Foreign Exchange

Updates

noreply@blogger.com (Hell Raiser) — Wed, 15 Apr 2009 19:24:00 +0000

* Dollar, yen advance on safe-haven bid
* Investors wary ahead of more U.S. corporate earnings
* U.S. retail sales unexpectedly fell in March (Updates prices, adds quotes, changes byline, changes dateline, previous LONDON)
By Wanfeng Zhou
NEW YORK, April 14 (Reuters) - The dollar and yen rose on Tuesday after disappointing U.S. retail sales data and caution ahead of a string of corporate earnings boosted safe-haven flows into the two currencies.
While investors' wariness stoked demand for the dollar and yen, which are often perceived as safer places to park money in times of heightened risk aversion, it pressured the euro and other currencies seen as riskier, such as the Australian dollar.
Despite much higher-than-expected profits from Goldman Sachs , analysts said investors remained cautious ahead of more earnings results later this week from Citigroup , JP Morgan Chase and General Electric .
A government report showing sales at U.S. retailers unexpectedly fell in March further fueled worries about a shaky global economy and helped reverse some of the recent positive sentiment in markets. For more, see [ID:nN13538760].
"This morning's U.S. data came well below expectations and doused the positive sentiment in the markets in the past couple of weeks," said Omer Esiner, forex market analyst at Ruesch International in Washington.
"The data shows that expectations that the U.S. economy has bottomed were overdone," he added. "The (data) reintroduced some risk."
In early New York trading, the euro fell 0.9 percent to $1.3252 and 1.5 percent to 131.70 yen .
Traders said the euro also fell on technical factors after failing to extend gains on Monday that took it close to $1.34 against the dollar, its highest level in nearly a week.
"The euro made a big move yesterday but of very low liquidity. The moves today are more of a bit of payback from that," said Adarsh Sinha, currency strategist at Barclays Capital.
The dollar dropped 0.7 percent against the yen to 99.35 yen . The ICE Futures' U.S. dollar index, which tracks the greenback against a basket of currencies, rose 0.4 percent to 84.933

Law Review: Pro bono: Test cases for lawyers and ideals

noreply@blogger.com (Hell Raiser) — Wed, 15 Apr 2009 19:23:00 +0000

Like thousands of his peers, lawyer Joseph Sullivan toils every day in a soaring Center City office tower for a firm that counts among its clients some of the richest and most powerful companies in the world.

Sullivan's firm, Pepper Hamilton L.L.P., generates hundreds of millions each year in chargeable hours for its work.

Yet Sullivan himself bills no clients for his time. Nor is he, like so many of his colleagues, under pressure to generate business for his firm.

Sullivan's sole task at Pepper Hamilton is to oversee the firm's practice of providing free legal services to people and institutions who cannot afford to pay the pricey, $600-plus-per-hour charge that top lawyers in Philadelphia command and that is the price of admission for clients into the world of Big Law.

In the last year, Pepper Hamilton lawyers have represented not only Guantanamo detainees seeking release, but also a U.S. Marine accused of war crimes in Iraq; they helped win the Marine an acquittal in a federal criminal trial in Southern California.

They defend poor tenants facing eviction. And Philadelphia homeowners in so-called tangled-title cases where houses have been passed from one generation to the next with little or no paperwork.

That can be a problem when the owners go to the bank for a loan, or have trouble getting government housing assistance because there is no paper trail of ownership.

And the lawyers have represented artists in copyright disputes with huge institutions in legal fights the artists wouldn't have a prayer of winning absent the services of some serious legal firepower.

"The legal system applies to everyone, and everyone should have access to it," Sullivan said. "Meaningful access to the system means having an attorney, but many people cannot afford one."

Sullivan began his career as a commercial litigator at Schnader Harrison Segal & Lewis L.L.P. and over time took on more and more pro bono work. When a full-time position opened at Pepper running the pro bono program, he made the jump.

There has been a lot of handwringing recently that greed is ruining the practice of law.

But the substantial pro bono practice at Pepper Hamilton and other law firms suggests that the issue is a bit more complicated than that.

It is undeniable that at the biggest firms, law looks more and more like any other business with each passing day.

The biggest firms in Philadelphia have revenues of $1 billion or more a year, full-time CEOs, and far-flung empires that circle the globe. Because so many firms have overseas offices, foreign exchange rates have become key factors in determining firms' profitability.

On the biggest cases, they can assemble hundreds of lawyers to comb documents, depose witnesses, write briefs, and make oral arguments.

And when things turn sour, as they have now for so many law firms, it's hard to tell the difference between the legal industry and other financially strapped lines of business.

Bodies are quickly tossed overboard when the economy retreats and firms are under urgent pressure to make budget.

Yet for all their seemingly cold-blooded efficiency, the biggest firms persist in the highly uneconomical practice of representing penniless clients. Sullivan said that Pepper Hamilton lawyers last year devoted 34,800 hours to pro bono cases. Assuming that most of the pro bono work was logged by younger lawyers at the lower end of the income scale at Pepper, that is easily more than $3 million worth of legal services provided through the program.

It is certainly the case that there is some self-interest involved here and that the firms expect a fairly immediate payback. That is because pro bono programs provide excellent training for young lawyers in everything from taking depositions to writing briefs to making oral arguments. Clients increasingly are telling firms that they do not want inexperienced yet highly paid junior lawyers on their jobs, so putting them to work on a pro bono case has benefits all around.

Moreover, "it is sometimes nice just to get a short break from fee work and go out and help a tenant who is facing eviction," says Sullivan.

But the program also evinces some of the ideals of the profession, which have shown remarkable resilience in even these self-serving times. Sullivan argues, convincingly I think, that the chief value of pro bono work is that it serves to bolster the credibility of the legal system.

This is the same system, of course, that lawyers need to earn their, in many instances, very handsome incomes. But these are also times in which short-term thinking reigns supreme, and against that backdrop the still-large commitment by law firms to pro bono work seems surprisingly old-fashioned.

"We don't just get up every day and say how much money can we make today, although that is on the minds of many lawyers," Sullivan said. "This [pro bono work] is our version of the Hippocratic oath. We have a legal system that is our sworn duty to uphold and affirm."

Singapore Dollar Rises After Being Devalued Less Than Projected

noreply@blogger.com (Hell Raiser) — Wed, 15 Apr 2009 19:22:00 +0000

Singapore’s dollar rose to a two- month high after the central bank said it sees no reason for “any undue weakening” of the local currency, signaling it doesn’t plan to add to a devaluation announced today.

The Monetary Authority of Singapore, following a twice- yearly policy review, today lowered the trading band in which the local currency is managed and said it doesn’t plan to seek further depreciation as the economy is “sound.” Gross domestic product fell an annualized 19.7 percent in the last quarter from the previous three months, more than double the 9.6 percent shrinkage forecast in a Bloomberg survey of economists.

Singapore’s dollar gained 1 percent to trade at S$1.5017 versus the U.S. currency as of 4:35 p.m. local time. It earlier reached S$1.4963, the strongest since Feb. 11. The median estimate of 21 analysts surveyed by Bloomberg News before today’s decision was for the currency to weaken to S$1.59 by end-June.

“People were expecting a more aggressive move given the disastrous GDP,” Sean Callow, a Sydney-based currency strategist at Westpac Banking Corp. said in an interview. “If now is not the time to adopt significant easing, then they never will.”

The MAS conducts its monetary policy by guiding the Singapore dollar within an undisclosed trade-weighted band of major trading partners’ currencies. It adopted a faster currency appreciation stance in October 2007, announced a one-off strengthening in April 2008 and halted gains altogether at the last policy meeting in October.

