China says capital flows, major FX to decide yuan value
BEIJING (Reuters) – China will refer to changes in capital flows and fluctuations in the values of major currencies when guiding the value of the yuan, the central bank said on Wednesday, in a departure from past language.
The reference to a new set of benchmarks for determining the value of the yuan holds out the possibility of a departure from past practice, which has seen the currency in a holding pattern since mid-2008, at around 6.83 per dollar.
"Following the principles of initiative, controllability and gradualism, with reference to international capital flows and changes in major currencies, we will improve the yuan exchange rate formation mechanism," the central bank said in a 46-page monetary policy report.
Until now, ever since the landmark revaluation and launching of forex reforms in July 2005, the People's Bank of China has stuck to the language of keeping the yuan "basically stable at a reasonable and balanced level" when talking about future forex reforms in such quarterly reports loans until payday.
The comments come ahead of a visit to China next week by President Barack Obama, and come amid growing pressure from other countries for Beijing to let its currency be more flexible in the face of dollar weakness.
The central bank added in its report that it would stick to its loose monetary policy stance and keep sufficient liquidity in the banking system. It said it expected continued impact from falling external demand.
Data issued on Wednesday showed factory output growth surged to a 19-month high in October, suggesting the world's third-largest economy has firmly put the worst of the global financial crisis behind it.
(Reporting by Zhou Xin, Aileen Wang and Jason Subler; Editing by Ken Wills)
Lloyds to cut another 5,000 jobs by end of 2010
LONDON (Reuters) – Bailed-out British lender Lloyds Banking Group (LLOY.L) is to cut a further 5,000 jobs by the end of 2010 as it continues to overhaul its operations and integrate HBOS.
Lloyds, 43 percent owned by the government, said on Tuesday it would take mitigating actions, including redeploying staff and releasing contractors and temporary employees, to limit the net reduction in permanent jobs to 2,600.
That would take net cuts to permanent jobs at Lloyds to around 9,000 since it acquired HBOS in January. Analysts have estimated that over 30,000 jobs could go as the two banks integrate.
News of further bank sector redundancies came a week after more than 5,400 jobs were cut at part-nationalized rival Royal Bank of Scotland (RBS.L) and HSBC (HSBA.L).
The Unite union said the cuts were "corporate arrogance."
"This country's financial sector should be looking toward the future, rather then continuing to slash jobs without proper consideration of how to re-build the public's confidence in our tarnished banking sector," Unite national officer Rob MacGregor said in a statement calling for a suspension of job losses installment payday loans.
Lloyds said 2,820 roles — the bulk of the total — would be cut in group operations, with contractors and temporary staff helping to keep the net reduction to 1,350.
It will also cut 1,190 jobs in insurance across Britain, and 950 in its mortgage operations where business will be consolidated to a handful of sites.
Lloyds said compulsory redundancies would be a last resort.
(Reporting by Clara Ferreira-Marques; Editing by Dan Lalor)
Stocks eye retailers as jobless ranks swell
NEW YORK (Reuters) – As unemployment in the United States edges above 10 percent, anxious investors will look to earnings reports from major retailers for signs of life in the beaten-up consumer.
Comments from Wal-Mart Stores Inc (WMT.N), the world's largest retailer, as well as from a host of smaller stores, will be of vital importance to investors trying to judge the recovery's pace.
"The best way of gaining an insight into the consumer is from hearing from the companies that sell to them," said Peter Boockvar, equity strategist at Miller Tabak & Co in New York.
Stocks are up 50 percent since the lows in March, but the market has languished recently as investors try to determine the strength of the economic recovery.
"Fundamentals and valuation pretty much fully reflect reality so now we have to rely on liquidity, momentum and psychology to help guide the direction," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.
Unsurprisingly, discount retailers are expected to do better. Wal-Mart and Kohls Corp (KSS.N) are both expected to post slightly better third-quarter earnings than a year ago.
Wal-Mart should see earnings of 81 cents per share, compared with 77 cents a year earlier, when it reports results on Thursday, according to analysts polled by Thomson Reuters.
