Economic Summary
Markets had to juggle weak economic data, another pledge from Fed Chairman
Bernanke to act in a "timely" manner, and news that FNMA and FHLMC's regulator
will remove the agencies' portfolio caps on March 1. In a volatile session,
stocks and Treasury coupon securities ended mixed with small changes. The
dollar hit a new record low against the euro and lost more ground versus the
yen.
New orders for durable goods fell 5.3% in January, following a 4.4% gain in
December (revised from +5.0%). The data were weaker than the consensus call of
-4.0%. Nondefense aircraft orders (-30.5%) were a significant negative
influence, as expected. Excluding transportation, orders were down 1.6%. A
positive aspect of the report was that January nondefense capital goods
shipments ex aircraft, which factor into the business spending component of
GDP, stood an annualized 5.1% above the Q4 average, little changed from the
Q4/Q3 growth rate of 5.0%. While this did not rule out a slowdown in business
spending growth in Q1, it did paint a less dire picture than some of the
regional manufacturing surveys have painted in the past couple of months.
New home sales fell by 2.8% in January to an annualized 588k, below the
consensus call of 600k. January's was the lowest level of sales since February
1995. Net revisions to November and December totalled an inconsequential -3k.
Inventories of new homes rose to 479kin January, and median sales prices are
down some 15% from a year ago. These disappointing sales, supply, and price
data underscored the fact that we have not yet seen a bottom in the housing
market contraction.
Fed Chairman Bernanke presented his semi-annual testimony before House
Financial Services Committee. As he did on February 14 in testimony before the
Senate Banking Committee, Bernanke emphasized that "downside risks to growth
remain" and that the FOMC "will act in a timely manner as needed to support
growth..." In fact, on these points, the Chairman's wording was identical in
both testimonies. Bernanke again made it clear that the FOMC is prepared to
ease more if economic conditions deteriorate or if credit conditions tighten
further. Since we have been seeing further softening in economic activity, we
expect that the FOMC will cut the funds rate by another 50bp to 2.50% at the
March 18 policy meeting.
Growth clearly is the more worrisome variable on the Fed's radar screen than
inflation right now, but Bernanke's text today also suggested that he has
become mildly more concerned over the past couple of weeks about inflation. In
a change from his February 14 text, Bernanke warned today that "upside risks
to the inflation projection are also present..." Moreover, he said the FOMC
sees "slightly greater upside risks to the projections of both overall and
core inflation than we saw last month."
Economic Outlook
Initial unemployment claims for the week ended February 23 will be released on
Thursday at 8:30 (Consensus 350k). Claims in the previous were 349k, in line
with the consensus forecast. The four-week average for claims climbed to 361k,
the highest level since early October 2005 (in the aftermath of Hurricane
Katrina). A claims figure in line with the consensus forecast would lower the
four-week average to about 354k.
Thursday, February 28, 2008
Commodities Daily - 28th Feb 2008
Spotlight: Crude oil fell from record after a government report showed that U.S. inventories increased a seventh week. Wheat surged to a record in Chicago as prices seesawed from the biggest gain ever to the largest decline and then back again. The European Union will ease restrictions on Brazilian beef imports. Corn and soybeans futures declined as record prices may boost plantings. Gold rose to a record.
Energy: Crude oil fell from a record after a government report showed that U.S. inventories increased a seventh week as the economy of the world's biggest energy-consuming country slows. Gasoline futures fell after an Energy Department report showed that supplies rose for the 16th consecutive week to the highest in 14 years. Natural gas fell on outlook for warmer weather and lower demand.
Agriculture: Wheat surged to a record in Chicago as prices seesawed from the biggest gain ever to the largest decline and then back again. Corn fell for a second straight session, and soybeans dropped on signs U.S. crop planting will increase, boosting grain and oilseed output and building inventories.
Coffee rose the most in a week reaching a 10-year high in London as speculators hedge against a declined in the Dollar. Sugar rose to the highest in 18 months on speculation investors seek lagging commodities. Separately, cotton fell from 4-year high as prices hurt exports and falling corn and soybean futures damped speculation of reduced cotton planting.
Precious Metals: Gold and silver futures rose as the dollar fell to the lowest ever against the euro, boosting the appeal of the metal as an alternative investment. Platinum futures fell after orders for U.S. durable goods in January dropped.
Industrial Metals: Copper jumped to the highest price since May 2006 as a decline in the dollar sparked purchases of commodities by investors as a hedge against inflation.
Energy: Crude oil fell from a record after a government report showed that U.S. inventories increased a seventh week as the economy of the world's biggest energy-consuming country slows. Gasoline futures fell after an Energy Department report showed that supplies rose for the 16th consecutive week to the highest in 14 years. Natural gas fell on outlook for warmer weather and lower demand.
Agriculture: Wheat surged to a record in Chicago as prices seesawed from the biggest gain ever to the largest decline and then back again. Corn fell for a second straight session, and soybeans dropped on signs U.S. crop planting will increase, boosting grain and oilseed output and building inventories.
Coffee rose the most in a week reaching a 10-year high in London as speculators hedge against a declined in the Dollar. Sugar rose to the highest in 18 months on speculation investors seek lagging commodities. Separately, cotton fell from 4-year high as prices hurt exports and falling corn and soybean futures damped speculation of reduced cotton planting.
Precious Metals: Gold and silver futures rose as the dollar fell to the lowest ever against the euro, boosting the appeal of the metal as an alternative investment. Platinum futures fell after orders for U.S. durable goods in January dropped.
Industrial Metals: Copper jumped to the highest price since May 2006 as a decline in the dollar sparked purchases of commodities by investors as a hedge against inflation.
Financials Daily - 28th Feb 2008
US: Most U.S. stocks fell for the first time in four days as a slump in utility and drugmaker shares overshadowed speculation Federal Reserve Chairman Ben S. Bernanke will cut interest rates to stave off a recession.
Europe: European stocks fell for the first time this week after record oil prices and earnings reports from HBOS Plc and Bouygues SA reignited concern that profits will decline as inflation accelerates.
Asia: Asian stocks rose, sending the region's benchmark to a six-week high, as a rally in commodity prices and profit reports at Standard Chartered Plc and Marui Group Co. stoked optimism earnings will endure a global slowdown.
Commodities: Crude oil was little changed below $100 after a government report showed that U.S. inventories increased for a seventh week as the economy of the world's biggest energy-consuming country slows. Gold futures rose to a record $967.70 an ounce as the dollar fell to the lowest ever against the euro, boosting the appeal of the metal as an alternative investment. Silver extended a rally to the highest since 1980.
Currencies: The dollar traded at a record low below $1.51 per euro after Federal Reserve Chairman Ben S. Bernanke signaled he's ready to lower interest rates again to support the weakening U.S. economy.
Source: Bloomberg
Europe: European stocks fell for the first time this week after record oil prices and earnings reports from HBOS Plc and Bouygues SA reignited concern that profits will decline as inflation accelerates.
Asia: Asian stocks rose, sending the region's benchmark to a six-week high, as a rally in commodity prices and profit reports at Standard Chartered Plc and Marui Group Co. stoked optimism earnings will endure a global slowdown.
Commodities: Crude oil was little changed below $100 after a government report showed that U.S. inventories increased for a seventh week as the economy of the world's biggest energy-consuming country slows. Gold futures rose to a record $967.70 an ounce as the dollar fell to the lowest ever against the euro, boosting the appeal of the metal as an alternative investment. Silver extended a rally to the highest since 1980.
Currencies: The dollar traded at a record low below $1.51 per euro after Federal Reserve Chairman Ben S. Bernanke signaled he's ready to lower interest rates again to support the weakening U.S. economy.
Source: Bloomberg
Wednesday, February 27, 2008
Commodities Daily - 27th Feb 2008
Spotlight: Crude oil rose above $100 a barrel to record close after the Dollar fell. Wheat climbed above $12 a bushel for the first time in Chicago. Notably, U.S. steel imports rose 33 percent in January. Precious metals: gold and platinum climbed in New York on inflation concerns.
Energy: Crude oil rose above $100 a barrel as the U.S. dollar fell to an all-time low against the euro, prompting some traders to invest in commodities as a hedge against inflation. Besides, heating oil futures rose to a record for a sixth consecutive day on signs cold weather may increase demand. Natural gas was little changed, amid an outlook for supplies to decline.
Agriculture: Wheat climbed above $12 a bushel for the first time in Chicago, as investors poured money into agricultural commodities on signs that crop production isn't keeping pace with demand.
Sugar rallied to the highest price in more than 18 months as sweetener is seen as ``cheap'' compared with other agricultural commodities that are reaching records. Coffee fell the most in a month as speculative demand eased following a rally to the highest price in 10 years. Cocoa rose, extending a rally to the highest price since 1984, on supply concerns and the U.K. pound's gained.
Precious Metals: Gold, silver, platinum and palladium futures rose after the dollar approached a record low against the euro, increasing demand for the precious metals as hedges against inflation.
Industrial Metals: Copper rose on speculation that increasing demand from emerging markets such as China and India will erode inventories.
Energy: Crude oil rose above $100 a barrel as the U.S. dollar fell to an all-time low against the euro, prompting some traders to invest in commodities as a hedge against inflation. Besides, heating oil futures rose to a record for a sixth consecutive day on signs cold weather may increase demand. Natural gas was little changed, amid an outlook for supplies to decline.
Agriculture: Wheat climbed above $12 a bushel for the first time in Chicago, as investors poured money into agricultural commodities on signs that crop production isn't keeping pace with demand.
Sugar rallied to the highest price in more than 18 months as sweetener is seen as ``cheap'' compared with other agricultural commodities that are reaching records. Coffee fell the most in a month as speculative demand eased following a rally to the highest price in 10 years. Cocoa rose, extending a rally to the highest price since 1984, on supply concerns and the U.K. pound's gained.
Precious Metals: Gold, silver, platinum and palladium futures rose after the dollar approached a record low against the euro, increasing demand for the precious metals as hedges against inflation.
Industrial Metals: Copper rose on speculation that increasing demand from emerging markets such as China and India will erode inventories.
US Markets Closing Comments - 26th Feb 2008
Economic Summary
Evidence of accelerating inflation, falling home prices, and faltering
confidence could not keep equities down today. While closing off their highs,
equities rallied on a $15bn stock buyback plan from IBM and on optimism the
market has adequately priced in the risk of a recession. Treasuries did react
to the poor economic news with a rally of their own. And the dollar fell in FX
trading, hitting a new record intraday low of 1.4970 against the euro.
The January Producer Price Index surged 1.0% (+7.4% YoY), beating market
expectations of a +0.4% rise. Both food and energy prices bounded past
estimates. Even excluding the volatile food and energy components, the index
rose more than anticipated. The core PPI was up 0.4% (+2.3% YoY). Accelerating
inflation will complicate the Fed's monetary policy going forward but should
not keep the FOMC from cutting rates again as soon as its March 18 policy
meeting. We still look for a 50bp cut to 2.5% on the funds rate target.
The 20-city S&P/Case-Shiller home price index fell 2.2% for December (-9.1%
YoY), and the national index was down 8.9% YoY in Q4 (versus -4.6% in Q3).
This is generally considered a superior index of home prices because it
attempts to adjust for the quality of homes. Recent readings are the lowest in
the history of the index. By now it is painfully clear that consumers cannot
count on rising home equity to supplement their incomes and support their
discretionary spending.
February Consumer Confidence plunged 12.3 points to 75.0, a five-year low. The
expectations index, at 57.9 (versus 69.3 in Jan) was the lowest since January
1991, two recessions ago. The present situation index fell to 100.6 from 114.3
in January; it hadn't been this low since November 2004. These data will
certainly help justify further rate cuts from the Fed, even in light of the
stronger inflation data we've been seeing.
The Richmond Fed manufacturing index was not quite as bad as anticipated, at
-5 in February versus -12 in January. Shipments, which had plunged to an index
level of -17 in January, recovered to -4 in February. Employment fell to -5
from January's -2. These data continued to signal contraction in manufacturing
activity.
The OFHEO House Price Index fell 1.3% in Q4, following a 0.3% decline in Q3.
In YoY terms, prices as measured by OFHEO were -0.3% in Q4 (versus +1.9% in
Q3), the first YoY downturn in this index in the current housing market
contraction.
Economic Outlook
January's new orders for durable goods will be reported at 8:30 on Wednesday
(Forecast -6.0%, Consensus -4.0%). Durable goods orders in December surprised
on the upside with a 5.0% jump, but we should see an offset in January.
Reports from Boeing suggest that orders for all civilian aircraft fell by over
30% in January. We look for a decline of 6.0% in overall January durable goods
orders. Excluding transportation goods, new orders probably fell by 1.5% after
their 2.3% rise in December.
Evidence of accelerating inflation, falling home prices, and faltering
confidence could not keep equities down today. While closing off their highs,
equities rallied on a $15bn stock buyback plan from IBM and on optimism the
market has adequately priced in the risk of a recession. Treasuries did react
to the poor economic news with a rally of their own. And the dollar fell in FX
trading, hitting a new record intraday low of 1.4970 against the euro.
The January Producer Price Index surged 1.0% (+7.4% YoY), beating market
expectations of a +0.4% rise. Both food and energy prices bounded past
estimates. Even excluding the volatile food and energy components, the index
rose more than anticipated. The core PPI was up 0.4% (+2.3% YoY). Accelerating
inflation will complicate the Fed's monetary policy going forward but should
not keep the FOMC from cutting rates again as soon as its March 18 policy
meeting. We still look for a 50bp cut to 2.5% on the funds rate target.
The 20-city S&P/Case-Shiller home price index fell 2.2% for December (-9.1%
YoY), and the national index was down 8.9% YoY in Q4 (versus -4.6% in Q3).
This is generally considered a superior index of home prices because it
attempts to adjust for the quality of homes. Recent readings are the lowest in
the history of the index. By now it is painfully clear that consumers cannot
count on rising home equity to supplement their incomes and support their
discretionary spending.
February Consumer Confidence plunged 12.3 points to 75.0, a five-year low. The
expectations index, at 57.9 (versus 69.3 in Jan) was the lowest since January
1991, two recessions ago. The present situation index fell to 100.6 from 114.3
in January; it hadn't been this low since November 2004. These data will
certainly help justify further rate cuts from the Fed, even in light of the
stronger inflation data we've been seeing.
The Richmond Fed manufacturing index was not quite as bad as anticipated, at
-5 in February versus -12 in January. Shipments, which had plunged to an index
level of -17 in January, recovered to -4 in February. Employment fell to -5
from January's -2. These data continued to signal contraction in manufacturing
activity.
The OFHEO House Price Index fell 1.3% in Q4, following a 0.3% decline in Q3.
In YoY terms, prices as measured by OFHEO were -0.3% in Q4 (versus +1.9% in
Q3), the first YoY downturn in this index in the current housing market
contraction.
Economic Outlook
January's new orders for durable goods will be reported at 8:30 on Wednesday
(Forecast -6.0%, Consensus -4.0%). Durable goods orders in December surprised
on the upside with a 5.0% jump, but we should see an offset in January.
Reports from Boeing suggest that orders for all civilian aircraft fell by over
30% in January. We look for a decline of 6.0% in overall January durable goods
orders. Excluding transportation goods, new orders probably fell by 1.5% after
their 2.3% rise in December.
Financials Daily - 27th Feb 2008
US: U.S. stocks gained for a third day as International Business Machines Corp.'s $15 billion buyback, higher retail earnings and rising commodity prices bolstered confidence profits will hold up even as the economy slows.
Europe: European stocks rose for a second day after the biggest bond insurers kept their top debt ratings, increasing speculation that banks will avert another $70 billion in credit losses.
Asia: Asian stocks advanced, led by financial companies, after the world's largest bond insurers retained top credit ratings, easing concern that global economic growth will slow on new credit losses.
Commodities: Crude oil traded near a record in New York as the U.S. dollar fell to an all-time low against the euro, prompting some traders to invest in commodities as a hedge against inflation. Gold futures rose on speculation a weakening dollar and the surging cost of raw materials will boost demand for the precious metal as a hedge against inflation. Silver jumped 3.5 percent.
Currencies: The dollar fell to an all-time low of $1.50 per euro on speculation Federal Reserve Chairman Ben S. Bernanke today will indicate the U.S. central bank is prepared to keep lowering interest rates.
Source: Bloomberg
Europe: European stocks rose for a second day after the biggest bond insurers kept their top debt ratings, increasing speculation that banks will avert another $70 billion in credit losses.
Asia: Asian stocks advanced, led by financial companies, after the world's largest bond insurers retained top credit ratings, easing concern that global economic growth will slow on new credit losses.
Commodities: Crude oil traded near a record in New York as the U.S. dollar fell to an all-time low against the euro, prompting some traders to invest in commodities as a hedge against inflation. Gold futures rose on speculation a weakening dollar and the surging cost of raw materials will boost demand for the precious metal as a hedge against inflation. Silver jumped 3.5 percent.
Currencies: The dollar fell to an all-time low of $1.50 per euro on speculation Federal Reserve Chairman Ben S. Bernanke today will indicate the U.S. central bank is prepared to keep lowering interest rates.
Source: Bloomberg
Tuesday, February 26, 2008
Commodities Daily - 26th Feb 2008
Spotlight: Crude oil continue its upward trend on forecasts that fuel consumption will rise because of cold weather in the U.S. Cocoa rose to highest since 1984 on Pound rally and fund demand in agriculture commodities. Notably, coffee rose to 10-year high on demand for inflation hedge. Gold falls as U.S. pledges support for some IMF Bullion sales. Platinum falls as sales may decline after 42 percent rally in 2008.
Energy: Crude oil rose on forecasts that fuel consumption will rise because of cold weather in the northern half of the country. Natural gas rose to more than a two-year high on speculation of tight supply. Besides, heating oil futures rose to a fifth consecutive record after supplies dropped and forecasts showed below-normal temperatures.
Agriculture: Corn and soybeans surged to records and wheat rallied the most allowed by U.S. exchanges on signs that global crop production is not keeping pace with demand for food, animal feed and biofuels.
Coffee rose to a 10-year high as investors bought commodities as safeguards against inflation. Cotton rose reaching the highest since 2003, on speculation that record corn and soybean prices will encourage a switch in crops. Besides, cocoa rose extending a rally to the highest since 1984, as the U.K. pound gained against the dollar as well as fund demand in agriculture commodities.
Precious Metals: Gold fell the most in almost two weeks after the U.S. said it would back ``limited'' sales of bullion reserves by the International Monetary Fund, the third-largest holder of the precious metal. Besides, platinum fell in on concern the metal is too expensive for consumers after a 42 percent rally in 2008.
Industrial Metals: Copper fell from the highest since May 2006 as inventories rose, heightening speculation that supplies will outpace demand this year.
(Source: Bloomberg)
Energy: Crude oil rose on forecasts that fuel consumption will rise because of cold weather in the northern half of the country. Natural gas rose to more than a two-year high on speculation of tight supply. Besides, heating oil futures rose to a fifth consecutive record after supplies dropped and forecasts showed below-normal temperatures.
Agriculture: Corn and soybeans surged to records and wheat rallied the most allowed by U.S. exchanges on signs that global crop production is not keeping pace with demand for food, animal feed and biofuels.
Coffee rose to a 10-year high as investors bought commodities as safeguards against inflation. Cotton rose reaching the highest since 2003, on speculation that record corn and soybean prices will encourage a switch in crops. Besides, cocoa rose extending a rally to the highest since 1984, as the U.K. pound gained against the dollar as well as fund demand in agriculture commodities.
Precious Metals: Gold fell the most in almost two weeks after the U.S. said it would back ``limited'' sales of bullion reserves by the International Monetary Fund, the third-largest holder of the precious metal. Besides, platinum fell in on concern the metal is too expensive for consumers after a 42 percent rally in 2008.
Industrial Metals: Copper fell from the highest since May 2006 as inventories rose, heightening speculation that supplies will outpace demand this year.
(Source: Bloomberg)
Financials Daily - 26th Feb 2008
US: U.S. stocks staged their biggest rally this month after Standard & Poor's kept AAA debt ratings for the nation's largest bond insurers, easing concern credit losses will extend the worst earnings slump since 2001.
Europe: European stocks gained, led by financial companies, on speculation bond insurers will avoid a cut in their credit ratings and limit further losses related to subprime mortgages.
Asia: Asian stocks rose, led by financial companies and electronics exporters, on speculation U.S. banks will prevent subprime losses from slowing global economic growth.
Commodities: Crude oil was little changed in New York after gaining for the past two sessions on forecasts that fuel consumption will rise because of cold weather in the northern half of the U.S. Gold fell the most in almost two weeks after the U.S. said it would back ``limited'' sales of bullion reserves by the International Monetary Fund, the third-largest holder of the precious metal.
Currencies: The yen fell to a two-month low against the New Zealand dollar after MBIA Inc. said it plans to split its bond insurance business, encouraging traders to buy higher-yielding assets funded with loans in Japan.
Source: Bloomberg
Europe: European stocks gained, led by financial companies, on speculation bond insurers will avoid a cut in their credit ratings and limit further losses related to subprime mortgages.
Asia: Asian stocks rose, led by financial companies and electronics exporters, on speculation U.S. banks will prevent subprime losses from slowing global economic growth.
