Wednesday, January 7, 2009

Thai Rice, Rubber Output May Fall on Global Recession

By Rattaphol Onsanit

Jan. 7 (Bloomberg) -- Thailand, the world’s biggest exporter of rice and rubber, may produce fewer commodities this year, as a global recession weakens buyers’ purchasing power.

Rice output may fall 1.6 percent this year from 2008, while rubber production will probably drop 1.3 percent, according to a report by the farm ministry on this year’s crop outlook.

Thailand’s economy, Southeast Asia’s second-biggest, may contract this quarter, extending a possible shrinkage three months earlier, as commodity prices tumbled and the country’s largest markets including the U.S. slipped into a recession.

“We projected the falls because farmers have less incentive from prices,” Apichart Jongskul, secretary general of the ministry’s Office of Agricultural Economics, said in a phone interview today. “It’s all linked to the global economy.”

Exports from Thailand sank 18.6 percent in November. That’s the first contraction since March 2002 and the biggest decline since January 1992 when Bloomberg began tracking the data. Commodity prices tumbled as the U.S., Europe and Japan have slipped into a recession.

“The local rubber industry may shrink as the global economy has stalled,” the farm ministry said in the report.

Rubber production may decline to 3.08 million tons from 3.12 million, with shipments probably falling 1.9 percent to 2.55 million, it said.

Output of unprocessed rice may total 31.6 million tons, down from 32.1 million tons in 2008. Exports of the processed product may decline to 9.5 million tons from an estimate of 10.6 million.

Thailand, also the world’s second biggest sugar exporter, will probably manufacture 7.6 million tons of the sweetener, a 2.6 percent decline from last year. Shipments may fall “slightly” from last year to 5.7 million tons, the ministry said without elaborating.

To contact the reporter on this story: Rattaphol Onsanit in Bangkok at ronsanit@bloomberg.net

Soybeans, Corn Fall as Stronger Dollar, Oil Decline Sap Demand

By Jae Hur

Jan. 7 (Bloomberg) -- Soybeans dropped for the first time in three days after touching a three-month high and corn and wheat fell as the dollar advanced and crude oil extended losses, reducing demand prospects for U.S. supplies.

The dollar gained as much as 0.8 percent against the euro after touching a three-week high yesterday. Crude oil lost as much as 2 percent, eroding demand prospects for the oilseed and corn as a source of alternative fuel.

“The firmer dollar and weaker oil prices put pressure on the grains market,” said Hiroyuki Kikukawa, general manager of research at IDO Securities Co. in Tokyo.

Soybeans for March delivery traded 0.9 percent lower at $10.07 a bushel by 4:16 p.m. in Tokyo during after-hours trading on the Chicago Board of Trade, after touching a peak of $10.23, the highest since Oct. 3. Soybeans are up 30 percent from an 18-month low of $7.7625 on Dec. 5.

Corn for March delivery was 0.5 percent lower at $4.25 a bushel after gaining more than 4 percent to reach $4.29 yesterday, the highest since Oct. 30. The price has risen 39 percent from a two-year low of $3.055 on Dec. 5.

Crude oil fell for a second day on signs the economy in the U.S., the world’s biggest energy consumer, contracted further in November and December, pushing oil inventories higher. Crude oil for February delivery fell 1.2 percent to $47.95 a barrel at 4 p.m. in Tokyo on the New York Mercantile Exchange.

The dollar traded near a three-week high versus the euro on speculation U.S. President-elect Barack Obama’s $775 billion package of tax cuts and government spending will help the economy recover from a recession. The dollar was at $1.3486 per euro from $1.3536 late in New York yesterday, when it rose to $1.3313, the highest since Dec. 12.

Wheat for March delivery lost 2.2 percent to $6.2925 a bushel, declining for the first time in six days. The grain earlier touched $6.4625, the highest since Oct. 3.

To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net

Oil Is Steady Before Report Forecast to Show Stockpiles Gained

By Christian Schmollinger and Grant Smith

Jan. 7 (Bloomberg) -- Crude oil traded little changed before a report forecast to show that crude inventories increased in the U.S. as its economy contracted.

U.S. crude oil stockpiles probably rose for a second week in the week ended Jan. 2, according to a Bloomberg News survey before an Energy Department report today. Orders placed with U.S. factories in November fell twice as much as forecast, signaling businesses are cutting back on investments, according to data from the Commerce Department.

“We’ve seen over the last few months that the market has been really focused on demand,” said Gerard Burg, an energy economist at National Australia Bank Ltd. in Melbourne. “Anytime we get negative economic news out of the U.S. it puts a damper on the crude market.”

Oil for February delivery traded at $48.53, 5 cents lower, in electronic trading on the New York Mercantile Exchange as of 8:58 a.m. London time. It earlier fell as much as 97 cents, or 2 percent, to $47.61 a barrel.

U.S. crude oil stockpiles probably increased 900,000 barrels in the week ended Jan. 2, from 318.7 million the week before, according to the median forecast of 10 analysts surveyed by Bloomberg News.

Gasoline inventories rose 1 million barrels from 208.1 million, according to the survey. It would be the fifth consecutive weekly gain. Gasoline supplies have risen in 12 out of the past 14 weeks.

Falling Consumption

Supplies of distillate fuel, a category that includes heating oil and diesel, probably increased 1.1 million barrels from 136 million barrels. Refineries probably operated at 82.5 percent of capacity, unchanged from the week before, when they ran at the lowest since the period ended Oct. 10 because of damage caused by Hurricanes Gustav and Ike.

The Energy Department is scheduled to release its weekly report at 10:30 a.m. in Washington. The release time will change this week from 10:35 a.m. previously.

U.S. gasoline consumption fell 3.5 percent last week to a two-month low as the U.S. recession reduced demand, a MasterCard Inc. report showed.

Motorists bought an average 8.97 million barrels of gasoline a day in the week ended Jan. 2, down from 9.299 million a year earlier and the lowest since early November, MasterCard, the second-biggest credit-card company, said in its weekly SpendingPulse report yesterday.

Slowing Economy

The U.S. Federal Reserve released minutes of a meeting of policy makers last month that showed they believed “risks to the economy would be substantial.”

U.S. factory orders fell 4.6 percent in November after a revised 6 percent decrease in October that was larger than previously estimated, the Commerce Department said in Washington. The back-to-back decline was the biggest since records began in 1992.

Brent crude oil for February settlement rose as much as 40 cents, or 0.8 percent, to $50.93 a barrel on London’s ICE Futures Europe exchange.

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.

