Posts Tagged ‘Financial News’
Further Downgrade in Greece Triggered Credit Concerns, Investors Sheltered under USD
Broad-based rally in USD pared commodity gains made Wednesday. The dollar surged to 1.434, the highest level in 3 months, as S&P downgrades Greece’s credit rating for the second time this year.
Commodities pulled back as strength in the dollar reduced demand. WTI crude oil price retreated to 72.6 after surging to as high as 73.55. Comex gold also dropped to 1136 from 1142.5. Commodity currencies also tumbled. The Australian dollar plunged to 0.887, the lowest level in more than 2 months, while the New Zealand dollar slipped for the 3rd day to 0.71.
After placing Greece’s long-term rating on Credit Watch for a week, S&P eventually decided to downgrade it to BBB+ from A-. According to the agency, ‘the downgrade reflects our opinion that the measures the Greek authorities have recently announced to reduce the high fiscal deficit are unlikely, on their own, to lead to a sustainable reduction in the public debt burden’. The downgrade also made S&P’s rating consistent with that of Fitch which downgraded Greece to BBB+ on December 8. However, they may not be the end of the story. Greece remains in S&P’s Credit Watch, suggesting further downgrade is possible.
Risk aversion increased and shifted from higher-yield assets for USD, Japanese and bonds. Stock market also declined. In Asia, the MSCI Asia Pacific Index lost -0.9% as driven by financial companies. Concerning individual indices, China’s Shanghai Composite Index lost -2.3% while Japan’s Nikkei stock average lost -0.1%.
In Europe, all benchmark indices opened lower. In UK, the FTSE 100 Index slid -1% while both of Germany’s DAX and France’s CAC 40 fell around -0.8%.
On the macro data front, UK’s retail sales surprisingly dropped -0.3% mom in November, following a +0.6% increase a month ago. This was the first monthly decline in 6 months and suggested economic recovery in the country remained choppy.
Later today, Canada will report November’s CPI which probably rose +0.3% and +0.8% on monthly and yearly respectively. Over +5% increase in gasoline price in November, as well as potential increase in auto sales price, should have pushed price levels in the nation.
In the US, initial jobless claims probably declined to 466K from 474K in the previous week. Moreover, leading indicators are anticipated to have risen +0.7% in November after an increase of +0.3% a month ago.
Source: oil n gold
RBA’s Tightening Boosts Sentiment. Investors Seek Risks Again
Commodities rally in European morning as RBA’s surprising rate hike suggested global economic recovery is on the way. WTI crude oil price surges to 71.15 while gold price rallies to as high as 1029, only $5 below the 1033.9 high made on March 2008.
At the October meeting, the RBA announced to raise its policy rate by 25 bps to 3.25% as global economy is resuming growth. According to the accompanying statement, ‘the recovery will likely continue during 2010 and forecasts are being revised higher. The expansion is generally expected to be modest in the major countries, due to the continuing legacy of the financial crisis. Prospects for Australia’s Asian trading partners appear to be noticeably better. Growth in China has been very strong, which is having a significant impact on other economies in the region and on commodity markets. For Australia’s trading partner group, growth in 2010 is likely to be close to trend’.
Stock markets also strengthen across the board. In Asia, the MSCI Asia Pacific Index gained +1.4% after falling for 3 days. Japan’s Nikkei 225 Stock Average added +0.2% while Hong Kong’s Hang Seng Index rose +1.9%. Rise in Australia’s S&P/500 200 Index shrank as rate hike will increase the borrowing costs of corporations.
In European morning, UK’s FTSE 100 Index and France’s CAC 40 surge +1.5% to 5099 and 3729 respectively while Germany’s DAX Index adds +1.64% to 5599. Good signs from Australia shadowed weak economic data in the region. UK’s industrial production declined -2.5% mom in August after rising +0.5% in the previous month. In Switzerland, CPI stayed flat in September, following modest gain of +0.1% a month ago.
Saudi Arabia’s central bank denied the news that it has been discussing with China and other countries regarding trading oil using a basket of currencies. Governor Muhammad al-Jasser said that the news is ‘absolutely incorrect and there’s ‘absolutely nothing’ regarding the issue was being discussed.
