunged heavily to 1.8430 levels, as according to technical indicators the pair falls in an extremely oversold area.
Finally USD/JPY pair retrieved back its strength surging higher to 110.00 levels, supported by expectation that the plunging oil prices will be boosting the manufacturing sector in the States, the pair remains to face 110.66 levels as if breached more confirmation will be obvious that the US dollar will beat the Yen reaching above to 111 levels and higher.
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...
Asia-Pacific Market Recap: Fixed Income Mixed, Equities Close Higher
Asia-Pacific Market Recap: Fixed Income Mixed, Equities Close Higher
25 Agustus 2008 13:19
(CEP News) - Asia-Pacific fixed income markets are mixed and equities closed higher with yields on Australian 10-year bonds flat at 5.80% and Japanese 10-year government bonds down 1.0 bps to 1.44%.
Read more...
25 Agustus 2008 13:19
(CEP News) - Asia-Pacific fixed income markets are mixed and equities closed higher with yields on Australian 10-year bonds flat at 5.80% and Japanese 10-year government bonds down 1.0 bps to 1.44%.
Read more...
Asia Session Recap
Daily Forex Fundamentals | Written by Forex.com | Aug 25 08 07:08 GMT |
The Asia session began the week with a move in Cable that proved to be the first domino in a series of currency moves that lifted the US Dollar to loftier heights. The proverbial spark in the powder keg was an option barrier at 1.8500 in GBP/USD, and once that gave way, the flood gates were open as the pair collapsed from 1.8502 to 1.8413 in a matter of mere minutes as stops were triggered in a holiday thinned UK market. The fall in GBP/USD continued later in the session to just a hair above 1.8400 as traders found little reason to buy the pair even at the discounted prices with the UK's GDP on Friday uninspiring at best, and the grim fact that growth has all but stalled a current reality. The new two year low in the pair reinforced Dollar buying across the board, anchored by a downturn in crude oil and gold prices. Even Warren Buffett, who usually has nothing good to say about the Greenback, is on board the Dollar rally, stating he had 'no bets against the Dollar'.
The EUR/USD followed the Pound lower, initially to a 1.4715 low, but just around lunch time in Asia, a new wave of stop losses pushed the pair to under 1.4700 to 1.4694. With a combination of lower oil and an anemic Euro Zone economy, the EUR/USD pair could continue to see pressure this week especially with German IFO and inflation data on the docket. Look for poor data to damage the Euro, as well look for any moves lower in oil to be once again a benefit for the Dollar.
With the price of crude oil dropping for its biggest daily decline since 2004 on Friday, in thanks to the faltering of Tropical Storm Fay, some Russian troop movement in Georgia and an overall decline in demand, Asian stocks all rallied as oil laid at $114.50 a barrel. USD/JPY popped back above 110.00 to reach a high of 110.27 as the Nikkei soared about 1.5% Japan's week will end with a ton of data on Friday, including unemployment, CPI and the BoJ's unveiling of a stimulus package to help business and consumers deal with the rocketing inflation. Information on the package is scarce, but it is said to be worth about 8 trillion Yen. There are no data releases in Europe today, and the UK is currently enjoying a bank holiday.
Forex.com
http://www.forex.com
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Read more...
The Asia session began the week with a move in Cable that proved to be the first domino in a series of currency moves that lifted the US Dollar to loftier heights. The proverbial spark in the powder keg was an option barrier at 1.8500 in GBP/USD, and once that gave way, the flood gates were open as the pair collapsed from 1.8502 to 1.8413 in a matter of mere minutes as stops were triggered in a holiday thinned UK market. The fall in GBP/USD continued later in the session to just a hair above 1.8400 as traders found little reason to buy the pair even at the discounted prices with the UK's GDP on Friday uninspiring at best, and the grim fact that growth has all but stalled a current reality. The new two year low in the pair reinforced Dollar buying across the board, anchored by a downturn in crude oil and gold prices. Even Warren Buffett, who usually has nothing good to say about the Greenback, is on board the Dollar rally, stating he had 'no bets against the Dollar'.
The EUR/USD followed the Pound lower, initially to a 1.4715 low, but just around lunch time in Asia, a new wave of stop losses pushed the pair to under 1.4700 to 1.4694. With a combination of lower oil and an anemic Euro Zone economy, the EUR/USD pair could continue to see pressure this week especially with German IFO and inflation data on the docket. Look for poor data to damage the Euro, as well look for any moves lower in oil to be once again a benefit for the Dollar.
With the price of crude oil dropping for its biggest daily decline since 2004 on Friday, in thanks to the faltering of Tropical Storm Fay, some Russian troop movement in Georgia and an overall decline in demand, Asian stocks all rallied as oil laid at $114.50 a barrel. USD/JPY popped back above 110.00 to reach a high of 110.27 as the Nikkei soared about 1.5% Japan's week will end with a ton of data on Friday, including unemployment, CPI and the BoJ's unveiling of a stimulus package to help business and consumers deal with the rocketing inflation. Information on the package is scarce, but it is said to be worth about 8 trillion Yen. There are no data releases in Europe today, and the UK is currently enjoying a bank holiday.
Forex.com
http://www.forex.com
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Read more...
US Stocks Rally Taking Dollar For The Ride
Daily Forex Fundamentals | Written by Easy Forex | Aug 25 08 01:20 GMT |
U.S. Dollar Trading (USD) rallied before Fed Chief Bernanke's speech on speculation that Lehman Brother's may receive capital from the Korean Development Bank. Also supporting was a massive drop in Oil on the back of easing geopolitical concerns and reopening of major pipelines in Turkey. Bernanke took some of the wind out of the Dollar's rally though with comments that slowing US growth would mediate inflation concerns indicating that the Fed would be able to keep target rates low for an extended period of time. In the U.S. share markets, the NASDAQ was up 34 points (1.44%) and the Dow Jones was up 197 points (1.73%). Crude Oil closed down $6.59 ending the New York session at $114.59 per barrel. Looking ahead, July Home Sales are forecast at 4.9 Million up from 4.86 Million in June.
The Euro (EUR) pulled back from Thursday's highs as Oil retreated and the USD rallied broadly. Eurozone data did little to support with the June Current Account blowing out to -8.2 Billion. Industrial Orders for June were better than forecast although still negative, down -0.3% in June or -7.4% Y/Y. Overall the EUR/USD traded with a low of 1.4759 and a high of 1.4909 before closing the day at 1.4790 in the New York session.
The Japanese Yen (JPY) reversed Thursday's losses gaining all day to reclaim the 110 level driven by buoyant equities and renewed risk appetite. Monetary Policy Minutes showed Bank of Japans concern with rising global Inflation and growing downside risks. Overall the USDJPY traded with a low of 108.33 and a high of 110.15 before closing the day around 109.90 in the New York session.
The Sterling (GBP) suffered more than most currencies as Oil losses combined with downgraded data. Q2 GDP was revised down to 0.0% from 0.1% initially forecast. Support was finally found pre 1.8500. Overall the GDP/USD traded with a low of 1.8503 and a high of 1.8780 before closing the day at 1.8520 in the New York session. Looking Ahead, Bank Holiday in UK today. UPDATE GDP/USD BREAKS 1.8500 dropping quickly to 1.8425.
The Australian Dollar (AUD) fell in line with the pullback in commodity prices. AUD was also under pressure from a wide range of currencies as the market pared longs especially against the AUD/NZD. The Aussie has consolidated between the .8600-.8800 levels against the Greenback. Overall the AUD/USD traded with a low of 0.8649 and a high of 0.8804 before closing the US session at 0.8780.
Gold (XAU) positive stocks and heavy losses in Oil set the tone with the precious metal falling over $10 an ounce. Overall trading with a low of USD$821 and high of USD$838 before ending the New York session at USD$823 an ounce.
Easy Forex
http://www.easy-forex.com
Easy-Forex makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites and the information contained does not take into account your personal objectives, financial situation and needs. Therefore you should consider whether these products are appropriate in view of your objectives, financial situation and needs as well as considering the risks associated in dealing with those products
Read more...
U.S. Dollar Trading (USD) rallied before Fed Chief Bernanke's speech on speculation that Lehman Brother's may receive capital from the Korean Development Bank. Also supporting was a massive drop in Oil on the back of easing geopolitical concerns and reopening of major pipelines in Turkey. Bernanke took some of the wind out of the Dollar's rally though with comments that slowing US growth would mediate inflation concerns indicating that the Fed would be able to keep target rates low for an extended period of time. In the U.S. share markets, the NASDAQ was up 34 points (1.44%) and the Dow Jones was up 197 points (1.73%). Crude Oil closed down $6.59 ending the New York session at $114.59 per barrel. Looking ahead, July Home Sales are forecast at 4.9 Million up from 4.86 Million in June.
The Euro (EUR) pulled back from Thursday's highs as Oil retreated and the USD rallied broadly. Eurozone data did little to support with the June Current Account blowing out to -8.2 Billion. Industrial Orders for June were better than forecast although still negative, down -0.3% in June or -7.4% Y/Y. Overall the EUR/USD traded with a low of 1.4759 and a high of 1.4909 before closing the day at 1.4790 in the New York session.
The Japanese Yen (JPY) reversed Thursday's losses gaining all day to reclaim the 110 level driven by buoyant equities and renewed risk appetite. Monetary Policy Minutes showed Bank of Japans concern with rising global Inflation and growing downside risks. Overall the USDJPY traded with a low of 108.33 and a high of 110.15 before closing the day around 109.90 in the New York session.
The Sterling (GBP) suffered more than most currencies as Oil losses combined with downgraded data. Q2 GDP was revised down to 0.0% from 0.1% initially forecast. Support was finally found pre 1.8500. Overall the GDP/USD traded with a low of 1.8503 and a high of 1.8780 before closing the day at 1.8520 in the New York session. Looking Ahead, Bank Holiday in UK today. UPDATE GDP/USD BREAKS 1.8500 dropping quickly to 1.8425.
The Australian Dollar (AUD) fell in line with the pullback in commodity prices. AUD was also under pressure from a wide range of currencies as the market pared longs especially against the AUD/NZD. The Aussie has consolidated between the .8600-.8800 levels against the Greenback. Overall the AUD/USD traded with a low of 0.8649 and a high of 0.8804 before closing the US session at 0.8780.
Gold (XAU) positive stocks and heavy losses in Oil set the tone with the precious metal falling over $10 an ounce. Overall trading with a low of USD$821 and high of USD$838 before ending the New York session at USD$823 an ounce.
Easy Forex
http://www.easy-forex.com
Easy-Forex makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites and the information contained does not take into account your personal objectives, financial situation and needs. Therefore you should consider whether these products are appropriate in view of your objectives, financial situation and needs as well as considering the risks associated in dealing with those products
Read more...
Daily Forex Market Commentary
Daily Forex Technicals | Written by Global Forex Trading | Aug 25 08 01:15 GMT |
The market is looking for a dip to buy dollars again after missing the big rally on July 22. The US currency rallied on Friday for this reason, but the sell-off in oil and the rally in stocks on rumors that Lehman will be bought underpinned. The immediate risk is on the upside and the only US economic report is existing home sales.
Euro/dollar
Euro/dollar gave back most of the gains made on Thursday. My model is long, but the immediate risk is on the downside.
