Asia FX By Cornelius Luca - Mon 16 Jul 2012 17:03:09 CT (Source: CME/www.lucafxta.com)
The appetite for risk was mixed on Monday amid economic stagnation and concern over the Eurozone crisis. Most of the foreign currencies fell reversed early losses and ended up, extending their recovery from Friday. The US stock markets fell, but oil rallied. The short-term outlook for the European and commodity currencies is sideways. The medium-term outlook for most of the foreign currencies is bearish. The LGR short-term model is short on the European currencies and yen. Good luck!
Overnight
US: Retail sales fell unexpectedly by 0.5% in June after shrinking 0.2% in May.
US: The NY Empire State Manufacturing index expanded to 7.4 in July from 2.3 in June.US: Business inventories rose 0.3% in May, while the April figure was revised to 0.4% from 0.3%. Total business sales fell 0.1% in May, matching the April decline.
Canada: Foreigners have purchased $26.1 billion of Canadian securities during May, while domestic investors have acquired $1.3 billion of domestic securities during the same period.
Traxis Partners Founder Barton Biggs Dies at Age 79 (Source: Bloomberg)
Barton Biggs, the money manager whose attention to emerging markets during a 30-year career at Morgan Stanley made him one of the first global investment strategists, has died. He was 79. Biggs died on July 14, Morgan Stanley Chairman and Chief Executive Officer James Gorman said yesterday in a memo to employees obtained by Bloomberg News. The cause was complications from a bacterial infection, according to a person with direct knowledge of the situation who asked not to be named because the matter is private. The New York native predicted the bull market in U.S. stocks that began in 1982 and warned investors away from Japanese shares in 1989 before they collapsed. He sealed his fame telling investors to sell technology companies as they soared in the late 1990s, a judgment dismissed by the press and other investors until the dot-com bubble burst.
“Barton was an exceptional financial strategist and a great friend,” Julian Robertson, founder of hedge fund Tiger Management LLC, said in a statement. “He had an immense impact on the financial industry for five decades. I shall miss him greatly.” After retiring from Morgan Stanley in 2003 at age 70, Biggs started Traxis Partners, a hedge fund, with two other Morgan Stanley (MS) alumni. While he was blindsided by the credit crisis that sent the Standard & Poor’s 500 Index in 2008 to its biggest annual decline since 1937, he correctly called the bottom in U.S. stocks in March 2009, and Traxis’s flagship fund returned three times the industry average in 2009.
Asian Stocks Little Changed on IMF Outlook, U.S. Data (Source: Bloomberg)
Asian stocks were little changed after U.S. retail sales dropped and the International Monetary Fund cut its 2013 global economic growth forecast. JX Holdings Inc. (5020), a petroleum refiner, sank 6 percent in Tokyo after saying it will shut all processing units at one of its plants after finding falsified safety reports over more than a decade. Hyundai Motor Co. fell 3.1 percent in Seoul after a report Hyundai Heavy Industries Co. will sell shares of the South Korean automaker at a discount. Fortescue Metals Group Ltd. (FMG), an iron-ore producer, rose 0.7 percent in Sydney after its shipments beat analyst estimates. The MSCI Asia Pacific Index (MXAP) was little changed at 115.74 as of 9:31 a.m. in Tokyo, with about five stocks declining for every four that gained. Markets are yet to open in Hong Kong and China. Japan’s Nikkei 225 Stock Average swung between gains and losses after reopening from a holiday yesterday. Australia’s S&P/ASX 200 Index (AS51) rose 0.2 percent.
South Korea’s Kospi Index retreated 0.7 percent after the nation’s Finance Minister Bahk Jae Wan ruled out additional fiscal stimulus for now, saying it could do more harm than good because the global economy is too weak to make it meaningful.
