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U.S. Economy: Consumer Confidence, Home Prices Exceed Forecasts
By Courtney Schlisserman and Shobhana Chandra
Aug. 25 (Bloomberg) -- U.S. consumer confidence climbed more than forecast and national home prices increased for the first time in three years, signaling government efforts to right the world’s biggest economy are starting to pay off.
The Conference Board’s confidence
index rose to 54.1 in August, the first gain since May, as consumers became less concerned about the outlook for jobs, the New York research group said today. The S&P/Case-Shiller
home-price index advanced 2.9 percent in the second quarter from the previous three months, the first increase since 2006 and the biggest in almost four years.
The reports underscore why President
Barack Obama gave
Ben S. Bernanke a vote of confidence today by nominating the head of the Federal Reserve to a second term as chairman. Indications the housing crisis that triggered the worst recession since the 1930s is dissipating boosted stocks even as the White House downgraded growth and deficit forecasts.
“We’ve moved into the recovery phase,” said
Conrad DeQuadros, senior economist at RDQ Economics in New York. “The talk about the recession being over, combined with better economic data, stabilization in housing and strength in equity markets is driving consumer confidence higher.”
The Standard & Poor’s 500 index rose 0.8 percent to 1,033.35 at 11:39 a.m. in New York. Treasuries dropped, sending the yield on the benchmark 10-year note to 3.50 percent compared with 3.48 percent late yesterday.
Four More Years
Obama nominated Bernanke, who led the biggest expansion of the central bank’s power in its 95-year history to stem the worst financial crisis since the Great Depression, for a second four-year term starting Jan. 31. The appointment still needs to be approved by the Senate.
“It’s a reasonably positive batch of news we got this morning, including the renomination of Chairman Bernanke,”
Julia Coronado, a senior U.S. economist at BNP Paribas in New York, said in a Bloomberg Television interview.
The White House Office of Management and Budget today forecast the economy will grow 2 percent in 2010, less than the 3.2 percent expected in May, and the contraction this year will be more than twice as deep as previously anticipated.
Unemployment will surge to 10 percent this year and the budget
deficit will be $1.5 trillion next year, both higher than the prior estimates, according to the mid-year review.
Consumer confidence was projected to rise to 47.9, according to the
median estimate in a Bloomberg News survey of 67 economists. Forecasts ranged from 42 to 51. The index averaged 57.95 last year. The Conference Board revised the July reading up to 47.4 from a previously reported 46.6.
Auto Plan
Consumers this quarter have benefited from government efforts such as the “cash-for-clunkers” plan and extended jobless benefits aimed at buttressing spending, which accounts for 70 percent of the economy.
The Conference Board’s measure of present conditions increased to 24.9 from 23.3 the prior month. The gauge of expectations for the next six months jumped to 73.5, the highest since December 2007, from 63.4.
“The economy is on a recovery path, that’s the overall picture,” said
Jonathan Basile, an economist at Credit Suisse in New York. “We’re on the path but we’re not necessarily all the way to feeling better yet. We can be encouraged by the gains in expectations and we can be encouraged by the increase in house prices.”
The share of consumers who said jobs are plentiful rose to 4.2 percent. The proportion of people who said jobs are hard to get decreased to 45.1 percent from 48.5 percent.
Spending Limited
Some retailers are finding consumers are still retrenching even as the economy shows signs of improvement.
AnnTaylor Stores Inc., which sells women’s business attire, last week reported a 21 percent drop in second-quarter revenue and forecast continued pressure on sales this year.
“There is no question our client is more cautious in her spending today, updating her wardrobe with fewer pieces and shopping her own closet,”
Kay Krill, president and chief executive officer of AnnTaylor, said on a conference call.
The S&P/Case-Shiller report showed home prices nationally were down 14.9 percent in the second quarter from a year earlier, the smallest drop in a year. The group’s monthly index of 20 cities declined 15.4 percent in June from a year earlier, the smallest drop since April 2008. The gauge rose from the prior month by the most in four years.
Lower prices and government stimulus efforts have made homes more
affordable to first-time buyers, spurring increases in sales that will eventually stem the slide in property values. Gains in housing and stocks will speed the process of restoring the record loss of wealth that has shackled consumer spending.
“The sharp freefall in prices is over,” said
Michelle Meyer, an economist at Barclays Capital Inc. in New York. “People are entering the market and that is starting to normalize prices. It’s a clear positive.”
Compared with the prior month, 18 of the 20 areas covered showed an increase, while two showed a decrease. Cleveland and San Francisco had the biggest monthly gains.
To contact the reporters on this story:
Courtney Schlisserman in Washington
cschlisserma@bloomberg.net;
Shobhana Chandra in Washington at
schandra1@bloomberg.net Last Updated: August 25, 2009 11:44 EDT
U.S. Stocks Advance as Confidence, Home Sales Beat Forecasts
By Elizabeth Stanton
Aug. 25 (Bloomberg) -- U.S. stocks rose as better-than- estimated consumer confidence and home prices bolstered optimism the recession is ending. Treasuries fell before a record-tying $42 billion sale of two-year notes, while crude oil slumped.
Macy’s Inc. and Abercrombie & Fitch Co. added more than 4 percent as the Conference Board’s measure of
consumer sentiment increased to 54.1, topping the median projection of 47.9.
Pulte Homes Inc., the nation’s biggest builder by market value, advanced 3.7 percent as the S&P/Case-Shiller home-price
index for 20 U.S. cities fell by the smallest amount since April 2008.
The
Standard & Poor’s 500 Index added 0.8 percent 1,033.83 at 11:41 a.m. The Dow Jones Industrial Average increased 79.28 points, or 0.8 percent, to 9,588.56, gaining for the sixth straight day. Both gauges reached their highest levels of 2009.
“Obviously there’s a lot of questions about whether the economic recovery is sustainable, but stocks tend to react before the fundamentals do,” said
Jeffrey Coons, who helps oversee $21 billion as co-director of research at Manning & Napier Advisors Inc. in Fairport, New York. “We haven’t yet begun to see investors shift more assets into equities, so we think stocks have more room to appreciate.”
The S&P 500 has advanced five straight months and in five of the past six weeks following better-than-forecast corporate profits and signs of an improving economy. More than 72 percent of its companies beat the average analyst estimate for second- quarter earnings, the most since Bloomberg began tracking the data in 1993. The Conference Board’s index of leading economic indicators has risen every month since April. With today’s gain, the S&P 500 has risen 53 percent from a 12-year low in March.
Europe, Asia Shares
The
Dow Jones Stoxx 600 Index of European shares advanced 0.4 percent after earlier falling as much as 0.8 percent. The MSCI Asia Pacific Index slipped 0.3 percent as the Shanghai Composite Index slid for the first time in four days, decreasing 2.6 percent.
Wen Jiabao, China’s premier, said yesterday that excess industrial capacity may limit growth and authorities can’t be “blindly” optimistic.
The yield on 10-year Treasury notes, which move inversely to the price of the securities, rose 0.3 point to 3.50 percent. The Treasury will auction the two-year notes at 1 p.m. today, followed by $39 billion of five-year notes tomorrow and $28 billion of seven-year notes on Aug. 27.
The U.S. government is selling the securities to pay for its record budget deficit, which resulted from measures to prop up the economy. The
deficit will widen to $1.5 trillion next year, reflecting a “deeper recession” than previously expected, White House budget chief
Peter Orszag said today.
Teen Clothing
Macy’s, the second-biggest U.S. department-store chain, rose 4.1 percent to $15.95. Abercrombie & Fitch, a teen-clothing retailer, climbed 4.1 percent to $33.33. The S&P 500 Consumer Discretionary Index advanced 1.7 percent, the most among 10 industries, following the consumer-confidence report.