Commodities: Crude oil was little changed in New York after gaining for the past two sessions on forecasts that fuel consumption will rise because of cold weather in the northern half of the U.S. Gold fell the most in almost two weeks after the U.S. said it would back ``limited'' sales of bullion reserves by the International Monetary Fund, the third-largest holder of the precious metal.
Currencies: The yen fell to a two-month low against the New Zealand dollar after MBIA Inc. said it plans to split its bond insurance business, encouraging traders to buy higher-yielding assets funded with loans in Japan.
Source: Bloomberg
Monday, February 25, 2008
Commodities Daily - 25th Feb 2008
Spotlight: Bloomberg surveys showed crude oil and natural gas may fall this week on speculation inventories are ample to meet demand. Copper fell from the highest in almost two years in London; robusta coffee headed for a fifth weekly advance. Gold headed for its biggest weekly gain in 19 months. Platinum fell.
Energy: Crude oil for April delivery rose to $98.81 a barrel last week on the New York Mercantile Exchange. Besides, Bloomberg survey showed crude oil may fall this week because of rising U.S. inventories and weakening demand as refineries perform seasonal maintenance. However, heating oil futures rose to a record after supplies dropped and the weather turned colder.
Agriculture: Soybean and soybean oil futures in Chicago surged on speculation that global demand for food, animal feed and biofuels will exceed production this year. Corn also reached its highest ever, and wheat surged.
Robusta coffee headed for a fifth weekly advance in London, the longest rally in more than eight months, on signs farmers are hoarding crops and speculators are increasing purchases in anticipation of further price gains. Cocoa surged the most since October, on speculation that dry weather may harm the harvest in Ivory Coast, the world's biggest producer.
Precious Metals: Gold headed for its biggest weekly advance in 19 months as lower U.S. interest rates may revive investor demand for the metal as an alternative to the dollar. Platinum fell from a record.
Industrial Metals: Copper fell from the highest in almost two years in London as higher prices attracted more metal into stockpiles and deterred buying in China, the world's largest user of the metal. Aluminum fell.
(Source: Bloomberg)
Energy: Crude oil for April delivery rose to $98.81 a barrel last week on the New York Mercantile Exchange. Besides, Bloomberg survey showed crude oil may fall this week because of rising U.S. inventories and weakening demand as refineries perform seasonal maintenance. However, heating oil futures rose to a record after supplies dropped and the weather turned colder.
Agriculture: Soybean and soybean oil futures in Chicago surged on speculation that global demand for food, animal feed and biofuels will exceed production this year. Corn also reached its highest ever, and wheat surged.
Robusta coffee headed for a fifth weekly advance in London, the longest rally in more than eight months, on signs farmers are hoarding crops and speculators are increasing purchases in anticipation of further price gains. Cocoa surged the most since October, on speculation that dry weather may harm the harvest in Ivory Coast, the world's biggest producer.
Precious Metals: Gold headed for its biggest weekly advance in 19 months as lower U.S. interest rates may revive investor demand for the metal as an alternative to the dollar. Platinum fell from a record.
Industrial Metals: Copper fell from the highest in almost two years in London as higher prices attracted more metal into stockpiles and deterred buying in China, the world's largest user of the metal. Aluminum fell.
(Source: Bloomberg)
Financials Daily - 25th Feb 2008
US: U.S. stocks rallied in the final 30 minutes of trading, helping the market post its second straight weekly gain, as speculation bond insurer Ambac Financial Group Inc. may be rescued overcame concern bank earnings will falter.
Europe: European stocks fell, trimming their second straight weekly advance, after RWE AG reported its first loss since 2000 and Morgan Stanley cut its profit forecast for Renault SA.
Asia: Asian stocks fell, giving the region's benchmark its seventh weekly drop this year, on renewed concern the U.S. will enter a recession. Toyota Motor Corp., the second-largest carmaker in the U.S. by sales, had its longest losing streak in almost five weeks, and Samsung Electronics Co. declined after a U.S. manufacturing index slumped.
Commodities: Crude oil rose for a second day in New York as Turkey continued its military assault against rebel bases in northern Iraq, OPEC's sixth-largest oil producer. Gold may rise for a second straight week, extending a rally to a record, as higher energy costs boost demand for a hedge against inflation.
Currencies: The dollar traded near a three-week low against the euro on concerns an industry report today will show the housing recession in the U.S. is deepening.
Source: Bloomberg
Europe: European stocks fell, trimming their second straight weekly advance, after RWE AG reported its first loss since 2000 and Morgan Stanley cut its profit forecast for Renault SA.
Asia: Asian stocks fell, giving the region's benchmark its seventh weekly drop this year, on renewed concern the U.S. will enter a recession. Toyota Motor Corp., the second-largest carmaker in the U.S. by sales, had its longest losing streak in almost five weeks, and Samsung Electronics Co. declined after a U.S. manufacturing index slumped.
Commodities: Crude oil rose for a second day in New York as Turkey continued its military assault against rebel bases in northern Iraq, OPEC's sixth-largest oil producer. Gold may rise for a second straight week, extending a rally to a record, as higher energy costs boost demand for a hedge against inflation.
Currencies: The dollar traded near a three-week low against the euro on concerns an industry report today will show the housing recession in the U.S. is deepening.
Source: Bloomberg
Economic Releases for week of 25 Feb
US
Date Time Event Survey Prior Revised
Monday
2/25/2008 23:00 Existing Home Sales JAN 4.80M 4.89M - -
2/25/2008 23:00 Existing Home Sales MoM JAN -1.80% -2.20% - -
Tuesday
2/26/2008 21:30 Producer Price Index (MoM) JAN 0.40% -0.10% -0.30%
2/26/2008 21:30 PPI Ex Food & Energy (MoM) JAN 0.20% 0.20% - -
2/26/2008 21:30 Producer Price Index (YoY) JAN 7.20% 6.30% - -
2/26/2008 21:30 PPI Ex Food & Energy (YoY) JAN 2.20% 2.00% - -
2/26/2008 22:00 S&P/CaseShiller Home Price Ind DEC - - 188.8 - -
2/26/2008 22:00 S&P/CS Composite-20 YoY DEC -9.80% -7.70% - -
2/26/2008 22:00 S&P/Case-Shiller US HPI 4Q - - 180.5 - -
2/26/2008 22:00 S&P/Case-Shiller US HPI YOY% 4Q - - -4.50% - -
2/26/2008 23:00 Consumer Confidence FEB 82 87.9 - -
2/26/2008 23:00 Richmond Fed Manufact. Index FEB -10 -8 - -
2/26/2008 23:00 House Price Index QoQ 4Q -1.00% -0.40% - -
Wednesday
2/27/2008 6:00 ABC Consumer Confidence 25-Feb - - -37 - -
2/27/2008 20:00 MBA Mortgage Applications 23-Feb - - -22.60% - -
2/27/2008 21:30 Durable Goods Orders JAN -4.00% 5.20% 5.00%
2/27/2008 21:30 Durables Ex Transportation JAN -1.40% 2.60% 2.30%
2/27/2008 23:00 New Home Sales JAN 600K 604K - -
2/27/2008 23:00 Bernanke Report on Economy & Fed Policy
2/27/2008 23:00 New Home Sales MoM JAN -0.70% -4.70% - -
Thursday
2/28/2008 21:30 GDP Annualized 4Q P 0.70% 0.60% - -
2/28/2008 21:30 Personal Consumption 4Q P 2.00% 2.00% - -
2/28/2008 21:30 GDP Price Index 4Q P 2.60% 2.60% - -
2/28/2008 21:30 Core PCE QoQ 4Q P 2.70% 2.70% - -
2/28/2008 21:30 Initial Jobless Claims 24-Feb 350K 349K - -
2/28/2008 21:30 Continuing Claims 17-Feb 2778K 2784K - -
2/28/2008 23:00 Help Wanted Index JAN 21 22 - -
Friday
2/29/2008 21:30 Personal Income JAN 0.20% 0.50% - -
2/29/2008 21:30 Personal Spending JAN 0.20% 0.20% - -
2/29/2008 21:30 PCE Deflator (YoY) JAN 3.50% 3.50% - -
2/29/2008 21:30 PCE Core (MoM) JAN 0.30% 0.20% - -
2/29/2008 21:30 PCE Core (YoY) JAN 2.20% 2.20% - -
2/29/2008 22:45 Chicago Purchasing Manager FEB 49.6 51.5 - -
2/29/2008 23:00 U. of Michigan Confidence FEB F 70 69.6 - -
2/29/2008 23:00 NAPM-Milwaukee FEB - - 58 - -
UK
Date Time Event Survey Prior
Monday
2/25/2008 17:30 BBA Loans for House Purchase JAN - - 42088
Tuesday
2/26/2008 17:30 Total Business Investment(QoQ) 4Q P 0.90% 2.00%
2/26/2008 17:30 Total Business Investment(YoY) 4Q P 2.90% 6.60%
2/26/2008 19:00 U.K. CBI February Distributive Trades Reported Sales
Wednesday
2/27/2008 17:30 GDP (QoQ) 4Q P 0.60% 0.60%
2/27/2008 17:30 GDP (YoY) 4Q P 2.90% 2.90%
2/27/2008 17:30 Private Consumption 4Q P 0.60% 1.10%
2/27/2008 17:30 Government Spending 4Q P 0.60% 0.30%
2/27/2008 17:30 Gross Fixed Capital Formation 4Q P 0.70% 2.40%
2/27/2008 17:30 Exports 4Q P 0.40% 2.00%
2/27/2008 17:30 Imports 4Q P -0.10% 4.70%
2/27/2008 17:30 Index of Services (3mth/3mth) DEC 0.70% 0.60%
Friday
2/29/2008 15:00 Nat'wide House prices sa (MoM) FEB 0.00% -0.10%
2/29/2008 15:00 Nat'wide House prices nsa(YoY) FEB 3.60% 4.20%
2/29/2008 17:30 M4 Money Supply (MoM) JAN F - - 1.30%
2/29/2008 17:30 M4 Money Supply (YoY) JAN F - - 12.90%
2/29/2008 17:30 M4 Sterling Lending (BP) JAN F - - 21.6B
2/29/2008 17:30 Net Consumer Credit JAN 0.8B 0.6B
2/29/2008 17:30 Net Lending Sec. on Dwellings JAN 8.2B 8.6B
2/29/2008 17:30 Mortgage Approvals JAN 70K 73K
2/29/2008 17:30 BSA Mortgage Approvals SA JAN - - £4079M
2/29/2008 18:30 GfK Consumer Confidence Survey FEB -15 -13
Germany
Date Time Event Survey Prior Revised
Tuesday
2/26/2008 15:00 GDP s.a. (QOQ) 4Q F 0.30% 0.30% - -
2/26/2008 15:00 GDP wda (YoY) 4Q F 1.80% 1.80% - -
2/26/2008 15:00 GDP nsa (YoY) 4Q F 1.60% 1.60% - -
2/26/2008 15:00 Private Consumption 4Q F -0.40% 0.50% - -
2/26/2008 15:00 Government Spending 4Q F 0.30% -0.10% - -
2/26/2008 15:00 Capital Investment 4Q F 1.50% 0.60% - -
2/26/2008 15:00 Construction Investment 4Q F -0.40% 0.60% - -
2/26/2008 15:00 Domestic Demand 4Q F -0.20% 0.90% - -
2/26/2008 15:00 Imports 4Q F -0.90% 3.90% - -
2/26/2008 15:00 Exports 4Q F 1.00% 3.10% - -
2/26/2008 17:00 IFO - Business Climate FEB 102.9 103.4 - -
2/26/2008 17:00 IFO - Current Assessment FEB 107.2 107.9 - -
2/26/2008 17:00 IFO - Expectations FEB 98.7 99 - -
Wednesday
2/27/2008 15:00 Import Price Index (MoM) JAN 0.30% -0.10% - -
2/27/2008 15:00 Import Price Index (YoY) JAN 4.70% 3.70% - -
2/27/2008 15:10 GfK Consumer Confidence Survey MAR 4.4 4.5 - -
27-29 FEB IFO Dec. Business Climate Survey by Industry (Table)
Thursday
28-Feb CPI - Baden Wuerttemberg (MoM) FEB - - - - - -
28-Feb CPI - Baden Wuerttemberg (YoY) FEB - - - - - -
28-Feb CPI - Bavaria (MoM) FEB - - - - - -
28-Feb CPI - Bavaria (YoY) FEB - - - - - -
28-Feb CPI - Hesse (MoM) FEB - - - - - -
28-Feb CPI - Hesse (YoY) FEB - - - - - -
2/28/2008 15:00 ILO Unemployment Rate JAN 7.70% 7.80% - -
2/28/2008 16:55 Unemployment Rate (s.a) FEB 8.00% 8.10% - -
2/28/2008 16:55 Unemployment Change (000's) FEB -48K -89K - -
2/28/2008 17:00 Bloomberg Germany Retail PMI FEB - - 44.2 - -
Friday
29-Feb CPI - North Rhine-West. (MoM) FEB - - - - - -
29-Feb CPI - Brandenburg (YoY) FEB - - - - - -
29-Feb CPI - North Rhine-West. (YoY) FEB - - - - - -
29-Feb CPI - Saxony (MoM) FEB - - - - - -
29-Feb CPI - Brandenburg (MoM) FEB - - - - - -
29-Feb CPI - Saxony (YoY) FEB - - - - - -
29-Feb Consumer Price Index (MoM) FEB P 0.40% -0.30% - -
2/29/2008 15:00 Retail Sales (MoM) JAN 1.00% -0.10% -1.00%
2/29/2008 15:00 Retail Sales (YoY) JAN -2.10% -6.90% - -
29-Feb Consumer Price Index (YoY) FEB P 2.70% 2.70% - -
29-Feb CPI - EU Harmonised (MoM) FEB P 0.40% -0.30% - -
29-Feb CPI - EU Harmonised (YoY) FEB P 3.00% 3.00% - -
Japan
Date Time Event Survey Prior
Tuesday
2/26/2008 7:50 Corp Service Price (YoY) JAN 1.40% 1.40%
2/26/2008 13:00 Small Business Confidence FEB 43 43.5
Thursday
2/28/2008 7:50 Industrial Production (MoM) JAN P -0.80% 1.40%
2/28/2008 7:50 Industrial Production (YoY) JAN P 3.70% 0.80%
2/28/2008 7:50 Foreign Buying Japan Stocks 22-Feb - - ¥171.1B
2/28/2008 7:50 Foreign Buying Japan Bonds 22-Feb - - -¥164.3B
2/28/2008 7:50 Japan Buying Foreign Stocks 22-Feb - - ¥179.1B
2/28/2008 7:50 Japan Buying Foreign Bonds 22-Feb - - -¥344.8B
2/28/2008 7:50 Large Retailers' Sales JAN -1.60% -1.50%
2/28/2008 7:50 Retail Trade YoY JAN 0.00% 0.20%
2/28/2008 7:50 Retail Trade MoM SA JAN 1.60% -0.80%
2/28/2008 12:00 Vehicle Production (YoY) JAN - - 1.50%
Friday
2/29/2008 7:15 Nomura/JMMA Manufacturing PMI FEB 52 52.3
2/29/2008 7:30 Jobless Rate JAN 3.90% 3.80%
2/29/2008 7:30 Job-To-Applicant Ratio JAN 0.97 0.98
2/29/2008 7:30 Overall Hhold Spending (YoY) JAN 0.30% 2.20%
2/29/2008 7:30 Tokyo CPI YoY FEB 0.50% 0.20%
2/29/2008 7:30 Tokyo CPI Ex-Fresh Food YoY FEB 0.50% 0.40%
2/29/2008 7:30 Tokyo CPI Ex Food, Energy YoY FEB 0.00% 0.00%
2/29/2008 7:30 Natl CPI YoY JAN 0.70% 0.70%
2/29/2008 7:30 Natl CPI Ex-Fresh Food YoY JAN 0.90% 0.80%
2/29/2008 7:30 Natl CPI Ex Food, Energy YoY JAN -0.10% -0.10%
2/29/2008 13:00 Housing Starts (YoY) JAN -12.30% -19.20%
2/29/2008 13:00 Annualized Housing Starts JAN 1.115M 1.050M
2/29/2008 13:00 Construction Orders (YoY) JAN - - 4.70%
Singapore
Date Time Event Survey Prior
Monday
2/25/2008 13:00 CPI (YoY) JAN 5.60% 4.40%
2/25/2008 13:00 CPI (MoM) JAN - - 0.50%
Tuesday
2/26/2008 13:00 Industrial Production YoY JAN 5.80% -1.70%
2/26/2008 13:00 Industrial Production MoM SA JAN -0.10% -4.70%
Friday
2/29/2008 10:00 M2 Money Supply (YoY) JAN - - 13.40%
2/29/2008 10:00 M1 Money Supply (YoY) JAN - - - -
2/29/2008 10:00 Bank Loans & Advances (YoY) JAN - - 20.00%
2/29/2008 10:00 Credit Card Billings JAN - - 2328.9M
2/29/2008 10:00 Credit Card Bad Debts JAN - - 9.3M
HongKong
Date Time Event Survey Prior
Wednesday
2/27/2008 16:15 GDP (YoY) 4Q 6.10% 6.20%
2/27/2008 16:15 GDP sa (QoQ) 4Q 1.40% 1.70%
27-Feb Annual GDP 31-Dec 6.10% 6.80%
Thursday
2/28/2008 16:15 Exports YoY% JAN 9.30% 8.20%
2/28/2008 16:15 Imports YoY% JAN 11.40% 10.30%
2/28/2008 16:15 Trade Balance JAN - - -HK27.4B
Friday
2/29/2008 17:00 Money Supply M3 - in HK$ (YoY) JAN - - 18.10%
2/29/2008 17:00 Money Supply M2 - in HK$ (YoY) JAN - - 18.10%
2/29/2008 17:00 Money Supply M1 - in HK$ (YoY) JAN - - 17.10%
2/29/2008 17:00 Govt Mthly Budget Surp/Def HK$ JAN - - 35.6B
Energy
Date Time Event Survey Prior
Wednesday
2/27/2008 0:00 Eni's Scaroni, MIT's Hockfield Brief Press on Solar Research
2/27/2008 23:30 DOE U.S. Crude Oil Inventories 23-Feb - - 4204K
2/27/2008 23:30 DOE U.S. Gasoline Inventories 23-Feb - - 1028K
2/27/2008 23:30 DOE U.S. Distillate Inventory 23-Feb - - -4446K
2/27/2008 23:30 DOE U.S. Refinery Utilization 23-Feb - - -1.56%
2/27/2008 23:30 API U.S. Crude Oil Inventories 23-Feb - - 5495K
2/27/2008 23:30 API U.S. Gasoline Inventories 23-Feb - - -2987K
2/27/2008 23:30 API U.S. Distillate Inventory 23-Feb - - -5817K
Thursday
2/28/2008 23:30 EIA Natural Gas Storage Change 23-Feb - - - -
Saturday
3/1/2008 2:00 Baker Hughes U.S. Rig Count 1-Mar - - 1771
Agriculture
Date Time Event Survey Prior
Tuesday
2/26/2008 0:00 Export Inspections - Corn 22-Feb - - 48.41
2/26/2008 0:00 Export Inspections - Soybeans 22-Feb - - 32.96
2/26/2008 0:00 Export Inspections - Wheat 22-Feb - - 20.45
2/26 3/ 1 US DOE Monthly Ethanol Prod DEC - - 14356K
2/26 3/ 1 US DOE Monthly Ethanol Stocks DEC - - 11194K
Wednesday
2/27/2008 6:00 Chicago Merc. Inventories PB 23-Feb - - 53504
Thursday
2/28/2008 21:30 Export Sales - Cotton 22-Feb - - 483.8
2/28/2008 21:30 Export Sales - Soy Oil 22-Feb - - 27
2/28/2008 21:30 Export Sales - Wheat 22-Feb - - 101
2/28/2008 21:30 Export Sales - Soy Meal 22-Feb - - 48.6
2/28/2008 21:30 Export Sales - Corn 22-Feb - - 1141.4
2/28/2008 21:30 Export Sales - Soybeans 22-Feb - - 630.7
Source: Bloomberg
Date Time Event Survey Prior Revised
Monday
2/25/2008 23:00 Existing Home Sales JAN 4.80M 4.89M - -
2/25/2008 23:00 Existing Home Sales MoM JAN -1.80% -2.20% - -
Tuesday
2/26/2008 21:30 Producer Price Index (MoM) JAN 0.40% -0.10% -0.30%
2/26/2008 21:30 PPI Ex Food & Energy (MoM) JAN 0.20% 0.20% - -
2/26/2008 21:30 Producer Price Index (YoY) JAN 7.20% 6.30% - -
2/26/2008 21:30 PPI Ex Food & Energy (YoY) JAN 2.20% 2.00% - -
2/26/2008 22:00 S&P/CaseShiller Home Price Ind DEC - - 188.8 - -
2/26/2008 22:00 S&P/CS Composite-20 YoY DEC -9.80% -7.70% - -
2/26/2008 22:00 S&P/Case-Shiller US HPI 4Q - - 180.5 - -
2/26/2008 22:00 S&P/Case-Shiller US HPI YOY% 4Q - - -4.50% - -
2/26/2008 23:00 Consumer Confidence FEB 82 87.9 - -
2/26/2008 23:00 Richmond Fed Manufact. Index FEB -10 -8 - -
2/26/2008 23:00 House Price Index QoQ 4Q -1.00% -0.40% - -
