Asian News

[Ichiro]

Bernanke's Job Is Cake Compared With Fukui's: William Pesek

By William Pesek

More Photos/Details

Sept. 7 (Bloomberg) -- Few people in their right mind would want to be a central banker these days.

Rarely have monetary-policy makers faced a more daunting assortment of things that could go awry. They include a global credit crunch, swooning stock markets, out-of-whack currencies, hedge-fund blowups and whether to fret more about inflation or recession -- or both.

Nowhere are the risks bigger and the stakes higher than in Tokyo, where the Bank of Japan faces an unprecedented balancing act.

Modern history knows of no other major economy holding short-term interest rates at, or near, zero for almost a decade. The BOJ has even gone further, adding additional yen to the financial system when zero rates failed to boost demand for credit.

Only now are the side effects of that policy becoming clear. Aside from a chronically undervalued yen, ultra-low Japanese rates are exporting bubbles around the globe.

``Overinvestment amid conditions of ample global liquidity was a major factor in causing the subprime issue,'' BOJ board member Atsushi Mizuno said Aug. 30. The market turmoil ``is proof that keeping rates at levels that stray from fundamentals could actually cause instability.''

http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_pesek&sid=aF2mpScI1TOs

 

[Ichiro]

Daily FX-=Carry Trades: Expect More Losses
Friday September 7, 5:43 pm ET
By Kathy Lien, Chief Currency Strategist strategist@dailyfx.com

None of the Japanese Yen crosses have been spared from today?s massive and widespread exodus out of carry trades. With the exception of CHFJPY, every other yen cross lost a minimum of 200 pips.

Risk aversion is back and we expect it to be here to stay. Unless the Fed steps in with an intermeeting rate cut, the Dow will want to test the 13,000 level by the end of next week. As currencies and equities continue to move together, this should have a negative impact on the Yen crosses as well. When Asian traders return to the markets on Sunday night, we expect them to react the same way as US and European traders.

http://biz.yahoo.com/fxcm/070907/1189201408006.html?.v=1

 

[Ichiro]

Daily FX-US Dollar: Will the Fed be Proactive or Reactive?
Friday September 7, 5:26 pm ET
By Kathy Lien, Chief Currency Strategist strategist@dailyfx.com

- US Dollar: Will the Fed be Proactive or Reactive?
- Carry Trades: Expect More Losses
- Euro Breaks Out, Headed Towards All Time Highs

US Dollar: Will the Fed be Proactive or Reactive?
Volatility has rocked the financial markets after the shockingly weak non-farm payrolls report. Economists were looking for companies to add 100k jobs last month, but they ended up firing more people than they hired. The Federal Reserve can no longer pretend that the subprime and credit crisis is not having an impact on the overall economy. It is and in a very serious way. At the end of trading today, Countrywide Financial announced job cuts of up to 12k. The only choice that they have at this point is between cutting interest rates by 25 or 50bp. After today?s non-farm payrolls number, the interest rate curve is pricing in 75bp of easing. There are even rumors about the possibility of an emergency intermeeting cut. The chance of this is low since the FOMC meeting is only 7 trading days away. The bigger question will be whether the Fed chooses to be proactive or reactive. If they really want to do more than put a band aid on the problems that the US economy currently faces, they will need to surprise the markets with a half point cut, but based upon the measures that we have seen from Bernanke so far, it is more likely that the Fed to play it safe with by cutting interest rates 25bp.

http://biz.yahoo.com/fxcm/070907/1189200641471.html?.v=1

 

[Ichiro]

Daily FX
USDJPY Could Show Brief Recovery to 114.00 on Japanese GDP Contraction
Friday September 7, 4:22 pm ET
By Terri Belkas, Currency Analyst strategist@dailyfx.com

SEP 9


How Will The Markets React?

Normally, final readings of GDP don?t tend to garner too much attention, as initial and secondary estimates tend to pinpoint the figure relatively accurately. However, the story will be quite different for Japan as Q2 GDP is anticipated to be revised down to an annualized rate of -0.7 percent, reflecting contraction in the economy for the first time in two and a half years. The reason? Capital spending during the second quarter unexpectedly dropped at a rate of 4.9 percent after rocketing 13.6 percent higher during the previous period.

http://biz.yahoo.com/fxcm/070907/1189196577979.html?.v=1

 

[tsptalk]

Wow, USDJPY 113.50?? That's not good.

