Asian News

[Ichiro]

5jun-Euro Rises to Record Against Yen; ECB May Signal Higher Rates

By Anchalee Worrachate and David McIntyre

June 5 (Bloomberg) -- The euro strengthened to a record against the yen and advanced versus the dollar on expectations the European Central Bank will raise interest rates tomorrow and signal further increases this year.

The euro has gained for four straight days against the yen as the extra yield investors earn on European two-year debt over similar maturity Japanese bonds widened to near a five-year high. The yen is the world's worst performing currency against the dollar so far this quarter, declining 3.2 percent, as Japanese investors seek higher-yielding assets overseas.

``It's not just an ECB story that's driving euro-yen higher, it's Japanese investors investing abroad,'' said Adam Myers, currency strategist at UBS AG in London. ``They're putting significant amounts of their own capital offshore to generate a higher yield.''

The European currency rose to an all-time high of 164.61 yen and was at 164.44 as of 11:07 a.m. in London, from 164.27 in late New York yesterday. It was at $1.3508 to the dollar from $1.3489. The dollar bought 121.74 yen, from 121.77. The euro may rise to as high as $1.40 by the end of the year, Myers said.

http://www.bloomberg.com/apps/news?pid=20601101&sid=aDBducNcjna8&refer=japan

 

[Ichiro]

5jun-European Stocks Rise, Led by Vodafone; Standard Life Gains

By Adria Cimino

June 5 (Bloomberg) -- European stocks advanced on takeover speculation in the telecommunications industry and after brokerages advised investors to buy insurers and mining companies.

Vodafone Group Plc climbed after the Wall Street Journal said the mobile-phone company might be worth more split into parts, fueling speculation it may be taken over. Standard Life Plc and Old Mutual Plc gained after Merrill Lynch & Co. raised its recommendation on both shares. Mining stocks rose after Xstrata Plc said it's prepared to make an acquisition and Citigroup Inc. raised its recommendation on BHP Billiton's shares.

``Equities should perform well,'' said Toby Nangle, who helps manage $37 billion in assets at Baring Investment Service in London. ``The mergers and acquisitions boom is set to continue in Europe.''

The Dow Jones Stoxx 600 Index gained 0.1 percent to 399.49 as of 11:35 a.m. in London, with the industry group for raw- materials companies leading advances. The index lost 0.3 percent yesterday, halting a rally that pushed the measure to its highest since September 2000.

http://www.bloomberg.com/apps/news?pid=20601085&sid=adKyjWfv2zV0&refer=europe

 

[Ichiro]

5jun---Bill Gross, China Have Roles in Brazil's Revival: William Pesek

By William Pesek

June 1 (Bloomberg) -- Call it BRICs envy.

The BRICs -- Brazil, Russia, India and China -- are poised to be the superpowers of tomorrow. The grouping has no doubt led to hard feelings among those promising economies not in it. South Korea, anyone? What about Mexico or Turkey? How about Indonesia, Iran or Nigeria?

A more intriguing envy dynamic seems to be afoot among those that did make the BRICs cut, Brazil in particular.

With China growing 11 percent and India not far behind, Brazil is getting serious about catching up. With January's election well behind him, President Luiz Inacio Lula da Silva is using his second term to put the world's 11th-biggest economy on firm footing once and for all.

Here, China's rise might be far more advantageous than many of Brazil's 190 million citizens tend to believe. In recent years, the focus has been on how China is killing local industries and eroding support for free trade in developing economies. Yet China may be playing a different -- and beneficial -- role: catalyst for change.

http://www.bloomberg.com/apps/news?pid=20601039&sid=ap4BUwsb6dvI&refer=columnist_pesek

 

[Ichiro]

6jun-European Stocks Drop on Interest-Rate Concern; E.ON Shares Fall

By Adria Cimino

June 6 (Bloomberg) -- European stocks headed for the biggest decline in more than two months on expectations the European Central Bank will raise interest rates today and signal further increases.

E.ON AG and Iberdrola SA led a decline by utilities, while BNP Paribas SA and Spain's Banco Popular Espanol SA pushed banking shares lower. Thales SA, Europe's largest defense- electronics company, fell after Societe Generale SA downgraded the stock.

