政権が交代して～補正予算の配分を変えて～官僚と戦争して～ムダを削っても、失業率は上がり続けるとブルームバーグ。失業率を下げられないと、鳩山民主党のハネムーンは短期で終わると。英語ですが、読んでください。「民主党に騙された～！」となる公算は高い。オバマ政権も暗礁が目前に来ている。麻生自民は負ける条件が揃っていた。だが、鳩山民主も、岩礁の海域を渡ることには変りはないのである。この時期に政権交代が良かったのかどうか、１００日も経てばはっきりとする。伊勢平次郎 ルイジアナJapan’s Unemployment May Shorten ‘Honeymoon’ for DPJ
Aug. 31 (Bloomberg) -- Democratic Party of Japan leader Yukio Hatoyama, fresh from a sweeping election victory, may have limited options to address record unemployment and deflation that threaten to hobble the nation’s economic recovery.
The DPJ won power for the first time yesterday on a pledge to support households battered by two decades of economic stagnation. Hatoyama has also committed to avoid increasing government bond issuance, leaving his main initiative as a redistribution of the former Liberal Democratic Party government’s stimulus efforts, which focused on public works.
Economic reports indicate the expansion that began last quarter may already be in danger: the jobless rate rose to a record 5.7 percent in July, factory output growth slowed and household spending dropped the most in five months. That leaves Japan “more dependent on exports that it’s ever been,” said Hugh Patrick, a professor at Columbia University in New York.
“Japan’s economy is emerging from the deep woods but will be in the shallow woods for some time,” putting pressure on a party with factions that differ on policies including deficit reduction, said Patrick, who heads Columbia’s Center on Japanese Economy and Business and wrote 15 books on Japan. “Politically, the next nine to 10 months will be very exciting.”
Naoki Iizuka, a senior economist in Tokyo at Mizuho Securities Co., predicted the DPJ will draw up a job-creation package as soon as October. “The most urgent priority for the new government is stopping the rising jobless rate,” he said.
Hatoyama, 62, led the DPJ to win 308 seats yesterday in the 480-seat lower house, public broadcaster NHK said, ousting the party that ruled Japan for all but 10 months since 1955. The DPJ gained control of the upper house two years ago.
Stocks rose and the yen gained, while bonds were little changed. The Nikkei 225 Stock Average climbed 1.2 percent to 10,663.68 at 10:03 a.m. in Tokyo. Japan’s currency strengthened to 92.83 per dollar from 93.60 late Aug. 28. The yield on the benchmark 10-year bond stayed at 1.31 percent.
The DPJ assumes power as outgoing Prime Minister Taro Aso’s 25 trillion yen ($269 billion) in stimulus may already be wearing off.
Consumer prices fell an unprecedented 2.2 percent in July, threatening to erode corporate profits in the aftermath of the nation’s worst postwar recession. Companies such as Aeon Co., Japan’s second-largest retailer, have been forced to offer discounts to attract consumers.
Support for Households
The DPJ plans to increase spending on child care and tuition aid, cut gasoline taxes and eliminate highway tolls. It also promises 100,000 yen a month for job seekers enrolled in training, a minimum wage boost and higher employment insurance.
It may be hard to fulfill the pledges without worsening a public debt already nearing 200 percent of gross domestic product. Hatoyama said on TV Asahi Aug. 23 he won’t let new bond sales for the next fiscal year exceed this year’s record 44.1 trillion yen. In a sign of differences in the party, DPJ policy chief Masayuki Naoshima last month said higher bond sales may be unavoidable should there be a need for additional stimulus.
“The DPJ has promised far more than it can possibly deliver,” said Edward Lincoln, director of the Center for Japan-U.S. Business and Economic Studies at New York University’s Stern School of Business, who advised Walter Mondale, the former U.S. ambassador to Japan. “If they don’t do much on the things they promised and if the economy remains sluggish, then the honeymoon will be very short.”
Manufacturers increased production 1.9 percent in July from a month earlier, the slowest pace since March, as effects of the global stimulus and inventory restocking began to fade, a Trade Ministry report showed today. Retail sales slumped 2.5 percent, an 11th monthly drop.