 

[JOVARN]

If a rate cut happens sooner then later the dollar will increase, that is not good for the I funders such as myself.

I am 40% I and 60 S and it wont take muck for me to go back to G

 

[Ichiro]

If the FEDS reduces the federal rate by .5%, the USDJY will be below 110 in the next few days and that is one of the reasons why the NIkkei is doing so poorly.. The individual Japanese investors who thought that blue chip Nikkei stocks were safe are now bailing out of the Japan Stock Market. I am sure that former PM Koizumi will replace PM Abe in the near future to restore confidence in the economy....

 

[Ichiro]

Abe Quits as Japan's Prime Minister; No Successor Yet (Update4)

((It is about time that PM ABE resigned since Japan's economy is going down hill. I am pretty sure that Koizumi will be the next PM. Any other candidate will cause Japan's economy to fall into a recessionary environment and the NIKKEI will drift sideways)).

By Sachiko Sakamaki and Hideko Takayama


Sept. 12 (Bloomberg) -- Japanese Prime Minister Shinzo Abe resigned after failing to regain public support following his party's defeat in Upper House elections in July.

``I've decided to create a new situation by resigning,'' Abe, 52, said at a televised news conference broadcast nationally. The Liberal Democratic Party will hold an election for a new president Sept. 19, according to party officials who declined to be identified. LDP Secretary General Taro Aso, 66, declined to comment on whether he'll seek the party's leadership.

A prolonged period of political instability puts at risk the government's plan to raise revenue, cut spending and balance the budget by 2011. Unpopular budgetary controls are required to stop the expansion of the world's largest public debt. The opposition Democratic Party of Japan opposes raising the sales tax and wants more spending in rural areas.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aaAVwMOArTK8&refer=worldwide

 

[Ichiro]

Bernanke Says `Saving Glut' Still Helps Lower Rates (Update5)

By Scott Lanman

Sept. 11 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said the ``global saving glut'' is still helping to keep interest rates low, and they may not rise much in the event that the pool of excess capital dwindles in coming decades.

While theory suggests that yields, adjusted for inflation, would rise as saving diminishes, ``factors other than the saving- investment balance affect long-term interest rates,'' Bernanke said in a speech in Berlin. ``We are again reminded of the need to maintain appropriate humility in forecasting.''

Nations such as China have invested the proceeds of trade surpluses in U.S. Treasuries, driving yields lower. China has a record $1.3 trillion of foreign-exchange reserves and household savings that amount to almost one-fifth of its economy. Investors abroad hold half of Treasuries outstanding, helping drive benchmark 10-year note yields down to 4.37 percent on average in the past five years, from 6.82 percent in the 1990s.

http://www.bloomberg.com/apps/news?pid=20601068&sid=ah0GNLWMyByg&refer=economy

 

[Ichiro]

European stocks down 1 pct, banks hit again
Fri Sep 14, 2007 4:51am EDT



By Anshuman Daga

LONDON, Sept 14 (Reuters) - European shares extended losses
in morning trade on Friday, hit by new worries over financing
for banks after UK mortgage lender Northern Rock (NRK.L: Quote, Profile, Research) issued a profit warning and tapped the Bank of England for funding.



Shares in Northern Rock plunged 25 percent as it became the
biggest British casualty so far of the credit squeeze sparked by
the crisis in the U.S. subprime mortgage market.

Recently battered banks were again standout losers, with
HBOS (HBOS.L: Quote, Profile, Research) down 3 percent, BNP Paribas (BNPP.PA: Quote, Profile, Research) fell 2.1
percent and Barclays (BARC.L: Quote, Profile, Research) declined 3.1 percent. Retail shares were also lower.

http://www.reuters.com/article/marketsNews/idINL1477584020070914?rpc=44

 

[Ichiro]

AP-Dollar Falls in Asia on Credit Problems
Friday September 14, 3:06 am ET
Dollar Falls Against Yen on Reports of Credit Problems at Britain's Largest Mortgage Lender

TOKYO (AP) -- The dollar fell against the yen Friday in Asia on reports of credit problems at Britain's largest mortgage lender.

