Asian News

[Ichiro]

17apr-U.S. March Core Prices Rise Less Than Forecast (Update2)

By Joe Richter

April 17 (Bloomberg) -- A measure of prices paid by U.S. consumers rose less than forecast last month, supporting the Federal Reserve's call that inflation will subside as the economy slows.

The 0.1 percent increase in core consumer prices, which exclude food and energy costs, was the smallest this year and follows a 0.2 percent February gain, the Labor Department said today in Washington. Prices overall rose 0.6 percent in March, led by a jump in fuel costs.

Less inflation may give Fed Chairman Ben S. Bernanke and his colleagues more latitude to lower interest rates to reinvigorate the economy in coming months, economists said. Cheaper clothing and hotel stays and a smaller gain in medical care costs restrained price gains last month, suggesting a slowing economy is starting to help alleviate price pressures.

``This buys the Fed some time so they can sit tight for a little while longer,'' said Lindsey Piegza, a market analyst at FTN Financial in New York. ``We're going to have to get a few more months of declining core inflation before the Fed can start to cut interest rates.''

Housing starts unexpectedly rose for a second month in March, bolstering expectations the worst housing slump in 15 years may be easing, a report from the Commerce Department showed. Builders broke ground on new homes at an annual rate of 1.518 million last month, an increase of 0.8 percent from February. Building permits, a sign of future construction, also rose 0.8 percent.

Rates Fall

The yield on Treasury securities fell after the reports on speculation less inflation may give the Fed leeway to lower interest rates if necessary. The yield on the benchmark 10-year note fell to 4.70 percent at 8:47 a.m. in New York from 4.74 percent late yesterday. The dollar weakened.

Economists forecast consumer prices would rise 0.6 percent after a 0.4 percent February gain, according to the median of 73 projections in a Bloomberg News survey. Estimates ranged from increases of 0.4 percent to 1 percent. Core prices were projected to rise 0.2 percent, according to the survey median.

Core prices were up 2.5 percent in the 12 months ended in March, the smallest year-over-year gain since May. Overall prices were up 2.8 percent from the same time last year, compared with a 2.4 percent gain in February.

Broadest Measure

The CPI is the government's broadest gauge of costs because it includes goods and services. Other inflation reports this week showed wholesale prices jumped 1 percent in March, while prices of U.S. imports rose by the most in almost a year.

http://www.bloomberg.com/apps/news?pid=20601068&sid=aMyH1y12ptr4&refer=economy

 

[Ichiro]

17apr-Asian Stocks Fall From Seven-Week High; BHP, China Life Drop

By Chen Shiyin and Chua Kong Ho

April 17 (Bloomberg) -- Asian stocks fell from a seven-week high, with benchmarks in Australia and South Korea retreating from records. BHP Billiton and China Life Insurance Co., drivers of the recent rally, led declines.

``Investors are stepping back and waiting for the next indicators, whether it's corporate earnings or economic numbers, before going back in,'' said Nicole Sze, a Singapore-based investment analyst at Bank Julius Baer & Co., which manages about $360 billion worldwide.

Sumitomo Mitsui Financial Group Inc., Tokyo Electric Power Co. and East Japan Railway Co. paced declines in Japan on concern earnings forecasts from companies reliant on domestic demand will disappoint.

Japan's Nikkei 225 Stock Average and the broader Topix index both lost 0.6 percent. Declines were limited after Goldman, Sachs & Co. raised its ratings on Tokyo Electron Ltd. and Nikon Corp., pushing shares of semiconductor-equipment makers higher.

The Morgan Stanley Capital International Asia-Pacific Index lost 0.1 percent to 147.69 as of 7:11 p.m. in Tokyo. The measure earlier gained as much as 0.6 percent to 148.63, just shy of the record close of 148.69 set Feb. 27. About two stocks fell for each that gained among the index's 1,067 constituents.

Key indexes in China and Singapore extended records, while Philippine stocks posted the biggest gains in the region after overseas workers sent more money home. Concern that currency appreciation will hurt exporters contributed to declines in India and South Korea.

BHP, China Life

The 14-day relative strength index for measures in Malaysia and South Korea yesterday climbed above 70, the level that indicates to some analysts that prices are set to fall. The reading for Australia's benchmark was at 67.

http://www.bloomberg.com/apps/news?pid=20601080&sid=ayzAjZxjVPiY&refer=asia

 

[Ichiro]

17apr- AP-Dow, Nasdaq Point to Higher Opening
Tuesday April 17, 8:56 am ET
By Madlen Read, AP Business Writer
Dow, Nasdaq Point to Higher Opening on Surprising Climb in Home Construction

NEW YORK (AP) -- Stocks pointed to a higher opening Tuesday after a surprising climb in home construction encouraged investors to buy into the stock market.

The Commerce Department reported that housing starts for March rose 0.8 percent, a feeble rise compared to February's 7.6 percent advance, but much stronger than the drop that investors had been bracing for. The stock market has experienced several tumultuous weeks this year due to worries about the financial troubles of the subprime lending sector spilling into the already sluggish housing market.