‘Re-Centered’ Band

The central bank said the currency, which has slid 3.8 percent so far this year versus the U.S. dollar, largely moved in the lower half of the policy band since the October review. The band was “re-centered” to the “prevailing level of the Singapore dollar nominal effective exchange rate,” it added.

A lowering of the policy band was forecast by 15 of 17 economists surveyed by Bloomberg News last month, though DBS Group Holdings Inc., HSBC Holdings Plc, UBS AG and Westpac all said they expected a steeper devaluation than was announced. DBS, Singapore’s biggest bank, maintained its forecast for the currency to weaken 3.7 percent to S$1.56 by the end of June, according to a research note published today.

The MAS move “was against market expectations of a more aggressive re-centering below the current Singapore dollar NEER level,” wrote Daniel Hui, a foreign exchange strategist at HSBC in Hong Kong, in a note today. “The relatively conservative tone was reinforced by a reiteration of Singapore’s fundamentals and noting there was no reason for any undue weakening.”

Shrinking Economy

The economy may shrink between 6 percent and 9 percent this year, more than a January forecast for a contraction of as much as 5 percent, the trade ministry said in a statement today. Non- oil domestic exports fell 17 percent from a year earlier in March, sliding for an 11th straight month, according to government data released today.

Exporters are losing out to regional rivals after Singapore’s dollar weakened 9.5 percent in the past year, compared with a 26 percent loss in the South Korean won and 20 percent slide in India’s rupee.

Swiss franc falls after Hilde brand's FX comments

noreply@blogger.com (Hell Raiser) — Sun, 05 Apr 2009 13:22:00 +0000

* Euro up as ECB cuts rates by only 25 bps
* Trichet talk of non-standard measures curbs euro gains
* Yen, dollar index fall as risk tolerance rises
* G20's call for more IMF funding boosts risk appetite
* Swiss franc falls after Hilde brand's FX comments
NEW YORK, April 2 (Reuters) - The euro jumped against the dollar on Thursday after the European Central Bank delivered a smaller interest-rate cut than expected and hinted vaguely that it could adopt more aggressive means to boost growth.
Optimism also surged as leaders from 20 high-income and developing countries pledged to boost world output and agreed to add $500 billion to International Monetary Fund coffers.
The euro soared to nearly $1.35 after the ECB cut lending rates to 1.25 percent, confounding expectations for a deeper cut to 1 percent, but eased a bit as ECB President Jean-Claude Trichet refused to rule out additional rate cuts in future.
He also said officials had yet to decide on "non-standard" policy measures and would offer more details at the central bank's next policy meeting in May.
Markets were on alert for signs the ECB planned to follow other central banks by buying corporate or government debt to stimulate bank lending, a move that would likely spur growth, but could also undermine the euro through increased supply.
"The ECB is still concerned about preserving the integrity of its currency," said Boris Schlossberg, head of FX research at GFT Forex in New York. "They do not want to debase it in any way, shape or form by doing radical unconventional measures."
The euro rose 1.6 percent to $1.3440, near a session peak of $1.3489, and added 2.5 percent against Japan's yen to 133.80 yen.
The dollar also gained against the yen, rising 1 percent to 99.52 yen after earlier touching 99.90, a five-month high.
The Group of 20 agreement, struck after a meeting in London, whetted investors' risk appetite, igniting a rally in stocks and driving the Dow Jones industrial average back up above 8,000 for the first time since Feb. 10, while slowing safe-haven flows into the dollar and yen.
The decision to increase IMF funding was positive for the euro, as it could help battered eastern European economies where euro-zone banks have been active.
Sterling rose 1.5 percent to $1.4689 while the Australian dollar, which boasts the highest interest rates among developed countries, rose 2.7 percent to $0.7166.
"The bottom line is that it's a positive for risk appetite ... I think the dollar is under pressure as a result," said Ruesch International market strategist Omer Esiner.
ECB QUESTIONS REMAIN
Whether that sense of optimism can endure is another story, analysts said, and from a currency market perspective, it may depend largely on the ECB's next move.
Regarding ECB quantitative easing, the process of flooding the banking system with money to kick-start lending and boost growth, "there is still an 'if," said John McCarthy, director of foreign exchange at ING Capital Markets in New York.
Trichet "leaves enough wiggle room," he added. "They are not ruling anything out, but not announcing anything today."
But Alan Ruskin, international strategist at RBS Greenwich Capital, said markets may yet reassess the ECB's stance.
"The initial inclination is simply to follow bond spreads around, which is euro positive," he said. "But I fear that without quantitative easing, the market will soon be feeling that neither the euro-zone periphery nor its Eastern European neighbors have the appropriate central bank support they need, and that will soon drag the euro back down."
At the Swiss National Bank, Vice President Philipp Hildebrand -- unlike his ECB counterparts -- fired a clear warning shot on Thursday, saying the central bank will use all means to prevent further gains in the Swiss franc.
The SNB has started buying corporate and government debt and intervened last month to weaken the franc, which fell on Thursday against the dollar and euro.

WORLD FOREX: Euro Rallies On Higher Stocks, G20

noreply@blogger.com (Hell Raiser) — Sun, 05 Apr 2009 13:21:00 +0000

NEW YORK (Dow Jones)--The euro extended earlier gains Thursday afternoon as U.S. stocks mounted a rally and after Group of 20 leaders agreed on a wide range of measures to counter the global financial crisis.

This combination boosted market confidence, pushing the euro to fresh intraday highs after already advancing on a smaller-than-expected rate cut by the European Central Bank.

The common currency rose to a one-week high of $1.3518 and a two-week high of Y134.23. The U.K. pound also rose to a two-week high of $1.4748. Greater interest in riskier assets sent the dollar lower against commodity currencies as well, such as the Australian dollar. The Aussie gained to its highest level since early January, $0.7198.

Thursday afternoon in New York, the euro was at $1.3479 from $1.3229 late Wednesday, and the dollar was at Y99.37 from Y98.67, according to EBS. The euro was at Y133.92 from Y130.55. The U.K. pound was at $1.4721 from $1.4440, while the dollar was at CHF1.1340 from CHF1.1466.

The Dow Jones Industrial Average was recently up about 250 points on the day, slightly off its highs, after the Financial Accounting Standards Board voted to relax mark-to-market accounting rules, giving auditors more flexibility in valuing illiquid assets.

Meanwhile, G20 leaders agreed at their summit in London Thursday on plans including a $5 trillion stimulus by the end of 2010, additional International Monetary Fun funding, as well as regulatory reforms for the banking and rating industries, among other measures.

"Their actions on the IMF are a big deal," said Alan Ruskin of RBS. "Large sums of money applied to some of the smaller countries, can go far in keeping the wolves from the door."

Emerging market currencies are seen particularly supported on this deal, as well as commodity currencies, on the boost to market sentiment and, fundamentally, their economies.

Earlier Thursday, the euro first rallied after the ECB cut its key interest rate by a quarter percentage point to 1.25%, a surprise for most market watchers, who were expecting a reduction down to 1%. Tighter monetary policy relative to other central banks support a currency.

The euro's rally against the dollar in the wake of measures by the Federal Reserve earlier in March to start quantitative easing was tempered by expectations that the ECB would move to do the same. But, that turned out not to be the case, and the common currency gained in a knee-jerk response.

Oil Drops Below $51

noreply@blogger.com (Hell Raiser) — Tue, 31 Mar 2009 14:48:00 +0000

Profit-taking and uncertainty around the G20 Summit Meeting are being blamed for a reversal in the price of crude as the benchmark prices fell nearly $2 a barrel in Monday morning trading in Europe and Asia.

