Some Chinese firms now telling clients: Pay in euros, please

Some Chinese firms now telling clients: Pay in euros, please
Posted by Raja Petra
Thursday, 01 May 2008

Exporters in a bind as US$ slips, demand softens and workers demand more pay

Chinese exporters face a double whammy as the dollars that they earn buy fewer yuan, even as Chinese workers are demanding fairly sizable wage increases.


FACING the double-barrelled threat of a falling United States dollar and weakening American demand, some Chinese exporters are starting to ask European customers to pay in euros.

Others are trying to increase domestic sales. This, in a nation whose economic juggernaut was built on exports.

Drastic times call for drastic measures. And the dollar's accelerating fall against China's currency - down 4 per cent so far this year, after dropping 7 per cent last year - has left businesses across China nursing losses and trying to figure out how to raise prices for overseas buyers.

Mr Ma Lin Ping, the general manager of Taizhou City Qizhou Industry, said his company lost US$43,000 (S$58,553) on a single deal last year because of the dollar's tumble against China's yuan or renminbi.

The company agreed at the end of 2006 to send 16 shipping containers full of collapsible wood houses for use in gardens and at the beach. When the company finally completed the deal at the start of this year, the payment was in dollars that had lost nearly a tenth of their value in yuan.

Since the start of this year, 'I quote prices in euros to all my European clients', Mr Ma said, adding that the company was also starting to design products for the Chinese market.

Companies that sell mostly to the United States have not yet tried to set prices in euros.

Instead, Mr Chen Mang, a manager at a musical instrument exporter, said his company now quoted dollar prices valid only for two or three months. That limits exposure to declines in the dollar over longer periods of time.

Making matters worse for many Chinese companies, American buyers have become very tough negotiators, as the US economy has slowed.

'They're just extremely sensitive to any price adjustment I make,' said Mr Wang Ming Guang, a sales manager at a company that exports salt and pepper shakers and spice racks.

Chinese exporters face a double whammy as the dollars that they earn buy fewer yuan, even as Chinese workers are demanding fairly sizable wage increases.

Some European buyers have agreed to pay in euros, which protects them from the risk they previously took that the dollar would strengthen against the euro. But others have been so delighted with the fall in the dollar that they still insist on paying in dollars. The Chinese currency has been fairly stable against the euro over the last several years.

China intervenes intensely in the currency markets to slow the rise of the yuan and preserve the competitiveness of Chinese goods in foreign markets. It has quintupled foreign reserves in the last five years to US$1.68 trillion last month.

Despite the hesitancy of American buyers, several exporters said they were passing on sizable price increases for shipments to the US.

Mr Chen, the sales manager at Shanghai Lansheng Grand Luck Import and Export, a musical instrument company, said his company had raised prices sharply - by 10 per cent over the last year to offset the fall of the dollar, and by another 5 per cent to cover rising costs in China for labour and raw materials.

NEW YORK TIMES

Stocks fall as investors wary of consumer data, Fed decision

Stocks fall as investors wary of consumer data, Fed decision

By JOE BEL BRUNO, AP Business Writer 31 minutes ago

NEW YORK - Wall Street pulled back Tuesday as investors, disappointed by a low reading on consumer sentiment, traded cautiously ahead of the Federal Reserve's Wednesday decision on interest rates.
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The Conference Board said its April reading on consumer confidence fell for the fourth straight month because of heightened concerns about soaring inflation and the weakening job market.

Consumers are not the only ones anxious about inflation — Wall Street is worried that accelerating inflation could curtail consumer spending, which accounts for more than two-thirds of the U.S. economy. Rising costs are also of paramount concern to the Fed, which began a two-day policy meeting Tuesday.

The Fed is expected to cut interest rates by a quarter point on Wednesday, but then hold firm for a while. Policy makers face a difficult juggling act of trying to shore up the faltering economy without triggering inflation.

"There's no panic out there (in the market) because of the consumer confidence numbers, but there is more concern about inflation then we had just a few weeks ago," said Jim Herrick, director of equity trading at Baird & Co. "Everyone is interested in what the Fed will do about it."

In early afternoon trading, the Dow Jones industrial average fell 28.82, or 0.22 percent, to 12,842.93.

Broader markets also declined. The Standard & Poor's 500 index dipped 4.29, or 0.31 percent, to 1,392.08, and the Nasdaq composite index retreated 3.79, or 0.16 percent, to 2,420.61.

Bond prices rose as investors remained hesitant about equities. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.77 percent from 3.82 percent late Monday.

Oil prices fell amid expectations that a supply disruption in Britain would soon be resolved and as the U.S. dollar strengthened further against the euro. Light, sweet crude for June delivery fell $2.55 to $116.21 a barrel on the New York Mercantile Exchange.

Wall Street was also pressured by a report from research firm RealtyTrac that showed the number of U.S. homes heading toward foreclosure more than doubled in the first quarter from a year earlier.

In corporate news, Merck & Co. — one of the 30 Dow companies — sank $4.07, or 9.8 percent, to $37.38 after saying the Food and Drug Administration refused to approve a new cholesterol drug, Cordaptive.

And earnings reports came in mixed.

On the positive side, Lear Corp. reported a first-quarter profit rise, lifted its 2008 sales outlook, and backed its earnings prediction for the year. Lear shares rose $4.72, or 17.9 percent, to $31.14.

Meanwhile, MasterCard Inc. spiked $24.06, or 9.8 percent, to $266.56 after reporting that profit more than doubled in the first quarter, and rival Visa Inc. rebounded from an early decline to rise $1.28 to $76.35 after reporting late Monday its first-quarter profit increased 28 percent. Both companies said cardholder use rose moderately in the United States, and particularly quickly abroad.

But profit woes are not yet over for financial institutions with big exposure to consumer debt.

Countrywide Financial Corp., the nation's largest mortgage lender and servicer, said it lost $893 million during the first quarter due to a sharp increase in its provisions for unpaid home mortgage loans. The latest results marked the third consecutive quarterly loss for Countrywide, which agreed in January to sell itself to Bank of America Corp. for about $4 billion in stock.

Shares of the lender rose 9 cents to $5.92, while BofA fell 44 cents to $37.74.

And Deutsche Bank AG said it wrote down $4.2 billion in leveraged loans, commercial real estate and mortgage-backed securities, during the first quarter, pushing Germany's biggest bank to its first quarterly loss since 2003 amid trading losses, lower revenue and global market jitters.

The Russell 2000 index of smaller companies fell 10.02, or 1.38 percent, to 715.35.

Declining issues surpassed advancers by nearly 2 to 1 on the New York Stock Exchange, where volume came to a light 596.5 million.

Overseas, Japan's Nikkei stock average rose 0.22 percent. Britain's FTSE 100 fell 0.02 percent, Germany's DAX index fell 0.58 percent, and France's CAC-40 shed 0.71 percent.

Malaysian central bank unlikely to move rates on slowdown fears - economists

Malaysian central bank unlikely to move rates on slowdown fears - economists
Posted by Raja Petra
Monday, 28 April 2008

(Thomson Financial) - The Malaysian central bank is not expected to move interest rates when it meets on Tuesday even after inflation edged up for a second straight month in March as it weighs the risk of a possible sharp slowdown should the U.S. economy sink into a severe recession, economists said.

'It is unlikely Bank Negara will raise interest rates to check inflation this year as domestic demand is the required driver of growth against the backdrop of a U.S. recession-led global economic slowdown,' said Aseambankers Research.

Southeast Asia's third largest economy is highly dependent on exports to fuel growth. But the export sector has performed poorly since last year as the turmoil in the subprime mortgage market dragged the United States, a major buyer of Malaysian-made electrical and electronic goods, into a severe downturn.

'The risks of further subdued export growth have risen with the deepening U.S. subprime debacle,' said the Malaysian Institute of Economic Research (MIER), an independent economic think tank.

The economy is expected to grow at a slower pace of 5 percent to 6 percent this year after expanding by 6.3 percent last year as external demand falters, according to the government.

The government is hoping that robust domestic spending and strong commodity prices would help offset weakness in the manufacturing sector, which accounts for a third of the economy.

Malaysia, a net exporter of petroleum and the world's leading palm oil producer, has benefited from the high prices of crude oil and crude palm oil.

But having a share of only about 20 percent of total exports, commodity exports have not been able to offset the slack in the key electronic and electrical sector, MIER said in a report issued this month.

The electronic and electrical segment accounts for about 37 percent of total exports.

The MIER has maintained its 2008 economic growth forecast at 5.4 percent, saying growth is likely to slump in the second half as it takes a hit from the slowdown in the United States.



Keeping prices low



Malaysia's inflation rate accelerated to 2.8 percent in March with the food price index up 4.9 percent, according to official data.

The March inflation was the highest in 12 months but was still considered mild when compared to other countries in the region where inflation has hit multi-year highs.

The Malaysian government is able to keep domestic prices low even after global food and energy prices skyrocketed because it imposes strict price control on essential items such as rice, bread and flour.

Domestic retail prices of gasoline, diesel and natural gas are also heavily subsidized.