Initial support is now seen at 1.4700. The next level is 1.4631.
Immediate resistance comes at 1.4800. This is followed by 1.4845, 1.4902 and 1.4950.
Oscillators are falling.
NEAR-TERM: Mixed with downside risk
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/yen
Dollar/yen reversed aggressively all of the losses made a day earlier. My model is barely short. The initial risk is barely on the upside now.
Immediate resistance remains at 110.35 from a 50-point pivot, which targets 109.85 and 110.85. Distant resistance is 111.60 from another 50-point pivot, which targets 112.10 and 111.10.
Support remains at 109.85. Further strong support is at 109.15 from a 50-point pivot, which targets 109.65 and 108.65.
Oscillators are declining.
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Mixed
Sterling/dollar
Sterling/dollar failed its attempt to recover and closed on a very bearish tone on Friday. The medium term outlook remains negative.
Immediate support is at 1.8405. Further supports are at 1.8330 and 1.8190.
Initial resistance now comes at 1.8480. The next likely cap is 1.8620.
Oscillators are falling.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/Swiss franc
Dollar/Swiss franc reversed Thursday's sharp losses while alternating up and down days and my model is barely short here. The immediate risk is now on the upside while the market is trying to make up its mind.
Immediate resistance is at 1.1040. Above it, key resistance remains at 1.1185.
Initial support is pegged at 1.0910. Below 1.0855, support remains at 1.0725.
Oscillators are declining.
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Mixed
Cornelius Luca
Global Forex Trading
http://www.gftforex.com
DISCLAIMER: This forum and the information provided here should not be relied on as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. The views of the author are not necessarily those of Global Forex Trading, its owners, officers, agents or employees. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Cornelius Luca will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this column. Global Forex Trading and Cornelius Luca do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.
Read more...
The market is looking for a dip to buy dollars again after missing the big rally on July 22. The US currency rallied on Friday for this reason, but the sell-off in oil and the rally in stocks on rumors that Lehman will be bought underpinned. The immediate risk is on the upside and the only US economic report is existing home sales.
Euro/dollar
Euro/dollar gave back most of the gains made on Thursday. My model is long, but the immediate risk is on the downside.
Initial support is now seen at 1.4700. The next level is 1.4631.
Immediate resistance comes at 1.4800. This is followed by 1.4845, 1.4902 and 1.4950.
Oscillators are falling.
NEAR-TERM: Mixed with downside risk
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/yen
Dollar/yen reversed aggressively all of the losses made a day earlier. My model is barely short. The initial risk is barely on the upside now.
Immediate resistance remains at 110.35 from a 50-point pivot, which targets 109.85 and 110.85. Distant resistance is 111.60 from another 50-point pivot, which targets 112.10 and 111.10.
Support remains at 109.85. Further strong support is at 109.15 from a 50-point pivot, which targets 109.65 and 108.65.
Oscillators are declining.
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Mixed
Sterling/dollar
Sterling/dollar failed its attempt to recover and closed on a very bearish tone on Friday. The medium term outlook remains negative.
Immediate support is at 1.8405. Further supports are at 1.8330 and 1.8190.
Initial resistance now comes at 1.8480. The next likely cap is 1.8620.
Oscillators are falling.
NEAR-TERM: Slightly bearish
MEDIUM-TERM: Bearish
LONG-TERM: Mixed
Dollar/Swiss franc
Dollar/Swiss franc reversed Thursday's sharp losses while alternating up and down days and my model is barely short here. The immediate risk is now on the upside while the market is trying to make up its mind.
Immediate resistance is at 1.1040. Above it, key resistance remains at 1.1185.
Initial support is pegged at 1.0910. Below 1.0855, support remains at 1.0725.
Oscillators are declining.
NEAR-TERM: Slightly bullish
MEDIUM-TERM: Bullish
LONG-TERM: Mixed
Cornelius Luca
Global Forex Trading
http://www.gftforex.com
DISCLAIMER: This forum and the information provided here should not be relied on as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. The views of the author are not necessarily those of Global Forex Trading, its owners, officers, agents or employees. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Cornelius Luca will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this column. Global Forex Trading and Cornelius Luca do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.
Read more...
Blue Skies for Beijing Need Marathon Plan That May Slow Economy
By Lee Spears
More Photos/Details
Aug. 25 (Bloomberg) -- Zhang Guoqing says the air quality in Beijing is better since the government clamped down on tailpipes, smokestacks and construction cranes for the Olympics.
``The traffic condition became less crowded and the air quality also improved,'' Zhang, 58, said while watching ice skaters at the China World Trade Center. ``I don't want the government to stop those measures.''
Beijing officials say the city experienced its best air quality in 10 years this month after authorities implemented odd- even driving days and shut down factories and building sites before the Aug. 8-24 games. More than half of 2,000 Beijingers surveyed said traffic control measures should continue after the games, state-run China Daily reported.
Yet they won't get their wish. The world's most populous nation needs to create 10 million new jobs a year to maintain economic growth and social stability, so business will return closer to usual once the upcoming Paralympics end Sept. 17.
``These temporary measures are meant to address the issue temporarily,'' said Tao Dong, chief Asia economist at Credit Suisse Group AG in Hong Kong. ``You can't prohibit people from driving their cars. You're going to have a riot.''
Slow Growth
China, the world's No. 4 economy, may have lost as much as 3 percent of its estimated 4 trillion-yuan ($585.3 billion) gross domestic product by shutting down factories in Beijing and surrounding areas for two months, Tao said. Some factories, including Beijing Shougang Co., the nation's fourth-biggest steelmaker, were evicted from the capital.
The affected regions generate about 26 percent of China's economic output, so the world's fastest-growing major economy will slow during the next two months, Goldman Sachs Group Inc. said in an Aug. 8 report.
GDP growth has slowed for four straight quarters, prompting President Hu Jintao to say Aug. 1 that his priorities were maintaining steady, fast growth and controlling inflation.
There was such concern about Beijing's air quality that International Olympic Committee President Jacques Rogge said some outdoor events could be postponed if necessary. World-record holder Haile Gebrselassie, an asthmatic, pulled out of the marathon because of the pollution and heat.
The city spent about $70 billion to improve air quality and build subways, sports stadiums and an airport terminal for the games. Chinese officials say the measures worked.
`Itchy Palms'
The average daily pollution index this month was about 31 percent lower than August 2007, the city's environmental protection bureau said Saturday. Major air pollutants were an average 40 percent lower, with nitrogen oxide emissions from automobiles down 61 percent, the bureau said.
Even Gebrselassie said he noticed the change.
``I was here in February, I don't see no blue sky,'' he said. ``To keep such clear air, that's fantastic.''
Still, levels of particulates known as PM10 were up to double the World Health Organization's recommended levels on some days. China's pollution index doesn't measure smaller particles called PM2.5, which can penetrate deeper into lungs and create greater risk for developing asthma and bronchitis.
Several riders in the 245-kilometer (152.2-mile) bicycle road race on Aug. 9 said they were affected by poor air quality.
``First few days when we went out, I was coughing a lot after,'' said American George Hincapie, who finished 40th.
Even the archers suffered.
``I didn't like the pollution,'' bronze medalist Yun Ok-Hee of South Korea said. ``My palms and hands were itchy.''
More Emissions
China's release of greenhouse gases blamed for global warming is increasing more than previously forecast and will swamp pollution cuts planned by the U.K., Germany and other industrialized nations, the United Nations Intergovernmental Panel on Climate Change said in May. It surpassed the U.S. as the world's largest emitter.
Air pollution-related illnesses and deaths may cost China an additional 3.8 percent of GDP, a World Bank report said. Beijing's 15 million residents face higher incidences of asthma, respiratory infections and lung cancer, said Hans Troedsson, WHO's representative in China.
``The government is taking measures in the right direction, but it needs to be scaled up,'' Troedsson said.
For the games, the government said cars with license plates ending in odd numbers could drive only on odd-numbered days, and vice versa for even numbers. Beijing has about 3.3 million cars and adds about 300,000 a year.
Controls Continue
City officials said Saturday that normal traffic patterns would return next month.
``They should at least try to continue some of these measures,'' said Ricardo Browne, 41, a Brazilian pilot working for Shenzhen Airlines Co. ``It's hard to see the sun.''
Steps are being taken. China will restrict factory discharges and may not let some polluters reopen, and last month it imposed cleaner fuel standards to reduce auto emissions. The government will double the tax on large vehicles to spur demand for more fuel-efficient cars.
``They are meaning business in terms of structural changes that will positively influence the climate and the environment,'' Rogge said yesterday.
Beijing editor Zhou Min, 27, said she, like Zhang, wanted the driving restrictions to continue, even though it meant more crowded buses and subways.
``I fully support the environment-friendly measures since the air quality has been improved, which puts me in a good mood,'' she said.
To contact the reporter on this story: Lee Spears in Beijing at lspears2@bloomberg.net.
Read more...
More Photos/Details
Aug. 25 (Bloomberg) -- Zhang Guoqing says the air quality in Beijing is better since the government clamped down on tailpipes, smokestacks and construction cranes for the Olympics.
``The traffic condition became less crowded and the air quality also improved,'' Zhang, 58, said while watching ice skaters at the China World Trade Center. ``I don't want the government to stop those measures.''
Beijing officials say the city experienced its best air quality in 10 years this month after authorities implemented odd- even driving days and shut down factories and building sites before the Aug. 8-24 games. More than half of 2,000 Beijingers surveyed said traffic control measures should continue after the games, state-run China Daily reported.
Yet they won't get their wish. The world's most populous nation needs to create 10 million new jobs a year to maintain economic growth and social stability, so business will return closer to usual once the upcoming Paralympics end Sept. 17.
``These temporary measures are meant to address the issue temporarily,'' said Tao Dong, chief Asia economist at Credit Suisse Group AG in Hong Kong. ``You can't prohibit people from driving their cars. You're going to have a riot.''
Slow Growth
China, the world's No. 4 economy, may have lost as much as 3 percent of its estimated 4 trillion-yuan ($585.3 billion) gross domestic product by shutting down factories in Beijing and surrounding areas for two months, Tao said. Some factories, including Beijing Shougang Co., the nation's fourth-biggest steelmaker, were evicted from the capital.
The affected regions generate about 26 percent of China's economic output, so the world's fastest-growing major economy will slow during the next two months, Goldman Sachs Group Inc. said in an Aug. 8 report.
GDP growth has slowed for four straight quarters, prompting President Hu Jintao to say Aug. 1 that his priorities were maintaining steady, fast growth and controlling inflation.
There was such concern about Beijing's air quality that International Olympic Committee President Jacques Rogge said some outdoor events could be postponed if necessary. World-record holder Haile Gebrselassie, an asthmatic, pulled out of the marathon because of the pollution and heat.
The city spent about $70 billion to improve air quality and build subways, sports stadiums and an airport terminal for the games. Chinese officials say the measures worked.
`Itchy Palms'
The average daily pollution index this month was about 31 percent lower than August 2007, the city's environmental protection bureau said Saturday. Major air pollutants were an average 40 percent lower, with nitrogen oxide emissions from automobiles down 61 percent, the bureau said.
Even Gebrselassie said he noticed the change.
``I was here in February, I don't see no blue sky,'' he said. ``To keep such clear air, that's fantastic.''