Some Banks Will Need More Funding:

U.S. Treasury Secretary Timothy Geithner told a news program aired Sunday that some financial institutions will require substantial government aid in order to remain solvent. He also warned against taxing investors who participate in the Private Public Investment Program intended to buy the toxic assets held by many of the large banks. More
Spain Forced to Provide Bail Out Help for Regional Bank

Share prices for Spain’s financial institutions fell today after the government announced that the Bank of Spain would assume control over Caja Castilla la Mancha.

Obama Gets Tough with Auto Manufacturers

noreply@blogger.com (Hell Raiser) — Tue, 31 Mar 2009 14:48:00 +0000

In a startling move over the the weekend, the Obama administration has forced the resignation of General Motors Chairman Rick Wagoner. The White House has also questioned the viability of General Motors and Chrysler saying that the plans the two companies submitted over the weekend were “unacceptable” and unless the companies are prepared to “remake” themselves, the government will not commit to further funding.

FOREX-Dollar, yen up as stocks stumble, auto woes weigh

noreply@blogger.com (Hell Raiser) — Tue, 31 Mar 2009 14:47:00 +0000

* US auto woes, Spanish bank rescue dull risk appetite

* Dollar, yen up broadly, technically shaky euro slides

* Heavy event risk this week as ECB, G20 meetings loom

* Stocks fall sharply, adding to risk-aversion trades (Updates prices, adds comment)

By Steven C. Johnson

NEW YORK, March 30 (Reuters) - The dollar and yen rallied on Monday as fears of bankruptcy for U.S. automakers General Motors and Chrysler prompted anxious investors to cut exposure to risk and seek safety in the U.S. and Japanese currencies.

The euro continued to retreat from last week's two-month high above $1.37, falling below $1.32 after Spain was forced to take over a regional savings bank, its first rescue since the financial crisis began, and Hungary's credit rating was cut.

That added to selling by those anticipating a cut in euro zone interest rates this week and increased the appeal of the dollar and yen, which tend to rise in times of trouble as investors repatriate funds from higher-yielding currencies and relatively riskier assets such as stocks.

"The poor start to the week in global equity markets has acted as a speed bump for the broad rally in risk appetite we'd been seeing, and its roots are in renewed concern about the financial sector and U.S. auto sector," said Todd Elmer, senior currency strategist at CitiFX in New York.

U.S. stocks swooned after the White House rejected funding pleas from GM (GM.N) and Chrysler and forced out GM's CEO, pushing the ailing carmakers closer to possible bankruptcy.

That added to worries stoked over the weekend when U.S. Treasury Secretary Timothy Geithner said some banks will need large amounts of assistance -- remarks that BMO Capital Markets currency analyst Andrew Bush said "put the bulls-eye back on the financial sector."

The euro was last down 1.3 percent at $1.3133 , its lowest since March 18 and near a $1.3118 session low. It lost 2.2 percent to 127.18 yen, a two-week low .

Standard & Poor's move to cut Hungary's long-term foreign currency rating added to pressure on the euro by refocusing attention on troubles in central and eastern Europe, a region to which euro zone banks are heavily exposed.

"It's rubbing salt in the wound and adds pressure to the euro, and as long as stocks continue to fall, we'll shoot for $1.31, where there's strong buying interest," said GFT Forex's Boris Schlossberg.

Analysts say $1.31 is the euro's next technical target on the downside because it marks the 50 percent retracement level of its March rally from $1.2455 to $1.3737.

Sterling fell 1.2 percent to $1.4150 while the dollar shed 1 percent to 96.81 yen .

Dennis Gartman, an independent investor and author of The Gartman Letter, said yen gains may also be tied partly to the view that Japan's carmakers stand to benefit from GM's and Chrysler's continuing woes.

The White House said it would only fund GM for the next 60 days while it develops a more convincing restructuring plan.

Widespread market anxiety on Monday was in stark contrast to a growing sense of optimism that lifted stock markets over the last few weeks and dimmed the dollar's safe-haven appeal.

Despite the improvement in risk appetite over the last few weeks, "there were still a few banana skins out there," said Daragh Maher, deputy head of global FX strategy at Calyon.

One such could be the European Central Bank's meeting on Thursday. Rates are seen falling to 1 percent from 1.5 percent, and markets will be on alert for signs the ECB plans to follow the U.S., British and Japanese central banks by purchasing government or corporate debt to free up credit and lending.

Stock Markets Decline as Washington Rejects Automaker Plans

noreply@blogger.com (Hell Raiser) — Tue, 31 Mar 2009 14:47:00 +0000

After forcing the resignation of General Motors CEO Rick Wagoner over the weekend and rejecting the restructuring plans of both GM and Chrysler as being unrealistic, investors were in a cautious mood, translating into a loss of nearly 300 points on the New York Stock Exchange.

Stocks tumble as automaker plans are rejected>>>>>>>>

NEW YORK – Wall Street's March rally is on hold after the White House rejected turnaround plans from General Motors Corp. and Chrysler and gave investors an economic reality check.

Major indexes fell about 3 percent Monday, including the Dow Jones industrial average, which lost about 254 points but finished well off its lows. Financial stocks weighed heavily on the market amid worries that banks will need fresh injections of capital.

Fears of an automaker bankruptcy have been looming over investors for months, and the latest developments, which included the removal of GM's CEO Rick Wagoner, made the market uneasy not only about the industry, but the overall economy. However, analysts said the pullback, which began with a 148-point drop in the Dow Friday, wasn't surprising after the average surged 21 percent over just 13 days.

"The market had a very significant rally off the lows," said David Katz, chief investment officer at Matrix Asset Advisors. "We think it's just taking a breather."

The Dow tumbled 254.16, or 3.3 percent, to 7,522.02. It was down as much as 339 points, so the market's ability to pull above its lows on light trading volume could signal that investors aren't ready to give up on the rally.

The Standard & Poor's 500 index fell 28.41, or 3.5 percent, to 787.53, while the Nasdaq composite index fell 43.40, or 2.8 percent, to 1,501.80.

Despite the two-day retreat, the Dow is still up 975 points, or 14.9 percent, from its low of 6,547.05 on March 9, when it ended at its worst level since April 1997. The S&P 500 index is still up 16.4 percent from its low.

The March rally was fed by economic and corporate reports that were starting to look more encouraging. Now, investors are taking money out of the market ahead of economic numbers this week and first-quarter earnings in the weeks ahead, fearing that disappointing data, including the government's March employment report on Friday, will set the market back.

Problems still facing automakers and banks gave investors more incentive to sell.

President Barack Obama refused further long-term federal bailouts for GM and Chrysler, saying the companies needed to get more concessions from unions, creditors and others before the money could be approved. He also raised the possibility of controlled bankruptcy for one or both of the companies.

"It was a pretty sharp reminder that there are some difficulties here," said Matt King, chief investment officer at Bell Investment Advisors.

Underscoring the fear that the financial industry's troubles are far from over, Treasury Secretary Timothy Geithner said Sunday banks would likely need considerably more money. Also over the weekend, Spain was forced to bail out a bank for the first time since the financial crisis began. The Bank of Spain took control of a savings bank and provided $12 billion in government funds to support it.

Banks were a driving force behind the market's rally in March and analysts now expect those shares to see some of the biggest declines as investors become more conservative ahead of the first-quarter earnings reports in the next few weeks. Bank of America Corp. fell 17.8 percent Monday and Citigroup fell 11.8 percent.

A bear market began in October 2007 after the Dow and S&P hit record highs. After the indexes hit bottom this past March 9 and then rose shaply, market watchers began debating whether the bear market ended that day. The pessimists believe the rise has been a "bear market rally" and the bear remains intact.

With the economy still deeply troubled, some analysts say Wall Street may have gotten ahead of itself.

