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Create Date: 2008-05-20 16:28:55 | Popularity Level: 160 |
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2008-11-21 23:49:03
The Week Ahead Canada & U.S.: U.S. Consumer Confidence, Durable Goods
(CEP News) - Traders will be anxious over the weekend as financial turmoil once again dominates the markets and data takes a back seat. The U.S. Thanksgiving holiday will also impact trading this week as markets will be closed Thursday and Friday.A full docket of data, including U.S. consumer confidence, durable goods, new and existing home sales and PCE, will be released during the shortened trading week. Meanwhile in Canada, markets will receive retail sales. However, George Androulidakis, director of FX trading at the National Bank of Canada, said most of the focus will be on the banking industry as Citigroup continues to deal with financial problems."Financials haven’t been the main focus for the last few weeks but they are back," he said."I think over the weekend people will be looking closely at the financials and if a solution can be worked out for Citigroup than I think markets will be okay," he added. "I don’t think the government will let Citigroup fail. We would have the same problems that we did when they let Lehman fail." Michael Cheah, fund manager at AIG SunAmerica, said the bond market is definitely benefiting from the general fear, which is a trend he expects will continue into next week and for at least the end of the year.Guy LeBas, fixed income strategist from Janney Montgomery Scott, said the recent gains in the Treasury market were driven by deflationary fears. As for next weekm he said people are going to use the holiday as a chance to take a break."It’s the first time you can justify taking a couple of days of and I think people are going to take advantage of that and flows are going to be anemic," he said.Looking at the trend, he said there is still room for 10-year yields to fall. However, he added the market remains extremely volatile in the short term."I think 3.00% is going to be a tough psychological level for the 10-year," he said. "It has become quantitatively impossible to model an economic fair value for the two-year. There is no fundamental basis to tell where the two-year note is going to go from here. It’s not a traders market. It’s an investor’s market; someone who can buy something and hold it for a few months."Looking at the currency markets, Androulidakis agrees that he expects to see a quiet trading environment as people limit their risks ahead of the holiday. However, he added that liquidity will be a problem and will push the markets. "I think most people will be hesitant to hold any positions ahead of Thanksgiving," he said. "Less liquidity is going to be a problem and add to the volatility."Jimmy Tintle, futures broker at Transworld Futures, said he could see a modest recovery in S&Ps next week, but any bounce would see viewed as a short-term move and markets will continue to test new lows."I think 800 in the S&P is going to be the new resistance level in this down trend," he said.All times in ESTMonday: The week starts with the release of U.S. existing homes sales for October, which are expected to fall 3.5% following September’s rise of 5.5%. Economists are forecasting that 5,000,000 homes were sold during the month, which is down September’s sales of 5,180,000.10:00 US Existing Home Sales October Exp: 5.00M Prior: 5.18M 10:00 US Existing Home Sales (M/M) October Exp: -3.5% Prior: +5.5% 11:30 US Treasury to Sell $28B 3-Month Bills 11:30 US Treasury to Sell $28B 6-Month Bills 13:00 US Treasury to Sell $36B 2-Year Notes Tuesday: In this shortened trading week, Tuesday will be a busy day with Canadian retail sales, U.S. third-quarter GDP and consumer confidence.Canadian retail sales for September are expected to rise 0.3% following August’s decline of 0.3%. Core sales, excluding autos, for the month are expected to rise 0.2% following a previous 0.3% decline.Markets will receive