Page 4 of
5 CREDIT BUBBLE
BULLETIN More
than one step
backwards Commentary and market
watch by Doug Noland
its first loss in six
quarters in part because it had not been able to
pass the cost of feeding its birds on to consumers
… The company said that the higher price of corn
and soyabeans would add about $600m to costs this
year in its chicken business … Cooking oil,
breading and feed ingredients such as vitamins
could be among factors adding a further $400m to
costs. Last year, corn and soy costs doubled to
$2bn … ‘We can’t raise prices fast enough to keep
up with the rising costs of our inputs,’ said
Richard Bond, chief executive."
Gold fell
3.4% to $886 and Silver 2.9% to $16.47. May Copper
declined 2.3%. June Crude declined $2.02 to
$116.50. June Gasoline dropped 2.7% (up 19.8%
y-t-d), and June Natural Gas
slid 2.9% (up 44% y-t-d).
July Wheat declined 0.6%. The CRB index fell 2.3%
(up 13.8% y-t-d). The Goldman Sachs Commodities
Index (GSCI) declined 1.8% (up 19.9% y-t-d and 57%
y-o-y).
China Watch April 29 -
Bloomberg (William Bi): "Food prices in China
…will rise by an average 10% or more this year as
demand outpaces farm production and record global
prices boost import costs, a state-run research
institute said."
April 28 - Bloomberg (Li
Yanping): "China’s average urban wages rose 18.3%
in the first quarter from a year earlier, the
National Bureau of Statistics said."
April
28 - Bloomberg (Li Yanping): "China’s urban
jobless rate was four percent at March 31, the
state-owned Xinhua News Agency reported …"
May 1 - Bloomberg (Zhang Dingmin):
"Manufacturing in China, the world's biggest maker
of steel and cement, expanded at the fastest pace
on record, spurred by new orders from domestic
customers as export demand eased."
April
30 - Market Wire: "In the first quarter of 2008,
China’s overall social power consumption reached
813.34 billion kilowatt-hours, up 13.04% compared
with the same period last year, according to a
report published this month by the China
Electricity Council."
April 29 - Bloomberg
(Nipa Piboontanasawat): "Hong Kong’s retail sales
grew at a faster pace in March as low unemployment
and cuts to interest rates and taxes boosted
household consumption. Sales by value rose 20%
from a year earlier …"
India
Watch April 29 - Bloomberg (Cherian
Thomas): "India’s central bank unexpectedly
ordered lenders to set aside more reserves for the
second time in less than two weeks to tame runaway
inflation. The Reserve Bank of India raised its
cash reserve ratio to 8.25% from 8%..."
May 2 - Bloomberg (Kartik Goyal): "India’s
inflation accelerated at the fastest pace in more
than three years … Wholesale prices rose 7.57%...
from a year earlier …"
May 1 - Bloomberg
(Kartik Goyal): "India’s exports slowed in March …
March shipments rose 26.6% to $16.3 billion from a
year earlier …"
Asia Watch April
28 - Bloomberg (Shamim Adam): "Central bank
officials in Indonesia, the Philippines and
Thailand may raise interest rates this year as
higher oil and commodity prices feed into
inflation, according to JPMorgan … ‘The overall
inflation trajectory in many cases is now expected
to breach the inflation targets of the region’s
inflation-targeting central banks - Indonesia and
the Philippines in particular,’ Singapore-based
analyst Sin Beng Ong said."
May 1 -
Bloomberg (Seyoon Kim): "South Korea’s exports …
the engine of more than half of the economy’s
first-quarter economic expansion, jumped 27% in
April from a year earlier …"
May 1 -
Bloomberg (Seyoon Kim and William Sim): "South
Korea’s consumer prices rose in April, exceeding
the central bank’s target for a sixth straight
month … The consumer-price index jumped 4.1% from
a year earlier …"
April 29 - Bloomberg
(Dinakar Sethuraman and Sophie Tan): "Taiwan,
Asia’s fourth-largest importer of liquefied
natural gas, increased imports of the fuel by 33%
in March and paid record prices …"
May 1 -
Bloomberg (Suttinee Yuvejwattana and Rattaphol
Onsanit): "Thailand’s inflation accelerated at the
fastest pace since 2005 in April as food and oil
prices surged to records … Consumer prices gained
6.2% last month from a year earlier …"
May
2 - Bloomberg (Aloysius Unditu and Arijit Ghosh):
"Indonesia’s inflation accelerated to a 19-month
high … Consumer prices rose 9% from a year earlier
…"
April 30 - Bloomberg (Wahyudi
Soeriaatmadja and Arijit Ghosh): "Indonesia’s
President Susilo Bambang Yudhoyono said rising
global energy prices pose a serious challenge to
the economy …. ‘I’d like to be honest and frank
that the problem that we are facing is not light,’
Yudhoyono said … ‘Problems relating to our economy
are serious.’"
