See Search Box
lower down this column for searches of Finfacts news pages. Where there may be
the odd special character missing from an older page, it's a problem that
developed when Interactive Tools upgraded to a new content management system.
Welcome
Finfacts is Ireland's leading business information site and
you are in its business news section.
We
provide access to live business television and business
related videos from: Bloomberg TV; The Wall Street Journal;
CNBC and the Financial Times. Click image:
Markets News Thursday: Former Anglo Irish Bank chief Seán FitzPatrick under arrest; China carrying out yuan stress tests on 12 industries
By Finfacts Team
Mar 18, 2010 - 10:30:25 AM
The water in the fountain on the North Lawn of the White House is dyed green in honour of St. Patrick's Day, March 17, 2010.
The former chairman and chief executive of Anglo Irish Bank, Seán Fitzpatrick, was arrested this morning by Gardaíand is being questioned at Bray Garda station in Co Wicklow. Fitzpatrick was arrested at his home in Greystones at 6.30am this morning by Gardaí from the Garda Bureau of Fraud Investigation. A search of Fitzpatrick's home has been carried out.
Seán FitzPatrick, a chartered accountant, joined Anglo Irish Bank in 1980 and served as chief executive officer from 1986 to January 2005. He resigned as chairman of the bank on Dec 18, 2008 following confirmation that he had deceived shareholders over an 8-year period by hiding huge loans to him from the bank. FitzPatrick also resigned in December 2008, from the boards of Smurfit Kappa, Aer Lingus, food group Greencore and investor, Gartmore Irish Growth Fund. The bank was seized by the Irish State in January 2009.
FitzPatrick is being detained under Section 4 of the Criminal Justice Act and he can be questioned for up to 12 hours. The Gardaí said the arrest was part of the ongoing investigation by the fraud bureau into alleged financial irregularities at a financial institution.
China's yuan/renminbi: A Chinese trade group said today in Beijing that the government is testing the ability of companies to handle a stronger currency. China is carrying out yuan stress tests for 12 industries, Zhang Wei, vice chairman of the China Council for the Promotion of International Trade, said at a press briefing.
Exporters in labour-intensive sectors such as garments and furniture worked on margins as low as 3%, he said. "If the yuan rises, these companies will face the immediate risk of going bust as their profit margin is already very narrow," Zhang told reporters."So for these companies, the consequences would be disastrous."
China has the yuan/ renminbi pegged at 6.83 to the US dollar since July 2008 and on Tuesday it was claimed in the US that pressure for a stronger Chinese currency rather than being a tonic for the US economy or manufacturing, would be a huge mistake if it resulted in tariffs on imports from China. Daniel Griswold, who made the comment, is director of the Center for Trade Policy Studies at the Cato Institute, a non-profit public policy research foundation headquartered in Washington, DC. He is also the author of a new book, Mad about Trade: Why Main Street America Should Embrace Globalization.
The trade expert told China's State news agency Xinhua during what it termed an exclusive interview,"China has been moving in the right direction since 2005 by allowing the currency to appreciate. Threats from the US government actually make it more difficult for the Chinese government to resume appreciation because it would look as though Beijing was giving in to foreign pressure."
China's State-controlled Global Times reports that more than 96% of about 7,500 web users who participated in an online poll on website huanqiu.com say China is justified to stand against US pressure and ignore its calls for yuan appreciation.
US senators on Tuesday unveiled legislation that threatens heavy penalties if Beijing refuses to act. The bill would punish currency manipulation as an unfair subsidy and could trigger retaliatory actions.
"There is no bigger step that we can take to promote job creation here in the US than to confront Chinese currency manipulation," said Democratic Senator Chuck Schumer, one of the 14 senators who have sponsored the bill.
Estimates of undervaluation against the US dollar range up to 40%.
The trade war between the U.S. and China is heating up with a bipartisan bill introduced in the Senate to penalize China if it failes to revalue the Yuan, with Sam Brownback, (R-KS):
Construction and Labour cost data: Eurostat, the EU statistics office reported on Wednesday, that in the construction sector, seasonally adjusted production1 fell by 2.2% in the Eurozone (EA16) and by 2.0% in the EU272 in January 2010, compared with the previous month. In December 20093, production decreased by 1.0% in the Eurozone, but rose by 0.8% in the EU27. Compared with January 2009, output in January 2010 dropped by 12.5% in the Eurozone and by 8.4% in the EU27.
Eurostat reported that hourly labour costs in the Eurozone rose by 2.2% in the year up to the fourth quarter of 2009, compared with 3.0% for the previous quarter. In the EU27, the annual rise was 2.4% up to the fourth quarter of 2009, compared with 2.9% for the previous quarter.