Aditya Birla Halts Underground Mining at Mt. Gordon Operation

By Madelene Pearson

Jan. 7 (Bloomberg) -- Aditya Birla Minerals Ltd., the Australian copper mining unit of India’s Hindalco Industries Ltd., will halt underground mining at its Mt. Gordon operation after a “significant” fall in the metal’s price.

The company will also suspend crushing and stacking at its Nifty Oxide operations, Perth-based Aditya said today in a statement to the Australian stock exchange. That will help save about A$4 million ($2.9 million) to A$5 million a month, it said.

Aditya has also hired an external consultant as it reviews all costs, the company said.

To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net

Fonterra Milk Powder Prices Decline for Sixth Month

By Tracy Withers

Jan. 7 (Bloomberg) -- Fonterra Cooperative Group Ltd., the world’s biggest dairy exporter, said whole milk powder auction prices fell to their lowest in more than two years amid slowing global demand.

The average price fell 9.3 percent to $2,017 a metric ton in a sale yesterday, the company said on its GlobalDairyTrade Web site. Milk powder slumped a sixth month and is down 54 percent since the company began the monthly auctions in July.

World prices of butter, milk and cheese have fallen from record highs 13 months ago as the slowing global economy capped demand for commodities and the U.S. and Europe increased dairy exports.

“Dairy prices have fallen as a result of a cyclical lag between supply and demand,” Kelvin Wickham, managing director of GlobalDairyTrade said in an e-mailed statement. “This has been accelerated by the demand downturn resulting from the global financial crisis and recession.”

Fonterra last month said falling prices and weakening demand may force a cut to the price it pays for milk this season. The company will review its payout estimate on Jan. 27 and there is an “increasing likelihood” New Zealand farmers will receive less than currently forecast, Chairman Henry van der Heyden said Dec. 30.

Internet Auctions

The company’s Internet-based auctions offer a one-month contract with delivery starting two months after the auction, and two three-month contracts with delivery starting three and six months after the sale.

In yesterday’s sale, powder for March delivery rose to an average $2,106 a ton, up 1.3 percent from the price for February shipment in last month’s auction.

Still, powder for delivery April through June fell 14 percent to $1,954 a ton, Fonterra said. Powder for shipment in July to September sold for an average $2,053 a ton, down 16 percent.

The rise in prices for March delivery is “encouraging,” said Wickham. “Our analysis indicates that we are near the bottom of the price cycle. Current price levels represent excellent buying.”

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

European Stock Market Rally to End, Strategists Say

By Alexis Xydias and Adam Haigh

Jan. 7 (Bloomberg) -- The best start for European stocks in at least two decades will give way to losses as slumping corporate profits send equities to new lows, the biggest securities firms say.

The Dow Jones Stoxx 600 Index’s 7.3 percent surge in 2009 through yesterday was part of a so-called bear-market rally that will end as earnings deteriorate, according to Morgan Stanley and Merrill Lynch & Co. Profits at European companies will tumble 20 percent this year, Goldman Sachs Group Inc. says.

The Stoxx 600 rebounded 17 percent since Nov. 21 on speculation U.S. President-elect Barack Obama will revive the world’s biggest economy with $775 billion of tax cuts and spending as the European Central Bank and the Bank of England lower interest rates to combat the biggest financial crisis since the Great Depression. Stocks gained even after data showed manufacturing and service industries in Europe are contracting at the fastest pace since data began in 1998.

“This is a bear-market rally, it is a chance to sell rather than to buy,” said Teun Draaisma, the London-based head of European equity strategy at Morgan Stanley. “The fundamentals are in big trouble with the economy.”

Morgan Stanley, ranked second by Europe-based investors in last year’s Thomson Extel survey for global-equity strategy, says stock prices don’t yet reflect the drop in earnings. The rally pushed the Stoxx 600’s valuation to 9.8 times the profits of its companies, compared with a ratio of 7.9 on Oct. 27.

European stocks fell for the first time in seven days today, with the Stoxx 600 retreating 1 percent to 210.79 at 8:59 a.m. in London.

Writedowns, Recessions

The Stoxx 600 slumped to a five-year low of 182.13 on Nov. 21 as credit-market losses and writedowns at European financial firms climbed toward $300 billion and the U.S., Europe and Japan fell into the first simultaneous recessions since World War II.

Europe’s regional benchmark rebounded after the U.S. rescued New York-based Citigroup Inc. The gains accelerated over the last six days as governments from Washington to Beijing and New Delhi stepped up efforts to boost global growth. The advance to start the year was the fastest since the Stoxx 600’s data began in 1987.

Stocks rallied as analysts reduced their outlook for earnings. On the day the Stoxx 600 reached its 2008 low, analysts projected profits at companies in the index would climb 4.5 percent in 2009, data compiled by Bloomberg show. They now estimate earnings will slip 0.8 percent.

For U.S. companies in the Standard & Poor’s 500 Index, analysts estimated a profit rebound of 4.3 percent this year, Bloomberg data show.

‘Chase the Market’

Strategists are more bearish on Europe, with New York-based Merrill Lynch and Goldman Sachs estimating profits will fall at least 20 percent in 2009. Morgan Stanley, also based in New York, says earnings may tumble as much as 43 percent from their peak.

“My concern is that we had a rally from the depths of late October and November but we are still too optimistic for earnings in ‘09,” said Neil Dwane, who oversees $80 billion as chief investment officer for Europe at Allianz Global Investors’ RCM unit. “I would not chase the market from here,” he said in a Bloomberg Television interview yesterday in London.

The 505 European companies tracked by Bloomberg that announced earnings since the Stoxx 600 began its rebound in November posted a 75 percent decline in average profit.

Economic Deterioration

Morgan Stanley’s Draaisma forecasts European shares will make little headway in 2009. While Merrill Lynch and Goldman Sachs estimate that share prices may reach fresh lows in the coming months, they say European benchmark indexes may climb 13 percent and 20 percent, respectively, for the full year if credit markets recover and the pace of economic deterioration slows.

Recent data give little indication that a rebound is imminent.

A survey of purchasing managers by London-based Markit Economics yesterday showed a composite index of Europe’s manufacturing and service industries dropped to 38.2 in December, the lowest since the survey began in 1998. Separate data showed U.K. services from restaurants to airlines shrank at close to the fastest pace in at least a dozen years last month.

The global recession may prompt the Bank of England to reduce its key interest rate tomorrow to an all-time low of 1.5 percent from 2 percent, according to economists surveyed by Bloomberg. The ECB has reduced its benchmark rate by 1.75 percentage points to 2.5 percent since October.

“Investors will buy back into the markets on any good news in early 2009,” Merrill Lynch’s London-based strategist, Karen Olney, wrote in a report dated Jan. 5. The rally triggered by government and central bank efforts “will be capped and could unwind” in the first two quarters, Olney added. “Profits gained should be taken.”

