Thread: Asian News

AP-Dollar Falls to Euro
Monday August 6, 6:53 am ET
As Fed Meeting Looms, Dollar Falls to the Euro

FRANKFURT, Germany (AP) -- The dollar slipped lower against the euro Monday as markets looked toward the upcoming meeting of the U.S. Federal Reserve to see if interest rates might be lowered to ward off an economic slowdown.

The 13-nation euro rose to a high of $1.3839 in trading, just off its all-time high of $1.3852, before falling back to $1.3825, still above the $1.3801 it bought in late New York trading on Friday.

The dollar fell to 117.63 Japanese yen from 118.41 late Friday, while the British pound drifted lower to $2.0391 from $2.0447.

This week's Fed meeting is being held amid two weeks of market turbulence that has sent stocks tumbling.

The Fed's Open Market Committee's regularly scheduled August meeting on Tuesday may be key in settling investor anxiety.

The Fed is widely expected to maintain its benchmark rate of 5.25 percent, as it has done for the past year, in the face of increases by the Bank of England and the European Central Bank.

http://biz.yahoo.com/ap/070806/dollar.html?.v=1

AP-Most Asian Markets Fall
Monday August 6, 7:43 am ET
Most Asian Markets Drop in Wake of Wall Street's Plunge

TOKYO (AP) -- Many Asian and European stock markets fell Monday after Wall Street plunged at the end of last week on the lingering credit concerns that have roiled markets.

Stocks in Indonesia and Singapore fell 3 percent. Share prices in Hong Kong, the Philippines, and Thailand all fell more than 2 percent.


Chinese stocks meanwhile shrugged off the drops elsewhere to lift key indexes to record highs for the second straight session. The benchmark Shanghai Composite Index rose 1.5 percent to a record 4628.11, partly on bullish forecasts for rising profits at Chinese steel makers.

Tokyo's benchmark Nikkei 225 index shed 0.39 percent to 16,914.46 points, after hitting an intraday low of 16,675.39 points in the morning session.

Hong Kong's Hang Seng Index fell 2.67 percent to close at 21,936.73.

In Europe, London's FTSE 100 index managed to gain 0.3 percent to 6,240.30 and the German DAX 30 index edged up 0.2 percent to 7,451.50 as markets came off their earlier lows, but the French CAC-40 index was still down 0.5 percent at 5,567.96 and benchmark indexes were lower in Milan, Madrid, Zurich and Stockholm.

Wall Street's selloff on Friday set the tone for most Asian markets Monday, just as it had when it plunged earlier last week, said David Cohen, director of Asian forecasting at Action Economics in Singapore.

http://biz.yahoo.com/ap/070806/world_markets.html?.v=3

AP-Stocks Rise Following Pullback Friday
Monday August 6, 3:26 pm ET
By Tim Paradis, AP Business Writer
Stocks Gain Following Dow's 2 Percent Drop Friday; Volatility High Ahead of Fed Meeting

NEW YORK (AP) -- Wall Street was buffeted by volatility yet again Monday, surging higher even as investors wrestled with credit concerns ahead of Tuesday's Federal Reserve meeting.

Investors have been searching for signs of where the economy and the markets are headed after the fractious trading of the past two weeks. In a day devoid of economic news and with few earnings reports, investors early in the session seemed to avoid making big bets, though stocks later gained steam after midday.


The move comes ahead of the Fed's meeting on interest rates Tuesday. Policy makers are widely expected to hold the benchmark rate steady at 5.25 percent; as usual, the greater concern is with the Fed's economic assessment statement. This time, investors will be looking to see what the Fed says about credit.

"I think a lot of it has to do with people sort of squaring up before the Fed on the short side, covering some shorts. I really wouldn't read too much into it," said Charles Norton, principal and portfolio manager at GNICapital, referring to the market's move higher and investors who sell stocks "short," betting that they will fall. Such investors can be forced to buy stock to cover their positions if they believe the market is poised to move higher.