“The DPJ must realize that public frustration with the LDP is going to turn into high expectations,” said Hiroshi Miyazaki, chief economist in Tokyo at Shinkin Asset Management Co. “The DPJ may try to appease voters and that would only worsen the economy and debt.”
Hatoyama’s choice of finance minister may be key to assuring investors the DPJ will restrain debt issuance, analysts said.
The new government will need to show “it has a competent and steady hand on the tiller at the Finance Ministry,” said Tobias Harris, author of the “Observing Japan” political blog and a former aide to ex-DPJ lawmaker Keiichiro Asao.
May Pick Fujii
Hatoyama may pick Hirohisa Fujii, 77, Kyodo News reported on Aug. 26, without citing anyone. Fujii, a former finance ministry official, served in the post in the coalition government that ousted the LDP for 10 months in 1993-94.
That experience might make Fujii best suited to work with ministry staff, economists said. The DPJ has committed to shift power from the bureaucracy to elected politicians, setting the stage for potential clashes with government officials.
Other candidates include DPJ Secretary-General Katsuya Okada, 56, and Vice President Naoto Kan, 62, economists said.
The party has said it will pay for its promises by cutting what it terms wasteful spending, shrinking the public service, tapping money from special accounts managed by bureaucrats and abolishing some tax deductions. Economists and investors have questioned whether that’s realistic, given tax revenue is falling and welfare costs are swelling as the population ages.
“These are deep-rooted structural problems that the Japanese economy faces,” said Michael Taylor, a senior economist at Lombard Street Research Ltd. in London. Fixing the pension system and reducing people’s anxiety about retirement, for example, will take time, he said on Bloomberg Television. The next prime minister “has got an awfully big job on his hands to try and sort things out.”
英語ですが読んでください。こうした記事や、NY/TIMESへ寄稿した奇妙な「鳩山ドクトリン」などによって、米政府や知日派の指導者が、鳩山のビジョンに疑いを持つのですね。在米４２年の伊勢爺さんは恥ずかしくて穴に入りたいほどだ。主観ではないよ。ウチの青い目のカミサンは、リベラルだが、米軍空輸の勤務では、空軍大尉なのだ。「ヘンねえ？」だとさ、、おおハズカシ～！伊勢平次郎DPJ Leader Hatoyama Would Seek Talks With N. Korea
Aug. 23 (Bloomberg) -- Yukio Hatoyama, leader of the Democratic Party of Japan, said he’ll push for “dialogue and cooperation” with North Korea should his party win the Aug. 30 lower house parliamentary elections.
“Even President Obama has begun to seek dialogue and cooperation,” with North Korea, Hatoyama said on a Fuji TV program today. “In pursuing dialogue and cooperation, if North Korea doesn’t listen to us, we’ll think about taking severe measures.”
Hatoyama was responding to Prime Minister Taro Aso, who heads the ruling Liberal Democratic Party, saying in the same program that North Korea is a threat. North Korea pulled out of talks with Japan, South Korea, the U.S., China and Russia in April aimed at ending its nuclear weapons program.
“We should not overlook a reality that there is a threat in North East Asia,” Aso said. “There exists a country which doesn’t share the value of democracy and conducts nuclear tests, fires missiles and abducts people.”
Previously, Aso has said the international community needs to put pressure on North Korea to persuade the communist country to abandon nuclear weapons.
Hatoyama said his diplomatic policy will be based on “fraternalism” and he will seek a way “to deal with those countries with different values,” including North Korea and China.
DPJ Leads Polls
Aso’s LDP will seek to provide Japan’s military with the ability to intercept North Korean missiles that could reach the U.S. and to defend U.S. ships, according to the party’s election platform.
A Kyodo News poll shows the LDP, which has governed for all but 10 months since 1955, may lose power to the opposition party in the coming elections.
The DPJ may win more than 300 lower house seats, while the LDP is likely to retain at least 100 seats, falling from the 300 ahead of the election, Kyodo reported today, citing its opinion poll and interviews.
As part of its platform, the LDP also would eliminate pre- school fees by 2012, create 2 million jobs in the next three years, and boost economic growth to 2 percent by 2011, according to the party’s platform announced last month.
