november

Job Losses in U.S. May Have Almost Ended in December as Economy Picked Up

January 3, 2010

By Courtney Schlisserman Jan. 3 (Bloomberg) — The worst U.S. employment slump in the post-World War II era may have almost ended in December, signaling the recovery will not be jobless much longer, economists said before reports this week. Payrolls probably fell by 1,000 workers last month, the smallest drop since the recession began two years ago, according to the median of 58 economists surveyed by Bloomberg News ahead of a Jan. 8 Labor Department report. The unemployment rate may have climbed to 10.1 percent from 10 percent. Stimulus-driven gains in global demand mean American companies may need to start boosting payrolls in 2010 after eliminating 7.2 million jobs since the recession began in December 2007. Manufacturers are leading the rebound in growth as a pickup in orders and rising exports, combined with a record reduction in inventories, spurs production. “Businesses are starting to come out of their shells,” said Zach Pandl , an economist at Nomura Securities International Inc. in New York. “We have turned the corner convincingly and have started on a path toward growth.” The declines in payrolls the last two years have been the biggest as a percentage of all jobs since 1944-45. A 10.1 percent reading in December would put the average jobless rate last year at 9.3 percent. The increase from 5.8 percent in 2008 would mark the biggest annual surge in records going back to 1940. Economists anticipate the jobless rate will exceed 10 percent through the first half of this year, according to the median forecast of economists surveyed last month. Government Measures President Barack Obama last month proposed additional spending on the nation’s transportation system, tax credits to spur hiring by small businesses and incentives to make homes more energy efficient in a second round of efforts to cut the jobless rate. Lawrence Summers , the White House chief economic adviser, said in a Bloomberg Radio interview on Dec. 15 that the prospect of a return to job growth is “an important achievement.” The economy grew at a 2.2 percent annual rate in the third quarter, the first gain in more than a year. The median projection of economists surveyed in December anticipated growth of 3 percent in the last three months of 2009. Since the survey, economists at JPMorgan Chase & Co. and Credit Suisse have revised estimates to more than 4 percent. Staffing at temporary employment agencies jumped the most in five years in November, which some economists and executives view as a sign total payroll growth is imminent. Temporary Help Increases in temporary hiring are “a classic part of the recovery,” Manpower Inc. Chief Executive Officer Jeffrey Joerres said in a Bloomberg Television interview Dec. 31. The firm is seeing “slow but steady increases in people who are out on assignment. It’s a little bit in every office, which is a good sign because it’s broad-based.” Manufacturing, which accounts for about 12 percent of the economy, has been a driver of the recovery and is projected to continue to expand. The Institute for Supply Management may report tomorrow its factory index rose last month to 54, according to the survey median. The gauge has surpassed the breakeven level of 50 since August. A separate report from the Commerce Department on Jan. 5 may show factory bookings increased 0.5 percent in November after rising 0.6 percent the previous month, according to economists surveyed. Another report from the supply managers may show the broader economy returned to expansion in December. The group’s gauge covering non-manufacturing firms , due Jan. 6, probably rose to 50.5, according to the survey median. Stocks in Second Half U.S. stocks rallied in the second half of the year as evidence of an economic recovery mounted. The Standard & Poor’s 500 Index climbed 65 percent since sinking to a 12-year low on March 9, ending 2009 at 1,115.1. Reports on housing this week may show the market slowing after a government tax credit spurred sales earlier in the year. The National Association of Realtors on Jan. 5 may report that pending sales of existing homes fell 3 percent in November after rising 3.7 percent the prior month, according to the survey median. Spending on construction projects, due from the Commerce Department tomorrow, may have dropped 0.5 percent in November after no change the month before, the survey showed. To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net

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Job Losses in U.S. May Have Almost Ended in December as Economy Picked Up

January 3, 2010

By Courtney Schlisserman Jan. 3 (Bloomberg) — The worst U.S. employment slump in the post-World War II era may have almost ended in December, signaling the recovery will not be jobless much longer, economists said before reports this week. Payrolls probably fell by 1,000 workers last month, the smallest drop since the recession began two years ago, according to the median of 58 economists surveyed by Bloomberg News ahead of a Jan. 8 Labor Department report. The unemployment rate may have climbed to 10.1 percent from 10 percent. Stimulus-driven gains in global demand mean American companies may need to start boosting payrolls in 2010 after eliminating 7.2 million jobs since the recession began in December 2007. Manufacturers are leading the rebound in growth as a pickup in orders and rising exports, combined with a record reduction in inventories, spurs production. “Businesses are starting to come out of their shells,” said Zach Pandl , an economist at Nomura Securities International Inc. in New York. “We have turned the corner convincingly and have started on a path toward growth.” The declines in payrolls the last two years have been the biggest as a percentage of all jobs since 1944-45. A 10.1 percent reading in December would put the average jobless rate last year at 9.3 percent. The increase from 5.8 percent in 2008 would mark the biggest annual surge in records going back to 1940. Economists anticipate the jobless rate will exceed 10 percent through the first half of this year, according to the median forecast of economists surveyed last month. Government Measures President Barack Obama last month proposed additional spending on the nation’s transportation system, tax credits to spur hiring by small businesses and incentives to make homes more energy efficient in a second round of efforts to cut the jobless rate. Lawrence Summers , the White House chief economic adviser, said in a Bloomberg Radio interview on Dec. 15 that the prospect of a return to job growth is “an important achievement.” The economy grew at a 2.2 percent annual rate in the third quarter, the first gain in more than a year. The median projection of economists surveyed in December anticipated growth of 3 percent in the last three months of 2009. Since the survey, economists at JPMorgan Chase & Co. and Credit Suisse have revised estimates to more than 4 percent. Staffing at temporary employment agencies jumped the most in five years in November, which some economists and executives view as a sign total payroll growth is imminent. Temporary Help Increases in temporary hiring are “a classic part of the recovery,” Manpower Inc. Chief Executive Officer Jeffrey Joerres said in a Bloomberg Television interview Dec. 31. The firm is seeing “slow but steady increases in people who are out on assignment. It’s a little bit in every office, which is a good sign because it’s broad-based.” Manufacturing, which accounts for about 12 percent of the economy, has been a driver of the recovery and is projected to continue to expand. The Institute for Supply Management may report tomorrow its factory index rose last month to 54, according to the survey median. The gauge has surpassed the breakeven level of 50 since August. A separate report from the Commerce Department on Jan. 5 may show factory bookings increased 0.5 percent in November after rising 0.6 percent the previous month, according to economists surveyed. Another report from the supply managers may show the broader economy returned to expansion in December. The group’s gauge covering non-manufacturing firms , due Jan. 6, probably rose to 50.5, according to the survey median. Stocks in Second Half U.S. stocks rallied in the second half of the year as evidence of an economic recovery mounted. The Standard & Poor’s 500 Index climbed 65 percent since sinking to a 12-year low on March 9, ending 2009 at 1,115.1. Reports on housing this week may show the market slowing after a government tax credit spurred sales earlier in the year. The National Association of Realtors on Jan. 5 may report that pending sales of existing homes fell 3 percent in November after rising 3.7 percent the prior month, according to the survey median. Spending on construction projects, due from the Commerce Department tomorrow, may have dropped 0.5 percent in November after no change the month before, the survey showed. To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net

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India’s exports surge 18% in November

January 2, 2010

India’s exports surge 18% in November

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China Manufacturing Grows at Fastest Pace in 20 Months, Cementing Recovery

December 31, 2009

By Bloomberg News Jan. 1 (Bloomberg) — China’s manufacturing expanded at the fastest pace in 20 months in December, cementing the recovery in the world’s third-biggest economy. The Purchasing Managers’ Index climbed to a seasonally adjusted 56.6, the Federation of Logistics and Purchasing said today in an e-mailed statement in Beijing. That compares with 55.2 in November and the median 55.4 estimate in a Bloomberg News survey of seven economists. The boost to Chinese manufacturing from subsidies for home- appliance purchases and tax rebates for exporters will continue this year as the government extends policies to counter the financial crisis. China’s growth will accelerate to 8.8 percent in 2010, four times faster than the U.S., as the world economy expands 2.4 percent, the United Nations forecast last month. “Manufacturing will stay at a high level as industrial production quickens and companies receive more orders for new- year holiday sales,” Lu Zhengwei , an economist at Industrial Bank Co. in Shanghai, said before today’s data. “Exports may return to growth in December, aiding manufacturing growth.” Industrial production grew in November at the fastest pace since March 2008, exports dropped the least in 13 months and imports surged. Today’s figure compares with a record-low 38.8 in November 2008, when recessions in the U.S., Europe and Japan sent export orders plunging. A reading above 50 indicates an expansion. Global Recovery China and Asia are leading the world recovery, helping to boost global confidence , which held near a record high in December, according to a Bloomberg survey of users of six continents, first conducted two years ago. China may overtake Japan as the world’s second-biggest economy this year. Profits are climbing as the economy gathers pace. Beijing Automotive Industry Holding Co. , the company which is buying technology from General Motors Corp.’s Saab unit, said Dec. 23 that 11-month net income more than tripled. China Gas Holdings Ltd. ’s profit in the six months ended September jumped nearly six-fold. Premier Wen Jiabao said Dec. 27 that China won’t make the mistake of ending stimulus policies too soon, even as he signaled that the government may cool new lending that reached an unprecedented $1.3 trillion in the first 11 months of last year. Wen also said China will “absolutely not yield” to pressure from foreign countries for currency gains as the nation holds the yuan at about 6.83 per dollar. Tax Rebates Commerce Minister Chen Deming pledged Dec. 24 to maintain export tax rebates in 2010 because of a slow recovery in global demand. Also aiding manufacturers, a program of subsidies for purchases of appliances such as refrigerators and washing machines within rural China will be expanded by raising price caps to make more products eligible. China’s economic growth in the fourth quarter probably topped the third-quarter’s 8.9 percent, Xu Xianchun, deputy head of the statistics bureau said last month. Gross domestic product probably expanded 8.5 percent in 2009 and may grow 9.4 percent in 2010, according to a Bloomberg News survey of economists. The manufacturing index, released by the logistics federation and the Beijing-based National Bureau of Statistics, is based on replies to questionnaires sent to purchasing executives at more than 730 companies in 20 industries. It started in January 2005. — Li Yanping and Mark Lee. Editors: Paul Panckhurst , Michael Dwyer To contact Bloomberg News staff for this story: Li Yanping in Beijing at +86-10-6649-7568 or yli16@bloomberg.net Mark Lee in Hong Kong at +852-2977-6909 or wlee37@bloomberg.net

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U.S. Auto Sales Show `Slow Slog’ of December Recovery as Ford Gains Ground