Also giving investors some relief, the Labor Department reported that its consumer price index rose 0.6 percent in March. The core index, which strips out energy and food costs, climbed 0.1 percent. The figures were mostly in line with expectations, alleviating some anxiety about the Federal Reserve raising interest rates to curb rising costs.

Along with economic data, investors were watching for first-quarter results from various companies, notably technology heavyweights Intel Corp. and International Business Machines Corp.

Nearly half the component companies of the Dow Jones industrial average release earnings this week. Analysts expect the earnings reports to show corporate growth is slowing, but on Monday, many companies' financial results surpassed expectations, helping push the Dow Jones industrial average up more than 100 points.

http://biz.yahoo.com/ap/070417/wall_street.html?.v=9

 

[Ichiro]

19apr-BOE Policy Makers Voted 7-2 to Keep Rate Unchanged (Update3)

By Jennifer Ryan

April 18 (Bloomberg) -- Bank of England policy makers voted 7- 2 to keep interest rates unchanged for a third month in April, with Timothy Besley and Andrew Sentance in favor of a quarter- point increase.

The majority of the Monetary Policy Committee said the rate should stay at 5.25 percent, with some members predicting inflation to slow to the 2 percent target in the next few months and others cautioning that investors had only a ``limited expectation'' of higher borrowing costs. Besley and Sentance said inflation risks were strong enough to warrant a rate increase.

Policy makers at the April meeting didn't see yesterday's data showing inflation in March at the fastest pace in a decade. The report forced Governor Mervyn King to assure Chancellor of the Exchequer Gordon Brown that the bank ``remains determined'' to contain consumer prices, and sent the pound above $2 for the first time since 1992.

``With two members voting for a hike, it suggests the bank is going to raise rates in May,'' said James Knightley, an economist at ING Financial Markets in London. ``There's also a risk of another hike further out.''

http://www.bloomberg.com/apps/news?pid=20601068&sid=a4au7zm9b10Q&refer=economy

 

[Ichiro]

19apr-U.S. Bank Stocks Lift Dow Average to Record; JPMorgan Advances

By Michael Patterson

April 18 (Bloomberg) -- U.S. bank stocks sent the Dow Jones Industrial Average to a record and the Standard & Poor's 500 Index to its highest since September 2000 after JPMorgan Chase & Co. and Washington Mutual Inc. reported earnings that beat analysts' estimates.

JPMorgan was the best performer in the Dow industrials after the third-largest U.S. bank said profit was the most ever for a quarter. Washington Mutual, the biggest U.S. savings and loan, staged its steepest rally since May 2004 after posting a rise in profit at its card-services and retail-banking units.

About 68 percent of the S&P 500 companies that reported first-quarter results beat analysts' estimates, according to data compiled by Bloomberg. Financial shares, which account for a fifth of the S&P 500's value, erased their 2007 losses for the first time since the Feb. 27 global equity sell-off.

``The financial stocks have absolutely been better than the worst fears,'' said Doug Peta, market strategist at J&W Seligman & Co. in New York, which manages $20 billion. ``We've gotten to where earnings expectations are manageable.''

The Dow average added 64.03, or 0.5 percent, to 12,837.07 as of 3:28 p.m. in New York. The measure surpassed its record close of 12,786.64 for a second day and its intraday high of 12,795.93. The S&P 500 rose 5.04, or 0.3 percent, to 1476.52.

http://www.bloomberg.com/apps/news?pid=20601084&sid=aO2AD0Md67dk&refer=stocks

 

[Ichiro]

19apr- Dollar Trades Within Cent of Record Low Versus Euro on Growth

By Min Zeng and Bo Nielsen

April 18 (Bloomberg) -- The dollar traded within a cent of its record low against the euro and near the weakest in more than a quarter century versus the pound on speculation slower U.S. inflation and growth has dimmed the allure of the currency.

Investors are betting the Federal Reserve may cut borrowing costs to spur growth as the European Central Bank and Bank of England raise rates further. The yen rallied as investors reduced holdings in higher-yielding assets funded by loans in Japan. The unwinding of what are known as carry trades helped the dollar erase its decline against the pound and cap its drop versus the euro, according to traders.

``We are trading on the soft dollar side,'' said Jens Nordvig, a senior currency strategist in New York at Goldman, Sachs & Co. ``The U.S. data is not looking very good. I think the market will swing toward the view of at least one rate cut from the Fed this year. It is possible for the euro to test $1.3666 this week.''

The U.S. currency fell 0.04 percent to $1.3573 per euro at 2:30 p.m. in New York, and earlier reached $1.3616, the weakest since Dec. 31, 2004. The currency set a record low of $1.3666 the previous day. The dollar also dropped 0.23 percent to 118.64 yen, falling from a seven-week high of 119.87 yen on April 16.

The unwinding of some of the carry trade pushed up the yen against all 16 of the most active currencies tracked by Bloomberg. The Japanese currency rose 0.16 percent to 161.07 per euro, rebounding from a record low of 162.43 set April 16. The Swiss franc, another funding currency for carry trades, also gained against the dollar, euro and the pound.