To contact the reporters on this story: Alexis Xydias in London at axydias@bloomberg.net; Adam Haigh in London at ahaigh1@bloomberg.net

Germany Stocks Update: DAX Index Falls 35.83 to 4,990.48

By Daniel Hauck

Jan. 7 (Bloomberg) -- Germany's benchmark stock index, the DAX Index, fell 0.71 percent at 9:05 a.m.

The index of 30 companies traded on the Frankfurt Stock Exchange fell 35.83 to 4,990.48. Among the stocks in the index, 5 rose, 24 fell and 1 was unchanged.

Declines in the DAX were led by E.on Ag, Bayer Ag and Deutsche Telekom Ag. About 3.29 million shares traded in the DAX.

U.K. Stocks End Six-Day Advance; Scottish & Southern Declines

By Alexis Xydias

Jan. 7 (Bloomberg) -- U.K. stocks fell, ending a six-day rally. Scottish & Southern Energy Plc, the country’s second- biggest energy supplier, led losses after selling new shares to raise money for investments.

The benchmark FTSE 100 Index slipped 57.84, or 1.3 percent, to 4,581.08 as of 8:22 a.m. in London, after rising 10 percent in the previous six days. The broader All-Share Index dropped 1.1 percent. Ireland’s ISEQ Overall Index decreased 0.7 percent.

Scottish & Southern retreated 6.3 percent to 1,184 pence, the steepest drop in the FTSE 100. The company is selling as many as 40 million new shares, equivalent to 5 percent of its issued share capital, to fund investment in power plants and acquisitions.

Man Group Plc fell 4.1 percent to 275.25 pence, its first decline in eight sessions. The largest publicly traded hedge-fund manager was downgraded to “sell” from “buy” at UBS AG, which cited “heightened risk-aversion” among investors after Bernard Madoff’s alleged $50 billion fraud.

Marks & Spencer Group Plc rose 1.2 percent to 241.5 pence. Britain’s largest clothing retailer said revenue at outlets open at least a year fell 7.1 percent in the fiscal third quarter. That beat the 8.3 percent decline forecast by the median estimate of five analysts in a Bloomberg News survey.

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net

European Stocks Fall After Six-Day Rally; U.S. Futures Decline

By Adam Haigh

Jan. 7 (Bloomberg) -- European stocks retreated for the first time in seven days on speculation deteriorating earnings will overshadow government efforts to revive the global economy. U.S. index futures fell, while shares in Asia advanced.

Man Group Plc, the largest publicly traded hedge-fund manager, declined 5.5 percent after UBS AG recommended selling its shares. Commerzbank AG dropped 2.7 percent as JPMorgan Chase & Co. gave the stock an “underweight” recommendation. Rio Tinto Group slid 2.7 percent after surging 29 percent in the first three days of trading in 2009.

The Stoxx 600 had rebounded 17 percent since Nov. 21 through yesterday on speculation that U.S. President-elect Barack Obama will revive the world’s biggest economy with $775 billion of tax cuts and spending as central banks lower interest rates to combat the worst financial crisis since the Great Depression. Meanwhile, the 505 European companies tracked by Bloomberg that announced results since the Stoxx 600 began its rebound posted a 75 percent decline in average profit.

“The Santa Claus rally started just before Christmas and ends today,” Chris Tinker, head of equity research at ICAP Apollo in London, said in a Bloomberg Television interview. “We have seen that rally but we are not comfortable about where we go from here. It is a trading environment, not an investing environment.”

The Stoxx 600 lost 0.8 percent to 211.26 at 8:16 a.m. in London, while futures on the Standard & Poor’s 500 Index declined 0.8 percent.

The MSCI Asia Pacific Index rose 1.8 percent, the biggest gain in three weeks, after Obama said U.S. stimulus spending will continue for years, boosting confidence that consumption in the world’s biggest economy will rebound.

$1 Trillion

The Stoxx 600 slid a record 46 percent last year as more than $1 trillion in losses at financial companies eroded profits and the U.S., Europe and Japan fell into the first simultaneous recessions since World War II. The European Central Bank now has scope to reduce borrowing costs further after the region’s inflation rate fell to the lowest in more than two years.

Man Group dropped 5.5 percent to 271.25 pence after UBS cut its recommendation to “sell” from “buy” and slashed its price-estimate on the stock 17 percent to 260 pence. The shares soared a record 17 percent yesterday as analysts at Credit Suisse Group AG and Evolution Securities raised earnings estimates for the company.

Commerzbank, Rio Tinto

Commerzbank fell 2.7 percent to 6.22 euros. The bank is facing further “capital erosion” and Dresdner Bank, which Commerzbank is taking over, may make a loss until 2011, according to a JPMorgan note.

Rio Tinto, the world’s third biggest mining company, lost 2.7 percent to 1,875 pence. BHP Billiton Ltd., the largest, slid 3.6 percent to 1,398 pence. BHP had climbed 12 percent in 2009 through yesterday.

Marks & Spencer Group Plc, Britain’s largest fashion retailer, gained 2.7 percent to 245.25 pence after reporting a 7.1 percent drop in same store sales for the fiscal third quarter, less than the 8.3 percent decline forecast by analysts surveyed by Bloomberg.

Profits at European companies may fall at least 20 percent this year, according to strategists at New York-based Goldman Sachs Group Inc. and Merrill Lynch & Co.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

Black’s Apollo Said to Be Among Lenders in Lyondell Bankruptcy

By Pierre Paulden and Jonathan Keehner

Jan. 7 (Bloomberg) -- Apollo Management LP, the private- equity firm led by Leon Black, is among the largest creditors of Lyondell Chemical Co., which filed for bankruptcy protection, according to a person with direct knowledge of the matter.

Apollo, based in New York, is now a member of a lending group providing so-called debtor-in-possession financing to fund Lyondell’s operations, according to the person, who asked not to be identified because Apollo’s stake hasn’t been disclosed. Steven Anreder, a spokesman for Apollo, declined to comment. Lyondell spokeswoman Susan Moore didn’t return phone calls seeking comment.

Apollo, TPG Inc. and Blackstone Group LP’s GSO Capital Partners were among buyout firms that bought high-yield, high- risk debt last year at discounted prices. The average high-yield loan price fell 28 cents on the dollar last year to 66.6 cents, according to Standard & Poor’s LCD, as Wall Street firms whittled down $230 billion of loans they’d promised to private-equity firms to fund takeovers before credit markets seized up.

“Apollo may be trying to protect an earlier error in judgment with Lyondell,” said Jonathan Macey, a law professor at Yale University. He said Apollo may be trying to avoid deeper losses by providing bankruptcy financing.