Hatoyama said in an NHK program today that it’s “possible to squeeze out about 6 trillion yen” from the government’s 200 trillion yen spending plan for this fiscal year. Aso claims the DPJ hasn’t made clear how it would fund measures including a childcare allowance and cutting gasoline taxes.
オバマの支持率は、９月に入れば、５０％以下になると、前のエントリーで書いた。８月２０日、もう早々と、ゾグビーが世論調査を発表した。英語ですが、読んでください。伊勢平次郎 ルイジアナZogby: Obama Hits Record Low in Poll オバマの支持率急落
Thursday, August 20, 2009
President Barack Obama's popularity has plummeted to a record low, with just 45 percent of voters now approving of his performance, according to the latest Zogby International poll.
Asked whether they approve or disapprove of the president's job performance, just 45.3 percent of likely voters say they approve. That compares with 50.5 percent who disapprove of the job Obama is doing.
The results are a strong indication that contentious national debate over healthcare reform has taken a major toll on the president's popularity.
Those numbers also indicate that Obama clearly is in serious political trouble, Fox News analyst and best-selling author Dick Morris tells Newsmax.
"As soon as Obama dropped below 52 percent . . . he was leaking real voters who had backed him in November," Morris tells Newsmax. "Now that he is down to 45 percent among likely voters . . . he is in deep political trouble."
Of greatest concern to Obama may well be his decline among all-important independent voters. Just 37.5 percent of self-identified independents say they approve of how Obama is handling the presidency. That compares with 59.2 percent of independents who disapprove.
"There is nothing counterintuitive in any of these numbers," pollster John Zogby of Zogby International tells Newsmax. "The president is clearly taken a slide — most especially with independent voters, who play such an important role in any legislation or policy support.
"Interestingly, the president had been making some inroads with groups like investors, and frequent Walmart shoppers . . . both typically conservative," Zogby says. "However, he has slipped considerably with them in this poll."
Zogby adds: "The healthcare plan appears to be consolidating conservative opposition and scaring independent voters."
Pundits pay especially close attention to trends involving swing voters.
Continued evidence of declining popularity there will ratchet up the pressure on congressional blue dogs and other conservative Democrats to go their own way on controversial proposals such as public-option healthcare and energy cap-and-trade, knowing they can't rely on presidential coattails to prop them up with voters.
As expected, Obama continues to score well with Democrats, who give him an 83.9 percent approval rating. But among GOP voters, Obama has flat-lined at a 5.7 percent approval rating — a problem in itself for a president who promised to bring a new, bipartisan spirit to Washington politics.
Obama's decline has been startling. Various polls had his approval rating at well over 60 percent at the 100-day mark of his presidency.
By mid-June, his approval number had dipped to 51 percent. In July, it dropped further to 48 percent of likely voters.
Experts say the failure of the $787 billion stimulus to deliver on Obama's promise of massive jobs creation, the ongoing economic woes, and the increasingly bitter fight over Democrats' determination to push the government-subsidized, public-option healthcare reforms are among the reasons for Obama's rapid descent.
"Clearly, the healthcare reform package is dragging him down," Morris tells Newsmax, "and will drag every Democrat down unless they realize that they cannot afford to alienate the elderly of America by cutting Medicare and rationing medical care."
The Zogby International interactive poll has a margin of error of plus or minus 2 percent.
Stocks Slide on Economy Concern; Yen, Dollar, Treasuries Gain
Aug. 17 (Bloomberg) -- Stocks fell around the world, led by China, while the yen and dollar advanced and Treasuries rose as investors speculated that a rally in riskier assets has outpaced prospects for economic growth.
The MSCI World Index of 23 developed nations sank 2.5 percent at 9:35 a.m. in New York, the biggest retreat in six weeks. The Standard & Poor’s 500 Index slid 2 percent, while China’s Shanghai Composite Index slumped the most since November. The yen strengthened against all 16 of the most-traded currencies tracked by Bloomberg, while the dollar advanced against every one except the yen. The yield on the benchmark 10- year Treasury note dropped to its lowest level this month. Copper and oil declined for a second day.
