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Global stocks surge on world stimulus hope

admin — Tue, 05 Oct 2010 22:05:42 +0000

By Alex Richardson

SINGAPORE | Wed Oct 6, 2010 3:39am EDT

SINGAPORE (Reuters) – Stocks and metals rose on Wednesday while the dollar and Japanese bond yields fell after monetary easing moves by the Bank of Japan spurred expectations of a new round of central bank action to boost feeble economies.

European shares extended a rally that began after the BOJ’s move on Tuesday, with the pan-European FTSEurofirst 300 .FTEU3 up 0.4 percent on early trade and benchmark indexes in Britain .FTSE, France .FCHI and Germany .GDAXI rising 0.5 percent.

The unexpectedly bold action by the BOJ — which cut interest rates close to zero and said it would pump cash into the financial system through asset purchases — was seen as the first salvo in a reflationary splurge by policymakers in Japan, the United States and Britain.

Global markets are now preoccupied with the likelihood that the Federal Reserve will make a new sortie into “quantitative easing” — effectively printing money to buy assets — next month, an expectation that pushed the dollar down broadly.

Chicago Fed President Charles Evans was the latest senior official to give credence to that view, when he was quoted by the Wall Street Journal as saying the central bank should do “much more” to stimulate the sluggish recovery.

“It’s really going to be a struggle between Fed easing and BOJ easing, and whoever wins that contest is going to dictate the direction of dollar/yen,” said Gareth Berry, a currency strategist at UBS in Singapore.

The weakening dollar drove traditional safe haven gold to the latest in a series of record highs and silver to a 30-year peak, while hopes that monetary stimulus will boost industrial demand sent tin to a record and copper to its highest level in more than two years.

But ultra-low interest rates and monetary easing in the rich world has ignited fears of “beggar-thy-neighbor” currency wars, with International Monetary Fund chief Dominique Strauss-Kahn warning that countries risk undermining the global recovery if they use their currencies to try and boost domestic growth.

“There is clearly the idea beginning to circulate that currencies can be used as a policy weapon,” Strauss-Kahn said in comments published in the Financial Times on Wednesday.

STRONG YEN

The BOJ’s decision to buy a broad range of assets, including real estate investment trusts and exchange traded funds, lifted the Nikkei share average .N225 1.8 percent to a 2-month closing high, although some players remained wary of the strong yen. .T

“The most important focus seems to have been aimed at currencies but the yen hasn’t weakened against the dollar, and that’s keeping a lid on further stock gains,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management Co.

“Rather, the yen is staying on the strong side due to expectations that the U.S. Federal Reserve might announce a larger-scale easing.”

Hopes of further stimulus from the Fed pushed U.S. stocks to a near 5-month high on Tuesday, with the S&P 500 .SPX up 2.1 percent, and the exuberance continued in Asia. .N

MSCI’s broadest index of Asia Pacific shares outside Japan .MIAPJ0000PUS rose 1.6 percent to a 2-year high, led by the materials and energy sectors .MIAPJMT00PUS .MIAPJEN00PUS.

Japan

feeds.reuters.com

Goldman charges rattle world markets

admin — Sat, 17 Apr 2010 21:43:46 +0000

NEW YORK (Reuters) – World stock markets dropped on Friday after U.S. regulators charged Goldman Sachs Group Inc. (GS.N) with fraud related to subprime mortgages, while the euro dropped on worries about Greece’s debt crisis.

Greece

The CBOE Volatility index .VIX jumped 15.54 percent as U.S. stocks ended the session down more than 1 percent in the

heaviest volume of the year. The VIX, which is Wall Street’s favorite gauge of investor fear, surged just as the Goldman news headlines came out, according to Reuters charts.

Investors moved money into safe-haven U.S. government debt, pushing prices higher and yields lower.

World equities moved in sympathy with U.S. stocks, which were under severe selling pressure as financial issues plunged on the charges against Goldman Sachs and some disappointing earnings. The decline was the market’s biggest in nearly two months, taking the shine off a six-day winning streak.

Goldman (GS.N) fell nearly 13 percent in its worst one-day drop since January 2009, to $160.70 on huge volume after the Securities and Exchange Commission sued it for fraud tied to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression.

“It’s going to take a while for the markets to digest this as investors weed out what it could mean for Goldman and if other banks could be hit with something similar,” said Tom Lydon, president of Global Investment Trends in Newport Beach, California.

