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whats spinnin spider cat?
mornin cash cow! Yen, Dollar Rise, Stocks Retreat on Concern Recovery Faltering
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By Justin Carrigan
July 10 (Bloomberg) -- The yen and Treasuries rose on speculation the global recovery is faltering while stocks fell in Europe after Renault SA Chief Executive Officer Carlos Ghosn ruled out an economic rebound before 2011.
The yen strengthened against all 16 most-traded currencies as of 12:48 p.m. in London, gaining 1.1 percent versus the euro and 0.4 percent compared with the dollar. The Dow Jones Stoxx 600 Index of European shares slipped 0.7 percent, extending its fourth weekly drop, the longest streak since March.
China’s exports declined for an eighth month, the state-run Xinhua News Agency cited customs data as showing, underscoring the economy’s dependence on government spending to boost growth. Renault’s Ghosn said on Europe1 radio that next year will be “as difficult as 2009.” The global economy will shrink 1.4 percent this year before expanding 2.5 percent in 2010, the International Monetary Fund said July 8.
“Divergent indications from data will cloud the picture and keep investors on the defensive in the near term,” Morgan Stanley currency strategists Sophia Drossos in New York and London-based Emma Lawson wrote in a report. “The yen is likely to be the biggest beneficiary in such an environment.”
Futures on the Standard & Poor’s 500 Index retreated 0.8 percent, indicating the benchmark gauge for U.S. equities may extend its fourth straight weekly decline.
CIT, IBM Decline
CIT Group Inc. slid 17 percent in pre-market New York trading. The Federal Deposit Insurance Corp. is unwilling to guarantee CIT’s bond sales because the commercial lender’s credit quality is worsening, according to people familiar with the U.S. regulator’s thinking.
International Business Machines Corp. slipped 1.3 percent in pre-market New York trading. The world’s biggest computer services provider was downgraded to “neutral” from “buy” at Goldman Sachs Group Inc.
The Stoxx 600 has slumped 3 percent this week, extending its retreat since June 11 to 7.9 percent on concern that the first global recession since World War II is far from over.
Renault, France’s second-largest automaker, slipped 2.1 percent. Ghosn said the expiration of government-backed sales incentives will offset any improvement in demand for cars, preventing a European auto-market recovery in 2010.
DnB NOR ASA retreated 4 percent. Norway’s largest bank said net income fell to 1.2 billion kroner ($180 million) from 3.3 billion kroner a year earlier as writedowns on loans and guarantees climbed.
The recession may be prolonged because consumers see few signs that job losses and declines in home prices are ending, economists Nouriel Roubini and Robert Shiller said yesterday on Bloomberg Radio’s “Surveillance.”
More Stimulus
The U.S. needs another stimulus package because President Barack Obama’s initial $787 billion plan hasn’t been implemented fast enough, according to Shiller, a Yale University professor. Roubini, a professor at New York University, said more spending is necessary to avoid stagnation such as that experienced by Japan in the 1990s.
The yen advanced most against the Swiss franc, strengthening 1.6 percent. The dollar gained against every one of its 16 peers tracked by Bloomberg except the yen. The euro had its biggest decline against the dollar in a week.
Treasuries rose, driving the 10-year yield down 6 basis points to 3.34 percent, as investors reduced bets that the U.S. slump is ending.
Crude oil dropped 1.5 percent to $59.53 a barrel in New York trading even after the International Energy Agency said global oil demand will rebound next year, recovering from the fastest drop since the early 1980s.
Metals Retreat
Copper fell 1.3 percent to $4,831 a metric ton on the London Metal Exchange, leading a retreat in industrial metals, after Ghosn’s comments. The average car contains 2 kilometers (1.2 miles) of copper and alloy cables, according to the International Copper Study Group.
The Micex index of stocks in Russia, the world’s biggest energy exporter, slid 1.9 percent to the lowest level since April. The ruble weakened 2.8 percent against the dollar after the Russian central bank cut its main interest rates for the fourth time in less than three months.
Hungary’s forint and the Polish zloty weakened against the euro after Handelsblatt reported the International Monetary Fund is discussing aid programs with at least 10 east European governments.
The MSCI Emerging Markets Index, a benchmark for equities in 22 countries, declined 0.7 percent. Stock investors pulled more than $500 million from emerging-market funds in the week ended July 8, according to data compiled by EPFR Global.
