Wednesday, September 28, 2011

20110928 1546 Global Market Related News.

Stocks edge up, euro stalls as caution prevails
SINGAPORE, Sept 28 (Reuters) - Asian stocks edged higher and a rally in the euro stalled, as investors looked for more signs that European leaders were tackling a debt crisis that threatens the financial system before committing bolder market bets.
"Investors think, isn't the European situation better? But we have no way of knowing for sure at this point, and until they're more confident, we probably won't see major buying," said Hiroichi Nishi, equity division manager at SMBC Nikko Securities Inc in Tokyo.

GLOBAL MARKETS-Stocks edge up, euro down as caution prevails
SINGAPORE, Sept 28 (Reuters) - Asian stocks crawled higher and a rally in the euro stalled on Wednesday, as investors looked for more signs of progress from European leaders on tackling a debt crisis that threatens the financial system before committing bolder market bets.
"Today's rebound could easily give way at some point," ANZ Bank said in a research note.

Obama’s Jobs Plan Prevents Election-Year Recession in Survey of Economists (Source: Bloomberg)
President Barack Obama’s $447 billion jobs plan would help avoid a return to recession by maintaining growth and pushing down the unemployment rate next year, according to economists surveyed by Bloomberg News. The legislation, submitted to Congress this month, would increase gross domestic product by 0.6 percent next year and add or keep 275,000 workers on payrolls, the median estimates in the survey of 34 economists showed. The program would also lower the jobless rate by 0.2 percentage point in 2012, economists said. Economists in the survey are less optimistic than Treasury Secretary Timothy F. Geithner, who has cited estimates for a 1.5 percent boost to gross domestic product. Even so, the program may bolster Obama’s re-election prospects by lowering a jobless rate that has stayed near 9 percent or more since April 2009.

Euro Crisis Makes Fed Lender of Only Resort (Source: Bloomberg)
The Federal Reserve, chastised by Congress for lending money to foreign institutions such as the Central Bank of Libya, is once again the lender of last resort for banks around the world it knows little about. Three years after the collapse of Lehman Brothers Holdings Inc., money-market borrowing rates for dollars are rising, leading the Fed and European Central Bank to make the currency available to Europe’s institutions for as many as three months. U.S. prime money-market funds cut their exposure to euro-zone bank deposits and commercial paper, or short-term IOUs, to $214 billion in August from $391 billion at the end of last year, according to JPMorgan Chase & Co. data.
The failure of regulators worldwide to address European banks’ fragile dependence on short-term funding is “putting the Fed in a really awkward position,” said Karen Shaw Petrou, managing partner at Federal Financial Analytics, a Washington regulatory research firm whose clients include the biggest U.S. banks. The swaps with Europe “are an extremely advantageous political football” for critics of the Fed, she said.

U.S. Economic Stimulus Needs Housing Effort, New York Fed’s Tracy Says (Source: Bloomberg)
Any success for government efforts to stimulate the economy will be limited unless policies are combined with steps to aid the housing market, according to Federal Reserve Bank of New York economist Joseph Tracy. “We need to fold in some pretty serious housing policies at the same time, not just to get housing going, but to get the full benefit of all these policies,” Tracy said today at a conference hosted by the New York State Society of Certified Public Accountants. “That would be very complementary.” The housing market is still a drag on the economy even as the Fed has kept its target rate for overnight loans between banks at a record low since December 2008 and plans to extend the maturities of its $2.64 trillion of securities holdings to tamp down longer-term borrowing costs. President Barack Obama has proposed a $447 billion plan that includes infrastructure spending and payroll tax cuts to reduce the 9.1 percent unemployment rate.

U.S. Senate Approves Bill to Avoid Government Shutdown, Fund Disaster Aid (Source: Bloomberg)
The U.S. Senate reached a bipartisan deal on stopgap spending designed to avoid a government shutdown and defuse a fight over aid to victims of hurricanes, tornadoes and other natural disasters. Senators approved legislation yesterday, 79-12, to finance the government through Nov. 18, a measure including $2.65 billion for federal disaster assistance. With the expectation that the House would consent, senators also passed on a voice vote a measure to tide the government over through Oct. 4 so that the House, in recess this week, can consider the longer funding measure. The 2011 fiscal year ends on Sept. 30, and the House can approve the short-term bill by unanimous consent without bringing members back to Washington.

