Came across this post in bbc.com which explains all the complex jargon's of the Financial world. Useful for laymen to understand the terminologies they across business news pages
GM - Some Interesting Facts
GM lost $31 billion in 2008, taking its total losses to $82 billionin the past four years.
A bankruptcy filing by General Motors would rank as the third-largest bankruptcy in U.S. history and one of the largest and most complex manufacturing bankruptcies ever.
GM's brands include Chevrolet, Cadillac, Buick, GMC, Saab, Saturn, Hummer and Pontiac.
GM had 243,000 employees as of December 2008 -- 170,000 hourly and 73,000 salaried. About 54,000 workers are U.S. factory workers represented by the United Auto Workers union.
GM's purchasing budget runs to about $94 billion annually. It works with about 3,200 suppliers who supply more than 160,000 parts
Source : http://www.cnbc.com/id/31003493
Week End Reading -- 31.5.09
The world Economy, Should you be over excited about the recent stock market rally and positive news, Good read at economist.com
World Bank President Warns Stimulus ‘Sugar High’ Won’t Stem Unemployment
Bloomberg -- World Bank President Robert Zoellick warned policy makers that fiscal-stimulus plans are insufficient to turn around the “real economy” and rising joblessness threatens to set off political unrest across the globe 
“While the stimulus has given an impulse, it’s like a sugar high unless you eventually get the credit system working,” Zoellick said in an interview yesterday with Bloomberg Television’s “Political Capital with Al Hunt.” “When unemployment increases, that’s probably the most political combustible issue.”
Zoellick’s caution is a contrast with private economists, who are raising their outlooks for growth from India to China as stimulus measures take effect. The biggest developed and emerging nations have committed spending increases and tax cuts totaling 2 percent of their combined economies, a level the International Monetary Fund recommended to end the recession.
Performance of US Indices for 2009
| Index | Last | May 29th % Change | 1 Week % Change | MTD % Change | YTD % Change |
| Dow | 8500.33 | 1.15% | 2.69% | 4.07% | -3.15% |
| NASDAQ | 1774.33 | 1.29% | 4.87% | 3.32% | 12.51% |
| S&P 500 | 919.14 | 1.36% | 3.62% | 5.31% | 1.76% |
| Russell 2000 | 501.58 | 1.90% | 5.02% | 2.88% | 0.43% |
| CBOE VIX | 28.96 | -8.56% | -11.25% | -20.66% | -27.60% |
US Economy shrinks at 5.7% rate
The U.S. economy shrank at an annual pace of 5.7% in the first quarter, a less severe drop than initially reported but still the second-biggest quarterly decline in 27 years, the government said Friday.
Economists expect a drop in gross domestic product this quarter as well, although not as sharp as in the first three months of the year.
Last month, the government initially reported that gross domestic product -- the broadest measure of the nation's economic activity -- fell at an annual rate of 6.1%.
The revision fell short of economists' expectations of a 5.5% drop, according to a consensus estimate from Briefing.com.
The first quarter of 2009 marked the third quarter in a row that the economy has contracted. It was the second worst drop in the measure since the early 1980s -- behind only the fourth quarter of 2008, when GDP plunged at an annual pace of 6.3%.
more at : cnnmoney.com
The Decopling theory - Revisited
A couple of years ago when the markets were sky rocketing one theory that was doing rounds frequently were the De-coupling theory. Believers of the theory argued that the Emerging Economies including the BRIC (Brazil, Russia, India, and China) nations were beginning to decouple from the Developed world. The argument put forward by them was that the emerging economies were in a different lane of growth driven by local consumption and Inclusive growth. The theory was doing fine until the subprime bubble burst in the US and their economy began to falter.
In 2008 Major economies like US, UK, France, Japan & Germany saw a nose dive in their growth rate as a consequence of Subprime bubble that burst in the US. During the course of the crisis the credit markets froze due to large scale bankruptcies of some investments banks and panic began to spread across the world markets resulting in a big plunge only to prove a point that the world economies were more intertwined than ever before with the troubled banks having their wings spread in investments across the globe. It was the markets of the Emerging economies that took a bigger hit than of developed ones. Brazil and Russia are more of commodity driven markets. As the recession became severe and demand for consumption began to fall, Russian markets took a big knock losing 70% of its value. China and India saw a significant slowdown in their growth rates and huge outflows of investments. After this chaos in 2008 the Decoupling theory was shelved and no one really talked about it thereafter.
Performance of Stock markets in 2008
United States -38%
Japan -42%
France -42%
India -52%
China -65%
Russia -72%
Now after nearly 16 months since the recession began in the US and when there are some signs of a turnaround in the economy the arguments of Decoupling theory is making a comeback. As the Credit markets have eased and the Stimulus packages are showing effects, In the first 3-4 months of 2009 emerging economies like china have began to show some signs of revival of growth, although it would be a bit too optimistic to call it a complete turnaround. The developed world even in optimistic estimates will take a few more quarters to get back to growing ways, however the emerging economies like India & china could stabilize and recover much sooner given that the governments & central banks take proactive measures in the wake any further significant negative macro factors or any big scale bankruptcies of institutions in US or Europe.
From India’s perspective the formation of UPA lead government turned out to be a huge positive, the markets rejoiced with a massive rally. The Government now has an opportunity to hasten the long standing economic reforms which could put India back to its rapid growth trajectory. For now the idea of decoupling theory will live on, however it cannot be concluded that the current uptick in the emerging economies could be sustained forever given the fact how fluid times are. It’s yet to be seen if the recent positive data points or the “Green shoots” are indeed real recovery and not false signals or “weeds” that appear often during prolonged periods of severe recessions.