December 31, 2009

By Katie Merx and Mike Ramsey Dec. 31 (Bloomberg) — U.S. auto sales probably rose in December, signaling a recovery in 2010 after a year marked by the bankruptcies of General Motors Corp. and Chrysler LLC and the fewest new vehicles delivered in almost three decades. The seasonally adjusted annual rate may be 11.1 million cars and light trucks, according to the average estimate of eight analysts in a Bloomberg survey. That would be up from 10.3 million in December 2008 and 10.9 million in November, marking the second straight monthly gain, according to Bloomberg data. The year may end with 10.4 million new cars and light trucks sold, the fewest since 1982, when the country had one- quarter fewer adults. Ford Motor Co. gained further market share, analysts said, building on its increasing reputation for high quality and good will for avoiding a government bailout. “We’re looking at a slow, fragile recovery in 2010,” said Mirko Mikelic , senior portfolio manager at Fifth Third Asset Management in Grand Rapids, Michigan, which manages $19 billion in assets. “It will be a slow slog. With the wind down of brands, GM’s going to be paying the price. And Ford will benefit.” GM, based in Detroit, is shedding Saab, Saturn, Pontiac and Hummer to concentrate on its four remaining U.S. brands: Chevrolet, Cadillac, Buick and GMC. In 1982, the U.S. had 177 million driving-age adults, 36 percent fewer than now, said Sean McAlinden , chief economist for the Center for Automotive Research in Ann Arbor, Michigan. At the time, 59 new vehicles were sold per 1,000 adults, he said, compared with 42 this year. “That would make it a worse recession than 1980-82” and indicate significant pent-up demand, he said. Increase Forecast Sales in 2010 may rise 19 percent to 12.4 million because of the need for new vehicles and improving availability of consumer credit, McAlinden said. Other preliminary forecasts for industrywide sales range from Chrysler’s outlook of about 10.8 million to Ford’s 12.3 million. Chrysler declined to elaborate on its 2010 forecast, issued last month as part of its five-year plan. U.S. sales totaled 13.2 million in 2008, according to Autodata Corp., after averaging 16.8 million this decade through 2007. Surging unemployment and tight credit depressed auto sales, particularly in the first half of the year, when the annual rate didn’t exceed 10 million. The tumult in the economy led to government-backed bankruptcies that produced Auburn Hills, Michigan-based Chrysler Group LLC on June 10 and General Motors Co. on July 10. ‘Clunker’ Effect Manufacturers, dealers and investors use the sales rate to compare monthly totals by taking into account seasonal buying patterns. February’s 9.11 million pace was the year’s lowest, and the highest was August’s 14.1 million, fueled by the Transportation Department’s “cash for clunkers” program. During the one-month effort, the U.S. contributed as much as $4,500 toward the trade-in of an older model for a more efficient new one, boosting sales in July and August. Rising vehicle sales in November and December, without federal support, add to signs that the U.S. economy is improving. Household spending “will pick up steam as we move into the second half of 2010,” said Dean Maki , the most-accurate forecaster of gross domestic product for the first three quarters of 2009 in a Bloomberg News survey. “The overall picture for 2010 will be an economy growing rapidly enough to bring down the unemployment rate” to an average of 9.6 percent, said Maki, the chief U.S. economist at Barclays Capital Inc. Ford Growing Ford , based in Dearborn, Michigan, may report a 13 percent gain, while GM may say its sales this month fell 10.6 percent, based on the average estimates of 6 analysts surveyed by Bloomberg. Chrysler’s sales probably fell 13.9 percent, according to the analysts. The estimates are based on daily selling rates. December had 28 selling days, 2 more than in 2008. Without the adjustment, sales comparisons will be about 8 percent higher. Tom Henderson , a GM spokesman, said he wouldn’t speculate on December’s results. Among Japanese automakers, Toyota Motor Corp. sales gained 21 percent, Honda Motor Co. ’s gained 7.8 percent, and Nissan Motor Co. ’s fell rose 4.9 percent, according to estimates by Edmunds.com. Toyota’s Decline Toyota, which surpassed GM as the world’s largest automaker in 2008, experienced a 23.8 percent U.S. sales decline through November as President Akio Toyoda apologized for the company straying from its customer focus and for its biggest U.S. recall because of loose floor mats. Toyota was probably overtaken by Germany’s Volkswagen AG last year in terms of global vehicle sales. VW’s U.S. share rose to 2.9 percent through November, up from 2.3 percent a year earlier. Hyundai Motor Co. , South Korea’s largest automaker, may report a 52.1 percent increase, according to Edmunds.com, a market-research firm in Santa Monica, California. George Pipas , Ford’s chief sales analyst, said the automaker will report a full-year gain in U.S. market share in 2009 for the first time since 1995. “It appears December will be the strongest sales month this year, except for August,” Pipas said. “That’s a nice way to close out 2009 and it’s a positive sign of higher levels of interest and buying next year.” The following table shows estimates for car and light-truck sales in the U.S. Estimates for companies are a percentage change from December 2008. Forecasts for the seasonally adjusted annual rate, or SAAR, are in millions of vehicles. The estimates are based on daily selling rates. December had 28 selling days, 2 more than in 2008. To contact the reporters on this story: Katie Merx in Southfield, Michigan, at kmerx@bloomberg.net ; Mike Ramsey in Southfield, Michigan, at mramsey6@bloomberg.net

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Credit Card Delinquencies Up November, More Borrowers Struggling: Moody’s

December 29, 2009

NEW YORK — More U.S. credit card users fell further behind on their payments in November, Moody’s Investor’s Services said Tuesday. The charge-off rate on U.S. credit cards, as measured by Moody’s Credit Card Index, rose to 10.56 percent last month after falling for the two previous months. October’s charge-off rate was 10.04 percent. The charge-off rate measures those credit card account balances written off as uncollectable, as an annualized percentage of total outstanding principal balance. The record-high of 10.76 percent was reached in June. The delinquency rate also rose, reaching 6.2 percent in November from 6.1 percent in October. That includes all credit card payments that are between 30 days and 180 days late, but have not yet been written off. This figured peaked at 6.4 percent reached in March. One positive sign was that while the number of people who are late paying rose, the dollar amount of delinquent balances is lower than a year ago for cards issued by three of the six largest card issuers. The early stage delinquency rate, which measures payments that are 30 to 60 days late, slipped to 1.6 percent from 1.66 percent in October. Moody’s said this measure is volatile and the improvement may not indicate any consumer trends. Moody’s expects delinquencies to continue to rise through the winter. The charge-off rate is forecast to peak at between 12 percent and 13 percent in mid-2010. The principal payment rate, or the average amount of principal cardholders repay each month, slipped to 16.42 percent in November from 17.31 percent in October.

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Hong Kong retail sales surge in November

December 29, 2009

Hong Kong retail sales surge in November

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Hawaii tourism revenues decline in November

December 29, 2009

Hawaii tourism revenues decline in November

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UAE- Investor confidence improves

December 29, 2009

Capital, the UAE’s biggest investment bank, said investor confidence was dented due to the November 25 surprise debt restructuring announcement by Dubai World. But optimism has returned, although only partially, after the repayment of a $4.1 billion

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Investor Confidence Improves after Dubai World Episode

December 28, 2009

Capital, the UAE’s biggest investment bank, said investor confidence was dented due to the November 25 surprise debt restructuring announcement by Dubai World. But optimism has returned, although only partially, after the repayment of a $4.1 billion

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Christopher Brauchli: Bank Presidents and the U.S. President

December 28, 2009

Surfeit begets insolence, when prosperity comes to a bad man. Theognis, c. 545b.c. I hope the President didn’t take it personally. I’m sure no offense was intended. Even though bank presidents have shown they can single handedly almost sink the economy, they can’t control the weather that prevented their making it to the meeting. Of course some people might wonder why they didn’t leave a day earlier. A lot of people who have a morning meeting scheduled with the President of the United States would be very anxious to make sure they were in town the night before so as not to miss the meeting. Such a meeting is heady stuff even for a bank president. My guess is that the men all had good reasons for not arriving in Washington D.C. the night before the meeting and it was not, as some might think, a lack of respect for the President of the United States. A number of factors explain their actions. One is that it was the middle of the holiday season and a Sunday night two weeks before Christmas is a time when there are lots of holiday parties. It is important for bank presidents to be in attendance to show that even though 12 months ago they were being bailed out by, among others, the people at the parties as well as lots of other people their cheerful demeanors prove that they are not the least bit nervous about the economy or the state of their banks. Another reason they may have waited until Monday to travel to see the President (if they were not partying) was to give them additional time to work for the benefit of customers, employees and shareholders. Lloyd Blankfein, president of Goldman Sachs (who missed the meeting), was very likely spending the evening doing rough calculations as to how to divide up $16 billion in bonuses among his thousands of employees. That is a complicated calculation. He may also have been working on the speech he would give to his employees to explain why some of them would get bonuses in stock instead of cash. Citigroup’s Vikram Pandit missed the meeting because Citigroup had a $17 billion stock offering on the same day as the meeting with the President took place. Mr. Pandit spent the day convincing investors they should buy some of the stock that was being offered. Thanks to those efforts Citigroup received $425 million in fees from the offering. In Mr. Pandit’s place Citigroup’s chairman, Richard Parsons was to attend, but having better things to do on Sunday night than spend the night in the capitol he waited until Monday morning to travel and because of weather had to miss the meeting. He may have spent some time Sunday night working on helping those struggling to pay their mortgages who were hoping to qualify under the “Making Home Affordable Program.” In November 2008 Citigroup said its intention was to reach out to 500,000 borrowers who needed help to avoid foreclosure. It said its program might result in $20 billion of mortgage refinancings. As of November 2009 it had fallen a bit shy of its goal. Of all mortgagees who were eligible for modification it had only entered into trial modifications with 100,126 homeowners instead of 500,000 homeowners and had only made permanent modifications with 271 borrowers out of the 231,000 who were estimated to be eligible. John Mack of Morgan Stanley was probably also spending Sunday night trying to figure out how to help those threatened with foreclosure who were in distress. Morgan Stanley’s subsidiary, Saxon Mortgage Services, Inc. had an estimated 80,000 eligible loans and had 35,565 trial modifications going on but as of the end of November had only made 42 of the loan modifications permanent. The rest were still awaiting approval. Of course he might have been toasting the fact that although those numbers are not impressive, when its permanent loans modifications are added to its trial modifications it turns out that 44% of its loans have been modified or are in the trial stage and that, percentage wise, places it at the top of all the Servicers in the program. The “Making Home Affordable Program” has been in place for slightly over a year. The Treasury Department estimates there are 3,299,780 people eligible to participate in the program. As of the end of November only 31,382 have received permanent modifications. The three bank presidents who missed the meeting are probably keenly ware of the failure of their institutions to do more for those in trouble. They may even feel a bit of guilt about it. Not enough, however, to have made sure they’d get to the meeting with the President on time. And not enough to cause them to forego their large bonuses. Christopher Brauchli can be e-mailed at brauchli.56@post.harvard.edu. For political commentary see his web page at http://humanraceandothersports.com

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Japan’s industrial output grows 2.6% in November

December 28, 2009

Japan’s industrial output grows 2.6% in November

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Japan’s retail sales fall 1% in November

December 28, 2009

Japan’s retail sales fall 1% in November

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Chinese Industrial Company Profits Surge as Stimulus Boosts Construction