Wednesday
2/27/2008 6:00 ABC Consumer Confidence 25-Feb - - -37 - -
2/27/2008 20:00 MBA Mortgage Applications 23-Feb - - -22.60% - -
2/27/2008 21:30 Durable Goods Orders JAN -4.00% 5.20% 5.00%
2/27/2008 21:30 Durables Ex Transportation JAN -1.40% 2.60% 2.30%
2/27/2008 23:00 New Home Sales JAN 600K 604K - -
2/27/2008 23:00 Bernanke Report on Economy & Fed Policy
2/27/2008 23:00 New Home Sales MoM JAN -0.70% -4.70% - -
Thursday
2/28/2008 21:30 GDP Annualized 4Q P 0.70% 0.60% - -
2/28/2008 21:30 Personal Consumption 4Q P 2.00% 2.00% - -
2/28/2008 21:30 GDP Price Index 4Q P 2.60% 2.60% - -
2/28/2008 21:30 Core PCE QoQ 4Q P 2.70% 2.70% - -
2/28/2008 21:30 Initial Jobless Claims 24-Feb 350K 349K - -
2/28/2008 21:30 Continuing Claims 17-Feb 2778K 2784K - -
2/28/2008 23:00 Help Wanted Index JAN 21 22 - -
Friday
2/29/2008 21:30 Personal Income JAN 0.20% 0.50% - -
2/29/2008 21:30 Personal Spending JAN 0.20% 0.20% - -
2/29/2008 21:30 PCE Deflator (YoY) JAN 3.50% 3.50% - -
2/29/2008 21:30 PCE Core (MoM) JAN 0.30% 0.20% - -
2/29/2008 21:30 PCE Core (YoY) JAN 2.20% 2.20% - -
2/29/2008 22:45 Chicago Purchasing Manager FEB 49.6 51.5 - -
2/29/2008 23:00 U. of Michigan Confidence FEB F 70 69.6 - -
2/29/2008 23:00 NAPM-Milwaukee FEB - - 58 - -
UK
Date Time Event Survey Prior
Monday
2/25/2008 17:30 BBA Loans for House Purchase JAN - - 42088
Tuesday
2/26/2008 17:30 Total Business Investment(QoQ) 4Q P 0.90% 2.00%
2/26/2008 17:30 Total Business Investment(YoY) 4Q P 2.90% 6.60%
2/26/2008 19:00 U.K. CBI February Distributive Trades Reported Sales
Wednesday
2/27/2008 17:30 GDP (QoQ) 4Q P 0.60% 0.60%
2/27/2008 17:30 GDP (YoY) 4Q P 2.90% 2.90%
2/27/2008 17:30 Private Consumption 4Q P 0.60% 1.10%
2/27/2008 17:30 Government Spending 4Q P 0.60% 0.30%
2/27/2008 17:30 Gross Fixed Capital Formation 4Q P 0.70% 2.40%
2/27/2008 17:30 Exports 4Q P 0.40% 2.00%
2/27/2008 17:30 Imports 4Q P -0.10% 4.70%
2/27/2008 17:30 Index of Services (3mth/3mth) DEC 0.70% 0.60%
Friday
2/29/2008 15:00 Nat'wide House prices sa (MoM) FEB 0.00% -0.10%
2/29/2008 15:00 Nat'wide House prices nsa(YoY) FEB 3.60% 4.20%
2/29/2008 17:30 M4 Money Supply (MoM) JAN F - - 1.30%
2/29/2008 17:30 M4 Money Supply (YoY) JAN F - - 12.90%
2/29/2008 17:30 M4 Sterling Lending (BP) JAN F - - 21.6B
2/29/2008 17:30 Net Consumer Credit JAN 0.8B 0.6B
2/29/2008 17:30 Net Lending Sec. on Dwellings JAN 8.2B 8.6B
2/29/2008 17:30 Mortgage Approvals JAN 70K 73K
2/29/2008 17:30 BSA Mortgage Approvals SA JAN - - £4079M
2/29/2008 18:30 GfK Consumer Confidence Survey FEB -15 -13
Germany
Date Time Event Survey Prior Revised
Tuesday
2/26/2008 15:00 GDP s.a. (QOQ) 4Q F 0.30% 0.30% - -
2/26/2008 15:00 GDP wda (YoY) 4Q F 1.80% 1.80% - -
2/26/2008 15:00 GDP nsa (YoY) 4Q F 1.60% 1.60% - -
2/26/2008 15:00 Private Consumption 4Q F -0.40% 0.50% - -
2/26/2008 15:00 Government Spending 4Q F 0.30% -0.10% - -
2/26/2008 15:00 Capital Investment 4Q F 1.50% 0.60% - -
2/26/2008 15:00 Construction Investment 4Q F -0.40% 0.60% - -
2/26/2008 15:00 Domestic Demand 4Q F -0.20% 0.90% - -
2/26/2008 15:00 Imports 4Q F -0.90% 3.90% - -
2/26/2008 15:00 Exports 4Q F 1.00% 3.10% - -
2/26/2008 17:00 IFO - Business Climate FEB 102.9 103.4 - -
2/26/2008 17:00 IFO - Current Assessment FEB 107.2 107.9 - -
2/26/2008 17:00 IFO - Expectations FEB 98.7 99 - -
Wednesday
2/27/2008 15:00 Import Price Index (MoM) JAN 0.30% -0.10% - -
2/27/2008 15:00 Import Price Index (YoY) JAN 4.70% 3.70% - -
2/27/2008 15:10 GfK Consumer Confidence Survey MAR 4.4 4.5 - -
27-29 FEB IFO Dec. Business Climate Survey by Industry (Table)
Thursday
28-Feb CPI - Baden Wuerttemberg (MoM) FEB - - - - - -
28-Feb CPI - Baden Wuerttemberg (YoY) FEB - - - - - -
28-Feb CPI - Bavaria (MoM) FEB - - - - - -
28-Feb CPI - Bavaria (YoY) FEB - - - - - -
28-Feb CPI - Hesse (MoM) FEB - - - - - -
28-Feb CPI - Hesse (YoY) FEB - - - - - -
2/28/2008 15:00 ILO Unemployment Rate JAN 7.70% 7.80% - -
2/28/2008 16:55 Unemployment Rate (s.a) FEB 8.00% 8.10% - -
2/28/2008 16:55 Unemployment Change (000's) FEB -48K -89K - -
2/28/2008 17:00 Bloomberg Germany Retail PMI FEB - - 44.2 - -
Friday
29-Feb CPI - North Rhine-West. (MoM) FEB - - - - - -
29-Feb CPI - Brandenburg (YoY) FEB - - - - - -
29-Feb CPI - North Rhine-West. (YoY) FEB - - - - - -
29-Feb CPI - Saxony (MoM) FEB - - - - - -
29-Feb CPI - Brandenburg (MoM) FEB - - - - - -
29-Feb CPI - Saxony (YoY) FEB - - - - - -
29-Feb Consumer Price Index (MoM) FEB P 0.40% -0.30% - -
2/29/2008 15:00 Retail Sales (MoM) JAN 1.00% -0.10% -1.00%
2/29/2008 15:00 Retail Sales (YoY) JAN -2.10% -6.90% - -
29-Feb Consumer Price Index (YoY) FEB P 2.70% 2.70% - -
29-Feb CPI - EU Harmonised (MoM) FEB P 0.40% -0.30% - -
29-Feb CPI - EU Harmonised (YoY) FEB P 3.00% 3.00% - -
Japan
Date Time Event Survey Prior
Tuesday
2/26/2008 7:50 Corp Service Price (YoY) JAN 1.40% 1.40%
2/26/2008 13:00 Small Business Confidence FEB 43 43.5
Thursday
2/28/2008 7:50 Industrial Production (MoM) JAN P -0.80% 1.40%
2/28/2008 7:50 Industrial Production (YoY) JAN P 3.70% 0.80%
2/28/2008 7:50 Foreign Buying Japan Stocks 22-Feb - - ¥171.1B
2/28/2008 7:50 Foreign Buying Japan Bonds 22-Feb - - -¥164.3B
2/28/2008 7:50 Japan Buying Foreign Stocks 22-Feb - - ¥179.1B
2/28/2008 7:50 Japan Buying Foreign Bonds 22-Feb - - -¥344.8B
2/28/2008 7:50 Large Retailers' Sales JAN -1.60% -1.50%
2/28/2008 7:50 Retail Trade YoY JAN 0.00% 0.20%
2/28/2008 7:50 Retail Trade MoM SA JAN 1.60% -0.80%
2/28/2008 12:00 Vehicle Production (YoY) JAN - - 1.50%
Friday
2/29/2008 7:15 Nomura/JMMA Manufacturing PMI FEB 52 52.3
2/29/2008 7:30 Jobless Rate JAN 3.90% 3.80%
2/29/2008 7:30 Job-To-Applicant Ratio JAN 0.97 0.98
2/29/2008 7:30 Overall Hhold Spending (YoY) JAN 0.30% 2.20%
2/29/2008 7:30 Tokyo CPI YoY FEB 0.50% 0.20%
2/29/2008 7:30 Tokyo CPI Ex-Fresh Food YoY FEB 0.50% 0.40%
2/29/2008 7:30 Tokyo CPI Ex Food, Energy YoY FEB 0.00% 0.00%
2/29/2008 7:30 Natl CPI YoY JAN 0.70% 0.70%
2/29/2008 7:30 Natl CPI Ex-Fresh Food YoY JAN 0.90% 0.80%
2/29/2008 7:30 Natl CPI Ex Food, Energy YoY JAN -0.10% -0.10%
2/29/2008 13:00 Housing Starts (YoY) JAN -12.30% -19.20%
2/29/2008 13:00 Annualized Housing Starts JAN 1.115M 1.050M
2/29/2008 13:00 Construction Orders (YoY) JAN - - 4.70%
Singapore
Date Time Event Survey Prior
Monday
2/25/2008 13:00 CPI (YoY) JAN 5.60% 4.40%
2/25/2008 13:00 CPI (MoM) JAN - - 0.50%
Tuesday
2/26/2008 13:00 Industrial Production YoY JAN 5.80% -1.70%
2/26/2008 13:00 Industrial Production MoM SA JAN -0.10% -4.70%
Friday
2/29/2008 10:00 M2 Money Supply (YoY) JAN - - 13.40%
2/29/2008 10:00 M1 Money Supply (YoY) JAN - - - -
2/29/2008 10:00 Bank Loans & Advances (YoY) JAN - - 20.00%
2/29/2008 10:00 Credit Card Billings JAN - - 2328.9M
2/29/2008 10:00 Credit Card Bad Debts JAN - - 9.3M
HongKong
Date Time Event Survey Prior
Wednesday
2/27/2008 16:15 GDP (YoY) 4Q 6.10% 6.20%
2/27/2008 16:15 GDP sa (QoQ) 4Q 1.40% 1.70%
27-Feb Annual GDP 31-Dec 6.10% 6.80%
Thursday
2/28/2008 16:15 Exports YoY% JAN 9.30% 8.20%
2/28/2008 16:15 Imports YoY% JAN 11.40% 10.30%
2/28/2008 16:15 Trade Balance JAN - - -HK27.4B
Friday
2/29/2008 17:00 Money Supply M3 - in HK$ (YoY) JAN - - 18.10%
2/29/2008 17:00 Money Supply M2 - in HK$ (YoY) JAN - - 18.10%
2/29/2008 17:00 Money Supply M1 - in HK$ (YoY) JAN - - 17.10%
2/29/2008 17:00 Govt Mthly Budget Surp/Def HK$ JAN - - 35.6B
Energy
Date Time Event Survey Prior
Wednesday
2/27/2008 0:00 Eni's Scaroni, MIT's Hockfield Brief Press on Solar Research
2/27/2008 23:30 DOE U.S. Crude Oil Inventories 23-Feb - - 4204K
2/27/2008 23:30 DOE U.S. Gasoline Inventories 23-Feb - - 1028K
2/27/2008 23:30 DOE U.S. Distillate Inventory 23-Feb - - -4446K
2/27/2008 23:30 DOE U.S. Refinery Utilization 23-Feb - - -1.56%
2/27/2008 23:30 API U.S. Crude Oil Inventories 23-Feb - - 5495K
2/27/2008 23:30 API U.S. Gasoline Inventories 23-Feb - - -2987K
2/27/2008 23:30 API U.S. Distillate Inventory 23-Feb - - -5817K
Thursday
2/28/2008 23:30 EIA Natural Gas Storage Change 23-Feb - - - -
Saturday
3/1/2008 2:00 Baker Hughes U.S. Rig Count 1-Mar - - 1771
Agriculture
Date Time Event Survey Prior
Tuesday
2/26/2008 0:00 Export Inspections - Corn 22-Feb - - 48.41
2/26/2008 0:00 Export Inspections - Soybeans 22-Feb - - 32.96
2/26/2008 0:00 Export Inspections - Wheat 22-Feb - - 20.45
2/26 3/ 1 US DOE Monthly Ethanol Prod DEC - - 14356K
2/26 3/ 1 US DOE Monthly Ethanol Stocks DEC - - 11194K
Wednesday
2/27/2008 6:00 Chicago Merc. Inventories PB 23-Feb - - 53504
Thursday
2/28/2008 21:30 Export Sales - Cotton 22-Feb - - 483.8
2/28/2008 21:30 Export Sales - Soy Oil 22-Feb - - 27
2/28/2008 21:30 Export Sales - Wheat 22-Feb - - 101
2/28/2008 21:30 Export Sales - Soy Meal 22-Feb - - 48.6
2/28/2008 21:30 Export Sales - Corn 22-Feb - - 1141.4
2/28/2008 21:30 Export Sales - Soybeans 22-Feb - - 630.7
Source: Bloomberg
Saturday, February 23, 2008
Analyst reports on Cosco Corp
Cosco - 4QFY07 results - Full speed ahead
(CIMB - Outperf $7.33) 22 Feb 08
Above expectations. 4Q07 core net profit of S$116.5m (up 178% yoy) was 36% above
our expectations and 29 % above consensus. Revenue rose 132% yoy to S$847m. Full
year core profit came in at S$337m, up 86% yoy on revenues of S$2.3bn (up 86% yoy).
This is mainly driven by stronger-than-expected order book recognition from shipbuilding,
offshore and conversion and ship repair with revenues of S$2.03bn, doubled that of
FY06. FY07 dry bulk charter revenues grew 40% to S$208m on the back of firmer charter
rates and buoyant shipping market. 4Q07 EBITDA margin dropped to 20% from 31% due
to higher shipbuilding jobs recognised which typically fetch lower margins relative to
repairs and conversions.
Harvesting first fruits of order book built-up and chasing higher value jobs. We
believe Cosco has just started to book in the offshore/conversion and shipbuilding orders
clinched in end-06 and 1Q07. Current net order book stood at about US$7bn compared
to US$542m in end-06 with impressive order momentum of US$6bn in 2007. In ship
repair, Cosco handled 480 jobs (down 18% yoy) but average revenue per ship improved
21% yoy to RMB9.3m.
What about rising costs? While we expect labour and raw material (steel) costs to
increase going forward, we believe margins contractions could be insignificant as the
group enjoys better operating leverage from higher project volume. Our lower EBITDA
margins for FY08 of 23% (FY07:25%) is mainly to account for higher shipbuilding jobs
with lower margins.
Bullish on FY08. Cosco is scheduled to deliver 10 bulk carriers and some high value
offshore/conversion contracts in FY08 including the Sevan rigs and FDPSO which could
underscore significant revenue recognition.
Maintain Outperform but target price cut to S$7.33 from S$9.09, still based on sumof-
the-parts valuation. We upgraded our FY08 earnings estimates by 3% to account for
stronger shipping income and introduce our FY10 forecasts. A final dividend of 4 Scts,
along with a special dividend of 3 Scts were declared. We applied a 20% discount to our
forward P/E to 24x (from 30x) to reflect lower investment risk appetite in the market.
Cosco is trading at compelling valuations of 17x CY08 and 13x CY09 against its 25% 3-
year CAGR through to 2010.
Cosco - FY07 Results
(Phillip - Buy $6.70) 22 Feb 08
Results in line. Cosco Corp announced yet another strong set of results for FY07.
Turnover came in below our estimates, at S$2,261.7 mil (+86.1% yoy). PATMI came
in within expectations, at S$336.6 mil (+63.9% yoy). Although all segments showed
improvements over FY06, stronger results were due mainly to an 89.8% increase in
revenue contribution from ship repair, shipbuilding and marine engineering business.
The Group proposed an ordinary dividend of 4.0 cents/sh, and an additional special
dividend of 3.0 cents/sh.
FY08 looking swell. The shipbuilding segment made its first contribution to revenue
in FY07, augmenting top line by approximately S$325.1 mil. The shipbuilding
business should boost top line by a significant degree in FY08, as it makes its first full
year contribution. Net order book for the shipyard business stands at S$6.5 B at
present, and we expect a sizable portion to be progressively recognized in FY08.
Cosco also expects its new yard in Lianyungang, Jiangsu, to contribute to earnings in
08. Operations have already begun at the new yard, and an 80,000 dwt floating dock
has already been added.
Ongoing facility expansion to add capacity. Cosco is still in the midst of adding to
capacity at its existing yards. When this is completed in 2010, the Group will have
access to an additional 3,100,000 sq m of land, 4 new dry docks (1.3m dwt), and 3
new berths, totaling 1km. The Group has also announced the plans for developing a
new shipyard at Qidong, Jiangsu province. When fully built in 2011, the new yard will
encompass 8 new berths for ship repair, conversion and offshore operations.
TP raised to S$6.70, Maintain BUY. We have adjusted our top and bottom line
estimates for FY08F up by 10.0% and 15.2%, respectively, as we expect a higher
proportion of revenue recognition this year. We have also adjusted our margin
assumptions, as we believe margins should keep slightly better than previously
anticipated. In addition, we have introduced FY09F estimates into our forecasts.
Based on 26.4x FY08F earnings, our revised fair value estimate of S$6.70 implies an
upside of 53.0% from previous close. Maintain BUY.
Cosco - Rising risks, key is in execution
(DBSV - Buy $6.70) 22 Feb 08
Story: FY07 Net profit(+64% yoy) was 5% above our
forecasts on the back of lower tax, and strong
contributions from shipping(avg day rates +55% to
US34k). 4Q07 sales was boosted by shipbuilding(S$315m)
which accounted for 36% of sales. However, the lower
margin shipbuilding projects caused 4Q EBIT margins to
drop from 3Q’s 26% to 17%. We estimate shipbuilding
EBIT margins at only 8% compared to shiprepair and
conversions margins at 18%. We attribute this to the
group frontloading its cost, as this is the initial phase of
earnings recognition from shipbuilding.
Point: Order book remains strong at US$6.5bn, of which
80% are shipbuilding orders stretched up to 2011. We
expect the group to focus on clinching offshore and
rigbuilding projects this year, due to its new rigbuilding
yard at Qitong, which when fully completed by 2010, will
be capable of building up to six rigs annually. Key concern
lies in a) rising steel prices b) strengthening Rmb vs US$
and c) rising labour cost in China. Steel prices have risen
37% in 2007 and +6% YTD in 2008, the trend expected
to continue on the back of the rise in iron ore prices(+65%
in Japan). With 20% of its shipbiulidng cost in steel, a
10% rise in steel prices will impact its net profit by -4%.
Relevance: We have cut our FY08(-5%) and FY09(-10.6%)
to impute rising steel and labour costs. Our target price
has been cut to S$6.70, following the de-rating of the
sector due to rising operational risks. Our SOP value is
pegged to 25x its shiprepair and offshore conversions
earnings in FY09, and 20x on shipbuilding earnings.
Maintain BUY, the stock offers decent upside of 53%,
trading at P/E of 19x (FY08) vs its eps CAGR of 48%, and
upside from its potential restructuring to raise its stake in
its crown jewel, Cosco Shipyard Group.
COSCO Corp Credit Suisse
Maintain OUTPERFORM
FY07 results: tax rebates help earnings top analyst estimates EPS: ▼ TP: ▼
● COSCO reported a strong fourth quarter yesterday, with record
PATMI of S$ 116.6 mn (up 86% YOY), beating our FY07
estimates by 12% and Street estimates by 7%.
● The bottom line in 4Q was boosted by one-off tax rebates for land
acquisition and development in China for shipbuilding. Although a
positive surprise, the rebate is event specific and we have not
factored in further rebates in our numbers.
● Revenue of COSCO Shipyard Group (not listed) was 10% below
our expectations at S$775 mn, owing to slower revenue
recognition on some offshore projects. We adjusted our forecast.
● Marine revenue and profitability came in ahead of our estimates.
● COSCO has also announced a dividend payout of 7 cents a
share, representing a 50% payout ratio.
● We have adjusted our estimates by -3% to 0.2% in FY08 and 09.
Our SOTP value is slightly lowered to S$6.20 from S$6.30,
implying 42% upside potential from current levels. Reiterate
OUTPERFORM.
(CIMB - Outperf $7.33) 22 Feb 08
Above expectations. 4Q07 core net profit of S$116.5m (up 178% yoy) was 36% above
our expectations and 29 % above consensus. Revenue rose 132% yoy to S$847m. Full
year core profit came in at S$337m, up 86% yoy on revenues of S$2.3bn (up 86% yoy).