3 straight days of rally has not only sent the Comex gold futures +2.6% higher, but also helped it made a fresh 18-month high today. As commodities have gathered strong trading momentum these 2 days, it’s likely for the yellow metal to break the record high level of 1033.9 soon.
Investment demand in gold stays robust. Bullion holdings in SPDR Gold Trust have risen for 3 consecutive days to 35.3M oz. This represented an increase of +1.9% from a month ago and +47.5% from a year ago.
Gold Miners Soar on Record Prices
Associated Press
Tuesday, October 6, 2009
Record gold prices in New York trading Tuesday sent shares of precious metals miners soaring.
A faltering dollar helped kick up the price of gold. Commodities such as precious metals and oil are often used as a hedge against inflation and a weakening dollar. A sliding greenback also makes the commodities priced in dollars cheaper for foreign investors.
Gold for December delivery soared to a record $1,045 an ounce in morning trading on the New York Mercantile Exchange. Gold prices closed Monday at $1,017.80 an ounce. Prices for silver and platinum also rose.
The dollar’s fall was linked to a report in a British newspaper, the Independent, which said that secret meetings were taking place between oil-producing countries and China, Russia, Japan and France. These talks were aimed at ending the pricing of crude in dollars, the report said, and moving instead to using a basket of currencies that included the Japanese yen, Chinese yuan and the 16-nation euro, as well as gold.
The dollar sank on that report, down 0.6 percent at midday against a basket of currencies that includes the yen and euro, even though officials from several governments denied any meetings taking place. Rising risk appetite due to Australia boosting its interest rate also helped propel markets and commodity prices.
Shares of gold producers jumped in midday trading.
Kinross Gold Corp. rose $1.46, or 6.9 percent, to $22.57; Yamana Gold Inc. added 84 cents, or 8 percent, to $11.24; AngloGold Ashanti Ltd. gained $2.92, or 7.1 percent, to $44.13; Barrick Gold Corp. rose $2.12, or 5.7 percent, to $39.04; Gold Fields Ltd. was up 88 cents, or 6.4 percent, to $14.87; Newmont Mining Corp. gained $3.07, or 7.1 percent, to $46.25; Hecla Mining Co. soared 52 cents, or 12 percent, to $4.87; Coeur d’Alene Mines Corp. rose $1.64, or 8.1 percent, to $21.83; Rio Tinto PLC moved up $7.88, or 4.7 percent, to $174.56; Freeport-McMoRan Copper & Gold Inc. climbed $2.58, or 3.8 percent, to $69.84; Eldorado Gold Corp. jumped $1.21, or 11.1 percent, to $12.14.
SOURCE: http://www.forbes.com/feeds/ap/2009/10/06/business-materials-us-gold-miners-sector-snap_6971525.html
Inflation Outlook Fuels Investor Demand for Gold
By Pham-Duy Nguyen, Nicholas Larkin and Kim Kyoungwha
Bloomberg
Tuesday, October 6, 2009
Gold rose to a record on speculation that currencies will depreciate, spurring inflation and boosting the appeal of the precious metal for investors seeking to preserve their wealth.
Gold futures climbed as high as $1,045 an ounce in New York, topping the previous record of $1,033.90 in March 2008. The spot price is headed for a ninth straight annual gain, the longest rally since at least 1948. The dollar fell as much as 0.7 percent against a basket of six major currencies.
“Gold is acting like the ultimate currency,” said Chip Hanlon, the president of Delta Global Advisors Inc. in Huntington Beach, California. “Central banks are following the same monetary course and trying to stimulate and inflate their way back to growth. Everyone’s concerned about the dollar, but it’s not like you can hate the dollar and fall in love with the euro or the yen.”
U.S. President Barack Obama has increased the nation’s marketable debt to an unprecedented $6.78 trillion as he borrows to spur the world’s largest economy. Goldman Sachs Group Inc. predicts the country will sell about $2.9 trillion of debt in the two years ending next September.
Gold futures for December delivery climbed $24.40, or 2.4 percent, to $1,042.20 an ounce at 11:16 a.m. on the Comex division of the New York Mercantile Exchange. Prices may reach $1,400 within six months, Hanlon said. Gold for immediate delivery in London gained as much as 2.6 percent to a record $1,043.78. The metal has climbed 18 percent this year.