December 27, 2009

By Bloomberg News Dec. 28 (Bloomberg) — Chinese industrial companies’ profits rose for the first time in a year, cementing the recovery in the world’s third-largest economy. Net income grew 7.8 percent in the January to November period to 2.59 trillion yuan ($379 billion) from a year earlier, the statistics bureau said today. Profits dropped 10.6 percent in the first eight months of the year. Stimulus spending and a record $1.3 trillion of new loans in the first 11 months of 2009 helped to drive up demand, boosting earnings at companies from China Resources Enterprise Ltd. to Beijing Automotive Industry Holding Co. Premier Wen Jiabao said yesterday that the government was wary of derailing the recovery by withdrawing stimulus measures too early. “Companies’ profits will continue to improve as China’s recovery gains momentum,” said Lu Ting , an economist at Bank of America-Merrill Lynch in Hong Kong. “Industrial companies are enjoying better price margins and expanding domestic demand.” China’s economy is leading the recovery in Asia, where Japan reported today its biggest gain in output in six months. Chinese industrial companies’ sales through November rose 7.1 percent to 47.5 trillion yuan. The data, released every three months, is for businesses with annual sales of more than 5 million yuan in 39 industries, including steel, chemicals, electricity, telecommunications and mining. PetroChina’s Expansion A fuel pricing system introduced last year guarantees a profit margin for state oil refiners and has encouraged China Petroleum & Chemical Corp. and PetroChina Co. to expand capacity to meet rising demand. Manufacturers reporting higher earnings include China Resources , the Chinese partner of SABMiller Plc, and Beijing Auto, which is buying technology from General Motors Co.’s Saab unit to speed the development of own-brand models to meet growing domestic demand. China’s industrial production grew in November at the fastest pace since March 2008 as property sales climbed and government subsidies supported consumer spending. Gross domestic product will expand 8.5 percent this year and 9.4 percent in 2009, according to a Bloomberg News survey of economists. On Dec. 25, the statistics bureau said the economy grew 9.6 percent last year, more than the 9 percent initially reported. That narrowed the gap with Japan, the world’s second-biggest economy. China may become No. 2 next year, according to International Monetary Fund projections. — Li Yanping , Sophie Leung. Editors: Paul Panckhurst , To contact Bloomberg News staff for this story: Li Yanping in Beijing at +86-10-6649-7568 or yli16@bloomberg.net

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Mexico’s oil output falls in November

December 27, 2009

Mexico’s oil output falls in November

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Japan’s unemployment climbs to 5.2% in November

December 27, 2009

Japan’s unemployment climbs to 5.2% in November

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Kuwait real estate sees 33% increase in sales (Zawya)

December 26, 2009

Kuwait’s real estate market has seen a steady recovery with sales transactions in November posting a 33 per cent rise compared to October, according to a report.

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US durable orders edge up in November

December 26, 2009

US durable orders edge up in November

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Treasury Yield Curve Steepens to Record on Debt-Auction Demand Concerns

December 25, 2009

By Susanne Walker Dec. 25 (Bloomberg) — Treasuries fell, with the difference in yields between 2- and 10-year notes widening to a record amount, as investors bet the U.S. recovery will fuel inflation and reduce demand at the government’s debt auctions. The 10-year note’s yield climbed to the highest level in four months as reports showed increases in sales of existing homes and orders for durable goods. The U.S. will sell a record- tying $118 billion of 2-, 5- and 7-year notes next week. “We are in a steepening trend,” said John Spinello , chief technical strategist in New York at Jefferies Group Inc., one of the Federal Reserve’s 18 primary dealers, which are required to bid at government debt auctions. “It was the recognition that the Treasury will be extending the debt as we know it and the economy is showing signs of recovery.” The benchmark 10-year note’s yield rose 26 basis points on the week, or 0.26 percentage point, to 3.80 percent, according to BGCantor Market Data. That’s the highest level since Aug. 10. The 3.375 percent security due in November 2019 fell 2 5/32 or $21.56 per $1,000 face amount to 96 16/32. Two-year note yields rose 18 basis points on the week to 0.97, the highest level since Oct. 30. The note to be sold on Dec. 28 in a record-tying $44 billion offering traded at 1.02 percent in pre-auction trading. The debt drew a yield of 0.802 percent, the lowest ever, at the last auction, a $44 billion offering on Nov. 23. ‘Inflationary Pressures’ The difference, or spread, between 2- and 10-year note yields widened to 2.88 percentage points on Dec. 22. The previous record of 2.81 percentage points was set on June 5, when Treasuries plunged after a government report showed the smallest decline in U.S. payrolls in eight months. Ten-year note yields touched 4 percent the following week, the highest level in 2009. “If you are going to have a recovery, you are going to have higher inflationary pressures, so the curve should continue to steepen from here,” said Dan Greenhaus , chief economic strategist at Miller Tabak & Co. in New York. “The curve could reach 300 to 325 basis points.” Holders of U.S. Treasuries of all maturities have lost 3.3 percent this year, according to Bank of America Merrill Lynch indexes. That would be the worst performance since 1994. American consumers’ spending and incomes climbed in November, indicating that the biggest part of the economy is poised to strengthen as the labor market recovers, government reports showed. Purchases rose 0.5 percent and incomes increased 0.4 percent. Debt Sales Existing home sales rose 7.4 percent last month to a 6.54 million annual rate, the highest since February 2007, from a revised 6.09 million pace the prior month, the National Association of Realtors said on Dec. 22. Sales were expected to rise to a 6.25 million annual rate, according to the median forecast in a Bloomberg News survey of economists. Excluding demand for transportation equipment, bookings for long-lasting goods climbed a greater-than-forecast 2 percent in November, figures from the Commerce Department showed on Dec. 24 in Washington. The U.S. will sell $44 billion in two-year notes on Dec. 28, $42 billion in five-year debt the next day and $32 billion in seven-year securities on Dec. 30. The five-year sale and seven-year offering equal the all-time highest issues of the securities set last month. Seven-Year Auction “The seven-year coming just a day before New Year’s eve, when the Fed had been a strong buyer of the seven-year sector to help out mortgage rates, that’s probably the auction to worry about,” Michael Pond , an interest-rate strategist in New York at primary dealer Barclays Plc, said on Dec. 24 in an interview on Bloomberg TV. “The two-year should be well spoken for. At year-end, there is plenty of demand for short paper. It’s really further out the curve that you have to worry about.” President Barack Obama is borrowing unprecedented amounts for spending programs. U.S. marketable debt increased to a record $7.17 trillion in November from $5.80 trillion at the end of last year. Treasury officials on Nov. 4 announced a long-term target of six to seven years for the average maturity of Treasury debt and said the department wants to cut back on its issuance of bills and two- and three-year notes. Treasury yields will increase in 2010 as the Fed ends purchases of mortgage and agency securities, Barclays’s Pond said. The yield on the benchmark 10-year note may climb to 4.5 percent, he said. The Fed said on Dec. 16 it will continue purchases of agency mortgage-backed securities totaling $1.25 trillion and about $175 billion of agency debt through the first quarter of next year. The Federal Open Market Committee and the Fed’s Board of Governors reiterated that “most of the Federal Reserve’s special liquidity facilities will expire on Feb. 1 2010.” The central bank completed a $300 billion program of Treasury purchases in October.

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Japan Jobless Rate Climbs for First Time Since July as Job Prospects Wane

December 24, 2009

By Aki Ito and Mayumi Otsuma Dec. 25 (Bloomberg) — Japan’s unemployment rate rose for the first time in four months in November, an indication job growth may not be strong enough to support the economy’s recovery from its deepest postwar recession. The jobless rate climbed to 5.2 percent from 5.1 percent in October, the statistics bureau said today in Tokyo, matching the median forecast of 26 economists surveyed by Bloomberg News. More than $2 trillion in global stimulus spending has revived Japanese exports and production, fueling corporate sentiment in the world’s second-largest economy. The improvements haven’t spread to households, whose confidence is waning because of wage cuts and deflation. “Compared to the situation a couple months ago, I think we can say the job market is no longer worsening,” said Yoshiki Shinke , senior economist at Dai-Ichi Life Research Institute in Tokyo. “But companies still have a strong desire to save labor costs, and they’re certainly not ready to start aggressively hiring again.” The yen traded at 91.47 per dollar at 10:32 a.m. in Tokyo from 91.43 before the figure was published. A separate report showed consumer prices slid for a ninth month in November. Prices excluding fresh food slid 1.7 percent from a year earlier, matching the median estimate of 25 economists surveyed by Bloomberg News. Sales Tumble Sales at the nation’s largest service companies will tumble 11.8 percent in the year ending March 31, the Bank of Japan’s Tankan survey showed this month, more pessimistic than projections made three months ago. Consumers weighed down by 17 months of pay cuts are demanding lower prices, squeezing profits. CSK Holdings Corp ., a computer-services company, said this month it will cut 440 jobs by offering employees incentives to quit. “The jobless rate dropped in the past few months not because of a rise in demand for workers, but because people became so discouraged” they stopped looking for work, said Kyohei Morita , chief economist at Barclays Capital in Tokyo. “Today’s figures confirm that it’s too early to say we’re seeing improvements in employment.” Household spending rose 2.2 percent in November, advancing for a fourth month, the government said today. The 7.2 trillion yen stimulus package Prime Minister Yukio Hatoyama ’s Cabinet compiled this month allocated 600 billion yen to support employment. The money will be distributed to employment offices and fund an expansion of a subsidy program that encourages companies to keep people on their payrolls. Bank of Japan policy makers, who also unveiled emergency measures to support growth this month, said on Dec. 18 that they are intolerant of price declines, spurring expectations among investors they will hold interest rates near zero until inflation returns. Governor Masaaki Shirakawa said this week the announcement may influence investors’ expectations and lower borrowing costs further, supporting growth. ‘Binding Hands’ “The BOJ’s price statement is binding the bank’s hands and making it harder for them to raise interest rates,” said Hiroaki Muto , a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “Small price gains will probably be insufficient to prompt a rate hike.” Core consumer prices in Tokyo slumped 1.9 percent in December from a year earlier, today’s report showed. Figures for the capital are released a month earlier than nationwide data, making them a harbinger of price trends. Nationwide prices excluding energy and food, which economists say are a better reflection of price trends than the core measure, fell 1 percent in November from a year earlier. Falling wages are discouraging households and prompting companies to cut prices to attract customers. Cut Prices Seiyu Ltd. , a supermarket operator owned by U.S.-based Wal- Mart Stores Inc., this week cut the price of coats, sweaters, shoes and underwear by as much as 60 percent to boost sales as consumers tighten their purse strings. Rival Ito Yokado, owned by Seven & I Holdings Co., last week held a cash-back campaign for clothing and household goods. Nevertheless, there are signs that the labor market won’t deteriorate further. The job-to-applicant ratio rose for a third month to 0.45, meaning there are 45 positions for every 100 candidates, the Labor Ministry said today. The report also showed there were 80 newly advertised jobs in November for every 100 people who started looking for a job that month, the most since January. Economists regard the gauge as a leading indicator of employment. Analysts say manufacturers, who increased workers’ overtime hours for a seventh month in October to keep up with a jump in orders, will eventually need to hire more staff as exports improve. Shipments to Asia rose for the first time since September 2008 last month, a Finance Ministry report showed this week. “There’s no doubt the job market will keep improving as long as production and exports keep growing,” said Hiroshi Miyazaki , chief economist at Shinkin Asset Management Co. in Tokyo. “But I’m concerned these improvements are going to be very, very slow.” To contact the reporter on this story: Aki Ito in Tokyo at aito16@bloomberg.net ; Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

