Monday, December 29, 2008

S.Korea probing possible dollar hoarding -Yonhap

South Korea is investigating possible cases of dollar hoarding by individuals and companies, Yonhap news agency quoted an unnamed official at the country's top financial regulatory agency as saying on Tuesday.

"We are checking on talk that there are cases of dollar stockpiling in the local currency market," the Financial Supervisory Service official was quoted as saying. "We plan to ask banks to submit foreign exchange transaction records of their individual and corporate clients."

JGBs jump on US Treasuries, year-end fund relief

Japanese government bonds jumped on Tuesday in the final trading session of 2008, with the benchmark 10-year yield falling to a five-year low, helped by overnight gains in U.S. Treasuries and relief that year-end funding has gone smoothly.

Analysts said a variety of domestic and overseas factors boosted the JGB market, which closed after the morning session on Tuesday and reopens on Jan. 5.

Bonds opened modestly higher after the previous day's gains in U.S. Treasuries, which rose on flight-to-quality bids following an eruption of violence in the Middle East.

March 10-year JGB futures then proceeded to surge more than half a point, giving a boost to cash bonds.

"The market was mostly led by futures. There was relief in the shorter-dated maturities after repo rates came down the previous day," said Atsushi Ito, a fixed-income strategist at Morgan Stanley.

Market participants swap bonds for cash in the JGB repo market, and declines in repo rates can make it easier for brokerages to fund their positions in JGBs.

"Repo rates came down as concerns eased in the money market that participants might not be able to secure enough funds going into the year-end," said Katsutoshi Inadome, a fixed-income strategist at Mitsubishi UFJ Securities.

"Investors also want to cover shorts before the last trading session of the year ends, as other overseas markets will still be open into the new year," he said.
March futures climbed 0.76 point to 140.12.

The five-year yield fell 3.5 basis points to 0.680 percent , the lowest since September 2005.
The benchmark 10-year yield declined 3.5 basis points to 1.165 percent after hitting 1.155 percent, its lowest since August 2003.

The yield curve, which has been flattening this month on recent easing steps by the Bank of Japan and a steadily worsening outlook for the economy, flattened further as some investors extended durations of their bond holdings for the end of the month.

The 20-year yield dropped 3 basis points to 1.690 percent after touching 1.660 percent, its lowest since September 2003.

Market participants are keen to see whether the curve flattening can continue into next year, when issuance amounts of super-long JGBs will increase as Japan relies more heavily on debt with the economy deeper in recession.

Participants are also keeping an eye on BOJ policy in the new year after the daily Sankei Shimbun reported on Tuesday that the Japanese government and central bank are considering launching a $110 billion scheme to buy bad loans and other financial assets from banks using public funds to ease a corporate credit crunch.

The BOJ has already unveiled a series of measures to ease credit strains, cutting interest rates to near zero and deciding to temporarily buy commercial paper outright this month.

Sunday, December 28, 2008

Q+A-Why are Bangladesh's elections important?

Bangladeshis were voting on Monday in a parliamentary election that returns the country to democracy after two years of emergency rule.

Following are answers to key questions about the poll:

WHAT IS THE ELECTION FOR?
Voters will choose a 300-seat parliament that will in turn put in place a civilian, ministerial government succeeding an army-backed interim authority.

The authority took power in January 2007 amidst politically related violence, cancelling an election scheduled for that month and suspending many political rights.

WHY IS IT IMPORTANT?
Bangladesh is an impoverished Muslim-majority country of 140 million people strategically placed on the Indian Ocean at the eastern edge of South Asia between India and Myanmar.

Neighbours worry about an increasingly violent Islamist militant minority that could provide support and shelter for radical activists in their own countries.

A government that brings economic growth to Bangladesh will improve the lives and minimise social unrest among the populace, some 45 percent of whom are below the poverty line, and reduce the need for foreign aid.

The country has a thriving textile industry but growth for it and other manufacturers has been limited by energy shortages. Past governments have failed to develop significant natural gas and coal resources.

WHO ARE THE KEY PLAYERS?
Former prime ministers Sheikh Hasina and Begum Khaleda Zia lead the two strongest election alliances, and one is expected to be prime minister again when the dust settles.

Hasina is seen as perhaps slightly more business-friendly and more likely to defend a secular Bangladesh than Khaleda, although the latter also supports economic liberalisation and has promised an aggressive crackdown on violent extremists.

Indeed, analysts say the women's policy differences are minimal and it matters less who wins than that the losers accept the results, avoiding strikes and street violence. In the past such turbulence has made it difficult for any government to be effective and spurred military intervention.

Foreign banks ask for China tax delay - WSJ

A group of foreign banks in China have asked the Chinese government to delay a recently imposed tax on interest paid on borrowings from overseas, the Wall Street Journal reported, citing a petition signed by 36 foreign lenders.

China is starting to levy a 10 percent withholding tax, retroactive to Jan. 1, on interest payments on all loans to banks in China from overseas lenders, the paper said on its website.
A lower rate of 7 percent will be placed on lenders from places with which China has a tax treaty, such as Hong Kong, it said.

The 36 foreign banks, which include HSBC Holdings Plc , Standard Chartered Plc and Bank of East Asia , said in their petition that the tax was an excessive burden on their China operations, which typically have small deposit bases, and are more reliant than local rivals on borrowing from overseas sources, such as their parent companies.

The foreign banks have asked that they only be required to pay the withholding tax on interest payments that occur after Dec. 4 while Beijing reviews the petition, and that any back-payment be put on hold, the Journal said.

HSBC and Citibank declined to comment on the report. Standard Chartered and Bank of East Asia could not be immediately reached for comment.

Monday, December 22, 2008

TABLE-NZ Q3 gross domestic product falls 0.4 pct

New Zealand's gross domestic
product fell 0.4 percent in the third quarter on a seasonally
adjusted basis, according to official data on Tuesday.

Economists polled by Reuters had a median forecast for a fall
of 0.5 percent on the previous quarter, and also a decline of 0.1
percent on an annual average basis. The Reserve Bank of New
Zealand had forecast a quarterly fall of 0.3 percent.

--------------------------------------------------------------
Production-based GDP, qtr-on-qtr s/adj chain volume series:
Sept 2008 qtr Jun 2008 qtr Sept 2007 qtr
-0.4 pct -0.2 pct +0.7 pct
--------------------------------------------------------------
S/adj change in chain-volume series vs yr-ago quarter:
Sept 2008 qtr Jun 2008 qtr Sept 2007 qtr
-0.1 pct +1.0 +3.4 pct
--------------------------------------------------------------
Real annual average change*
Sept 2008 qtr Jun 2008 qtr Sept 2007 qtr
+1.7 pct +2.5 pct +2.8 pct
--------------------------------------------------------------
Expenditure-based GDP, s/adj change in chain-volume prices
from previous qtr:
Sept 2008 qtr Jun 2008 qtr Sept 2007 qtr
-0.7 pct -0.5 pct 0.0 pct
---------------------------------------------------------------
Expenditure-based GDP, actual annual percentage change*
Sept 2008 qtr Jun 2008 qtr Sept 2007 qtr
0.0 pct +1.1 (+1.3) pct +3.6 pct
---------------------------------------------------------------
* Calculated as the sum of the four quarters ended in the
quarter shown divided by the sum of the previous four quarters,
then expressed as a percentage change.
SNZ said fourth quarter GDP data will be released on March
27.

China central bank drains 50 bln via 28-day repos

The People's Bank of China said it drained 50 bln yuan from the money market via 28-day repurchase agreements today.

The yield for the sale was set at 0.9 pct, compared to 1.0 pct last week.
(1 usd = 6.85 yuan)

US Court blocks Microsemi from shedding Semicoa assets

A federal court on Monday ordered Microsemi Corp to preserve and maintain semiconductor assets acquired from Semicoa Inc. before a ruling on the acquisition.

The U.S. Justice Department filed an antitrust lawsuit last Thursday alleging that Microsemi's July 2008 purchase of Semicoa assets had reduced competition in markets for semiconductors used in military and space programs.

The Justice Department on Monday sought a temporary restraining order barring Microsemi from destroying, disposing of or ceasing operations of Semicoa assets before the lawsuit is decided.

"Destruction of the Semicoa equipment, or its sale, other than to a firm that would use those assets to compete effectively against Microsemi, would permanently prevent this court from exercising its authority to restore competition," the Justice Department said in support of its request for preliminary relief.

The Justice Department's lawsuit asks the court to require Irvine, Calif.-based Microsemi to undo its purchase of the assets of Costa Mesa-based Semicoa.

In a statement last week responding to the lawsuit, Microsemi said: "The revenues generated by the Semicoa assets from the sales of the products covered in the complaint were approximately $8.3 million. Microsemi's 2008 fiscal year revenues were $514.1 million."

US Court blocks Microsemi from shedding Semicoa assets

A federal court on Monday ordered Microsemi Corp to preserve and maintain semiconductor assets acquired from Semicoa Inc. before a ruling on the acquisition.

The U.S. Justice Department filed an antitrust lawsuit last Thursday alleging that Microsemi's July 2008 purchase of Semicoa assets had reduced competition in markets for semiconductors used in military and space programs.

