By Meera Louis - Feb 8, 2012 4:26 AM GMT+0800
Consumer borrowing in the U.S. rose more than forecast in December, driven by demand for auto and student loans.
Credit increased by $19.3 billion to $2.5 trillion, Federal Reserve figures showed today in Washington. The gain topped the $7 billion median forecast of economists surveyed by Bloomberg News and followed a $20.4 billion advance the prior month.
Consumers “are willing to take on this debt because there is some increasing degree of confidence in the economy,” said Ken Mayland, president of ClearView Economics LLC in Pepper Pike, Ohio, who projected credit would climb by $15 billion, the highest in the Bloomberg survey. “Consumers over the past several years have done a pretty good job of repairing their balance sheets.”
An improving job market may be giving households the courage to take on more debt in order to sustain spending, which accounts for about 70 percent of the economy. At the same time, increasing dependence on credit may be an indication the gains in employment have yet to push wages high enough to single- handedly give consumers the means to keep shopping.
The median forecast was based on a survey of 37 economists. Estimates ranged from a decrease of $8 billion to an increase of $15 billion.
The back-to-back increase at the end of 2011 was the biggest since October-November 2001.
Auto, School Lending
Non-revolving debt, including educational and auto loans increased by $16.6 billion in December, the biggest gain since November 2001, today’s report showed. The Fed’s report doesn’t track debt secured by real estate, such as home equity lines of credit.
Industrywide sales of cars and light trucks totaled 12.8 million for all of 2011, a 10 percent increase from 2010, according to researcher Autodata Corp.
Demand for credit may keep growing as demand keeps improving. Auto sales climbed to a 14.1 million annual rate last month, according to industry data. Excluding a surge in August 2009 that reflected the government’s “cash-for-clunkers” program, it was the strongest month since May 2008.
General Motors Co. (GM) and Ford Motor Co. (F), the largest automakers by U.S. sales, forecast industrywide deliveries will rise to as much as 14 million in 2012, including medium- and heavy-duty trucks.
Revolving debt, which includes credit cards, climbed by $2.76 billion, according to the Fed’s statistics.
Credit Cards
MasterCard Inc., the world’s second-biggest payments network, last week said fourth-quarter profit climbed 24 percent as spending with credit and debit cards increased. Debit-card purchases increased 18 percent from the same time a year earlier, while those on credit cards rose 6.6 percent. Shares of the Purchase, New York-based company surged 66 percent in 2011, the fourth-best performer in the Standard & Poor’s 500 Index.
Employers added 243,000 workers to payrolls in January, exceeding all forecasts of economist surveyed by Bloomberg, and the jobless rate unexpectedly dropped to a three-year low of 8.3 percent, figures from the Labor Department showed last week.
A report from the Labor Department today showed there were almost four unemployed Americans vying for each job vacancy in December, more than twice the number before the recession began in December 2007. That may explain why wages have yet to pick up, prompting households to borrow.
Hourly earnings were up 1.9 percent in January from the same month in 2011 on average, the smallest year-over-year gain since April, the Labor Department reported last week. For production workers, the 1.5 percent increase was the smallest in records going back to 1965.
Tuesday, February 7, 2012
Greece, Troika Work on Final Rescue Draft
By Maria Petrakis, Natalie Weeks and Marcus Bensasson - Feb 8, 2012 4:59 AM GMT+0800
Greek Prime Minister Lucas Papademos postponed a meeting with heads of the political parties supporting his caretaker government a second time in as many days as the government and international creditors haggled over terms to secure a second aid package.
Papademos will meet with the leaders in Athens tomorrow, instead of tonight as previously scheduled, a spokeswoman for his office said. Instead, he will meet tonight with the so- called troika, comprising the European Commission, the European Central Bank and the International Monetary Fund, to put the final touches to terms required for a 130 billion-euro ($172 billion) rescue package, the spokeswoman said.
The delay is yet another hitch in completing a package that’s been on the table since July as the government struggles to wind up financing to avert a collapse of the economy, risking a new round of contagion in the euro area. With the country facing a 14.5 billion-euro bond payment on March 20, German Chancellor Angela Merkel warned yesterday that “time is running out” to reach an accord.
A Greek official said earlier the government and international creditors were close to a final draft of an agreement on budget and structural measures needed to extend the financial lifeline.
Further Cuts
While the prime minister and party chiefs have agreed to make further cuts this year equal to 1.5 percent of gross domestic product, they have yet to close gaps over measures demanded by creditors for the rescue. Unions, which struck today, have derided the conditions as “blackmail.”
“It is clear we are going into another drama for Greece with many questions unanswered,” Patrick Legland, head of research at Societe Generale SA, told Bloomberg Television today. “It’s kind of a catch-22 where they have to reduce their deficit but there is no growth. It’s very tricky.”
At stake is whether Greece wins the bailout, secures a debt write-off with private creditors and remains in the euro region. Finance Minister Evangelos Venizelos told reporters late yesterday that “failure of these talks, failure of the plan, the country’s bankruptcy, means even greater sacrifice.”
The euro rose 0.9 percent to $1.3254 at 10:16 p.m. Athens time after touching $1.3270, the highest level since Dec. 12. The Stoxx Europe 600 Index slipped 0.3 percent.
Elections Due
With elections due as early as April, Greek political leaders are arguing over demands such ensuring the viability of pension funds and reducing wage- and non-wage costs to boost competitiveness. Greece still needs to agree on 600 million euros of fiscal measures for 2012, a government official told reporters in Athens today.
Efforts to win a second bailout from the troika have hung in the balance over the past five days as negotiations in Athens failed to clinch an agreement on measures demanded by lenders, which may include a cut in the minimum wage, lower pensions and immediate layoffs for as many as 15,000 state employees.
Citigroup Inc. raised the probability that Greece will be forced to leave the euro area in the next 18 months to 50 percent from 25 percent to 30 percent previously.
