Japan's Large Retailers Boost Sales on Warm Weather (Update1)

Japan's Large Retailers Boost Sales on Warm Weather (Update1)

By Jason Clenfield

March 29 (Bloomberg) -- Sales at Japan's biggest retailers rose for the first time in five months, signaling the country's economic expansion may be spreading to consumers.

Sales at large stores open for at least 12 months climbed 0.5 percent from a year earlier, the trade ministry said today in Tokyo. Including new stores, receipts rose 1.6 percent, the most in more than a year. Shoppers flocked to Daimaru Inc. and Isetan Co. stores as warm weather spurred demand for spring clothes.

Consumer spending accounts for more than half of Japan's economy and a rebound may help sustain growth in the face of likely slowdowns in exports and business investment. Economists predict reports tomorrow will show unemployment matched an eight- year low and household spending rose for a second month, following more than a year of declines.

``Large retailers are losing market share, so the fact that the number comes in strong says something positive about spending,'' said Hiroshi Shiraishi, an economist at Lehman Brothers Japan Inc. ``The contribution of exports will fade and household spending will pick up a bit.''

The yen traded at 117.20 per dollar at 1:13 p.m. in Tokyo from 116.93 before the report.

Overall retail sales dropped 0.2 percent from a year earlier as warm weather cut demand for heating oil, the trade ministry said. February's temperatures were between 2 and 3 degrees Celsius higher than average and some areas had the most sunshine in 50 years, according to the weather bureau.

Willing to Spend

``Weather effects tend to come out in the wash over the course of a few months,'' said Julian Jessop, chief international economist at Capital Economics Ltd. in London. ``People are willing and able to spend.''

Department store sales, which account for 8 percent of the retail total, rose at the fastest pace in 11 months in February, as warmer weather sparked interest in spring clothing, the Japan Department Stores Association said last week.

Daimaru and Isetan, Japan's third- and fourth-largest department stores, reported higher sales in the month, buoyed by brisk demand for dresses and light jackets.

Retail sales were ``basically flat,'' though there are signs of improvement, said Takahide Arai, a trade ministry spokesman. He cited last month's report in which four of the seven categories tracked by the ministry showed declines, while this month only two did: autos and weather-affected fuel sales.

Sales of automobiles fell 5.2 percent, the 11th month of declines. Japan's aging consumers are choosing not to replace their vehicles as manufacturers including Nissan Motor Co. release fewer new models.

Services, Internet

Today's report probably understates consumption because it excludes spending on services and the Internet. The government's index of demand for services climbed to a record in February.

Japan Travel Bureau estimated spending on vacations increased 2 percent in 2006. Combined sales at the vendors listed on Rakuten Inc., Japan's largest Internet shopping site, surged 37 percent for the year.

Spending on services made up 57 percent of private consumption in 2006, compared with about 50 percent a decade ago, according to the Cabinet Office. As Japan's consumers get older, spending will probably shift from retailing toward travel and leisure, economists say.

Household spending probably grew 0.6 percent in February after rising for the first time in 13 months in January, economists estimate. The unemployment rate probably stayed at 4 percent for a fourth month. The government releases both reports tomorrow at 8:30 a.m. in Tokyo.

A Cabinet Office survey of merchants who deal directly with the public showed sentiment improved in the month for the first time since September.

From a month earlier, retail sales fell a seasonally adjusted 0.9 percent after jumping 2.2 percent in January, the trade ministry said.

To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net

Last Updated: March 29, 2007 00:15 EDT

Bernanke Says New Words Mean Little Change to Inflation Message

Bernanke Says New Words Mean Little Change to Inflation Message

By Scott Lanman and Steve Matthews

March 29 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke's words may be different, but the message is the same as the past seven months: He's more concerned about inflation than a slowing economy.

Bernanke told Congress yesterday that risks to economic growth have increased, especially because of the downturns in housing and company investment. The dangers aren't big enough to make the Fed dump its orientation toward combating prices, or ``inflation bias,'' he added.

The chairman clarified the Federal Open Market Committee's March 21 interest-rate statement, which led to conflicting interpretations by Wall Street economists. He rebuffed the notion that officials had shifted to a ``neutral'' stance and, in doing so, reduced speculation borrowing costs will be cut in coming months.

