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

To: Haim R. Branisteanu who wrote (17154)	11/30/2004 9:10:39 AM
From: mishedlo	Respond to of 116555

UK trade deficit set to come down as pound adjusts to competitive level - King Tuesday, November 30, 2004 11:34:49 AM afxpress.com LONDON (AFX) - The UK's trade deficit is poised to decline as the pound adjusts to a more sustainable level against the euro, Mervyn King, the governor of the Bank of England, said today In testimony to the Treasury Select Committee, King sought to dampen concerns about the impact of the trade deficit and argued that sterling's marked depreciation against the single currency should start feeding through into an improved export performance to the euro zone If adjusted to the old Deutsche Mark level, the pound is trading at around 2.80 DM, more or less the level at which it was when it was ignominiously ejected from the Exchange Rate Mechanism in Sept 1992. At its height a couple of years ago, the pound was trading at the equivalent of a 3.20 DM rate "The pound doesn't pose major competitive problems now and I do think that with the adjustment, that (the trade deficit) may come down," he said However, he conceded that the pound's relative strength since 1996 led to some capacity to disappear "Those markets will have to be won back," he said In addition, King said the trade deficit has also been a function of anaemic economic growth in the euro zone Once growth in the euro zone picks up to the UK's levels, then the pressure on the UK's trade position will diminish Elsewhere, King told MPs on the committee that it would not be good for the global economic system if the entire burden of the dollar adjustment fell on the euro.

To: Haim R. Branisteanu who wrote (17154)	11/30/2004 9:38:15 AM
From: mishedlo	Respond to of 116555

BoE´s Bean suggests UK rates could rise even if house prices fall sharply Tuesday, November 30, 2004 11:47:00 AM afxpress.com BoE's Bean suggests UK rates could rise even if house prices fall sharply LONDON (AFX) - Bank of England chief economist Charles Bean suggested that interest rates could still rise even if house prices start falling sharply. He told a parliamentary Select Committee that consumer spending is not shrinking as much as feared despite growing concerns of a slide in house prices. "The link's rather weaker than just looking at past correlation would suggest," he said However, the historical relationship may re emerge - where consumers adjust spending in line with the value of a home, he warned. At the same hearing, Richard Lambert, another member of the nine-strong Monetary Policy Committee, said he expects month-to-month house price movements to be "erratic" although not as volatile as seen in the early 1990s, when house prices crashed in the wake of double-digit interest rates and an increase in unemployment to over 3 mln

To: Haim R. Branisteanu who wrote (17154)	11/30/2004 9:52:55 AM
From: mishedlo	Respond to of 116555

UK retail sales shows modest pick up in Nov but expected weak in Dec - Tuesday, November 30, 2004 11:47:36 AM afxpress.com (Updating with more details throughout) LONDON (AFX) - UK retailers reported a modest pick-up in sales in November, with underlying sales growth rising after four months of deceleration, but Christmas sales are expected to be disappointing, the Confederation of British Industry said. In its latest quarterly distributive trades survey, the CBI said 43 pct of high street stores reported sales were up, against 24 pct reporting that sales fell. The balance of plus 19 is an improvement on plus 11 in October, but well below the balances reported in April, May, June and July. However, 25 pct of firms said sales in November were poor for this time of year, while 21 pct said they were good, giving a balance of minus 4 pct -- no improvement on last month Looking ahead to December, however, the balance worsens to minus 9 pct. "With stores open longer it's not unusual to experience a slow build-up to Christmas. However, this year retailers appear to be bracing themselves for a disappointing Christmas as consumers show a reluctance to spend in the face of rising interest rates and concerns about the economy," said Ian McCafferty, CBI chief economic adviser. The underlying trend has begun to rise again after falling continuously for the previous four months, although it remains well below that seen earlier in the year, the CBI said. The volume of sales measured on a three-month moving average showed a balance of plus 7 in November, up from plus 1 last month and plus 6 in September. In November last year, however, the balance was plus 24. Survey results suggest retailers are keeping volumes up by cutting prices or discounting. Retail jobs were cut back and firms said investment has deteriorated, while business optimism over the next three months remains flat, the CBI said. The survey shows confectioners and newsagents reporting the strongest growth compared with a weak November last year, the CBI said. Grocers, booksellers and stationers and stores selling hardware, china and DIY also reported healthy growth. Stores selling durable household goods continued to report negative growth but indicate an improvement on the previous two months. Wholesalers reported continuing sales growth and expect to increase investment "significantly" over the coming year. Motor traders, however, experienced a large fall in sales volumes over November and the business situation is expected to deteriorate over the coming quarter, the survey said.

