Asia Stocks Advance on U.S. Economic Optimism (Source: Bloomberg)
Asian stocks (MXAP) rose for a second day on optimism the U.S. economy is weathering Europe’s sovereign- debt crisis. Honda Motor Co., the Japanese carmaker that gets about 44 percent of sales from North America, increased 1.6 percent in Tokyo. James Hardie Industries SE (JHX), a building materials supplier that counts the U.S. as its biggest market, rose 1 percent in Sydney. Pacific Brands Ltd. surged 14 percent after KKR & Co. approached the Australian distributor of the Everlast, Clarks and Dunlop brands for a possible takeover. The MSCI Asia Pacific Index (MXAPJ) gained 0.6 percent to 115.36 as of 9:53 a.m. in Hong Kong, with almost four shares rising from each that fell. The measure increased 0.9 percent last week as declining American unemployment and manufacturing growth from China to the U.S. added to signs the global economy may withstand Europe’s debt crisis.
U.S. Stocks Advance as EU Leaders Meet (Source: Bloomberg)
U.S. stocks advanced, extending last week’s rally for the Standard & Poor’s 500 Index, as European leaders discussed shoring up the region’s currency and investors awaited the start of the fourth-quarter earnings season. Measures of industrial, energy and financial shares had the biggest gains (SPXL1) in the S&P 500 among 10 groups. Alcoa Inc. (AA), the largest U.S. aluminum producer, increased 2.9 percent before reporting its quarterly results. Broadcom Corp. (BRCM) rallied 2.5 percent as Deutsche Bank AG said soft fourth-quarter results for chipmakers (SOX) create a buying opportunity for the industry. The S&P 500 rose 0.2 percent to 1,280.70 at 4 p.m. New York time. The benchmark gauge for American equities gained 1.6 percent last week, the second-best start of a year since 2006. The Dow Jones Industrial Average climbed 32.77 points, or 0.3 percent, to 12,392.69. About 6 billion shares changed hands on U.S. exchanges, or 16 percent below the three month-average.
European Stocks Retreat as Merkel Meets Sarkozy; UniCredit, Glaxo Plunge (Source: Bloomberg)
European stocks fell, trimming three weeks of gains for the Stoxx Europe 600 Index, as a summit between German Chancellor Angela Merkel and French President Nicolas Sarkozy failed to assuage concern over the debt crisis. UniCredit SpA (UCG) tumbled as rights to buy the bank’s shares slumped in their first day of trading in Milan. GlaxoSmithKline Plc fell 4.1 percent after saying its experimental respiratory drug Relovair failed to prove its superiority to an existing medicine in a late-stage study. Nokia Oyj (NOK1V) fell 2.8 percent as supplier RF Micro Devices Inc. reported preliminary quarterly revenue that trailed its earlier forecast. The Stoxx 600 (SXXP) slipped 0.5 percent to 246.42 at the close of trading in London, having swung between gains and losses more than 10 times today. The gauge gained 1.2 percent last week as economic reports from around the world added to optimism that the global economy can weather the fallout from the euro area’s sovereign-debt crisis.
Japan Stocks Snap 2-Day Losing Streak on U.S. Economic Optimism (Source: Bloomberg)
Jan. 10 (Bloomberg) -- Japanese stocks (TPX) rose, snapping a two-day loss, after U.S. jobs data last week buoyed optimism the U.S. is weathering Europe’s debt crisis. Honda Motor Co. (7267), a Japanese carmaker that generates 44 percent of its revenue in North America, rose 1 percent. Sony Corp. (6758), the nation’s leading exporter of consumer electronics, climbed 1.1 percent before a report this week expected to show U.S. retail sales advanced in December. Trading company Mitsubishi Corp. (8058) gained 1.4 percent after commodity prices rose. The Nikkei 225 Stock Average (NKY) added 0.6 percent to 8,441.97 as of 9:19 a.m. in Tokyo. The broader Topix Index gained 0.9 percent to 735.80. Japan’s markets were closed yesterday for a public holiday.
China Stocks Rise Most in 3 Months on Loan, Money Data (Source: Bloomberg)
China’s stocks (IFB1) rose the most in three months after new lending and money supply exceeded estimates in December, boosting speculation the government is relaxing monetary policies to bolster economic growth. China Merchants Bank Co. (600036) and China Construction Bank Corp. (939) led gains for lenders after money supply grew at the fastest pace since July. China Shenhua Energy Co., the nation’s largest coal producer, advanced the most in 10 months on expectations new loan growth will boost demand for commodities. Anhui Conch Cement Co. (600585) climbed 5.6 percent after the Xinhua News Agency said the banking regulator will ensure demand for loans for the construction of affordable housing.