The Justice Department on Monday sought a temporary restraining order barring Microsemi from destroying, disposing of or ceasing operations of Semicoa assets before the lawsuit is decided.

"Destruction of the Semicoa equipment, or its sale, other than to a firm that would use those assets to compete effectively against Microsemi, would permanently prevent this court from exercising its authority to restore competition," the Justice Department said in support of its request for preliminary relief.

The Justice Department's lawsuit asks the court to require Irvine, Calif.-based Microsemi to undo its purchase of the assets of Costa Mesa-based Semicoa.

In a statement last week responding to the lawsuit, Microsemi said: "The revenues generated by the Semicoa assets from the sales of the products covered in the complaint were approximately $8.3 million. Microsemi's 2008 fiscal year revenues were $514.1 million."

Singapore's Nov inflation slows to 5.5 pct yr/yr

Singapore's annual inflation slowed to 5.5 percent in November from 6.4 percent in October, helped by a drop in petrol prices, taxi fares and car prices.

Consumer prices fell 0.2 percent after seasonal adjustments month-on-month following a rise of 0.8 percent in October, the Department of Statistics said in a statement on Tuesday.

Singapore's inflation has been on the downtrend since peaking at a 26-year high of 7.5 percent in April, May and June.

Average inflation for the first 11 months of 2008 was 6.7 percent and the government expects the rate of price increases to fall sharply to 1 to 2 percent in 2009.

TREASURIES-Drift lower in Asia before data deluge, supply

U.S. Treasury futures drifted lower in Asia on Tuesday in very light trade as dealers prepared to absorb $28 billion of five-year paper and investors awaited a slew of year-end economic figures.

* Activity was limited due to a national holiday in Japan and with many market players moving to the sidelines for Christmas and other year-end holidays.

* Data later in the day expected to show the final reading of third-quarter U.S. gross domestic product unchanged with a 0.5 percent annualised contraction. New and existing home sales in November are both seen posting deeper declines.

* The Treasury will sell $28 billion of five-year notes after a record $38 billion offer of two-year notes the previous day, highlighting the government's big financing needs even before President-elect Barack Obama launches what is expected to be hefty fiscal spending next year.

* In when-issued trade, the yield on the new five-year issue was quoted about 8 basis points above than the current yield, according to data from TradeWeb.

* March T-note futures dipped 1/32 to 126-28.5/32, with less than 1,000 lots changing hands.
* Ten-year notes edged up 2/32 in price to yield 2.173 percent, down nearly a basis point from late U.S. trade. But five-year notes were a shade weaker to yield 1.428 percent, up a basis point.

China premier urges firms to avoid cutting jobs

Chinese Premier Wen Jiabao has urged companies to "do everything possible" to maintain their workforce amid the global downturn, state media said on Tuesday.

During a two-day visit to the southwestern city of Chongqing from Sunday, Wen expressed great concerns about the fallout from the global economic crisis, the China Daily said.

"Companies must not lay off workers easily," Wen said to the city's carmaker Changan Group, which may cut more staff over the next four months after sales declined in November.

"The automobile industry has a long industrial chain and it is an industry the government should strongly support," he said.

Rising unemployment has fed fears of unrest as forecasts for China's growth next year fall below 8 percent. Urban umemployment has risen to about 9.4 percent, double the official figure, the Chinese Academy of Social Science said in a report last week.

Chongqing -- home to millions of migrant workers who have been the backbone of cheap labour which has fueled China's export-driven boom -- has had tens of thousands flood back after being laid off due to cuts in factory orders from the United States and Europe.

Wen said personnel should be cherished, not only by companies but also by the government.
"Human resources are a fundamental competitiveness. While the economy worsens, we should treasure the professionals more," he said.

Wen also encouraged students at Chongqing University to be optimistic about job prospects after he reassured university students in Beijing, as reports said a quarter of 6.1 million college students could have trouble finding jobs.

Wen said it was a prime task to maintain stable and relatively fast economic development and take more direct, powerful and effective measures to implement central policies to meet domestic demands and promote growth in a substantial way.

"Next year, it is the most important target to stop the declining trend of economic growth," he said

Friday, December 19, 2008

Canada Liberals say they might hike sales taxes

Canada's new opposition leader, Michael Ignatieff, said in a television interview that if he took power he would consider hiking the controversial federal sales tax at some point to eliminate future budget deficits.

The Goods and Services Tax has been an explosive issue over the past two decades, and cutting it to 5 percent from 7 percent figured prominently in the platform of Conservative Stephen Harper when he was first elected prime minister in 2006. The tax covers a wide range of products and services.

Ignatieff, who last week replaced Stephane Dion as Liberal leader after the party's disastrous performance in October's federal election, said he would not hike the GST now because of the tough economic times, but that it might be necessary after a couple of years of budget deficits.

Canada is expected to start running deficits next fiscal year, which starts April 1.

"Let me be clear here. If we are in a deep deficit in year three or four, you can't exclude tax increases to get us out. Canadians understand how bad deficits are," he said.

"So I'm not going to take a GST hike off the table later. I just think it'd be a bad idea now in a recession."
Ignatieff was speaking in an interview on Thursday with CityNews television. The interview did not win wide play initially but the Conservatives called attention to it on Friday.

The Conservative government holds only a minority of seats in Parliament and could be brought down in late January or early February over their budget. But Ignatieff has urged caution in toppling a government that was just re-elected.

If the Conservatives fall, they would be replaced by an opposition coalition led by Ignatieff or head into an election in which they would be certain to highlight the possibility of Liberal tax hikes.

A previous Conservative government introduced the sales tax in 1991. The Liberals pledged in their victorious 1993 campaign to scrap the GST, but have since become its champion, arguing it is better to cut income taxes than sales taxes.

Harper cut the tax after winning the 2006 election, and although the Liberals criticized that move, they pledged in the 2008 campaign not to reverse it.

Canada's large budget deficits were a potent political issue in the early 1990s. Harper said on Thursday he might have to run a C$30 billion ($25 billion) deficit to boost the economy but has promised to get back to surplus soon.

US OKs Novartis Gleevac to reduce recurring cancer

Dec 19:U.S. health regulators have approved Novartis' drug Gleevac to reduce the risk of cancer recurring in patients with a rare type of stomach cancer, Novartis said on Friday.

Gleevac is already approved by the Food and Drug Administration to treat gastrointestinal stromal tumor, a severe type of cancer that recurs in as many as one of two patients.

Now Gleevac has been approved by the FDA for post surgery treatment of adult patients following complete surgical removal of the tumors, Novartis said.

Gleevac has been on the market since 2001 and is also used to treat some forms of leukemia, cancer that arises in the white blood cells, and other cancers of the blood cells.

Mexico cuts 2008 foreign direct investment forecast

Mexico lowered its estimate of how much money foreign companies will invest in the country this year as the U.S. recession increasingly weighs on Mexico's economy.

Economy Minister Gerardo Ruiz told reporters on Friday that foreign direct investment in Mexico would fall to between $17 billion and $18 billion this year, down from $23 billion in 2007.

The government had previously estimated direct investment flows from abroad of $20 billion for this year.

The deepening recession in the United States is leading many companies to slow down operations in Mexican factories that export goods north of the border. Manufacturers have laid off some 175,000 workers this year through November.

About 80 percent of Mexican exports are U.S.-bound, and many economists think Mexico is now sliding into a recession
.
The government expects foreign direct investment will fall between 10 percent and 20 percent in 2009.

Cyclone forms in west Australian mine region

A cyclone generating winds up to 130 kilometres per hour was bearing down on the remote west Australian coast on Saturday but has so far had only minimal impact on gas exploration in the region.

Cyclone Billy was located 65 kilometres (40 miles) north of the iron ore mining camp of Wyndham and 180 kilometres west southwest of Port Keats in the Northern Territory at about 2130 GMT moving at 7 kilometres per hour, according to Australia's Bureau of Meteorology.

Gervase Greene, a spokesman for Rio Tinto, which operates an iron ore mine in Wyndham, said there had been no impact on operations, which are in the process of shutting down for two weeks over the Christmas season.

A BHP spokeswoman Samantha Evans said there were no disruptions to its mines from the storm.

Earlier this week, Woodside Petroleum Ltd suspended drilling of an appraisal well in Australia's Browse Basin and evacuated staff from a semi-submersible drilling vessel as a precaution as the storm intensified.

Another exploration well, Libra-1, being drilled by Royal Dutch Shell in the Browse under a joint venture with Mitsui E&P Australia and Nexus Energy, was also suspended and staff evacuated.

The bureau said winds with gusts of up to 130 kilometres per hour were being experienced within 25 kilometres of the core, and gales with gusts of up to 100 kilometres per hour were battering other parts of the coast.

"The cyclone is expected to weaken into a tropical low by tonight as it crosses the north Kimberley region, but may redevelop into a tropical cyclone late in the weekend," the bureau said.

A powerful cyclone in northwestern Australia last February forced oil companies, including Apache Corp, Woodside and BHP Billiton to shut over 220,000 barrels a day of oil production, about 40 percent of Australia's output, for nearly a week.

