Japan's Bonds Gain as Stocks Slump, Demand Rises at Auction - BusinessWeek

October 04, 2011, 3:13 AM EDT By Mariko Ishikawa

Oct. 4 (Bloomberg) -- Japan’s bonds rose, driving down 30- year yields for the first time in seven days, as stocks fell, boosting demand for the relative safety of government debt.

Benchmark 10-year yields dropped from near a one-month high on concern Greece will default and Europe’s debt crisis will worsen. Bonds also advanced after today’s auction of 10-year debt drew the highest demand in three months and as Goldman Sachs Group Inc. cut its forecasts for Japan’s economic growth and yields for the securities.

“The bond market is reflecting risk aversion,” said Toru Suehiro, a market analyst in Tokyo at Mizuho Securities Co., one of the 25 primary dealers obliged to bid at government debt sales. “Because there isn’t a fundamental resolution to the European problem, we may see a cycle of optimism and pessimism continue which will disappoint investors. I think pessimism will prevail in the end.”

Thirty-year yields fell 1.5 basis points to 1.905 percent at 3:26 p.m. in Tokyo at Japan Bond Trading Co., the nation’s largest interdealer debt broker. The 2 percent securities maturing in September 2041 rose 0.29 yen to 101.811 yen. Benchmark 10-year rates fell 2.5 basis points to 0.99 percent after touching 1.025 percent on Sept. 30, a four-week high.

Ten-year bond futures for December delivery advanced 0.27 to 142.54 at the 3 p.m. close of the Tokyo Stock Exchange. The Nikkei 225 Stock Average sank 1.1 percent.

Today’s sale of 10-year bonds drew bids valued at 6.3 trillion yen ($82.2 billion), or 3.15 times the amount sold. That was the highest ratio since July even after the coupon was set at 1 percent, the least since November 2010.

‘Slightly Stronger’

“The results for the 10-year auction were slightly stronger than expected,” said Reiko Tokukatsu, a senior fixed- income strategist at Barclays Capital Japan Ltd. “Bonds tend to find more buyers on dips because sentiment in financial markets has deteriorated” amid the worsening situation in Greece.

Goldman Sachs halved its forecast for Japan’s growth to 0.1 percent during the fiscal year ending March 2012 owing to a slowdown in the global economy. The company also cut its forecast for Japan’s 10-year yields to 1.1 percent in three months from 1.25 percent.

European finance ministers meeting in Luxembourg pushed back a decision on the release of Greece’s next loan installment until after Oct. 13. It was the second postponement of a decision originally slated for this meeting.

--With reporting by Masaki Kondo in Tokyo. Editors: Nate Hosoda, Rocky Swift

To contact the reporter on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

View the original article here

BOJ's Miyao: may get less support from overseas demand (Reuters)

HAKODATE, Japan (Reuters) – Bank of Japan board member Ryuzo Miyao said on Wednesday the country's economy may get less support than initially expected from overseas demand as the recovery in the U.S. and European economies loses steam.

"Japan's economy will continue a moderate recovery based on output and exports after supply constraints are resolved," Miyao said in a speech to business leaders in Hakodate on the northernmost main island of Hokkaido.

"But there are some concerns over the recovery scenario," he added, also citing persistent yen rises, higher energy costs and prolonged deflation expectations as factors that could hurt growth.

A former academic, Miyao has voted with the majority since joining the board last year and is regarded as among those on the board who are more pessimistic about the economy.

Below are key quotes from Miyao's speech:

JAPAN ECONOMY

"Japan's economy is picking up steadily as supply constraints stemming from the (March 11 earthquake) disaster have mostly been resolved. Production and exports, in particular, are on a growth trend ...

"Japan's economy will continue a moderate recovery based on output and exports after supply constraints are resolved. But there are some concerns over the recovery scenario: these are slowing overseas economies, the yen's sustained strength, increased electricity costs and worries about prolonged deflation."

OVERSEAS DEMAND

"The first concern regarding the Japanese economy's recovery scenario is the likelihood of overseas demand falling more than expected as the recovery in the U.S. and European economies slows, as a result hurting Japan's recovery.

POLICY

"The BOJ took additional easing at the August 4 meeting ... Although the economy has recovered steadily mainly in output, the BOJ took into account negative factors for the outlook including uncertainty about the global economy and the effect of the change in the base-year for the consumer price index."

EUROPE

"European financial and capital markets remain unstable.

"Since the Greek crisis broke out in May 2010, more and more countries have become targets of market attacks, while the authorities have expanded assistance each time. As the contagion spreads to Italy and Spain, risks surrounding Europe's debt problems are heightening ...

"What is worrying for the future are the spillover effect from the debt problems on Europe's banking sector and real economy. This concern seems to have partly materialized in the form of rises in CDS and widening spreads of corporate bonds. We thus need to closely watch developments."

U.S., EMERGING NATIONS

"The U.S. economy is recovering but the pace of recovery has slowed substantially.

"Emerging economies in Asia have maintained a high growth rate driven by China, and I expect their medium- to long-term growth expectations to remain high. But underlying economic indicators are showing some slowdowns, due in part to monetary tightening to counter price hikes ...