Huntsman Deal

Black’s Apollo lost money last year after agreeing to pay $1 billion to Huntsman Corp. to terminate an acquisition of the chemical maker by its Hexion Specialty Chemicals Inc. unit. Apollo paid Huntsman $425 million in cash and bought $250 million of convertible notes, Woodlands, Texas-based Huntsman said in a statement on Dec. 30. Huntsman also received a $325 million termination fee from Hexion on Dec. 19.

Lyondell Chemical cited waning demand for its products in its bankruptcy filing yesterday in New York. The Houston-based unit of LyondellBasell Industries, a chemical maker based in Rotterdam, the Netherlands, said it arranged for up to $8 billion of debtor-in-possession funding, including $3.25 billion of fresh cash as well as refinanced debt.

Apollo bought Lyondell bank loans from Citigroup in April, bankers familiar with the sale said at the time. Citigroup sold about $1.9 billion of the debt, about a fifth of a $9.45 billion term loan, according to a CreditSights Inc. report on April 29.

Goldman Sachs Group Inc., Merrill Lynch & Co. and the other banks that held the loans offered to sell the debt above 90 cents on the dollar in May, according to a Standard & Poor’s LCD report that month.

Lyondell’s Debt

The chemicals maker has struggled with the debt that financed the $12.3 billion acquisition of Lyondell Chemical Co. by Basell AF in December 2007. That’s sent its U.S. bank loans tumbling to 44.6 cents on the dollar from 60 cents at the end of October, according to London-based pricing service Markit.

Buyout firms that purchased loans may be required to offer bankruptcy financing as banks restrict lending to preserve capital, said Chris Taggert, a New York-based senior loan strategist at CreditSights.

“Debtor-in-possession lending is caught up in the same malaise as credit markets generally,” he said.

Access Industries, which owns LyondellBasell, is providing $750 million of the debtor-in-possession funding. Billionaire Len Blavatnik is founder and chairman of Access.

To contact the reporters on this story: Pierre Paulden in New York at ppaulden@bloomberg.net; Jonathan Keehner in New York jkeehner@bloomberg.net

General Motors May Not Require Further U.S. Loans to Survive

By Jeff Green

Jan. 7 (Bloomberg) -- General Motors Corp. has enough government loans to cover the worst-case scenario it described last month and says it won’t need more if the economy holds up.

The U.S. Treasury has pledged as much as $13.4 billion in aid to help GM pay its bills and $6 billion to prop up lender GMAC LLC, which GM relies on for auto loans and dealer support. President George W. Bush agreed to the rescue after the biggest U.S. automaker said it wouldn’t have enough money to pay bills in December.

“The U.S. Treasury’s $13.4 billion bridge loan to GM, coupled with the separate transaction for GMAC, meets our liquidity needs under the scenarios outlined in our December plan to Congress,” GM spokesman Greg Martin said yesterday.

GM is trying to win concessions from its biggest union, cut its debt level in half, and trim brands and dealerships as part of a restructuring plan to show it will be able to repay the money. A progress report is due Feb. 17 to the Treasury Department, and a final report is due March 31. If the plan doesn’t pass government scrutiny, GM has to repay the loans.

“It all depends on a lot of difficult-to-forecast factors, like the size of the market,” said John Casesa, a former Merrill Lynch auto analyst who’s now a partner at consulting firm Casesa Shapiro Group in New York. GM’s market share, the health of the economy and action by competitors are all unknowns, he said.

GM’s Worst Case

The Detroit automaker said Dec. 2 that its worst-case scenario for 2009 U.S. auto sales is 10.5 million vehicles. GM reiterated Jan. 5 that U.S. sales will range from 10.5 million to 12 million this year, based on the current economic expectation.

GM received the first $4 billion Dec. 31 from the Troubled Asset Relief Program administered by Treasury. GM is spending that money to pay bills, mostly to its 3,000 suppliers, said spokeswoman Renee Rashid-Merem.

The automaker is due to receive an additional $5.4 billion this month. Should Congress agree to release a second $350 billion in TARP funds, GM will get $4 billion more in February.

The Treasury Department also gave Chrysler LLC $4 billion Jan. 2 to help it stay in business and said Dec. 31 it has drafted broad guidelines for aid to the auto industry that would let officials provide funds to any company they deem important to making or financing cars.

With both companies saying they were only weeks away from insolvency, the White House stepped in after a compromise plan backed by Bush and House Democrats stalled in the Senate, raising the prospect of a collapse that would have weakened a U.S. economy already in recession.

Vehicle Sales Fall

U.S. automakers are struggling to cut costs after U.S. sales last year fell to 13.2 million units, the lowest level since 1992, as a global credit crunch hurt buyers’ ability to get loans and the slowing economy sapped demand.

Chrysler, the No. 3 U.S. automaker, said Dec. 2 it would run out of cash early this year without the loans. Auburn Hills, Michigan-based Chrysler finished the third quarter with $6.1 billion and needs at least $3 billion to operate, Chief Executive Officer Robert Nardelli told Congress Nov. 18.

GM’s losses have amounted to almost $73 billion since 2004. Chrysler says its first-half loss, the most recent information available, totaled $1.08 billion.

Chrysler is 80.1 percent owned by Cerberus Capital Management LP, which also owns 51 percent of GMAC.

Because it’s closely held, Chrysler isn’t required to release financial results and Chrysler said yesterday it still doesn’t plan to release financial information to the public after getting $4 billion in U.S. loans last month. The terms of the loans require it to release that information to the Treasury department.

If GM or Chrysler is unable to develop a viable business plan, the U.S. loan terms also allow the funds to be used as so- called debtor in possession funding to keep operating in bankruptcy. Both automakers have said bankruptcy would result in their liquidation because they wouldn’t be able to get such loans from private banks.

To contact the reporter on this story: Jeff Green in Southfield, Michigan, at jgreen16@bloomberg.net

Equities Trading Higher On Obamas Stimulus Plan

Daily Forex Fundamentals | Written by Saxo Bank | Jan 07 09 08:26 GMT |

Equities has lately been trading higher on the back of Obama's stimulus plan currently infusing hope and optimism in the market. When earnings season starts mid January reality will revert

Calendar

Economic Data Releases
Country	Name	Time (GMT)	Expectation	Prior	Comment
GE	Unemployment Rate (DEC)	08:55	7.5%	7.5%
US	ADP Employment Change (DEC)	13:15	-493K	-472K
US	DOE U.S. Crude Oil Inventories (JAN)	15:30	900K	549K

What's going on?