Zeti Akhtar Aziz, the governor of the Malaysian central bank, said last week that inflation may hit 3 percent in the coming months as food prices continue to trend higher.

But the central bank chief dismissed the idea of curbing rising food prices by moving interest rates.

The current rise in food prices is being driven by supply conditions and is not a result of rising demand and 'fiddling with interest rates is not the answer in this kind of environment,' she said.

The central bank's overnight policy rate at its current level is not discouraging demand for raising financing and is not discouraging consumption and investment activities, Zeti said.

The central bank has left its overnight policy rate unchanged at 3.5 percent since April 2006.

Economists said instead of depending on monetary tools, the government is exploring fiscal and administrative measures to rein in inflation. They said the central bank is also more likely to tolerate a faster rise in the ringgit in a bid to curb import inflation.

In an effort to ensure price stability, the government has set up a cabinet-level committee to tackle inflation issues.

The government also said this month that several big-ticket projects under its multi-billion-ringgit development blueprint are currently under review due to rising costs, Abdullah said.

'We see the government re-scheduling and re-prioritizing the development projects for implementation to make allocation for higher subsidy,' said OSK Research in a note.

Malaysia's fuel subsidies could hit 53 billion ringgit if crude oil prices stay around $117 a barrel, according to the government.

The exchange rate could be another useful tool in the face of rising prices, economists said.

The Malaysian ringgit hit a new 10-year high of 3.13 ringgit against the U.S. dollar earlier this month.

'We believe the central bank is comfortable with the strengthening of the ringgit so far this year, to partially offset the inflationary pressures coming from import costs,' said Aseambankers Research.

MIER is forecasting the ringgit will break the 3.00 ringgit per U.S. dollar mark by the end of this year, saying the local currency is still undervalued as the declining dollar has yet to bottom out.

Many states appear to be in recession

Many states appear to be in recession

Friday, April 25, 2008
By ANDREW WELSH-HUGGINS, Associated Press Writer 1 hour, 21 minutes ago

The finances of many states have deteriorated so badly that they appear to be in a recession, regardless of whether that's true for the nation as a whole, a survey of all 50 state fiscal directors concludes.

The situation looks even worse for the fiscal year that begins July 1 in most states.

"Whether or not the national economy is in recession — a subject of ongoing debate — is almost beside the point for some states," said the report to be released Friday by the National Conference of State Legislatures.

The weakening economy is hitting tax revenue in a number of ways: People's discretionary income is being gobbled up by higher food and fuel costs, while the tanking housing market means people are spending less on furniture and appliances associated with buying a house.

The situation is grim in Delaware, with a $69 million gap this year, and bleak in California, with a projected $16 billion budget shortfall over the next two years, the report said. Florida does not expect a rapid turnaround in revenue because of the prolonged real estate slump there.

By mid-April, 16 states and Puerto Rico were reporting shortfalls in their current budgets as the revenue those budgets were built on — typically, taxes — fell short of estimates. That's double the number of states reporting a deficit six months ago.

The NCSL said the news is even worse for the upcoming fiscal year, with 23 states and Puerto Rico already reporting budget shortfalls totaling $26 billion. More than two-thirds of states said they are concerned about next year's budgets.

The results are consistent with a drumbeat of bad economic news for states that several budget groups have produced in the past few months.

Last week, the Washington-based Center on Budget and Policy Priorities said 27 states are reporting projected budget shortfalls next year totaling at least $39 billion.

President Bush said Tuesday that the economy was not in a recession but a period of slower growth. However, some economists have pointed to the string of declines in manufacturing orders to argue that the economy has fallen into a recession.

Bolstering their position, the Commerce Department reported Thursday that sales of new homes plunged in March to the lowest level in 16 1/2 years. The government also reported that orders to factories for big-ticket goods fell for a third straight month in March, the longest string of declines since the 2001 recession.

Some states "have declined so much that they appear to be in a recession," the NCSL report said.

It also noted the silver lining for states where the economy is based on energy, such as North Dakota and Wyoming. Alaska is making so much money from oil that it announced an estimated surplus next year of $8 billion, almost twice the state's annual budget.

In North Dakota, revenue is above legislative predictions by 13 percent, and in Louisiana, the oil and gas sector is robust.

"For energy-producing states, the fiscal situation is strong and the outlook is good," the report said.

Among other findings:

_More than half the 16 states reporting deficits this year have cut spending, including $1 billion by Florida lawmakers last year and across-the-board cuts in Nevada. At least eight states are debating raising taxes or fees, including a proposed $1-per-pack cigarette tax increase in Massachusetts to raise $175 million.

_Twelve states, including Georgia, Idaho and Illinois, reported that personal income tax collections were failing to meet estimates, and in eight of these, collections were even below a reduced forecast.

_Many states, including Alabama, Arizona, Massachusetts, Minnesota, Nevada and Wisconsin, plan to tap their rainy day funds, which contain money set aside for fiscal emergencies. Nevada may use its entire rainy day balance.
___

Oil prices rise after Nigeria pipeline attack

Oil prices rise after Nigeria pipeline attack

Friday April 25, 10:41 am ET
By Robert Barr, Associated Press Writer AP
Oil prices rise above $116 a barrel on supply worries after Nigeria pipeline attack

LONDON (AP) -- Oil prices rose Friday, largely reversing an earlier $2 a barrel drop, after a militant group behind recent attacks in Nigeria's southern oil region said it had sabotaged another pipeline and a strike hit Exxon Mobil production in Africa's biggest exporter.

Light, sweet crude for June delivery climbed $1.89 to $117.95 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe. Before news of the pipeline attack, it had fallen as low as $114.51 a barrel.

The contract had dropped $2.24 in the previous session to settle at $116.06 a barrel.

In Nigeria, the Movement for the Emancipation of the Niger Delta, or MEND, said Friday that its fighters hit a pipeline late Thursday in southern Rivers State. That brought to four the number of pipelines the group has attacked in the past week.

MEND said in a statement that the pipeline attacked Thursday belongs to a Royal Dutch Shell PLC joint venture. A Shell spokesman had no immediate comment.

White-collar workers at Exxon Mobil Corp. -- one of the largest producers in Nigeria, with an output of about 2 million barrels a day of crude oil -- have "commenced a safe and orderly shut-in of production" to push for more pay, the company said in a statement.

Brent crude futures rose $1.41 to $115.75 a barrel on the ICE Futures exchange in London.

Gasoline prices rose 3.14 cents to $2.9895 a gallon on the Nymex, while heating oil futures rose 2.57 cents to $3.2840 a gallon. Natural gas futures rose 11.5 cent to $10.905 per 1,000 cubic feet.

Oil seemed poised to hit $120 a barrel this week but stalled in its march there on Thursday after the dollar gained against the euro. The dollar benefited from speculation that the Federal Reserve is growing concerned about inflation and may not cut interest rates as much as once thought.

Higher U.S. interest rates tend to stabilize or strengthen the dollar, and investors see commodities such as oil as a less effective hedge against inflation when the dollar is stronger. A higher dollar also makes oil more expensive to investors overseas.

Associated Press writer Edward Harris in Lagos, Nigeria, contributed to this report.

Stocks decline on consumer survey, earnings and inflation

Stocks decline on consumer survey, earnings and inflation

By TIM PARADIS, AP Business Writer 5 minutes ago

NEW YORK - An early advance fizzled on Wall Street Friday after a consumer sentiment reading fell to its lowest level in more than 25 years and a disappointing forecast from Microsoft Corp. weighed on technology issues. A spike in oil prices put further pressure on stocks.
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The Reuters/University of Michigan consumer sentiment index fell to 62.6 for April from 69.5 a month earlier. It was the lowest reading since the early 1980s as Americans contended with rising energy and food prices. Consumers' flagging mood is worrisome for Wall Street because consumer spending accounts for about 70 percent of U.S. economic activity.

Investors were also unimpressed by Microsoft's forecast for the current quarter and its revenue figures.

Oil prices, meanwhile, jumped on a series of troubling events overseas, including word from the U.S. Navy that a ship under contract with the Navy fired flares and warning shots at two small boats of unknown origin in the Persian Gulf. Oil was up earlier following an attack on a pipeline in Nigeria and a looming refinery strike in Scotland; light, sweet crude shot as high as $119.50 a barrel on the New York Mercantile Exchange before settling back to hover just below $119 a barrel.

Oil's advance raises the specter of higher inflation, which could be a further deterrent to consumer spending.

"It looked like the market wanted to rally this morning," said Neil Massa, equity trader at John Hancock Funds, adding that news of the incident in the Gulf unnerved investors.

"That's what drove crude up and that's what's taking us down," he said, referring to the stock market. "I think it rally shows how the easily the energy market can go back up again."

In midday trading, the Dow fell 51.13, or 0.40 percent, to 12,797.82 after earlier being down more than 100 points.

Broader stock indicators fell. The Standard & Poor's 500 index declined 1.77, or 0.13 percent, to 1,387.05, and the Nasdaq composite index fell 26.25, or 1.10 percent, to 2,402.67.

Declining issues narrowly outpaced advancers on the New York Stock Exchange, where volume came to 561.6 million shares.