Merkel said today that the impact of a Greek exit from the euro would be “incalculable,” and restated her determination to keep Greece in the single currency region.
“I don’t want Greece to leave the euro and therefore the question doesn’t arise,” Merkel said in a speech in Berlin. “I won’t take part in any effort to push Greece out of the euro. It would have incalculable consequences.”
Even so, Merkel said that there is “no way around” Greece carrying out reforms. Greece is in a “very complicated situation”, she said.
Museums Shut
Adding to pressure on Papademos and political leaders jostling ahead of the elections, about 10,000 people marched through the capital after the biggest public-sector and private- sector union groups, ADEDY and GSEE, held a 24-hour general strike. The walkout shut down government services, courts, schools, museums and ferry services. Dockworkers and bank employees also walked off the job.
The troika argues that lower wage costs and pension cuts are among reforms necessary to boost competitiveness in the country. Those opposed say the cuts would deepen the country’s recession, now in its fifth year.
New Democracy
Antonis Samaras, the head of the second-biggest party, New Democracy, has indicated he will oppose measures that will deepen the country’s downturn. George Karatzaferis, the head of Laos, one of the three supporting Papademos, said he would seek assurances that the measures would lead the country out of the crisis and said the “aggressive humiliation” of Greece is unacceptable.
Guarantees from Greek political leaders such as Samaras, who leads in opinion polls, are key to securing the funds from the EU and IMF. International lenders want assurances that whoever wins the next election will stick to pledges made now to receive financing.
Samaras’s party has 31 percent support from voters, according to a Public Issue poll released today, compared with 8 percent for the socialist Pasok party, which is the biggest party in the current parliament. The survey of 1,002 Greeks showed a growing number of Greeks wanting elections immediately and waning support both for Papademos and the three parties that back him.
Rescue Blueprint
The rescue blueprint includes a loss of more than 70 percent for bondholders in a voluntary debt exchange that will slice 100 billion euros off 200 billion euros of privately-held Greek debt and loans that will probably exceed the 130 billion euros now on the table.
Papademos met tonight for “constructive” talks with Charles Dallara, managing director of the International Institute of Finance, which has negotiated the terms of the swap and Deutsche Bank AG Chairman Joseph Ackermann, according to an IIF statement.
A formal offer for the debt swap must be made by Feb. 13 to allow all procedures to be completed before the March 20 bond comes due. Parliament may be called to vote on the terms of the writedown on Feb. 12, state-runs Athens News Agency reported, without saying how it got the information.
Creditors are prepared to accept an average coupon of as low as 3.6 percent on new 30-year bonds in the exchange, said a person familiar with the talks, who declined to be identified because a final deal hasn’t been struck yet.
Greek Prime Minister Lucas Papademos postponed a meeting with heads of the political parties supporting his caretaker government a second time in as many days as the government and international creditors haggled over terms to secure a second aid package.
Papademos will meet with the leaders in Athens tomorrow, instead of tonight as previously scheduled, a spokeswoman for his office said. Instead, he will meet tonight with the so- called troika, comprising the European Commission, the European Central Bank and the International Monetary Fund, to put the final touches to terms required for a 130 billion-euro ($172 billion) rescue package, the spokeswoman said.
The delay is yet another hitch in completing a package that’s been on the table since July as the government struggles to wind up financing to avert a collapse of the economy, risking a new round of contagion in the euro area. With the country facing a 14.5 billion-euro bond payment on March 20, German Chancellor Angela Merkel warned yesterday that “time is running out” to reach an accord.
A Greek official said earlier the government and international creditors were close to a final draft of an agreement on budget and structural measures needed to extend the financial lifeline.
Further Cuts
While the prime minister and party chiefs have agreed to make further cuts this year equal to 1.5 percent of gross domestic product, they have yet to close gaps over measures demanded by creditors for the rescue. Unions, which struck today, have derided the conditions as “blackmail.”
“It is clear we are going into another drama for Greece with many questions unanswered,” Patrick Legland, head of research at Societe Generale SA, told Bloomberg Television today. “It’s kind of a catch-22 where they have to reduce their deficit but there is no growth. It’s very tricky.”
At stake is whether Greece wins the bailout, secures a debt write-off with private creditors and remains in the euro region. Finance Minister Evangelos Venizelos told reporters late yesterday that “failure of these talks, failure of the plan, the country’s bankruptcy, means even greater sacrifice.”
The euro rose 0.9 percent to $1.3254 at 10:16 p.m. Athens time after touching $1.3270, the highest level since Dec. 12. The Stoxx Europe 600 Index slipped 0.3 percent.
Elections Due
With elections due as early as April, Greek political leaders are arguing over demands such ensuring the viability of pension funds and reducing wage- and non-wage costs to boost competitiveness. Greece still needs to agree on 600 million euros of fiscal measures for 2012, a government official told reporters in Athens today.
Efforts to win a second bailout from the troika have hung in the balance over the past five days as negotiations in Athens failed to clinch an agreement on measures demanded by lenders, which may include a cut in the minimum wage, lower pensions and immediate layoffs for as many as 15,000 state employees.
Citigroup Inc. raised the probability that Greece will be forced to leave the euro area in the next 18 months to 50 percent from 25 percent to 30 percent previously.
Merkel said today that the impact of a Greek exit from the euro would be “incalculable,” and restated her determination to keep Greece in the single currency region.
“I don’t want Greece to leave the euro and therefore the question doesn’t arise,” Merkel said in a speech in Berlin. “I won’t take part in any effort to push Greece out of the euro. It would have incalculable consequences.”
Even so, Merkel said that there is “no way around” Greece carrying out reforms. Greece is in a “very complicated situation”, she said.
