WEEKLY COMMODITES REVIEW: Oil leads way as commodity prices strike record highs
LONDON:The price of oil soared to an historic high above 101 dollars this week, while gold and platinum also scored record peaks as speculators dived into already buoyant commodities markets. Prices of raw materials are surging on concerns over tight supplies and strong demand for raw materials, particularly from emerging economic powers China and India. Oil: New York crude spiked Wednesday to a record high of 101.32 dollars a barrel on fears about supply disruptions around the globe and amid strong demand. Also on Wednesday, Brent North Sea crude struck a record peak of 99.22 dollars. “Oil gained sharply, supported by a combination of factors, including persistent supply concerns,” said Sucden analyst Andrey Kryuchenkov. Despite supply worries, the Organisation of Petroleum Countries could cut output at its meeting in Vienna next month because demand for oil drops in the second quarter as winter ends in the northern hemisphere. One OPEC member is Venezuela, which has reduced supplies to the United States owing to a row with US energy giant ExxonMobil, the world’s biggest oil company. ExxonMobil says it has won court orders in New York, London, the Netherlands and the Netherlands Antilles freezing some 12 billion dollars of assets in those jurisdictions from Venezuela’s state-owned oil producer PDVSA. The legal battle relates to ExxonMobil’s bid to secure compensation after Venezuela’s government nationalised key oil fields in the Orinoco basin, including two ExxonMobil operations. Crude prices slumped on Thursday after two days of record peaks as a stronger-than-expected rise in US crude-oil reserves damped supply jitters. On Friday, New York’s main oil futures contract, light sweet crude for delivery in April, was at 97.52 dollars per barrel, compared with 96.38 dollars for the now-expired March contract a week earlier. Brent North Sea crude for April rallied to 95.94 dollars from 95.64 dollars. Platinum and palladium: Platinum, which is used to produce expensive jewellery and catalytic converters in vehicles, hit a historic pinnacle of 2,206 dollars an ounce. The white metal faces a tight supply situation because South Africa, which produces about 75 percent of the world’s platinum, is in the grips of a power crisis that has badly hit the country’s mining industry. Platinum’s sister metal palladium, which has also been affected by the South African situation, hit 525.50 dollars an ounce — a high point which was last scaled in 2001. On the London Platinum and Palladium Market, platinum rose to 2,155 dollars an ounce at the late fixing Friday from 2,057 dollars a week earlier. Palladium climbed to 506 dollars an ounce from 439.25 dollars. Gold and silver: Gold prices enjoyed a record high of 953.91 dollars per ounce on Thursday. Analysts said gold jumped higher as investors sought a haven for their cash amid concerns over rising inflation and surging oil prices. James Moore of TheBullionDesk.com said the precious metal “looks set to extend higher in the coming sessions as investors seek assets to offset rising inflation”. “Silver mirrored the move in gold ... hitting a new multi-decade high,” noted UBS analyst John Reade. On the London Bullion Market, gold soared to 943 dollars at Friday’s late fixing from 912.50 dollars a week earlier. Silver rose to 17.94 dollars an ounce at the late fixing from 17.38 dollars. Base metals: Base metals prices rallied across the board as tightening global supplies dictated market direction. “The strength in base metals prices is impressive given recent equity market volatility and macroeconomic concerns,” said Barclays Capital analysts. “Recently metals prices have decisively broken their link with equity markets and are being driven higher by supply concerns.” On Friday, copper for delivery in three months jumped to 8,325 dollars a tonne on the London Metal Exchange from 7,815 dollars a week earlier. Three-month aluminium prices climbed to 2,917 dollars a tonne from 2,850 dollars. Three-month nickel rose to 28,525 dollars a tonne from 27,700 dollars. Three-month lead gained to 3,260 dollars a tonne from 3,030 dollars. Three-month zinc climbed to 2,490 dollars a tonne from 2,350 dollars. Three-month tin increased to 17,550 dollars a tonne from 16,897 dollars. Grains and soya: Soya surged to a record peak at 14.28 dollars on Tuesday, while maize enjoyed a historic closing high of 5.24 dollars a bushel on Thursday. “We are in an uptrend with a lot of investment fund money pushing the market this week to new highs,” said US Commodities analyst Dax Wedemeyer. He added that runaway crude oil prices had underscored bumper gains for corn or maize, which is used to produce ethanol, a clean plant-based fuel. By Friday on the Chicago Board of Trade, wheat for May delivery rose to 10.35 dollars a bushel from 10.27 dollars the previous week. May-dated soyabean meal used in animal feed soared to 14.24 dollars from 14.05 dollars. The price of maize for March delivery advanced to 5.21 dollars a bushel from 5.14 dollars a week earlier. On LIFFE, the price per tonne of wheat for November delivery rose to 155.50 pounds from 153.80 pounds a week earlier. Cocoa: Cocoa prices surged to multi-year peaks in London and New York. “This market, and many in the softs complex, seem to be ... influenced by the large quantity of seemingly endless (investment) fund money that they are attracting,” said Sucden analyst Stephanie Garner. By Friday on LIFFE, London’s futures exchange, the price of cocoa for May delivery rallied to 1,324 pounds a tonne from 1,311 pounds a week earlier. On the New York Board of Trade (NYBOT), the May cocoa contract spiked to 2,567 dollars a tonne from 2,530 dollars a week earlier. SUGAR: Sugar prices also gained ground on fund buying. By Friday on LIFFE, the price per tonne of white sugar for May delivery jumped to 376 pounds from 372.10 pounds a week earlier. On NYBOT, the price of unrefined sugar for May delivery stood at 14.35 US cents a pound compared with 13.68 cents for the March contract the previous week. Rubber: Rubber prices stretched higher, backed by weak supplies and strong demand from China and Europe. Production in several major producing countries including Malaysia and Thailand was hampered by the dry season, which means that trees produce less latex. On Friday, the Malaysian Rubber Board’s benchmark SMR20 increased to 277.40 US cents per kilogramme from 268.30 US cents last week. Wool: The Australian wool market finished 2.1 percent lower on average, owing to abundant supplies. The Eastern Index slid to 9.74 Australian dollars a kilo, from 9.92 Australian dollars a week earlier.
Tuesday, February 26, 2008
WEEKLY COMMODITES REVIEW: Oil leads way as commodity prices strike record highs
LONDON:The price of oil soared to an historic high above 101 dollars this week, while gold and platinum also scored record peaks as speculators dived into already buoyant commodities markets. Prices of raw materials are surging on concerns over tight supplies and strong demand for raw materials, particularly from emerging economic powers China and India. Oil: New York crude spiked Wednesday to a record high of 101.32 dollars a barrel on fears about supply disruptions around the globe and amid strong demand. Also on Wednesday, Brent North Sea crude struck a record peak of 99.22 dollars. “Oil gained sharply, supported by a combination of factors, including persistent supply concerns,” said Sucden analyst Andrey Kryuchenkov. Despite supply worries, the Organisation of Petroleum Countries could cut output at its meeting in Vienna next month because demand for oil drops in the second quarter as winter ends in the northern hemisphere. One OPEC member is Venezuela, which has reduced supplies to the United States owing to a row with US energy giant ExxonMobil, the world’s biggest oil company. ExxonMobil says it has won court orders in New York, London, the Netherlands and the Netherlands Antilles freezing some 12 billion dollars of assets in those jurisdictions from Venezuela’s state-owned oil producer PDVSA. The legal battle relates to ExxonMobil’s bid to secure compensation after Venezuela’s government nationalised key oil fields in the Orinoco basin, including two ExxonMobil operations. Crude prices slumped on Thursday after two days of record peaks as a stronger-than-expected rise in US crude-oil reserves damped supply jitters. On Friday, New York’s main oil futures contract, light sweet crude for delivery in April, was at 97.52 dollars per barrel, compared with 96.38 dollars for the now-expired March contract a week earlier. Brent North Sea crude for April rallied to 95.94 dollars from 95.64 dollars. Platinum and palladium: Platinum, which is used to produce expensive jewellery and catalytic converters in vehicles, hit a historic pinnacle of 2,206 dollars an ounce. The white metal faces a tight supply situation because South Africa, which produces about 75 percent of the world’s platinum, is in the grips of a power crisis that has badly hit the country’s mining industry. Platinum’s sister metal palladium, which has also been affected by the South African situation, hit 525.50 dollars an ounce — a high point which was last scaled in 2001. On the London Platinum and Palladium Market, platinum rose to 2,155 dollars an ounce at the late fixing Friday from 2,057 dollars a week earlier. Palladium climbed to 506 dollars an ounce from 439.25 dollars. Gold and silver: Gold prices enjoyed a record high of 953.91 dollars per ounce on Thursday. Analysts said gold jumped higher as investors sought a haven for their cash amid concerns over rising inflation and surging oil prices. James Moore of TheBullionDesk.com said the precious metal “looks set to extend higher in the coming sessions as investors seek assets to offset rising inflation”. “Silver mirrored the move in gold ... hitting a new multi-decade high,” noted UBS analyst John Reade. On the London Bullion Market, gold soared to 943 