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.
Wednesday, December 7, 2011
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.”
Monday, October 10, 2011
Asian Stocks Rise After U.S., Europe Shares Jump on Debt Pledge; Rio Gains
By Shani Raja - Oct 11, 2011 8:42 AM GMT+0800
Asian stocks rose, driving a regional benchmark index higher for the fourth straight day, after U.S. and European shares jumped in response to a pledge by German and French leaders to stem Europe’s debt crisis.
Rio Tinto Group, the world’s second-largest mining company by sales, rose 1.6 percent in Sydney. Korea Zinc Co. surged 6.5 percent in Seoul. Mitsubishi Corp., which gets 43 percent of its revenue from commodities trading, gained 2.9 percent in Tokyo, while Sony Corp., Japan’s largest exporter of consumer electronics, jumped 5.2 percent. Japanese markets resumed trading today after a public holiday yesterday.
The MSCI Asia Pacific Index gained 1.1 percent to 114.94 as of 9:25 a.m. in Tokyo, led by exporters and mining companies as commodity prices advanced after German Chancellor Angela Merkel and French President Nicholas Sarkozy pledged at the weekend to deliver a plan to recapitalize the Europe’s banks and address Greece’s sovereign-debt crisis by Nov. 3. More than four stocks rose for each that fell on the gauge.
“There is hope that if a comprehensive European bank package is announced, the damage on the real economy will be less than currently expected,” said Belinda Allen, a senior investment analyst at Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “That would be better news for global growth and commodity demand.”
Estimated Earnings
The MSCI Asia Pacific Index dropped 17 percent this year through yesterday, compared with a 5 percent loss for the S&P 500 and a 14 percent decline for the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 11.6 times estimated earnings on average, compared with 12 times for the S&P 500 and 10 times for the Stoxx 600.
Australia’s S&P/ASX 200 Index gained 0.4 percent today, South Korea’s Kospi Index climbed 2.2 percent and Japan’s Nikkei 225 Stock Average advanced 2 percent.
Futures on the Standard & Poor’s 500 Index slid 0.1 percent today. In New York yesterday, the gauge rose 3.4 percent, its biggest rally since August, with all 10 industry groups advancing. The S&P 500 last week rebounded from the threshold of a bear market on optimism Europe will tame its debt crisis and after U.S. economic data improved.
The Stoxx Europe 600 Index completed its biggest four-day gain since 2008 yesterday.
“Commodity prices and stocks fell sharply over the last few months on worries Europe would blow up, causing a collapse in global growth,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “The pledges from Merkel and Sarkozy help provide confidence that this won’t happen.”
Copper futures for December delivery climbed 2.9 percent on the Comex in New York yesterday and gold futures rose 2.1 percent, while crude oil for November delivery gained 2.9 percent. The London Metal Exchange Index of prices for six industrial metals, including copper and aluminum, added 1.7 percent for its third straight daily gain.
Asian stocks rose, driving a regional benchmark index higher for the fourth straight day, after U.S. and European shares jumped in response to a pledge by German and French leaders to stem Europe’s debt crisis.
Rio Tinto Group, the world’s second-largest mining company by sales, rose 1.6 percent in Sydney. Korea Zinc Co. surged 6.5 percent in Seoul. Mitsubishi Corp., which gets 43 percent of its revenue from commodities trading, gained 2.9 percent in Tokyo, while Sony Corp., Japan’s largest exporter of consumer electronics, jumped 5.2 percent. Japanese markets resumed trading today after a public holiday yesterday.
The MSCI Asia Pacific Index gained 1.1 percent to 114.94 as of 9:25 a.m. in Tokyo, led by exporters and mining companies as commodity prices advanced after German Chancellor Angela Merkel and French President Nicholas Sarkozy pledged at the weekend to deliver a plan to recapitalize the Europe’s banks and address Greece’s sovereign-debt crisis by Nov. 3. More than four stocks rose for each that fell on the gauge.
“There is hope that if a comprehensive European bank package is announced, the damage on the real economy will be less than currently expected,” said Belinda Allen, a senior investment analyst at Colonial First State Global Asset Management in Sydney, which oversees about $145 billion. “That would be better news for global growth and commodity demand.”
Estimated Earnings
The MSCI Asia Pacific Index dropped 17 percent this year through yesterday, compared with a 5 percent loss for the S&P 500 and a 14 percent decline for the Stoxx Europe 600 Index. Stocks in the Asian benchmark were valued at 11.6 times estimated earnings on average, compared with 12 times for the S&P 500 and 10 times for the Stoxx 600.
Australia’s S&P/ASX 200 Index gained 0.4 percent today, South Korea’s Kospi Index climbed 2.2 percent and Japan’s Nikkei 225 Stock Average advanced 2 percent.
Futures on the Standard & Poor’s 500 Index slid 0.1 percent today. In New York yesterday, the gauge rose 3.4 percent, its biggest rally since August, with all 10 industry groups advancing. The S&P 500 last week rebounded from the threshold of a bear market on optimism Europe will tame its debt crisis and after U.S. economic data improved.
The Stoxx Europe 600 Index completed its biggest four-day gain since 2008 yesterday.
“Commodity prices and stocks fell sharply over the last few months on worries Europe would blow up, causing a collapse in global growth,” said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd., which has almost $100 billion under management. “The pledges from Merkel and Sarkozy help provide confidence that this won’t happen.”
Copper futures for December delivery climbed 2.9 percent on the Comex in New York yesterday and gold futures rose 2.1 percent, while crude oil for November delivery gained 2.9 percent. The London Metal Exchange Index of prices for six industrial metals, including copper and aluminum, added 1.7 percent for its third straight daily gain.