Museums Shut
Adding to pressure on Papademos and political leaders jostling ahead of the elections, about 10,000 people marched through the capital after the biggest public-sector and private- sector union groups, ADEDY and GSEE, held a 24-hour general strike. The walkout shut down government services, courts, schools, museums and ferry services. Dockworkers and bank employees also walked off the job.
The troika argues that lower wage costs and pension cuts are among reforms necessary to boost competitiveness in the country. Those opposed say the cuts would deepen the country’s recession, now in its fifth year.
New Democracy
Antonis Samaras, the head of the second-biggest party, New Democracy, has indicated he will oppose measures that will deepen the country’s downturn. George Karatzaferis, the head of Laos, one of the three supporting Papademos, said he would seek assurances that the measures would lead the country out of the crisis and said the “aggressive humiliation” of Greece is unacceptable.
Guarantees from Greek political leaders such as Samaras, who leads in opinion polls, are key to securing the funds from the EU and IMF. International lenders want assurances that whoever wins the next election will stick to pledges made now to receive financing.
Samaras’s party has 31 percent support from voters, according to a Public Issue poll released today, compared with 8 percent for the socialist Pasok party, which is the biggest party in the current parliament. The survey of 1,002 Greeks showed a growing number of Greeks wanting elections immediately and waning support both for Papademos and the three parties that back him.
Rescue Blueprint
The rescue blueprint includes a loss of more than 70 percent for bondholders in a voluntary debt exchange that will slice 100 billion euros off 200 billion euros of privately-held Greek debt and loans that will probably exceed the 130 billion euros now on the table.
Papademos met tonight for “constructive” talks with Charles Dallara, managing director of the International Institute of Finance, which has negotiated the terms of the swap and Deutsche Bank AG Chairman Joseph Ackermann, according to an IIF statement.
A formal offer for the debt swap must be made by Feb. 13 to allow all procedures to be completed before the March 20 bond comes due. Parliament may be called to vote on the terms of the writedown on Feb. 12, state-runs Athens News Agency reported, without saying how it got the information.
Creditors are prepared to accept an average coupon of as low as 3.6 percent on new 30-year bonds in the exchange, said a person familiar with the talks, who declined to be identified because a final deal hasn’t been struck yet.
Dow Rises Toward Highest Level Since ’08
By Rita Nazareth - Feb 8, 2012 5:28 AM GMT+0800
U.S. stocks advanced, sending the Dow Jones Industrial Average to its highest level since May 2008, as Greece made progress on measures to secure international aid.
Seven out of 10 groups in the Standard & Poor’s 500 Index gained, helping the measure rebound from an earlier decline. McDonald’s Corp., the world’s biggest restaurant chain, added 1.4 percent ahead of its sales report. Yum! Brands Inc., owner of the KFC and Taco Bell fast-food chains, climbed 2.6 percent as earnings surged 30 percent. Anadarko Petroleum Corp. (APC), the biggest U.S. independent oil and natural-gas producer by market value, increased 5.2 percent as profit beat estimates.
The S&P 500 rose 0.2 percent to 1,347.05 at 4 p.m. New York time, wiping out an earlier decline of as much as 0.6 percent. The Dow advanced 33.07 points, or 0.3 percent, to 12,878.20.
“We need to see some real austerity from Greece,"Hank Smith, chief investment officer at Haverford Trust Co. in Radnor, Pennsylvania, said in a telephone interview. His firm manages about $6.5 billion. "When we see that, we will have more confidence that Europe is serious about growth. I have confidence that we’ll get some sort of resolution that allows for additional funding."
Greek Prime Minister Lucas Papademos postponed a meeting with heads of the political parties supporting his caretaker government a second time in as many days as the government and international creditors haggled over terms to secure a second aid package. Papademos will meet with the leaders in Athens tomorrow, instead of tonight as previously scheduled, a spokeswoman for his office said. In the U.S., consumer borrowing rose more than forecast in December.
Earnings Season
Today’s gain put the S&P 500 about 1.2 percent away from its peak nine months ago, which would send it to the highest level since June 2008. The index rose 7.1 percent this year amid better-than-expected economic data and corporate profits. Earnings beat projections at 68 percent of the 280 companies in the S&P 500 that reported quarterly results since Jan. 9, according to data compiled by Bloomberg.
The S&P 500 Consumer Services Index had the biggest advance among 24 industries, rising 0.9 percent.
McDonald’s added 1.4 percent, the most in the Dow, to $100.91. It may say tomorrow that sales at global stores open at least 13 months gained 5.8 percent in January, according to the average estimate of six analysts surveyed by Bloomberg News.
Yum gained 2.6 percent to $64.85. The company, with about 18,800 restaurants outside the U.S., said fourth-quarter sales at stores open at least 12 months grew 21 percent in China. Yum said it opened a record 656 stores last year in the Asian nation, where it gets more than 40 percent of its revenue.
Coca-Cola
Coca-Cola Co. advanced 0.8 percent to $68.55. The largest soft-drink maker reported fourth-quarter profit that topped analysts’ estimates as teas and juices boosted sales in Asia.
Anadarko climbed 5.2 percent to $87.21. Output rose 12 percent to the equivalent of 683,000 barrels of oil a day during the last three months of 2011, The Woodlands, Texas-based company said. Sales volumes climbed to 63 million barrels at an average price of $104.82 a barrel of oil and condensate, more than the $98 estimate from Raymond James & Associates Inc.
Cliffs Natural Resources Inc. rose 0.7 percent to $75.51. The iron-ore producer yesterday sold for 6.4 times its cash from operations, after deducting capital expenses, according to data compiled by Bloomberg. That was less than every other metals or mining company in the U.S. or Canada exceeding $5 billion in market value, and a 70 percent discount to the median.
Takeover Target
With Glencore International Plc and Xstrata Plc agreeing to merge to create a $90 billion global mining company, Cliffs may attract interest from BHP Billiton Ltd. or Rio Tinto Group, Lutetia Capital said. An acquirer could pay a 30 percent premium and still get Cliffs for less than any comparable publicly traded mining company versus its free cash flow, the data show.