UPDATE: Euro Drops To Session Lows Vs Dollar, Yen

The euro fell to session lows against the dollar and yen Friday morning, reversing the gains it earned in the wake of the Federal Reserve's rate cut Tuesday. The euro fell below $1.3900 to an intraday low of $1.3875 and also fell to an intraday low of Y123.77.
This is a turnaround from the dramatic advance in the common currency over the previous two days, after the U.S. central bank slashed the fed funds target rate, effectively to zero, making the euro's yield advantage more pronounced.
Currency analysts said a lack of liquidity so near to the end of the year and Christmas holiday is creating these sharp market swings.
"Erratic action will dominate through the month," said Geoff Kendrick, a currency strategist at UBS in London. And while correlations between different asset classes become weaker in an illiquid market, the dive in crude oil futures may be putting its regular pressure on the euro.
The euro usually weakens with crude prices.

Also, the U.S. currency may be gaining some support from the announcement by the White House on Friday that it will give struggling U.S. auto makers $17.4 billion in emergency loans from the Treasury Department's Troubled Asset Relief Program.
"The carmaker bailout will be positive for the dollar in short term," said Kendrick. Friday morning in New York, the euro was at $1.3932 from $1.4238 late Thursday, while the dollar was at Y89.24 from Y89.30, according to EBS.
The euro was at Y124.34 from Y127.18. The U.K. pound was at $1.4978 from $1.5015, and the dollar was at CHF1.1067 from CHF1.0839 late Thursday.

Thursday, December 18, 2008

HIGHLIGHTS-BOJ's additional measures to ease credit

The Bank of Japan cut its key policy rate to 0.10 percent and took other steps, such as increasing its outright purchases of government bonds and temporary outright buying of commercial paper.

Following is a summary of the Bank of Japan's latest easing measures:
-- BOJ will increase outright purchase of JGBs to 1.4 trillion yen per month from 1.2 trillion yen until now, starting this month.

-- BOJ will include 30-year JGBs, 15-year floating-rate JGBs and 10-year inflation-linked JGBs in its buying of JGBs.

-- In order to manage the duration of its JGB holdings, the BOJ will introduce three separate buying schemes based on maturities: a year or less to maturity; one to ten years to maturity;
and over 10 years to maturity. The details will be announced as soon as they are worked out.

-- The BOJ will buy commercial paper outright temporarily to help ease a funding squeeze at the end of the fiscal year in March. It will also study measures on other corporate debt products.

-- The bank said it would study how long and to what extent it will take on credit risks.

-- The BOJ will include the Development Bank of Japan, a government-affiliated bank which is asked to buy commercial paper, as its counterparty for money market operation.

-- The BOJ said it will conduct the new operation to buy corporate debt, which it unveiled earlier this month, six times from January.

-- The Lombard rate was cut to 0.30 percent from 0.50 percent. The interest rate the BOJ will pay on excess reserves is kept at 0.10 percent. All rate changes are effective immediately

BOJ cuts key interest rate to 0.10 pct from 0.30 pct

The Bank of Japan cut its key policy rate to 0.10 percent on Friday and took other steps to ease corporate credit strains, as sharp yen rises and crumbling global demand hit an economy already in recession.

The decision, which follows Tuesday's dramatic rate cut by the Federal Reserve, was made by a vote of 7-1. Board member Tadao Noda voted against the rate decision, which takes effect immediately.

BOJ Governor Masaaki Shirakawa will hold an embargoed news conference later in the day, with his comments expected to come some time after 4:15 p.m. (0715 GMT).

Japan, like the United States, is already in recession as companies such as carmakers Toyota and Honda slash output as customers close their wallets worldwide.

The Fed's rate cut, which brought down U.S. rates to 0-0.25 percent, and the yen's rise to a 13-year high against the dollar have heightened calls from within the government and markets for the BOJ to further ease credit to help the economy.

The BOJ cut its key policy rate to 0.3 percent from 0.5 percent in October and unveiled a series of measures to ease credit strains as the fallout from the global financial turmoil spread.

BOJ cuts key interest rate to 0.10 pct from 0.30 pct

The Bank of Japan cut its key policy rate to 0.10 percent on Friday and took other steps to ease corporate credit strains, as sharp yen rises and crumbling global demand hit an economy already in recession.

The decision, which follows Tuesday's dramatic rate cut by the Federal Reserve, was made by a vote of 7-1. Board member Tadao Noda voted against the rate decision, which takes effect immediately.

BOJ Governor Masaaki Shirakawa will hold an embargoed news conference later in the day, with his comments expected to come some time after 4:15 p.m. (0715 GMT).

Japan, like the United States, is already in recession as companies such as carmakers Toyota and Honda slash output as customers close their wallets worldwide.

The Fed's rate cut, which brought down U.S. rates to 0-0.25 percent, and the yen's rise to a 13-year high against the dollar have heightened calls from within the government and markets for the BOJ to further ease credit to help the economy.

The BOJ cut its key policy rate to 0.3 percent from 0.5 percent in October and unveiled a series of measures to ease credit strains as the fallout from the global financial turmoil spread.

Wednesday, December 17, 2008

UPDATE 2-China's President Hu urges growth and stability

China must focus on economic growth and social stability in the face of a global slump, President Hu Jintao said on Thursday, vowing a stronger state role in steering market reforms.

In a speech celebrating 30 years of reform policies, Hu also said his government's efforts to counter the global economic downturn were working and he renewed his promise to create a more equal and "harmonious society".

But pride of place in Hu's address to ranks of officials in the cavernous Great Hall of the People was the insistent message that growth and Party control came before all else.

"Only development makes hard sense," Hu said more than once, reviving a slogan the late reformist leader Deng Xiaoping used to spur on investment and spending.

"Making economic development the focus is the key to national rejuvenation and it is the fundamental imperative for our Party and our country achieving prosperity and development and enduring peace and stability."

Hu's speech celebrated China's success since 1978, when a Party leadership meeting agreed to focus on economic development after decades of turmoil and isolation under Mao.

But the keynote address was also a peptalk for a country under strain from the global economic downturn that has abruptly slowed growth and lifted joblessness, as export-driven factories either curtail production or shut down.

Exports shrank 2.2 percent from their year-earlier level in November, the first monthly fall in many years, underlining the danger of increasing social instability, a primary concern of the Communist leadership.

Hu said China had "achieved positive results in responding to the international financial crisis", but also that the country needed to continue its difficult balance of market reforms and top-down political control.

"We must earnestly implement various measures to further boost domestic demand and promote economic growth, properly address the global financial crisis and other risks from the international economic world, and do our best to keep relatively fast and stable growth," Hu said.
China is worried that the thousands of factories shutting or laying off workers, especially along the export-dependent coast, could lead to unrest if the unemployed hit the streets.

NO TO WESTERN POLITICAL SYSTEM
While stressing that officials must back market reforms and the private economy, Hu dwelt on the need for greater state control. China must "focus on strengthening and improving the state's macro-economic controls and overcoming certain shortcomings in the market itself", he said.

But Hu also said the country owed three decades of growth to Deng's reforms that tore down the rigid controls of Mao Zedong's time, opening the economy to private and foreign investment.

His theme of carefully controlled change under the Communist Party extended to politics, where he said officials must heed the needs of citizens but rejected any notion of Western-style democratic liberalisation.

"We must draw on the beneficial fruits of humankind's political civilisation, but we will never copy the model of the Western political system," Hu said in a speech loaded with Party slogans and salutes to past leaders.

China is already grappling with a surge in popular discontent, caused by corruption, a growing rich/poor divide, illegal land grabs and other contentious issues.

"We must be clearly aware that development is of overriding importance and stability is our overriding task; if there is no stability, then nothing can be achieved, and what achievements we have made will be lost," he said.

35 Iraqi officials arrested over coup plot - NYT

About 35 Iraqi officials have been arrested at the interior ministry, some accused of planning a coup, the New York Times reported on Wednesday, citing senior security officials in Baghdad.

The arrests over the past three days were carried out by an elite counterterrorism force that reports directly to Prime Minister Nuri al-Maliki, the report said.

Royal Bank Scotland unit to sell A$ bonds-sources

Dec 18:The Australian unit of Royal Bank
of Scotland is planning to sell an A$ bond issue
including government-guaranteed and non-government guaranteed
securities, market sources said on Thursday.

The offer is likely to include a one-year tranche of
government-guaranteed bonds at 60 basis points over swap, the
sources said.

Pricing is expected later on Thursday.

Macquarie Bank, RBS and Westpac Institutional Bank are
involved in the bond sale

NZ business confidence mixed in December - NBNZ

Dec 18 New Zealand business confidence was mixed in December with the overall measure rising from a 20-year low, amid lower interest rates, but businesses were the most pessimistic on record about their own outlook, a survey showed on Thursday.

The National Bank of New Zealand's monthly business outlook showed a net 21.5 percent of companies expected their own business to deteriorate in the next 12 months, compared with 14.1 percent pessimism level in the previous survey.

The survey's headline measure of sentiment was 35 percent of respondents expecting the economy to worsen over the next 12 months compared with a net 43 percent who expected it to worsen in November.

Inflation expectations for the year ahead fell to 3.15 percent from 3.74 percent in the previous month.

The Reserve Bank of New Zealand cut its cash rate by a record 150 basis points on Dec. 4 to a five year low of 5 percent to try to help lift the economy from recession and cushion the impact of the global slowdown.