Defaults on subprime mortgages and the unraveling of related derivatives and debt played a major role in the credit crunch that led to a meltdown on Wall Street and the worst U.S. recession since the 1930s.

At the close, the Dow Jones industrial average .DJI was down 125.91 points, or 1.13 percent, at 11,018.66, while the Standard & Poor’s 500 Index .SPX was off 19.54 points, or 1.61 percent, at 1,192.13. The Nasdaq Composite Index .IXIC lost 34.43 points, or 1.37 percent, at 2,481.26.

The MSCI’s global equity index .MIWD00000PUS settled down 1.57 percent, though still set for its seventh straight weekly gain. The pan-European FTSEurofirst 300 .FTEU3 also was down 1.52 percent.

Overall, global shares edged off 16-month highs as persistent uncertainty over Greece’s ability to pay its debts tempered optimism over the global economic recovery.

In currencies, the dollar was up against a basket of major trading-partner currencies, with the U.S. Dollar Index .DXY up 0.37 percent at 80.778 from a previous session close of 80.482.

The euro remained pressured and Greek bond yields rose after Athens said it was preparing to activate an IMF/EU financial aid package.

The euro was down 0.54 percent at $1.3506 from a previous close of $1.3579.

Against the Japanese yen, the dollar was down 0.95 percent at 92.11 from a previous session close of 92.990.

GREECE MOVES

The euro slid for the second day due to renewed worries over Greece’s ability to service its sovereign debt. On Thursday, the euro snapped a five-day winning streak as investors’ concerns escalated about Greece’s debt problems.

Greece lurched closer toward asking for international aid after it requested official talks with European authorities and the International Monetary Fund.

European Central Bank President Jean-Claude Trichet told euro zone finance ministers that the situation for Greek banks remains difficult and could deteriorate further.

The cost of insuring Greek sovereign debt rose about 10 basis points from Thursday’s close to 428.5 bps, according to CMA DataVision. Greek 10-year bond yields rose to 7.4 percent, widening the 10-year Greek/German government bond yield spread.

U.S. Treasury debt, investors’ favorite safe haven, rose.

The benchmark 10-year U.S. Treasury note was up 17/32, with the yield at 3.77 percent, while the 2-year U.S. Treasury note was up 3/32, with the yield at 0.96 percent. The 30-year U.S. Treasury bond was up 22/32, with the yield at 4.67 percent.

In energy and commodities trading, U.S. light sweet crude oil fell $2.40, or 2.81 percent, to $83.11 per barrel, and spot gold fell $21.35, or 1.84 percent, to $1136.60. The Reuters/Jefferies CRB Index .CRB was down 3.46 points, or 1.24 percent, at 276.29.

(Additional reporting by Rodrigo Campos in New York and Sebastian Tong in London; Editing by Dan Grebler)