Pulte Homes, the biggest U.S. homebuilder, advanced 3.8 percent to $13.10. The four homebuilders in the S&P 500 gained 3.7 percent as a group, and reached the highest level since Oct. 2. The S&P/Case-Shiller home-price index declined 15.4 percent in June from a year earlier, less than the median economist estimate of 16.4 percent. Prices rose from the prior month by the most in four years.
More than 72 percent of S&P 500 companies beat the average analyst estimate for second-quarter profit, the biggest proportion since Bloomberg began tracking the data in 1993.
Big Lots Inc. rose 7.6 percent to $25.85. The closeout retailer said second-quarter profit from continuing operations was 35 cents a share, or 15 percent
more than the average analyst estimate.
Hamburgers
Burger King Holdings Inc. increased 8.9 percent to $19.23. The second-largest U.S. hamburger chain said fourth-quarter profit was 43 cents a share,
topping the average estimate by 32 percent, as the company expanded overseas.
Harman International Industries Inc. rose the most in the S&P 500, climbing 9 percent to $29.55. The maker of audio systems for homes and vehicles was rated “overweight” in new coverage at JPMorgan Chase & Co., which said the company has the potential to cut costs and boost sales.
Most U.S. stocks fell yesterday, led by financial companies, after SunTrust Banks Inc. said lenders face more credit losses and commercial real estate may falter through 2010. The S&P 500’s five-month rebound left it the
valued at 18.9 times the trailing 12-month operating profits of its companies last week, the highest ratio since 2004, according to data compiled by Bloomberg.
Manitowoc Co. fell 5.8 percent to $6.48. The crane maker was picked to replace CareFusion Corp., which is being spun off from Cardinal Health Inc., in the S&P 500.
Denbury Resources Inc. fell 5.7 percent to $15.92. The oil and natural-gas producer was cut to “neutral” from “buy” at UBS AG.
To contact the reporter on this story:
Elizabeth Stanton in New York at
estanton@bloomberg.net.
Last Updated: August 25, 2009 11:47 EDT
TOKYO
TOKYO - JAPANESE share prices closed down 0.79 per cent on Tuesday as investors took profits a day after a strong rally driven by mounting optimism about prospects for a global economic recovery.
The benchmark Nikkei-225 index slipped 83.69 points to 10,497.36. The broader Topix index of all first section shares declined 5.16 points, or 0.53 percent, to 965.11.
HONG KONG
Hong Kong share prices ended the morning 1.11 per cent lower on Tuesday on profit taking as the bourse tracked falls across the region.
The benchmark Hang Seng Index finished the session down 228.53 points at 20,307.41. Turnover was HK$29.74 billion Hong Kong dollars (S$5.52 billion).
SHANGHAI
Chinese shares tumbled 3.35 per cent by midday Tuesday a day after Premier Wen Jiabao said the economic situation was 'still very grave", dealers said.
The Shanghai Composite Index, which covers both A and B shares, was down 100.39 points at 2,893.04. The key index rebounded 1.10 percent following big fluctuations in the previous week.
'(Monday's) rally is just a technical rebound following weakness in the past three weeks, further upside is likely to be limited as there's no positive factor to push it up,' Shenyin & Wanguo Securities analyst Qian Qimin told Dow Jones Newswires.
Mr Wen said on a trip to eastern Zhejiang province on Monday that the country's economic performance showed increasingly positive signs, but stressed any recovery remained fragile.
'There are still a lot of unstable and uncertain factors ahead and the economic situation is still very grave, although both the world economy and the national economy are making positive changes,' he said, according a State Council statement.
Investor sentiment remained sluggish due to worries over tightening liquidity and the outlook of corporate earnings, traders said.
The Shanghai A-share index shed 105.50 points, or 3.36 per cent, to 3,036.35, while the Shenzhen A-share index lost 32.15 points, or 3.06 per cent, to 1,017.04.
KUALA LUMPUR
At 12.30pm today, there were 203 gainers, 320 losers and 201 counters traded unchanged on the Bursa Malaysia.
The FBM-KLCI was at 1,170.39 down 4.10 points, the FBMACE was at 4,165.61 down 17.24 points, and the FBMEmas was at 7,900.98 down 31.24 points.
Turnover was at 346.846 million shares valued at RM394.649 million (S$162 million).
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S'pore shares open lower
SINGAPORE shares opened lower on Tuesday with the benchmark Straits Times Index down 13.74 points, or 0.53 per cent, at 2,598.59.
About 40.3 million shares exchanged hands in the first few minutes of trading.
Losers beat gainers 39 to 25.
Stock gains peter out
Wall Street retreats after the Dow, S&P 500 and Nasdaq had surged to new 2009 highs.
By Alexandra Twin, CNNMoney.com senior writer
Last Updated: August 24, 2009: 5:51 PM ET
NEW YORK (CNNMoney.com) -- Stocks struggled Monday, as investors turned cautious after pushing the Dow, S&P 500 and Nasdaq to new 2009 highs.
The Dow Jones industrial average (INDU) added 3 points, or less than 0.1%. The S&P 500 (SPX) index lost less than one point. The Nasdaq composite (COMP) lost 3 points, or 0.1%.
All three major gauges had risen soundly through the early afternoon, with rising oil prices and continued economic optimism lifting the market. But the gains dissolved in the afternoon, with only the energy sector remaining buoyant.
"We've got a lot of economic news coming out later this week and I think people are kind of waiting to see if the reports confirm the economy is bottoming," said John Wilson, chief technical strategist at Morgan Keegan.
Standouts this week include a consumer confidence report Tuesday, housing reports Tuesday and Wednesday and the revised read on second-quarter GDP growth Thursday.
Crude oil prices touched a fresh 10-month high and lifted oil services stocks, including Dow components Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500). But big consumer names including Kraft Foods (KFT, Fortune 500), Coca-Cola (KO, Fortune 500) and Home Depot (HD, Fortune 500) all declined.
Stocks rallied Friday after Fed chief Ben Bernanke said the economy is near a recovery and existing home sales posted their biggest jump in two years. That sent the Dow to its highest close since Nov. 4, the S&P 500 to its highest close since Oct. 6 and the Nasdaq to its highest close since Oct. 1.
Stocks have had a surprisingly upbeat summer, as investors have welcomed a number of better-than-expected quarterly results and economic reports.
The S&P 500 is up 52% from the March 9 lows, as of Friday's close. And the Dow is up 45% during that same time period. After a run of that magnitude in such a short period of time, many analysts predict that stocks are due for a pullback, perhaps by as much as 15%. However, the momentum remains up, and with historically high amounts of cash held in mutual funds, the advance doesn't appear to be flagging.
"A lot of people didn't get in at the March lows and there's still a lot of buying interest out there," Wilson said. "We could see a number of 3 to 5% corrections, but I think people will use them to get back in."
Company news: Advanced Micro Devices (AMD, Fortune 500) gained 8% after Citigroup upgraded the chipmaker to "buy" from "hold." The brokerage said that while AMD is struggling now, its businesses are starting to stabilize.
Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) shares both surged on economic optimism and in reaction to Friday news that the Federal Reserve bought $5.6 billion of Fannie, Freddie and Federal Home Loan Bank debt.
Nokia (NOK) is planning to expand its traditional cell phone business by introducing a mini-laptop early next month. The Nokia Booklet 3G will use Microsoft's Windows software.
Dow component Procter & Gamble (PG, Fortune 500) said its selling its pharmaceuticals business to drugmaker Warner Chilcott (WCRX) for $3.1 billion. P&G shares were little changed, while Warner Chilcott shares surged 27%.