Bond prices fell ahead of next week's meeting of the Federal Reserve's interest rate committee. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.86 percent from 3.83 percent late Thursday.

Beyond spikes in oil, the market is concerned about corporate news. Craig Hester, chief executive at Hester Capital Management in Austin, Texas, said stocks will likely fluctuate as investors digest the flood of corporate results from this week and next as well as ahead of the Fed decision.

"The big risks I see for stocks right now are earnings," he said, adding that next week should help give investors a better idea about the state of the economy with reports due on the nation's gross domestic product and employment.

In corporate news, Microsoft fell $2.02, or 6.4 percent, to $29.78 after its first-quarter report. The tech leader said after the closing bell Thursday that worldwide sales next year should offset weakness in the U.S. economy.

Goodyear Tire & Rubber Co. rose $1.70, or 6.2 percent, to $28.95 after posting a first-quarter profit amid increased revenue. The tiremaker, which reported a loss for the same period a year earlier, said it focused on higher-priced tires and international markets.

American Express Co. rose $1.49, or 3.3 percent, to $46.67 after reporting its first-quarter earnings fell 6 percent as more U.S. cardholders failed to make their payments. The credit card lender's total provisions for credit losses jumped 48 percent from a year earlier to $1.27 billion. However, the company said cardholders are continuing to spend and that strength abroad has helped make up for troubles in the U.S.

The Russell 2000 index of smaller companies fell 2.39, or 0.33 percent, to 714.68.

Overseas, Japan's Nikkei stock average closed up 2.28 percent. Britain's FTSE 100 rose 0.67 percent, Germany's DAX index advanced 1.10 percent, and France's CAC-40 rose 0.99 percent.

Stock Market Tecnical Indicator: Using Fibonacci Ratios And Momentum

Stock Market Tecnical Indicator: Using Fibonacci Ratios And Momentum
Tuesday, May 01, 2007

Do any of these samples of sage advice sound familiar? “Don’t buy it here, but wait for a pullback.” “I would wait and sell on a bounce.” What does this really mean? Where and when do you act? Here’s one technique for calculating retracement levels using that tried-and-true favorite, Fibonacci ratios, as well as using momentum to define the trend.
Markets trend in a zigzag manner: rallying, leveling off, and surging again, only to be hit by a wave of profit-taking before settling into a trading range, awaiting the next reason to advance or retreat. This activity carries on in the general direction of the trend, easily seen on a price chart. Technically, the trend should be considered up as long as the market unfolds with a series of higher lows and higher highs. Similarly, the rend is considered down if the price action is a series of lower lows, with lower highs before each new low. A market is considered not to be in a trend if the price movement manifests itself in a series of fits and starts or if it fails to sustain levels beyond the previous extreme points, often reversing and forming the range.
During an uptrend, good traders will buy the pullbacks, positioning themselves with the trend, taking advantage of the market’s tendency to ebb and flow. When the market is in a downtrend, however, the strategy is to sell rallies, awaiting for the downtrend to resume. So what is the appropriate strategy to calculate price levels for buying pullbacks or selling rallies? One popular technique is to calculate and project a percentage retracement of the prior swing and use that as an entry level. But what percentage retracement is suitable? One popular set of retracement levels is based on a mathematical series discovered by an Italian mathematician more than 700 years ago...
Download the full article @ http://www.sendspace.com/file/6afipi
Posted by . at 2:01 PM

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Wednesday, April 25, 2007
Stock Market Timing: Short-Term Trading Is Important?

You might think that short-term trading is less important than long-term investing. However, if you look at the amount of money invested by shortterm traders (e.g., specialists, floor traders, day traders) you find that it represents about 30% of daily volume or more, and this is a rather large percent. You might say, “Yes, but these traders produce short-term price moves that last a day or two and can be ignored.” Wrong! Here is where chaos theory and the power of feedback loops show that short-term traders may be able to trigger a movement that can carry on for weeks.
Each group of investors, grouped by the time intention of their trading, can generate feedback-loop movements in that time frame. For example, short-term traders can become nervous and produce extremely fast, but short-term, price changes. Certain instabilities can also exist in the minds of intermediate-term traders that, when triggered, can produce extremely fast intermediate-term price changes. Finally, instabilities can exist in the minds of long-term traders that can influence longer-term price changes.
Long-term trader instability is much less important than the first two because the mechanism behind the feedback loops lies in emotional reactions of the participants, and it is difficult to hold an emotion and react to it over a long period. In fact, I have never seen a feedback-loop decline last longer than 13 weeks. On the other hand, positive feedback loops—instabilities that drive prices higher than economics justifies—seem to be able to carry forward to extremes for up to 6 months.

Saturday, May 05, 2007
Stock Market Trading Skill: Hit and Run

New home sales plunge to lowest level in 16 1/2 years

By MARTIN CRUTSINGER, AP Economics Writer 44 minutes ago

WASHINGTON - Sales of new homes plunged in March to the lowest level in 16 1/2 years as housing slumped further at the start of the spring sales season.
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The median price of a new home in March, compared with a year ago, fell by the largest amount in nearly four decades.

The Commerce Department reported Thursday that sales of new homes dropped by 8.5 percent last month to a seasonally adjusted annual rate of 526,000 units, the slowest sales pace since October 1991.

The median price of a home sold in March dropped by 13.3 percent compared with March 2007, the biggest year-over-year price decline since a 14.6 percent plunge in July 1970.

The dismal news on new home sales followed earlier reports showing sales of existing homes fell by 2 percent in March. Housing, which boomed for five years, has been in a prolonged slump for the past two years with sales and home prices falling at especially sharp rates in formerly boom areas of the country.

For March, sales were down in all regions of the country, dropping the most in the Northeast, a decline of 19.4 percent. Sales fell by 12.9 percent in the West, 12.5 percent in the Midwest and 4.6 percent in the South.

In other economic news, orders to factories for big-ticket manufactured goods fell for a third straight month in March, the longest string of declines since the 2001 recession, while applications for unemployment benefits fell by 33,000 to 342,000.

The Commerce Department said demand for durable goods dropped by 0.3 percent last month, a worse-than-expected performance that underscored the problems manufacturers are facing from a severe economic slowdown. The last time orders fell for three consecutive months was from February to April of 2001, when the country was sliding into the last recession.

The weakness in manufacturing orders was led by a 4.6 percent drop in orders for autos, a sector hard hit by soaring gasoline prices, and the weakening economy, which have cut sharply into car sales. Orders in the category that includes home appliances fell by 6.6 percent. This industry has been hurt by the two-year slump in home sales.

President Bush said Tuesday that the economy was not in a recession but a period of slower growth. However, economists who believe the country has fallen into a recession pointed to the string of declines in manufacturing orders to support their view.

"The broad swath of data in the March (orders) report is indicative of a mixed set of conditions in a factory sector that is, overall, in a mild recession," said Cliff Waldman, economist for the Manufacturers Alliance/MAPI.

The Labor Department reported that claims for unemployment benefits fell by 33,000 last week to 342,000. Economists had been expecting claims to rise by 3,000. The four-week moving average for claims fell by 7,250 to 369,500.

Even with the improvements, analysts said the weak economy is still putting greater pressures on the labor market. The unemployment rate climbed to 5.1 percent in March as businesses laid off the largest number of workers in five years.

Economic growth slowed to a near-standstill at the end of last year as the economy was battered by the prolonged slump in housing and a severe credit crunch that has resulted in billions of dollars of losses at many of the nation's largest financial institutions and has made it harder for consumers and businesses to get loans.

Consumer sentiment, meanwhile, has plunged to recessionary lows as Americans have also watched gasoline soar to an average price above $3.50 per gallon nationally.

The 0.3 percent drop in orders for durable goods, items expected to last at least three years, followed even bigger declines of 0.9 percent in February and 4.4 percent in January.

Orders for all transportation products fell by 4.6 percent, reflecting the big drop in demand for autos. Orders for commercial aircraft actually rose by 5.5 percent while demand for defense aircraft surged by 29.4 percent. Many defense industries have seen big increases reflecting the wars in Iraq and Afghanistan.

A key category viewed as a proxy for business investment plans showed no increase in March after a big 2 percent drop in February. Businesses have cut back on plans to expand and modernize as the economy has softened.

Oil sets new record above $118 a barrel on supply concerns

By PABLO GORONDI, Associated Press Writer 2 hours, 42 minutes ago

Oil prices rose Tuesday to a all-time highs above $118 a barrel on concerns over supplies from some key producers.
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Light, sweet crude for May delivery rose as high as $118.05 a barrel in electronic trading on the New York Mercantile Exchange, eclipsing Monday's all-time high of $117.83.

By midday in Europe, the contract had risen to $117.77, up 29 cents on Monday's close of $117.48 a barrel. The May contract expires at the end of trading Tuesday.

In London, Brent crude futures added 28 cents to $114.71 a barrel on the ICE Futures exchange.

A Royal Dutch Shell PLC joint venture in Nigeria said Monday it may have to cut crude deliveries some 169,000 barrels a day in April and May because militants sabotaged a pipeline last week in the country's south.