Greece

feeds.reuters.com

10 Great Mutual Funds You’ve Never Heard of (U.S. News & World Report)

admin — Tue, 23 Mar 2010 22:30:00 +0000

Zeke Ashton knows a thing or two about playing defense. In 2008, for instance, his Tilson Dividend Fund beat the market by 18 percent. Meanwhile, for the trailing three years, the fund's returns land it in the top 1 percent of Morningstar's mid-cap blend category.
U.S. News'
to find the best investments for you.]
By any measure, it would seem that Tilson Dividend has a lot to brag about. But it chooses not to. “We don't have an affiliated broker dealer,” says Ashton. “We are very small, and we rely entirely on referrals for new investors. And we don't have a marketing budget, so we haven't spent any
.” As a result, despite its superior performance, Tilson Dividend has just $10.7 million under management. In the $11 trillion
, that doesn't even qualify as a blip on the radar.
In many ways, Tilson Dividend is the prototype for the small but successful fund struggling to differentiate itself in what has turned into an incredibly crowded field. According to Morningstar, there are currently 6,735 distinct mutual funds (excluding money market funds).
[Slide Show: 10 Great Mutual Funds You've Never Heard of.]
Given the sheer size of the fund universe, it's impossible for any one investor–or even one firm–to be familiar with every fund. From a practical standpoint, that means that in the fight to catch the attention of registered investment advisers or to nab one of a limited number of spots on brokerage platforms, products from big-name fund shops have a distinct advantage. Meanwhile, smaller funds often go unnoticed.
“If you go back and look at the '90s, [back then] you could go directly to shareholders and talk to them about your products and your style,” says Jay Sekelsky, a comanager of the Madison Mosaic Disciplined Equity fund. “These days there's always an intermediary. … And so trying to get shelf space, or trying to get people to notice you, is often difficult.”
Put another way, it's a Catch-22: In order to get noticed, a fund has to be big. But in order to be big, it has to get noticed.
With that in mind, here are 10 great funds you've probably never heard of. All of them are small funds (only one has more than $100 million under management) that receive at least an 8 out of 10 using
U.S. News'
.
.
This isn't your typical equity income fund. Unlike most of its peers, which focus exclusively on dividend-paying stocks, the fund frequently uses covered calls to supplement its goal of providing investors with current income. A
works like this: The fund enters into a contract with a buyer in which the fund agrees to sell a security if that security reaches a certain price. In exchange for the right to purchase the security at an agreed-upon price, the buyer pays an upfront fee, and this provides investors with current income in much the same way that dividends do. That's not to say dividends aren't important to this fund. But since they're not its sole focus, Tilson Dividend has the flexibility to be more selective in its stock picking. Meanwhile, the fund currently has around 20 percent of its assets in cash. “With the market having performed so strongly, we've been doing more selling than buying, and we've been very patient about redeploying that capital,” says Ashton, who comanages the fund.
.
For Disciplined Equity's management team, investing is all about stock picking. To neutralize sector dynamics, the fund keeps its sector weightings almost identical to the
's. That means all of the fund's relative outperformance stems from superior stock selection. “In general, we're looking for companies that are growing faster than the market but yet have higher-quality balance sheets,
, sustainable competitive advantages, and … reasonable valuations,” says Sekelsky. The fund generally owns between 50 and 60 stocks and tends to hold on to them for the long haul. Sekelsky and his team prefer conservative blue chips that have proved their potential over the years. “You're more likely to see a Johnson & Johnson in the portfolio than a
, for instance,” Sekelsky says.
.
Over the past decade, Lou Holland Growth has, from a relative standpoint, had its best years in rough markets. Still, management does know how to step on the gas in a bull market, as evidenced by the fund's 39 percent return last year. (The average large-growth fund returned 35 percent last year, according to Morningstar.) Although it's technically a growth fund, its managers are just as likely to consider a stock's value as they are to look at its growth potential. “We focus on companies with earnings-per-share growth rates that are faster than the general market. We like to buy those at reasonable valuations,” says comanager Monica Walker. Management also prefers to own companies with strong balance sheets. “Obviously, we understand that some businesses require debt,” says Walker. “But we do like companies that have good balance sheets and good cash flows.”
.
Mark Roach, a comanager of Dreman Contrarian
, likes to describe the companies the fund owns as “straw hats in the winter.” These businesses, which he also refers to as “fallen angels,” have solid models but are temporarily out of favor. “We're
. We look for those stocks that have been overreacted to by
and by other investors,” he says. The fund invests in companies with market capitalizations of between $300 million and $2.5 billion, which means that in addition to the small-cap stocks that anchor the portfolio, management will also own some mid-cap names. At any given time, it will own 100 stocks. Management looks to maintain equal weightings, so each company will represent roughly 1 percent of the fund's overall invested position. The fund's most senior manager is
, a well-known value investor who has been with the fund since its 2003 inception.
.
This fund, which is managed by William Chester of
, generally owns between 20 and 25 stocks. In picking stocks for the fund, Chester draws exclusively from companies owned by other managers at his firm. In that sense, Westcore Select is a “best-ideas” fund that buys only Denver's highest-conviction picks. The Select fund follows a “smid-cap” strategy, meaning that it purchases both small- and
. Chester likes companies that have “emerging growth characteristics and attractive valuations.” The fund's main focus is exploiting “the differences between expectations and reality,” he says.
.
Managed by Doug Rao, this is a classic “go anywhere” fund. Currently, Rao has around 80 percent of the portfolio invested in the United States, but at times, up to 30 percent has been in China. Meanwhile, the fund can invest in common or
of companies of any market capitalization, as well as in bonds and even warrants. Occasionally, Rao will also keep a sizeable chunk of the portfolio in cash. As a result of his opportunistic strategy, Rao generally does a lot of trading. The fund's turnover ratio, for example, is 259 percent. By comparison, a fund that replenishes its entire portfolio once a year would have a turnover ratio of 100 percent. In picking stocks, Rao seeks out companies with long-term advantages. These advantages can come from a company's technological prowess, cost structure, or brand appeal. “What we look for are what we would define as very high-quality companies that have long-term, sustainable moats around their businesses,” he says.
.
This fund has shown a great deal of talent in navigating the volatile small-cap market. Part of Needham's premium comes from an extensive research process, which is particularly valuable given the fact that smaller companies are often the most difficult to get an accurate read on. Within the small-cap universe, manager Christopher Retzler pursues a fairly diverse strategy. Notably, he employs a long-short approach, in part as a hedge against volatility. Shorting is a tactic that allows an investor to profit when a company's stock price goes down. Retzler says he likes to short companies where the
are “notorious for shareholder destruction.” Meanwhile, the fund's long positions are often in post-IPOs that offer strong growth potential at a reasonable price. In 2008, the fund landed in the top 1 percent of Morningstar's small growth category.
.
funds: Diamond Hill Small Cap, Diamond Hill Large Cap, and Diamond Hill Small-Mid Cap. If a stock isn't in at least one of those three portfolios, the Select fund can't buy it. In that sense, the fund's holdings are a bit like Diamond Hill's all-star list. Another restriction is that the fund can't own more than 40 stocks at a time. “Because it's intended to be a best-ideas fund, we don't want to have [too many] names in there,” says comanager William Dierker. Lately, the fund has liked the healthcare sector. “With the concerns over what was going to come out of healthcare reform, a lot of these healthcare stocks were–and I think to a certain extent still are–not getting the credit they deserve,” says Dierker. For the past several years, the fund has also maintained healthy positions in energy stocks.
.
While this fund certainly has some retail clients, it was designed for institutional investors. Notably, to gain access to the fund, investors need to pony up at least $100,000. For high-net-worth retail investors, though, there are certainly some potential advantages to a fund like this: Its annual expenses, for example, are capped at 1 percent. “I don't think anyone should pay more than 1 percent to have their money managed; that's enough,” says manager Domenic Colasacco. In terms of style, the fund doesn't emphasize either growth or value investing. Its goal is to find companies with high-quality balance sheets and a competitive edge. It also likes to avoid business models that require a lot of leverage. The fund did a good job playing defense in 2008, but it lagged behind the competition during the rally last year, largely because its high-quality holdings were left behind as riskier fare shot up in value.
.
A lot of funds looking to have the full faith and credit of the U.S. government behind them will look to
. Earnest Partners Fixed Income, on the other hand, prefers some slightly more obscure options, such as bonds backed by lesser-known U.S. agencies. These agencies include the
and the Maritime Administration. “These are [investments] that have irrevocable, ironclad guarantees,” says comanager Douglas Folk. The fund has most of its portfolio in AAA-rated bonds, but it does take on some credit risk, mostly through BBB (the lowest rating that is still considered to be investment grade) holdings.