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US new home sales drop 9% in November

December 24, 2009

US new home sales drop 9% in November

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Malaysia’s auto sales rise 10.6% in November

December 24, 2009

Malaysia’s auto sales rise 10.6% in November

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U.S. consumer spending rises by 0.5% in November

December 24, 2009

U.S. consumer spending rises by 0.5% in November

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Singapore: Industrial production slips 8.2% in November

December 24, 2009

Singapore: Industrial production slips 8.2% in November

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`Many’ Bank of Japan Board Members Signaled Readiness to Act, Minutes Show

December 23, 2009

By Mayumi Otsuma Dec. 24 (Bloomberg) — The Bank of Japan said “many” of its board members expressed readiness to act against financial- market volatility last month, before officials held an emergency meeting to address a surge in the yen. “Many” agreed “the bank would maintain its stance of responding promptly to changes in the market situation,” according to minutes of the bank’s Nov. 19-20 meeting released in Tokyo today. The central bank “would adopt the most effective method for money-market operations that conformed to changes in financial markets,” the report said. The central bank unveiled a 10 trillion yen ($110 billion) fixed-rate lending facility in an emergency meeting on Dec. 1 to lower borrowing costs and counter the yen’s advance to a 14-year high against the dollar. Governor Masaaki Shirakawa has said the bank is ready to do more and can extend the lending program if the demand for cash jumps. “The central bank’s next option will probably be to provide abundant funds aggressively by utilizing the latest program,” said Mari Iwashita , chief market economist at Nikko Cordial Securities Inc. in Tokyo. “Expanding the program will allow the bank to enhance the effect of its accommodative monetary policy.” The board kept its benchmark overnight lending rate at 0.1 percent in a unanimous vote at the November gathering. Board members said the bank would maintain an “extremely accommodative financial environment,” the minutes showed. The bank may also consider increasing its government-bond purchases from lenders from the current level of 1.8 trillion yen per month, Nikko’s Iwashita said. Board members also discussed how it should express its view on deflation, according to the minutes. To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

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Sales of New U.S. Homes Unexpectedly Fell in November to Seven-Month Low

December 23, 2009

By Timothy R. Homan Dec. 23 (Bloomberg) — Spending by U.S. consumers increased in November less than anticipated as Americans cut back on services after buying more autos and electronics. The 0.5 percent increase in purchases was the sixth gain in the past seven months and followed a 0.6 percent increase in October, Commerce Department figures showed today in Washington. The report also showed incomes climbed 0.4 percent, the biggest increase since May, and inflation cooled. Retailers such as Best Buy Co. are cutting prices on some items to help households overcome the worst employment slump in the post-World War II era and mounting foreclosures. Shortfalls in spending, which accounts for 70 percent of the economy, indicate the recovery will take time to gain speed. “Consumer panic ended in December of last year,” said Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado, who accurately forecast the increase in purchases. “Consumers will have little influence on growth from here.” Stock-index futures trimmed earlier gains following the smaller-than-forecast increase in spending, while Treasury securities rose on the smaller than anticipated inflation readings. The contract on the Standard & Poor’s 500 Index climbed 0.3 percent to 1,116.5 at 9:09 a.m. in New York. The yield on the benchmark 10-year note fell to 3.72 percent from 3.76 percent late yesterday. Less Than Forecast The median estimate of 72 economists surveyed called for a 0.7 percent increase in spending, matching an originally reported gain of 0.7 percent the prior month. Projections ranged from gains 0.4 percent to 0.9 percent. The gain in incomes followed a 0.3 percent increase in October. Wages and salaries grew 0.3 last month, the biggest gain since April. Today’s report showed prices were stabilizing, reflecting discounting by retailers. The Federal Reserve’s preferred price measure, which is tied to spending patterns and excludes food and fuel, was unchanged in November from the previous month, the first time it didn’t increase this year. The gauge was up 1.4 percent from a year earlier, the same as in October. Prices overall climbed 0.2 percent after increasing 0.3 percent in October. Adjusted for inflation, spending climbed 0.2 percent following a 0.4 percent rise the prior month, restrained by a decline in purchases of services. Savings Rate The increases in spending and incomes left the savings rate at 4.7 percent in November, unchanged from the prior month. Inflation-adjusted spending on durable goods, such as autos, furniture, and other long-lasting items, climbed 1.2 percent last month. Purchases of non-durable goods increased 0.6 percent, and spending on services, which account for almost 60 percent of all outlays, fell 0.1 percent. Best Buy, the largest U.S. electronics retailer, is promoting notebook computers and $299 flat-screen televisions to lure consumers. As a result, the Richfield, Minnesota-based company will see its gross margin decline by as much as 1 percentage point in the fourth quarter, Chief Executive Officer Brian Dunn said on a Dec. 15 conference call with analysts. The labor markets and tight credit remain a hurdles. The jobless rate is projected to exceed 10 percent through the first half of next year. Payrolls fell by 11,000 last month, bringing total job losses to 7.2 million since the recession began in December 2007, the most of any contraction since the Great Depression. Retailers may lose almost $9 billion in holiday sales as banks rein in lending to cash-strapped consumers before a new credit-card law takes effect, according to Britt Beemer, chairman of consumer polling firm America’s Research Group. Sales in November and December may fall 1.2 percent to from the same period in 2008, said Beemer in a Dec. 21 interview. If lenders weren’t cutting customer spending limits and rejecting more credit-card applicants, sales would gain about 0.8 percent to $445.5 billion, he said. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Consumer Spending, Incomes Climb as U.S. Job Market Shows Sign of Recovery

December 23, 2009

By Timothy R. Homan Dec. 23 (Bloomberg) — Spending by U.S. consumers increased in November less than anticipated as Americans cut back on services after buying more autos and electronics. The 0.5 percent increase in purchases was the sixth gain in the past seven months and followed a 0.6 percent increase in October, Commerce Department figures showed today in Washington. The report also showed incomes climbed 0.4 percent, the biggest increase since May, and inflation cooled. Retailers such as Best Buy Co. are cutting prices on some items to help households overcome the worst employment slump in the post-World War II era and mounting foreclosures. Shortfalls in spending, which accounts for 70 percent of the economy, indicate the recovery will take time to gain speed. “Consumer panic ended in December of last year,” said Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado, who accurately forecast the increase in purchases. “Consumers will have little influence on growth from here.” Stock-index futures trimmed earlier gains following the smaller-than-forecast increase in spending, while Treasury securities rose on the smaller than anticipated inflation readings. The contract on the Standard & Poor’s 500 Index climbed 0.3 percent to 1,116.5 at 9:09 a.m. in New York. The yield on the benchmark 10-year note fell to 3.72 percent from 3.76 percent late yesterday. Less Than Forecast The median estimate of 72 economists surveyed called for a 0.7 percent increase in spending, matching an originally reported gain of 0.7 percent the prior month. Projections ranged from gains 0.4 percent to 0.9 percent. The gain in incomes followed a 0.3 percent increase in October. Wages and salaries grew 0.3 last month, the biggest gain since April. Today’s report showed prices were stabilizing, reflecting discounting by retailers. The Federal Reserve’s preferred price measure, which is tied to spending patterns and excludes food and fuel, was unchanged in November from the previous month, the first time it didn’t increase this year. The gauge was up 1.4 percent from a year earlier, the same as in October. Prices overall climbed 0.2 percent after increasing 0.3 percent in October. Adjusted for inflation, spending climbed 0.2 percent following a 0.4 percent rise the prior month, restrained by a decline in purchases of services. Savings Rate The increases in spending and incomes left the savings rate at 4.7 percent in November, unchanged from the prior month. Inflation-adjusted spending on durable goods, such as autos, furniture, and other long-lasting items, climbed 1.2 percent last month. Purchases of non-durable goods increased 0.6 percent, and spending on services, which account for almost 60 percent of all outlays, fell 0.1 percent. Best Buy, the largest U.S. electronics retailer, is promoting notebook computers and $299 flat-screen televisions to lure consumers. As a result, the Richfield, Minnesota-based company will see its gross margin decline by as much as 1 percentage point in the fourth quarter, Chief Executive Officer Brian Dunn said on a Dec. 15 conference call with analysts. The labor markets and tight credit remain a hurdles. The jobless rate is projected to exceed 10 percent through the first half of next year. Payrolls fell by 11,000 last month, bringing total job losses to 7.2 million since the recession began in December 2007, the most of any contraction since the Great Depression. Retailers may lose almost $9 billion in holiday sales as banks rein in lending to cash-strapped consumers before a new credit-card law takes effect, according to Britt Beemer, chairman of consumer polling firm America’s Research Group. Sales in November and December may fall 1.2 percent to from the same period in 2008, said Beemer in a Dec. 21 interview. If lenders weren’t cutting customer spending limits and rejecting more credit-card applicants, sales would gain about 0.8 percent to $445.5 billion, he said. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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Consumer Spending in U.S. Rises on Discounts; Incomes Climb Most Since May