Still, levels of particulates known as PM10 were up to double the World Health Organization's recommended levels on some days. China's pollution index doesn't measure smaller particles called PM2.5, which can penetrate deeper into lungs and create greater risk for developing asthma and bronchitis.
Several riders in the 245-kilometer (152.2-mile) bicycle road race on Aug. 9 said they were affected by poor air quality.
``First few days when we went out, I was coughing a lot after,'' said American George Hincapie, who finished 40th.
Even the archers suffered.
``I didn't like the pollution,'' bronze medalist Yun Ok-Hee of South Korea said. ``My palms and hands were itchy.''
More Emissions
China's release of greenhouse gases blamed for global warming is increasing more than previously forecast and will swamp pollution cuts planned by the U.K., Germany and other industrialized nations, the United Nations Intergovernmental Panel on Climate Change said in May. It surpassed the U.S. as the world's largest emitter.
Air pollution-related illnesses and deaths may cost China an additional 3.8 percent of GDP, a World Bank report said. Beijing's 15 million residents face higher incidences of asthma, respiratory infections and lung cancer, said Hans Troedsson, WHO's representative in China.
``The government is taking measures in the right direction, but it needs to be scaled up,'' Troedsson said.
For the games, the government said cars with license plates ending in odd numbers could drive only on odd-numbered days, and vice versa for even numbers. Beijing has about 3.3 million cars and adds about 300,000 a year.
Controls Continue
City officials said Saturday that normal traffic patterns would return next month.
``They should at least try to continue some of these measures,'' said Ricardo Browne, 41, a Brazilian pilot working for Shenzhen Airlines Co. ``It's hard to see the sun.''
Steps are being taken. China will restrict factory discharges and may not let some polluters reopen, and last month it imposed cleaner fuel standards to reduce auto emissions. The government will double the tax on large vehicles to spur demand for more fuel-efficient cars.
``They are meaning business in terms of structural changes that will positively influence the climate and the environment,'' Rogge said yesterday.
Beijing editor Zhou Min, 27, said she, like Zhang, wanted the driving restrictions to continue, even though it meant more crowded buses and subways.
``I fully support the environment-friendly measures since the air quality has been improved, which puts me in a good mood,'' she said.
To contact the reporter on this story: Lee Spears in Beijing at lspears2@bloomberg.net.
Read more...
Mersch Says ECB to Announce Changes to Collateral Rules Soon
By John Fraher
Aug. 25 (Bloomberg) -- The European Central Bank will announce changes to the rules governing its money-market auctions in coming weeks to head off the risk of abuse by financial institutions, council member Yves Mersch said.
``At the margins there can still be cases where you see dangers of gaming the system,'' Mersch said in an interview on Aug. 23 in Jackson Hole, Wyoming. ``The Governing Council has been discussing the whole issue'' and has agreed on a ``certain amount'' of refinement to the existing rules, he said.
ECB officials have become increasingly concerned that banks are taking advantage of collateral rules that are broader than those used by the Federal Reserve and the Bank of England. The danger is that banks struggling to sell securities damaged by the credit-market turmoil will dump them on the ECB and become overly reliant on central-bank funds.
Dutch policy maker Nout Wellink said in an interview with the Het Financieele Dagblad newspaper published Aug. 21 that banks shouldn't become too dependent on the ECB for funding.
``It's not a broad-based revolution,'' said Mersch, who is attending a meeting of central bankers and financial officials organized by the Fed. ``We are satisfied with our framework. But since there are always on the margins evolutions, we have to adjust our framework regularly to market practices.''
``The precisions'' planned by the ECB ``concern some instruments,'' Mersch said, declining to elaborate. Unlike the Fed and the Bank of England, the ECB hasn't had to change its operation rules since the credit crisis began.
Lender of Last Resort
``The ECB is in an unenviable situation,'' said Paul McCulley, a fund manager at Pacific Investment Management Co, in an interview at Jackson Hole. ``The lender of last resort should be just that, a last resort, and not a permanent provider of funds to the private sector.''
Central bankers including Federal Reserve Ben S. Bernanke met in the Teton Mountain retreat at the weekend to discuss ways to address the past year's credit rout. ECB President Jean-Claude Trichet said ``we are still in a market correction'' and Bank of Israel Governor Stanley Fischer said the crisis has yet to run its course.
Spain's banks in particular are struggling to attract investors as a decade-long property boom ends and mortgage delinquencies soar to the highest in at least six years. Investors demand higher rewards to buy bonds backed by Spanish mortgages than any other home loans in Europe. The ECB lent Spanish banks a record 49.4 billion euros ($73.1 billion) in July.
Demand From Outside
The ECB's money market system is also attracting demand from outside the euro region. The Frankfurt-based central bank said in June it will accept asset-backed bonds sold by Macquarie Group Ltd., Australia's biggest securities firm, and backed by Australian consumer loans as collateral.
U.K. mortgage lender Nationwide Building Society said Aug. 18 it's planning to expand into Ireland, a member of the euro region, to take advantage of ``funding opportunities.''
Banks with operations in the countries sharing the euro can raise funding from the ECB by pledging certain types of collateral including asset-backed securities. Bonds backed by mortgages and other assets accounted for 18 percent of the ECB's loan collateral at the end of 2007, up from 4 percent in 2004, Fitch Ratings data show.
The ECB lends to banks mostly through the main refinancing operations maturing in one week. Longer-term auctions provide financing to banks during three- and six-month periods.
`Moral Suasion'
Mersch said the central bank prefers to tackle individual instances of abuse problems with ``moral suasion.''
``Our framework is complex, and if we can warn people that this is not acceptable beforehand, and they adjust in due time, we would be satisfied,'' Mersch said. While the ECB hasn't yet taken ``specific action,'' the central bank plans to strengthen its powers. He didn't say what that action might be.
Mersch said the ECB's response to any abuse case ``would not necessarily be a question to be discussed publicly.''
The financial crisis is taking its toll on Europe's economy, which contracted in the second quarter.
Mersch said ``the question is whether the slowdown will last a little bit longer'' and Bundesbank President Axel Weber, who was also in Jackson Hole, said Aug. 22 the current quarter may show ``some weakness.'' The economy may expand below its potential rate of 2 percent ``into next year,'' he said.
At the same time, ``you shouldn't be getting too hung up about the volatility in quarter-to-quarter GDP readings,'' Weber said. Weber and Mersch both said inflation will exceed the ECB's 2 percent limit next year, with Weber saying there's a ``substantial risk' that price pressures will persist. The ECB will publish revised projections next month.
To contact the reporter on this story: John Fraher in Jackson Hole, Wyoming at jfraher@bloomberg.net
Read more...
Malaysia May Refrain From Raising Interest Rate as Growth Slows
By Stephanie Phang
Aug. 25 (Bloomberg) -- Malaysia's central bank may keep its benchmark interest rate unchanged today to avoid exacerbating an economic slowdown, refraining from joining its neighbors who have increased borrowing costs to fight inflation.
Bank Negara Malaysia will maintain its overnight policy rate at 3.5 percent for a 19th straight meeting, according to 8 of the 12 economists surveyed by Bloomberg News last week before the release of July inflation figures. The other four expect an increase to 3.75 percent. The decision is due at 6:00 p.m. in Kuala Lumpur.
Malaysia has avoided following Thailand, Indonesia, India, Vietnam and the Philippines in raising borrowing costs this year as a deepening global slowdown threatens Asian growth. Central Bank Governor Zeti Akhtar Aziz has said she expects commodity prices, which drove inflation to a 26-year high last month, to ease next year as expansion cools around the world.
``Although we believe the economic case for modest rate hikes remains intact, policymakers appear to think the growth slowdown will in itself take care of inflation,'' said Kit Wei Zheng, an economist at Citigroup Inc. in Singapore. ``Given the difficult political backdrop, it is unlikely the government would appreciate a rate increase that will only add to the woes of households.''
Voter anger over rising prices contributed to opposition gains in March elections that deprived Prime Minister Abdullah Ahmad Badawi's of his two-thirds majority in parliament. Former deputy premier Anwar Ibrahim will run for a seat in a by- election tomorrow in a bid to return to the legislature for the first time in a decade and oust the government.
Seize Power
Anwar, now the leader of an alliance of opposition parties, has said he plans to lure enough lawmakers from the ruling coalition to form a new government next month. He has promised to reduce fuel prices should he seize power.
Bank Negara, which hasn't raised borrowing costs since April 2006, unexpectedly refrained from increasing the overnight policy rate last month, saying its immediate concern is to avoid a ``fundamental economic slowdown'' even as it raised this year's inflation forecast to between 5.5 percent and 6 percent. Slowing growth will cause inflation to ease in the second half of 2009, the central bank said.
Malaysia's inflation accelerated to 8.5 percent in July after the government increased retail gasoline prices 41 percent and diesel rates 63 percent in June to prevent subsidies that keep pump costs artificially low from spiraling amid soaring oil prices. Electricity rates also rose in July.
Tightening Bias
The last time Malaysia's inflation was above 6 percent was June 1998, when the central bank's then benchmark three-month intervention rate was 11 percent. Malaysia's overnight policy rate, introduced in April 2004, is the second lowest in Asia outside Japan, together with Hong Kong's and Thailand's.
``While we agree that there are significant concerns on growth in the near term, runaway inflation could make matters worse going forward,'' said Irvin Seah, an economist at DBS Bank Ltd. in Singapore. ``It could potentially undermine the longer- term growth potential of the economy. We believe that the policy direction is still biased towards tightening.''
Still, expectations for a Malaysian rate increase have eased along with weakening global economic prospects since last month, when more than half of the 20 economists surveyed by Bloomberg News had expected the central bank to raise borrowing costs at its July 25 meeting.
Neighboring Singapore cut its 2008 growth forecast for a second time this year in August, joining other nations in Asia signaling a deeper slowdown. Malaysia's economic expansion probably slowed in the second quarter, a Bloomberg survey of economists shows ahead of an Aug. 29 central bank release.
U.S. Slowdown
The effect of a U.S. housing slump last year that sparked about $500 billion in credit-market losses for banks globally is spreading as rising borrowing costs combine with record commodity prices to sap growth in the world's largest economies. The U.S. is close to a recession and Japan contracted in the second quarter.
Economists at Goldman Sachs Group Inc. said last week countries that account for half of the world economy face recession, and those at JPMorgan Chase & Co. estimate a global expansion of 1 percent this quarter, the weakest in seven years.
The following table gives economist forecasts for Malaysia's benchmark interest rate:
Malaysia Overnight Policy Rate Estimates
--------------------------------------------
Policy Meeting Aug. Oct. Nov.
Dates 25 24 24
--------------------------------------------
Median 3.50% 3.50% 3.50%
% forecasts at Median 67% 56% 44%
High 3.75% 4.00% 4.00%
Low 3.50% 3.50% 3.25%
Number of Estimates 12 9 9
--------------------------------------------
Action Economics 3.75% 3.75% 4.00%
Aseambankers 3.50% 3.50% 3.50%
Bank Islam Malaysia 3.50% 3.50% 3.50%
Barclays Capital 3.50% 3.50% 3.50%
Citi 3.50% -- --
Credit Suisse 3.50% 3.50% 3.50%
DBS Group 3.75% 4.00% 4.00%
Kenanga Investment 3.75% 4.00% 4.00%
Reuters IFR 3.75% 3.75% 4.00%
Standard Chartered 3.50% -- --
Sumitomo Mitsui 3.50% 3.50% 3.25%
Westpac Banking 3.50% -- --
--------------------------------------------
To contact the reporter on this story: Stephanie Phang in Singapore at sphang@bloomberg.net
Read more...