Equities tumbled after foreign direct investment in China fell, Yunnan Copper Industry Co. said there were “no clear signs” of a recovery and Japan’s economy grew less than economists estimated, reigniting concern that a five-month, 52 percent rally in the MSCI World was overdone. The tally of failed U.S. banks this year climbed to 77 last week, while the Reuters/University of Michigan index of consumer sentiment in America showed an unexpected decrease.
“The rally in risk assets has become overextended as it has run ahead of the improvement in fundamentals,” Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, wrote in an e-mailed report. “The dollar and yen have been boosted by a pickup in safe-haven demand.”
Lowe’s Cos. slid 9.7 percent in New York trading after the second-largest U.S. home-improvement retailer reported second- quarter profit that missed analysts’ estimates.
The Dow Jones Stoxx 600 Index of European shares retreated 1.9 percent, the biggest drop in a month. A 42 percent rebound since March 9 has left the regional measure valued at 40.2 times the profits of its companies, near the most expensive since 2003, data compiled by Bloomberg show.
Raw-materials shares declined with metals and oil. Rio Tinto Group, the world’s third-largest metals producer, decreased 5.1 percent in London.
Swedbank AB decreased 3.4 percent in Stockholm. The Baltic region’s biggest bank announced a second rights offer in less than a year as it seeks to shore up reserves and exit the Swedish state’s bank support plan. The lender faces soaring loan losses and provisions in Latvia, Lithuania and Estonia.
The world’s biggest pension funds have lost confidence in stocks as the best long-term investment, cutting holdings or leaving them unchanged during the steepest rally since the 1930s. Funds overseeing money for California teachers and public workers, Dutch government retirees and South Korean private- sector employees reduced their target weightings for equities this year, data compiled by Bloomberg show.
The MSCI Asia Pacific Index lost 3.2 percent, the steepest decline since March. Japan’s gross domestic product expanded at an annual 3.7 percent pace in the three months ended June 30, missing the median estimate for a 3.9 percent increase in a Bloomberg News survey. Sony Corp., the maker of the PlayStation 3 game console, retreated 4.1 percent in Tokyo.
Confidence in the world economy surged to a 22-month high in August on signs the first global recession since World War II is approaching an end, a Bloomberg survey of users on six continents showed last week.
The U.S. unemployment rate dropped in July for the first time since April 2008, data from the Labor Department showed this month, while the German and French economies unexpectedly grew last quarter, government figures indicated last week.
The U.S. recession is “ending right now,” Abby Joseph Cohen, New York-based senior investment strategist at Goldman Sachs Group Inc., said in an interview today on Bloomberg Television and Radio. The Federal Reserve Bank of New York’s general economic index showed manufacturing in the New York region grew in August for the first time in more than a year.
Profit that missed analysts’ estimates at Ping An Insurance (Group) Co. helped send China’s Shanghai Composite Index down 5.8 percent, the steepest slump since Nov. 18.
Ping An, China’s second-biggest insurance company, fell 3.9 percent after first-half net income dropped 45 percent. Yunnan Copper sank 10 percent after posting a first-half loss.
The MSCI Emerging Markets Index declined 3.7 percent, the steepest drop since March. Russia’s ruble weakened 1.8 percent against the dollar and depreciated 0.8 percent against the euro.
The yen advanced 1.9 percent against the Australian dollar as demand for higher-yielding currencies waned, and rose 1.3 percent versus the euro. The pound slid 1.4 percent against the dollar on growing evidence the U.K.’s sputtering economy is halting the currency’s biggest five-month rally in 24 years.
Gains for Treasuries sent the yield on the benchmark 10- year note down 8 basis points to 3.49 percent. The 30-year yield lost 6 basis points to 4.36 percent.
The cost of protecting European corporate bonds from default rose to the highest since July 23 in the market for credit-default swaps. The Markit iTraxx Europe index of 125 companies with investment-grade ratings rose 4.25 basis points to 99, according to JPMorgan Chase & Co. prices.