us.rd.yahoo.com

World markets mostly higher after US stocks gain (AP)

admin — Tue, 23 Mar 2010 00:25:33 +0000

were mostly higher Tuesday, helped by an overnight rise on
U.S. health care
measure.
Major markets gained by 1 percent or less, reversing course after declines the day before. The dollar was up modestly against the euro and the yen, while
held above $81.
Sentiment was buoyed by another advance on Wall Street, where investors seemed relieved after U.S. lawmakers ended months of uncertainty and passed
that would extend benefits to millions and have a wide-ranging effect on companies.
Asian and European stocks lost ground on Monday as more questions about Greece’s ability to resolve its debt crisis dogged investors. Though Germany’s chancellor said over the weekend a bailout wouldn’t be up for negotiation at a European summit this week, other regional leaders suggested a deal that might include help from the International Monetary Fund was in the works.
As trading got started in Europe, France’s CAC-40 and Britain’s FTSE 100 both rose 0.9 percent while
was up 0.7 percent.
In Japan, the
stock average fell 50.57 points, or 0.5 percent, 10,774.15, bucking the broader move higher as it caught up with losses from the previous session.
Hong Kong’s market added 54.53, or 0.3 percent, to 20,987.78 and South Korea’s index rose 0.6 percent to 1,681.82.
Australia’s index gained 0.9 percent, lifted by shares of major resource companies after commodity prices edged higher. India’s market climbed 0.3 percent and Singapore shares rose 0.6 percent.
In oil, benchmark crude for May delivery was up 6 cents to $81.66 a barrel in Asia. The contract added 63 cents to settle at $81.60 on Monday.
The dollar was higher at 90.38 yen from 90.10 yen. The euro was off at $1.3521 from $1.3560.
In the U.S. Monday, markets were led higher by shares of drug and hospital companies after the
’s approval.
The Dow rose 43.91, or 0.4 percent, to 10,785.89, its highest level since October 2008.
The Standard & Poor’s 500 index rose 5.91, or 0.5 percent, to 1,165.81. The
rose 20.99, or 0.9 percent, to 2,395.40.

