Japan Exports Rise 12.1%, First Increase Since Lehman Collapse

Date Jan 27 2010 14:48:10 Source:Bloomberg

Jan. 27 (Bloomberg) -- Japan’s exports rose for the first time since Lehman Brothers Holdings Inc. collapsed 15 months ago, adding to signs that the world’s second-largest economy is recovering from the global recession.

Japanese manufacturers from Honda Motor Co. to Fuji Xerox Co. are benefiting from renewed demand in emerging nations including China, where gross domestic product expanded at the fastest pace since 2007 last quarter. The booming economy in Japan’s largest overseas market may help offset weak demand at home weighed down by falling wages and deflation.

“Shipments to Asia, especially China, have been growing a lot and these are strong results,” said Yoshiki Shinke, senior economist at Dai-Ichi Life Research Institute in Tokyo. “It’s safe to say that exports were strong” in the fourth quarter.

The improvement in exports last month was partly due to a favorable year-on-year comparison. In December 2008, shipments abroad tumbled 35 percent as global trade froze in the aftermath of Lehman Brothers’ collapse in September. From a month earlier, exports rose a seasonally adjusted 2.5 percent in December, today’s report showed.


Stronger Yen


The yen climbed to 89.25 against the dollar at 3:08 p.m. in Tokyo after touching 89.14, the strongest in five weeks. While the currency is weaker than the 14-year high of 84.83 reached in November, it has advanced 4 percent this year, threatening profits earned abroad. The Nikkei 225 Stock Average dropped 0.7 percent, a fourth straight decline.

Exporters are leading the recovery while Prime Minister Yukio Hatoyama runs out of options for spurring spending at home because of the country’s swelling debt burden. Standard & Poor’s yesterday cut the outlook on Japan’s AA credit rating, saying the government lacks a plan to rein in budget deficits.

Finance Minister Naoto Kan said the government’s mid-term fiscal strategy to be released by June will help to maintain investors’ confidence. “We need to keep yields around the current level by maintaining markets’ trust in our fiscal health,” he told parliament today.

The yield on Japan’s 10-year bond fell one basis point to 1.31 percent today.

Demand from Asia led the resurgence in trade. Shipments to the region advanced 31.2 percent from a year earlier, the fastest pace since February 2000. Exports to China climbed 42.8 percent, the most in almost three years, led by record demand for automobiles. Exports to the U.S. fell 7.6 percent, while shipments to Europe rose 1.4 percent, the first gain in 17 months.


Global Trade Rebound


Asian economies are benefiting from a global trade rebound that’s being driven by interest-rate cuts and more than $2 trillion in government spending worldwide.

Fuji Xerox, Japan’s biggest maker of color copiers, expects sales to recover as early as September, helped by growth in China and increased demand for printers in the U.S., President Tadahito Yamamoto said on Jan. 15.

Honda Motor’s venture with Dongfeng Motor Group Co. will invest 1.15 billion yuan to build a second plant in China as vehicle demand rises in the world’s largest car market. The plant, with an initial annual capacity of 60,000 vehicles, will start production in the second half of 2012, Honda said.

“In coming months, the export recovery may lose some of its speed since the rally so far has been so fast, but on the whole, exports will keep growing,” Dai-Ichi’s Shinke said. “Asian economies, particularly China, will keep expanding, and Japan will benefit from that.”


China Plant


Imports slid 5.5 percent in December from a year earlier, the smallest drop in 14 months, today’s report showed. Japan posted a trade surplus for an 11th straight month, totaling 545.3 billion yen ($6.1 billion).

Bank of Japan Governor Masaaki Shirakawa said yesterday the economy is likely to lose momentum as global stimulus spending fades. His board left interest rates at 0.1 percent and pledged to maintain an “extremely accommodative” policy.

The governor told lawmakers today that it’s “critical” that the central bank works to overcome price declines. Hatoyama said at the same session that Japan’s deflation remains “mild” and isn’t spiraling out of control.

“The economy will slow in the first half of 2010 due to weak domestic demand,” said Kyohei Morita, chief economist at Barclays Capital in Tokyo. “Evidence of deteriorating consumer confidence is consistent with this view.”

In 2009, exports fell 33 percent, the biggest drop since comparable figures were made available in 1979. China surpassed the U.S. as Japan’s largest export market for the first time on an annual basis, the report showed.

Apple''s Tablet: App Makers Target Business Use

Date Jan 27 2010 14:46:41 Source:BusinessWeek

In early February, an Apple (AAPL) rep is scheduled to pay a visit to the Cincinnati offices of Western & Southern Financial Group. Employees have been clamoring for the company to provide support for Apple''s iPhone and Mac computers, says Doug Ross, chief technology officer at the fund manager, with $43 billion in assets. So he''s eager to hear Apple''s pitch. Ross also looks forward to discussing a new type of device altogether: "I think he''s going to show us a tablet," Ross says.

