Page 4 of
5 CREDIT BUBBLE
BULLETIN Crunch time By Doug Noland
of the world no longer wants
to bankroll. ‘What we’re seeing is a very broad
rebalancing of economic and political power in the
world,’ says Jeffrey Garten, a Yale School of
Business professor who was the Commerce
Department’s undersecretary for international
trade in the Clinton administration. ‘The scales
are moving, and they’re moving quite fast.’”
November 15 – Bloomberg (Seyoon Kim and
Matthew Brown):
“The
United Arab Emirates may consider pegging its
dirham to a basket of currencies, consisting
mostly of dollars, said central bank Governor
Sultan Bin Nasser al-Suwaidi. The falling dollar
will trigger a ‘review’ of the U.A.E.’s dollar
peg, al-Suwaidi said…, signaling for the first
time that the U.A.E. may drop the dirham’s link to
the U.S. currency in the near future.”
November 12 – Bloomberg (Joshua Gallu):
“The Swiss franc is more of a ‘safe haven’ than
other major currencies in times of economic
stress, according to a working paper by the Swiss
National Bank. While the yen and the euro have
also been used as refuge currencies, ‘the Swiss
franc carries the strongest safe-haven
attributes,’ the paper said. So-called
‘safe-haven’ currencies tend to be stable in times
of economic volatility.”
The dollar index
recovered 0.6% to 75.83. For the week on the
upside, the Brazilian real increased 2.7%, the
Australian dollar 2.0%, the South African rand
1.9%, the New Zealand dollar 1.8%, the Swedish
krona 1.3%, the Euro 0.9%, and the Danish Krone
0.9%. On the downside, the Japanese yen declined
1.5%, the Norwegian krone 0.5%, the South Korean
won 0.4%, and the Canadian dollar 0.3%.
Commodities Watch November 14 –
Bloomberg (Pham-Duy Nguyen): “Gold demand rose 19%
in the third quarter, led by a sevenfold increase
in investment in exchange-traded funds backed by
bullion, the producer-funded World Gold Council
said. Global demand increased to 947 metric tons
from 796 tons a year earlier… Purchases of
so-called ETFs and similar products rose to 138
tons from 19 tons as investors sought a haven from
turmoil in financial markets. ‘Gold demand
benefited from the flight to quality that has
accompanied the growing financial problems sparked
by the subprime mortgage crisis,’ George
Milling-Stanley, the council's manager of
investment and market analysis, said…”
For
the week, Gold dropped 5.4% to $787, and Silver
6.7% to $14.51. March Copper added 0.6%. January
Crude declined $1.46 to $93.84. December gasoline
fell 3.3%, while December Natural Gas increased
1.3%. December Wheat lost 1.6%. For the week, the
CRB index declined 1.4% (up 13.7% y-t-d). The
Goldman Sachs Commodities Index (GSCI) fell 1.3%,
reducing 2007 gains to 38.1%.
Japan
Watch November 13 – Bloomberg (Lily
Nonomiya): “Japan’s economy grew faster than
economists forecast in the third quarter as an
unexpected increase in consumer spending countered
a drop in housing construction. The world’s
second-largest economy expanded an annualized 2.6%
in the three months ended Sept. 30 after a revised
1.6% contraction in the previous period…”
November 12 – Bloomberg (Jason Clenfield):
“Japanese household sentiment fell in October to a
three-year low as wages slumped, the job market
weakened and gas prices surged. An index that
measures confidence among households with two or
more people slid to 42.8 points last month from
44.1 in September… A reading below 50 means that
pessimists outnumber optimists. Japan’s labor
market is faltering as unemployment rises and
wages slump. Slower consumer spending, which
accounts for more than half of the economy, puts
growth at risk at a time when overseas demand may
wane because of the U.S. housing recession.”
China Watch November 13 –
Financial Times: “When inflation starts to kill
people then it is a serious problem. Three people
died and 31 were injured on Saturday in a stampede
to buy cut-price cooking oil in the western
Chinese city of Chongqing. China can no longer
explain away inflation as a short-term result of
floods and epidemics of animal disease - nor can
it ignore the strains its macroeconomic policies
are producing. Cooking oil is a special case - its
price influenced by demand from China's glut of
new biofuel refineries - but the broader price of
food has risen in recent months by more than 15%
compared with a year earlier. Floods and other
acts of God have had their effect, as has the
global rise in wheat prices, but there are
structural forces at work as well. Nor is
inflation confined to food any longer: producer
prices are creeping up. The PPI for manufactured
goods was up 3.2% cent in October - many steel
products rose by more than 10% - and the PPI is
likely to go even higher when the recent 10% hike
in the controlled pump price of diesel feeds
through…That is a worry for the rest of the world,
used to enjoying the ‘China price’, a seemingly
open-ended deflationary pressure on the world
economy.”