Sathya Prakash
In 2008 Major economies like US, UK, France, Japan & Germany saw a nose dive in their growth rate as a consequence of Subprime bubble that burst in the US. During the course of the crisis the credit markets froze due to large scale bankruptcies of some investments banks and panic began to spread across the world markets resulting in a big plunge only to prove a point that the world economies were more intertwined than ever before with the troubled banks having their wings spread in investments across the globe. It was the markets of the Emerging economies that took a bigger hit than of developed ones. Brazil and Russia are more of commodity driven markets. As the recession became severe and demand for consumption began to fall, Russian markets took a big knock losing 70% of its value. China and India saw a significant slowdown in their growth rates and huge outflows of investments. After this chaos in 2008 the Decoupling theory was shelved and no one really talked about it thereafter.
Performance of Stock markets in 2008
United States -38%
Japan -42%
France -42%
India -52%
China -65%
Russia -72%
Now after nearly 16 months since the recession began in the US and when there are some signs of a turnaround in the economy the arguments of Decoupling theory is making a comeback. As the Credit markets have eased and the Stimulus packages are showing effects, In the first 3-4 months of 2009 emerging economies like china have began to show some signs of revival of growth, although it would be a bit too optimistic to call it a complete turnaround. The developed world even in optimistic estimates will take a few more quarters to get back to growing ways, however the emerging economies like India & china could stabilize and recover much sooner given that the governments & central banks take proactive measures in the wake any further significant negative macro factors or any big scale bankruptcies of institutions in US or Europe.
From India’s perspective the formation of UPA lead government turned out to be a huge positive, the markets rejoiced with a massive rally. The Government now has an opportunity to hasten the long standing economic reforms which could put India back to its rapid growth trajectory. For now the idea of decoupling theory will live on, however it cannot be concluded that the current uptick in the emerging economies could be sustained forever given the fact how fluid times are. It’s yet to be seen if the recent positive data points or the “Green shoots” are indeed real recovery and not false signals or “weeds” that appear often during prolonged periods of severe recessions.
Sathya Prakash
RBI: Global Rally Not Sign of Economic Revival
The surge in global stock prices, including Indian shares, in recent months doesn't signal an economic recovery is around the corner, Reserve Bank of India Deputy Governor Rakesh Mohan said, indicating the central bank will take into account a broad range of signals before moving to rein in its easy monetary policy.
The RBI's government bond buyback program - part of its money market operations aimed at helping the market absorb the heavy debt issuance by the fiscally-strapped government - doesn't pose an inflationary threat, Mr. Mohan also said in a recent interview with Dow Jones Newswires.
The RBI's government bond buyback program - part of its money market operations aimed at helping the market absorb the heavy debt issuance by the fiscally-strapped government - doesn't pose an inflationary threat, Mr. Mohan also said in a recent interview with Dow Jones Newswires.
"We (RBI) look at multiple indicators and act with multiple instruments - we look at financial markets, industrial production, GDP growth, agricultural production, monsoon, bond markets," Mr. Mohan said.
"On one hand, our open market operation program is being done to help the government borrowing and on other hand, it is totally consistent with our monetary program in terms of expectation of GDP growth. It is non-inflation generating. We are not doing (balance sheet) expansion beyond that."
Since mid-September when the global financial crisis deepened, the RBI has flooded money markets with liquidity by cutting interest rates, lowering reserve ratios and, in late March, announcing a program to repurchase government bonds, an effort to support fiscal stimulus aimed at curbing a slowdown in economic growth. A drop in global crude oil prices late last year has helped pull down inflation to near zero levels, giving the RBI more room to ease monetary policy.
From : wsj.com
News Today - May 27
* General Motors has fallen far short of the bondholder support it needed for its proposed debt-for-stock offer, according to a source familiar with the matter, virtually guaranteeing that the nation's largest automaker will be forced to file for bankruptcy court protection within the week. full story
* North Korea reportedly restarts a nuclear reprocessing facility to produce plutonium and launches another missile into the Sea of Japan
* Japan reports another sharp fall in exports for April, though the drop is smaller than the previous month’s, showing signs of a possible bottoming.
* The home price slide accelerated during the first three months of 2009, according to a report issued Tuesday. The S&P/Case-Shiller National Home Price index, a bellwether of real-estate market direction, plunged a record 19.1% during the quarter compared with the first three months of 2008. That followed an 18.2% drop last quarter.
* A reading on U.S. consumer sentiment jumps to 54.9 in May from an upwardly revised 40.8 in April as expectations for jobs improves.
* Softening of real estate prices have proved to be a blessing for Wal-Mart India and the company is now planning to accelerate the opening up of up to 15 stores in the country within three years, instead of seven as planned earlier.
* Oil prices climbed on Tuesday to a new six-month high as traders viewed a jump in US consumer confidence as a signal for an economic rebound.
* North Korea reportedly restarts a nuclear reprocessing facility to produce plutonium and launches another missile into the Sea of Japan
* Japan reports another sharp fall in exports for April, though the drop is smaller than the previous month’s, showing signs of a possible bottoming.
* The home price slide accelerated during the first three months of 2009, according to a report issued Tuesday. The S&P/Case-Shiller National Home Price index, a bellwether of real-estate market direction, plunged a record 19.1% during the quarter compared with the first three months of 2008. That followed an 18.2% drop last quarter.
* A reading on U.S. consumer sentiment jumps to 54.9 in May from an upwardly revised 40.8 in April as expectations for jobs improves.
* Softening of real estate prices have proved to be a blessing for Wal-Mart India and the company is now planning to accelerate the opening up of up to 15 stores in the country within three years, instead of seven as planned earlier.
* Oil prices climbed on Tuesday to a new six-month high as traders viewed a jump in US consumer confidence as a signal for an economic rebound.
News Today - May 25
* The nearly three-month-old rally in U.S. stocks will square off against possible a General Motors bankruptcy and new housing data during the holiday-shortened week.
* German Economic Minister Karl Theodor zu Guttenberg says a trio of bids for General Motor's Opel division remain financially risky for the German government.
* PetroChina strikes a deal to acquire almost half of refiner Singapore Petroleum for about $1 billion and may soon buy the whole company.