us.rd.yahoo.com

World: Disappointment in Euroland

admin — Tue, 02 Mar 2010 13:04:44 +0000

Tue, Mar 2 2010, 09:57 GMT
Despite many encouraging global indicators, there is considerable unevenness among regions. In the euro zone, the recovery is on a shaky footing. However, we doubt that the European difficulties will derail the global recovery. We maintain our outlook of 2010 global GDP growth in excess of 4%.
The economic news of the past month supports our 2010 U.S. growth forecast of 3.4%. Our optimism is based on a shift of support for the economy from the public to the private sector. We are confident that domestic demand will firm in the months ahead.
The pace of the Canadian economy is quickening. Employment growth remains strong, with the private sector adding 100,000 jobs in three months. Hours worked began the year in strength, auguring the steepest quarterly rise of labour input since 2007. The stage is set for robust Canadian growth in the coming quarters.
We doubt that the shakiness of the euro-zone recovery will derail the global expansion. Our outlook for world growth in 2010 is unchanged at 4%-plus.
The CPB reports world trade flows up very robustly in November, a rise of more than 1% for the second month in a row. Trade was still down 12% from the April 2008 peak, but was up 10% from last May. With international credit flowing again, further improvement can be expected in the months ahead. No surprise, then, that November industrial production showed an eighth consecutive monthly rise and the first 12- month rise since the Lehman Brothers collapse. The leading economic indicators suggest that industrial production growth could top 6% annually in the first half of the year.
Financial markets are worried that China may reverse its accommodative policies. In mid-December Beijing set a target ceiling of 7.5 trillion yuan (US$1.1 trillion) for new loans by Chinese banks in 2010. That would be down from 2009 but more than double the volume of 2008. At this writing, the rolling six-month volume of new loans will have to accelerate markedly from its December level to reach the target pace. Thus the lending cap seems unlikely to brake Chinese growth and we are staying with our expectation of a 4.1% expansion of global GDP this year. The IMF recently upgraded its own outlook to almost 4%.
With global recovery gaining momentum, commodity prices are unlikely to correct much. Stockpiles seem high for some commodities, but relative to industrial production they are well below recession peaks and will soon be drawn down by accelerating worldwide demand.

fxstreet.com

Sterling under pressure; world stocks rise

admin — Mon, 01 Mar 2010 15:13:10 +0000

The pound came under further pressure on Tuesday, battered by political worries and engorged public finances, while global equities stayed relatively buoyant.
Euro zone government bond prices slipped with traders waiting for the next developments in Greece’s debt crisis, likely to come after a cabinet meeting on Wednesday.
World stocks as measured by MSCI .MIWD00000PUS were up about a third of a percent with emerging markets .MSCIEF leading the way and Japan’s Nikkei .N225 gaining around half a percent.
European shares struggled at the start but the FTSEurofirst 300 .FTEU3 was up 0.1 percent.
Equity markets were generally higher in February after a negative January. Many are still in the red for this year and stocks no longer appear to be the one-way bet they were during last year’s huge rally.
Wealth manager Sarasin said in a note that the rally is likely to continue but with corrections, prompting it to take some money off the table.
“Since the risks of setbacks are gradually increasing, we would use strong market phases to further reduce our equity positions,” it said.
European equities in particular remain skittish about the state of euro zone finances, with Greece and other member states struggling to get to grips with ballooning debt.
“Earnings in general have been on the right side of things. But, what is still going on in the background is the Greece issue,” said Bernard McAlinden, market strategist at NCB Stockbrokers in Dublin.
The European Union urged Greece on Monday to agree additional austerity measures within days to tackle its fiscal crisis and promised to help Athens overcome its debt problems.
Part of the focus within Europe was shifting to Britain, where a general election to be called in the first half of the year was creating uncertainty about attempts to fix the country’s public finances.
Sterling was under pressure again, falling half a percent to $1.4916.
On Monday, it slumped to a 10-month low of $1.4781, and although it later trimmed some losses, still finished the day down 1.7 percent for its biggest one-day percentage fall in more than four months.
Investors worry that the election, due in months, may give neither the opposition Conservatives nor the ruling Labour Party a parliamentary majority, leading to a political stalemate.
The Australian dollar slipped, giving back earlier gains made after a 25 basis point interest rate rise by the Reserve Bank of Australia and hints of more to come.