"There could be more vertical integration” after Glencore and Xstrata, Mark Keller, chief executive officer of Confluence Investment Management in St. Louis, which manages $1 billion including shares of Cliffs, said in a telephone interview. As a result, “the first-rate mid-sized companies like Cliffs I think potentially become takeover targets,” he said.
Becton Dickinson & Co. slipped 3.8 percent to $77.51. The maker of medical devices and supplies cut its forecast for 2012 to no more than $5.70 a share, below an earlier projection of as much as $5.85 and the average analyst estimate of $5.80.
Walgreen Co., the largest U.S. drugstore chain, slumped 2.4 percent to $33.46. Citigroup cut its recommendation for the shares to “sell” from “neutral.”
Bull Market
A potential retreat in U.S. stocks will set the stage for the S&P 500 to approach 1,370, the level where the current bull market ran out of steam last year, according to analysts who study charts to predict market moves.
The S&P 500 had gained for five weeks through Feb. 3, the longest streak in a year, sending its 14-day relative strength index, which measures the degree that gains and losses outpace each other, to the highest level since February 2011, according to data compiled by Bloomberg.
“We need to pause, rest, consolidate in order to stay healthy,” Carter Worth, New York-based chief market technician at Oppenheimer & Co., wrote in a note yesterday. “Any such consolidation would cure the market from a tad unhealthy right back to very healthy, and would be the perfect ‘setup’ for a breakout-type move to new 52-week highs.”
U.S. stocks advanced, sending the Dow Jones Industrial Average to its highest level since May 2008, as Greece made progress on measures to secure international aid.
Seven out of 10 groups in the Standard & Poor’s 500 Index gained, helping the measure rebound from an earlier decline. McDonald’s Corp., the world’s biggest restaurant chain, added 1.4 percent ahead of its sales report. Yum! Brands Inc., owner of the KFC and Taco Bell fast-food chains, climbed 2.6 percent as earnings surged 30 percent. Anadarko Petroleum Corp. (APC), the biggest U.S. independent oil and natural-gas producer by market value, increased 5.2 percent as profit beat estimates.
The S&P 500 rose 0.2 percent to 1,347.05 at 4 p.m. New York time, wiping out an earlier decline of as much as 0.6 percent. The Dow advanced 33.07 points, or 0.3 percent, to 12,878.20.
“We need to see some real austerity from Greece,"Hank Smith, chief investment officer at Haverford Trust Co. in Radnor, Pennsylvania, said in a telephone interview. His firm manages about $6.5 billion. "When we see that, we will have more confidence that Europe is serious about growth. I have confidence that we’ll get some sort of resolution that allows for additional funding."
Greek Prime Minister Lucas Papademos postponed a meeting with heads of the political parties supporting his caretaker government a second time in as many days as the government and international creditors haggled over terms to secure a second aid package. Papademos will meet with the leaders in Athens tomorrow, instead of tonight as previously scheduled, a spokeswoman for his office said. In the U.S., consumer borrowing rose more than forecast in December.
Earnings Season
Today’s gain put the S&P 500 about 1.2 percent away from its peak nine months ago, which would send it to the highest level since June 2008. The index rose 7.1 percent this year amid better-than-expected economic data and corporate profits. Earnings beat projections at 68 percent of the 280 companies in the S&P 500 that reported quarterly results since Jan. 9, according to data compiled by Bloomberg.
The S&P 500 Consumer Services Index had the biggest advance among 24 industries, rising 0.9 percent.
McDonald’s added 1.4 percent, the most in the Dow, to $100.91. It may say tomorrow that sales at global stores open at least 13 months gained 5.8 percent in January, according to the average estimate of six analysts surveyed by Bloomberg News.
Yum gained 2.6 percent to $64.85. The company, with about 18,800 restaurants outside the U.S., said fourth-quarter sales at stores open at least 12 months grew 21 percent in China. Yum said it opened a record 656 stores last year in the Asian nation, where it gets more than 40 percent of its revenue.
Coca-Cola
Coca-Cola Co. advanced 0.8 percent to $68.55. The largest soft-drink maker reported fourth-quarter profit that topped analysts’ estimates as teas and juices boosted sales in Asia.
Anadarko climbed 5.2 percent to $87.21. Output rose 12 percent to the equivalent of 683,000 barrels of oil a day during the last three months of 2011, The Woodlands, Texas-based company said. Sales volumes climbed to 63 million barrels at an average price of $104.82 a barrel of oil and condensate, more than the $98 estimate from Raymond James & Associates Inc.
Cliffs Natural Resources Inc. rose 0.7 percent to $75.51. The iron-ore producer yesterday sold for 6.4 times its cash from operations, after deducting capital expenses, according to data compiled by Bloomberg. That was less than every other metals or mining company in the U.S. or Canada exceeding $5 billion in market value, and a 70 percent discount to the median.
Takeover Target
With Glencore International Plc and Xstrata Plc agreeing to merge to create a $90 billion global mining company, Cliffs may attract interest from BHP Billiton Ltd. or Rio Tinto Group, Lutetia Capital said. An acquirer could pay a 30 percent premium and still get Cliffs for less than any comparable publicly traded mining company versus its free cash flow, the data show.
"There could be more vertical integration” after Glencore and Xstrata, Mark Keller, chief executive officer of Confluence Investment Management in St. Louis, which manages $1 billion including shares of Cliffs, said in a telephone interview. As a result, “the first-rate mid-sized companies like Cliffs I think potentially become takeover targets,” he said.
Becton Dickinson & Co. slipped 3.8 percent to $77.51. The maker of medical devices and supplies cut its forecast for 2012 to no more than $5.70 a share, below an earlier projection of as much as $5.85 and the average analyst estimate of $5.80.