Copper for delivery in three months fell 2.5 percent to $6,089.25 a metric ton on the London Metal Exchange. Aluminum, nickel and zinc also declined. Crude oil retreated 2.2 percent to $66 a barrel in New York. Gold fell 1.7 percent to $932.75 an ounce, leading a decline in precious metals.
To contact the reporters on this story: Daniel Hauck in London at email@example.com; Lynn Thomasson in New York at firstname.lastname@example.org.
Last Updated: August 17, 2009 09:38 EDT
Dollar May Extend Decline After Unexpected Drop in Retail Sales
Aug. 14 (Bloomberg) -- The dollar may extend the decline posted versus the yen after a report showed U.S. retail sales unexpectedly fell last month, adding to concern the nation’s consumers remain reluctant to increase spending.
The euro advanced versus the dollar yesterday as the yield advantage of U.S. bonds over German securities narrowed and economic data showed Europe’s economy shrank less than economists predicted in the second quarter. The Australian and Canadian dollars plunged against the yen yesterday after the retail sales data, recovering from the loss as stocks gained.
“The retail sales was just such a shock that people bailed on some of the risky positions that they had,” said Andrew Busch, a Chicago-based currency strategist at BMO Capital Markets. “Really, the yen strengthened against the currencies.”
The dollar traded at 95.40 yen at 6:07 a.m. in Tokyo, after declining 0.6 percent yesterday. The greenback traded at $1.4290 per euro, after falling 0.7 percent. Europe’s currency traded at 136.34 yen, compared with 136.46 yen yesterday.
U.S. retail sales fell 0.1 percent in July, after gaining a revised 0.8 percent the prior month, the Commerce Department said in Washington. The median forecast of 76 economists in a Bloomberg News survey was for an increase of 0.8 percent. The Standard & Poor’s 500 Index fluctuated, swinging between a 0.7 percent gain and 0.5 percent loss.
“You get a number like this and you have people sitting down and scratching their heads” about the dollar’s reaction, said Lauren Rosborough, a foreign-exchange strategist in London at Westpac Banking Corp. “Everyone expected retail sales, in particular the headline number, to be exceptionally good and going into a more risk-positive sentiment.”
The euro gained after the European Union’s statistics office in Luxembourg said gross domestic product fell 0.1 percent from the first quarter. Analysts estimated a decline of 0.5 percent in the period, a Bloomberg survey showed.
“We’re getting pretty excited about these numbers, seeing big hitters in euro land moving back into the black, and that’s why the euro is higher,” said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London.
The euro rose after Germany’s Federal Statistics Office said gross domestic product expanded a seasonally adjusted 0.3 percent during the second quarter. France’s economy grew by the same amount in that period, statistics office Insee said in Paris yesterday. Economists expected contractions in Germany and France by 0.2 percent and 0.3 percent, Bloomberg surveys show.
‘Reaching a Bottom’
Yields on 10-year German bonds lagged behind the decline in U.S. yields triggered by the retail sales report, falling three basis points to 3.42 percent. The extra yield earned by holding U.S. notes versus similar-maturity German government debt narrowed eight basis points, or 0.08 percentage point, to 18 basis points yesterday.
The data “may really lend credence to the view that we could be reaching a bottom,” Ashraf Laidi, chief market strategist at CMC Markets in London, said in an interview on Bloomberg Television. “In the short term we might see a nice pop in the euro.”
The dollar declined on Aug. 12 against most major currencies after the Federal Reserve said it will keep interest rates “exceptionally low” for an extended period and wind down purchases of Treasuries by the end of October.
Swings in currencies were exaggerated as investors were pushed out of bets that foreign-exchange rates would return to a medium-term average, said Sebastien Galy, a currency strategist at BNP Paribas SA in New York. The euro approached its highs against the dollar set before the Aug. 7 payrolls report, prompting strategists to question how long risk would continue to drive currency markets, he said.
“The mean-reverters, basically the ones betting on corrections, are getting squeezed out very fast,” Galy said in an interview from New York. “You have a lot of money that continuously whenever things improve a little bit just piles into risky assets. It’s not risk-on/risk-off. It’s a failure of mean reversion.”