the second print of U.S. GDP for the third quarter, which is expected to fall 0.5% from the previous reading of -0.3%.Economists are expecting a slight recovery in U.S. consumer confidence for November. The consensus is calling for a level of 38.8 up from October’s level of 38.0.8:30 CA Retail Sales (M/M) September Exp: +0.3% Prior: -0.3% 8:30 CA Retail Sales Less Autos (M/M) September Exp: +0.2% Prior: -0.3% 8:30 US GDP (Q/Q) Annualized Q3 Preliminary Exp: -0.5% Prior: -0.3% 8:30 US Personal Consumption Q3 Preliminary Exp: 3.5 Prior: -3.1% 8:30 US GDP Price Index Q3 Preliminary Exp: +4.2% Prior: +4.2% 8:30 US Core PCE (Q/Q) Q3 Preliminary Exp: +2.9% Prior: +2.9% 9:00 US S&P/CaseShiller Home Price Index September 164.6 9:00 US S&P/CaseShiller Composite-20 (Y/Y) September -16.9% Prior: -16.6% 9:00 US S&P/CaseShiller US Home Price Index (Q/Q) Q3 Prior: 155.3 9:00 US S&P/CaseShiller US Housing Price Index (Y/Y) Q3 Exp: 17.1 Prior: -15.4% 10:00 US Consumer Confidence November Exp: 38.8 Prior: 38.0 10:00 US Richmond Fed Manufacturing Index November Exp: -27 Prior: -26 10:00 US House Price Index (M/M) September Exp: 0.8 Prior: -0.6% 10:00 US House Price Purchase Index (Q/Q) Q3 Prior: -1.4% 13:00 US Treasury to Sell 4-Week Bills 13:00 US Treasury to Sell $26B 5-Year Notes 17:00 US ABC Consumer Confidence Prior: -52 Wednesday: It’s another busy day with the release of U.S. personal income and spending, new home sales, durable goods and weekly jobless claims.U.S. durable goods are expected to fall 2.6% in October following September’s revised increase of 0.9%. Core durable goods, excluding transportation, are expected to fall 1.5% following the previous revised decline of 1.0%. U.S. personal income for October is expected to rise 0.1% following September’s rise of 0.2% while personal spending is expected to continue to decrease with a decline of 1.0% in October following a 0.3% loss in September. Looking at inflation with the core PCE, economists are forecasting a flat monthly reading following September’s rise of 0.2%. Economists are expecting more bad news in the U.S. housing market with October’s new homes sales report. October’s sales are expected to be down 4.5% following September’s gain of 2.7%. The consensus is calling for 443,000 new homes to be sold, which is down from September’s sales of 464,000.7:00 US MBA Mortgage Applications Prior: -6.2% 8:30 US Durable Goods Orders October Exp: -2.6% Prior: +0.8% Revised: +0.9%8:30 US Durables Ex Transportation October Exp: -1.5% Prior: -1.1% Revised: -1.0%8:30 US Personal Income October Exp: +0.1% Prior: +0.2% 8:30 US Personal Spending October Exp: -1.0% Prior: -0.3% 8:30 US PCE Core (Y/Y) October Exp: +2.2% Prior: +2.4% 8:30 US PCE Core (M/M) October Exp: +0.0% Prior: +0.2% 8:30 US PCE Deflator (Y/Y) October Exp: +3.3% Prior: +4.2% 8:30 US Initial Jobless Claims W/E November 22 Exp: +533K Prior: +542K 8:30 US Continuing Claims W/E November 15 Exp: 4050 Prior: +4012K 9:45 US Chicago Purchasing Manager November Exp: 37.3 Prior: 37.8 10:00 US University of Michigan/Reuters Confidence November Final Exp: 57.9 Prior: 57.9 10:00 US New Home Sales October Exp: 443K Prior: 464K 10:00 US New Home Sales (M/M) October Exp: -4.5% Prior: +2.7% 10:35 US DOE U.S. Crude Oil Inventories W/E November 21 Prior: +1599K 10:35 US DOE U.S. Gasoline Inventories W/E November 21 Prior: +539K 10:35 US DOE U.S. Distillate Inventory W/E November 21 Prior: -1471K 10:35 US DOE U.S. Refinery Utilization W/E November 21 Prior: +0.32% 12:00 US EIA Natural Gas Storage Change W/E November 21 Prior: +16 Thursday: No data expected to be released in North America as U.S. markets are closed for the Thanksgiving holiday.Friday:U.S. markets are still closed for the holiday weekend. In Canada, markets will receive Canadian current account balance for the third quarter and October’s industrial product price index.The consensus is calling for Canada’s current account surplus to fall slightly in the third quarter to $5.1 billion, down from the previous surplus of $6.8 billion.Meanwhile, the industrial product price index is expected to fall 1.5% following September’s 1.2% rise.8:30 CA Current Account (Balance of Payments) Q3 Exp: C$5.1B Prior: C$6.8B 8:30 CA Industrial Product Price (M/M) October Exp: -1.5% Prior: -1.2% 8:30 CA Raw Materials Price Index (M/M) October Exp: -7.0% Prior: -7.2% 10:00 US NAPM-Milwaukee November Prior: 42 By Neils Christensen, neilsc@economicnews.ca, edited by Nancy Girgis, ngirgis@economicnews.caCEP Newswires - CEP News ? 