Walgreen Co., the largest U.S. drugstore chain, slumped 2.4 percent to $33.46. Citigroup cut its recommendation for the shares to “sell” from “neutral.”
Bull Market
A potential retreat in U.S. stocks will set the stage for the S&P 500 to approach 1,370, the level where the current bull market ran out of steam last year, according to analysts who study charts to predict market moves.
The S&P 500 had gained for five weeks through Feb. 3, the longest streak in a year, sending its 14-day relative strength index, which measures the degree that gains and losses outpace each other, to the highest level since February 2011, according to data compiled by Bloomberg.
“We need to pause, rest, consolidate in order to stay healthy,” Carter Worth, New York-based chief market technician at Oppenheimer & Co., wrote in a note yesterday. “Any such consolidation would cure the market from a tad unhealthy right back to very healthy, and would be the perfect ‘setup’ for a breakout-type move to new 52-week highs.”
Sunday, January 8, 2012
China Money Supply Growth Exceed Estimates
By Bloomberg News - Jan 9, 2012 9:42 AM GMT+0800
China’s December lending and money supply growth exceeded economists’ estimates, signaling monetary conditions may be easing as the nation’s central bank said it must be prepared for possible shocks from the U.S. and Europe.
New loans (CNLNNEW) totaled 640.5 billion yuan ($101 billion) for the month, exceeding the estimates of all 18 economists surveyed by Bloomberg. M2, a measure of money supply (CNMS2YOY), rose 13.6 percent, compared with the 12.9 percent median of 18 estimates.
People’s Bank of China Governor Zhou Xiaochuan said yesterday the nation must be ready to combat possible shocks from Europe’s debt crisis and an uncertain U.S. economic outlook, echoing comments by Premier Wen Jiabao. China last month cut the reserve requirement for banks for the first time since 2008 as Europe’s debt crisis eroded demand for its exports and consumer prices moderated to the slowest pace in 14 months.
“This is better-than-expected monetary data, suggesting monetary conditions have started to ease,” said Liu Li-Gang, a Hong Kong-based economist with Australia & New Zealand Banking Group Ltd., who previously worked at the World Bank. Liu said he expects that the central bank may cut the reserve requirement again before the Lunar New Year on Jan. 23. “Such easing will help ensure a soft landing for the Chinese economy,” he said.
The statement posted to the central bank’s website yesterday didn’t contain a figure for China’s foreign-exchange reserves, which are usually released with lending and money supply data issued at the end of each quarter.
External Shocks
Stocks in China fell. The benchmark Shanghai Composite Index (SHCOMP) was 0.4 percent lower at 9:35 a.m. local time. The measure lost 1.6 percent last week.
Money-market rates had the biggest weekly decline (CNRR007) since November last week as the central bank refrained from selling bills to help ease a cash shortage ahead of the week-long New Year public holiday. The PBOC said on Jan. 6 it will suspend debt sales ahead of the festival.
Zhou yesterday said in an interview with the official Xinhua News Agency that the global economy will face “a string” of difficulties in 2012 as a result of the European debt crisis, uncertainties in the U.S. and slowing growth in emerging markets. China must be ready to pick appropriate policy instruments to combat external shocks, Zhou was cited as saying.
Fighting inflation (CNCPIYOY) is not as urgent now as it was in early 2011, Xinhua cited Zhou as saying after a two-day meeting of financial regulators in Beijing. The National Financial Work meeting, which was attended by senior officials including Premier Wen, is held every five years to form development plans for the financial sector, Xinhua reported.
‘Relatively Difficult’
Wen last week pledged to fine tune monetary policy to preserve growth as business conditions in the first quarter may be “relatively difficult.” The nation’s export growth slowed in November to the weakest pace since 2009.
China is scheduled to release data for December exports, imports and trade balance on Jan. 10. It’s also due to issue December inflation figures on Jan. 12 and data for annual 2011 and fourth-quarter economic growth on Jan. 17, according to the nation’s statistics bureau.
The central bank’s data yesterday showed that December money supply grew at the fastest pace since July. The 12.7 percent pace reported for November was the weakest since 2001.
Lending in December was the highest monthly figure since April (CNLNNEW). The median estimate of 18 economists surveyed by Bloomberg was for 575 billion yuan of loans in the month.
Ease Liquidity
For the year, lending totaled 7.47 trillion yuan, according to the statement. The central bank may target lending in 2012 of 9 trillion yuan to 9.5 trillion yuan, said Dariusz Kowalczyk, a strategist at Credit Agricole CIB in Hong Kong.
The central bank still needs to ease liquidity in the money market to achieve more lending this year, Kowalczyk said. He said there is likely to be a cut of 250 basis points this year in the amount banks have to hold as reserves, with the first cut before the Lunar New Year holiday.
Easing in monetary conditions as indicated by the December data could also reduce the urgency for further policy easing, said Ken Peng, a Beijing-based economist at BNP Paribas SA.
In addition to lending and money supply, the December data also showed Chinese banks added 1.43 trillion yuan of deposits in the month. These funds largely came from the release of fiscal deposits into the commercial banking system as government agencies conducted concentrated spending at the end of the year, Peng said.
A “tepid” M1 money supply growth of 7.9 percent in December suggests that the increased bank deposits may have a “lifting impact” on January money supply, Peng said.
In a separate statement also issued yesterday, the central bank said it will continue to implement prudent monetary policy this year while maintaining policy continuity and controlling inflation expectations (CNCPIYOY). It will also make adjustments more targeted, flexible and forward looking, the central bank said.
China’s December lending and money supply growth exceeded economists’ estimates, signaling monetary conditions may be easing as the nation’s central bank said it must be prepared for possible shocks from the U.S. and Europe.