Market breadth was mixed. On the New York Stock Exchange, winners narrowly edged losers on volume of 1.23 billion shares. On the Nasdaq, decliners topped advancers seven to six on volume of 2.06 billion shares.
This last week of summer is expected to bring low trading volume as market pros head out on vacation or hold off on making any big changes in their portfolios until the fall.
World markets: Global markets followed the lead of U.S. markets Friday. Asian markets advanced, with the Japanese Nikkei rising 3.4%. European markets rallied.
Oil: U.S. light crude oil for October delivery rose 48 cents to settle at $74.37 a barrel on the New York Mercantile Exchange, a 10-month high.
Bonds: Treasury prices rallied at the start of a week that brings over $100 billion in government debt auctions. The rise in prices lowered the yield on the benchmark 10-year note to 3.48% from 3.56% Friday. Treasury prices and yields move in opposite directions.
Other markets: COMEX gold for December delivery fell $11.10 to settle at $943.60 an ounce.
In currency trading, the dollar fell versus the euro and gained against the Japanese yen.
First Published: August 24, 2009: 9:51 AM ET
From OCBC Investment Research:
Dow Jones Industrial Average (DJIA) – Strong breakout to new 2009 high
Marching towards the 9652 resistance:With the index staging a strong bullish breakout to set a new 2009 high on Friday, we expect more upside potential; the index could head towards the next key resistance of 9652 this week.
Technical indicators showing positive signs: With the daily RSI rebounding off strongly at the 50% level and the MACD on the verge of a bullish crossover, we could see bullish momentum building up in the days ahead.
Shanghai Stock Exchange Composite (SSEC) – Retesting the 3000 key resistance
More upside in the coming week: SSEC is likely to re-test the 3000 key support-turned-resistance level in the coming week after staging a strong rebound off its 8-month downtrend line.
Indicators show signs of a turnaround:With the RSI already showing oversold signals and the MACD showing a possible bottoming, the bearish momentum could be coming to an end soon.
Hang Seng Index (HSI) – Back to the 20,000 level
At an important juncture: With the index retreating back to the 20,000 level last week, much remains to be seen whether the index will be able to sustain above this level.
Technical indicators still bearish:With the RSI falling below the 50% level and the MACD indicator still heading lower, the odds may favor the bears
Barrons
West Will Languish; Asia Will Lead
Christopher Wood, Strategist, CLSA Asia-Pacific Markets
By LESLIE P. NORTON | MORE ARTICLES BY AUTHOR
AN INTERVIEW WITH CHRISTOPHER WOOD: The author of the popular newsletter
Greed & Fear thinks Asia will benefit most from the Western monetary
easing.
AFTER THE RECENT JUDDER IN THE ASIAN MARKETS, WHO BETTER to ask about the
region's prospects than Christopher Wood? The Hong Kong-based strategist
for CLSA Asia-Pacific Markets, a unit of Crédit Agricole, pens the widely
followed newsletter Greed & Fear.
He was early to spot the problems in the U.S. mortgage market and their
global financial implications, writing about them back in 2005.
Even earlier, he espied the troubles brewing in Thailand, before the 1997
Asian crisis.
Midway through last week, the MSCI AC Asia ex-Japan index had risen by 79%
in U.S. dollar terms since the October 27 bottom, while the Standard &
Poor's 500 is up just 17% over the same period. Wood acknowledges a modest
correction may be in order, but believes prospects are good for a long-term
bull market in Asia. To learn why, keep reading.
Barron's: You sure got this crisis right. Where are we now?
Wood: This financial crisis in the Western world will lead to a long period
of anemic growth. The data that is making people more optimistic on the
U.S. right now is tending to be production-oriented data like the ISM [a
survey of manufacturers] or car sales. But there is very little sign to me
that U.S. consumer demand is recovering or that real releveraging is taking
place.
In fact, all the evidence both in the U.S. and Euroland is that the
consumer is going into long-term retrenchment. Even when the banks in
America and Europe become healthier in coming quarters and years, I believe
demand for credit will be much less than it was in the last five, ten
years. So, we are going into a long-term period of deleveraging. We'll
continue to see deflation backdrops in the Western world. The best case is
a long period of subpar, anemic growth.
What does this mean for equities?
My formal target has been a 1050 on the S&P 500 [versus the current level
around 1,000]. But that is just a technical view. Either in the fourth
quarter of this year or definitely next year, the S&P is going to have a
proper correction, by which I mean declines below the technical level of
875. There is no evidence that the U.S. or British consumer is really
recovering. Actually, America and Europe remain at risk of Japanese-style
liquidity traps despite all this fiscal monetary policy activism you have
seen in the West.
From a global equity investor's standpoint, Asia and the emerging markets
stand out as a place to invest. I haven't been surprised that Asia and
emerging markets have outperformed since the autumn lows. It is a very
positive sign that Asia and emerging markets did not make new lows when the
S&P did in March. It's also positive that trading volumes have increased
for most of the period since the start of the year in the Asian stock
markets' recovery, whereas trading volumes were broadly static on the S&P.
Those rising volumes I attribute to growing domestic investor participation
within Asia.
The biggest beneficiaries of Western monetary easing aren't going to be
indebted Western consumers. The biggest beneficiary of monetary easing in
the West is going to be Asia...and emerging-market asset prices. That's
primarily equities and real estate, because the money generated by all this
excess liquidity from dramatic monetary easing in the past year or more, is
going to flow to the best story.
Which one?
When I say you want to be overweight Asia and emerging markets, I'm talking
predominantly about investing in domestic themes in [Asia and emerging]
markets, such as financial services, real estate, domestic infrastructure.
If I was advising a big global or domestic U.S. investor that didn't have
emerging-market expertise that just wanted to concentrate on three big
markets, I would advise them to invest in China, India and Brazil, because
they are all good stories.
Different, though.
Well, China is a weird mix of command economy and private-sector
capitalism. If you invest in the blue chips, you are predominantly
investing in state-owned enterprises, be they China Mobile [ticker: CHL],
Industrial & Commercial Bank of China [1398.Hong Kong], China Life
Insurance [LFC], PetroChina [PTR].
The advantage is that these are dominant companies without competitive
threat. You're not going to have huge corporate-governance abuse, because
[people who do that in China] are at risk of being executed.
The negative is, they are not pure capitalist enterprises, and you have
always got the regulatory risk if they decide to change the rules of the
game. That's the China story. The China index is predominantly domestic
demand.
India is very different. What's good about China tends to be bad about
India. And what's bad about India tends to be good about China. India is
much more the U.S. model of the stock market. You have a huge number of
companies, a wide diversity of sectors. In India, the question of who wins
and who loses in any sector is much more important than in China. You have
more than 100 years of stock-market history, and a more Western-style legal
system. In other words, a real element of due process, which is not the
case in any other emerging market. India is great, India is my favorite
emerging-market equity story. If I was only going to invest in one, I would
invest in India because of the wide diversity of companies you could invest
in. But it will always have a premium, good price/earnings rating.
The other virtue about India is that export is unimportant in terms of
gross domestic product. China is more about exports than India, but it's
not all about exports, either. That's why both China and India this year
have confounded most economists' forecasts, growing much more than most
people were predicting at the start of the year despite the fact that the
U.S. is barely growing.
Then there's Brazil, which I don't follow closely, because CLSA is an Asia
specialist. The big story there remains the ability for real interest rates
to really collapse, because they finally cracked inflation. Inflation is
very low. They can bring rates to single-digits, and that will encourage
the development of a middle class. Obviously, it has the resources as well.
BRICs without Russia? Why not Russia?
Russia is okay, but less diversified than Brazil and more a pure oil play.
The decoupling story, once debunked, is being revived.