dollars at Friday’s late fixing from 912.50 dollars a week earlier. Silver rose to 17.94 dollars an ounce at the late fixing from 17.38 dollars. Base metals: Base metals prices rallied across the board as tightening global supplies dictated market direction. “The strength in base metals prices is impressive given recent equity market volatility and macroeconomic concerns,” said Barclays Capital analysts. “Recently metals prices have decisively broken their link with equity markets and are being driven higher by supply concerns.” On Friday, copper for delivery in three months jumped to 8,325 dollars a tonne on the London Metal Exchange from 7,815 dollars a week earlier. Three-month aluminium prices climbed to 2,917 dollars a tonne from 2,850 dollars. Three-month nickel rose to 28,525 dollars a tonne from 27,700 dollars. Three-month lead gained to 3,260 dollars a tonne from 3,030 dollars. Three-month zinc climbed to 2,490 dollars a tonne from 2,350 dollars. Three-month tin increased to 17,550 dollars a tonne from 16,897 dollars. Grains and soya: Soya surged to a record peak at 14.28 dollars on Tuesday, while maize enjoyed a historic closing high of 5.24 dollars a bushel on Thursday. “We are in an uptrend with a lot of investment fund money pushing the market this week to new highs,” said US Commodities analyst Dax Wedemeyer. He added that runaway crude oil prices had underscored bumper gains for corn or maize, which is used to produce ethanol, a clean plant-based fuel. By Friday on the Chicago Board of Trade, wheat for May delivery rose to 10.35 dollars a bushel from 10.27 dollars the previous week. May-dated soyabean meal used in animal feed soared to 14.24 dollars from 14.05 dollars. The price of maize for March delivery advanced to 5.21 dollars a bushel from 5.14 dollars a week earlier. On LIFFE, the price per tonne of wheat for November delivery rose to 155.50 pounds from 153.80 pounds a week earlier. Cocoa: Cocoa prices surged to multi-year peaks in London and New York. “This market, and many in the softs complex, seem to be ... influenced by the large quantity of seemingly endless (investment) fund money that they are attracting,” said Sucden analyst Stephanie Garner. By Friday on LIFFE, London’s futures exchange, the price of cocoa for May delivery rallied to 1,324 pounds a tonne from 1,311 pounds a week earlier. On the New York Board of Trade (NYBOT), the May cocoa contract spiked to 2,567 dollars a tonne from 2,530 dollars a week earlier. SUGAR: Sugar prices also gained ground on fund buying. By Friday on LIFFE, the price per tonne of white sugar for May delivery jumped to 376 pounds from 372.10 pounds a week earlier. On NYBOT, the price of unrefined sugar for May delivery stood at 14.35 US cents a pound compared with 13.68 cents for the March contract the previous week. Rubber: Rubber prices stretched higher, backed by weak supplies and strong demand from China and Europe. Production in several major producing countries including Malaysia and Thailand was hampered by the dry season, which means that trees produce less latex. On Friday, the Malaysian Rubber Board’s benchmark SMR20 increased to 277.40 US cents per kilogramme from 268.30 US cents last week. Wool: The Australian wool market finished 2.1 percent lower on average, owing to abundant supplies. The Eastern Index slid to 9.74 Australian dollars a kilo, from 9.92 Australian dollars a week earlier.
LONDON:The price of oil soared to an historic high above 101 dollars this week, while gold and platinum also scored record peaks as speculators dived into already buoyant commodities markets. Prices of raw materials are surging on concerns over tight supplies and strong demand for raw materials, particularly from emerging economic powers China and India. Oil: New York crude spiked Wednesday to a record high of 101.32 dollars a barrel on fears about supply disruptions around the globe and amid strong demand. Also on Wednesday, Brent North Sea crude struck a record peak of 99.22 dollars. “Oil gained sharply, supported by a combination of factors, including persistent supply concerns,” said Sucden analyst Andrey Kryuchenkov. Despite supply worries, the Organisation of Petroleum Countries could cut output at its meeting in Vienna next month because demand for oil drops in the second quarter as winter ends in the northern hemisphere. One OPEC member is Venezuela, which has reduced supplies to the United States owing to a row with US energy giant ExxonMobil, the world’s biggest oil company. ExxonMobil says it has won court orders in New York, London, the Netherlands and the Netherlands Antilles freezing some 12 billion dollars of assets in those jurisdictions from Venezuela’s state-owned oil producer PDVSA. The legal battle relates to ExxonMobil’s bid to secure compensation after Venezuela’s government nationalised key oil fields in the Orinoco basin, including two ExxonMobil operations. Crude prices slumped on Thursday after two days of record peaks as a stronger-than-expected rise in US crude-oil reserves damped supply jitters. On Friday, New York’s main oil futures contract, light sweet crude for delivery in April, was at 97.52 dollars per barrel, compared with 96.38 dollars for the now-expired March contract a week earlier. Brent North Sea crude for April rallied to 95.94 dollars from 95.64 dollars. Platinum and palladium: Platinum, which is used to produce expensive jewellery and catalytic converters in vehicles, hit a historic pinnacle of 2,206 dollars an ounce. The white metal faces a tight supply situation because South Africa, which produces about 75 percent of the world’s platinum, is in the grips of a power crisis that has badly hit the country’s mining industry. Platinum’s sister metal palladium, which has also been affected by the South African situation, hit 525.50 dollars an ounce — a high point which was last scaled in 2001. On the London Platinum and Palladium Market, platinum rose to 2,155 dollars an ounce at the late fixing Friday from 2,057 dollars a week earlier. Palladium climbed to 506 dollars an ounce from 439.25 dollars. Gold and silver: Gold prices enjoyed a record high of 953.91 dollars per ounce on Thursday. Analysts said gold jumped higher as investors sought a haven for their cash amid concerns over rising inflation and surging oil prices. James Moore of TheBullionDesk.com said the precious metal “looks set to extend higher in the coming sessions as investors seek assets to offset rising inflation”. “Silver mirrored the move in gold ... hitting a new multi-decade high,” noted UBS analyst John Reade. On the London Bullion Market, gold soared to 943 dollars at Friday’s late fixing from 912.50 dollars a week earlier. Silver rose to 17.94 dollars an ounce at the late fixing from 17.38 dollars. Base metals: Base metals prices rallied across the board as tightening global supplies dictated market direction. “The strength in base metals prices is impressive given recent equity market volatility and macroeconomic concerns,” said Barclays Capital analysts. “Recently metals prices have decisively broken their link with equity markets and are being driven higher by supply concerns.” On Friday, copper for delivery in three months jumped to 8,325 dollars a tonne on the London Metal Exchange from 7,815 dollars a week earlier. Three-month aluminium prices climbed to 2,917 dollars a tonne from 2,850 dollars. Three-month nickel rose to 28,525 dollars a tonne from 27,700 dollars. Three-month lead gained to 3,260 dollars a tonne from 3,030 dollars. Three-month zinc climbed to 2,490 dollars a tonne from 2,350 dollars. Three-month tin increased to 17,550 dollars a tonne from 16,897 dollars. Grains and soya: Soya surged to a record peak at 14.28 dollars on Tuesday, while maize enjoyed a historic closing high of 5.24 dollars a bushel on Thursday. “We are in an uptrend with a lot of investment fund money pushing the market this week to new highs,” said US Commodities analyst Dax Wedemeyer. He added that runaway crude oil prices had underscored bumper gains for corn or maize, which is used to produce ethanol, a clean plant-based fuel. By Friday on the Chicago Board of Trade, wheat for May delivery rose to 10.35 dollars a bushel from 10.27 dollars the previous week. May-dated soyabean meal used in animal feed soared to 14.24 dollars from 14.05 dollars. The price of maize for March delivery advanced to 5.21 dollars a bushel from 5.14 dollars a week earlier. On LIFFE, the price per tonne of wheat for November delivery rose to 155.50 pounds from 153.80 pounds a week earlier. Cocoa: Cocoa prices surged to multi-year peaks in London and New York. “This market, and many in the softs complex, seem to be ... influenced by the large quantity of seemingly endless (investment) fund money that they are attracting,” said Sucden analyst Stephanie Garner. By Friday on LIFFE, London’s futures exchange, the price of cocoa for May delivery rallied to 1,324 pounds a tonne from 1,311 pounds a week earlier. On the New York Board of Trade (NYBOT), the May cocoa contract spiked to 2,567 dollars a tonne from 2,530 dollars a week earlier. SUGAR: Sugar prices also gained ground on fund buying. By Friday on LIFFE, the price per tonne of white sugar for May delivery jumped to 376 pounds from 372.10 pounds a week earlier. On NYBOT, the price of unrefined sugar for May delivery stood at 14.35 US cents a pound compared with 13.68 cents for the March contract the previous week. Rubber: Rubber prices stretched higher, backed by weak supplies and strong demand from China and Europe. Production in several major producing countries including Malaysia and Thailand was hampered by the dry season, which means that trees produce less latex. On Friday, the Malaysian Rubber Board’s benchmark SMR20 increased to 277.40 US cents per kilogramme from 268.30 US cents last week. Wool: The Australian wool market finished 2.1 percent lower on average, owing to abundant supplies. The Eastern Index slid to 9.74 Australian dollars a kilo, from 9.92 Australian dollars a week earlier.