"I think we had a huge run up ... that was not really justified," said Peter Jankovskis, co-chief investment officer at OakBrook investments. "There are a lot of negatives right now on the horizon."

Bank stocks had rallied on the hope that their first-quarter performance would be better than expected. But Friday, the heads of JPMorgan Chase & Co. and Bank of America Corp. diminished some of those hopes when they said March has not been as good for business as the first two months of the year.

"It's just prudent to take profits nowadays," said Ron Weiner, president and chief executive of Westport, Conn.-based investment advisory firm RDM Financial, who recently took half of his money out of a financial-based exchange-traded fund. "You have to mix up cash with alternatives that act opposite from the market."

Bank of America dropped $1.31, or 17.9 percent, to $6.03. Citigroup Inc. shed 31 cents, or 11.8 percent, to $2.31.

GM plunged 92 cents, or 25.4 percent, to $2.70. Chrysler is not publicly traded.

Investors are also awaiting Thursday's meeting in London of G-20 leaders of industrialized and developing countries. The group is expected to increase financial regulation, but investors' hopes for a coordinated fiscal boost are waning. The Financial Times, citing a draft of the meeting's communique, reported there are no specific plans for a fiscal stimulus package.

In other market moves, the Russell 2000 index of smaller companies dropped 13.03, or 3 percent, to 415.97.

About seven stocks fell for every one that rose on the New York Stock Exchange, where consolidated volume came to 5.8 billion shares, up from 5.48 billion on Friday.

Bond prices mostly rose as stocks fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.72 percent from 2.76 percent late Friday. The yield on the three-month T-bill was at 0.18 percent, up from 0.12 percent Friday.

Crude oil tumbled $3.97, or 7.6 percent, to settle at $47.99 a barrel on the New York Mercantile Exchange.

The dollar was higher against other major currencies. Gold prices slipped.

Overseas, Britain's FTSE 100 fell 3.1 percent, Germany's DAX index fell 5 percent, and France's CAC-40 fell 4.3 percent. Japan's Nikkei stock average fell 4.53 percent.

FOREX-Auto, bank worries lift safe-haven dollar, yen

noreply@blogger.com (Hell Raiser) — Tue, 31 Mar 2009 14:44:00 +0000

* U.S. auto, financial-sector fears dull risk appetite

* Dollar, yen up broadly, euro slides below $1.32

* Heavy event risk this week as ECB meeting looms (Updates prices, adds quotes, details)

By Wanfeng Zhou

NEW YORK, March 30 (Reuters) - The dollar and yen rose on Monday as fears of bankruptcy for U.S. automakers General Motors and Chrysler and persistent worries about banks worldwide boosted safe-haven flows into the two currencies.

The euro continued to retreat from last week's two-month high above $1.37, falling below $1.32 after Spain was forced to take over a regional savings bank, while Standard & Poor's cut the credit ratings of Hungary and Ireland.

Despite the United States being at the center of global financial crisis, the dollar has gained in recent months as anxious investors sought shelter in U.S. Treasury debt.

The yen has also served as a refuge in times of trouble, rising as traders repatriate funds from riskier assets.

"(There) is a reemergence of risk aversion and that has obviously been spurred on by what's going on with both GM and Chrysler," said Matt Esteve, a foreign exchange trader at Tempus Consulting in Washington. "With markets around the world tumbling ... investors are flocking back to the dollar and also to the Japanese yen."

In late New York trading, the euro was down 0.8 percent at $1.3189 , off a session low of $1.3115 -- its lowest level since March 18 -- according to Reuters data. Against the Japanese yen, the euro lost 1.4 percent to 128.22 yen .

The dollar shed 0.6 percent to trade at 97.22 yen , with risk aversion and Japan's fiscal year-end boosting demand for the yen.

Wall Street stocks closed sharply lower on Monday after the Obama administration rejected funding pleas from General Motors (GM.N) and Chrysler and forced out GM's CEO, pushing the carmakers closer to possible bankruptcy.

The news added to worries stoked over the weekend when U.S. Treasury Secretary Timothy Geithner said some banks will need "large amounts of assistance."

"While (Geithner) hasn't actually asked Congress for additional funds, it was pretty obvious that that's what he was preparing us all for," said Chris Gaffney, vice president at EverBank World Markets, in St. Louis, Missouri.

"That combined with news out of Europe that looks to push the (European Central Bank) into maybe more rate cuts caused the dollar to run up and the euro to sell off," Gaffney added.

ECB MEETING LOOMS

The ECB is widely expected to cut interest rates to 1 percent on Thursday. Markets are keen to see if it will follow the U.S., British and Japanese central banks in buying government or corporate debt to boost the availability of credit.

ECB President Jean-Claude Trichet said on Monday that no such decision has yet been made. He also said euro-zone growth is likely to remain sluggish this year before starting to rebound in 2010.

Dan Cook, a senior market analyst at IG Markets in Chicago, said the ECB may not be able to resist adopting unorthodox monetary policy for long.

"We still look to dollar strength as Trichet is eventually forced to move into this type of bond buying," he said.

In the latest sign of stress in the euro zone, Spain was forced to bail out regional savings bank Caja Castilla la Mancha, its first bank rescue since the financial crisis began.

Also on Monday, S&P's cut Ireland's prized 'AAA' credit rating to 'AA+' and warned it could drop further. The ratings agency also lowered Hungary's credit rating to one level above "junk."

Win Thin, senior currency strategist at Brown Brothers Harriman, said while expected ratings downgrades in 2009 for some euro zone members is of course negative for the region, the currency market has already discounted much of this.

"Bigger news would be if the agencies started to downgrade some of the stronger credits such as Germany and France," he said in a note.

Adds value of interventions, updates with closing prices By Andrei Ostroukh and Toni Vorobyova

noreply@blogger.com (Hell Raiser) — Fri, 27 Mar 2009 21:14:00 +0000

MOSCOW, March 24 (Reuters) - Russia's central bank intervened in the currency market for a fourth session running on Tuesday, buying dollars to keep a lid on the rouble's rally to two-month highs, dealers said.
The rouble, aided like other emerging currencies by improved global risk appetite, remained on a strong footing despite a bout of profit-taking in Russian stock markets <.MCX><.IRTS> -- which hit 4-1/2 month highs on Monday -- and on oil prices.
The rouble firmed to a two-month high of 38.57 versus a euro-dollar basket, according to Reuters data , before closing little changed on the day at 38.70.
"The market's a happier place again, spring has sprung and everyone is short dollar-rouble again," said a trader at a foreign bank in Moscow.
"It (rouble strengthening) probably will continue as long as stocks and oil stay bid. The positioning is still quite light."
The rouble had lost around a third of its value in a six-month slide to adjust to Russia's worst economic outlook in a decade, part of a crisis that has put pressure on its political elite.
The central bank spent tens of billions of dollars keeping the currency depreciation gradual and it has pledged to keep the rouble within a 26-41 range versus the basket.
But it has also said it would intervene to prevent excessive volatility and officials have indicated that they see current exchange rate levels as appropriate given the present price of the country's key export, oil.
Dealers said the central bank appeared to be moving its bid by around 5 kopecks at a time -- at first buying foreign currency around 38.70 roubles versus the basket, and then moving gradually to 38.59-38.60 by mid-session.
Dealers estimated Tuesday's interventions at $1.5-2.0 billion, taking the value of dollar purchases for the last four trading days to around $4.5 billion.
"I don't think the central bank has any desire for a strong appreciation of the rouble," said another dealer.
WEAKER IS BETTER?
A weaker currency benefits exporters but Economy Minister Elvira Nabiullina on Tuesday cautioned against excessive moves.
"There is now a real risk of a global devaluation race due to attempts by individual countries to stimulate economic growth," she said.
"Triggering that process may become as dangerous for the world economy and trade as direct protectionism."
Analysts say the upward pressure on the rouble gives the central bank an opportunity to replenish gold and forex reserves -- down by over a third from their August peak to $376 billion.
The central bank's own measures on Tuesday contributed to tighter liquidity and demand for roubles. It cut the amount on offer at its first repo auction of the day to 10 billion roubles, the lowest since limits were introduced in September. The daily cap for FX swap operations with the central bank was set at zero for the first time since January.
However, dealers said such liquidity restrictions were partly offset by the central bank's rouble selling interventions, as well as by the injection of budget funds into the economy.