``At some point a Fed speaker, and it turned out to be the man himself, would come out and correct any misperception that the bias had been outright dropped,'' said Steven East, chief economist at investment bank Friedman Billings Ramsey Group Inc. in Arlington, Virginia. ``The bias is still toward tightening --a little softer, but still toward tightening.''

Some investors are still having a hard time digesting the idea that the Fed remains tilted toward raising rates.

Traders expect the Fed to cut its benchmark rate a quarter- point by August and again by year-end. The central bank has left the overnight lending rate between banks at 5.25 percent since August. Most of the 73 economists surveyed by Bloomberg News this month said the Fed will cut its rate to 5 percent or lower by December.

`Probably Misplaced'

``What we learned today was that hopes for a rate cut sooner are probably misplaced,'' East said.

The comments, Bernanke's first since the March 21 decision, and the most expansive remarks on that day's statement by any Fed member, underscored the Fed's dilemma.

While inflation has been at or above the top of the Fed chief's comfort zone for almost three years, any further rate increases may worsen the housing slump, given the sensitivity to changes in borrowing costs.

``The uncertainties have risen, and therefore a little more flexibility might be desirable,'' Bernanke said under questioning from Representative Jim Saxton of New Jersey, the ranking Republican on the Joint Economic Committee. ``Nevertheless, I do want to emphasize that we have not shifted away from an inflation bias.''

He said the Fed's outlook for ``moderate'' growth over coming quarters wasn't much changed by recent data, which indicated the housing market has yet to hit bottom and business spending continues to contract. Gains in employment and income are helping consumer spending support growth, he said.

Deeper Decline

Some economists retained their predictions of lower rates, calculating that a deeper slump in housing, spurred by rising delinquencies on the riskiest mortgages, will infect the overall economy.

``There will be bigger spillover from the housing market,'' said Paul Kasriel, director of economic research for Northern Trust Securities in Chicago and a former Fed economist. ``I don't believe their forecast. I think we are skating on thin ice.''

Economic reports this week backed Kasriel's pessimism. The Commerce Department said yesterday that durable-goods orders excluding transportation unexpectedly fell for a second month in February, triggering declines in Treasury yields and higher expectations for Fed rate reductions.

Dropped Language

The FOMC last week dropped a reference to the potential for ``additional firming'' in interest rates, language repeated since it ceased two years of increases in August. The shift suggested to some Fed watchers that policy makers were opening the door to lowering rates.

Bernanke stressed yesterday that ``inflation is above the levels most conducive to the achievement of sustainable growth and price stability.''

He told lawmakers that problems in the subprime market are ``likely to be contained,'' noting that mortgages for prime borrowers continue to ``perform well.'' More broadly, ``the drag from residential investment should wane'' as the stock of unsold new homes diminishes, he said.

Foreclosures last month jumped 12 percent from a year ago and home values in 20 American metropolitan areas dropped 0.2 percent in January from a year earlier, according to reports this week. Delinquencies on subprime mortgages rose to a 3 1/2-year high of 13.3 percent last quarter, the Mortgage Bankers Association reported March 13.

Preferred Measure

The Fed's preferred inflation gauge, the personal consumption expenditures price index, minus food and energy, rose 2.3 percent in the 12 months to January. Bernanke and other Fed officials have said they are comfortable with the index rising at a 1 percent to 2 percent pace.

``Bernanke chose to emphasize that the Fed is still tilted toward higher interest rates, though the bias isn't as strong because of the uncertainties,'' said Tony Crescenzi, chief bond market strategist at broker Miller Tabak & Co. in New York. ``The best bet is for rates to be unchanged.''

To contact the reporters on this story: Scott Lanman in Washington at slanman@bloomberg.net ; Steve Matthews in Washington at smatthews@bloomberg.net .

Last Updated: March 29, 2007 00:07 EDT

Bernanke Keeps `Inflation Bias,' Sees Growth Risks (Update6)

Bernanke Keeps `Inflation Bias,' Sees Growth Risks (Update6)

By Craig Torres and Scott Lanman

March 28 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said monetary policy is still aimed at combating inflation even though risks to economic growth are multiplying.