This is mainly driven by stronger-than-expected order book recognition from shipbuilding,
offshore and conversion and ship repair with revenues of S$2.03bn, doubled that of
FY06. FY07 dry bulk charter revenues grew 40% to S$208m on the back of firmer charter
rates and buoyant shipping market. 4Q07 EBITDA margin dropped to 20% from 31% due
to higher shipbuilding jobs recognised which typically fetch lower margins relative to
repairs and conversions.
Harvesting first fruits of order book built-up and chasing higher value jobs. We
believe Cosco has just started to book in the offshore/conversion and shipbuilding orders
clinched in end-06 and 1Q07. Current net order book stood at about US$7bn compared
to US$542m in end-06 with impressive order momentum of US$6bn in 2007. In ship
repair, Cosco handled 480 jobs (down 18% yoy) but average revenue per ship improved
21% yoy to RMB9.3m.
What about rising costs? While we expect labour and raw material (steel) costs to
increase going forward, we believe margins contractions could be insignificant as the
group enjoys better operating leverage from higher project volume. Our lower EBITDA
margins for FY08 of 23% (FY07:25%) is mainly to account for higher shipbuilding jobs
with lower margins.
Bullish on FY08. Cosco is scheduled to deliver 10 bulk carriers and some high value
offshore/conversion contracts in FY08 including the Sevan rigs and FDPSO which could
underscore significant revenue recognition.
Maintain Outperform but target price cut to S$7.33 from S$9.09, still based on sumof-
the-parts valuation. We upgraded our FY08 earnings estimates by 3% to account for
stronger shipping income and introduce our FY10 forecasts. A final dividend of 4 Scts,
along with a special dividend of 3 Scts were declared. We applied a 20% discount to our
forward P/E to 24x (from 30x) to reflect lower investment risk appetite in the market.
Cosco is trading at compelling valuations of 17x CY08 and 13x CY09 against its 25% 3-
year CAGR through to 2010.
Cosco - FY07 Results
(Phillip - Buy $6.70) 22 Feb 08
Results in line. Cosco Corp announced yet another strong set of results for FY07.
Turnover came in below our estimates, at S$2,261.7 mil (+86.1% yoy). PATMI came
in within expectations, at S$336.6 mil (+63.9% yoy). Although all segments showed
improvements over FY06, stronger results were due mainly to an 89.8% increase in
revenue contribution from ship repair, shipbuilding and marine engineering business.
The Group proposed an ordinary dividend of 4.0 cents/sh, and an additional special
dividend of 3.0 cents/sh.
FY08 looking swell. The shipbuilding segment made its first contribution to revenue
in FY07, augmenting top line by approximately S$325.1 mil. The shipbuilding
business should boost top line by a significant degree in FY08, as it makes its first full
year contribution. Net order book for the shipyard business stands at S$6.5 B at
present, and we expect a sizable portion to be progressively recognized in FY08.
Cosco also expects its new yard in Lianyungang, Jiangsu, to contribute to earnings in
08. Operations have already begun at the new yard, and an 80,000 dwt floating dock
has already been added.
Ongoing facility expansion to add capacity. Cosco is still in the midst of adding to
capacity at its existing yards. When this is completed in 2010, the Group will have
access to an additional 3,100,000 sq m of land, 4 new dry docks (1.3m dwt), and 3
new berths, totaling 1km. The Group has also announced the plans for developing a
new shipyard at Qidong, Jiangsu province. When fully built in 2011, the new yard will
encompass 8 new berths for ship repair, conversion and offshore operations.
TP raised to S$6.70, Maintain BUY. We have adjusted our top and bottom line
estimates for FY08F up by 10.0% and 15.2%, respectively, as we expect a higher
proportion of revenue recognition this year. We have also adjusted our margin
assumptions, as we believe margins should keep slightly better than previously
anticipated. In addition, we have introduced FY09F estimates into our forecasts.
Based on 26.4x FY08F earnings, our revised fair value estimate of S$6.70 implies an
upside of 53.0% from previous close. Maintain BUY.
Cosco - Rising risks, key is in execution
(DBSV - Buy $6.70) 22 Feb 08
Story: FY07 Net profit(+64% yoy) was 5% above our
forecasts on the back of lower tax, and strong
contributions from shipping(avg day rates +55% to
US34k). 4Q07 sales was boosted by shipbuilding(S$315m)
which accounted for 36% of sales. However, the lower
margin shipbuilding projects caused 4Q EBIT margins to
drop from 3Q’s 26% to 17%. We estimate shipbuilding
EBIT margins at only 8% compared to shiprepair and
conversions margins at 18%. We attribute this to the
group frontloading its cost, as this is the initial phase of
earnings recognition from shipbuilding.
Point: Order book remains strong at US$6.5bn, of which
80% are shipbuilding orders stretched up to 2011. We
expect the group to focus on clinching offshore and
rigbuilding projects this year, due to its new rigbuilding
yard at Qitong, which when fully completed by 2010, will
be capable of building up to six rigs annually. Key concern
lies in a) rising steel prices b) strengthening Rmb vs US$
and c) rising labour cost in China. Steel prices have risen
37% in 2007 and +6% YTD in 2008, the trend expected
to continue on the back of the rise in iron ore prices(+65%
in Japan). With 20% of its shipbiulidng cost in steel, a
10% rise in steel prices will impact its net profit by -4%.
Relevance: We have cut our FY08(-5%) and FY09(-10.6%)
to impute rising steel and labour costs. Our target price
has been cut to S$6.70, following the de-rating of the
sector due to rising operational risks. Our SOP value is
pegged to 25x its shiprepair and offshore conversions
earnings in FY09, and 20x on shipbuilding earnings.
Maintain BUY, the stock offers decent upside of 53%,
trading at P/E of 19x (FY08) vs its eps CAGR of 48%, and
upside from its potential restructuring to raise its stake in
its crown jewel, Cosco Shipyard Group.
COSCO Corp Credit Suisse
Maintain OUTPERFORM
FY07 results: tax rebates help earnings top analyst estimates EPS: ▼ TP: ▼
● COSCO reported a strong fourth quarter yesterday, with record
PATMI of S$ 116.6 mn (up 86% YOY), beating our FY07
estimates by 12% and Street estimates by 7%.
● The bottom line in 4Q was boosted by one-off tax rebates for land
acquisition and development in China for shipbuilding. Although a
positive surprise, the rebate is event specific and we have not
factored in further rebates in our numbers.
● Revenue of COSCO Shipyard Group (not listed) was 10% below
our expectations at S$775 mn, owing to slower revenue
recognition on some offshore projects. We adjusted our forecast.
● Marine revenue and profitability came in ahead of our estimates.
● COSCO has also announced a dividend payout of 7 cents a
share, representing a 50% payout ratio.
● We have adjusted our estimates by -3% to 0.2% in FY08 and 09.
Our SOTP value is slightly lowered to S$6.20 from S$6.30,
implying 42% upside potential from current levels. Reiterate
OUTPERFORM.
Friday, February 22, 2008
Commodities Daily - 22nd Feb 2008
Spotlight: Cocoa tumbled 2 percent, the most this year. Crude oil advanced to a record $101 a barrel on rising demand. Gold futures rose to record as oil sparks demand for inflation hedge. However, platinum fell from on concern jewelry demand may drop. Copper fell.
Energy: Crude oil advanced to a record $101.32 barrel in New York on rising demand and concern inflation will erode the value of alternative investments. Natural gas was little changed on speculation inventories are ample to meet demand as the peak of the U.S. heating season wanes. Gasoline futures fell on forecasts a government report tomorrow will show that inventories rose.
Agriculture: Corn rose to a two-week high on speculation soaring energy costs will boost demand for crops to produce fuel. Soybeans fell from a record as rains improved production in Brazil and Argentina, reducing global demand from the U.S. Besides, wheat also fell as growers increase acreage after prices rally to record.
Cotton rose on speculation that demand is rising for investments that will hold their value as inflation quickens. Orange-juice rose the most in three weeks on speculation that dry weather in Florida will harm the harvest. However, cocoa tumbled 2 percent, the most this year, as pound slipped against the dollar and production in Brazil rose. Besides, coffee fell as a stronger dollar's reduced appeal of futures in New York.
Precious Metals: Gold futures rose to a record after energy costs jumped, boosting the appeal of the precious metal as a hedge against inflation. Platinum fell from a record in New York on concern that a 40 percent gain this year may cut demand from jewelery makers. Silver rose
Industrial Metals: Copper fell from a four-month high after a report showed U.S. housing starts remained near their lowest level since 1991 in January.
(Source: Bloomberg)
Energy: Crude oil advanced to a record $101.32 barrel in New York on rising demand and concern inflation will erode the value of alternative investments. Natural gas was little changed on speculation inventories are ample to meet demand as the peak of the U.S. heating season wanes. Gasoline futures fell on forecasts a government report tomorrow will show that inventories rose.
Agriculture: Corn rose to a two-week high on speculation soaring energy costs will boost demand for crops to produce fuel. Soybeans fell from a record as rains improved production in Brazil and Argentina, reducing global demand from the U.S. Besides, wheat also fell as growers increase acreage after prices rally to record.
Cotton rose on speculation that demand is rising for investments that will hold their value as inflation quickens. Orange-juice rose the most in three weeks on speculation that dry weather in Florida will harm the harvest. However, cocoa tumbled 2 percent, the most this year, as pound slipped against the dollar and production in Brazil rose. Besides, coffee fell as a stronger dollar's reduced appeal of futures in New York.
Precious Metals: Gold futures rose to a record after energy costs jumped, boosting the appeal of the precious metal as a hedge against inflation. Platinum fell from a record in New York on concern that a 40 percent gain this year may cut demand from jewelery makers. Silver rose
Industrial Metals: Copper fell from a four-month high after a report showed U.S. housing starts remained near their lowest level since 1991 in January.
(Source: Bloomberg)
Financials Daily - 22nd Feb 2008
US: U.S. stocks fell for the second time this week, led by energy and industrial shares, after a worse-than-forecast manufacturing report and higher stockpiles of oil spurred concern that the economy has fallen into a recession.
Europe: European stocks climbed for the third time this week on higher profits, rising commodities prices and growing optimism that demand from emerging markets will counter an economic slowdown in the U.S.
Asia: Asian stocks climbed the most in a week after earnings from Telstra Corp. and Tabcorp Holdings Ltd. raised optimism the region will overcome a U.S. economic slowdown.
Commodities: Crude oil fell for a second day in New York after an Energy Department report showed that U.S. inventories rose almost twice as much as forecast and refiners slowed processing to perform seasonal maintenance. Gold futures surged to a record $958.40 an ounce as a slumping dollar and soaring commodity costs boosted the appeal of the precious metal as an inflation hedge. Silver rose to the highest since 1980.
Currencies: The dollar headed for a second weekly decline against the euro after a report showed manufacturing in the Philadelphia region contracted this month, bolstering speculation the U.S. is poised for a recession.
Source: Bloomberg
Europe: European stocks climbed for the third time this week on higher profits, rising commodities prices and growing optimism that demand from emerging markets will counter an economic slowdown in the U.S.
Asia: Asian stocks climbed the most in a week after earnings from Telstra Corp. and Tabcorp Holdings Ltd. raised optimism the region will overcome a U.S. economic slowdown.
Commodities: Crude oil fell for a second day in New York after an Energy Department report showed that U.S. inventories rose almost twice as much as forecast and refiners slowed processing to perform seasonal maintenance. Gold futures surged to a record $958.40 an ounce as a slumping dollar and soaring commodity costs boosted the appeal of the precious metal as an inflation hedge. Silver rose to the highest since 1980.
Currencies: The dollar headed for a second weekly decline against the euro after a report showed manufacturing in the Philadelphia region contracted this month, bolstering speculation the U.S. is poised for a recession.
Source: Bloomberg
Tat Hong Holdings (S$2.48) - CIMB GK
- Buying opportunity
The share price of Tat Hong has fallen 7.7% in the past one month, despite posting a good set of 3QFY08 results on
13 Feb 08. Despite global equity markets being weak in the past months, the selldown on TAT shares has been
excessive and unwarranted as TAT’s strong fundamentals remain intact. In addition, the business outlook remains
positive with robust construction demand for cranes while the recent successful listing of its China associate,
towercrane manufacturer Yongmao Holdings should provide a boost in sentiment. Valuations are attractive and with
forward P/E near recent lows. Reiterate Outperform with a target price of S$4.43, based on CY09 P/E of 15x.
The share price of Tat Hong has fallen 7.7% in the past one month, despite posting a good set of 3QFY08 results on
13 Feb 08. Despite global equity markets being weak in the past months, the selldown on TAT shares has been
excessive and unwarranted as TAT’s strong fundamentals remain intact. In addition, the business outlook remains
positive with robust construction demand for cranes while the recent successful listing of its China associate,
towercrane manufacturer Yongmao Holdings should provide a boost in sentiment. Valuations are attractive and with
forward P/E near recent lows. Reiterate Outperform with a target price of S$4.43, based on CY09 P/E of 15x.
Thursday, February 21, 2008
Commodities Daily - 21st Feb 2008
Spotlight: Cocoa tumbled 2 percent, the most this year. Crude oil advanced to a record $101 a barrel on rising demand. Gold futures rose to record as oil sparks demand for inflation hedge. However, platinum fell from on concern jewelry demand may drop. Copper fell.
Energy: Crude oil advanced to a record $101.32 barrel in New York on rising demand and concern inflation will erode the value of alternative investments. Natural gas was little changed on speculation inventories are ample to meet demand as the peak of the U.S. heating season wanes. Gasoline futures fell on forecasts a government report tomorrow will show that inventories rose.
Agriculture: Corn rose to a two-week high on speculation soaring energy costs will boost demand for crops to produce fuel. Soybeans fell from a record as rains improved production in Brazil and Argentina, reducing global demand from the U.S. Besides, wheat also fell as growers increase acreage after prices rally to record.
Cotton rose on speculation that demand is rising for investments that will hold their value as inflation quickens. Orange-juice rose the most in three weeks on speculation that dry weather in Florida will harm the harvest. However, cocoa tumbled 2 percent, the most this year, as pound slipped against the dollar and production in Brazil rose. Besides, coffee fell as a stronger dollar's reduced appeal of futures in New York.
Precious Metals: Gold futures rose to a record after energy costs jumped, boosting the appeal of the precious metal as a hedge against inflation. Platinum fell from a record in New York on concern that a 40 percent gain this year may cut demand from jewelery makers. Silver rose
Industrial Metals: Copper fell from a four-month high after a report showed U.S. housing starts remained near their lowest level since 1991 in January.
(Source: Bloomberg)
Energy: Crude oil advanced to a record $101.32 barrel in New York on rising demand and concern inflation will erode the value of alternative investments. Natural gas was little changed on speculation inventories are ample to meet demand as the peak of the U.S. heating season wanes. Gasoline futures fell on forecasts a government report tomorrow will show that inventories rose.
Agriculture: Corn rose to a two-week high on speculation soaring energy costs will boost demand for crops to produce fuel. Soybeans fell from a record as rains improved production in Brazil and Argentina, reducing global demand from the U.S. Besides, wheat also fell as growers increase acreage after prices rally to record.
Cotton rose on speculation that demand is rising for investments that will hold their value as inflation quickens. Orange-juice rose the most in three weeks on speculation that dry weather in Florida will harm the harvest. However, cocoa tumbled 2 percent, the most this year, as pound slipped against the dollar and production in Brazil rose. Besides, coffee fell as a stronger dollar's reduced appeal of futures in New York.
Precious Metals: Gold futures rose to a record after energy costs jumped, boosting the appeal of the precious metal as a hedge against inflation. Platinum fell from a record in New York on concern that a 40 percent gain this year may cut demand from jewelery makers. Silver rose
Industrial Metals: Copper fell from a four-month high after a report showed U.S. housing starts remained near their lowest level since 1991 in January.
(Source: Bloomberg)
Financials Daily - 21st Feb 2008
US: U.S. stocks rose the most in a week, led by technology and energy shares, after Hewlett-Packard Co.'s profit topped analysts' estimates and oil climbed to a record for a second day.
Europe: European stocks fell for the first time in three days on concern expanding losses in credit markets will curb earnings and inflation in the U.S. may prevent central banks from cutting borrowing costs to boost growth.
Asia: Asian stocks fell, sending the region's benchmark to its biggest drop in two weeks, after oil's surge above $100 a barrel dragged down automakers and power generators.
Commodities: Crude oil was little changed near $100 a barrel after rising to a record yesterday on speculation U.S. interest rate cuts will bolster fuel consumption. Gold futures rose to a record $949.20 an ounce after energy costs jumped to the highest ever, boosting the appeal of the precious metal as a hedge against inflation.
Currencies: The yen traded near a three-week low against the euro after a rally in U.S. stocks restored confidence in buying higher-yielding assets funded in Japan.
Source: Bloomberg
Europe: European stocks fell for the first time in three days on concern expanding losses in credit markets will curb earnings and inflation in the U.S. may prevent central banks from cutting borrowing costs to boost growth.
Asia: Asian stocks fell, sending the region's benchmark to its biggest drop in two weeks, after oil's surge above $100 a barrel dragged down automakers and power generators.
Commodities: Crude oil was little changed near $100 a barrel after rising to a record yesterday on speculation U.S. interest rate cuts will bolster fuel consumption. Gold futures rose to a record $949.20 an ounce after energy costs jumped to the highest ever, boosting the appeal of the precious metal as a hedge against inflation.
Currencies: The yen traded near a three-week low against the euro after a rally in U.S. stocks restored confidence in buying higher-yielding assets funded in Japan.
Source: Bloomberg
Wednesday, February 20, 2008
Financials Daily - 20th Feb 2008
US: U.S. stocks fell after oil's surge above $100 a barrel dragged down consumer and technology shares, erasing a 157-point rally in the Dow Jones Industrial Average led by energy producers.
Europe: European stocks rose for the fifth time in six days, led by insurers on takeover speculation and mining companies as copper reached a four-month high.
Asia: Asian stocks rose, sending the region's benchmark to a two-week high, as concern eased that banks will report more subprime-related losses and after higher metals prices boosted natural-resources companies.
Commodities: Crude oil fell in New York after reaching a record $100.10 a barrel yesterday on speculation OPEC will decide to cut production next month. Gold futures rose the most in almost seven weeks on speculation a weaker dollar and higher commodity costs will boost the appeal of the precious metal as an inflation hedge. Silver reached its highest close since 1980.
Currencies: The dollar traded near a two-week low against the euro before minutes from Federal Reserve meetings last month that may show the central bank is willing to lower interest rates further to support the economy.
Source: Bloomberg
Europe: European stocks rose for the fifth time in six days, led by insurers on takeover speculation and mining companies as copper reached a four-month high.
Asia: Asian stocks rose, sending the region's benchmark to a two-week high, as concern eased that banks will report more subprime-related losses and after higher metals prices boosted natural-resources companies.
Commodities: Crude oil fell in New York after reaching a record $100.10 a barrel yesterday on speculation OPEC will decide to cut production next month. Gold futures rose the most in almost seven weeks on speculation a weaker dollar and higher commodity costs will boost the appeal of the precious metal as an inflation hedge. Silver reached its highest close since 1980.
Currencies: The dollar traded near a two-week low against the euro before minutes from Federal Reserve meetings last month that may show the central bank is willing to lower interest rates further to support the economy.
Source: Bloomberg
Commodities Daily - 20th Feb 2008
Spotlight: Commodity prices surged to a record, as oil jumped above $100 a barrel and copper rallied, on signs that increased global demand for raw materials and the weakening dollar are fueling inflation. Gold and platinum rose.
Energy: Crude oil rose to a record $100.01 a barrel on speculation OPEC will cut production when it meets next month. Besides, natural gas advanced to the highest in 15 months on cold weather and crude oil touched a record. Gasoline, heating oil also rose to a record on refinery explosion.
Agriculture: Soybean rose to a record, and corn gained on speculation China will boost imports to rebuild grain reserves after food inflation quickened. However, wheat rose on speculation U.S. farmers may switch more acres to soybeans.
Coffee soared as inventories dwindle and commodities soared to a record as the dollar’s slump. Sugar extended its rally to an 18-month high as commodity prices surged and on speculation demand for alternative fuels is gaining. Notably, cocoa dropped from 24-year high on speculation a rally was overdone. Besides, orange-juice touched a five-month low on speculation that an increase in U.S. production will leave a glut as domestic demand declines.
Precious Metals: Gold futures rose the most in almost seven weeks on speculation a weaker dollar and higher commodity costs will boost the appeal of the precious metal as an inflation hedge. Platinum and palladium soared on concern about South African supply.
Industrial Metals: Copper jumped 5.5 percent to a four-month high in New York on signs of expanding demand in China, the world's largest metals buyer.
(Source: Bloomberg)
Energy: Crude oil rose to a record $100.01 a barrel on speculation OPEC will cut production when it meets next month. Besides, natural gas advanced to the highest in 15 months on cold weather and crude oil touched a record. Gasoline, heating oil also rose to a record on refinery explosion.
Agriculture: Soybean rose to a record, and corn gained on speculation China will boost imports to rebuild grain reserves after food inflation quickened. However, wheat rose on speculation U.S. farmers may switch more acres to soybeans.
Coffee soared as inventories dwindle and commodities soared to a record as the dollar’s slump. Sugar extended its rally to an 18-month high as commodity prices surged and on speculation demand for alternative fuels is gaining. Notably, cocoa dropped from 24-year high on speculation a rally was overdone. Besides, orange-juice touched a five-month low on speculation that an increase in U.S. production will leave a glut as domestic demand declines.