Libor Signals Credit Seizing Up as Banks Balk at Money Lending
By Liz Capo McCormick and Gavin Finch
Aug. 25 (Bloomberg) -- Most of the bond strategists and salesmen that Resolution Investment Management Ltd.'s Stuart Thomson talked to last August expected the credit crunch to be long over by now. Instead, money markets show there's no end in sight, and it may even worsen.
``It's like an ongoing nightmare and no one is sure when we're going to wake up,'' said Thomson, a money manager in Glasgow at Resolution, which oversees $46 billion in bonds. ``Things are going to get worse before they get better.''
In a replay of the last four months of 2007, interest-rate derivatives imply that banks are becoming more hesitant to lend on speculation credit losses will increase as the global economic slowdown deepens. Binit Patel, an economist in London at Goldman Sachs Group Inc., said in an Aug. 21 report that nations accounting for half of the world's economy face a recession.
The premium banks charge for lending short-term cash may approach the record levels set last year, based on trading in the forward markets, where financial instruments are sold for future delivery. Back then, concern about the health of the banking system led investors to shun all but the safest government debt, sparking the biggest end-of-year rally for Treasuries since 2000.
``These problems going into year-end are likely to be worse this time round because of the amount banks have to refinance in December,'' Thomson said, citing a figure of $88 billion. ``The suspicion is that banks are still hiding losses. The banking system relies on trust and at the minute there quite simply isn't any.''
Rate Spreads
Banks are charging each other a premium of 77 basis points over what traders predict the Federal Reserve's daily effective federal funds rate will average over the next three months to lend cash. The spread is up from about 24 basis points in January, and may widen to 85 basis points, or 0.85 percentage point, by mid-December, prices in the forwards market show.
Former Fed Chairman Alan Greenspan said in June that this spread, which is the difference between the three-month London interbank offered rate for dollars and the overnight indexed swap rate, should serve as a measure for telling when markets have returned to normal.
A narrowing to 25 basis points in the so-called Libor-OIS spread would be viewed as a positive, he said. Forward markets signal that won't happen until sometime after June 2010. The premium averaged 11 basis points, or 0.11 percentage point, in the 10 years prior to August 2007.
Another 2007
Increased turmoil in the money markets may again serve as a catalyst for a surprise year-end rally in Treasuries like the one in 2007.
``The trade to do in December will be to get back into the most liquid thing you can find,'' such as Treasury bills or notes, said David Keeble, head of fixed-income strategy in London at Calyon, a unit of Credit Agricole SA, France's second- largest bank by assets. ``We are having a period now of a second round of pressures on banks. It's weak economic growth which is now piling the pain onto the banks.''
A year ago, 10-year note yields fell about half a percentage point to 4 percent between September and December, even though the median estimate of 65 economists surveyed by Bloomberg was for a rise to 5 percent. Treasuries returned 3.98 percent, versus 1.92 percent for company debt and a loss of 3.82 percent in the Standard & Poor's 500 Index, according to Merrill Lynch & Co.
And just like last year, economists and strategists are again calling for an increase in yields. The median of 52 estimates in a Bloomberg survey between Aug. 1 and Aug. 8 was for 10-year Treasury yields to rise to 4 percent by the end of 2008.
Flow of Cash
The yield on the benchmark 4 percent note due in August 2018 closed at 3.87 percent last week, rising from 3.31 percent after the Fed engineered the bailout of Bear Stearns Cos. in March and inflation accelerated to the highest level in 17 years.
``The credit crunch remains the centerpiece of our bond strategy,'' said Resolution's Thomas. He said he's bullish on Treasuries maturing in five years or less.
Banks began to hoard their cash when rising defaults on subprime mortgages led two Bear Stearns hedge funds to seek bankruptcy protection on July 31, 2007, as creditors forced them to liquidate at least $4 billion of securities tied to the loans.
Then on Aug. 9, 2007, Paris-based BNP Paribas SA halted withdrawals from three investment funds because it couldn't ``fairly'' value their subprime debt holdings and the European Central Bank took the unprecedented action of offering to pump unlimited cash into the banking system. The BNP funds had about 1.6 billion euros ($2.2 billion) of assets.
`Systemic' Problems
Losses and writedowns on securities related to home loans to people with poor credit now exceed $504 billion at financial institutions. Last month Treasury Secretary Henry Paulson was forced to seek congressional authority to inject unlimited capital into Fannie Mae and Freddie Mac, which are responsible for about 42 percent of the $12 trillion U.S. home loan market, after their shares tumbled about 90 percent, wiping out some $54 billion of stock market value.
Trust among banks remains low even after the Fed cut its target rate for overnight loans to 2 percent from 5.25 percent in September and created three emergency lending programs, including the Term Auction Facility, or TAF. In total, the Fed has provided almost $1 trillion of emergency loans.
The Fed's most recent lending survey released Aug. 11 said that more banks tightened credit standards for consumers and business borrowers since April as defaults and delinquencies on home loans climbed.
Libor Validity
``The problem is much more systemic than was widely anticipated a year ago,'' said Michael Darda, chief economist for MKM Partners LLC in Greenwich, Connecticut. ``Not only bank balance sheets but home balance sheets are under pressure due to falling house prices.''
The seizure in the credit markets and rise in short-term borrowing costs this year triggered questions over the validity of Libor, a benchmark administered by the London-based British Bankers' Association and used to calculate rates on $360 trillion of financial products worldwide.
The Bank for International Settlements in Basel, Switzerland, said in March some members of the BBA may have understated their borrowing costs to avoid being seen as having difficulty raising financing.
``Libor markets aren't reflective of the entire banking system but of three or four major banks that continue to have pressure on liquidity,'' said Saumil Parikh, a money manager who helps oversee $688 billion at Pacific Investment Management Co., in Newport Beach, California. ``That spreads to the entire system because you are not really sure who you are going to end up lending to through the Libor market.''
`Not Over'
Restrictive lending makes it harder for growth to accelerate in U.S. economy, where gross domestic product may slow to 1.5 percent this year, according to the median forecast of 76 contributors in a Bloomberg survey that puts a greater weighting on most recent estimates.
Meanwhile, Europe's GDP unexpectedly fell 0.2 percent in the second quarter, while Japan's economy shrank at an annual rate of 2.4 percent in the same period.
The crisis is ``not over and I'm not exactly sure when it's going to end,'' Nobel Prize-winning economist Myron Scholes said Aug. 21 at a conference in Lindau, Germany, featuring 14 Nobel laureates in economics.
To contact the reporters on this story: Liz Capo McCormick in New York at Emccormick7@bloomberg.net; Gavin Finch in London at gfinch@bloomberg.net
Read more...
Aug. 25 (Bloomberg) -- Most of the bond strategists and salesmen that Resolution Investment Management Ltd.'s Stuart Thomson talked to last August expected the credit crunch to be long over by now. Instead, money markets show there's no end in sight, and it may even worsen.
``It's like an ongoing nightmare and no one is sure when we're going to wake up,'' said Thomson, a money manager in Glasgow at Resolution, which oversees $46 billion in bonds. ``Things are going to get worse before they get better.''
In a replay of the last four months of 2007, interest-rate derivatives imply that banks are becoming more hesitant to lend on speculation credit losses will increase as the global economic slowdown deepens. Binit Patel, an economist in London at Goldman Sachs Group Inc., said in an Aug. 21 report that nations accounting for half of the world's economy face a recession.
The premium banks charge for lending short-term cash may approach the record levels set last year, based on trading in the forward markets, where financial instruments are sold for future delivery. Back then, concern about the health of the banking system led investors to shun all but the safest government debt, sparking the biggest end-of-year rally for Treasuries since 2000.
``These problems going into year-end are likely to be worse this time round because of the amount banks have to refinance in December,'' Thomson said, citing a figure of $88 billion. ``The suspicion is that banks are still hiding losses. The banking system relies on trust and at the minute there quite simply isn't any.''
Rate Spreads
Banks are charging each other a premium of 77 basis points over what traders predict the Federal Reserve's daily effective federal funds rate will average over the next three months to lend cash. The spread is up from about 24 basis points in January, and may widen to 85 basis points, or 0.85 percentage point, by mid-December, prices in the forwards market show.
Former Fed Chairman Alan Greenspan said in June that this spread, which is the difference between the three-month London interbank offered rate for dollars and the overnight indexed swap rate, should serve as a measure for telling when markets have returned to normal.
A narrowing to 25 basis points in the so-called Libor-OIS spread would be viewed as a positive, he said. Forward markets signal that won't happen until sometime after June 2010. The premium averaged 11 basis points, or 0.11 percentage point, in the 10 years prior to August 2007.
Another 2007
Increased turmoil in the money markets may again serve as a catalyst for a surprise year-end rally in Treasuries like the one in 2007.
``The trade to do in December will be to get back into the most liquid thing you can find,'' such as Treasury bills or notes, said David Keeble, head of fixed-income strategy in London at Calyon, a unit of Credit Agricole SA, France's second- largest bank by assets. ``We are having a period now of a second round of pressures on banks. It's weak economic growth which is now piling the pain onto the banks.''
A year ago, 10-year note yields fell about half a percentage point to 4 percent between September and December, even though the median estimate of 65 economists surveyed by Bloomberg was for a rise to 5 percent. Treasuries returned 3.98 percent, versus 1.92 percent for company debt and a loss of 3.82 percent in the Standard & Poor's 500 Index, according to Merrill Lynch & Co.
And just like last year, economists and strategists are again calling for an increase in yields. The median of 52 estimates in a Bloomberg survey between Aug. 1 and Aug. 8 was for 10-year Treasury yields to rise to 4 percent by the end of 2008.
Flow of Cash
The yield on the benchmark 4 percent note due in August 2018 closed at 3.87 percent last week, rising from 3.31 percent after the Fed engineered the bailout of Bear Stearns Cos. in March and inflation accelerated to the highest level in 17 years.
``The credit crunch remains the centerpiece of our bond strategy,'' said Resolution's Thomas. He said he's bullish on Treasuries maturing in five years or less.
Banks began to hoard their cash when rising defaults on subprime mortgages led two Bear Stearns hedge funds to seek bankruptcy protection on July 31, 2007, as creditors forced them to liquidate at least $4 billion of securities tied to the loans.
Then on Aug. 9, 2007, Paris-based BNP Paribas SA halted withdrawals from three investment funds because it couldn't ``fairly'' value their subprime debt holdings and the European Central Bank took the unprecedented action of offering to pump unlimited cash into the banking system. The BNP funds had about 1.6 billion euros ($2.2 billion) of assets.
`Systemic' Problems
Losses and writedowns on securities related to home loans to people with poor credit now exceed $504 billion at financial institutions. Last month Treasury Secretary Henry Paulson was forced to seek congressional authority to inject unlimited capital into Fannie Mae and Freddie Mac, which are responsible for about 42 percent of the $12 trillion U.S. home loan market, after their shares tumbled about 90 percent, wiping out some $54 billion of stock market value.