S&P500 edged higher, but did not manage to close above the 938 level (big picture 23.6% Fibo), perhaps helped by the better than expected ISM Non-Manufacturing Index (came out at 40.6).

The FOMC Minutes revealed a great deal of uncertainty as to how the Fed sees inflation expectations developing. Currently, the 10-year TIPS indicate an average inflation rate of 0.5% over the coming 10 years. The Fed might elect to adopt an inflation targeting regime in order to justify a lax monetary policy accommodating to what they perceive to be a very bleak outlook.

Increasing focus at the 'bubble' in Treasuries. Lots of comments recommending to short it. The speculations are valid, but the price (and yield) is at the mercy of the Fed.

FX

FX	Daily stance	Comment
EURUSD	0/-	Consolidation 1.3450-1.3550. Risks 1.3600 before downtrend resumes.
EURJPY	0/+	Support 125.50-126.0. Break of 127.20 yields 128.0. Still ranging though.
USDJPY	+	Look for gains past 94.0 to target 95.25. Support 93.25-40
GBPUSD	0/-	BOE mtg to keep GBP subdued. Res 1.4995 risks return to 1.4800-25.
AUDUSD	0/-	Needs to overcome 0.7240-50 for next leg higher towards 0.7350. Support 0.7175-85.

Equities

Equities	Daily stance	Comment
DAX	0/-	Sell at the break of 4980 targeting 4910. Keep S/L at 5035.
FTSE	0/-
S&P500	0/-	Sell at the break of 921 targeting 908 initially, 898 finally. Keep S/L at 930.
Nasdaq100	0/-
Nikkei225	0/-

Futures

Commodities	Daily Stance	Comment
Gold (XAUUSD)	0	O/n rally petered out at 870.0. Look to revert back to mid-range 850.0 lvl
Silver (XAGUSD)	0	Capped at 11.50 in Asia. Look to range-trade 10.80-11.50
Oil (CLG9)	0	Front month crude continues to test resistance. Looking for a break of $53.00 for further upside.

FX Options

FX-Options	Comment
EURUSD	Vols paid up yesterday and EUR puts still seem to be the main interest. Flys are bid and RRs are consistently trading around par so don’t rule out a turnaround in Jan.
GBPUSD	Big UK bank buying low delta upside for end Jan, could suggest another reversal on horizon the horizon.
USDJPY	Yen vols softer today through the middle of the curve as spot stays closer to 9400. Seen some early Tokyo bid interest in 2 week 9600 area strikes.

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Entel, Gerdau, Lupatech, Mirgor, Usiminas: Latin Equity Preview

By Paulo Winterstein and James Attwood

Jan. 7 (Bloomberg) -- The following companies may have unusual price changes today in Latin America trading. Stock symbols are in parentheses and share prices reflect the previous close.

The MSCI Latin America Index rose 3.9 percent yesterday to 2,365.53.

Argentina

Mirgor Sacifia (MIRG AF): Argentine automobile sales fell the most in at least four years in December as a global financial crisis reduced exports and discouraged domestic sales. Mirgor, which makes climate-control systems for vehicles, rose 5.7 percent to 47 pesos.

Brazil

Cia. Siderurgica Nacional SA (CSNA3 BS), Gerdau SA (GGBR4 BS) and Usinas Siderurgicas de Minas Gerais SA (USIM5 BS): Falling vehicle sales and a drop in industrial production in Brazil are negative for Brazil’s three largest steelmakers, Fator Corretora said in a note to clients yesterday. CSN rose 5.9 percent to 36.59 reais. Gerdau rose 4.1 percent to 17.70 reais. Usiminas rose 1.9 percent to 31.17 reais.

Chile

Empresa Nacional de Telecomunicaciones SA (ENTEL CC): JPMorgan Chase & Co. recommends an “overweight” position in the stock. Entel, Chile’s second-biggest wireless phone company, rose 0.7 percent to 6,848.1 pesos.

Mexico

Grupo Aeroportuario del Pacifico SAB (GAPB MM) and Grupo Aeroportuario del Centro Norte SAB (OMAB MM): The largest and third-largest airport operators in Mexico, respectively, were cut to “hold” from “buy” by Banco Santander SA in a research note yesterday. Aeroportuario del Pacifico rose 0.5 percent to 30.84 pesos. Aeroportuario del Centro Norte fell 1.6 percent to 18.8 pesos.

To contact the reporters on this story: James Attwood in Santiago at jattwood3@bloomberg.net; Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net

Federal Currency is the Highlight

Daily Forex Fundamentals | Written by Crown Forex | Jan 07 09 08:19 GMT |

The Federal Reserve Bank released its minutes stating why they reduced interest rates to near zero showing that there are "substantial" risks for the economy to severely spiral downwards during December even with the interest rates near zero as the outlook for the U.S. economy remains weak. Today the U.S. economy is scheduled to release its ADP employment change with expectations showing that the service sector shed 493 employees from the prior 250 terminated employees. The dollar is slightly rising in the markets on anticipations that the Barack Obama's $775 billion package of tax reduction and government spending will revive the economy.

The euro is sliding versus the dollar as a result of speculations in the markets that the ECB will reduce interest rates next week to ease recession effects and avoid deflation worries. The European Union today will release its producer prices index (PPI) yearly reading with expectations showing will fall to 4.4% from 6.3% further supporting a rate cut by the central bank. The EUR/USD is currently trading at 1.3483 between the support of 1.3455 and the resistance of 1.3550 while recording a high of 1.3541 and a low of 1.3430.

The Bank of England is expected to slash interest rates tomorrow by 50 basis points leaving rates at 1.50 percent which is the lowest since 1694! The anticipations of a rate cut are pressuring the pound to lose strength in the markets. The GBP/USD is currently traded at 1.4908 while recording a high of 14940 and a low of 1.4861. The UK economy lacks major fundamental data while the momentum indicators are showing us that the pair is trading in an overbought area and if successfully reaches the resistance of 1.4995 it will reverse to head towards the support of 1.4872.

The yen is also falling versus the dollar as investors are waiting for the new President-elect Barack Obama to be sworn into the White House. The pair is currently trading at 93.80 between the support of 93.50 and the resistance of 94.15 while recording a high of 94.13 and a low of 93.36.

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.

Forex Technical Analytics

Daily Forex Technicals | Written by FOREX Ltd | Jan 07 09 08:07 GMT |

CHF

The pre-planned breakout variant for buyers has been realized with attainment of minimal assumed target. OsMA trend indicator having marked the attainment of weekly top with the features of overbought factor with consequent relative activity rise of bearish party gives grounds to presume further period of rate correction with an argument of planning priorities in favor of sells for today. Hence at present taking into account the ascending direction of indicator chart we assume a possibility of pair return to the nearest resistance range 1.1190/1.1210, where it is recommended to evaluate the activity development of both parties according to the charts of shorter time interval. For short-term sells on condition of formation of topping signals the targets will be 1.1120/40, 1.1040/60, 1.0980/1.1000 and/or further breakout variant up to 1.0920/40, 1.0860/80, 1.0800/20. An alternative for buyers will be above 1.1340 with the targets 1.1380/1.1400, 1.1460/80, 1.1580/1.1600.

