After showing a lackluster performance earlier in the session, the stock markets are firmly in positive territory in early-afternoon trading on Monday. A better than expected report on business activity in the Chicago area has added to the positive sentiment in the final trading day of the first quarter.
The National Association of Purchasing Management - Chicago released its report on business activity in the Chicago-area manufacturing sector in the month of March, showing that its index of activity in the sector came in above economist estimates.
The report showed that the purchasing managers index rose to 48.2 in March from 44.5 in February, although a reading below 50 indicates a continued contraction in the sector. Economists had been expecting the index to edge up to 46.7.
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Monday, March 31, 2008
Dollar Heads for Biggest Quarterly Loss Against Euro Since 2004
The dollar headed for its biggest quarterly loss against the euro in almost four years as the Federal Reserve cut its target lending rate by the most since 1984 to revive the economy while the European Central Bank held borrowing costs at a six-year high to contain inflation.
The dollar traded within a cent of a record low against the euro after a European Union report showed consumer prices accelerated at the fastest pace in almost 16 years this month. The pound fell to an all-time low against the euro, posting its largest-ever quarterly decline, after U.K. housing prices dropped in March for a sixth month.
``Heading into this quarter, a lot of people thought the worst for the dollar was behind us,'' said Daniel Katzive, a currency strategist at Credit Suisse Group in New York. ``It's pretty clear that this view has been damaged.''
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The dollar traded within a cent of a record low against the euro after a European Union report showed consumer prices accelerated at the fastest pace in almost 16 years this month. The pound fell to an all-time low against the euro, posting its largest-ever quarterly decline, after U.K. housing prices dropped in March for a sixth month.
``Heading into this quarter, a lot of people thought the worst for the dollar was behind us,'' said Daniel Katzive, a currency strategist at Credit Suisse Group in New York. ``It's pretty clear that this view has been damaged.''
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Payrolls May Have Slumped for Third Month: U.S. Economy Preview
The U.S. lost jobs for a third month in March and manufacturing contracted at the fastest pace in five years, signs the economy continues to turn down, economists said before reports this week.
Payrolls probably shrank by 50,000, according to the median estimate of economists surveyed by Bloomberg News before the Labor Department's April 4 report. The last time the economy lost jobs for at least three consecutive months coincided with the start of the Iraq War in 2003.
``The economy has slipped into a recession,'' said Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. in New York. ``We expect the labor market to weaken, with payrolls falling steadily through the middle of next year.''
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Payrolls probably shrank by 50,000, according to the median estimate of economists surveyed by Bloomberg News before the Labor Department's April 4 report. The last time the economy lost jobs for at least three consecutive months coincided with the start of the Iraq War in 2003.
``The economy has slipped into a recession,'' said Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. in New York. ``We expect the labor market to weaken, with payrolls falling steadily through the middle of next year.''
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US recession seen by 70 pct of money mgrs-poll
The near-term outlook of money managers around the world has turned decidedly grim, with seven in 10 expecting a U.S. recession this year, a survey showed on Monday.
However, more than a third of the institutional fund managers in Asia, Europe and North America who took part in the poll conducted in February are actively seeking opportunities in illiquid securities, suggesting some investors see a bottom in the market.
Most investors are still reeling from the credit crisis, which has touched just about every financial market in the world. About a third of the 234 fixed-income and equity investors in the survey conducted by research consultancy Greenwich Associates said they they have suffered losses due to mortgage-backed securities.
"Growing fears of systemic risk and doubts about the soundness of some counterparties show that investors are increasingly worried about the ability of some markets to function properly on a much broader level," Greenwich Associates consultant Frank Feenstra said in a note.
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However, more than a third of the institutional fund managers in Asia, Europe and North America who took part in the poll conducted in February are actively seeking opportunities in illiquid securities, suggesting some investors see a bottom in the market.
Most investors are still reeling from the credit crisis, which has touched just about every financial market in the world. About a third of the 234 fixed-income and equity investors in the survey conducted by research consultancy Greenwich Associates said they they have suffered losses due to mortgage-backed securities.