Updates of Dollar

noreply@blogger.com (Hell Raiser) — Fri, 27 Mar 2009 21:10:00 +0000

* Dollar gains in safe-haven bid
* One-month Treasury bill yield goes negative (Updates with dollar rising on return of risk aversion)
NEW YORK, March 26 (Reuters) - The dollar climbed to a session high against the euro on Thursday as the U.S. one-month Treasury bill yield slipped into negative territory for the first time since mid-December, indicating risk aversion.
For more on one-month bill yield, click on [ID:nNYE000541].
The euro last traded at $1.3534, down 0.4 percent against the dollar, after going as low as $1.3522.
"U.S. 1-month T-bill rate going negative is an indication that risk aversion remains prevalent despite the rally in stocks," said a Forex.com trader from Bedminster, New Jersey.
The dollar rose 1 percent against the yen to 98.55 yen.
Earlier, the dollar was down against most major currencies Thursday, with investors reluctant to take big bets with U.S. Treasury Secretary Timothy Geithner making another appearance before a congressional committee.
The market showed little reaction to Geithner's prepared remarks for the hearing before the House of Representatives Financial Services Committee, which is about financial regulation reform. Investors were instead poised for the question and answer session.
"There is tremendous uncertainty over additional comments clarifying the U.S. Treasury Secretary's position over studying the replacement of the U.S. dollar as a reserve currency," said Andrew Busch, global FX strategist at BMO Capital Markets in Chicago.
The dollar swung wildly on Wednesday after Geithner said he was open to expanding the use of the International Monetary Fund's Special Drawing Rights (SDRs).

Thai stocks to open down on profit taking, politics

noreply@blogger.com (Hell Raiser) — Fri, 27 Mar 2009 21:08:00 +0000

BANGKOK, March 23 (Reuters) - Thai stocks are expected to
open lower on Monday after the main index hit a 3-week high
last week and investors worry about rising political tensions
ahead of an anti-government rally.

"It seems the political temperature is rising. Pressure
from domestic politics and the poor economic outlook should
trigger profit taking," Asia Plus Securities analyst Therdsak
Taveetheeratham said.

An anti-government group vowed to rally outside Prime
Minister Abhisit Vejjajiva's offices at Government House from
March 26 in a bid to force him to resign. The protest comes
after Abhisit easily survived a censure vote in Parliament on
Saturday. [nBKK451189]

Among stocks in the news, PTT PCL PTT.BK, Thailand's
biggest energy firm, announced plans to acquire a 60 percent
stake in a unit of Australia's Straits Resources (SRL.AX) (SRL)
for up to $335 million.

Other energy firms .SETEN may get a lift from higher
global oil prices.

Support on the main index .SETI is expected at 420 points
and resistance at 435 points, the analysts said.

On Friday, the benchmark SET index closed up 0.45 percent
at a three-week closing high of 429.64 points.

Click [TH/TRADING01] for cumulative trading value by
investor type. ----------------------MARKET SNAPSHOT @ 0050 GMT
------------

INSTRUMENT LAST PCT CHG NET CHG
S&P 500 .SPX 768.54 -1.98% -15.500
USD/JPY 96.14 0.49% 0.470
10-YR US TSY YLD 2.6434 -- 0.009
SPOT GOLD 951.05 0.02% 0.150
US CRUDE CLc1 52.62 1.06% 0.550
DOW JONES .DJI 7278.38 -1.65% -122.42
ASIA ADRS .BKAS 85.19 -2.27% -1.98
-------------------------------------------------------------
MARKET SUMMARY > Oil rises towards $53 on toxic asset plans
report [O/R] > US STOCKS-Futures rise on toxic asset plan
reports [.N] > FOREX-Dollar caps worst week in 24 years

[USD/] > TREASURIES-Profit-taking trims prices after big
rally[US/] > Gold dips on firm dollar but inflation underpins
[GOL/]

STOCKS AND FACTORS TO WATCH

- PTT PCL PTT.BK

Australian miner Straits Resources (SRL.AX) will sell part
of its coal and salt assets to top energy firm PTT in a deal
worth about A$500 million ($343 million) [nSYD422675]

- For the Thai press digest click on [ID:nBKK433750]

- For Thailand's IPO diary click on

- For Thailand's stock exchange news click on [TH-SET]

- For Thailand corporate earnings: [TH-RES-RTRS]

- For Thailand economic forecast: [POLL-ECI-TH-RTRS]
($1=35.33 Baht)

MARKET SNAPSHOT: U.S. Stocks Seek Further Gains, With Fed On Board

noreply@blogger.com (Hell Raiser) — Fri, 27 Mar 2009 21:07:00 +0000

Stocks will start next week riding a new wave of optimism after the Federal Reserve took extraordinary steps to lower borrowing costs, which helped the market score its first two back-to-back weeks of gains of the year.

"People in the stock market are encouraged by what the Fed is doing," said John Lonski, managing director at Moody's. "They're doing everything they can, and now some degree of their credibility is restored."

But with the two final sessions of the week ending lower and with upcoming data on housing, as well as key appearances by Treasury Secretary Timothy Geithner next week, some say the nascent rally could still trip up against some hurdles.

"I would like for the rally to continue, but it now looks a bit more precarious," said Robert Pavlik, chief market strategist at Banyan Partners. Still "we have a light economic calendar, so if we get numbers that show stabilization in housing and upbeat comments from Geithner, that would help."

Existing-home sales data for February come out Monday, followed by new home sales on Wednesday.

Markets will focus on Geithner's remarks to Congress, first on the controversies surrounding the bailout of American International Group Inc. (AIG) Tuesday and on bank regulation on Thursday.

Many also hope that he will elaborate on the Treasury's plans to handle toxic assets, the very same which have plagued banks' balance sheets and the financial system before bringing down the entire global economy.

Fed gets Street cred

Over the past week, the Fed gained back some credibility on Wall Street by announcing Wednesday a surprise move to buy up to $300 billion of Treasury bonds, as well as expanding its purchases of mortgage-backed securities and agency debt.

"The U.S. central bank has officially cranked up the printing presses and will be flooding the financial markets with money," said Kathy Lien, director of currency research at Global Forex Trading.

The bond market surged on the news, sending Treasury yields -- which move inversely to prices -- to their biggest one-day plunge since the stock market crash of 1987.

Treasury yields are used as benchmark for the interest rates on many consumer loans, including for mortgages. Lower bond yields also make Treasury bonds less attractive to investors, leading them to seek more risk, such as turning to stocks.

After the government moves, the dollar plunged, helping boost the price of commodities including oil and gold. and .

Stocks, for a change, reacted positively to the Fed's action. The Dow Jones Industrial Average gained 0.7% for the week. The broad S&P 500 Index rose 1.6% and the Nasdaq Composite Index (RIXF) posted a weekly gain of 1.8%.

For March, the broad market, as measured by the S&P, is up 4.6%.

"[The Fed] ran into credibility issue when it ran out of ways to lower interest rates," with the Fed's official key rates already near zero since last year, according to Banyan's Pavlik. "But now, they came out of the meeting with some newfound respect from the Street."