The company, Shell Petroleum Development Co., declared force majeure on its April and May oil delivery contracts from its 400,000-barrel-a-day Bonny fields, effective April 22, a move that protects it from litigation if it fails to deliver on contractual obligations to buyers.

Militancy and lawlessness have spread in Nigeria's south, and attacks on oil infrastructure have become common.

"The disruption in Nigeria with Royal Dutch Shell is serious," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

"It is light, sweet crude, which is much desired by the U.S. market during the summer gasoline season, so that certainly has affected the market," Shum said.

Nigeria is a major supplier to the United States. Attacks there in the past two years have cut nearly a quarter of the African country's oil output. Crude oil set a record above $117 Monday after the 150,000-ton tanker Takayama was attacked off the coast of Yemen as it headed for Saudi Arabia.

Kyodo News agency said there were no injuries, but the the rocket punctured a tank, spilling hundreds of gallons of fuel.

Analysts said comments Tuesday by the head of the Organization of Petroleum Exporting Countries about plans to boost oil production target capacity by 5 million barrels a day by 2012 would not have an immediate effect on oil prices.

Speaking at an energy forum in Rome, OPEC Secretary-General Abdalla Salem el-Badri told reporters that issues of supply and demand were being discussed but he did not expect any agreement on whether prices are too high or too low.

"This is not anything new and it will not help ease oil prices," said Ehsan ul-Haq, head of research at JBC Energy in Vienna, Austria. "The oil futures market is very strong, but the physical markets are not so strong."

Other supply developments also factored into the market. In Mexico, oil production slipped 7.8 percent in the first quarter to 2.91 million barrels a day as output at the country's traditional oil fields wanes, state oil company Petroleos Mexicanos said. In Scotland, workers at Ineos PLC's 196,000 barrel-a-day Grangemouth refinery and petrochemical plant have threatened to strike for 48 hours from April 27 over changes to an employee pension plan.

The weak U.S. dollar has continued to support oil prices despite strengthening some this week against the yen and euro. Commodities such as oil and gold are still attractive hedges to investors seeking hedges against further drops in the currency.

In other Nymex trading, heating oil futures fell 0.04 cent to $3.3110 a gallon while gasoline futures lost 0.29 cent to $2.9762 a gallon. Natural gas futures were unchanged at $10.733 per 1,000 cubic feet.

US firms' profits shrink as sales dwindle, costs of raw material soar
Posted by Raja Petra
Tuesday, 22 April 2008

Companies are more pessimistic, and more plan to cut hiring and investment: Survey

WASHINGTON - THE combination of slower sales and soaring expenses for raw materials is taking a harsh toll on companies in the United States, an influential survey has shown.

For the first time since 2003, companies reporting falling profit margins outnumbered those with increases in the past three months, according to the National Association for Business Economics (Nabe).

Almost two-thirds said they paid more for raw materials in the first quarter, the most since 2004.

US companies also grew more pessimistic in the first quarter, as the intensifying credit crisis and slump in housing weakened sales, the survey found.

Six per cent of the firms said demand improved last quarter, down from 20 per cent in the previous three months and the fewest since the 2001 recession.

The report, which also shows more companies planned to slow hiring and investment this year, reinforces concern that the US economy is in, or may slide into, a recession.

'Companies have pulled in their horns,' said Mr Ken Simonson, the chief economist for the Associated General Contractors of America and point man for the business group.

'They are finding it hard to pass through higher materials costs, and profits are getting squeezed,' he added.

Almost 40 per cent of the businesses reported they were hurt by stricter borrowing rules compared with just over a quarter in the prior survey in January.

Seventy per cent of the firms said their annual forecast for the year had dimmed. The Nabe survey, taken between March 24 and April 8, included responses from 109 members of the business economists group.

While employment still increased, fewer companies planned to add workers in the next six months compared with the January survey, and more businesses planned to reduce staff, the report showed.

The outlook for investment also remains soft.

About 28 per cent of the firms planned to increase capital spending in the next 12 months, down from 40 per cent in the January survey.

A majority of firms said the government's fiscal stimulus program and the Fed's rate cuts would have no effect on their business, the survey showed.

Sixty-nine per cent of the survey respondents said the Fed's moves to reduce borrowing costs and improve access to credit have no influence, the report showed.

'This is a warning sign that we may not get the quick pickup that people are looking for in the second half,' Mr Simonson said.

Thirty per cent of those polled predicted the economy would contract in the first six months this year, up from one out of 10 in January.

BLOOMBERG NEWS

Market-timers' caution a bullish sign to contrarians
MARK HULBERT
Wall of skepticism
Commentary:
By Mark Hulbert, MarketWatch
Last update: 12:01 a.m. EDT April 21, 2008

ANNANDALE, Va. (MarketWatch) -- You'd have thought that Friday would have brought stock market bulls out of the woodwork.
Chart of $INDU
The Dow Jones Industrial Average ($INDU:
Dow Jones Industrial Average

$INDU 12,756.87, -92.49, -0.7%) gained 229 points, topping off one of the better weeks for the market in some time and, at least according to some analysts, triggering a Dow Theory buy signal. More about the Dow Theory
But the market's strength didn't have that expected impact.
On the contrary, the editors of stock market-timing newsletters ended Friday no more bullish than they had been one week previously.
The editors' cautiousness is a good sign, according to contrarian analysts. Contrarians would be particularly concerned about the sustainability of this rally if too many were jumping on board.
Consider the latest readings of the Hulbert Stock Newsletter Sentiment Index (HSNSI), which reflects the average recommended stock market exposure among a subset of short-term stock market-timing newsletters tracked by the Hulbert Financial Digest. As of Friday night, the HSNSI stood at 27.5%.
That's exactly where the sentiment gauge stood Thursday night, and the previous Friday night as well.
The record low and high for the HSNSI are minus 81.8% and 79.7%, respectively, so the HSNSI currently stands only moderately above the midpoint of that range. In other words, stock-market timers are nowhere close to being excessively bullish.
To be sure, they aren't excessively bearish either. This is a shift from what prevailed at the mid-March low, when the HSNSI stood at minus 29.4%.
Is the HSNSI's 57-point increase since then a cause for concern? Only moderately so, in my opinion. I was more concerned a week ago, and was watching closely to see if the market timers would continue their fairly rapid shift from pessimism to optimism. But, as we have seen, market timers' shift back toward bullishness came to a screeching halt this past week, despite it being the best week for the stock market so far this year.
So, for now at least, according to contrarian analysis, the sentiment winds are continuing to blow in the direction of a higher stock market.
How far and for how long will the market continue going?
Contrarian analysts typically avoid such questions, since the answer depends so crucially on how sentiment changes as the market continues to rise. For example, it would be a very bullish sign if, in the wake of market strength in the next few weeks, advisers stubbornly refuse to become more bullish.
In contrast, the rally would probably have a short additional lifespan if advisers were to become enthusiastically bullish in the face of such market strength.
Fortunately we don't have to predict which is the likely outcome, since we can sit back and watch how the newsletter editors behave.
Stay tuned. End of Story
Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.

World may face deepest recession in 30 years

April 21, 2008
GIC's deputy chairman Tony Tan warns of its biggest challenge yet
By Bryan Lee, Economics Correspondent
THE world could be facing its worst recession in three decades but governments can lessen the effects of the downturn if they act decisively within the next three to four months.

The warning came from the deputy chairman of the Government of Singapore Investment Corp (GIC), Dr Tony Tan, who urged policymakers to take strong action to stabilise investment markets and sentiment amid the extreme uncertainty surrounding the global economy.

'We could be facing a recession which is longer, deeper and wider than any recession that we have encountered in the last 30 years,' he said on Monday.

'The next few years may well be among the most challenging years for GIC since our establishment in 1981.'

As for GIC's recent investments into global banks UBS and Citigroup, Dr Tan said these long-term investments will 'give us good returns when markets stabilise and economic conditions return to more normal levels'.

The world economy and its financial markets are in turmoil, sparked off by a mortgage crisis in the United States that is still unfolding.

The crisis of confidence has led central banks, especially the US Federal Reserve, to intervene in unprecedented ways to avert a seizure in the world's banking system.

Dr Tan told about 500 staff at GIC's first annual staff conference: 'The prospects for the US economy and possibly even the world economy are fraught with considerable downside risks.'

He warned that financial markets will be 'extremely nervous and volatile over the next one to two years'.

But the pain can be reduced and shortened if policymakers around the world act swiftly, he said. If so, 'investment markets and sentiments can turn around sharply'.

The alternative is that market forces would be left to themselves to stabilise the US housing sector, which would be a 'considerably more painful and long-drawn process'.

Dr Tan said the GIC has been alert to the prospect of the current problems since last year and moved its portfolio to a more conservative posture by selling some shares and holding on to the cash.

Such a move, said Dr Tan, had not been taken for 'quite some time'. And it provided liquidity for the GIC's subsequent investments into UBS and Citigroup.

The GIC has beefed up its management structure over the past nine months. After creating four senior posts in July last year, the GIC set up three group-level committees to oversee operations, investments and risks across its three main units.

The management committee is helmed by managing director Lim Siong Guan and looks into organisational, business and personnel issues.