‘Just Begun’
“Gold has just begun its ascent,” said John Brynjolfsson, the chief investment officer of Armored Wolf LLC, a hedge fund in Aliso Viejo, California. “As central banks print more and more money, the private demand for gold as an investment and inflation hedge is destined to grow. It’s pretty clear that gold will be at $2,000 by 2012, and it could happen a lot faster.”
Expectations of higher consumer prices are building. The difference between rates on 10-year notes and Treasury Inflation Protected Securities, which reflects the outlook among traders for inflation, widened to 1.84 percentage points from almost zero at the end of 2008. It averaged 2.2 percentage points in the past five years.
Soaring Crude Oil
Crude-oil futures, used by some investors to forecast inflation, have soared 61 percent this year in New York.
“Even though the current inflation rate is low, the risk of a blowup in inflation in the future is becoming higher all the time,” said Adam Farthing, Deutsche Bank AG’s head of metals trading in Asia. “Gold is pricing that in.”
Farthing projected the metal will reach $1,150 by the end of the year.
Gold priced in other currencies will also rise, said Dan Greenhaus, the chief economic strategist at Miller Tabak & Co. in New York.
“Gold is not just seen as an inflation hedge here in the U.S. but is rather acting as a hedge against all currencies,” Greenhaus said. “As your currency depreciates in value, the consumer has less purchasing power and therefore it costs more to buy the same number of goods. Gold in inflation-adjusted terms is well below its highs.”
A weaker dollar helped propel gold above the previous record. The dollar fell after Australia unexpectedly raised interest rates. The Federal Reserve has kept the benchmark rate between zero and 0.25 percent since December.
Interest Rate Differentials
“Interest-rate differentials will begin to work increasingly against the dollar,” Greenhaus said.
Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter, recommended that investors buy gold in other currencies.
“By owning gold in foreign-currency terms, we’ve been able to hedge away our U.S. dollar exposure,” Gartman said.
Gold held in the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, reached an all-time high of 1,134 metric tons on June 1 and was at 1,098.07 tons yesterday. The fund has passed Switzerland as the world’s sixth-largest gold holding.
Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said gold’s rally is sustainable.
“Gold is not going up parabolic,” McGhee said. “You’ll have some technical selling here against the old highs but it’s put some time in around $1,000 so the next first real stop will be around $1,200.”
After reaching the previous record in March 2008, gold fell for four straight weeks, dropping as much as 18 percent to $846.40.
Silver futures for December delivery advanced 82 cents, or 5 percent, to $17.355 an ounce on the Comex. The metal climbed to a 13-month high of $17.69 on Sept. 17 and is up 54 percent this year.
SOURCE: http://www.bloomberg.com/apps/news?pid=20601091&sid=aE48docaZFJQ
Gold Price Reaches Record High
By Chris Flood
Financial Times
Tuesday, October 6, 2009
Gold prices hit a new record above $1,036 an ounce on Tuesday as the dollar lost ground following reports that the US currency’s critical role in global oil trading was coming under scrutiny.
Gold reached a record $1,036.40, racing past its previous peak of $1,030.80 set last March when Bear Stearns, the US investment bank ran into trouble.
The catalyst was a report in The Independent newspaper in London that Gulf Arab states, along with China, Russia, Japan and France, had held secret meetings to consider using a basket of currencies to trade oil instead of the US dollar.
The report was denied by Saudi Arabia’s central bank and a Kuwaiti minister said there weren’t any negotiations, according to Reuters. Top officials from Russia, speaking on the sidelines of the IMF meeting in Istanbul, also denied the report, the news agency said.
Analysts were also sceptical.
“This speculation appears to have no foundation whatsoever, nor does it even make much sense, but it certainly plays well with the gold bugs” said Julian Jessop, chief international economist at Capital Economics.
Commerzbank said: “From an economic point of view the plan would be completely nonsensical.” They pointed out that traders would try to avoid the transaction costs that introducing a basket of currencies for oil trading would entail.