``Our policy is still oriented towards control of inflation, which we consider to be at this time to be the greater risk,'' he told the Joint Economic Committee of Congress in Washington today. Still, ``uncertainties have risen, and therefore a little more flexibility might be desirable.''

His comments contained no reference to a possible interest rate cut, which some economists predict as soon as next quarter. Bernanke said the central bank last week dropped its stated tilt toward higher borrowing costs because policy makers wanted more room to maneuver. Policy makers want to move away from guidance on future rate decisions, he added.

``Neutral policy would be one where there is sense that the risks are weighted equally on both sides of the dual mandate, and therefore policy is essentially unpredictable and it depends on events as they come forward,'' Bernanke said. ``I do want to emphasize that we have not shifted away from an inflation bias.''

Bernanke was also chastised for the Fed's role in allowing too many subprime borrowers -- people with weak or sketchy credit histories -- to get mortgages they couldn't afford to repay. He told Committee Chairman Senator Charles Schumer, a New York Democrat, that the Fed ``needs more clarity'' about its ability to supervise the non-bank subsidiaries of bank holding companies. He added that ``it is worth looking at'' a federal predatory lending law.

First Since FOMC

The comments are his first on the economy since the Fed last week kept its benchmark rate at 5.25 percent. Reports this month showed a slide in new-home sales and consumer confidence, rising foreclosures and inflation that's still elevated.

``The economy appears likely to continue to expand at a moderate pace over coming quarters,'' he said earlier today in his prepared remarks to the Committee, dismissing concerns about a recession expressed by his predecessor Alan Greenspan.

Stocks fell and the dollar pared a decline against the yen. Hours before Bernanke spoke, a government report showed orders for durable goods excluding transportation unexpectedly fell for a second month.

Clarification

The Fed's statement last week puzzled investors because it abandoned an explicit preference for tighter credit at the same time that inflation was described as the ``predominant concern.'' Some economists read the language as opening the door to a rate cut and others clung to predictions of an increase.

``He was clarifying that inflation risks are still existent,'' said Jason Schenker, an economist at Wachovia Corp. in Charlotte, North Carolina. ``This is further reinforcement that the Fed is on hold for the rest of the year.'' He had previously predicted a reduction by June.

Fed officials forecast last month an expansion of 2.5 percent to 3 percent this year and 2.75 percent to 3 percent in 2008. Inflation, according to their outlook, will run at 2 percent to 2.25 percent this year, and 1.75 percent to 2 percent next year, minus food and energy. The unemployment rate will remain between 4.5 percent and 4.75 percent in both years.

Rising mortgage defaults and falling home prices have dimmed prospects for a quick recovery in housing. Foreclosures last month jumped 12 percent from a year ago and home values in 20 American metropolitan areas dropped 0.2 percent in January from a year ago, according to reports this week.

Foreclosures

A rise in foreclosures increases the possibility that builders and sellers will have to compete with an even bigger glut of properties on the market. The supply of unsold new homes at the current sales pace rose to the highest in 16 years as sales fell to the lowest level since 2000, the Commerce Department reported this week.

Stronger-than-forecast sales of previously owned homes and a rebound in residential construction last month may have been influenced by better weather, economists said.

Economists trimmed estimates for growth this year after corporate purchases of equipment and software declined at an annual rate of 3.2 percent last quarter, the most since the final three months of 2002, according to Commerce Department data.

The Fed's preferred inflation benchmark, the personal consumption expenditures price index, minus food and energy, has been at or above the two percent comfort zone of at least six Fed officials for 34 months. The price measure rose 2.3 percent for the twelve months ending January.

An index of 18 industrial materials tracked by the JOC-ECRI Index is up 2.5 percent year-to-date, and 12 percent over the past year. Oil prices are climbing.

Attacked in Congress

Congress has been critical of federal bank regulators in recent weeks for failing to curb lax lending standards during the biggest mortgage boom in American history. Last week, Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, said the Fed failed to act on early signs of trouble.

Delinquencies on loans to subprime borrowers with limited or weak credit history rose to 13.3 percent in the fourth quarter, the highest since the third quarter of 2002.