Developing-nation debt dropped, pushing the extra yield investors demand to own the bonds over U.S. Treasuries 9 basis points higher to 4.48 percentage points, according to JPMorgan Chase & Co.’s EMBI+ Index.
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gm bt cats...Economic concerns push oil prices to a five-week low
Posted Jul 7th 2009 8:00AM by Michael Fowlkes
Filed under: Major movement, Middle East, Economic data, Oil, Recession, Financial Crisis
More
Over the past couple of months we have seen oil prices move steadily higher, but the precious crude sold off Monday as economic concerns returned to the market.
What a difference a week makes. This time last week we were seeing increased optimism that the current recession was nearing its end, but those hopes were wiped out late last week by disappointing consumer confidence and employment data.
As a result, oil fell to a five week low yesterday, dropping 4% to kick off the week. Traders pushed oil down $2.68 on the day, to $64.05. This is the lowest that we have seen since back on May 27.
The main underlying factor for Monday's action was dismal employment data last week that has created concern over just how quickly America is going to be able to come out of its recession.
The markets were closed last Friday for the 4th of July holiday, but on Thursday were rattled by a report from the Labor Department showing that unemployment had hit a 26-year high of 9.5%, and not showing any signs of slowing down. The consensus opinion is that we will definitely be seeing double digit unemployment by the end of the year. Just how quickly we hit those numbers remains to be seen.
For most of this year there has been widespread speculation that the global economy would rebound during the second half of the year. Well, we are now in the second half of the year and there is still no signs that the recession is coming to an end.
What are your current thoughts on the economy? Are you expecting to see the recession come to an end by the end of this year, or are we going to have to wait until 2010 for a turnaround? Let us hear your predictions.
top of the morning cc cats....Before the bell: Futures mixed as Lear files for bankruptcy
Posted Jul 7th 2009 7:45AM by Melly Alazraki
Filed under: Before the bell, International markets, Market matters, Economic data, Oil, Recession
U.S. stock futures edged higher Tuesday morning as investors await the start of the second quarter earnings season to be unofficially kicked off Wednesday. Also tomorrow, the G8 summit begins in Italy. Meanwhile, a debate regarding a second stimulus package continues just as autoparts supplier Lear filed for Chapter 11 bankruptcy protection.
While futures are higher now [7:30 a.m.], they have been trading in a tight range, indicating stocks will start more flat than with a strong conviction upward. The general view and feel in the market now is that stocks could decline in near future. Update 8:30 am: Futures are mixed.
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what's happenin eco cat?
Nasdaq Composite down 13.42 points at 1,783.1
S&P 500 Index off 3.29 points to 893.13
Dow industrials off 18.59 points at 8,262.1
gm breakout felines...
tough start...U.S. Stocks Drop, Extending Global Slide, as Commodities Slump
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By Rita Nazareth
July 6 (Bloomberg) -- U.S. stocks extended a global retreat, dragging the MSCI World Index lower for a third day, as concern that the economic recovery will stall sent commodity producers and industrial shares lower. Oil slid to a five-week low, while the dollar and two-year Treasuries advanced.
Exxon Mobil Corp. and Royal Dutch Shell Plc fell at least 2.9 percent as crude slumped as much as 5 percent. Freeport- McMoRan Copper & Gold Inc. and BHP Billiton Ltd. lost more than 3.4 percent as copper declined for a third day. Caterpillar Inc. and Boeing Co. slipped at least 0.6 percent.
The Standard & Poor’s 500 Index fell 0.7 percent to 890.53 as of 9:34 a.m. in New York. The Dow Jones Industrial Average lost 49.43 points, or 0.6 percent, to 8,231.31. The MSCI World Index of 23 developed nations sank 1.1 percent. Germany’s DAX Index extended a drop from its 2009 high to 10 percent, the common definition of a correction.
“The bears have control for the short-term,” said Tom Wirth, senior investment officer at Chemung Canal Trust Co., which manages $1.5 billion in Elmira, New York. “We’re having a pullback because people are starting to believe it might take longer for an economic rebound.”
U.S. Vice President Joe Biden said yesterday that the Obama administration “misread the economy” when it forecast unemployment would peak at 8 percent if Congress enacted a $787 billion fiscal stimulus plan. Biden, appearing on ABC’s “This Week” program, said the administration followed consensus views of the severity of the crisis. Unemployment reached 9.5 percent last month, the Labor Department said July 2.