The latest Reuters poll has 10 of 17 economists expecting a further 50 basis point cut at the Jan. 29 review, with five expecting of 75 basis point cut, and two picking a 100 basis point cut.

The New Zealand economy has been in recession in the first half of the year, which is expected to continue into next year.

Tuesday, December 16, 2008

South African Markets - Factors to watch on Dec 17

The following company announcements, scheduled economic indicators, debt and currency market moves and political events may affect South African markets on Wednesday.
- - - -
GLOBAL MARKETS
Asia stocks rose and the U.S. dollar remained under pressure on Wednesday after the Federal Reserve cut rates to a record low, paving the way for regional policymakers to take more aggressive actions to support growth.

Government bonds rallied after the Fed also said it would use unconventional means to revive the U.S. economy from a deep recession, including buying long-dated Treasuries, as other central banks were expected to slash their benchmark rates, ushering in an unprecedented era of cheap money.
SOUTH AFRICAN MARKETS
South African stocks firmed on Monday as renewed hopes for a U.S. auto industry bailout buoyed platinum and diversified miners and MTN rose after it said it would sell shares to black investors.

The rand softened against the dollar in thin trade as importers covered their positions ahead of the Christmas and New Year holidays, while government bonds rallied sharply as the market priced in aggressive interest rate cuts next year.

The Johannesburg Top-40 index of blue-chip stocks climbed 2.39 percent to 19,879.83 points while the All-share index rose 2.11 percent to 21,805.83 points.
Tuesday was a public holiday in South Africa.

For Monday's South African financial markets closing report, double click on
ARM
South African diversified mining group African Rainbow Minerals Ltd (ARM) said on Tuesday it would form a 50-50 joint venture with Brazilian miner Vale.


SOUTH AFRICAN POLITICS
The new South African party founded by breakaway ANC officials named former defence minister Mosiuoa Lekota as leader at its formal launch on Tuesday and pledged to campaign on a pro-business platform.

The Congress of the People, founded two months ago by loyalists of ousted President Thabo Mbeki, represents the biggest challenge to the African National Congress since it took power at the end of apartheid in 1994.


GOLD
Gold recoiled on Wednesday, giving back more than $10 after a strong showing overnight on the back of the latest U.S. interest rate cut
.
The U.S. Federal Reserve cut its target for overnight rates to a record low zero to 0.25 percent, and said it would employ "all available tools" to dispel a year-long recession
Spot gold was fetching $847.20 an ounce against New York's last notional close of $857.35. In the last week, gold has gained as much as 11 percent
.
WALL STREET
U.S. stocks rallied on Tuesday after the Federal Reserve rewrote its playbook by slashing borrowing costs to a record low, even zero, and pledging more unconventional steps to fight the deepest recession in generations.

Banks led the charge higher, spurred both by the Fed's move to cap its target lending rate at a quarter percentage point and by a quarterly loss from Wall Street icon Goldman Sachs that was not as gruesome as many feared. Goldman's stock gained more than 14 percent, outshining an 11 percent advance in the S&P 500's financial index.

EMERGING MARKETS

Some of the main stories out of the South African press:
BUSINESS DAY

- New-look COPE leaders "ready to take on ANC"
- Saudi Arabia wants historic OPEC cutback
- U.S. Fed takes drastic action on rates
BUSINESS REPORT
- Euro Zone employment zone drops
- Two-pronged tactic to drive MTN expansion
- COPE backs Finance Minister Trevor Manuel's policies, but favours non-racial means tests
THE STAR
- Electrified supporters on their feet chanting "Boesak"!
- The ANC has neglected its people, Zuma tells MK vets

Tanzania inflation rises to 12.3 pct y/y in Nov

Tanzania's annual inflation rose to 12.3 percent in November from 11.8 percent in October due to higher food prices, the National Bureau of Statistics (NBS) said on Wednesday.

"The Annual Headline Inflation rate for the year ended November 2008 increased to 12.3 percent compared to 11.8 percent that was registered for the year ended October 2008," NBS said on its website

CORRECTED-GLOBAL MARKETS-Stocks climb, US dollar under pressure after Fed

Asia stocks rose and the U.S. dollar remained under pressure on Wednesday after the Federal Reserve cut rates to a record low, paving the way for regional policymakers to take more aggressive actions to support growth.

Government bonds rallied after the Fed also said it would use unconventional means to revive the U.S. economy from a deep recession, including buying long-dated Treasuries, as other central banks were expected to slash their benchmark rates, ushering in an unprecedented era of cheap money.

U.S. Treasuries slid after a sharp rally overnight, but Japanese government bonds climbed, pushing down the 10-year yield to an 8-month low, on growing speculation the Bank of Japan would cut the overnight cash rate from its current low level of 0.3 percent as early as Friday.

"This opens door for more rate cuts in Asia. Everyone is now looking at the Bank of Japan, which may feel compelled to cut rates for some symbolic gesture," said David Cohen, director of Asian economic forecasting with Action Economics in Singapore.

"The Fed has emphasised the further deterioration of their economy. A similar situation holds in Asia, so central banks will have some motivation to cut rates further."

Japan's Nikkei share average rose 1 percent, led by banks, though uncertainty about the course of the yen capped gains of exporter stocks.

Shares of the country's second-largest bank Mizuho Financial Group were up 4 percent, while Sumitomo Mitsui Financial Group climbed 4.4 percent.

Mitsubishi UFJ Financial Group, Japan's biggest bank, was up 3.7 percent.

The MSCI index of stocks elsewhere in the Asia-Pacific rose 2.7 percent, extending its gain in December to 10.6 percent as foreign investors wade back into the region, seeking value and sustainable growth.

Hong Kong's Hang Seng index led the region higher, up 1.8 percent, boosted by a 2.4 percent rise in Industrial and Commercial Bank of China.

In an all-out battle to protect the U.S. economy from profit-evapourating deflation, the Fed explicitly said it would take steps to make sure benchmark rates remain low for some time and to keep its balance sheet loaded with debt.

U.S. DOLLAR RALLY LOOKS MATURE
The prospect of effectively littering the financial system with dollars kept the U.S. currency struggling. The rally it enjoyed earlier this month on the back of U.S. investor capital flows back home has clearly faded.

"You are starting to move away from dollar-positive signals and dollar-bullish signals we've had over recent months," said Dwyfor Evans, currency strategist with State Street Global Markets in Hong Kong.
"People are getting a little concerned with the whole idea of quantitative easing. To the extent that means simply throwing more dollars on to the market, then that implies a weakness in the currency," he said.

The euro rose 0.5 percent to $1.4065, approaching a 2-1/2-month high reached overnight just below $1.4200. Since December began the euro has strengthened by around 13 cents as dealers close out of positions as the end of 2008 approaches.

The dollar dipped 0.1 percent against the yen compared to late U.S. trading on Tuesday to 88.84 yen, edging back towards a 13-year low of 88.10 yen hit on trading platform EBS late last week.

Commodities got a boost from a weaker dollar, with copper futures edging higher and oil rising above $44 a barrel on expectations OPEC will cut supplies further.

BOND YIELDS STAY LOW
Data reflecting a worsening global economic recession have kept demand for government bonds high, especially heading into year end. However, expectations that other central banks will follow the Fed's lead and aggressively cut rates as well as pour liquidity into particular areas desperate for cash has increased hunger for government paper.

The benchmark 10-year Japanese government bond yield dropped 3.5 basis points to 1.330 percent, the lowest since mid-April.

The 2-year yield dropped to the lowest since February 2006, shrinking the advantage of 2-year U.S. Treasury yields over Japan's to 21 basis points. On Tuesday, the spread was the lowest since 1992, according to Reuters data.

U.S. Treasuries sold off in Asia, but only after yields hit record lows overnight in the wake of the Fed's actions.

The 10-year note yield edged up to 2.29 percent after hitting 2.26 percent on Tuesday, the lowest since 1951, according to Global Financial Data. The yields on 2-year and 30-year U.S. paper fell to record lows.

Given the moves in U.S. yields, some investors were moving back to the short end of the yield curve from longer maturities.

"The Fed will have to continue to focus on the more innovative forms of monetary stimulus," said Mike Zelouf, product specialist at Western Asset Management, a part of Legg Mason.

"With Treasury yields at historic lows, and potentially trillions of dollars of new government issuance in the pipeline, it is appropriate to reduce durations in the U.S. back to or even slightly below benchmark levels with an emphasis on shorter-dated yields, he said in a note.

Singapore Nov exports fall 2.8 pct s/adj

Singapore's non-oil exports fell a less-than-expected 2.8 percent in November from the previous month after seasonal adjustments.

November's fall followed a revised 7.5 percent drop in October, as a weakening global economy hit demand for the country's exports.

Non-oil exports in November fell 17.5 percent from a year earlier to S$12.06 billion ($8.22 billion), trade agency International Enterprise Singapore said in a statement on Wednesday.

Singapore's economy depends heavily on trade, and non-oil domestic exports were worth about 70 percent of the country's gross domestic product last year.

