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Japan: Japan's unemployment rate dipped to a two-year low in February,
government data showed Tuesday, however, power blackouts and supply chain
disruptions are likely to push up the rate in coming months following the March
11 devastating earthquake a tsunami.
Japan's jobless rate stood at 4.6% in February, data from the Ministry of
Internal Affairs and Communications showed. The rate was unchanged from January.
Irish Bank Stress Tests: Donal O'Mahony, Global Strategist at
Davy, commented in his weekly report on Monday: "Ireland's
creditworthiness has suffered untold damage by enforced entanglement with
domestic bank credit risk. On Thursday, Ireland announces its latest and most
critical attempt to disentangle such risks, and the stakes could not be higher
in terms of future economic and financial stability.
In early Feb, Standard & Poor's attributed its latest
downgrading of Ireland’s sovereign credit rating (one notch to A-) to the
'uncertainty surrounding the banking sector crisis '. This is a depressingly
familiar refrain. Absent the banking burden, the sovereign would have ended
2010 with a restrained Debt/GDP ratio of 74%, not to mention the contra of a
public pension fund (NPRF) replete with €25bn of assets (16% of GDP). However,
the entwining of both sovereign and banks commenced with the blanket liability
guarantee of Sep/08, and has proceeded via the NAMA asset-transfer and attendant
recapitalisation processes to its current €77bn involvement (49% of GDP). The
latter encompasses €31bn of NAMA bonds (off balance sheet), €12bn of investments
(NPRF) and €34bn in borrowings. The EU/IMF Accord of Nov/10 commits up to a
further €35bn for 'deep restructuring' of the Irish banking system. This
contingency is weighing very heavily on rating agencies, investors and indeed
the Irish State itself, the latter upshot of which being those self-defeating
calls for a default on senior bank debt to ease the burden of Ireland’s
On Thursday, the €35bn contingency faces its long-awaited
quantification, following publication of Irish bank 'stress tests' on both
capital (PCAR) and liquidity (PLAR) requirements. The outcome remains uncertain,
but recent speculation of a full €35bn drawdown may prove to have been somewhat
hyperbolic. The requisite injections for bank recapitalisation purposes will
more likely fall within the ambit of the NPRF’s investment capacity (€17.5bn),
thereby protecting the sovereign (and its credit rating) against any incremental
borrowing needs. Furthermore, those feared capital outlays to subvent
'fire-sale' disposals of bank assets as part of system deleveraging requirements
may also have been allayed.
Weekend press reports indicate that the ECB is preparing a
'medium term funding' solution to the liquidity crisis in Irish banks, one that
will facilitate a more orderly and far less costly downsizing of bank balance
sheets to their targeted levels. Such facility may initially be tailor-made for
Irish bank resolution purposes, but may also become template for a broader
application involving other distressed banking systems across the Eurozone area.
There have been far too many false dawns involving Irish
stabilisation efforts to pre-judge the outcome of forthcoming events. However,
one plausible scenario involves a credible restructuring of the Irish banking
system (over-capitalisation and secured funding), along with an agreed paring of
the 'bail-out' interest rate cost and retention of the coveted 12.5% corporate
tax rate. A quid pro quo will be needed for such EU sponsored outturns, and the
honouring of bank debt may be part of it."
Japan's reconstruction could turn around deflation and allow the economy to blossom says Clem Chambers, CEO of ADVFN:
Irish Financials: Media commentary on state involvement in IL&P;
Goodbody's Eamonn Hughes comments -- "Volumes in the banks yesterday
were very light ahead of Thursday’s stress tests where media commentary has
centred around possible capital requirements in an €18-23bn range for the 4
banks being evaluated (including the €10bn earmarked last November).
With the results due on Thursday evening, any interest in the banks ahead
of then is the equivalent of playing red or black until details on the stress
test emerge at the individual company level. This morning’s press commentary
(Irish Times) focuses on the likelihood of the State having to inject capital
into IL&P, which will see it cede a significant ownership to the State as it
faces a substantial challenge under the PLAR tests to rebase its €38bn of loans
closer to its €19bn of deposits.