`Covering Short Yen'

Reuters, citing Bank of Japan sources, reported today the Bank of Japan is likely to say in an April 27 report that core consumer prices will rise at a faster pace.

http://www.bloomberg.com/apps/news?pid=20601083&sid=a3FKsg.wDPXo&refer=currency

 

[Ichiro]

19apr-he Genius of Paying Politicians $1.6 Million: William Pesek

By William Pesek

April 13 (Bloomberg) -- Singapore is getting lots of flack for boosting the pay for new government ministers to S$2.5 million ($1.6 million).

That seems like a huge paycheck for anyone who isn't acting in front of a movie camera or who isn't an ``American Idol'' finalist. George W. Bush makes $400,000 a year, and some say he's the leader of the free world. Shouldn't the U.S. president make as much as Justin Timberlake, J.K. Rowling or Jackie Chan?

Well, perhaps not that much, though Singapore is acting to narrow its own gap. It's increasing the pay of Prime Minister Lee Hsien Loong and President S.R. Nathan by 25 percent. Lee will get S$3.1 million annually. Amid public criticism, Lee said he will accept only his 2006 salary level for the next five years and give the rest to charity.

Controversy aside, Asia might be better off if governments paid top officials more.

One reason: It's hard to get the best and brightest to enter politics when they can make infinitely more money in the private sector. Many of us Americans would be happy to pay more to a president who knows better than to invade other countries without provocation, hire incompetent people or dismiss global warming as a conspiracy.

Yet the most important reason relates to rooting out corruption.

Money in Politics

There's an old saying in Asia that the real money is in government. Not the paychecks, but the kickbacks. That reality was summed up by the latest corruption-perceptions index by Berlin-based Transparency International. Out of the 163 nations ranked in 2006, Indonesia came in 130th, level with Ethiopia, the Central African Republic and Burundi. The Philippines ranked 121st, along with Nepal, Honduras and Guyana.

http://www.bloomberg.com/apps/news?pid=20601039&sid=a.iLeP2t_V08&refer=columnist_pesek

 

[Ichiro]

19apr-Wolfowitz, Like Global Imbalances, Won't Go Away: William Pesek

By William Pesek

April 18 (Bloomberg) -- Call them the ``Wolfowitz meetings.''

Last weekend's spring meetings of the International Monetary Fund and World Bank were supposed to offer a forum to address global imbalances. Instead, the fate of Paul Wolfowitz was all anyone could talk about.

Would the World Bank president resign? Would he be sacked? Might he survive a scandal over his role in promoting his girlfriend and giving her a huge pay raise?

Whether a man who acted in such a manner has credibility to root out corruption in developing nations is another question we're still grappling with in Asia. The reason: Wolfowitz, unfortunately, refuses to go away.

Sadly, the same is true of the imbalances World Bank- and IMF-meeting attendees should have been discussing. Thanks to the denial pervading the halls of power from Tokyo to Washington, the global system may be even riskier than it was a week ago. Its problems will merely fester below the surface a bit longer.

Japanese officials, for example, returned to Tokyo thinking they had gotten a green light to maintain a weak yen. U.S. officials returned to Washington lacking urgency to reduce their current-account and budget deficits. European policy makers headed home after making vague pledges for structural change.

Sunny View

Finance chiefs from the Group of Seven nations -- which met April 13 -- chose to accentuate the positive, expressing confidence that global growth will reduce lopsided trade and investment flows. Demand in Asia and Europe, they said, is strong enough to offset a slowdown in the U.S., ease trade gaps and extend the strongest world expansion since the 1970s.

http://www.tsptalk.com/mb/newreply.php?do=newreply&noquote=1&p=90209

 

[Ichiro]

20apr- AP-Chinese Economy Jolts Stock Markets
Thursday April 19, 12:32 pm ET
By Matt Moore, AP Business Writer
Jitters Over Chinese Economy Trigger Share Declines in World Markets

FRANKFURT, Germany (AP) -- Worries that officials will take measures to cool China's booming economy pushed shares lower across Asia on Thursday, with slight declines spilling into European markets. U.S. stocks fell modestly.

The declines were an abrupt turnaround from a day earlier, when the Dow Jones industrial average closed above 12,800 for the first time, signaling Wall Street's recovery from its decline in February as investors rewarded strong earnings reports.

Some indexes pared their losses as the day went on, with analysts expecting markets could shrug off the initial shock this time, compared to when a plunge in Chinese shares in February caused a global market selloff.

"The market has heeded the lesson of late February and is not going to leave it to China to set the agenda for global selloff," said Saxo Bank equity strategist Torben Krogh Nielsen in Copenhagen. "This is an intraday washout and we expect the market to regain its footing again fairly quickly."

In London, the FTSE 100 index dropped more than 50 points in early trading, losing much of the recent gains that had seen it reach six-and-a-half-year highs just days ago. But it recovered to close at 6,440.60, down just 0.1 percent.

Germany's DAX Xetra 30 index dropped 0.5 percent to 7,242.73 and the French CAC-40 index fell 0.1 percent to 5,829.04.