The investment committee is charged with developing and implementing asset allocation policies and investment strategies. Led by chief investment officer Ng Kok Song, it also does regular reviews of the risk and performance of the GIC's various investments.

Finally, the risk committee provides oversight and guidance for the GIC's risk management policies and practices. It is led by chief risk officer Sung Cheng Chih.

Mr Ng's and Dr Sung's appointments were two of the new posts created last July. The other appointments were for GIC's asset management arm. GIC managing director Lee Ek Tieng was made chairman of the subsidiary and Mr Quah Wee Ghee, president.

'This management structure enables GIC to have groupwide oversight on our operations, investments and risks,' said Dr Tan.

But it also gives sufficient autonomy to the GIC's investment subsidiaries - asset management, real estate and special investments - so that they can respond in a timely fashion to changes in investment circumstances, he added.

Read the full report in Tuesday's edition of The Straits Times.

AP
Attacks in Middle East, Nigeria send oil to record $117.40
Monday April 21, 7:21 am ET
By Pablo Gorondi, Associated Press Writer
Oil spikes to record $117.40 after Mideast attack on Japanese tanker and Nigerian pipelines

Oil prices spiked to a record $117.40 a barrel after a Japanese oil tanker was hit by a rocket near Yemen and militants in Nigeria claimed two attacks on pipelines.

The 150,000-ton tanker Takayama was attacked about 270 miles off the east coast Yemen coast in the Gulf of Aden while it was heading for Saudi Arabia, its Japanese operator, Nippon Yusen K.K., said in a statement.

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None of the ship's 23 crew members was injured. Hundreds of gallons of fuel leaked before a 1-inch hole in the tanker's stern was repaired, the company said.

Kyodo News agency reported that the Japanese tanker was fired on by a rocket launcher from a small boat.

Light, sweet crude for May delivery reached $117.40 a barrel but fell back to $116.88 by midday in Europe, up 19 cents from Friday's closing price.

In London, Brent crude futures for June rose 21 cents to $114.13 a barrel on the ICE Futures exchange.

"There's clearly some geopolitical tension in the market," said Mark Pervan, senior commodity strategist at the ANZ Bank in Melbourne, Australia. "This will die down, but the market is pretty jittery at the moment."

Adding to the worries were claims Monday from the main militant group in Nigeria's restive south that it had launched two more attacks on oil pipelines in the region. There was no immediate confirmation.

Last Friday, oil prices rose to touch $117 for the first time after an attack on a Royal Dutch Shell PLC pipeline by the Movement for the Emancipation of the Niger Delta.

Shell confirmed a pipeline leak that it said appeared to have been caused by explosives. It said it had isolated the line for repairs and that a small quantity of production had been shut.

Attacks since early 2006 on Nigerian oil infrastructure by the militant group have cut nearly one-quarter of the country's normal petroleum output. Nigeria is a major supplier of oil to the U.S.

Pervan said incidents such as the pipeline and tanker attacks were "one-off" issues that didn't really change the market. "They're not fundamental, they're not going to be sustainable," he said.

Comments over the weekend by an OPEC official that the group isn't likely to increase production also supported prices on Monday.

Abdullah el al-Badri, secretary-general of the Organization of Petroleum Exporting Countries, said Sunday that oil prices would likely go higher and that the group was ready to raise production if the price pressure was due to a shortage of supply -- something he doubted.

"Oil prices, there is a common understanding that has nothing to do with supply and demand," al-Badri said on the sidelines of an energy conference in Rome.

Also over the weekend, Iranian President Mahmoud Ahmadinejad was quoted Saturday as saying crude oil prices at $115 a barrel are too low, and that oil must "discover its real value."

Ahmadinejad made the remarks during a visit to an oil and gas exhibition in Tehran late Friday.

In other Nymex trading, heating oil futures rose 2.87 cents to $3.210 a gallon while gasoline prices rose 0.07 cents to $2.99 a gallon. Natural gas futures rose 9.7 cents to $10.684 per 1,000 cubic feet.

AP Business Writer Thomas Hogue in Bangkok, Thailand, contributed to this report.

Oil hits another record high as dollar tumbles to record low

By PABLO GORONDI, Associated Press Writer 1 hour, 44 minutes ago

Oil prices hit all-time highs above $115 a barrel Thursday with reports that oil and gasoline stocks in the United States were lower than expected and as the dollar hit record lows.
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Light, sweet crude for May delivery rose as high as $115.52 a barrel in electronic trading on the New York Mercantile Exchange. It eased back to $115.23 a barrel by midday in Europe, up 30 cents.

On Wednesday, the contract settled at $114.93 a barrel.

In London, Brent crude futures were up 43 cents to $113.09 a barrel on the ICE Futures exchange in London.

Oil and other commodities continued to attract investors as the values of the dollar continued falling and as a hedge against inflation. A weaker dollar also makes oil cheaper to investors overseas.

The euro hit a new all-time high of $1.5982 on Thursday, its second record in as many days against the sagging greenback, and stood at $1.5966 by midday in Europe.

Concerns about sagging U.S. gasoline supplies ahead of the peak demand of the Northern Hemisphere summer also helped boost prices.

The U.S. Energy Department said Wednesday that inventories of gasoline fell 5.5 million barrels last week, a much bigger decline than forecast by analysts surveyed by Dow Jones Newswires.

Crude inventories fell 2.3 million barrels last week, the department's Energy Information Administration also reported, compared to the gain analysts expected.

"The market has focused on the substantial draw in gasoline in the U.S. and also the large crude oil draw," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "The report has provided a knee-jerk reaction for the market and has driven oil to a new high."

The surge in oil prices reflected concerns about how much gasoline will be available during America's driving season.

But analysts said the U.S. inventory report also showed that the country's appetite for increasingly expensive gas is declining, noting that gasoline inventories remained at healthy levels despite the drop.

"Gasoline and crude inventories dropped primarily because refiners are not really ordering crude oil and they are also holding back on operating rates because demand is weak," Shum said. "The concerns about gasoline supply in the summer may be overdone."

The EIA report also said inventories of distillates, which include heating oil and diesel, unexpectedly rose last week by about 100,000 barrels. Analysts had expected a sharp decline.

In other Nymex trading, gasoline futures rose 2.92 cents to $2.9682 a gallon while heating oil futures gained 1.63 cents to $3.2993 a gallon. Natural gas prices were up 1.7 cents to $10.450 per 1,000 cubic feet.

___

Associated Press writer Gillian Wong in Singapore contributed to this report.

The One-Year $1 Million Challenge
by Chuck Saletta
Tuesday, April 8, 2008provided byFool.com

It's true what they say: Youth is wasted on the young.

I'm not going to get all sentimental about how responsibilities are nil and possibilities are endless. No, the real waste is the time young folks have to compound their money.

The One-Year $1 Million Challenge

At a certain age, if you:

* Max out your 401(k) contributions for one year,
* Max out your IRA for that same year, and
* Merely meet the market's historical 10% annual returns

... you'll wind up a millionaire by the time you hit retirement.

That age? Twenty-six. In 41 years of compounding at 10% annually, $20,500 ($15,500 in a 401(k) and $5,000 in an IRA) will turn into $1 million. And you'll never have to contribute another dime. Of course, inflation between now and then means that $1 million won't buy nearly as much four decades in the future as it does today. Still, it's a remarkable feat of compounding.

In fact, that's how you win the $1 million one-year challenge: You make time your biggest ally in amassing phenomenal sums of wealth.

You See the Absurdity Here, Right?

In order for most 26-year-olds to save $20,500 in a single year, they'd either need to find a fabulously high-paying job or a rent-free room in their parents' basement. Either way, they'd probably be living on a strict diet of ramen noodles.

It's a stretch goal for people just starting out in life, to say the least.

But here's some good news for those of us who long ago celebrated a 26th birthday: The power of compounding doesn't care whether you invest it all at once, or only save a bit at a time.

It's most important to simply sock away as much as you can, as quickly as you can, and let it compound for as long as possible.

If You're Past 26 ...

While time is the ally of the young investor, we more mature folks haven't been entirely left out to dry. In fact, even if you're around 50 and haven't yet saved a dime for your retirement, it's still possible for you to retire with $1 million at the reasonable age of 67.

This table shows how much more effort it takes to become a millionaire when you wait longer to start saving:

Starting Age First Year's Contribution Grows to ... Consecutive Contribution Years to Reach $1 Million
26 $1,020,596 1
32 $576,100 2
36 $393,484 3
39 $295,630 4
41 $244,323 5
42 $222,111 6
44 $183,563 7
45 $166,876 8
47 $137,914 9
48 $125,376 10
49 $113,978 11
50 $133,943 12
51 $121,767 15
52 $110,697 DNF*
These calculations assume you max out your contributions every year -- including catch-ups for ages 50 and up. Does not include any employer contributions. *DNF: Does not finish with $1 million or more by age 67.

The older you get, the clearer the picture becomes: You cannot retire a millionaire from one year's savings. You'll need to be disciplined and consistent about saving, taxes, and investing.

