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

To: zonder who wrote (16847)	11/26/2004 10:25:20 AM
From: mishedlo	Respond to of 116555

ECB says euro zone banks appear to have reduced USD assets in H1 2004 UPDATE Wednesday, November 24, 2004 2:53:19 PM afxpress.com (Updates with further quote) FRANKFURT (AFX) - Euro zone banks appear to have reduced their holdings of US dollar-denominated assets in the first half of 2004, the European Central Bank said in a report on EU banking sector stability "In 2004 there were indications that banks' usd-denominated assets remained broadly constant or decreased. In particular, in the case of euro area countries, holdings of usd-denominated fixed-income assets appear to have decreased in the first half of 2004," the report said "Overall, this evidence suggests that foreign exchange risk is likely to have decreased." An ECB official at the briefing to present the reports' findings said the decline in holdings of dollar-denominated assets in the euro zone is "not striking" but "a clear trend"

To: zonder who wrote (16847)	11/26/2004 5:11:29 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

WOT sanctions One would think we would address this rather obvious issue with our exports instead of complaining about currency pegs and thrifty world citizens. forbes.com The World Trade Organization on Friday approved stiff sanctions on a wide range of American exports intended to punish the United States for failing to repeal what it considers protectionist legislation, a trade diplomat said. "It's been approved," said Amina C. Mohamed, Kenyan ambassador to the WTO and chairwoman of the organization's dispute settlement body. The European Union and other plaintiffs sought formal WTO authorization to retaliate by imposing new duties against various U.S. products. Among the potential targets are cod, textiles, glassware, mobile homes and apples.

To: zonder who wrote (16847)	11/26/2004 5:54:59 PM
From: mishedlo	Respond to of 116555

UK Oct mortgage lending little changed vs Sept but approvals fall - BBA Thursday, November 25, 2004 9:45:02 AM afxpress.com LONDON (AFX) - Mortgage lending by major UK banks in October stayed little changed from the previous two months but approval numbers fell, according data from the British Bankers Association. Seasonally adjusted net lending rose 4.4 bln stg in October, similar to levels in September and August. The number of loan approvals fell 7 pct from September and 33 pct compared with a year ago while house purchase loans dropped 1.5 pct and 35 pct respectively However, the value of the average house purchase loan rose to 113,110 stg after falling in each of the last three months. Meanwhile, consumer credit growth slowed down in line with weaker retail sales, BBA said. Additionally, new borrowing on credit cards fell to the lowest level since February at 7.173 bln stg, some 8.6 pct weaker than the average of the previous six months.

To: zonder who wrote (16847)	11/26/2004 5:58:13 PM
From: mishedlo	Respond to of 116555

BoE´s Bean says dollar set for further falls, poses risk to UK economy Thursday, November 25, 2004 9:15:26 PM afxpress.com BoE's Bean says dollar set for further falls, poses risk to UK economy LONDON (AFX) - The US dollar is set for further falls, in turn posing a considerable risk to the UK economy, Bank of England chief economist Charles Bean said "At some stage action will have to be taken to close the US fiscal deficit and, when that happens, the real value of the dollar will need to fall if a sharp slowdown is to be avoided there," he told businessman in a speech in Colchester In the mid-1980s, the elimination of the twin gaps in the US fiscal and current account - then about 3 pct of GDP - led to a 30 pct fall in the dollar's trade weighted terms. Now, the deficits stand at 5 pct of GDP and the dollar has lost only 15 pct of its trade weighted value since its peak in Feb 2002 "So a further, possibly substantial, decline may accompany closure of the current account deficit," Bean added But it is hard to predict just when this will happen, and the impact on the UK depends on what happens to the pound. So far, much of the pound's gains on the dollar have been cancelled out by its falls against the euro, he said. "If that pattern is maintained, then the deterioration in overall UK competitiveness from further dollar depreciation would be limited. But there can be no guarantee that this pattern of 'sterling-in-the-middle' will continue," Bean added The dollar has been facing a hefty sell down in recent weeks, taking the pound to 9-month highs just under 1.90 usd today. The euro meanwhile has raced to a series of records against the beleaguered dollar. The current all time high stands at 1.3246 usd, set in European trading hours today Bean also listed other considerable risks facing the UK economy, among them the outlook for consumer spending "Despite last week's announcement of a 0.4 pct fall in retail sales in October, our central projection is for consumer spending to continue to grow steadily over the next few quarters, albeit at a lower rate than seen in recent years," he said But with the housing market slowing rapidly there is a risk of a sharper slowdown, he added Additionally, while inflation in the UK remains benign it is not clear how things will pan out. Still, Bean declined to pronounce that UK interest rates have hit peak at 4.75 pct, saying instead that upcoming data will be the ultimate decider "Neither I nor my colleagues on the Monetary Policy Committee know how the data will unfold over the coming months and quarters, and it is the data that will determine where interest rates go next," he told businessmen in Colchester His comments echoed central bank governor Mervyn King's own assessment earlier this month The nine-strong MPC has left the benchmark rate unchanged at 4.75 pct for three straight months since August, having steadily raised it from 3.50 pct in November last year