Mounting concern that interest rates will rise in Europe and the U.S. halted a rally that sent the Dow Jones Stoxx 600 Index to within 6 points of a record. U.S. stocks slipped for the first time in a week yesterday after bond yields surged to a nine-month high amid signs the economy may be gaining momentum.

``We are in a period of rising interest rates and that obviously has an impact on the market,'' said Andrea Williams, a fund manager at Royal London Asset Management, where she helps manage about $2 billion.

All 18 industry groups in the Stoxx 600 fell, except for a measure for health-care. GlaxoSmithKline Plc led drugmakers higher after a company-run study found its diabetes drug didn't increase the likelihood of heart attack and death.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aGAA15iT.c8M&refer=home

 

[Ichiro]

6jun-Asian Stocks Rise, Led by Japan's Mitsubishi; Canon, Toll Fall

By Darren Boey and Makiko Suzuki

June 6 (Bloomberg) -- Asian stocks rose, led by Mitsubishi Corp. and BHP Billiton Ltd., companies that may report higher earnings as commodity prices climb.

Mitsubishi, which trades in goods ranging from oil and fuel to food, advanced after Daiwa Institute of Research Ltd. raised share-price targets on Japanese trading companies, citing gains in prices of crude and copper. Marubeni Corp. soared the most in three years after it said it was close to winning a contract to build a power and water plant in the United Arab Emirates.

``Trading companies have been eyeing various profit-making opportunities where they can use earnings from their commodities business,'' said Tomokatsu Mori, who helps oversee $7.4 billion at Fukoku Capital Management Inc. in Tokyo.

Canon Inc. paced exporters lower as the yen gained and on concern a cut in U.S. interest rates will be delayed.

The Morgan Stanley Capital International Asia-Pacific Index climbed 0.2 percent to 153.18 at 7:27 p.m. in Tokyo, set for a record close. About three stocks fell for every two that rose. Japan's Topix Index added 0.1 percent while the Nikkei 225 Stock Average dropped 0.1 percent.

http://www.bloomberg.com/apps/news?pid=20601080&sid=aPuM8NRitPsI&refer=asia

 

[Ichiro]

6jun-uro Trades Near Three-Week High Against Dollar Before ECB

By Anchalee Worrachate and Kosuke Goto

June 6 (Bloomberg) -- The euro traded near a three-week high against the dollar on expectations the European Central Bank will lift interest rates today and signal further increases for the rest of the year.

The single currency has rebounded this month from the lowest in seven weeks against the dollar after a report showed economic growth in Europe was faster than expected, outpacing the U.S. The euro is also trading near a record high against the yen after the ECB lifted rates to a six-year high of 3.75 percent.

``Rates will almost certainly be raised by 25 basis points,'' said David Simmonds, head of global currency research at Royal Bank of Scotland Plc in London. ``It's unlikely the ECB sees 4 percent as neutral, so the tone of the press conference should make it clear that it maintains a tightening bias.''

The euro traded at $1.3515 to the dollar as of 11:38 a.m. in London, from $1.3524 in New York late yesterday, when it reached $1.3554, the highest since May 16. It was at 163.69 yen from 164.16 yesterday, when it rose to a record of 164.61 yen. The dollar traded at 121.11 yen, from 121.39 yen.

The yen was buoyed against the dollar and euro today after European equities and U.S. stock futures declined, prompting investors to reduce investments funded with cheap borrowing in Japan. Benchmark rates in Japan are at 0.5 percent.

http://www.bloomberg.com/apps/news?pid=20601083&sid=aX8eGEiy0edM&refer=currency

 

[Ichiro]

6jun-U.S. Stock-Index Futures Drop Before Reports; Citigroup Falls

By Ludwig Burger

June 6 (Bloomberg) -- U.S. stock-index futures fell before productivity and labor-cost reports that may validate the Federal Reserve's concern that inflation is accelerating.

Shares of Citigroup Inc., the biggest U.S. bank by market value, dropped in Europe. Financial-services stocks are among the most sensitive to higher interest rates. Utilities including FPL Group fell in Europe as higher yields reduced the attractiveness of their dividends.

