Wednesday, 25 March 2009

Financial world is still in crisis

Hedge fund pay fall

UK bond auction fail - What it really means?

Very bad - People talk about AIG again ... Thưởng chi cho lắm

The world new money! Great: China said it

As the various level of incentives are just getting into the economic system, financial markets might start to discount current recession and target the next scenario, which could be characterized by a weaker dollar and higher inflation numbers. => God, it is killing me!

Markets are starting the look over?

Howard Ruff : Great, if Ruff is right, we will be all dead.

Inflation is rising again in Europe

The economic contraction is intensifying in Europe and consumes are fading away. German foreign trade surplus printed Euro 8.3 billion in January, the lowest of the past 7 years, as export fell 4.4% month on month (20.7% yearly) and imports declined 0.8% on the top of December down move of almost 5.0%. In effect, things are not going well for the leading economic power in Europe. Industrial production, as an example, fell to the lowest level in modern history to -7.5% months on month in January (-4.0% expected). Manufacturing (-8.4%) and construction (-7.8%) were the weakest spots in production, which fell more than 19.0% on a yearly basis. However, it is the entire Euro zone to suffer by the global contraction, albeit ECB’s president Trichet expects growth the shortly pick up again, following various level of intervention.

The European Central Bank might cut rates again to 1.0% in the coming meetings, but the down cycle of interest rates could be closer to an end, since inflation remains the main issue for the ECB. For the first time in various months, German CPI rose 1.0% year on year in February from an up move of 0.9% in January. For now, nevertheless, growth is contracting everywhere. In France, non-farm payroll declined 0.7% in the fourth quarter of last year from the third quarter, marking the worst contraction in 40 years. Industrial production slid instead 3.1% and manufacturing production moved back 4.1%. Finally, for the eight consecutive month, retail sales receded in the Euro zone. In January, they dropped 2.2% versus December’s decline of 2.4%.

The global economic recession is hitting demand for U.S exports, while domestic request is fading away along with the household wealth. As a result, the U.S. trade deficit narrowed to USD 36 billion in January from USD 39.9 billion in December 2008 (markets estimated a balance of USD 38.4 billion). Exports moved down more than 16% yearly, while imports declined 22.8%. Industrial production fell 1.4% in February after having declined 1.9% in January. The Federal Reserve is expected to keep rates near 0 for most of the year, and beyond, if the economic growth will not pick up tangibly over the coming months. In effect, the potential demand for treasury securities might increase, but household wealth has declined 20% since topping in 2007. Such a move was not seen since the end of War World 2 and again testifies the peculiarity of current moment. The huge power shift from the credit to the debit era is still in motion and time is required to find a new equilibrium for the world economies.

In the week ending March 7th, US jobless claims rose to 654,000, more than the expected 644,000., while the four-week moving average is now at 650,000, the largest decline of the past 26 years. Retail sales moved slightly lower 0.1% in February versus the expected 0.5%. Auto sales fell 4.3% in the month, but the down move was balanced by the increase of sales for other components. The rise of gasoline prices, as an example, was one major tractor last month. However, the up move was broad based, January retail sale numbers changed to 1.8% from 1.0%, reflecting a tentative stabilization of sales. In effect, the financial markets might somehow begin to discount the actual economic recession and preparing for the next scenario, which could be characterized by a weaker dollar and higher inflation numbers.

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