Rising delinquency rates are occurring at a time of economic growth and a low unemployment rate of 4.5 percent, suggesting that poor underwriting standards caused the crisis.

To contact the reporters on this story: Craig Torres in Washington at ctorres3@bloomberg.net ; Scott Lanman in Washington at slanman@bloomberg.net .

Last Updated: March 28, 2007 16:26 EDT

U.S. Economy: Consumer Confidence Wanes, House Prices Decline

U.S. Economy: Consumer Confidence Wanes, House Prices Decline

By Bob Willis and Shobhana Chandra

March 27 (Bloomberg) -- U.S. consumer confidence declined from a five-year high in March as gasoline prices rose, the stock market fell and the housing recession showed few signs of ending.

The New York-based Conference Board's index of consumer confidence retreated more than forecast to 107.2, from 111.2 in February. The survey also said fewer Americans planned to buy a house, while the S&P/Case-Shiller index showed home prices dropped in January for the first time in at least six years.

The reports pushed stocks lower as investors fretted that consumer spending, which is carrying the five-year economic expansion, will weaken. The Conference Board also observed that jobs are plentiful, suggesting rising wages may yet shield most consumers from the worst of the housing downturn.

``Gas prices are weighing on confidence, and the stock- market volatility and all the reports on the subprime mortgage fiasco are also shaking people,'' said Michael Feroli, an economist at JPMorgan Chase & Co. in New York. At the same time, ``prospects for continued income gains and consumer spending still look pretty good.''

Economists anticipated the confidence index would fall to 108.5 from an originally reported 112.5 the prior month, according to the median of estimates in a Bloomberg News survey. Forecasts ranged from 100 to 112.5.

``We're looking for moderation in consumer spending, but we're not looking for any sharp, sudden clamping of purses or wallets that could push the overall economy into a recession,'' said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh.

Prices Retreat

Home values in 20 American metropolitan areas dropped 0.2 percent in January from a year earlier, according to S&P/Case- Shiller. The decrease was the first since the group started keeping year-over-year records in January 2001.

The numbers follow a report yesterday that showed new-home sales at the lowest level in almost seven years as builders struggled with a glut of unsold dwellings. Falling prices make it harder for owners to borrow against home equity and may make lenders even more wary as delinquencies climb.

Lennar Corp., the largest U.S. homebuilder by revenue, said today that earnings plunged 73 percent in the fiscal first quarter. The Miami-based company also said that it will likely miss its 2007 profit forecast.

Stock Swings

Gyrations in stock prices may also be making consumers queasy. The Dow Jones Industrial Average dropped more than 400 points on Feb. 27 after a sell-off in China spread throughout the world and former Federal Reserve Chairman Alan Greenspan warned of the possibility of a recession. The Dow posted its biggest gain in eight months on March 21, wiping away most of the losses of the year, after the Fed indicated it was no longer leaning toward raising interest rates.

The Conference Board's measure of present conditions rose to 137.6, the highest since August 2001, from 137.1 in February. The gauge of expectations for the next six months dropped to 86.9 from 93.8.

``Apprehension about the short-term future has suddenly cast a cloud over consumers' confidence,'' Lynn Franco, the survey's director, said in the report. ``Despite diminishing expectations, consumers' assessment of present-day conditions remains steady and does not suggest a weakening in economic conditions.''

Labor Market

The share of consumers who said jobs are plentiful rose to 30.5 percent in March, the highest since August 2001, from 27.8 percent in February. The proportion of people who said jobs are hard to get rose to 19.1 percent from 17.9 percent.

The proportion of people who expect their incomes to rise over the next six months fell to 17.5 percent from 19.2 percent. The share expecting more jobs fell to 12.7 percent from 13.3 percent.

The Conference Board's index has fared better than other confidence measures in recent months because it tends to be more influenced by consumer attitudes about the state of the labor market, economists said. Still, news of increasing mortgage delinquencies and stagnant home values is instilling unease.

A preliminary survey by Reuters/University of Michigan released earlier this month showed sentiment fell to 88.8, a six-month low, from 91.3 in February. Another measure, the ABC News/Washington Post confidence index, posted its biggest decline since February 2004 for the week ended March 18.

