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March 7, 2013
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  Top Stories 
  • U.S. private-sector report suggests upbeat labor market
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    Reuters
    A key U.S. reading of growth in the private job sector surprised with a strong gain of 198,000 jobs last month. The report by payroll processor ADP is considered a bellwether for the Labor Department's monthly unemployment data, due Friday. "This report is effectively pointing to a sustained improvement in the labor market recovery in February following the positive momentum generated at the end of last year," said Millan Mulraine, a macro strategist at TD Securities. MarketWatch (3/6) LinkedInFacebookTwitterEmail this Story

  • Revised U.S. orders data show best 3 months in 20 years
    Revised U.S. figures for January show a 7.2% gain from December in orders for nonmilitary capital goods excluding aircraft. The Commerce Department data also show a 9.8% rise in orders since November, the biggest three-month gain in 20 years. "The fundamentals that drive investment activity are improving rapidly. You really do have all this pent-up demand and catch-up activity," said Diane Swonk, chief economist for Mesirow Financial in Chicago. Bloomberg (3/6) LinkedInFacebookTwitterEmail this Story
  • U.S. consumer poll reveals plunging confidence
    Despite buoyant stock and housing markets and other signs of upturn, a new reading of U.S. consumer sentiment registered a sharp decline last month from January. The Christian Science Monitor/TIPP poll of consumer optimism came in at 42.2, down from 47.3 the previous month and well below the 50 neutral mark. Among factors dimming the mood are a "persistently weak" job market and continued shrinkage in incomes, said pollster Raghavan Mayur. The Christian Science Monitor (3/5) LinkedInFacebookTwitterEmail this Story
  • Eurozone recession deepens as trade falters
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    Reuters
    Adding to the beleaguered eurozone's woes in the fourth quarter was the first decline in the region's exports in more than three years, helping to plunge the region deeper into recession. GDP fell 0.6% as imports and exports both declined 0.9%. Looking head, it appears "highly likely that growth will remain a major struggle for the eurozone for some time to come," observed Howard Archer, chief European economist at IHS Global Insight in London. Bloomberg Businessweek (3/6) LinkedInFacebookTwitterEmail this Story

  • Monetary tightening seen on China's horizon
    Looking to China's ballooning property market and growing prospects of rising prices this year after a lull, recent signals emerging from the Chinese leadership indicate that a monetary tightening may soon be in order. Analysts expect the central bank to take cautious steps initially, such as selling bonds to banks, before resorting to a boost in interest rates. The Wall Street Journal (3/6) LinkedInFacebookTwitterEmail this Story
  • Japan is warned twice over plans for yen
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    Reuters
    Bank of Japan nominee Haruhiko Kuroda received warnings from two quarters over his stated goal of targeting 2% inflation. Former BOJ policy board member Atsushi Mizuno said Kuroda's policy would run the risk of inflating a government bond bubble. From the mainland, China Investment Corp. President Gao Xiqing warned Japan against using competitors as a "garbage bin" by undermining the yen. Bloomberg (3/6) , The Wall Street Journal (3/6) LinkedInFacebookTwitterEmail this Story

  • Bank of England chief calls for RBS to be split
    Royal Bank of Scotland Group should be split into a healthy bank and another entity in which bad loans are concentrated, recommended outgoing Bank of England chief Mervyn King. King also urged the government to use the government-managed bank to help boost the sagging U.K. economy by lending to businesses and consumers. "It's 4½ years on, and there is no immediate sign of [RBS] going back to the private sector. That means we have not been sufficiently decisive in either recapitalizing the bank or restructuring it," King told a parliamentary commission. The Wall Street Journal (3/6) LinkedInFacebookTwitterEmail this Story
  • S&P: Asia at risk as world economy picks up
    Asia faces a growing risk of hot money inflows as the U.S. and Europe extend their monetary easing, which also raises the risk of later sudden outflows that could harm regional economies, warns Standard & Poor's in an otherwise generally upbeat global assessment. For Asia, "the volatility and management of these flows is, in our opinion, a risk for many economies in the region," S&P said. Business World (Philippines) (3/6) LinkedInFacebookTwitterEmail this Story
  Reader Survey 
  • What will the next major financial market mover be (i.e., effects lasting for 1 year+)?
    A political event, like a U.S. government shutdown or a shift in the EU's makeup  24.77%
    A macroeconomic event, like a sovereign debt crisis or inflation  22.02%
    A central bank action, like more QE or no more QE  19.27%
    A random, unforeseeable event  13.76%
    A geopolitical event, such as an incident in the South China Sea or in the Middle East  11.93%
    A change in corporate profits (up or down)  8.26%
    An announced technological revolution, like a new computing technology or biotechnology  0.00%
  • We asked readers earlier this week about what will be the next major financial market mover whose effects will last longer than one year. Most interestingly, for a group made up mostly of professional finance folks, only about one in 12 respondents chose "a change in corporate profits (up or down)." That is, investors can choose to directly invest in corporations, while all of the other answer options investors do not have control over. So it must be an anxious time for the professional finance crowd. Among the most popular answers was the belief that a macroeconomic event is most likely to change the direction of the financial markets. This may be evidence of discounting the status quo, or it may be an example of priming, in the behavioral finance sense of the word. In other words, our preceding long period of market activity ('08 to now) was driven by macroeconomic events and therefore investors are primed to expect more of the same. Last, folks seem to no longer see technology in the golden light of half a generation ago, when all things electronic and biotech lifted investor spirits. Jason A. Voss, CFA, Content Director, CFA Institute
  Market Activities 
  • INTERNATIONAL MARKETS OVERVIEW
    A reported slide in U.S. factory orders in January helped knock European stocks lower Wednesday, but a bright jobs report lifted shares on the other side of the Atlantic. The Stoxx Europe 600 was down 0.25% at 293.38, and the S&P 500 edged up 0.11% to 1,541.46 while the Dow Jones Industrials extended their climb into record territory, adding 0.30% to close at 14,296.24. Here is a continuously updated list of global stock indexes. The Wall Street Journal (3/7) , The Wall Street Journal (3/6) , CNNMoney (3/6) LinkedInFacebookTwitterEmail this Story
  • Shares climb across Asia
    A record close for the blue-chip Dow Jones Industrials in the U.S. market and additional signals on the deflation-fight front in Japan lifted shares across the Asia-Pacific region Wednesday. The Nikkei surged 2.13% to 11,932.27, the Hang Seng rose 0.96% to 22,777.84, the Kospi added 0.20% to 2,020.74 and the S&P/ASX climbed 0.82% to close at 5,116.80. MarketWatch (3/6) LinkedInFacebookTwitterEmail this Story
  Economic Trends & Outlook 