* British Airways posted the airline's worst annual loss since its privatization in 1987 as its chief executive declared there were "absolutely no signs of recovery" in the industry.
* Satyam may sack 7,500-8,000 non-billable staff from June.
* South Korean officials detect an 'artificial earthquake' in North Korea, believed to be a fresh nuclear weapons test, reports say.
* Thailand's economy shrank 1.9% during the first quarter of the year, with the result 7.1% lower than the year-ago period, data from the National Economic & Social Development Board showed.
* German Economic Minister Karl Theodor zu Guttenberg says a trio of bids for General Motor's Opel division remain financially risky for the German government.
* PetroChina strikes a deal to acquire almost half of refiner Singapore Petroleum for about $1 billion and may soon buy the whole company.
* British Airways posted the airline's worst annual loss since its privatization in 1987 as its chief executive declared there were "absolutely no signs of recovery" in the industry.
* Satyam may sack 7,500-8,000 non-billable staff from June.
* South Korean officials detect an 'artificial earthquake' in North Korea, believed to be a fresh nuclear weapons test, reports say.
* Thailand's economy shrank 1.9% during the first quarter of the year, with the result 7.1% lower than the year-ago period, data from the National Economic & Social Development Board showed.
Jim Rogers Prefers China, Sri Lanka to India for Investment
May 21 (Bloomberg) - China and Sri Lanka are better investment opportunities than India even after the Congress party’s biggest election victory in two decades, investor Jim Rogers said.
India’s benchmark Sensitive Index, or Sensex, jumped a record 17 percent on May 18, causing a trading halt, on speculation Prime Minister Manmohan Singh’s victory will enable him to accelerate economic reforms.
“I’ve heard the same thing for the last 30 years,” Rogers told an Economist Conferences forum in Singapore today, saying he’s skeptical of Singh’s pledges. Still, India will be “the next great investment” if Singh sticks to his commitments, Rogers said.
This week’s gains drove the Sensex to a 42 percent advance for 2009 to date, in line with the Shanghai Composite Index’s 43 percent climb on optimism China’s 4 trillion yuan ($586 billion) stimulus plan will bolster the economy. Sri Lanka’s Colombo All- Share Index jumped to a seven-month high today as the central bank raised its forecast for economic growth following the end of a 26-year civil war.
“You’ve got the wind in your face doing business in India, you’ve got the wind in your back in China,” Rogers said, adding that he sees “great, cheap” opportunities in Sri Lanka because of “dramatic” changes in the country after the end of the war.
More at : bloomberg.com
Green shoots of economic recovery - A macro perspective
Over the last 10 weeks the stock markets have had a phenomenal run up with indices around the world gaining over 30-40% from the lows they made in early march. The rally was triggered by a string of positive news from the US markets & economy termed by Fed chairman Bernanke as the "Green shoots of economic recovery". Some of the leading Indicators that gauge the health of the US economy had shown signs of revival or were slowing down in their rapidity of fall. As all world markets including our Indian markets are following the trend of US & global cues it becomes increasingly important to keep an eye on these developments. Let us first examine the indicators that are showing positive trend.
The Baltic Dry Index:
Baltic dry index is believed to be one of the purest indicators that reflect the state of the world trade. In simple terms it shows the shipping activity happening around the world. So in a way it directly shows the state of of the supply - demand scenario as shipping is the main means of transporting raw materials in global trade.
On 20 May 2008 the index reached its record high level of 11,793 points. Six months later during the height of the economic collapse, on 5 December 2008, the index had dropped by 94%, to 663 points. The index has now recovered and is trading around 2000 levels, which indicates some sort of recovery in the global slump.
LIBOR RATES :
The London Interbank Offered Rate or Libor rate is the rate at which banks lend money to one another. Libor rates give indication of credit flow in the financial system. During the collapse of Lehman Bros the credit markets literally froze and lending almost came to a halt. As central banks around the world took measures to ease liquidity, the libor rates began to thaw. In May the 3 month Libor fell below 1%, clearing signs of credit markets returning to normalcy.
TED SPREADS:
The TED spread is the difference between the 3 month libor rate and 3 month US Treasury bill rate (T-Bills). The TED spread indicates risk and liquidity premiums of the market. During the subprime crisis the TED spread spiked to 150-200 bps. In Sep-Oct 2008, it reached an extreme level of 300-400 bps. Recently the rates have subsided to sub 100 bps levels, again an indication of better liquidity conditions in the markets.
THE VIX (Volatility Index):
The US VIX is widely used as an indicator to judge the market sentiment. It shows the market participants' greed or conviction with the markets. The VIX shot up to 80 levels during the Oct - Nov 2008 when Lehman and AIG were in trouble. Recently the VIX has managed to break below its 200 DMA, signs that market participants are less fearful.
U.S - ECONOMIC INDICATORS:
Some of the economic indicators including the consumer sentiment posted a slight increase in March and improved considerably in April , the index now stood at 39.2 , up from 26.9 in March . A key measure of manufacturing activity, the manufacturing index rose to a reading of 40.1 in April from 36.3 in March , fourth straight gain in last 4 months . Also easing deflationary concerns brought some confidence that the worst of the down turns may be behind us. There is some small revival is US housing markets, but it is too early to call it a reversal of any sort. The recent quarter earnings were better than street expectations and analysts say that the current market levels reflect fair value for the markets.
It is clear that the down turn of the economy is easing and some economists believe that growth would return as early as in the 3rd quarter. According to Federal Reserve estimates they expect the US economy to grow by 2% next year. However there are some contrary signals as well.
Let us have a look at some data that continue to show negative trend.
The US unemployment rate: Recent data shows that the US unemployment rate has shot to 8.9%, highest level in 25 years. The economy is continuing to lose jobs and there are very little signs of easing in the job market. It is expected to hit double digits by end of 2009 or in early 2010. The most recent jobs data shows that jobless claims continue to rise.