A flat, touchscreen computer like the one Apple is expected to introduce Jan. 27 could help wean Western & Southern workers off their reliance on three-ring binders filled with paper and noisy laptops that can be a distraction during meetings, Ross says. "I would love to have [documents] in an electronic form that people could interact with in a friendly way."

Before the Jan. 27 introduction, most speculation and reports on the tablet focused on ways it will be used to showcase books, newspapers, and entertainment. Yet, Apple''s new creation may also have an impact in cubicles and boardrooms. "This is going to be huge for business," says Bruce Francis, vice-president for corporate strategy at (CRM), which created an application that makes its software-based tools available on Apple''s iPhone. "Apple has blown through the barriers with the iPhone, and the same thing is going to happen with the tablet."

Software programmers are all too happy to help. In a January survey of more than 500 software developers conducted by mobile app-making service Appcelerator, about 49% of respondents identified business as a category of application they would be interested in creating for the tablet. That was the most popular response, followed by productivity (47%), entertainment (44%), and social networking (42%). Apple is likely to offer a new version of its App Store and tools for creating apps sized to fit the tablet, says Appcelerator CEO Jeff Haynie.

iPhone Snubbed by Many Businesses
IT experts say Apple hasn''t traditionally gone to great lengths to cater to business users. "Apple has been widely criticized for not paying enough attention to core business foundation needs in the areas of security, management, and telephony," says Ken Dulaney, analyst at Gartner (IT). While Apple has made security improvements to the iPhone, and added support for Microsoft''s (MSFT) e-mail service for businesses, Dulaney says IT managers often snub the iPhone because it lacks features standard on other mobile computers, such as the ability to run multiple applications at once. "Apple has been unwilling to go the extra step that Microsoft and [Research In Motion (RIMM), maker of the BlackBerry] have gone to support the enterprise," he says.

Still, third-party application developers have helped drive use of the iPhone in the workplace, and many plan to get behind the tablet. "The bigger the screen, the easier it will be to type and manipulate data," saysMichael Simon, CEO of LogMeIn (LOGM), a company that lets customers access their PCs remotely, through mobile applications. LogMeIn, which counts professionals like doctors, lawyers, and small business owners among its users, held an initial share sale last year. It has generated more than $1 million in sales of its most popular iPhone application, which costs $29.99. Simon says he will watch the Jan. 27 Apple announcement closely.

Engineers at Evernote, an online service for storing photos and personal notes on many devices, are creating mockups of a 10-inch digital screen to test the possibilities of the tablet. "If you''re holding something roughly the size of a magazine in your hand, how would you want to use it?" asks Phil Libin, Evernote''s CEO. The team at Mobiata, maker of the popular iPhone travel app FlightTrack, is testing the idea of running multiple functions within the same screen., an enterprise take on microblogging services like Twitter, might be turned into a tablet application that displays photos and video alongside 140-character messages. The makers of ProOnGo, a mobile app that lets users take pictures of receipts and organize expenses, are holding out hope that the tablet comes with a camera.

Higher-Priced Apps
A bigger Apple device could mean more powerful—and profitable—apps. "Price points can be higher in the tablet than they are in the iPhone," says Alan Masarek, chief executive of Quickoffice. For years, his company has sold mobile software compatible with Microsoft''s Office for the PC. With the increased capabilities promised by the tablet, Quickoffice could charge more than the $7.99 it does for the iPhone version.

Tablet computing could eventually pose broader changes to the way people do business, says Raju Vegesna, an executive at Zoho. The Pleasanton (Calif.) maker of online productivity applications plans to release at least two apps for the iPhone in February, and may start planning versions for Apple''s tablet as soon as this week. Businesses make up about 60% of Zoho''s customers.

Vegesna says touchscreen technology could be used increasingly in business if devices like Apple''s tablet catch on. "If the keyboard and the mouse are going away in computing, that''s going to be a huge change," he says. "And that means there is a great opportunity for [software] vendors big and small."

Lenders start sign up on ''piggyback'' mortgage plan

Date Jan 27 2010 14:42:52 Source:AP Real Estate

WASHINGTON – Mortgage companies are finally starting to sign up for a long-delayed piece of the Obama administration''s $75 billion foreclosure-prevention program.

The administration had been offering lenders who made so-called "piggyback" mortgages — second loans that allowed consumers to make a little or no down payment — incentives to lower payments or eliminate the loans entirely.

But no one signed up until Tuesday when Bank of America became the first to do so.

During the housing boom, lenders readily gave such second loans. While home prices soared, such mortgages were even extended to borrowers with poor credit and people who didn''t provide proof of their incomes or assets.