Tuesday, September 6, 2011
Swiss franc falls sharply after SNB sets target rate
LONDON, Sept 6 | Tue Sep 6, 2011 4:15am EDT
(Reuters) - The Swiss franc fell sharply and Swiss shares rose on Tuesday after the Swiss National Bank set an exchange rate target at 1.20 francs per euro.
The euro soared 7 percent on the day to 1.220 francs, according to electronic trading platform EBS, from around 1.1270 francs, while the dollar jumped the same amount against the Swiss currency to 0.8579 francs.
The Swiss National Bank said on Tuesday it would set a minimum exchange rate target of 1.20 francs to the euro and would enforce it by buying foreign currency in unlimited quantities.
Switzerland's share benchmark SMI extended gains to trade 3.2 percent higher at 5,306.54 points. It traded at 5,209.77 points before the announcement. (Reporting by London Markets Team)
(Reuters) - The Swiss franc fell sharply and Swiss shares rose on Tuesday after the Swiss National Bank set an exchange rate target at 1.20 francs per euro.
The euro soared 7 percent on the day to 1.220 francs, according to electronic trading platform EBS, from around 1.1270 francs, while the dollar jumped the same amount against the Swiss currency to 0.8579 francs.
The Swiss National Bank said on Tuesday it would set a minimum exchange rate target of 1.20 francs to the euro and would enforce it by buying foreign currency in unlimited quantities.
Switzerland's share benchmark SMI extended gains to trade 3.2 percent higher at 5,306.54 points. It traded at 5,209.77 points before the announcement. (Reporting by London Markets Team)
Monday, August 29, 2011
Big Banks Bet Crude Oil Prices Would Fall in 2008 Run-Up, Leaked Data Show
By Matthew Leising and Silla Brush - Aug 29, 2011 12:00 PM GMT+0800
Just before crude oil hit its record high in mid-2008, 15 of the world’s largest banks were betting that prices would fall, according to private trading data released by U.S. Senator Bernie Sanders.
The net positions of the banks undermine arguments made by Sanders that speculative trades on Wall Street drove oil prices in 2008, said Craig Pirrong, director of the Global Energy Management Institute at the University of Houston. Retail gasoline reached a record $4.08 a gallon on July 7, 2008, and oil peaked at $147.27 a barrel on July 11 that year.
“If you believe the banks are jerking around the market and the market is going the way they were trading, the price should have been lower,” Pirrong, who reviewed the data, said in an interview.
The records of oil futures and derivatives trades in the first half of 2008 were compiled by the Commodity Futures Trading Commission and made public Aug. 19 by Sanders. Banks including Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM), Morgan Stanley and UBS AG collectively held 229,460 net short contracts compared with 101,537 net long contracts, the data show. Short trades make money if prices fall.
Sanders, a Vermont Independent, and other supporters of curbs on speculation have said the CFTC documents demonstrate the need for the agency to complete its rule on so-called position limits. The Dodd-Frank regulatory overhaul enacted last year requires the CFTC to limit traders’ positions in exchange- traded and over-the-counter derivatives for oil, natural gas, wheat and other commodities.
‘Major Reason’
In an Aug. 22 letter to CFTC Chairman Gary Gensler, Sanders said the 2008 data showed that banks and other speculators harmed the economy. “We now know that excessive oil speculation is a major reason why oil prices have risen so sharply,” he wrote.
Asked to comment specifically on the analysis of the banks’ positions, Warren Gunnels, senior policy adviser to Sanders, declined, saying the senator’s office would need more information from the industry and regulators. “The bottom line is that we need the CFTC to obey the law, do its job and eliminate excessive oil speculation,” Gunnels said in an interview.
The position-limits rule, first proposed by the agency in January, spurred more than 13,000 public comments filed with the CFTC from supporters including Delta Air Lines Inc. (DAL) and opponents including Barclays Capital.
The data released by Sanders lists transactions by more than 200 traders, offering a dated but rare glimpse into an opaque market. It was collected by the CFTC for a Sept. 11, 2008, report on the run-up in oil prices. The agency said at the time that the data had limitations and, while it was the best available snapshot of trading, it might not be definitive.
‘Utmost Concern’
When the agency told Congress in 2008 that its review found no evidence that non-commercial trading had driven the spikes in prices, three House Democrats questioned the conclusion and sought the underlying data about companies and their positions.
The CFTC data was kept confidential until Sanders publicized it. John Damgard, president of the Futures Industry Association, said in an Aug. 19 statement that the release was of “utmost concern” to the trade group’s members and could “seriously jeopardize the CFTC’s ability to gather information from market participants and carry out its market surveillance mission.”
The CFTC and its inspector general should investigate if any laws were broken because of the leak, the association said on Aug. 25.
‘Laughable’
Sanders has suggested he acted in part to counter the CFTC’s assertion when it released its January proposal that it needed more data on the private over-the-counter swaps market to implement position limits on contracts that settle outside of the current month.
Sanders’ office said the data he released included both exchange-traded and over-the-counter transactions. “It is my understanding that the CFTC is still claiming that it cannot impose strict speculation limits because it does not have enough information,” Sanders said in the Aug. 22 letter to Gensler. That, Sanders said, is “laughable.”
Steve Adamske, CFTC spokesman, declined to comment on Sanders’s letter.
The swaps market was largely unregulated until those trades helped fuel the 2008 credit crisis. Dodd-Frank, enacted last year, aims to reduce risk, boost transparency and give regulators access to databases of information about exchange- traded and private trades.