Consumer Confidence Stagnates at Two-Year Low (Source: Bloomberg)
Confidence among U.S. consumers stagnated in September near a two-year low as the share of households saying it was difficult to find a job climbed to the highest level in almost three decades. The Conference Board’s sentiment index increased to 45.4 from a revised 45.2 reading in August that was the lowest since April 2009, when the economy was in a recession, figures from the New York-based private research group showed today. A report on home prices showed values dropped less than forecast in the year ended July. The confidence reading signals hiring hasn’t improved after the world’s largest economy failed to create jobs in August and the unemployment rate held at 9.1 percent. Plunging stock prices and concern the crisis in Europe will undermine the global recovery may also be shaking Americans’ resolve, raising the risk that spending will cool during the holiday shopping season.

Roubini: U.S. in Throes of Economic Contraction (Source: Bloomberg)
Most advanced economies are lapsing back into recession while the U.S. is already in the throes of an economic contraction, according to Nouriel Roubini, co- founder and chairman of Roubini Global Economics LLC. “The way I see the global economy, I think we’re entering into a recession again in most advanced economies,” Roubini said in a panel discussion today at the Bloomberg Dealmakers Summit in New York. “I think we’re already into one in the U.S. based on the hard and soft data -- same with most of the euro zone, same with the United Kingdom.” The Conference Board today said that confidence among U.S. consumers stagnated in September near a two-year low as the share of households saying it was difficult to find a job climbed to the highest level in almost three decades. European leaders over the weekend faced pressure at the annual meetings of the International Monetary Fund to solve a debt crisis already spilling over into other parts of the world.

Home Prices in U.S. Cities Fall 4.1% (Source: Bloomberg)
Home prices in the U.S. declined less than forecast in July from a year earlier, a sign bank delays in processing foreclosures may have temporarily slowed the slump in real-estate values. The S&P/Case-Shiller index of property values in 20 cities fell 4.1 percent from July 2010, after a revised 4.4 percent drop in the 12 months to June, the group said today in New York. The median forecast of 28 economists surveyed by Bloomberg News projected a 4.4 percent decline. Values were little changed in July from the prior month after adjusting for seasonal changes, the same as in June. Investigations into bank foreclosure practices led to delays in processing that may have helped stabilize prices in recent months. Values may soon resume their slide as the holdups dissipate, putting more houses on to the market and pushing back any recovery in the industry that precipitated the last recession.

Treasury Bonds Advance on Concern Major Economies Will Fall into Recession (Source: Bloomberg)
Treasury 30-year bonds rose for the first time in four days on speculation European efforts to solve the region’s debt crisis won’t stave off a recession in developed economies. The difference between U.S. five- and 30-year yields narrowed to 2.11 percentage points from this year’s high of 2.88 percentage points in July. The spread shrank to 1.97 percentage points on Sept. 23, the least since January 2010. The U.S. plans to sell $35 billion of five-year debt today, the second of three note auctions this week. The 10-year yield declined to a record low of 1.6714 percent on Sept. 23. “I can’t say the bond rally is over,” said Tsutomu Komiya, who helps oversee the equivalent of $120.9 billion as an investor in Tokyo at Daiwa Asset Management Co., a unit of Japan’s second-biggest brokerage by market value. “Globally, the business cycle is fragile.”

U.S. Stocks Rise, Paring Gains in Final Hour, as Investors Focus on Greece (Source: Bloomberg)
U.S. stocks rose, with benchmark indexes weathering a final-hour selloff, after Greece made progress in meeting requirements for more international aid and Germany vowed continued support for the country. All 10 groups in the Standard & Poor’s 500 Index rose as gains were led by commodity and industrial shares. Dow Chemical Co. (DOW) and United Technologies Corp. (UTX) climbed at least 2.2 percent to pace a rally in companies most-tied to the economy. Financial stocks pared gains as the Financial Times reported that some euro-area countries are demanding private creditors take bigger writedowns on their Greek bond holdings. Bank of America Corp. (BAC) reversed a 3.8 percent advance, falling 1.8 percent. The S&P 500 increased 1.1 percent to 1,175.38 at 4 p.m. New York time, rising 4.1 percent in three days, the biggest gain over that same period since Aug. 30. The Dow Jones Industrial Average rose 146.83 points, or 1.3 percent, to 11,190.69 today.

China’s Stocks Drop to 14-Month Low, as Property, Railway Companies Sink (Source: Bloomberg)
China’s stocks fell, sending the benchmark index to its lowest level since July 2010, on concern government measures to tame inflation and a faltering global economy will hurt earnings growth. China Vanke Co. and Poly Real Estate Group Co. led losses by developers amid speculation funding costs will rise at the same time as sales slow. Railcar makers CSR Corp. and China CNR Corp. sank after a train collision in Shanghai’s metro injured 271 people. The Shanghai Composite Index dropped 24.61 points, or 1 percent, to 2,390.45 as of 2:50 p.m. local time, erasing an earlier 0.6 percent gain. The CSI 300 Index (SHSZ300) declined 1 percent to 2,611.38. The country’s markets will be shut all next week for holidays.