Trust among banks remains low even after the Fed cut its target rate for overnight loans to 2 percent from 5.25 percent in September and created three emergency lending programs, including the Term Auction Facility, or TAF. In total, the Fed has provided almost $1 trillion of emergency loans.
The Fed's most recent lending survey released Aug. 11 said that more banks tightened credit standards for consumers and business borrowers since April as defaults and delinquencies on home loans climbed.
Libor Validity
``The problem is much more systemic than was widely anticipated a year ago,'' said Michael Darda, chief economist for MKM Partners LLC in Greenwich, Connecticut. ``Not only bank balance sheets but home balance sheets are under pressure due to falling house prices.''
The seizure in the credit markets and rise in short-term borrowing costs this year triggered questions over the validity of Libor, a benchmark administered by the London-based British Bankers' Association and used to calculate rates on $360 trillion of financial products worldwide.
The Bank for International Settlements in Basel, Switzerland, said in March some members of the BBA may have understated their borrowing costs to avoid being seen as having difficulty raising financing.
``Libor markets aren't reflective of the entire banking system but of three or four major banks that continue to have pressure on liquidity,'' said Saumil Parikh, a money manager who helps oversee $688 billion at Pacific Investment Management Co., in Newport Beach, California. ``That spreads to the entire system because you are not really sure who you are going to end up lending to through the Libor market.''
`Not Over'
Restrictive lending makes it harder for growth to accelerate in U.S. economy, where gross domestic product may slow to 1.5 percent this year, according to the median forecast of 76 contributors in a Bloomberg survey that puts a greater weighting on most recent estimates.
Meanwhile, Europe's GDP unexpectedly fell 0.2 percent in the second quarter, while Japan's economy shrank at an annual rate of 2.4 percent in the same period.
The crisis is ``not over and I'm not exactly sure when it's going to end,'' Nobel Prize-winning economist Myron Scholes said Aug. 21 at a conference in Lindau, Germany, featuring 14 Nobel laureates in economics.
To contact the reporters on this story: Liz Capo McCormick in New York at Emccormick7@bloomberg.net; Gavin Finch in London at gfinch@bloomberg.net
Read more...
Beijing Games Are Fiscal Triumph, Moral Failure: John Helyar
Commentary by John Helyar
Aug. 25 (Bloomberg) -- We got our full measure of Olympic moments in the just-completed Beijing Games, topped by Michael Phelps's eight gold medals and Usain Bolt's lightning sprints.
Nonetheless, some of the greatest feats took place in corporate suites, where the Olympics' global sponsors calculated huge returns on their investments.
General Electric Co.'s NBC soared past its $1 billion ad revenue target by delivering the biggest TV audience for a non- U.S. Summer Games since Barcelona in 1992. Its industrial divisions sold $700 million of equipment to Olympics venues and other Beijing customers.
Coca-Cola's Olympic-themed ``Red Around The World'' campaign yielded 17 percent and 18 percent volume gains in China the past two years. Coke not only cut into Pepsi's market share lead, it also induced Yao Ming, China's iconic basketball player, to leave Pepsi and endorse Coke.
I could go on and on about the Olympic sponsors as hustlers -- perhaps McDonald's super-sized ad campaign, ``I'm loving it when China wins'' or Adidas's new four-story retail emporium in Beijing, the shoemaker's biggest in the world. Yes I could, except I know my astute readers don't need Kodak to get the picture. (If you did happen to need Kodak, Beijing is awash with this Olympic sponsor's latest digital imaging products.)
Corporate Land Rush
Let me be blunt. What has unfolded in China the past two weeks is less a global sports festival than a corporate land rush into the world's No. 1 growth market. In those terms, the Cha-Ching Games of Beijing have been a huge success.
In terms of the vision of Pierre de Coubertin, founder of the modern Olympics, Beijing represents a total bastardization. His credo was ``The important thing is not to win but take part.'' The Beijing Games' motto was: ``Do you take Visa?'' (Of course they do, silly; Visa is another global sponsor which plowed hundreds of millions of dollars into the Games.)
I'm no naif. Sure it's been many an Olympiad since there were pure amateurs. Sure the Games have been big business ever since the Los Angeles Games of 1984, when Peter Ueberroth showed how lucrative they could be.
What Beijing did was remove the last fig leaf from the Olympic ideal. Put it right up there among the laurel leaves on the winners' heads and that was that.
The International Olympic Committee sold out the Games' soul -- even if at a handsome price -- to accommodate a host that didn't subscribe to basic Olympics values and sponsors that didn't seem to care.
Berlin Games
Not since the worst moments of Avery Brundage, the longtime Olympics autocrat who appeased Hitler at the 1936 Berlin Games by pulling American Jewish runners from a track event, has there been such pitiful leadership.
IOC President Jacques Rogge and his cohorts repeatedly let the Chinese play them for patsies. In part, the suits from Lausanne, Switzerland -- IOC headquarters -- were victims of their own egos.
They awarded Beijing the Games in 2001 under a dearly held conceit: that the Olympics are a great geopolitical force for good. It's why they prefer to call this a Movement, not a sports property. That's why Juan Antonio Samaranch, the longtime imperious president of the IOC, liked to be called ``Your Excellency.''
Beijing represented both a grand commercial opportunity for sponsors and a grandiose gesture for the Movement. The Olympics were supposed to be, at once, a welcoming of China into the international community and a means of changing China's uglier practices. The Beijing delegation pledged human-rights reforms if awarded the Games.
Business China's Way
Alas, this proved to be less the stuff of a Nobel Peace Prize than of a Faustian bargain. The closer the 2008 Games grew, the less sway Lausanne held over Beijing. In the seven years between bid and Games, China had become a fast-emerging economic power, which did business the way it did government: in its own didactic way.
By the time it was clear China had its own ideas about what constituted human rights, media access, peaceful dissent and other such western values, it was too late. A predictable, recurring pattern developed.
NBC and other broadcasters would scream about China's severe restrictions on where they'd allow cameras outside athletic venues. IOC officials would ``tsk, tsk.'' China would do as it bloody well pleased.
Internet Access
Journalists would scream about China's restrictions on their Internet access during the Games. IOC officials would ``tsk, tsk.'' China would do as it pleased.
The IOC was at its most feeble when it refused to stand up for Joey Cheek, the gold-medal speed skater at Turin. He's become a prominent advocate for Darfur and wanted to come to Beijing to enlist other Olympians in the cause.
China, which is Sudan's biggest oil customer and has been accused of complicity in that country's Darfur slaughters, could see no good in that. Cheek was refused a visitor visa and the IOC declined to stand up for him.
In the same non-Olympic spirit, IOC spokeswoman Giselle Davies repeatedly deflected reporters' increasingly hostile questions about why no permits had been issued for protests that were supposed to be allowed in designated areas.
The Chinese government finally provided an answer of sorts. It threatened two elderly women who'd submitted repeated protest applications with a sentence to re-education camp if they persisted. With such hosts, the Olympics were about as much fun as the cultural revolution.
Rogge's Status
Thus did Beijing wind up being less a coming-out party for China than a shakedown of its many visitors. Olympic sponsors may nonetheless have done very well by the Games, but the IOC has not. Rogge's alpha status in the Olympic movement has been weakened.
And even sponsors who did great business in Beijing should worry about the way these Games played out. The Olympic rings are the world's most recognized brand, but they have been dinged.
(John Helyar, co-author of ``Barbarians at the Gate,'' is an editor-at-large for Bloomberg News. The opinions expressed are his own.)
To contact the reporter on this story: John Helyar in Atlanta at jhelyar@bloomberg.net
Read more...
Aug. 25 (Bloomberg) -- We got our full measure of Olympic moments in the just-completed Beijing Games, topped by Michael Phelps's eight gold medals and Usain Bolt's lightning sprints.
Nonetheless, some of the greatest feats took place in corporate suites, where the Olympics' global sponsors calculated huge returns on their investments.
General Electric Co.'s NBC soared past its $1 billion ad revenue target by delivering the biggest TV audience for a non- U.S. Summer Games since Barcelona in 1992. Its industrial divisions sold $700 million of equipment to Olympics venues and other Beijing customers.
Coca-Cola's Olympic-themed ``Red Around The World'' campaign yielded 17 percent and 18 percent volume gains in China the past two years. Coke not only cut into Pepsi's market share lead, it also induced Yao Ming, China's iconic basketball player, to leave Pepsi and endorse Coke.
I could go on and on about the Olympic sponsors as hustlers -- perhaps McDonald's super-sized ad campaign, ``I'm loving it when China wins'' or Adidas's new four-story retail emporium in Beijing, the shoemaker's biggest in the world. Yes I could, except I know my astute readers don't need Kodak to get the picture. (If you did happen to need Kodak, Beijing is awash with this Olympic sponsor's latest digital imaging products.)
Corporate Land Rush
Let me be blunt. What has unfolded in China the past two weeks is less a global sports festival than a corporate land rush into the world's No. 1 growth market. In those terms, the Cha-Ching Games of Beijing have been a huge success.
In terms of the vision of Pierre de Coubertin, founder of the modern Olympics, Beijing represents a total bastardization. His credo was ``The important thing is not to win but take part.'' The Beijing Games' motto was: ``Do you take Visa?'' (Of course they do, silly; Visa is another global sponsor which plowed hundreds of millions of dollars into the Games.)
I'm no naif. Sure it's been many an Olympiad since there were pure amateurs. Sure the Games have been big business ever since the Los Angeles Games of 1984, when Peter Ueberroth showed how lucrative they could be.
What Beijing did was remove the last fig leaf from the Olympic ideal. Put it right up there among the laurel leaves on the winners' heads and that was that.
The International Olympic Committee sold out the Games' soul -- even if at a handsome price -- to accommodate a host that didn't subscribe to basic Olympics values and sponsors that didn't seem to care.
Berlin Games
Not since the worst moments of Avery Brundage, the longtime Olympics autocrat who appeased Hitler at the 1936 Berlin Games by pulling American Jewish runners from a track event, has there been such pitiful leadership.
IOC President Jacques Rogge and his cohorts repeatedly let the Chinese play them for patsies. In part, the suits from Lausanne, Switzerland -- IOC headquarters -- were victims of their own egos.
They awarded Beijing the Games in 2001 under a dearly held conceit: that the Olympics are a great geopolitical force for good. It's why they prefer to call this a Movement, not a sports property. That's why Juan Antonio Samaranch, the longtime imperious president of the IOC, liked to be called ``Your Excellency.''
Beijing represented both a grand commercial opportunity for sponsors and a grandiose gesture for the Movement. The Olympics were supposed to be, at once, a welcoming of China into the international community and a means of changing China's uglier practices. The Beijing delegation pledged human-rights reforms if awarded the Games.
Business China's Way
Alas, this proved to be less the stuff of a Nobel Peace Prize than of a Faustian bargain. The closer the 2008 Games grew, the less sway Lausanne held over Beijing. In the seven years between bid and Games, China had become a fast-emerging economic power, which did business the way it did government: in its own didactic way.
By the time it was clear China had its own ideas about what constituted human rights, media access, peaceful dissent and other such western values, it was too late. A predictable, recurring pattern developed.