On an existing group basis, the last PCAR assessment (November) indicated
IL&P required very little additional capital, though we believe it needs to
disaggregate its banks which could see the figure over the €1bn mark, though
liability management could reduce this by about 30%. However, the PCAR/PLAR
assessment this week may drive this base figure higher again, so the commentary
this morning is no real surprise.
Elsewhere, it looks like the government may be publishing the results of the
restructuring plans of the banks to downsize their balance sheets on Thursday as
well. Previously, these plans were pencilled in for the end of April, but the
inter-relationship with the PLAR means it makes more sense to publish the
results all together. On this point, it appears that the €60bn of medium term
financing on the table from the ECB to wean the banks off the ELA dependence
will be conditional on a strict timetable on the restructuring. It appears the
government will be reviewing the stress tests at this morning’s weekly cabinet
meeting, with a further meeting pencilled in for Thursday morning."
Siemens unveiled its largest corporate revamp since 2007, whereby it plans to spin off its lighting division, Osram. "This is a great opportunity where Osram can actually enhance its leading market position and technology position," CEO Peter Löscher told CNBC Tuesday.
UK and US data releases indicate a weak outlook for the
consumer; Davy economist, Conall Mac Coille, comments --
number of data releases for the UK economy today (March 29th) are
likely to underline that growth prospects remain weak. UK GDP in Q4
is expected to show little revision from the 0.6% decline indicated
in the previous release. This is a sharp pace of contraction,
accentuated by the impact of December's bad weather, which the
Office for National Statistics estimates reduced growth by 0.5
percentage points on the quarter. But there is considerable
uncertainty around this estimate. As in other countries, the
temporary negative impact of the snow in December has made reading
the Q1 data more difficult as bad weather effects dissipate.
Overall, net trade continues to struggle to provide a substantial
contribution to growth, and today's release of the UK balance of
payments is expected to show that the current account deficit rose
from £9.6bn in Q3 to £10.5bn in Q4.
UK mortgage approvals data are expected to show that activity
remained weak in the UK housing market in February with approvals
expected to equal 46,000 compared with pre-recession rates in excess
of 100,000. Similarly, net lending by banks, secured on dwellings,
in February is expected to be £1.8bn compared with net lending close
to £10bn prior to the recession. The February headline M4 broad
money growth figure is likely to remain close to negative territory,
reflecting continued weakness in bank lending. Net consumer credit
is expected to fall by £0.1bn given the weakness of the British
Banking Association data for credit card and personal borrowing
already released for February. Together, today's data releases
therefore provide a pessimistic outlook for growth and consumer
spending in the UK.
Today's release of the US Conference Board measure of consumer
confidence is expected to show that confidence fell back sharply in
March to 65.0 from the three-year high of 70.4 in February. The US
personal income and spending data released yesterday (March 28th)
showed that higher inflation and rising oil prices are eating into
real incomes. Personal income growth was 0.3% in nominal terms but
fell by 0.1% in real terms, the first decline since September.
Similarly, the nominal 0.7% increase in personal spending meant a
smaller 0.3% rise in real terms. So, as in the UK and other
economies, higher energy prices are likely to dent consumer
confidence and spending."
Economic View: Irish consumers still finding it tough; Goodbody chief
economist, Dermot O’Leary, comments - - "With weather affecting both
month-on-month comparisons and year-on-year ones in recent months, it has been
difficult to get a handle on the true state of the Irish consumer. February’s
retail sales data thus gave us a clearer picture; in February, retail sales fell
by 1% yoy, with core sales (i.e. excluding the motor trade) down by a larger 3%.