2008. All Rights Reserved. www.economicnews.caThe Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News. A copy of CEP News disclaimer can be found at www.economicnews.ca/cepnews/wire/disclaimer. |
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2008-11-21 23:44:04
Week Ahead UK & Europe: German Ifo; European Inflation
(CEP News) - A number of key events are on the docket for the upcoming week in the euro zone, including the Ifo German business climate index for Germany and the ’flash’ inflation estimate for the monetary union, both for the month of November.IDEAglobal economist Lorenzo Cella foresees the Ifo business climate reading to reach a 15-year low of 87.0 for the month, down from October’s 90.2 level."The reported all-time low in the Nov German manufacturing PMI is a supportive factor for the materialisation of our forecast," Cella said. "Given the current economic juncture in Germany, we remain skeptical on the Ifo m/t outlook."Regarding the euro zone CPI estimate, Barclays Capital economist Nick Matthews is forecasting the consumer price index to rise by only 2.3% year-over-year, down markedly from October’s 3.2% print, "further reinforcing the need for sharp downward revisions to the ECB/Eurosystem staff HICP projections for 2008 and 2009 (the September mid-points of 3.5% for 2008 and 2.6% for 2009) and further ECB rate cuts." "Consistent with our projection, we forecast the German preliminary November HICP to have fallen 0.4% m/m and to 1.6% y/y from 2.5% in October (CPI: -0.3% m/m, 1.6% y/y from 2.4% in October) on sharply lower energy inflation and falling food inflation. We also expect similar dynamics to push the Italian preliminary HICP down to 2.9% y/y in November from 3.6% y/y in October and the Spanish "flash" HICP inflation rate lower another 1pp to 2.6% y/y in November (cf. 3.6% in October and 4.6% in September)," Matthews added.All times in ESTSaturday: The week starts with markets paying close attention to what Bank of England Deputy Governor Charles Bean will have to say when he speaks at an event in Istanbul, Turkey.04:45 GB BOE Deputy Governor Charles Bean to deliver speech at an event in IstanbulMonday: The Ifo Institute’s German business climate index will be released and is expected to fall to 88.7 in November from October’s 90.2 level. Looking at the sub-components, the median consensus forecast is calling for the current assessment indicator to slip to 96.8 from October’s 99.9 reading, while the expectations indicator is expected to worsen to 81, down 0.4 points from the previous month.Shortly after the Ifo release, Eurostat will publish data on euro zone industrial new orders. Economists are expecting the new orders level to fall 2.8% from August to September, adding to the 1.2% decline recorded in the previous period.On an annualized basis, industrial new orders are expected to fall 1.5% in September, up from the 6.6% contraction in the 12 months to August.4:00 DE IFO - Business Climate November Exp: 88.7 Prior: 90.2 4:00 DE IFO - Current Assessment November Exp: 96.8 Prior: 99.9 4:00 DE IFO - Expectations November Exp: 81 Prior: 81.4 4:00 EU ECB European Current Account SA September Prior: -8.4B 4:00 EU European Current Account (NSA) September Prior: -7.9B 5:00 EU Industrial New Orders SA (M/M) September Exp: -2.8% Prior: -1.2% 5:00 EU Industrial New Orders (Y/Y) September Exp: -1.5% Prior: -6.6% 10:30 GB UK Government to Release Pre-Budget Report November 24-28 GB Nationwide House prices (M/M) (SA) November Exp: -1.7% Prior: -1.4% November 24-28 GB