Meeting the Burden
Opponents of the position-limit proposal have argued that the agency doesn’t have enough data and that regulators haven’t demonstrated that excessive speculation is driving prices.
“The commission has not met its burden of showing that the proposed position limit regime is ‘necessary’ and ‘appropriate,’” Craig S. Donohue, chief executive of CME Group Inc. (CME), the world’s largest futures exchange, wrote in a March 28 letter to the CFTC.
The agency has come under the opposite pressure from Senators Maria Cantwell, a Washington Democrat, Carl Levin, a Michigan Democrat, and Sanders, among other lawmakers. “The CFTC is breaking the law” by not meeting the Jan. 17 deadline set by Dodd-Frank, Sanders said in the Aug. 22 letter.
The agency may vote to complete the position-limit rule as early as Sept. 22, Gensler said Aug. 25. The regulation has split the agency’s five commissioners: Jill E. Sommers, a Republican, opposed the January proposal, while Scott O’Malia, a Republican, and Michael V. Dunn, a Democrat, supported seeking further public comment even as they registered concerns about imposing trading limits. Bart Chilton, a Democrat, has urged the agency to implement the trading curbs.
Offset Positions
All banks included in the data released by Sanders held both long and short positions, which when offset against each other provide a net view of expectations of where oil prices were headed. Credit Suisse held the largest net-short position at 109,655 contracts, which was 2.7 times as large as the largest net long position of 41,338 lots held by Deutsche Bank. Each lot represents 1,000 barrels of oil.
“Goldman Sachs, Morgan Stanley (MS) and other speculators on Wall Street dominated the crude oil futures market causing tremendous harm to the entire economy,” Sanders said on Aug. 19. Mark Lake, a spokesman at Morgan Stanley, and Andrea Raphael, a spokeswoman at Goldman Sachs, declined to comment.
Limited Data
Pirrong, who has consulted for exchanges and whose research on derivatives regulation has been published by the industry, said that one of the limitations of the CFTC data is that it doesn’t distinguish between banks’ trading positions for their own accounts and those handled for clients.
The aggregate position of the more than 200 traders was net short by 36,327 contracts, according to the data. T. Boone Pickens, the billionaire Texas hedge-fund manager, had 145,257 lots and was net short 1,983, according to the data.
A separate set of CFTC data provided to Bloomberg News by Sanders’s office on Aug. 24 shows commodity index fund investments holding net long positions on Dec. 31, 2007, March 31, 2008 and June 30, 2008. The data, also collected for the CFTC’s 2008 report, shows index funds, institutional investors, sovereign wealth funds and other clients all holding net long positions expecting crude oil to rise.
A third set of data released by Sanders showed six hedge and pension funds with crude positions exceeding so-called accountability levels -- which are set by exchanges, not the CFTC. Traders that exceed accountability levels may be required to provide information about the positions to exchanges, while not necessarily facing hard limits on the overall size of the transactions.
The data shows non-commercial trades on exchanges and in private over-the-counter markets. D.E. Shaw & Co., the now $21- billion hedge fund, and Caisse de Depot et Placement, now Canada’s biggest pension fund, held net short positions. Meanwhile, Bridgewater Associates LP, the hedge fund founded by Ray Dalio, expected crude prices to increase.
Bank Long Short Difference
Deutsche Bank 273,403 232,065 41,338
Goldman Sachs 451,997 419,324 32,673
UBS AG 100,206 82,383 17,823
Lehman Brothers 154,507 146,165 8,342
Barclays 277,461 276,731 730
Credit Agricole 89,346 88,715 631
Total= 101,537
Credit Suisse 81,638 191,293 -109,655
JPMorgan 200,062 245,261 -45,199
BNP Paribas 106,994 123,944 -16,950
Societe Generale 141,186 155,518 -14,332
Bank of America 50,893 62,412 -11,519
Macquarie Bank 42,611 51,820 -9,209
Citigroup 87,070 94,943 -7,873
Morgan Stanley 312,527 320,223 -7,696
Merrill Lynch 115,396 122,423 -7,027
Total= -229,460
Just before crude oil hit its record high in mid-2008, 15 of the world’s largest banks were betting that prices would fall, according to private trading data released by U.S. Senator Bernie Sanders.
The net positions of the banks undermine arguments made by Sanders that speculative trades on Wall Street drove oil prices in 2008, said Craig Pirrong, director of the Global Energy Management Institute at the University of Houston. Retail gasoline reached a record $4.08 a gallon on July 7, 2008, and oil peaked at $147.27 a barrel on July 11 that year.
“If you believe the banks are jerking around the market and the market is going the way they were trading, the price should have been lower,” Pirrong, who reviewed the data, said in an interview.
The records of oil futures and derivatives trades in the first half of 2008 were compiled by the Commodity Futures Trading Commission and made public Aug. 19 by Sanders. Banks including Goldman Sachs Group Inc. (GS), JPMorgan Chase & Co. (JPM), Morgan Stanley and UBS AG collectively held 229,460 net short contracts compared with 101,537 net long contracts, the data show. Short trades make money if prices fall.
Sanders, a Vermont Independent, and other supporters of curbs on speculation have said the CFTC documents demonstrate the need for the agency to complete its rule on so-called position limits. The Dodd-Frank regulatory overhaul enacted last year requires the CFTC to limit traders’ positions in exchange- traded and over-the-counter derivatives for oil, natural gas, wheat and other commodities.
‘Major Reason’
In an Aug. 22 letter to CFTC Chairman Gary Gensler, Sanders said the 2008 data showed that banks and other speculators harmed the economy. “We now know that excessive oil speculation is a major reason why oil prices have risen so sharply,” he wrote.