Kohls also will give its quarterly scorecard on Thursday.
Higher-end department stores probably won't fare as well as their discount cousins. Macy's Inc (M.N) is expected to see third-quarter losses widen on Wednesday and JC Penney's (JCP.N) profit is likely to be down sharply when it reports results on Friday.
What these companies, and especially Wal-Mart, say about the future will potentially overshadow profit figures. Top-line revenue performance will be key in judging to what extent business is creeping back.
October retail chain sales showed half of retailers fell short of Wall Street's expectations — another blow for hopes of a widespread recovery for the holiday season.
"People know that global growth is definitely improving, but the U.S. consumer still remains stretched," Boockvar said.
WHAT'S $81 BILLION AMONG FRIENDS?
November's record U.S. Treasury debt refunding during the week is a reminder of the cost of economic recovery and the toll on consumers as the U one hour payday loan.S. dollar remains under pressure. Recent auctions have been strong, but any sign that appetite for the debt is waning could ruffle markets.
Three Treasury auctions are scheduled next week to refinance U.S. government debt in a record $81 billion November refunding. Last month signaled the end of the Federal Reserve's Treasury purchase program, removing one element of demand.
"This is going to be an auction where the Fed can't participate. They've run out of their $300 billion limit. We'll have to see how demand steps up on its own," Ablin said.
After giving some hints to help financial markets gauge how long they will keep interest rates ultra-low, Fed officials will hit the lecture circuit during the week to offer their views on the economic outlook.
Fed Governor Daniel Tarullo will speak on financial regulation on Monday. He will be followed by five regional Fed bank presidents throughout the week. All are likely to face questions on the economy.
TRADE GAP AND CONSUMER SENTIMENT
The menu of economic indicators will be relatively light after the past week's huge helpings of data.
Friday the 13th is the day to note, when the U.S. international trade deficit for September will be released, along with October's import and export prices. The first reading for November on consumer sentiment will also be given that day by the Reuters/University of Michigan Surveys of Consumers.
The September trade gap is expected to edge up to $31.60 billion from $30.71 billion the previous month, according to economists polled by Thomson Reuters.
Import and export prices in October are also like to have increased, the Reuters poll showed. Import prices are projected to have gained 1 percent in October, following a tiny rise of 0.1 percent in the previous month. October export prices are forecast to have risen 0.2 percent, following a decline of 0.3 percent in the previous month.
The Reuters/University of Michigan consumer sentiment index for November is forecast at 71.0, up slightly from October's final reading of 70.6.
(Reporting by Edward Krudy; Editing by Jan Paschal)
Fannie Mae to Allow Borrowers to Lease Homes
WASHINGTON (AP) — Thousands of borrowers on the verge of foreclosure will soon have the option of renting their homes from Fannie Mae, under a policy announced Thursday.
The government-controlled company, through its new Deed for Lease program, will allow borrowers to transfer ownership to Fannie Mae and sign a one-year lease, with month-to-month extensions after that.
The program “helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities,” Jay Ryan, a Fannie Mae vice president, said in a statement.
But the effort is likely to affect a relatively small number of homeowners. In the first half of the year, Fannie Mae took back about 1,200 properties through this process, known as a deed-in-lieu of foreclosure. That pales in comparison to the 57,000 foreclosed properties the company repossessed in the period.
While neither option is particularly attractive for the homeowner, the deed-in-lieu program does less harm to the borrower’s credit record business card templates.
The rental program is designed to help homeowners who don’t qualify for a loan modification under the Obama administration’s plan, but still want to remain in their homes. Fannie Mae is not planning to market the homes for sale during the one-year rental period.
Fannie Mae has hired an outside company, which officials declined to identify, to manage the properties.
To qualify, homeowners have to live in the home as their primary residence and prove that they can afford the market rent, which would be determined by the management company. The rent can’t be more than 31 percent of their pretax income.