In late morning New York trading, the Dow Jones industrial average fell 0.12 percent to 12,787.91. The Standard & Poor's 500 index fell 0.13 percent and the Nasdaq composite index fell 0.15 percent.

http://biz.yahoo.com/ap/070419/world_markets.html?.v=5

 

[Ichiro]

20apr- AP-Dollar at 2-Year Low Versus Euro
Thursday April 19, 3:53 pm ET
By Jackie Farwell, AP Business Writer
Dollar at 2-Year Low Against Euro As ECB Stresses Likely Interest Rate Increase in June

NEW YORK (AP) -- The dollar hovered near a record low versus the euro Thursday after the European Central Bank reiterated the likelihood of a June interest rate hike.

The British pound continued to trade above the $2 mark, ensuring that dollar-spending visitors to the country would pay twice as much for purchases. It rose as high as $2.0092, then settled back to $2.0019 -- dipping from the $2.0057 it fetched late Wednesday in New York.


The 13-nation euro climbed to $1.3616, a level last reached in December 2004, before falling back to $1.3603 in late New York trading. That was up from $1.3580 late Wednesday in New York, although still less than a penny short of its all-time high of $1.3667, also from December 2004.

Historic levels of healthier European growth, continuing interest rate increases by the ECB and concern over the strength of the U.S. economy have boosted the euro. That means a price shock for some visitors to the continent.

The euro's jump came after the Conference Board in New York said its index of leading economic indicators rose a tepid 0.1 percent to 137.4 last month. The index, designed to forecast economic activity in the next three to six months, remains below its most recent high of 138 in January 2006.

http://biz.yahoo.com/ap/070419/dollar.html?.v=4

 

[Ichiro]

22apr-Paulson Says China Must Yield `Tangible Results' on Yuan, Trade

By Kevin Carmichael and Matthew Benjamin

April 21 (Bloomberg) -- U.S. Treasury Secretary Henry Paulson said China must accelerate its commitments on trade and a market-set exchange rate to head off protectionist legislation in Congress.

Paulson, who hosts the second session of a new bilateral economic dialogue next month, said yesterday that the talks need to yield ``tangible results.'' He said in a speech in New York that Chinese policy makers ``are not moving, in my judgment, quickly enough'' on the yuan.

The Treasury chief is under pressure to produce benefits from the Strategic Economic Dialogue he established last year as lawmakers consider about half a dozen bills to protect American companies. Tensions with China also threaten to rise after the Commerce Department imposed duties on Chinese paper last month.

``The American people are concerned, Congress is concerned and there's a lot of protectionist sentiment'' toward China, Paulson said in an interview on the ``Charlie Rose'' show on PBS television following his speech in New York. ``The more tangible reforms we see, the easier it is for me to deal with Congress.''

Paulson, 61, told the Committee of 100, a group that consists of prominent Chinese-Americans, including cellist Yo-Yo Ma and architect I.M. Pei, it was ``natural'' for problems to develop as trade increases. ``There's going to be tension and we have to manage through it.''

China passed Mexico last year to become the second-largest U.S. trade partner, after Canada. The U.S. trade deficit with China widened 15 percent to a record $232.5 billion in 2006.

`Unnatural Act'

Paulson, who has traveled to China three times since taking office in July, said the focus on Chinese policies centers on the exchange rate because that's the most ``visible'' gauge of the speed of change. As China integrates with the global economy, it's ``an unnatural act'' to keep managing its currency, he said.

China prevents the yuan from gaining more than 0.3 percent a day against a basket of currencies that includes the dollar, euro and yen. The yuan has risen only 7.2 percent since the government ended a link to the dollar and introduced the current system in July 2005. It closed at 7.72 per dollar yesterday in Shanghai.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ajolGIe7te5A&refer=home

 

[Ichiro]

22apr-U.S. Stocks Gain, Pushing Dow to Record Three Times, on Profits

By Nick Baker

April 21 (Bloomberg) -- U.S. stocks rose, pushing the Dow Jones Industrial Average to a record, after profit and economic reports were better than expected.

Honeywell International Inc., Caterpillar Inc. and JPMorgan Chase & Co. led the Dow average's rally this week after their earnings increased more than analysts estimated. Countrywide Financial Corp. paced gains by financial shares, which climbed the most since October 2004, on optimism the so-called subprime lending crisis is contained. The Standard & Poor's 500 Index is on pace for the biggest monthly advance since December 2003.

Profits that exceeded estimates spurred analysts to double their projections for first-quarter earnings growth at S&P 500 companies, suggesting expectations for a slowdown were excessive. Data showing slower-than-anticipated inflation boosted chances the Federal Reserve may reduce interest rates.

``Corporate profits are still growing,'' said Neil Hennessy, who helps manage $2.2 billion as chief executive officer of Hennessy Funds in Novato, California. ``I'm bullish to say the least. We've got a long way to go from here.''

The Dow average this week added 2.8 percent to 12,961.98, an all-time high. The S&P 500 rose 2.2 percent to 1484.35, the highest since September 2000. The Nasdaq Composite Index climbed 2.2 percent to 2526.39, the highest since February 2001.