Precious Metals: Gold futures rose the most in almost seven weeks on speculation a weaker dollar and higher commodity costs will boost the appeal of the precious metal as an inflation hedge. Platinum and palladium soared on concern about South African supply.
Industrial Metals: Copper jumped 5.5 percent to a four-month high in New York on signs of expanding demand in China, the world's largest metals buyer.
(Source: Bloomberg)
Saturday, February 16, 2008
Financials Daily - 15th Feb 2008
US: U.S. stocks fell for the first time this week after Federal Reserve Chairman Ben S. Bernanke warned that a scarcity of credit will restrain economic growth and analysts said Intel Corp. may be hurt by slower computer sales
Europe: European stocks rose, led by Clariant AG and Cap Gemini SA, after their earnings beat analyst estimates and Japan's economy grew faster than forecast.
Asia: Asian stocks rose the most in three weeks, led by banks and technology companies, as faster Japanese economic growth and better-than-expected U.S. retail sales eased concern the two biggest economies are sliding into a recession.
Commodities: Crude oil rose to a one-month high as economic indicators from Asia and the U.S. allayed concern that a global recession is imminent. Gold futures rose after Federal Reserve Chairman Ben S. Bernanke signaled more U.S. interest-rate cuts this year, boosting the appeal of the precious metal as an alternative investment to the dollar.
Currencies: The dollar headed for the biggest weekly loss since December against the euro after U.S. Federal Reserve Chairman Ben S. Bernanke signaled the bank may cut interest rates further to avert a recession.
Source: Bloomberg
Europe: European stocks rose, led by Clariant AG and Cap Gemini SA, after their earnings beat analyst estimates and Japan's economy grew faster than forecast.
Asia: Asian stocks rose the most in three weeks, led by banks and technology companies, as faster Japanese economic growth and better-than-expected U.S. retail sales eased concern the two biggest economies are sliding into a recession.
Commodities: Crude oil rose to a one-month high as economic indicators from Asia and the U.S. allayed concern that a global recession is imminent. Gold futures rose after Federal Reserve Chairman Ben S. Bernanke signaled more U.S. interest-rate cuts this year, boosting the appeal of the precious metal as an alternative investment to the dollar.
Currencies: The dollar headed for the biggest weekly loss since December against the euro after U.S. Federal Reserve Chairman Ben S. Bernanke signaled the bank may cut interest rates further to avert a recession.
Source: Bloomberg
Greenspan Says U.S. Economy Is `On the Edge' of a Recession
By Vivien Lou Chen
Feb. 15 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the U.S. economy is on the verge of its first recession in six years as falling home values hurt consumer spending.
``We are clearly on the edge,'' Greenspan told a group of energy-industry executives yesterday at the Cambridge Energy Research Associates' 27th annual CERAWeek conference in Houston. He reiterated comments from last month that the odds of an economic contraction are ``50 percent or better.''
Greenspan's view has evolved from a year ago, when he saw a one-in-three chance of a recession, citing slowing profit growth and becoming one of the first economists to warn of the risk. Now, Wall Street firms including Merrill Lynch & Co. and Goldman Sachs Group Inc. are forecasting a contraction in the aftermath of the worst housing downturn in a quarter century.
Fed Chairman Ben S. Bernanke, Greenspan's successor, acknowledged ``downside'' risks to the expansion yesterday, while telling lawmakers he expects growth to pick up later this year. He reiterated the central bank is prepared to take ``timely'' action to aid the economy as needed.
``While we are at stall speed in the U.S. at the moment, we haven't yet seen the discontinuity that characterizes recession,'' Greenspan said during a question-and-answer session yesterday. ``American business was in such extra-good shape before this problem hit. Otherwise we would be talking about how long and how deep. We are not there yet.''
Credit Availability
The lack of available credit ``hasn't been a major problem yet for American business,'' he added. Among consumers, though, spending has been slowed by falling home values, which leaves homeowners with less capital to borrow against, Greenspan said.
``Home prices will continue to weaken,'' the 81-year-old former Fed chief said. ``When a bubble breaks, you go to primordial fear.''
Separately, the former chairman, a Republican, gave a nod toward Republican presidential candidate John McCain, comparing him with ex-President Ronald Reagan. He made the remarks after his predecessor at the Fed's helm, Paul Volcker, last month endorsed Democratic candidate Barack Obama, the Illinois senator.
``John McCain has the same roots as Reagan, being a Goldwater Republican,'' Greenspan said. McCain, like the late Barry Goldwater, is a senator from Arizona. McCain ``is a conservative and has many of the same characteristics that Reagan did.''
Bernanke, 54, told the Senate Banking Committee yesterday that Fed officials lowered their forecasts for growth after the U.S. lost jobs in January, and declining home and stock values threatened consumer spending.
Growth Forecast
Economists predict economic growth will slow to a 0.5 percent pace in the first quarter from the annualized rate of 0.6 percent recorded in the previous three months, according to a Bloomberg News survey this month.
Traders anticipate the Fed will cut the benchmark interest rate by half a point, to 2.5 percent, by March 18, after 2.25 percentage points of reductions since September. Last month, policy makers reduced rates by 1.25 percentage point, the fastest easing of monetary policy in two decades.
Some Fed officials, such as Dallas Fed President Richard Fisher and Philadelphia Fed chief Charles Plosser, warned that the central bank must also monitor inflation as it lowers rates. Fisher said this month that rate cuts can have the potential to ``juice up inflation.''
Faster inflation, combined with slower growth, is a condition known as stagflation, which throttled the U.S. economy in the 1970s.
No `Stagflation'
``Stagflation is too strong a term for what we are on the edge of,'' Greenspan said yesterday. ``I trust we have enough sense to come up with policies to avoid that.''
He also told the group of energy-industry executives that a mandatory cap on carbon emissions ``will lead to lower levels of economic activity and significantly higher unemployment.''
Greenspan left the Fed in January 2006 after almost two decades at the helm. He has returned to his role as a private economic forecaster, speaking at conferences and to groups of bankers and investors, while consulting for clients such as Deutsche Bank AG.
During a Jan. 24 speech in Vancouver, the former chairman said he's worried that an ``inevitable'' global recession will create a backlash that forces countries to retreat from world markets. He then put the probability of a U.S. recession at ``50 percent or more, but we're not there yet.''
In November, he told a Sao Paulo, Brazil, audience that the odds of a recession were less than 50 percent.
Feb. 15 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the U.S. economy is on the verge of its first recession in six years as falling home values hurt consumer spending.
``We are clearly on the edge,'' Greenspan told a group of energy-industry executives yesterday at the Cambridge Energy Research Associates' 27th annual CERAWeek conference in Houston. He reiterated comments from last month that the odds of an economic contraction are ``50 percent or better.''
Greenspan's view has evolved from a year ago, when he saw a one-in-three chance of a recession, citing slowing profit growth and becoming one of the first economists to warn of the risk. Now, Wall Street firms including Merrill Lynch & Co. and Goldman Sachs Group Inc. are forecasting a contraction in the aftermath of the worst housing downturn in a quarter century.
Fed Chairman Ben S. Bernanke, Greenspan's successor, acknowledged ``downside'' risks to the expansion yesterday, while telling lawmakers he expects growth to pick up later this year. He reiterated the central bank is prepared to take ``timely'' action to aid the economy as needed.
``While we are at stall speed in the U.S. at the moment, we haven't yet seen the discontinuity that characterizes recession,'' Greenspan said during a question-and-answer session yesterday. ``American business was in such extra-good shape before this problem hit. Otherwise we would be talking about how long and how deep. We are not there yet.''
Credit Availability
The lack of available credit ``hasn't been a major problem yet for American business,'' he added. Among consumers, though, spending has been slowed by falling home values, which leaves homeowners with less capital to borrow against, Greenspan said.
``Home prices will continue to weaken,'' the 81-year-old former Fed chief said. ``When a bubble breaks, you go to primordial fear.''
Separately, the former chairman, a Republican, gave a nod toward Republican presidential candidate John McCain, comparing him with ex-President Ronald Reagan. He made the remarks after his predecessor at the Fed's helm, Paul Volcker, last month endorsed Democratic candidate Barack Obama, the Illinois senator.
``John McCain has the same roots as Reagan, being a Goldwater Republican,'' Greenspan said. McCain, like the late Barry Goldwater, is a senator from Arizona. McCain ``is a conservative and has many of the same characteristics that Reagan did.''
Bernanke, 54, told the Senate Banking Committee yesterday that Fed officials lowered their forecasts for growth after the U.S. lost jobs in January, and declining home and stock values threatened consumer spending.
Growth Forecast
Economists predict economic growth will slow to a 0.5 percent pace in the first quarter from the annualized rate of 0.6 percent recorded in the previous three months, according to a Bloomberg News survey this month.
Traders anticipate the Fed will cut the benchmark interest rate by half a point, to 2.5 percent, by March 18, after 2.25 percentage points of reductions since September. Last month, policy makers reduced rates by 1.25 percentage point, the fastest easing of monetary policy in two decades.
Some Fed officials, such as Dallas Fed President Richard Fisher and Philadelphia Fed chief Charles Plosser, warned that the central bank must also monitor inflation as it lowers rates. Fisher said this month that rate cuts can have the potential to ``juice up inflation.''
Faster inflation, combined with slower growth, is a condition known as stagflation, which throttled the U.S. economy in the 1970s.
No `Stagflation'
``Stagflation is too strong a term for what we are on the edge of,'' Greenspan said yesterday. ``I trust we have enough sense to come up with policies to avoid that.''
He also told the group of energy-industry executives that a mandatory cap on carbon emissions ``will lead to lower levels of economic activity and significantly higher unemployment.''
Greenspan left the Fed in January 2006 after almost two decades at the helm. He has returned to his role as a private economic forecaster, speaking at conferences and to groups of bankers and investors, while consulting for clients such as Deutsche Bank AG.
During a Jan. 24 speech in Vancouver, the former chairman said he's worried that an ``inevitable'' global recession will create a backlash that forces countries to retreat from world markets. He then put the probability of a U.S. recession at ``50 percent or more, but we're not there yet.''
In November, he told a Sao Paulo, Brazil, audience that the odds of a recession were less than 50 percent.
Thursday, February 14, 2008
Singapore Dollar Declines as Government Cuts Growth Forecast
By David Yong and Lilian Karunungan
Feb. 14 (Bloomberg) -- The Singapore dollar fell to the lowest in more than a week after the government cut its economic growth forecast for this year.
Gross domestic product will probably expand between 4 percent and 6 percent, lower than an earlier estimate of 4.5 percent to 6.5 percent, the trade ministry said in a statement today. The economy grew 7.7 percent in 2007. The government trimmed its estimate because of concern that the U.S., Singapore's biggest export market, will enter a recession.
``The numbers reinforce the idea that Singapore is the most open economy in Asia and is exposed to the slowdown in the U.S., Europe and Japan,'' said Cem Karacadag, an economist at Credit Suisse in Singapore. ``The Monetary Authority of Singapore will continue to allow only a modest pace of appreciation in the currency until uncertainties over global growth risks diminish.''
The island's currency fell 0.1 percent to S$1.4184 against the U.S. dollar as of 9:38 a.m. in Singapore, according to data compiled by Bloomberg. It dropped to as low as S$1.4214.
The central bank in October said it would allow ``slightly'' faster appreciation in the island's dollar. The MAS uses the currency instead of interest rates to control monetary policy.
The monetary stance remains ``appropriate,'' the MAS said today.
Credit Suisse forecasts Singapore growth at 6 percent this year.
Feb. 14 (Bloomberg) -- The Singapore dollar fell to the lowest in more than a week after the government cut its economic growth forecast for this year.
Gross domestic product will probably expand between 4 percent and 6 percent, lower than an earlier estimate of 4.5 percent to 6.5 percent, the trade ministry said in a statement today. The economy grew 7.7 percent in 2007. The government trimmed its estimate because of concern that the U.S., Singapore's biggest export market, will enter a recession.
``The numbers reinforce the idea that Singapore is the most open economy in Asia and is exposed to the slowdown in the U.S., Europe and Japan,'' said Cem Karacadag, an economist at Credit Suisse in Singapore. ``The Monetary Authority of Singapore will continue to allow only a modest pace of appreciation in the currency until uncertainties over global growth risks diminish.''
The island's currency fell 0.1 percent to S$1.4184 against the U.S. dollar as of 9:38 a.m. in Singapore, according to data compiled by Bloomberg. It dropped to as low as S$1.4214.
The central bank in October said it would allow ``slightly'' faster appreciation in the island's dollar. The MAS uses the currency instead of interest rates to control monetary policy.
The monetary stance remains ``appropriate,'' the MAS said today.
Credit Suisse forecasts Singapore growth at 6 percent this year.
Commodities Daily - 14th Feb 2008
Spotlight: Crude oil rose as U.S. retail sales unexpectedly climbed. Cocoa rallies to highest since 1984 as Pound climbs. Platinum reaches record, surpasses $2,000 on African shortages. Notably, copper halts five-day rally in New York on U.S. growth concerns.
Energy: Crude oil rose after government reports showed that U.S. retail sales unexpectedly climbed and gasoline demand increased. Besides, the International Energy Agency, cut its forecast for 2008 global oil demand because of the slowing U.S. economy. Nymex natural gas fell on speculation supplies are ample.
Agriculture: Wheat fell after Egypt canceled purchase at prices that are near the highest ever. Soybeans rose on speculation that a record surge in wheat prices will encourage U.S. farmers to plant less of the oilseed in the northern Great Plains. Notably, corn fell on speculation that overseas demand for the biggest U.S. crop is slowing after prices climbed to records last week.
Cocoa extended a rally to a 23-year high as the U.K. pound’s rise. Coffee rose to the highest price since April 1998 as food companies and investors boosted purchases. Cotton fell on signs that the U.S. surplus will expand on increasing output and dwindling global demand. Besides, orange-juice fell to a four-month low on speculation rain may ease Florida’s drought conditions.
Precious Metals: Gold may decline on speculation a rally in equities will reduce the appeal of the precious metal as alternative investment. Platinum rose to a record, breaching $2,000 an ounce, as South Africa's state-owned electric utility advised mines that power shortages will persist for four years. Silver rose.
Industrial Metals: Copper fell, snapping a five-session rally, on renewed concern that a slowing U.S. economy will erode demand for the metal used.
(Source: Bloomberg)
Energy: Crude oil rose after government reports showed that U.S. retail sales unexpectedly climbed and gasoline demand increased. Besides, the International Energy Agency, cut its forecast for 2008 global oil demand because of the slowing U.S. economy. Nymex natural gas fell on speculation supplies are ample.
Agriculture: Wheat fell after Egypt canceled purchase at prices that are near the highest ever. Soybeans rose on speculation that a record surge in wheat prices will encourage U.S. farmers to plant less of the oilseed in the northern Great Plains. Notably, corn fell on speculation that overseas demand for the biggest U.S. crop is slowing after prices climbed to records last week.
Cocoa extended a rally to a 23-year high as the U.K. pound’s rise. Coffee rose to the highest price since April 1998 as food companies and investors boosted purchases. Cotton fell on signs that the U.S. surplus will expand on increasing output and dwindling global demand. Besides, orange-juice fell to a four-month low on speculation rain may ease Florida’s drought conditions.
Precious Metals: Gold may decline on speculation a rally in equities will reduce the appeal of the precious metal as alternative investment. Platinum rose to a record, breaching $2,000 an ounce, as South Africa's state-owned electric utility advised mines that power shortages will persist for four years. Silver rose.
Industrial Metals: Copper fell, snapping a five-session rally, on renewed concern that a slowing U.S. economy will erode demand for the metal used.
(Source: Bloomberg)
US Markets Closing Comments - 13th Feb 2008
Economic Summary:
For the first time in recent memory, the financial markets reacted to
stronger-than expected economic data. An unexpected 0.3% rise in retail sales
kicked off an equity rally. Also, a forecast by Applied Materials of stronger
orders helped boost tech stocks. Treasuries were mixed, with the long end
selling off on the retail sales data and the equity rally. The dollar edged
higher versus the euro and made large gains against the yen
Retail sales rose 0.3% in January, a stronger result than the 0.3% decline
expected by the consensus. Rising prices of such inelastic goods as food and
gasoline led to higher nominal sales of those goods, +0.6% and +2.0%,
respectively. Excluding gasoline sales, retail sales would have been up just
+0.1%. Sales of motor vehicles (+0.6%) were stronger than anticipated, given
the weak unit sales in January. Despite the strongerthan- consensus headline
gain, retail sales in real terms are still in a slowing trend and are
consistent with our call for a significant slowdown in real personal
consumption in Q1.
Business inventories rose 0.6% in December, thanks mainly to a
petroleum-priceinduced 1.1% jump in wholesale inventories. Retail inventories
were reported down 0.1% in December, following a 0.3% decline in November.
Factoring in the data recently reported for Q4, including today's retail sales
and inventory figures, it looks like the "preliminary" Q4 GDP report (due out
on Feb 28) will show a +0.2% growth rate, downwardly revised from the
"advance" report of +0.6%. We caution, however, that a big missing piece of
this puzzle, December international trade, is due out tomorrow. Trade has the
potential of altering the picture significantly.
Economic Outlook:
Initial unemployment claims for the week ended February 9 will be released on
Thursday at 8:30 (Consensus 347k). Claims in the previous week fell by a
less-than expected 22k to 356k. The latest two-week average of 367k has not
been that high since the spike in claims that occurred in 2005 in the
aftermath Hurricane Katrina. These data tentatively suggest that the labor
market may have taken a turn for the worse.
The December Trade Balance will also be reported at 8:30 (Forecast -$62.2bn,
Consensus -$61.5bn). The cost of imported oil dropped slightly in December.
This should limit the increase in the nominal cost of imports. Exports of
agricultural products are benefiting from price increases. Meanwhile,
non-agricultural exports are getting a boost from a lower dollar and have been
increasing at close to a 10% rate for most of 2007. For December, we expect an
improvement in the trade balance of about $1bn, bringing the deficit down to
$62.2bn.
Federal Reserve Chairman Bernanke will be testifying on the economy before the
Senate Banking Committee at 10:00 on Thursday. He will likely make the case
that economic activity has slowed significantly, due in part to the housing
market contraction and to tighter credit conditions in general. But he is
likely to hold out hope that the Fed's 225bp in easing since September, and
the tax rebates starting in May, will serve to keep the economy out of
recession.
For the first time in recent memory, the financial markets reacted to
stronger-than expected economic data. An unexpected 0.3% rise in retail sales
kicked off an equity rally. Also, a forecast by Applied Materials of stronger
orders helped boost tech stocks. Treasuries were mixed, with the long end
selling off on the retail sales data and the equity rally. The dollar edged
higher versus the euro and made large gains against the yen
Retail sales rose 0.3% in January, a stronger result than the 0.3% decline
expected by the consensus. Rising prices of such inelastic goods as food and
gasoline led to higher nominal sales of those goods, +0.6% and +2.0%,
respectively. Excluding gasoline sales, retail sales would have been up just
+0.1%. Sales of motor vehicles (+0.6%) were stronger than anticipated, given
the weak unit sales in January. Despite the strongerthan- consensus headline
gain, retail sales in real terms are still in a slowing trend and are
consistent with our call for a significant slowdown in real personal
consumption in Q1.
Business inventories rose 0.6% in December, thanks mainly to a
petroleum-priceinduced 1.1% jump in wholesale inventories. Retail inventories
were reported down 0.1% in December, following a 0.3% decline in November.
Factoring in the data recently reported for Q4, including today's retail sales
and inventory figures, it looks like the "preliminary" Q4 GDP report (due out
on Feb 28) will show a +0.2% growth rate, downwardly revised from the
"advance" report of +0.6%. We caution, however, that a big missing piece of
this puzzle, December international trade, is due out tomorrow. Trade has the
potential of altering the picture significantly.
Economic Outlook:
Initial unemployment claims for the week ended February 9 will be released on
Thursday at 8:30 (Consensus 347k). Claims in the previous week fell by a
less-than expected 22k to 356k. The latest two-week average of 367k has not
been that high since the spike in claims that occurred in 2005 in the
aftermath Hurricane Katrina. These data tentatively suggest that the labor
market may have taken a turn for the worse.
The December Trade Balance will also be reported at 8:30 (Forecast -$62.2bn,
Consensus -$61.5bn). The cost of imported oil dropped slightly in December.
This should limit the increase in the nominal cost of imports. Exports of
agricultural products are benefiting from price increases. Meanwhile,
non-agricultural exports are getting a boost from a lower dollar and have been
increasing at close to a 10% rate for most of 2007. For December, we expect an
improvement in the trade balance of about $1bn, bringing the deficit down to
$62.2bn.
Federal Reserve Chairman Bernanke will be testifying on the economy before the
Senate Banking Committee at 10:00 on Thursday. He will likely make the case
that economic activity has slowed significantly, due in part to the housing
market contraction and to tighter credit conditions in general. But he is
likely to hold out hope that the Fed's 225bp in easing since September, and
the tax rebates starting in May, will serve to keep the economy out of
recession.