“It shows the government’s policy of fine-tuning monetary policies is taking effect,” Ha Jiming, vice chairman and chief investment strategist for Goldman Sachs Group Inc.’s investment management division for China, said in an interview with Bloomberg Television today. “The government is able to engineer a soft landing, maintaining economic growth at around 8 percent. The market this year will have some opportunities.”
Emerging-Market Stocks Rise on Monetary Easing Speculation; China Rallies (Source: Bloomberg)
Emerging-market stocks rose on speculation China is loosening monetary policy and as Hungary said it’s open to any deal with the International Monetary Fund. The MSCI Emerging Markets Index (MXEF) advanced 0.4 percent to 930.87 at the close in New York, its first gain in four days. The Shanghai Composite Index (SHCOMP) climbed 2.9 percent. Brazil’s Bovespa index advanced 0.8 percent while the ISE National 100 Index (XU100) fell 0.7 percent in Istanbul. Chinese stocks gained the most in three months after an increase in new lending and money supply expansion boosted speculation the government is relaxing monetary policies as slowing exports threaten economic growth. Hungary’s BUX Index (BUX) rose 3.5 percent, the most among major world bourses, after the nation’s Prime Minister Viktor Orban abandoned objections to a bailout from the IMF, indicating his government is open to “any kind” of credit line to prop up financing.
Hedge Funds Sit Out Rally With Speculation on Stock Gains Close to ’09 Low (Source: Bloomberg)
Rallying stocks (INDU) have done little to entice professional money managers back to U.S. equities. A gauge of hedge-fund bullishness measuring the proportion of bets that shares will rise climbed to 44.5 last week from 43.9 at the end of 2011, holding close to the lowest level since 2009, according to International Strategy & Investment Group. Compared with the price of the Standard & Poor’s 500 Index, managers’ so-called net exposure is close to the lowest since June 2008, the ISI data show. Speculators have been cutting equities since the index peaked in February 2011 at 54.2, concerned Europe’s credit crisis will spread and curb global economic growth. They stayed bearish after October when the S&P 500 began a 17 percent rally that has restored $2 trillion to the value of American equities.
More U.S. Part-Timers Find Full-Time Jobs (Source: Bloomberg)
More Americans are moving from part- time to full-time jobs, adding to evidence a strengthening labor market will bolster household confidence and spending. The number of people putting in a full week (USEMFULL) rose to 113.8 million in December, the most since February 2009, the Labor Department’s monthly employment report showed last week. At the same time, 8.1 million (USEMPTER) worked fewer hours because they couldn’t find a full-time job, the least since January 2009. “It’s what will traditionally happen when the job market overall is beginning to improve,” Tig Gilliam, chief executive officer of Adecco Group North America, said in a telephone interview.
U.S. Economy’s Challenges Greater This Year Than Last, Gluskin Sheff Says (Source: Bloomberg)
David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates Inc., said the U.S. economy faces more challenges in 2012 than last year, while he backed away from his prediction the nation was facing a near- certain recession. “Certainly, we’re not in a recession right now,” Rosenberg said in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. Nonetheless, he said, “I still believe the economy is still fragile and this recovery is still quite spotty.” The effects of the European recession and a slowdown in China will weigh on U.S. exports and industrial production this year, he said. Even last week’s stronger-than-forecast jobs growth (USURTOT) number of 200,000 for December may end up being revised down to about 140,000, when holiday hiring at delivery companies and other seasonal factors are taken into account, he said.
Corporate Profit Growth Slows as Europe Drags (Source: Bloomberg)
U.S. corporations ended 2011 with the slowest profit growth in two years as the mending economy that lifted Macy’s Inc. (M) was met by a European slump that vexed companies more tied to global sales, such as Cisco Systems Inc. Standard & Poor’s 500 Index companies may have earned $24.74 a share (SPX) in the fourth quarter, according to analysts’ estimates compiled by Bloomberg as of Jan. 6. The projected 6 percent gain is the smallest against a year-earlier quarter (SPWPPRCT) since September 2009, just after the U.S. recovery began. “Slowing global growth, some impairment of export activity to Europe and perhaps even the rise of the dollar collectively have begun to sort of work against the multinational story,” said Mark Luschini, chief investment strategist at Philadelphia- based Janney Montgomery Scott LLC, which manages $54 billion. While growth is still “subpar,” he said he intends to invest more in the U.S. to avoid higher international risk.