Latin America
Watch April 30 - Bloomberg (Fabio Alves and
Carlos Caminada): "Brazil won an investment grade
credit rating for the first time from Standard
& Poor’s … Faster growth in Latin America’s
biggest economy and a reduction in the country’s
international debt were cited for the increase in
the long-term foreign currency debt rating to BBB-
from BB+ …"
April 30 - Bloomberg (Dan
Levy): "Real estate lending in Brazil will
increase 36% this year, driven by a housing
shortage and a national economy growing at more
than 5% a year, said Joao Teixeira, managing
director of GoldenTree InSite Partners LP … ‘We
have an 8 million unit housing shortage,’ Teixeira
said. ‘Demand is very strong.’"
April 30 -
Bloomberg (Guillermo Parra-Bernal): "Petroleo
Brasileiro SA, Brazil’s state-controlled oil
company, may quadruple bond sales to help fund
development of the Western Hemisphere’s biggest
petroleum discovery since 1976 … Petrobras, as the
company is known, issued less than $800 million,
on average, from 2001 through 2007. Petrobras
plans to increase borrowings by $11 billion this
year …"
Unbalanced Global Economy
Watch April 29 - Bloomberg (Simon Kennedy):
"Three Chinese shoppers were trampled to death in
November as they battled for discounted cooking
oil after the price had climbed about 40%...
Haitian Prime Minister Jacques Edouard Alexis was
ousted this month amid protests over soaring food
prices, which the United Nations says surged 57%
globally in March from a year earlier. Caterpillar
Inc. plans to mark up its earthmoving equipment as
much as 5 percent worldwide in July to deal with
rising costs for steel, copper and oil. U.K. car
enthusiasts paid an average of $151,000 for a
Range Rover Vogue SE in 2007, a 20% jump from ‘06.
In April, they spent an average of [16% more] per
liter to fill it up … ‘We’re seeing a marked
increase in inflation pressure everywhere,’ says
Harvard University professor Kenneth Rogoff, who
was formerly chief economist at the International
Monetary Fund. Rogoff says the threat may be the
greatest since the 1980s."
April 29 -
Bloomberg (Brian Swint): "Bank of England Governor
Mervyn King said bonuses awarded by London’s
finance industry are so lucrative they’re draining
talent away from other parts of the economy. ‘I do
think it is rather unattractive that so many young
people when contemplating careers look at the
compensation packages available in the City and
think that these dominate almost any other kind of
career,’ King told lawmakers …’Such a high
proportion of young people naturally think of the
City as the first place to work in. It shouldn’t
be.’"
April 29 - Bloomberg (Jurjen van de
Pol): "European retail sales dropped the most in
more than four years in April as rising fuel and
food prices squeezed shoppers' budgets, the
Bloomberg purchasing managers index showed."
April 28 - Bloomberg (John Glover):
"European corporate credit quality is sinking at
an ‘alarming’ rate as rising oil prices, the
possibility of a US recession and the euro’s
strength restrain the region’s economic growth,
Moody’s …said."
April 29 - Bloomberg
(Christian Vits): "German wages increased the most
in 12 years in January as companies boosted hiring
to meet orders. Salaries rose 3.3% in January from
a year earlier, the Federal Statistics Office
…said …"
April 28 - Bloomberg (Christian
Wienberg): "Iceland’s inflation rate rose to an
18-year high in April … The annual rate rose to
11.8% from 8.7% in March … Prices gained 3.4% in
the month."
May 2 - Bloomberg (Steve
Bryant): "Turkey’s inflation rate rose in April to
a 12-month high, adding to pressure on the central
bank to reverse its earlier policy of cutting the
benchmark interest rate. Inflation accelerated to
9.7% from 9.2% a month earlier …"
April 30
- Financial Times (Vincent Boland): "Turkey’s
central bank said on Wednesday that inflation in
2008 would be nearly double its official target in
the face of rising energy and food prices … Durmus
Yilmaz, central bank governor, said inflation for
this year would probably come in at 9.3%..."
April 30 - Bloomberg (Steve Bryant and Ali
Berat Meric): "Turkey won International Monetary
Fund approval to increase spending on dams and
roads this year as economic growth slows …"
April 30 - Bloomberg (Daniel Williams and
Abeer Allam): "With opposition groups calling for
a May 4 general strike, Egypt’s President Hosni
Mubarak proposed a 30% increase in wages for
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