Fannie Mae’s sibling company, Freddie Mac, started a similar effort in March. That policy, however, requires the foreclosure to be complete and only allows month-to-month leases. A Freddie Mac spokesman declined to say how many borrowers have participated.
GlobalFoundries Chairman to Take Leave, Then Resign
Hector Ruiz, the former chief executive of Advanced Micro Devices, will step down as chairman of GlobalFoundries, the chip maker spun off from A.M.D. last year, the company said on Monday.
Mr. Ruiz, 63, will take a leave of absence before formally resigning from the GlobalFoundries board on Jan. 4, the company said. He will be succeeded by Alan E. Ross, who will hold the title of interim chairman until a permanent successor is found.
As chief executive from 2002 to 2008, Mr. Ruiz helped direct one of the most successful runs in A.M.D.’s history. A.M.D. began to eat away at Intel’s position in the personal computer and server computer markets.
Buoyed by this success, A.M.D. moved to acquire the graphics chip specialist ATI Technologies for $5.4 billion in 2006 no fax pay day loans.
A.M.D. soon began to run into familiar problems. A planned version of one of its best-selling chips developed a defect, and the company had to delay the product. In addition, A.M.D. was forced to take a write-down related to the ATI acquisition.
As A.M.D.’s costs rose and sales declined, Mr. Ruiz led an effort under which the company separated from its chip manufacturing arm, making it into an independent entity now known as GlobalFoundries. A.M.D. now focuses on designing chips, while GlobalFoundries, which is privately held, runs the high-cost plants needed to make the products.
GlobalFoundries Chairman to Take Leave, Then Resign
Hot News: U.S. sets preliminary penalties on Chinese wire decking
Stocks end higher on manufacturing, housing data
NEW YORK (Reuters) – U.S. stocks rose on Monday after another round of solid economic reports, but pulled off session highs after a Fed official's warning about banks' loan losses.
The three major indexes had previously risen about 1 percent earlier in the session as stronger-than-expected data on manufacturing and pending home sales spurred a broad-based advance and soothed worries over the recovery's strength.
Industrial and materials stocks rose after the solid numbers on manufacturing activity, with the S&P Industrials index (.GSPI) and the S&P Materials index (.GSPM) both rising 1 percent.
However, a Federal Reserve official's critical comments about banks' potential losses on commercial real estate loans caused investors to sell some financial shares. Stocks still managed to close the session with solid gains, but could not maintain earlier momentum.
"The market has turned from buying on dips to selling on rallies," said Terry Morris, senior vice president and senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania.
Ford Motor Co (F.N) shares jumped 8.3 percent to $7.58 after the automaker posted a quarterly profit, topping Wall Street's estimates for a loss as it cut costs and gained market share, prompting it to boost its 2011 outlook to "solidly profitable" from break-even.
In testimony on Monday, Jon Greenlee, the associate director of the Fed's Division of Banking Supervision and Regulation, said U easy online payday loans.S. banks are at risk for sizable new loan losses, particularly on commercial property, and some banks may not have enough capital to fully cushion against setbacks.
On Tuesday, the Federal Reserve is set to begin its two-day policy meeting.
The KBW Banks index (.BKX) rose 0.9 percent, well off its earlier high that had driven it up more than 3 percent. Citigroup Inc (C.N) shares fell 2.4 percent to $3.99.
The Dow Jones industrial average (.DJI) gained 76.71 points, or 0.79 percent, to end at 9,789.44. The Standard & Poor's 500 Index (.SPX) climbed 6.69 points, or 0.65 percent, to 1,042.88. The Nasdaq Composite Index (.IXIC) added 4.09 points, or 0.20 percent, to 2,049.20.
The S&P 500 is up more than 52 percent since its 12-year closing low on March 9. But the S&P has shown signs of slowing recently and has struggled to maintain rallies, posting declines in the past two weeks.
The Nasdaq eked out a slim gain, weighed down by a 5.1 percent drop in the stock of BlackBerry maker Research In Motion (RIM.TO)(RIMM.O). The stock finished at $55.74, down $2.99. It limited the Nasdaq's gains after an analyst told investors to sell the stock because of increasing competition from other smart phone makers.