US Markets Closing Comments - 12th Feb 2008
Economic Summary:
The equity markets were cheered by news that Warren Buffett's firm, Berkshire
Hathaway, offered to reinsure roughly $800bn of municipal bonds. Also, a plan
announced by Treasury Secretary Paulson to prevent (or at least forestall)
home foreclosures didn't hurt. Treasuries fell on the same news, and the
dollar was mixed.
The January Treasury budget balance was reported at +$17.8bn versus +$38.2bn
in January 2007. A fall off in corporate profits late in 2007 helped to lower
the surplus compared to a year ago. The budget balance for fiscal 2008 to date
(October through January) is -$87.7bn versus -$42.2bn for the same four months
in fiscal 2007. The federal government posted a deficit of $163bn in fiscal
2007. Factoring in the upcoming fiscal stimulus package, we expect the deficit
to balloon to $381bn this fiscal year.
Economic Outlook:
Retail sales for January will be reported at 8:30 on Wednesday (Forecast
+0.2%/+0.5%, Consensus -0.3%/+0.2%). Retail sales may be positive in January
but mainly because of rising prices of such inelastic goods as food and
gasoline. Sales of autos and homerelated goods like furniture and building
materials probably declined in the month. We put overall retail sales up 0.2%
in January and expect a 0.5% rise excluding autos. Our forecast incorporates a
1.0% decline in auto sales and a 2.5% increase in gasoline sales. Excluding gas
sales alone, we put retail sales down 0.1% in January.
December business inventories are due out at 10:00 (Forecast +0.4%, Consensus
+0.5%). Business inventories is composed of factory inventories, wholesale
inventories, and retail inventories. Factory inventories were up 0.8% for
December, and wholesale inventories jumped 1.1%, boosted by higher prices --
particularly higher prices for petroleum goods. This larger-than-expected
wholesale inventories figure suggests that our forecast of +0.4% for December
business inventories may be too low.
Market Summary:
The Fed reported that Monday's $30bn 28-day TAF auction had a stop-out rate of
3.01%, 15bp above the minimum bid-rate of 2.86%. The bid-to-cover was 1.95,
above the 1.55 average of the two previous auctions. There were 66 bidders
this time around, above the 54 average of the two January auctions. One
possible reason for the more aggressive bidding in yesterday's auction was the
fact $30bn in TAF loans were maturing from 28- days ago. Previous TAF auctions
had provided $10-to-$20bn of net new reserves.
The equity markets were cheered by news that Warren Buffett's firm, Berkshire
Hathaway, offered to reinsure roughly $800bn of municipal bonds. Also, a plan
announced by Treasury Secretary Paulson to prevent (or at least forestall)
home foreclosures didn't hurt. Treasuries fell on the same news, and the
dollar was mixed.
The January Treasury budget balance was reported at +$17.8bn versus +$38.2bn
in January 2007. A fall off in corporate profits late in 2007 helped to lower
the surplus compared to a year ago. The budget balance for fiscal 2008 to date
(October through January) is -$87.7bn versus -$42.2bn for the same four months
in fiscal 2007. The federal government posted a deficit of $163bn in fiscal
2007. Factoring in the upcoming fiscal stimulus package, we expect the deficit
to balloon to $381bn this fiscal year.
Economic Outlook:
Retail sales for January will be reported at 8:30 on Wednesday (Forecast
+0.2%/+0.5%, Consensus -0.3%/+0.2%). Retail sales may be positive in January
but mainly because of rising prices of such inelastic goods as food and
gasoline. Sales of autos and homerelated goods like furniture and building
materials probably declined in the month. We put overall retail sales up 0.2%
in January and expect a 0.5% rise excluding autos. Our forecast incorporates a
1.0% decline in auto sales and a 2.5% increase in gasoline sales. Excluding gas
sales alone, we put retail sales down 0.1% in January.
December business inventories are due out at 10:00 (Forecast +0.4%, Consensus
+0.5%). Business inventories is composed of factory inventories, wholesale
inventories, and retail inventories. Factory inventories were up 0.8% for
December, and wholesale inventories jumped 1.1%, boosted by higher prices --
particularly higher prices for petroleum goods. This larger-than-expected
wholesale inventories figure suggests that our forecast of +0.4% for December
business inventories may be too low.
Market Summary:
The Fed reported that Monday's $30bn 28-day TAF auction had a stop-out rate of
3.01%, 15bp above the minimum bid-rate of 2.86%. The bid-to-cover was 1.95,
above the 1.55 average of the two previous auctions. There were 66 bidders
this time around, above the 54 average of the two January auctions. One
possible reason for the more aggressive bidding in yesterday's auction was the
fact $30bn in TAF loans were maturing from 28- days ago. Previous TAF auctions
had provided $10-to-$20bn of net new reserves.
Financials Daily - 14th Feb 2008
US: U.S. stocks rose for a third day, the longest stretch of gains in 2008, after increased demand at Applied Materials Inc. spurred a technology rally and energy shares advanced on higher gas-station sales.
Europe: European stocks erased their earlier gains. ABB Ltd., the world's largest maker of power networks, and software maker Dassault Systemes SA dropped.
Asia: Asian stocks rose for a second day, led by commodity producers and shipping lines, on speculation demand for fuel and metals will outstrip supply after recent storms in China toppled power lines and cut output.
Commodities: Crude oil rose after government reports showed that U.S. retail sales unexpectedly climbed and gasoline demand increased. Gold, little changed in New York, may decline on speculation a rally in equities will reduce the appeal of the precious metal as alternative investment. Silver gained.
Currencies: The pound climbed to a two-week high against the euro after the Bank of England raised its inflation forecast, prompting traders to pare bets on interest-rate cuts.
Source: Bloomberg
Europe: European stocks erased their earlier gains. ABB Ltd., the world's largest maker of power networks, and software maker Dassault Systemes SA dropped.
Asia: Asian stocks rose for a second day, led by commodity producers and shipping lines, on speculation demand for fuel and metals will outstrip supply after recent storms in China toppled power lines and cut output.
Commodities: Crude oil rose after government reports showed that U.S. retail sales unexpectedly climbed and gasoline demand increased. Gold, little changed in New York, may decline on speculation a rally in equities will reduce the appeal of the precious metal as alternative investment. Silver gained.
Currencies: The pound climbed to a two-week high against the euro after the Bank of England raised its inflation forecast, prompting traders to pare bets on interest-rate cuts.
Source: Bloomberg
Wednesday, February 13, 2008
Commodities Daily - 13th Feb 2008
Spotlight: Oil fell on forecasts U.S. inventories gained for a fifth week. Wheat fell, capping the biggest two-day loss since 2003. Cocoa extended a rally to the highest since 1985 as U.K. pound rose. Gold, silver, platinum and palladium fell.
Energy: Crude oil fell for the first time in four days on forecasts that a government report tomorrow will show U.S. stockpiles increased for a fifth week. Natural gas fell, amid speculation higher temperatures may pare demand of the fuel for heating. Gasoline futures fell before a government report that's expected to show a 14th consecutive rise in U.S. inventories.
Agriculture: Wheat fell, capping the biggest two-day loss since 2003, on speculation that farmers will increase planting to take advantage of prices that have doubled to a record in the past year. Corn fell on speculation overseas grain demand is slowing after prices surged to a record. Notably, soybeans fell, erasing an earlier gain, on speculation investors will sell commodities and buy more stocks.
Sugar prices fell the most in a week on speculation that a global surplus and lower crude oil futures may slow demand. Cocoa extended a rally to the highest since 1985 on speculation the U.K. pound's rise against the U.S. dollar is boosting purchases of futures in New York. Coffee rose to the highest since 1998 as exchange inventories dropped.
Precious Metals: Gold fell the most in a week as a rally in equities reduced the appeal of the precious metal as an alternative investment. Besides, platinum fell from a record on concern that industrial demand for the metal may ease after prices rose 27 percent this year. Silver and palladium fell.
Industrial Metals: Copper rose for the fifth straight session on concern supplies will trail demand for the metal used.
Energy: Crude oil fell for the first time in four days on forecasts that a government report tomorrow will show U.S. stockpiles increased for a fifth week. Natural gas fell, amid speculation higher temperatures may pare demand of the fuel for heating. Gasoline futures fell before a government report that's expected to show a 14th consecutive rise in U.S. inventories.
Agriculture: Wheat fell, capping the biggest two-day loss since 2003, on speculation that farmers will increase planting to take advantage of prices that have doubled to a record in the past year. Corn fell on speculation overseas grain demand is slowing after prices surged to a record. Notably, soybeans fell, erasing an earlier gain, on speculation investors will sell commodities and buy more stocks.
Sugar prices fell the most in a week on speculation that a global surplus and lower crude oil futures may slow demand. Cocoa extended a rally to the highest since 1985 on speculation the U.K. pound's rise against the U.S. dollar is boosting purchases of futures in New York. Coffee rose to the highest since 1998 as exchange inventories dropped.
Precious Metals: Gold fell the most in a week as a rally in equities reduced the appeal of the precious metal as an alternative investment. Besides, platinum fell from a record on concern that industrial demand for the metal may ease after prices rose 27 percent this year. Silver and palladium fell.
Industrial Metals: Copper rose for the fifth straight session on concern supplies will trail demand for the metal used.
Financials Daily - 13th Feb 2008
US: U.S. stocks rose for a second day, led by financial shares, on expectations Warren Buffett, the world's No. 1 investor, will help stem credit losses by offering to shore up the municipal bond market.
Europe: European stocks advanced the most in two weeks after Warren Buffett offered to assume liabilities of some bond insurers and investors speculated a plan to help U.S. borrowers will shore up the economy.
Asia: Asian stocks advanced for the first time in three days, led by BHP Billiton Ltd. and Inpex Holdings Inc. after oil and metals prices climbed.
Commodities: Crude oil was little changed in New York after falling yesterday for the first time in four days on forecasts that a government report will show U.S. stockpiles increased for a fifth week. Gold futures fell the most in a week as a rally in equities reduced the appeal of the precious metal as an alternative investment. Silver also declined.
Currencies: The dollar may fall for a fourth day against the euro on speculation a government report will show U.S. retail sales dropped in January, bolstering speculation the economy is headed for a recession.
Source: Bloomberg
Europe: European stocks advanced the most in two weeks after Warren Buffett offered to assume liabilities of some bond insurers and investors speculated a plan to help U.S. borrowers will shore up the economy.
Asia: Asian stocks advanced for the first time in three days, led by BHP Billiton Ltd. and Inpex Holdings Inc. after oil and metals prices climbed.
Commodities: Crude oil was little changed in New York after falling yesterday for the first time in four days on forecasts that a government report will show U.S. stockpiles increased for a fifth week. Gold futures fell the most in a week as a rally in equities reduced the appeal of the precious metal as an alternative investment. Silver also declined.
Currencies: The dollar may fall for a fourth day against the euro on speculation a government report will show U.S. retail sales dropped in January, bolstering speculation the economy is headed for a recession.
Source: Bloomberg
Tuesday, February 12, 2008
Commodities Daily - 12th Feb 2008
Spotlight: Oil rose to one-month high on refinery shutdown, natural gas and heating oil advanced on the back of colder weather. Wheat fell from a record in Chicago after the exchange expanded daily pricing limits. Gold and silver rose on demand for inflation hedge.
Energy: Crude oil rose to a one-month high after Valero Energy Corp. shut its Delaware refinery because of a power failure yesterday and cold weather swept across the northern U.S. Natural gas and heating oil soared on the back of colder weather will linger into next week.
Agriculture: Wheat fell from a record in Chicago after the exchange expanded daily pricing limits, clearing the way for sales that had been halted during the 16 percent rally last week, the biggest ever. Notably, corn fell and soybeans dropped the most in two weeks on speculation rains will help harvests in Brazil and Argentina, the biggest exporters of the crops after the U.S.
Cotton fell to a six-week low on signs global demand will slow. However, coffee rose to its highest in almost a decade as Colombia and Vietnam harvested less, tightening supplies. Cocoa rose on speculation that investors are betting commodities will outpace stocks again this year.
Precious Metals: Gold futures rose to a one-week high after energy costs climbed. Platinum rose to record on supply concerns. Silver and palladium rose.
Industrial Metals: Copper rose to the highest in more than three months as falling production and slumping inventories heightened speculation that metal supplies will trail demand.
Energy: Crude oil rose to a one-month high after Valero Energy Corp. shut its Delaware refinery because of a power failure yesterday and cold weather swept across the northern U.S. Natural gas and heating oil soared on the back of colder weather will linger into next week.
Agriculture: Wheat fell from a record in Chicago after the exchange expanded daily pricing limits, clearing the way for sales that had been halted during the 16 percent rally last week, the biggest ever. Notably, corn fell and soybeans dropped the most in two weeks on speculation rains will help harvests in Brazil and Argentina, the biggest exporters of the crops after the U.S.
Cotton fell to a six-week low on signs global demand will slow. However, coffee rose to its highest in almost a decade as Colombia and Vietnam harvested less, tightening supplies. Cocoa rose on speculation that investors are betting commodities will outpace stocks again this year.
Precious Metals: Gold futures rose to a one-week high after energy costs climbed. Platinum rose to record on supply concerns. Silver and palladium rose.
Industrial Metals: Copper rose to the highest in more than three months as falling production and slumping inventories heightened speculation that metal supplies will trail demand.
Financials Daily - 12th Feb 2008
US: U.S. stocks rose as a rally in oil prices boosted energy shares, outweighing concern that financial companies face more writedowns after American International Group Inc. said it overstated the value of some assets.
Europe: European stocks fell after the Group of Seven said financial-market turmoil will hurt the economy and auditors found a ``material weakness'' in how American International Group Inc. values its credit-default swap portfolio.
Asia: Asian stocks fell, led by Commonwealth Bank of Australia and Kookmin Bank, after the Group of Seven policy makers said financial-market turmoil will sap global economic growth.
Commodities: Crude oil rose to a one-month high after Valero Energy Corp. shut its Delaware refinery because of a storm-related power failure yesterday and cold weather moved across the northern U.S. Gold futures rose to a one-week high after energy costs climbed, boosting the appeal of the precious metal as a hedge against inflation. Silver extended a rally to the highest since 1980.
Currencies: The yen rose the most this month against the dollar after the Group of Seven nations warned of further financial-market turmoil, spurring investors to reduce holdings of higher-yielding assets bought with loans from Japan.
Source: Bloomberg
Europe: European stocks fell after the Group of Seven said financial-market turmoil will hurt the economy and auditors found a ``material weakness'' in how American International Group Inc. values its credit-default swap portfolio.
Asia: Asian stocks fell, led by Commonwealth Bank of Australia and Kookmin Bank, after the Group of Seven policy makers said financial-market turmoil will sap global economic growth.
Commodities: Crude oil rose to a one-month high after Valero Energy Corp. shut its Delaware refinery because of a storm-related power failure yesterday and cold weather moved across the northern U.S. Gold futures rose to a one-week high after energy costs climbed, boosting the appeal of the precious metal as a hedge against inflation. Silver extended a rally to the highest since 1980.
Currencies: The yen rose the most this month against the dollar after the Group of Seven nations warned of further financial-market turmoil, spurring investors to reduce holdings of higher-yielding assets bought with loans from Japan.
Source: Bloomberg
Wednesday, February 6, 2008
Commodities Daily -6th Feb 2008
Spotlight: Commodity prices dropped on concern the U.S. is headed for a recession. Gold and platinum fell. Monsanto Co. said Japan, the Philippines and Taiwan have approved imports of its new genetically modified soybeans.
Energy: Crude oil fell more than $1 a barrel after a report showed that U.S. service industries contracted in January, a sign of a slowing economy and reduced energy demand. BP Plc, Europe's second-biggest oil company, posted a 53 percent jump in fourth-quarter profit and increased its dividend after production rose for the first time since 2005.
Agriculture: Wheat futures limit up in early trade yesterday on shrinking supplies of high-protein spring varieties from the U.S. and Canada, the two largest exporters. Wheat jumped 30 cents, or 3.1 percent, to $10.03 a bushel in Chicago. Corn and soybeans fell on speculation that declining energy costs will reduce demand for biofuels made from crops. Corn fell 1.25 cents, or 0.2 percent, to $5.0925 a bushel in Chicago. Soybeans fell 3 cents, or 0.2 percent, to $13.23 a bushel in Chicago.
Precious Metals: Gold futures fell to the lowest in more than a week after the dollar rose against the euro, eroding the appeal of the precious metal as an alternative investment. Gold tumbled $19.10, or 2.1 percent, to $890.30 an ounce in New York. Silver dropped 43.5 cents, or 2.6 percent, to $16.345 an ounce.
Industrial Metals: Copper dropped the most in almost two weeks after a report showed U.S. services industries unexpectedly shrank last month, renewing concern that the world's largest economy is slipping into a recession. LME copper for three-month fell $130 and settled at $7,130 a tonne.
(Source: Bloomberg)
Energy: Crude oil fell more than $1 a barrel after a report showed that U.S. service industries contracted in January, a sign of a slowing economy and reduced energy demand. BP Plc, Europe's second-biggest oil company, posted a 53 percent jump in fourth-quarter profit and increased its dividend after production rose for the first time since 2005.
Agriculture: Wheat futures limit up in early trade yesterday on shrinking supplies of high-protein spring varieties from the U.S. and Canada, the two largest exporters. Wheat jumped 30 cents, or 3.1 percent, to $10.03 a bushel in Chicago. Corn and soybeans fell on speculation that declining energy costs will reduce demand for biofuels made from crops. Corn fell 1.25 cents, or 0.2 percent, to $5.0925 a bushel in Chicago. Soybeans fell 3 cents, or 0.2 percent, to $13.23 a bushel in Chicago.
Precious Metals: Gold futures fell to the lowest in more than a week after the dollar rose against the euro, eroding the appeal of the precious metal as an alternative investment. Gold tumbled $19.10, or 2.1 percent, to $890.30 an ounce in New York. Silver dropped 43.5 cents, or 2.6 percent, to $16.345 an ounce.
Industrial Metals: Copper dropped the most in almost two weeks after a report showed U.S. services industries unexpectedly shrank last month, renewing concern that the world's largest economy is slipping into a recession. LME copper for three-month fell $130 and settled at $7,130 a tonne.
(Source: Bloomberg)
Financials Daily - 6th Feb 2008
US: U.S. stocks tumbled, pushing the Standard & Poor's 500 Index down the most in 11 months, after the first contraction in service industries since 2002 reinforced concern the economy is in a recession.
Europe: European stocks fell the most in two weeks after a service-industries report strengthened speculation the U.S. is in a recession and National Semiconductor Corp. and Heidelberger Druckmaschinen AG cut their forecasts.
Asia: Asian stocks fell for the first time in four days as lower profit forecasts from Yamaha Motor Corp. and Olympus Corp. and downgrades of Posco and South Korean shipbuilders fueled concern regional earnings growth will slow.
Commodities: Crude oil fell more than $1 a barrel after a report showed that U.S. service industries contracted in January, a sign of a slowing economy and reduced energy demand. Gold futures fell to the lowest in more than a week after the dollar rose against the euro, eroding the appeal of the precious metal as an alternative investment.
Currencies: The euro declined the most against the dollar in almost two months after Europe's service industries weakened and raised concern that Jean-Claude Trichet's reluctance to cut interest rates will hamper growth.
Europe: European stocks fell the most in two weeks after a service-industries report strengthened speculation the U.S. is in a recession and National Semiconductor Corp. and Heidelberger Druckmaschinen AG cut their forecasts.
Asia: Asian stocks fell for the first time in four days as lower profit forecasts from Yamaha Motor Corp. and Olympus Corp. and downgrades of Posco and South Korean shipbuilders fueled concern regional earnings growth will slow.
Commodities: Crude oil fell more than $1 a barrel after a report showed that U.S. service industries contracted in January, a sign of a slowing economy and reduced energy demand. Gold futures fell to the lowest in more than a week after the dollar rose against the euro, eroding the appeal of the precious metal as an alternative investment.
Currencies: The euro declined the most against the dollar in almost two months after Europe's service industries weakened and raised concern that Jean-Claude Trichet's reluctance to cut interest rates will hamper growth.
US Markets Closing Comments - 5th Feb 2008
Economic Summary:
There was only one monthly indicator reported today, the ISM non-manufacturing
index, but it had an outsized impact on the markets. A sharp decline in this
index, while somewhat suspicious, unsettled equities and drove Treasuries
higher. Concerned words from normally-hawkish Richmond Fed President Lacker
about the increased likelihood of recession exacerbated the market moves in
the early afternoon. And Fitch's decision to put MBIA on negative watch,
announced just before the market close, pushed equities to the lows of the
session. While off its intraday highs, the dollar rose despite the news,
partly because Europe posted surprisingly weak service industry data of its
own.
The Institute for Supply Management's Non-manufacturing Index (NMI) for
January fell to a below neutral 44.6 from 53.2 in December. Like its
manufacturing counterpart, a reading of below 50 on the NMI indicates a
contraction in activity. January's was the first sub-50 reading for the
non-manufacturing sector since March 2003. Moreover, 44.6 was the lowest
reading since the ISM began surveying non-manufacturing activity in July 1997.
While a deterioration in the ISM non-manufacturing index was not particularly
surprising, the severity of the decline reported for January was hard to
believe, especially as it came amid an annual revision to the seasonal factors
and a new methodology for compiling the data. Nevertheless, the data
reinforced the general impression given by other data that the economy is weak.