Nationwide House prices (Y/Y) (NSA) November Exp: -15.1% Prior: -14.6% Tuesday: The Federal Statistical Office will release its final estimates for German Q3 GDP. While no revisions are expected to the headline ’flash’ estimates, the statistics office will also publish data on the GDP components. Expectations are for the consumption component to have rebounded slightly by 0.1% quarter-over-quarter after falling 0.7% in Q2, while government spending is likely to have risen 0.5%, adding to the 0.3% increase in the previous period. At the same time, investment levels are expected to have slipped 1.3% after falling 1.9% in Q2.Next up for Tuesday is the GfK consumer confidence survey for Germany, which is expected to rise 1.5% in December following an increase of 1.9% in November.The National Institute for Statistics and Economic Studies (INSEE) will publish its French business confidence indicator, which is expected to slip three points to 85 in November. The French production outlook indicator for November is also scheduled for Tuesday and is likely to fall further to -68 for the month from -66 in October.In terms of speakers, European Central Bank Executive Board member Lorenzo Bini Smaghi will speak at an event in Venice, Italy.2:00 DE GDP (Q/Q) (SA) 3Q Final Exp: -0.5% Prior: -0.5% 2:00 DE GDP (Y/Y) (WDA) 3Q Final Exp: +0.8% Prior: +0.8% 2:00 DE GDP (Y/Y) (NSA) 3Q Final Exp: +1.3% Prior: +1.3% 2:00 DE Private Consumption 3Q Final Exp: +0.1% Prior: -0.7% 2:00 DE Government Spending 3Q Final Exp: +0.5% Prior: +0.3% 2:00 DE Capital Investment 3Q Final Exp: -1.3% Prior: -1.9% 2:00 DE Construction Investment 3Q Final Exp: 0.0% -3.5% 2:00 DE Domestic Demand 3Q Final Exp: +0.5% Prior: -1.0% 2:00 DE Imports 3Q Final Exp: 1.0% Prior: -1.3% 2:00 DE Exports 3Q Final Exp:-0.7% Prior: -0.2% 2:10 DE GfK Consumer Confidence Survey DEC Exp: 1.5% Prior: 1.9%2:45 FR Business Confidence Indicator November Exp: 85 Prior: 88 2:45 FR Production Outlook Indicator November Exp: -68 Prior: -66 2:45 FR Own-Company Production Outlook November Exp: -25 Prior: -19 2:45 FR Housing Starts 3-month average (Y/Y) Change October Exp: -19.0% Prior: -8.1% 2:45 FR Housing Permits 3-month average (Y/Y) Change October Prior: -23.3% 3:30 IT Consumer Confidence Index November Exp: 100.1 Prior: 102.2 3:45 IT ECB executive member Lorenzo Bini Smaghi and Unicredit’s Alessandro Profumo Speak at an Event Venice 4:00 IT Trade Balance Non-European October Prior: -€ 3,274 4:30 GB Total Business Investment (Q/Q) Q3 Preliminary Exp: -1.9% Prior: -1.0% 4:30 GB Total Business Investment (Y/Y) Q3 Preliminary Exp: -2.2% Prior: 1.2% 4:30 GB BBA Loans for House Purchase October Prior: 23422 4:45 GB BOE Governor Mervyn King, deputy governor Sir John Gieve, deputy governor Charles Bean and MPC members Kate Barker and Andrew Sentance to testify 7:00 EU Greek central bank governor Georgios Provopoulos holds press conference. 12:00 EU ECB executive member Lorenzo Bini Smaghi Speaking in Madrid November 25 German Regional CPI ReportsNovember 24-28 GB Nationwide House prices (M/M) (SA) November Exp: -1.7% Prior: -1.4% November 24-28 GB Nationwide House prices (Y/Y) (NSA) November Exp: -15.1% Prior: -14.6% Wednesday: Destatis is scheduled to release German import price figures for October. The median consensus forecast is calling for the import price index to contract 1.4% month-over-month, adding to the 1.0% fall from August to September.On an annual basis, import price inflation is expected to come in at 5.0% in October, down from September’s 7.6% figure.Following the German figures, INSEE will report on French consumer confidence, which is expected to fall to -49 in November from October’s -47 print. Meanwhile, ISTAT will release data on Italian business confidence, which is forecast to fall further to 76 in November from the previous 77.7 reading.02:00 DE Import Price Index (M/M) October Exp: -1.4% Prior: -1.0% 02:00 DE Import Price Index (Y/Y) October Exp: 5.0% Prior: 7.6% 2:45 FR Consumer Confidence Indicator November Exp: -49 Prior: -47 3:30 IT Business Confidence November Exp: 76 Prior: 77.7 4:30 GB GDP (Q/Q) Q3 Preliminary Exp: -0.5% Prior: -0.5% 4:30 GB GDP (Y/Y) Q3 Preliminary +0.3% Prior: +0.3% 4:30 GB Private Consumption Q3 Preliminary Exp: -0.3% Prior: -0.1% 4:30 GB Government Spending Q3 Preliminary Exp: +0.6% Prior: +0.4% Revised: +0.5%4:30 GB Gross Fixed Capital Formation Q3 Preliminary Exp: -1.5% Prior: -5.3% Revised: -2.8%4:30 GB Exports Q3 Preliminary Exp: -0.3% Prior: -0.5% Revised: 0.0%4:30 GB Imports Q3 Preliminary Exp: -0.9% Prior: -1.4% Revised: -0.5%4:30 GB Index of Services 3-month average September Exp: -0.4% Prior: -0.3% November 26 DE Consumer Price Index (M/M) November Preliminary Exp: +0.3% Prior: -0.2% November 26 DE Consumer Price Index (Y/Y) November Preliminary Exp: 1.6% Prior: +2.4% November 26 DE CPI - EU Harmonised (M/M) November Preliminary Exp:-0.3% Prior: -0.3% November 26 DE CPI - EU Harmonised (Y/Y) November Preliminary Exp: 1.7% Prior: +2.5% November 24-28 GB Nationwide House prices (M/M) (SA) November Exp: -1.7% Prior: -1.4% November 24-28 GB Nationwide House prices (Y/Y) (NSA) November Exp: -15.1% Prior: -14.6% Thursday: Markets will see M3 money supply growth figures out of the euro zone for October. Current forecasts point to further slowing in the year-over-year growth rate to 8.1% from the 8.6% rate in September. A decline is also expected in the three-month average, likely to slow to 8.5%, down 0.4 percentage points from September’s print.One hour later, the EU Commission will publish data on its various sentiment indicators for November. Currently, economists expect the EU business climate indicator to worsen to -1.57 from October’s -1.34, while consumer sentiment is likely to deteriorate further to -25 in November, down one point from the previous month. Economic sentiment is also expected to worsen in the month, with expectations calling for the indicator to decline to 78.3 in November from 80.4 in October. Following the trend, industrial confidence is expected to fall to -21 from October’s -18 level, while services is likely to lose two points and fall to -8 over the same period.2:00 DE ILO Unemployment Rate October Exp: 7.1% Prior: 7.1% 3:30 IT Retailers’ Confidence General November Prior: 105.7 3:30 IT Services Survey November Prior: -18 3:55 DE Unemployment Change November Exp: -5K Prior: -26K 3:55 DE Unemployment Rate (SA) November 4:00 IT Hourly Wages (M/M) October Exp: +0.3% Prior: +0.1% 4:00 IT Hourly Wages (Y/Y) October Exp: +4.0% Prior: +4.1% 4:00 EU European M3 (Y/Y) (SA) October Exp: +8.1% Prior: +8.6% 4:00 EU European M3 3-month average (SA) October +8.5% Prior: +8.9% 5:00 IT Large Company Employment (Y/Y) (NSA) September Prior: -0.5% 5:00 EU Business Climate Indicator November Exp: -1.57 Prior: -1.34 5:00 EU European Consumer Confidence November Exp: -25 Prior: -24 5:00 EU European Economic Confidence November Exp: 78.3 Prior: 80.4 5:00 EU European Industrial Confidence November Exp: -21 Prior: -18 5:00 EU European Services Confidence November Exp: -8 Prior: -6 13:00 FR Total Jobseekers October Prior: 1957.6 19:01 GB GfK Consumer Confidence Survey November -37 Prior: -36 November 27-30 DE IFO Business Climate Survey by Industry report November 24-28 GB Nationwide House prices (M/M) (SA) November Exp: -1.7% Prior: -1.4% November 24-28 GB Nationwide House prices (Y/Y) (NSA) November Exp: -15.1% Prior: -14.6% Friday: INSEE will release its estimates for French producer prices, which are forecast to reach a growth rate of 5.0% in the 12 months to October, down from September’s 6.1% rate. On a monthly basis, the consumer price index is expected to contract 0.9% following the 0.4% decline in the previous month.Shortly afterwards, ISTAT will report on Italian PPI. Economists are looking for the year-over-year growth rate to come in at 6.0% in October, down from September’s 7.3% increase. On a monthly basis, Italian PPI is expected to have contracted 0.7%, deepening September’s 0.5% fall.Eurostat will publish its preliminary estimates for euro zone