To contact the reporters on this story: Oliver Biggadike in New York at email@example.com; Ye Xie in New York at firstname.lastname@example.org
Last Updated: August 13, 2009 17:10 EDT
CASH IS KINGとブルームバーグ。「金融危機第二波がやってくる」と米国の大企業、GEなどが準備している。今度の危機では、TARP（金融機関救済）なないだろと。オバマの刺激策は一向に刺激効果を上げない。現在、失業からホームを失っている米国国民は、「おれらは、仕事も家もなくした～何をチェンジするのか？」と、ANGRY・MOB（怒れる群集）に変っている。夏休みで帰郷した議員たちのタウン・ミーテイングでは、怒鳴りあいが起きている。オバマはアメリカ史上で、その支持率を最速で失っている。伊勢平次郎 ルイジアナTreasurers’ Fear of Next Credit Freeze Shown in Cash Hoarding
Aug. 10 (Bloomberg) -- Two years after credit markets seized up and caused the worst financial crisis since the Great Depression, companies are hoarding the most cash in at least a decade.
“Every action we take or contemplate taking is measured by its impact on our balance sheet and liquidity,” Mark Jacobs, the chief executive officer of Houston-based RRI Energy Inc., told analysts and investors on Aug. 3. The company sold its Texas retail electricity business and the Reliant brand name in May, helping triple cash and equivalents from a year earlier to 18 percent of assets, according to data compiled by Bloomberg.
Even as government reports show that the first global recession since World War II may be easing, corporate treasurers are raising cash as fast as they can, wary of losing access to capital. Corporate defaults reached 10.7 percent worldwide in July, the highest since 1991, according to Moody’s Investors Service. Credit markets that started to freeze in August 2007, have now triggered more than $1.5 trillion in writedowns and losses at the world’s biggest financial institutions.
Cash and short-term investments accounted for about $1.98 trillion, or 8.2 percent, of assets at the end of the second quarter for companies in the Standard & Poor’s 500 index, up from about $1.6 trillion, or 6.4 percent, a year earlier, Bloomberg data show. Cash reached a record $2 trillion in the first quarter, 8.3 percent of assets.
‘Cash is King’
“Cash is king,” said Paul Kasriel, the chief economist at Northern Trust Corp. in Chicago. “Businesses are in survival mode right now.”
While companies sold a record $837.9 billion of bonds this year and raised $109.8 billion in stock offerings, the increase in cash shows they are following the lead of consumers, who pushed the U.S. savings rate to a 14-year high of 6.2 percent in May.
“There’s going to be a generational psychology shift as to how you and I and the rest of the world think about finance,” said Jonathan Fine, a managing director on the investment-grade syndicate desk at Goldman Sachs Group Inc. in New York. “People will keep cash on hand so long as what happened in the last two years remains so visible in the rearview mirror.”
General Electric Co., the world’s biggest maker of power- plant turbines, increased cash and short-term investments at the fastest pace in 14 years in the second quarter, to $97.5 billion, or 12.5 percent of assets, from $64.9 billion, or 7.7 percent, a year earlier, Bloomberg data show.
The Fairfield, Connecticut-based company raised about $49 billion this year with unsecured and government-guaranteed debt through its GE Capital Corp. finance arm as CEO Jeffrey Immelt began boosting cash after the collapse of Lehman Brothers Holdings Inc. in September.
“We’ve done a lot of stress testing in terms of making sure we’ve got sufficient liquidity, sufficient cash,” Kathryn Cassidy, GE’s treasurer, said in an interview.
That wasn’t the thinking until defaults on subprime mortgages made to consumers with poor credit began accelerating in 2007, causing losses on securities backed by the loans. Concern that the contagion would spread led investors to rein in credit.
The asset-backed commercial paper market contracted about 20 percent in five weeks from its peak in August 2007. Paris- based BNP Paribas SA said it halted withdrawals from three investment funds on Aug. 9 because France’s largest bank couldn’t “fairly” value their holdings. High-yield, high-risk companies such as Plainview, New York-based Aeroflex Inc., a maker of testing gear for the aerospace and defense industries, were forced to delay or cancel bond sales.