In late afternoon trading, the Dow Jones industrial average soared 194.04, or 1.47 percent, to 13,375.95, after zigzagging throughout the session and rising more than 200 points. The blue chip index fell about 2 percent on Friday.

http://biz.yahoo.com/ap/070806/wall_street.html?.v=37

AP-Oil, Gas Plunge on Economic Worries
Monday August 6, 3:48 pm ET
By John Wilen, AP Business Writer
Oil, Gas Futures Fall Sharply on Economic Worries, Profit-Taking

NEW YORK (AP) -- Oil and gasoline futures plunged Monday on concerns about the economy's health and as investors sold to lock in profits from last week's record-setting rally.

September oil fell more than $3 a barrel, and gas futures slid more than 10 cents to settle below $2 a gallon. Both contracts extended declines that began Friday after the government issued weaker-than-expected employment numbers. That data added to the sentiment of a series of other government reports analysts say suggest the economy might be slowing.


"The weaker ... numbers are raising the prospect of softening U.S. commodity demand in general, and energy demand in particular," wrote MF Global UK Ltd. analyst Ed Meir in a research note.

But investors are also taking profits from the rally that sent oil prices to record levels last week, analysts said.

"It's all related to the (investment) funds dumping a portion of their long holdings," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Ill.

Light, sweet crude for September delivery fell $3.42 to settle at $72.06 a barrel on the New York Mercantile Exchange. The contract has fallen more than $6 from the intraday price record of $78.77 it set last week.

http://biz.yahoo.com/ap/070806/oil_prices.html?.v=18

Reuters-Mortgage delinquencies, defaults spreading: AIG
Thursday August 9, 2:02 pm ET

NEW YORK (Reuters) - American International Group (NYSE:AIG - News), one of the biggest U.S. mortgage lenders, warned on Thursday that mortgage defaults are spreading.


While saying most of its mortgage insurance and residential loans were safe, AIG made a presentation to analysts and investors that showed delinquencies are becoming more common among borrowers in the category just above subprime.

Although acknowledging the "significant declines" in subprime securities, Chief Executive Martin Sullivan said AIG's tight underwriting standards had minimized losses and he was "poised to take advantage of opportunities" in the mortgage market.

But it was clear the overall market was getting worse.

"We are experiencing stress in the Midwest markets where jobs have been lost and we are now seeing it in Florida and California," said William Nutt Jr., chief executive of AIG's mortgage insurance arm.

AIG shares were at $65.60, down 88 cents, or 1.32 percent, in afternoon trading on the New York Stock Exchange. The Standard & Poor's insurance index (^GSPINSC - News) was down 2 percent.

'PANIC MODE'

"The market's in a panic mode because the subprime crisis is spreading into other areas of the economy," said Bill Hackney, a managing partner of Atlanta Capital Management.

But Hackney said he was keeping AIG as one of his largest holdings because it had "the size and diversity to weather it."

http://biz.yahoo.com/rb/070809/aig_subprime.html?.v=8

AP-Dow Plunges 387 on Subprime Concerns
Thursday August 9, 4:46 pm ET
By Tim Paradis, AP Business Writer
Dow Plunges 387 on Following Renewed Subprime Mortgage Concerns

NEW YORK (AP) -- Wall Street plunged again Thursday after a French bank said it was freezing three funds that invested in U.S. subprime mortgages because it was unable to properly value their assets. The Dow Jones industrials extended its series of triple-digit swings, this time falling more than 380 points.

The announcement by BNP Paribas raised the specter of a widening impact of U.S. credit market problems. The idea that anyone -- institutions, investors, companies, individuals -- can't get money when they need it unnerved a stock market that has suffered through weeks of volatility triggered by concerns about tight credit and bad subprime mortgages.

A move by the European Central Bank to provide more cash to money markets intensified Wall Street's angst. Although the bank's loan of more than $130 billion in overnight funds to banks at a low rate of 4 percent was intended to calm investors, Wall Street saw it as confirmation of the credit markets' problems. It was the ECB's biggest injection ever.