You Can Still Get There

If you can save the cash and have the time to let compounding work, you can reach these returns. Every number in this article assumes you simply match the stock market's 10% historical annualized returns. There's no guarantee of that happening, of course. But if history is a worthy guide for the future, an easy way to match those returns is with an S&P 500-tracking index mutual fund.

The Vanguard 500 Index (VFINX), Fidelity Spartan 500 (FSMKX), or SPDRs (SPY) exchange-traded fund are three vehicles that have low costs and broad diversification.

Use Everything You've Got

Of course, the toughest part of this plan is coming up with the $20,500 per year ($26,500 if you're 50 or older) it takes to max out both your 401(k) and an IRA. It's quite a sacrifice, but fortunately, you don't have to make it on your own. Depending on your specific circumstances and the plans you have available, you'll get some combination of:

* Tax-deductible contributions,
* Tax-deferred (or potentially tax-free) growth, and/or
* Employer-matching funds

... to significantly soften the blow to your pocketbook.

Fool contributor Chuck Saletta wishes the IRA and 401(k) limits were at their current height when he was in his 20s. At the time of publication, Chuck owned shares of General Electric and Intel. Intel is a Motley Fool Inside Value pick. UPS and US Bancorp are Income Investor picks. Time Warner is a Stock Advisor selection. The Motley Fool owns shares of SPDRs and has a strict disclosure policy.
Copyrighted, The Motley Fool. All rights reserved.

http://www.businesstimes.com.sg/sub/latest/story/0,4574,275317,00.html?

Malaysian economy to deteriorate in H208: think-tank
April 16, 2008, 1.02 pm (Singapore time)

KUALA LUMPUR - Malaysia's economy would decline in the second-half of the
year due to a downturn in the US economy with growth in 2008 expected to
reach 5.4 per cent, an independent think tank said on Wednesday.

The Malaysian Institute of Economic Research (Mier) said that the Malaysian
economy could sustain its rate of growth in the first-half of 2008 'before
cooling in the second-half'. 'The fear is that the US turmoil is getting
deeper and nobody is certain when it will bottom out,' it said.

'We stick to our earlier growth forecast of 5.4 per cent this year ... until
there is clearer evidence that the economy has lost momentum.'

'It is likely that growth would remain sound in the first-half, but
conditions would deteriorate in the second-half of 2008 as the Malaysian
economy takes the hit from the knock-on effects,' it added.

Last month the central bank said that Malaysia's growth is expected to slow
to 5.0-6.0 per cent in 2008, down from 6.3 per cent last year.

Mier warned that food prices would continue to rise and Malaysia would see a
hike in inflation.

'Price pressures may persist with the rise in global prices of agriculture
produce and the threat of imported inflation arising from higher world oil
prices,' it said.

Malaysia's annual inflation rate in February was 2.7 per cent compared with
2.3 per cent in January due to a strong rise in food prices. Bank Negara
expects inflation for the year rise to 2.5-3.0 per cent from 2.0 per cent in
2007.

Anger over rising prices was also a major factor in the March elections
which saw the ruling coalition lose a third of parliamentary seats and five
states in its worst results in half a century. -- APR
____

The long hangover

The long hangover
Posted by Raja Petra
Monday, 14 April 2008

America's economy is in recession. Don't expect a quick recovery

If the IMF is right, weakness will last longer this time. America's new president will be elected against the backdrop of a shrinking economy and on taking office will face months of economic malaise.

THE ECONOMIST

IT MAY not be official but it is increasingly obvious: America's economy has slipped into recession. The latest labour-market figures—a jump in the unemployment rate to 5.1% and the loss of 98,000 private-sector jobs in March, the fourth consecutive month of decline—point to a shrinking economy. So do surveys of manufacturing and services. So does Ben Bernanke, chairman of the Federal Reserve. On April 2nd he told a congressional committee that output was unlikely to “grow much, if at all, over the first half of 2008 and could even contract slightly.”

The official judges of American downturns—a group of academics at the National Bureau of Economic Research (NBER)—define a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production and wholesale-retail sales.” (Contrary to popular belief, recession does not require two consecutive quarters of falling output.) Though the NBER's wonks will not pronounce for many months, their criteria look increasingly likely to be met.

The question now is: what kind of recession will this be? Shallow or deep; short or long? So far, it seems remarkably gentle, given that many think America is suffering its worst financial shock since the Great Depression. Since December the economy has shed an average of almost 80,000 jobs a month. In most recessions a rate of 150,000-200,000 is normal.

To be sure, this downturn has only just started. The labour market will surely worsen as firms cut back in the face of weaker consumer spending. But a buoyant world economy is still boosting American exports; a fiscal stimulus is on the way; real interest rates are around zero and likely to fall further; and, with the rescue of Bear Stearns, the Fed has given an implicit guarantee to Wall Street. So few forecasters expect outright slump. A liberal enough loosening of fiscal and monetary policy can stop recession turning into depression, and American policymakers have left little doubt that they will use their recession-fighting weaponry freely.

More controversial is the question of how long the weakness will last. Not very, Mr Bernanke told Congress. Growth will strengthen in the second half of the year, nourished by lower interest rates and the fiscal package. In 2009, he suggested, the economy would be growing “at or a little above” its trend rate, which the Fed is thought to put at around 2.5%. Many investors seem to agree that the downturn will be short as well as shallow. Share prices have recovered since the Bear Stearns rescue, even as economic statistics have been gloomy. The S&P 500 stockmarket index is around 5% higher than it was a couple of weeks ago and is still only 13% below its all-time high.

Others are more pessimistic. In its latest World Economic Outlook, published on April 9th, the IMF slashed its forecasts for America's economy both this year and next. It now expects GDP to shrink in every quarter of this year. By the fourth quarter the economy will be 0.7% smaller than a year before. (Only three months ago the fund expected a rise of 0.9%.) Nor does the IMF expect 2009 to be much better: GDP will grow, but at well below its trend rate.

Such a dramatic divergence of official economic opinion is rare. And it matters. Recent recessions, as defined by the NBER, have been both short and shallow: those of 1990-91 and 2001 each lasted eight months, below the post-war average of ten. If the Fed is right, the 2008 recession may be shorter and shallower still. That would be remarkable, given the extent of the housing bust and credit turmoil.

If the IMF is right, weakness will last longer this time. America's new president will be elected against the backdrop of a shrinking economy and on taking office will face months of economic malaise. That in turn will imply bigger budget deficits, and redefine next year's big domestic policy debates: whether to roll back George Bush's tax cuts for the wealthy, for instance, and how ambitiously to reform health care. It could fuel protectionist and populist sentiment, particularly since Americans are already unusually fed up. A new CBS/New York Times poll finds that eight out of ten people think the country is “on the wrong track”, the most since the question was first asked in 1991.

The hangover's duration will depend on many things, from the strength of foreign economies to the degree to which American firms cut jobs and investment. But top of the list, given the recession's origins in the property bust and the credit crunch, are the fate of the housing market and the resilience of consumer spending. On both counts, the odds are against catastrophe but on a lasting headache.

By many measures the news from housing is still getting grimmer. Housing starts are at less than half their peak, and builders are continuing to cut back. Although this has begun to reduce the stock of unsold new homes, the frailty of demand means that supply still vastly outweighs sales. At 9.8 months' worth of sales, the stock is at a 26-year high. The official overhang of existing homes (which excludes those repossessed) is not much lower. The excess of supply over demand means that the fall in house prices is accelerating. According to the S&P/Case-Shiller index, house prices are 13% off their peak. They fell at an annual rate of 25% in the three months to January.

The drop in house prices so far has left some 9m people, or 10% of all those with mortgages, owing more than their houses are worth. Among all mortgage borrowers, 6% are behind on their payments; among subprime borrowers, 17% are in arrears. Lenders are already foreclosing on more than 1m homes. The pessimists expect these figures to climb much higher, adding to supply and further depressing prices.



In the short term that is likely. But there are some signs of hope. Demand seems to have stabilised: since November total home sales have been running at an annualised rate of 5m or so (see chart 1). Lower prices have made houses a bit more affordable. And government action may help to ease the drought of mortgage finance stemming from the collapse of the subprime market and the contraction of the market for large (“jumbo”) mortgages, and to limit foreclosures.

At the height of the housing boom in 2006, non-traditional loans, such as subprime and jumbo mortgages, backed nearly 40% of home sales. Some $750 billion of financing disappeared as they shrank. Fannie Mae and Freddie Mac, America's government-backed mortgage behemoths, will fill part of that hole. The Bush administration recently announced changes to these institutions' capital rules, to let them buy up to an extra $200 billion of mortgages. Political momentum is also building to prevent a surge of foreclosures. For now Congress is debating some modest tax incentives. But a more ambitious idea is gaining support: to allow the Federal Housing Administration to refinance troubled mortgages at a discount.

Hit from all sides

Despite these hopeful signs, house prices will continue to fall until the excess inventory is worked off. Even the cheeriest analysts expect that average house prices will continue to fall this year. Worse, house-price deflation is only the first element of a quadruple whammy that is thumping American consumers. The other three elements are tougher credit conditions; a deteriorating labour market (with unemployment on the way up and wages slowing); and high commodity prices pushing up the cost of fuel and food.