To: zonder who wrote (16847)	11/26/2004 6:02:11 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Deflation continues in Japan Tokyo Nov core CPI down 0.2 pct mth-on-mth; nationwide Oct CPI unchanged Friday, November 26, 2004 12:07:59 AM afxpress.com TOKYO (AFX) - The metropolitan Tokyo core consumer price index (CPI), a leading indicator of nationwide price trends, fell 0.2 pct from the previous month, the Ministry of Internal Affairs and Communications said Year-on-year, the Tokyo area core rate fell 0.3 pct, the 62nd straight monthly decline, showing Japan remains troubled by deflation. That index fell 0.3 pct in October The year-on-year decline in November was worse than the 0.2 pct drop expected in a Nihon Keizai Shimbun survey of 22 brokerages and research houses. All 22 organizations forecast declines, with the estimates ranging from minus 0.3 pct to minus 0.1 pct. The core rate excludes volatile fresh food prices, and thus gives a clearer picture of the underlying rate of inflation or deflation Including fresh food prices, Tokyo area consumer prices in November fell 0.1 pct month-on-month Year-on-year, the overall consumer price index for Tokyo rose 0.6 pct in November, after rising 0.3 pct in October, the first rise in 62 months The ministry also released nationwide CPI data for October On a nationwide basis, the core rate was unchanged from the previous month, following rises in three of the previous four months Year-on-year the core rate -- the Bank of Japan's primary measure of price trends -- fell 0.1 pct, less than expected. The average of estimates in the Nikkei survey of 22 research houses foresaw a 0.2 pct drop. The estimates ranged from minus 0.3 pct to unchanged. The Bank of Japan has declared it will maintain its ultra-easy credit stance, under which it seeks to keep short-term interest rates near zero in an effort to stem deflation, until the core CPI remains above zero for a prolonged period, shows no signs of dropping and the economy is growing The nationwide core rate was unchanged in September, after falling 0.2 pct in both August and July and by 0.1 pct in June, all from year-earlier levels The index for overall prices nationwide in October rose 0.5 pct month-on-month, after rising in three of the previous four months Year-on-year it rose 0.5 pct, after remaining unchanged in September, falling 0.2 pct in August and by 0.1 pct in July, and remaining unchanged in June

To: zonder who wrote (16847)	11/26/2004 6:10:37 PM
From: mishedlo	Respond to of 116555

Issing says ECB cannot react to short-term impact of external shocks UPDATE Thursday, November 25, 2004 5:23:15 PM afxpress.com (updating with comments on wages) BERLIN (AFX) - European Central Bank chief economist Otmar Issing said the ECB cannot change interest rates in response to the short-term impact of external developments, such as this year's sharp rise in oil prices "Monetary policy is powerless to deal with the short-term impact of exogenous shocks such as a rise in oil prices or increases in indirect taxes," Issing said in a speech He said this needs to be understood by wage negotiators, who can be assured that the ECB will maintain price stability over the medium term "Nothing is more damaging for confidence as when price increases erode the real value of wage agreements," he said Issing said monetary policy can only foster growth and employment through its contribution to economic stability "Stability from the perspective of monetary policy means stability of the value of money" he said He added; "Stability of the value of money is not everything, but without it there is no sustained development of growth and employment."