Housing starts: Housing starts are down by more than 70% from its peak. The subprime issue started with the housing market and it needs to stabilize for any sustainable recovery.
Auto Industry & Banks: The US auto industry is continuing to collapse, auto sales are down by 40%, large automakers are either bankrupt or at the verge of bankruptcy. The stress test conducted on big banks by the US treasury caused some positive noises, but it appears more likely to be an reverse engineered exercise whose worst case scenario assumptions are more are less existent now itself. Also it needs to be seen if banks can continue to post better results in coming quarters.
Retails sales: Retail sales that comprise of 2/3rd of consumption painted a disappointing picture. The recent retail sales number shows a slip of 0.4% after falling by 1.3% in March.
It is evident that there are some positive signs emerging as the billions of dollars of stimulus money pumped by governments around the world is working its way through the economy. But the question remains whether the recovery could be sustainable. Although for Indian markets the election results came out as a huge positive boost, in terms of macro factors it is advisable to stay cautious once markets surge to higher valuations.
By prakash , Mail : sharemarketidea@yahoo.com
News Today - May 22
* The Obama administration announced that it has invested $7.5 billion in GMAC, aiming to prop up the troubled lender and boost its ability to make loans to Chrysler dealers and customers. full story
* Britain may lose its AAA credit rating for the first time as government finances deteriorate in the worst recession since World War II. Standard & Poor’s lowered its outlook on Britain to “negative” from “stable” and said the nation faces a one in three chance of a ratings cut as debt approaches 100% of gross domestic product.
* Stocks closed sharply lower Thursday as optimism about a global economic recovery was tempered by mixed data and a potential downgrade of the United Kingdom's credit rating.
* The Japanese yen touches its highest level in two months against the U.S. dollar after an official statement that the government won't intervene in the foreign-exchange market.
* TED spreads , One of the most popular barometers for the credit crunch has fallen to July 2007 levels, as one of the bear-market triggers dissipates.
* The Bank of Japan, for the first time in nearly three years, acknowledged Friday that there are signs of improvement in the economy. "The pace of deterioration in economic conditions is likely to moderate gradually, leading to a leveling out of the economy," the central bank's board members said at the conclusion of a two-day meeting. Members, as expected, said they will also keep policy rates unchanged at 0.1%.
* The US government is readying to steer General Motors into bankruptcy with a plan to fund the ailing automaker with tens of billions of dollars in extra public financing, media reports said on Thursday.
* Britain may lose its AAA credit rating for the first time as government finances deteriorate in the worst recession since World War II. Standard & Poor’s lowered its outlook on Britain to “negative” from “stable” and said the nation faces a one in three chance of a ratings cut as debt approaches 100% of gross domestic product.
* Stocks closed sharply lower Thursday as optimism about a global economic recovery was tempered by mixed data and a potential downgrade of the United Kingdom's credit rating.
* The Japanese yen touches its highest level in two months against the U.S. dollar after an official statement that the government won't intervene in the foreign-exchange market.
* TED spreads , One of the most popular barometers for the credit crunch has fallen to July 2007 levels, as one of the bear-market triggers dissipates.
* The Bank of Japan, for the first time in nearly three years, acknowledged Friday that there are signs of improvement in the economy. "The pace of deterioration in economic conditions is likely to moderate gradually, leading to a leveling out of the economy," the central bank's board members said at the conclusion of a two-day meeting. Members, as expected, said they will also keep policy rates unchanged at 0.1%.
* The US government is readying to steer General Motors into bankruptcy with a plan to fund the ailing automaker with tens of billions of dollars in extra public financing, media reports said on Thursday.
World Economies Plummet
Steep declines in the economies of three of the U.S.'s biggest trading partners -- Mexico, Japan and Germany -- underscored the severity of the global recession and put pressure on major industrialized nations to revive moribund global trade talks.
On Wednesday, Mexico became the latest country to report a plunge in output. The country's gross domestic product fell at an annualized rate of 21.5% in the first quarter, the worst performance since the 1995 peso crisis led to an International Monetary Fund and U.S. Treasury financial rescue. This time, Mexico has insulated itself somewhat by arranging a $47 billion IMF credit line in advance.
More at : wsj.com
News Today - May 21
* The Federal Reserve's latest forecasts for the U.S. economy are gloomier than the ones released three months earlier, with an expectation for higher unemployment and a steeper drop in economic activity. full story
*Central bank now expects unemployment to rise to a range of 9.2% to 9.6% this year. Fed also predicts a sharper decline in GDP than it had forecast in January.
* Japanese corporate giant Sony plans to cut ties with more than half of its suppliers by the end of 2010, a move that could save it at least $5.3 billion, a report says
* Oil prices hit a six-month high on Wednesday, climbing above $62 a barrel after a government report showed a drop in US oil supplies for the second straight week.
* According to the latest data shared by the US treasury department, India’s outstanding exposure to US government bonds rose from $18.3 billion in October ‘08 to $38.2 billion in March ‘09. The latest tranche of investment into treasuries has made India the fourth-largest creditor to the US after China, Japan and Russia during this period.
* The Japanese yen strengthened against major global currencies Thursday on increased risk aversion after an overnight fall on Wall Street. The gains came after the minutes of a U.S. Federal Reserve meeting showed some members favored more puchases of long-term Treasurys and mortgage-related debt. The U.S. dollar fell in early Asian trading, hitting an early intraday low of 94.34 yen, reportedly the weakest in two months.
*Central bank now expects unemployment to rise to a range of 9.2% to 9.6% this year. Fed also predicts a sharper decline in GDP than it had forecast in January.
* Japanese corporate giant Sony plans to cut ties with more than half of its suppliers by the end of 2010, a move that could save it at least $5.3 billion, a report says
* Oil prices hit a six-month high on Wednesday, climbing above $62 a barrel after a government report showed a drop in US oil supplies for the second straight week.