Merkel Says Budget Rules to Stem Europe’s Debt Woes May Be Done This Month (Source: Bloomberg)
Euro-area leaders may complete their new budget rulebook by Jan. 30, one month ahead of schedule, and are considering accelerating capital contributions to the bailout fund being set up this year to stem the debt crisis. German Chancellor Angela Merkel and French President Nicolas Sarkozy outlined the increased pace of their response as the financial crisis that began in Greece in 2009 entered its third year amid concern that the future of the single currency itself was in doubt. “There is a good chance that we can sign the debt brakes and everything that’s connected to it already in January, but at the latest in March, and that we’re making really good progress in negotiations,” Merkel said at a joint press conference with Sarkozy after they met in Berlin today. “Germany and France made a substantial contribution to this.”
Draghi May Copy Bernanke Over Trichet on Path to Record-Low Interest Rates (Source: Bloomberg)
European Central Bank President Mario Draghi may act more like Ben S. Bernanke than Jean-Claude Trichet in 2012. With the euro area’s debt crisis pulling its economy into a second recession in three years, Draghi soon may cut the ECB’s benchmark interest rate (EURR002W) below 1 percent for the first time and help banks by further inflating its balance sheet, which already has ballooned 17 percent since he took office Nov. 1. Such activism would mark a reversal from a year ago -- when the Trichet-led ECB was pivoting toward higher rates -- and is causing economists at Bank of America Corp. and Jefferies International Ltd. to declare that Draghi is behaving more like Federal Reserve Chairman Bernanke than his ECB predecessor. If the slump drags down Germany, Europe’s largest economy, and fans deflation, it may even prompt the bank to consider Fed-style asset buying, providing relief it now balks at for governments.
Europe’s Powers Over National Budgets Face First Test in EU-Belgium Clash (Source: Bloomberg)
Europe’s newfound powers over national taxing and spending face a first test when the European Commission prods Belgium to make deeper savings just over a week into the budget year. Under authority granted last month, the commission will on Jan. 11 decide whether an emergency Belgian spending freeze is enough to drive the deficit below the euro-area limit in 2012. A negative verdict would expose Belgium, saddled with Europe’s fifth-highest debt, to potential sanctions in a precedent-setting trial of rules designed to overcome investors’ skepticism about the euro area’s response to the two-year-old debt crisis. “The key challenge for Belgium is the reduction of its sizable public debt,” Olivier Bizimana, an economist at Morgan Stanley in London, said in a research note. “Near-term pressures on public debt have significantly increased, with rising costs of borrowing, lower growth and a still-fragile banking sector.”
ECB Financing to Portuguese Lenders Rose to 46 Billion Euros in December (Source: Bloomberg)
The European Central Bank’s financing (PLBLTOTL) to Portuguese lenders rose for a second month in December, the Bank of Portugal said. ECB financing increased to 46.0 billion euros ($58.7 billion) from 45.69 billion euros in November, the Lisbon-based central bank said today on its website. ECB financing levels peaked at 49.1 billion euros in August 2010. Portugal in April became the third euro-area country to seek a bailout after Greece and Ireland, and will receive 78 billion euros under the agreement with the International Monetary Fund and the European Union. The aid plan earmarks 12 billion euros for Portugal’s lenders if needed.
Banks Can Go Below Minimum Basel Liquidity Levels During Financial Crisis (Source: Bloomberg)
Banks will be allowed go below minimum liquidity levels set by global regulators during financial crises to avoid cash-flow difficulties. “During a period of stress, banks would be expected to use their pool of liquid assets, thereby temporarily falling below the minimum requirement,” the Basel Committee on Banking Supervision’s governing board said in a statement on its website yesterday, following a meeting in the Swiss city. The aim of the measure, known as a liquidity coverage ratio, is to ensure that lenders hold enough easy-to-sell assets to survive a 30-day credit squeeze. The requirement, one of several measures from the Basel group designed to prevent a repeat of the 2008 financial crisis, is scheduled to enter into force in 2015.
Canadian Confidence in Economy Rises From Two-Year Low, Nanos Poll Shows (Source: Bloomberg)
Canadian consumer confidence rose in the fourth quarter from a two-year low on optimism about real estate prices and the global economy according to a Nanos Research poll. The Nanos Economic Mood Index rose to 107.4 in the fourth quarter from 105.1 the prior three months, according to a report by Nik Nanos, president of the Ottawa-based polling company. About 19 percent of those surveyed said the economy will be stronger in the next six months, up from 16 percent, while the share who said it will be weaker declined to 31 percent from 39 percent. “The pessimism Canadians have in terms of the future of the economy has lessened,” Nanos said, citing progress with “turmoil in Europe and the political gridlock in the U.S.”
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