“Who would be in a position to set the weighting of such a synthetic ‘oil trading currency’ in a binding way?” they asked.
“Gold has garnered strength several times this year every time the dollar’s role as the world’s reserve currency comes under question,” said James Steel, precious metals analyst at HSBC: “If the USD remains on the defensive gold could maintain prices even at these high levels.”
Mr Steel said that it was particularly striking that the gold market had held up well considering that both Russia and Saudi Arabia had denied the report that they were in discussions with the Gulf States to replace the pricing of oil in dollars with a basket of currencies.
“Although not the sole driver, the dollar has once again played a pivotal part, and we believe currency movements are likely to remain crucial in setting the tone of trading for gold,” said Suki Cooper of Barclays Capital.
Ms Cooper said that although strong investment demand had been more than sufficient to offset a slowdown in jewellery demand, but investor buying would need to expand further to propel prices higher.
However, analysts continue to warn that the long position (bets on prices rising) held by speculators remains close to record levels, leaving the market vulnerable to a correction if the dollar managed to recover.
The latest data from the Commodity Futures Trading Commission showed that the speculative net long position fell for the first time in five weeks, down 2.2 per cent to 231,386 lots in the week ending September 29 from a record 236,749 lots in the previous week.
Gold’s advance lifted other precious metals with silver up 3.3 per cent to $17.14 a troy ounce while platinum added 1 per cent at $1,306 a troy ounce and palladium hit the $300 a troy ounce mark, up 0.5 per cent.
Crude oil prices also moved higher as the dollar weakened.
Nymex November West Texas Intermediate rose $1 to $71.41 before slipping back to trade 84 cents higher at $71.25.
ICE November Brent reached a session high of $69.20 before easing back to trade 80 cents higher at $68.84 a barrel.
Cocoa prices dipped after a sharp jump in the previous session. Liffe March cocoa fell 1.3 per cent to £2,125 a tonne after jumping 7.2 per cent in the previous session.
ICE December cocoa eased 1.2 per cent to $3,202 a tonne after surging 8 per cent in the previous session.
The extent of Monday’s jump, which saw the ICE contract surge $195 in the space of a minute, took even seasoned traders by surprise.
Traders at Sucden said substantial stop-loss positions that had been opened on Friday when the market was moving lower were exposed and had to be closed.
“Who knows where this market can go?” said one trader, adding that until there was more selling by cocoa producers, any kind of ceiling for the market above current levels could prove tentative.
Dealers remain concerned that the market could face a supply deficit for a fourth successive year as yields from ageing cocoa trees in the Ivory Coast have been affected by disease.
Among base metals, copper rose 1 per cent to $6,062.5 a tonne while aluminium added 1.6 per cent to $1,834 a tonne.
SOURCE: http://www.ft.com/cms/s/0/60d5e290-b25f-11de-bbaf-00144feab49a.html
Absence of Sales Illuminates Recovery Hubris
By Paul R. La Monica
CNNMoney
Tuesday, October 6, 2009
More and more economists are talking about how they think the economy actually grew in the third quarter. Unfortunately, it might be hard to find evidence of that once companies start reporting their latest quarterly results.
There’s only a trickle of significant third- quarter reports due out this week, but investors will be keeping a close eye on them to see how Corporate America is faring during what might really be the waning days of this brutal recession.
Wall Street is hopeful that blue-chip companies will generate better-than-expected profits. If so, that could help rekindle some confidence in the economy after the disappointing September jobs report and get the market rally, which has stalled for the past two weeks, back on track.
But it’s going to take more than good earnings news to get people excited. A parade of positive earnings surprises should only be considered encouraging if the better earnings are a result of increased consumer demand as opposed to more cost cutting (i.e. layoffs and reduced spending on new production).
At first blush though, sales aren’t looking promising.
“Everybody thinks that earnings are going to be better than expected, but people still don’t expect revenue growth for another six months. So we’ve got that tug-of-war going on,” said Phil Dow, director of equity strategy with RBC Wealth Management in Minneapolis. “You’re going to have decent sales growth from the technology, materials and energy sectors but that’s probably going to be about it.”
None of the major companies that will be announcing results this week are expected to report substantial revenue growth from the same period last year.