To: Haim R. Branisteanu who wrote (17154)	11/30/2004 9:57:26 AM
From: mishedlo	Respond to of 116555

EU says HICP in line with forecast Tuesday, November 30, 2004 11:41:23 AM afxpress.com BRUSSELS (AFX) - The European Commission shrugged off today's euro zone confidence data, and noted that the provisional inflation estimate is in line with its forecasts The commission's euro zone economic sentiment indicator for November fell to 100.8 points from 101.3 in October The industrial confidence component of the indicator was unchanged in the euro area at minus 3 from a revised minus 3 in October, while consumer confidence improved to minus 13 from minus 14 Commission spokeswoman Amelia Torres said: "I don't think we can see this as our major concern." She added that the commission has "no major concerns" about the report As for inflation, the euro zone harmonised index of consumer prices rose a provisional 2.2 pct year-on-year in November compared with a year-on-year rise of 2.4 pct in October Torres said the figures "are in line with our forecast"

To: Haim R. Branisteanu who wrote (17154)	11/30/2004 10:06:33 AM
From: mishedlo	Read Replies (2) \| Respond to of 116555

Uneven start to retailers´ key holiday selling season Tuesday, November 30, 2004 1:00:15 PM afxpress.com Uneven start to retailers' key holiday selling season WASHINGTON (AFX) -- The International Council of Shopping Centers says the holiday selling season got off to a softer-than-expected start. Citing consumers holding out for bargains and a dropoff in Saturday's customer traffic, U.S. retail chains' same-store sales fell 1.5 percent in the week ended Nov. 27 compared to the prior week, according to ICSC's latest survey compiled with UBS. On a year-over-year basis, sales grew by 2.4 percent, but this was slower than the growth rates seen in each of the previous few weeks. Assessing the post-Thanksgiving period, ICSC chief economist Mike Niemira said sales were "strong" on Friday but "weakened on Saturday and posted a moderate gain on Sunday." Against this backdrop, ICSC lowered its forecast for monthly sales to a growth range of 2.5 percent to 3.0 percent compared to November 2003, down from a prior projection of 3.0 percent to 4.0 percent

To: Haim R. Branisteanu who wrote (17154)	11/30/2004 10:17:49 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

eurodollars interesting and much welcome but totally unexpected reaction Eurodollars rally in the face of falling treasuries. Mish

To: Haim R. Branisteanu who wrote (17154)	11/30/2004 10:55:03 AM
From: mishedlo	Respond to of 116555

UK rate setters cement view cost of borrowing will stay unchanged Tuesday, November 30, 2004 2:44:10 PM afxpress.com ----by Pan Pylas---- LONDON (AFX) - Testimony from UK rate setters today did little to alter the market's perception that the cost of borrowing is going to stay unchanged for months to come The Bank of England's governor Mervyn King and other members of the rate-setting Monetary Policy Committee did not divert too much from the sentiments expressed in the Inflation Report earlier this month, during questioning by MPs on the influential Treasury Select Committee King repeated his view that growth is likely to pick up from the so-called 'soft patch' experienced in the third quarter, where the economy improved by only 0.4 pct, with inflation remaining relatively subdued Analysts also said the governor appeared to reiterate his view that the risks to growth and inflation, on balance, remain on the downside and only stronger than expected data in the months to come is likely to alter that view "There is little to alter the market's view that rates in the UK have peaked, but nor is there a sufficient sea-change in language to foster hopes of a swift rate reduction," said Daragh Maher, senor FX strategist at CALYON. Since last November, the MPC has raised interest rates a quarter point on five occasions, taking its key repo rate up to 4.75 pct, in an attempt to stem inflationary pressures emanating from rampant consumer demand and above trend economic growth Analysts said the direction of interest rates will depend largely on how an apparent slowdown in the housing market impacts upon consumer spending and if the central bank's observation that the historical link between the two has loosened continues "They don't want to pre-empt the data and it all depends on what happens to housing and consumption," said George Buckley, economist at Deutsche Bank, who, on balance, reckons rates will stay on hold for a number of months before being reduced The BoE's chief economist Charles Bean even went so far as to suggest that interest rates could still rise even if house prices start falling sharply. He told the MPs that consumer spending is not shrinking as much as feared despite growing concerns of a slide in house prices. "The link's rather weaker than just looking at past correlations would suggest," he said However, the historical relationship may re-emerge - where consumers adjust spending in line with the value of a home, he warned. At the same hearing, Richard Lambert, another member of the nine-strong MPC, said he expects month-to-month house price movements to be "erratic" although not as volatile as seen in the early 1990s, when house prices crashed in the wake of double-digit interest rates and an increase in unemployment to over 3 mln On the inflation front, analysts said some sort of division is beginning to emerge on the MPC, which was accused by one MP of being dissenting since King became governor in the summer of 2003 While Bean and Lambert warned about pipeline inflationary pressures, Stephen Nickell said it was unclear how far CPI inflation will get towards the 2.0 pct target over the next two to three years King conceded that CPI inflation has been lower than expected, reflecting continued downward pressure on the prices of imported food and clothing, competition in the distribution sector and modest wage inflation However, he refused to be complacent and said the absence of spare capacity in the economy apparent in surveys suggests that there are upside risks to the the MPC's central projection of relatively low inflation over the next two years "And the upside risk from a tight labour market chimes with the views I have heard on my regional visits in recent months," he said Nevertheless, King said there is a possibility that for a period, the link between inflation and demands on supply capacity will be weaker than has typically been the case in the past "Consequently, the inflation debate will likely hinge on the data, and for now the undershoot on CPI favours the doves, and may continue to do so well into 2005," said CALYON's Maher

