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

To: RealMuLan who wrote (25556)	3/14/2005 12:58:00 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

China premier says market may be suprised by yuan reform plans [WTF? are we wrong about the timing of all this with all the hot money? This statement can have money flowing into China. Mish] Monday, March 14, 2005 5:31:04 AM forexstreet.com (Updates with further details, background and quotes from premier) BEIJING (AFX) - China's Premier Wen Jiabao said plans for reform of the exchange rate regime were in progress and the markets could be surprised by the timing and contents of the measures Speaking in response to a question at a nationally televised news conference, he said planning to adjust the regime was under way but "regarding the timing of the reform or specific measures to be adopted... maybe they will come unexpectedly." He did not say specifically what Beijing had in mind or when a plan might emerge "Our objective for exchange reform is to have a market-based, managed, floating exchange rate," he said "When we consider reform plans, our purpose is to make the exchange rate more responsive to supply and demand in the market." Wen said a number of conditions would have to be met before the currency regime is reformed, including a healthy financial situation along with the development of macro-economic stability and economic growth Beijing has been under pressure to revalue the yuan, effectively pegged at about 8.3 to one dollar, or loosen controls on the currency to let it trade in a wider band. So far it has said it is moving ahead with reforms but has resisted giving any timetable for its reform plans The pressure on Beijing for a revaluation largely stems from China's major trading partners, such as the US and Japan, which insist that the currency is being kept artificially weak to make exports more competitive China insists this is not the case even though it has not ruled out a revaluation Some critics -- and even the International Monetary fund - have suggested China should consider linking the yuan to a basket of currencies Wen also said that China would take into consideration its own interests as well as those of neighboring countries and the global economy as a whole, adding that many advocates of the revaluation of China's currency "haven't given much thought to the problems that could arise later on." He did not elaborate on these themes but he mentioned the health of state enterprises and clearly had exporters in mind. The premier also may have been referring to the impact of any inflows of so-called "hot money" into the country on expectations of a further adjustment in the currency after any revaluation

To: RealMuLan who wrote (25556)	3/14/2005 1:05:50 AM
From: mishedlo	Respond to of 116555

Japan Feb corp failures fall 12.6 pct yr/yr, liabilities down 25.8 pct -UPDATE Monday, March 14, 2005 5:32:10 AM forexstreet.com TOKYO (AFX) - Japanese corporate bankruptcies in February declined 12.6 pct from a year earlier to 1,056, the 26th straight monthly decline, Teikoku Databank Ltd reported Total liabilities left by the failed companies dropped 25.8 pct from a year earlier to 808.3 bln yen, remaining below 1.0 trln yen for the 11th consecutive month, the quasi-private credit research firm said Compared to the previous month, the number of corporate bankruptcies rose 1.6 pct, while the amount of liabilities increased 35.1 pct, Teikoku said Teikoku said no publicly listed Japanese companies failed for a third straight month in February But 799 of the companies that collapsed did so because of recession-like factors, a term used to refer to dwindling revenues because of declining prices, drooping demand, or in many cases both. Some 75.7 pct of the companies that collapsed last month did so because of recession-like factors, exceeding 75 pct for the first time in three months, Teikoku said. Teikoku said special government programs aimed at keeping struggling companies afloat were primarily responsible for the improvement that occurred "The overall decline in the number of corporate failures is attributed mainly to the expanded public assistance for small to medium-sized enterprises, such as the safety net guarantee program and guarantee system for refinancing," Teikoku said in a statement Earlier this decade, to counter fears of a systemic failure of the Japanese banking system because of a surge in corporate bankruptcies, the government introduced a slew of measures aimed at keeping struggling companies afloat. The government both increased the amount of money it lent, and more significantly took steps to guarantee a big increase in lending by private banks to cash-starved companies But private economists say economic recovery as well has played a major role in causing corporate bankruptcies to fall the past two years. In late 2001 the Japanese economy began to rebound, with the recovery accelerating sharply over a six-month period to March last year. Profits in many industries, and especially among many of Japan's largest companies, have risen sharply, while overall corporate debt has fallen sharply due to restructuring Bad debts at Japan's biggest banks have been slashed to much more manageable levels. Bad debts as a percentage of outstanding loans have fallen to around 4 pct at three of Japan's four so-called megabanks, while all but two of Japan's seven largest banks are again operating profitably. The prolonged decline in corporate bankruptcies has also greatly eased anxiety among Japanese workers about losing their jobs due to corporate failures, at last sparking a sporadic pick-up in Japanese consumer spending, which underpins 55 pct of the economy.