Japan Stocks Swing Between Gains, Losses on Yen, China (Source: Bloomberg)
Japanese stocks swung between gains and losses, after trading resumed in Tokyo following a three-day weekend, as gains in the yen offset speculation China may take more steps to boost its economy amid a global slowdown. Sony Corp. dropped 1.3 percent after the yen rose to a one- month high against the dollar, cutting the earnings outlook for Japan’s biggest consumer-electronics exporter. JX Holdings Inc. lead declines on the Nikkei 225 (NKY) Stock Average after the oil refiner said it will shut processing at one its plants after finding falsified safety reports. Create Restaurants Holdings Inc. advanced 6.6 percent after the operator of fast-food chains said it will buy back almost half its shares. The Nikkei 225 fell less than 0.1 percent to 8,720.07 as of 9:17 a.m. The broader Topix Index (TPX) dropped 0.2 percent, the longest losing streak since 2010, with about four stocks declining for every three that rose.
“As tightening measures have slowed China’s growth, the market’s focus is shifting to stimulus measures such as an interest-rate cut,” said Koichi Kurose, chief economist in Tokyo at Resona Bank Ltd., which oversees about 15 trillion yen ($190 billion) in assets. “One thing to remember is that the yen is on the rise. Japan’s equities are sensitive to the yen’s level, which is likely to put a lid on the market.” Premier Wen Jiabao said momentum for a recovery in Chinese economic growth isn’t yet in place and that “difficulties” may persist for a while, the official Xinhua News Agency reported on July 15. The government will step up policy fine-tuning in the second half to support growth. The comments drove a 0.4 percent increase yesterday in the MSCI Asia Pacific Index.
U.S. Stocks Fall as Economy Concern Offsets Energy Gains (Source: Bloomberg)
U.S. stocks fell, dragging the Standard & Poor’s 500 Index lower for the seventh time in eight days, after the International Monetary Fund cut its global economic forecast and retail sales unexpectedly dropped. JPMorgan Chase & Co. (JPM) lost 2.7 percent while Home Depot Inc. and Caterpillar Inc. (CAT) dropped more than 1 percent to lead the Dow Jones Industrial Average lower. Equities pared losses as energy companies rose with the price of oil while Visa (V) Inc. and MasterCard (MA) Inc., the world’s biggest payment networks, gained at least 1.7 percent after agreeing to a settlement of at least $6.05 billion in a price-fixing case. The S&P 500 declined 0.2 percent to 1,353.64 at 4 p.m. New York time after earlier retreating as much as 0.6 percent. The Dow slipped 49.88 points, or 0.4 percent, to 12,727.21 today.
“The retail sales gives you another indicator that uncertainty has showed up in the consumer side,” James Dunigan, who helps oversee $112 billion as chief investment officer in Philadelphia for PNC Wealth Management, said in a telephone interview. “We’re in a bit of the summer doldrums.” The S&P 500 is down 4.6 percent from a four-year high in April as economic data trails forecasts and investors brace for what is projected to be the first decrease in quarterly earnings since 2009. The Citigroup Economic Surprise Index for the U.S., which measures how much data from the past three months is beating or missing the median estimates in Bloomberg surveys, is at minus 64, near the almost 11-month low of minus 64.9 reached last week.
Recap Stock Index Market Report (Source:CME)
The September S&P 500 was mostly lower during the Monday morning trade, largely in response to slowing economic growth concerns. US economic data this morning on June retail sales showed their third monthly decline and were weaker than expected, and that pressured stocks lower. Meanwhile, better than expected earnings earlier from Citigroup lent a measure of support to the market. There was also news that Visa and Master Card were close to a settlement with US retailers, and that offered an added level of support to financial shares. A late morning rebound in financial and tech-related shares helped lift the S&P 500 briefly into positive territory.
European Stocks Rise, Extending Rally Into Seventh Week (Source: Bloomberg)
European stocks rose for a second day, extending the Stoxx Europe 600 Index’s longest stretch of weekly gains in more than two years, as manufacturing in the New York region expanded more than forecast. SEB (SEBA) AB, the Swedish bank that’s the second-largest lender in the Baltic countries, soared 8.2 percent after earnings topped analysts’ estimates. G4S Plc (GFS) sank 8.7 percent as the world’s biggest security company said it may incur a 50 million- pound ($78 million) loss after failing to provide enough guards for the Olympic Games. The Stoxx 600 (SXXP) advanced 0.2 percent to 256.73 at the close of trading. The gauge has climbed for six straight weeks, rallying 9.8 percent from this year’s low on June 4, as the European Central Bank and People’s Bank of China cut their benchmark interest rates and euro-area leaders eased repayment rules for Spanish banks and conditions for possible Italian aid.