The Federal Reserve added a larger-than-normal $24 billion in temporary reserves to the U.S. banking system.

The concerns that arose in Europe and spilled onto Wall Street underscored the potential worldwide ramifications of an implosion of some subprime loans and perhaps also weakened arguments that strength in the global economy could help keep profit growth going in the U.S. among large companies that do business overseas.

http://biz.yahoo.com/ap/070809/wall_street.html?.v=80

BERNANKE:-Up Against the Wall (Bernanke may throw in the towel and start lowering the interest rate if the sub prime situation gets any worse)
by Joe Duarte, MD
Joe-Duarte.com & IntelligentForecasts.com
August 8, 2007


The stock market has found support, near the 200 day moving averages for the major indexes. This is a positive, but not necessarily the end of the road for the current market’s story, as the potential for more problems in the credit market is out there. In fact, a recent set of events is worth noting, as we move forward into the Dog Days of August, a time when thin volumes and vacant trading desks can make for highly volatile markets.

Indeed, despite the Fed’s bare bones mention of “conditions” having “become tighter” in the credit markets, found in its Tuesday afternoon statement of no change in interest rates, the situation in the mortgage market continues to implode with the jumbo mortgage market now starting to feel the negative effects of the ongoing liquidity crisis. Elsewhere, one subprime mortgage lender, American Home Mortgage Investment, has filed for Chapter 11 bankruptcy protection.

And there’s more, according to the Wall Street Journal, there is also more trouble ahead for the mortgage sector as "Aegis Mortgage Corp., Houston, notified mortgage brokers that it is unable to provide funds for loans already in the pipeline, a spokeswoman said. And Luminent Mortgage Capital Inc. of San Francisco said it faced calls for repayments from creditors and is suspending its dividend."

So, here's where things stand, as we see them.

There are two major problems in the mortgage market, a cash crunch, and a credit crunch, and they are related. When subprime borrowers stopped paying their mortgages, cash became scarce. Lower cash flows made it harder to get credit. Interest rates started to rise. And now fewer people can borrow money to pay off their loans. And the vicious cycle is repeating, rising in a deadly spiral that has now reached the mortgage lenders themselves, who can't get loans to pay off their own loans. And since many of these companies had relationships with each other, when the first one went down, it's likely just a matter of time before the dominoes start to fall.

The big question then, is how long it will take for Morgan Stanley, Goldman Sachs, and Merrill Lynch to take a hit big enough for the Fed to come to their rescue.

According to the Journal, citing comments by Doug Duncan, chief economist of the Mortgage Bankers Association, anyone who does business in the mortgage market right now has to be willing to hold on to the loan for a long period of time, or hope that the loan is of a high enough quality that it can be bought by Fannie Mae or Freddie Mac. Duncan told the Journal for any other kind of loan, "there is no market."

So this seems to be a classic battle between Bernanke’s academia and the real world, and there are no winners, no matter how it turns out. If Bernanke lowers interest rates in the near future, the market will likely rally, but eventually some will wonder why he did it and the sellers will return, with the excuse being that if Bernanke bent to pressure the situation must be a lot worse than even people like Cramer were hinting at.

Still others will likely say that Bernanke had no spine, and the Fed is in danger of losing its credibility in its fight against inflation.

No matter what, the bottom of the pile borrowers won't get any help since they've already been foreclosed against. And the bankrupt, and possibly corrupt subprime lenders, might get a break that they may not have deserved, since their lax lending practices contributed to the current situation.

http://www.financialsense.com/editor...2007/0808.html

IS THE END NIGH? ( A buying opportunity!!!)
by Puru Saxena
Editor, Money Matters
August 7, 2007


Over the past few days, the ongoing credit-crunch in the US has grabbed all the media attention and the capital markets have responded with sharp declines. At present, there is an ongoing debate as to whether the sub-prime debacle will sink the US into the next “Great Depression”. Not surprisingly, the bears are out of their dens again, forecasting the very end of capitalism! So, what should we make of the current situation and more importantly, how should we invest during these volatile times?