NBC and other broadcasters would scream about China's severe restrictions on where they'd allow cameras outside athletic venues. IOC officials would ``tsk, tsk.'' China would do as it bloody well pleased.
Internet Access
Journalists would scream about China's restrictions on their Internet access during the Games. IOC officials would ``tsk, tsk.'' China would do as it pleased.
The IOC was at its most feeble when it refused to stand up for Joey Cheek, the gold-medal speed skater at Turin. He's become a prominent advocate for Darfur and wanted to come to Beijing to enlist other Olympians in the cause.
China, which is Sudan's biggest oil customer and has been accused of complicity in that country's Darfur slaughters, could see no good in that. Cheek was refused a visitor visa and the IOC declined to stand up for him.
In the same non-Olympic spirit, IOC spokeswoman Giselle Davies repeatedly deflected reporters' increasingly hostile questions about why no permits had been issued for protests that were supposed to be allowed in designated areas.
The Chinese government finally provided an answer of sorts. It threatened two elderly women who'd submitted repeated protest applications with a sentence to re-education camp if they persisted. With such hosts, the Olympics were about as much fun as the cultural revolution.
Rogge's Status
Thus did Beijing wind up being less a coming-out party for China than a shakedown of its many visitors. Olympic sponsors may nonetheless have done very well by the Games, but the IOC has not. Rogge's alpha status in the Olympic movement has been weakened.
And even sponsors who did great business in Beijing should worry about the way these Games played out. The Olympic rings are the world's most recognized brand, but they have been dinged.
(John Helyar, co-author of ``Barbarians at the Gate,'' is an editor-at-large for Bloomberg News. The opinions expressed are his own.)
To contact the reporter on this story: John Helyar in Atlanta at jhelyar@bloomberg.net
Read more...
Australia's Queensland State Bans Shale-Oil Mining for 20 Years
By Angela Macdonald-Smith
Aug. 25 (Bloomberg) -- Australia's Queensland state placed a 20-year ban on shale-oil mining at the McFarlane deposit in the Whitsundays region, citing a risk to the environment.
The move stops immediate plans to dig up about 400,000 metric tons of rock for resource testing at the site, Queensland Premier Anna Bligh said yesterday in an e-mailed statement. Only one lease currently exists to mine shale oil in the state, in Gladstone, and no new mines will be permitted, she said.
Queensland Energy Resources Ltd. has been investigating a plan to mine as much as 1.6 million barrels of oil from the deposit in a A$14 billion ($12.2 billion) project, the Courier- Mail reported. The project is opposed by environmental groups including Greenpeace, which described it as ``lunacy'' because of the amount of harmful emissions that would be generated.
``Government will devote the next two years to researching whether shale oil deposits can be used in an environmentally acceptable way,'' Bligh said in the statement. ``While the development of shale oil has potential as an energy source, we will not allow it until we can be assured that it can be extracted and processed without harming the environment.''
The decision will further erode Queensland's standing as a destination for exploration investment, the Queensland Resources Council, a mining industry association, said in a separate e- mailed statement.
The proposed mine, located 10 kilometers (6.2 miles) from the Great Barrier Reef, would have created as much as 40 million tons a year of greenhouse gases, equivalent to a quarter of Queensland's annual emissions, Greenpeace says on its Web site.
Shale-oil mining involves heating solid organic matter called kerogen found in rocks until it decomposes to release hydrocarbons that can be captured to produce synthetic crude oil and combustible gas.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
Read more...
Aug. 25 (Bloomberg) -- Australia's Queensland state placed a 20-year ban on shale-oil mining at the McFarlane deposit in the Whitsundays region, citing a risk to the environment.
The move stops immediate plans to dig up about 400,000 metric tons of rock for resource testing at the site, Queensland Premier Anna Bligh said yesterday in an e-mailed statement. Only one lease currently exists to mine shale oil in the state, in Gladstone, and no new mines will be permitted, she said.
Queensland Energy Resources Ltd. has been investigating a plan to mine as much as 1.6 million barrels of oil from the deposit in a A$14 billion ($12.2 billion) project, the Courier- Mail reported. The project is opposed by environmental groups including Greenpeace, which described it as ``lunacy'' because of the amount of harmful emissions that would be generated.
``Government will devote the next two years to researching whether shale oil deposits can be used in an environmentally acceptable way,'' Bligh said in the statement. ``While the development of shale oil has potential as an energy source, we will not allow it until we can be assured that it can be extracted and processed without harming the environment.''
The decision will further erode Queensland's standing as a destination for exploration investment, the Queensland Resources Council, a mining industry association, said in a separate e- mailed statement.
The proposed mine, located 10 kilometers (6.2 miles) from the Great Barrier Reef, would have created as much as 40 million tons a year of greenhouse gases, equivalent to a quarter of Queensland's annual emissions, Greenpeace says on its Web site.
Shale-oil mining involves heating solid organic matter called kerogen found in rocks until it decomposes to release hydrocarbons that can be captured to produce synthetic crude oil and combustible gas.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
Read more...
Oil Falls for a Second Day as BP Restarts Caspian Sea Pipeline
By Angela Macdonald-Smith and Christian Schmollinger
Aug. 25 (Bloomberg) -- Crude oil fell for a second day in New York as BP Plc restarted flows through a Caspian Sea pipeline.
The Baku-Tbilisi-Ceyhan pipeline, which moves oil from Azerbaijan through Georgia to Turkey's Mediterranean coast, may resume full operations within days after a fire halted exports, a BP spokeswoman said Aug. 23. Oil dropped 5.4 percent on Aug. 22, the most in percentage terms for more than three years.
``The pipeline restart was a contributing factor, putting more supply in the market,'' said Jonathan Barratt, managing director of Commodity Broking Services in Sydney. ``Oil is trading in a very volatile, wide range. The volatility is telling me that a base is trying to form'' and prices won't sink much further, he said.
Crude oil for October delivery declined as much as 56 cents, or 0.5 percent, to $114.03 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It traded at $114.12 at 9:08 a.m. in Singapore.
To contact the reporters on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net; Christian Schmollinger in Singapore at christian.s@bloomberg.net
Read more...
Thailand Economic Growth Probably Slowed, Easing Rate Pressure
By Suttinee Yuvejwattana and Michael Munoz
Aug. 25 (Bloomberg) -- Thailand's economic growth probably slowed for the first time in more than a year as increased exports of rice and rubber failed to offset weak local demand.
Southeast Asia's second-biggest economy expanded 5.8 percent in the second quarter from a year earlier after gaining 6 percent in the previous three months, according to the median forecast of 10 economists surveyed by Bloomberg News. The report is due today at 9:30 a.m. in Bangkok.
Slowing growth means the Bank of Thailand may be on the verge of its last interest-rate increase this year, according to a Bloomberg survey. Governor Tarisa Watanagase is coming under pressure from the government to keep borrowing costs on hold and spur the economy amid signs inflation may be easing.
``Putting politics aside, I see a lot of room for the central bank to increase its key rate by 25 basis points this time,'' said Vishnu Varathan, an economist at Forecast Singapore Ltd., who expects the Bank of Thailand to keep its benchmark unchanged at its meeting on Aug. 27. ``But things are quite messy. The government has tried to politicize interest rates.''
The Bank of Thailand will raise its one-day repurchase rate by a quarter of a percentage point to 3.75 percent, the second increase in two months, according to eight of 13 economists surveyed by Bloomberg. The rest expect borrowing costs to be left unchanged. Of the eight predicting an increase this week, four say it will be the last for this year and the others forecast at least a further quarter-point rise.
Inflation to Peak
``The central bank needs to raise rates another time to anchor inflation expectations and it should be the last time,'' said Usara Wilaipich, a Bangkok-based economist at Standard Chartered Plc., who predicts borrowing costs will start to fall next year. ``Inflation will peak in a couple of months before easing off as growth eases in the second half. The central bank needs to take care of growth.''
Lower fuel costs will start to slow inflation from October onwards, Finance Minister Surapong Suebwonglee said Aug. 15.
The central bank last month raised its key rate by a quarter point to 3.5 percent, the first increase in two years, after inflation hit a decade-high 9.2 percent in July. The move has been criticized by members of the government.
Thailand shouldn't raise interest rates because it will lower economic growth, newly-appointed Deputy Finance Minister Suchart Thadathamrongvej said on Aug. 7. Governor Tarisa should resign if the central bank's policy differs from the government's position, he added.
`Stand Straight'
Governor Tarisa on Aug. 21 vowed to ``stand straight'' and continue to act in ``the best interest of the country'' after King Bhumibol Adulyadej praised the Bank of Thailand for its handling of monetary policy and its concern with inflation.
The central bank and the finance ministry agree that Thailand's economic growth may ease in the second half as a global slowdown reduces demand for the nation's exports, even as their views on interest rates differ.
Thailand is ``relying a lot on exports,'' said Sebastien Barbe, a Hong Kong-based strategist for the investment banking unit of France's Credit Agricole SA. ``With the U.S., Europe and Japan decelerating, the rest of Asia will weaken in the next few months. It is a very challenging backdrop for Thailand.''
Exports from Thailand, which account for about 70 percent of gross domestic product, rose 26.3 percent in the second quarter from a year earlier. That was faster than the 22.9 percent pace recorded in the previous three-month period.
Consumer Confidence
Spending by local consumers and companies hasn't been that strong. An index of consumer confidence fell from April through June in line with surging oil costs, and protests and court cases against Prime Minister Samak Sundaravej's government.
Prime Minister Samak reshuffled his cabinet on Aug. 2, removing five ministers, after court rulings forced out key members of his administration. Allegations that Samak is a proxy for former premier Thaksin Shinawatra have led to protests since May urging the prime minister and his team to resign.
Thailand's Supreme Court on Aug. 11 issued an arrest warrant for Thaksin after he skipped bail and fled to the U.K. instead of attending a court hearing on corruption charges. The election commission will also decide next month whether to seek a court order to disband the ruling People Power Party because of alleged vote-buying.
The following tables show economists' estimates for economic growth and interest rates:
Thailand GDP Estimates
----------------------------------------------------------------
2Q 2Q 3Q 4Q GDP GDP
Firm YoY QoQ SA YoY YoY 2008 2009
----------------------------------------------------------------
Median 5.8% 1.0% 4.6% 4.1% 5.0% 5.3%
Average 5.8% 0.9% 4.6% 4.1% 5.1% 5.1%
High 6.2% 1.0% 5.0% 4.8% 5.4% 5.8%
Low 5.5% 0.8% 4.3% 2.9% 4.6% 4.5%
Number of Estimates 10 3 8 8 10 9
----------------------------------------------------------------
Action Economics 5.8% 1.0% 4.8% 3.6% 5.0% 4.5%
Capital Nomura 5.8% 0.8% -- -- 4.6% 4.8%
CIMB Securities 5.9% -- 5.0% 4.4% 5.3% 5.5%
HSBC 5.6% -- 4.3% 4.2% 5.0% 5.0%
Kasikorn Research 5.8% 1.0% 5.0% 4.6% 5.3% 5.8%
KTB Securities 5.5% -- 4.5% 4.0% 5.0% 5.3%
Moody's Economy.com 6.2% -- -- -- 5.4% --
SCB Securities 5.7% -- 4.7% 4.0% 5.0% 5.5%
Standard Chartered 5.8% -- 4.3% 2.9% 4.7% 4.5%
Tisco Securities 5.6% -- 4.5% 4.8% 5.2% 5.4%
----------------------------------------------------------------
Thailand Benchmark Interest Rate Estimates
-------------------------------------------------
Aug. Oct. Dec.
