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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: LTK007 who wrote (84696)	6/25/2002 4:59:45 AM
From: nsumir81	Read Replies (1) \| Respond to of 99280

Geman Biz Confidence drops unexpectedly..this is what they said earlier that could spur a rally. Small decline nevertheless. Betcha they don't care now 'cause the beer is gushing all over ?-g quote.bloomberg.com 06/25 04:46 German Business Confidence Unexpectedly Fell in June (Update2) By Christian Baumgaertel Frankfurt, June 25 (Bloomberg) -- German business confidence unexpectedly fell in June, a survey of 7,000 companies showed, as Europe's largest economy struggles to recover from recession. The Ifo economic research institute's index of western German business confidence declined to 91.3 in June from 91.6 in May. Retailers and construction companies led the decline. ``All that talk about a domestic recovery -- I don't know where that's coming from,'' said Hans-Juergen Thaus, deputy chairman of Krones AG, a German maker of packaging machines for beer and soft drink bottlers. ``Business has clearly weakened, particularly in Germany.'' Strikes, rising unemployment and concern about exports may damp Europe's recovery. Deutsche Bank AG said it may shed more jobs as sliding stock prices erode profit. WPP Group Plc, an advertising company whose customers include Siemens AG, said it sees ``few, if any'' signs of an increase in ad spending. ``We don't expect a real recovery before 2003,'' said Sabine Decker, chief financial officer of Washtec AG, a maker of high- pressure water cleaners for the car and rail industries. Ifo, which gets half of its funding from the government, asks executives each month about production, inventories, orders, prices and employment. The confidence index peaked at 107.3 in November 1990. The low was 75.7 in 1982. Analysts had predicted the index would rise to 92 this month. An index of future expectations for business conditions fell to 104.9, compared with 106.2 in May. `Little Momentum' Concern the U.S. recovery is slowing has pushed stocks and the dollar lower. The euro climbed to 98.11 cents Monday, the first move above 98 since February 2000. The Dow Jones Stoxx 50 Index of European shares rose today after tumbling to the lowest level in more than 3 1/2 years on Monday. ``There's little momentum in the rebound,'' said Gernot Nerb, an economist at the Ifo institute. ``One danger is that the euro rises too much, damping export expectations.'' The U.S. economy -- destination of about a fifth of Europe's exports -- will probably slow after growing at an annual rate of 5.6 percent in the first quarter, economists said. Consumer confidence probably dropped the most in June since the Sept. 11 terrorist attacks, analysts said. German unemployment gained the most in five years in May and the HDE retailers' association said retail sales may drop as much as 2.75 percent this year. Italian business confidence declined for the first time in five months in June and French consumer spending fell in May at the fastest pace since September 1999. ``Growth in the euro area is very fragile,'' Germany's BDB banking association said Monday, citing the dependence on exports and the lack of investment. ``It will pick up steam only slowly in coming months.'' Interest Rates Struggling growth and slowing inflation may give the European Central Bank leeway to defer raising interest rates. German inflation slowed to the lowest level in more than 2 1/2 years in June. European inflation fell to in May to a five-month low of 2 percent from 2.4 percent in April. The ECB wants to keep inflation below 2 percent. It pared credit costs to 3.25 percent from 4.75 percent last year. The U.S. Federal Reserve cut the price of money to a 40-year low of 1.75 percent. The Fed probably won't raise the overnight rate until hiring and business investment increase, economists say. Investors have scaled back expectations of a rate increase, interest rate futures trading shows. The yield on the three-month contract maturing in September was 3.57 percent today, compared with 3.95 percent five weeks ago. DaimlerChrysler, Ford Still, low interest rates may help boost investment and spending. The German carmakers association on Wednesday repeated a forecast that 2002 car sales in Europe's largest market will match last year's levels even after five-month sales dropped. Factory orders and production in Europe's largest economy rose in April and companies from Deutsche Lufthansa AG to battery maker Varta AG said they expect profit to rise. DaimlerChrysler AG said it may raise the profit forecast for 2002 when it posts second-quarter earnings next month. Ford Motor Co. expects to reach its goal of a ``small'' profit in Europe in the second quarter and full year, helped by a stronger euro, said Martin Leach, who will become president of the Europe division of the second-largest automaker on Aug. 1. ``The second quarter looks favorable,'' said Washtec's Decker. ``Orders have clearly improved since the end of May.''