Kuwait cuts 1-month repo, leaves benchmark steady

DUBAI, Dec 17- Kuwait's central bank reduced its one-month repurchase rate to 2.5 percent from 3 percent on Wednesday after a sharp U.S. rate cut a day earlier, but left its benchmark discount rate steady.

The central bank cut the one-month repo rate to 2.5 percent from 3 percent.

It left the discount rate at 4.25 percent and the overnight and one-week repurchase rates at 1 percent and 2 percent, respectively.

Kuwait, the only Gulf state that does not peg its currency to the U.S. dollar, revamped monetary policy tools last month by introducing new repurchase agreements to give banks more access to short-term funding.

The U.S. Federal Reserve chopped its interbank federal funds rate to a range of zero to 0.25 percent, a record low.
GULF RATES/KUWAIT

PetroChina Lanzhou aims to double crude capacity-media

PetroChina's largest in western China, hopes to double its crude processing capacity to 400,000 barrels per day (bpd) in the five years between 2011 to 2015, a business paper said on Wednesday.

"We are planning to expand our refining scale, as China's western regions need a plant with annual processing capacity above 20 million tonnes (or 400,000 bpd)," Xuan Changwei, general manager of Lanzhou Petrochemical Corp, was quoted as saying by the 21st Century Business Herald.

The expansion plan is awaiting approval from the headquarters of PetroChina Corp Ltd, the report said.

The paper did not say how much the investment for expansion would be.

Large refinery projects also require approval from the National Development and Reform Commission, China's top economic planning ministry.

Lanzhou's operating income is expected to reach 60 billion yuan ($8.78 billion) in 2008, and its chemical business earned 1.7 billion yuan profit from January to November, the paper said.

The report did not disclose the amount of its operating losses from its refining unit.

Soaring crude oil costs and low state-set fuel prices forced state-run oil giants PetroChina and Sinopec to suffer refining losses of 180.4 billion yuan ($26.4 billion) from January to October.
($1=6.837 Yuan)

ABC/Wash Post: US Consumer Confidence Up 1 Pt Latest Wk

U.S. overall consumer confidence rose last week, according to an ABC News/Washington Post poll released Tuesday.

The consumer comfort index rose 1 point to -51 in the week ended Dec. 15, from -52 a week earlier. According to the survey, 7% of respondents expressed confidence in the economy, down from 8% the week before. Also, 44% of those polled said their own finances were in good standing, up from 43% in the prior week.

In assessing the buying climate, 22% of respondents said it was good, up from 21% a week earlier. The consumer comfort index was based on a random survey of 1,000 respondents nationwide in the four weeks ending Dec.

15. The index measures typical Americans' confidence in three areas: the national economy, their own finances, and their willingness to spend money, according to the report. The poll has a margin of error of plus or minus three percentage points.
The index is derived by subtracting the negative response to each index question from the positive response to that question. The three resulting numbers are added and divided by three. The index can range from 100 (everyone positive on all three measures) to -100 (all negative on all three measures). The survey began in December 1985.

Monday, December 15, 2008

Pakistani shares and rupee lower after floor removal

Pakistani shares were down in dull trade on Tuesday after the removal of a floor on the main index the previous day, and dealers said the only offers they were getting for bluechips were at their lower circuit breakers.

The Karachi Stock Exchange (KSE) benchmark 100-share index was 0.71 percent, or 62.53 points, lower at 8,754.57 on turnover of 4.54 million shares by 11:21 a.m. (0621 GMT).

The KSE-index closed on a two-and-a-half year low on Monday, after the floor on the index, imposed on Aug. 28 after sharp falls, was removed.

"There has not been a single transaction in any of the major scrips yet they have big sell orders at their lower circuit breakers," said Sajid Bhanji, a dealer at brokers Arif Habib Ltd, indicating that there were no buyers for bluechips.

The KSE index has a daily 5 percent limit.
Dealers said trade had only been seen in third-tier stocks and the market was likely to end lower.

The floor saw trade virtually coming to a halt as it blocked investors from exiting the market and brokerages cut jobs, with JP Morgan suspending its equities operations in Pakistan in late November.

Off-market trading was at up to 40 to 50 percent lower than official prices.

MSCI said last week it was removing Pakistan from its emerging markets index
.
In the currency market, dealers said fear of portfolio outflows put pressure on the rupee and it was quoted one percent lower at 80.80/81.00 to the dollar, compared with Monday's close of 79.95/80.05.

"We could see the dollar hitting 82 rupees in a day or two," said a currency dealer.

Dealers said there were a few import payments but sentiment had turned negative.

Analysts expect foreign selling of $500 million to $600 million of the total $2.2 billion invested in Pakistani shares
.
This is likely to hit the rupee, which has already weakened close to 23.5 percent this year.
Moody's Investors Service confirmed on Monday its rating of four Pakistani banks' outlook as negative.

Currency dealers said the tension with India after militant attacks in Mumbai last month had also put pressure on the rupee.

Saudi cenbank cuts interest rates by 50 bps

RIYADH, Dec 16 (Reuters) - Saudi Arabia's central bank reduced its two key policy interest rates on Tuesday by 50 basis points to help boost banking sector liquidity and meet domestic credit demand, the central bank said.

The Saudi Arabian Monetary Agency (SAMA) cut its benchmark repurchase rate to 2.5 percent from 3 percent, it said in a circular reported by bankers in Riyadh and Dubai and the official Saudi Press Agency.

It also reduced the reverse repurchase rate to 1.5 percent from 2 percent.
The moves were taken "in line with recent monetary measures taken by SAMA to ensure adequate system liquidity to meet genuine domestic credit demand and in view of evolving global development," SAMA said in the circular

MONEY MARKETS-Dollar spreads tighten while awaiting Fed

A further fall in dollar bank-to-bank lending rates and anticipation of another U.S. rate cut depressed dollar spreads further in Asia on Tuesday, although markets were expecting no big surprises from the Federal Reserve.

In Japan, where rates are already at an ultra-low 0.3 percent and the economy possibly poised for its longest ever slump, the central bank governor said monetary conditions were becoming less accommodative..
The Bank of Japan meets to review rates at the end of this week
.
Meanwhile, South Korea's central bank pumped another $50 million into its swap market and a rising cross-currency swap pointed to improved access for local banks to dollar funding.

In U.S. dollar funding markets on Tuesday, three-month dollar rates in Singapore dropped to 1.86 percent from 1.9 on Monday, slipping further down from highs of 2.24 percent at the start of December.

"They (the Federal Reserve) will cut the target rate, by 50 basis points," said Peter Jolly, head of research at NAB Capital in Sydney.

"But I can't see what else they can pull out of their hat to surprise us, to be honest," he said.
The effective overnight dollar cost in U.S. markets is already near zero, far below the target one percent rate. The Fed is expected to announce its policy statement at 1915 GMT.

Analysts at Bank Julius Baer said the Fed would focus its unconventional policy measures more on bypassing the banking system than on removing duration risk.

Other analysts had a range of expectations from the Fed statement, such as a more explicit commitment to buy longer term Treasuries and agency debt -- a proposal that Fed Chairman Ben Bernanke had outlined earlier which pushed Treasury yields across the curve sharply lower.

U.S. overnight index swaps, which had until last week fallen steadily on expectations of the Fed funds rate being halved, were higher, with the 3-month dollar OIS at 0.29 percent, off a trough of 0.2 earlier in December.

The spread between three-month dollar Libor and overnight index swaps eased overnight to 157 basis points, a sharp narrowing from 191 last week.

The two-year swap spread, the spread between swaps and comparable Treasury yields, declined to 103.75 points from levels as high as 123 earlier this month.

"Libor is responsible for all the 32 basis points narrowing in the TED spread in the last week but we think it's a matter of time before greed outweighs fear and the T-bill rate starts to contribute," ING said in a note to clients.

KOREAN SPREAD
In Korea, the one-year cross currency swap showed the dollar at a 0.4 point premium to the won, a reversal from a week ago when intense swapping of won to generate scarce dollars had driven the swap into a won premium.

Most traders seemed surprised by the turn in sentiment in the won markets, which by most measures were Asia's worst hit by the credit crisis.

It appeared Korea's reaching deals to expand its swap arrangements with Japan and China, announced on Friday, had calmed markets that had not responded to its heavy injections of dollar funding drawn from a credit line with the Fed.

On Tuesday, Bank of Korea injected a mere $50 million through an auction of 3-month swaps, far less than the $7 billion done in similar auctions over the past two weeks.

"We're not sure whether to credit the new bilateral swap arrangements but we think increased availability of U.S. dollars is behind the recent rise in CCS rates," ING said in a note.

Won interest rate swaps have meanwhile dived, with one-year IRS down 100 basis points in two weeks, after the Bank of Korea's rate cut of the same magnitude this month.

Sunday, December 14, 2008

FACTBOX-Taiwan, China launch new direct links

Dec 15 (Reuters) - China and Taiwan launched daily flights, new shipping routes and postal links on Monday in a further thaw of once icy relations between the two rivals.

The shipping links resumed after a six-decade hiatus when a vessel bound for Taiwan left in the morning from the Chinese port of Tianjin, and one bound for China left from Kaohsiung.

Launch of the new links comes after Taiwan and China signed a series of landmark agreements last month.