Firm 27 8 3
-------------------------------------------------
Median 3.75% 3.75% 3.75%
% Estimates at Median 62% 50% 50%
High 3.75% 4.00% 4.00%
Low 3.50% 3.50% 3.50%
Number of Estimates 13 10 10
-------------------------------------------------
Action Economics 3.50% 3.75% 3.75%
Capital Nomura Securities 3.75% 3.75% 3.75%
CIMB Securities 3.75% 3.75% 3.75%
Credit Suisse 3.75% -- --
HSBC 3.75% 4.00% 4.00%
Kasikorn Research 3.50% -- --
KTB Securities 3.50% -- --
Moody's Economy.com 3.50% 3.50% 3.50%
SCB Securities 3.75% 4.00% 4.00%
Standard Chartered Bank 3.75% 3.75% 3.75%
Reuters IFR 3.75% 4.00% 4.00%
Tisco Securities 3.75% 3.75% 3.75%
Westpac Banking Corp 3.50% 3.50% 3.50%
-------------------------------------------------
To contact the reporters on this story: Suttinee Yuvejwattana in Bangkok at suttinee1@bloomberg.net; Michael Munoz in Hong Kong at mjmunoz@bloomberg.net
Read more...
Malaysian Ringgit Drops to 8-Month low on Interest Rate Concern
By David Yong
Aug. 25 (Bloomberg) -- Malaysia's ringgit fell to an eight- month low on speculation the central bank will refrain from raising interest rates today, choosing to support economic growth rather than tackle the fastest inflation in 26 years.
Consumer prices jumped 8.5 percent from a year earlier in July, the government reported after local financial markets closed on Aug. 22. That exceeded the estimates of 21 economists surveyed by Bloomberg News ahead of the announcement.
``The inflation number underlines some chain effects from higher fuel and electricity prices,'' said Ameer Ali Mohamed, head of research at JF Apex Securities Bhd. in Petaling Jaya outside Kuala Lumpur. ``This puts policy makers in a predicament and markets could suffer'' from any policy inaction, he said.
The ringgit slumped 0.5 percent to 3.3570 per dollar as of 8:35 a.m. in Kuala Lumpur, the lowest since Dec. 21, according to data compiled by Bloomberg.
The central bank will keep its overnight policy rate at 3.5 percent today for a 19th straight meeting since April 2006, according to 12 of 20 economists in a Bloomberg survey. Eight predicted an increase to 3.75 percent. The announcement is due at about 6 p.m. in Kuala Lumpur.
To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net.
Read more...
Aug. 25 (Bloomberg) -- Malaysia's ringgit fell to an eight- month low on speculation the central bank will refrain from raising interest rates today, choosing to support economic growth rather than tackle the fastest inflation in 26 years.
Consumer prices jumped 8.5 percent from a year earlier in July, the government reported after local financial markets closed on Aug. 22. That exceeded the estimates of 21 economists surveyed by Bloomberg News ahead of the announcement.
``The inflation number underlines some chain effects from higher fuel and electricity prices,'' said Ameer Ali Mohamed, head of research at JF Apex Securities Bhd. in Petaling Jaya outside Kuala Lumpur. ``This puts policy makers in a predicament and markets could suffer'' from any policy inaction, he said.
The ringgit slumped 0.5 percent to 3.3570 per dollar as of 8:35 a.m. in Kuala Lumpur, the lowest since Dec. 21, according to data compiled by Bloomberg.
The central bank will keep its overnight policy rate at 3.5 percent today for a 19th straight meeting since April 2006, according to 12 of 20 economists in a Bloomberg survey. Eight predicted an increase to 3.75 percent. The announcement is due at about 6 p.m. in Kuala Lumpur.
To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net.
Read more...
Australian Dollar Falls for Second Day on Weaker Commodities
By Chris Young
Aug. 25 (Bloomberg) -- The Australian dollar fell for a second day on speculation a decline in commodity prices will deter traders from buying the currency.
The local dollar traded near a six-month low after the UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials slid the most in two weeks on Aug. 22. The Australian dollar also weakened on bets the central bank will cut interest rates at a policy meeting next week.
``A strong U.S. dollar and weaker commodities are a powerful combination against the Australian dollar,'' said Tony Morriss, a currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney. ``Any rally will be sold ahead of the Reserve Bank of Australia meeting next week.''
The Australian dollar fell 0.5 percent to 86.25 U.S. cents as of 10:37 a.m. in Sydney, from 86.65 cents in New York late last week. It will trade between 86 and 88 cents this week, Morriss said.
Prices of commodities influence the Australian dollar because raw materials account for about 60 percent of the nation's exports. Gold, Australia's third-most valuable commodity export, fell 1.1 percent on Aug. 22 as a rebound in the U.S. dollar eroded its appeal as an alternative investment.
Any losses in the currency may be limited after Aluminum Corp. of China, or Chinalco, got Australian approval to raise its stake in Rio Tinto Group to 11 percent, Morriss said.
``This will remind people of support for Australia's resource base,'' he said.
Traders are certain the RBA will cut its 7.25 percent benchmark interest rate by a quarter-percentage point when policy makers meet on Sept. 2, according to a Credit Suisse Group index based on trading on swaps.
Australian government bonds fell for a second day. The yield on the 10-year note rose 3 basis points to 5.82 percent, according to data compiled by Bloomberg. The price of the 5.25 percent bond due March 2019 declined 0.203, or A$2.03 per A$1,000 face amount, to 95.56. A basis point equals 0.01 percentage point.
To contact the reporter on this story: Chris Young in Sydney at cyoung12@bloomberg.net.
Read more...
Aug. 25 (Bloomberg) -- The Australian dollar fell for a second day on speculation a decline in commodity prices will deter traders from buying the currency.
The local dollar traded near a six-month low after the UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials slid the most in two weeks on Aug. 22. The Australian dollar also weakened on bets the central bank will cut interest rates at a policy meeting next week.
``A strong U.S. dollar and weaker commodities are a powerful combination against the Australian dollar,'' said Tony Morriss, a currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney. ``Any rally will be sold ahead of the Reserve Bank of Australia meeting next week.''
The Australian dollar fell 0.5 percent to 86.25 U.S. cents as of 10:37 a.m. in Sydney, from 86.65 cents in New York late last week. It will trade between 86 and 88 cents this week, Morriss said.
Prices of commodities influence the Australian dollar because raw materials account for about 60 percent of the nation's exports. Gold, Australia's third-most valuable commodity export, fell 1.1 percent on Aug. 22 as a rebound in the U.S. dollar eroded its appeal as an alternative investment.
Any losses in the currency may be limited after Aluminum Corp. of China, or Chinalco, got Australian approval to raise its stake in Rio Tinto Group to 11 percent, Morriss said.
``This will remind people of support for Australia's resource base,'' he said.
Traders are certain the RBA will cut its 7.25 percent benchmark interest rate by a quarter-percentage point when policy makers meet on Sept. 2, according to a Credit Suisse Group index based on trading on swaps.
Australian government bonds fell for a second day. The yield on the 10-year note rose 3 basis points to 5.82 percent, according to data compiled by Bloomberg. The price of the 5.25 percent bond due March 2019 declined 0.203, or A$2.03 per A$1,000 face amount, to 95.56. A basis point equals 0.01 percentage point.
To contact the reporter on this story: Chris Young in Sydney at cyoung12@bloomberg.net.
Read more...
Dollar Rises on Speculation Oil Decline to Support U.S. Economy
By Stanley White
Aug. 25 (Bloomberg) -- The dollar climbed for a second day against the euro on speculation a decline in crude oil prices will support the U.S. economy.
The dollar gained to $1.4732 per euro at 9:52 a.m. in Tokyo from $1.4793 in New York late yesterday. The U.S. currency advanced to 110.25 yen from 110.07.
Editor: James Regan, Sandy Hendry
To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.net
Read more...
Aug. 25 (Bloomberg) -- The dollar climbed for a second day against the euro on speculation a decline in crude oil prices will support the U.S. economy.
The dollar gained to $1.4732 per euro at 9:52 a.m. in Tokyo from $1.4793 in New York late yesterday. The U.S. currency advanced to 110.25 yen from 110.07.
Editor: James Regan, Sandy Hendry
To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.net
Read more...
Oil Is Steady After Falling More Than $6 as Pipeline Restarts
By Angela Macdonald-Smith
Aug. 25 (Bloomberg) -- Crude oil was little changed in New York after dropping more than $6 a barrel on Aug. 22, the most in percentage terms for more than three years, as BP Plc resumed flows through a Caspian Sea pipeline.
The Baku-Tbilisi-Ceyhan pipeline, which moves oil from Azerbaijan through Georgia to Turkey's Mediterranean coast, may resume full operations within days after a fire halted exports, a BP Plc spokeswoman said Aug. 23. Oil also fell on Aug. 22 as the dollar strengthened.
``The pipeline restart was a contributing factor, putting more supply in the market,'' said Jonathan Barratt, managing director of Commodity Broking Services in Sydney. ``Oil is trading in a very volatile, wide range. The volatility is telling me that a base is trying to form'' and prices won't sink much further, he said.
Crude oil for October delivery was at $114.45 a barrel, down 14 cents, in after-hours electronic trading on the New York Mercantile Exchange at 6:26 a.m. in Singapore.
Oil fell $6.59 on Aug. 22, or 5.4 percent, to $114.59 a barrel, the biggest drop since Dec. 27, 2004. In dollar terms, it was the biggest decline since Jan. 17, 1991, when U.S.-led forces expelled Iraq from Kuwait. The October contract, which had jumped 4.9 percent the previous day, still rose 0.6 percent for the week.
The price swings indicate that fundamental factors aren't the only influence in the market, Barratt said.
`Huge Move'
``That's a huge move,'' he said. ``From that price action on Thursday and Friday it seems there are some big boys pushing it around.''
BP, Europe's second-largest oil company, StatoilHydro ASA and partners cut output at Caspian oil fields following the closure of the 1,768-kilometer (1,100-mile) Baku-Tbilisi-Ceyhan link on Aug. 5. The pipeline is used to carry oil from Azerbaijan through Georgia to Turkey, where it's loaded onto tankers for U.S. and European markets.
BP is ``carrying out integrity testing on the pipeline,'' Tamam Bayatly, a company spokeswoman, said by telephone from Baku on Aug. 23. She didn't specify a date for full production, due this week.
Oil may rise this week because of a weakening dollar, tension between the U.S. and Russia and falling gasoline stockpiles, a Bloomberg News survey found. The dollar fell 0.7 percent last week, to $1.4793 per euro on Aug. 22. It was at $1.4789 per euro at 6:38 a.m. in Singapore.
Sixteen of 29 analysts surveyed, or 55 percent, said prices will increase through Aug. 29. Seven of the respondents, or 24 percent, said oil will be little changed and six said there would be a drop in prices. Last week 63 percent expected prices to increase.
Brent crude oil for October settlement declined $6.24, or 5.2 percent, to $113.92 a barrel Aug. 22 on London's ICE Futures Europe exchange.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net
Read more...