“As we go into August-September, there’s a good possibility that we’ll see a slight uptick in macroeconomic data, particularly in northern Europe and probably in the United States,” Robert Parker, senior adviser at Credit Suisse Asset Management, said in a Bloomberg Television interview. “Investors have remained very underweight. The earnings season will run another month and expectations are so negative that the downside risk is low.”
Emerging Stocks Advance for Second Day on Stimulus Speculation (Source: Bloomberg)
Emerging-market stocks gained as the prospect that central banks in the U.S. and developing nations will take measures to stimulate their economies offset a lower global growth forecast from the International Monetary Fund. The MSCI Emerging Markets Index (MXEF) added 0.1 percent to 926.73 at 5:30 p.m. in New York, with 375 companies advancing and 364 declining. Mexico’s IPC (MEXBOL) index gained 1 percent, led by Grupo Elektra SA (ELEKTRA*), the retail and banking company controlled by billionaire Ricardo Salinas. Russia’s benchmark Micex gauge rose 0.4 percent and Hungary’s BUX Index (BUX) climbed 1.2 percent. Brazil’s Bovespa stock index fell from a one-week high and mining companies Vale SA (VALE3) and MMX Mineracao & Metalicos SA slumped on concern China’s slowdown may hurt exports. Investors speculated that Federal Reserve Chairman Ben S. Bernanke may highlight the need for low borrowing costs to spur the world’s largest economy when he speaks tomorrow before the Senate Banking committee.
Chinese authorities may announce measures to boost their economy following a cabinet meeting this week after the IMF cut its 2013 global growth forecast to 3.9 percent from 4.1 percent in April, and reduced projections for China’s growth this year to 8 percent from 8.2 percent. “There remains the hope, and to some degree the probability, that central banks in emerging markets, principally China, and the U.S. Federal Reserve, will continue to ease monetary policy in an effort to fuel forward growth,” Mark Luschini, chief investment strategist for Philadelphia-based Janney Montgomery Scott LLC, which manages about $54 billion, said in a phone interview. “Perhaps then, investors will be able to focus on fundamentals and valuations rather than trying to handicap the next policy-maker moves.”
Recap Interest Rate Market Report (Source:CME)
Treasury prices forged another impressive trading range today with the bull camp clearly garnering the upper hand with the highest trade in September bonds since the June 4th, 2012 high. In addition to softer than expected US retail sales data, ongoing weakness in global equities, weakness in precious metals and a downward revision in Chinese growth by the IMF the Treasury market had very little competition for the flow of flight to quality funds today. Many traders think that volatility will remain very high into the US Fed Chairman testimony on Tuesday and for the time being the bull camp thinks volatility will simply push prices in their direction.
FOREX-Euro falls vs dollar, focus turns to Bernanke
LONDON, July 16 (Reuters) - The euro eased against the dollar on concerns about euro zone debt and high peripheral bond yields though its falls were tempered before testimony this week by U.S. Federal Reserve Chairman Ben Bernanke, who may hint at more monetary stimulus.
"The euro is likely to remain on the defensive ... If this report gains credibility that would be another reason to play the euro from the short side," said Jeremy Stretch, currency strategist at CIBC.
Dollar Remains Lower Before Bernanke Senate Testimony (Source: Bloomberg)
The dollar remained lower following a decline yesterday against the most of its major peers amid speculation Federal Reserve Chairman Ben S. Bernanke will hint at further monetary easing at testimony before Congress today. The greenback maintained a three-day decline versus the yen after an unexpected drop in U.S. retail sales rekindled speculation the Fed will introduce additional steps to support the world’s largest economy. The euro was 0.2 percent from the lowest in more than three years against the pound before German data that may signal deteriorating confidence among investors. “There is market positioning for Bernanke to deliver something today,” said Joseph Capurso, a strategist in Sydney at Commonwealth Bank of Australia (CBA), the nation’s biggest lender. “There is a high risk of more policy easing before the end of this year.”