Earnings Watch
Analysts estimate profits at S&P 500 companies fell an average 34 percent in the second quarter and will decrease 21 percent from July through September after plunging about 60 percent in the year’s first three months, according to data compiled by Bloomberg. Alcoa Inc. unofficially kicks off the U.S. earnings season on July 8.
“Investors would need a confirmation of more positive numbers in order to justify continued buying,” said Bruce McCain, chief investment strategist at Cleveland-based Key Private Bank, which manages $20 billion. “We don’t expect the second-quarter earnings season to bring that.”
U.S. stocks have fallen for three straight weeks, the longest losing streak since March, on concern deeper-than- estimated job cuts and a drop in consumer confidence will prolong the recession.
6 Percent Drop
The S&P 500 has slumped 6 percent since June 12 on concern the 40 percent, three-month surge in the index outpaced prospects for an economic recovery. Even though the S&P 500 gained 15 percent in the second quarter for its best rally since 1998, the advance stalled in June, leaving the index up less than 0.1 percent for the month. Investors are paying 14.1 times profits from S&P 500 companies during the past 12 months. When the valuation reached 15.5 on June 2, it was the most expensive since October.
The biggest drop in U.S. options prices since 1998 masks growing anxiety over the stock market’s rebound, as traders pay more for bearish contracts than any time since before the failure of Lehman Brothers Holdings Inc.
Investors are spending the most since August 2008 to protect against a 10 percent decline in the S&P 500 versus wagers on an advance, according to data compiled by Bloomberg. That’s one month prior to New York-based Lehman’s bankruptcy.
Exxon, the biggest U.S. oil company, fell 2.9 percent to $66.51. Chevron, the second-largest U.S. energy company lost 2.3 percent to $62.92.
Oil Tumbles
Crude oil for August delivery declined as much as $3.33, or 5 percent, to $63.40 a barrel on the New York Mercantile Exchange, the lowest intraday price since May 28.
Freeport-McMoRan lost 4.4 percent to $47.55. Copper fell for a third day as Deutsche Bank AG said demand for the metal will decline 3.9 percent in 2009, leaving a supply surplus this year and in 2010.
Bank of America slid 2 percent to $12.39.
U.S. service industries from retailers to homebuilders probably contracted last month at the slowest pace since September, a sign the worst recession in half a century is easing, economists said before a report at 10 a.m. New York time.
The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the economy, rose to 46 from 44 the previous month, according to the median forecast in a Bloomberg News survey.
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no surprise here...Emerging Market Equity Share at Record; China Tops $3 Trillion
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By Michael Patterson and Laura Cochrane
July 3 (Bloomberg) -- Developing countries’ share of worldwide equity value climbed to a record as the fastest- growing economies lured investors amid the first global recession since World War II.
The 22 nations classified as “emerging” by index provider MSCI Inc. comprise 24 percent of world market capitalization, up from 18 percent at the start of this year, the highest proportion since Bloomberg began compiling the data in 2003. China shares surpassed $3 trillion yesterday for the first time since August, from $1.8 trillion at the end of 2008.
The increase signals growing confidence in developing countries as equity investors, spurred by interest-rate cuts and stimulus plans, redeploy cash after the worst U.S. losses last since the Great Depression. The MSCI Emerging Markets Index rose 35 percent, beating a 2.9 percent advance in the MSCI World Index of developed economies and lifting the value of stocks to $8.5 trillion from $5.1 trillion in 2008
“Everyone is trying to jump on that bandwagon,” said Nicholas Field, who helps manage about $11 billion in emerging- market stocks at Schroders Plc in London. “There are projects in emerging markets in which I can make more money than I can in the West at the moment.”
Developing economies will probably expand 1.6 percent as a group this year and 4 percent in 2010, according to the Washington-based International Monetary Fund. Developed nations will contract 3.8 percent in 2009 and have zero growth next year, the IMF forecast in its April World Economic Outlook report.
China Stimulus
Investors poured a record $26.5 billion into developing- nation stock funds in the second quarter, with China receiving $3.8 billion, according to data released yesterday by EPFR Global. The funds overall attracted $972 million in the week ended July 1, resuming net inflows after the first decline since March the previous week, the Cambridge, Massachusetts-based research firm said.