To: Haim R. Branisteanu who wrote (17154)	11/30/2004 10:59:39 AM
From: mishedlo	Respond to of 116555

U.S. Q3 GDP revised up to 3.9% - Tuesday, November 30, 2004 2:44:18 PM afxpress.com WASHINGTON (AFX) - The U.S. economy grew at a 3.9 percent annual rate in the third quarter, slightly faster than the 3.7 percent estimated a month ago, the Commerce Department reported Tuesday The revisions to real gross domestic product were largely due to higher exports, consumer spending and business investments, which were offset by lower inventory building and residential investment. In the third quarter, final sales of domestic products increased 4.9 percent, the best in a year, and nearly double the 2.5 percent in the second quarter Economists were predicting a revision to about 3.8 percent, according to a survey conducted by CBS MarketWatch Bonds held lower after the report while the dollar weakened further. The government will estimate third-quarter growth one more time The economy grew at a 3.3 percent annual rate in the second quarter In the past year, the economy has grown 4 percent. Annualized GDP was $11.81 trillion in the third quarter in current dollar terms. As in the first estimate a month ago, growth in the quarter was supported by consumer spending, especially on durable goods, and by business investments in equipment and software Inflation remained tame. The core personal consumption expenditure price index (which excludes food and energy costs) increased an unrevised 0.7 percent annualized in the quarter, the lowest core inflation in 42 years Even including energy, price inflation was moderate. The gross domestic purchases price index increased 1.8 percent Profits blown away Meanwhile, before-tax corporate profits from current production fell $27.6 billion or 2.4 percent to $1.15 trillion annualized in the third quarter, the fastest decline in three years, bringing the year-over-year growth down to 8.4 percent, the slowest growth in 10 quarters. Profits were hurt by the series of hurricanes that devastated parts of Florida and other Southeastern states in the quarter. Corporate profits were reduced by $10.4 billion in uninsured losses and $69.3 billion in insurance payments to noncorporate sectors, the government said Excluding the impact of the storms, profits rose by $52.1 billion annualized GDP details Consumer spending increased 5.1 percent, the most in nearly three years. Spending on durable goods advanced 17.2 percent, spending on nondurable goods increased 4.8 percent and spending on services increased 2.9 percent. Disposable personal incomes increased an upwardly revised 2 percent, while the personal savings rate dropped to 0.5 percent, matching the lowest since the Great Depression "The outlook for the consumer is somewhat mixed," said Haseeb Ahmed, an economist for Economy.com. "Strong job and income growth are offsetting the drag from fading tax cuts and still elevated energy prices. But the unusually low savings rate renders some uncertainty to the outlook: should households attempt to raise the savings rate in a relatively rapid fashion, the drag on spending could be considerable." Business investments increased 12.9 percent, including a 17.2 percent gain in equipment and software Residential investments increased 1.7 percent Exports of U.S.-made goods and services increased 6.3 percent, the slowest increase in five quarters. Imports grew even slower, rising 6 percent Government spending increased 1.2 percent behind the 9.8 percent gain in defense spending. Nondefense federal spending fell 5.2 percent and state and local government spending fell 0.8 percent

To: Haim R. Branisteanu who wrote (17154)	11/30/2004 11:05:53 AM
From: mishedlo	Respond to of 116555

U.S. Nov consumer confidence falls unexpectedly Tuesday, November 30, 2004 3:23:44 PM afxpress.com WASHINGTON (AFX) -- U.S. consumers became more cautious in November, the Conference Board said Tuesday. The consumer confidence index fell to 90.5 in November from a revised 92.9 in October. This is the lowest level since March and the fourth straight monthly decline. The drop was unexpected. Economists surveyed by CBS MarketWatch were expecting the index to rise to 95.7 as the stock market has been strong in the wake of the decisive reelection of President Bush. The October confidence index was revised up slightly from the initial estimate of 92.8. The bulk of the decline in November came from the expectations index, which slipped to 87.4 from 92.2. This is the lowest level since July 2003. The present situation index rose to 95.2 from 94.0 Lynn Franco, the director of the Conference Board's consumer research center, said the outlook for retailers in the holiday season was still mildly encouraging because consumers assessment of current conditions held fast and intentions to spend are up from a year ago "But looking beyond the upcoming holidays, the continuing erosion in expectations suggests consumers do not feel the economy is likely to gain major momentum in early 2005," Franco said Consumers assessment of the labor market was not as positive as last month. Those saying jobs are plentiful fell to 16.8 percent from 17.4 percent, while the number saying jobs are hard to get rose to 28.1 percent from 27.9 percent The number of consumers who say business conditions are good rose to 23.0 percent from 21.6 percent, while those saying conditions are bad edged down to 20.5 percent from 21.4 percent