The dollar was at 78.86 yen as of 9:28 a.m. in Tokyo after losing 1.1 percent in the past three sessions to 78.87. It was little changed at $1.2278 per euro. The 17-nation currency fetched 96.82 yen from 96.80. The euro was at 78.51 pence after touching 78.32 yesterday, the lowest since October 2008. Bernanke will deliver his semiannual report on the economy and monetary policy. He will testify to the House Financial Services Committee tomorrow.
IMF Cuts Global Outlook as EU Ensnares Emerging Economies (Source: Bloomberg)
The International Monetary Fund cut its 2013 global growth forecast as Europe’s debt crisis prolongs Spain’s recession and slows expansions in emerging markets from China to India. Growth worldwide will be 3.9 percent next year, less than the 4.1 percent estimate in April, the fund predicted in an update of its World Economic Outlook. Spain’s economy will contract 0.6 percent instead of a prior forecast for 0.1 percent growth, and India’s projection for next year was reduced 0.7 percentage point to a 6.5 percent expansion, it said. Central bankers from London to Seoul have lowered borrowing costs or increased bond buying in recent weeks in a round of international stimulus echoing the response to the 2007-08 global financial crisis. The fund said a U.S. rebound is moderating, the outlook is deteriorating for developing economies and global growth could suffer further if European policy makers put off measures agreed at a June summit to arrest the region’s instability.
“In the past three months, the global recovery, which was not strong to start with, has shown signs of further weakness,” the Washington-based IMF said in the report. “Downside risks continue to loom large, importantly reflecting risks of delayed or insufficient policy action.”
Fed Shifts Focus to Jobs as Unemployment Stalls Above 8% (Source: Bloomberg)
Joblessness is the blemish on Ben S. Bernanke’s report card. Since the recession ended in June 2009, the Federal Reserve chairman has achieved inflation near his target of 2 percent, bolstered capital across the banking system and helped underpin confidence in the U.S. economy that’s contributed to record-low borrowing costs for the nation. Meanwhile, the unemployment rate has stalled above 8 percent for 41 consecutive months. The failure to bring joblessness closer to Fed officials’ longer-run goal of 5.2 percent to 6 percent has prompted Bernanke and his lieutenants to emphasize the need for economic growth over price stability, said John Silvia, chief economist at Wells Fargo Securities LLC. Bernanke added to his record monetary stimulus last month and said more action will be needed without “sustained improvement” in the jobs outlook.
“The employment number just isn’t improving; it’s the thing that’s out of whack,” Silvia said in a telephone interview from his Charlotte, North Carolina, office. “Yes, you’ve got a dual mandate, but like everything else in life sometimes you’ve got to focus on one more than the other.” Bernanke, who is scheduled to deliver his semi-annual monetary-policy report to Congress today and tomorrow, said June 20 that policy makers are focusing “primarily” on the outlook for jobs in deciding whether to ease further. The Federal Open Market Committee last month prolonged its maturity-extension program, known as Operation Twist, through the end of the year by $267 billion.
Retail Purchases in U.S. Unexpectedly Decrease 0.5% (Source: Bloomberg)
Retail sales in the U.S. unexpectedly fell for a third month in June as limited employment gains took a toll on consumers. The 0.5 percent drop followed a 0.2 percent decrease in May, Commerce Department figures showed today in Washington. The decline exceeded the most pessimistic forecast in a Bloomberg News survey that called for a median 0.2 percent gain in sales. Other reports today showed manufacturing in the New York region picked up this month and U.S. inventories increased in May. The retail figures prompted economists at Morgan Stanley, Goldman Sachs Group Inc. and Credit Suisse to lower their forecasts for economic growth in the second quarter. A cooling job market is sapping the household spending that makes up 70 percent of the economy, curbing sales at retailers such as Target Corp. (TGT) and Macy’s Inc. (M)
“Weak spending growth and weak employment are reinforcing one another in a disconcerting negative feedback loop,” said Jay Feldman, a director of U.S. economics at Credit Suisse in New York, who cut his tracking estimate for second-quarter economic growth to 1.6 percent from 2 percent.