feeds.reuters.com

The present world’s superpower continues to recover from the worst recession since WWII…

admin — Mon, 01 Feb 2010 04:48:33 +0000

Mon, Feb 1 2010, 12:36 GMT
by ecPulse.com analysis team
So far, the world’s leading economy revival and healing from the ongoing downside pressures of the worst recession witnessed since WWII is enhancing further despite the continuous deterioration of the key sector; the labor market, knowing that last week it has been shown that the growth rate of the county expanded the most in six, while that today’s overall income report is highly forecasted to be cheerful.
In fact, last week the U.S Commerce Department showed that the economy of the United States expanded in the fourth quarter in 2009 by 5.7%; the most in six years, while that the country’s fourth quarter advanced reading of its Personal Consumption came in better than forecasted at 2.0% and the Chicago PMI of last month rose cheerfully to 61.5, indicating clearly that overall economic conditions are enhancing increasingly.
Moreover as for today, the income report of the world’s superpower will be released and is highly speculated to be positive and spread further optimism concerning the current revival of the economy knowing that personal income is expected to have climbed to the upside in December by 0.3%, while that the personal spending is also expected to have risen by 0.3%, being supported strongly by the Christmas holiday season in which overall consumption across the country rose.
Furthermore, later on today, the PCE Deflator for the year ending December may show a cheerful incline to come in around 2.2% from 1.5%, while that the PCE Core; the favorite indicator for inflation for the Fed, may slightly inclined to 0.1% from 0.0% in December.
If truth be told, this obviously demonstrates that inflationary pressures remain controlled as what is already highly projected by the Feds, knowing that they believe that inflation would not be a treat over this coming long and short term and that the core inflation will continue on being below their 2 percent target over the next two years.
Now, turning to the country’s manufacturing sector, the last month ISM Manufacturing may have faintly plunged to come in around 55.5 from a prior reading of 55.9, while that the ISM Prices Paid could have rose to come in around 62.4 from a prior reading of 61.5, pointing out that the manufacturing conditions across the country remain on enhancing but at a slow rate, having in mind that a reading above fifty is considered a healthy growth level and implies expansion.