There is no doubt in my mind that the US economy is past its prime. Gone are the days when the international markets used to shudder in fear at the very thought of American investors withdrawing their capital from overseas. Remember, not so long ago, financial crises used to spawn in some far-flung “emerging” nations in Asia, Latin America and Eastern Europe. And the US establishment used to stand firm as the lender of last resort. This time around, however, it is ironic that the world’s most influential nation is weighing down on the global economy and causing a mini-panic in the markets. A few years ago, the US was a creditor nation, but today it is the largest debtor nation the world has ever seen. Previously, Americans used to fund other less fortunate nations, however these developing nations are now funding the American way of life by financing those horrendous deficits! Based on these facts, it is clear to me that over the coming years, the over-leveraged American society will have to undergo some sort of adjustment. Moreover, I suspect that this adjustment will not be easy. In other words, I expect the standard of living in the US to gradually decline in the years ahead.

http://www.financialsense.com/editor...2007/0807.html

MBS MONETIZATION & US DOLLAR--- a mild panic!!!! ECB added $130B into their money fund!!!)--very interesting!!!
by Jim Willie CB
August 9, 2007

Fannie Mae is being groomed to be the central clearing house for mortgages and their bonds, sponsored by the USGovt and the US Federal Reserve. Fannie Mae (FNM) just requested permission to take on much greater volume of mortgages, in order to alleviate the secondary market flow of capital funds. Since the accounting scandal which peaked in September 2004, a limit was imposed on FNM on its holdings at $727 billion. In today’s climate, marred by credit seizure to some degree, FNM is deeply missed in its former prominent centrifuge role. A key question arises on the general inflation impact, if and when FNM expands its role and is the nexus (surely a hidden basement) of grandiose illicit monetization of mortgage bonds. If the banking maestros undertake to put a secretive floor on mortgage backed securities (MBS), a solid bid to prevent further breakdown, then vast amounts of new printing press money will enter the system. The mortgage finance sector desperately needs a bid on subprime MBS bonds so as to clear them upon liquidations. The bank wizards could start monetizing them, and work their way up the quality ladder toward Alt-A loans which are also in trouble.

### OVERNIGHT PANIC UPDATE ###

Overnight, in the US wee hours of Thursday morning, the Europeans suffered a shock wave. The Euro Central Bank added €94.8 billion (US$130.2 billion) into the money market funds as retail depositors forced a run on their banks, in a MILD PANIC. The overnight rates that banks charge each other to lend in dollars jumped to the highest level in six years. The dollar London Interbank Offered (LIBOR) rate rose to 5.86% today from 5.35% and in euros rose to 4.30% from 4.11%. The ECB response to the fastest increase in the dollar bank rate since June 2004 signals that lenders are reducing the supply of money as losses triggered by the US mortgage slump spread worldwide. In addition to BNP Paribas halting withdrawals, and Dutch investment bank NIBC Holdings said it had lost at least €137 million on subprime investments, more evidence that credit markets are not stabilizing. A Commerzbank commercial bond trader summed it up. “Liquidity in the market has completely dried up as investors are not recycling their money back because of subprime concerns. Levels have shot up dramatically since yesterday as issuers are trying to entice investors back.” The ECB provided the largest amount ever in a single fine-tuning operation, exceeding the €69.3 billion provided on 12 Sept 2001, the day after the terror attacks on New York. The US Federal Reserve accepted $12 billion in overnight repurchase agreements overnight simultaneously.

PNB Paribas, the French bank conglomerate closed three funds associated with US subprime toxic mortgages. The company made a bold plainly worded comment, a severe criticism of this fraud-ridden credit sector. “The complete evaporation of liquidity in certain market segments of the US securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating. The situation is such that it is no longer possible to value fairly the underlying US ABS assets in the three above mentioned funds,… therefore unable to calculate a reliable net asset value (NAV) for the funds.” Export of US bond fraud to Europe has led to renewed shock waves.