The Dow and S&P 500 had their third straight weekly gain, the longest stretch since October. The S&P 500 has risen 4.5 percent in April, which would be the most for a month since December 2003.

Beating Estimates

About 66 percent of companies in the S&P 500 that have reported first-quarter results topped analysts' estimates, according to data compiled by Bloomberg. In the fourth quarter, about 61 percent of S&P 500 members beat estimates.

Profits increased 6.2 percent during the first quarter at S&P 500 companies, according analyst estimates compiled yesterday by Bloomberg. A week prior, growth of 3.1 percent was projected.

Economic reports aided the market this week. U.S. consumer prices grew less than economists predicted in March and new home construction unexpectedly rose, encouraging investors that the economy may keep expanding without prompting the Fed to raise interest rates. Retail sales, which account for almost half of all consumer spending, rose the most in three months in March.

The economy ``looks very good,'' said Kenneth Brusda, who manages $930 million at North Star Asset Management in Menasha, Wisconsin. ``We've been a little more upbeat than average about the economy, and it's starting to show up in better earnings reports than people expected.''
http://www.bloomberg.com/apps/news?pid=20601087&sid=a.tG4ECOJpa4&refer=home

 

[Ichiro]

22apr-Dollar Drops to 27-Month Low Versus Euro on U.S. Growth, Rates

By Min Zeng

April 21 (Bloomberg) -- The dollar dropped to a 27-month low against the euro as signs of slowing inflation and growth lessen the currency's appeal.

The U.S. currency also tumbled to the weakest against the British pound in 26 years as investors bet the Federal Reserve will cut borrowing costs later this year while the European Central Bank and Bank of England raise rates. The dollar dropped this week against 14 out of 16 most actively traded currencies tracked by Bloomberg.

``It's interest rate differentials that are carrying the day against the dollar,'' said Paresh Upadhyaya, who helps manage $29 billion in currency assets in Boston at Putnam Investments. ``The downward trend in the dollar remains in place'' as concern on slowing growth weighs in.

The dollar fell 0.46 percent to $1.3590 per euro this week and 0.82 percent to $2.0026 per pound. The U.S. currency also declined 0.49 percent to 118.68 yen over the period.

The U.S. currency touched $1.3638 per euro yesterday, the lowest since Dec. 31, 2004. The all-time low, $1.3666, was recorded Dec. 30, 2004.

The dollar tumbled to $2.0133 per pound on April 18, the weakest since June 1981. The dollar also reached a 17-year low of 83.92 U.S. cents April 19 against the Australian currency. It fell to 74.94 U.S. cents April 18 versus the New Zealand dollar, the lowest since June 16, 1982.

`Fairly Fragile'

``The dollar is fairly fragile right now,'' said Nick Bennenbroek, head of currency strategy at Wells Fargo Bank in New York. ``The market is getting more conviction that the ECB will continue to raise rates. It is only a matter of time for the euro to test the all-time high.''

Bennenbroek said the euro may test the record next week, and the currency may rise to $1.3750 to $1.38 within three months.

The dollar's losses this week accelerated after a U.S. government report showed consumer prices excluding energy and food moderated last month. That contrasted with reports from U.K. and New Zealand indicating accelerating price pressure.

Core consumer prices in the U.S., excluding energy and food, rose 0.1 percent last month after a 0.2 percent increase in February, the U.S. Labor Department reported in Washington on April 17. Core prices rose 2.5 percent from a year earlier, compared with a 2.7 percent increase in February. Separate U.S. economic reports this week showed declining industrial production and weakness in the labor market.

http://www.bloomberg.com/apps/news?pid=20601083&sid=a2CNtds_7CxI&refer=currency

 

[Ichiro]

22apr-apan's Corporate Activists Are Getting Restless: William Pesek

By William Pesek

April 20 (Bloomberg) -- ``Shareholder Activists Reactivated.''

How many times have analysts made this claim, only to see Japan Inc. circle the wagons and reassert itself? Yet when Kathy Matsui, chief strategist at Goldman Sachs (Japan) Securities Ltd., titled a recent report with these words, she was on solid footing.

Asia's biggest economy may be experiencing its most important wave of shareholder activism in decades. Long-silent and largely ignored shareholders are finding their voice and speaking out. If it continues, Japan's stock market may soar and its economic recovery could shift into a higher gear.

It's a big ``if,'' though. If anything can be said about the seven-month-old premiership of Shinzo Abe it's that economic change isn't high on his priority list. Hopes he would accelerate the efforts of predecessor Junichiro Koizumi to make Japan more efficient are fading fast.

This might be another episode involving Lucy, Charlie Brown and the football. Time and time again, as those familiar with Charles Schulz's characters will recall, Lucy convinces Charlie she won't yank away the ball as he runs to kick it. Each time, Charlie ends up in the mud as Lucy does just that. Japan's reform efforts often seem to be this way.