To: zonder who wrote (16847)	11/26/2004 6:15:01 PM
From: mishedlo	Respond to of 116555

Trichet says ECB has kept inflation under control in face of shocks UPDATE Friday, November 26, 2004 11:22:45 AM afxpress.com (Updating with comments on commercial banks' interest rates, Greek deficit data) FRANKFURT (AFX) - European Central Bank president Jean-Claude Trichet said the ECB has been very successful in keeping euro zone inflation under control in the face of adverse shocks such as the recent rise in oil prices "The conduct of our monetary policy... has been very successful overall." "In particular, it has been instrumental in keeping inflation under control even in the face of substantial adverse shocks, and in keeping medium to long-term inflation expectations well anchored," Trichet said in a letter to the European Parliament Euro zone inflation is currently running at 2.4 pct following this year's surge in oil prices. The ECB aims to keep inflation below but close to 2 pct Trichet said the ECB's success in controlling inflation expectations have resulted in very low real and nominal interest rates, which provide the best financial conditions that euro zone countries have experienced for a long time These conditions help support economic growth and job creation, the ECB president said He said the ECB's goal of an inflation rate below but close to 2 pct gives a sufficient safety margin against the risk of deflation in the euro area as a whole It also ensures that individual countries do not have to cope with periods of excessively low or negative inflation rates, Trichet said Trichet's letter to the European Parliament also includes comments on a series of questions raised by MEPs during his presentation of the ECB's annual report to the parliament in October Trichet said commercial banks tended to be slow in passing on ECB rate reductions to corporate customers between 2001 and 2003, but did reduce rates on mortgages relatively quickly ECB rates were reduced from a peak of 4.75 pct in Oct 2000 to a low point of 2.00 pct in June 2003, and have remained at that level since Trichet said the banks reacted slightly differently to the ECB rate cuts than they did in the past He said there was a "slower downward adjustment followed by quicker upward adjustment of monetary financial institutions' (MFI) interest rates on loans to non-financial corporations with a maturity over one year and, conversely, a somewhat faster downward adjustment of MFI interest rates on loans to households for house purchases" This may reflect differences in perceived credit risks and in changes in the financial conditions of the banking sector, Trichet said. Meanwhile, the president of the ECB rejected MEPs' calls for the ECB to publish a regular study on the economic situation in individual euro zone countries, along the lines of the US Federal Reserve's Beige Book He said national economic developments are already covered in reports from national central banks On the other hand, Trichet said he shared MEPs' concerns about sharp upward revisions to estimates for Greece's budget deficits in the 2000-2003 period "The Greek case underlines that the compilation and reporting of reliable government finance statistics is of vital importance to the credibility of budgetary surveillance in individual countries and in EMU as a whole," he said Finally, Trichet said any move to withdraw one and two cent coins and round prices for cash payments to the nearest five cent multiple, as already happens in the Netherlands and Finland, would not have any major impact on inflation "There is a risk that rounding rules for cash payments would provide an opportunity for producers and retailers to round up the quoted prices for some goods...such effects should, however, remain limited as a result of competition in the retailing sector," he said

To: zonder who wrote (16847)	11/26/2004 6:30:45 PM
From: mishedlo	Respond to of 116555