"The effects of the earthquake have largely ended since July but external demand could struggle to pick up on the slowing pace of economic recovery in Europe and the United States."

UNORTHODOX POLICY

"When policy rates are reduced close to zero percent further monetary easing becomes difficult. At the same time a central bank can pledge to keep zero rates in the foreseeable future or expand the size of its assets or change their composition to boost the effects of monetary easing.

"The BOJ's 'comprehensive easing' taken from October last year includes all such elements and is thus an unorthodox monetary policy package. The BOJ has pledged to continue the zero rate policy until price stability is in sight, and is buying various assets ...

"A series of U.S. monetary policy steps since the Lehman crisis are similar.

"While unorthodox policy steps have the mechanism of affecting the economy through various channels, excessive easing is feared to have side effects. First of all, if a central bank intervenes in markets excessively and tamps down risk premiums excessively, it hampers markets' risk-based pricing functions ...

"We need to be fully aware of the fact that unorthodox monetary policy could have unique side effects.

"We need to examine the timing and steps that maximize the effects and minimize the drawbacks and be cautious and decisive in our policy response."

(Reporting by Leika Kihara, Rie Ishiguro and Tetsushi Kajimoto; Editing by Michael Watson)

View the original article here

Tiffany sparkles as global demand lifts profit 33% - MarketWatch

By Andria Cheng, MarketWatch

NEW YORK (MarketWatch) — Luxury jewelry retailer Tiffany & Co. on Friday lifted its outlook for the year as it reported a much better-than-expected 33% increase in fiscal second-quarter profit, driven by demand across the world, including earthquake-hit Japan.

/quotes/zigman/243577/quotes/nls/tif TIF 66.75, +3.64, +5.77%

The company also lifted its full-year outlook, sending its shares up 5% to $66.25 in premarket trading. Its stock has risen 1.4% this year, outperforming the broader markets, but dropped 21% this month against worries that macroeconomic concerns and market volatility will dampen the sentiment of its upscale shoppers.

The company, however, appeared to shrug those concerns as well, saying its third quarter-to-date performance is continuing to exceed its expectations, with strength in the Americas, Asia-Pacific and Japan. It also said it’s been able to absorb rising precious metal and gemstone prices while improving margins. Second-quarter gross margin widened to 59% from 57.8%.

“Despite continuing economic uncertainty, our strong first half performance gives us ample reason to remain confident about our prospects for the balance of the year,” Chief Executive Michael Kowalski said.

Second-quarter net income rose to $90 million, or 69 cents a share, from $67.7 million, or 53 cents a share, a year earlier.

Sales in the quarter ended July 31 grew 30% to $872.7 million, and would have risen 24% excluding the currency translation impact. Comparable-store sales rose 22%.

Excluding expenses related to the relocation of its New York headquarters staff, the company said it would have earned 86 cents a share.

Analysts polled by FactSet Research had expected adjusted earnings of 70 cents a share on sales of $785.6 million.

Tiffany lifted its earnings forecast for the year to a range of $3.65 to $3.75 a share, from the previous projection of as much as $3.55. Analysts had been forecasting earnings of $3.55 a share for the year. Gains are expected across all regions, led by at least a 30% increase in Asia. Even Japan sales are expected to rise in the high-single-digit rate.

“Luxury spending has more momentum than one could fear given financial markets,” said Stifel, Nicolaus & Co. analyst David Schick.

In the Americas, sales rose 25% to $438.2 million. Comparable-store sales rose 24%. Sales in the New York flagship store increased 41%, helped by strong foreign tourist demand. Comparable branch store sales in the Americas increased 19% Internet and catalog sales increased 16%.

In Asia-Pacific, sales increased 55% to $173.2 million. They were still up 45% on a constant-exchange-rate basis. Comparable store sales minus currency impact increased 41%, led by growth in the greater China region.

In Japan, sales rose 21% to $142.5 million. They were up 8% excluding translation impact. On that basis, comparable store sales increased 8%.

In Europe, sales increased 32% to $101.3 million. On a constant-exchange-rate basis, sales increased 17% with same-store sales up 11%, reflecting growth in most countries.

At the end of the quarter, Tiffany operated 236 stores, including 98 in the Americas, 55 in Japan, 52 in Asia-Pacific and 31 in Europe.

Other sales increased 46% to $17.4 million, helped by wholesale sales of finished products to independent distributors within emerging markets, partly offset by a decline in wholesale sales of rough diamonds.

Andria Cheng is a MarketWatch reporter based in New York.

View the original article here

Disaster hits Japan's semiconductor demand - Computerworld

Computerworld - The March earthquake and disaster in Japan are still affecting the global semiconductor market and may continue to do so for months to come.

But one industry analyst said that, unlike the months immediately following the disaster , the problem now isn't that Japan can't keep up with supply needs. Shane Rau, an analyst with IDC, said the problem now is on the demand side.

"The supply chain [in Japan] was able to adapt fairly quickly to any disruptions," Rau said. "The longer-term issue has been more on the demand side ... This has affected people's ability to function and survive. When they're trying to find homes and necessities, they're not thinking about buying PCs."