(Reporting by Chuck Mikolajczak; Editing by Jan Psachal)
East Timor Considers Promoting Its Struggle for Independence as a Tourist Attraction
DILI, EAST TIMOR — East Timor’s struggle against Indonesian occupation may soon become a money maker. The government is considering plans to promote major sites of the 25-year fight for independence as part of a tourism campaign.
East Timor, a former Portuguese colony, was invaded in 1975 by Indonesia, but a secessionist movement soon emerged, led by Xanana Gusmão, who is now the country’s prime minister, and José Ramos-Horta, its president.
Mr. Gusmão spent much of the occupation either in jail or on the run, often hiding with guerrilla fighters in East Timor’s mountainous terrain; Mr. Ramos-Horta lived in exile, campaigning for independence.
An estimated 180,000 people died during the occupation, including 1,000 the U.N. said were killed during a 1999 vote for independence.
But tourists regard East Timor’s turbulent past as an attraction, a Japanese tour guide, Noriko Inaba, said as she escorted a Japanese tour group to Dili’s Santa Cruz cemetery. More than 200 East Timorese were killed there in 1991, when Indonesian troops fired on mourners, an event known as the Dili massacre.
“It’s an historical place because of the tragedy,” she said. “This is one of the things we came to see here.”
The cemetery’s caretaker, João da Costa, said tourists often visited the site and took photos.
“If more people came from overseas, maybe we could develop faster,” he said.
East Timor’s tourism minister, Gil da Costa Alves, said the government wanted tourism to contribute more to economic growth in a country that is one of the poorest in Asia and dependent on oil and natural gas revenues for the bulk of state finances.
While there are serious obstacles, including poor infrastructure and a shortage of hotel rooms, he sees an opportunity to promote the historic sites, beaches and wildlife.
“We have this opportunity for historical tourism, for people who are interested in those sites that are part of our history,” he said.
“Even the cave where Xanana was in hiding — this is a place we can promote, and other places around the country where our leaders were hiding up in the hills payday advances.”
About 19,000 people visited East Timor last year, up from about 12,000 in 2006, when tourists stayed away because of political strife.
Mr. Alves said he hopes that East Timor can attract as many as 200,000 tourists a year within five years.
However, Loro Horta, an East Timor analyst based at Singapore’s Nanyang Technological University, was skeptical.
“The entire country has less than 700 rooms. Right now it’s already difficult to get rooms in Dili,” said Mr. Horta, who is also the son of the president.
“So 200,000 a year — that’s something like 700 a day. How exactly are they flying there and where are they going to stay?”
Mr. Horta said more affordable flights to Dili, a bigger airport and a more reliable power supply were also needed before East Timor could compete with Bali in Indonesia as a tourist destination.
“I really hope I’m wrong, but we will be lucky if we can get 50,000 a year by 2014,” he said.
Mr. Alves said a new infrastructure plan — including a $600 million redevelopment of the airport, the construction of boutique hotels and the improvement of basic infrastructure like roads — would increase tourism.
He said a broader tourism campaign would be aimed at the Australian and Japanese markets and would involve advertising and competitions like a recently opened fishing tournament and the Tour de Timor bicycle race, which took place earlier this year.
Last year, the government opened the Nino Konis Santana National Park in an effort to protect many of its animal and plant species while providing a new attraction for tourists.
“Our strategy is to focus on the things that make East Timor different to surrounding destinations,” Mr. Alves said.
Reuters
East Timor Considers Promoting Its Struggle for Independence as a Tourist Attraction
U.S. economy rebounds in third quarter after four consecutive quarters of contraction
WASHINGTON, Oct. 29 (Xinhua) — The U.S. economy rose at a pace of 3.5 percent in the third quarter after four consecutive quarters of contraction, according to official data released Thursday, providing the strongest signal yet that the worst recession since the 1930s has ended.