December 23, 2009

By Timothy R. Homan Dec. 23 (Bloomberg) — Spending by U.S. consumers increased in November less than anticipated as Americans cut back on services after buying more autos and electronics. The 0.5 percent increase in purchases was the sixth gain in the past seven months and followed a 0.6 percent increase in October, Commerce Department figures showed today in Washington. The report also showed incomes climbed 0.4 percent, the biggest increase since May, and inflation cooled. Retailers such as Best Buy Co. are cutting prices on some items to help households overcome the worst employment slump in the post-World War II era and mounting foreclosures. Shortfalls in spending, which accounts for 70 percent of the economy, indicate the recovery will take time to gain speed. “Consumer panic ended in December of last year,” said Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado, who accurately forecast the increase in purchases. “Consumers will have little influence on growth from here.” Stock-index futures trimmed earlier gains following the smaller-than-forecast increase in spending, while Treasury securities rose on the smaller than anticipated inflation readings. The contract on the Standard & Poor’s 500 Index climbed 0.3 percent to 1,116.5 at 9:09 a.m. in New York. The yield on the benchmark 10-year note fell to 3.72 percent from 3.76 percent late yesterday. Less Than Forecast The median estimate of 72 economists surveyed called for a 0.7 percent increase in spending, matching an originally reported gain of 0.7 percent the prior month. Projections ranged from gains 0.4 percent to 0.9 percent. The gain in incomes followed a 0.3 percent increase in October. Wages and salaries grew 0.3 last month, the biggest gain since April. Today’s report showed prices were stabilizing, reflecting discounting by retailers. The Federal Reserve’s preferred price measure, which is tied to spending patterns and excludes food and fuel, was unchanged in November from the previous month, the first time it didn’t increase this year. The gauge was up 1.4 percent from a year earlier, the same as in October. Prices overall climbed 0.2 percent after increasing 0.3 percent in October. Adjusted for inflation, spending climbed 0.2 percent following a 0.4 percent rise the prior month, restrained by a decline in purchases of services. Savings Rate The increases in spending and incomes left the savings rate at 4.7 percent in November, unchanged from the prior month. Inflation-adjusted spending on durable goods, such as autos, furniture, and other long-lasting items, climbed 1.2 percent last month. Purchases of non-durable goods increased 0.6 percent, and spending on services, which account for almost 60 percent of all outlays, fell 0.1 percent. Best Buy, the largest U.S. electronics retailer, is promoting notebook computers and $299 flat-screen televisions to lure consumers. As a result, the Richfield, Minnesota-based company will see its gross margin decline by as much as 1 percentage point in the fourth quarter, Chief Executive Officer Brian Dunn said on a Dec. 15 conference call with analysts. The labor markets and tight credit remain a hurdles. The jobless rate is projected to exceed 10 percent through the first half of next year. Payrolls fell by 11,000 last month, bringing total job losses to 7.2 million since the recession began in December 2007, the most of any contraction since the Great Depression. Retailers may lose almost $9 billion in holiday sales as banks rein in lending to cash-strapped consumers before a new credit-card law takes effect, according to Britt Beemer, chairman of consumer polling firm America’s Research Group. Sales in November and December may fall 1.2 percent to from the same period in 2008, said Beemer in a Dec. 21 interview. If lenders weren’t cutting customer spending limits and rejecting more credit-card applicants, sales would gain about 0.8 percent to $445.5 billion, he said. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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U.S. Consumer Spending Increases Less Than Forecast; Personal Incomes Gain

December 23, 2009

By Timothy R. Homan Dec. 23 (Bloomberg) — Spending by U.S. consumers increased in November less than anticipated as Americans cut back on services after buying more autos and electronics. The 0.5 percent increase in purchases was the sixth gain in the past seven months and followed a 0.6 percent increase in October, Commerce Department figures showed today in Washington. The report also showed incomes climbed 0.4 percent, the biggest increase since May, and inflation cooled. Retailers such as Best Buy Co. are cutting prices on some items to help households overcome the worst employment slump in the post-World War II era and mounting foreclosures. Shortfalls in spending, which accounts for 70 percent of the economy, indicate the recovery will take time to gain speed. “Consumer panic ended in December of last year,” said Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado, who accurately forecast the increase in purchases. “Consumers will have little influence on growth from here.” Stock-index futures trimmed earlier gains following the smaller-than-forecast increase in spending, while Treasury securities rose on the smaller than anticipated inflation readings. The contract on the Standard & Poor’s 500 Index climbed 0.3 percent to 1,116.5 at 9:09 a.m. in New York. The yield on the benchmark 10-year note fell to 3.72 percent from 3.76 percent late yesterday. Less Than Forecast The median estimate of 72 economists surveyed called for a 0.7 percent increase in spending, matching an originally reported gain of 0.7 percent the prior month. Projections ranged from gains 0.4 percent to 0.9 percent. The gain in incomes followed a 0.3 percent increase in October. Wages and salaries grew 0.3 last month, the biggest gain since April. Today’s report showed prices were stabilizing, reflecting discounting by retailers. The Federal Reserve’s preferred price measure, which is tied to spending patterns and excludes food and fuel, was unchanged in November from the previous month, the first time it didn’t increase this year. The gauge was up 1.4 percent from a year earlier, the same as in October. Prices overall climbed 0.2 percent after increasing 0.3 percent in October. Adjusted for inflation, spending climbed 0.2 percent following a 0.4 percent rise the prior month, restrained by a decline in purchases of services. Savings Rate The increases in spending and incomes left the savings rate at 4.7 percent in November, unchanged from the prior month. Inflation-adjusted spending on durable goods, such as autos, furniture, and other long-lasting items, climbed 1.2 percent last month. Purchases of non-durable goods increased 0.6 percent, and spending on services, which account for almost 60 percent of all outlays, fell 0.1 percent. Best Buy, the largest U.S. electronics retailer, is promoting notebook computers and $299 flat-screen televisions to lure consumers. As a result, the Richfield, Minnesota-based company will see its gross margin decline by as much as 1 percentage point in the fourth quarter, Chief Executive Officer Brian Dunn said on a Dec. 15 conference call with analysts. The labor markets and tight credit remain a hurdles. The jobless rate is projected to exceed 10 percent through the first half of next year. Payrolls fell by 11,000 last month, bringing total job losses to 7.2 million since the recession began in December 2007, the most of any contraction since the Great Depression. Retailers may lose almost $9 billion in holiday sales as banks rein in lending to cash-strapped consumers before a new credit-card law takes effect, according to Britt Beemer, chairman of consumer polling firm America’s Research Group. Sales in November and December may fall 1.2 percent to from the same period in 2008, said Beemer in a Dec. 21 interview. If lenders weren’t cutting customer spending limits and rejecting more credit-card applicants, sales would gain about 0.8 percent to $445.5 billion, he said. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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BOE Voted 9-0 to Maintain Bond Plan as Dale, Miles Switched to Consensus

December 23, 2009

By Jennifer Ryan Dec. 23 (Bloomberg) — Bank of England policy makers unanimously kept their bond-purchase plan at 200 billion pounds ($320 billion) this month as Spencer Dale and David Miles suspended dissenting votes and opted for consensus. Miles, who favored 215 billion pounds in November, and Chief Economist Dale, who had wanted to limit it to 175 billion pounds, said it was better to continue the current program , minutes of the Dec. 10 meeting published today in London showed. They said their previous arguments could still be justified. The nine-member Monetary Policy Committee, led by Governor Mervyn King , is counting on a return to economic growth as soon as this quarter in its fight against the threat of deflation. The economy shrank 0.2 percent in the third quarter, less than previously estimated, as a jump in construction drew the longest recession on record closer to an end, data showed yesterday. “Most members felt that there had been some positive developments for the near term, albeit relatively minor ones by comparison to the uncertainties,” the minutes said. “Developments during this month had not been sufficient to alter committee members’ views about the major forces driving the medium-term outlook for inflation or about the risks.” The panel also voted unanimously to keep the benchmark interest rate at a record low of 0.5 percent, the minutes show. The pound was little changed after the report, trading at $1.5950 as of 9:50 a.m. in London. The yield on the two-year gilt rose 5 basis points today to 1.264 percent. February Decision “For those members who had preferred a different policy action at the November meeting, a slightly different scale of asset purchases could still be justified,” the minutes said. Policy makers have signaled they prefer to assess the size of their so-called quantitative-easing program only in months where they publish new quarterly growth and inflation forecasts. The next projections will be released in February. “There’s a sense that the January meeting will be a bit of an irrelevance,” said Ross Walker , an economist at Royal Bank of Scotland Group Plc in London. “The decision in February is still quite finely balanced. They probably won’t do more but there’s a significant risk, perhaps 35 percent to 40 percent, they might extend it. Economic reports are still painting a mixed picture of the U.K.’s route out of recession. The U.K. statistics office said today that services industries contracted in the three months through October. At the same time, mortgage lending rose to the highest in two years last month, the British Bankers Association said today. Momentum While policy makers said that the economy’s performance in the third quarter “was consistent with greater momentum looking ahead,” they also said that there had been “less favorable developments.” Growth in money supply has been “disappointing,” the minutes said. The panel said that the narrowing in the spread between gilt yields and corresponding swap rates, which they had previously seen as a positive sign of the bond plan’s success, has “partly reversed” in the past two months. The measure of M4 money supply that the bank uses to assess the effectiveness of quantitative easing fell 0.7 percent in October from the previous month and was down an annualized 5.3 percent in the three months through October, the bank said Nov. 30. The gauge excludes financial companies that specialize in intermediating between banks. The panel also noted recent events in Dubai and Greece during their meeting. “Financial market volatility surrounding events in Dubai and the rating agency downgrade of Greek sovereign debt had provided a reminder of the potential for shocks to affect the United Kingdom,” the minutes said. To contact the reporter on this story: Jennifer Ryan in London at jryan13@bloomberg.net

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Local home sales picking up, but prices not following suit (Newark Advocate)

December 23, 2009

NEWARK — Local real-estate agents enjoyed a good month in November, according to statistics from the Licking County Board of Realtors.

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French November Consumer Spending Drops as Job Concerns Beat Car Subsidy

December 23, 2009

By Mark Deen Dec. 23 (Bloomberg) — French consumer spending unexpectedly fell in November as concern about unemployment outweighed the impact of government incentives to buy new cars. Spending on manufactured goods declined 0.1 percent from October, national statistics office Insee said in a statement today. Economists expected a 0.5 percent gain, the median of 10 estimates in a Bloomberg survey showed. November spending rose 3.2 percent from a year earlier and October’s month-on-month increase was revised down to 1 percent from 1.1 percent. French households are grappling with joblessness at a three-year high in the wake of the deepest recession in more than half a century. While subsidies have spurred car sales, consumers are cutting back in other areas, causing spending to drop in six of the first 11 months of 2009. “When people spend on cars they tend to cut back in other areas,” said Dominique Barbet , an economist at BNP Paribas in Paris. “Unemployment is unlikely to peak before next spring.” France’s jobless rate climbed to 9.5 percent in the third quarter, the highest since the first quarter of 2006, as Air France-KLM Group shrank its workforce. The number of unemployed actively looking for a job in October rose by 52,400. The labor and finance ministries report their latest figures tomorrow. Auto Incentives Meanwhile, car sales are surging. Motorists and automobile manufacturers benefited as the government offers 1,000 euros ($1,500) to buyers who trade in old cars to purchase new ones. That subsidy will be cut in half on Jan. 1. French car sales jumped 48 percent in November, the seventh consecutive monthly increase, to 216,452 vehicles, the national automakers association said on Dec. 1. Total spending on cars rose 4.2 percent in the month, lifting demand for durable goods by 2 percent, Insee said today. By contrast, spending on textiles and leather goods fell 1.8 percent, while industries including home improvement and jewelry also posted declines. “The impact of unfavorable labor market conditions will increasingly come to the fore, leaving spending lackluster going forward,” said Joost Beaumont , an economist at Fortis Bank in Amsterdam. To contact the reporter on this story: Mark Deen in Paris at markdeen@bloomberg.net

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Existing U.S. Home Sales Rise to Highest Level Since 2007 in Recovery Sign

