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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: zonder who wrote (15476)	11/11/2004 9:11:20 AM
From: mishedlo	Respond to of 116555

A sharp decline in Japanese machinery orders in September has pointed to contracting business investment and set a bearish tone for the upcoming release of third quarter economic growth figures. Machinery orders dipped 1.9 per cent from the previous month, according to government figures released on Thursday that fell well short of the consensus forecast of a 0.1 per cent rise. The disappointing figures reinforced an impression that much of corporate Japan has gone into temporary hibernation as a slowdown in external demand and high oil prices eat into revenues and profits... news.ft.com

To: zonder who wrote (15476)	11/11/2004 9:18:26 AM
From: mishedlo	Respond to of 116555

Exports blamed for slowdown in German growth By Ralph Atkins in Frankfurt Germany's economic growth has slowed significantly, according to gross domestic product figures for the three months to September. The federal statistics office said on Thursday that GDP increased by just 0.1 per cent compared with the previous quarter, blaming a fall in exports for the dissapointing data. It also revised downwards the growth figure for the second quarter, from 0.5 per cent to 0.4 per cent. The data highlighted the vulnerability of the eurozone's largest economy to a slowdown in the world economy and the impact of higher oil prices. Exports may be hit further by the recent appreciation of the euro against the dollar. Jürgen Stark, vice president of the Bundesbank, told reporters at a conference in Vienna: "This is probably a small temporary weakening due to the effects of the oil price." [damn those blips seem to be popping up everywhere these days - mish] Eurozone GDP figures due out on Friday are expected to show a similar pattern of slowing growth, particularly in France. The data, combined with the strong euro, makes an increase in European Central Bank interest rates even less likely in coming months. However, Ralph Solveen, economist at Commerzbank in Frankfurt, said there was a "glimmer of hope" in the German GDP figures as domestic demand appeared to have increased strongly "with machinery and equipment and inventories as the main driving forces". He added: "The poor development in the third quarter will only be a dent, caused by a correction in exports." Commerzbank is forecasting German GDP growth for this year at 2.0 per cent. news.ft.com

To: zonder who wrote (15476)	11/11/2004 9:26:54 AM
From: mishedlo	Respond to of 116555

German Q3 GDP up 0.1 pct vs Q2; consensus up 0.3 pct; Q2 GDP revised down Thursday, November 11, 2004 7:16:51 AM afxpress.com WIESBADEN (AFX) - German GDP rose a seasonally and calendar-adjusted 0.1 pct in the third quarter from the second quarter, according to preliminary figures from the Federal Statistics Office. Unadjusted year-on year GDP growth was 1.3 pct, the office said Economists polled by AFX News had forecast quarter-on-quarter growth of 0.3 pct and year-on-year growth of 1.5 pct. German GDP grew a revised 0.4 pct in the second quarter from the first quarter, the office said. This was revised down from 0.5 pct growth The statistics office said third-quarter GDP growth was dampened by a slowing in export growth which, together with relatively strong growth in imports, resulted in a negative growth effect from the trade balance. Final third quarter GDP results are due on Nov 23 ========================================================================== Recession in Germany starting next quarter? Mish

To: zonder who wrote (15476)	11/11/2004 9:33:02 AM
From: mishedlo	Respond to of 116555

ECB says oil price impact on inflation ´a worrisome development´ Thursday, November 11, 2004 9:28:55 AM afxpress.com ECB says oil price impact on inflation 'a worrisome development' FRANKFURT (AFX) - The European Central Bank reiterated it is concerned by the impact of the recent rise in oil prices on euro zone inflation "Oil price increases have had a visible direct impact on consumer prices this year, and inflation is likely to remain significantly above 2 pct in the coming months. This is a worrisome development," the ECB said in its November monthly bulletin But it said there are no strong indications yet that medium-term inflation pressures are building in the euro area, with wage growth remaining limited The editorial of the bulletin closely matched ECB president Jean-Claude Trichet's introductory statement to the bank's Nov 4 news conference

To: zonder who wrote (15476)	11/11/2004 10:22:15 AM
From: mishedlo	Respond to of 116555

ECB warns of higher sensitivity to interest rates in euro zone housing market Thursday, November 11, 2004 12:39:56 PM afxpress.com FRANKFURT (AFX) - The European Central Bank today warned that the euro zone housing market has become more sensitive to changes in official interest rates because of an increase in the number of variable rate mortgages In its November monthly bulletin, the central bank said euro zone house buyers with variable rate mortgages face the risk of significant increases in mortgage payments if interest rates rise from their current low levels "Households which have been tempted to finance mortgages under the currently low interest rate conditions at variable rates with low initial interest payments should be aware of the risks they bear in the event that interest rates were to rise to levels more in line with historical standards," the ECB warned The central bank said it estimates that around 50 pct of outstanding euro zone mortgage debt is in loans where the interest rate is fixed for at least ten years, while around one third is accounted for by loans which are exposed to a change in interest rates in the year ahead The ECB said although the structure of mortgage contracts varies widely across the euro zone, the proportion of variable rate mortgages may have increased in recent years, with the result that households are more vulnerable to changes in interest rates "The interest rate sensitivity of households in the euro area has probably risen over recent years," it said Nevertheless, fixed rate mortgages still account for the largest share of euro zone house loans, largely because of their prominence in Germany, France, Belgium and the Netherlands Interest rates on many euro zone mortgages are fixed for the duration of the mortgage, with these rates based on bond yields at the time the mortgage is taken out Rates on variable rate mortgages generally fluctuate in line with money market rates over the life of the mortgage, although the rates are sometimes capped Rates on variable rate mortgages are therefore currently around 3 pct, but are expected to rise significantly once the ECB starts raising its main interest rate from its current historically low level of 2 pct Rates on fixed rate mortgages are presently around 4 pct Mortgage lending has been growing strongly in recent months, partly as a result of property price rises in some euro zone countries. Growth in loans for house purchases stood at 9.8 pct year-on-year in September