Manufacturing in New York Region Grew at a Faster Pace (Source: Bloomberg)
Manufacturing in the New York region expanded in July at a faster pace than anticipated, signaling factories will keep contributing to growth. The Federal Reserve Bank of New York’s general economic index rose to 7.4 from 2.3 in June. The median forecast of 51 economists surveyed by Bloomberg News called for an increase to 4.0. Readings greater than zero signal expansion in the so- called Empire State Index that covers New York, northern New Jersey and southern Connecticut. The last negative reading was in October. The figures may ease concern that factory production, which was bolstering the world’s largest economy, is faltering. At the same time, softening demand from Europe to China will likely weigh on exports of American-made goods and decelerating U.S. consumer spending may curb orders.
“The fact that manufacturing is still growing is good news,” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto, who projected a rise in the Empire index. “Any improvement, especially right now, should be welcomed. The sector is still contributing to economic growth.” In a separate report, the Commerce Department said retail sales in the U.S. declined for a third straight month in June. The 0.5 percent drop followed a 0.2 percent decrease in May.
Business Inventories in U.S. Increased More Than Forecast (Source: Bloomberg)
Inventories in the U.S. rose more than forecast in May as sales declined for a second month, indicating companies may limit factory orders. The 0.3 percent increase in stockpiles followed a revised 0.3 percent gain in April that was smaller than initially estimated, Commerce Department data showed today in Washington. The median forecast in a Bloomberg News survey projected a 0.2 percent gain. Sales fell 0.1 percent in May for a second month. Companies may reduce orders placed with manufacturers as they attempt to keep stockpiles in line with sales and gauge whether spending and the economy will keep slowing. Another report today showed retail sales fell in June for a third month.
“Business inventories are generally in pretty good shape, but businesses have been proactive and when seeing moderation in demand, keeping their inventories relatively tight as well,” Russell Price, senior economist at Ameriprise Financial Inc. in Detroit, said before the report. Smaller job gains have meant “slower income growth, and that translates directly to slower spending growth.” Businesses had enough goods on hand to last 1.27 months at the current sales pace in May, up from 1.26 months in April and the highest in a year.
Downgrade Anniversary Shows Investors Gained Buying U.S. (Source: Bloomberg)
When Standard & Poor’s downgraded the U.S. government’s credit rating in August, predictions of serious fallout soon followed. Republican presidential candidate Mitt Romney described it as a “meltdown” reminiscent of the economic crises of Jimmy Carter’s presidency. He warned of higher long-term interest rates and damage to foreign investors’ confidence in the U.S. U.S. House Budget Committee Chairman Paul Ryan said the government’s loss of its AAA rating would raise the cost of mortgages and car loans. Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said over time the standing of the dollar and U.S. financial markets would erode and credit costs rise “for virtually all American borrowers.” They were wrong. Almost a year later, mortgage rates have dropped to record lows, the government’s borrowing costs have eased, the dollar and the benchmark S&P stock index are up, and global investors’ enthusiasm for Treasury debt has strengthened.
Short Sales on NYSE Top 2011 Peak as September Bets Lost 21% (Source: Bloomberg)
Short sales on the New York Stock Exchange have climbed above last September’s peak, a level that preceded a five-month rally and heralded losses for bears. Shares borrowed and sold reached 5.35 percent of stock available for trading last month, according to data compiled by NYSE Euronext. (NYX) That eclipses 5.28 percent on Sept. 15, when bearish bets peaked last year and the 25 most-shorted companies in the Standard & Poor’s 500 Index (SPX) began a 21 percent advance, data compiled by Bloomberg show. Investors speculating on declines have pushed up short sales each of the last two years only to see the trades fizzle as actions by central banks helped stoke rallies. Bulls say the same thing will happen in 2012 as European leaders work to contain the debt crisis and companies beat earnings projections for a 14th straight quarter. For bears, slowing economies from China to Germany mean the bets will finally pay off.