I wouldn't put it that strongly. I would look at it like this: At the
beginning of 2008, the investment community had basically largely embraced
the notion of decoupling. By the end of '08, the investment consensus had
embraced the precisely opposite notion that China and Asian emerging
markets would prove to be export train wrecks correlated with the U.S.
consumer.
The reality is something in the middle, what I call macroeconomic,
incremental decoupling -- a boring, middle-of-the-road view. China, India
growth has slowed, but not to the extent of some of the more bearish
forecasts. Many were correctly bearish on the U.S. and Euroland...[while]
China will grow 8% to 9% this year. It has the help of a big command
economy stimulus. The natural excuse for a breather is renewed tightening
concerns in China, but I don't think China will be slamming on the brakes.
India will probably grow more than 6%. In India, there's no command-economy
stimulus, because the government couldn't organize one. But it's not a
train wreck correlated with the U.S. consumer. Today, the trend in
bank-lending in India remains healthy.
Stock-market decoupling is a different story. As of today, we have zero
evidence of the stock-market decoupling. We've had dramatic outperformance
by Asia and emerging markets since the October low.
When stock markets correct, Asian and emerging markets normally
underperform on the downside as much as they outperformed on the upside. We
can't stress-test if Asia and emerging-market stock markets have started to
decouple until the next time the S&P has a proper correction -- let's say
below 875. The key issue for people involved in Asian emerging markets is
how resilient they prove to be. Now, if they only go down as much as the
S&P in the context of the dramatic outperformance we've seen to date, that
would be incredibly positive. But they've demonstrated this year their
macroeconomic resilience.
You've talked about an asset bubble in Asia. How far into it are we?
Valuations have expanded quite dramatically.
No way I would call it an asset bubble yet. All we've had is
outperformance. And Asian valuations collapsed late last year way beyond
where common sense suggested they should stop, simply because hedge funds
and funds-of-funds were liquidating the one investment they still had made
some money on, and didn't face lockouts in Asian and emerging-market
equities. If you were a fund-of-funds with a lot of hedge funds owning
garbage credit, you just redeemed what you could sell. Asian valuations are
not cheap today. But in a real bubble, Asia ends up trading two or three
times the P/E of the S&P.
In the very short term, frankly, Asia has outperformed so much that there's
a risk of the S&P outperforming Asia. On a three-month basis, if you had
not invested anything in Asia up to now and had $100 to invest, I'd only
invest a third of the amount today, and the rest after a correction.
What are some of the stresses in Asia?
The big stresses remain in the West, where monetary policy remains very
easy for a long time. If Western policy remains very loose, that could
trigger a speculative bubble in Asia. You know, that doesn't have to
happen. The Asian policy makers can counter that by tightening
aggressively. But there is a remarkable lack of stress in Asia and emerging
markets, because there's a remarkable lack of consumer debt, corporate
debt, and government debt. There are high savings rates. They are just in
much better condition than the developed world.
What themes do you like and dislike?
I like financial services, real estate and domestic infrastructure -- the
three broad domestic sectors linked to a domestic demand, asset-reflation
theme. If you have got the ability to buy smaller stocks, then you can buy
consumer stocks. [Wood's thematic model portfolio is shown on the nearby
table.] Search-engine stocks are also domestic demand proxies. I would be
less aggressive investing in exporters, but there's nothing I aggressively
dislike in Asia, I'd say.
(Embedded image moved to file: pic05436.gif)
When stock markets correct, Asian and emerging markets normally
underperform on the downside as much as they outperformed on the upside. We
can't stress-test if Asia and emerging-market stock markets have started to
decouple until the next time the S&P has a proper correction -- let's say
below 875. The key issue for people involved in Asian emerging markets is
how resilient they prove to be. Now, if they only go down as much as the
S&P in the context of the dramatic outperformance we've seen to date, that
would be incredibly positive. But they've demonstrated this year their
macroeconomic resilience.
You've talked about an asset bubble in Asia. How far into it are we?
Valuations have expanded quite dramatically.
No way I would call it an asset bubble yet. All we've had is
outperformance. And Asian valuations collapsed late last year way beyond
where common sense suggested they should stop, simply because hedge funds
and funds-of-funds were liquidating the one investment they still had made
some money on, and didn't face lockouts in Asian and emerging-market
equities. If you were a fund-of-funds with a lot of hedge funds owning
garbage credit, you just redeemed what you could sell. Asian valuations are
not cheap today. But in a real bubble, Asia ends up trading two or three
times the P/E of the S&P.
In the very short term, frankly, Asia has outperformed so much that there's
a risk of the S&P outperforming Asia. On a three-month basis, if you had
not invested anything in Asia up to now and had $100 to invest, I'd only
invest a third of the amount today, and the rest after a correction.
What are some of the stresses in Asia?
The big stresses remain in the West, where monetary policy remains very
easy for a long time. If Western policy remains very loose, that could
trigger a speculative bubble in Asia. You know, that doesn't have to
happen. The Asian policy makers can counter that by tightening
aggressively. But there is a remarkable lack of stress in Asia and emerging
markets, because there's a remarkable lack of consumer debt, corporate
debt, and government debt. There are high savings rates. They are just in
much better condition than the developed world.
What themes do you like and dislike?
I like financial services, real estate and domestic infrastructure -- the
three broad domestic sectors linked to a domestic demand, asset-reflation
theme. If you have got the ability to buy smaller stocks, then you can buy
consumer stocks. [Wood's thematic model portfolio is shown on the nearby
table.] Search-engine stocks are also domestic demand proxies. I would be
less aggressive investing in exporters, but there's nothing I aggressively
dislike in Asia, I'd say.
I also think Asian currencies are long-term appreciation stories, another
reason to own the equities. Asian currencies are going to be relatively
safe havens compared with Western currencies, because they are not going to
blow up their solvent balance sheets bailing out banks. And basically, on a
five-year view, I'm expecting investors to lose confidence in Western paper
currencies.
Tell us about Taiwan.
This is a specific story that has nothing to do with the general Asian
theme, based on political developments. Sooner or later, you will see a
formal end of hostilities or tensions between China and Taiwan, which will
lead to a dramatic improvement in economic links. That will lead to a huge
rerating in equity prices in Taiwan, and probably also an appreciation of
the [New Taiwan] dollar. Over the past year you've already seen pretty
significant developments, most importantly a growing number of direct
flights. On a five year view, I'd expect more integration: Chinese banks
would be able to function in Taiwan and vice versa, growing investments by
big Chinese companies in Taiwan, and Taiwan companies integrating their
China operations into reported results. This is a very good story and
people should buy Taiwan on pullbacks if they don't already own it, and
take a long-term bullish view of the NT$.
How about Japan, which votes in a parliamentary election on August 30?
It isn't an emerging market. But if the DPJ [Democratic Party of Japan]
does win the election as expected, that can only be a potential positive.
It creates the hope of change and [of] a more domestic-demand-driven
policy.
If the equity-market rally keeps going, Japan is overdue some
outperformance, particularly the exporters, which are actually doing some
genuine cost-cutting. But it has all kinds of structural issues that the
rest of Asia doesn't have. The most interesting domestic sector in Japan is
the real-estate investment trusts, like Japan Prime Realty [8955.Japan] and
the Japan Retail Fund [8953.Japan]. The REITs have distressed valuations
and very high yields -- 6% to 9% -- relative to very low Japanese interest
rates. And the government is now supporting the sector.
Thank you.
Birinyi Says Stocks Rally Signals Economic Rebound (Update1)
By Whitney Kisling and Thomas R. Keene
Aug. 24 (Bloomberg) -- The
rally that pushed the Standard & Poor’s 500 Index to the highest level since October is signaling the rebound in the economy will be stronger than most forecasters expect, investor
Laszlo Birinyi said.