"Growing fears of systemic risk and doubts about the soundness of some counterparties show that investors are increasingly worried about the ability of some markets to function properly on a much broader level," Greenwich Associates consultant Frank Feenstra said in a note.
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Weak Dollar Could Mean More Auto Jobs
In an odd twist of economic ups and downs, the plummeting value of the dollar could lead to more auto manufacturing jobs in the U.S. Companies like GM are having trouble making a profit on imported cars like the new Saturn Astra – built in Belgium – and the new Pontiac G8 — built in Australia — and will have to limit how many they import.
The wilting dollar is also extremely alluring to foreign automakers. Volkswagen and Volvo are considering building assembly plants stateside, while BMW is expanding its South Carolina facility so it can export more cars. That could mean thousands of new jobs in the manufacturing sector. Unfortunately, there aren’t signs that jobs sent to Canada and Mexico will return.
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The wilting dollar is also extremely alluring to foreign automakers. Volkswagen and Volvo are considering building assembly plants stateside, while BMW is expanding its South Carolina facility so it can export more cars. That could mean thousands of new jobs in the manufacturing sector. Unfortunately, there aren’t signs that jobs sent to Canada and Mexico will return.
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The Bankrupting of America
No matter where you get your news, it seems that the pitiful state of the American economy is the front and center story. One day it’s the foreclosure rate. On another day it’s about a major financial institution getting bailed out by the Fed. The most telling, however, was the article I found about tent cities going up in the Los Angeles area. This is particularly disturbing, especially when you look back at where this country was before George Bush took office.
When President Clinton took office, we were operating in deficit mode in part because of the disastrous economic policies of the Reagan-Bush (George H.W.) years. In August of 1993, President Clinton signed the Omnibus Budget Reconciliation Act, which raised taxes on the wealthiest 1.2% of taxpayers and lowered the taxes on 15 million low-income families. It also made tax cuts available to 90% of small businesses and reigned in spending. By 1998, the United States had its first surplus in 42 years. Now, everyone knows that all administrations take credit for these kinds of statistics, and the Clinton administration was no exception.
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When President Clinton took office, we were operating in deficit mode in part because of the disastrous economic policies of the Reagan-Bush (George H.W.) years. In August of 1993, President Clinton signed the Omnibus Budget Reconciliation Act, which raised taxes on the wealthiest 1.2% of taxpayers and lowered the taxes on 15 million low-income families. It also made tax cuts available to 90% of small businesses and reigned in spending. By 1998, the United States had its first surplus in 42 years. Now, everyone knows that all administrations take credit for these kinds of statistics, and the Clinton administration was no exception.
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Friday, March 28, 2008
US recession and what needs to be done
Wall Street got its hopes up on Mar 11. Elated by a Federal Reserve move to stop the credit crunch, the US stock market posted its biggest one-day gain in five years, with the Dow Jones industrial average rising more than 400 points.
Look out, though. Fed officials are the first to acknowledge that their initiative attacks only one problem, the liquidity squeeze at big banks. It does nothing about the central risk to the US economy: an unprecedented crash in home values that is sapping households' wealth and confidence while putting an enormous strain on the banking system.
How bad will this downturn get? No one can know because we've never experienced such a headlong slide in the housing market - and this comes at a time when its current value of $20 trillion accounts for the vast majority of most families' wealth.
Right now most economists expect the US to experience a mild, short recession in 2008. But there is at least a possibility of a steeper decline that the traditional recession remedies - interest-rate cuts here, deficit spending there - won't be able to handle.
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Look out, though. Fed officials are the first to acknowledge that their initiative attacks only one problem, the liquidity squeeze at big banks. It does nothing about the central risk to the US economy: an unprecedented crash in home values that is sapping households' wealth and confidence while putting an enormous strain on the banking system.
How bad will this downturn get? No one can know because we've never experienced such a headlong slide in the housing market - and this comes at a time when its current value of $20 trillion accounts for the vast majority of most families' wealth.
Right now most economists expect the US to experience a mild, short recession in 2008. But there is at least a possibility of a steeper decline that the traditional recession remedies - interest-rate cuts here, deficit spending there - won't be able to handle.
Read Complete Story
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