Fast-food chain kingpin Yum! Brands (YUM, Fortune 500) will release its numbers after the closing bell Tuesday. Analysts are forecasting a sales drop of 1.5% from a year ago.
Agricultural giant Monsanto (MON, Fortune 500) and retailer Costco (COST, Fortune 500) will both report numbers for their most recent quarter, which ended in August, on Wednesday morning. Analysts are predicting a 2% decline for Monsanto and 3% decline for Costco. Dow component Alcoa (AA, Fortune 500) is set to announce its third-quarter results on Wednesday afternoon and the consensus estimate is for a 38% drop in sales.
PepsiCo (PEP, Fortune 500) and Marriott (MAR, Fortune 500) are the only other two companies of note to report this week, with each of their results due out Thursday morning. Pepsi’s sales are expected to be as flat as an opened can of soda left in the fridge for too long, with forecasts of a meager 0.1% increase in revenue. And analysts are predicting a nearly 20% decline in Marriott’s sales. 0:00 /3:32Market on fire but not volatile
To be fair, it’s unreasonable to expect a major surge in sales for companies. It’s no secret that while many Wall Street traders, market strategists and other financial experts are tripping over themselves to declare that the recession is over, it doesn’t feel that way for most consumers.
And since consumer spending is still the main growth engine of the economy, it will be nearly impossible for companies to generate sizeable increases in their top lines until consumers are willing to spend more freely.
“The economy has probably just reached a trough and we’re still at the low end of the valley. So we are in a gray area,” said Mike O’Rourke, chief market strategist with BTIG, an institutional brokerage firm in New York. “There will people complaining about the lack of revenue growth, but it’s asking too much for big sales growth at this time.”
O’Rourke added that because many companies have slashed their expenses in recent quarters, it won’t take a huge increase in sales to have a meaningful impact on profits.
“We had massive layoffs and companies stopped investing in their businesses. I expect some type of revenue bump, but not a big one. But since companies cut to the bone, a little bump should help earnings nicely,” he said.
That’s a good point. But there’s a flip side to it. Once you’ve cut to the bone, there’s little, if anything, left to slice off. That means that, sooner or later, companies will need bigger increases in sales to lift their profits.
And the more that people talk about an economic recovery, the more demanding investors are going to become as well.
“Investors are going to be looking for evidence of sales improvement. Most importantly, they’ll be looking at the guidance going forward,” said John Stoltzfus, director and senior market strategist with Ticonderoga Securities in New York. “As the market develops more of this show-me-the-money attitude, investors are going to be less forgiving.”
So the fact that sales don’t appear to be picking up yet is troubling for several reasons. You could argue that companies should be able to have an easier time reporting sales growth in the third quarter because they are facing comparisons to a dismal period this time a year ago.
It shouldn’t be too challenging to have a better quarter this year considering that the third quarter of 2008 was when we had to live through the meltdowns of Fannie Mae, Freddie Mac, Lehman Brothers and AIG.
But if companies can’t report growth compared to one of the tumultuous economic periods in the nation’s history, is it really safe to claim that a recovery is in full swing?
And with unemployment steadily rising, that’s another reason to think that sales growth may not be in the cards just yet. What’s more, times are getting tougher for people with jobs as well. The size of the weekly paycheck shrunk in September because employers continued to cut back on hours.
If these disturbing trends in the labor market continue, it may be a blue Christmas for retailers and investors.
“You need to see hours go up and actual job improvement for consumers to spend. It’s hard to envision sales growth without that,” Dow said.
Hopefully, companies will back up all the talk of an economic rebound by being more bullish about their sales outlook for the fourth quarter. If they aren’t, it’s worth wondering just how strong the recovery really is — or if there is one at all.
SOURCE: http://money.cnn.com/2009/10/05/markets/thebuzz/index.htm?section=money_markets.php
Tags: Financial News
Arab States to Ditch U.S. Dollar-based Oil Pricing
Associated Press
Tuesday, October 6, 2009
The dollar fell Tuesday towards year lows against the euro and the yen after a report that Arab states and other countries were contemplating an end to the U.S. currency’s role in the pricing oil.