U.S. Economy Ranks as World’s Most Competitive
Innovation, market efficiency contribute most to U.S. standing
Washington -- The U.S. economy has regained its ranking as the world's most competitive, largely as a result of its efficient markets and corporate innovation, according to a major report.
Following the United States were Switzerland, Denmark, Sweden and Germany in the 2007 edition of The Global Competitiveness Report, published by the World Economic Forum (WEF), an international research and policy-support group. In 2006, the U.S. economy ranked Number 6 in overall competitiveness.
“The efficiency of the country’s markets, the sophistication of its business community, the impressive capacity for technological innovation that exists within a first-rate system of universities and research centers, all contribute to making the United States a highly competitive economy," said economist Xavier Sala-i-Martin, a co-editor of the report.
However, the report warns that macroeconomic imbalances, including current account deficit, and some weaknesses of U.S. institutions “pose a risk to the country’s overall competitiveness potential.”
Innovation, market efficiency contribute most to U.S. standing
Washington -- The U.S. economy has regained its ranking as the world's most competitive, largely as a result of its efficient markets and corporate innovation, according to a major report.
Following the United States were Switzerland, Denmark, Sweden and Germany in the 2007 edition of The Global Competitiveness Report, published by the World Economic Forum (WEF), an international research and policy-support group. In 2006, the U.S. economy ranked Number 6 in overall competitiveness.
“The efficiency of the country’s markets, the sophistication of its business community, the impressive capacity for technological innovation that exists within a first-rate system of universities and research centers, all contribute to making the United States a highly competitive economy," said economist Xavier Sala-i-Martin, a co-editor of the report.
However, the report warns that macroeconomic imbalances, including current account deficit, and some weaknesses of U.S. institutions “pose a risk to the country’s overall competitiveness potential.”
U.S. Economy Is Fundamentally Strong, President Says
Short-term stimulus package designed to stave off a downturn
Washington -- President Bush and Federal Reserve Chairman Ben Bernanke have emphasized to world economic markets that the U.S. economy remains fundamentally resilient and concerns about a slowdown in growth could be ameliorated by a short-term stimulus package.
"[The U.S. economy] has a strong labor force, excellent productivity and technology, and a deep and liquid financial market that is in the process of repairing itself. So I think we need to keep in mind also that the economy does have inherent strengths and that those will certainly surface over a period of time," Bernanke said during testimony before the U.S. House Budget Committee January 17. Periodically during the year, Bernanke testifies before Congress on the current economic outlook and future trends.
Coinciding with Bernanke's remarks about the continuing strength of the U.S. economy, President Bush announced January 18 that he is asking Congress for a short-term economic stimulus package to help avoid a slowdown in the economy and to help reassure world markets he is prepared to act swiftly.
"Our economy has a solid foundation, but there are areas of real concern. The economy is still creating jobs, though at a reduced pace. Consumer spending is still growing, but the housing market is declining. Business investment and [trade] exports are still rising, but the cost of imported oil has increased," Bush said in a televised White House address
Washington -- President Bush and Federal Reserve Chairman Ben Bernanke have emphasized to world economic markets that the U.S. economy remains fundamentally resilient and concerns about a slowdown in growth could be ameliorated by a short-term stimulus package.
"[The U.S. economy] has a strong labor force, excellent productivity and technology, and a deep and liquid financial market that is in the process of repairing itself. So I think we need to keep in mind also that the economy does have inherent strengths and that those will certainly surface over a period of time," Bernanke said during testimony before the U.S. House Budget Committee January 17. Periodically during the year, Bernanke testifies before Congress on the current economic outlook and future trends.
Coinciding with Bernanke's remarks about the continuing strength of the U.S. economy, President Bush announced January 18 that he is asking Congress for a short-term economic stimulus package to help avoid a slowdown in the economy and to help reassure world markets he is prepared to act swiftly.
"Our economy has a solid foundation, but there are areas of real concern. The economy is still creating jobs, though at a reduced pace. Consumer spending is still growing, but the housing market is declining. Business investment and [trade] exports are still rising, but the cost of imported oil has increased," Bush said in a televised White House address
Short-term stimulus package designed to stave off a downturn
Washington -- President Bush and Federal Reserve Chairman Ben Bernanke have emphasized to world economic markets that the U.S. economy remains fundamentally resilient and concerns about a slowdown in growth could be ameliorated by a short-term stimulus package.
"[The U.S. economy] has a strong labor force, excellent productivity and technology, and a deep and liquid financial market that is in the process of repairing itself. So I think we need to keep in mind also that the economy does have inherent strengths and that those will certainly surface over a period of time," Bernanke said during testimony before the U.S. House Budget Committee January 17. Periodically during the year, Bernanke testifies before Congress on the current economic outlook and future trends.
Coinciding with Bernanke's remarks about the continuing strength of the U.S. economy, President Bush announced January 18 that he is asking Congress for a short-term economic stimulus package to help avoid a slowdown in the economy and to help reassure world markets he is prepared to act swiftly.
"Our economy has a solid foundation, but there are areas of real concern. The economy is still creating jobs, though at a reduced pace. Consumer spending is still growing, but the housing market is declining. Business investment and [trade] exports are still rising, but the cost of imported oil has increased," Bush said in a televised White House address
Washington -- President Bush and Federal Reserve Chairman Ben Bernanke have emphasized to world economic markets that the U.S. economy remains fundamentally resilient and concerns about a slowdown in growth could be ameliorated by a short-term stimulus package.
"[The U.S. economy] has a strong labor force, excellent productivity and technology, and a deep and liquid financial market that is in the process of repairing itself. So I think we need to keep in mind also that the economy does have inherent strengths and that those will certainly surface over a period of time," Bernanke said during testimony before the U.S. House Budget Committee January 17. Periodically during the year, Bernanke testifies before Congress on the current economic outlook and future trends.
Coinciding with Bernanke's remarks about the continuing strength of the U.S. economy, President Bush announced January 18 that he is asking Congress for a short-term economic stimulus package to help avoid a slowdown in the economy and to help reassure world markets he is prepared to act swiftly.
"Our economy has a solid foundation, but there are areas of real concern. The economy is still creating jobs, though at a reduced pace. Consumer spending is still growing, but the housing market is declining. Business investment and [trade] exports are still rising, but the cost of imported oil has increased," Bush said in a televised White House address
Economic Growth Decline Predicted for 2008, with Rebound in 2009
U.S. economy remains resilient, secretary of state tells Economic Forum
Washington -- The pace of U.S. economic growth will slow somewhat through 2008, and an economic rebound is likely to begin early in 2009 as the housing and financial sectors improve, says a Congressional Budget Office forecast.
Peter Orszag, director of the nonpartisan Congressional Budget Office (CBO), said in testimony before several congressional budget and finance committees that the current economic weakness was created by tight credit, a housing crisis and rising oil prices. The CBO provides Congress at least two economic outlook forecasts annually.
"The state of the economy is particularly uncertain at the moment. The pace of economic growth slowed in 2007, and there are strong indications that it will slacken further in 2008," Orszag said January 24 in congressional testimony. "In CBO's view, the ongoing problems in the housing and financial markets and the high price of oil will curb spending by households and businesses this year and trim the growth of [the gross domestic product]."
A nation's gross domestic product (GDP) is the total market value of all final goods and services produced by a nation. It generally includes four components -- consumer spending, investment, government spending and exports and imports. For 2008, CBO estimates the U.S. GDP to reach approximately $13.67 trillion and will rise further to $14.2 trillion in 2009.
A stock broker monitors volatile trading action in London on January 23. (© AP Images)
In congressional testimony, Orszag said it is not likely the U.S. economy will worsen beyond the expected slowing in growth, but the estimate of the gross domestic product is revised throughout the year as conditions change. "CBO expects the economy to rebound after 2008, as the negative effects of the turmoil in the housing and financial markets fade," he said.
Secretary of State Condoleezza Rice, speaking January 23 at the World Economic Forum in Davos, Switzerland, said the U.S. economy remains a leading engine for global economic growth, and world markets should have confidence in the underlying strength of the global economy.
"I know that many are concerned by the recent fluctuations in U.S. financial markets, and by concerns about the U.S. economy," she said. "The U.S. economy is resilient, its structure is sound, and its long-term economic fundamentals are healthy. The United States continues to welcome foreign investment and free trade."
On January 18, President Bush announced he was asking Congress to pass a temporary economic package designed to stimulate consumer spending and business investment. He said the stimulus package would amount to about 1 percent of GDP, or between $140 billion and $145 billion, though the final amount could reach as high as $150 billion.
Treasury Secretary Henry Paulson, House Speaker Nancy Pelosi and Republican Minority Leader John Boehner announced January 24 that a deal had been struck between the White House and Congress to provide a stimulus package of tax rebates for consumers and incentives for business investment. Senate Majority Leader Harry Reid told the Reuters news agency that the bipartisan package could be sent to Bush for his signature by mid-February.
That action in fiscal policy by the president was matched by the U.S. Federal Reserve on January 22 in monetary policy when it lowered interest rates to encourage banks to lend money to businesses and stimulate investment. That action helped world stock markets rally and recover from a trading slide that began earlier.