The Commerce Department’s advance estimate of real gross domestic product (GDP) — the output of goods and services produced by labor and property located in the United States — in the third quarter exceeded economists’ expectations of 3.3 percent. A trader gestures as he watches the Dow rise on the floor of the New York Stock Exchange, October 14, 2009. (Xinhua/Reuters Photo)
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In the first two quarters of 2009, the U.S. real GDP decreased 6.4 percent and 0.7 percent, respectively. In the third and fourth quarters of 2008, the economy contracted 2.7 percent and 5.4 percent. Related Wall Street rallies on better-than-expected GDP report Gold bounces to 3-day high as dollar weakens on GDP report Strong U.S. GDP data drives dollar lower U.S. economy rises 3.5% in third quarter U.S. durable goods orders rise 1% in September U.S. new home sales drop 3.6% in September U.S. consumer confidence dips in October”After four consecutive quarters of decline, positive GDP growth is an encouraging sign that the U.S. economy is moving in the right direction.” the White House said in a statement.
The department said that the increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, federal government spending, and residential fixed investment.
Real personal consumption expenditures increased 3.4 percent in the third quarter, compared to a 0.9 percent decline in the second.
Consumer spending on durable goods — items expected to last more than three years — soared at an annualized rate of 22.3 percent in the July-September period, the biggest rise since the end of 2001.
The jump largely reflected car purchases driven by the government’s Cash for Clunkers program, which offered a rebate of up to 4,500 U.S. dollars to buy new cars and trade in old gas guzzlers.
Exports of goods and services increased 14.7 percent in the third quarter, in contrast to a decrease of 4.1 percent in the second.
The change in real private inventories added 0.94 percentage point to the third-quarter change in real GDP after subtracting 1.42 percentage points from the second-quarter change.
Federal government spending, which rose at a rate of 7.9 percent in the third quarter, also made a significant contribution to the economic turnaround.
The housing market also showed positive signs during the summer payday loans. Spending on housing projects surged at an annualized pace of 23.4 percent, the largest jump since 1986.
The Commerce Department emphasized that the third-quarter advance estimate released Thursday was based on source data that were incomplete or subject to further revision by the source agency.
The “second” estimate for the third quarter, based on more complete data, will be released on Nov. 24, 2009.
Although the economy returned to growth, economists said the recovery remained nascent and fragile.
Federal Reserve (Fed) Chairman Ben Bernanke and members of U.S. President Barack Obama’s economics team have warned the recovery would not be robust enough to prevent the unemployment rate ¨C now at a 26-year high of 9.8 percent — from rising into next year.
Many economists expected the unemployment rate would keep above9 percent in 2010 before reaching double digit level.
Obama said earlier that the recovery was not real unless the job market recovered.
“This welcome milestone (growth in the third quarter) is just another step, and we still have a long road to travel until the economy is fully recovered,” the White House statement said. “It will take sustained, robust GDP growth to bring the unemployment rate down substantially. Such a decline in unemployment is, of course, what we are all working to achieve.”
Other experts worried that the recovery was mainly driven by the government’s stimulus package and might not be sustainable when the stimulus policies fell off.
The Obama Administration launched a 787-billion-dollar stimulus package in February. But some of the policies have expired or will expire soon.
After the popular Cash for Clunkers program came to an end in August, U.S. auto sales fell accordingly.
The Commerce Department reported Wednesday that U.S. new home sales decreased at an unexpectedly high annual rate of 3.6 percent in September.
As the government-supported 8,000-dollar tax credit program for first-time home buyers will expire on Nov. 30, home builders worry that they will have trouble selling their homes without the incentive.
To foster the recovery, the Fed is expected to keep its key bank lending rate at record low of near zero when it meets next week and probably will hold it there into next year.
However, economists were concerned that the measures would plant the seeds of another asset bubble if the central bank kept the interest rate at too low a level for too long. Special Report: Global Financial Crisis
U.S. economy rebounds in third quarter after four consecutive quarters of contraction