Headline sales volumes had been up by 5% yoy in January, but were
flattered by very weak base effects. The modest annual decline seen in February
masks some weaker performances in some categories of retail sales. For example,
sales of furniture on lighting fell by 13%, while sales volumes in the hardware,
paints and glass category, our proxy for DIY sales, fell by 6% yoy. Outside of
the strong growth in the motor trade (+5% yoy), which continues to be aided by
the scrappage scheme, the only other categories showing growth are non-specialised
stores (supermarkets, +0.5%), department stores (+0.3%) and clothing and
Another interesting aspect of the data is the fact that inflation is making a
return, albeit a modest one. The retail sales deflator, calculated from the
volume and value figures, rose on an annual basis in February (+0.3%) for the
first time since October 2008. While significant deflation still exists in some
sectors (clothing and footwear, electrical goods), price increases are returning
in supermarkets (impact of food price rises), pharmaceutical goods and bars, all
of which represent notable changes in trends. With the well known pressures on
Irish consumer likely to remain, the return of inflation is unlikely to spur
demand. We are expecting a fall in consumer spending of 1% in 2011. These data
do nothing to change that view and, in fact, the risks are still on the downside
given the recent weak employment data."
Mitul Kotecha, head of global FX strategy at Credit Agricole CIB, shares his outlook on the U.S. dollar and other currencies:
In New York Monday, the Dow fell 23 points or 0.19% to 12,198.
The S&P 500 slid 0.27% and the Nadaq slipped 0.45%.
MSCI Asia Pacific Index was little changed Tuesday.
Japan's Nikkei 225 dipped 0.21%; China's Shanghai Composite fell 0.87%;
Australia's S&P/ASX 200 Index rose 0.47% and the Bombay Stock Exchange's Sensex
index gained 1.03% in Mumbai.
Europe, the Dow Jones Stoxx 600 is down 0.32% in early trading Tuesday.
ISEQ has dipped 0.70% in Dublin.
is off 1.66%; Elan
is down 0.29% and Zamano is unchanged.
Closing Price €0.04); Results behind forecasts: Goodbody's Clodagh McCarthy
comments -- "Zamano reported its FY10 results this morning, which were behind our forecasts.
Revenue came in at €15.8m compared to €25.1m in FY09 and our forecasts of
€16.9m, while EBITDA was €0.9m (FY09 €4.3m) versus forecasts of €1.7m. Net debt
was €3m verses our forecast of €1.4m (€2.2m in FY09). The variance in the top
line from FY09 to FY10 stems from transition delays in re-structuring the Group,
initiated last year. However, the impact of new regulations and challenges in
the smart phone area has delayed improved financial performance.
Outlook for the company remains 'challenging,' bank agreements have been
renegotiated and 'cost reductions are allowing the company to invest in future
opportunities.' The Board remains confident that stability has now been achieved
and the capacity to grow will follow. Despite this, we reiterate our reduce
BDI closed at 3,005 on Thursday, Dec 31st - - a rise of 289% in 2009. The index
averaged 59% lower in 2009 than a year earlier.
Thursday, July 15, 2010, the index fell for the 35th straight session, by 9
points, or 0.537%, to 1,700 points,
On Friday July16th, the BDI rose 20
points or 1.12% to 1,700 to break the 35-session losing streak.
Monday this week, the BDI was unchanged at 1,585.
The Financial Times reported
earlier in January, that Australia’s flooding and fears of ship oversupply has
pushed down a gauge of the cost of hiring ships to carry coal, iron ore and
other dry bulk by nearly half since October to the lowest level since the
aftermath of the financial crisis. The Baltic Dry index, the widely watched
measure of dry bulk charter rates, fell to 1,453, nearly half the 2,784 peak
reached on October 27, 2010.
margin between the US benchmark WTI (West Texas Intermediate) used on the New
York Mercantile Exchange and Brent is almost $11.
said in early February that a surge in oil inventories in Cushing, Oklahoma,
where WTI is delivered into America’s pipeline system, has depressed the value
of the benchmark against other yardsticks. The
International Energy Agency said on Thursday that with “few relief valves” to
cut the stock overhang in Cushing, the price dislocation “may persist for months
[or years] to come”.