Economic News

Moving the Market

* Dollar comes under renewed pressure
* Overseas markets make strong gains amid strong data from Asia and strong earnings from some major European companies
* Gold prices ascend to new record highs
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Industrial production and foreign trade up, but the Yuan remains low

Maximum growth in 19 months: +16.1 production, retail sales +16.2. The Yuan depreciated by at least 50%. Barack Obama makes requests to APEC. Some doubt on the recovery.
Beijing (AsiaNews) - In October, industrial production in China reached its highest level in over 19 months, showing signs of recovery from the global crisis. Several analysts attribute this growth to the low value of the Yuan and ask that it be appreciated.
According to figures published today by the statistics bureau, production increased by 16.1%, the strongest increase since March 2008.
Retail sales were up by 16.2%, showing that domestic consumption in China has also grown. The surplus in trade balance has doubled compared to September, reaching $ 24 billion, a sign that the reduction in exports, registered in the past months, has become less harsh: the minimum in 10 months.
The figures published today come just a few days from the meeting of the leaders of the Asia-Pacific area (APEC) in Singapore (14-15 November), where President Barack Obama will also speak. Obama almost certainly will ask China to appreciate the value of the Yuan, too undervalued and therefore considered able to impose itself unfairly in the export market. Premier Wen Jiabao has so far refused pressures on the value of the Yuan, hoping to increase exports even further and provide more jobs and more stability in his country.
Since July 2008, China has fixed the value of the Yuan at 6.83 to one U.S. dollar, with an increase of 21% compared to three years ago. But according to many economists, the real exchange rate should be 1 U.S. dollar to 3.821 Yuan (cf., 09/12/2008 Economic crisis: US, China and the coming monetary storm).
There are also doubts whether all this apparent recovery is not due to the aid package against the crisis of $ 4 trillion Yuan (over 390 billion) launched by the government last year as well as the indiscriminate granting of bank loans. According to the World Bank, more than 80% growth this year was produced by State support.
At the grassroots level, among the population increasingly high consumer prices were registered. At the same time, tens of millions of migrant workers have been laid off (because of fall in exports), who have since been re-employed on a part time basis on even lower wages than before.
The Fed decision: almost exactly as expected!
The Federal Reserve Open Market Committee (FOMC) issued its statement almost exactly as expected. The language on interest rates is remaining low for an extended period of time remained largely unchanged, and the decision was unanimou

Fed Expected To Hold Rates At Record-Low
WASHINGTON -- Even with the Federal Reserve widely expected to leave interest rates at a record low this week to nurture the fragile recovery, fissures are growing among policymakers about when to start boosting rates to head off inflation.
A shift to higher borrowing costs is probably months away, but Fed Chairman Ben Bernanke and his colleagues likely will privately debate how best to signal a change in stance to investors, businesses and ordinary Americans when they open a two-day meeting Tuesday.
Construction Spending

September 2009

Pending Home Sales
Sep 6.1%
October 2009 Manufacturing ISM Report On Business
PMI at 55.7%
Fed unlikely to raise interest rates

WASHINGTON: The US Federal Reserve is unlikely to raise key interest rates this week or unwind emergency support as the economy starts a tough recovery from recession, analysts say.
Fed policymakers were expected to hold the base lending rate at near-zero and maintain a trillion-plus dollar program to underpin the recovery at the conclusion of their two-day meeting Wednesday.
Economists and traders will be poring over the Federal Open Market Committee statement released after the meeting in search of signals for the direction of monetary policy.
"The Federal Open Market Committee will use its post-meeting statement to acknowledge the recession has ended and revise its near-term forecast to reflect the better tone of the data," said Joseph Brusuelas of Moody's

U.S. Preview: Consumer Confidence to Rise in Response to Equity Rallies

(CEP News) - Economists expect the Reuters/University of Michigan Consumer Confidence Index to climb slightly higher in April as U.S. consumers react to the recent gains in stock markets. Nevertheless, relentless job losses and higher gas prices will keep any improvement in sentiment subdued.
The index is forecast to climb to 58.5 from 57.3 in March.
"The boost to confidence from the stock market rally will outweigh the continuing downdraft from widespread job losses and rising unemployment," said economists at IHS Global Insight. They expect the index to reach 60.0.
The S&P 500 stock index has climbed 8.5% in the month of April, while the Dow Jones is up 6.9% on the month.
Paul Dales, economist with Capital Economics, pointed out that weekly initial jobless claims have fallen unexpectedly in the last two weeks - another reason for improvement.
"That said, the jobless claims figures are still consistent with payrolls plunging by at least 600,000 a month," he said. In March, the U.S. nonfarm payrolls report revealed 663,000 job losses in the United States.
Economists at Desjardins were reluctant to call any optimism amongst consumers sustainable.
They said there have been incremental gains the index, but it still remains very low, adding that while healthy financial markets could inspire a boost, there are still the effects of higher gas prices and ongoing job losses to consider.
The Reuters/University of Michigan Consumer Confidence Index wil be released at 10:00 a.m. EDT on Friday.

JPMorgan Chase posts better-than-expected profit


JPMorgan Chase said Thursday it earned $2.14 billion for the first quarter, thanks to a boost in trading activity and deposits. The profit was 10 percent lower than last year, but better than expected.
JPMorgan has not posted a quarterly loss since the financial crisis began.
Like other banks, JPMorgan's loans are still seeing defaults increase. Credit costs amounted to $10 billion, JPMorgan said.
But the company is benefiting from a jump in mortgage refinancing and deposits, as well as low interest rates. When a bank can borrow cheaply, it can profit more from lending.
Date ET Release For Actual Consensus Prior Revised From
Apr 16 08:30 Building Permits Mar 513K 545K 549K 564K 547K
Apr 16 08:30 Housing Starts Mar 510K 560K 540K 572K 583K
Apr 16 08:30 Initial Claims 04/11 610K 645K 658K 663K 654K

Retail sales fall unexpectedly in March

WASHINGTON - Retail sales fell unexpectedly in March, delivering a setback to hopes that the economy's steep slide could be bottoming out.
President Barack Obama and Federal Reserve Chairman Ben Bernanke said in separate speeches Tuesday that while other recent economic signs have been hopeful, problems persist and a true recovery will take more time.
The Commerce Department said retail sales dipped 1.1 percent in March. It was the biggest decline in three months and a much weaker showing than the 0.3 percent increase that analysts expected.
A big drop in auto sales led the overall slump in demand. Sales also plunged at clothing stores, appliance outlets and furniture stores.
Meanwhile, the Labor Department reported that wholesale prices plunged 1.2 percent in March as the cost of gasoline, other energy products and food fell sharply.
Gas prices fell 13.1 percent, the steepest drop since December, while food costs dipped 0.7 percent. Excluding volatile food and energy prices, the Producer Price Index was unchanged, below analysts' forecasts of a 0.1 percent
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