New loans (CNLNNEW) totaled 640.5 billion yuan ($101 billion) for the month, exceeding the estimates of all 18 economists surveyed by Bloomberg. M2, a measure of money supply (CNMS2YOY), rose 13.6 percent, compared with the 12.9 percent median of 18 estimates.
People’s Bank of China Governor Zhou Xiaochuan said yesterday the nation must be ready to combat possible shocks from Europe’s debt crisis and an uncertain U.S. economic outlook, echoing comments by Premier Wen Jiabao. China last month cut the reserve requirement for banks for the first time since 2008 as Europe’s debt crisis eroded demand for its exports and consumer prices moderated to the slowest pace in 14 months.
“This is better-than-expected monetary data, suggesting monetary conditions have started to ease,” said Liu Li-Gang, a Hong Kong-based economist with Australia & New Zealand Banking Group Ltd., who previously worked at the World Bank. Liu said he expects that the central bank may cut the reserve requirement again before the Lunar New Year on Jan. 23. “Such easing will help ensure a soft landing for the Chinese economy,” he said.
The statement posted to the central bank’s website yesterday didn’t contain a figure for China’s foreign-exchange reserves, which are usually released with lending and money supply data issued at the end of each quarter.
External Shocks
Stocks in China fell. The benchmark Shanghai Composite Index (SHCOMP) was 0.4 percent lower at 9:35 a.m. local time. The measure lost 1.6 percent last week.
Money-market rates had the biggest weekly decline (CNRR007) since November last week as the central bank refrained from selling bills to help ease a cash shortage ahead of the week-long New Year public holiday. The PBOC said on Jan. 6 it will suspend debt sales ahead of the festival.
Zhou yesterday said in an interview with the official Xinhua News Agency that the global economy will face “a string” of difficulties in 2012 as a result of the European debt crisis, uncertainties in the U.S. and slowing growth in emerging markets. China must be ready to pick appropriate policy instruments to combat external shocks, Zhou was cited as saying.
Fighting inflation (CNCPIYOY) is not as urgent now as it was in early 2011, Xinhua cited Zhou as saying after a two-day meeting of financial regulators in Beijing. The National Financial Work meeting, which was attended by senior officials including Premier Wen, is held every five years to form development plans for the financial sector, Xinhua reported.
‘Relatively Difficult’
Wen last week pledged to fine tune monetary policy to preserve growth as business conditions in the first quarter may be “relatively difficult.” The nation’s export growth slowed in November to the weakest pace since 2009.
China is scheduled to release data for December exports, imports and trade balance on Jan. 10. It’s also due to issue December inflation figures on Jan. 12 and data for annual 2011 and fourth-quarter economic growth on Jan. 17, according to the nation’s statistics bureau.
The central bank’s data yesterday showed that December money supply grew at the fastest pace since July. The 12.7 percent pace reported for November was the weakest since 2001.
Lending in December was the highest monthly figure since April (CNLNNEW). The median estimate of 18 economists surveyed by Bloomberg was for 575 billion yuan of loans in the month.
Ease Liquidity
For the year, lending totaled 7.47 trillion yuan, according to the statement. The central bank may target lending in 2012 of 9 trillion yuan to 9.5 trillion yuan, said Dariusz Kowalczyk, a strategist at Credit Agricole CIB in Hong Kong.
The central bank still needs to ease liquidity in the money market to achieve more lending this year, Kowalczyk said. He said there is likely to be a cut of 250 basis points this year in the amount banks have to hold as reserves, with the first cut before the Lunar New Year holiday.
Easing in monetary conditions as indicated by the December data could also reduce the urgency for further policy easing, said Ken Peng, a Beijing-based economist at BNP Paribas SA.
In addition to lending and money supply, the December data also showed Chinese banks added 1.43 trillion yuan of deposits in the month. These funds largely came from the release of fiscal deposits into the commercial banking system as government agencies conducted concentrated spending at the end of the year, Peng said.
A “tepid” M1 money supply growth of 7.9 percent in December suggests that the increased bank deposits may have a “lifting impact” on January money supply, Peng said.
In a separate statement also issued yesterday, the central bank said it will continue to implement prudent monetary policy this year while maintaining policy continuity and controlling inflation expectations (CNCPIYOY). It will also make adjustments more targeted, flexible and forward looking, the central bank said.
Stocks, Euro Fall Before Merkel-Sarkozy Meeting
By Lynn Thomasson and Masaki Kondo - Jan 9, 2012 9:03 AM GMT+0800
Asian stocks (MXAP) fell for a third day, while the euro and oil retreated before German Chancellor Angela Merkel and French President Nicolas Sarkozy meet to develop rescue plans for the euro over the next three months.
The MSCI Asia Pacific Index lost 0.3 percent as of 8:50 a.m. in Hong Kong. Standard & Poor’s 500 Index (SPX) futures declined 0.4 percent. The euro fell to an 11-year low against the yen and weakened to its least in nearly 16 months versus the dollar. The Australian dollar dropped 0.6 percent. Gold slid 0.5 percent to $1,610.20 an ounce, while oil decreased 0.3 percent.
“People are now saying that a recession in Europe, or a double dip, is far more likely than in the U.S.,” said Kara Ordway, a foreign-exchange strategist at City Index Asia Pacific in Sydney.
Germany will sell 4 billion euros ($5.1 billion) of six- month bills today, while France will auction a total of 7.7 billion euros of debt maturing in 364 days or less. China’s December lending and money supply growth exceeded economists’ estimates, signaling monetary conditions may be easing as the nation’s central bank said it must be prepared for possible shocks from the U.S. and Europe.
The meeting between Merkel and Sarkozy will be followed by a round of talks among euro-area leaders before the next summit meeting in Brussels on Jan. 30. Italian Prime Minister Mario Monti also will visit Berlin this week, and Sarkozy and Merkel will both travel to Rome on Jan. 20 for negotiations with the Italian government.