TD Ameritrade Holding Corp., the third-largest online brokerage, rose after two hedge funds urged it to consider a tie-up with other securities firms.

Benchmark indexes posted their first decline in a week yesterday after bond yields surged and Fed Chairman Ben S. Bernanke said core inflation ``remains somewhat elevated.'' Reports today may show labor costs increased and productivity growth slowed, adding to speculation that interest rates will rise to cool inflation.

http://www.bloomberg.com/apps/news?pid=20601084&sid=aj7VHlQJsS6E&refer=stocks

 

[Ichiro]

7jun- AP
Euro Drifts Lower Against U.S. Dollar
Thursday June 7, 6:52 am ET
A Day After ECB Raises Interest Rates, Euro Drifts Slightly Lower Against U.S. Dollar

BERLIN (AP) -- The euro drifted below $1.35 on Thursday, a day after the European Central Bank raised interest rates but sent moderate signals on its future course.

The 13-nation euro bought $1.3493 in morning European trading, compared with $1.3506 in New York late Wednesday. The British pound dropped to $1.9915 from $1.9928 before an interest rate decision by the Bank of England.

The dollar rose to 121.28 Japanese yen from 121.01 yen.

http://biz.yahoo.com/ap/070607/euro_dollar.html?.v=2

 

[Ichiro]

6jun-Bank of England Keeps Main Rate at Six-Year High of 5.5 Percent

By Brian Swint and Jennifer Ryan

June 7 (Bloomberg) -- The Bank of England left its benchmark interest rate unchanged at a six-year high, giving four previous increases time to slow inflation.

The nine-member Monetary Policy Committee, led by Governor Mervyn King, kept the Bank Rate at 5.5 percent today, as predicted by 58 of 62 economists in a Bloomberg News survey. The rest predicted a quarter-point increase.

``They would like to wait and see how things progress before raising rates again,'' said Matthew Sharratt, an economist at Bank of America Corp. in London. ``We still expect them to move to 5.75 percent in the third quarter because they are worried about underlying inflation.''

http://www.bloomberg.com/apps/news?pid=20601087&sid=a261mSGzwTdE&refer=home

 

[Ichiro]

7jun-Asian Stocks Are Little Changed; Sony Declines, Cnooc Jumps

By Chen Shiyin

June 7 (Bloomberg) -- Asian stocks were little changed as concern global interest rates will rise dragged on technology and property shares, offsetting gains among oil producers.

Sony Corp. and Sino Land Co. led declines after U.S. labor costs rose more than economist forecasts, while energy shares including Cnooc Ltd. tracked oil higher. China's CSI 300 Index climbed for a third day, damping speculation a rout that erased more than $400 billion of market value will resume.

``We are moving into a phase whereby long-term interest rates will go a lot higher,'' said Chua Soon Hock, who manages about $400 million at Asia Genesis Asset Management Pte in Singapore. ``You need to be defensive and preserve your capital.''

http://www.bloomberg.com/apps/news?pid=20601080&sid=aBEIEuY7OgOE&refer=asia

 

[Ichiro]

7jun-Yen, Swiss Franc Weaken as Rising Global Rates Spur Carry Trade (here comes carry trade again!!!)

By Anchalee Worrachate and Ron Harui

June 7 (Bloomberg) -- The yen and Swiss franc weakened for the first day this week on expectations rising global interest rates will spur investors to borrow in Japan and Switzerland and buy higher-yielding assets elsewhere.

The currencies slid after New Zealand unexpectedly raised rates and the European Central Bank lifted its benchmark to a six-year high. Japan and Switzerland have the lowest borrowing costs among major economies. Steen Elverdal, managing director of hedge-fund Hamton Asset Management Ltd., said he uses Swiss francs to fund European investments that have higher yields.

http://www.bloomberg.com/apps/news?pid=20601101&sid=alU5hRQyhraY&refer=japan

 

[Ichiro]

7jun-apan's 10-Year Bonds Fall; Yields Rise to Highest Since August

By Issei Morita

June 7 (Bloomberg) -- Japan's bonds fell, pushing 10-year yields to the highest since August, on speculation a report tomorrow will show machinery orders rose the most in 10 months.

