NEW YORK: Commodities rose broadly Wednesday as the dollar tumbled to a fresh 14-month low against other major currencies.
Gold prices soared to a new record high of US$1,072 an ounce in early trading, before giving up 30 cents to settle at $1,064.70 an ounce on the New York Mercantile Exchange on some profit-taking.
Oil prices, meanwhile, rose above $75 a barrel for the first time in a year.
The gains came as the ICE Futures U.S. dollar index, a widely used benchmark of the dollar's movement against other major currencies, tumbled to its lowest point since August 2008.
A weak dollar makes commodities cheaper for foreign buyers.
The dollar has fallen steadily since March as investors become more confident about the economy's prospects for a solid recovery.
Their growing optimism has led them to dump safe-haven assets that have lower returns, like the dollar, in favor of risker investments like stocks and commodities.
Rising commodity prices helped buoy stocks, as did upbeat earnings reports from Intel Corp. and JPMorgan Chase & Co.
The Dow Jones industrials surged more than 150 points in afternoon trading, passing the 10,000 mark for the first time in a year.
Other metals also marked fresh highs. December silver gained 6.8 cents to $17.908 an ounce. Earlier in the session, prices rose to a new 13-month high of $18.175 an ounce.
October platinum added $5.80 to $1,358.60 an ounce after earlier rising to a contract high of $1,359.60.
Among industrial metals, December copper futures rose 5 cents to $2.8445 a pound.
Elsewhere on the Nymex, light, sweet crude for November delivery added $1.03 to settle at $75.18 on the New York Mercantile Exchange.
The last time crude finished above $75 a barrel was exactly one year ago.
Gasoline for November delivery climbed 2.57 cents to settle at $1.8575 a gallon, and heating oil for November delivery added 1.93 cents to settle at $1.9427 a gallon.
Grain prices inched higher on the Chicago Board of Trade. December wheat futures rose 1.75 cents to $5.13 a bushel, while December corn added 1.25 cents to $3.83 a bushel.
November soybeans gained a penny to $9.94 a bushel.
In other trading, cotton, coffee and cocoa prices rose. Sugar and orange juice fell. - AP
Published: Thursday October 15, 2009 MYT 7:54:00 AMUpdated: Thursday October 15, 2009 MYT 8:00:29 AM
Friday, October 16, 2009
In a bad economy, banks trade their way to profits
By STEVENSON JACOBS, AP Business Writer Stevenson Jacobs, Ap Business Writer Thu Oct 15, 5:37 pm ET
NEW YORK – The big banks are showing they can still make money, even as Main Street struggles — though not from lending, refinancing homes or other bread-and-butter business.
Instead, they're doing what Wall Street does best — betting big on stocks, bonds, commodities and other assets.
Citigroup, the shakiest of the major banks during the financial crisis, reported Thursday it eked out a quarterly profit from trading, despite suffering more losses on consumer loans. Trading also drove big profits at Goldman Sachs and JPMorgan Chase.
That some banks are making money now is a sign of remarkable recovery from the crisis a year ago. But the lopsided business model raises questions about what happens if trading profits fall off and banks are left to rely on more traditional operations.
After all, the economy is still struggling to recover, unemployment is approaching 10 percent and Americans are saving money and trying to pay down debt, not taking on more.
"The good news is that banks are in better shape. The bad news is that they're not making loans to consumers and businesses," said market analyst Edward Yardeni. "That could come back to bite them because these trading gains will only last so long."
Mindful of the problems banks still face, investors reacted cautiously a day after the Dow Jones industrials powered back above 10,000 for the first time in a year. Stocks zigzagged for most of Thursday before ending modestly higher.
For now, trading is pretty much the only way banks can make money. And it's more lucrative because there are fewer competitors, interest rates are near zero and government subsidies have allowed banks to borrow cheaply and invest in assets that offer the highest returns.
Goldman Sachs Group Inc. has benefited more than most. Famed for its trading prowess, the New York investment bank said Thursday that third-quarter earnings swelled to $3.03 billion, more than triple what it made a year ago.
As in past quarters, Goldman leaned heavily on its trading operation — buying and selling stocks, bonds, foreign currencies and commodities like oil and gold — to make money.
"They've been on the mark on the trading side," said Stephen Hagenbuckle, a principle at private equity fund TerraCap Partners.
Goldman's strong showing came a day after JPMorgan Chase & Co. reported its own big profits — $3.59 billion for the quarter. That was even more impressive because, unlike Goldman, JPMorgan has suffered heavy losses on consumer loans like credit cards and mortgages.
But JPMorgan's strong investment banking division is "carrying the burden right now," banking analyst Bert Ely said. "If not for that, they would've lost money."
Goldman's quick recovery allowed it to repay the $10 billion it received in government bailout money. That freed the company from restrictions on employee pay, which is on track to reach record levels.