German industrial production (GRIPIMOM) probably dropped 0.5 percent in November after a 0.8 percent increase the previous month, according to the median estimate of economists surveyed by Bloomberg News before the figures are released today.
Asian stocks (MXAP) fell for a third day, while the euro and oil retreated before German Chancellor Angela Merkel and French President Nicolas Sarkozy meet to develop rescue plans for the euro over the next three months.
The MSCI Asia Pacific Index lost 0.3 percent as of 8:50 a.m. in Hong Kong. Standard & Poor’s 500 Index (SPX) futures declined 0.4 percent. The euro fell to an 11-year low against the yen and weakened to its least in nearly 16 months versus the dollar. The Australian dollar dropped 0.6 percent. Gold slid 0.5 percent to $1,610.20 an ounce, while oil decreased 0.3 percent.
“People are now saying that a recession in Europe, or a double dip, is far more likely than in the U.S.,” said Kara Ordway, a foreign-exchange strategist at City Index Asia Pacific in Sydney.
Germany will sell 4 billion euros ($5.1 billion) of six- month bills today, while France will auction a total of 7.7 billion euros of debt maturing in 364 days or less. China’s December lending and money supply growth exceeded economists’ estimates, signaling monetary conditions may be easing as the nation’s central bank said it must be prepared for possible shocks from the U.S. and Europe.
The meeting between Merkel and Sarkozy will be followed by a round of talks among euro-area leaders before the next summit meeting in Brussels on Jan. 30. Italian Prime Minister Mario Monti also will visit Berlin this week, and Sarkozy and Merkel will both travel to Rome on Jan. 20 for negotiations with the Italian government.
German industrial production (GRIPIMOM) probably dropped 0.5 percent in November after a 0.8 percent increase the previous month, according to the median estimate of economists surveyed by Bloomberg News before the figures are released today.
Wednesday, December 7, 2011
‘Buy French’ Becomes Crisis Battle Cry in France
By Helene Fouquet - Dec 7, 2011 6:52 PM GMT+0800
With France’s economy slowing and joblessness at its highest in 12 years, politicians are turning to a well-worn credo: “Buy French.”
France is entering the height of its holiday spending season with politicians egging consumers on to buy “Made in France” products to keep jobs at home. Consumer spending, which accounts for 56 percent of the $2.56 trillion economy, may create jobs if the French buy local goods, says Francois Bayrou, a centrist candidate in the presidential elections next year.
“My proposal is to rectify our country’s brand image, to encourage consumers to buy French and to support very small-and medium-sized companies,” Bayrou said in a posting on his website today, ahead of the official announcement of his candidacy this afternoon.
As the European debt crisis rips through France, President Nicolas Sarkozy, who faces an election in April and May next year, is struggling to cap unemployment. Joblessness is the biggest concern for French people, ahead of wages and pensions, according to a CSA survey for BFM radio in November.
Sarkozy’s Union for a Popular Movement party unveiled its platform last month, saying it wants “Made in France” to become a trademark that’s as recognizable as “Made in Germany.” His Socialist Party rival Francois Hollande has made creating jobs at home a cornerstone of his campaign.
A poll last month showed that more than 50 percent of French people are willing to pay more for a “Made in France” product. The willingness is even greater in the purchase of food products, at 78 percent, according to the Opinion Way survey for the monthly Terra Eco.
‘Economic Solidarity’
Buying products that are local rather than low-cost is driven largely by “national economic solidarity,” the poll showed.
A separate Ifop survey for Cedre, an association to promote local entrepreneurs, showed that French consumers are ready to pay 5 to 10 percent more for domestic products.
Goods manufactured in France are on average 15 to 25 percent more expensive than in countries such as China, according to Vincent Gruau, head of Paris-based Cedre.
“The crisis is pushing French people to realize they must stop being naïve; they understand that to keep jobs at home they must consume locally,” said Gruau, who also heads Majencia, an office-supplies maker.
The number of people actively looking for work in France has jumped by 91,500 to 2.82 million since the start of the year, figures published last month by the Labor Ministry show.
Record Trade Deficit
The Organization for Economic Cooperation and Development said Nov. 28 that French unemployment will exceed 10 percent next year and gross domestic growth in the euro-zone’s second- largest economy will expand no more than 0.3 percent. That’s less optimistic than Sarkozy’s target of 1 percent. The unemployment rate was 9.7 percent at the end of September.
The push to buy local products also comes as France’s trade deficit rose to 72 billion euros ($97 billion) in the year through October, heading toward an annual record.
The rising shortfall has prompted calls from Sarkozy for greater “reciprocity” in trade. He has suggested that the European Union block products from countries that don’t have the same labor, quality and environmental standards as the region.
Socialist lawmaker Arnaud Montebourg, who was defeated in the Socialist presidential primaries, has gone so far as to call for “de-globalization.”
Earlier this year, the far-right National Front party candidate Marine Le Pen, who ranks third in presidential polls, promised to create 500,000 jobs over a five-year period using “strategic planning” and a protectionist economic policy.
‘Patriotic Purchase’
Hollande, the frontrunner in the presidential race, is visiting a 20-person Montceau-Les-Mines, France-based factory today to celebrate the return of the production of an electronic cooking recipes tablet called “Qook” to France from China.
Meanwhile, in spite of the economic slump, French people will spend 1.9 percent more on Christmas shopping this year from 2010, according to a November study from Deloitte LLP. They’ll shell out on average 606 euros on gifts, food and socializing, compared with 449 euros for Germany, Deloitte said.
French leaders want them to spend it on goods produced at home, making the ”Made in France” leitmotiv pervasive.
A recent advertisement for Renault SA’s Megan car showed off French quality with a spoof of an Opel ad that praised German technology and reliability.
“It’s a funny ad, but it’s a symptomatic one,” said Gruau. “We laugh because we have hang ups about our industrial capability. Germans don’t; they are proud of their industry.”