Australia Stocks: Babcock, Centro, National Australia Bank, Rio
By Shani Raja
Aug. 25 (Bloomberg) -- The S&P/ASX 200 Index rose 87.50 points, or 1.8 percent, to 5,018.90 at 10:20 a.m. in Sydney, the most in almost three weeks. The broader All Ordinaries Index added 88.70 points, or 1.8 percent, to 5,098.90, while the futures index expiring in September advanced 2.3 percent to 5,006.
Financial stocks: National Australia Bank Ltd. (NAB AU), the nation's largest lender by assets, gained 57 cents, or 2.4 percent, to A$24.12, the most since Aug. 12. Commonwealth Bank of Australia (CBA AU) advanced 78 cents, or 1.9 percent, to A$42.16.
U.S. stocks advanced, led by banks and retailers, on oil's biggest plunge in four years and speculation a purchase of Lehman Brothers Holdings Inc. would end the worst slump by financial shares since at least 1962. The Standard & Poor's 500 Index added 14.48 points, or 1.1 percent, to 1,292.20.
Babcock & Brown Ltd. (BNB AU), an Australian manager of infrastructure assets, rose 18 cents, or 7.3 percent, to A$2.26, the eight-best performer on the benchmark. Babcock may seek a buyer for Irish phone company Eircom Group Plc, the Irish Times reported, citing unidentified people.
Centro Properties Group (CNP AU), which won a reprieve this year on debt of as much as A$6.6 billion ($5.7 billion), slumped 2 cents, or 6.8 percent, to a record low 20 cents. Centro may have to offer hybrid securities to win a further extension by Dec. 15, after rejecting proposals for new equity. ``This may impact the value of the group's existing ordinary equity,'' the Melbourne-based company in a statement to the Australian stock exchange.
Rio Tinto Group (RIO AU) rose A$3.45, or 2.9 percent, to A$124.45, the highest since the end of July. Aluminum Corp. of China, or Chinalco, got Australian approval to raise its stake in Rio to 11 percent.
Warrnambool Cheese & Butter Factory Co. (WCB AU), bidding to buy Australia's Dairy Farmers with Kirin Holdings Co., surged 53 cents, or 12 percent, to A$4.93, the most since October 2007. The company said full-year profit rose to a record as it processed more milk into cheese and prices rose.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
Read more...
Aug. 25 (Bloomberg) -- The S&P/ASX 200 Index rose 87.50 points, or 1.8 percent, to 5,018.90 at 10:20 a.m. in Sydney, the most in almost three weeks. The broader All Ordinaries Index added 88.70 points, or 1.8 percent, to 5,098.90, while the futures index expiring in September advanced 2.3 percent to 5,006.
Financial stocks: National Australia Bank Ltd. (NAB AU), the nation's largest lender by assets, gained 57 cents, or 2.4 percent, to A$24.12, the most since Aug. 12. Commonwealth Bank of Australia (CBA AU) advanced 78 cents, or 1.9 percent, to A$42.16.
U.S. stocks advanced, led by banks and retailers, on oil's biggest plunge in four years and speculation a purchase of Lehman Brothers Holdings Inc. would end the worst slump by financial shares since at least 1962. The Standard & Poor's 500 Index added 14.48 points, or 1.1 percent, to 1,292.20.
Babcock & Brown Ltd. (BNB AU), an Australian manager of infrastructure assets, rose 18 cents, or 7.3 percent, to A$2.26, the eight-best performer on the benchmark. Babcock may seek a buyer for Irish phone company Eircom Group Plc, the Irish Times reported, citing unidentified people.
Centro Properties Group (CNP AU), which won a reprieve this year on debt of as much as A$6.6 billion ($5.7 billion), slumped 2 cents, or 6.8 percent, to a record low 20 cents. Centro may have to offer hybrid securities to win a further extension by Dec. 15, after rejecting proposals for new equity. ``This may impact the value of the group's existing ordinary equity,'' the Melbourne-based company in a statement to the Australian stock exchange.
Rio Tinto Group (RIO AU) rose A$3.45, or 2.9 percent, to A$124.45, the highest since the end of July. Aluminum Corp. of China, or Chinalco, got Australian approval to raise its stake in Rio to 11 percent.
Warrnambool Cheese & Butter Factory Co. (WCB AU), bidding to buy Australia's Dairy Farmers with Kirin Holdings Co., surged 53 cents, or 12 percent, to A$4.93, the most since October 2007. The company said full-year profit rose to a record as it processed more milk into cheese and prices rose.
To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.
Read more...
Japanese Stocks Climb as Inflation, Financial Concerns Ease
By Patrick Rial and Masaki Kondo
Aug. 25 (Bloomberg) -- Japanese shares advanced for the first time in five days after crude oil dropped the most since December 2004, relieving inflationary pressure, and speculation mounted Lehman Brothers Holdings Inc. will be bought out.
Bridgestone Corp., the world's largest tiremaker by sales, surged 3.7 percent after oil fell more than $6 a barrel and Federal Reserve Chairman Ben S. Bernanke said inflation should slow. Sumitomo Trust and Banking Co., Japan's fifth-largest publicly traded bank, jumped 3.9 percent after a report Korea Development Bank might acquire Lehman.
The Nikkei 225 Stock Average rose 241.99, or 1.9 percent, to 12,908.03 as of 9:29 a.m. in Tokyo. The broader Topix index advanced 25.35, or 2.1 percent, to 1,241.77. All but two of 33 industry groups on the Topix rose.
``This week the market will get a strong start due to the slump in oil prices,'' Hiroyuki Nakai, chief strategist at Tokai Tokyo Research Center in Tokyo, said in an interview with Bloomberg Television.
The stronger dollar and the reopening of a pipeline through Georgia helped send crude oil for October delivery 5.4 percent lower to $114.59 in New York on Aug. 22. As of 9:11 a.m. Japan time, the contract dipped $0.02 to $114.57 a barrel in New York.
A recovery in the dollar and declines in commodity prices ``should lead inflation to moderate,'' Bernanke said on Aug. 22.
Lehman rallied 5 percent on Aug. 22 after Reuters reported KDB is considering a purchase of the investment bank. Lehman's shares had earlier slumped on a report talks to sell a 50 percent stake had collapsed.
Bridgestone gained 1,793 yen, headed for the biggest advance since Aug. 11, while its closest rival Yokohama Rubber Co. added 3.1 percent to 564 yen. Makers of rubber products posted the steepest jump among the Topix industry groups.
Banks Advance
Sumitomo Trust and Banking soared to 662 yen, set for the largest gain since July 7. Mizuho Financial Group Inc., Japan's second-biggest publicly traded bank, climbed 3.2 percent to 455,000 yen and market leader Mitsubishi UFJ Financial Group Inc. rose 3.2 percent to 818 yen.
Steelmakers climbed after the Nikkei newspaper said they plan to spend 1 trillion yen ($9.1 billion) to jointly acquire iron ore mining companies to ensure a stable supply of the raw material for steel. Nippon Steel Corp., the world's No. 2 maker of the alloy, climbed 1.8 percent to 515 yen. JFE Holdings Inc., Japan's second largest, gained 2.5 percent to 4,540 yen.
Daikin Industries Ltd., the biggest Japanese maker of air conditioners, jumped 2.9 percent to 3,880 yen after the Nikkei said air conditioner sales climbed 20 percent since June from the previous year, driven by hotter weather.
Nikkei futures expiring in September gained 1.9 percent to 12,910 in Osaka and climbed 1.7 percent to 12,910 in Singapore.
To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Masaki Kondo in Tokyo at mkondo3@bloomberg.net.
Read more...
Asian Stocks Rise on Oil Drop, Lehman Speculation; Banks Gain
By Chen Shiyin
Aug. 25 (Bloomberg) -- Asian stocks rose, helping the regional benchmark index rebound from a two-year low, after oil slumped and on speculation a possible investment in Lehman Brothers Holdings Inc. will ease concerns over credit losses.
Honda Motor Co., Japan's second-largest automaker, climbed 4.1 percent after crude fell more than $6 a barrel on Aug. 22 and Federal Reserve Chairman Ben S. Bernanke said inflation should slow. Macquarie Group Ltd., Australia's biggest securities firm, added 2.5 percent, leading financial companies higher, as Korea Development Bank said it's considering an investment in Lehman.
The MSCI Asia Pacific Index gained 1.1 percent to 122.99 as of 9:24 a.m. in Tokyo, rebounding from a four-week, 8.5 percent retreat that sent the gauge to the lowest since July 24, 2006. Energy companies including Inpex Holdings Inc. were the only gauge to decline among the index's 10 industry groups.
The regional measure has dropped 22 percent this year as soaring inflation assailed global economies and the world's largest financial companies posted writedowns and credit losses of more than $500 billion.
Japan's Nikkei 225 Stock Average advanced 1.9 percent to 12,908.32, poised for its largest gain since Aug. 11. Indexes also climbed in Australia, New Zealand and South Korea.
U.S. stocks advanced on Aug. 22, lifting the Standard & Poor's 500 Index by 1.1 percent. Financial companies on the S&P 500 index rose the most in two weeks, led by a rally in Lehman.
Crude oil for October delivery plunged 5.4 percent to $114.59 a barrel, the biggest drop since Dec. 27, 2004, after BP Plc resumed flows through a Caspian pipeline.
To contact the reporter for this story: Chen Shiyin in Singapore at schen37@bloomberg.net
Read more...
Aug. 25 (Bloomberg) -- Asian stocks rose, helping the regional benchmark index rebound from a two-year low, after oil slumped and on speculation a possible investment in Lehman Brothers Holdings Inc. will ease concerns over credit losses.
Honda Motor Co., Japan's second-largest automaker, climbed 4.1 percent after crude fell more than $6 a barrel on Aug. 22 and Federal Reserve Chairman Ben S. Bernanke said inflation should slow. Macquarie Group Ltd., Australia's biggest securities firm, added 2.5 percent, leading financial companies higher, as Korea Development Bank said it's considering an investment in Lehman.
The MSCI Asia Pacific Index gained 1.1 percent to 122.99 as of 9:24 a.m. in Tokyo, rebounding from a four-week, 8.5 percent retreat that sent the gauge to the lowest since July 24, 2006. Energy companies including Inpex Holdings Inc. were the only gauge to decline among the index's 10 industry groups.
The regional measure has dropped 22 percent this year as soaring inflation assailed global economies and the world's largest financial companies posted writedowns and credit losses of more than $500 billion.
Japan's Nikkei 225 Stock Average advanced 1.9 percent to 12,908.32, poised for its largest gain since Aug. 11. Indexes also climbed in Australia, New Zealand and South Korea.
U.S. stocks advanced on Aug. 22, lifting the Standard & Poor's 500 Index by 1.1 percent. Financial companies on the S&P 500 index rose the most in two weeks, led by a rally in Lehman.
Crude oil for October delivery plunged 5.4 percent to $114.59 a barrel, the biggest drop since Dec. 27, 2004, after BP Plc resumed flows through a Caspian pipeline.
To contact the reporter for this story: Chen Shiyin in Singapore at schen37@bloomberg.net
Read more...
Economic Calendar Eco Data 8/25/08
| ||||||||||||||||||||||||||||||||
Read more...
Subscribe to:
Posts (Atom)
Posts