The dollar was trading at 114.98 yen midafternoon, down from 115.29 yen late Thursday in New York. The euro fell to US$1.3874 from US$1.3927.


The BBC and the Financial Times reported that Northern Rock had tapped the U.K. central bank's emergency funding, reviving fears of global credit woes and sending the dollar lower against the yen.

Worries about a credit crunch set off selling of high-yielding currencies like the dollar.

"The market is still sensitive to such news," said Masashi Kurabe, senior foreign exchange manager at Bank of Tokyo-Mitsubishi UFJ.

http://biz.yahoo.com/ap/070914/asia_dollar.html?.v=1

 

[Ichiro]

WALL STREET MAY GET WHAT IT WISHES FOR
by David Yu
Chartmentary.com
September 14, 2007

((The anticipated reduction of .25% iinterest rate is already factored in the stock market. Unless the FED reduces rate by .50%, I really don't think that the market will move much on Tuesday)),


Lately, it's almost impossible not to be reminded of the rising probability of a recession by the Wall Street cheerleading squad, which used to dispute vehemently any notion of a recession just a couple of months ago. As it gets closer to the FOMC meeting next week, the R word has been thrown around by experts and Wall Street pundits more frequently than the re-run of Frasier. They're apparently hoping the onslaught of this recession campaign would sway the Fed to cut its overnight lending rate more drastically. The market, nonetheless, appears to have already priced in 0.25% rate cut and moved on since the end of August. Unless the Fed does something unexpected, the market seems no longer driven by the highly anticipated rate cut. The revival of yen carry trade may be the driving force behind recent rally.

I mentioned in Rally by Carry Trade on 9/11/2007 that recent intraday charts of the SPX (S&P 500 Index) and the Dollar-Yen Exchange Rate were moving almost tick for tick. The longer term chart also shows synchronized movement between the SPX and the exchange rate. I use 11-day simple moving average on Chart 1 to smooth out the curve of the daily % change of the SPX and the yen. They show almost identical pattern since the end of August (blue dotted box), when the intraday SPX reached above 1480 for the first time since 8/9/2007. What's interesting is that this is all happening while the Dollar's sinking like a stone against most other major currencies.

http://www.[[financialsense.com/fsu/editorials/yu/2007/0914.html

 

[Ichiro]

IT'S NOT MY FAULT
by Anthony M. Cherniawski
The Practical Investor, LLC
September 14, 2007


“GREENSPAN SAYS HE KNEW ABOUT ABUSES IN SUBPRIME LENDING BUT FAILED TO FORESEE THEIR PARALYZING MARKET EFFECTS UNTIL LATE 2005.”

Former Federal Reserve Chairman Alan Greenspan admits he "didn't really get it" that the subprime lending trend was significant enough to hurt the economy until very late 2005, but still defends his lowering of interest rates from 2001 until 2004 that critics say caused the crisis in the first place. Greenspan, who led the U.S. Federal Reserve Bank through 18 years and four presidents, speaks to Lesley Stahl in his first major interview, to be broadcast on 60 MINUTES Sunday, Sept. 16 (7:00-8:00 PM, ET/PT) on the CBS Television Network. (Source: DRUDGE REPORT FLASH 2007®)

Really? Back in February 2004 (USA Today), he said, “… a Fed study suggested many homeowners could have saved tens of thousands of dollars in the last decade if they had ARMs. Those savings would not have been realized, however, had interest rates shot up.” Unfortunately, his comments were taken out of context and he never corrected the error. Without mentioning that interest rates might possibly go back up (starting in June 2004) and only looking at past history a statement was made that encouraged the acceptance of adjustable rate mortgages at precisely the wrong time in history.