As French Christmas shoppers flock to department stores and browse the Internet for presents, they’ll find websites touting Gallic products.
“To make a patriotic purchase, the solution is offer a gift produced in France!” says www.100pour100-madeinfrance.fr, a Montpellier-based online gift shop that sells liquor, umbrellas, shoes and jewelry.
With France’s economy slowing and joblessness at its highest in 12 years, politicians are turning to a well-worn credo: “Buy French.”
France is entering the height of its holiday spending season with politicians egging consumers on to buy “Made in France” products to keep jobs at home. Consumer spending, which accounts for 56 percent of the $2.56 trillion economy, may create jobs if the French buy local goods, says Francois Bayrou, a centrist candidate in the presidential elections next year.
“My proposal is to rectify our country’s brand image, to encourage consumers to buy French and to support very small-and medium-sized companies,” Bayrou said in a posting on his website today, ahead of the official announcement of his candidacy this afternoon.
As the European debt crisis rips through France, President Nicolas Sarkozy, who faces an election in April and May next year, is struggling to cap unemployment. Joblessness is the biggest concern for French people, ahead of wages and pensions, according to a CSA survey for BFM radio in November.
Sarkozy’s Union for a Popular Movement party unveiled its platform last month, saying it wants “Made in France” to become a trademark that’s as recognizable as “Made in Germany.” His Socialist Party rival Francois Hollande has made creating jobs at home a cornerstone of his campaign.
A poll last month showed that more than 50 percent of French people are willing to pay more for a “Made in France” product. The willingness is even greater in the purchase of food products, at 78 percent, according to the Opinion Way survey for the monthly Terra Eco.
‘Economic Solidarity’
Buying products that are local rather than low-cost is driven largely by “national economic solidarity,” the poll showed.
A separate Ifop survey for Cedre, an association to promote local entrepreneurs, showed that French consumers are ready to pay 5 to 10 percent more for domestic products.
Goods manufactured in France are on average 15 to 25 percent more expensive than in countries such as China, according to Vincent Gruau, head of Paris-based Cedre.
“The crisis is pushing French people to realize they must stop being naïve; they understand that to keep jobs at home they must consume locally,” said Gruau, who also heads Majencia, an office-supplies maker.
The number of people actively looking for work in France has jumped by 91,500 to 2.82 million since the start of the year, figures published last month by the Labor Ministry show.
Record Trade Deficit
The Organization for Economic Cooperation and Development said Nov. 28 that French unemployment will exceed 10 percent next year and gross domestic growth in the euro-zone’s second- largest economy will expand no more than 0.3 percent. That’s less optimistic than Sarkozy’s target of 1 percent. The unemployment rate was 9.7 percent at the end of September.
The push to buy local products also comes as France’s trade deficit rose to 72 billion euros ($97 billion) in the year through October, heading toward an annual record.
The rising shortfall has prompted calls from Sarkozy for greater “reciprocity” in trade. He has suggested that the European Union block products from countries that don’t have the same labor, quality and environmental standards as the region.
Socialist lawmaker Arnaud Montebourg, who was defeated in the Socialist presidential primaries, has gone so far as to call for “de-globalization.”
Earlier this year, the far-right National Front party candidate Marine Le Pen, who ranks third in presidential polls, promised to create 500,000 jobs over a five-year period using “strategic planning” and a protectionist economic policy.
‘Patriotic Purchase’
Hollande, the frontrunner in the presidential race, is visiting a 20-person Montceau-Les-Mines, France-based factory today to celebrate the return of the production of an electronic cooking recipes tablet called “Qook” to France from China.
Meanwhile, in spite of the economic slump, French people will spend 1.9 percent more on Christmas shopping this year from 2010, according to a November study from Deloitte LLP. They’ll shell out on average 606 euros on gifts, food and socializing, compared with 449 euros for Germany, Deloitte said.
French leaders want them to spend it on goods produced at home, making the ”Made in France” leitmotiv pervasive.
A recent advertisement for Renault SA’s Megan car showed off French quality with a spoof of an Opel ad that praised German technology and reliability.
“It’s a funny ad, but it’s a symptomatic one,” said Gruau. “We laugh because we have hang ups about our industrial capability. Germans don’t; they are proud of their industry.”
As French Christmas shoppers flock to department stores and browse the Internet for presents, they’ll find websites touting Gallic products.
“To make a patriotic purchase, the solution is offer a gift produced in France!” says www.100pour100-madeinfrance.fr, a Montpellier-based online gift shop that sells liquor, umbrellas, shoes and jewelry.
Monday, November 7, 2011
European Stocks, U.S. Futures Decline on Italy
By Sarah Jones - Nov 7, 2011 8:07 PM GMT+0800
European stocks resumed their losses after a report that Italian Prime Minister Silvio Berlusconi said he’s not planning on stepping down.
The Stoxx Europe 600 Index slipped 0.6 percent to 238.3 at 12:06 p.m. in London. In response to earlier reports that he may quit within hours, Berlusconi denied that he’s stepping down, Ansa said, citing comments from the premier.
“We are all looking for the next policy maker’s speech,” Robert Talbut, chief investment officer at Royal London Asset Management, said in an interview with Bloomberg Television. “There is an enormous amount of uncertainty around how this crisis is going to play out.”
European stocks resumed their losses after a report that Italian Prime Minister Silvio Berlusconi said he’s not planning on stepping down.
The Stoxx Europe 600 Index slipped 0.6 percent to 238.3 at 12:06 p.m. in London. In response to earlier reports that he may quit within hours, Berlusconi denied that he’s stepping down, Ansa said, citing comments from the premier.
“We are all looking for the next policy maker’s speech,” Robert Talbut, chief investment officer at Royal London Asset Management, said in an interview with Bloomberg Television. “There is an enormous amount of uncertainty around how this crisis is going to play out.”
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