fxstreet.com

The world’s leading economy expands the most in six years

admin — Sat, 30 Jan 2010 21:11:38 +0000

Fri, Jan 29 2010, 14:13 GMT
by ecPulse.com analysis team
The U.S Commerce Department showed that the economy of the United States expanded in the fourth quarter of 2009 by 5.7% as reported in the advanced GDP reading whereas economical conditions improved significantly throughout the past period to validate that the U.S economy shook off the worst financial crisis since the Great Depression sealing off 2009 on growth.
The advanced reading for the fourth quarter GDP estimate came in to show that the economy expanded by 5.7% which was projected by markets to reach 4.7%, and the previous 2.2 percent, nevertheless challenges still standing in front of economical recovery such as high unemployment and tight credit conditions not to mention inflationary threats, therefore revision for this reading is highly projected in the upcoming reports.
It is projected that these challenges will even trim off growth in the fourth quarter but the pivot point will be consumers spending in this quarter, we saw that the final GDP reading for the third quarter showed that personal consumption rose by 2.8% coming in below the previous and the expected 2.9% meanwhile consumer consumption in the fourth quarter rose by 2.0% coming in below the previous reported estimate of 2.8% while higher than market expectations of 1.8% giving the fact that holiday season did not support spending as hoped where it was seen previously throughout the Retail Sales report that declined unexpectedly.
The commerce department report showed that different parts and sectors of the economy sent mixed signs over their performance throughout the fourth quarter as some improved while some still can’t find stability in conditions, sub indices showed that Durable Goods dropped by 0.9% compared with the previous rise of 20.4 percent, while the Nondurable Goods rose by 4.3% from 1.5%, in addition Services rose by 1.7% in the GDP reading from 0.8%
Personal Consumption added 1.44% to the GDP compared with the previous 1.96%, meanwhile Net exports added 0.50 percent to the GDP compared with the previous -0.81%, in addition import slashed -1.41 percent but enhanced from the previous -2.59 percent, finally government consumption slashed 0.02% from the previous added 0.55 percent in the third quarter of this year. The change in inventories reached -$33.5 billion in the fourth quarter coming in better than the previous reported estimate of -$139.2 billion while Net exports eased to -$341.1 billion from -$357.4 billion.
High unemployment continues to weaken consumer spending and consumption whereas unemployment reached in the month of November a 26 year record high of 10.0% but despite the recent improvement witnessed in the labor sector, unemployment along with tight credit conditions and diminishing wealth will continue to affect spending and drive growth lower as spending accounts for 70% of GDP thus revisions to this strong growth is highly expected.
The government stimulus plans helped support economical conditions in the housing, financial and manufacturing sector, but the biggest contributor to the strong growth witnessed in the fourth quarter came from investments whereas the Gross private domain investments rose by 3.83 percent from the previous 0.54 percent while fixed investments rose by 0.43% from the previous -0.15 percent.
The report showed that GDP price index in the fourth quarter rose by 0.6% compared with the previous rise of 0.4% but below market expectations of 1.3 percent, meanwhile the Fed Favorite indicator for inflation; the Core PCE rose above the expected 1.3% and the previous 1.2% to reach 1.4% thus the Federal Reserve projection still stands of subdued over the upcoming period.
Inflation along with high unemployment will cause spending to decline adding to that tight credit conditions that prevent the nation from obtaining the required loans to facilitate their spending or expanding their investments whether it was small businesses or regular people that wants to obtain loans for cars, houses or education tuition.
Huge amount of liquidity pumped into the financial system will cause inflationary levels to incline adding to that the Fed policy that still push for growth on the expense of inflation thus inflationary levels will incline on the long term causing serious threat to economical recovery. The world’s leading economy is expected to continue its upside trend in growth throughout this year before it manages to reach its long term growth potentials by the year 2011.
Talking about the Canadian economy, it released its GDP reading for the month of November, whereas the index rose by 0.4% coming in higher than the previous revised and the expected 0.3% by markets.
In addition the Canadian economy showed that the industrial product prices declined in the month of December by -0.1% compared with the previous reported rise of 1.0% that was revised to 0.9% and below market expectations of 0.5%, meanwhile the Raw Materials price index sank by -1.7% from the previous rise of 2.2% and below market expectations of 1.4 percent.
The Canadian economy is following the footsteps of the U.S economy whereas conditions in Canada improved as it did in the U.S by the start of the second half of 2009 due to the tight relation between both countries in various sectors whereas Canada is considered the biggest trading partner for the U.S.
Expectations show that the Canadian economy will manage to reach its long term growth potentials by the second half of 2011, therefore this year the economy will continue to expand and influenced upon by its biggest partner where it will continue to recover over the course of this year before both reach their designated long term growth by the upcoming year.

fxstreet.com

World stocks tumble as Obama targets banks (AP)