  • Chinese officials push for more urbanization, cuts in some industries
    Chinese officials pointed to more aggressive measures to fund the nation's urbanization process and the need to rationalize industry, where overcapacity burdens some sectors. Citing such methods as asset securitization, central bank Governor Zhou Xiaochuan said that "many overseas financial instruments can be applied to China's urbanization, especially in term of the construction of infrastructure facilities and public utilities." But separately, the need for restraint in a number of industries was cited by National Development and Reform Commission chief Zhang Ping, who noted that such basic sectors as steel, cement and plate glass are operating at as little as 70% of capacity. China Daily (Beijing)/Xinhuanet (3/6) , Xinhuanet.com (China) (3/6) LinkedInFacebookTwitterEmail this Story
  • Major China borrowing plan adds to investment spending worries
    In a bid to help with strained local budgets, China's State Council is weighing a new borrowing plan under which the Ministry of Finance could extend as much as 350 billion yuan worth of local government debts this year. The borrowing would be the largest since 2009 and would raise concerns over growing risks associated with investment-driven spending. Caijing Magazine online (3/6) LinkedInFacebookTwitterEmail this Story
  • South Korean think tank sees 2.9% growth in 2013
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    Reuters
    The Korea Economic Research Institute projects 2.9% growth this year for the South Korean economy, in line with its previous prediction of less than 3% growth for the next two years. The think tank also sees the service account trade balance turning to deficit this year, helping to shrink the current-account balance to US$30.1 billion from $43.1 billion in 2012. Maeil Business Newspaper (South Korea) (3/6) LinkedInFacebookTwitterEmail this Story

  • Australia posts 0.6% growth for final quarter
    Australia's economy grew 0.6% in the fourth quarter, and the country finished 2012 with 3.6% growth for the full year, the Australian Bureau of Statistics reported. "The broad picture is one of an economy in better shape than many commentators give credit. Despite all the economic dramas and general pessimism, the growth outcome actually beat the consensus forecast," said Michael Blythe, chief economist in Sydney at Commonwealth Bank of Australia. Bloomberg Businessweek (3/5) LinkedInFacebookTwitterEmail this Story
  • Cathay paints brighter picture for Taiwan growth, employment
    With a little more growth from Taiwan's labor market, the nation's unemployment rate could drop below 4% as GDP growth tops 4% this year, projects Cathay Financial Holding. Higher GDP should be supported by 7% growth in exports as the global economy recovers, although much depends on developments in the U.S. and China, said National Central University economics professor Hsu Chih-chiang, who headed up the quarterly report by Cathay. The Taipei Times (Taiwan) (3/7) LinkedInFacebookTwitterEmail this Story
  Capital Markets & Financial Products 
  Industry & Regulatory Update 
  • Monetary Authority of Singapore adds voice to advisory review
    Earlier recommendations by Singapore's Financial Advisory Industry Review, or Fair, to enhance the quality of the city-state's advisory industry have now been joined by further ideas from the Monetary Authority of Singapore. "MAS has reviewed the report and agrees in principle to the recommendations made by the Fair panel," MAS said, noting that its proposals are designed to assist in implementation. The Business Times (Singapore) (3/6) LinkedInFacebookTwitterEmail this Story
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