The company said it set aside $16.7 billion, or nearly half its net revenue, through the first nine months of the year for compensation, which includes salaries, bonuses and related costs.
Citigroup Inc., meanwhile, offered a grim reminder of just how shaky the economy remains.
Helped by trading gains, Citi reported a $101 million profit in the third quarter. But including the $288 million the bank paid out in preferred stock dividends, plus the deal that gave the government a 34 percent stake in the bank, it lost $3.24 billion.
The bank, one of the hardest hit during the recession, said loan losses during the quarter came to $8 billion. That's down from nearly $8.4 billion in the second quarter, but a sign that people are still defaulting in large numbers.
Banks have warned that loan losses would continue into next year. Citigroup CEO Vikram Pandit said improving the bad employment picture would be crucial for turning things around.
"Ultimately it's going to come down to how many jobs are there in the country," Pandit told analysts. "And that is probably the single best driver of trying to figure out what happens on a macro basis."
Experts don't expect the job market to pick up anytime soon, meaning banks could be relying on trading gains for the foreseeable future. While the economy may be out of recession, the unemployment rate isn't expected to peak until the middle of next year.
For now, most big banks "are holding their breath to see what 2010 will mean for retail profits," said Brad Hintz, investment banking analyst at Sanford C. Bernstein & Co. "Will unemployment come down? Will the consumer start spending? No one knows."
___
AP Business Writers Stephen Bernard in New York and Ieva M. Augstums in Charlotte, N.C. contributed to this report.
NEW YORK – The big banks are showing they can still make money, even as Main Street struggles — though not from lending, refinancing homes or other bread-and-butter business.
Instead, they're doing what Wall Street does best — betting big on stocks, bonds, commodities and other assets.
Citigroup, the shakiest of the major banks during the financial crisis, reported Thursday it eked out a quarterly profit from trading, despite suffering more losses on consumer loans. Trading also drove big profits at Goldman Sachs and JPMorgan Chase.
That some banks are making money now is a sign of remarkable recovery from the crisis a year ago. But the lopsided business model raises questions about what happens if trading profits fall off and banks are left to rely on more traditional operations.
After all, the economy is still struggling to recover, unemployment is approaching 10 percent and Americans are saving money and trying to pay down debt, not taking on more.
"The good news is that banks are in better shape. The bad news is that they're not making loans to consumers and businesses," said market analyst Edward Yardeni. "That could come back to bite them because these trading gains will only last so long."
Mindful of the problems banks still face, investors reacted cautiously a day after the Dow Jones industrials powered back above 10,000 for the first time in a year. Stocks zigzagged for most of Thursday before ending modestly higher.
For now, trading is pretty much the only way banks can make money. And it's more lucrative because there are fewer competitors, interest rates are near zero and government subsidies have allowed banks to borrow cheaply and invest in assets that offer the highest returns.
Goldman Sachs Group Inc. has benefited more than most. Famed for its trading prowess, the New York investment bank said Thursday that third-quarter earnings swelled to $3.03 billion, more than triple what it made a year ago.
As in past quarters, Goldman leaned heavily on its trading operation — buying and selling stocks, bonds, foreign currencies and commodities like oil and gold — to make money.
"They've been on the mark on the trading side," said Stephen Hagenbuckle, a principle at private equity fund TerraCap Partners.
Goldman's strong showing came a day after JPMorgan Chase & Co. reported its own big profits — $3.59 billion for the quarter. That was even more impressive because, unlike Goldman, JPMorgan has suffered heavy losses on consumer loans like credit cards and mortgages.
But JPMorgan's strong investment banking division is "carrying the burden right now," banking analyst Bert Ely said. "If not for that, they would've lost money."
Goldman's quick recovery allowed it to repay the $10 billion it received in government bailout money. That freed the company from restrictions on employee pay, which is on track to reach record levels.
The company said it set aside $16.7 billion, or nearly half its net revenue, through the first nine months of the year for compensation, which includes salaries, bonuses and related costs.
Citigroup Inc., meanwhile, offered a grim reminder of just how shaky the economy remains.
Helped by trading gains, Citi reported a $101 million profit in the third quarter. But including the $288 million the bank paid out in preferred stock dividends, plus the deal that gave the government a 34 percent stake in the bank, it lost $3.24 billion.
The bank, one of the hardest hit during the recession, said loan losses during the quarter came to $8 billion. That's down from nearly $8.4 billion in the second quarter, but a sign that people are still defaulting in large numbers.
Banks have warned that loan losses would continue into next year. Citigroup CEO Vikram Pandit said improving the bad employment picture would be crucial for turning things around.
"Ultimately it's going to come down to how many jobs are there in the country," Pandit told analysts. "And that is probably the single best driver of trying to figure out what happens on a macro basis."