Japan's role as a semiconductor consumer is significant. In 2009, Japan accounted for 15.3% of the world consumption of semiconductors. This year IDC expects that number to drop to 14.2%.

IDC is forecasting worldwide semiconductor growth of 7% this year, according to Rau, down from about 8% last year. One reason that IDC lowered its forecast is because of the disaster in Japan and its effect on the demand for electronic systems inside Japan, he said.

IDC is also predicting that growth in semiconductor demand in Japan for 2012 will be down to 0.9%, compared with 3.6% growth in 2011. IDC had initially predicted that 2011 would see 5.6% growth in Japan but that number was later lowered to 3.6%.

"That's a flagging number for Japan, and part of that is the earthquake and the ongoing effects of that," Rau said." It's such low growth for a country that has been such a power player in the high-tech market."

Of course, after Japan makes headway in rebuilding and starts buying computers, smartphones, automobiles and televisions again, some of that demand will come back.

"Companies [in Japan] and individuals simply aren't buying PCs. They will by fits and starts," Rau added. "Reconstruction will boost demand but then there will be a lot of folks who just aren't ready to buy again because they're worried about radiation and rebuilding their homes, getting insurance money... so many things that come before a discretionary purchase like a PC."

However, Rau said the disaster this year fed into a larger trend that has Japan becoming less of a force in the worldwide demand for computer chips.

"It's a little bit of stagnation in Japan that has been in effect," Rau said, adding that Japan's demand has been showing a long-term decline. "Other countries, like China, are overshadowing Japan in terms of semiconductor consumption.

He pointed out that while Japan is dealing with the earthquake and tsunami aftermath, the country also is facing tough economy times, including a drop in exports due to the high values of the yen as well reactions to the troubled world economy. Rau noted that demand should start to come back in 2013 but even then overall chip demand out of Japan will be weaker.

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin or subscribe to Sharon's RSS feed . Her e-mail address is sgaudin@computerworld.com.

Read more about Hardware in Computerworld's Hardware Topic Center.

This independent paper from senior analyst Jon Collins at FreeForm Dynamics considers how Web-based security threats are evolving, within the context of IT trends including mobile, home computing and other forms of remote access that could potentially increase the attack surface of the companies. It defines the scale and types of threat, what to look for in a corporate web security solution and compares the different types of technological approach available to companies and the processes that need to be considered for effective protection.

Read now.

Security is not an option. This KnowledgeVault Series offers professional advice how to be proactive in the fight against cybercrimes and multi-layered security threats; how to adopt a holistic approach to protecting and managing data; and how to hire a qualified security assessor. Make security your Number 1 priority.

Read now.

To date, small businesses have been unable to cost justify an IP-based communications system. This paper provides organizations with fewer than 250 employees a way to meet unique voice and data communications needs even with a limited budget and small IT staff.

Read now.

View the original article here

Commodities fall on worries about future demand - BusinessWeek

By SANDY SHORE

Commodity prices fell Thursday after fresh economic reports added to concerns about a weak global economy. Gold was a notable exception as it hit a new record near $1,830 an ounce.

U.S. economic news was discouraging: consumer prices and claims for jobless benefits rose, existing home sales fell and manufacturing weakened in the mid-Atlantic region. Overseas, Japan's exports fell for the fifth straight month in July and European leaders continued to grapple with sovereign debt problems.

Investors sold contracts for everything from oil to wheat and industrial metals as they worried about the potential for future demand if the global economy continues to slow.

Kingsview Financial analyst Matt Zeman said debt issues are key concerns for investors. "Add to that these just extremely weak economic numbers that we're seeing and it spells trouble and that's what we're seeing," he said.

The government said the number of people applying for unemployment benefits rose last week. The Consumer Price Index increased 0.5 percent in July as Americans paid more for necessities like fuel and food.

Gold prices rose for a fourth day. The precious metal is considered a relatively stable asset during economic turmoil. Gold for December delivery rose $28.20 to finish at $1,822 an ounce after hitting $1,829.70 an ounce earlier in the day. That was a record in dollar terms but still below the 1980 peak after adjusting for inflation.

Several analysts have predicted that gold could reach $2,000 an ounce if economic troubles deepen.

Gold's increase benefited silver and platinum, which are traded both as precious and industrial metals.

September silver rose 33.7 cents to end at $40.688 an ounce and October platinum increased $6.90 to $1,847.70 an ounce.

In other trading, September copper fell 6.6 cents to finish at $3.966 a pound and September palladium fell $18.90 to $757 an ounce.

Oil and other energy products dropped. Benchmark West Texas Intermediate crude for September delivery declined $5.20, or 5.9 percent, to finish at $82.38 per barrel on the New York Mercantile Exchange.

In other Nymex trading for September contracts, heating oil fell 8.68 cents to end at $2.8748 per gallon, gasoline futures lost 8.71 cents at $2.7832 per gallon and natural gas fell 4.1 cents to $3.892 per 1,000 cubic feet.

Wheat for September delivery fell 19.75 cents to $7.0775 a bushel, December corn lost 12.5 cents at $7.13 a bushel and November soybeans fell 5.75 cents to $13.61 a bushel.

View the original article here