Federal Reserve Chairman Ben Bernanke said in congressional testimony that he sees an economic stimulus package as effective in blunting recent economic turmoil as long as the stimulus package is timely, targeted and temporary.
U.S. economy remains resilient, secretary of state tells Economic Forum
Washington -- The pace of U.S. economic growth will slow somewhat through 2008, and an economic rebound is likely to begin early in 2009 as the housing and financial sectors improve, says a Congressional Budget Office forecast.
Peter Orszag, director of the nonpartisan Congressional Budget Office (CBO), said in testimony before several congressional budget and finance committees that the current economic weakness was created by tight credit, a housing crisis and rising oil prices. The CBO provides Congress at least two economic outlook forecasts annually.
"The state of the economy is particularly uncertain at the moment. The pace of economic growth slowed in 2007, and there are strong indications that it will slacken further in 2008," Orszag said January 24 in congressional testimony. "In CBO's view, the ongoing problems in the housing and financial markets and the high price of oil will curb spending by households and businesses this year and trim the growth of [the gross domestic product]."
A nation's gross domestic product (GDP) is the total market value of all final goods and services produced by a nation. It generally includes four components -- consumer spending, investment, government spending and exports and imports. For 2008, CBO estimates the U.S. GDP to reach approximately $13.67 trillion and will rise further to $14.2 trillion in 2009.
A stock broker monitors volatile trading action in London on January 23. (© AP Images)
In congressional testimony, Orszag said it is not likely the U.S. economy will worsen beyond the expected slowing in growth, but the estimate of the gross domestic product is revised throughout the year as conditions change. "CBO expects the economy to rebound after 2008, as the negative effects of the turmoil in the housing and financial markets fade," he said.
Secretary of State Condoleezza Rice, speaking January 23 at the World Economic Forum in Davos, Switzerland, said the U.S. economy remains a leading engine for global economic growth, and world markets should have confidence in the underlying strength of the global economy.
"I know that many are concerned by the recent fluctuations in U.S. financial markets, and by concerns about the U.S. economy," she said. "The U.S. economy is resilient, its structure is sound, and its long-term economic fundamentals are healthy. The United States continues to welcome foreign investment and free trade."
On January 18, President Bush announced he was asking Congress to pass a temporary economic package designed to stimulate consumer spending and business investment. He said the stimulus package would amount to about 1 percent of GDP, or between $140 billion and $145 billion, though the final amount could reach as high as $150 billion.
Treasury Secretary Henry Paulson, House Speaker Nancy Pelosi and Republican Minority Leader John Boehner announced January 24 that a deal had been struck between the White House and Congress to provide a stimulus package of tax rebates for consumers and incentives for business investment. Senate Majority Leader Harry Reid told the Reuters news agency that the bipartisan package could be sent to Bush for his signature by mid-February.
That action in fiscal policy by the president was matched by the U.S. Federal Reserve on January 22 in monetary policy when it lowered interest rates to encourage banks to lend money to businesses and stimulate investment. That action helped world stock markets rally and recover from a trading slide that began earlier.
Federal Reserve Chairman Ben Bernanke said in congressional testimony that he sees an economic stimulus package as effective in blunting recent economic turmoil as long as the stimulus package is timely, targeted and temporary.
U.S. in role of wounded giant at Davos
DAVOS, Switzerland: The United States has filled various roles at the World Economic Forum over the past decade: dot-com dynamo, benevolent superpower, feared aggressor, and now, wounded giant.
On the first day of this conference, a parade of bankers, economists, and political officials expressed deep fears about the faltering American economy, peppered with blunt criticism of its institutions, chiefly the Federal Reserve, which some accused of sowing the seeds of today's crisis.
George Soros, the financier who made a fortune betting against the pound, went so far Wednesday as to say that the downturn would put an end to the long status of the dollar as the world's default currency.
"The current crisis is not only the bust that follows the housing boom," Soros said. "It's basically the end of a 60-year period of continuing credit expansion based on the dollar as the reserve currency."
Signs of a new economic order abounded in this Swiss ski resort: the minister of commerce and industry of India, Kamal Nath, noted that China had overtaken the United States as India's largest trading partner - buttressing his view that India could largely sidestep an American recession
The head of the National Bank of Kuwait, Ibrahim Dabdoub, said Americans who opposed sovereign wealth funds like the one run by his government needed to come to terms with the new reality.
Completing the role reversal, Nouriel Roubini, an American economist, said, "the United States looks like an emerging market," with large budget deficits and a swooning currency. By contrast, he said, Brazil, an actual emerging market, had done a better job of overhauling its economy.
Roubini, whose frequent predictions of a downturn have made him something of a soothsayer in Davos, predicted the United States would suffer a recession lasting at least a year. He foresees a flood of defaults on car loans and corporate bonds, as well as a prolonged bear market.
"The debate is not whether we're going to have a soft landing or a hard landing," he said. "The question is only how hard the hard landing will be."
Several economists said the Federal Reserve seemed to have lost control of events since the subprime crisis erupted last summer. Some criticized its steep cut in interest rates Tuesday as a knee-jerk reaction to calm the markets rather than a sound response to a deteriorating situation
Policy makers are reaching back into the same playbook that got us into this mess in the first place," said Stephen Roach, an economist who recently became the chairman of Morgan Stanley Asia.
DAVOS, Switzerland: The United States has filled various roles at the World Economic Forum over the past decade: dot-com dynamo, benevolent superpower, feared aggressor, and now, wounded giant.
On the first day of this conference, a parade of bankers, economists, and political officials expressed deep fears about the faltering American economy, peppered with blunt criticism of its institutions, chiefly the Federal Reserve, which some accused of sowing the seeds of today's crisis.
George Soros, the financier who made a fortune betting against the pound, went so far Wednesday as to say that the downturn would put an end to the long status of the dollar as the world's default currency.
"The current crisis is not only the bust that follows the housing boom," Soros said. "It's basically the end of a 60-year period of continuing credit expansion based on the dollar as the reserve currency."
Signs of a new economic order abounded in this Swiss ski resort: the minister of commerce and industry of India, Kamal Nath, noted that China had overtaken the United States as India's largest trading partner - buttressing his view that India could largely sidestep an American recession
The head of the National Bank of Kuwait, Ibrahim Dabdoub, said Americans who opposed sovereign wealth funds like the one run by his government needed to come to terms with the new reality.
Completing the role reversal, Nouriel Roubini, an American economist, said, "the United States looks like an emerging market," with large budget deficits and a swooning currency. By contrast, he said, Brazil, an actual emerging market, had done a better job of overhauling its economy.
Roubini, whose frequent predictions of a downturn have made him something of a soothsayer in Davos, predicted the United States would suffer a recession lasting at least a year. He foresees a flood of defaults on car loans and corporate bonds, as well as a prolonged bear market.
"The debate is not whether we're going to have a soft landing or a hard landing," he said. "The question is only how hard the hard landing will be."
Several economists said the Federal Reserve seemed to have lost control of events since the subprime crisis erupted last summer. Some criticized its steep cut in interest rates Tuesday as a knee-jerk reaction to calm the markets rather than a sound response to a deteriorating situation
Policy makers are reaching back into the same playbook that got us into this mess in the first place," said Stephen Roach, an economist who recently became the chairman of Morgan Stanley Asia.
American Stock Exchange Lists Units of Asia Special Situation Acquisition Corp
NEW YORK, Jan. 17 /PRNewswire/ -- The American Stock Exchange(R) (Amex(R)) today lists the units of Asia Special Situation Acquisition Corp. under the ticker symbol CIO.U. The offering size is 10,000,000 units at $10.00 per unit for gross proceeds of $100,000,000 (excluding the underwriters' over-allotment option). One unit consists of one ordinary share and one warrant to purchase one ordinary share. Initially, the units will be the only security trading. Maxim Group LLC is the lead underwriter on this IPO.
Asia Special Situation Acquisition Corp. is a newly organized company formed for the purpose acquiring all or a majority interest in one or more operating businesses, through a capital stock exchange, asset acquisition, stock purchase, or other similar transaction, including obtaining a majority interest through contractual arrangements. The Company intends to identify prospective acquisitions that are either located in Asia, provide products or services to consumers located in Asia, or invest in Asia.
"We are pleased to welcome Asia Special Situation Acquisition Corp. to the American Stock Exchange," said Neal Wolkoff, Chairman and CEO of the Amex. "We look forward to working with the Company in building increased awareness and visibility with U.S. investors."
Angela Ho, Chairman and CEO of Asia Special Situation Acquisition Corp., stated, "We are excited to be listed on the American Stock Exchange, and we look forward to creating value for our shareholders. We intend to leverage the extensive relationships of our management to source an attractive business combination."
The specialist in Asia Special Situation Acquisition Corp. is Kellogg Capital Group LLC. For further information on CIO.U and other Amex-listed companies, please visit www.amex.com.
About American Stock Exchange
The American Stock Exchange(R) (Amex(R)) offers trading across a full range of equities, options and exchange traded funds (ETFs), including structured products and HOLDRS(SM). In addition to its role as a national equities market, the Amex is the pioneer of the ETF, responsible for bringing the first domestic product to market in 1993. Leading the industry in ETF listings, the Amex lists 381 ETFs to date. The Amex is also one of the largest options exchanges in the U.S., trading options on broad-based and sector indexes as well as domestic and foreign stocks.