Money market freeze – the new monster that nobody saw coming.

http://www.[[financialsense.com/fsu/editorials/cherniawski/2007/0914.html

 

[Ichiro]

Yen Gains Against Pound, Euro as Credit Losses Damp Confidence

By Anchalee Worrachate and Kosuke Goto

Sept. 25 (Bloomberg) -- The yen gained versus the pound and the euro on speculation credit market losses will damp business and consumer confidence across Europe.

The yen climbed against all 16 of the most-active currencies as investors unwound carry trades, reducing holdings of higher- yielding assets funded by loans from Japan. The pound snapped a three-day advance against the dollar after the Independent newspaper reported the U.K.'s deposit protection plan doesn't have enough cash to cover a failure of a lender such as Northern Rock Plc.

``The yen's gain suggests risk level is picking up again,'' said Chris Turner, head of currency research at ING Financial Markets in London. ``The market remains very vulnerable to bad news about banks and the financial sector, and it is reacting strongly to the U.K news today.''

http://www.bloomberg.com/apps/news?pid=20601083&sid=am5b9sBaZrmU&refer=currency

 

[Ichiro]

Japan's Five-Year Notes Fall; Gain in Stocks Cuts Risk Aversion

By Theresa Barraclough and Oliver Biggadike

Sept. 25 (Bloomberg) -- Japan's five-year notes fell for a fourth day as gains in stocks limited demand for the relative safety of government securities.

Yields on the debt climbed to the highest in almost six weeks as stocks extended their gains after the Federal Reserve's half percentage point cut in interest rates on Sept. 18. The Nikkei 225 Stock Average has climbed 3.8 percent since then on speculation the cut in rates will support global economic growth.

``Rebounding stocks are prompting people to reverse flight- to-quality bets that they had put on,'' said Tsutomu Kawasaki in Tokyo, a fund manager who helps oversee the equivalent of about $20 billion in Japanese bonds at Pension Fund Association, which has more than 1,600 corporate pension funds as members in Japan. ``Bond yields will probably be adjusted higher a bit more.''

The yield on the 1.1 percent note due in September 2012 gained 3 basis points to 1.235 percent as of 4:57 p.m. in Tokyo at Japan Bond Trading, the nation's largest interdealer debt broker. The price fell 0.14 yen to 99.366 yen.

http://www.bloomberg.com/apps/news?pid=20601009&sid=ahyjrCTT8ANE&refer=bond

 

[Ichiro]

European shares led down by financials, data eyed
Fri Sep 28, 2007 4:52am EDT

FRANKFURT, Sept 28 (Reuters) - European shares fell on Friday, led lower by weaker financial shares that outweighed gains in resource stocks, ahead of a slew of economic data later in the session.

Stricken British mortgage lender Northern Rock (NRK.L: Quote, Profile, Research) fell 4.2 percent after reports the bank had borrowed a further 5 billion pounds ($10.12 billion) from the Bank of England. Tate & Lyle Plc (TATE.L: Quote, Profile, Research) fell more than 25 percent after the British sugar and sweetener maker cautioned on its outlook.

By 0831 GMT, the pan-European FTSEurofirst 300 index (.FTEU3: Quote, Profile, Research) was down 0.23 percent at 1,547.84 points.

The FTSEurofirst index was broadly unchanged over the week, but has fallen 3.6 percent since the beginning of the third quarter, which ends on Friday.

http://www.reuters.com/article/marketsNews/idINL2874015420070928?rpc=44

 

[Ichiro]

AP-Dollar Lower Against Yen in Asia
Friday September 28, 4:43 am ET
Dollar Lower Against Yen in Asia on Selling by Japanese Exporters

TOKYO (AP) -- The dollar fell versus the yen Friday in Asia, with selling of the greenback by Japanese exporters overwhelming buying by investment trusts.

The dollar was trading at 115.05 yen midafternoon, down from 115.59 yen late Thursday in New York. The euro rose to US$1.4166 from US$1.4160.