December 22, 2009

By Bob Willis Dec. 22 (Bloomberg) — Sales of existing U.S. homes rose more than forecast in November, to the highest level in more than two years, a sign housing is gaining strength along with the broader economy entering 2010. Purchases increased 7.4 percent to a 6.54 million annual rate, the highest since February 2007, from a revised 6.09 million pace the prior month, the National Association of Realtors said today in Washington. The median sales price declined 4.3 percent from the same month a year earlier, the smallest decrease since November 2007. Lower interest rates , cheaper homes and a homebuyer tax credit have resuscitated a housing market that contributed to the worst economic slump since the 1930s. A sustained recovery in housing and the economy depends on regenerating the 7.2 million jobs lost in the last two years. “Housing is in recovery mode,” Aaron Smith , a senior economist at Moody’s Economy.com in West Chester, Pennsylvania, said before the report. “The combination of the homebuyers’ tax credit, good affordability and looser credit conditions going forward will continue moderate gains in housing.” The economy grew at a 2.2 percent annual rate in the third quarter, compared with a prior estimate of 2.8 percent, the Commerce Department said earlier today in Washington in its final revision to gross domestic product. Existing home sales were forecast to rise to a 6.25 million annual rate, according to the median forecast of 69 economists in a Bloomberg News survey. Estimates ranged from 5.2 million to 6.5 million, after an initially reported 6.1 million rate in October. Previously owned home sales are compiled from contract closings and may reflect purchases agreed upon weeks or months earlier. Many economists consider new home sales , recorded when a contract is signed, a more timely barometer of the market. New-Home Sales The Commerce Department may report on Dec. 23 that new home sales rose 1.7 percent in November to a 438,000 annual pace, according to the Bloomberg survey. Existing home sales reached a 4.49 million pace in January, their lowest level since comparable records began in 1999. Purchases of existing homes rose 44 percent in November compared with a year earlier, the biggest increase on record. The median price fell to $172,600. The number of previously owned unsold homes on the market fell 1.3 percent to 3.52 million. At the current sales pace, it would take 6.5 months to sell those houses compared with 7 months at the end of October. Foreclosures Share The share of homes sold as foreclosures or otherwise distressed properties was 33 percent, NAR chief economist Lawrence Yun said in a press conference today in Washington. The report showed sales of existing single-family homes rose 8.5 percent to an annual rate of 5.77 million. Sales of condos and co-ops were unchanged at a 770,000 rate. Purchases increased 10.6 percent in the West, 8.4 percent in the Midwest, 6.6 percent in the Northeast, and 4.8 percent in the South. Federal Reserve debt purchases are helping keep mortgage rates close to record lows, while President Barack Obama’s Nov. 7 extension and expansion of the tax credit through April may provide more impetus to sales and construction in coming months. The Fed last week signaled it would keep lending rates low for “an extended period” to foster growth. The average rate on a 30-year fixed mortgage was 4.94 percent last week and has averaged 4.85 percent since the end of October, according to Freddie Mac. Federal Reserve “Household spending appears to be expanding at a moderate rate, though it remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit,” Fed policy makers said in their statement last week after holding interest rates near zero. Unemployment forecast to average 10 percent through 2010 remains a risk to the recovery in housing and the broader economy. Fed Chairman Ben S. Bernanke said Dec. 7 that the labor market and tight credit were limiting the economy. Record foreclosures are also restraining housing by driving down prices. Foreclosure filings in the U.S. will reach a record for the second consecutive year with 3.9 million notices sent to homeowners in default, RealtyTrac Inc. said on Dec. 10. This year’s filings will surpass 3.2 million for all of 2008, the Irvine, California-based company said. Toll Brothers Inc., the largest U.S. luxury-home builder, projected that deliveries may fall by as much as 33 percent in the 12 months through October 2010, and the average selling price may drop as low as $540,000. “We believe it may take some time for Americans to regain confidence in our economy, their job status and the benefits of home ownership,” Robert Toll, chief executive officer at Toll Brothers, said in a Dec. 3 statement. “We anticipate a gradual recovery in housing, similar to the one that occurred in the early 1990s.” To contact the report on this story: Bob Willis in Washington at bwillis@bloomberg.net

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Taiwan’s unemployment edges down in November

December 22, 2009

Taiwan’s unemployment edges down in November

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UK’s public sector borrowing surges to $32.7b in November

December 21, 2009

UK’s public sector borrowing surges to $32.7b in November

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Japan’s trade surplus hits $4.14b in November

December 21, 2009

Japan’s trade surplus hits $4.14b in November

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UK car production jumps 15.7% in November

December 20, 2009

UK car production jumps 15.7% in November

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Britain’s mortgage lending drops by 10% in November

December 20, 2009

Britain’s mortgage lending drops by 10% in November

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Russia’s jobless rate climbs to 8.1% in November

December 20, 2009

Russia’s jobless rate climbs to 8.1% in November

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Consumer Spending Probably Increased in Signal of Stronger U.S. Economy

December 20, 2009

By Timothy R. Homan Dec. 20 (Bloomberg) — American consumers probably earned and spent more in November, giving retailers and real-estate agents reason to anticipate business will improve in 2010, economists said before reports this week. Household purchases rose 0.7 percent for a second month and incomes climbed 0.5 percent, the most since May, according to the median estimate of 60 economists surveyed by Bloomberg News before a Commerce Department report Dec. 23. Combined sales of new and existing homes last month may have reached the highest level since May 2007, other figures may show. Government efforts to push down interest rates and spur lending, combined with discounts by merchants such as Best Buy Co. , may encourage consumers to keep buying in coming months. A jobless rate forecast to average 10 percent next year and mounting foreclosures will serve as reminders that the world’s largest economy is not free from all threats to the recovery. “We’re still looking at consumer spending expanding, but obviously with a lot of constraints because of the weak job market and tight credit,” said Scott Brown , chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. “You’re not going to see a full recovery in the housing sector until the job market recovers.” An increase in consumer spending for goods and services during November would be the sixth in the past seven months. Sales at U.S. retailers last month increased 1.3 percent after a 1.1 percent gain in October, the Commerce Department reported on Dec. 11. More Discounting Companies are luring shoppers by offering lower prices during the holiday season. Best Buy , the largest electronics retailer, was offering flat-screen TVs for $299.99 alongside discounted laptops. As a result, the Richfield, Minnesota-based company will see its gross margin decline by as much as 1 percentage point in the fourth quarter, Chief Executive Officer Brian Dunn said on a Dec. 15 conference call with analysts. Americans are also buying more cars. Sales of cars and light trucks rose to a 10.9 million unit annual pace in November, up 4.5 percent from the previous month, according to industry data. The rate was the highest since 14.1 million in August, when the government’s “cash-for-clunkers” plan expired near the end of that month. Auto sales probably contributed to a gain in orders at factories. Orders for durable goods , those meant to last at least three years, rose 0.5 percent in November after a 0.6 percent drop, according to the median estimate ahead of a Dec. 24 report from the Commerce Department. Excluding demand for transportation equipment, which tends to be volatile, orders probably increased 1 percent, the survey median showed. Consumer Confidence A slowdown in the pace of job cuts and higher stock prices are boosting consumer sentiment. The Reuters/University of Michigan’s final gauge of December consumer confidence on Dec. 23 is projected to climb to 73.7, its highest level in almost two years, from 67.4 in November. Payrolls fell by 11,000 last month, the fewest job cuts since the recession began in December 2007, Labor Department figures showed Dec. 4. The unemployment rate in November fell to 10 percent from a 26-year high of 10.2 percent. The Standard & Poor’s 500 Index has risen 63 percent from a 12-year low in March, closing at a 14-month high on Dec. 14. Lower interest rates, cheaper homes and a homebuyer tax credit are bolstering a housing market that contributed to the worst economic slump since the 1930s. Home Sales The National Association of Realtors is expected to report Dec. 22 that purchases of existing homes rose 2.5 percent in November to an annual pace of 6.25 million, the highest level since February 2007, according to the survey median. The Commerce Department on Dec. 23 may report sales of new homes rose 1.9 percent to a 438,000 annual pace last month, the fastest since August 2008, according to the Bloomberg survey median. Gains in the housing market may prove uneven as foreclosures mount. Some 306,627 properties received a default or auction notice or were seized by banks last month and a similar number is expected for December, according to Irvine, California-based RealtyTrac Inc. The government’s final figure for third-quarter gross domestic product may show the economy expanded at a 2.8 percent annual rate, matching last month’s estimate, according to the survey median. The Commerce Department will report the data on Dec. 22. To contact the reporter on this story: Timothy R. Homan in Washington at Thoman1@bloomberg.net

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U.S. Treasuries Little Changed as Rise in Oil Fuels Concern on Inflation

December 19, 2009

By Cordell Eddings Dec. 19 (Bloomberg) — Treasury 10-year notes were little changed as the Federal Reserve pledged to keep interest rates near zero and rising commodity prices spurred concern inflation will increase in coming months. Treasury 10-year notes declined yesterday as crude oil rose after Iranian forces entered Iraq and occupied an oil well. The U.S. dollar posted its biggest weekly gain against the euro since October amid concern Greece and other European nations may struggle to pay their debts. Consumer spending rose 0.7 percent in November, according to the median estimate in a Bloomberg survey before a Commerce Department report Dec. 23. “The market took its direction from flows after the FOMC announcement,” said Ian Lyngen , senior government bond strategist at CRT Capital Group LLC in Stamford, Connecticut. “The announcement was more upbeat on growth than in the past, but still, the extended period language is still there. The big take-away is we are in a range until the facts change.” The yield on the 10-year note fell one basis point on the week, or 0.01 percentage point, to 3.54 percent, according to BGCantor Market Data. The 3.375 percent security due November 2019 rose 2/32, or 63 cents per $1,000 face amount, to 98 20/32. Treasuries have lost investors 2.2 percent this year through Dec. 17, according to Bank of America Corp. Merrill Lynch indexes. Fed officials said on Dec. 16 after the conclusion of their two-day policy meeting that the U.S. economy isn’t improving enough for them to raise interest rates and that rates would remain ‘exceptionally low” for an “extended period.” ‘Sword of Damocles’ “They’ve got the Sword of Damocles hanging over them,” Richard Schlanger , who helps invest $13 billion in fixed-income securities as vice president at Pioneer Investments in Boston. “They’re not going to move until the indicators are definitely pointing that there is inflation concern and the economy really has sustained growth momentum and unemployment is going to come down significantly.” Ten-year note yields fell on Dec. 17 as much as 13 basis points, the most since Oct. 1, after the number of Americans filing initial jobless claims rose by 7,000 to 480,000 in the week ended Dec. 12. Economists surveyed by Bloomberg forecast a drop to 465,000. “The bias is for lower yields,” said Sergey Bondarchuk , an interest-rate strategist in New York at primary dealer BNP Paribas. “We have a more certain outlook after the Fed restated low rates for longer, which continues to give support to the front end. The weakness in the long end should be contained.” Positioned Tanks Fed Chairman Ben S. Bernanke said on Dec. 7 that conditions warranting a low interest rate have not changed even as a Labor Department report on Dec. 4 showed the jobless rate fell to 10 percent in November from a 26-year high of 10.2 percent the previous month. The U.S. is still in a recession and home prices may resume declines, Harvard University economics professor Martin Feldstein said. “The recession isn’t over,” Harvard’s Feldstein said Dec. 17 in an interview on Bloomberg Radio in New York. “It will be a while before we have enough information to know if the recession ended.” Crude oil for January delivery rose as much as 2.8 percent yesterday as Iraq’s National Security Council said that Iran violated their shared border and Iraq’s “territorial integrity.” Iranian forces entered Iraq on Dec. 17. and occupied a well in the East Maysan oil field. Crude Oil “Oil prices have spiked some as a result of political intrigue, which leads to inflation expectation concerns,” said Eric Lascelles , chief rates strategist and economist at TD Securities Inc. in Toronto. “The Fed earlier this week indicated that they weren’t concerned about inflation, but you still had inflation data in general coming in higher than expected.” The yield spread between 10-year notes and Treasury Inflation Protected Securities, a gauge for price-growth expectations, rose to 231 basis points this week, the most in 16 months. Ten-year yields on Dec. 15 touched their highest levels since August after a report showed a 1.8 percent increase in prices paid to factories, farmers and other producers, more than twice as large as anticipated. Investors sought the relative safety of government debt after Standard & Poor’s cut Greece’s credit rating on Dec. 16. ‘Too Much Money’ “Sovereign nations have borrowed too much money with relation to GDP, so that’s what’s impacting the ratings agencies downgrade,” said Thomas L. di Galoma , head of U.S. rates trading at Guggenheim Partners LLC, a New York-based brokerage for institutional investors. Bill Gross , who runs the world’s biggest bond fund at Pacific Investment Management Co., cut holdings of government debt and boosted cash to the most since Lehman Brothers Holdings Inc. collapsed in September 2008. Gross increased cash in the $199.4 billion Total Return Fund to 7 percent in November, from a negative 7 percent in October, according to Newport Beach, California-based Pimco’s Web site. The fund can have a so-called negative position by using derivatives, futures or by shorting. He reduced government-related securities to 51 percent from a five-year high of 63 percent in October. To contact the reporter on this story: Cordell Eddings in New York at ceddings@bloomberg.net