NEW YORK, Jan. 17 /PRNewswire/ -- The American Stock Exchange(R) (Amex(R)) today lists the units of Asia Special Situation Acquisition Corp. under the ticker symbol CIO.U. The offering size is 10,000,000 units at $10.00 per unit for gross proceeds of $100,000,000 (excluding the underwriters' over-allotment option). One unit consists of one ordinary share and one warrant to purchase one ordinary share. Initially, the units will be the only security trading. Maxim Group LLC is the lead underwriter on this IPO.
Asia Special Situation Acquisition Corp. is a newly organized company formed for the purpose acquiring all or a majority interest in one or more operating businesses, through a capital stock exchange, asset acquisition, stock purchase, or other similar transaction, including obtaining a majority interest through contractual arrangements. The Company intends to identify prospective acquisitions that are either located in Asia, provide products or services to consumers located in Asia, or invest in Asia.
"We are pleased to welcome Asia Special Situation Acquisition Corp. to the American Stock Exchange," said Neal Wolkoff, Chairman and CEO of the Amex. "We look forward to working with the Company in building increased awareness and visibility with U.S. investors."
Angela Ho, Chairman and CEO of Asia Special Situation Acquisition Corp., stated, "We are excited to be listed on the American Stock Exchange, and we look forward to creating value for our shareholders. We intend to leverage the extensive relationships of our management to source an attractive business combination."
The specialist in Asia Special Situation Acquisition Corp. is Kellogg Capital Group LLC. For further information on CIO.U and other Amex-listed companies, please visit www.amex.com.
About American Stock Exchange
The American Stock Exchange(R) (Amex(R)) offers trading across a full range of equities, options and exchange traded funds (ETFs), including structured products and HOLDRS(SM). In addition to its role as a national equities market, the Amex is the pioneer of the ETF, responsible for bringing the first domestic product to market in 1993. Leading the industry in ETF listings, the Amex lists 381 ETFs to date. The Amex is also one of the largest options exchanges in the U.S., trading options on broad-based and sector indexes as well as domestic and foreign stocks.
EUR/USD (1.4823)European & US sessions forecast levels: 1.4745/1.4860Trend Sessions: European – Neutral/DownwardUS – NeutralMarket Focus: 10:00 AM Existing Home Sales, 4:00 AM Italian Retail Sales, 1:50 PM ECB President Trichet Speaks.Daily Strategy: The fears about the high Euro Zone inflation stop the rumors and speculations about eventually interest rates cut by ECB. With so high inflation the chances for cut of the interest rates in the Euro Zone are minimal. The new jump of the oil prices will hurt serious the world economy and will pump the inflation. For today we expect temporary recovery of the dollar during the European session. If the dollar break above 1.4860 will follow levels of 1.4920/25.
RBA) Malcolm Edey - Economic and Political Overview 2008
(RBA) Malcolm Edey - Economic and Political Overview 2008
Talk to CEDA Economic and Political Overview 2008
Malcolm EdeyAssistant Governor (Economic)
Committee for Economic Development of Australia (CEDA)Economic and Political Overview 2008Sydney - 19 February 2008
Thanks to CEDA for the invitation to speak here today.
Since the last time I spoke at this event, the RBA has taken a number of steps to increase the amount of information it makes available to the public, both about its policy processes, and its thinking about the economy. We now issue a monthly statement after each Board meeting, setting out the reasons for the latest decision, whether or not the interest rate is being changed. Minutes of the Board meetings are now also published, and they give additional detail on the matters that were considered and the reasoning behind the decision. And those of you who follow these things closely would know that we've increased the level of detail in the economic forecasts set out in our quarterly Statement on Monetary Policy.
So there's a lot of material out there for financial markets and Reserve Bank watchers to get their teeth into. Today I won't be trying to add anything new to that, but rather, I'll base my presentation on our latest Statement, which was released last week.
The challenge in assessing the economic outlook at the moment is to weigh up the effects of contrasting domestic and international forces. Over the past few months the run of new information coming from abroad, at least in the major industrial economies, has been mostly bad. One important aspect of that is the deterioration in global equity markets, and the ongoing strains in credit markets. I'm not going to focus on those things today, but instead I'll focus on the evolving economic data.
Naturally, a lot of attention has focused on the United States (Graph 1). The fourth quarter national accounts confirmed a sharp slowdown in the US, and most expectations now are for a period of further weakness in the first half of this year. Some observers are saying the US is about to enter a recession, or is already in one.
Graph 1
What's driving the weakness most significantly is the downturn in the housing market. Housing starts are down by more than 50 per cent from their peak two years ago (Graph 2). Even though housing is typically only about 5 per cent of the economy, falls of this magnitude are a significant drag on growth. It's interesting to note that expenditure on US GDP excluding housing construction was still growing at a rate of 3½ per cent through the latest year (Graph 3). The problem is that a divergence of this size between the housing sector and the rest of the economy can't persist indefinitely, because the housing slowdown feeds back into employment, incomes and other forms of spending. Adding to the contractionary impact is a downturn in established house prices which, according to one major index are down about 9 per cent from their peak, and still falling (Graph 4). These forces, and the ongoing fall-out from the sub-prime crisis, could continue to dampen the US economy for a while yet.
Graph 2
Graph 3
Graph 4
On the other hand, it's important to note that there are some forces supporting growth. The US export sector is getting the benefit of a lower dollar; there's a significant fiscal package in the pipeline, which will add more than 1 per cent of GDP to private spending power; and sharp cuts have been made in US official interest rates, with financial markets expecting more to come. So the overall course of the US economy will depend on the net impact of all these forces. Opinions still differ as to how severe the US slowdown will be.
In varying degrees, the other major industrial economies are also experiencing a period of weakness. The important question is to what extent the weakness in the major industrial countries will affect China and the developing world. Up to now, the available indicators show the Chinese economy still growing strongly, at 11 per cent over the year to the December quarter (Graph 5). Chinese export growth did slow towards the end of last year, but only from around 30 to around 25 per cent, and, in any case, the bulk of China's growth is being driven by domestic demand. I note in passing that, on the latest data we have, the Indian economy is also growing well, though we don't yet have fourth quarter figures. And of course, both these strongly growing economies are now a bigger share of world and trading partner GDP than they were in previous business cycles.
Graph 5
Elsewhere in east Asia, conditions seem to have remained firm through to the end of last year. Growth in industrial production picked up during the course of last year, as did export growth, probably a result of rising Chinese demand (Graph 6).
Graph 6
Despite these continuing signs of strength, it's still likely that a generalised slowdown in the major industrial countries will have some dampening effect on the Asian region, and on other parts of the developing world. The most obvious channel for this to happen is through trade linkages, but these effects are probably not large enough on their own to generate a sharp slowdown in the developing world. Bigger effects would be seen if there were direct spillovers from recent events into developing-countries' financial systems. But while there has been some spillover of equity market weakness, the difficulties in credit markets at this stage have been mainly confined to the industrial countries.
Drawing all of this together, the RBA is forecasting that growth in Australia's trading partners will slow to a below-trend rate this year and next (Graph 7). This incorporates very weak growth in the G7 economies, comparable to the rates seen in the early part of this decade. Growth in our other trading partners is also forecast to slow down from last year, but unlike in the G7 countries, we expect their growth rates to stay relatively strong. Overall, trading partner growth is forecast at just under 4 per cent for each of the next two years, which is down from the 5 per cent pace seen in 2007. This outlook is a little softer than the outlook published by the IMF in late January.
Graph 7
The other important aspect of the international environment is the outlook for commodity prices and Australia's terms of trade (Graph 8). For the last four years, our terms of trade have risen at a rate of about 8 per cent per annum. This is the largest cumulative run-up since the 1950s, and a big source of stimulus to domestic incomes and spending. Developments over the latest year have been more mixed. Base metals prices have come off their peaks, by an average of about 30 per cent, though they're still high compared to earlier history. On the other hand, markets for coal and iron ore have tightened further, and big rises in this year's contract prices are widely expected. Rural prices have also been rising. Based on these developments, we expect Australia's terms of trade to rise by another 5 per cent or so this year, but to fall gradually thereafter (Graph 9).
Graph 8
Graph 9
As I said at the outset, the striking thing about the current situation is the contrast between domestic and international conditions. The Australian economy to date has stayed robust, and the main domestic challenges are those of strong demand, tight capacity and inflationary pressures. I'll outline some of the main features of all that and then finish up with the RBA's domestic forecasts.
The latest national accounts are now a bit dated, but they show a high rate of growth, over the year to the September quarter, of just over 4 per cent (Graph 10). Growth of domestic spending was even higher, at 5½ per cent. It's often the case in reading economic data that we get conflicting signals that make it hard to judge the overall pace of the economy. We had a period like that a year or two ago, when GDP growth was estimated to be quite low but other indicators, like business survey results and employment growth, were pointing to stronger outcomes. But in the more recent period we're getting a fairly consistent picture of strong growth, at least up to the September quarter.