November 13 – Bloomberg (Nipa
Piboontanasawat): “Inflation in China, the world’s
fastest-growing major economy, accelerated in
October as food prices jumped, increasing pressure
on the central bank to raise interest rates for a
sixth time this year. Consumer prices rose 6.5%
from a year earlier, matching the decade high in
August, the National Bureau of Statistics said
today, after gaining 6.2 percent in September…
Pork prices jumped 55%, vegetable costs were up
almost 30%... Rising food costs threaten to fan
unrest, spur wage demands and undermine the
stability of an economy that grew 11.5% in the
third quarter. ‘Food inflation has expanded into
other categories -- energy, labor and asset
prices,’ said Chris Leung, senior economist at DBS
Bank Ltd. in Hong Kong. ‘Everyone in China is
feeling inflation, especially the poor.’”
November 12 – Bloomberg (Nipa
Piboontanasawat): “China’ money-supply growth in
October exceeded the central bank’s annual target
for a ninth straight month as a swelling trade
surplus injected cash into the world’s
fastest-growing major economy. M2…rose 18.47% from
a year earlier to 39.42 trillion yuan ($5.3
trillion)…”
November 12 – Bloomberg (Nipa
Piboontanasawat): “China’s trade surplus rose to a
record $27.05 billion in October, adding fuel to
U.S. and European complaints the yuan is
undervalued. The gap increased 13.5% from a year
earlier…imports surged 25.5%, exceeding export
growth for the first time since March.”
November 12 – Bloomberg (Winnie Zhu):
“China’s economy is likely to expand 11.2% in the
fourth quarter, slightly slower than in the first
nine months of the year, Xinhua News Agency said…”
November 14 – Bloomberg (Nipa
Piboontanasawat): “China’s house prices rose in
October at the fastest pace since 2005 as
inflation outpaced returns on bank deposits,
encouraging households to speculate on property.
Prices in 70 major cities jumped 9.5% from a year
earlier after gaining 8.9% in September…”
November 14 – Bloomberg (Nipa
Piboontanasawat): “China’s retail sales rose at
the fastest pace in eight years as consumers in
the world's fastest-growing major economy got
richer and inflation accelerated. The 18.1%
increase in October from a year earlier to 826.3
billion yuan ($111 billion) topped 17% growth in
September… It was the biggest gain since 1999…
Sales of clothes, electronics and automobiles
jumped more than 30%...”
India
Watch November 12 – Bloomberg (Cherian
Thomas): “India’s industrial production grew at
the slowest pace in 11 months in September as
decade-high interest rates crimped consumer demand
and a stronger currency made exports less
competitive. Production at factories, utilities
and mines rose 6.4% from a year earlier after
gaining 10.7% in August…”
November 13 –
Bloomberg (Anil Varma): “India’s central bank
bought a record $11.9 billion of foreign currency
in September, its 11th straight month of
purchases. The Reserve Bank of India’s currency
purchases in September jumped almost sevenfold
from the previous month… The bank had bought $1.82
billion in August.”
Asia Boom
Watch November 15 – Bloomberg (Shamim
Adam): “East Asia’s economies will expand at the
fastest pace in more than a decade in 2007 as
China’s accelerating growth offsets a slowdown in
U.S. demand for the region’s exports, the World
Bank said. East Asia, which excludes Japan and the
Indian subcontinent, will grow 8.4% this year,
faster than the 7.3% rate the World Bank predicted
in April.”
November 12 – Bloomberg (Jean
Chua and Shamim Adam): “Singapore’s inflation rate
may accelerate to as much as 5% in the first
quarter of 2008 amid record oil prices and higher
food and transportation costs, Minister of Trade
and Industry Lim Hng Kiang said.”
November
15 – Bloomberg (Aloysius Unditu and Arijit Ghosh):
“Indonesia’s economy expanded 6.5% in the third
quarter, the fastest pace since the 1997 Asian
financial crisis, spurred by bumper harvests and
rising sales of cars, motorcycles and homes.”
Unbalanced Global Economy
Watch November 15 – Bloomberg (Fergal
O’Brien): “Inflation in Europe accelerated in
October to the fastest in two years, rising
further above the European Central Bank’s 2%
ceiling on higher prices for energy and food.
Consumer prices in the 13-nation euro region
increased an annual 2.6%, the highest since
September 2005, up from 2.1% in the prior month…”
November 13 – Financial Times (Chris
Giles): “Fear of a slowing economy has led to a
big fall in business confidence across Europe… The
confidence in the European business outlook of
earlier this year has given way to much weaker
expectations for business activity, revenues,
profits, capital spending and employment.”
November 15 – Bloomberg (Jennifer Ryan):
“U.K. retail sales unexpectedly fell for the first
time in nine months in October as
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