Excellent News for Short Sterling Players [I have no idea what that last shakeout was all about but new highs were posted the last couple days - mish] DATAWATCH - UK Q3 GDP data suggest govt will have to shave 2005 estimates Friday, November 26, 2004 1:13:51 PM afxpress.com LONDON (AFX) - The factors that shored up UK GDP growth in the third quarter - rising exports and government spending - could well disappear in coming months, suggesting that government forecasts for growth next year will have to be shaved, analysts warned Data out today confirmed that GDP growth rose just 0.4 pct in the third quarter, well down on the 0.9 pct pace set in the previous three months. Strikingly, the traditional engine of growth, household spending - which makes up about 60 pct of GDP - slowed sharply from the second quarter while business investment stalled after several quarters of steady rises "The mix of growth, was slightly disappointing, heavily dependent on government consumption and a rise in exports – both of which may disappear going forward," said John Butler, economist at HSBC said Government current spending was the key source of growth, up 1.7 pct on the quarter compared to HSBC's expectations of a 0.6 pct rise "The government boost is coming to an end next year while the global outlook remains uncertain. That supports our view that GDP growth in 2005 will disappoint," Butler said HSBC expects GDP growth in 2005 to come in at 2.2 pct versus the government's current estimate of 3.0-3.5 pct Jonathan Loynes at Capital Economics agreed The breakdown of third quarter growth makes Chancellor Gordon Brown's estimates for 2005 look shaky, he said. "Overall, whilst backward-looking, the figures added some support to our view that the economy is likely to slow quite sharply over the next year as net trade and investment fail to compensate for weaker growth in household spending," he said Chancellor Brown is scheduled to make his annual pre-budget speech on Dec 2 where he will outline estimates for government spending based on fresh forecasts for economic growth He is widely expected to revise down GDP estimates but many believe the adjustments may still be a tad too optimistic Even for 2004, it is touch and go whether Brown's forecasts will be met, analysts said But Brown did get some help today, when the annual rate of growth in the third quarter was rounded up to 3.1 pct from 3.0 pct, Loynes pointed out

To: zonder who wrote (16847)	11/26/2004 7:25:59 PM
From: mishedlo	Respond to of 116555

OUTLOOK Brown set to downgrade 2005 growth forecast in pre-budget report Friday, November 26, 2004 1:24:11 PM afxpress.com ----by Pan Pylas---- LONDON (AFX) - Chancellor of the Exchequer Gordon Brown looks set to downgrade his 2005 growth forecast for the UK economy in next Thursday's pre-budget report as higher borrowing costs, sky-high oil prices and a slowdown in the global economic recovery take their toll As a result, most analysts think the Chancellor will have to concede that his projections for government borrowing have been too upbeat too, despite the revenue boost coming from 50 usd a barrel oil prices Though they fully expect Brown to meet his 2004 GDP growth forecast of 3.0-3.5 pct, they think Brown will have to reduce his forecast for 2005 growth to 2.5-3.0 pct from the current 3.0-3.5 pct prediction Though analysts expect the government to meet its sustainable investment rule that net debt is below 40 pct of GDP, there are real doubts about whether it will meet the so-called 'golden rule' of balancing the budget, excluding investment, over the course of the economic cycle, expected to end in 2005/6 "The Chancellor's forecasts for GDP growth and tax revenues remain more optimistic than those of independent forecasters and, if current trends continue, his fiscal golden rule will be broken in 2005," said Geoff Dicks, economist at Royal Bank of Scotland Lower than expected tax receipts and a pick-up in government spending in recent years mean the government has little margin for error At the half year stage, the public finances were no better than last year despite the Treasury's projections of a moderate improvement. Over 2004/5, Brown predicted public sector net borrowing of 33 bln stg At the time of March's budget, Brown said there was a margin of 11 bln stg against the golden rule. That margin will narrow and possibly close as most forecasters expect both the 2004/5 and 2005/6 deficits to be tweaked higher. "The Treasury will begin the next cycle with a large structural deficit and the method it uses for assessing the golden rule will add urgency to the need to raise taxes after the election," said Peter Spencer, chief economic advisor to the Ernst & Young ITEM Club, which uses the same forecasting model as the Treasury Taxes, most commentators believe, will have to rise after the next general election, to help plug the fiscal hole Brown won't say anything remotely suggesting the possibility of tax hikes as this statement comes six months before the expected general election Given the proximity of the election, Brown is likely to announce a series of headline-grabbing initiatives "Though the Chancellor is hemmed in by lower growth prospects and a tight tax and spend balance, I expect that electorally sensitive areas like health, education and transport are allocated resources," said Neil Mackinnon, chief economist at ECU Group Other possible policies include reforming inheritance tax to take into account the vast increase in house prices over the last few years, initiatives to increase the rate of housebuilding, a further freezing in petrol duties, and measures to help families with childcare