Graph 10
More recent indicators seem to point to further growth. Retail sales posted a big rise in the December quarter (Graph 11). The value of sales over the latest year was up by 8 per cent, which was the fastest rate since 2004. Employment growth in the past few months has continued at an above-average rate, and the job vacancy rate rose further. Spending on imports has picked up, which can be taken as a general sign of strong demand. And most of the business surveys reported good trading conditions in the December quarter. An average of the results from the major surveys shows conditions were moderating in the second half of last year, after a strong first half, but they were still at a high level at the end of the year (Graph 12).
(RBA) Malcolm Edey - Economic and Political Overview 2008
Talk to CEDA Economic and Political Overview 2008
Malcolm EdeyAssistant Governor (Economic)
Committee for Economic Development of Australia (CEDA)Economic and Political Overview 2008Sydney - 19 February 2008
Thanks to CEDA for the invitation to speak here today.
Since the last time I spoke at this event, the RBA has taken a number of steps to increase the amount of information it makes available to the public, both about its policy processes, and its thinking about the economy. We now issue a monthly statement after each Board meeting, setting out the reasons for the latest decision, whether or not the interest rate is being changed. Minutes of the Board meetings are now also published, and they give additional detail on the matters that were considered and the reasoning behind the decision. And those of you who follow these things closely would know that we've increased the level of detail in the economic forecasts set out in our quarterly Statement on Monetary Policy.
So there's a lot of material out there for financial markets and Reserve Bank watchers to get their teeth into. Today I won't be trying to add anything new to that, but rather, I'll base my presentation on our latest Statement, which was released last week.
The challenge in assessing the economic outlook at the moment is to weigh up the effects of contrasting domestic and international forces. Over the past few months the run of new information coming from abroad, at least in the major industrial economies, has been mostly bad. One important aspect of that is the deterioration in global equity markets, and the ongoing strains in credit markets. I'm not going to focus on those things today, but instead I'll focus on the evolving economic data.
Naturally, a lot of attention has focused on the United States (Graph 1). The fourth quarter national accounts confirmed a sharp slowdown in the US, and most expectations now are for a period of further weakness in the first half of this year. Some observers are saying the US is about to enter a recession, or is already in one.
Graph 1
What's driving the weakness most significantly is the downturn in the housing market. Housing starts are down by more than 50 per cent from their peak two years ago (Graph 2). Even though housing is typically only about 5 per cent of the economy, falls of this magnitude are a significant drag on growth. It's interesting to note that expenditure on US GDP excluding housing construction was still growing at a rate of 3½ per cent through the latest year (Graph 3). The problem is that a divergence of this size between the housing sector and the rest of the economy can't persist indefinitely, because the housing slowdown feeds back into employment, incomes and other forms of spending. Adding to the contractionary impact is a downturn in established house prices which, according to one major index are down about 9 per cent from their peak, and still falling (Graph 4). These forces, and the ongoing fall-out from the sub-prime crisis, could continue to dampen the US economy for a while yet.
Graph 2
Graph 3
Graph 4
On the other hand, it's important to note that there are some forces supporting growth. The US export sector is getting the benefit of a lower dollar; there's a significant fiscal package in the pipeline, which will add more than 1 per cent of GDP to private spending power; and sharp cuts have been made in US official interest rates, with financial markets expecting more to come. So the overall course of the US economy will depend on the net impact of all these forces. Opinions still differ as to how severe the US slowdown will be.
In varying degrees, the other major industrial economies are also experiencing a period of weakness. The important question is to what extent the weakness in the major industrial countries will affect China and the developing world. Up to now, the available indicators show the Chinese economy still growing strongly, at 11 per cent over the year to the December quarter (Graph 5). Chinese export growth did slow towards the end of last year, but only from around 30 to around 25 per cent, and, in any case, the bulk of China's growth is being driven by domestic demand. I note in passing that, on the latest data we have, the Indian economy is also growing well, though we don't yet have fourth quarter figures. And of course, both these strongly growing economies are now a bigger share of world and trading partner GDP than they were in previous business cycles.
Graph 5
Elsewhere in east Asia, conditions seem to have remained firm through to the end of last year. Growth in industrial production picked up during the course of last year, as did export growth, probably a result of rising Chinese demand (Graph 6).
Graph 6
Despite these continuing signs of strength, it's still likely that a generalised slowdown in the major industrial countries will have some dampening effect on the Asian region, and on other parts of the developing world. The most obvious channel for this to happen is through trade linkages, but these effects are probably not large enough on their own to generate a sharp slowdown in the developing world. Bigger effects would be seen if there were direct spillovers from recent events into developing-countries' financial systems. But while there has been some spillover of equity market weakness, the difficulties in credit markets at this stage have been mainly confined to the industrial countries.
Drawing all of this together, the RBA is forecasting that growth in Australia's trading partners will slow to a below-trend rate this year and next (Graph 7). This incorporates very weak growth in the G7 economies, comparable to the rates seen in the early part of this decade. Growth in our other trading partners is also forecast to slow down from last year, but unlike in the G7 countries, we expect their growth rates to stay relatively strong. Overall, trading partner growth is forecast at just under 4 per cent for each of the next two years, which is down from the 5 per cent pace seen in 2007. This outlook is a little softer than the outlook published by the IMF in late January.
Graph 7
The other important aspect of the international environment is the outlook for commodity prices and Australia's terms of trade (Graph 8). For the last four years, our terms of trade have risen at a rate of about 8 per cent per annum. This is the largest cumulative run-up since the 1950s, and a big source of stimulus to domestic incomes and spending. Developments over the latest year have been more mixed. Base metals prices have come off their peaks, by an average of about 30 per cent, though they're still high compared to earlier history. On the other hand, markets for coal and iron ore have tightened further, and big rises in this year's contract prices are widely expected. Rural prices have also been rising. Based on these developments, we expect Australia's terms of trade to rise by another 5 per cent or so this year, but to fall gradually thereafter (Graph 9).
Graph 8
Graph 9
As I said at the outset, the striking thing about the current situation is the contrast between domestic and international conditions. The Australian economy to date has stayed robust, and the main domestic challenges are those of strong demand, tight capacity and inflationary pressures. I'll outline some of the main features of all that and then finish up with the RBA's domestic forecasts.
The latest national accounts are now a bit dated, but they show a high rate of growth, over the year to the September quarter, of just over 4 per cent (Graph 10). Growth of domestic spending was even higher, at 5½ per cent. It's often the case in reading economic data that we get conflicting signals that make it hard to judge the overall pace of the economy. We had a period like that a year or two ago, when GDP growth was estimated to be quite low but other indicators, like business survey results and employment growth, were pointing to stronger outcomes. But in the more recent period we're getting a fairly consistent picture of strong growth, at least up to the September quarter.
Graph 10
More recent indicators seem to point to further growth. Retail sales posted a big rise in the December quarter (Graph 11). The value of sales over the latest year was up by 8 per cent, which was the fastest rate since 2004. Employment growth in the past few months has continued at an above-average rate, and the job vacancy rate rose further. Spending on imports has picked up, which can be taken as a general sign of strong demand. And most of the business surveys reported good trading conditions in the December quarter. An average of the results from the major surveys shows conditions were moderating in the second half of last year, after a strong first half, but they were still at a high level at the end of the year (Graph 12).
Tuesday, February 19, 2008
PAkistan Election
Nawaz calls President Musharraf to step down:
LAHORE: Muslim League-N leader Nawaz Sharif Tuesday called President Musharraf to step down from office. He said the decision about eligibility of President Musharraf should be taken from the same court that was hearing the case. Addressing press briefing in Lahore Nawaz said the freedom of judiciary and democracy are the foremost targets of his agenda. He said he was talking with all parties for formation of the government. The PML-N leader said after restoration of the judiciary it would be decided whether Musharraf’s election as president is legal or not. He said the judiciary could not regain its freedom without restoration of the deposed judges. He also demanded release of all detained lawyers.He said the matter of Dr. Abdul Qadeer would also be reconsidered.Nawaz said he would meet the Co-chairman f Pakistan Peoples Party Asif Ali Zardari in a day or two to discuss all concerned matters. He said he was in contact with ANP’s Asfandyar Wali to discuss all options for the formation of the coalition government.
Sharif also his party would lead a coalition government in Punjab and all parties will be consulted on the matter. He said the PCO of Nov 3, 2007 has to be nullified and the judges will have to be reinstated. On question of the president, he said the restored judiciary can abjudicate over legality of president's election. He said he expects the army to abide by the constitution and law.Nawaz said he is committed to upholding his agenda of upholding democracy, rule of law, sovereignty, independence of judiciary.Lauding media role and its
Nawaz calls President Musharraf to step down:
LAHORE: Muslim League-N leader Nawaz Sharif Tuesday called President Musharraf to step down from office. He said the decision about eligibility of President Musharraf should be taken from the same court that was hearing the case. Addressing press briefing in Lahore Nawaz said the freedom of judiciary and democracy are the foremost targets of his agenda. He said he was talking with all parties for formation of the government. The PML-N leader said after restoration of the judiciary it would be decided whether Musharraf’s election as president is legal or not. He said the judiciary could not regain its freedom without restoration of the deposed judges. He also demanded release of all detained lawyers.He said the matter of Dr. Abdul Qadeer would also be reconsidered.Nawaz said he would meet the Co-chairman f Pakistan Peoples Party Asif Ali Zardari in a day or two to discuss all concerned matters. He said he was in contact with ANP’s Asfandyar Wali to discuss all options for the formation of the coalition government.