Experts don't expect the job market to pick up anytime soon, meaning banks could be relying on trading gains for the foreseeable future. While the economy may be out of recession, the unemployment rate isn't expected to peak until the middle of next year.
For now, most big banks "are holding their breath to see what 2010 will mean for retail profits," said Brad Hintz, investment banking analyst at Sanford C. Bernstein & Co. "Will unemployment come down? Will the consumer start spending? No one knows."
___
AP Business Writers Stephen Bernard in New York and Ieva M. Augstums in Charlotte, N.C. contributed to this report.
Wednesday, September 9, 2009
Malaysia drops to 24 in competitiveness ranking
Wednesday September 9, 2009
Fall attributed to poor institutional framework, according to WEF report
SINGAPORE: Malaysia’s global competitiveness ranking dropped three positions to 24, according to the World Economic Forum’s (WEF) Global Competitiveness Report for 2009-2010 released yesterday.
The drop essentially was the result of a much poorer assessment of its institutional framework, said the report, which was released ahead of WEF’s annual meeting of the New Champions 2009 in Dalian, China.
The report said every indicator in the area had been exhibiting a downward trend since 2007, causing Malaysia to tumble from 17th to 43rd position in this dimension in just two years.
Switzerland topped the overall ranking of 133 economies, while the United States fell one place to second position, and Asia continued to feature prominently with Singapore at third and Japan at eighth, and Hong Kong, South Korea and Taiwan all in the top 20.
The report also said security was of particular concern in Malaysia with its ranking dropped 25 levels to 85th.
According to the business community, the potential of terrorism (ranked 97th) and crime (ranked 95th) both imposed significant business costs.
Also of concern was the budget deficit, which increased in 2008, amounting to almost 5% of Malaysia’s gross domestic product, it said.
However, Malaysia scored high in most other dimensions, particularly in those factors at the top end of the value chain, namely business sophistication (ranked 24th) and innovation (also ranked 24th).
The report said expectations were high for Malaysia that averaged an impressive 7% growth per year between 1990 and 2000 and a healthy 5% since then.
Mirroring this economic success, Malaysia had featured prominently in the competitiveness rankings ever since its first inclusion in 1994, it said.
“Indeed, it remains the most competitive Stage 2 (efficiency-driven) Country,” it said.
It pointed that in order to maintain its competitive edge, Malaysia now needed to prepare its conversion into a knowledge-based, innovation-driven economy.
“Improving both the quantity and quality of higher education (ranked 41st) and boosting technological readiness (ranked 37th), particularly information and communications technology penetration, would serve this effort well,” it said. — Bernama
ฉ 1995-2009 Star Publications (Malaysia) Bhd (Co No 10894-D)
Fall attributed to poor institutional framework, according to WEF report
SINGAPORE: Malaysia’s global competitiveness ranking dropped three positions to 24, according to the World Economic Forum’s (WEF) Global Competitiveness Report for 2009-2010 released yesterday.
The drop essentially was the result of a much poorer assessment of its institutional framework, said the report, which was released ahead of WEF’s annual meeting of the New Champions 2009 in Dalian, China.
The report said every indicator in the area had been exhibiting a downward trend since 2007, causing Malaysia to tumble from 17th to 43rd position in this dimension in just two years.
Switzerland topped the overall ranking of 133 economies, while the United States fell one place to second position, and Asia continued to feature prominently with Singapore at third and Japan at eighth, and Hong Kong, South Korea and Taiwan all in the top 20.
The report also said security was of particular concern in Malaysia with its ranking dropped 25 levels to 85th.
According to the business community, the potential of terrorism (ranked 97th) and crime (ranked 95th) both imposed significant business costs.
Also of concern was the budget deficit, which increased in 2008, amounting to almost 5% of Malaysia’s gross domestic product, it said.
However, Malaysia scored high in most other dimensions, particularly in those factors at the top end of the value chain, namely business sophistication (ranked 24th) and innovation (also ranked 24th).
The report said expectations were high for Malaysia that averaged an impressive 7% growth per year between 1990 and 2000 and a healthy 5% since then.
Mirroring this economic success, Malaysia had featured prominently in the competitiveness rankings ever since its first inclusion in 1994, it said.
“Indeed, it remains the most competitive Stage 2 (efficiency-driven) Country,” it said.
It pointed that in order to maintain its competitive edge, Malaysia now needed to prepare its conversion into a knowledge-based, innovation-driven economy.
“Improving both the quantity and quality of higher education (ranked 41st) and boosting technological readiness (ranked 37th), particularly information and communications technology penetration, would serve this effort well,” it said. — Bernama
ฉ 1995-2009 Star Publications (Malaysia) Bhd (Co No 10894-D)
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