The deals aim to increase trade and tourism between the longtime political rivals.
Following are details of the agreements .
-- Daily direct China-Taiwan charter flights, up from Friday through Monday now and totalling 108 per week, to smooth passage for Taiwan investors in China and bring in more Taiwan-bound Chinese tourists.

-- New, shorter direct Taiwan-China flight paths to save time. Existing direct flights must detour through Hong Kong airspace for security reasons.

-- Sixteen new Chinese airports, in addition to the current five, that can accept direct flights to or from Taiwan.

-- Sixty direct cargo flights per month between Taiwan and China, cutting out third countries or regions per the current practice mandated due to sovereignty concerns.

-- A launch of direct sea cargo routes between 11 Taiwan ports and 63 China destinations, sparing costly detours, required due to sovereignty concerns, for Taiwan investors.

-- An introduction of direct postal links between five Taiwan postal centres and eight China postal centres, reducing delivery time from the current seven to 10 days by sidestepping third countries.

-- A framework to handle food safety issues by quickly notifying, removing and investigating tainted products, in light of China's contaminated milk powder scandal that has prompted product recalls around the world, including in Taiwan.

DATA SNAP:BOJ Tankan Big Mfrs DI Down At Worst Pace In 34 Yrs

Sentiment among Japanese big manufacturers drastically worsened with the global financial crisis taking a severe toll on the real economy, the Bank of Japan's December tankan survey showed Monday.

The headline diffusion index in the central bank's quarterly survey of corporate sentiment showed that conditions among large manufacturers plunged to minus 24 in December from minus 3 in the September survey.

Economists surveyed by Dow Jones Newswires had forecast on average that the DI for large manufacturers would fall to minus 23.

The figure represents the percentage of companies saying business conditions are good minus those saying conditions are bad.

Sentiment among large non-manufacturers also deteriorated to minus 9 in December from a reading of plus 1 in September.

That was in line with economists' forecasts. The results may strengthen the view that Japan will slide into a deeper and longer recession as corporate performance flags.

Some analysts say such a rapid fall in sentiment may prompt the BOJ to cut interest rates again in coming months to prevent the economy from entering a free-fall.

Saturday, December 13, 2008

WRAPUP 1-U.S. retail sales drop for fifth straight month

Sales at U.S. retailers fell for a fifth straight month in November, the longest decline in at least 16 years, as gasoline sales tumbled by a record amount, according to government data on Friday.

The Commerce Department said total retail sales fell 1.8 percent to a seasonally adjusted $355.66 billion last month following a revised 2.9 percent plunge in October. Excluding motor vehicles and parts, sales were down 1.6 percent in November after a revised 2.4 percent October fall.

Sales have fallen since July, the longest stretch since the Commerce Department began collecting the data in 1992. The decline was driven by a weakening economy and plummeting energy prices, which was also reflected in a report on producer prices.

Wholesale prices dipped for a fourth month in a row in November, with the Producer Price Index dropping 2.2 percent after a record 2.8 drop in October.

Wholesale energy prices fell 11.2 percent in November, a fourth straight monthly decline, with gasoline prices plunging by a record 25.7 percent.

"It just speaks to how weak the economy is, and it is definitely impacting costs," said Robert Macintosh, chief economist for Eaton Vance Corp. in Boston. "I think this all fits with the fact we are in a pretty deep recession."

The November sales decline was slightly less than the drops of 1.9 percent for total sales and 1.8 percent for sales excluding motor vehicles that had been forecast by Wall Street economists surveyed by Reuters. Sales of furniture, electronics and clothing were up last month after decreasing in October.

The period from Thanksgiving through Christmas is typically the most robust one for U.S. retail sales but analysts expect consumers to pull back on the totals they spend this year.

"We're in a recession, sentiment is very bad and it is not surprising to see sales continuing to fall," said Kim Rupert, managing director for global fixed income analysis at Action Economics LLC in San Francisco.

Prices for U.S. Treasury debt securities gave up some gains just after the sales data was issued but still were higher. U.S. stock futures were sharply lower after a bid to provide aid to U.S. automakers failed in the Senate on Thursday night.

Gasoline sales plummeted a record 14.7 percent in November after falling 12.9 percent in October. Prices at the pump have fallen significantly and that is reflected in the retail sales report, which simply compiles total sales by gasoline stations.

Excluding gasoline, November retail sales were down 0.2 percent after a 1.6 percent slide in October.

Sales of electronic goods climbed 2.8 percent in November, the strongest monthly rise since the beginning of 2006. Clothing sales rose a modest 0.8 percent after a 2 percent drop in October.

Sales by dealers of new cars and parts fell 2.8 percent after declining 5.5 percent in October.

New-car sales have been crumbling for months, in part because of an ongoing credit crisis that makes it harder to get loans but also because consumers have been cautious when jobs are being cut and the economic outlook is weakening.

US consumers' mood improves on massive price drops

U.S. consumer sentiment improved this month helped by falling gasoline prices, retail discounts and "tumbling" inflation expectations, but pessimism over the future tempered their enthusiasm, a survey showed on Friday.

The Reuters/University of Michigan Surveys of Consumers said its index of confidence for December rose to 59.1 from November's 55.3, aided by the fall in one-year inflation expectations to their lowest in five years.

That was the highest since September and contrary to economists' expectations of a fall to 54.8, according to the median of forecasts in a Reuters poll. Their projections ranged from 50.0 to 58.0.

Despite the improvement, sentiment remains depressed by historical standards. The University of Michigan confidence index dates back to 1952 and is still mired near the record low of 51.7 hit in May 1980.

"Consumer confidence edged slightly higher in early December due to the collapse of gasoline prices, deep discounts by retailers and tumbling inflation expectations," the report said.

"Nonetheless, consumers have become even more pessimistic about prospects for the overall economy, especially the outlook for employment."

Though sentiment firmed and consumers' assessment of current economic conditions improved, expectations declined for the third consecutive month, hitting their lowest since June.

One-year inflation expectations fell to 1.7 percent -- their lowest since July 2003 -- from 2.9 percent in November. It was the biggest drop in one-year inflation expectations since November 2005.

Five-year inflation expectations fell to their lowest in nearly four years, dropping to 2.7 percent in December from November's 2.9 percent.

In the short term the drop in inflation expectations will help consumers, who struggled with rising prices all year, and will also aid the Federal Reserve's attempt to stimulate the moribund economy.

However, it will also heighten worries that the deepening year-old U.S. recession could lead to a debilitating deflationary spiral of falling prices, wages and economic activity last seen in the United States during the Great Depression of the 1930s.

Thursday, December 11, 2008

Senate plays role of Grinch for U.S. autoworkers

WASHINGTON, Dec 12 (Reuters) - The U.S. Senate took on the role of Christmas Grinch for autoworkers when it failed on Thursday to pass a $14 billion rescue package for Detroit's three major car manufacturers.

Attention now turns to the Bush administration's Treasury Department, who Reid and other supporters of a bailout said should dip into the $700 billion fund Congress created to help Wall Street firms and banks, and lend automakers the money they need to avoid bankruptcy and save millions of jobs.

The Senate late on Thursday came only a few "yes" votes short of the 60 needed to block a filibuster on the bailout bill, effectively killing any chance of Congress providing a lifeline to the financially drowning automakers this year.

"It's going to be a very, very bad Christmas for a lot of people based on what takes place here tonight," Senate Majority Leader Harry Reid told his colleagues before the vote. "It's over with."
A Treasury Department official declined to comment on the Senate's failure to approve the rescue package and said it was up to the White House to respond.

White House spokesman Tony Fratto said the administration would evaluate its options "in light of the breakdown in Congress," saying the legislation had "presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds only go to firms whose stakeholders were prepared to make difficult decisions to become viable."

Markets across the Asia-Pacific region were down more than 3 percent after news the talks had collapsed, with Japan's Nikkei average and Hong Kong's Hang Seng both down more than 5 percent.

U.S. crude oil prices fell more $2 toward $45 a barrel on news of the bailout bust.
Senators negotiated late into the night on a possible compromise that participants said fell apart over proposed wage concessions by the powerful United Auto Workers union.

"We were three words away from a deal," said Sen. Bob Corker, a Tennessee Republican who proposed the alternative and led the talks.

Sen. Christopher Dodd, a Connecticut Democrat, said the main issue of disagreement was the date to require the Detroit autoworkers' pay parity with foreign-based U.S. auto manufacturers.

General Motors Corp and Chrysler LLC are seeking billions of dollars in immediate aid, while Ford Motor Co wants a hefty line of credit.

The industry is reeling from depressed sales, made worse by the credit crunch and the recession and GM and Chrysler said government intervention was required now to avert potential failure.

Wednesday, December 3, 2008

South African Markets - Factors to watch on Dec 4

GLOBAL MARKETS
Asian shares rose for a second session on Thursday, though investors' willingness to take on risk was mainly limited to defensive plays, while the dollar and yen rose as central banks in the UK and Europe prepared to cut interest rates to their lowest in years.

The European Central Bank and the Bank of England on Thursday are expected to join central banks from Thailand to New Zealand in drastically reducing interest rates in response to a deep and potentially prolonged global economic downturn.