Debt declined before the Cabinet Office report that may show orders for April ended two months of declines, according to a Bloomberg News survey. Government data earlier this week showed business investment increased to a record, signaling growth may be accelerating in the world's second-largest economy.

``The bearishness in Japan's bond market does not stop,'' said Kotaro Morota, a fund manager in Tokyo at the Pension Fund Association, which has more than 1,600 corporate funds as members. ``I anticipate yields will head higher.''

http://www.bloomberg.com/apps/news?pid=20601101&sid=a1ByjlGgyEOM&refer=japan

 

[Ichiro]

7jun-Karl Marx Is Back, and Punting on Chinese Stocks: William Pesek

By William Pesek

June 6 (Bloomberg) -- Karl Marx is back in China, and the philosopher is arguably bigger than ever.

Yes, yes, Asia's No. 2 economy is barreling ahead on the free-market highway. Beijing has even gotten hip to the private- equity craze, buying a $3 billion stake in Blackstone Group LP. Now that, as Milton Friedman might say, is capitalism.

It's interesting, then, that China's markets in some respects are looking more like the kinds envisioned by Marx than by laissez-faire champion Friedman.

Mao Zedong fancied himself an heir to Marx. Today, when investors look at China's 11 percent growth and domestic reforms, the Marxist theory China subscribed to back in the 20th century seldom comes to mind.

http://www.bloomberg.com/apps/news?pid=20601039&sid=aS1ymHqJh_xU&refer=columnist_pesek

 

[Ichiro]

8jun-Treasury 10-Year Note Falls Most in 3 Years as Yield Tops 5%

By Elizabeth Stanton

June 7 (Bloomberg) -- The benchmark 10-year U.S. Treasury note fell the most in more than three years after New Zealand unexpectedly raised interest rates, igniting concern other central banks will respond to faster global growth.

Interest-rate futures and options showed traders who as recently as December were betting on three quarter-percentage point rate cuts by the Federal Reserve this year boosted bets on an increase in borrowing costs. Ten-year yields surpassed 5 percent for the first time since August and exceeded two-year yields by the most in a year.

``We've had a global interest-rate structure that's been trading extremely rich to historical norms for years and years,'' said Tom McGlade, who trades 30-year Treasuries at RBS Greenwich Capital in Greenwich, Connecticut. Signs of faster global growth ``are driving a repricing of the global interest-rate complex back to areas that are still rich but somewhat more reasonable.''

http://www.bloomberg.com/apps/news?pid=20601087&sid=aOfETUyU9CDE&refer=worldwide

 

[Ichiro]

8jun-U.S. Stocks Drop as Bond Yields Rise; Exelon, Wal-Mart Retreat

By Michael Patterson

June 7 (Bloomberg) -- U.S. stocks fell the most in almost three months after the yield on 10-year Treasury notes rose above 5 percent.

Exelon Corp. and Southern Co. led utilities to the steepest drop in the Standard & Poor's 500 Index as higher bond yields make their dividends less attractive. All 16 homebuilders in S&P indexes declined on concern rising interest rates will diminish demand for mortgages. Wal-Mart Stores Inc., Macy's Inc. and J.C. Penney Co. retreated after May sales trailed estimates.

Stocks extended a three-day plunge from a record after benchmark bond yields advanced to the highest since July 19 on speculation central banks will increase borrowing costs in response to faster global growth. Higher interest rates may reduce profits and make takeovers more expensive.

http://www.bloomberg.com/apps/news?pid=20601084&sid=aXyxAF3iXCtg&refer=stocks

 

[Ichiro]

8jun- AP-Rates on 30-Year Mortgages Jump (With the increase in the mortgage rate, this will increase the sub-prime rates and slow the economy in the long run. )
Thursday June 7, 10:45 am ET
By Martin Crutsinger, AP Economics Writer
Rates on 30-Year Mortgages Jump to the Highest Level in 10 Months

WASHINGTON (AP) -- Rates on 30-year mortgages rose for a fourth straight week, hitting the highest level in 10 months, as bond markets responded to strong employment growth.

Mortgage giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages averaged 6.53 percent this week. That was up sharply from 6.42 percent last week and represented the highest point for 30-year mortgages since they averaged 6.55 percent on Aug. 10.