Weekly private-sector wages rose by 3.6% in the year to March, the slowest pace since mid-2003. Headline consumer-price inflation is likely to have topped 4% in the same period, so for many real pay is falling. Economists at Goldman Sachs reckon that consumers' real discretionary cashflow—their income plus any new credit minus debt service and spending on essentials—has been shrinking since late last year.

Faced with all this, no wonder Americans are glum. The forward-looking bit of the Conference Board's measure of consumer confidence is at depths not seen since the recession of 1973. Indicators of financial stress outside housing, such as delinquencies on car loans and credit cards, are rising. And consumer spending, after years of resilience, has finally cracked. Not all economists share the IMF's view that spending is actually falling, but none doubts that it is at best barely growing. Because it makes up 70% of total demand, its feebleness does much to explain why the economy has tipped into recession.

On all four counts—house prices, credit, the labour market, and fuel and food prices—the consumer's position is likely to worsen in coming months. Granted, the imminent fiscal stimulus should help. Between early May and mid-July $117 billion will be paid out in tax rebates. The average American household with two children will get a cheque from Uncle Sam for up to $1,800 and will spend at least some of it.

Unfortunately, most of the forces dragging down consumer spending are likely to persist long after the cheques have been banked. Even with stronger exports, growth is likely to be too sluggish to raise incomes by a lot or offer much support to employment. Looser monetary policy will cushion but not avert financial deleveraging. Lending standards are usually tight for years after credit busts, not months. And by most estimates less than half the likely losses in America's financial sector have been written down. Meanwhile, lower house prices will reduce both homeowners' wealth and their potential collateral.




Even when house prices eventually stop falling, they will not suddenly soar. After years of tapping rising housing wealth to finance their consumption, Americans will need to build wealth the old fashioned way, by saving more. At 0.3%, the household saving rate is above its all-time nadir, but not by a lot (see chart 2).

No one knows by how much, or for how long, America's economy will be weighed down. The IMF's gloom is based in part on its reading of history. An analysis by the fund of post-war housing busts in rich countries, written in 2003, suggests that crashes typically last about four years and are often accompanied by banking crises. Economies end up 8% smaller, on average, than they would have been had they carried on growing at pre-crunch rates. Perhaps this time will be different, and the hangover will soon be gone. But given the scale of America's housing binge and of the financial crisis the bust has spawned, that seems unlikely.

by Clarens Renois 1 hour, 28 minutes ago

by Clarens Renois 1 hour, 28 minutes ago

PORT-AU-PRINCE (AFP) - Haiti's prime minister was ousted Saturday in a no confidence vote after more than a week of violent demonstrations over rocketing food and fuel prices.
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Just as President Rene Preval unveiled a plan to cut the price of rice by 15 percent, 16 senators in the upper house of parliament voted unanimously to censure Prime Minister Jacques-Edouard Alexis over the crisis, costing him his job leading the government.

With the 10 senators in Alexis's own party absent, the legislators reproached the prime minister for failing to respond to the needs of Haiti's 8.5 million people, 80 percent of whom live on less than two dollars a day.

The move came amid reports that UN peacekeepers fired tear gas at protesters in central Port-au-Prince and that a UN policeman dressed in civilian clothes was shot dead by unknown assailants near the capital's cathedral.

"He was a riot policeman from Nigeria," said Sophie Boutaud de la Combe, spokeswoman for the Minustah force.

Earlier Preval said that he would not block any attempt to remove Alexis. He agreed to work with senate and lower house chiefs to find a replacement.

"If parliament fires the prime minister, I will do what the constitution demands -- I will consult the two parliamentary leaders to name a new prime minister, because no party has a parliamentary majority," Preval said.

Flanked by food importers, Preval announced his plan to bring down rice prices following more than a week of protests and riots that left at least five people dead and 200 injured, according to an unofficial count.

He said the plan would cut the cost of a 50 kilogram (110 pound) bag of rice, which had doubled to 70 dollars within a week, by eight dollars (15 percent).

"It is a move the government has agreed to thanks to the three million dollars in aid provided by the international community," Preval said, adding that the government would also work to encourage more food production.

He defended Alexis as having done what he could in the face of global increases in food prices, and said it was "unfair" to place all the blame on him.

Thousands of people took to the streets around Haiti last week after the latest jump in food and fuel prices, in sometimes violent demonstrations that forced United Nations troops deployed here to intervene.

Blue-helmeted UN peacekeepers were called in to protect the presidential palace, using tear gas and firing into the air to repel demonstrators, radio reports said, while there were also reports of looting.

Preval's government was formed in 2006 after elections that followed two years of turmoil sparked by the departure of president Jean-Bertrand Aristide. Preval named Alexis as his prime minister, and Alexis won a vote of confidence in the lower house of parliament as recently as a month ago.

However, pressure had grown on the government in the current crisis.

Senator Jean Judnel, who backed Saturday's censure motion, said lawmakers would now "work with the president to chose a new prime minister."

"We will size up that prime minister to see if he can respond to the needs of the population," he told AFP.

"He must be able to listen to the cries of the people," Judnel said.

Meanwhile, Venezuelan President Hugo Chavez announced that Caracas would send Haiti 364 tonnes of emergency food aid, including beef, chicken, milk, cooking oil, lentils and other foods.

Chavez, in Caracas, said the decision was aimed at helping "to ease a crisis that is enormous."

World finance leaders tackle bank reform

http://news.yahoo.com/s/ap/20080412/ap_on_bi_ge/credit_crisis

By MARTIN CRUTSINGER, AP Economics Writer 57 minutes ago

WASHINGTON - World financial leaders facing the gravest economic crisis in at least a decade are pledging tighter control of banks and other financial institutions and hoping the U.S. slump is short.
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The 185-nation International Monetary Fund and the World Bank readied for weekend discussions following talks among the world's seven richest industrial countries.

The IMF, the lender of last resort for countries in trouble, is facing its own hard times. One proposal on the agenda would trim 15 percent of the agency's staff and sell about $11 billion in the institutions' vast gold reserves.

Overshadowing the sessions was the severe credit crisis, which could result in losses approaching $1 trillion before it is over, according to an IMF estimate released this week.

Treasury Secretary Henry Paulson assured the IMF's policy-setting panel on Saturday that the Bush administration was dealing aggressively with the U.S. slowdown, but that risks remain.

"The weak housing market, together with high energy prices and stress in financial markets, is penalizing U.S. economic growth," he said. "We must expect more bumps in the road."

The world's economic powers endorsed a plan Friday to keep closer watch over big banks, investment houses and other financial firms. These institutions have reported billions of dollars in losses from the credit crisis. The problem began with the widespread defaults on subprime mortgages in the United States, but quickly spread to other types of global investments.

Announcement of the tighter oversight came in a joint statement after talks among the Group of Seven nations — the United States, Japan, Germany, Britain, France, Italy and Canada. other types of investments around the world.

"The turmoil in global financial markets remains challenging and more protracted than we had anticipated," G-7 officials said.

"The U.S. economy has to get over the economic unrest," Japanese Finance Minister Fukushiro Nukaga told reporters. What happens in the United States, he said, will affect Asia and other countries.

An IMF economic outlook predicted a mild recession this year in the U.S., the world's biggest economy. That is seen as raising the risks of a global recession to 1-in-4.

Paulson and Federal Reserve Chairman Ben Bernanke tried to reassure officials that U.S. policymakers are doing everything possible to loosen U.S. credit markets. That would enable businesses and consumers to get loans more easily and help the economy revive.

Axel Weber, head of Germany's central bank, said the "measures that were taken in the U.S. have already had some effect" and that the Fed's interest rate cuts should help bolster growth.

Democrats in Congress are pushing for a more aggressive program to help an estimated 2 million homeowners at risk of defaulting on their mortgages. But Paulson said the administration believes its plan, which relies heavily on voluntary efforts by the private sector, was the best approach.

The G-7's statement's also touched on currencies.

Europeans won in an effort to note "concern" about the sharp fluctuations in currency values. It was the first major change in the language on the issue in four years and was meant to show European worries about the dollar's decline to record lows against the euro. That has led to cries of protests from European manufacturers losing sales to American producers whose goods are now more competitive.

French Finance Minister Christine Lagarde said the true test of the revised wording would come Monday when currency markets reopen. But there was no expectation the words would be backed up by any joint intervention to prop up the dollar.

The proposal to bolster financial regulation is intended to ensure that companies have sufficient capital to protect against losses, improve risk-management procedures and set deadlines so countries act quickly to put in place reforms.

___

Associated Press writers Jeannine Aversa, Harry Dunphy, Foster Klug and Desmond Butler contributed to this report.

Iris Corporation Berhad

Yang Adil Disembah, Yang Zalim Disanggah.
04.10.08
Iris Corporation Berhad

Posted in Bloggers-United, Malaysia, Reformasi at 2:05 am by Ketua Perusuh

Komentar saya kali ini berkisar kepada beberapa insiden yang berlaku (boleh diklasifikasikan sebagai jenayah terancang) dalam sebuah organisasi yang diberikan kepercayaan mengendalikan maklumat peribadi semua rakyat Malaysia. Organisasi ini adalah Iris Corporation Berhad (IRIS).

