Today in the economy

[killersheep]

3/12/09

France - CPI

Actual0.40%|Forecast0.20%|Previous-0.40%


The Consumer Price Index (CPI) determines the rate of inflation (i.e., the rate of price changes) experienced by consumers when purchasing goods and services. An upward trend has a positive effect on the country's currency. CPI is one of the most closely watched indicators and will usually have a high impact upon release.The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates to bring prices down. Higher interest rates attract foreign investment, thus lifting demand for the country's currency.

----------------------------------------------------------------

Switzterland - Interest Rate Statement

Actual-|Forecast | Previous0.50%

Four times per year the Swiss National Bank (SNB) Governing Board meets to set the nation's short term interest rate (i.e., "three-month libor"). Shortly after the meeting they release a statement that contains the decided rate, a brief commentary of the economic conditions that effected their decision, and most importantly, clues regarding the outcome of future meetings. The decision on where to set interest rates depends mostly on inflation. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates in an attempt to bring prices down. A rising trend in interest rates has a positive effect on the nation's currency. Short term rates are the paramount factor in currency valuation; traders look at most other indicators merely to predict how interest rates may change in the future. High interest rates attract foreigners looking for the best "risk-free" return on their money, which can dramatically increases demand for the nation's currency.

------------------------------------------------------------------

USA - Core Retail Sales

Actual0.70%|Forecast-0.10%|Previous0.90%

Derivative of Retail Sales that omits the Automobile Sales component. Retail Sales with the exclusion of this volatile component is thought to be a better indicator of the underlying trend in consumption. Automobile Sales make up roughly 25% of Retail Sales, but they can be very volatile from month to month and can distort the picture.

------------------------------------------------------------------

New Zealand - Retail Sales

Actual-|Forecast-0.10%|Previous-1.00%

Determines the worth of sales at the retail level. Traders pay close attention to Retail Sales as it is usually the first significant indicator of the month that relates to consumer behavior and is susceptible to surprises. A rising trend has a positive effect on the nation's currency as Retail Sales make up a large portion of consumption, which is a key driver of the economy and has a sizable impact on GDP.

[CGM]

OK this is a little more like it. The first three articles do a fairly good job of describing "Positive effect on nation's currency", because it really is the foreign component, investment and exports, which drives up exchange rates.

The last one, about an increase in retail sales in New Zealand having a positive effect on the nation's currency, is a bit of a stretch though. Sure you could argue that an increase in retail sales has an upward effect on inflation which leads to an upward effect on interest rates, which has an upward effect on foreign demand in risk free investments, which as an upward effect on exchange, but it don't mean it's gonna happen. For example, one could just as easily argue that the apparent increase in spending power would also lead to an increase in demand for foreign goods, which would have a downward effect on currency.

[killersheep]

OK this is a little more like it. The first three articles do a fairly good job of describing "Positive effect on nation's currency", because it really is the foreign component, investment and exports, which drives up exchange rates.

The last one, about an increase in retail sales in New Zealand having a positive effect on the nation's currency, is a bit of a stretch though. Sure you could argue that an increase in retail sales has an upward effect on inflation which leads to an upward effect on interest rates, which has an upward effect on foreign demand in risk free investments, which as an upward effect on exchange, but it don't mean it's gonna happen. For example, one could just as easily argue that the apparent increase in spending power would also lead to an increase in demand for foreign goods, which would have a downward effect on currency.

Perhaps we should just take a step back instead of analyzing the nation's currency effect. Since I get this from a Forex site it will certainly be focused on currency exchange and speculation based off of that. If anyone can tell me where to get a more general focus economic calender, I would greatly appreciate it.

Looking at these numbers I am very suprised to see the US core retail sales in positive territory. I fully expected with the amounts of layoffs and foreclosures that people would be padlocking their wallets. I understand that they aren't huge numbers, but there aren't any spending spree months coming up either.

[Kirkland Laing]

Retail sales are given a big statistical adjustment in February as it's quietest month of the year. No telling if they're goosing the numbers.

But the big retail spending problem is this.

It's 70% of us GDP, 70% of the economy.

The US consumer has for decades been the engine of economic growth, buying the world's products and growing the global economy.

But since 1980 median wages have been static but living costs have risen, forcing the US consumer to go into debt to finance their lifestyles.

Over the past decade that debt has been secured on their houses, something that was rising in value and looked to be an ATM machine.

But now those houses are falling to half their value so the US consumer is now heavily indebted with no increase in earnings and can't borrow any more as their assets have halved in value.

So how is the economy going to pick up? It will do at some point but it'll probably be a dead cat bounce when it does, it's hard to see what's going to drive substantial future growth right now.