“The markets are suggesting that the economy has turned the corner and is going to do a lot better than most people anticipate,” Birinyi, the founder of Westport, Connecticut- based research and money-management firm Birinyi Associates Inc., said today in an interview broadcast on Bloomberg Radio and Television. “I’m still very optimistic.”
Birinyi predicted on May 20 that the S&P 500 will climb to a record 1,700 in the next two or three years, a 66 percent gain from its current level. The index has rallied 14 percent since he made that forecast. The benchmark index for U.S. stocks may rise another 5.9 percent to 1,087 within the next three months “if it continues to progress at the rate it’s been progressing,” Biryini said.
Birinyi, who spent a decade on the trading desk at Salomon Brothers Inc. and is known for pioneering money-flow analysis, said he bought General Electric Co. shares and recommended Google Inc., Apple Inc., as well as health-care and retail stocks.
The S&P 500 has rallied 52 percent from a 12-year low on March 9 as 76 percent of companies in the benchmark reported better-than-estimated second-quarter results and economic reports showed improvement.
To contact the reporter on this story:
Whitney Kisling in New York at
wkisling@bloomberg.net Last Updated: August 24, 2009 07:59 EDT
Metals, Stocks Advance as Bernanke, Trichet Bolster Confidence
By Stuart Wallace and Lynn Thomasson
Aug. 24 (Bloomberg) -- Industrial metals advanced and stocks rose around the world for a fifth day as leaders of the world’s biggest central banks buttressed confidence in the global economic recovery.
Copper climbed for a third day and lead reached its highest level since September. The
MSCI World Index of 23 developed nations added 0.7 percent at 8:36 a.m. in New York, its longest streak in almost a month. Futures on the Standard & Poor’s 500 Index gained 0.3 percent. The yen declined against all 16 most- traded currencies tracked by Bloomberg.
Federal Reserve Chairman
Ben S. Bernanke and European Central Bank President
Jean-Claude Trichet, speaking at the annual central bankers’ symposium in Jackson Hole, Wyoming, said the world economy is pulling out of recession. The Commerce Department on Aug. 26 may report that purchases of new U.S. houses rose 1.6 percent in July to 390,000, the highest level since November, a Bloomberg survey of economists showed.
“Recent data justify relief, not euphoria,”
Marco Annunziata, chief economist at UniCredit Group in London, wrote in a research note. “Policy makers will maintain a supportive fiscal and monetary stance -- exit strategies are definitely not around the corner -- while trying to set market expectations on an even keel.”
European
industrial orders increased more than economists forecast in June, another indication that the worst recession in six decades is easing. Orders rose 3.1 percent from May, the biggest gain in 19 months, the European Union’s statistics office in Luxembourg said.
Copper, Lead
Copper for delivery in three months rose 0.8 percent to $6,319.50 a metric ton on the London Metal Exchange and has more than doubled this year. Lead added 5.1 percent to $1,957.50, after earlier reaching $1,999.50, the highest level since Sept. 26. Nickel and zinc also gained.
Raw-material companies led the advance in European shares, climbing 2.7 percent as a group as the
Dow Jones Stoxx 600 Index added 0.6 percent.
BHP Billiton Ltd., the world’s largest mining company, gained 2.9 percent in London, while Rio Tinto Group, the third-biggest, surged 4 percent.
U.S. futures indicated the S&P 500 may post its fifth straight advance, which would mark the longest stretch of gains since November.
Freeport-McMoRan Copper & Gold Inc., the world’s largest publicly traded copper producer, increased 1.4 percent in pre-market New York trading.
Hungary, Estonia
The MSCI Emerging Markets Index of stocks in 22 developing economies added 1.8 percent to 860.52, heading for the highest close in almost three weeks.
The Budapest Stock Exchange Index in Hungary rose 4.2 percent to the highest level since October. The country’s central bank cut the benchmark interest rate to a 17-month low of 8 percent today, matching the forecast of all 17 analysts in Bloomberg survey, as it grapples with the worst recession in 18 years. The exchange was closed Aug. 20 and 21.
Estonia’s benchmark
OMX Tallinn index surged the most in 11 years, jumping 13 percent.
AS Eesti Telekom, which accounts for 46 percent of the gauge’s value, rose 23 percent after TeliaSonera AB offered acquire the 39.88 percent of Eesti it doesn’t already own.
Emerging market borrowing costs dropped to a seven-day low. The
extra yield investors demand to own developing nations’ bonds instead of U.S. Treasuries declined 3 basis points to 3.62 percentage points, the lowest level since Aug. 12, according to JPMorgan Chase & Co.’s EMBI+ Index.
Yen Falls
The yen fell, weakening 1 percent against the South Korean won and the Australian dollar, as demand for the safety of the Japanese currency declined in favor of higher-yielding investments. The dollar was little changed versus the euro.
Nouriel Roubini, the New York University professor who predicted the credit crisis, wrote in today’s Financial Times that he sees increased risks of a double-dip recession as governments try to unwind economic stimulus packages. The ECB’s Trichet said the world economy may face a “very bumpy road ahead.”
The rally that pushed the S&P 500 to the highest level since October is signaling the economic rebound will be stronger than most forecasters expect, according to
Laszlo Birinyi.
“The markets are suggesting that the economy has turned the corner and is going to do a lot better than most people anticipate,” Birinyi, the founder of Westport, Connecticut- based research and money-management firm Birinyi Associates Inc., said today in an interview broadcast on Bloomberg Radio and Television. “I’m still very optimistic.”
Obama’s Debt Sales
The U.S. government plans to sell $109 billion of Treasuries in three days starting tomorrow, matching a record, as President
Barack Obama’s administration borrows record amounts of debt to revive the economy. The yield on the 10-year note increased 2 basis points to 3.59 percent.
Credit-default swaps on the Markit iTraxx Crossover Index of 44 companies with mostly high-yield credit ratings fell 22.5 basis points to 581.5, the lowest level since Aug. 10, according to JPMorgan Chase & Co. prices in London. The decline signals an improvement in perceptions of credit quality.
To contact the reporter on this story:
Stuart Wallace in London at
swallace6@bloomberg.net;
Lynn Thomasson in New York at
lthomasson@bloomberg.net.
Last Updated: August 24, 2009 08:42 EDT
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File picture of a share prices board in Tokyo
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TOKYO: Asian stocks powered higher Monday, tracking strong gains on US and European markets as optimism mounted that the global economy is getting back on its feet after the worst recession in decades.
The upbeat start to the week came after stocks rose to fresh 2009 highs on Wall Street Friday in response to bright housing data and Federal Reserve chief Ben Bernanke's comments that global recovery prospects "appear good."
"This is a new wave of optimism," IG Markets institutional dealer Chris Weston told Dow Jones Newswires. "There's no way this momentum on Wall Street will just turn around."
Tokyo soared 3.35 per cent by the close while Seoul climbed 1.98 per cent. Taipei ended up 2.76 per cent and Manila 5.11 per cent. Hong Kong closed 1.9 percent higher, while the Shanghai Composite ended up 1.10 percent.
Signs that the Chinese market is stabilising after recent sharp falls sparked by fears of overheating calmed investors' nerves across the region.
"The bubble in the (Shanghai) market valuation has been corrected to a degree," said Great Wall Securities analyst Zhang Yong.
Investors took their cue from Wall Street where the Dow Jones Industrial Average surged 1.67 per cent on Friday to finish at 9,505.96, posting a fourth straight daily gain. The blue-chip index had not finished above 9,500 since early November and has now climbed about 45 per cent from its March low.
Fed chairman Bernanke lifted spirits, telling a meeting of central bankers in Jackson Hole, Wyoming, that the global outlook for recovery from the worst slump in six decades appeared good.