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New Finance’s Opus Commodities Fund of Funds Receives Highest Feri Ranking

December 18, 2009

By Chanyaporn Chanjaroen and Asjylyn Loder Dec. 18 (Bloomberg) — New Finance Capital LLP’s Opus Commodities Fund managed by David Mooney topped the performance ranking of 45 funds of commodity hedge funds surveyed by Feri Institutional Advisors GmbH, an investment adviser. The Opus fund returned 15.7 percent in the 12 months to October, according to Bad Homburg, Germany-based Feri. Pinnacle Natural Resources LP managed by Jason Kellman was second, followed by the Almanac fund founded by George Zivic and Willem Kooyker . “We see an uptick in interest from institutional investors in commodity hedge funds,” said Dieter Kaiser , a director of investment management for Feri. “Some investors even use commodity funds of hedge funds to replace some of their passive commodity investments.” Commodity investments increased at hedge funds, funds that track indexes and other products related to raw materials as prices rebounded this year from the worst slump ever in 2008. Assets under management at commodity hedge funds expanded 5.7 percent to $64.3 billion in November, according to New York- based HedgeFund.net. The S&P GSCI Total Return index of raw materials rose 11 percent this year through October. The 45 funds Feri tracks represent about 90 percent of assets under management at funds of commodity hedge funds, Kaiser said. The $895-million Opus fund advanced 1.1 percent last month and this year’s return was the best since 2006, when it advanced 16.35 percent, according to Schroders Plc, which owns New Finance Capital. Investment Approach “We don’t chase hot commodity traders,” said Mooney, 47, who has spent more than two decades in commodities. The fund prefers to allocate assets to managers who consistently profit in any market conditions, he said in a telephone interview. Mooney also manages the $50 million Opus Commodities Core Plus Fund , which invests only in funds that bet prices will rise. The fund returned almost 25 percent this year through November, compared with 16.6 percent in the Dow Jones UBS Commodity Total Return index . He joined New Finance in 2005 from Merrill Lynch & Co, where he ran the bank’s internal investments on energy hedge funds. He headed Trafigura Group’s power and gas trading during 2003 and 2004 and before that was Bank of America’s head of commodity derivatives. Pinnacle Natural Resources returned almost 15 percent to investors during the 12 months through October, according to Feri. Jonathan Gasthalter , a spokesman for Pinnacle, declined to comment. The fund is the largest fund of commodity funds, according to Feri. Pinnacle Fund Kellman, his brother Scott Kellman and Donnell Segalas run Pinnacle Asset Management LP. The fund’s average annualized return since inception in 2003 is 17.3 percent, according to a marketing document from Pinnacle obtained by Bloomberg News. The Almanac Commodity Offshore Fund returned 10.3 percent in the 12 months to October, according to Feri. Zivic, 40, started Almanac Capital Management LP in May 2007 with Kooyker, chairman of Berkeley Heights, New Jersey-based Blenheim Capital Management LLC. Both partners provided initial capital for the fund, according to Zivic. Blenheim is not an Almanac investor. “We’re not a traditional fund of funds,” said Zivic. Almanac devises a trading strategy based on its own market outlook for each sector, and looks for specialized managers whose views match the fund’s strategies. Managers in Almanac’s portfolio include those trading agriculture, natural gas volatility, natural gas and electricity arbitrage, weather derivatives, metals and other strategies, Zivic said. Almanac Commodity Fund LP, with less than $500 million in assets, is up 13 percent through November, he said. To contact the reporters on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net ; Asjylyn Loder in New York aloder@bloomberg.net .

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Britain’s retail sales drop sharply in November

December 18, 2009

Britain’s retail sales drop sharply in November

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Manufacturing in Philadelphia Area Expands as Sales, Employment Increase

December 17, 2009

By Vincent Del Giudice Dec. 17 (Bloomberg) — Manufacturing in the Philadelphia region expanded in December at the fastest pace in more than four years as sales and employment grew. The Federal Reserve Bank of Philadelphia’s general economic index climbed to 20.4, higher than forecast, from 16.7 in November. Readings greater than zero signal growth and this month’s level was the highest since April 2005. Gains in orders slowed in December, limiting prospects for early 2010. Manufacturers have benefited from renewed demand for exports as well as record declines in inventories following the worst recession since the 1930s. The report contrasts with a similar gauge issued by the Fed Bank of New York this week that showed manufacturing in that region slowed more than economists anticipated. “The general state of manufacturing reflects improving inventory levels, business sentiment and capital expenditure outlays and very decent demand for exports,” said John Herrmann , chief economist at Herrmann Forecasting in Summit, New Jersey. “The economic recovery and the manufacturing recovery remain on track, with significant improvements expected for next year.” Economists forecast the Philadelphia Fed index would fall to 16 for December, according to the median of 58 estimates in a Bloomberg News survey. Projections ranged from 6.9 to 20.3. The bank’s district covers parts of Pennsylvania, New Jersey and all of Delaware. Other reports today showed the index on leading indicators increased for an eight consecutive month and jobless claims unexpectedly rose. The gauge of the economy’s outlook over the next three to six months climbed 0.9 percent in November, capping the longest series of gains since 2003-2004, the Conference Board, a New York-based private research group said. More Claims Initial jobless claims rose by 7,000 to 480,000 in the week ended Dec. 12, Labor Department figures showed today in Washington. The number of people receiving unemployment insurance was little changed in the prior week, while those getting extended payments jumped. Stocks fell after Citigroup Inc. sold stock at a discount and FedEx Corp.’s profit forecast trailed analyst estimates. The Standard & Poor’s 500 Index was down 0.8 percent to 1,100.09 at 10:40 a.m. in New York. Treasury securities rose. The Philadelphia Fed’s employment index rose to 6.3, the highest level October 2007, from minus 0.5. The shipments index fell to 15.3 from a two-year high of 15.7 in November. The index of prices paid jumped to 33.8 from 14.9. Prices received fell to minus 1.8 from minus 1.5. Lower Expectations The gauge of expectations for the next six months eased to 24.4 from 36.8 in November. The overall index number isn’t composed of the individual measures, and some economists consider it a gauge of business sentiment rather than manufacturing. Earlier in the week, figures from the Fed showed industrial production – a gauge of output at factories, mines and utilities — rose 0.8 percent in November, the fourth gain in five months. The plant-use rate increased to the highest since December 2008. Factories in the New York region expanded at the slowest pace in five months in December, another report this week showed. The Fed Bank of New York’s general economic index fell to 2.6 from 23.5 in November. While the measure can be volatile, the almost 21-point drop was the biggest since records began in 2001. Fed policy makers yesterday indicated the recovery is gaining strength and repeated a pledge to keep the benchmark interest rate almost at zero for an “extended period.” They kept the benchmark overnight lending rate between banks in range of zero and 0.25 percent, where it has been for a year. Earnings Forecast Honeywell International Inc. , the maker of aircraft instruments and industrial controls, yesterday forecast 2010 earnings that trails analyst estimates after the recession cut demand for business jets in the U.S. and Europe. Sales next year will benefit from a backlog in orders and “momentum coming out of 2009,” Chief Financial Officer Dave Anderson said on a conference call with analysts. “We should see a pretty good start to 2010.” In the Fed’s regional economic assessment, the beige book, which was released Dec. 2, the Philadelphia Fed said in its district “manufacturers, on balance, reported an increase in shipments and a steady rate of new orders. Retailers indicated that sales have been rising slowly, although they remained below the year-ago level for most stores.” — With assistance from Jack Kaskey in New York. Editor: Carlos Torres To contact the reporter on this story: Vincent Del Giudice in Washington at vdelgiudice@bloomberg.net

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Leading Economic Index in U.S. Climbed More-Than-Forecast 0.9% in November