Hacking Group Anonymous Targets Chinese Agriculture Firm (Source: CME)
Fresh from its attacks on the Iranian government, Bank of America Corp. and Sony Corp., hacker group Anonymous has now set its sights on a Chinese fruit and vegetable producer it claims is one of the Hong Kong stock Exchange's "largest, and longest running frauds." According to a document released on the website of Anonymous Analytics, a new offshoot of the "hacktivist" group, dedicated to exposing corporate fraud, Chaoda Modern Agriculture (Holdings) Ltd. has been engaging in 11 years of "deceit and corporate fraud." But its first target isn't exactly a bombshell reminiscent of Muddy Waters LLC's muck-raking of Sino-Forest Corp. Chaoda hasbeen under scrutiny for some time. Most recently, Hong Kong-based Next Magazine wrote in May that the company had overstated the size of its farmland in China, among other allegations. Chaoda has denied the report.
In an emailed response to The Wall Street Journal, Anonymous Analytics said it had chosen Chaoda as its first target, despite it already being the subject of much controversy, because "it was an easy project for us to get our feet wet in this arena. The evidence was everywhere." In the report, peppered with Internet memes and quotes from TV shows "The Simpsons" and "Seinfeld," the group says Chaoda "has an extensive history of deceiving investors and shareholders" since going public in 2000, and has consistently overstated its cash balance and falsified its books. It calculates Chaoda's fair value to be HK$0.60 per share, though it believes Chaoda's end-game is a delisting from the Hong Kong Stock Exchange as it "will not be able to survive scrutiny." Anonymous Analytics also accuses Hong Kong regulators of sleeping at the wheel, allowing an "obvious fraud" to operate for so long.
Perhaps of more interest than the content of the Sept. 26 report is its timing. That Monday morning in Hong Kong, media reports said the company was being investigated by the government for market misconduct, sending shares down 27%, and 81% year-to-date at HK$1.10. The company was suspended from trading at midday. When asked about the timing, Anonymous Analytics said: "After 11 years, the government decided to announce proceedings hours before we released our report. We will let your readers do the math." According to the government's Market Misconduct Tribunal website, a preliminary hearing for Chaoda's case was held Sept. 6. A second hearing is scheduled for Wednesday. Hong Kong's Securities and Futures Commission declined to comment. A spokesman for Chaoda said the company is preparing a statement in response to the Anonymous Analytics report. The Market Misconduct Tribunal declined further comment on details of the case.
Anonymous Analytics states in a disclaimer in the report that while it doesn't hold a direct position in Chaoda, it stands to gain from any fall in the share price through an indirect interest in short positions held by parties associated with its investigation. In short, it's not, as it says on its Twitter page, merely "taking down corporations for the lulz" (or laughs).

Japan Ruling Party Proposes Tax Hikes, Japan Tobacco Stake Sale to Rebuild (Source: Bloomberg)
Japan’s ruling party proposed a 9.2 trillion yen ($120 billion) temporary tax increase and selling the government’s stake in Japan Tobacco Inc. (2914) to fund rebuilding from the March 11 earthquake and nuclear disaster. The Democratic Party of Japan yesterday also agreed on a third post-quake stimulus package of about 12 trillion yen, party policy chief Seiji Maehara told reporters last night. Prime Minister Yoshihiko Noda’s government must now negotiate with opposition lawmakers to get the plans approved. “We need to explain sincerely to the public that tax increases are needed to support reconstruction,” Maehara said yesterday. “These are temporary measures. We want to avoid a negative impact on the economy.”

Nikkei 225 Pares Gains as Stalled French GDP Reignites Europe Concern (Source: Bloomberg)
Japan’s Nikkei 225 (NKY) Stock Average pared gains in the final minutes of trading after a report showed France’s gross domestic product failed to grow last quarter, sparking concern Europe’s debt crisis is damping growth in one of Asia’s biggest markets. The Nikkei 225 rose 0.1 percent to 8,615.65 as of 3 p.m. close in Tokyo, paring earlier gains of as much as 0.7 percent. The gauge advanced for a second day from its lowest level since April 2009. The broader Topix gained 0.7 percent to 754.07 today after German Chancellor Angela Merkel signaled support for Greece, saying, “Germany is ready to offer all kinds of help that is needed.” “Investors have no idea whether Greece’s debt problem will really be solved,” said Hisakazu Amano, who helps oversee the equivalent of $29 billion at Tokyo-based T&D Asset Management Co. “The European Union as a whole supports measures to help Greece, but voters in Germany and other countries may not want to put money into it.”