Oil prices fell below $46 a barrel to almost four-year lows as fears of deepening economic woes overshadowed bullish weekly U.S. oil stocks data, while gold was range-bound after slumping nearly 2 percent on Wednesday.

SOUTH AFRICAN MARKETS
South Africa's resource-heavy bourse stumbled on Wednesday, tracking U.S. stocks lower, but the rand firmed against the greenback in a quiet session as exporters offloaded dollars.

The Johannesburg Top-40 index closed 3.48 percent lower at 17,183.38 points, reversing earier gains in the session. The broader All-share index skidded 3.05 percent to 19,113.28 points.
At 1548 GMT the rand traded 1.5 percent stronger against the dollar at 10.1250 compared to Tuesday's close at 10.28.
For Wednesday's South African financial markets closing report, double click on.

MTN
Africa's biggest mobile operator by subscribers said mobile spending by MTN customers in many of its markets remained "resilient", according to the Financial Times.
Business Day newspaper, in an article attributed to the FT, quoted CEO Phuthuma Nhleko as saying telecom firms could be less hard hit that other sectors by a global economic slowdown because communications were viewed as essential.

SANLAM
South African financial services firm Sanlam reported an 86 percent drop in normalised headline EPS for the 10 months to October and said a global economic slowdown would hit growth at all its key units.

Sanlam, one of the biggest asset managers in South Africa, said total new business volumes for the period had increased by 7 percent and new business sales at its UK unit rose 19 percent.
For a story, double click on

ESKOM, MINERS
South Africa is in talks with the World Bank over a loan of up to $5 billion for the state-owned power utility Eskom's expansion programme, a senior official at the Treasury said on Wednesday.

Eskom, which provides 95 percent of the country's power, has been rationing electricity since January, when the national grid nearly collapsed, affecting major industries, including mining.
For a story, double click on

BLACK ECONOMIC EMPOWERMENT
The government is not considering new ways of supporting black economic empowerment companies in trouble because of the financial crisis and said such firms should approach two existing government bodies for help, Business Report newspaper said.
The paper quoted trade and industry director-general Tshediso Matona as saying the National Empowerment Fund and the Industrial Development Corporation were providing support for black businesses.

GOLD
Gold slipped on Thursday as the dollar gained against the euro and worries about demand weighed on oil, driving investors away from bullion ahead of the release of U.S. nonfarm payrolls data later this week.
Gold was trading at $771.30 an ounce, down $1.30 from New York's notional close, after hitting an intraday high of $775.35. Gold posted its biggest daily percentage fall in almost eight weeks on Monday on falling oil and firm dollar.
For the latest precious metals report, double click on .

WALL STREET
U.S. stocks rose for a second day on Wednesday as investors flocked to shares of Coke and other companies that hold up well in recessions following another round of disappointing economic data and corporate outlooks.
Coca-Cola Co, the soft-drink maker, rose 5 percent, making it one of the Dow's top advancers. Fast-food chain McDonald's was another standout, rising more than 4 percent.
The Dow Jones industrial average jumped 172.60 points, or 2.05 percent, to end at 8,591.69. The Standard & Poor's 500 Index rose 21.93 points, or 2.58 percent, to 870.74. The Nasdaq Composite Index shot up 42.58 points, or 2.94 percent, to 1,492.38.
EMERGING MARKETS
For the top emerging markets news, double click on .

ZIMBABWE
Zimbabwe riot police broke up protests by doctors, nurses and union members on Wednesday and the death toll from a cholera epidemic blamed on the country's spiralling crisis jumped to 565.
Trade unions have called protests over a shortage of increasingly worthless cash while at least 100 health workers protested to demand better pay and conditions at a time they are fighting Zimbabwe's worst cholera outbreak on record.
For a story, double click on
- - - -
Some of the main stories out of the South African press:
BUSINESS DAY
- Watershed for Mugabe as soldiers rampage
- No BEE law changes - official
- Sanlam falls on poor profit news
- MTN reassures potential investors

BUSINESS REPORT
- Lifeline offered to black economic empowerment casualties
- Dearth of credit can strangle commerce

Australians told to take a break, for the economy

CANBERRA, Dec 4 (Reuters) - As Australia fights to head off recession, the national government on Thursday urged workers to take a holiday to help stimulate the economy.

The country's 11 million workers have hoarded about 121 million days of paid-leave entitlements which the government wants to unlock to help stimulate a tourism sector hard hit by the global downturn.
]
Australian Tourism Minister Martin Ferguson said tourism officials would hold meetings with major employer groups next week to kickstart a "No Leave, No Life" campaign.

Ferguson has set his eyes on the A$31 billion ($20 billion) of holiday pay owed to workers and is leading the push to force business to make sure employees take their accrued holidays, and to encourage Australians to holiday at home.

"It is good for business, good for employees and potentially good for our tourism industry as it faces some tough times because of the global financial crisis," Ferguson said.

The holiday campaign comes after official data found Australia's economy grew by just 0.1 percent in the September quarter, its slowest rate of growth in eight years as consumers pull back on spending.

Australia's tourism industry is worth about A$40 billion a year, or about 4 percent of gross domestic product, generating about 500,000 jobs. Tourists from overseas account for about 25 percent of the industry.

But the global downturn has led to a sharp decline in visitor numbers, particularly from key markets such as Japan and the United States, both now in recession, and from Britain.
The global slowdown has also prompted Australia's flag carrier Qantas to cut some flights from Japan to Australia's tropical northern tourist centre of Cairns, and to put smaller planes on other flights.

SOMBRE MOOD
Australian full-time workers are entitled to a minimum four weeks annual leave and 10 public holidays each year. But many don't take their full holidays for fear of losing their jobs or falling behind on work.

Tourism officials are banking on a new advertising campaign in 22 countries, on the back of the new film "Australia" starring Nicole Kidman and Hugh Jackman, which urges tourists to escape the rat race at home and lose themselves in Australia.

But tourism companies want the government to do more to help restore domestic consumer confidence, get people to spend on holidays and overturn the gloomy outlook in holiday spots.
"It's pretty sombre," said Kim Thomas, whose company can take more than 1,000 tourists a day to islands on the Great Barrier Reef off the northern Queensland state. Tourist numbers were down around 20 percent on a year ago.

"We expect our numbers from Japan to reduce by about 50 percent by mid December. Up until now, they have been our largest single international market. It will have a big impact."
($1=A$1.54) (Editing by Valerie Lee) Keywords: AUSTRALIA ECONOMY/HOLIDAY

Tuesday, December 2, 2008

Chart of the Day − USD/CAD

USD/CAD – The key USD/CAD pair (a daily chart of which is shown) is giving off some clear, yet conflicting, technical signals. After coming down from a rather precise double test of the 1.3000 price region, the pair has settled down somewhat to adhere to a significant uptrend support line (the steeply angled green line) that began back in late September.

A true double top formation, of course, would not be confirmed unless price dropped below the trough between the double peaks. The level of this trough is approximately 1.1470, which is around 1000 pips below the current price. In the meantime, as mentioned, price is currently respecting the dynamic support offered by the steep uptrend line after dropping from the second peak of the double test.

Any continued upward momentum could once again target the 1.3000 region. Somewhat more likely from a technical perspective, however, we should eventually be seeing a breakdown of the uptrend support line, in which case price should initially target the 1.2100 level, a key prior support/resistance region.

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GLOBAL MARKETS-Asian stocks, oil rebound, but caution prevails

HONG KONG, Dec 3 (Reuters) - Asian stocks and oil recovered on Wednesday following recent sell-offs, but low-risk assets such as U.S. Treasuries also retained their lustre, highlighting investor caution about the weakening global economy.

The euro and the sterling fell ahead of meetings on Thursday by the European Central Bank and the Bank of England, which are expected to result in hefty interest rate cuts as policymakers try to avoid off a deep and prolonged recession.

Governments and central banks worldwide are passing more measures to stabilise financial markets, including potential help being discussed for struggling U.S. auto makers, but it will take some time to restore battered consumer and investor confidence.

"It is difficult to see the rally in equities being sustained and it will not take much in the way of more bad economic news to bring a dose of reality back," Calyon analysts said in a note to clients on Wednesday.

The MSCI index of Asia-Pacific stocks outside Japan rose 1.3 percent as of 0255 GMT, rebounding from a 4.1 percent slump in the prior session.

The gains tracked a rally in Wall Street on Tuesday that came following a pledge by global industrial bellwhether General Electric to leave its dividend intact despite the worsening economy.

Still, the outlook for the global economy continues to weaken, with Australia saying on Wednesday that growth in the last quarter was at its slowest pace in eight years.

Corporate profits worldwide are also under threat as consumers cut back spending. U.S. auto makers on Tuesday posted a nearly 37 percent plunge in monthly sales that brought levels to their lowest in since 1982, reinforcing their plea for a bailout from the U.S. government.

Asian markets gained, nonethless, led by shares seen as oversold, though that was balanced by weakness in some auto makers such as Honda Motor and technology exporters such as Samsung Electronics whose profits are set to suffer.

Tokyo's Nikkei average advanced 1 percent, clawing back some ground after a drop of more than 6 percent on Tuesday.

Shares in Hong Kong, Shanghai, Singapore , and Australia gained more than 1 percent each, but markets in South Korea and Taiwan posted modest losses.