GBP

The pre-planned buyers' positions from the key supports have been realized with attainment of assumed targets. OsMA trend indicator having marked the advantage of development of bullish party continues to support the priority of buyers' planning for today. Hence and because of current bearish development according to OsMA version, we assume a possibility of pair return to the nearest supports 1.4820/40, where it is recommended to evaluate the activity development according to the charts of shorter time interval. For short-term buyers' positions on condition of formation of topping signals the targets will be 1.4880/1.4900, 1.4960/80, 1.5020/40 and/or further breakout variant up to 1.5080/1.5100, 1.5160/80, 1.5280/1.5300. An alternative for sells will be below 1.4700 with the targets 1.4620/40, 1.4560/80, 1.4480/1.4500.

JPY

The pre-planned breakout variant for buyers has been realized with attainment of main assumed targets. OsMA trend indicator having marked the features of advantage of bearish party generally does not give grounds to choose a priority of sells' planning. Hence because of chosen strategy and presumptions about incompletion of rate correction period we assume a possibility of rate return to the nearest supports 93.00/20, where it is recommended to evaluate the activity development of both parties according to the charts of shorter time interval. For short-term buyers' positions on condition of formation of topping signals the targets will be 93.60/80, 94.20/40, 94.80/95.00 and/or further breakout variant up to 95.40/60, 96.00/20, 96.60/80. An alternative for sells will be below 92.00 with the targets 91.40/60, 90.80/91.00, 89.80/90.00.

EUR

The pre-planned breakout variant for sells has been realized with attainment of main assumed targets. OsMA trend indicator having marked the Low of current week with a formation of reversal bullish signal with consequent rise of buyers' activity because of chosen strategy gives grounds to choose a priority of buyers' planning for today. Hence and taking into account the descending direction of indicator chart, we assume a possibility of pair return to the nearest supports 1.3440/60, where it is recommended to evaluate the activity development according to the charts of shorter time interval. For short-term buyers' positions on condition of formation of topping signals the targets will be 1.3500/20, 1.3560/80, 1.3620/40 and/or further breakout variant up to 1.3680/1.3700, 1.3780/1.3800, 1.3920/40. An alternative for sells will be below 1.3380 with the targets 1.3320/40, 1.3260/80.

FOREX Ltd
www.forexltd.co.uk

Daily Technical Analysis

Daily Forex Technicals | Written by FX Instructor | Jan 07 09 03:01 GMT |

EURUSD Outlook

As I had expected, EURUSD made another bearish momentum yesterday. The pair hit my short target at 1.3380 even further, bottomed at 1.3313 but closed higher at 1.3498. We have another descending triangle both on hourly 4h chart supporting the bearish scenario targeting 1.3250 and 1.3125 area. A break below 1.3300 could also be considered as a breakdown of the descending triangle and could trigger further bearish momentum. CCI just cross -100 line up on 4h chart so watch out for a minor upside correctional move testing 1.3550 and 1.3625 resistance area.

EURUSD Daily Supports and Resistances:

S1= 1.3321
S2= 1.3144
S3= 1.2976
R1= 1.3666
R2= 1.3834
R3= 1.4011

GBPUSD Outlook

After breakout from the rectangle formation yesterday, the GBPUSD made another bullish movement. The pair topped at 1.4992 and closed at 1.4907. The bias is bullish in nearest term testing 1.5250 resistance area but neutral in longer term. A break above 1.5000 psychological level could trigger further bullish momentum. CCI just cross 100 line down on hourly chart suggesting a potential downside pressures testing 1.4750 support area.

GBPUSD Daily Supports and Resistances:

S1= 1.4610
S2= 1.4314
S3= 1.4123
R1= 1.5097
R2= 1.5288
R3= 1.5584

USDJPY Outlook

The USDJPY attempted to push higher yesterday, topped at 94.61 but further bullish momentum was rejected as the pair whipsawed to the downside and closed lower at 93.43. The bias remains bullish. Initial resistance at 94.61 (yesterday's high). A break above that level could trigger further bullish scenario towards 95.40 area. CCI in overbought area on 4h chart suggesting a potential downside pressures testing 93.20 and 92.83 support area.

USDJPY Daily Supports and Resistances:

S1= 92.64
S2= 91.85
S3= 90.87
R1= 94.41
R2= 95.39
R3= 96.18

USDCHF Outlook

The USDCHF made a limited bullish movement yesterday. After break the 1.1122 resistance, the pair attempted to push higher, topped at 1.1277 but closed lower at 1.1162. The bias should remains bullish and still targeting 1.1410. CCI just cross 100 line down on 4h chart so watch out for a potential downside corrective pressures testing 1.1122 and 1.0950 support area.

USDCHF Daily Supports and Resistances:

S1= 1.1063
S2= 1.0965
S3= 1.0858
R1= 1.1268
R2= 1.1375
R3= 1.1473

FX Instructor LLC
www.fxinstructor.com

The information has been prepared for information purposes only. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. This information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. FXInstructor LLC assumes no responsibilities for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person's reliance upon this information. FXInstructor LLC does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FXInstructor LLC shall not be liable for any indirect, incidental, or consequential damages including without limitation losses, lost revenues or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results

Eurozone Inflation Drops To 26 Year Low

Daily Forex Fundamentals | Written by Easy Forex | Jan 07 09 01:49 GMT |

U.S. Dollar Trading (USD) was mixed again today gaining against the EUR and JPY but losing ground to most others. US economic data was weak with Durable Goods Orders falling -1.5% in November and Pending Home sales dropping -4%. A bright note was the rebound in December Non Manufacturing ISM to 40.6 vs. 37 forecast. Also released last night were the FOMC minutes from the December meeting where the drastic cut to 0-0.25% Band interest rate decision was taken. The members noted that they were extremely worried about the possibility of a hard recession and wanted to act as quickly to stop deflationary forces building. In U.S. share markets, the NASDAQ was up 25 points (1.50%) and the Dow Jones was up 62 points (0.69%). Crude Oil closed down $-0.23 ending the New York session at $48.58 per barrel. Looking ahead, December ADP Employment is forecast at -473K vs. -250K.