That month, the Federal Reserve, in a surprise move, cut the interest rate it charged banks. It would ultimately lower its target rate for overnight loans between banks to between zero and 0.25 percent from 5.25 percent.
As the financial crisis spread, New York-based Lehman Brothers, which was founded in 1850, filed for the biggest bankruptcy in U.S. history. The government bailed out American International Group Inc. and Citigroup Inc., while Bear Stearns Cos. and Merrill Lynch & Co. were acquired. The government assumed control of Fannie Mae and Freddie Mac, the nation’s two biggest mortgage-finance companies.
The collapse of so many financial giants worsened the credit freeze. Rates banks charged each other for three-month loans soared about fourfold to a record 4.63 percentage points more than Treasury bills of the same maturity on Oct. 10 from 1.17 percentage point a month earlier.
‘Road to Hell’
Speculative-grade companies, those with ratings below Baa3 by Moody’s and BBB- at S&P, got shut out of the bond market as the extra yield investors demanded to own their debt soared to more than 20 percentage points above Treasuries, according to Merrill indexes. Before the markets collapsed, the spread was less than 3 percentage points.
“It’s been a road to hell,” said Pat Freeman, treasurer of Calgary-based Agrium Inc., North America’s third-largest fertilizer producer. The company saw its shares tumble to as low as $23.31 from a high of $112.45 in June 2008. They closed at $49.12 last week. “You never know when the market might shut down on you.”
Unprecedented steps by the U.S. government and the Federal Reserve halted the slide as they spent, lent or committed $12.8 trillion to revive the economy, Bloomberg data show.
Access to credit still remains limited for companies that need it the most. Defaults may rise to 12.2 percent worldwide in the fourth quarter, according to Moody’s. Commercial and industrial loans fell to $1.48 trillion at the end of July, down 11 percent from a peak of $1.65 trillion in October, Fed data show.
Record Bond Sales
Yield spreads on junk bonds ended last week at 8.57 percentage points on average, Merrill data show. For investment- grade companies, the difference is 2.54 percentage points. While down a record 6.56 percentage points in December, it’s above the average 1.42 points this decade before the credit seizure.
Even with the relatively high rates, U.S. corporate bond issuance in the first half rose 11 percent from the previous record pace in 2007, as businesses repaid short-term loans, Bloomberg data show. Stock sales were about double the same period of 2007.
“The days of excessive leverage are over,” said Scott Minerd, who helps supervise more than $100 billion as chief investment officer of Guggenheim Partners LLC in Santa Monica, California. “Having term financing in place and not having yourself be vulnerable to a refinancing event is an important feature in every balance sheet.”
Signs the recession is easing may encourage companies to spend more cash, said Howard Silverblatt, a senior index analyst at S&P in New York.
“Once they believe the economy is getting better and not just less worse, they’ll start spending,” Silverblatt said.
The economy is showing signals of improving. Payrolls fell by 247,000 in July, after a 443,000 loss in June, the Labor Department said Aug. 7 in Washington. The jobless rate unexpectedly dropped to 9.4 percent from 9.5 percent.
The recession may have ended in July, said Jeffrey Frankel, a member of the committee at the National Bureau of Economic Research that dates business cycles. The median estimate of 60 economists surveyed by Bloomberg is for growth of 2.10 percent in 2010, after a contraction of 2.50 percent this year.
“Confidence is improving but there are still a lot of people who are nervous,” Ronald Millos, chief financial officer of Vancouver-based Teck Resources Ltd., Canada’s largest base- metals producer, said in an interview.
Teck eliminated its annual dividend last year, fired employees and reduced capital spending “to the bone” to bolster the confidence of lenders and investors, Millos said.
The company sold $4.23 billion of notes in U.S. dollars in May at interest rates as high as 10.75 percent to retire short- term borrowing that funded last year’s purchase of Fording Canadian Coal Trust. When Teck issued $700 million of debt in 2005, it paid a coupon of 6.125 percent.
Pitney Bowes Inc., the world’s largest maker of postal meters, replaced commercial paper -- debt due in nine months or less -- with bonds after Lehman’s collapse reduced the availability of short-term financing. The company sold $300 million of 10-year, 6.25 percent bonds on March 2 at a spread of 3.38 percentage points. The average rate on 30-day commercial paper sold by non-financial companies ended last week at 0.15 percent, according to the Fed.