Mortgage Rates Drop to Lowest in Two Years as Economy Slows: Japan Credit (Source: Bloomberg)
Japan’s home-mortgage costs are dropping, with rates at the lowest since 2009, as a recession deters borrowers and keeps benchmark government bond rates low. The 10-year fixed-mortgage rate is 3.75 percent at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s biggest listed bank, compared with more than 4 percent in May, according to data compiled by Bloomberg. Home-loan costs fell in September, tracking a drop to record levels in the U.S., as Japan’s 10-year sovereign yields slid for a sixth-straight month. “Government bond yields should hover at low levels,” said Kenro Kawano, head of Japan interest-rate strategy at Credit Suisse Group AG in Tokyo, one of the 25 primary dealers obligated to bid at the government’s debt sales. “The mortgage rate could go lower as banks struggle to find borrowers. There’s no need to rush to buy a house.”

Greek Leaders Appeal for Support as U.S. Presses for EU Faster Debt Action (Source: Bloomberg)
Greek leaders appealed for support at home and abroad to avert default before key legislative votes as the U.S. criticized European leaders for moving too slowly to stem the debt crisis. Prime Minister George Papandreou traveled to Berlin two days before German lawmakers ratify an overhaul of the euro rescue fund, pledging success in a struggle to restore budget balance. Finance Minister Evangelos Venizelos promised “superhuman” efforts hours before a vote in Athens on an unpopular property tax needed to avoid default. President Barack Obama underscored the urgency late yesterday when he said European governments are “trying to take responsible actions, but those actions haven’t been quite as quick as they need to be.” His treasury secretary, Timothy F. Geithner, said Europe has “not very much time” to act.

Papandreou Wins Vote on Property Tax (Source: Bloomberg)
Greek Prime Minister George Papandreou won parliamentary backing for a property tax to meet deficit-reduction targets required to avoid default. Papandreou’s Socialist Pasok party won the vote in Athens late yesterday by 155 to 142 after Finance Minister Evangelos Venizelos told Greeks they face economic collapse if they don’t plug a budget gap that is exceeding the target set in a bailout, putting an 8 billion-euro ($11 billion) aid payment due next month at risk. “Implementation of the measures is the biggest challenge for the government as the trade unions and parts of the civil service will mount significant resistance, raising the risk of inertia and inaction,” Wolfango Piccoli, an analyst in London at Eurasia Group, said before the vote.

Spanish Central Government Budget Deficit Narrows to 2.8% of GDP From 3.3% (Source: Bloomberg)
Spain’s central government budget deficit narrowed in the eight months through August, bolstering the nation’s chances of meeting its deficit goal even as regional administrations fall behind their targets. The central government reported a 30.9 billion-euro ($40.5 billion) deficit, or 2.83 percent of gross domestic product, compared with 3.28 percent a year earlier, the Finance Ministry in Madrid said today. For the full year, the central government aims to reduce the gap to 4.8 percent of GDP, as part of the goal to cut the overall public-sector shortfall to 6 percent from 9.2 percent in 2010, when it was the third-biggest in the euro region.

German Bonds Rise Before Inflation Report, Snapping 3-Day Drop (Source: Bloomberg)
German 10-year bonds rose, snapping a three-day decline, before a report that economists said will show the nation’s consumer prices dropped in September. Two-year notes, perceived to be among Europe’s safest securities, gained for the first time in three days after Bild reported that Germany’s government privately anticipates a default by Greece as early as this year. The 10-year bund yield dropped three basis points to 1.93 percent at 7:19 a.m. in London. The yield has climbed from a record low 1.636 percent on Sept. 23. The 2.25 percent security due September 2021 gained 0.285, or 2.85 euros per 1,000-euro ($1,358) face amount, to 102.860. Two-year yields fell one basis point to 0.52 percent.

European Stock-Index Futures Decline Amid EU Moves to Contain Greek Debt (Source: Bloomberg)
European stock-index futures fell after a report that some countries are demanding private creditors take bigger writedowns on Greek bonds. Asian shares and U.S. futures were little changed. PSA Peugeot Citroen, Europe’s second-largest carmaker, may decline after Goldman Sachs Group Inc. advised selling the shares. Telefonica SA (TEF) may be active after Fitch Ratings cut its long-term issuer default rating. Futures on the Euro Stoxx 50 Index, a benchmark for the euro region, fell 0.8 percent to 2,160 at 7:12 a.m. in London, while FTSE 100 Index (UKX) futures slid 0.9 percent. Contracts on the Standard & Poor’s 500 Index declined 0.1 percent, while the MSCI Asia Pacific Index advanced 0.2 percent.

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