* According to the latest data shared by the US treasury department, India’s outstanding exposure to US government bonds rose from $18.3 billion in October ‘08 to $38.2 billion in March ‘09. The latest tranche of investment into treasuries has made India the fourth-largest creditor to the US after China, Japan and Russia during this period.
* The Japanese yen strengthened against major global currencies Thursday on increased risk aversion after an overnight fall on Wall Street. The gains came after the minutes of a U.S. Federal Reserve meeting showed some members favored more puchases of long-term Treasurys and mortgage-related debt. The U.S. dollar fell in early Asian trading, hitting an early intraday low of 94.34 yen, reportedly the weakest in two months.
Geithner says US banks are healing
U.S. Treasury Secretary Timothy Geithner said Wednesday the Obama administration's was making headway in settling financial markets and said a program to cleanse so-called toxic assets from banks' balance sheets will start operating over the next six weeks
Testifying to the Senate Banking Committee, Geithner said the U.S. financial system was "starting to heal" after a period of severe trauma, and he estimated that $123.7 billion was left in a financial bailout fund approved by Congress in October.
Testifying to the Senate Banking Committee, Geithner said the U.S. financial system was "starting to heal" after a period of severe trauma, and he estimated that $123.7 billion was left in a financial bailout fund approved by Congress in October.
But in opening remarks, the top Republican on the panel, Sen. Richard Shelby of Alabama, said there had been "a massive waste of taxpayer dollars" because there was no clear strategy for deploying hundreds of billions of dollars in rescue funds.
Geithner said financial companies were adjusting their operations in ways that will make them less vulnerable to shocks like the one they have gone through
"Leverage has declined, the most vulnerable parts of the non-bank financial system no longer pose the same risk, and banks are funding themselves more conservatively," he said.
More at : cnbc.com
Jim Rogers : Market to make a new bottom
The stock market may hit new lows this year or the next as the current rally has been largely caused by the money printed by central banks and fundamental problems remain unsolved, legendary investor Jim Rogers told CNBC Wednesday.
His views echo those of renowned bear Marc Faber, who told CNBC last week that the rises in share prices did not mean the world was embarking on a path of sustainable economic growth.
His views echo those of renowned bear Marc Faber, who told CNBC last week that the rises in share prices did not mean the world was embarking on a path of sustainable economic growth.
"I'm not buying shares if that's what you mean. Not at all," Rogers told "Squawk Box Asia.""The bottom will probably come later this year, next year, who knows when," he added.
Governments have not solved the essential problems that caused the crisis but instead they "flooded the world with money," according to Rogers.
Trying to solve the problem of too much consumption and too much debt with more consumption "defies belief" and will not work, he said.
News Today - May 19
* Wall Street rallies after positive news about the U.S. housing market, including an upbeat profit forecast from Lowe's, as well as an upgrade of Bank of America, encouraged investors to step back into the market after last week's selloff. full story
* With signs that China’s massive economic stimulus plan is beginning to take hold, some strategists are suggesting that investors focus on a country that is already bolstering global markets.
* The Obama administration plans to combine California’s tough new auto-emissions rules with existing fuel economy limits to create a single new national standard.
* Commercial real-estate loans could generate losses of $100 billion by the end of next year at over 900 small and midsize U.S. banks if economic woes deepen, according to a Wall Street Journal analysis.
* Goldman Sachs, Morgan Stanley and other banks have applied to repay billions of dollars they borrowed under the U.S. government's Troubled Asset Relief Program, sources familiar with the situation said.
* The rupee surged over three percent on Monday, posting its biggest gain in more than 11 years on hopes of reforms and renewed capital flows from foreign funds after the ruling UPA coalition got a decisive mandate back to power.
* With signs that China’s massive economic stimulus plan is beginning to take hold, some strategists are suggesting that investors focus on a country that is already bolstering global markets.
* The Obama administration plans to combine California’s tough new auto-emissions rules with existing fuel economy limits to create a single new national standard.
* Commercial real-estate loans could generate losses of $100 billion by the end of next year at over 900 small and midsize U.S. banks if economic woes deepen, according to a Wall Street Journal analysis.
* Goldman Sachs, Morgan Stanley and other banks have applied to repay billions of dollars they borrowed under the U.S. government's Troubled Asset Relief Program, sources familiar with the situation said.
* The rupee surged over three percent on Monday, posting its biggest gain in more than 11 years on hopes of reforms and renewed capital flows from foreign funds after the ruling UPA coalition got a decisive mandate back to power.
Golden Day For Indian Stock Markets !
India's main stock index leapt more than 17 percent on Monday for its biggest single-day gain in almost two decades, after the ruling coalition sealed a decisive election victory that calmed fears of political uncertainty.
The rupee soared more than 3 percent to five-month highs against the dollar, its best one-day rise in more than a decade, and bond yields fell as the win boosted hopes a strong coalition, would be able to push through economic reforms that would boost foreign investment.
A strong coalition, free of the pressures from its former communist partners, has boosted the prospect of reforms to encourage growth in Asia's third-largest economy, analysts said.
The rupee soared more than 3 percent to five-month highs against the dollar, its best one-day rise in more than a decade, and bond yields fell as the win boosted hopes a strong coalition, would be able to push through economic reforms that would boost foreign investment.
A strong coalition, free of the pressures from its former communist partners, has boosted the prospect of reforms to encourage growth in Asia's third-largest economy, analysts said.
Investors cheered the victory by sending the market up nearly 15 percent within seconds of opening, triggering circuit breakers that halted trade for two hours.
A final circuit breaker was set off almost immediately after trading resumed, halting trade for the rest of the day. But overall volume was light at just 13.3 million shares, against a daily average of 400 million in 2009.
News Today - May 18
* Indian Financial markets are set to gain on election outcome that will strengthen the hand of the ruling Congress party.