Economic Outlook:
The preliminary readings on Q4 Productivity and Unit Labor Costs will be
released at 8:30 on Wednesday (Forecast +1.0%/+2.5%, Consensus +0.5%/+3.5%).
Given the tepid annualized growth rate of 0.6% reported for Q4 GDP, it appears
that productivity grew at only about 1.0% last quarter. This rate would
represent a substantial deceleration from the 6.3% growth in productivity
reported for Q3. With productivity growth slowing, ULC probably accelerated,
rising about 2.5% after a 2.0% drop in Q3. That would translate into a year
over-year ULC growth rate of +1.1% for Q4, down from +3.0% YoY through Q3.
Market Summary
The broad equity indexes were weak from the opening bell after disappointing
service sector news in Europe drove down stocks abroad. A record drop in the
newly-calculated ISM non-manufacturing index added momentum to the decline,
and Richmond Fed President Lacker didn't help by mentioning the "R" word.
Fitch placed MBIA's AAA insurer financial strength reading on negative watch
17 minutes before the market close, and that was the final straw. The major
indexes closed down some 3% at or very close to their intraday lows. (DJ INDU
12265, -370; S&P500 1337, -44; NASDAQ 2310, -73)
There was only one monthly indicator reported today, the ISM non-manufacturing
index, but it had an outsized impact on the markets. A sharp decline in this
index, while somewhat suspicious, unsettled equities and drove Treasuries
higher. Concerned words from normally-hawkish Richmond Fed President Lacker
about the increased likelihood of recession exacerbated the market moves in
the early afternoon. And Fitch's decision to put MBIA on negative watch,
announced just before the market close, pushed equities to the lows of the
session. While off its intraday highs, the dollar rose despite the news,
partly because Europe posted surprisingly weak service industry data of its
own.
The Institute for Supply Management's Non-manufacturing Index (NMI) for
January fell to a below neutral 44.6 from 53.2 in December. Like its
manufacturing counterpart, a reading of below 50 on the NMI indicates a
contraction in activity. January's was the first sub-50 reading for the
non-manufacturing sector since March 2003. Moreover, 44.6 was the lowest
reading since the ISM began surveying non-manufacturing activity in July 1997.
While a deterioration in the ISM non-manufacturing index was not particularly
surprising, the severity of the decline reported for January was hard to
believe, especially as it came amid an annual revision to the seasonal factors
and a new methodology for compiling the data. Nevertheless, the data
reinforced the general impression given by other data that the economy is weak.
Economic Outlook:
The preliminary readings on Q4 Productivity and Unit Labor Costs will be
released at 8:30 on Wednesday (Forecast +1.0%/+2.5%, Consensus +0.5%/+3.5%).
Given the tepid annualized growth rate of 0.6% reported for Q4 GDP, it appears
that productivity grew at only about 1.0% last quarter. This rate would
represent a substantial deceleration from the 6.3% growth in productivity
reported for Q3. With productivity growth slowing, ULC probably accelerated,
rising about 2.5% after a 2.0% drop in Q3. That would translate into a year
over-year ULC growth rate of +1.1% for Q4, down from +3.0% YoY through Q3.
Market Summary
The broad equity indexes were weak from the opening bell after disappointing
service sector news in Europe drove down stocks abroad. A record drop in the
newly-calculated ISM non-manufacturing index added momentum to the decline,
and Richmond Fed President Lacker didn't help by mentioning the "R" word.
Fitch placed MBIA's AAA insurer financial strength reading on negative watch
17 minutes before the market close, and that was the final straw. The major
indexes closed down some 3% at or very close to their intraday lows. (DJ INDU
12265, -370; S&P500 1337, -44; NASDAQ 2310, -73)
Tuesday, February 5, 2008
Yen Near Three-Week Low Versus Australian Dollar as RBA Meets
By Kosuke Goto and David McIntyre
Feb. 5 (Bloomberg) -- The yen traded near a three-week low against the Australian dollar on speculation the central bank of the southern hemisphere nation will raise its benchmark interest rate today.
The currency may weaken for a fourth day against the New Zealand dollar as a decline in expectations for price swings encourages investors to purchase higher-yielding assets funded in Japan. Volatility fell to the lowest level in almost a month, improving confidence in so-called carry trades.
``You expect the yen to weaken on the back of carry trades rallying,'' said Joanne Masters, a currency strategist at Macquarie Bank Ltd. in Sydney. ``There's a bit more to go for the Australian dollar on the confirmation of a rate hike.''
The yen traded at 96.82 against the Australian dollar at 9:11 a.m. in Tokyo from 96.91 late in New York yesterday, when it fell to 97.21 yen, the lowest since Jan. 15. The Australian dollar was at 90.71 U.S. cents after reaching an almost three- month high of 91.01 cents.
Japan's currency was little changed at 106.68 per dollar and 158.18 a euro, from 106.71 and 158.26 in New York yesterday, respectively. The dollar traded at $1.4825 per euro from $1.4830.
Australian Interest Rate
All 27 economists surveyed by Bloomberg News forecast the Australian central bank will raise its benchmark rate a quarter- percentage point to 7 percent, the highest level since 1996. Policy makers will announce their decision at 2:30 p.m. in Sydney.
In carry trades, speculators get funds in a country with low borrowing costs such as Japan and invest in one with higher returns, earning the spread between the two. Japan's benchmark rate is 0.5 percent, the lowest among industrialized nations.
One-month implied volatility for the yen fell to 11.48 percent today, the lowest since Jan. 10. Dealers quote implied volatility, a gauge of expectations for currency moves, as part of pricing options.
Service Growth
Gains in the dollar may be limited before a U.S. report today that is likely to show service industries expanded in January at the slowest pace in almost a year. The Institute for Supply Management's index of non-manufacturing businesses, which make up almost 90 percent of the economy, dropped to 53 from 54.4, according to the median estimate of economists in a Bloomberg News survey.
``The dollar is an unreliable currency now,'' said Yuuki Sakurai, a Tokyo-based investment manager at Fukoku Mutual Life Insurance Co., which manages the equivalent of $41.5 billion in assets. ``The U.S. housing markets will remain sluggish, buffeting the economy.''
The U.S. currency may fall to 105.80 yen this week, Sakurai said.
ECB
The euro may strengthen for the second day as traders cut bets that the European Central Bank will reduce borrowing costs this year. ECB policy maker Klaus Liebscher said the central bank will do what is needed to prevent a price-wage spiral from boosting inflation, according to a statement published by the Austrian central bank.
The ECB will leave its benchmark interest rate at a six- year high of 4 percent on Feb. 7, all 55 economists surveyed by Bloomberg forecast. Interest-rate futures show the implied rate on the June Euribor contract rose to 4.03 percent yesterday, from 3.96 percent on Feb. 1. The rate averaged 18 basis points more than the ECB's benchmark from 1999 until August, when the collapse of the U.S. subprime-mortgage market sparked a squeeze on credit.
The dollar will trade at $1.48 per euro by the end of this quarter and $1.40 by year-end, according to the median forecast of 44 analysts in a Bloomberg News survey.
Feb. 5 (Bloomberg) -- The yen traded near a three-week low against the Australian dollar on speculation the central bank of the southern hemisphere nation will raise its benchmark interest rate today.
The currency may weaken for a fourth day against the New Zealand dollar as a decline in expectations for price swings encourages investors to purchase higher-yielding assets funded in Japan. Volatility fell to the lowest level in almost a month, improving confidence in so-called carry trades.
``You expect the yen to weaken on the back of carry trades rallying,'' said Joanne Masters, a currency strategist at Macquarie Bank Ltd. in Sydney. ``There's a bit more to go for the Australian dollar on the confirmation of a rate hike.''
The yen traded at 96.82 against the Australian dollar at 9:11 a.m. in Tokyo from 96.91 late in New York yesterday, when it fell to 97.21 yen, the lowest since Jan. 15. The Australian dollar was at 90.71 U.S. cents after reaching an almost three- month high of 91.01 cents.
Japan's currency was little changed at 106.68 per dollar and 158.18 a euro, from 106.71 and 158.26 in New York yesterday, respectively. The dollar traded at $1.4825 per euro from $1.4830.
Australian Interest Rate
All 27 economists surveyed by Bloomberg News forecast the Australian central bank will raise its benchmark rate a quarter- percentage point to 7 percent, the highest level since 1996. Policy makers will announce their decision at 2:30 p.m. in Sydney.
In carry trades, speculators get funds in a country with low borrowing costs such as Japan and invest in one with higher returns, earning the spread between the two. Japan's benchmark rate is 0.5 percent, the lowest among industrialized nations.
One-month implied volatility for the yen fell to 11.48 percent today, the lowest since Jan. 10. Dealers quote implied volatility, a gauge of expectations for currency moves, as part of pricing options.
Service Growth
Gains in the dollar may be limited before a U.S. report today that is likely to show service industries expanded in January at the slowest pace in almost a year. The Institute for Supply Management's index of non-manufacturing businesses, which make up almost 90 percent of the economy, dropped to 53 from 54.4, according to the median estimate of economists in a Bloomberg News survey.
``The dollar is an unreliable currency now,'' said Yuuki Sakurai, a Tokyo-based investment manager at Fukoku Mutual Life Insurance Co., which manages the equivalent of $41.5 billion in assets. ``The U.S. housing markets will remain sluggish, buffeting the economy.''
The U.S. currency may fall to 105.80 yen this week, Sakurai said.
ECB
The euro may strengthen for the second day as traders cut bets that the European Central Bank will reduce borrowing costs this year. ECB policy maker Klaus Liebscher said the central bank will do what is needed to prevent a price-wage spiral from boosting inflation, according to a statement published by the Austrian central bank.
The ECB will leave its benchmark interest rate at a six- year high of 4 percent on Feb. 7, all 55 economists surveyed by Bloomberg forecast. Interest-rate futures show the implied rate on the June Euribor contract rose to 4.03 percent yesterday, from 3.96 percent on Feb. 1. The rate averaged 18 basis points more than the ECB's benchmark from 1999 until August, when the collapse of the U.S. subprime-mortgage market sparked a squeeze on credit.
The dollar will trade at $1.48 per euro by the end of this quarter and $1.40 by year-end, according to the median forecast of 44 analysts in a Bloomberg News survey.
Commodities Daily - 5th Feb 2008
Spotlight: Gold and silver fell while platinum surged to a record. Oil rose as dense sea fog slowed crude imports into the Houston Ship Channel. Wheat limit up on Monday as demand for spring wheat strengthened while inventories remained at a low.
Energy: Crude oil rose after Turkish planes attacked suspected Kurdish insurgent bases and the Houston Ship Channel reopened following an 18-hour shutdown for fog. Oil rebounded more than a $1 to over $90 a barrel on Monday as dense sea fog slowed crude imports into the Houston Ship Channel, the waterway to the busiest U.S. petrochemical port. President George W. Bush is asking Congress to fund a 4.7 percent increase for the Energy Department's budget, the largest request for the department in five years.
Agriculture: Wheat in CBOT soared on Monday as demand for spring wheat has been strong of late, with inventories hovering at 30-year lows. CBOT wheat limit-up 30 cents and settled at $9.73 a bushel. Soybean futures also soared yesterday amid beginning of the year fund-buying, Brazilian crop concerns and spillover buying from soyoil. Soyoil futures hit record highs yesterday amid a strong showing from vegetable oils. Crude Palm Oil rose 3.5 percent on Monday after Indonesia said it will impose a 20-25 percent export tax on CPO and its by-products if international prices hit $1,200 and $1,300 a tonne.
Precious Metals: Gold futures extended Friday’s losses but finished off the low as profit-taking and technical weakness led investors to sell. Active month gold contract settled at $909.40 an ounce, down $4.10 from the previous day. Platinum futures on the other hand scaled to fresh record highs above $1,800 an ounce as power outages in South Africa disrupted mine production in the country. Platinum settled at $1,797.60 an ounce, up $27.40 from a day ago.
Industrial Metals: Copper prices firmed on Monday on signs of stronger demand and as the market feared about supply disruptions in China. Copper for three-month delivery in LME settled at $7,260 a tonne. Copper supply in China has been quite tight as the country battles its worst winter in five decades. Aluminium also closed higher as production of the metal used in power, packaging and construction is energy intensive and speculators watching the power problems in China and South Africa have been betting on higher prices. Aluminium closed at $2,665 a tonne.
(Source: Bloomberg)
Energy: Crude oil rose after Turkish planes attacked suspected Kurdish insurgent bases and the Houston Ship Channel reopened following an 18-hour shutdown for fog. Oil rebounded more than a $1 to over $90 a barrel on Monday as dense sea fog slowed crude imports into the Houston Ship Channel, the waterway to the busiest U.S. petrochemical port. President George W. Bush is asking Congress to fund a 4.7 percent increase for the Energy Department's budget, the largest request for the department in five years.
Agriculture: Wheat in CBOT soared on Monday as demand for spring wheat has been strong of late, with inventories hovering at 30-year lows. CBOT wheat limit-up 30 cents and settled at $9.73 a bushel. Soybean futures also soared yesterday amid beginning of the year fund-buying, Brazilian crop concerns and spillover buying from soyoil. Soyoil futures hit record highs yesterday amid a strong showing from vegetable oils. Crude Palm Oil rose 3.5 percent on Monday after Indonesia said it will impose a 20-25 percent export tax on CPO and its by-products if international prices hit $1,200 and $1,300 a tonne.
Precious Metals: Gold futures extended Friday’s losses but finished off the low as profit-taking and technical weakness led investors to sell. Active month gold contract settled at $909.40 an ounce, down $4.10 from the previous day. Platinum futures on the other hand scaled to fresh record highs above $1,800 an ounce as power outages in South Africa disrupted mine production in the country. Platinum settled at $1,797.60 an ounce, up $27.40 from a day ago.
Industrial Metals: Copper prices firmed on Monday on signs of stronger demand and as the market feared about supply disruptions in China. Copper for three-month delivery in LME settled at $7,260 a tonne. Copper supply in China has been quite tight as the country battles its worst winter in five decades. Aluminium also closed higher as production of the metal used in power, packaging and construction is energy intensive and speculators watching the power problems in China and South Africa have been betting on higher prices. Aluminium closed at $2,665 a tonne.
(Source: Bloomberg)
Financials Daily - 5th Feb 2008
US: U.S. stocks declined for the first time in three days after analysts told investors to sell American Express Co., Wells Fargo & Co. and Wachovia Corp. on concern a recession will worsen defaults among consumers.
Europe: European stocks pared gains as shares of Societe Generale SA and Vodafone Group Plc declined.
Asia: Asian stocks rose after Aluminum Corp. of China Ltd. bought a stake in Rio Tinto Group and Fortescue Metals Group Ltd. said it had held talks about selling shares.
Commodities: Crude oil was little changed in New York after rising more than $1 a barrel yesterday as Turkish planes attacked suspected Kurdish insurgent bases and the Houston Ship Channel reopened after an 18-hour shutdown for fog. Gold futures fell on speculation the dollar will rally later this year, eroding the appeal of the precious metal as an alternative to the U.S. currency. Silver also declined.
Currencies: The yen may weaken for a fourth day against the dollar as a decline in volatility is prompting investors to purchase higher-yielding assets funded by low-cost loans in Japan.
Source: Bloomberg
Europe: European stocks pared gains as shares of Societe Generale SA and Vodafone Group Plc declined.
Asia: Asian stocks rose after Aluminum Corp. of China Ltd. bought a stake in Rio Tinto Group and Fortescue Metals Group Ltd. said it had held talks about selling shares.
Commodities: Crude oil was little changed in New York after rising more than $1 a barrel yesterday as Turkish planes attacked suspected Kurdish insurgent bases and the Houston Ship Channel reopened after an 18-hour shutdown for fog. Gold futures fell on speculation the dollar will rally later this year, eroding the appeal of the precious metal as an alternative to the U.S. currency. Silver also declined.
Currencies: The yen may weaken for a fourth day against the dollar as a decline in volatility is prompting investors to purchase higher-yielding assets funded by low-cost loans in Japan.
Source: Bloomberg
Gold Increases in Asia on U.S. Negative Real Interest Rates
By Feiwen Rong
Feb. 4 (Bloomberg) -- Gold rose in Asia after the biggest decline in 11 weeks as negative real interest rates in the U.S. increased demand for the metal as an alternative investment.
The Federal Reserve cut borrowing costs by 1.25 percentage point to 3 percent in January. The three-month U.S. dollar London interbank offered rate, a lending benchmark that fluctuates depending on how willing banks are to lend to each other, fell below 3.1 percent on Feb. 1, the lowest since 2005, according to the British Bankers' Association.
The rate cuts pushed the ``real 3-month Libor rate even further into negative territory'' which has ``serious implications for the gold prices,'' analysts at Credit Suisse said in a report Feb. 1. ``Since gold is a non-yielding asset, its price should benefit, particularly in an environment of negative real rates.''
Bullion for immediate delivery gained as much as $7.42, or 0.8 percent, to $912.90 an ounce and traded at $909.45 at 3:56 p.m. Singapore time. The metal rose to a record $936.92 Feb. 1, before closing down 2.2 in the biggest one-day drop since Nov. 15. Silver for immediate delivery was little changed at $16.80 an ounce.
U.S. consumer prices rose 4.1 percent in the 12 months ended Dec. 31.
Gold also benefited from a rising euro against the dollar on speculation the European Central Bank will keep interest rates at a six-year high this week.
South Africa
Power shortages in South Africa also drove bullion's rally last week. Miners including Anglo Platinum Ltd. and Gold Fields Ltd. were raising electricity consumption to 90 percent of normal levels on Feb. 1 to boost output after cuts last week.
``The situation remains shaky,'' the Credit Suisse report said. Eskom Holdings Ltd., South Africa's state-owned power utility, said a generator at its Tutuka power station tripped late Feb. 2, reducing power supply by a further 640 megawatts.
Bullion for December delivery on the Tokyo Commodity Exchange fell 1.5 percent to 3,146 yen a gram ($916 an ounce) at the 5 p.m. local time.
Bullion for June delivery on the Shanghai Futures Exchange, the most active contract, closed down 3.15 yuan, or 1.4 percent, to 215.6 yuan a gram ($933 an ounce).
Gold for April delivery was little changed at $914.30 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange at the same time.
Feb. 4 (Bloomberg) -- Gold rose in Asia after the biggest decline in 11 weeks as negative real interest rates in the U.S. increased demand for the metal as an alternative investment.
The Federal Reserve cut borrowing costs by 1.25 percentage point to 3 percent in January. The three-month U.S. dollar London interbank offered rate, a lending benchmark that fluctuates depending on how willing banks are to lend to each other, fell below 3.1 percent on Feb. 1, the lowest since 2005, according to the British Bankers' Association.
The rate cuts pushed the ``real 3-month Libor rate even further into negative territory'' which has ``serious implications for the gold prices,'' analysts at Credit Suisse said in a report Feb. 1. ``Since gold is a non-yielding asset, its price should benefit, particularly in an environment of negative real rates.''
Bullion for immediate delivery gained as much as $7.42, or 0.8 percent, to $912.90 an ounce and traded at $909.45 at 3:56 p.m. Singapore time. The metal rose to a record $936.92 Feb. 1, before closing down 2.2 in the biggest one-day drop since Nov. 15. Silver for immediate delivery was little changed at $16.80 an ounce.
U.S. consumer prices rose 4.1 percent in the 12 months ended Dec. 31.
Gold also benefited from a rising euro against the dollar on speculation the European Central Bank will keep interest rates at a six-year high this week.
South Africa
Power shortages in South Africa also drove bullion's rally last week. Miners including Anglo Platinum Ltd. and Gold Fields Ltd. were raising electricity consumption to 90 percent of normal levels on Feb. 1 to boost output after cuts last week.
``The situation remains shaky,'' the Credit Suisse report said. Eskom Holdings Ltd., South Africa's state-owned power utility, said a generator at its Tutuka power station tripped late Feb. 2, reducing power supply by a further 640 megawatts.
Bullion for December delivery on the Tokyo Commodity Exchange fell 1.5 percent to 3,146 yen a gram ($916 an ounce) at the 5 p.m. local time.
Bullion for June delivery on the Shanghai Futures Exchange, the most active contract, closed down 3.15 yuan, or 1.4 percent, to 215.6 yuan a gram ($933 an ounce).
Gold for April delivery was little changed at $914.30 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange at the same time.
Bernanke Makes Bulls From Dollar Bears Seeing Growth (Update)
By Bo Nielsen
Feb. 4 (Bloomberg) -- Ben S. Bernanke's decision to lower interest rates 1.25 percentage points last month will end the dollar's two-year slide, according to the world's biggest currency traders.
For the first time since 2003, investors are focused on relative growth prospects rather than absolute borrowing costs, according to Geoffrey Yu, a London-based strategist with UBS AG, the No. 2 trader. The steepest cuts by a Federal Reserve chairman in seven years will support economic growth in the U.S. as Europe slows, said BNP Paribas SA, the most accurate currency forecaster Bloomberg tracks. The dollar will gain at least 9 percent against the euro this year, UBS and BNP predict.
``We're not chasing dollar weakness any lower,'' said Robert Robis, a fixed-income manager in New York at OppenheimerFunds Inc., which oversees $260 billion. ``The Fed's actions have avoided a long recession and we may start to see a recovery later this year.''
Robis has reduced the share of euro-denominated assets versus those linked to the dollar in his $9 billion portfolio. It now holds less than the benchmark index because he expects the U.S. currency to outperform. As recently as November, he was ``overweight'' the euro against the dollar.