To: RealMuLan who wrote (25556)	3/14/2005 1:08:42 AM
From: mishedlo	Respond to of 116555

Japanese net sellers of 647.5 bln yen of foreign bonds in February - MoF Monday, March 14, 2005 1:44:20 AM forexstreet.com TOKYO (AFX) - Japanese investors were net sellers of 647.5 bln yen worth of foreign bonds and notes in February, Ministry of Finance (MoF) data shows, adding to concern over foreign flight from dollar-denominated securities Japanese investors sold 9.52 trln yen of foreign bonds and notes during February, and bought 8.87 trln yen, according to international investment fund flow data for the month released by MoF Japan has the world's largest foreign currency reserves, and the Japanese are major players in the US Treasuries market. Thus Japanese investment behavior is watched closely for signs of whether foreign investors remain willing to continue financing the growing US fiscal and current account deficits by buying US government bonds Over the first two months of 2005, Japan's foreign exchange reserves fell by nearly 4.0 bln usd, to 840.56 bln usd as of February 28. The finance ministry attributed that decline to the diminished value of US Treasury bonds held by the Japanese government. Analysts have warned any sign of a prolonged decline in Japanese buying of US Treasuries would almost certainly cause the dollar to tumble in value against the yen and other major currencies, and US interest rates to rise, possibly imperilling global economic growth. Last week Japanese Prime Minister Junichiro Koizumi briefly rattled the international currency market by saying, in reply to a question in parliament, that Japan's foreign currency reserves should be "diversified" The dollar quickly sank in value on the remark, until the Ministry of Finance issued a statement saying Koizumi was speaking in a general sense and there was no change to Japan's strategy of investing its vast foreign reserves. Top Japanese officials have repeatedly declared that Tokyo has no intention of cutting its exposure to US-dollar denominated assets Today's MoF data also showed that foreign investors remained net buyers of Japanese equities last month, and reverted to be net buyers of Japanese bonds Foreigners were net buyers of 1.03 trln yen of Japanese stocks, and net buyers of 205.0 bln yen of Japanese bonds

To: RealMuLan who wrote (25556)	3/14/2005 1:11:55 AM
From: mishedlo	Respond to of 116555

BoE´s Lambert says no mechanical link between inflation forecast and rates Monday, March 14, 2005 12:16:09 AM forexstreet.com BoE's Lambert says no mechanical link between inflation forecast and rates LONDON (AFX) - A Bank of England policy-maker stressed today that there is no direct, mechanical link between the central bank's inflation forecast and the level of interest rates Richard Lambert, a member of the rate-setting Monetary Policy Committee, said there "could be circumstances in which the Committee decided that it would make sense to let the projection stray above the 2 pct target for a while, allowing the economy some extra time to get back into balance" Writing in the Bank's quarterly economic bulletin, Lambert said the MPC "constantly worries about uncertainties and risks, and is ready to move at any time if it feels that things are not working out as expected" The nine-member panel has a history of raising or lowering the cost of borrowing during the months it publishes its quarterly economic projections; February, May, August and November In last month's Inflation Report, the MPC forecast that inflation was likely to rise above the 2 pct target on a two-year horizon, raising expectations that another interest rate hike may be on the cards soon "There is no mechanical link between the central projection as published in the Report and the level of interest rates," said Lambert The MPC has not raised interest rates since last August as evidence emerged of a slowdown in the growth of consumer spending, particularly in the housing market, and the economy appeared to come off the boil. Between November 2003 and August 2004, it raised its key repo a quarter point on five occasions, taking the base rate up to 4.75 pct But in the first few months of the new year, that view appears to have changed as consumer spending remained resilient and the economy grew above its so-called long-term trend rate in the fourth quarter of 2004 In the article, which provided a guide to the workings of the MPC, Lambert revealed that the Bank's staff presents its benchmark forecasts to the MPC around four weeks before publication and the final view emerges following six or seven meetings of the rate-setting body Lambert, a former editor of the Financial Times newspaper and one of four external appointments to the rate-setting body, also said the MPC seems to prefer "small incremental moves in interest rates to larger, bolder steps" and noted that 26 of the 30 changes in interest rates since the Committee was established in 1997 have been quarter-point changes in either direction "The MPC has never raised rates by more than a quarter of a percentage point and its cuts of half a point came in November and December of 1998, February 1999 and November 2001," said Lambert He said quarter point changes are preferred given the overall uncertainty surrounding the economic data and the economy "Members tend to feel that by moving in small steps they have a better chance of assessing their action, and perhaps refining their views about how much further rates might have to move in the future," he said In addition, Lambert said there is a strong feeling on the MPC that sharp movements, which surprise the financial markets, should be avoided unless they are essential "Where possible, its instinct is to try to manage public expectations than to shock people into changing their behaviour," he said "If the markets felt that the Committee was prone to springing surprises, they might feel the need to insure themselves against this riks by pushing market interest rates higher than would otherwise be the case," added Lambert