By early afternoon London time, the dollar was down 0.5 percent at 89 yen, while the euro was up by 0.6 percent to $1.4729.
Further sustained falls could see the dollar fall below its multi-year low of 87.11 yen, and the euro break above its two-year high of $1.4842, achieved last month. Story continues below ?advertisement | your ad here
The selling was stoked by an article in Britain’s “Independent” newspaper from respected journalist Robert Fisk.
Citing unnamed Gulf Arab and Chinese banking sources in Hong Kong, the article said ‘secret’ meetings were taking place between Arab states, China, Russia, Japan and France, to end dollar dealings for oil and moving instead to a basket of currencies, including the euro, the yen and the Chinese yuan.
Officials in several countries either denied talks or said they had no knowledge.
Kuwait’s oil minister, Sheik Ahmed Al Abdullah Al Sabah, said there have been no talks on the topic among Gulf oil ministers. “At our level, no,” he said. “I didn’t even dream about it.”
Feeding skepticism
Despite the denials, the report fed market skepticism about the U.S. currency in favor of the euro and the yen as the dollar’s future as the world’s reserve currency continues to be openly discussed.
Last week, figures from the International Monetary Fund showed that the dollar’s share of total reserves has fallen to its lowest level since 1995. Meanwhile, Robert Zoellick, a former U.S. trade representative who now heads the World Bank, warned that the currency’s status as the world’s leading reserve currency should not be taken for granted.
“Some stories will run and run and this morning’s report regarding a possible replacement of the dollar as the exchange currency for oil is another chapter in the plot against the dollar as the world’s most dominant reserve currency,” said Jane Foley, research director at Forex.com.
The worries are in part based on much larger U.S. budget deficits and expansive monetary policy at the Federal Reserve, including rock-bottom interest rates and expansion of the money supply. Those are all policies that can undermine a country’s currency.
The dollar’s role as a reserve and pricing currency supports its value because it obliges governments and companies to hold or obtain dollars.
Bank of New York Mellon currency strategist Neil Mellor said the notion that Gulf states may look to reduce their dependence on the dollar is “potentially very significant indeed,” particularly as they share the dilemma with China over the value of their dollar holdings. Any move that undermines the dollars’ value would reduce the value of those extensive holdings.
‘Not even serious’
Over the last five years, the dollar has broadly fallen against many of its main competitors, leading to calls in dollar surplus countries, such as China and the Gulf states, for a greater diversification in their currency reserves.
As a result, talk of the dollar losing its price function is nothing new — in 2003, Russia moved its ruble peg to a two-currency basket of the dollar and the euro. During the oil price boom in recent years, Russia built up big dollar reserves because of its status as one of the world’s major producers.
Dimitry Peskov, spokesman for Russian Prime Minister Vladimir Putin, dismissed the newspaper report as “not even serious” but did reiterate Russia’s recent policy of multiplying the amount of reserve currencies “to ease the burden on a single world currency and save ourselves from another crisis.”
Meanwhile, China has taken stakes directly in energy and commodity producers in an attempt to diversify its dependence on the dollar.
Hans Redeker, global head of foreign exchange strategy at BNP Paribas, said Saudi Arabia, which has the biggest oil reserves, will be the key country when discussing which currencies oil should be factored in.
“What investors should not forget is that Saudi Arabia has an interest to keep the U.S. strong and involved in the region,” he said.
“Switching the dollar for a basket of currencies for commodity factoring would weaken the U.S. additionally, which would be against the interest of Saudi Arabia,” he added.
SOURCE: http://money.cnn.com/2009/10/05/markets/thebuzz/index.htm?section=money_markets.php
World Bank Says U.S. Dollar Not the Only Reserve Currency Option
By Glen Somerville
Market Watch
World Bank President Robert Zoellick said the United States should not take the dollar’s status as the world’s key reserve currency for granted because other options are emerging.
In excerpts released on Sunday from a speech that he is to deliver on Monday, Zoellick said global economic forces were shifting and it was time now to prepare for the fact that growth will come from multiple sources.
“The United States would be mistaken to take for granted the dollar’s place as the world’s predominant reserve currency,” he said. “Looking forward, there will increasingly be other options.”