This wave of shareholder activism is different. It's not just about Gordon Gekko-like Wall Street raiders shaking things up, but Japanese investors fed up with the establishment's clubby, insular ways. And since fewer companies are owned largely by banks or chummy business partners than in the past, executives are being forced to listen.

http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_pesek&sid=aReRaUo0ss4A

 

[Ichiro]

22apr-European Stocks Gain on Takeover Speculation; ABN Amro Climbs

By Ludwig Burger

April 21 (Bloomberg) -- European stocks rose for a third week, buoyed by takeover speculation after banks said they would compete for ABN Amro Holding NV and Alliance Boots Plc, the U.K.'s largest drugstore chain, received sweetened offers.

Societe Generale SA, France's second-biggest bank by market value, had the biggest gain in four years following reports that the company is in merger talks with Italy's UniCredit SpA.

``Mergers and acquisitions will certainly continue for a while because companies' coffers are filled,'' said Rolf Biland, who oversees the equivalent of $4.1 billion as chief investment officer at VZ Vermoegenszentrum in Zurich. ``That's a rather positive backdrop for further gains.''

So far in 2007, mergers in Europe have totaled $668 billion, according to data compiled by Bloomberg. They reached a record $1.6 trillion in 2006.

The Dow Jones Stoxx 600 Index added 1.6 percent to 389.26. The Stoxx 50 rose 2.2 percent and the Euro Stoxx 50, a measure for the 13 nations sharing the euro, climbed 2.3 percent.

National benchmarks gained in all but one of western Europe's 18 major markets. The U.K.'s FTSE advanced 0.4 percent, France's CAC 40 rallied 2.6 percent and Germany's DAX increased 1.8 percent.

Societe Generale surged 16 percent. Dow Jones Newswires reported UniCredit and Societe Generale are in preliminary merger talks, citing unidentified people familiar with the situation. Germany's Handelsblatt also reported the two banks are holding talks in early stages, without saying who provided the information.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aAGrBl_VRjmQ&refer=worldwide

 

[Ichiro]

22apr-ARE WE READY FOR ANOTHER YEN CARRY STOCK FLUE?
by Christopher Laird
PrudentSquirrel.com
April 19, 2007


With the Asian markets all down heavily last night, and the Yen strengthening again, I thought to talk about another possible Yen carry related market sell off.

China bubble trigger

A month or so ago, Premier Wen of China said that their manufacturing and financial bubbles were unsustainable and out of control. This was in light of recent financial tightening in China, increasing reserve requirements for banks to over 10% now, and raising interest rates moderately. It is important to realize that China is determined to do something about their financial bubbles.

The trouble is, there is so much hot money flowing into China, and that combined with a bubble mania in financial assets as well as manufacturing and stocks by Chinese has created a flood of money flowing into their markets.

Since the last year the Shanghai stock index is up over 150% - again at an all time high right now. The recent panic 9% sell off that Tuesday a month or so ago led to a about of panicky selling in Asian markets in general. That both led to and was caused by a rising Yen after the EU stated several months ago that investors should not ‘make one way bets on a weak Yen’. Soon after that statement, there was the Shanghai stock sell off, Asian stock sell offs, and other world sell offs. Eventually, things stabilized, but it took over two weeks of Central bank efforts and calming to stem the repeated bouts of selling into markets world wide.

The US stock market at that time, though initially falling 500 points in the beginning of the mess, stabilized, and every time it failed to follow through on Asian sell offs the night before, the Asian markets subsequently calmed the next day.

That was our last bout of sell offs

But, that was that bout of selling. Now, with markets again at new highs, the Dow, and Shanghai, (up to today when it dropped over 4% again) seemed to flow ever higher, oblivious of the danger of any new bouts of Yen strengthening.

Well, we again have many of the same factors gathering for another bout of Yen strengthening, and related stock and financial market sell offs….

First, the Yen has been very weak and is very undervalued for YEARS. China, the EU, and every major trade partner of Japan is not liking this one bit. The Yen has a lot of reason to strengthen, not to mention the gigantic scale of the Yen carry that has built up in RISING stock markets all over the world in the last years.

The overall situation is that markets are heavily infected with leverage. I don’t care if many of them mare making new highs again. Well, a few months ago they all made new highs, then we had that bout of Asian selling and Yen carry unwinding that led to weeks of stock drops a month or so ago that bad Tuesday. Now, markets have recovered to new highs, - except that now the Asian markets are just crashing again now – and maybe all we saw was a double top in these new highs?

It certainly would fit the idea of a pending second wave of Yen carry unwinding to come.

In the last few days, the Yen has strengthened very roughly 1%. It had been on a rather long downwind to about 83.5 on the $XJY.

IF the Yen begins another bout of strengthening, look out. We may have just seen the beginning of another –rather overdue- bout of Yen strengthening and Yen carry unwinding.

The thing is, with markets to toppy right now, it does not take a lot to cause new Yen carry unwinding…

Yen Carry monster is a hungry one!