Analysts attributed the increase to recent signs of economic strength outside of the slumping housing market including last week's report that the economy created 157,000 jobs in May, nearly double the April pace.

"Mortgage rates climbed this week owing to market concerns of a tight labor force and wage growth," said Frank Nothaft, Freddie Mac's chief economist.

He said that bond markets have also grown concerned about renewed inflation pressures, reflected in a report this week that unit labor costs rose at a 1.8 percent annual rate in the first three months of this year, double the government's initial estimate.

http://biz.yahoo.com/ap/070607/mortgage_rates.html?.v=1

 

[Ichiro]

8jun-ARE WORLD BUBBLES PEAKING?
by Christopher Laird
PrudentSquirrel.com
June 6, 2007


Get this:

* China is serious about slowing their stock bubbles. They just increased a stamp tax to .3% on stock sales, formerly a .1% rate. This is not a miniscule amount because it is assessed on every trade - they add up. China has raised interest rates repeatedly, and their senior economic leaders have stated that their stock bubbles are rising too fast. China intends to cool their bubbles. More on that, but they may be the ones to break the entire world financial bubbles - first - judging on the reaction to their February 9% stock declines that led to two weeks of serious Asian market crashes - and one 500 point drop in the US DOW - that led to so much volatility that Dow fell behind in the quotes for several hours that day.

* China’s manufacturing purchasing index declined from 58.6 to 55.7. I posited last week or so that China manufacturing boom will be telegraphed by dropping base metal demand in things like copper, and that commodities would likely telegraph any slowing in China before economic data does.

* ECBs Trichet, and Bernanke, have just stated - again - that the world financial markets are not taking into account the risk out there - ie they are in a semi euphoria. The last time we heard comments such as these from the ECB - within a month or two, we saw the February stock crashes in Asia led by the Chinese.

* The BOJ Fukui just stated that hedge funds add welcome liquidity to markets, but also add unwelcome volatility in stress presently.

* The Hong Kong monetary authority recently stated that they are concerned that derivatives are an increasing danger and that it is of unknown extent. (Fed has also stated this, as has the ECB and the BOJ.)

* A month or so ago, I wrote an article that stated that world stock collapses will likely lead to the next world recession. Reason: stock gains worldwide have buffered the real estate declines here in the US and also abroad. When the stocks let go, the last remaining buttress of US consumer confidence will flag. Certainly, US GDP performance of about .3% annualized is not behind any consumer confidence at this time.

http://www.[[financialsense.com/fsu/editorials/laird/2007/0606.html

 

[Ichiro]

8jun-THE CHINA SYNDROME
by Joe Average
aka Dr. William R. Swagell
June 6, 2007

“The issue on the table is not whether the US needs to take action to respond to the interventionist policies of China and Japan in this key area, but what form that action should take.” Sander Levin, Chairman trade subcommittee House Ways & Means Committee.

“The time for talk has passed; we must act now to end this unfair trade practice that cripples American industries.” Charles Rangel, Chairman House Ways & Means Committee.

“…by going after China, you in the Congress are playing with fire…(risking) a policy blunder of monumental proportions…if the China bashers get their way.”

“If Congress changes its mind and backs away, it fears it will lose all credibility on this key issue with American workers. With respect to China, I am afraid that means the US Congress has now gone past the point of no return.” Stephen Roach, chief economist Morgan Stanley.

“China’s breakneck industrialization is placing it on a collision course with the entire world. Tomorrow’s China Wars will be fought over everything from decent jobs, liveable wages and leading technologies to strategic resources such as oil, copper and steel…even food, water and air.”
Jim Puplava, www.financialsense.com .

The Looming Trade War with China.

China’s ongoing massive trade surpluses with America (a record $233 billion last year) have incited demands in the U.S. Congress for the Chinese to revalue their currency by up to 40 per cent, amid claims that undervaluation of the Yuan is giving China’s exporters an unfair advantage. Among some of the tough measures being mooted are a 44 per cent duty on polyester fibre imports, an across-the-board 27 per cent tariff on all Chinese goods, and a recently introduced tariff of 11 to 21 per cent on glossy paper.