inflation in November. Economists expect an annualized CPI growth rate of 2.4%, down notably from October’s 3.2% rise.At the same time, Eurostat will report on the unemployment rate in the monetary union, which is expected to have inched up to 7.6% in October from September’s 7.5% level.2:45 FR Producer Prices (M/M) October Exp: -0.9% Prior: -0.4% 2:45 FR Producer Prices (Y/Y) October Exp: +5.0% Prior: +6.1% 4:00 IT PPI (M/M) October Exp: -0.7% Prior: -0.5% 4:00 IT PPI (Y/Y) October Exp: +6.0% Prior: +7.3% 5:00 IT CPI including tobacco (M/M) November Preliminary Exp: -0.2% Prior: 0.0% 5:00 IT CPI including tobacco (Y/Y) November Preliminary Exp: +2.8% Prior: +3.5% 5:00 IT CPI - EU Harmonized (M/M) November Preliminary Exp: -0.3% Prior: +0.5% 5:00 IT CPI - EU Harmonized (Y/Y) November Preliminary Exp: +2.9% Prior: +3.6% 5:00 EU European CPI Estimate (Y/Y) November Exp: +2.4% Prior: +3.2% 5:00 EU European Unemployment Rate October Exp: +7.6% Prior: +7.5% 6:00 GB U.K. CBI November Distributive Trades Report 6:00 IE Irish Central Bank Publishes Monthly Credit Statistics November 27-30 DE IFO Business Climate Survey by Industry report November 24-28 GB Nationwide House prices (M/M) (SA) November Exp: -1.7% Prior: -1.4% November 24-28 GB Nationwide House prices (Y/Y) (NSA) November Exp: -15.1% Prior: -14.6% By Todd Wailoo, twailoo@economicnews.ca, edited by Nancy Girgis, ngirgis@economicnews.caCEP Newswires - CEP News ? 2008. All Rights Reserved. www.economicnews.caThe Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News. A copy of CEP News disclaimer can be found at www.economicnews.ca/cepnews/wire/disclaimer. |
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2008-11-21 23:09:03
Friday’s News Recap: Canadian Inflation Rate Falls, Geithner Chosen as Tsy Secretary
(CEP News) - The key data release today came out of Canada, where headline inflation slowed below expectations in October. In the U.S., an absence of major economic data caused markets to focus on growing fears about Citigroup as its share price fell below $4.Canada’s headline inflation rate dipped to a lower-than-expected 2.6% in October, Statistics Canada reported, against forecasts for a drop to 3.1%. On a monthly basis, the consumer price index shrank by a seasonally adjusted 0.5% as gasoline prices tumbled sharply from September. On a non-seasonally adjusted basis, the total CPI decreased 1.0% month-over-month. Analysts had expected a 0.6% decline.The core inflation rate, which excludes the eight most volatile components including gas, mortgage interest and fresh fruits and vegetables, was unchanged from September, in line with expectations, and was +1.7% on an annual basis, somewhat lower than the +1.9% forecast."This lower than expected report, with notable weakness in a variety of core components adding to the deep dive in gasoline, gives the all-clear signal to the Bank of Canada to continue cutting rates," noted Douglas Porter, deputy chief economist from BMO Capital Markets. Meanwhile, BMO chief economist Sherry Cooper urged the Canadian government Friday to move quickly and decisively to stimulate the country’s economy. "Canadians have been far too sanguine thinking that we would be cushioned from the crisis in credit and the global recession," she said in a research note. "Just as Washington is taking extraordinary steps to ballast financial institutions, non-financial businesses, households, and state and local governments, Ottawa should be preparing for a worst case scenario."In the United States, equity markets surged after NBC News reported that Barack Obama will ask Timothy Geithner to succeed Henry Paulson as Treasury Secretary. The announcement is expected Monday and is expected to include Hillary Clinton as Secretary of State and Bill Richardson as Commerce Secretary. Geithner is the current head of the New York Federal Reserve and the man who engineered the rescue of Bear Stearns.Canadian natural gas sales fell 3.8% in September compared to the same month last year, Statistics Canada