“To the extent people have gone short U.S. domestic equities, I think they’re kind of wasting their time,” Michael Shaoul, chairman of Marketfield Asset Management in New York, which oversees more than $2 billion, said July 11. “As I said last year when Europe was falling apart and the U.S. was going down, once this panic is over we’ll go straight back up again.”
China Echoes 2009 Stimulus Planned Railway Spending Boost (Source: Bloomberg)
China’s railway infrastructure investment may double in the second half of this year from the first six months, aiding efforts to reverse a slowdown in the world’s second-biggest economy. Full-year spending will be 448.3 billion yuan ($70.3 billion), according to a statement dated July 6 on the website of the National Development and Reform Commission’s Anhui branch. That indicates about 300 billion yuan of investment in the second half, up from about 148.7 billion yuan in the first. China’s fixed-asset investment has already started to pick up and a jump in spending on railway construction would echo the stimulus rolled out during the global financial crisis. A decline in foreign direct investment reported by Vice Commerce Minister Wang Chao in Hong Kong yesterday underscored the toll that Europe’s debt woes and austerity measures are taking on Asia’s largest economy.
“China’s stimulus may be stronger than the market has expected,” said Zhang Zhiwei, a Hong Kong-based economist for Nomura Holdings Inc. who formerly worked for the International Monetary Fund. “There will be more positive signs in the coming months to confirm that China’s pro-growth policies are taking effect.”
China Slowdown Stymies Plan to Curb Shadow-Banking Risks (Source: Bloomberg)
China’s economic slowdown threatens to derail efforts to curb underground lending -- measures championed by Premier Wen Jiabao as crucial to future growth. The country grew in the second quarter at the slowest pace since the depths of the global financial crisis in 2009, 7.6 percent, putting pressure on China’s leaders to boost stimulus spending. Wen’s proposals to rein in the shadow-banking system, estimated to be about one-third the size of official lending, may be sidelined as a result, according to half a dozen economists interviewed by Bloomberg News.
“With an economy slowing more aggressively than the authorities perhaps want, the imperative to crack down on shadow financing becomes increasingly conflicted,” said Alistair Thornton, a Beijing-based economist with research firm IHS Global Insight Ltd. (IHS) “With the government increasingly in firefighting mode, the desire to push through tough reform in the financial sector inevitably takes a back seat to staving off a hard landing and managing global economic volatility.” Wen, whose term ends next year, has led calls to control what IHS estimates is $1.3 trillion of private financing, an amount equal to last year’s U.S. budget deficit. He has proposed channeling that money through government-regulated institutions to break what he called a “monopoly” on lending by state-owned banks and open a cascade of capital to China’s 42 million small and medium-sized businesses.
Tudou Drops as Growth Concerns Trigger Tumble: China Overnight (Source: Bloomberg)
Chinese equities fell in New York, sending the benchmark index to to the lowest level in nine months, on concern stimulus measures will take time to spur growth in the world’s second-largest economy. The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese shares in New York lost 1.4 percent to 86.55 yesterday, the lowest level since Oct 5. Tudou Holdings Ltd. (TUDO) led declines in Internet companies after the South China Morning Post said the resignation of the video website’s chief operating officer may prompt more people to leave. Aluminum Corp. of China Ltd. slid the most among government-owned companies after their combined first-half net income fell 12 percent.
The International Monetary Fund cut its 2013 global growth forecast yesterday, reducing projections for China’s growth this year to 8 percent from 8.2 percent three months ago. China’s Premier Wen Jiabao warned that the nation’s recovery is yet to build up momentum, according to a Xinhua News Agency report July 15, fueling speculation that extra economic support measures may be announced after a cabinet meeting this week. “People are pessimistic about Chinese stocks because they haven’t seen obvious and quick effects of the stimulus measures,” Elena Ogram, who manages $50 million in emerging market assets, including Chinese stocks, at Bank am Bellevue AG said by phone yesterday from Zurich. “People will remain skeptical until there’s some confirmation that the stimulus which is being gradually introduced this year would feed through into the economy.”
