Action in Europe --- Mike (slow)
Asia Pacific --- Gene (slow)
>> we turn our attention overseas beginning with a preview of next week’s action in europe.
>> let’s look at the agenda for europe on monday. president jean-claude trichet and other european economic policymakers may add to the debate of the effect of the plunging dollar at the euro zone. the euro’s gains may have affected german factory in other words october, they probably fell for the second time in three months as ongoing job cuts and rising oil prices prompted consumers to keep spending plans on hold. we’ll see manufacturing data in the u.k. economists say this may be a higher number, adding to evidence that the british economy is accelerating. the retail sector takes centerstage heading into the half of the christmas holiday shopping season. the bloomberg retail p.m.i. out on monday will provide clues on whether investors in european retailers have a reason to be cherry and we’ll have november retail sales from the b.r.k. in the u.k. on the corporate agenda, investors will be looking for an update from hsbc on the situation at its household international unit in the united states. last month, shares plunged after hsbc said the unit posted a 32% drop in third-quarter profits, about a quarter of hsbc’s profits come from household. other company news to look for includes full-year earnings at aberdeen asset management and news as to whether goldfields shareholders will approve the company’s plan to take over canada’s iamgold and bloomberg will be live at the business weak european leadership forum in paris, interviewing top names in the world of business, including the secretary general of the oecd, for his outlook of the european and global economy. i’m mark barton.
>> we turn to the asia-pacific region. gene otani begins by looking at expectations for growth.
>> japan’s economy may end five quarters of expansion as consumers cut spending because of a weakening job market . japan on wednesday reports revised third-quarter gross domestic product. the initial report showed growth unexpectedly slowed to .3%. companies slashed investment and overseas demand cooled in the three months through september. the recovery showed signs of faltering in october. employment, factory output and consumer spending fell short of expectations that month. thailand reports third-quarter growth figures next week. economists we surveyed expect g.d.p. expanded 5.9% for the slowest pace in a year. high fuel prices, regional unrest and bird flu affected the figures in thailand. south korea may cut interest rates for the third time this year which may allow policymakers to lower policy costs to a record to revive consumer spending in south korea. three other asian central banks meet to set interest rates. australian policymakers gather tuesday. new zealand meets thursday and the philippines meet thursday, as well. analysts expect strong demand for the $2.7 billion real estate investment trust i.p.o. figures may show china’s efforts to slow its economy are working. the nation’s industrial output growth, overseas sales and inflation all probably slowed last month. china raised interest rates and imposed lending curbs to cool growth in their economy. october exports on monday and taiwan releases november overseas sales figures on tuesday. australian consumer confidence figures wednesday followed by south korea consumer confidence on thursday and india on friday reports october industrial production. back to you.
>> crude oil fell to a three-month low on expectations that u.s. heating oil inventories will rise in coming weeks because of warm weather in the northeast. crude at the close of trading at $42.54 a barrel, down 1.64% on the session. oil plunged 14% in new york. the biggest weekly decline since start of the u.s. invasion of iraq in 2003. 31 of 59 traders and analysts we surveyed expect prices to fall next week. only 11 are looking for them to turn around and rise. among the other energy movers, red arrows with gasoline, unleaded, wholesale basis down 1.6%. when we come back, could next week bring an end to the 78-day nhl player lockout? and a 16-year-old takes the spotlight on espn2. we’ll have “money & sports” after the break.
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Listen Interview: Anthony Santomero --- Philadelphia Federal Reserve Bank
>> you’re watching ’s “world financial report.” i’m bob bowden, recapping the day on wall street. stocks didn’t go very far on the day with the digating jobs number, the dow and s&p 500 both up .07%. the nasdaq up .2%. philadelphia federal reserve bank president anthony santomero sees more measured interest rate increases by the fed in 2005. santomero becomes a voting member of the fomc in january. he spoke with matt nesto who asked him about the jobs number.
>> i’ve been on the record a few times indicating a range of 150,000 to 200. 1,000 jobs per month and this is low from those numbers but it indicates we’re moving forward.
>> if you look at the strength in the broader economy and the less numbers we’re seeing than economists want, how do you explain the disconnect?
>> well, as you know, productivity has been strong. most economists expect productivity to return to long-term trends. and while productivity has, in fact, come down, it’s not come down to the long-term trend yet so we’re really getting more output with less new labor.
>> if we talk about inflation, would you say you are―your concerns about inflation accelerating now are the same, more or less?
>> i think at the moment inflation is contained but i do hear from businessmen that there is pressure on margins and wholesale price pressure is showing up. we must be watchful because it’s important, as the economy proceeds, that we keep that inflation well contained. so i guess i would say i’m more vigilant.
>> interesting that you brought up the word vigilant. that’s the second time we’ve heard that today. you said the fed has to be vigilant when it comes to the dollar and inflation. what do you mean by vigilant?
>> as you look at the process of price movements and you ask people in our area, in the third district, i try to get some sense of what they hear going on. what i’m hearing is pressure on raw material prices and some pressures on margins. but in general, the c.e.o.’s that i speak to indicated it’s hard to pass that on. so even though there is some pressure on cost, so far it’s not translating to inflation at the retail level.
>> what about rising energy prices? is that going to become an increasing inflationary factor?
>> clearly that caused pressure on margeens―margins, as well. the movement down from the highs has taken some of the pressure off but it’s higher than it was at the beginning of the year.
>> if we can discuss the dollar, it sems to make more headlines every day, the 10th or 12th new high in the past month versus the―new low versus the euro. can you imagine a circumstance in the near future that would make the fed adjust rates because of currency movement?
>> well, the objective of the federal reserve, as you know, is an environment of sustained optimal growth with a stable price environment. that’s a domestic focus. clearly, as the exchange rates change and trade balances shift, we will take that into consideration but i think we have to keep focus on the u.s. economy and get it to grow at its potential with stable prices.
>> to summarize, a currency-spurred move by the fed is not out of the question?
>> oh, i clearly didn’t say that. i think the issue before us is trying to maintain our eye on the ball, which is price stability and an environment of sustained growth and as things around us change, whether they’re international policy, domestic policy or fiscal policy, we take that into account when we make our decision.
>> also, quasi related to the dollar would be the effect that the weak dollar has on trade deficits, typically positive. those trade deficits, though, both the current account deficit and u.s. total trade deficit, do you see those narrowing in the coming year?
>> as you know, the value of the exchange rate has an effect on the tad balance but it takes quite some time. we are starting to see the implications of earlier changes in the exchange rate on our trade balance. in addition, as economies around the globe grow more quickly, that will aid our trade position. but it is a long, long line between our domestic economy and these movements.
>> what, in your opinion right now, is the greatest threat to continued economic expansion?
>> well, i guess i could list a whole bunch of things people talk about, but the reality is we are on a path and have been on a path, moderate sustained growth, for a while. and i think that’s what the data is showing us. at times we flip one way or the other, a little weaker on the monthly labor numbers, a little more concern on higher labor numbers, sometimes concern about prices, sometimes not. i think we are in a position of moderate growth and that’s what the data’s telling us.
>> anthony santomero, president of the philadelphia federal reserve bank. when we come back, crude oil plunges this week with its biggest decline since the war in iraq. we’ll tell you if economists expect the drop in prices to continue. we’ll turn our attention overseas ahead of the trading week in europe and asia. are