“Our approach in general changed in the sense of giving ourselves a lot more event-risk protection,” said Helen Shan, vice president and treasurer at Stamford, Connecticut-based Pitney Bowes.
RRI’s decision to sell its Texas energy provider freed up almost $3 billion of capital, Jacobs said. It also presented an opportunity for NRG Energy Inc., which snapped up the business for $288 million, said Robert Flexon, chief financial officer at the Princeton, New Jersey-based power producer. The purchase boosted NRG’s earnings by $233 million, according to a July 30 regulatory filing.
“When you look back on the market over the last year, if you’re going to make a mistake, it’s to have too much liquidity,” Flexon said in an interview. “In an environment like this, where liquidity is tight, the opportunities for investment are probably at their peak.”
NRG had about 8.4 percent cash as a percentage of assets on its balance sheet in the second quarter, up from 4.9 percent the previous period and 4.7 percent a year earlier, Bloomberg data show. The company sold $700 million of 10-year, 8.5 percent notes on June 2 priced to yield 5.06 percentage points more than similar-maturity Treasuries.
The last two years “really showed the importance of maintaining adequate cash and liquid investments so you’re not relying solely on banks,” Flexon said. “We carry cash balances today of over $1 billion. We invest that primarily in U.S. government-backed overnight securities, so it’s an extremely liquid investment.”
“商業ローン(クレジットカード、車、家屋改造、、）の支払い不能が銀行に第２波の危機をもたらす”と、AG(Deutsche Bank)のチェアマンである、ジョセフ・アッカーマンは予告している。Ackermann Says Bad Loans Are ‘Next Wave’ of Crisis
July 31 (Bloomberg) -- Rising delinquencies among consumer and corporate borrowers are the “next wave” of the financial crisis and may affect banks that have avoided losses so far, said Deutsche Bank AG Chief Executive Officer Josef Ackermann.
“This crisis has consisted of a series of earthquakes, with changing epicenters,” Ackermann said late yesterday at an event in Zurich. “Bad loans are the next wave. Banks that have fared relatively well so far will also be affected by this.”
Deutsche Bank, Germany’s biggest lender, said this week it set aside 1 billion euros ($1.4 billion) for risky loans in the second quarter. The seven-fold increase in provisions and below- forecast revenue from trading sent the Frankfurt-based bank’s shares to the biggest decline in four months on July 28.
“We were struck by the 44 percent increase in problem loans in the quarter,” Morgan Stanley analysts Huw van Steenis and Hubert Lam said in a note today, cutting their rating on Deutsche Bank shares to “equal-weight” from “overweight.”
Deutsche Bank fell 77 cents, or 1.7 percent, to 45.92 euros by 11:08 a.m. in Frankfurt trading, making it the worst performer on the 63-company Bloomberg Europe Banks and Financial Services Index over the past five days with a 10 percent drop.
‘Crisis Not Over’
“The crisis is not over,” Ackermann said. “When one looks at the developments of global economic growth, then it can be expected that starting in the second half of this year we slowly move into the positive territory. But we’re still moving on a low level.”
Banks that were forced to take government aid and are now encouraged to increase domestic lending may be more in danger from rising loan defaults than companies that can expand internationally and diversify risks, Ackermann said.
Deutsche Bank “intentionally” reduced its balance sheet and risk-taking this year, he said.
“We were disciplined in our considerations about what risks which should take,” Ackermann said. “If we had played it out to the full extent, we could have earned significantly more.”
Morgan Stanley analysts lowered their earnings per share estimate for Deutsche Bank this year to 5.88 euros from 6.01 euros because of “increased provisioning in the investment bank and the German retail business and reduced fee income revenues.”
The Swiss-born Ackermann, whose contract extension until 2013 was approved by Deutsche Bank’s supervisory board this week, said German lawmakers had urged him to stay.
Former German Chancellor Gerhard Schroeder “told me already three years ago, ‘Mr. Ackermann you definitely have to stay, we need you,’” he said.