Economic View; Confusion on Greek plan a negative for the euro:Goodbody economist, Dermot O’Leary, comments -- "Two days is a long time in a fiscal crisis. On Tuesday, we were commenting on the statements emanating from the group of euro-zone finance ministers that suggested a deal had been reached to provide loans to Greece if they were needed. It now appears that some countries, notably Germany but also Italy, the Netherlands and Finland, take a different view on bail-outs of this kind.
German chancellor Merkel now appears to be lukewarm on the idea of “a quick act of solidarity”, while one of her party colleagues was even more explicit yesterday in his comments that “nobody apart from the IMF has these instruments” (to push for Greece to restore its capital markets access). While some, including the European Commission President yesterday, are still suggesting that a European solution has been agreed, reports this morning indicate that Greece is now lining up a contingency plan, with contact with the IMF already apparently made (and may seek aid over the April 2-4 weekend).
With an EU summit on March 25th likely to be dominated by this issue, it is likely that the Greeks are trying to jockey for position ahead of it by putting the onus on the EU to come up with a solution, or else. We commented on Tuesday that EU officials look to have played a smart game of carrot and stick over the past month, but that was in the belief that solidarity was now being shown. Judging by the most recent reports, this game is not quite over, but is now getting into dangerous territory, as the credibility of the currency is at stake in particular. The most likely outcome in the short-term is further euro weakness. This, of course, would not be a bad thing for a country tryng to engineer a restoration of competitiveness like Ireland, but there are bigger issues at play here too."
Geoff Lewis, head of investment services at J.P. Morgan Asset Management is overweight equities and picks Japan as an option for contrarian investors. He tells CNBC's Oriel Morrison that the Japanese market is cheap and economic indicators signal a strong cyclical rebound.
Markets continue to advance on evidence that inflation remains subdued despite recovery: Davy analyst, Barry Dixon, comments: "Markets continued to rally yesterday (March 17th) as the latest PPI data in the US indicated that inflation remained subdued despite recovering demand. February's PPI fell by 0.6% after a 1.4% increase in January. The market had expected a 0.2% decline.
Excluding energy (which fell by 2.9% mom), the index would have increased by 0.2%. The core index (excluding food and energy) increased by just 0.1%. Capital equipment prices fell by 0.1%, indicating that inflationary pressure in the economy remains weak.
This weak inflation should convert to lower CPI over time, which is likely to result in the Fed maintaining its low interest rate policy for longer than expected in order to safeguard the recovery. With the economic recovery (albeit slowly) and interest rates remaining low, this continues to provide a positive backdrop for equity markets."
US markets
On Wednesday, the Dow Jones rose 48 points or 0.45% to 10,734.
The S&P 500 gained 0.58% and the Nasdaq added 0.47%.
Asia
The MSCI Asia Pacific Index lost 0.4% Thursday.
The Nikkei 225 dipped 0.95%; the Shanghai Composite slid 0.1%; Australia’s S&P/ASX 200 Index gained 0.20% and India's Sensex Index inched up 0.01%.
Bloomberg reports that the Bank of Japan’s decision to double the size of a liquidity program for banks may prove more effective in placating the government than stemming deflation.
The bank yesterday increased its three-month lending facility for banks to ¥20 trillion yen ($221 billion) in a 5-2 vote, a “monetary easing” that may help reduce borrowing costs and bolster corporate sentiment, Governor Masaaki Shirakawa said at a Tokyo press briefing.
The BDI closed at 3,005 on Thursday, Dec 31st - - a rise of 289% in 2009.
The Baltic Dry Index, rose 3.9% last Friday according to the Baltic Exchange. The index jumped 18% last week - - the biggest advance since the five days to Nov. 13, 2009.
On last Friday, the BDI jumped 190 points or 5.73% to 3,506 - - a rise of 5.00% in the week and the highest close since mid-December.
On Monday this week, the BDI added 68 points or 1.94% to 3,574; On Tuesday the index rose 24 points and on Wednesday dipped 71 points or 2.03% to 3,427.
In the Financial Times on Wednesday, Feb 17th, Javier Blaswrote that the weakness in the Baltic Dry Index, long seen as an indicator of global economic activity, does not reflect a downturn in global trade. Instead, the measure of freight costs is showing a strong supply of new vessels that helps explain the 40% drop in three months. “New supply is astonishingly high and it is overwhelming the otherwise robust demand for bulk commodities from China,” he wrote. “On the other hand, bullish investors should be cautious of any near-term turnround. Rather than a sign of stronger economic activity and commodities demand, it is likely to reflect cancelled orders, scrappage and port congestion.”