Zoellick said that a meeting of Group of 20 rich and developing countries in Pittsburgh on Thursday and Friday had made “a good start” toward increased global cooperation but they will have accept global monitoring of their activities.
“Peer review will need to be peer pressure,” he said.
Zoellick said that the G20, as the new chief forum for international economic cooperation, also must not forget the 160 countries left outside its structure and should try to open opportunity for them.
“We need a system of international political economy that reflects a new multi-polarity of growth,” Zoellick said. It needs to integrate rising economic powers as ‘responsible stakeholders’ while recognizing that these countries are still home to hundreds of millions of poor and face staggering challenges of development.”
SOURCE: http://www.reuters.com/article/ousivMolt/idUSTRE58Q1YU20090928
Chicago Fed Index Still Signals Subpar Economy
Wall Street Journal
The Federal Reserve Bank of Chicago’s National Activity Index worsened in August, but its three-month moving average rose above its level from a year earlier, in August 2008 just before the financial crisis deepened.
The three-month average stood at -1.09 in August, below the recessionary threshold of -0.7. An index reading of zero signals a trend rate of growth (usually defined as around 3%).
The index tracks national economic activity through monthly 85 data series. In a new Chicago Fed Letter released this morning, Fed economist Scott Brave explains that the index’s three-month average (as of August) indicates that economic activity is now finally above the trough of the 2001 and 1990-91 recessions.
“It appears likely that recovery from the current recession had not yet reached full swing as of August 2009, but early signs of recovery are apparent,” he says.
Obama Touting U.S. Economy
By Joseph Spector
USA Today
President Obama visited an Albany-area community college this morning to discuss the economy and promote hi-tech investments as a way to boost business growth in the country.
The president, in his first trip to upstate New York since he was elected, outlined his innovation strategy, which uses more than $100 million in federal stimulus funds to support education and new infrastructure. The stage at Hudson Valley Community College in Troy, Rensselaer County, where the president spoke has a backdrop of computer chips and other high-tech equipment behind the podium.
Obama talked about how in Troy and upstate New York, the area has long suffered from a decline in manufacturing jobs and loss of young people because of a lack of jobs. He offered hope that the region can turn around, citing the Erie Canal and Thomas Edison, who started General Electric in nearby Schenectady.
“We know that upstate New York can succeed,” he said. “We know that in a global economy where there is no room for error and there is certainly no room for wasted potential America needs you to succeed.”
He continued, “As we emerge from this current economic crisis, our great challenge will be to ensure that we do not simply drift into the future, accepting less for our children and less for America. We have to choose to do what past generations have done: shape a brighter future through hard work and innovation.”
The Democratic president toured a college classroom and was joined by Dr. Jill Biden, a community college professor in the Washington D.C., area and wife of Vice President Biden.
The president arrived at Albany International Airport at about 11 a.m. and started his speech shortly before noon. He is headed to New York City to tape an interview on David Letterman’s Late Show. He will begin three days of meetings at the United Nations on Tuesday.
Obama’s visit to upstate comes amid involvement by the White House in recent days to advise Gov. David Paterson to not run for election next year. While no one-on-one meeting is planned between the two, Paterson met Obama at the airport and traveled in the president’s motorcade to the event.
Obama offered praise to Paterson in his remarks, calling him a “wonderful man.” He also praised Attorney General Andrew Cuomo, who may run for governor next year, as well as other elected officials in the audience.
The president vowed that by 2020, the country will have the highest percentage of college graduates in the world.
Obama proposed using $80 billion the banks currently get and use it to make grants larger for college students. He also said that FCC Chairman Julius Genachowski will announce efforts to create an “open Internet in which all Americans can participate and benefit.” His said his budget makes tax credits for research and experimentation permanent.
He also spoke briefly about health care, saying that the country needs to bring down health-insurance costs so businesses can thrive.
“This generation has an unparalleled opportunity that we are called upon to seize,” Obama said. “That is what you are doing at Hudson Valley Community College. And that is what we will do as a nation.”
SOURCE: http://www.usatoday.com/news/washington/2009-09-21-obama-newyork-speech_N.htm
