Warren Buffett“A public opinion poll is no substitute for thought.”
Adlin Sinclair“Success is a welcomed gift for the uninhibited mind.”
US Morning Briefing
Thu, Jan 28 2010, 13:07 GMT
JGBs dipped with 10-year futures pulling back from a four-week peak, as Tokyo Nikkei average rose on upbeat earnings from several blue-chip companies. JGBs were trading at 139.55 (-0.03) at 0621 GMT. Nikkei rose 1.6% to snap a four-day losing streak, with upbeat reports on profits at Honda Motor and Sony Corp adding to momentum from strong earnings at other big name stocks such as Cannon. But Toyota Motor Corp slid on concerns about its suspension of US sales of key car models, while Nippon Steel fell 3.8% after halving its fullyear profit forecast to below the market consensus. (RTRS)
I other news, Japan’s ministry of finance said that Japan won’t suffer double dip in January-March quarter.
(RTRS) Also, Japan’s new government bond issuance may climb in the fiscal year to March 2012 from an already record amount planned for next fiscal year. (RTRS)
Elsewhere, Chinese economic official said that there is no inflation in China now. (RTRS) Also, China stressed it wants to cooperate with the US, in a wake of tensions between the two countries over Google, US arms sales to Taiwan and a host of other trade issues. (Sources)
OECD’s Gurria said that global economy still has downside risks, adding that unemployment and oil prices are global risks. Gurria also said that India and China are only fraction of world’s economy and we need to get US and Europe into sustainable growth (BBG)
President Barack Obama pushed job creation to the top of his agenda and vowed not to abandon his struggling healthcare overhaul after a political setback that raised doubts about his leadership. Obama also proposed a three-year freeze on some domestic programmes to take aim at soaring budget deficits. He also called for the creation of a bipartisan commission to tackle long-term budget challenges. In specific, deficit goal of 3% of GDP, USD 30bln from TARP fund to boost lending by local banks, looking to save 1.5mln more jobs this year, to double export, spending freeze to save USD 20bln in FY 2011, eyes tax breaks for small businesses and extend middleclass tax cuts were some of the main highlights of Obama’s speech. (RTRS)
Elsewhere, Federal Reserve chief Bernanke’s nomination for a second term running faces a decisive day in the Senate today when his confirmation vote looks set to go ahead. Reuters poll showed 50 Senators support Bernanke and 21 oppose. The rest of the 100-member chamber is undecided or undeclared. (RTRS) Barney Frank has also said today that if Bernanke were dumped it would be very bad for the markets and very destabilising.
Also, California mortgage defaults dropped 24.3%. The number of homes entering the first stage of foreclosure fell in the fourth quarter compared with the previous quarter, MDA DataQuick says — a sign that banks are working with delinquent borrowers. (Los Angeles Times)
Bund futures ticked higher, and the Greek/German 10yr spread widened to fresh highs, at the US entrance as worries persisted in regard to Greece and also Portugal who outlined there latest budget proposals this week.
However, rumours stemming from the French newspaper, Le Monde, and the Economist.com suggested that the likes of France and Germany were in agreement for a Greek full or in part bailout on the troubled country under the condition enough restraint is shown in their budget. The latest development has seen the peripheral spreads narrow and the 5yr Greek CDS has fallen from its highs. Officially, commentary has yet to be seen.
ECB’s Tumpel-Gugerell said that as financial markets improve not all support will be needed to the same extent, adding that the ECB will exit from crisis measures at the right time. She also said that Eurozone inflation expectations are firmly anchored and now is the time to prepare consolidation strategy of fiscal policies. Tumpel- Gugerell also commented that no individual bailouts are possible (RTRS) Also, ECB’s Makuch said that it is too soon to speak of sustainable recovery, adding that rising jobless, public and household debt and bad loans are key risks to the recovery. (BBG/RTRS)
Eurozone Business Climate Indicator (Jan) M/M -1.12 vs. Exp. -1.10 (Prev. -1.22, Rev. to -1.30)
Eurozone Consumer Confidence (Jan F) M/M -16 vs. Exp. -15 (Prev. -16)
Eurozone Industrial Confidence (Jan) M/M -14 vs. Exp. -15 (Prev. -16)
Eurozone Economic Confidence (Jan) M/M 95.7 vs. Exp. 92.3 (Prev. 91.3, Rev. to 94.1)
Eurozone Services Confidence (Jan) M/M -1 vs. Exp. -3 (Prev. -3)
German Unemployment Change (000’s) (Jan) M/M +6K vs. Exp. 15K (Prev. -3K)
German Unemployment Rate SA (Jan) M/M 8.2% vs. Exp. 8.2% (Prev. 8.1%)
Italian BTP Tap Auction for EUR 3.538bln, 2% 15-Dec-12, Bid/Cover 1.362 vs. Prev. 1.42
Italian BTP Tap Auction for EUR 3.5bln, 4.25% 01-Mar-20, Bid/Cover 1.32 vs. Prev. 1.50
NYSE LIFFE Gilts opened lower following strength in equities and comments from UK DMO that yields will rise, however following concerns about the economic situation in Portugal and Greece, some strength came back into Gilts. Moving into the North American open, Gilts are trading almost unchanged.
Alistair Darling will today order cabinet ministers to draw up specific cuts in their departmental spending plans so that he can unveil a “hit list” in his Budget in March. The Chancellor’s twin aims are to outflank the Conservative Party and reassure the financial markets that the Government is totally committed to its pledge to halve the GBP 178bln deficit in the public finances within four years. (Independent)
In other news, Alistair Darling is to meet the chiefs of top British and American banks at a secret meeting in Davos tomorrow to hear their concerns about the introduction of tough new sanctions against the banking sector.
European bourses opened higher following the FOMC rate decision to keep the rate unchanged and comments from Obama to focus on economic issues in the US, especially job creation. The strength in Asian equities also supported European bourses and financials led the strength in equities. Moving into the European session, equities pared back some gain following renewed concern about economic situation in some European countries, especially Portugal and Greece, however moving into the North American open, equities have recouped some of the losses made earlier as a bailout for Greece could be pending according to several press reports.
CNY is facing increasing pressure to rise, and expectations of appreciation could hurt exports, a Commerce Ministry official said. (RTRS)
Heading into the North American open, WTI crude prices are trading higher on renewed optimism surrounding the recovery in the United States which should see demand pick-up for commodity related products.
Head of Saudi Aramco says world oil production is past its peak.
China may raise gas, retail electricity prices in 2010.
Japan’s latest oil data is set to show demand last year fell by its most in 28 years, the fourth straight yearly decline, due to a steep recession and industrial users increasingly diversifying energy sources.
Bad weather restricts oil exports from Iraq’a Basra port to 840,000 bpd, down from 1.464mln bpd, according to shipping source.
North Korea fired several artillery rounds in the direction of a South Korean island off the peninsula, raising tension with a second day of shooting near a disputed sea border.
Somali gunmen hijack Cambodian Cargo ship MV Layla-S off Berbera port.
**Prices taken at 12.43 GMT