Wen Says China’s Economic Recovery Yet to Show Momentum (Source: Bloomberg)
China’s Premier Wen Jiabao warned that the nation’s recovery is yet to build up momentum, fueling speculation that extra economic support measures may be announced after a cabinet meeting this week. “It should be clearly understood that the momentum for a stable rebound in the economy has not yet been established,” Wen said during an inspection tour in southwest Sichuan province, according to a Chinese-language report from the official Xinhua News Agency yesterday. At the same time, expansion is within the targeted range and measures to stabilize growth are “bearing fruit,” he said. China’s State Council may this week give details of easing measures to support growth after provincial visits by Wen and Vice Premier Li Keqiang to check on the economy, Nomura Holdings Inc. said in a note today. The China Securities Journal reported that a meeting as early as July 18 may be followed by policy steps, citing unidentified analysts.
“The State Council meeting may help shed some light on specific policy easing measures,” said Zhang Zhiwei, a Hong Kong-based economist for Nomura.
Tokyo Anti-Nuclear Rally Attracts Thousands as Protests Grow (Source: Bloomberg)
Tens of thousands of people packed Tokyo’s Yoyogi Park yesterday for Japan’s biggest anti-nuclear rally since the Fukushima disaster last year in growing protests against government moves to restart atomic reactors. Speakers at the demonstration, which broke up at 1:30 p.m. into three separate marches through Japan’s capital, included Nobel laureate Kenzaburo Oe and musician Ryuichi Sakamoto, who wrote the score for the movie “Merry Christmas, Mr. Lawrence.” Japan’s Prime Minister Yoshihiko Noda angered nuclear opponents last month when he approved the restart of two reactors at Kansai Electric Power Co. (9503)’s Ohi plant, which were shutdown along with other units for safety checks after the meltdown and radiation release from the wrecked Fukushima station. A Mainichi newspaper poll on June 4 showed as many as 71 percent of Japanese opposed the restart.
“The government allowed the Ohi nuclear reactors to restart and it’s going to allow more reactors to restart. We feel we are insulted by the government,” said Oe in his speech to the rally. “We have to stop the government’s plan,” said Oe, 77, who received the Nobel Prize for Literature in 1994.
South Korea’s Bahk Rules Out Additional Fiscal Stimulus (Source: Bloomberg)
South Korean Finance Minister Bahk Jae Wan ruled out additional fiscal stimulus for now, saying it could do more harm than good because the global economy is too weak to make it meaningful. “You don’t plant a tree in winter,” Bahk said yesterday in an interview with Bloomberg News in Seoul. While Asia’s fourth-largest economy retains room to boost growth both through monetary and fiscal measures, 3 percent growth “is not bad, given the global economy,” he said. Gross domestic product rose 2.8 percent in the first quarter from a year before. South Korea’s government and central bank have stepped up efforts to ease the impact from Europe’s debt crisis, a Chinese slowdown and muted U.S. job creation. The Bank of Korea unexpectedly cut its benchmark rate on July 12 and the Finance Ministry announced economic support measures on June 28.
Bahk, 57, said there was no way to say if the impact on South Korea’s economy from the European debt crisis has peaked, though the situation may improve later this year with ”occasional hiccups.” Policy makers in Seoul “still have ammunition” and would favor joining other nations in a coordinated approach if the global economy worsens significantly, he said.
India Inflation Unexpectedly Eases; Still BRIC’s Fastest (Source: Bloomberg)
India’s inflation unexpectedly eased in June while exceeding 7 percent for a fifth straight month, indicating price pressures may limit room to join a monetary stimulus drive stretching from China to Europe. The benchmark wholesale-price index rose 7.25 percent from a year earlier, after climbing 7.55 percent in May, the Commerce Ministry said in a statement in New Delhi today. The median of 36 estimates in a Bloomberg News survey was 7.61 percent. Jumps in the cost of living in a nation where most people get by on less than $2 per day prevented the Reserve Bank of India from cutting interest rates last month even with economic growth at a nine-year low. Governor Duvvuri Subbarao said June’s inflation reading is “way above the threshold level,” adding the bank’s policy aims at “restraining demand.”