Among the advancers in the region, shares in Australia's Qantas Airways rose 6.2 percent after saying it was in talks with British Airways to form a dual-listed airline that could be worth almost $6 billion at current market prices.

EYE ON CENTRAL BANKS
Oil prices gained 78 cents to $47.74 a barrel after steep drops in prior sessions that had left it at three-and-a-half year lows. However, the outlook remains weak ahead of data later in the day expected to show a third consecutive week of rises in U.S. crude inventories as economic growth and fuel demand slow.

Crude prices may find it hard to rally much farther in the short-term given that only two-thirds of members of the Organization of the Petroleum Exporting Countries (OPEC) are meeting their pledge to lower output in November, according to a Reuters survey.

The European Central Bank meets on Thursday, and most economist still expect an interest rate cut of only 50 basis points, despite a stream of poor economic data and a sharp drop in inflation that had raised hopes for a larger easing.

On the other hand, the Bank of England is expected to cut rates by an aggressive 100 basis points, while financial markets have priced in a 150 bps cut from New Zealand's central bank, both scheduled for Thursday.

Ahead of the decisions, the euro fell 0.4 percent to 118.05 yen and eased 0.1 percent to $1.2695 against the dollar. The sterling slid 0.5 percent to 138.32 yen , crawling towards 13-year lows hit just above 137 yen the previous day.

The dollar slipped 0.2 percent from late U.S. trading on Tuesday to 92.97 yen, hovering near a five-week low of 92.63 yen hit on trading platform EBS the previous day.

U.S. Treasuries were range-bound after gaining on Tuesday amid safe-haven bids, anticipation of more rate cuts and the possibility that the Federal Reserve could buy long-dated U.S. government bonds.

Yields on benchmark 10-year Treasury notes were range-bound at 2.71 percent, while those for the 2-year note gained by about 4 basis points to 0.94, still below the Fed's 1.00 percent target rate for overnight lending between banks.

Tuesday, November 25, 2008

PLATFORM - TFI FX

PLATFORM - TFI FX

The platform boasts a simple and user friendly interface that allows clients to easily monitor their transactions, manage their account and perform a variety of technical analysis. Some of the features include: Coverage of the financial markets. Constantly updated real time prices. Instant execution, order placement, stop-loss and take-profit orders. Large numbers of technical indicators and the ability to script more complex customized indicators through the platform’s own programming language. High security through the strong encryption of information transmitted. Users can define and view unlimited charts. Daily account statement. Multi-lingual platform with up to 20 different languages to choose from. You can program your own trading strategies with the Expert Advisor.

FOREX - FX Market

FOREX - FX Market:

The FX market is the largest global market with daily trading volumes greater than USD 3 trillion! It is currently one of the most efficient and liquid markets accessible.

TFI FX offers its clients the ability to make speculative transactions on FX fluctuations between currencies. Customers can also buy/sell deliverable currency to cover FX obligations.

In the last decade the foreign exchange market has developed and expanded. Originally banks executed FX deals to cover the need of their importing/exporting clients. Today we are in an efficient FX market with a variety of participants ranging from investment firms, asset managers, hedge funds and individuals that cater for trading and speculation requirements.
The FX market is a global over the counter (OTC) market (i.e. no central bank or clearing house acting as an intermediary). Deals are agreed between participants where firm credibility and local regulations ensure the delivery of transactions.
A number of market contributors execute FX deals to finance international business so as to acquire a range of assets and services. Others sell/buy currencies for speculation aiming to profit from price fluctuations. The international demand and supply for currencies is what determines the exchange rates of all currency pairs at any given moment.

Friday, November 21, 2008

Forex Glossary

ASK (Offer) _price of the offer,the price you buy for.

Aussie_ a Forex slang name for the Australian dollar.

Bank Rate _ the percentage rate at which central bank of a country lends money to the country's commercial banks.

Bid_ price of the demand,the price you sell for.

Broken_ the market participating body which serves as the middleman between retail traders and larger commercial institutions.

Cable_ a Forex,traders slang word GBP/USD currency pair.

Carry Trade_ in Forex,holding a position with w positive overnight interest return in hope of gaining profits,without closing the position,just for the central banks interest rates difference.

CFD_ a Contract for Difference_special trading instrument that allows financial speculation on stocks,commodities and other instruments without actually buying.

Commission_broker commissions for operation handling.

CPI_consumer price index the statistical measure of inflation based upon changer of prices of a specified set of goods.

EA (Expert Advisor) _ an automated script which is used by the trading platform software to manage positions and orders automatically without _or with little) manual control.

ECN Broker _ a type of forex brokerage firm that provide its clients direct access to other Forex market participants.ECN brokers dont discourage scalping,dont trade against the client,dont charge spread (low spread is defined by current market prices)but change commissions for every order.

ECB(European Central Bank)_ the main regulatory body of the European Union financial system.

Fed (Federal Reserve)_ the main regulatory body of the United states of America financial system,which division_ FOMC ( Federal Poen Market Committee)_ regulates,among other things,federal interest raets.

Fibonacci Retracements_ the levels with a high probability of trend break or bounce,calculated as the 23.6%,32.8%,50% and 61.8% of the trend range.

Flat (Square) _ neutral state when all your positions are closed.

Fundamental analysis _the analysis based only an news,economic indicators and global events.

GDP(Gross Domestic Product) _ is a measure of the national income and output for the country's economy; it's one of the most important Forex indicators.

Hedging _ maintaining a market position which secures the existing open positions in the opposite direction.

Jobber _ a slang word for a trader which is aimed toward fast but small and short-term profit from an intre-day trading.Jobber rarely leaves open positions overnight.

Kiwi _
a Forex slang name for the New Zealand currency _ New Zealand dollar.

leading Indicators _ a composite index (year 1992 =100%) of the most important macroeconomic indicators that predicts future (6-9 months) economic activity.









Jerry Furst


Name: Jerry Furst

Position: President

Company: Investors Education Network

As Founder and President of Investors Education Network (IEN), Jerry Furst has been conducting and coordinating live training seminars and events for years and is now a frequent speaker at Traders Expos, FXstreet.com Webinars, and an author in well known trading publications and web sites. Jerry is a former Sr. Analyst/ Programmer with IBM and has been a paid consultant and trainer to Fortune 500 companies.

Jerry has been trading his own account since 1987 and primarily trades and invests with Forex currencies, stocks, and equity options for his own accounts. He has found that running a networking group for traders is extremely rewarding as he continues to learn from the experts in the industry and the traders in his group.

Mr. Furst is also a mentor and trading coach to select clients. Jerry can be reached at JerryB1st (at) ienweb (dot) com or visit www.InvestorsEducationNetwork.com.

Thursday, November 20, 2008

Forex History

The Evolution of FX Markets

The Gold Exchange and the Brett on Woods Agreement

In 1967,a Chicago bank refused a college professor by the name of Milton Friedman a loan in pound sterling because he had intended to use the funds to short the British currency.Friedman,who had perceived sterling to be priced too high against the dollar,wanted to sell the currency,then later buy it back to repay the bank after the currency declined,thus pocketing a quick profit.The bank's refusal to grant the loan was due to the Brett on woods Agreement,established twenty years earlier,which foxed nation currencies against the dollar,and set the dollar at a rate of $35 per ounce of gold.


The Bretton woods Agreement,set up in 1944,aimed at installing international monetary stability by preventing money from fleeing across nations,and restricting speculation in the world currencies.prior to the Agreement,the gold exchange standard--prevailing between 1876 and world war I--dominated the international economic system.under the gold exchange,currencies gained a new phase of stability as they were backed by the price of gold.It abolished the age-old practice used by kings and rulers of arbitrarily debasing money and triggering inflation.

But the gold exchange standard did not lack faults.As an economy strengthened,it would import heavily from abroad until it ran down its gold reserves required to back its money; consequently,the money supply would shrink,interest rates rose and economic activity slowed to the extent of recession.Ultimately,prices of goods had hit bottom,appearing attractive to other nations,who would rush into buying sprees that injected the economy with gold until it increased its money supply,and drive down interest and recreate wealth into the economy,Such boom bust patterns prevailed throughout the gold standard until the outbreak of World War I interrupted trade flows and the free movement of gold.

After the wars,the Bretton Woods Agreement was founded,where participating countries agreed to try and maintain the value of their currency with a narrow margin against the dollar and a corresponding rate of gold as needed.Countries were prohibited from devaluing their currencies to their trade advavtage and were only allowed to do so for devaluations of less than 10%.Into the 1950s,the ever-expanding volume of international trade led to massive massive movements of capital generated by post-war construcation.That destabilized foreign exchange rates as setup in Bretton Woods.


The Agreements was finally abandoned in 1971,and the US dollar would no longer be convertible into gold.By 1973, currencies of major industrialozed nations floated more freely,as they were controlled mainly by the forces of supply and demand.Prices were floated daily,giving rise to new financial instruments,market deregulation and trade.

In the 1980s, cross-border capital movements accelerated with the advent of computers and technology,extending market continuum through Asian,European and American time zones.Transactions in foreign exchange rocketed from about $70 billion a day in the 1980s, to more then $1.5 trillion a day two decades later.