Asked to comment specifically on the analysis of the banks’ positions, Warren Gunnels, senior policy adviser to Sanders, declined, saying the senator’s office would need more information from the industry and regulators. “The bottom line is that we need the CFTC to obey the law, do its job and eliminate excessive oil speculation,” Gunnels said in an interview.
The position-limits rule, first proposed by the agency in January, spurred more than 13,000 public comments filed with the CFTC from supporters including Delta Air Lines Inc. (DAL) and opponents including Barclays Capital.
The data released by Sanders lists transactions by more than 200 traders, offering a dated but rare glimpse into an opaque market. It was collected by the CFTC for a Sept. 11, 2008, report on the run-up in oil prices. The agency said at the time that the data had limitations and, while it was the best available snapshot of trading, it might not be definitive.
‘Utmost Concern’
When the agency told Congress in 2008 that its review found no evidence that non-commercial trading had driven the spikes in prices, three House Democrats questioned the conclusion and sought the underlying data about companies and their positions.
The CFTC data was kept confidential until Sanders publicized it. John Damgard, president of the Futures Industry Association, said in an Aug. 19 statement that the release was of “utmost concern” to the trade group’s members and could “seriously jeopardize the CFTC’s ability to gather information from market participants and carry out its market surveillance mission.”
The CFTC and its inspector general should investigate if any laws were broken because of the leak, the association said on Aug. 25.
‘Laughable’
Sanders has suggested he acted in part to counter the CFTC’s assertion when it released its January proposal that it needed more data on the private over-the-counter swaps market to implement position limits on contracts that settle outside of the current month.
Sanders’ office said the data he released included both exchange-traded and over-the-counter transactions. “It is my understanding that the CFTC is still claiming that it cannot impose strict speculation limits because it does not have enough information,” Sanders said in the Aug. 22 letter to Gensler. That, Sanders said, is “laughable.”
Steve Adamske, CFTC spokesman, declined to comment on Sanders’s letter.
The swaps market was largely unregulated until those trades helped fuel the 2008 credit crisis. Dodd-Frank, enacted last year, aims to reduce risk, boost transparency and give regulators access to databases of information about exchange- traded and private trades.
Meeting the Burden
Opponents of the position-limit proposal have argued that the agency doesn’t have enough data and that regulators haven’t demonstrated that excessive speculation is driving prices.
“The commission has not met its burden of showing that the proposed position limit regime is ‘necessary’ and ‘appropriate,’” Craig S. Donohue, chief executive of CME Group Inc. (CME), the world’s largest futures exchange, wrote in a March 28 letter to the CFTC.
The agency has come under the opposite pressure from Senators Maria Cantwell, a Washington Democrat, Carl Levin, a Michigan Democrat, and Sanders, among other lawmakers. “The CFTC is breaking the law” by not meeting the Jan. 17 deadline set by Dodd-Frank, Sanders said in the Aug. 22 letter.
The agency may vote to complete the position-limit rule as early as Sept. 22, Gensler said Aug. 25. The regulation has split the agency’s five commissioners: Jill E. Sommers, a Republican, opposed the January proposal, while Scott O’Malia, a Republican, and Michael V. Dunn, a Democrat, supported seeking further public comment even as they registered concerns about imposing trading limits. Bart Chilton, a Democrat, has urged the agency to implement the trading curbs.
Offset Positions
All banks included in the data released by Sanders held both long and short positions, which when offset against each other provide a net view of expectations of where oil prices were headed. Credit Suisse held the largest net-short position at 109,655 contracts, which was 2.7 times as large as the largest net long position of 41,338 lots held by Deutsche Bank. Each lot represents 1,000 barrels of oil.
“Goldman Sachs, Morgan Stanley (MS) and other speculators on Wall Street dominated the crude oil futures market causing tremendous harm to the entire economy,” Sanders said on Aug. 19. Mark Lake, a spokesman at Morgan Stanley, and Andrea Raphael, a spokeswoman at Goldman Sachs, declined to comment.
Limited Data
Pirrong, who has consulted for exchanges and whose research on derivatives regulation has been published by the industry, said that one of the limitations of the CFTC data is that it doesn’t distinguish between banks’ trading positions for their own accounts and those handled for clients.
The aggregate position of the more than 200 traders was net short by 36,327 contracts, according to the data. T. Boone Pickens, the billionaire Texas hedge-fund manager, had 145,257 lots and was net short 1,983, according to the data.
A separate set of CFTC data provided to Bloomberg News by Sanders’s office on Aug. 24 shows commodity index fund investments holding net long positions on Dec. 31, 2007, March 31, 2008 and June 30, 2008. The data, also collected for the CFTC’s 2008 report, shows index funds, institutional investors, sovereign wealth funds and other clients all holding net long positions expecting crude oil to rise.
A third set of data released by Sanders showed six hedge and pension funds with crude positions exceeding so-called accountability levels -- which are set by exchanges, not the CFTC. Traders that exceed accountability levels may be required to provide information about the positions to exchanges, while not necessarily facing hard limits on the overall size of the transactions.
The data shows non-commercial trades on exchanges and in private over-the-counter markets. D.E. Shaw & Co., the now $21- billion hedge fund, and Caisse de Depot et Placement, now Canada’s biggest pension fund, held net short positions. Meanwhile, Bridgewater Associates LP, the hedge fund founded by Ray Dalio, expected crude prices to increase.