The Euro (EUR) continued to slide in Europe as preliminary December Inflation showed a drop to 1.6%y/y well below the 2-3% band opening up the potential of more rate cuts. The pair bounced off support at 1.3300 rallying as FOMC minutes painted a bleak US picture. Overall the EUR/USD traded with a low of 1.3314 and a high of 1.3637 before closing the day at 1.3525. Looking ahead, December German Unemployment is forecast at 3.07Mn with an unemployment rate at unchanged at 7.5%. Also released Eurozone PPI output for November seen falling -1% to a 4.3% y/y rate.

The Japanese Yen (JPY) was sold aggressively against most currencies as the uptrend continued to be tested on the USD/JPY. The 94.00 level proved to have little resistance although as Stock came off highs in the US the pair slipped back below this rate. GBY/JPY enjoyed a very strong rally. Overall the USDJPY traded with a low of 92.86 and a high of 94.63 before closing the day around 93.50 in the New York session.

The Sterling (GBP) mixed data and a buoyant market mood allowed the pair to rally back towards 1.5000 on cable. Heavy GBP/JPY buying and EUR/GBP once again supported the pair. December PMI Services increased to 40.2 vs. 39 previously. Also released Nationwide House Prices which dropped -2.5% in December. Overall the GDP/USD traded with a low of 1.4506 and a high of 1.4992 before closing the day at 1.4950 in the New York session.

The Australian Dollar (AUD) was volatile but better supported ending at new 3 month highs above 0.7200. AUD/JPY made substantial gains as well with stocks making gains across the world. High Commodities continued to support. Overall the AUD/USD traded with a low of 0.7034 and a high of 0.7270 before closing the US session at 0.7230. Looking ahead, November Retail sales are forecast at -0.3% vs. 0.7% previously.

Gold (XAU) made small gains after rallying off lows in the US session. Oil rose above $50 a barrel and this helped the precious metal higher. Overall trading with a low of USD$839 and high of USD$870 before ending the New York session at USD$860 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

Australian Retail Sales Rose 0.1% in November on Food

By Jacob Greber

Jan. 7 (Bloomberg) -- Australian retail sales rose in November as consumers spent more on food.

The retail sales trend series increased 0.1 percent from October, when it advanced by 0.2 percent, the Bureau of Statistics said in Sydney today. The median forecast of 10 economists surveyed by Bloomberg News was for a 0.1 percent gain.

Australia’s economy expanded at the weakest pace in eight years in the three months through September as spending by households stalled. To stoke domestic spending, central bank Governor Glenn Stevens has cut borrowing costs by three percentage points since September, the biggest round of easing since the economy was last in recession in 1991.

“We suspect sales volumes were boosted in November by the aggressive discounting seen among retailers, coupled with lower interest rates and falling petrol prices,” said Helen Kevans, an economist a JPMorgan Chase & Co. in Sydney.

“Households are facing considerable headwinds, however,” she added. “The labor market has started to loosen, credit availability has fallen and precautionary saving has risen.”

Spending on food rose 0.7 percent in November, while sales at department stores dropped 0.4 percent, the report showed. Consumers also spent 0.3 percent less on clothing.

The seasonally adjusted measure of retail sales climbed 0.4 percent in November from the previous month. Economists had expected a 0.4 percent decline.

Sales Slow

Australia’s dollar traded at 72.04 U.S. cents at 12:21 p.m. in Sydney from 71.92 cents before the figures were released. The two-year government bond yield rose 3 basis points, or 0.03 percentage point, to 2.99 percent.

Retail sales gained by an average of 0.1 percent a month in 2008, according to the bureau’s trend series, down from 0.6 percent monthly growth in 2007.

The statistics bureau shifted its focus to trend retail sales after it cut the sample size of the survey by two thirds in July to reduce costs. The bureau said today it will reinstate the full survey for December and that it increased its sample size for November.

The government distributed A$8.9 billion ($6.4 billion) at the start of last month to the elderly and families after retailers including David Jones Ltd., the nation’s second- biggest department store chain, reported waning sales.

Outlook Worsens

David Jones Chief Executive Officer Mark McInnes said in November that the outlook for the rest of fiscal 2009 is worse than that experienced by the company in the last recession of 1990 to 1991.

A report yesterday predicted sales of new cars and trucks will fall 13 percent this year to 880,000 vehicles. Sales dropped 3.6 percent in 2008 to 1.01 million vehicles from the previous 12 months, the Federal Chamber of Automotive Industries said.

“The Reserve Bank has further work to do although we do expect a more modest pace of easing in the months ahead,” said Su-Lin Ong, senior economist at RBC Capital Markets Ltd. in Sydney. She expects a half-point reduction in the benchmark rate to 3.75 percent on Feb. 3.

To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net

Indonesia May Lower Key Interest Rate for Second Month Running

By Aloysius Unditu and Michael Munoz

Jan. 7 (Bloomberg) -- Indonesia’s central bank will probably cut its benchmark interest rate for a second straight meeting after inflation cooled to a six-month low.

Bank Indonesia may lower its reference rate by a quarter percentage point to 9 percent, according to 14 of 16 economists in a Bloomberg News survey. The decision is due around noon in Jakarta today.

Policy makers across Asia are cutting borrowing costs to help sustain growth as the global recession reduces demand for the region’s exports. Finance Minister Sri Mulyani Indrawati expects Indonesia’s economy to expand about 5 percent this year, the weakest pace since 2002.

“The domestic economy is slowing,” said Destry Damayanti, chief economist at PT Mandiri Sekuritas in Jakarta. “Further rate cuts are needed to bolster the growth momentum.”

Governor Boediono and his seven board colleagues unexpectedly lowered Bank Indonesia’s key rate to 9.25 percent from 9.5 percent on Dec. 4, the first cut in a year.

The Reserve Bank of India on Jan. 2 reduced its repurchase rate to 5.5 percent from 6.5 percent and the reverse-repurchase rate to 4 percent from 5 percent. Bangko Sentral ng Pilipinas cut its benchmark interest rate in December for the first time in 11 months.

Bank Indonesia may refrain from “aggressive” rate cuts on concern it could weaken the nation’s currency, said David E. Sumual, an economist at PT Bank Central Asia in Jakarta. The rupiah fell 13.8 percent against the dollar last year.

Slower inflation has given Indonesia’s central bank scope to trim borrowing costs. Consumer prices rose 11.1 percent in December from a year earlier, after the government last month twice reduced domestic fuel prices.

Growth in Southeast Asia’s largest economy may be aided by a government stimulus package and election-year spending, Sri Mulyani said in a Bloomberg News interview yesterday.

President Susilo Bambang Yudhoyono, who is eligible for re -election this year, this week announced plans to spend an extra 50 trillion rupiah ($4.5 billion) to help sustain growth.