"After contracting sharply over the past year, economic activity appears to be levelling out, both in the United States and abroad, and the prospects for a return to growth in the near term appear good," Bernanke said.
Figures showing existing-home sales in the United States surged 7.2 per cent in July to a seasonally adjusted annual rate of 5.24 million units - the largest gain since records began in 1999 - poured more fuel on the rally.
The report "encouraged expectations of a US housing recovery," said NAB Capital analyst John Kyriakopoulos.
Economists say a recovery in the stricken housing sector, after a bubble collapsed three years ago, is key to pulling the world's largest economy firmly out of recession.
Europe's main stock markets had also soared on Friday as encouraging economic data in the eurozone reinforced the positive mood.
The eurozone's purchasing managers' index, compiled by data and research group Markit, rose to 50 points in August from 47 points in July - a record jump and the highest level since the economic crisis began last year.
- AFP/yb
| Index |
Last |
Change |
% |
High |
Low |
Time |
| STI |
2597.04 |
52.18 |
2.05% |
2600.90 |
2586.36 |
10:52:15 |
| Hangseng |
20638.69 |
439.67 |
2.18% |
20649.96 |
20559.80 |
10:52:18 |
| Nikkei225 |
10557.33 |
319.13 |
3.12% |
10579.81 |
10388.78 |
11:00:44 |
| SSE |
2983.92 |
23.15 |
0.78% |
2986.90 |
2944.92 |
10:52:14 |
| KLCI |
1169.97 |
6.18 |
0.53% |
1173.03 |
1163.79 |
10:52:15 |
| SET |
644.63 |
3.65 |
0.57% |
645.56 |
636.41 |
16:35:33 |
richtan ( Date: 24-Aug-2009 10:26) Posted:
| Index |
Last |
Change |
% |
High |
Low |
Time |
| STI |
2593.45 |
48.59 |
1.91% |
2600.90 |
2586.36 |
10:24:00 |
| Hangseng |
20573.33 |
374.31 |
1.85% |
20649.96 |
20568.02 |
10:24:17 |
| Nikkei225 |
10557.33 |
319.13 |
3.12% |
10579.81 |
10388.78 |
11:00:44 |
| SSE |
2964.34 |
3.57 |
0.12% |
2986.90 |
2944.92 |
10:23:48 |
| KLCI |
1170.88 |
7.09 |
0.61% |
1173.03 |
1163.79 |
10:23:46 |
| SET |
644.63 |
3.65 |
0.57% |
645.56 |
636.41 |
16:35:33 |
|
|
Asian Stocks Advance on Signs Global Recovery Is Strengthening
By Shani Raja and Masaki Kondo
Aug. 24 (Bloomberg) -- Asian
stocks rose, led by commodities producers, as copper and oil prices increased and sales of existing homes in the U.S. surged the most on record, fueling speculation a global economic recovery is strengthening.
BHP Billiton Ltd., the world’s biggest mining company, gained 4.1 percent in Sydney.
Woodside Petroleum Ltd. rose 3.9 percent, and
Komatsu Ltd., a Japanese maker of construction equipment added 2.7 percent. Hyundai Motor Co., South Korea’s largest automaker, climbed 5.3 percent in Seoul after the company appointed a new vice chairman.
“The fundamentals of the global economy and corporate earnings are improving, supporting the resilience of the market,” said Yoshinori Nagano, a senior strategist at Tokyo- based Daiwa Asset Management Co., which oversees the equivalent of $91 billion. “The housing report confirmed the U.S. is clearly on a path to recovery.”
The
MSCI Asia Pacific Index rose 2.1 percent to 112.37 as of 10:33 a.m. in Tokyo, with about 14 times as many stocks gaining as retreating. All 10 industry groups climbed, led by materials producers. Japan’s Nikkei 225 Stock Average added 3.1 percent to 10,559.40, with only four stocks falling. All Asian benchmark gauges open for trading advanced.
In New York, the
Standard & Poor’s 500 Index climbed 1.9 percent on Aug. 21 to a level not seen since Oct. 6. Purchases of existing U.S. homes jumped 7.2 percent in July, the most since the tallies began in 1999, the National Association of Realtors
said. Federal Reserve Chairman Ben S. Bernanke said the global economy is “beginning to emerge” from recession.
Mining, Oil
BHP added 4.1 percent to A$38.11 after copper futures climbed 5.1 percent in New York on Aug. 21, the steepest gain since June 1.
Rio Tinto Group Ltd., the world’s third-biggest mining company, advanced 4.2 percent to A$58.70.
Komatsu, the world’s second-largest maker of construction machinery, rose 2.7 percent in Tokyo, and
Mitsubishi Corp., a Japanese trading company that gets more than a third of its sales from commodities, advanced 3.6 percent.
Woodside Petroleum, Australia’s second-largest oil and gas producer, rose 3.9 percent to A$48.40. Also in Sydney,
Santos Ltd., an explorer seeking to develop three liquefied natural gas projects, climbed 4 percent to A$15.50.
Inpex Corp., Japan’s biggest energy explorer, surged 4.3 percent to 750,000 yen.
Oil traded near a 10-month high in New York today on speculation demand will increase as the global economy emerges from the deepest recession since World War II.
Australian Banks
Australian banks rallied on speculation a recovery will reduce loan losses and spur credit growth.
National Australia Bank Ltd., the nation’s largest by assets, climbed 2.9 percent to A$26.42 in Sydney.
Australia & New Zealand Banking Group Ltd., Australia’s fourth-biggest lender, gained 2.8 percent to A$19.57.
Shares on the
MSCI Asia Pacific Index traded at 23.7 times their estimated net income on Aug. 21, the lowest level in a month. The gauge dropped 3.2 percent last week, the most since the five days ended June 19, on concern China will curb bank lending, hampering growth.
Hyundai Motor rallied 5.3 percent to 108,500 won, as the company named Chung Eui Sun, the only son of the company’s chairman, vice chairman in charge of planning and sales.
Japanese exporters got a further boost from the strengthening dollar, which lifts the value of overseas sales at Japanese companies when converted into their home currency. The dollar gained to as much as 94.70 yen today from 93.77 at the close of Tokyo stock trading on Aug. 21.
Canon Inc., the world’s biggest maker of digital cameras and which gets a third of its sales from the Americas, added 4.9 percent to 3,670 yen.
Honda Motor Co., a carmaker which gets more than half its sales in North America, gained 3.2 percent to 3,050 yen, while bigger rival Toyota Motor Corp. rose 3 percent to 4,100 yen.
“Japanese exporters are discounted as investors are wary of U.S. consumer spending,” said
Tomochika Kitaoka, a senior strategist at Mizuho Securities Co. in Tokyo. “The home-sales report will likely help narrow this discount.”
To contact the reporter on this story:
Shani Raja in Sydney at
sraja4@bloomberg.net;
Masaki Kondo in Tokyo at
mkondo3@bloomberg.net.
Last Updated: August 23, 2009 22:01 EDT
| Index |
Last |
Change |
% |
High |
Low |
Time |
| STI |
2593.45 |
48.59 |
1.91% |
2600.90 |
2586.36 |
10:24:00 |
| Hangseng |
20573.33 |
374.31 |
1.85% |
20649.96 |
20568.02 |
10:24:17 |
| Nikkei225 |
10557.33 |
319.13 |
3.12% |
10579.81 |
10388.78 |
11:00:44 |
| SSE |
2964.34 |
3.57 |
0.12% |
2986.90 |
2944.92 |
10:23:48 |
| KLCI |
1170.88 |
7.09 |
0.61% |
1173.03 |
1163.79 |
10:23:46 |
| SET |
644.63 |
3.65 |
0.57% |
645.56 |
636.41 |
16:35:33 |
Wall Street hopes to extend hot streak
Although many bulls are on the beach, stocks may continue their summer surge this week. But experts say more recovery evidence is needed to keep rally going.