Bank Long Short Difference
Deutsche Bank 273,403 232,065 41,338
Goldman Sachs 451,997 419,324 32,673
UBS AG 100,206 82,383 17,823
Lehman Brothers 154,507 146,165 8,342
Barclays 277,461 276,731 730
Credit Agricole 89,346 88,715 631
Total= 101,537
Credit Suisse 81,638 191,293 -109,655
JPMorgan 200,062 245,261 -45,199
BNP Paribas 106,994 123,944 -16,950
Societe Generale 141,186 155,518 -14,332
Bank of America 50,893 62,412 -11,519
Macquarie Bank 42,611 51,820 -9,209
Citigroup 87,070 94,943 -7,873
Morgan Stanley 312,527 320,223 -7,696
Merrill Lynch 115,396 122,423 -7,027
Total= -229,460
Dollar Undervalued in Purchasing Parity
By Allison Bennett and Catarina Saraiva - Aug 29, 2011 11:46 AM GMT+0800
The dollar is poised for its biggest monthly gain since May, reclaiming its status as a haven while Switzerland and Japan boost efforts to weaken their currencies.
The greenback has appreciated 1.2 percent in August against a basket of the developed world’s nine most-traded exchange rates, according to data compiled by Bloomberg. That compares with a decline of 14 percent in the world’s reserve currency from this time last year through July.
Demand for U.S. assets is rising even though the Federal Reserve has pledged to keep its benchmark interest rate near zero through mid-2013 and Standard & Poor’s cut the nation’s credit rating from AAA. The two other currencies considered havens in times of financial and political strife -- the Swiss franc and yen -- are under siege by their governments and central banks after strengthening to records.
“The dollar is a buy through the end of the third quarter,” Nick Bennenbroek, head of currency strategy in New York at Wells Fargo & Co., the third-most accurate forecaster in the last six quarters as measured by Bloomberg, said in an Aug. 23 telephone interview. “The yen and the Swiss franc are very expensive and the dollar is very cheap and it’s the only major central bank that is not standing in the way of a currency advance.”
The dollar strengthened 0.1 percent to 76.64 yen last week, and rallied 2.7 percent versus the franc to 80.63 centimes. The Bloomberg Correlation-Weighted Currency Index for the dollar closed at 89.4521, up from 88.3486 at the end of July. The U.S. currency bought 76.68 yen today and gained 0.4 percent to 80.96 centimes.
Purchasing Power Parity
Even with the gains, America’s currency is 47 percent too weak against the franc and 31 percent undervalued compared with the yen, based on an index developed by the Organization for Economic Cooperation and Development in Paris that measures currencies using prices for similar goods and services in two countries.
The dollar may continue to appreciate as the Swiss National Bank and Bank of Japan intervene to stem gains and currencies of commodity-producing nations such as Australia, New Zealand and Canada lose some of their luster amid a global economic slowdown.
‘Dollar Is Cheap’
“The dollar is cheap against the G-10 small currencies like Australia, Canada, New Zealand, Sweden, Norway, Swiss and also against the yen,” Greg Anderson, a senior currency strategist at New York-based Citigroup Inc., said in a telephone interview Aug. 14. “If we have continued turbulence with commodities and equities selling off, the dollar is a short-term buy.”
America’s currency is 37 percent below fair value against the Australian dollar and 20 percent versus the Canadian dollar, according to the OECD index.
The dollar has mainly weakened since Fed Chairman Ben S. Bernanke signaled last year at an annual conference sponsored by the Federal Reserve Bank of Kansas City that the central bank may boost the economy by printing money and buying bonds. It purchased $600 billion of Treasuries between November and June, contributing to a 6.25 percent drop in the U.S. currency as measured by Bloomberg Correlation-Weighted Indexes.
Fed’s Toolbox
Bernanke said at an annual forum in Jackson Hole, Wyoming, on Aug. 26 that the central bank still has tools to stimulate the economy without providing details or signaling when or whether policy makers might deploy them.
Slowing growth in the U.S. and the Fed’s pledge to keep its target rate for overnight loans between banks at a record low of zero to 0.25 percent until mid-2013 may constrain the greenback. Citigroup lowered its 2011 U.S. growth estimate to 1.6 percent from 1.7 percent, and Goldman Sachs Group Inc. said it saw a one-in-three chance of a recession as it cut its gross domestic product forecast to 1.7 percent from 1.8 percent.
“Until we can get to a point where the dollar can demonstrate some independent strength, like the economic data justifies the Fed to provide some interest rate support, we don’t think the dollar can shine,” Robert Sinche, the global head of foreign exchange strategy at Royal Bank of Scotland Group Plc, said Aug. 24 in a telephone interview from Stamford, Connecticut.
RBS predicts the dollar will trade at $1.45 versus the euro by the end of the third quarter, from $1.4499 last week, and at $1.06 against the Australian currency, from $1.0573.
Increased Dollar Demand
Demand for the U.S. currency has increased as S&P’s Aug. 5 downgrade of the nation’s credit rating to AA+ caused stock markets to gyrate and sent investors to the safety of Treasuries. Investors repudiated the ratings company’s assertion that the U.S. was less creditworthy, driving 10-year note yields to record low 1.9735 percent on Aug. 18. The dollar appreciated the last month against all but one of the 16 most-traded currencies as tracked by Bloomberg, falling versus the yen.
“The downgrade obviously caused a big risk-aversion theme that is still en vogue,” Blake Jespersen, the director of foreign-exchange at Bank of Montreal in Toronto said Aug. 24 by telephone.