To contact the reporters on this story: Aloysius Unditu in Jakarta at aunditu@bloomberg.net

N.Z. Annual Trade Deficit Narrows to NZ$5.16 Billion

By Tracy Withers

Jan. 7 (Bloomberg) -- New Zealand’s annual trade deficit unexpectedly narrowed in November as a domestic recession curbed demand for imports.

The gap narrowed to NZ$5.16 billion ($3.1 billion) in the 12 months ended Nov. 30 from NZ$5.27 billion in the year through October, Statistics New Zealand said in Wellington today. The median estimate in a Bloomberg survey of five analysts was for a NZ$5.49 billion shortfall.

New Zealand’s economy was in a recession last year as a housing slump and the global financial crisis curbed spending on imported cars and computers. Consumer spending on debit and credit cards fell by the most in almost three years in November, according to a government report this week.

“Demand for imports will remain subdued as domestic demand flags amid deteriorating housing and labor-market conditions,” said Helen Kevans, an economist at JPMorgan Chase & Co. in Sydney.

New Zealand’s dollar bought 59.72 U.S. cents at 4:05 p.m. in Wellington from 59.77 cents immediately before the report.

Smiths City Group, a Christchurch-based furniture and appliance retailer, last month said sales fell in November amid a slump in consumer confidence.

Imports rose 5.2 percent in November from a year earlier to NZ$4.21 billion, the slowest annual gain since January, the statistics agency said.

Cars, Petroleum

Car imports plunged 52 percent from a year earlier, the agency said. Petroleum and jet fuel imports also declined.

The figures aren’t adjusted for inflation and reflect falling prices for imports as well as actual shipments.

Crude oil imports increased because of higher volumes. The price paid by oil importers fell 29 percent from October after global crude prices dropped to less than $50 barrel for the first time since May 2005 on Nov. 20.

Imports of fertilizer and other chemicals rose amid an increase in prices, the agency said.

Exports gained 9.4 percent in November from a year earlier to NZ$3.69 billion.

Sales of milk powder, butter and cheese, which make up almost one-fifth of overseas shipments, rose 10 percent in November from a year earlier.

Oil Exports

The value of crude oil sales fell 60 percent and aluminum exports also declined.

“Weak global demand and falling commodity prices will mean that export growth will moderate,” said Kevans.

The U.S., Japanese, U.K. and euro-area economies will all shrink in 2009, the Organization for Economic Cooperation and Development said last month.

Prices of butter, meat and other commodities dropped 7.4 percent in December from November, extending their decline last year to 25 percent, according to an index published today by ANZ National Bank Ltd.

Economists monitor the rolling, 12-month trade balance because of volatility in the month-on-month figures, which aren’t seasonally adjusted.

In November, there was a NZ$520 million trade deficit compared with a NZ$628 million gap a year earlier. Economists expected a NZ$775 million monthly deficit.

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

N.Z. Workers Less Optimistic About Job Prospects

By Tracy Withers

Jan. 7 (Bloomberg) -- New Zealander workers are less optimistic about the outlook for employment and earnings, according to an index compiled by Westpac Banking Corp. and McDermott Miller Ltd.

The fourth-quarter employment confidence index slumped to a record-low 104 from 121.2 in the third quarter, according to a report released in Wellington today. A reading above 100 indicates most people are optimistic about employment prospects.

Confidence collapsed after New Zealand’s economy slumped into a recession last year and the jobless rate rose to a five- year high. Unemployment will probably keep rising in 2009 as the world’s largest economies contract, crimping exports and company profits.

“Employees have finally succumbed to the negativity that has pervaded the economy over the past year,” said Donna Purdue, senior economist at Westpac in Wellington. “Demand for workers has been satisfied and redundant workers will find it increasingly difficult to obtain work.”

Companies expect to fire more workers while profit and investment intentions are near record lows, according to an ANZ National Bank Ltd. survey published last month.

Westpac expects the jobless rate will rise to about 6 percent later this year from 4.2 percent in the third quarter of 2008.

Job Security

A net 26 percent of employees say jobs are hard to get compared with 25 percent who said jobs were plentiful in the third quarter, Westpac said today. The net number subtracts pessimists from optimists.

More New Zealanders expect jobs will be harder to get in a year, while job security has slumped to 1.8 percent from 12.2 percent in the third quarter.

Fewer of the 1,056 employees questioned expect wages will be higher in a year. The survey was conducted between Dec. 1 and Dec. 14 and has a margin of error of 2.5 percent.

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

Asia to Have 'V-shaped' Recovery in 2010, BNP Paribas Says

By Jason Clenfield

Jan. 7 (Bloomberg) -- Asian economic growth, after slowing this year, will probably rebound in 2010 as government spending and interest rate cuts spur demand, BNP Paribas SA said.

Asia, excluding Japan and China, will grow 4.3 percent next year after a 1.4 percent expansion in 2009, Richard Iley, a New York-based economist at the bank, wrote in a report. Public spending in China, Taiwan and South Korea, combined with increasingly loose monetary policy, should help to drive a “reasonably vibrant” recovery, he said.

Asian governments are planning more measures to boost growth as a slump in global demand hurts exports, deepening the region's economic slowdown. South Korea has pledged about $30 billion in extra spending and tax cuts since September. China may follow a 4 trillion yuan ($585 billion) spending package announced November with a second plan as early as this month.

“The scale of the global policy response -- monetary and fiscal -- should ensure the recovery is more V than U-shaped,” Iley said. “In many instances, economies will experience a 6 to 7 percentage point swing in growth rates.”

Iley said economic growth will worsen this year before the 2010 improvement, in a report titled ``Asia: Apocalypse Now.''

``Global industrial production appears to have collapsed at a 30-40 percent annualized rate since September,'' he said, referring to the ``biggest demand shock since the 1930s.''

Forecast Cut

As a result of the drop in output, BNP Paribas cut its 2008 forecast for Asian economic growth to 1.4 percent from a November prediction of 3.9 percent. BNP Paribas' definition of the region includes Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand.

Iley said China will grow about 7.7 percent in 2009, helped by the November fiscal package ``worth an eye-popping'' 14 percent of gross domestic product over two years. The economy probably expanded 9.3 percent in 2008, slowing from 11.9 percent the year before. He predicted 8.1 percent growth in 2010.

Hong Kong will grow 3.5 percent in 2010 after shrinking 3.4 percent this year, the bank predicted. Taiwan will expand 3.9 percent after contracting 3.3 percent; Singapore will grow 4.4 percent after declining 2.8 percent this year. South Korea will expand 3.2 percent, rebounding from a 2.4 percent contraction.

To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net