* As top government and business leaders wrapped up a weekend forum on the Middle East, all eyes were moving toward Washington to restart the stalled Arab-Israeli peace process that many say lies at the heart of political and economic instability in the region. full story
* Europe experienced its worst quarterly drop in GDP in the first three months of the year, shedding 2.5 percent as German exports tumbled and investment plummeted across the 27-country bloc.
* The US economy is no longer in "free-fall" but is not out of the woods yet, White House budget overseer Peter Orszag said. "I think what happened is the free-fall in the economy seems to have stopped," Orszag, director of President Barack Obama's Office of Management and Budget, told CNN.
* US credit card defaults rose in April to record highs, with Citigroup and Wells Fargo posting double digit loss rates, as the recession slashed more than 2 million jobs since the beginning of the year.
* A regulatory filing shows the Berkshire Hathaway chairman expanded his company’s holdings in wells fargo during the first quarter as its shares swooned.
* As top government and business leaders wrapped up a weekend forum on the Middle East, all eyes were moving toward Washington to restart the stalled Arab-Israeli peace process that many say lies at the heart of political and economic instability in the region. full story
* Europe experienced its worst quarterly drop in GDP in the first three months of the year, shedding 2.5 percent as German exports tumbled and investment plummeted across the 27-country bloc.
* The US economy is no longer in "free-fall" but is not out of the woods yet, White House budget overseer Peter Orszag said. "I think what happened is the free-fall in the economy seems to have stopped," Orszag, director of President Barack Obama's Office of Management and Budget, told CNN.
* US credit card defaults rose in April to record highs, with Citigroup and Wells Fargo posting double digit loss rates, as the recession slashed more than 2 million jobs since the beginning of the year.
* A regulatory filing shows the Berkshire Hathaway chairman expanded his company’s holdings in wells fargo during the first quarter as its shares swooned.
Euro Zone Sinking into a deep hole
From Economist.com :
The euro area is falling into such a deep hole that the recovery, when it eventually comes, will be a long, hard journey. Figures released on Friday May 15th showed that GDP in the 16-country currency zone fell by 2.5% in the first quarter, an annualised rate of some 10%, far worse than many analysts had feared. Germany, the largest economy in the group, fell even harder: its GDP shrank by 3.8% in the three months to March and has plunged by almost 7% since its recession began a year ago. Italy’s GDP fell by 2.4% in the quarter; Spain’s by 1.8%. The 1.2% fall in France, large by any normal standards, almost counts as a boom.
The figures confirmed that the euro zone has been hit far harder by the global downturn than its rich-world peers (and largest export markets) in America and Britain. When spending in these countries dried up, because of scarce credit, they exported some of the pain to their suppliers. For that reason Germany has so far paid a higher price for its reliance on exports than the Anglo-Saxon countries have borne for their dependence on credit and rising house prices. Since the collapse of Lehman Brothers in September, export-led manufacturers have been hit hardest. For example Slovakia, the euro zone’s newest member (it joined in January), saw its GDP crash by 11.2% in the first quarter. Its economy leans heavily on carmaking and its loss has been far more severe even than in Germany.
Continue reading : economist.com
The euro area is falling into such a deep hole that the recovery, when it eventually comes, will be a long, hard journey. Figures released on Friday May 15th showed that GDP in the 16-country currency zone fell by 2.5% in the first quarter, an annualised rate of some 10%, far worse than many analysts had feared. Germany, the largest economy in the group, fell even harder: its GDP shrank by 3.8% in the three months to March and has plunged by almost 7% since its recession began a year ago. Italy’s GDP fell by 2.4% in the quarter; Spain’s by 1.8%. The 1.2% fall in France, large by any normal standards, almost counts as a boom.
The figures confirmed that the euro zone has been hit far harder by the global downturn than its rich-world peers (and largest export markets) in America and Britain. When spending in these countries dried up, because of scarce credit, they exported some of the pain to their suppliers. For that reason Germany has so far paid a higher price for its reliance on exports than the Anglo-Saxon countries have borne for their dependence on credit and rising house prices. Since the collapse of Lehman Brothers in September, export-led manufacturers have been hit hardest. For example Slovakia, the euro zone’s newest member (it joined in January), saw its GDP crash by 11.2% in the first quarter. Its economy leans heavily on carmaking and its loss has been far more severe even than in Germany.
Continue reading : economist.com
News Today - May 15
* Chrysler is closing 789 dealerships, or roughly 25 percent of the current number, according to a plan filed in bankruptcy court today. CNNMoney reports that Chrysler had 3,181 dealers at the time of its April 30 bankruptcy court filing. "I feel like I'm on death row," said Aaron Beecher, whose dealership near New York is on the list to be cut. full story
* Japan’s much-watched core machinery orders fall in March, reversing an expansion in the previous month though by a less-than-expected margin, while wholesale prices post a sharp April drop.
* The Sony Corp. announced net losses of $1 billion for the fiscal year ending March 31, ending a year in the red for the first time in 14 years.The company announced plans to reduce plants worldwide to 49 from 57, including four factories in Japan.
* General Motors said Thursday night, it would most likely pursue the same legal strategy as Chrysler if it spirals into bankruptcy, while Chrysler unveiled details for slashing its dealer network.
* New jobless claims rose more than expected last week due partly to an increase in layoffs by the automobile industry, while the number of people continuing to receive unemployment benefits set a record for the 15th straight week. The Labor Department said on Thursday that the number of new claims rose to a seasonally adjusted 637,000, from a revised 605,000 in the previous week. That's above analysts' expectations of 610,000.
* Japan’s much-watched core machinery orders fall in March, reversing an expansion in the previous month though by a less-than-expected margin, while wholesale prices post a sharp April drop.
* The Sony Corp. announced net losses of $1 billion for the fiscal year ending March 31, ending a year in the red for the first time in 14 years.The company announced plans to reduce plants worldwide to 49 from 57, including four factories in Japan.