Strategists don’t expect the dollar to falter in the slowing economy. It will remain unchanged on average by the fourth quarter against currencies of the Group of 10 Nations, according to estimates of strategists compiled by Bloomberg.
Main Reserve Currency
The dollar represents 60.7 percent of the world’s currency reserves, compared with 26.6 percent for the euro, which has the next biggest portion, according to the International Monetary Fund in Washington. That leaves investors with few alternatives as the Swiss National Bank and Bank of Japan step up their efforts to curb gains in their currencies, according to Jespersen.
“The SNB and the BOJ have been very aggressive, not only in talk but in action, and therefore safe-haven flows are being allocated more toward the U.S. dollar,” Jespersen said.
Gains of 10 percent in the Swiss franc and 4.5 percent for the yen in the past three months have weighed on the export- reliant economies and prompted the central banks to take action to curb further appreciation.
The SNB lowered its target for three-month franc London interbank offered rate, or the rate banks charge to lend to each other in Swiss francs for three months, to “as close to zero as possible” on Aug. 3. It said it may take further steps.
The yen has erased all its losses since the Bank of Japan intervened Aug. 4 and expanded monetary stimulus by 10 trillion yen ($130.5 billion). Finance Minister Yoshihiko Noda introduced a $100 billion funding program last week for Japanese businesses intended to encourage the exchange of “yen-denominated funds to foreign currencies.”
“There are few currencies left to buy that don’t mind going up,” Kit Juckes, head of foreign-exchange research in London for Societe Generale SA and the second-most accurate currency forecaster as measured by Bloomberg said in an interview last week. “How much weaker can the dollar get?”
The dollar is poised for its biggest monthly gain since May, reclaiming its status as a haven while Switzerland and Japan boost efforts to weaken their currencies.
The greenback has appreciated 1.2 percent in August against a basket of the developed world’s nine most-traded exchange rates, according to data compiled by Bloomberg. That compares with a decline of 14 percent in the world’s reserve currency from this time last year through July.
Demand for U.S. assets is rising even though the Federal Reserve has pledged to keep its benchmark interest rate near zero through mid-2013 and Standard & Poor’s cut the nation’s credit rating from AAA. The two other currencies considered havens in times of financial and political strife -- the Swiss franc and yen -- are under siege by their governments and central banks after strengthening to records.
“The dollar is a buy through the end of the third quarter,” Nick Bennenbroek, head of currency strategy in New York at Wells Fargo & Co., the third-most accurate forecaster in the last six quarters as measured by Bloomberg, said in an Aug. 23 telephone interview. “The yen and the Swiss franc are very expensive and the dollar is very cheap and it’s the only major central bank that is not standing in the way of a currency advance.”
The dollar strengthened 0.1 percent to 76.64 yen last week, and rallied 2.7 percent versus the franc to 80.63 centimes. The Bloomberg Correlation-Weighted Currency Index for the dollar closed at 89.4521, up from 88.3486 at the end of July. The U.S. currency bought 76.68 yen today and gained 0.4 percent to 80.96 centimes.
Purchasing Power Parity
Even with the gains, America’s currency is 47 percent too weak against the franc and 31 percent undervalued compared with the yen, based on an index developed by the Organization for Economic Cooperation and Development in Paris that measures currencies using prices for similar goods and services in two countries.
The dollar may continue to appreciate as the Swiss National Bank and Bank of Japan intervene to stem gains and currencies of commodity-producing nations such as Australia, New Zealand and Canada lose some of their luster amid a global economic slowdown.
‘Dollar Is Cheap’
“The dollar is cheap against the G-10 small currencies like Australia, Canada, New Zealand, Sweden, Norway, Swiss and also against the yen,” Greg Anderson, a senior currency strategist at New York-based Citigroup Inc., said in a telephone interview Aug. 14. “If we have continued turbulence with commodities and equities selling off, the dollar is a short-term buy.”
America’s currency is 37 percent below fair value against the Australian dollar and 20 percent versus the Canadian dollar, according to the OECD index.
The dollar has mainly weakened since Fed Chairman Ben S. Bernanke signaled last year at an annual conference sponsored by the Federal Reserve Bank of Kansas City that the central bank may boost the economy by printing money and buying bonds. It purchased $600 billion of Treasuries between November and June, contributing to a 6.25 percent drop in the U.S. currency as measured by Bloomberg Correlation-Weighted Indexes.
Fed’s Toolbox
Bernanke said at an annual forum in Jackson Hole, Wyoming, on Aug. 26 that the central bank still has tools to stimulate the economy without providing details or signaling when or whether policy makers might deploy them.
Slowing growth in the U.S. and the Fed’s pledge to keep its target rate for overnight loans between banks at a record low of zero to 0.25 percent until mid-2013 may constrain the greenback. Citigroup lowered its 2011 U.S. growth estimate to 1.6 percent from 1.7 percent, and Goldman Sachs Group Inc. said it saw a one-in-three chance of a recession as it cut its gross domestic product forecast to 1.7 percent from 1.8 percent.
“Until we can get to a point where the dollar can demonstrate some independent strength, like the economic data justifies the Fed to provide some interest rate support, we don’t think the dollar can shine,” Robert Sinche, the global head of foreign exchange strategy at Royal Bank of Scotland Group Plc, said Aug. 24 in a telephone interview from Stamford, Connecticut.
RBS predicts the dollar will trade at $1.45 versus the euro by the end of the third quarter, from $1.4499 last week, and at $1.06 against the Australian currency, from $1.0573.