Back in the Untied States, American International Group (AIG) announced that residential mortgage delinquencies and defaults are becoming more common among borrowers in the category just above subprime. AIG, the world’s largest insurer and one of the biggest mortgage lenders, said total delinquencies were 2.5% in its $25.9 billion real estate portfolio. It offered details. They cite 10.8% of its subprime mortgages were 60 days overdue, compared with 4.6% in the category with credit scores just above subprime, indicating that the threat to the mortgage market may be spreading. This no longer just a subprime problem, clearly.

http://www.[[financialsense.com/fsu/...2007/0809.html

AP-U.S. Stocks Head for Sharply Lower Open
Friday August 10, 8:43 am ET
By Tim Paradis, AP Business Writer
U.S. Stocks Head for Lower Open Amid Continued Credit Concerns; Central Banks Add Liquidity

NEW YORK (AP) -- U.S. stocks moved toward another opening plunge Friday after Thursday's huge sell-off and as bank regulators including the Federal Reserve injected cash into money markets, stoking concerns of a more pronounced liquidity crunch. Futures came off of their lows Friday after the Fed's move.


Early Friday, the Fed announced a three-day repurchase agreement, or "repo," to inject liquidity into the market. The Fed said early Friday it would accept $19 billion. The move occurred after the fed funds rate, the rate banks charge each other for overnight loans, ticked above 6 percent again Friday -- well above the Fed's target of 5.25 percent.

The Fed stepped in after the same occurrence Thursday, injecting a larger-than-normal $24 billion in temporary reserves to the U.S. banking system. In a repo, the Fed arranges to buy securities from dealers, who then deposit the money the Fed has paid them into commercial banks.

http://biz.yahoo.com/ap/070810/wall_street.html?.v=16

AP-ECB Sends Additional $83.8B Into System (Bernanke is fighting the wrong war. Its major credit crunch, not inflation!!!!)
Friday August 10, 8:44 am ET
By Matt Moore, AP Business Writer
ECB Injects Additional $83.8 Billion Into Banking System Amid Jittery Credit Markets

FRANKFURT, Germany (AP) -- The European Central Bank injected another $83.8 billion into the banking system Friday amid signs that bad U.S. mortgages were digging deeper into the world economy.

But investors did not seem appeased, with major indexes plunging in London, Frankfurt, Paris and Tokyo.

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The 61 billion-euro move by the ECB, which had provided 95 billion euros ($130.7 billion) in funds to banks on Thursday, came after Japan's central bank injected 1 trillion yen ($8.4 billion) into money markets. Early Friday, the U.S. Federal Reserve announced a three-day addition of liquidity. The Fed had already intervened Thursday, injecting a larger-than-normal $24 billion in temporary reserves to the U.S. banking system.

It was the first time the U.S., European and Japanese central banks had taken such action together since the aftermath of the Sept. 11 terrorist attacks. The Australian, Hong Kong and Canadian central banks also joined in.

"This liquidity-providing fine-tuning operation follows up on the operation conducted yesterday and aims to assure orderly conditions in the euro money market," the ECB said.

But edginess in global markets was reflected in sharp declines in global stock indices on Friday. London's FTSE 100 dropped 3 percent to 6,082.10, the CAC-40 in Paris fell 2.9 percent to 5,459.36 and Germany's DAX index down 1.7 percent to 7,329.99.

"Market concerns about the U.S. subprime crisis are continuing without any apparent respite," said Joerg Kraemer, chief economist at Commerzbank AG in Frankfurt.

"Its fallout will not be limited to financial markets," he added. "The U.S. economy and with it, the rest of the world, will feel the negative consequences for quite some time."

http://biz.yahoo.com/ap/070810/europ...ters.html?.v=5