reported. Sales totalled 4.5 billion cubic metres, down from 4.7 billion in September 2007. Commercial sales increased while both residential and industrial sales declined year-over-year.There were no major data releases in the U.S., though shares of Citigroup continued to plummet, falling below $4 a share Friday after the firm’s CEO said he has no plans to break up the company. Shares initially rose early in the day on a report that the banking giant was considering breaking up and selling part of its operations. Speakers in the U.S. included Philadelphia Federal Reserve President Charles Plosser (voter), who said he expects growth in the U.S. economy to be anemic well into the first half of 2009. Plosser also said that the Federal Reserve will address the Fed funds target issue and that it was the excess liquidity that the Fed put into the system that has had the unintended effect of lowering the rate below the Fed’s target of 1%.Chicago Fed President Charles Evans echoed those comments, saying he expects to see a substantial downturn in the U.S. economy well into 2009, with a recovery taking root in 2010-2011. He predicted the PCE price index will come in at 1.4%-1.7% and that he expects it to remain "consistent with price stability."In terms of data, regional and state unemployment rates took a turn for the worse in October, as 38 states and the District of Columbia recorded over-the-month unemployment rate increases, five states registered decreases, and seven states had no change. The national unemployment rate was 6.5% in October, having advanced four-tenths of the month and by 1.7% over the year. U.S. mass layoff actions, involving 50 or more employees from a single firm, came in at a seasonally adjusted 2,140 in October, lower than the previous month’s record 2,269 actions, the U.S. Bureau of Labor Statistics reported. The number of mass layoff events this October decreased by 129 after the prior month’s total hit a seven-year high. The total number of workers involved was 232,468 in October, below the previous month’s 235,681 total.In overseas news, both euro zone manufacturing and services purchasing managers indexes hit new lows, causing some economists to say the worst may be in store for the euro zone. According to preliminary estimates from Markit Economics, the euro zone manufacturing purchasing managers index fell to a record low in November, coming in at 36.2, down from both the 40.5 print expected and October’s 41.1 level. The services PMI for the euro zone slipped to 36.2 for the month, the lowest level in the history of the survey.By Stephen Huebl, shuebl@economicnews.ca, with contributions from Geoff Matthews, gmatthews@economicnews.ca, Patrick McGee, pmcgee@economicnews.ca, Steve Stecyk, sstecyk@economicnews.ca, Todd Wailoo, twailoo@economicnews.ca, edited by Nancy Girgis, ngirgis@economicnews.caCEP Newswires - CEP News ? 2008. All Rights Reserved. www.economicnews.caThe Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News. A copy of CEP News disclaimer can be found at www.economicnews.ca/cepnews/wire/disclaimer. |
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2008-11-21 22:24:15
Markets Expecting 50bp Year-End Rate Cut as Fed Struggles to Control Fed Funds Rate
(CEP News) - Fed Funds futures are fully priced in for a 50bp rate cut by the year-end FOMC meeting as the Fed’s liquidity measures continue to undermine their ability to manage the basic interest rate in the economy.However, traders are factoring in a 16% chance for a 75bp rate reduction, down from 32% yesterday.Philadelphia Fed President Charles Plosser said that the Federal Reserve will address the Fed funds target issue. The excess liquidity that the Fed put into the system has had the unintended effect of lowering the rate below the Fed’s target of 1%Chief economist Sherry Cooper at BMO Capital Markets writes that the Fed has to resolve the problem it is having with the target rate at the next FOMC meeting. "With rates likely to be cut to a mere 50 basis points and the Fed having