By Alexandra Twin, CNNMoney.com senior writer
August 23, 2009: 9:09 AM ET
"We saw a huge rebound at the end of last week and that will probably carry over," said Richard Hughes, co-president of Portfolio Management Consultants. "But the trading volume is going to be very light."
The S&P 500 has jumped just shy of 52% since hitting a 12-year low on March 9. Bets that the sky is not falling after all and the economy will recover - paired with generous fiscal and monetary stimulus - have boosted the market.
But the recent leg of the advance has been run on thin trading volume, even for summer. Low volume tends to exaggerate market moves.
"It won't be until September that we'll be able to really see how it settles," Hughes said. "The focus is shifting from wondering when the recession is going to end to wondering what a recovery is going to look like," he said.
Next week brings reports on personal income and spending, as well as home prices, all of which are important in the bigger discussion about how the consumer is holding up. A revision of second-quarter gross domestic product (GDP) is also on tap.
Confirming a recovery: Last week, Fed chief Ben Bernanke said the U.S. economy is nearing a recovery, although the pace will be slow as unemployment stays high.
Reports on housing and manufacturing showed surprising gains last week, while the closely-watched weekly jobless claims report showed more Americans filed for first-time benefits than economists were expecting. In the weeks ahead, Wall Street is going to be looking for more confirmation that a recovery is underway.
"Typically when you're moving from recession to expansion, you get numbers that conflict with each other, like the jobless claims," said David Chalupnik, head of equities at First American Funds. "That trend will continue."
He said that of greater interest in the weeks ahead will be "how quickly the economy makes the transition" into a period of expansion and whether the consumer starts spending again. Consumers have jumped into the government's soon-to-end Cash for Clunkers program, but have otherwise held back on non-essentials..
On the docket
Monday: There are no market moving events on the schedule Monday.
Tuesday: The August consumer confidence index from the Conference Board is expected to have risen to 48.8 from 46.6 in July, according to a consensus of economists surveyed by Briefing.com.
The S&P/CaseShiller home price index, a measure of 20 major cities, is expected to have fallen 16.4% in June versus a year ago after falling 17.1% in May. If that estimate turns out to be accurate, it would be the third month in a row that the pace of declines has lessened.
In May, the report showed that home prices rose versus the previous month, the first monthly increase in almost 3 years.
Wednesday: New home sales are expected to have risen to an annualized rate of 390,000 in July from an annualized rate of 384,000 in June. The Commerce Department report is due after the start of trading.
July durable goods orders are expected to have risen 3.2% after falling 2.5% in June. Orders, excluding transportation, are expected to have risen 1% after rising 1.1% in June. The Commerce Department report is due in the morning.
The weekly crude oil inventories report from the Energy Information Administration is also due in the morning.
Thursday: Second-quarter gross domestic product growth (GDP) is expected to have contracted at a 1.4% annualized rate, worse than the initially reported 1% rate, but not as sharp as the 6.4% decline in the previous quarter. The Commerce Department report is due before the start of trading.
A report is also due in the morning on weekly jobless claims.
Toll Brothers (TOL) reports results in the morning. The homebuilder is expected to report a loss of $1.26 per share versus a loss of 18 cents a year ago, according to a consensus of analysts surveyed by Thomson Reuters.
Dell (DELL, Fortune 500) reports results after the close. The computer maker is expected to have earned 23 cents per share versus 31 cents a year ago, according to forecasts.
Friday: The Commerce Department releases reports on July personal income and spending before the start of trading.
Income is expected to have risen 0.1% after falling 1.3% in June. Spending is expected to have risen 0.2% after rising 0.4% in June. The PCE Core deflator, the report's inflation component, is expected to have risen 0.1% after rising 0.2% in June.
The University of Michigan's consumer sentiment index, due shortly after the start of trading, is expected to be revised up to 64.8 from the originally reported 63.2. 
Dow Average May Change Name as News Corp. Explores Index Sale
By Sarah Rabil and Lynn Thomasson
Aug. 22 (Bloomberg) -- The Dow Jones Industrial Average may get a new name after 113 years, if
News Corp. follows through on selling its stock-index business.
The Wall Street Journal, owned by News Corp. since 2007, reported yesterday that the company is exploring a sale of the unit, citing unidentified people familiar with the matter. Goldman Sachs Group Inc. was hired to evaluate deals that may fetch $700 million and prompt a new moniker for the flagship index, the newspaper said.
MSCI Inc., a former unit of Morgan Stanley,
NYSE Euronext and Bloomberg LP, the parent of Bloomberg News, are potential candidates, according to the Journal.
The
Dow Jones Industrial Average, a 30-stock benchmark for the U.S. market referred to as the Dow, was created in 1896 by Dow Jones co-founder
Charles Dow. News Corp. Chairman and Chief Executive Officer
Rupert Murdoch bought Dow Jones, which also includes the Wall Street Journal and Dow Jones Newswires, in 2007 for $5.2 billion. News Corp. wrote down the value of unit’s goodwill and intangible assets by $2.8 billion in 2008.
“It would be hard to imagine the Dow being called anything else,” said
Eric Marshall, who helps oversee $700 million at Hodges Capital Management in Dallas. “It wouldn’t surprise me, given how much the media industry has changed, that someone would want to spin off ownership of the Dow.”
Sybille Reitz, a spokeswoman for Dow Jones, and
Teri Everett, of News Corp., declined to comment. Goldman Sachs spokesman
Michael Duvally also declined, as did Bloomberg spokeswoman
Judith Czelusniak, MSCI spokesman
Pen Pendleton, NYSE spokesman
Richard Adamonis and Standard & Poor’s spokesman
Dave Guarino.
Jill Mathers, a spokeswoman for FTSE Group, didn’t immediately return a phone call or e-mail.
‘Clear, Straightforward’
The Dow was first made up of a dozen stocks, including U.S. Leather and American Sugar. General Electric Co. is the only one of the original 12 that’s still in the index today. The measure, which includes Exxon Mobil Corp. and International Business Machines Corp., is intended to “provide a clear, straightforward view of the stock market and, by extension, the U.S. economy,”
according to the company’s Web site.
“It’s the 30 largest industrial stocks and it’s been around forever,” Marshall said. “If someone asks you, ‘What is the market doing?’ You say up or down 100 points and you know they’re referring to the Dow without even thinking about it.”
The Dow added 184.56 points, or 2 percent, to 9,505.96 this week. It closed at the highest level since Nov. 4 yesterday and has rallied 8.2 percent in 2009.
130,000 Indexes
Dow Jones, which runs more than 130,000 indexes, is also part-owner of the Dow Jones Stoxx 600 Index, a benchmark for European equities. The business may be worth about $700 million, based on its 2007 performance and MSCI’s valuation, the Wall Street Journal said. The process could result in a joint venture or other combination, the newspaper reported. Goldman Sachs also advised Dow Jones on the sale to News Corp. in 2007.
Founded in 1882, Dow Jones began by delivering handwritten bulletins of stock and bond trading news in New York. An afternoon newsletter started the next year and went on to become the Wall Street Journal.
News Corp. and its subsidiaries compete with closely held Bloomberg LP in providing financial news and information.
To contact the reporters on this story:
Sarah Rabil in New York at
srabil@bloomberg.net;
Lynn Thomasson in New York at
lthomasson@bloomberg.net.
Last Updated: August 21, 2009 19:50 EDT
Hope Fed continue to make such positive and cautious statement amid the recovery , so that our govt also will continue with the stimulus package and reduce personal income tax next year....