Futures traders cut the value of contracts benefiting from a drop in the dollar to $13.9 billion as of Jan. 29, according to Charlotte, North Carolina-based Bank of America Corp., the second-largest U.S. bank by assets. That's down from a record $32.3 billion in November.
Yield Advantage
The dollar has gained 1.1 percent versus the euro to $1.4802 since sinking to an all-time low of $1.4967 on Nov. 23. The currency appreciated even as the yield advantage on a two- year German bund more than doubled to 1.28 percentage points over a comparable Treasury note, making bunds more appealing to international investors. The last time the spread was so large was 2002, when the euro surged 18 percent against the dollar.
Paris-based BNP, the most accurate of 31 firms surveyed about their currency predictions for the second half of 2007, is among the most bullish on the dollar in 2008 with its forecast of $1.36 per euro by yearend. Zurich-based UBS predicts $1.35. The median estimate calls for a 5.4 percent increase to $1.40 by the end of this year and a 6 percent gain to $1.32 in 2009. The dollar weakened 10.6 percent in 2007 and 11.4 percent in 2006 after strengthening 12.6 percent in 2005.
Fed Versus ECB
While two Fed cuts slashed the target rate for overnight loans between banks to 3 percent in nine days, the European Central Bank kept its benchmark rate unchanged at a seven-year high of 4 percent in an attempt to curb inflation. The ECB will keep rates unchanged at its Feb. 7 meeting, according to all 55 economists surveyed by Bloomberg News.
``If aggressive cuts by the Fed can stimulate the economy, then the U.S. will definitely lead the way in terms of economic recovery,'' Yu said. ``The ECB is behind the curve, so it's time to move back'' into the dollar, he said.
Deutsche Bank AG, the world's largest currency trader, predicts an 8 percent gain in the dollar this year as the euro- zone economy expands 1.6 percent, lagging behind the 1.9 percent growth projected for the U.S. For 2009, Frankfurt-based Deutsche Bank puts growth at 2.6 percent in the U.S. and 1.9 percent in Europe.
Maxime Tessier, head of foreign exchange at Caisse de Depot et Placement in Montreal, isn't counting on Bernanke. It may be too late for lower borrowing costs to keep the U.S. out of a recession, he said. The Labor Department said Feb. 1 that payrolls fell by 17,000 in January, the first decline since August 2003.
2001 Reprisal
``From our vantage point it doesn't look very good and every week we re-evaluate the U.S. economy, it has deteriorated,'' said Tessier, whose firm manages $143 billion. ``It's too early to position your portfolio for a dollar rebound because a month from now the currency could be in rally mode, but it could also be a lot lower.''
The U.S. is entering the ``worst consumer recession since 1980,'' and the dollar will fall to $1.57 by the end of March before recovering to its current $1.48 by yearend, according to David Rosenberg, chief economist for North America in New York at Merrill Lynch & Co. The firm is the world's largest brokerage.
The dollar has benefited from Fed rate cuts before. During the first six months of 2001, the currency gained 10 percent against the euro as the central bank slashed its target 2.75 percentage points to below the ECB's benchmark refinance rate following the bursting of the technology bubble.
``We still believe the U.S. promises good returns,'' Sultan bin Sulayem, the chairman of state-owned investment group Dubai World, said Jan. 25 at the World Economic Forum in Davos, Switzerland. Dubai World agreed in August to invest as much as $5.1 billion in Kirk Kerkorian's Las Vegas-based casino group MGM Mirage.
Foreign Holdings
Middle Eastern and Asian investors have poured up to $39 billion into U.S. banks since August, according to Bloomberg calculations. Foreign holdings of U.S. securities rose a net $149.9 billion in November, the most in 22 months, the Treasury Department said last month in Washington. In October, the gain was $92.2 billion.
Investors say there are encouraging signs that business investment will hold up. Last week the House and Senate Finance Committees approved a fiscal stimulus package of as much as $157 billion proposed by President George W. Bush. The same day the Labor Department said the economy was shedding jobs, the Institute for Supply Management said its manufacturing index rose in January.
``A lot of the people are finding this is a good time to get back in the dollar,'' said Scott Ainsbury, a money manager who helps oversee $12 billion in currencies at FX Concepts Inc., a New York-based hedge fund.
Feb. 4 (Bloomberg) -- Ben S. Bernanke's decision to lower interest rates 1.25 percentage points last month will end the dollar's two-year slide, according to the world's biggest currency traders.
For the first time since 2003, investors are focused on relative growth prospects rather than absolute borrowing costs, according to Geoffrey Yu, a London-based strategist with UBS AG, the No. 2 trader. The steepest cuts by a Federal Reserve chairman in seven years will support economic growth in the U.S. as Europe slows, said BNP Paribas SA, the most accurate currency forecaster Bloomberg tracks. The dollar will gain at least 9 percent against the euro this year, UBS and BNP predict.
``We're not chasing dollar weakness any lower,'' said Robert Robis, a fixed-income manager in New York at OppenheimerFunds Inc., which oversees $260 billion. ``The Fed's actions have avoided a long recession and we may start to see a recovery later this year.''
Robis has reduced the share of euro-denominated assets versus those linked to the dollar in his $9 billion portfolio. It now holds less than the benchmark index because he expects the U.S. currency to outperform. As recently as November, he was ``overweight'' the euro against the dollar.
Futures traders cut the value of contracts benefiting from a drop in the dollar to $13.9 billion as of Jan. 29, according to Charlotte, North Carolina-based Bank of America Corp., the second-largest U.S. bank by assets. That's down from a record $32.3 billion in November.
Yield Advantage
The dollar has gained 1.1 percent versus the euro to $1.4802 since sinking to an all-time low of $1.4967 on Nov. 23. The currency appreciated even as the yield advantage on a two- year German bund more than doubled to 1.28 percentage points over a comparable Treasury note, making bunds more appealing to international investors. The last time the spread was so large was 2002, when the euro surged 18 percent against the dollar.
Paris-based BNP, the most accurate of 31 firms surveyed about their currency predictions for the second half of 2007, is among the most bullish on the dollar in 2008 with its forecast of $1.36 per euro by yearend. Zurich-based UBS predicts $1.35. The median estimate calls for a 5.4 percent increase to $1.40 by the end of this year and a 6 percent gain to $1.32 in 2009. The dollar weakened 10.6 percent in 2007 and 11.4 percent in 2006 after strengthening 12.6 percent in 2005.
Fed Versus ECB
While two Fed cuts slashed the target rate for overnight loans between banks to 3 percent in nine days, the European Central Bank kept its benchmark rate unchanged at a seven-year high of 4 percent in an attempt to curb inflation. The ECB will keep rates unchanged at its Feb. 7 meeting, according to all 55 economists surveyed by Bloomberg News.
``If aggressive cuts by the Fed can stimulate the economy, then the U.S. will definitely lead the way in terms of economic recovery,'' Yu said. ``The ECB is behind the curve, so it's time to move back'' into the dollar, he said.
Deutsche Bank AG, the world's largest currency trader, predicts an 8 percent gain in the dollar this year as the euro- zone economy expands 1.6 percent, lagging behind the 1.9 percent growth projected for the U.S. For 2009, Frankfurt-based Deutsche Bank puts growth at 2.6 percent in the U.S. and 1.9 percent in Europe.
Maxime Tessier, head of foreign exchange at Caisse de Depot et Placement in Montreal, isn't counting on Bernanke. It may be too late for lower borrowing costs to keep the U.S. out of a recession, he said. The Labor Department said Feb. 1 that payrolls fell by 17,000 in January, the first decline since August 2003.
2001 Reprisal
``From our vantage point it doesn't look very good and every week we re-evaluate the U.S. economy, it has deteriorated,'' said Tessier, whose firm manages $143 billion. ``It's too early to position your portfolio for a dollar rebound because a month from now the currency could be in rally mode, but it could also be a lot lower.''
The U.S. is entering the ``worst consumer recession since 1980,'' and the dollar will fall to $1.57 by the end of March before recovering to its current $1.48 by yearend, according to David Rosenberg, chief economist for North America in New York at Merrill Lynch & Co. The firm is the world's largest brokerage.
The dollar has benefited from Fed rate cuts before. During the first six months of 2001, the currency gained 10 percent against the euro as the central bank slashed its target 2.75 percentage points to below the ECB's benchmark refinance rate following the bursting of the technology bubble.
``We still believe the U.S. promises good returns,'' Sultan bin Sulayem, the chairman of state-owned investment group Dubai World, said Jan. 25 at the World Economic Forum in Davos, Switzerland. Dubai World agreed in August to invest as much as $5.1 billion in Kirk Kerkorian's Las Vegas-based casino group MGM Mirage.
Foreign Holdings
Middle Eastern and Asian investors have poured up to $39 billion into U.S. banks since August, according to Bloomberg calculations. Foreign holdings of U.S. securities rose a net $149.9 billion in November, the most in 22 months, the Treasury Department said last month in Washington. In October, the gain was $92.2 billion.
Investors say there are encouraging signs that business investment will hold up. Last week the House and Senate Finance Committees approved a fiscal stimulus package of as much as $157 billion proposed by President George W. Bush. The same day the Labor Department said the economy was shedding jobs, the Institute for Supply Management said its manufacturing index rose in January.
``A lot of the people are finding this is a good time to get back in the dollar,'' said Scott Ainsbury, a money manager who helps oversee $12 billion in currencies at FX Concepts Inc., a New York-based hedge fund.
Bank of England May Cut Interest Rate a Quarter Point to 5.25%
By Jennifer Ryan
Feb. 4 (Bloomberg) -- The Bank of England will probably cut its key interest rate for the second time in three months this week, setting aside concern that inflation will accelerate as economic growth slows, a survey showed.
The nine-member Monetary Policy Committee will lower the rate by a quarter point to 5.25 percent on Feb. 7, according to 58 of the 61 economists in a Bloomberg News survey. Two expect a half-point cut and one forecasts no change.
Falling house prices and higher market lending rates have put the U.K. economy on course for its worst performance since the end of the last recession in 1992. At the same time, Governor Mervyn King has indicated inflation pressures will keep the bank from following the Federal Reserve and slashing rates further in coming months.
``There is clearly a sense at the bank that rates are restrictive and need to come down,'' said Matthew Sharratt, an economist at Bank of America Corp. in London. ``Worries about inflation mean there won't be the same kind of aggressive easing as we've been seeing from the Fed.''
King, reappointed by Prime Minister Gordon Brown on Jan. 30, says the Bank of England faces a ``difficult balancing act'' in 2008. House prices fell the most since 2000 in the fourth quarter, mortgage approvals dropped to a nine-year low and the threat of a U.S. recession is dragging down global growth prospects.
U.K. manufacturing expanded at the slowest pace in more than two years last month, a survey by the Chartered Institute of Purchasing and Supply showed.
Constraints
Growth is slowing as pricing pressures increase. King said Jan. 22 that oil and food prices may drive inflation above 3 percent this year from 2.1 percent in December, matching the fastest pace in a decade. Consumers' inflation expectations for the next 12 months jumped to the highest since at least 2005, a report commissioned by Citigroup Inc. showed.
``There are constraints on how many reductions they can make,'' said Alan Castle, an economist at Lehman Brothers Holdings Inc. in London.
The Bank of England has been slower than the Fed in cutting rates. The Fed has reduced its benchmark by one-and-a-quarter percentage points since Jan. 22, its fastest easing of policy since 1990, after banks including Goldman Sachs Group Inc. and Citigroup Inc. forecast the first U.S. recession since 2001 and global equity markets tumbled.
The slowdown was sparked by a slump in U.S. house prices that's forced banks worldwide to post more than $133 billion in asset writedowns and credit losses. The U.S. economy unexpectedly lost jobs in January for the first time in more than four years, the Labor Department said Feb. 1.
`Relatively Soft'
Some economists say contagion from the U.S. slowdown will force the Bank of England to ignore inflation risks again and cut rates further after next week's move.
``Economic growth and expectations of growth are relatively soft,'' said George Buckley, an economist at Deutsche Bank AG in London. ``We see a cut at the next meeting and then another in April or May. The risks are that they move earlier.''
The Bank of England will reduce its benchmark to 4.5 percent by the end of the year, according to the median forecast of 44 economists in a Bloomberg News survey.
King says the circumstances are presenting the bank with its biggest dilemma since it was given rate-setting independence in 1997. The bank will probably have to write at least one letter to Chancellor of the Exchequer Alistair Darling this year explaining why it can't keep inflation below the government's 3 percent limit, he says.
``It will be harder this time for the bank to be confident that inflation will fall back to target,'' said Castle. ``But if growth deteriorates further, we'll see deeper rate cuts.''
Feb. 4 (Bloomberg) -- The Bank of England will probably cut its key interest rate for the second time in three months this week, setting aside concern that inflation will accelerate as economic growth slows, a survey showed.
The nine-member Monetary Policy Committee will lower the rate by a quarter point to 5.25 percent on Feb. 7, according to 58 of the 61 economists in a Bloomberg News survey. Two expect a half-point cut and one forecasts no change.
Falling house prices and higher market lending rates have put the U.K. economy on course for its worst performance since the end of the last recession in 1992. At the same time, Governor Mervyn King has indicated inflation pressures will keep the bank from following the Federal Reserve and slashing rates further in coming months.
``There is clearly a sense at the bank that rates are restrictive and need to come down,'' said Matthew Sharratt, an economist at Bank of America Corp. in London. ``Worries about inflation mean there won't be the same kind of aggressive easing as we've been seeing from the Fed.''
King, reappointed by Prime Minister Gordon Brown on Jan. 30, says the Bank of England faces a ``difficult balancing act'' in 2008. House prices fell the most since 2000 in the fourth quarter, mortgage approvals dropped to a nine-year low and the threat of a U.S. recession is dragging down global growth prospects.
U.K. manufacturing expanded at the slowest pace in more than two years last month, a survey by the Chartered Institute of Purchasing and Supply showed.
Constraints
Growth is slowing as pricing pressures increase. King said Jan. 22 that oil and food prices may drive inflation above 3 percent this year from 2.1 percent in December, matching the fastest pace in a decade. Consumers' inflation expectations for the next 12 months jumped to the highest since at least 2005, a report commissioned by Citigroup Inc. showed.
``There are constraints on how many reductions they can make,'' said Alan Castle, an economist at Lehman Brothers Holdings Inc. in London.
The Bank of England has been slower than the Fed in cutting rates. The Fed has reduced its benchmark by one-and-a-quarter percentage points since Jan. 22, its fastest easing of policy since 1990, after banks including Goldman Sachs Group Inc. and Citigroup Inc. forecast the first U.S. recession since 2001 and global equity markets tumbled.
The slowdown was sparked by a slump in U.S. house prices that's forced banks worldwide to post more than $133 billion in asset writedowns and credit losses. The U.S. economy unexpectedly lost jobs in January for the first time in more than four years, the Labor Department said Feb. 1.
`Relatively Soft'
Some economists say contagion from the U.S. slowdown will force the Bank of England to ignore inflation risks again and cut rates further after next week's move.
``Economic growth and expectations of growth are relatively soft,'' said George Buckley, an economist at Deutsche Bank AG in London. ``We see a cut at the next meeting and then another in April or May. The risks are that they move earlier.''
The Bank of England will reduce its benchmark to 4.5 percent by the end of the year, according to the median forecast of 44 economists in a Bloomberg News survey.
King says the circumstances are presenting the bank with its biggest dilemma since it was given rate-setting independence in 1997. The bank will probably have to write at least one letter to Chancellor of the Exchequer Alistair Darling this year explaining why it can't keep inflation below the government's 3 percent limit, he says.
``It will be harder this time for the bank to be confident that inflation will fall back to target,'' said Castle. ``But if growth deteriorates further, we'll see deeper rate cuts.''
Commodities Daily - 4th Feb 2008
Spotlight: OPEC said that it would not raise oil output in its meeting on Friday as the market is well-supplied. Wheat rose on limited supplies in the U.S. while gold fell by 1.5 percent on profit-taking.
Energy: Crude oil may fall this week on speculation that U.S. fuel demand will drop as consumers respond to the slowing economy and high prices. Crude oil for March delivery fell $1.75 last week, or 1.9 percent, to $88.96 a barrel on the New York Mercantile Exchange. Futures reached a record $100.09 a barrel on Jan. 3. OPEC said in its meeting on Friday that it would leave output unchanged as the market is well-supplied and it’s not necessary to raise output.
Agriculture: Wheat rallied on Friday on signs of rising demand for limited U.S. supplies of high-protein spring varieties. Wheat futures for March delivery rose 13.5 cents, or 1.4 percent, to $9.43 a bushel on the Chicago Board of Trade. Soybeans rose on signs that declining shipping costs and a falling dollar are boosting overseas demand for supplies from the U.S., even after prices reached a record last month. Soybean futures for March delivery rose 12.75 cents, or 1.1 percent, to $12.8725 a bushel. Corn settled almost unchanged on Friday.
Precious Metals: Gold fell sharply on Friday as investors booked profits after prices rose to a record high on earlier reduction in interest rates. COMEX gold fell 1.5% or $14.50 to $913.50 an ounce in late week. Platinum, on the other hand, climbed to a record on concern that a power shortage in South Africa, which accounts for about 80 percent of world supply, would cut output.
Industrial Metals: Copper prices fell by 1.6 percent on Friday after the U.S. unexpectedly lost jobs in January; renewing concern demand will fall in the world's largest economy. U.S. payrolls fell by 1,000 last month, the first drop in more than four years, the Labor Department said on Friday.
(Source: Bloomberg)
Energy: Crude oil may fall this week on speculation that U.S. fuel demand will drop as consumers respond to the slowing economy and high prices. Crude oil for March delivery fell $1.75 last week, or 1.9 percent, to $88.96 a barrel on the New York Mercantile Exchange. Futures reached a record $100.09 a barrel on Jan. 3. OPEC said in its meeting on Friday that it would leave output unchanged as the market is well-supplied and it’s not necessary to raise output.
Agriculture: Wheat rallied on Friday on signs of rising demand for limited U.S. supplies of high-protein spring varieties. Wheat futures for March delivery rose 13.5 cents, or 1.4 percent, to $9.43 a bushel on the Chicago Board of Trade. Soybeans rose on signs that declining shipping costs and a falling dollar are boosting overseas demand for supplies from the U.S., even after prices reached a record last month. Soybean futures for March delivery rose 12.75 cents, or 1.1 percent, to $12.8725 a bushel. Corn settled almost unchanged on Friday.
Precious Metals: Gold fell sharply on Friday as investors booked profits after prices rose to a record high on earlier reduction in interest rates. COMEX gold fell 1.5% or $14.50 to $913.50 an ounce in late week. Platinum, on the other hand, climbed to a record on concern that a power shortage in South Africa, which accounts for about 80 percent of world supply, would cut output.
Industrial Metals: Copper prices fell by 1.6 percent on Friday after the U.S. unexpectedly lost jobs in January; renewing concern demand will fall in the world's largest economy. U.S. payrolls fell by 1,000 last month, the first drop in more than four years, the Labor Department said on Friday.
(Source: Bloomberg)
Financials Daily - 4th Feb 2008
US: U.S. stocks rose, capping their best weekly gain in five years, after Microsoft Corp.'s $44.6 billion bid for Yahoo! Inc. and a plan to rescue bond insurers overshadowed the first decrease in jobs since 2003.
Europe: European stocks climbed after Alcoa Inc. and Aluminum Corp. of China Ltd. challenged BHP Billiton Ltd.'s bid for Rio Tinto Group and Microsoft Corp. offered to buy Yahoo! Inc. for $44.6 billion.
Asia: Asian stocks fell for a fifth week, completing their longest losing streak in more than three years, on concern the U.S. and Japan are sinking into recessions. Mizuho Financial Group Inc. led a decline among financial stocks after reporting losses from subprime-related investments
Commodities: Crude oil fell for a third day in New York, extending a 1.9 percent decline last week, on signs growth in the U.S. economy, the world's largest oil user, may be slowing. Gold may rise on speculation the U.S. Federal Reserve's interest-rate cuts last month will erode the value of the dollar and boost the appeal of the precious metal.
Currencies: The dollar fell for a second straight week against the euro after the Federal Reserve lowered its benchmark lending rate by a half-percentage point to 3 percent and indicated further cuts in borrowing costs may be needed.
Source: Bloomberg
Europe: European stocks climbed after Alcoa Inc. and Aluminum Corp. of China Ltd. challenged BHP Billiton Ltd.'s bid for Rio Tinto Group and Microsoft Corp. offered to buy Yahoo! Inc. for $44.6 billion.
Asia: Asian stocks fell for a fifth week, completing their longest losing streak in more than three years, on concern the U.S. and Japan are sinking into recessions. Mizuho Financial Group Inc. led a decline among financial stocks after reporting losses from subprime-related investments
Commodities: Crude oil fell for a third day in New York, extending a 1.9 percent decline last week, on signs growth in the U.S. economy, the world's largest oil user, may be slowing. Gold may rise on speculation the U.S. Federal Reserve's interest-rate cuts last month will erode the value of the dollar and boost the appeal of the precious metal.
Currencies: The dollar fell for a second straight week against the euro after the Federal Reserve lowered its benchmark lending rate by a half-percentage point to 3 percent and indicated further cuts in borrowing costs may be needed.
Source: Bloomberg
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