Either there is a push to sell and capture profits – which puts upward pressure on the Yen as carry is paid off, and then puts more downward pressure on the financial markets, and or, because Yen strengthening itself causes more selling of Yen carry and then more Yen strengthening.

http://www.[[financialsense.com/fsu/editorials/laird/2007/0419.html

 

[Ichiro]

22apr-BRITISH POUND FINALLY AWAKENS TO INFLATION
FEEDING RISING UK INTEREST RATES
by Nadeem Walayat
themarketoracle.co.uk
April 18, 2007

Inflation as measured by the CPI jumped above 3% to 3.1%, which now virtually guarantees a hike in UK interest rates to 5.5% at Mays Bank of England MPC Meeting. The British Pound surged through the $2.00 barrier, having flirted with it for nearly 2 years now, each attempt at a break having held, but no more !

Both the rise to 5.50% at the May meeting and the Pounds jump above $2.00 have been long forecast and expected.

The Story of 2007 has been and will continue to be of higher interest rates across the world. Not just for the UK but for most major economies. The resulting effect is already being seen in the currency markets with a selling of the US dollar especially against the Euro and Sterling.

The Target for UK interest rates, set way back on 7th November 2006, is for UK interest rates to hit 5.75% this year, (UK Interest Rates could rise to 5.75% in 2007) . The time line for this is a rise to 5.5% in May, with the following rise to 5.75% scheduled for August / Sept 07.

The underlining reason for this remains the surging money supply, relative strength of the UK housing market and economy which continues to force inflation ever higher. This was expanded upon in the article of 26th Dec 06 UK Interest Rate forecast for 2007 - Bank of England to do battle with inflation ,

The rise to 5.50% for May 07, was reinforced in March 07, with the failure of the subprime mortgage fallout to impact on the UK housing market, and expectations of the UK housing market gathering strength as it moved into the traditionally strong summer demand period. UK strong house price growth signals further rises in interest rates

UK interest rates in real terms remain at historic lows. We have the CPI index (the fake inflation indices) at 3.1%, which despite being manipulated has nudged above its upper band of 3%, which basically automatically calls for a rise in UK interest rates. The closest thing the UK has to an accurate measure of inflation is the RPI index , this index is the one people actually pay attention to with regards all aspects of the UK economy, from pay deals to indexation of government bonds to increases in social benefit payments. The CPI is by and large ignored by the 'real' economy.

http://www.[[financialsense.com/fsu/editorials/walayat/2007/0418.html

 

[Ichiro]

22apr-CENTRAL BANKS ARE THE PRIMARY BUBBLE-CREATORS AND EQUITY MARKET MANIPULATORS!!
by Stephen Tetreault
April 17, 2007

Manipulation of the global markets is directly tied to central banks around the globe and their wild levels of liquidity creation, as the overall global money supply is on a mega-hyper growth trend and there seems little anyone can/will do about it, until it’s to fricking late and the global economies crack! Remember the basic definition of inflation folks:

The modern definition of inflation is: A persistent increase in the level of consumer prices or a persistent decline in the purchasing power of money... The American Heritage® Dictionary of the English Language, 4th Edition, goes on to say: ...caused by an increase in available currency and credit beyond the proportion of available goods and services. I have often told my students that inflation is the consistent rise in the money supply followed by a rise in the cost of goods, commodities and services; as more dollars are chasing fewer goods…. However, it’s is also somewhat accurate to say that inflation is the weakening of the purchasing power of the dollar. As your dollars are worth less as more and more money hits the economy, you’re hit with this hidden tax because your purchasing power is being eroded, and most folks do not even understand this principle.


We have seen lately folks that there appears to be a huge disconnect with the Asian markets these past weeks following the belt tightening measures by their central banks, though it will be very difficult for just a couple of central banks of a developing country to continue tightening while others stay on course with their easy and almost free easy money regime.

Currently according to my technical and fundamental analysis the Chinese Shanghai Composite and other emerging market indexes (Hang Seng, Taiwan Weighted, Bovespa, and México to name a few) are displaying significant bubble like formations but it is difficult to guess when this bubble will be get pricked, and hopefully they deflate gradually, or we could see a global melt-down of the markets.

This wild global bull-run the world over is primarily driven by an enormous glut of excess LIQUIDITY. One is reminded that around mid-March this year the Australian money supply is 13% higher from a year ago, Brazil's M3 is up 18%, Canada's M3 is up 10.5%, China's M2 is up 17.8%, England's M3 is up 13%, the Euro Zone's M3 is up 9.8%, India's M3 is up nearly 22%, Korea's M3 is up 11%, Russia's M2 is up 49% and the US M3 as best as it can be calculated is up 11%. In the midst of such an enormous run-up in "global liquidity” this new-glut is responsible for most of the global bullish trying to keep markets down, for any extended period of time, is like pushing down a helium balloon under water. With most if not all of the major central banks having been "asset targeting" with their manipulated maneuvers until the fierce inflation monster rears its ugly head in a manor that will frighten the proverbial crap out of the global markets. Their ongoing manipulation could/might continue for some time, more until they press to hard on the accelerator and are unable to stay on course and they run off the cliff.