So far, consumer spending, which accounts for more than two-thirds of the economy, continues to grow. Spending may expand at a 3.2 percent pace this quarter, compared with a 4.2 percent rate the previous three months, according to the median forecast of economists surveyed by Bloomberg News earlier this March. Spending has averaged 3.3 percent gains since 1990.

Gasoline Prices

Still, increasing gasoline prices are having some effect. Retail sales rose less than forecast last month as higher fuel costs limited spending on other goods, a Commerce Department report earlier this month showed. Sales rose 0.1 percent following no change the prior month.

Fuel prices are up even more this month. The average price of a gallon of regular gasoline at the pump rose to $2.58 as of March 25, the highest since September, according to figures from the American Automobile Association. The average price this month is up 12 percent from February.

Mortgage Defaults

Another concern may be rising mortgage defaults. Home foreclosure filings last month jumped 12 percent compared with a year ago as owners struggled with declining home values and higher adjustable mortgage rates, according to a report yesterday from RealtyTrac, an online listing of foreclosed properties.

Defaults among so-called subprime borrowers, those with poor or limited credit records, are probably behind the increase, economists said.

The limited size of this market suggests it's not a threat to the entire economy, Fed policy makers have said.

While assessing the full effect will take time, currently ``there are few signs that the disruptions in this one sector of the credit markets will have a lasting impact on credit markets as a whole,'' Fed Bank of New York President Timothy Geithner said yesterday.

Only about 15 percent of the more than $9.5 trillion of outstanding U.S. home mortgages are subprime loans, according to bond analysts at Bear Stearns Cos.

One reason for optimism is jobs. The economy created 97,000 jobs in February, and payroll figures for the previous two months were revised higher, the Labor Department said earlier this month. Hourly wages rose 4.1 percent in February from a year earlier and unemployment dropped to 4.5 percent, approaching a six-year low.

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net ; Shobhana Chandra in Washington at schandra1@bloomberg.net

About Gajah (Updated)

Alhamdulillah..

Selama dua hari ini prediksi gajah gak pernah meleset, mudah2an besok, lusa dan hari hari berikutnya tetap sama ya guys...
Jangan lupa buat yang udah profit sedekahin 2.5% dari profit anda anda semua..

regards
Nebula Arung Langi

Daily Premium Analysis

USD

The USD slipped and fell against many currencies yesterday on data showing new home sales fell to 848K with the previous revised at 882K. This result has been the lowest since June, 2000 and its effect has boosted expectations that the U.S. Federal Reserve Board till cut its interest rate.

Analysts continued by saying that data was quite a turnaround from expectations. In fact, earlier in the session, some economists were referring to Friday’s existing home sales’ positive outcome claiming that the worst of the housing market slowdown was over.

Countering existing homes data seen last week, the new home sales figure widely disappointed the market and confirmed the fact that home construction weakness is likely to linger over the economy. Perhaps with the Chairman of the U.S. Federal Reserve, Mr. Bernanke, scheduled to speak before the Joint Economic Committee on the outlook of the economy, this unease will be addressed.

Although committee members will look on the consequences that the housing market may have on future growth, very little is expected to change from last week’s Federal Open Market Committee (FOMC) meeting. Only if Mr. Bernanke chooses to paint a different picture from the data, the USD may return to its early Monday trading strength.

In other U.S. economic news, crude oil rose by $0.63 a barrel to $62.91. This was amid tension in the Gulf with Iran over its developing nuclear program as well as holding 15 British navy personnel.

Stay posted for this afternoon’s consumer confidence report. If the forecast is accurate and confidence will drop, watch for a USD reaction on all the majors.

EUR

In addition to bad housing data which motivated the EUR/USD back up to 1.3330 trading level, the market was optimistic following Euro releases as well. Firstly, the French business confidence survey rose unexpectedly to a one year high of 109. The survey was combined with French production outlook results helping the EUR to gain further ground against the USD.

Although yesterday’s releases are only a handful, they nevertheless managed to boost speculation of a better than expected German IFO scheduled for early this morning’s European session. With both the current and future assessments to remain at par, there is evidence of a better outcome. Data shows strong factory orders, as compared annually, while industrial production continues at 1.9% pace.