The actual impact on the economy from the Fed's moves will be the ultimate measure of the central bank's success, he added. In the meantime, most data continue to paint a bleak picture for the economy.

Besides the housing reports next week, Wednesday will bring February data on orders for durable goods, which include some measures of business spending. Thursday brings final figures on fourth-quarter gross domestic production. Friday will bring reports on consumer confidence in March, and personal income in February.

Geithner's test

Ailing financials stocks have managed to rally through March, helped by upbeat comments from Citigroup Inc. and Bank of America Corp. , whose outlook has improved after receiving billions of dollars of government money.

Financial stocks also have found support after the government backed away from the possibility of nationalizing some of the biggest ailing banks -- something that would have wiped out their shareholders.

But Wall Street has remained uneasy with the toxic assets linked to bad home loans still sitting on banks' balance sheets. Some hope Congress will change accounting rules -- so-called mark-to-market rules -- to allow banks to revalue their assets above what the market might assign them.

The Treasury, for its part, launched a program to try and incite private investors to partner with the government in assigning values to the assets and find them buyers.

"But so far, the feeling is that the question of toxic assets hasn't been addressed, and that attracting private capital will be a problem," said Pavlik.

Daily Forex Market Summary

noreply@blogger.com (Hell Raiser) — Fri, 27 Mar 2009 21:05:00 +0000

The US dollar gained stability against a basket of currencies as the dust settled from Wednesday’s Fed announcement. On Thursday, the Fed debuted its long-awaited program to resuscitate consumer and small business lending. The Fed pledged $200 billion in an effort to revive lending and help pull the economy out of the deepening recession. Off to a stuttering start in the first round of the Term Asset-Backed Securities Loan Facility, known as TALF, big investors applied for only $4.7 billion in loans.

Although fears of inflation stoked many investors, Wall Street is set to edge higher today with a rebound in shares of natural resources companies which could push the dollar weaker against a basket of currencies.

The euro weakened against its overnight highs against the dollar, but was set to have its biggest increase since its inception in 1999. The slight weakening against the dollar comes after the Eurozone industrial output dropped 3.5% in January. Pointing to a further contracting economy the ECB is under intense pressure to cut rates at their April 2 meeting.

European Union leaders agreed today to provide 75 billion euros ($103 billion) in new loans to the International Monetary Fund in an effort to fight the global recession. Pressure from the US to increase the European economic stimulus plan was brushed off.

The British pound maintained its gains against the dollar, as Bank of England’s chief economist Spencer Dale hinted that Britain may have seen much of the recession. Though economic data this past week point to a continued downturn, Dale said the economy will begin growing again by the end of the year and expand at normal rates throughout 2010.

The Japanese yen weakened 1.1% against the dollar after profit-taking but remains steady against the dollar. As Wednesday’s news settles, some investors began questioning the impact of the Fed’s unconventional policy measures.

The Canadian dollar weakened against the greenback as oil prices dipped below $51 a barrel. Oil fell from a four-month high as attention returned to weak demand and high inventories.

The Australian and New Zealand dollars held their ground against the US dollar as the appeal for commodities increased in the wake of the weakening greenback. Some analysts are forecasting that the Aussie could push towards 70 cents in the next week, while the kiwi may be brought back down to earth on poor data next week.

The Mexican peso remains steady against the dollar ahead of Banco de Mexico’s interest rate announcement today. Analysts are forecasting a quarter percent cut bringing Mexico’s benchmark rate to 7.25%. While central banks around the world have drastically slashed interest rates close to zero, Mexico’s central bank has been slow in reducing interest rates which wreaked havoc on the peso back in February.
Indicative rates:

EUR/USD 1.3757

USD/JPY 94.79

GBP/USD 1.4456

USD/CAD 1.2334

USD/MXN 14.1410

USD/CHF 1.1158

AUD/USD 0.6961

NZD/USD 0.5655

USD/DKK 5.4562

USD/SEK 8.1450

USD/NOK 6.3355

USD/TWD 33.760

USD/CNY 6.8247

10-Year Treasury Note Yield: 2.597%

Dow Jones Industrial Average: 7,423.58 + 22.78

Review on China Stock Market by Prieur du Plessis

noreply@blogger.com (Hell Raiser) — Mon, 09 Mar 2009 13:30:00 +0000

Global Markets in Review: Another Plunge of Equities, Ongoing Flight to Safety

Down, down, deeper and down”. So goes the chorus of a Status Quo song, but it is eerily starting to sound like the stock markets’ anthem.

Another week and another plunge of equities on fears about the intensity of the global recession and renewed skepticism regarding the beleaguered financial sector. And, yet again, flight-to-safety trades such as the US dollar (at a three-year high) and government bonds took center stage.
Our family yesterday celebrated my son’s eighth birthday. While the kids were amusing themselves in pirate garb, the parents engaged in a more subdued deliberation about the exhausting stream of ugly news on the financial front. Interestingly, never in a career of 26 years have I had so many people sympathizing with my “day job” as investment manager. Will the arrival of food parcels at my front door perhaps herald a bottom in the stock market?

Back to the past week’s action on the markets. Globally, stocks were generally in the red, as summarized by the week’s movements of the MSCI Global Index (-7.1%, YTD -24.2%) and the MSCI Emerging Markets Index (EEM) (countries like Italy (+15.6%), Denmark (-11.7%), Belgium (-10.0%) and Holland (-9.2%) were on the receiving end of the selling orders.

The FTSE Eurofirst 300 Index touched the lowest level in its 12-year history, whereas the Japanese Nikkei 225 Average (-5.2%) came to within a stone’s throw of a 26-year low.

But a few bourses also up put a good show, mostly among emerging markets. The Russian Trading System Index (+5.8%) and Chinese Shanghai Composite Index (+5.3%) brought some joy to investors, while Eastern European markets like Poland (+2.9%) and Romania (+2.3%) rebounded.

As shown in the table below , the major US indices suffered another miserable week, recording eight losing weeks out of nine in 2009 and falling to 12-year lows. The Dow Jones Industrial Index’s 2009 year-to-date decline of 24.5% is by far the worst start to a year after 44 trading days since 1900. According to Bespoke, there have been 19 previous years where the Dow was down 5% or more at this point, and only four of those years ultimately finished in positive territory.

The Dow is currently down by 53.2% since its peak of October 2007. Chart of the Day points out that since 1896 only the bear market that started in 1929 has produced a larger slump.

On the exchange-traded fund (ETF) front, John Nyaradi (Wall Street Sector Selector) reports that “all things short” was again the theme of the week, with ProShares Short Financial (SEF) leading the way with a gain of 18.1%. Other inverse leaders were ProShares Short Russell 2000 (RWM) (+10.0%) and ProShares Short MidCap 400 (MYY) (+9.3%).

Among “long” ETFs the notable leaders were iShares MSCI Taiwan Index (EWT) (+5.0%) and US Oil (USO) (+3.5%).

Notwithstanding supply concerns, government bond yields in the US, UK and Germany declined as investors continued their flight to safety. Yields of 10-year Treasuries, Bunds and Gilts were down by 15, 58 and 20 basis points respectively.

In the case of the UK, the Bank of England introduced quantitative easing as its new monetary tool and unveiled an ambitious plan to buy UK government paper by printing money. Speculation rose that the Federal Reserve may also commence a program of buying longer-dated government securities. In typical David Fuller style, he offered the following advice to governments: “The patient is hemorrhaging on the operating table; do anything and everything to resuscitate (inflate) this deflating body.”

On the credit front, Markit’s spreads show that the cost of insuring corporate debt against default has increased markedly throughout the world over the past month. This is illustrated by the movement in the spreads (expressed in basis points) for the five-year credit derivative indices listed below.