Disini saya petik maklumat yang tersedia dilaman web Iris Corporation Berhad (www.iris.com.my);

“IRIS Corporation Berhad is a global security solution provider with core expertise in the area of securing government security documents i.e. National ID and Passport. Incorporated in 1994, IRIS is the first company in Asia to set up fully integrated manufacturing facilities for Contact and Contactless Smart Cards, Contactless Document Inserts and assembled Module in Tapes and Reels.

IRIS pioneered the world’s first electronic passport and national multiapplication smart card with the implementation of the Malaysian Electronic Passport in March 1998 and MyKAD - the Malaysian Government Multi Purpose Card in April 2001. These technologies are deployed in many countries across the Asia, Middle East and Africa regions.

IRIS also provides a full range of smart cards readers, integrated terminals, card personalization equipment and biometrics scanner to complement the application of its smart card solutions.

Other IRIS products include the Digital Conferencing System and Immigration Autogate.

IRIS Corporation Berhad is an MSC Status company and is listed on the Kuala Lumpur Stock Exchange.”

Apakah yang menjadi persoalan dibenak kita bila mendapat tahu bahawa Suruhanjaya Sekuriti telah “memfailkan saman terhadap lapan syarikat asing dan dua syarikat tempatan yang didakwa melakukan kesalahan manipulasi dan penipuan dalam pasaran saham Iris Corporation Bhd.”? Tentunya ramai yang terkejut bila mendapat tahu kejadian ini yang dikisahkan ini berlaku pada tahun 2005 dan 2006.

Persoalannya sekarang ialah kenapa Suruhanjaya Sekuriti (SC) begitu lambat bertindak sedangkan beberapa maklumat telahpun disampaikan kepada mereka oleh beberapa pihak yang perihati pada pertengahan tahun 2005 lagi. Adakah SC dihalang oleh pihak-pihak tertentu? Adakah pimpinan peringkat tertinggi dalam Kerajaan Malaysia yang menjadi penghalang kepada siasatan SC? Dimana perginya Badan Pencegah Rasuah (BPR)? Kenapa BPR tidak turut sama menyiasat perkara ini? Malah beberapa lagi kesalahan (boleh diklasifikasikan jenayah terancang) telah dikesan dilakukan oleh Iris Corporation Berhad (IRIS) termasuklah kegiatan mendedahkan maklumat peribadi yang terdapat dalam pangkalan data mereka kepada pihak ketiga.

Mengenai kes pemalsuan kad pengenalan (IC) yang mana terdapat beberapa petunjuk yang mengaitkan penglibatan beberapa pihak didalam IRIS dengan beberapa individu demi untuk mengaut keuntungan peribadi. Malah beberapa serbuan (yang disenyapkan daripada pengetahuan rakyat Malaysia) menunjukkan bahawa peralatan (perisan dan pekakasan) yang digunakan untuk membuat pemalsuan kad pengenalan dibekalkan oleh pihak IRIS.

Persoalan mengenai hak ekslusif mengeluarkan kad pengenalan MyKAD kepada Iris Corporation Berhad juga mengundang tanda tanya. Ini kerana pihak Jabatan Pendaftaran Negara (JPN) telah diarahkan menggunakapakai khidmat IRIS tanpa tender terbuka. Malah ada pihak yang mendedahkan bahawa terdapat beberapa unsur rasuah berlaku dalam kontrak pembekalan MyKAD kepada JPN oleh IRIS. Telah dikenalpasti beberapa individu yang mengaut untung (laba) yang begitu besar atas perkhidmatan yang dibekalkan oleh IRIS kepada JPN.

Masalah keselamatan dalam negeri (akibat dari isu MyKAD dan Paspot Antarabangsa Malaysia) amat meruncing dan memerlukan satu kajiselidik dan penyelesaian cepat dan menyeluruh. Pendedahan kes saman oleh SC menunjukkan bahawa kesemua operasi dan perniagaan IRIS perlu disiasat dan diselidiki oleh Badan Pencegah Rasuah (BPR). Ini adalah untuk memastikan bahawa kebocoran maklumat data peribadi awam dan sebagainya tidak menjadi lebih ketara dan seterusnya dapat dikawal.

Terlalu banyak kepincangan dalam operasi IRIS dan badan-badan kerajaan yang berkaitan namun ianya masih lagi tersimpan dan tidak didedahkan. Saya amat berharap mana-mana pihak yang mempunyai maklumat lanjut mengenai kepincangan dalam operasi IRIS dapat mendedahkannya demi untuk menyelamatkan Malaysia.

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Abad Naluri chairman quits; game over for Patrick

Just heard from a reliable source that Dato Sri Kamal Hashim, the chairman of Abad Naluri, has resigned from his position with immediate effect.

Kamal Hashim is presently the northern region director of The Star, which gave the launch of the PGCC by the prime minister last year prominent coverage.

It is also believed that the Prime Minister and his family are now distancing themselves from Patrick Lim, whose dealings exposed the BN to stinging criticism in the run-up to the general election - from opposition parties as well as from Mahathir.

Abad Naluri is the developer of the controversial PGCC project and was supposed to sign an agreement to buy and develop 300 acres of land in Batu Kawan as a replacement race-course for the Penang Turf Club.

These deals have been shrouded in controversy, and it is widely believed that powerful vested interests were the driving force behind them. In particular, the Penang state government has been asked to probe deeper and find out how Abad Naluri could end up buying 750 acres of prime land right next to the site of the proposed second bridge for Penang.

So who was really behind these land deals? As at October last year, the directors of Abad Naluri were Patrick Lim, Md Isahak bin Md Yusuf, Kamal Mohamed Hashim bin Che Din and Chin Pei Fung.

While much has been said of Patrick Lim’s interest in the PGCC, this could be a red herring as his Taman Equine firm only has a 25 per cent stake in the PGCC developer, Abad Naluri Sdn Bhd.

So who are the other major shareholders of Abad Naluri, which had an issued capital of only RM519,867? A company search revealed that the firm’s other main shareholders were Syed Jalaludin bin Syed Salim (Prof Tan Sri Dato’ Dr) (24 per cent) stake and Aneka Mayang Sdn Bhd (46 per cent). The rest were mainly small Chinese Malaysian shareholders holding 100 shares each.

Now let’s look at Abad Naluri’s biggest shareholder, Aneka Mayang Sdn Bhd. Surprise, surprise, Aneka Mayang is a RM2 company! One share each is held by, yes, Syed Jalaludin again and the other by Idris bin Denan. Imagine, a RM2 company has a 46 per cent interest in Abad Naluri, which in turn was supposed to undertake the RM25 billion PGCC project! Only in Malaysia…

Any of these individuals and firms could be proxies for other more powerful interests.

Although the end of the PGCC project is nigh, this does not mean we are going to get a People’s Park in Batu Gantong tomorrow.

For, would you believe it, certain members of the Turf Club are now salivating at the prospect of making a tidy profit from “developing” the Batu Gantung land for private gain.

A prominent member has circulated a proposal which would involve members buying the 259-acre plot of land from the Turf Club for RM488 million.

Under the proposal, the members would allocate 180 acres out of the 259 acres for property development. Basically, they want to build 581 bungalows (each 7,000-8,000 sq ft) and sell them to the members at RM100 sq ft. (The Turf Club has 581 members.) They also want to build a further 140 bungalows for sale to the public at RM200 sq ft.

Incidentally, the market value of the land is now around 250 sq ft.

Under this proposal, the profit from this property development would be RM115 million, which would be donated to charity. (But the members would already profit from buying the bungalows at a discounted price of only RM100 sg ft, which means each member would in effect make a cool unrealised profit of around RM1 million on top of the RM20,000 they had earlier received.)

The proposal also involves the members handing over the unused 79 acres as “open space” for a public park to the Penang state government. Wah, so generous! But hang on a minute - this “open space” is actually hill land and cemetery land (which cannot be developed in the first place) for crying out loud. Now I wonder how many people fancy strolling around hill-slopes and tombstones for their leisurely morning and evening walks.

Imagine, whoever came up with this hare-brained, land-grabbing proposal dares to call it a “win-win situation for all parties concerned”.

Let’s be clear. The land does not belong to individual Turf Club members so that they can profit from it. It was handed over to the Penang Turf Club by the State in 1935 for recreational use. The only reason we got into this mess is that the previous state government, with the connivance of vested interests, re-zoned this land to “mixed development”. It is time the new state government put a stop to this nonsense of certain quarters eyeing this precious green lung and wanting to “develop” it for personal profit. The land and surrounding areas should remain a heritage enclave and the only way that can happen is if the new state government re-zones the land back to its original status as “recreational” and turns it into a permanent People’s Park.

That should keep away the greedy vultures, now circling in the air while eyeing the carcass of the still-born PGCC below.

Thursday, 10 April 2008 - Posted by anilnetto | Accountability, Development issues, Environment/climate change, Malaysian finance/business | | 13 Comments