[CGM]

OK this is a little more like it. The first three articles do a fairly good job of describing "Positive effect on nation's currency", because it really is the foreign component, investment and exports, which drives up exchange rates.

The last one, about an increase in retail sales in New Zealand having a positive effect on the nation's currency, is a bit of a stretch though. Sure you could argue that an increase in retail sales has an upward effect on inflation which leads to an upward effect on interest rates, which has an upward effect on foreign demand in risk free investments, which as an upward effect on exchange, but it don't mean it's gonna happen. For example, one could just as easily argue that the apparent increase in spending power would also lead to an increase in demand for foreign goods, which would have a downward effect on currency.

Perhaps we should just take a step back instead of analyzing the nation's currency effect. Since I get this from a Forex site it will certainly be focused on currency exchange and speculation based off of that. If anyone can tell me where to get a more general focus economic calender, I would greatly appreciate it.

Looking at these numbers I am very suprised to see the US core retail sales in positive territory. I fully expected with the amounts of layoffs and foreclosures that people would be padlocking their wallets. I understand that they aren't huge numbers, but there aren't any spending spree months coming up either.

Fair enough. I'll just make one final observation about currency. Very often the value of a nation's currency relative to another's is held up as a barometer to the health of that nation's economy, but it ain't quite so simple. For example, you could argue that a fall in the exchange rate of your country in and of itself in some ways will have a positive effect on the economy, in that it makes foreign goods more expensive, thus encuouraging domestic consumption, while at the same time making your own products more attractive to foreign purchasers. Oh wait, increased exports will then drive the exchange rate back up.

It's all a bit complicated, ain't it. Equilibrium is a very interesting topic.

[killersheep]

OK this is a little more like it. The first three articles do a fairly good job of describing "Positive effect on nation's currency", because it really is the foreign component, investment and exports, which drives up exchange rates.

The last one, about an increase in retail sales in New Zealand having a positive effect on the nation's currency, is a bit of a stretch though. Sure you could argue that an increase in retail sales has an upward effect on inflation which leads to an upward effect on interest rates, which has an upward effect on foreign demand in risk free investments, which as an upward effect on exchange, but it don't mean it's gonna happen. For example, one could just as easily argue that the apparent increase in spending power would also lead to an increase in demand for foreign goods, which would have a downward effect on currency.

Perhaps we should just take a step back instead of analyzing the nation's currency effect. Since I get this from a Forex site it will certainly be focused on currency exchange and speculation based off of that. If anyone can tell me where to get a more general focus economic calender, I would greatly appreciate it.

Looking at these numbers I am very suprised to see the US core retail sales in positive territory. I fully expected with the amounts of layoffs and foreclosures that people would be padlocking their wallets. I understand that they aren't huge numbers, but there aren't any spending spree months coming up either.

Fair enough. I'll just make one final observation about currency. Very often the value of a nation's currency relative to another's is held up as a barometer to the health of that nation's economy, but it ain't quite so simple. For example, you could argue that a fall in the exchange rate of your country in and of itself in some ways will have a positive effect on the economy, in that it makes foreign goods more expensive, thus encuouraging domestic consumption, while at the same time making your own products more attractive to foreign purchasers. Oh wait, increased exports will then drive the exchange rate back up.

It's all a bit complicated, ain't it. Equilibrium is a very interesting topic.

It is an interesting and very complicated topic, there is definately a reason I don't dabble in Forex. I picture it as an abacus that is infinately long and all the scales move independently and constantly, but sometimes together Each scale is based on a different variety of vastly complex economic systems.

[Kirkland Laing]

American International Group Inc. will pay $450 million in bonuses to employees in its financial products unit. That division was at the heart of AIG's collapse last fall, which compelled the U.S. government to provide $173.3 billion in aid to keep it running.
Chief Executive Edward Liddy told Treasury Secretary Timothy Geithner in a letter dated Saturday that the next payments to employees of the financial products unit -- whose woes caused massive losses at the giant insurer -- are due on Sunday, and added "quite frankly, AIG's hands are tied."


AIG to Pay $450 Million in Bonuses - WSJ.com

[killersheep]

American International Group Inc. will pay $450 million in bonuses to employees in its financial products unit. That division was at the heart of AIG's collapse last fall, which compelled the U.S. government to provide $173.3 billion in aid to keep it running.
Chief Executive Edward Liddy told Treasury Secretary Timothy Geithner in a letter dated Saturday that the next payments to employees of the financial products unit -- whose woes caused massive losses at the giant insurer -- are due on Sunday, and added "quite frankly, AIG's hands are tied."


AIG to Pay $450 Million in Bonuses - WSJ.com

I hate Liddy