admin — Fri, 22 Jan 2010 19:11:55 +0000

LONDON – World markets fell Friday, led by bank stocks after
to avert future financial crises.
or cost taxpayer money in bailouts.
The announcement spooked investors, causing a sell-off in Europe after sharper falls in the U.S. and Asia.
Britain’s FTSE 100 stock index was down 1.0 percent at 5,280.82 and
shed 1.0 percent to 5,691.31.
’s CAC-40 lost 1.0 percent to 3,823.01.
Wall Street fell for a third day on the open, with the
down 0.6 percent at 10,330.18 and the Standard & Poor’s 500 index down 0.5 percent at 1,110.87.
’s recent moves to prevent its economy from overheating amid worries of inflation and asset bubbles.
Bank stocks were hit hardest, with Barclays Plc down 5.8 percent,
3.8 percent and
4.2 percent lower.
Adding to the uncertainty are questions about whether this year’s economic prospects justify more gains after the run-up in stock prices that began in early 2009, said Mark Matthews, strategist at Macquarie Capital Securities in
.
Last year “was such an amazing ride and people are starting to wonder if the recovery that we’re seeing in 2010 was already priced in,” Matthews said.
Upbeat earnings from McDonald’s,
and Kimberly-Clark failed to reassure investors, who moved to cash in on their gains on a 10-month rally in equities.
In Europe, attention remained focused on the debt problems of Greece, with officials stressing the country will not need a bailout but will manage its funding on the market. The possibility that other countries, such as Portugal or
, could also have trouble handling their debt has kept markets on edge, pushing the euro to 5-month lows against the dollar.
The euro recovered somewhat on Friday, to $1.4118 from $1.4082 late Thursday. The dollar weakened to 90.25 yen from 90.49 yen.
In the U.K., officials statistics confirmed that British consumers splurged on food and drink during the holidays, with retail sales rising 3.6 percent in December. The rise, however, was not a strong as some analysts expected, suggesting recovery from recession will be gradual.
In Asia earlier,
led the drop, with the
stock average diving 2.6 percent to 10,590.55.
dropped 0.7 percent to 20,726.18 and Korea’s main market index lost 2.2 percent to 1,684.35.
Elsewhere, China’s Shanghai benchmark fell 1 percent, India’s Sensex shed 1 percent and Australian stocks retreated 1.6 percent.
While banks in the U.S. fell steeply, shares in
performed better, with many closing the session higher. Japanese lender
edged up 0.2 percent and China’s ICBC gained 2.3 percent in
. Other industries like commodities suffered big drops as concerns about future global demand prompted investors to scale back their riskier bets.
edged lower, with benchmark crude for March delivery down 40 cents at $75.68 a barrel. The contract dropped $1.66 to settle at $76.08 overnight.
AP Business Writer Jeremiah Marquez contributed to this report from Hong Kong.

us.rd.yahoo.com

The world’s superpower and neighbor remain on the right track for recovery…

admin — Fri, 22 Jan 2010 09:25:28 +0000

Fri, Jan 22 2010, 13:02 GMT
by ecPulse.com analysis team
The world’s largest economy; the Unites States, along with its major trading partner and territorial neighbor, Canada,remains onthe right track of economical healing from the ongoing downside pressures of the worst recession witnessed since WWII; however, a full strong recovery is still far from being seen since both governments of the North American continent keep on facing strong obstacles that are healable on a long-term.
Currentlystarting with the U.S, the present economical conjuncture, it is clear that the recovery path is gaining momentum throughout most economical activities and conditions in the country; having better data on consumer spending, home sales, and industrial production along with an obvious enhancement and expansion of the manufacturing and services sector in the country, although this month US Philadelphia Fed, which reflects general business conditions within the manufacturing sector, plunged to 15.2.
However, the continuous deterioration of the U.S key sector; the labor market, is the major obstacle postponing a full and strong recovery of the economy and is the key barrier that the U.S government is facing throughout the past phase and long-term upcoming period, keeping in mind that the U.S Conference of Mayors and research group Global insight reported this week that unemployment rates could stay or even rise above 10 percent, through 2013 in some areas, such as California’s central valley and cities in Nevada. Not forgetting that the national jobless level of the world’s superpower had recentlyreached 10 percent, which is the highest level in 26 years
MeanwhileU.S president; Barack Hussein Obama, along with his new administrationand government, continue on trying to heal this deteriorated labor sector of the country by creating new jobs across the country, alongside other efforts within the financial sector, knowing that yesterday the U.S president proposed to impose restrictions on risk-taking at banks.
As a result of this suggestion of limitation of banks risk-taking and overall trading restraint on U.S financial institutions; the U.S. stocks plummeted deeply yesterday for a second day throughout the midday and closing sessions, to erase all of this year’s strong gains for both the Dow Jones Industrial Average and the NASDAQ Composite, while crude prices plunged and Treasuries gained yesterday.
As for the world’s largest territorial country and foremost business partner; Canada, the U.S continues on recovering gradually from the crisis, knowing that its leading indicators index of last month that was posted this past Monday cheerful and unexpectedly rose to 1.5 percent, reflecting that its economy is on the right track; conversely the Bank of Canada chose to keep its interest rate unchanged at 0.25% this week, which could be the case until June till the economic conditions enhance further.
Furthermore, Statistics Canada will release today as it does every month the Canadian Retail Sales of November, that are highly forecasted to show a gloomy decline as they could fall around -0.2% for November; while Retail Sales Less Autos could climb up to 0.5%, indicating once again that the revival of the country remains slow but sure.

fxstreet.com