To: zonder who wrote (15476)	11/11/2004 10:59:05 AM
From: mishedlo	Respond to of 116555

ECB says euro zone economy still growing in H2 but pace of growth uncertain Thursday, November 11, 2004 11:46:07 AM afxpress.com FRANKFURT (AFX) - The European Central Bank said the euro zone economy is continuing to grow in the second half of the year but the pace of the economic expansion is uncertain "Survey data... point to ongoing growth in the second half of the year, although mixed indications give rise to some uncertainty as regards its pace," the ECB said in its November monthly bulletin EU statistics office Eurostat reports euro zone third quarter GDP tomorrow and growth is expected to slow from the 0.5 pct rate recorded in the second quarter and the 0.7 pct first quarter rate, particularly after this morning's news of a marked slowdown in German growth "At the sectoral level, available information points to ongoing expansion in the third quarter, although growth in the industrial sector may have moderated compared with the second quarter," the ECB said But surveys suggest that industrial output is continuing to grow at the start of the fourth quarter, with only limited impact from the recent oil price rise, it added "Survey data indicate that industrial confidence has not been affected significantly by the recent increase in oil prices, suggesting ongoing growth in industrial production," it said But indications for the services sector are more mixed, with the purchasing managers' index for services suggesting that growth has moderated in recent months, it said Meanwhile, private consumption is unlikely to have strengthened in the third quarter, the ECB said Looking ahead, the ECB said there are some risks to the growth outlook but the basic determinants for continuing growth next year remain favourable But it said the world economic cycle may now be past its peak "There are more indications that the current cycle, while likely to remain robust, has passed its peak," it said. "Both the OECD composite leading indicator and the purchasing managers' index signal a continuation of expansion, but also suggest a slowdown in growth rates from their very high levels observed in late 2003 and early 2004." And it said the high level of oil prices "could entail risks" for euro zone growth and inflation But the euro's appreciation has had some dampening effect on oil prices in euro terms, and dollar oil prices are in any case below previous peak levels in real terms "All in all, the current rise should have a more limited impact on the euro area economy than the large oil price shocks of the past," it said But it added: "Persistently high levels of oil prices or even further increases would be a reason for concern." The ECB said economic models suggest that a sustained 50 pct rise in oil prices would depress euro zone growth by 0.1-0.8 percentage points in the first year. But in the second year after such a price rise, the growth impact is estimated to range between a decline of 0.3 points and an increase of 0.2 points, while in the third year it is estimated to range between a decline of 0.1 points and an increase of 0.4 points However, the central bank said the results of such models need to be treated with caution The positive impact on growth suggested by some models in the second and third year may reflect an assumption that oil-exporting countries will increase their consumption of euro zone goods when oil prices rise, it said. The models point to a greater negative impact on inflation, which is expected to increase by 0.3-0.6 percentage points in the first year, 0.1-0.4 points in the second year. The inflation impact in the third year is estimated at between zero and 0.1 points The direct inflation impact of the oil price rise cannot be avoided, but the ECB said it must be prepared to raise interest rates if wages are raised in response to higher energy costs, leading to more general inflation pressures "If there are indications that general inflationary pressures are increasing, central banks need to be ready to take action," it said It said it therefore has to closely monitor inflation expectations and wage negotiations And governments must not seek to compensate for the oil price impact on growth by loosening fiscal policy, the ECB said "Fiscal policies can support the conduct of monetary policy geared to price stability by not trying to accommodate negative economic effects associated with oil price shocks," it said In countries which already have high deficits, an accommodative budgetary policy stance could have a destabilising effect and could prolong inflation pressures, it said =============================================================== What a hodgepodge of ideas and some seem convoluted if not contradictory. Let me summ it up: "We really do not know WTF is happening other than growth is slowing. We are over the hill in terms of peak, but it is too foggy to see how far the valley is below. As such we prefer to remain optimists and pretend that the we are overlooking a valley rather than a steep gorge. Even though we can not see where we are going, we will continue on the same path until it is obvious that we have fallen into a deflationary gorge. At that point we may or may not cut interest rates. We believe that rising oil prices are inflationary even though our models(which we ourselves do not trust)do not show it. We have done so much bitching about the strength of the Euro lately that we do not need to bitch more about it today." There. Is that a short accurate version of the above or not? Mish