• CDX (North America, investment-grade) Index: up from 196 to 250
• CDX (North America, high-yield) Index: up from 1,458 to 1,824
• Markit iTraxx Europe Index: up from 161 to 204
• Markit iTraxx Europe Crossover Index: up from 1,065 to 1,150
• Markit iTraxx Japan Index: up from 400 to 528
• Markit iTraxx Asia ex Japan IG Index: up from 363 to 462
• Markit iTraxx Asia ex Japan HY Index: up from 1,210 to 1,325

Next, a tag cloud of all the articles I have read during the past week. This is a way of visualizing word frequencies at a glance. Key words such as “banks”, “economy” and “markets” dominated the list, whereas “China” seems to be gaining more prominence by the week.

Having breached the November 20, 2008 and October 2002 lows, the Dow and S&P 500 have fallen significantly below their respective 50- and 200-day moving averages, as shown in the customary table summarizing important chart levels . The large deviations of the moving averages point to a massively oversold situation - almost like a spring that is stretched too far. Meanwhile, I have added the July 1996 lows to the table as these levels are now in sight of the indices.

As usual, some interesting thoughts were also contributed by Richard Russell (Dow Theory Letters): “The stock market doesn’t live in a vacuum. This huge decline in less than two years is telling us (me) something. It’s a warning. I think it’s a warning of very hard times to come, maybe as difficult as those times we saw during the Great Depression.
“I know that I stand pretty much alone with this scenario. I don’t think most Americans see or even envision the potential danger ahead. They don’t believe in the ‘truth of the stock market’. Over 60 years of studying the stock market and the economy, I’ve learned to believe the ‘language of the market’.

“I know that great bull markets and great bear markets tend to overrun at the extremes. Let me leave you with one thought - prepare for the extremes. Just as the bull market that ended in 2007 rose to the extremes, I believe this bear market will go to the extremes.”

At this juncture, short-term movements are almost impossible to predict, although the sell-off over the past few days - a capitulation in some respects - could nourish the long-awaited tradeable rally. Also, Lowry’s 90% down-days, like we experienced on Monday and Thursday, are often followed by two- to seven-day bounces. But we are not yet at the point where we leave the defeated bear’s carcass behind, although each downward move brings us closer to the eventual bottom.

For more discussion about the direction of stock markets, also see my recent posts “Video-o-rama: Gloomy investors shun risky trades“, “Technical talk: Bounce not that impressive …“, “Louise Yamada: Don’t ‘venture into the waters’” and “Stock market performance round-up: Nowhere to hide“. (And do make a point of listening to Donald Coxe’s weekly webcast, which can be accessed from the sidebar of the Investment Postcards site.)

Economy
“A pall continues to hang over global business confidence as it has since sentiment collapsed last fall. Confidence remains near a record low,” said the latest Survey of Business Confidence of the World conducted by Moody’s Economy.com. “Most worrisome is the recent collapse in pricing power - a record over one-third of respondents now say they are cutting prices for their goods and services.”

Confidence is uniformly weak across all industries and regions of the globe, as highlighted in a recent Forbes article by Nouriel Roubini (RGE Monitor): “With economic activity contracting in 2009’s first quarter at the same rate as in 2008’s fourth quarter, a nasty U-shaped recession could turn into a more severe L-shaped near-depression (or stag-deflation).

“The scale and speed of synchronized global economic contraction are really unprecedented (at least since the Great Depression), with a free fall of GDP, income, consumption, industrial production, employment, exports, imports, residential investment and, more ominously, capital expenditures around the world. And now many emerging-market economies are on the verge of a fully-fledged financial crisis, starting with emerging Europe.”

The European Central Bank’s growth projections for the Eurozone were significantly lowered from a range of -1.0% / 0.0% to a range of -3.2% / -2.2% for 2009, while for 2010 the range was revised from +0.5% / 1.5% to -0.7% / +0.7%, incorporating the possibility of an extended recession. As a result, the ECB lowered its refinance rate by 50 basis points to 1.50%, bringing its cumulative rate cuts to 275 basis points since mid-October 2008.

In an attempt to restore flagging confidence, the Bank of England also cut its target interest rates by 50 basis points to 0.5% and announced plans to start quantitative easing by printing money to purchase government bonds and other securities with an initial amount of £75 billion.

On a more positive note, China’s manufacturing Purchasing Managers’ Index (PMI) strengthened for a third consecutive month in February, climbing to 49.0% from 45.3% the previous month. As discussed in a recent post (”China - better days ahead“) and as shown in the graph below (click to enlarge), China’s improving PMI seems to indicate that the country might have seen the worst of its GDP growth statistics in this cycle. (The Hong Kong PMI is used as a proxy of the Chinese PMI prior to 2004.)

A snapshot of the week’s US economic data is provided below. (Click on the dates to see Northern Trust’s assessment of the various data releases.)

March 6
• February employment report underscores severity of recession

March 5
• Productivity decline reflects GDP revision
• Factory inventories-sales ratio registers new high
• Jobless claims - decline is noteworthy but too early to identify as a turning point

March 3
• Bernanke hints more may be necessary and notes that “premature removal of fiscal stimulus could blunt recovery”
• Auto sales decline once again
• The decline of the Pending Home Sales Index suggests home sales remain under stress

March 2
• Consumer spending gains strength in January, but underlying fundamentals raise questions
• ISM Manufacturing Survey - insignificant gain in February
• Construction spending - non-residential and public components deteriorate more
• Affordability - silver lining of housing sector

Commenting on the payroll employment data, Asha Bangalore (Northern Trust) said the statistics need to be evaluated within the context of the growth of the labor force. takes into account the growth of the labor force and indicates the extent of job losses in each recession in the post-war period from the peak of payroll employment to the end of a recession. The 3.17% drop in payroll employment in the current recession of 14 months is the largest percentage drop in jobs since the 1957 recession.”

At the same time, Bangalore said there was a silver lining in the housing market that might have been overlooked. As shown in the chart below, (click to enlarge), the Housing Affordability Index of the National Association of Realtors shot up to a record high of 166.8 in January. Also, the Obama administration has made available details of the Homeowner Affordability and Stability Plan, which raises expectations of improvement in the housing market.

Every man has a right to his opinion, but no man has a right to be wrong in his facts,” said legendary investor Bernard Baruch. Hopefully the “Words from the Wise” reviews will assist Investment Postcards readers to get the facts right, and provide some fodder for formulating sensible opinions. But remember the golden rule: don’t take investment decisions that will keep you from a good night’s sleep.

Fiction Reviews by Tom Rob Smith

noreply@blogger.com (Hell Raiser) — Mon, 09 Mar 2009 13:18:00 +0000

The Secret Speech

Set in 1956, bestseller Smith’s edgy second thriller to feature Leo Demidov (after Child 44) depicts the paranoia and instability of the Soviet Union after the newly installed Khrushchev regime leaks a “secret speech” laying out Stalin’s brutal abuses. Now working as a homicide detective, Leo has long since repudiated his days as an MGB officer, but his former colleagues, fearful of reprisals from their victims, have begun taking their own lives. Leo himself becomes the target of Fraera, the wife of a priest he imprisoned. Now the leader of a violent criminal gang, Fraera kidnaps Leo’s daughter, Zoya, and threatens to kill Zoya if Leo doesn’t liberate her husband from his gulag prison. Shifting from Moscow to Siberia and to a Hungary convulsed by revolution, this fast-paced novel is packed with too many incidents for Smith to dwell on any in great depth. Though its drama often lacks emotional resonance, this story paints a memorable portrait of post-Stalinist Russia at its dawn.