Increased Dollar Demand
Demand for the U.S. currency has increased as S&P’s Aug. 5 downgrade of the nation’s credit rating to AA+ caused stock markets to gyrate and sent investors to the safety of Treasuries. Investors repudiated the ratings company’s assertion that the U.S. was less creditworthy, driving 10-year note yields to record low 1.9735 percent on Aug. 18. The dollar appreciated the last month against all but one of the 16 most-traded currencies as tracked by Bloomberg, falling versus the yen.
“The downgrade obviously caused a big risk-aversion theme that is still en vogue,” Blake Jespersen, the director of foreign-exchange at Bank of Montreal in Toronto said Aug. 24 by telephone.
Strategists don’t expect the dollar to falter in the slowing economy. It will remain unchanged on average by the fourth quarter against currencies of the Group of 10 Nations, according to estimates of strategists compiled by Bloomberg.
Main Reserve Currency
The dollar represents 60.7 percent of the world’s currency reserves, compared with 26.6 percent for the euro, which has the next biggest portion, according to the International Monetary Fund in Washington. That leaves investors with few alternatives as the Swiss National Bank and Bank of Japan step up their efforts to curb gains in their currencies, according to Jespersen.
“The SNB and the BOJ have been very aggressive, not only in talk but in action, and therefore safe-haven flows are being allocated more toward the U.S. dollar,” Jespersen said.
Gains of 10 percent in the Swiss franc and 4.5 percent for the yen in the past three months have weighed on the export- reliant economies and prompted the central banks to take action to curb further appreciation.
The SNB lowered its target for three-month franc London interbank offered rate, or the rate banks charge to lend to each other in Swiss francs for three months, to “as close to zero as possible” on Aug. 3. It said it may take further steps.
The yen has erased all its losses since the Bank of Japan intervened Aug. 4 and expanded monetary stimulus by 10 trillion yen ($130.5 billion). Finance Minister Yoshihiko Noda introduced a $100 billion funding program last week for Japanese businesses intended to encourage the exchange of “yen-denominated funds to foreign currencies.”
“There are few currencies left to buy that don’t mind going up,” Kit Juckes, head of foreign-exchange research in London for Societe Generale SA and the second-most accurate currency forecaster as measured by Bloomberg said in an interview last week. “How much weaker can the dollar get?”
Tuesday, August 16, 2011
Industrial Production in U.S. Rose 0.9% in July
By Jillian Berman - Aug 16, 2011 9:52 PM GMT+0800
Industrial production in the U.S. climbed in July by the most this year as carmakers started to shake off the effects of the disaster in Japan and higher temperatures boosted utility use.
The 0.9 percent increase in production at factories, mines and utilities followed a revised 0.4 percent gain that was more the previously estimated, figures from the Federal Reserve showed today. Economists projected a 0.5 percent rise in July, according to the median estimate in a Bloomberg News survey. Factory output rose by the most in four months.
Production of business equipment picked up, showing gains in the industry that led the recovery may be sustained even as manufacturers contend with a slowdown in consumer spending and exports. Factories have also kept a tight rein on inventories, limiting the need for large-scale cutbacks that could trigger an economic slump.
“Given some of the other negatives in the economy, I think you still have to point to manufacturing as a bit of a bright spot,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut, who correctly predicted the gain. Production was bolstered “by a beginning of the recovery in the auto sector. Manufacturing excluding motor vehicles was still up. Not great, but a decent outcome.”
Forecasts for industrial production in the Bloomberg survey of 85 economists ranged from gains of 0.1 percent to 1 percent.
Stocks declined after the report on growing concern over a global growth slowdown after Germany said its economy almost stalled in the second quarter. The Standard & Poor’s 500 Index fell 1.3 percent to 1,189.24 at 9:51 a.m. in New York. Treasury securities rose, sending the yield on the benchmark 10-year note down to 2.28 percent from 2.31 percent late yesterday.
Housing Starts
The housing market is still struggling, separate figures from the Commerce Department showed today. Housing starts dropped 1.5 percent in July to a 604,000 annual rate.
Manufacturing output increased 0.6 percent last month, led by gains at the nation’s automakers, the Fed’s report showed.
Production of automobiles and parts surged 5.2 percent last month, a rebound from the supply-chain disruptions that resulted from the March earthquake in Japan, the Fed report showed. Manufacturing excluding motor vehicles climbed 0.3 percent after a 0.2 percent gain in the prior month.
Motor-vehicle assemblies rose to 8.73 million units at an annual rate in July from 7.89 million, today’s report showed. Cars and light trucks sold at a 12.2 million annual pace in July, up from 11.4 million annual rate a month earlier, Autodata Corp. said last week. Deliveries at Detroit-based General Motors Corp. climbed 7.6 percent from the same month in 2010 to 214,915.
Second Half
“Although the economy has clearly lost some momentum, we do believe that it will continue to recover, but more gradually than we had originally anticipated as we move through the second half of the year,” Don Johnson, GM’s vice president of U.S. sales said on an Aug. 2 conference call.
Business equipment production rose 0.6 percent in July following a 0.2 percent gain in June. Output of computers and electronic products increased 0.5 percent after a 0.8 percent decline in June. Furniture production rose 0.7 percent after a 2.4 percent decrease.
Capacity utilization, which measures the amount of a plant that is in use, increased to 77.5 percent, the highest since August 2008, from 76.9 percent in June. The gauge compares with the average of 79.5 percent over the past 20 years.
Mining production, which includes oil drilling, rose 1.1 percent after a 1.2 percent gain. Utility output increased 2.8 percent, the most this year, after a 0.8 percent gain.
