Thursday, March 07, 2002

March 7, 2002 Oil Price Soars on Iraq War Threat "Oil prices jumped five percent to a six-month high on Thursday as oil exporter Iraq began talks with the United Nations under threat of a massive bombing campaign by western powers. Dealers said the effects of mounting tensions in the oil-rich Middle East were exacerbated by speculative buying by investment funds encouraged by signs of surprisingly quick economic recovery in the United States. ... Cheaper oil for the last six months has fueled a recovery, but oil importing countries now fear that a sharp price spike could jeopardize that." ... [more] 2:08:22 PM    comment  []

March 7, 2002 Dollar Falls; Investors Look to Recovery "The yen shot to 2002 peaks against top currencies on Thursday, posting its biggest gain on the dollar in seven months, as Japanese stocks hit seven-month highs on hopes a U.S. economic recovery will carry the world out of a global slump." "Japan's Nikkei stock index leapt 2.55 percent on Thursday and has now gained 24 percent in the last month, helped by an improving global backdrop and by Japanese restrictions on short-selling the stock market. The yen has surged nearly 5 percent in a week, catapulted higher as dealers who had been betting the yen would fall due to Japan's bleak economic prospects were forced to bail out of their positions en masse." But many New York-based analysts doubted the staying power of the yen's gains. Disbelievers say the Nikkei's rise stemmed in part from the ban on short sales, as opposed to an improving economic picture, and from Japanese repatriation of overseas assets ahead of the March 31 fiscal year- end. 'I think the old ghosts have come back to haunt the yen after the end of the fiscal year ... " "The lack of an aggressive response to the yen's muscle has some analysts speculating Tokyo is keen to support the stock market ahead of the fiscal year-end to avoid chaos in the fragile financial sector." "The dollar's tumble against the yen sent the greenback falling to a six-week low of 88.13 cents per euro in European trading hours ... 'U.S. numbers are getting better, but euro zone numbers are also getting better. I don't think there is much change in the fundamental relationship between the two' ... Some analysts have said the dollar is looking a bit fragile, given its inability to rally despite signs of a stronger-then-expected recovery from recession. Some analysts said President Bush's decision to impose tariffs on steel imports was weighing on dollar sentiment, fueling fears of rising trade tensions." "U.S. manufacturers have urged Bush to scrap America's long-standing strong dollar policy, which they say reduces the competitiveness of U.S. exporters." ... [more] 1:28:46 PM    comment  []

Fed Survey Sees Signs of a Rebound March 7, 2002 "The economy showed more signs of improving in January and early February, a Federal Reserve survey says, offering fresh evidence the nation is recovering from the recession. The Fed's latest survey of business activity around the country, released yesterday, suggested that signs of a rebound were becoming more widespread and now were evident in most areas." ... [more] [from beige book] "A majority of Federal Reserve districts report some signs of improvement in economic conditions in January and early February. The Boston, Philadelphia, Richmond, Atlanta, Minneapolis, and San Francisco districts note some pickup in activity, Chicago cites a more positive tone, and Kansas City and St. Louis say that economic activity is weak, but there are some bright spots. Cleveland indicates that although some positive signs continue to emerge, overall business conditions in the district have neither improved nor deteriorated compared with the end of last year. New York reports mixed signals, and Dallas notes continued weak activity." "Most districts say that manufacturing activity is generally weak, but selected industries in some areas are showing more positive results." "Labor markets continue to be slack in most districts, with many citing business contacts who have suspended bonuses, frozen wages, or skipped annual salary increases." ... [beige book] 9:00:35 AM    comment  []

March 7, 2002 Manufacturing data show recovery taking hold: Fed "The U.S. Federal Reserve is becoming increasingly confident that economic recovery is underway, with two top Fed governors saying yesterday that there was compelling evidence of growth in virtually all sectors, including battered manufacturing." "'All those signs are very positive that we have started a recovery,' said Robert McTeer, president of the Dallas Fed, who said that manufacturing activity has returned to growth after a 1 1/2-year slump." ... [more] 8:50:22 AM    comment  []

U.S. Workers' Productivity Rose at Strong 5.2% Pace in 4th Quarter Thursday, March 7, 2002 08:45 AM ET "U.S. productivity rose more than than expected in the fourth quarter despite the overall weakness of the U.S. economy." "Nonfarm business productivity, or worker output per hour, grew at a revised annual rate of 5.2% from October through December, up from the 3.5% pace previously estimated ... " ... [more] 8:47:20 AM    comment  []

March 7, 2002 Greenspan Says Economic Recovery Is 'Well Under Way' "Federal Reserve Chairman Alan Greenspan said on Thursday a U.S. economic expansion was 'well under way,'' making a rare and unexpected revision of formal testimony to Congress he had delivered only last week." " ... the upbeat economic news of the past few days was encouraging. But he retained a note of caution, telling lawmakers during questioning the recovery would 'almost certainly'' not log the growth rates of rebounds from past recessions -- which he said typically averaged around 7 percent. He also said business spending was a cause for concern. 'The recent evidence increasingly suggests that an economic expansion is already well under way, although an array of influences unique to this business cycle seems likely to moderate its speed'" "Among the recent data, one of the most impressive reports was issued by the private Institute for Supply Management. The Purchasing Managers Index put out by ISM rose to 54.7 in February from 49.9 in January. The rise in the index above the key level of 50 indicated the factory sector had finally emerged from an 18-month slump."  ... [more] ... [testimony] 8:22:12 AM    comment  []