* General Motors said Thursday night, it would most likely pursue the same legal strategy as Chrysler if it spirals into bankruptcy, while Chrysler unveiled details for slashing its dealer network.
* New jobless claims rose more than expected last week due partly to an increase in layoffs by the automobile industry, while the number of people continuing to receive unemployment benefits set a record for the 15th straight week. The Labor Department said on Thursday that the number of new claims rose to a seasonally adjusted 637,000, from a revised 605,000 in the previous week. That's above analysts' expectations of 610,000.
Bank of England Warns of ‘Slow and Protracted’ Recovery
Nytimes : Britain’s recovery will probably be “slow and protracted,” the Bank of England warned Wednesday, tempering positive sentiment from recent economic reports suggesting that the end of the recession might be in sight.
Continue reading : nytimes.com
“Growth has just as much chance of being positive over the next 12 months as it has of being negative,” the governor of the central bank, Mervyn King, said.
Mr. King added that credit markets remained constricted and that banks were still reluctant to lend, a situation that needed to improve before a real recovery could occur.
Continue reading : nytimes.com
U.S. banking crisis may last until 2013: S&P
(Reuters) - A day after saying big U.S. banks probably needed to raise only one-fourth the capital demanded by the government, Standard & Poor's said the nation's banking crisis has "merely entered a new phase" and might not end before 2013.
The credit rating agency said the industry is being propped up by hundreds of billions of dollars of government support, especially for lenders considered too important to the financial system to fail.
While efforts to spur lending, take bad assets off banks' balance sheets, and restart the market for packaging and selling securities may help the sector, S&P said banks will have a tough time surviving absent a bigger capital cushion than regulators require.
Source : reuters.com
Indian Elections 2009 - Projections
* The exit polls commissioned by various news channels to get a sense of the shape of the next government at the Centre predicted a badly fractured mandate, with the Congress-led UPA shown holding a slight edge over the BJP-led NDA.
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* Prakash Karat says left will not allow BJP to form government and it says its ready for a congress lead minority government.
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* The desperate hunt for allies led Congress to “touch base” with recently estranged partner Samajwadi Party as Prime Minister Manmohan Singh and other top Congress leaders, who have taken charge of the numbers mobilisation, sought a meeting with the SP leadership.
News Today - May 14
* The European Commission finds leading computer chipmaker Intel guilty of violating European anti-trust rules and orders it to pay a fine of €1.06 billion ($1.4 billion). full story
* One in 374 U.S. mortgages is in default or foreclosure and the number of distressed homeowners is sure to grow.
* Sales at U.S. retailers fell for a second straight month in April as cash-strapped consumers held back on some purchases, according to a government report on Wednesday that dealt a blow to hopes the economy was beginning to improve,retail sales slipped 0.4 percent after falling by 1.3 percent in March.
* The US financial system has completed a big part of the painful adjustment away from its excessively leveraged state, and lending is starting to improve, US Treasury Secretary Timothy Geithner said on Wednesday.
* A day after saying big US banks probably needed to raise only one-fourth the capital demanded by the government, Standard & Poor's said the nation's banking crisis has "merely entered a new phase" and might not end before 2013.
* One in 374 U.S. mortgages is in default or foreclosure and the number of distressed homeowners is sure to grow.
* Sales at U.S. retailers fell for a second straight month in April as cash-strapped consumers held back on some purchases, according to a government report on Wednesday that dealt a blow to hopes the economy was beginning to improve,retail sales slipped 0.4 percent after falling by 1.3 percent in March.
* The US financial system has completed a big part of the painful adjustment away from its excessively leveraged state, and lending is starting to improve, US Treasury Secretary Timothy Geithner said on Wednesday.
* A day after saying big US banks probably needed to raise only one-fourth the capital demanded by the government, Standard & Poor's said the nation's banking crisis has "merely entered a new phase" and might not end before 2013.
Video Of A Clueless Fed Inspector General !
Elizabeth Coleman Inspector General - just see how clueless the person tasked with monitoring the Fed actually is.
News Today - May 12
* China's deflation moment Wholesale and consumer prices decline at a quicker pace in April, but analysts say the trend is likely temporary.
* Government "stress tests" of how 19 major banks would endure a sharp downturn in the economy already appear to be helping banks gain access to private capital, a key element in economic recovery, Federal Reserve Chairman Ben Bernanke said on Monday.
* General Motors is open to considering moving its headquarters from Detroit, selling off U.S. plants and even renegotiating parts of its restructuring plan with its major union, the new chief executive said Monday.
* Four big U.S. banks Monday announced plans to sell more than $6 billion of common stock, in an effort to raise capital and repay funds received under the government's bank bailout program.
* Measures taken by the Reserve Bank of India (RBI) have arrested the rate of decline in the economy and inflation is not a concern for now, one of its deputy governor said on Monday.
* Bank of Korea's monetary policy committee, led by Gov. Lee Song-tae (left), leaves interest rates unchanged at a record low of 2.0%, as expected.
* China's April exports contracted 22.6% from a year earlier, accelerating from a 17.1% slide March, while imports were down 23% on year, compared to a 25.1% decline in March, according to data released Tuesday by the National Bureau of Statistics.
* Government "stress tests" of how 19 major banks would endure a sharp downturn in the economy already appear to be helping banks gain access to private capital, a key element in economic recovery, Federal Reserve Chairman Ben Bernanke said on Monday.
* General Motors is open to considering moving its headquarters from Detroit, selling off U.S. plants and even renegotiating parts of its restructuring plan with its major union, the new chief executive said Monday.
* Four big U.S. banks Monday announced plans to sell more than $6 billion of common stock, in an effort to raise capital and repay funds received under the government's bank bailout program.
* Measures taken by the Reserve Bank of India (RBI) have arrested the rate of decline in the economy and inflation is not a concern for now, one of its deputy governor said on Monday.