Heat Wave
Temperatures soared across the U.S., with July records in Texas and Oklahoma, according to the National Climatic Data Center. Last month, temperatures were “above normal” or “much above normal” in 41 of the 48 contiguous U.S. states, it said.
The U.S. economy grew at a 1.3 percent annual rate during the second quarter after almost stalling in the previous three months, according to Commerce Department figures. Fed policy makers pledged to keep the benchmark interest rate near zero to bolster a recovery that’s moving “considerably slower” than expected, policy makers said in a statement last week.
The drop in the value of the dollar could boost confidence among manufacturers. A weaker dollar benefits American companies by making their products more attractive to buyers overseas. The dollar dropped 7.9 percent in the 12 months ended in July against a weighted basket of currencies from the country’s biggest trading partners.
Growth Overseas
Peoria, Illinois-based Caterpillar Inc., the world’s largest construction- and mining-equipment maker, posted increased profits and sales in the second quarter, largely due to growth overseas, the company said July 22.
“China is doing a good job of balancing growth and inflation, and our expectations for China remain positive,” Chief Executive Officer Douglas Oberhelman said in the statement. “While we’ve seen some softening of growth in China, dealer deliveries to end users were up in the second quarter of 2011 compared with the second quarter of last year."
Industrial production in the U.S. climbed in July by the most this year as carmakers started to shake off the effects of the disaster in Japan and higher temperatures boosted utility use.
The 0.9 percent increase in production at factories, mines and utilities followed a revised 0.4 percent gain that was more the previously estimated, figures from the Federal Reserve showed today. Economists projected a 0.5 percent rise in July, according to the median estimate in a Bloomberg News survey. Factory output rose by the most in four months.
Production of business equipment picked up, showing gains in the industry that led the recovery may be sustained even as manufacturers contend with a slowdown in consumer spending and exports. Factories have also kept a tight rein on inventories, limiting the need for large-scale cutbacks that could trigger an economic slump.
“Given some of the other negatives in the economy, I think you still have to point to manufacturing as a bit of a bright spot,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut, who correctly predicted the gain. Production was bolstered “by a beginning of the recovery in the auto sector. Manufacturing excluding motor vehicles was still up. Not great, but a decent outcome.”
Forecasts for industrial production in the Bloomberg survey of 85 economists ranged from gains of 0.1 percent to 1 percent.
Stocks declined after the report on growing concern over a global growth slowdown after Germany said its economy almost stalled in the second quarter. The Standard & Poor’s 500 Index fell 1.3 percent to 1,189.24 at 9:51 a.m. in New York. Treasury securities rose, sending the yield on the benchmark 10-year note down to 2.28 percent from 2.31 percent late yesterday.
Housing Starts
The housing market is still struggling, separate figures from the Commerce Department showed today. Housing starts dropped 1.5 percent in July to a 604,000 annual rate.
Manufacturing output increased 0.6 percent last month, led by gains at the nation’s automakers, the Fed’s report showed.
Production of automobiles and parts surged 5.2 percent last month, a rebound from the supply-chain disruptions that resulted from the March earthquake in Japan, the Fed report showed. Manufacturing excluding motor vehicles climbed 0.3 percent after a 0.2 percent gain in the prior month.
Motor-vehicle assemblies rose to 8.73 million units at an annual rate in July from 7.89 million, today’s report showed. Cars and light trucks sold at a 12.2 million annual pace in July, up from 11.4 million annual rate a month earlier, Autodata Corp. said last week. Deliveries at Detroit-based General Motors Corp. climbed 7.6 percent from the same month in 2010 to 214,915.
Second Half
“Although the economy has clearly lost some momentum, we do believe that it will continue to recover, but more gradually than we had originally anticipated as we move through the second half of the year,” Don Johnson, GM’s vice president of U.S. sales said on an Aug. 2 conference call.
Business equipment production rose 0.6 percent in July following a 0.2 percent gain in June. Output of computers and electronic products increased 0.5 percent after a 0.8 percent decline in June. Furniture production rose 0.7 percent after a 2.4 percent decrease.
Capacity utilization, which measures the amount of a plant that is in use, increased to 77.5 percent, the highest since August 2008, from 76.9 percent in June. The gauge compares with the average of 79.5 percent over the past 20 years.
Mining production, which includes oil drilling, rose 1.1 percent after a 1.2 percent gain. Utility output increased 2.8 percent, the most this year, after a 0.8 percent gain.
Heat Wave
Temperatures soared across the U.S., with July records in Texas and Oklahoma, according to the National Climatic Data Center. Last month, temperatures were “above normal” or “much above normal” in 41 of the 48 contiguous U.S. states, it said.
The U.S. economy grew at a 1.3 percent annual rate during the second quarter after almost stalling in the previous three months, according to Commerce Department figures. Fed policy makers pledged to keep the benchmark interest rate near zero to bolster a recovery that’s moving “considerably slower” than expected, policy makers said in a statement last week.
The drop in the value of the dollar could boost confidence among manufacturers. A weaker dollar benefits American companies by making their products more attractive to buyers overseas. The dollar dropped 7.9 percent in the 12 months ended in July against a weighted basket of currencies from the country’s biggest trading partners.
Growth Overseas
Peoria, Illinois-based Caterpillar Inc., the world’s largest construction- and mining-equipment maker, posted increased profits and sales in the second quarter, largely due to growth overseas, the company said July 22.
“China is doing a good job of balancing growth and inflation, and our expectations for China remain positive,” Chief Executive Officer Douglas Oberhelman said in the statement. “While we’ve seen some softening of growth in China, dealer deliveries to end users were up in the second quarter of 2011 compared with the second quarter of last year."
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