Fiction Reviews by John Hart. Minotaur

noreply@blogger.com (Hell Raiser) — Mon, 09 Mar 2009 13:17:00 +0000

The Last Child

A year after 12-year-old Alyssa Merrimon disappeared on her way home from the library in an unnamed rural North Carolina town, her twin brother, Johnny, continues to search the town, street by street, even visiting the homes of known sex offenders, in this chilling novel from Edgar-winner Hart (Down River). Det. Clyde Hunt, the lead cop on Alyssa’s case, keeps a watchful eye on Johnny and his mother, who has deteriorated since Alyssa’s abduction and her husband’s departure soon afterward. When a second girl is snatched, Johnny is even more determined to find his sister, convinced that the perpetrator is the same person who took Alyssa. But what he unearths is more sinister than anyone imagined, sending shock waves through the community and putting Johnny’s own life in danger. Despite a tendency to dip into melodrama, Hart spins an impressively layered tale of broken families and secrets that can kill. 175,000 first printing; author tour.

Fiction Reviews by Lee Child. Delacorte

noreply@blogger.com (Hell Raiser) — Mon, 09 Mar 2009 13:16:00 +0000

Gone Tomorrow: A Jack Reacher Novel

All good thriller writers know how to build suspense and keep the pages turning, but only better ones deliver tight plots as well, and only the best allow the reader to match wits with both the hero and the author. Bestseller Child does all of that in spades in his 13th Jack Reacher adventure (after Nothing to Lose). Early one morning on a nearly empty Manhattan subway car, the former army MP notices a woman passenger he suspects is a suicide bomber. The deadly result of his confronting her puts him on a trail leading back to the Soviet war in Afghanistan in the 1980s and forward to the war on terrorism. Reacher finds a bit of help among the authorities demanding answers from him, like the NYPD and the FBI, as well as threats and intimidation. And then there are the real bad guys that the old pro must track down and eliminate. Child sets things up subtly and ingeniously, then lets Reacher use both strength and guile to find his way to the exciting climax.

Fiction Reviews by Chuck Palahniuk

noreply@blogger.com (Hell Raiser) — Mon, 09 Mar 2009 13:15:00 +0000

Pygmy

Palahniuk’s 10th novel (after Snuff) is a potent if cartoonish cultural satire that succeeds despite its stridently confounding prose. A gang of adolescent terrorists trained by an unspecified totalitarian state (the boys and girls are guided by quotations attributed to Marx, Hitler, Augusto Pinochet, Idi Amin, etc.) infiltrate America as foreign exchange students. Their mission: to bring the nation to its knees through Operation Havoc, an act of mass destruction disguised as a science project. Narrated by skinny 13-year-old Pgymy, the propulsive plot deconstructs American fixtures, among them church (“religion propaganda distribution outlet”), spelling bees (“forced battle to list English alphabet letters”) and TV news reporters (“Horde scavenger feast at overflowing anus of world history”), before moving on to a Columbine-like shooting spree by a closeted kid who has fallen in love with the teenage terrorist who raped him in a shopping mall bathroom. Decoding Palahniuk’s characteristically scathing observations is a challenge, as Pygmy’s narrative voice is unbound by rules of grammar or structure (a typical sentence: “Host father mount altar so stance beside bin empty of water”), but perseverance is its own perverse reward in this singular, comic accomplishment.

Fiction Reviews by Mari Strachan

noreply@blogger.com (Hell Raiser) — Mon, 09 Mar 2009 13:14:00 +0000

The Earth Hums in B Flat

Twelve-year-old Gwenni Morgan bears witness as her family crumbles under the weight of its secrets in Strachan’s lyrical debut. In a small Welsh village swirling with secrets and gossip, few are willing to tell the truth about who they are. Gwenni soars above the local intrigue in her dreams—each night as she drifts off to sleep she flies away from her family and over the nearby fields and farms—and hopes someday to fly during the day as well. Though most, including her mother, see Gwenni’s unending curiosity as a nuisance, local schoolteacher Elin Evans nurtures Gwenni’s dreams of a different life. When Elin’s husband, Ifan, disappears, town tongues wag, and when his body is found, Gwenni’s mother mourns him more than seems proper. Strachan ramps up the tension, as Gwenni is caught between loyalties and learns some damning family secrets. The author’s light touch keeps the story unfamiliar and surprising, while Gwenni’s über-precocious narration revels in a love for language and reveals an unspoiled innocence about the world. It’s small, quiet and nicely done.

Fiction Reviews by Kate Christenen

noreply@blogger.com (Hell Raiser) — Mon, 09 Mar 2009 13:13:00 +0000

Trouble
Christensen follows The Great Man with this slightly lesser work, a coming-of-middle-age novel that explores the sexual lives of three women in their 40s. Best friends since their college days, trust-funder Indrani, therapist Josie and L.A. rocker Raquel are like three very different but close sisters. After flirting with a man at a New York party, Josie realizes that she is sexually starving and decides to leave her husband, though Indrani thinks it’s a terrible move. Meanwhile, on the left coast, the nearly washed-up ex-junkie Raquel becomes embroiled in a scandal when she’s smeared as the other woman to a young actor with a pregnant girlfriend. Raquel hightails it to Mexico City and begs a less than-reluctant Josie to join her. From here the novel takes a predictable route as the women drink their way across the city, Raquel spirals further out of control, and Josie’s inner vixen is awakened. The novel loses some of its mojo in the location change—Mexico City seems just out of focus—but the characters are marvelously realized, and when Christensen’s on a roll, her wit is irresistible.

Fiction Reviews By Beth Harbison. St. Martin’s,

noreply@blogger.com (Hell Raiser) — Mon, 09 Mar 2009 13:12:00 +0000

Hope in a Jar

Harbison (Secrets of a Shoe Addict) pushes a thin plot to its word-count limits in her latest confection, the tale of two former friends who reconnect at their 20th high school reunion. When Allie Denty—tall, blonde and, these days, just a bit heavy—discovers her boyfriend in the sack with another woman, her primary coping mechanism involves a credit card and the Sephora counter. Allie figures that some Dior lashes will help her feel more confident at her reunion—an event that the lovely, formerly mousy Olivia Pelham has no intention of attending until her mother shows up on her doorstep, licking her wounds from a breakup with husband number five. At the reunion, Allie and Olivia have an awkward meeting and go their separate ways until Allie learns that a mutual friend plans to marry a cosmetically enhanced Mean Girl from their class. It’s “life makeover” time for both women, as they get in touch with their true feelings about beauty, careers and, most importantly, love. Like the face cream from which it takes its title, this is slick, light and indulgent.

Fiction Reviews By Ward Just. Houghton Mifflin Harcourt

noreply@blogger.com (Hell Raiser) — Mon, 09 Mar 2009 13:09:00 +0000

Exiles in the Garden

Few if any novelists have captured Washington politics with the astute insights of Just, who here casts his dispassionate eye on a man who comes to question whether one can achieve a well-lived life on the outskirts of political action. Born and bred to the political arena, Alec Malone, son of a powerhouse U.S. senator, becomes an outsider twice removed, first by choosing photography as his profession and then by turning down an assignment in Vietnam. Content with his wife Lucia, the daughter of a Czech refugee, Alec dislikes the neighborhood cocktail parties, where a cosmopolitan mix of émigrés and exiles makes Lucia aware of the cultural chasm running through her marriage. Alec is devastated when she leaves him and bemused when, much later, his daughter follows in Senator Malone’s footsteps, though it’s the sudden appearance of Lucia’s long-lost father that provokes Alec to question the meaning of an existence that has avoided the barricades. Just writes with confidence and authority as he works through larger themes of politics, history, war and historical judgment. This intellectually rigorous narrative is absorbing, timely and very Washington.