Sharif also his party would lead a coalition government in Punjab and all parties will be consulted on the matter. He said the PCO of Nov 3, 2007 has to be nullified and the judges will have to be reinstated. On question of the president, he said the restored judiciary can abjudicate over legality of president's election. He said he expects the army to abide by the constitution and law.Nawaz said he is committed to upholding his agenda of upholding democracy, rule of law, sovereignty, independence of judiciary.Lauding media role and its
Sunday, February 17, 2008
US election at-a-glance:
DAY IN A NUTSHELL
Civil rights leader and Georgia congressman John Lewis - previously a supporter of Hillary Clinton - declares that in his role as a superdelegate he will vote for Barack Obama at the Democratic convention, the New York Times reports. Hillary Clinton's campaign releases another advertisement in Wisconsin accusing Mr Obama of dodging televised debates in the state. John McCain and Mike Huckabee campaign hard in Wisconsin.
KEY QUOTES
"If Lewis breaks away, take whatever you thought Clinton's chances of winning the nomination before and divide that number by as much as two - those would be the odds of her winning now."Time's Mark Halperin on John Lewis's decision to back Barack Obama at the convention
He's going around issuing promissory notes on the future that he can't possibly redeem
Charles Krauthammer on Barack ObamaWashington Post
"I am a candidate of, from and for the middle class of America."Hillary Clinton
"Obama has an astonishingly empty paper trail. He's going around issuing promissory notes on the future that he can't possibly redeem."Charles Krauthammer, Washington Post
"You can bet my father would be itching to get out on the campaign trail working to elect him even if he disagreed with him on a number of issues."Michael Reagan, son of Ronald, believes his father would have backed John McCain.
"[The rock band] Boston has never endorsed a political candidate, and with all due respect, would not start by endorsing a candidate who is the polar opposite of most everything Boston stands for."Tom Scholz, founder of the band Boston, objects to Mike Huckabee's use of the Boston song "More Than a Feeling" on the campaign trail
NUMBER NEWS
Two polls of Texan voters published today paint very different pictures of the state of the race in the Lonestar State.
A Rasmussen poll suggests that Hillary Clinton has a comfortable lead in Texas, with 54% to Barack Obama's 38%.
But an ARG poll, also published today, gives Mr Obama the lead in Texas, with 48% to Mrs Clinton's 42%.
Mrs Clinton is relying on a win in Texas on 4 March to regain the initiative in the race, after Mr Obama's run of victories in February, so she will be hoping that the Rasmussen poll is nearer to the truth than the ARG survey.
Both Rasmussen and ARG agree that in the Republican race in Texas, John McCain has a modest lead over Mike Huckabee.
Rasmussen has Mr McCain on 45%, to Mr Huckabee's 37%, while ARG has Mr McCain on 42%, six points ahead of Mr Huckabee on 36%.
DAY IN A NUTSHELL
Civil rights leader and Georgia congressman John Lewis - previously a supporter of Hillary Clinton - declares that in his role as a superdelegate he will vote for Barack Obama at the Democratic convention, the New York Times reports. Hillary Clinton's campaign releases another advertisement in Wisconsin accusing Mr Obama of dodging televised debates in the state. John McCain and Mike Huckabee campaign hard in Wisconsin.
KEY QUOTES
"If Lewis breaks away, take whatever you thought Clinton's chances of winning the nomination before and divide that number by as much as two - those would be the odds of her winning now."Time's Mark Halperin on John Lewis's decision to back Barack Obama at the convention
He's going around issuing promissory notes on the future that he can't possibly redeem
Charles Krauthammer on Barack ObamaWashington Post
"I am a candidate of, from and for the middle class of America."Hillary Clinton
"Obama has an astonishingly empty paper trail. He's going around issuing promissory notes on the future that he can't possibly redeem."Charles Krauthammer, Washington Post
"You can bet my father would be itching to get out on the campaign trail working to elect him even if he disagreed with him on a number of issues."Michael Reagan, son of Ronald, believes his father would have backed John McCain.
"[The rock band] Boston has never endorsed a political candidate, and with all due respect, would not start by endorsing a candidate who is the polar opposite of most everything Boston stands for."Tom Scholz, founder of the band Boston, objects to Mike Huckabee's use of the Boston song "More Than a Feeling" on the campaign trail
NUMBER NEWS
Two polls of Texan voters published today paint very different pictures of the state of the race in the Lonestar State.
A Rasmussen poll suggests that Hillary Clinton has a comfortable lead in Texas, with 54% to Barack Obama's 38%.
But an ARG poll, also published today, gives Mr Obama the lead in Texas, with 48% to Mrs Clinton's 42%.
Mrs Clinton is relying on a win in Texas on 4 March to regain the initiative in the race, after Mr Obama's run of victories in February, so she will be hoping that the Rasmussen poll is nearer to the truth than the ARG survey.
Both Rasmussen and ARG agree that in the Republican race in Texas, John McCain has a modest lead over Mike Huckabee.
Rasmussen has Mr McCain on 45%, to Mr Huckabee's 37%, while ARG has Mr McCain on 42%, six points ahead of Mr Huckabee on 36%.
Brazil: Rio de Janeiro Mass Transit - Additional Financing
WASHINGTON, February 12, 2008 - The following project was approved today by the World Bank’s Board of Executive Directors:
IBRD Loan: USD$44 million
Terms: Maturity= 15 years; Grace= 5 years < /font>
PROJECT DESCRIPTION: The main objectives of the project are: (a) to improve the quality of urban transport services in the Rio de Janeiro Metropolitan Region by enhancing the development of a fully integrated urban transport system; and (b) to substantially improve the level of service provided by the suburban railway while reducing the operating subsidies from the State through the substantial participation of the private sector in its operations and management.
For more information please call:
WASHINGTON, February 12, 2008 - The following project was approved today by the World Bank’s Board of Executive Directors:
IBRD Loan: USD$44 million
Terms: Maturity= 15 years; Grace= 5 years < /font>
PROJECT DESCRIPTION: The main objectives of the project are: (a) to improve the quality of urban transport services in the Rio de Janeiro Metropolitan Region by enhancing the development of a fully integrated urban transport system; and (b) to substantially improve the level of service provided by the suburban railway while reducing the operating subsidies from the State through the substantial participation of the private sector in its operations and management.
For more information please call:
Low-Cost Laptops Planned
The OLPC project started as an attempt to build a US$100 laptop and work with governments to pass them out to kids in poor nations, but the XO, will likely end up costing nearly double that amount at first. The organizers of the effort, led by academics and researchers from the Massachusetts Institute of Technology (MIT), hope high-volume sales of the device will drive down costs.
The goal of OLPC is to make sure nobody misses out on the benefits of computing. The fear is that the price of a PC is keeping too many people in developing countries from learning how software, the Internet and communications via computing can improve their economies, job prospects and lives, or that poor countries will fall further behind the modern world due to their inability to access computers.
The OLPC project started as an attempt to build a US$100 laptop and work with governments to pass them out to kids in poor nations, but the XO, will likely end up costing nearly double that amount at first. The organizers of the effort, led by academics and researchers from the Massachusetts Institute of Technology (MIT), hope high-volume sales of the device will drive down costs.
The goal of OLPC is to make sure nobody misses out on the benefits of computing. The fear is that the price of a PC is keeping too many people in developing countries from learning how software, the Internet and communications via computing can improve their economies, job prospects and lives, or that poor countries will fall further behind the modern world due to their inability to access computers.
EUR/USD Grows on Trade Balance News
EUR/USD rose from 1.4575 to 1.4635 today after the news from the U. S. Department of Labor and the U. S. Census Bureau arrived. Despite them being better than expected, they failed to stop dollar or even stock markets from declining today.
Initial jobless claims for the last week went down from 357,000 to 348,000 — slightly better than it was expected by the markets (350,000).
Trade balance deficit in U.S. decreased in December from $63.1 billion to $58.8 billion — much better than it was expected ($61.5 billion). Exported grew by more than two billion dollar, while imports dropped by almost the same value.
EUR/USD rose from 1.4575 to 1.4635 today after the news from the U. S. Department of Labor and the U. S. Census Bureau arrived. Despite them being better than expected, they failed to stop dollar or even stock markets from declining today.
Initial jobless claims for the last week went down from 357,000 to 348,000 — slightly better than it was expected by the markets (350,000).
Trade balance deficit in U.S. decreased in December from $63.1 billion to $58.8 billion — much better than it was expected ($61.5 billion). Exported grew by more than two billion dollar, while imports dropped by almost the same value.
Poor U.S. Macroeconomics Push Dollar Down
This week ends far worse for dollar bulls than they may have expected. Only Wednesday was an uptrend day for the U.S. dollar, but it didn’t gain a lot that day. Friday brought in the break through the 1.4700 resistance level on EUR/USD. Some disappointing data on the net foreign purchases and the manufacturing survey were the most important causes of today’s dollar’s decline.