Reasons given as to why “strong action” is called for include China’s “unfair currency manipulation” and that “China is illegally subsidizing some of its exports”.

So how did we get to this present situation?

The China miracle of the past decade has in large part been a result of globalization which has seen a nation of nearly 1.4 billion Chinese move rapidly from a poor, agricultural based economy to become the industrialized low-cost manufacturer to the world. The lowered manufacturing costs of most of the goods consumed in the world today has helped drive down inflationary forces, which in turn have allowed Central Banks to open the spigots further and flood the world with easy credit and liquidity in order to keep markets booming and to avoid any painful recession. The fact that this fiscal loosening also sent the U.S. dollar falling has continued the virtuous cycle as imports into America became even cheaper and more plentiful.

With a torrent of U.S. dollars pouring into its coffers, China has recycled these dollars back into U.S.D. securities (as Japan has also been doing) so as to artificially keep the exchange rate in its favour as well as to receive a better return than their own very low interest rates. This in turn has neutralized the “Bond Vigilantes” (preventing them from trying to keep an ever more profligate Federal Reserve honest) by keeping downward pressure on inflation and interest rates. The virtuous cycle has continued.

But now it appears the rules of engagement are changing.

http://www.[[financialsense.com/fsu/editorials/swagell/2007/0606.html

 

[Ichiro]

8jun-INFLATION, INFLATION, INFLATION
by David N. Vaughn
Gold Letter, Inc.
June 7, 2007

Are you feeling sorry for gold lately? 'Fraid it doesn’t need your sorrow with its present price action. As I have said before and will say again gold will do what gold wishes to do.

Click to enlargeHere’s a subject that brings humor to the table. Inflation.

The humor is the fact that inflation is the huge elephant in the living room that everyone wants to ignore and pretend its not there. Well, not exactly. The middle class, lower class, the upper class and every class in between knows that prices are rising across the board.

“GDP up at 0.6% annual rate, worst since '02.” The U.S. economy grew at the slowest pace in more than four years…”

“On the inflation front, the Commerce Department says the Federal Reserve's preferred price gauge, which measures consumer prices excluding food and energy, was up 2.2% in the first quarter, vs. 1.8% at the end of 2006 and above what several Fed officials, including Chairman Ben Bernanke, have called their inflation comfort zone.” Click

The humor is how our government attempts to hide it by playing with subtle numbers and hoping that the mere thought of inflation will disappear from the minds of the voters. And I guess this is true pretty much.

The reason the general public accepts inflation without a big fuss is that for 10 years the public has seen inflations effects primarily in the value of their home going up. And the big joke is that the classes have been convinced that their home is an investment and that there fore a rising home price means rising personal net worth.

Plus, the loan market added to the bubble by making cheap loans to all. Why not use cheap money to acquire an asset that is “guaranteed” to go up in value. How can you lose? Of course you lose when the asset quits appreciating and actually begins to go down in value. What? Does anything actually ever go down in the throes of an inflationary environment? Yes, some or many things will go up while a few things go down.

http://www.[[financialsense.com/fsu/editorials/vaughn/2007/0607.html

 

[Ichiro]

8jun-P
Oil Prices Decline in Asian Trading
Friday June 8, 5:31 am ET
Oil Prices Decline in Asian Trading After Big Gain on Lingering U.S. Gasoline Supply Worries

SINGAPORE (AP) -- Oil prices fell in Asian trading Friday after a big gain Thursday amid concerns that U.S. refineries are still not making enough gasoline to meet demand.

Light, sweet crude for July delivery fell 30 cents to $66.63 a barrel on the New York Mercantile Exchange mid-afternoon in Singapore.


The contract jumped above $67 a barrel early Thursday and settled 97 cents higher at $66.93 a barrel following a U.S. government report that showed refinery utilization fell 1.5 percent last week to 89.6 percent of capacity.

Brent crude contract for July fell 37 cents to $70.63 a barrel on the ICE Futures exchange in London.

Even an unexpectedly large gain in gasoline and distillate fuel stocks didn't alleviate concerns that the refinery run rates were too low.

Analysts said, though, that the inventory increases weighed on the prices.

http://biz.yahoo.com/ap/070608/oil_prices.html?.v=5