* Bank of Korea's monetary policy committee, led by Gov. Lee Song-tae (left), leaves interest rates unchanged at a record low of 2.0%, as expected.
* China's April exports contracted 22.6% from a year earlier, accelerating from a 17.1% slide March, while imports were down 23% on year, compared to a 25.1% decline in March, according to data released Tuesday by the National Bureau of Statistics.
Is the worst of the economic downturn over?
CNN- The worst troughs of the global economic downturn could be over, although there remain risks ahead, according to the man who spearheaded perhaps the most complete study yet of the genesis of the current financial crisis.
Thomas F. Cooley is Dean of the NYU Stern School of Business, which delivered its swift response to the financial turmoil, a collection of 18 papers examining different aspects of the phenomenon, to 100 leading U.S. policymakers, including inside the Obama administration, Congress, the Federal Reserve and financial regulators, bringing an appreciative response.
Thomas F. Cooley is Dean of the NYU Stern School of Business, which delivered its swift response to the financial turmoil, a collection of 18 papers examining different aspects of the phenomenon, to 100 leading U.S. policymakers, including inside the Obama administration, Congress, the Federal Reserve and financial regulators, bringing an appreciative response.
Cooley, who organized the production of the papers by 33 members of the Stern faculty over a period of just six weeks, told CNN he believed that recent sharp rises in stock markets could herald the beginnings of a wider recovery.
"There are distinct signs of a recovery in the U.S. economy, parts of Europe and elsewhere. There is a definite sense that the worst is over," he said. "But there are still many risks in the system, and we need to be cautious in what we evaluate because a lot of the problems aren't being addressed.
"For example, the recovery of the labor markets will be slow, partly because of the effects of monetary policy and the stimulus package."
Cooley organized the finance and economic staff into rapid and coordinated action in November in an attempt to address the what he describes as "clearly the worst financial crisis since the Great Depression."
Continue reading : cnn.com
Former Federal Bank Regulator Says Stress Test "A Complete Sham,"
Wells Fargo Co. Chairman Says Bank Stress Test Are "Asinine"
U.S Jobless rate jumps to 8.9%
MarketWatch -The unemployment rate jumped to a 26-year high of 8.9% in April as the U.S. economy shed 539,000 more jobs, the Department of Labor reported Friday.
April's loss of 539,000 jobs was the smallest decline since October's 380,000. However, job losses in February and March were revised higher by a total of 66,000.
The nonfarm payrolls report was largely as expected, reflecting a slight easing in the pace of massive job destruction that had averaged 680,000 over the previous five months. Since the recession began in December 2007, payrolls have fallen by 5.7 million, or 4.1% of payrolls, the largest percentage decline since the 1958 recession.
April's loss of 539,000 jobs was the smallest decline since October's 380,000. However, job losses in February and March were revised higher by a total of 66,000.
"It is a sobering toll," said President Barack Obama. "We're still in the midst of a recession that was years in the making and will be months or even years in the unmaking; and we should expect further job losses in the months to come."
Job losses were widespread across industries in April. The only sectors adding jobs were health care and government, which was boosted by the hiring of temporary workers to prepare for the census next year. Private-sector employment fell by 611,000.
News Today - May 08
* Stress tests: Banks need $75 billion
Ten of America's 19 largest banks will need to raise a total of $74.6 billion in capital, federal officials have announced, bringing an end to relentless speculation about how much more money the nation's leading banks would need to withstand the recession. full story
* The U.S. economy probably shed more than half a million jobs in April, but the pace of job destruction is slowly easing, economists say ahead of the release of the government's report on nonfarm payrolls on Friday
* Many members of the Bank of Japan's policy board said at last month's meeting that the deterioration of the global economy is showing signs of slowing in some places.
*Japanese auto giant Toyota is expected to post a larger-than-forecast operating loss of about $5 billion, the Nikkei reports.
* Media tycoon Rupert Murdoch expects News Corporation-owned newspaper Web sites to start charging users for access within a year in a move which analysts say could radically shake-up the culture of freely available content.
* The protectionist measures of the US government is a matter of concern, said Azim Premji, chairman, Wipro, India’s third-largest software services exporter. The steps proposed were contrary to the statements made by the US President on expanding free trade at the recently held G20 summit, Mr Premji added.
* India's largest real estate company DLF will have to pay additional tax of Rs 300-400 crore to the government for the financial year Tax (I-T) department in a special investigation found that the realty company’s books showed an income lower by Rs 1,200 crore for the given year. DLF was issued a directive in this regard on Wednesday.
* With the global economic crisis hitting Asia hard, the International Monetary Fund (IMF) expects India's growth to slow markedly in 2009 before starting to rebound toward year end.
* The U.S. economy probably shed more than half a million jobs in April, but the pace of job destruction is slowly easing, economists say ahead of the release of the government's report on nonfarm payrolls on Friday
* Many members of the Bank of Japan's policy board said at last month's meeting that the deterioration of the global economy is showing signs of slowing in some places.
*Japanese auto giant Toyota is expected to post a larger-than-forecast operating loss of about $5 billion, the Nikkei reports.
* Media tycoon Rupert Murdoch expects News Corporation-owned newspaper Web sites to start charging users for access within a year in a move which analysts say could radically shake-up the culture of freely available content.
* The protectionist measures of the US government is a matter of concern, said Azim Premji, chairman, Wipro, India’s third-largest software services exporter. The steps proposed were contrary to the statements made by the US President on expanding free trade at the recently held G20 summit, Mr Premji added.
* India's largest real estate company DLF will have to pay additional tax of Rs 300-400 crore to the government for the financial year Tax (I-T) department in a special investigation found that the realty company’s books showed an income lower by Rs 1,200 crore for the given year. DLF was issued a directive in this regard on Wednesday.
* With the global economic crisis hitting Asia hard, the International Monetary Fund (IMF) expects India's growth to slow markedly in 2009 before starting to rebound toward year end.