The global markets have been kept afloat by these huge inflows of liquidity folks and such is the overall power of easy and ever increasing monies chasing fewer goods, it’s this liquidity that has been propping up the asset markets. It would be a misnomer or being down right delusional to believe that asset markets all over the world are on a bull-run going longer than it should of, despite deteriorating fundamentals; earnings and consumer ballooning debt-loads and crumbling credit opportunities. Some investors are reluctant to consider the macro factors of the investing landscape and they consider only company specific fundamentals, momentum-players and general-market-hypsters. For the most part most of these factors do not really matter (as I have come to realize, many times) that in the near-term the macro factors don't significantly matter, price will follow money flows folks. However, when you see as I have that the equity markets all over the globe has risen and most of the major indexes and new host of ETF’s have been behaving in the same manner having begun their run from early 2003 (when the liquidity streams turned into tsunami’s) then the overall market movements have as I have been pointing out for several years now not based only on economic or company specific fundamentals; there has to be the underlying insurgency of these huge streams of liquidity….This is goldilocks scenario in progress when it will end only the central banks would know, but I can tell you this folks; if I’m only partly right this manipulation will create a mega negative economic tidal wave that will engulf most economies.

There is going to be a real-and increasing volatile component to the US and global markets that is just starting to raise its ugly head and be seen….despite the recent bullishness there is in my opinion a looming and growing concern and wall-of worry that has been plaguing veteran and very seasoned traders/investors like myself…yes its been almost 6+ weeks since the Shanghai stock market plunge sent shock waves vibrating throughout the global markets, like the waves of a first shock earthquake that triggered the first Tsunami in a pattern of larger ones. Although most of the indexes have since stabilized and as of Friday’s close have regained most of their losses albeit on significantly less volume than the selling waves we witnessed. It’s this type of volatility that I have been writing about, which could/should increase is frequency and probably in the days and weeks that lay ahead. Stock markets now are very prone to synchronized global down-turns or should I saw plunges when new and most often under-reported and ignored external shocks appear. But it is my opinion that the greatest factor behind the markets' recent problems on a global basis is the huge excess liquidity being pumped in by the central banks around the globe.

http://www.[[financialsense.com/fsu/editorials/tetreault/2007/0417.html

 

[Ichiro]

22apr-Ding, Dong, The Witch Isn't Dead
by Peter Schiff
Euro Pacific Capital
April 20, 2007

With this week's release of an apparently benign CPI report, Wall Street resembled Munchkin Land celebrating the death of the Wicked Witch of Inflation. Amidst the revelry few spared much concern that the Index actually registered a monthly gain of .6%. Since such a rise equates to an annualized inflation rate of 7.5%, how could the Wall Street Lollipop Guild be so euphoric? Simple; to pronounce the Witch sincerely dead, one needs only to consistently strip out marginally needed items such as food and energy. Without these "distractions" the core CPI increase can be shown to be only .1%: “way” below the .2% that had been forecast.

In the face of what was in reality a horrific March CPI report, Wall Street once again demonstrated its ability to spin economic straw into gold. The trick to making a 7.5% annualized inflation rate disappear is simply to misdirect attention towards meaningless monthly core numbers instead.

However, Wall Street’s power to make high inflation disappear before our very eyes will not last forever. If a magician repeats the same trick over and over, his audience is bound to get wise. The idea that the “core CPI” should trump the actual "headline number" is an example of a lie being repeated often enough that it becomes the truth. Originally, the emphasis on the core was supposed to smooth out month-to-month volatility. But putting primary weight on "year-over-year core CPI" is another matter entirely. Year-over-year changes are not volatility, they are reality! Of course, your typical Wall Street strategist could have figured this out, if they only had a brain.

Making the illusion all the more brazen is the fact that on the same day the CPI was released the dollar broke down to a 26-year low against the British pound, an 18-year low against the Australian dollar, and a near record low against the Euro. Since dollar weakness will inevitably exert additional upward pressure on already rising consumer prices, the ability to celebrate victory over inflation is premature in the extreme. As an added twist, gold finished the week with an impressive gain, rising to a new eleven-month high. Yet this tried and true measure of inflation was barely noticed, no doubt dismissed as representing a sign of increased global affluence resulting in higher jewelry demand, particularly in India.

http://www.[[financialsense.com/fsu/editorials/schiff/2007/0420.html

 

[Ichiro]

22may-FOREX-Dollar jumps, yen weakens as focus shifts from China

By Natsuko Waki

LONDON, May 21 (Reuters) - The dollar hit a five-week high on Monday as investors pared back aggressive bets against the currency after limited reaction to China's move on the yuan and rates last week shifted focus to U.S. economic fundamentals.

The yen hit a record low against the euro and a three-month trough versus the dollar as calm investor response to China's move boosted risk appetite and

The Canadian dollar hit its highest level in almost 30 years against the U.S. currency after recent robust data boosted expectations of higher rates.

Recent U.S. data showed improving consumer morale and a rebound in manufacturing activity, which pared expectations for a yield-harming interest rate cut. This helped investors cut back their overstretched positions against the dollar.

"We've seen speculative positioning carry on building in euro/dollar. Now these positions are being pared back. We are not seeing an environment where the dollar is damaged. U.S. data has been positive," said Adrian Hughes, currency strategist at Societe Generale.

http://yahoo.reuters.com/news/artic...5-21_11-35-00_L21581409&type=comktNews&rpc=44