“The fall is not the start of any trend and inflationary pressures are still predominant,” said Mumbai-based Prasanna Ananthasubramanian, chief economist at ICICI Securities Primary Dealership Ltd. “The Reserve Bank will not take this as a big move and they will not cut rates now.” The rupee, which has tumbled about 19.5 percent against the dollar in the past 12 months, weakened 0.3 percent to 55.3262 per dollar at the close in Mumbai. The BSE India Sensitive Index fell 0.6 percent, while the yield on the 8.15 percent government bond due June 2022 declined to 8.05 percent from 8.1 percent on July 13.
Singapore’s Home Sales Drop May Curb Price Gains: Southeast Asia (Source: Bloomberg)
Singapore’s biggest decline in home sales in 2 1/2 years may slow gains that pushed property prices to a record, easing concerns of further government curbs. The island state’s private residential property sales dropped 17 percent to 5,572 units in the three months ended June 30 from the previous quarter, according to data released by the Urban Redevelopment Authority yesterday. That’s the biggest quarterly decrease since the three months ended December 2009. “It’s an indication that things are slowing down,” Carolyn Goh, a spokeswoman at PropNex Realty, a Singapore-based real estate brokerage with 4,000 agents, said in an interview yesterday. “It looks like further cooling measures are unwarranted but it also depends on how the market responds in the second half.”
Singapore has been attempting to rein in prices since 2009, when it barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments still being built. The government said last week it’s prepared to enhance measures aimed at ensuring a “stable and sustainable” housing market, even as gains in home prices slowed this year. Home sales have climbed to 12,254 units this year through June 30, according to data from the authority. About 9,000 homes were sold in the first half of last year, according to PropNex. Suburban projects will be the “driving force” for developers in the second half of 2012, PropNex said.
German Court Won’t Rule on Bailout Fund for 8 Weeks (Source: Bloomberg)
Germany’s top court will take more than eight weeks to decide whether to suspend the euro-area’s permanent bailout fund, leaving Europe’s anti-crisis coffer less than half full to respond to the debt crisis. The Federal Constitutional Court in Karlsruhe will issue a ruling on bids to halt Germany’s participation in the European Stability Mechanism and the fiscal pact on Sept. 12, it said today in an e-mailed statement. That’s more than two months after it held a hearing on the measures. “The court has held a comprehensive hearing on the issue and will now take the time it needs to reach a decision,” German government spokesman Steffen Seibert told reporters in Berlin today. Finance Minister Wolfgang Schaeuble warned the hearing last week that a delay in activating the ESM “could lead to a significant worsening” of the crisis.
The delay could complicate efforts to resolve the 2 1/2- year-old crisis as European leaders squabble over the details of bailout conditions, bank rescues and burden sharing. In an interview yesterday, Chancellor Angela Merkel gave no ground on German demands for more centralized control over euro member states in return for joint liabilities.
Hollande Pressure on Peugeot Seen Limited by Mounting Losses (Source: Bloomberg)
French President Francois Hollande says PSA Peugeot Citroen (UG)’s plan to close a factory and slash 14,000 jobs won’t be tolerated. History suggests otherwise. In the last major clash between a sitting French president and a company over corporate downsizing, Hollande’s predecessor Nicolas Sarkozy vowed in 2008 that an ArcelorMittal (MT) plant in northeastern France would never close and jobs would be saved. A year later, the world’s biggest steel company shut the factory. Hollande, elected in May after pledging to block a “parade of firings,” said July 14 he would lean on Peugeot to rework a plan intended to stem losses and trim production capacity. The government will report the findings of a review later this month, as well as measures to prop up the French auto sector. “The state has no means to put pressure on Peugeot,” Florent Couvreur, an analyst at CM-CIC Securities in Paris. “We’ll see the plan they will present on July 25.”
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