Export and import prices in January grew faster than expected and this can be a positive sign for U.S. economy. Export prices index increased 1.2%, while import prices index increased 1.7%. Expected levels of growth were 0.3% for both of them.
NY Empire State Index — compiled through a survey of manufacturing sector — showed a very sharp decline this month. It went down from 9.0 to -11.7. For the first time since May 2005 it slid down below the zero level .
Net foreign purchases of the long-term securities in December were at $56.5 billion, which is much lower than $76.0 billion expected. Now the inflow barely covers the U.S. trading deficit.
Industrial production and capacity utilization in January weren’t good or bad, they were at the same levels as they have been expected by the analysts. The industrial production grew by 0.1% (the same as in December), while the capacity utilization was at 81.5% (the same as revised December’s value).
This week ends far worse for dollar bulls than they may have expected. Only Wednesday was an uptrend day for the U.S. dollar, but it didn’t gain a lot that day. Friday brought in the break through the 1.4700 resistance level on EUR/USD. Some disappointing data on the net foreign purchases and the manufacturing survey were the most important causes of today’s dollar’s decline.
Export and import prices in January grew faster than expected and this can be a positive sign for U.S. economy. Export prices index increased 1.2%, while import prices index increased 1.7%. Expected levels of growth were 0.3% for both of them.
NY Empire State Index — compiled through a survey of manufacturing sector — showed a very sharp decline this month. It went down from 9.0 to -11.7. For the first time since May 2005 it slid down below the zero level .
Net foreign purchases of the long-term securities in December were at $56.5 billion, which is much lower than $76.0 billion expected. Now the inflow barely covers the U.S. trading deficit.
Industrial production and capacity utilization in January weren’t good or bad, they were at the same levels as they have been expected by the analysts. The industrial production grew by 0.1% (the same as in December), while the capacity utilization was at 81.5% (the same as revised December’s value).
Saturday, February 16, 2008
China'economic impact - World Bank s storms to have limited
BEIJING (XFN-ASIA) - The recent winter storms are likely to have only a short-term impact on China's economy this year, and could even stimulate domestic investment, said an economist with the World Bank.
Louis Kuijs, economist and main author of the bank's quarterly update on the Chinese economy, told journalists that most of the impact of the storms -- including rising food prices and a decline in industrial output over January and February -- will turn out to be temporary, and that there "could be some pick-up (later in the year) as investment takes place to solve the bottlenecks"
Although a number of economists have lowered their forecasts for China's economic growth this year in response to the mayhem caused by the coldest winter in a century, the World Bank has maintained its estimate of 9.6 pct GDP growth in 2008.
"Natural disasters normally call for economic activity to repair the damage," said David Dollar, the head of the bank's China office.
BEIJING (XFN-ASIA) - The recent winter storms are likely to have only a short-term impact on China's economy this year, and could even stimulate domestic investment, said an economist with the World Bank.
Louis Kuijs, economist and main author of the bank's quarterly update on the Chinese economy, told journalists that most of the impact of the storms -- including rising food prices and a decline in industrial output over January and February -- will turn out to be temporary, and that there "could be some pick-up (later in the year) as investment takes place to solve the bottlenecks"
Although a number of economists have lowered their forecasts for China's economic growth this year in response to the mayhem caused by the coldest winter in a century, the World Bank has maintained its estimate of 9.6 pct GDP growth in 2008.
"Natural disasters normally call for economic activity to repair the damage," said David Dollar, the head of the bank's China office.
Tuesday, February 12, 2008
. Then, to perform your actual trades online you need a real-time 'trading platform' to execute your 'buys' and 'sells' directly in the Foreign Currency Market. You obtain a trading platform from a Forex Clearinghouse that is connected real-time to the interbank market. There are many good Clearinghouses (also confusingly called Brokerage Firms, Market Makers, etc.) that provide you with the trading platform to trade the funds in the account you have opened with them. Before you begin trading your 'real' money, while you are learning, you will practice on your own 'demo account' with play-money in it, which will be provided to you by the clearinghouse you plan to trade through. The contractual relationship you enter into with your Clearinghouse is a very important one because the Clearinghouse you choose determines many trading features and financial advantages to you both as a trader and as an investor. Forex-Trader tested Clearinghouses are reviewed in Tools of The Trade.
We have outlined a Getting Started path with uncomplicated steps. This is the path that we would take if we were beginning trading over again today with 'what we know now'. The products and services we mention in these steps are all ones that we have personally used for some time with consistent success. As always you are free to forge your own path, and if you do, happy hiking. There is a mountain of products and services try out, and if you find ones you like better we would love to compare notes with you
We have outlined a Getting Started path with uncomplicated steps. This is the path that we would take if we were beginning trading over again today with 'what we know now'. The products and services we mention in these steps are all ones that we have personally used for some time with consistent success. As always you are free to forge your own path, and if you do, happy hiking. There is a mountain of products and services try out, and if you find ones you like better we would love to compare notes with you
While you are learning you will need charting software to practice reading the Market. Charting is an indispensable tool that shows you in real-time data what the market is doing moment by moment and also what the market has done in the past. As you learn to analyze these charts you can determine what trades to enter and exit, where to set your stop losses, limits etc. There are several good charting software services that you can subscribe to online monthly. See our Forex-Trader tested Charting Software picks in Tools of The Trade.
The best advice on how to learn to trade profitably is to learn from experts with proven track records. Many learning styles are available to beginners at all levels: books, CDs, online courses, group seminars, even one-on-one mentors who will come right your home for a few days. We outline our Forex-Trader picks in Learning Forex Trading. Learning to trade from experts is worth every penny and has saved us untold thousands in mistakes. We would not recommend starting forex trading without any training. It is not hard to learn, nor difficult to trade successfully, but you must first provide yourself with a basic functioning knowledge of 'the game you're in'.
need to come to... not just producing commodities, but adding value to their own product and starting to think about the consumer and how to bridge that gap," says Horgan.
After a year or two of looking for something to add value to their product, the Haags and Rupprechts came across the BYB program and decided to try it. Direct marketing training was one of many steps the two families took in starting Chosen Acres Premium Beef.
Pricing products, developing a logo, designing fliers and ordering boxes were a few details they had to address. They also worked with the Minnesota Department of Agriculture to get a food handling license, and with the small business development center in Rochester, MN, for help with other business aspects.
"It's added a lot of labor, but it's been positive in that we're getting more for our steers," says Tammy.
Besides boxed assortments of steaks, roasts, kabob meat, ground beef and hamburger patties, Chosen Acres sells quarters, halves and whole beef. They offer some hormone-free beef, too.
For quarters, halves and whole beef, the consumer pays for the processing and Chosen Acres charges from $1.20/lb. to $1.35/lb. hanging weight. That's approximately 20-35 cents more than what the packer pays them per pound of hanging weight
After a year or two of looking for something to add value to their product, the Haags and Rupprechts came across the BYB program and decided to try it. Direct marketing training was one of many steps the two families took in starting Chosen Acres Premium Beef.
Pricing products, developing a logo, designing fliers and ordering boxes were a few details they had to address. They also worked with the Minnesota Department of Agriculture to get a food handling license, and with the small business development center in Rochester, MN, for help with other business aspects.
"It's added a lot of labor, but it's been positive in that we're getting more for our steers," says Tammy.
Besides boxed assortments of steaks, roasts, kabob meat, ground beef and hamburger patties, Chosen Acres sells quarters, halves and whole beef. They offer some hormone-free beef, too.
For quarters, halves and whole beef, the consumer pays for the processing and Chosen Acres charges from $1.20/lb. to $1.35/lb. hanging weight. That's approximately 20-35 cents more than what the packer pays them per pound of hanging weight
Like most folks who raise livestock, Glen and Tammy Haag and her parents Dave and Kathy Rupprecht aren't strangers to risk. But last year they took a different kind of risk with their 500-head cattle operation in Lewiston, MN.
They bought a truck, a trailer, a walk-in freezer and a sign that reads "Chosen Acres Premium Beef." Then, they started asking people in their community to buy beef directly from them.
"It's a different kind of risk when you get more involved with the consumer and the farm-to-table process. It also requires different skills," says Peter Reese, a sales and marketing consultant who teaches a four-part seminar series for producers as part of Branding Your Beliefs (BYB), a program that helps livestock producers aggressively market their products directly to consumers.
"It requires that (producers) get busy and get in touch with the market rather than just get angry about... the disparity between stockyard prices and consumer prices," Reese adds.
Kathy Horgan, a senior project officer for Land O' Lakes International Development Division, one of four sponsors of the BYB program, agrees.
They bought a truck, a trailer, a walk-in freezer and a sign that reads "Chosen Acres Premium Beef." Then, they started asking people in their community to buy beef directly from them.
"It's a different kind of risk when you get more involved with the consumer and the farm-to-table process. It also requires different skills," says Peter Reese, a sales and marketing consultant who teaches a four-part seminar series for producers as part of Branding Your Beliefs (BYB), a program that helps livestock producers aggressively market their products directly to consumers.
"It requires that (producers) get busy and get in touch with the market rather than just get angry about... the disparity between stockyard prices and consumer prices," Reese adds.
Kathy Horgan, a senior project officer for Land O' Lakes International Development Division, one of four sponsors of the BYB program, agrees.
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