China’s market capitalization has jumped more than fivefold from about $500 billion at the end of 2003, according to Bloomberg data that includes common and preferred stock. The Chinese economy more than doubled in that time to $3.8 trillion, according to the World Bank.
The world’s third-largest economy after the U.S. and Japan has been boosted by a 4 trillion-yuan ($585 billion) stimulus package and five reductions to the key one-year lending rate in the last four months of 2008. The Shanghai Stock Exchange Composite Index rose 70 percent this year.
Recovery
Investors should buy emerging-market equities rather than European stocks to benefit from China’s stimulus measures and a rally in commodities, Fortis Investments strategists Joost van Leenders said yesterday, adding to his already “overweight” position in developing economies. Fortis manages about $240 billion.
The Reuters/Jefferies CRB Index of 19 raw materials rose 13 percent in the three months to June 30 after falling for three quarters.
The MSCI Emerging Markets Index was little changed today, dropping 0.06 percent at 12:56 p.m. in London. It plunged a record 54 percent in 2008 as the financial crisis, which started with the collapse of the U.S. property market in 2007, triggered more than $1.47 trillion of losses at financial institutions worldwide and led to the seizure of global credit markets.
$75 Billion Bailout
Some $67 billion was pulled out of emerging-market equities and bond funds in 2008, EPFR data shows. Investors returned to become net buyers of emerging-market stocks this year on prospects government stimulus plans, interest-rate cuts and the potential of as much as $750 billion in International Monetary Fund support.
The IMF has so far pledged more than $75 billion to bail out economies hurt by a lack of credit and plunging exports. Romania, Hungary and Ukraine got a combined $50 billion in aid.
All 10 of the world’s best-performing indexes in the second quarter are developing markets, led by Ukraine, Vietnam and Kazakhstan, according to data tracked by Bloomberg.
“You have to remember how much emerging-markets fell and how much capital was withdrawn last year, so some of it is a kickback from that,” Schroders’ Field said.
Brazil, the world’s eighth-largest economy, has reduced taxes and cut the benchmark interest rate at all four policy- meetings this year in a bid to help Latin America’s largest economy recover. The market capitalization of the nation’s shares reached a year-high of $952 billion last month and was at $920 billion yesterday, Bloomberg data show.
Cutting Rates
The Reserve Bank of India, the fourth-biggest emerging economy, reduced borrowing costs six times in seven months and the government announced three stimulus packages comprising about 7 percent of gross domestic product. The market capitalization of Indian equities is at $989 billion after reaching a 10-month high $1 trillion last month.
Russia’s government has allocated $81 billion in stimulus spending this year on loans, state aid and subsidies to battle an economic contraction of 10.2 percent in the first five months of the year, when industrial production slumped a record 17.1 percent in May.
The country’s Micex Index last month became the world’s first benchmark equity index to enter a bear market since global stocks began rallying in March, tumbling more than 20 percent from a June 1 peak. The Micex dropped 2 percent today to an eight-day low. Russia’s shares have a market capitalization of $339 billion.
The annual gross domestic product of India and Brazil have more than doubled since 2003, while Russia’s economy has more than tripled to $1.6 trillion.
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say it ain't so...Millionaires have lost their optimism about the economy
Posted Jul 2nd 2009 9:30AM by Connie Madon
Filed under: Market matters, Personal finance, Recession
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Is there an index that measures millionaires' sentiment and whether they are optimistic or pessimistic? The answer is yes. It is called the Spectrem Millionaire Investor Index.
The next question naturally is: "So what are the millionaires thinking about the economy?" The news is not good. The index fell 18 points to a -20 in June, a record decline since the index was created in 2004. Plus the index fell 17 points in May. A range of -11 to -30 indicates a slightly bearish sentiment. It's likely that millionaires underwent a reality check after a bout of over optimism in May.
You may be asking how the index is calculated? Each month, 250 interviews are conducted of affluent households, 117 of which are millionaires. These interviews then form the basis for the index. The interviews revealed that the number of those not investing rose slightly, while those who preferred stocks, bonds, and mutual funds fell.
Millionaires cited three main areas of concern: the state of the economy, the political climate, and the threat of inflation.
The less rich, those worth $500,000 to a million, were even more bearish.
Yet, it should be noted that some millionaires remain optimistic for the long term. They are licking their wounds from the beating they took last year and are willing to rebuild their portfolios gradually.
Do you agree with the millionaires' sentiments about the market?
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