Overall, European ministers revised their previous warnings that the economy would have irrevocable damage as a result of further rate hikes. Countering previous concerns over higher costs imposed by rising interest rates, policy makers are now noting robust growth in the region. This sentiment coupled with a high EUR may help support further rate hikes in the near future.

BOJ Is Watching Land Prices for Excess, Fukui Says (Update3)

BOJ Is Watching Land Prices for Excess, Fukui Says (Update3)

By Mayumi Otsuma

March 27 (Bloomberg) -- Bank of Japan Governor Toshihiko Fukui said he's closely monitoring land prices after a report showed real estate in some parts of Tokyo surged as much as 46 percent last year.

``We aren't yet in a situation in which land-price gains warrant concern of excessiveness, but we'd like to keep a close watch on them,'' Fukui said in parliament today. ``Rising land prices won't automatically prompt a rate increase.''

Concern that borrowing costs at 0.5 percent will fuel land- price gains could prompt the Bank of Japan to raise interest rates in the first half of this year. The central bank wants to avoid a repeat of an asset-price bubble, the collapse of which in the early 1990s led to more than a decade of stagnation in the world's second-largest economy.

``Land prices are rising, and that's spreading to other big cities'' outside Tokyo, said Hiromichi Shirakawa, a former Bank of Japan official and now chief economist at Credit Suisse in Tokyo. ``This may increase chances of a rate increase before the July upper house election.''

Commercial land prices in Japan's three biggest cities rose 8.9 percent in 2006, the government said on March 22, as investors were lured by large-scale developments including Mitsui Fudosan Co.'s Tokyo Midtown project, which opens this week.

``We've got a clear impression that the recovery of land prices is becoming evident mainly in large cities,'' Fukui said, adding that gains in Tokyo, Osaka and Nagoya were ``prominent.''

Omotesando Hills

Commercial land in and around the three cities rose for a second straight year, after gaining 1 percent in 2005, the government said last week. Residential land prices increased for the first time in 16 years, up 2.8 percent.

The steepest gains were recorded in areas near Omotesando Hills, a retail and residential development in central Tokyo that opened on Feb. 11 last year. Commercial and residential land prices both rose as much as 46 percent near the project.

Japan's two largest developers will open developments in central Tokyo in coming weeks. Mitsui Fudosan's Tokyo Midtown project includes the city's tallest building. Mitsubishi Estate Co. is scheduled to open a new 42-story skyscraper in front of Tokyo Station in April.

``The recovery in land prices generally reflects the improving outlook for the economy and higher expectations for profits that can be made by utilizing land,'' Fukui said.

Land prices nationwide rose for the first time in 16 years in 2006 as gains in Tokyo, Osaka and Nagoya compensated for drops elsewhere in the country, last week's report showed. Japan's commercial and residential land values are still half the levels reached in 1988.

Some Areas `Overheating'

Finance Minister Koji Omi said last week that the gains don't signal another bubble is emerging. Economic and Fiscal Policy Minister Hiroko Ota said some areas are ``overheating'' and the government will ``watch developments closely.''

The central bank left the key overnight lending rate unchanged last week, a month after doubling it to 0.5 percent, the second increase in six years. Fukui said the bank will gradually raise rates as the economy keeps expanding and prices rise, adding that borrowing costs will be held at very low levels for the time being.

``If the economy continues to show positive developments, we will gradually adjust interest-rate levels,'' he said. Japan's key rate remains the lowest among major economies.

The governor said Japan's core consumer prices may ``hover around zero'' in coming months because of cheaper oil. Core prices will stay on a rising trend in the long run as the economy keeps expanding, he added.

Consumer-Price Stability

Core prices probably fell 0.1 percent in February after failing to rise in January, according to the median estimate of 36 economists surveyed by Bloomberg News. The government will release the figures on March 30 at 8:30 a.m. in Tokyo.

The governor said the central bank's policy shouldn't be bound too much by the board members' understanding of price stability. The bank's nine board members said last year that they consider consumer prices to be stable as long as they remain in the range of zero to 2 percent.

Should the bank be too influenced by short-term price changes, that could have a negative effect on monetary policy, Fukui said.

To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net