difficulty keeping the effective fed funds rate as high as the target, additional unconventional actions will be discussed and implemented, possibly as soon as the next policy statement," Cooper wrote. Economists at the Goldman Sachs expect that the Fed will have to resort to unconventional methods to stimulate the economy. "We continue to expect the FOMC to cut the federal funds rate target by 50 basis points (bp), to 50bp, at its next meeting on December 16, if not before," they wrote. "Although a subsequent rate cut to zero is not out of the question, we think that the committee will turn to unconventional policy tools more openly to remain aggressive in attempting to support the economy and financial markets."RBC Fixed Income Strategist T.J. Marta expects the Fed will cut rates to zero as disinflation threatens the economy. "The disinflationary, perhaps soon to be deflationary, environment, suggests the Fed will cut the target federal funds rate further towards zero and keep rates at rock bottom levels through 2009," wrote Marta.All data taken at 3:00 p.m. ESTBy Steve Stecyk, sstecyk@economicnews.ca, edited by Nancy Girgis, ngirgis@economicnews.caCEP Newswires - CEP News ? 2008. All Rights Reserved. www.economicnews.caThe Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News. A copy of CEP News disclaimer can be found at www.economicnews.ca/cepnews/wire/disclaimer. |
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2008-11-21 22:19:03
What’s Good for ’Detroit Three’ Is Good for Canada, BMO Economist Says
(CEP News) Ottawa - Canada has potentially even more riding on the fortunes of the Detroit Three automakers than the U.S. due to its greater economic exposure to the auto industry, a BMO economist says.Writing in the BMO e-newsletter Focus, BMO economist Michael Gregory says Canada’s auto sector accounts for a bigger percentage share of employment and gross domestic product than it does in the U.S. "U.S. President Eisenhower selected General Motors’ head Charles Wilson to be his Secretary of Defense in 1953. During his Senate confirmation hearings, Wilson was asked whether his pedigree would affect his ability to make decisions adverse to the interests of GM. He responded: ’what was good for the country was good for General Motors and vice versa’. This statement became a mantra for the importance of GM and the rest of the automotive industry to the U.S. economy, but it could be chanted even louder north of the border," Gregory wrote.He noted Canada’s auto sector accounted for 2.2% of Canadian GDP, while the industry only counts for 1.3% of U.S. GDP.Gregory says that while calculations of the value added by the auto sector necessarily excludes the value added by industries that provide inputs to car manufacturing, such calculation understates the impact on the economy that would result if domestic automakers were to disappear. "Not only would the automotive sector’s value added be lost, but the valued added of all the sectors that provided inputs to automotive production would be lost (such as from the materials industries)," Gregory writes.While auto manufacturing jobs account for 0.6% of U.S. payrolls, the auto sector makes up 0.9% of Canadian payrolls, Gregory says. In the first nine months of 2008, the Detroit Three made up 67% of Canadian light vehicle production, while GM, Ford and Chrysler were responsible for only 57% of U.S. auto production, Gregory writes."Canada’s relative economic exposure to the automotive sector is greater than America’s. This, to paraphrase Mr. Wilson’s famous words, means "what’s good for GM (and the rest of the industry) is good for Canada too," Gregory concluded.By Sean McKibbon, smckibbon@economicnews.ca, edited by Nancy Girgis, ngirgis@economicnews.caCEP Newswires - CEP News ? 2008. All Rights Reserved. www.economicnews.caThe Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News. A copy of CEP News disclaimer can be found at www.economicnews.ca/cepnews/wire/disclaimer. |
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