The market was dominated by trading to settle accounts at the end of Japan's fiscal first half, traders said, but once the seasonal factor fades, the dollar may weaken further on lingering concerns over the U.S. economic outlook.
http://biz.yahoo.com/ap/070928/asia_dollar.html?.v=1

 

[Ichiro]

Commodities Head for Biggest Monthly Increase in 32 Years

By Millie Munshi

Sept. 28 (Bloomberg) -- Commodities headed for the biggest monthly gain in 32 years, led by wheat, crude oil and gold, as the dollar's slump enhanced the appeal of energy, grains and precious metals as a hedge against inflation.

The 19-commodity Reuters/Jefferies CRB Index was up 8.7 percent this month, the most since July 1975. Wheat climbed to a record in September amid a global grain shortfall, boosting corn and soybeans. Oil also hit a record, and gold reached a 27-year high. The Federal Reserve cut borrowing costs to bolster the U.S. economy, sending the dollar tumbling.

``The Fed has signaled pretty clearly that they will answer the problem of a slowing economy with greater liquidity,'' said Chip Hanlon, who manages $1 billion at Delta Global Advisors Inc. in Huntington Beach, California. ``We're in a bullish phase for commodities.''

The CRB Index rose to 334.50 at 12:35 p.m. New York time from 308.76 on Aug. 31. Wheat reached a record $9.5125 a bushel today. Crude oil climbed to $83.90 a barrel, the highest ever, on Sept. 20 and approached the record today. Gold rose as high as $752.80 an ounce today, the highest since January 1980.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aPttN5PY7Uhg&refer=home

 

[Ichiro]

Fed to Cut Rates Again Before January, History Shows (Update3)

((Well, folks, it looks like the dollar will dip below 110 if the FED reduces the federal rate by another .5 again before 31 Dec.. That sure will be a plus for the I fund..))

By Elizabeth Stanton
Enlarge Image/Details

Sept. 24 (Bloomberg) -- Government bond traders, who predicted six of the last seven recessions, say the Federal Reserve will lower interest rates again before the end of the year as the economy comes to a standstill.

Since the Fed last week lopped half a percentage point off the central bank's target for overnight lending between banks -- the first orchestrated decline in so-called federal funds since 2003 -- traders have pushed the yield on Treasury two-year notes to almost three quarters of a point below the designated 4.75 percent funds rate. In the three previous occasions during the past 20 years when that has happened, policy makers have cut borrowing costs.

``The U.S. economy needs to grow at 2.5 to 3 percent or else it stalls,'' said Bill Gross, manager of the $104.4 billion Total Return Fund, the world's biggest bond fund. ``Historically every time we get close to stall speed the Fed lowers short rates.''

The latest government data show unexpected job losses in August, sagging core retail sales and no relief in sight for the moribund housing market. Now that U.S. gross domestic product probably is growing at an annualized rate of less than 2 percent, speculation is rampant that another Fed rate cut is assured before January.

Even former Fed Chairman Alan Greenspan provided encouragement to traders when he said in an interview two days after the central bank's Sept. 18 rate decision that the odds of a recession remained ``somewhat more'' than one in three.

http://www.bloomberg.com/apps/news?pid=20601068&sid=a5XiMQI6nAHk&refer=economy

 

[Ichiro]

Plosser Says Fed's Rate Cut May Spur Inflation (Update1)

(( The cheap foreign made goods will cost even more in the future since the foreign currency such as yen and euro will appreciate....))

By Scott Lanman and Anthony Massucci
Enlarge Image/Details

Sept. 26 (Bloomberg) -- Federal Reserve Bank of Philadelphia President Charles Plosser said last week's interest-rate cut could cause inflation to accelerate and that policy makers must be ready to reverse course if needed.

``Cutting the funds rate has the potential for aggravating inflation, there's no question about that,'' Plosser told the New Jersey Technology Council late yesterday. Should inflation or price expectations rise in coming months, ``the outlook will be affected and policy may have to be adjusted.''

Plosser, who doesn't vote on rates this year, is the first official to express concern about the Fed's Sept. 18 decision to lower the benchmark interest rate by a greater-than-forecast half-point. The reduction, while ``appropriate'' because of slowing job growth and falling home prices, shouldn't lead to further moves unless data become ``much weaker,'' he said.


http://www.bloomberg.com/apps/news?pid=20601068&sid=aCw9scWxBA8A&refer=economy