December 17, 2009

By Bob Willis Dec. 17 (Bloomberg) — The index of U.S. leading indicators rose for an eighth consecutive month in November, a sign economic growth will extend into the first half of 2010. The New York-based Conference Board’s gauge of the outlook for the next three to six months rose 0.9 percent, more than forecast, after climbing 0.3 percent in October. Separate reports showed Philadelphia-area manufacturing grew in December at the fastest pace in more than four years, while initial jobless claims rose last week. Rising stocks and fewer job losses are supporting consumer spending, which makes up 70 percent of the economy. The Federal Reserve said yesterday it intends to keep its benchmark interest rate near zero for an “extended period,” to spur growth as unemployment at 10 percent poses a risk to the recovery. “The nascent recovery is ending 2009 on a high note,” said Richard DeKaser , chief economist at Woodley Park Research in Washington, who correctly forecast the gain in leading indicators. “The consumer is doing all right, housing is clearly in an upswing and business investment is improving.” Economists forecast the leading indicators index would increase 0.7 percent, according to the median of 61 estimates in a Bloomberg News survey. Projections ranged from a gain of 0.5 percent to 1.2 percent. Philadelphia Manufacturing Manufacturing in the Philadelphia region expanded for a fifth month as sales and employment grew. The Fed Bank of Philadelphia’s general economic index rose to 20.4 this month, the highest since April 2005, from 16.7 in November. Readings greater than zero signal growth. Figures from the Labor Department showed jobless claims increased to 480,000 last week from 473,000 a week earlier, indicating the labor market will take time to strengthen. Stocks declined for a second day this week after Citigroup Inc. sold stock at a discount and FedEx Corp.’s profit forecast trailed analysts’ estimates. The Standard & Poor’s 500 Index dropped 0.8 percent to 1,100.18 at 10:20 a.m. in New York. Six of the 10 indicators in the leading index contributed to the gain, led by the difference between short- and long-term borrowing costs and fewer jobless claims. A longer factory workweek , higher stock prices, more building permits and a rise in money supply also helped the index. Weaker consumer expectations, faster supplier deliveries and fewer capital goods orders were a drag on the index. Consumer goods orders had no effect on the index. Coincident Indicators The Conference Board’s index of coincident indicators, a gauge of current economic activity, rose 0.2 percent in November after no change the prior month. The index tracks payrolls, incomes, sales and production, the measures used by the National Bureau of Economic Analysis to determine the beginning and end of U.S. recessions. The gauge of lagging indicators dropped 0.4 percent last month. The index measures business lending, length of unemployment , service prices and ratios of labor costs, inventories and consumer credit. The world’s largest economy probably expanded at a 3 percent annual pace from October through December after growing at a 2.8 percent rate in the prior quarter, according to the median estimate of economists surveyed earlier this month. That followed a 3.8 percent contraction in the 12 months to June, the economy’s worst performance since the 1930s. Yield Curve The index’s positive spread between the yield on the 10- year Treasury note and the overnight fed funds rate is based on mounting expectations of an economic recovery. Jobless claims averaged 482,000 in November, down from 524,200 a month earlier. Building permits rose 6 percent in November, the government reported yesterday, a sign home construction is gathering pace. U.S. stocks continued to rally last month as reports suggested the economy was stabilizing. The S&P 500 averaged 1,088.07 in November, compared with 1,067.66 in October. The index reached the highest closing level in 13 months on Dec. 14. Weighing on the index, the Reuters/University of Michigan’s reading on consumer expectations for the next six months fell in November from the prior month. Seven of 10 indicators for the leading index are known ahead of time: stock prices, jobless claims, building permits, consumer expectations, the yield curve, factory hours and supplier delivery times. Federal Reserve The Conference Board estimates new orders for consumer goods, bookings for capital goods, and the money supply adjusted for inflation. Reiterating its pledge to keep rates “exceptionally low” for “an extended period,” Fed policy makers yesterday said the recovery is facing hurdles. “Household spending appears to be expanding at a moderate rate, though it remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit,” they said in a statement. Manufacturers that export to emerging economies such as China are among companies anticipating stronger growth. General Electric Co. Chief Executive Officer Jeffrey Immelt said global orders for the world’s biggest maker of jet engines, power-plant turbines and medical imaging equipment were picking up in the fourth quarter compared with the prior three months. “Orders will be improving sequentially as we get into the fourth quarter of the year,” Immelt said at an investor meeting Dec. 15. GE had an order backlog of $174 billion at the end of the third quarter, with total company orders of $18.4 billion in the third quarter, including service contracts. To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

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Singapore’s exports surge 8.7% in November

December 17, 2009

Singapore’s exports surge 8.7% in November

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U.K. November Retail Sales Unexpectedly Fall 0.3% in First Drop Since May

December 17, 2009

By Scott Hamilton Dec. 17 (Bloomberg) — U.K. retail sales unexpectedly fell in November for the first time in six months as the recession prompted consumers to spend less at clothing and department stores in the approach to Christmas. Sales dropped 0.3 percent on the month after rising 0.6 percent in October, the Office for National Statistics said today in London. The median forecast was for a 0.5 percent gain, according to a Bloomberg News survey of 28 economists. The U.K. faces a “bumpy and uneven” path out of recession as unemployment keeps increasing, Bank of England policy maker Kate Barker said in an interview this week. The central bank has kept its benchmark interest rate at a record low and pledged to spend as much as 200 billion pounds ($327 billion) on bonds to aid the economy. “The accommodation that’s been dished out, such as the cuts in interest rates, is a boost that’s fading,” Alan Clarke, an economist at BNP Paribas in London, said before the announcement. “People are cautious.” The pound fell as much as 0.4 percent after the release of the data and traded at $1.6167 as of 9:32 a.m. in London. The yield on the two-year gilt fell as much as 3 basis points and traded at 1.217 percent. Non-food sales fell 0.9 percent in November, outweighing a 0.4 percent increase in food sales, the statistics office said. Clothing and department stores led the drop. On the year, sales rose 3.1 percent after gaining 3.7 percent in October. ‘Cautious’ on Christmas JJB Sports Plc , the unprofitable sporting goods retailer, said today that it was “cautious” about its performance over Christmas and the New Year and trading will “remain difficult.” Tesco Plc , the world’s third-largest retailer, on Dec. 8 reported slowing sales growth that missed analysts’ estimates. The economy has lost more than 600,000 jobs since the recession began, with the ax falling hardest on people under the age of 24. The effects of the slump will also be felt with more increases in unemployment that may continue to rise for several more quarters, Barker said. The weakness of the job market is making it harder for Prime Minister Gordon Brown to resuscitate his popularity in time for an election which he must call by June. Barker said on Dec. 15 that it is possible the economy may see another quarter of contraction and that pressures on inflation are mainly “downward.” Policy makers are trying to prevent inflation from undershooting the 2 percent target in the medium term. Inflation accelerated to 1.9 percent in November and will pick up before then dipping below the goal, the central bank’s forecasts show. The retail price deflator, a measure of cost changes, showed a 0.5 percent annual drop in November, the statistics office said today. To contact the reporter on this story: Scott Hamilton in London at shamilton8@bloomberg.net .

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Consumer Prices in U.S. Rose 0.4% in November; Core Rate Is Unchanged

December 16, 2009

By Timothy R. Homan Dec. 16 (Bloomberg) — The cost of living in the U.S. accelerated in November from a month earlier, led by higher prices for energy and medical care. The 0.4 percent increase in the consumer-price index followed a 0.3 percent gain in October, figures from the Labor Department showed today in Washington. The so-called core index that excludes food and energy was unexpectedly unchanged, the first month without an increase since December 2008 and restrained by a drop in shelter costs and cheaper clothing. Energy costs have retreated so far this month, and comments from companies such as Best Buy Co. indicate unemployment close to a 26-year high is prompting retailers to discount their merchandise. Federal Reserve policy makers have said they expect “subdued” inflation in coming months, allowing them to keep interest rates low. The report “gives them some more room to see how the recovery unfolds,” said Harm Bandholz, a U.S. economist at UniCredit Global Research in New York who correctly forecast the core rate. “The drivers are the vast underutilization of capacity, notably the high unemployment rate.” The rise in the consumer price index matched the median forecast of 80 projections in a Bloomberg News survey. Estimates ranged from increases of 0.2 percent to 0.6 percent. The core index was forecast to rise 0.1 percent, according to the Bloomberg survey. Housing Starts Builders in November broke ground on more U.S. homes, a sign the recovery in homebuilding may carry through into 2010. Housing starts rose 8.9 percent to an annual rate of 574,000, the Commerce Department said today in Washington. Stock index futures rose after the reports. Futures on the Standard & Poor’s 500 Index expiring in March added 0.4 percent to 1,108.5 at 8:46 a.m. in New York. Central bankers today will wrap up their final policy meeting of the year with no change in their benchmark lending rate, according to all 98 economists surveyed by Bloomberg. In November, they repeated a pledge to keep the interest rate low for an “extended period.” They also specified for the first time that the policy will stay unchanged as long as inflation expectations are stable and the labor market remains weak. “The bulk of the evidence indicates that resource slack is now substantial,” Fed Chairman Ben S. Bernanke said in a written response to questions from Senator Jim Bunning. His office released Bernanke’s Dec. 14 responses yesterday. “I continue to expect slack resources, together with the stability of inflation expectations, to contribute to the maintenance of low inflation in the period ahead.” Year-Over-Year Compared with a year earlier, consumer prices were up 1.8 percent. Core prices rose 1.7 percent from November 2008, matching the year-over-year gain in October. Fed policy makers’ long-term forecast for their preferred measure of inflation, the Commerce Department index tied to consumer spending and excluding food and fuel, calls for gains in a range of 1.8 percent to 2 percent. That gauge, which is typically lower than the CPI, was up 1.4 percent in the 12 months to October. Energy costs increased 4.1 percent in November, the most since August. Gasoline prices jumped 6.4 percent, accounting for more than 75 percent of the rise in total energy costs, the Labor Department said. Fuel oil costs rose 9 percent, the most since November 2007. The year-over-year declines in the consumer price index are getting smaller as crude oil prices increase from an almost five- year low in December 2008. Oil Prices Crude oil traded on the New York Mercantile Exchange averaged $78.15 a barrel in November, compared with $75.82 in October. Prices have retreated this month, averaging $73.16. Gasoline prices in November averaged $2.65 a gallon, compared with $2.56 a month earlier, according to AAA. Prices for regular-grade gasoline at the pump have averaged $2.63 so far this month. Food costs, which account for about 15 percent of the CPI, increased 0.1 percent in November. Rents, which make up almost 40 percent of the core CPI, fell. Owners-equivalent rent, one of the categories used to track rental prices, decreased 0.1 percent after no change. In September, the measure also dropped 0.1 percent, the first decline since 1992. Medical Care Medical care prices increased 0.3 percent in November, reflecting higher hospital and related services costs. Transportation costs jumped 2.3 percent as prices increased for new vehicles and airline fares. Apparel prices declined 0.3 percent last month after a 0.4 percent decrease. The CPI is the broadest of the three monthly price gauges from the Labor Department because it includes goods and services. A report yesterday showed wholesale prices in November rose 1.8 percent compared with the previous month. The cost of imported goods rose 1.7 percent, the government said last week. Almost 60 percent of the CPI covers prices consumers pay for services ranging from medical visits to airline fares and movie tickets. Jobless Rate The unemployment rate reached 10.2 percent in October before declining to 10 percent last month, the Labor Department said earlier this month. With companies still cutting jobs, companies are having to put more items on sale. Best Buy, the largest electronics retailer, said yesterday that its fourth-quarter gross profit rate will be lower than anticipated because of discounted laptop computers and $299.99 flat-screen TVs to attract customers. The Richfield, Minnesota-based company will see its gross margin decline by as much as 1 percentage point in the fourth quarter, Chief Executive Officer Brian Dunn said on a conference call with analysts. To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

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UK unemployment growth slows in November

December 16, 2009

UK unemployment growth slows in November

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Minister: Russia’s GDP up 8% in November

December 16, 2009

Minister: Russia’s GDP up 8% in November

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