Federal Reserve Chairman
Ben S. Bernanke and other global policy makers cautioned that the recovery is likely to be muted, indicating they would not soon remove all the stimulus injected into the financial system.
World Economy Emerging From Worst Recession Since World War II
By Rich Miller and Alison Sider
Aug. 22 (Bloomberg) -- The global economy may be coming out of the worst recession since World War II as record-low interest rates and trillions of dollars in fiscal stimulus spur demand.
Sales of existing U.S. homes jumped in July to the highest level since August 2007, and German service industries expanded this month for the first time in almost a year, reports yesterday showed. The Japanese economy grew for the first time in five quarters, according to a report earlier this week.
“There is no question the global economy is healing and emerging from recession,”
Kenneth Rogoff, a Harvard University professor and former chief economist for the International Monetary Fund, said in a Bloomberg Television interview yesterday.
Federal Reserve Chairman
Ben S. Bernanke and other global policy makers cautioned that the recovery is likely to be muted, indicating they would not soon remove all the stimulus injected into the financial system.
“Strains persist in many financial markets across the globe,” Bernanke said in a speech yesterday at the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming. “The economic recovery is likely to be relatively slow at first, with unemployment declining only gradually from high levels.”
The U.S. housing market, which led the way into the recession, is showing signs of righting itself after almost four years of declines. The 7.2 percent rise in sales of existing homes last month was the biggest since the National Association of Realtors began keeping records in 1999.
Housing Stabilizes
U.S. stocks gained for a fourth day, sending the Standard & Poor’s 500 Index to the highest level since October. The S&P 500 added 1.9 percent to 1,026.13, giving it a 2.2 percent advance this week. The dollar and Treasuries fell, while oil rose to a 10-month high.
The news yesterday followed a report earlier in the week that single-family
housing starts rose in July for the fifth consecutive month to reach the highest level since October.
“Although some of our markets are still stuck in the mud, many are improving,”
Robert Toll, Chairman and Chief Executive Officer of Toll Brothers Inc., told Wall Street analysts on Aug. 12. “It does feel as if the fence sitters are looking for reasons to jump in on the side of buying.” Horsham, Pennsylvania-based Toll is the largest U.S. luxury homebuilder.
Demand has been boosted by government tax credits for first-time buyers and near record-low
borrowing costs engineered by the Fed, which has coupled a cut in its benchmark interest rate to near zero with purchases of mortgage-backed securities.
The index of U.S. leading economic indicators, which is supposed to presage activity three to six months ahead, rose in July for a fourth consecutive month, the New York-based Conference Board reported on Aug. 20.
German Sentiment
In Germany, Europe’s largest economy, “business sentiment among service providers strengthened in August and was the most positive since January 2006,” Markit Economics said yesterday, pointing to its purchasing managers’
survey.
“The recession is over,” said
Klaus Baader, chief European economist at Societe Generale SA in London, who called the Markit data an “incredible reading.”
German investors are also upbeat. Their confidence jumped to its highest level in more than three years in August, the Mannheim, Germany-based ZEW Center for European Economic Research said on Aug. 18.
Chancellor
Angela Merkel, who faces national elections next month, is spending about 85 billion euros ($122 billion) in an effort to rekindle economic growth, including a 2,500-euro payment for consumers who scrap an old car and buy a new one. New-vehicle registrations in Germany rose 23 percent in the first five months of 2009 from the year-earlier period.
Japanese GDP
Japan’s economy is also being boosted by government measures ahead of an election. Prime Minister
Taro Aso, whose party is trailing in opinion polls before the Aug. 30 parliamentary elections, has put forward a 25 trillion yen ($265 billion) stimulus plan.
The 3.7 percent rise in Japanese
gross domestic product in the second quarter followed an 11.7 percent contraction in the first three months of the year. Exports led the revival of the world’s second-largest economy last quarter, jumping by 6.3 percent.
The IMF may increase its forecast for the global economic rebound next year as signs of growth return,
John Lipsky, the fund’s first deputy managing director, said yesterday.
The Washington-based lender last month predicted the world economy will expand 2.5 percent in 2010 after contracting 1.4 percent this year.
Recovery ‘Anticipated’
“We’re on track in broad terms for the kind of recovery we had anticipated,” Lipsky said in a Bloomberg Television interview from Jackson Hole. “But to get that recovery requires continued policy effort -- accommodative monetary policy, stimulative fiscal policy -- to make sure that growth shows up.”
European Central Bank President
Jean-Claude Trichet sounded a similar note, telling the Jackson Hole conference that it’s too soon to say a recovery can be sustained and that policy makers need to maintain efforts to restore confidence.
“We know that we have an enormous amount of work to do and we should be as active as possible,” Trichet said. The ECB has cut its benchmark interest rate to a record 1 percent and is buying covered bonds and flooding banks with money.
To contact the reporters on this story:
Rich Miller in Washington
rmiller28@bloomberg.netAlison Sider in Washington o
asider@bloomberg.net Last Updated: August 22, 2009 00:00 EDT
I am worried about this excessive lending though. Yesterday I saw an online ads that asking you to borrow money from China Bank $75000- $500000 yuan easily. Might experience some bad debts building up in the coming years. Its a big bubble that china feared, but they are stuck in this crisis where they have to carry on this lending if not recovery might stall.
el7888 ( Date: 21-Aug-2009 15:54) Posted:
| Updated: 21st August 2009, 0800 hrs |
| Chinese govt think tank forecasts GDP growth rising 8.5% in Q3 |
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China's gross domestic product will grow about 8.5 percent in the third quarter from a year earlier, picking up from the second quarter's 7.9 percent pace.
That's according to a Chinese government think-tank, the State Information Centre or SIC.
The bullish forecast comes against a background of anxiety in world markets that Chinese growth might falter as a boom in fiscal spending and bank lending peters out.
The SIC said growth in bank credit would "normalise" in coming months but warned that any abrupt slowdown in lending would leave many state-backed projects unfinished and result in a new crop of non-performing loans.
New lending will rebound to about 73 billion US dollars in August after shrinking to in July.
The SIC says China would stick to its "proactive" fiscal policy and "appropriately loose" monetary stance in the second half of the year.
It added that the Chinese economy has bottomed out but is still growing below potential, mainly due to weak exports
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Migrant workers return to their dorms at a factory in the southern Chinese city of Shenzhen.
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BEIJING - Half of the 24 million people on China's official unemployment rolls may not find jobs this year even if the country posts eight percent economic growth, the labour ministry said Friday.
The estimate given by the ministry does not take into account millions of recent university graduates and migrant workers, meaning the actual number of jobless could be much higher.
"Even if economic growth reaches eight percent, it could create a total of only about 12 million new jobs for the full year," Yin Weimin, minister of human resources and social security, said in a statement.
"The gap between (job) demand and supply will be further enlarged from 2008," Yin said, without giving a figure for last year.
China's economy grew by 6.1 percent in the first quarter, and 7.9 percent in the second, but the government says it needs at least eight percent growth to keep unemployment at bay and thereby prevent social unrest.
The government has pledged to create nine million new jobs this year and keep the urban registered unemployment rate below 4.6 percent.
The rate stood at 4.3 percent in the second quarter, unchanged from the first three months of the year and up from 4.2 percent at the end of 2008,
government data showed.
Earlier this year, a labour ministry official described the job situation in China, the world's third largest economy, as "grave", noting that four million migrants and three million graduates were without work.
Some critics have argued that Beijing's 585-billion-US-dollar economic stimulus, unveiled in November, did not give sufficient support to the labour-intensive sectors and firms that create most jobs.
Much of the package instead focused on large infrastructure projects that bring in quick nominal GDP growth, they said.
- AFP/ir