Those loans are now an obstacle to alleviating the housing crisis. That''s because piggyback lenders — fearing they won''t be repaid — can veto a borrower''s efforts to modify their primary mortgage.

Consumer advocates and even some on Wall Street have been calling on the government to help the roughly one in three homeowners who owe more on their mortgages than their homes are now worth.

The administration has been studying ways to encourage investors to cut borrowers'' mortgage balances. Many want to do so but say they have been blocked by investors in second loans. The Obama administration is hopeful that the piggyback program could help, said Bill Apgar, a senior adviser at the Department of Housing and Urban Development.

"We''re still a couple of weeks away," from getting more lenders to participate, Apgar said Tuesday. "This is not an easy problem to solve."

If more lenders follow Bank of America it could clear the way for more mortgage companies to cut borrowers'' principal balances on their primary loans. But administration officials appear wary of subsidizing such reductions with taxpayer money.

That could spark a backlash from critics who claim it''s unfair to people who are still paying their mortgages on time and a bailout for banks that made reckless loans.

With foreclosures still at record-high levels, The Obama administration''s program to aid homeowners has been a disappointment. Only about 66,500 borrowers, or 7 percent of those who signed up, had completed the program as of December.

The Treasury Department plans later this week to announce a streamlined process designed to get more borrowers to complete the loan modification program. The program reduces mortgage rates to as low as 2 percent for five years.

But many experts say more dramatic changes are needed.

"Unless you modify principal, there is absolutely no hope of restructuring mortgages on a mass scale to keep people in their homes," Daniel Alpert, managing director of the New York investment bank Westwood Capital LLC said earlier this month. "Eventually their hand will be forced."

British economy crawls free of record recession

Date Jan 27 2010 14:42:08 Source:AFP

LONDON (AFP) – Britain narrowly escaped from recession in the fourth quarter of 2009, official data has shown, joining other countries including the United States and Japan in breaking free from the downturn.

The country followed its European peers France and Germany as it emerged from the worst global recession since the 1930s -- but lower-than-expected data on Tuesday showed only a modest crawl into positive territory.

Gross Domestic Product -- the value of all goods and services produced in the economy -- grew by just 0.1 percent in the three months to December, aided by the services sector, after a 0.2-percent contraction in the third quarter.

"The recession is officially over -- but only just," said Deutsche Bank economist George Buckley.

The positive figure, which dashed market expectations for a 0.4-percent expansion, marked the end of a deep recession which began in the second quarter of 2008 as a result of the global financial crisis.

The return to quarterly growth may also not be enough for Prime Minister Gordon Brown to keep his job in an election due by June, as the nation faces a tough recovery amid calls to tackle soaring state debt.

"While the UK may be officially out of recession, it is far from out of the economic woods," said IHS Global Insight economist Howard Archer.

Like many Western countries, Britain''s public debt has rocketed as the government spent billions on financial stimulus measures and banking-sector bailouts in an attempt to avert economic meltdown.

Brown was "confident but cautious" about the outlook for the battered economy, his spokesman said on Tuesday.

The state of the economy has become the key battleground ahead of an election that is likely to see Brown''s Labour Party defeated by the main opposition Conservatives, according to polls.

Whichever party wins power, the nation faces serious public spending cuts and taxation hikes in the years ahead to cut borrowing, economists said.

Finance minister Alistair Darling told the BBC that the recovery would be "bumpy".

"There are many bumps along the way, we are not out of the woods yet so I think my caution is right," he said.

"What I would say though is these figures, which show modest growth, demonstrate the need for us to maintain support for the economy now."

The Conservatives'' finance spokesman, George Osborne, blasted the government over its handling of the economy.

"After this great recession, any signs of growth are welcome -- but these very weak growth figures show that Gordon Brown''s government left us badly prepared for the recession and badly prepared for the recovery," Osborne said.

"We urgently need a new model of economic growth that includes a credible deficit reduction plan that keeps mortgage rates low, creates jobs and doesn''t choke off recovery."

But Darling argued that the recovery could be compromised by cutting public expenditure too soon.

"If you start to take money out of the economy and start cutting (spending) too early you will end up wrecking the recovery."

The return to growth, after a record six straight quarters of contraction, means that Spain is the only major economy still trapped in recession after the worst global economic downturn since the 1930s.

Tuesday?s ugly Q4 GDP release was the latest in a line of disappointing hard data releases for the UK.

British GDP shrank by 3.2 percent in the fourth quarter, compared with the equivalent October-December period in 2008.

Some commentators argued that Britain''s return to growth was skewed because temporary government measures had lifted GDP, particularly in the retail and car sectors.

Britain''s Office for National Statistics said Tuesday that the economy shrank 4.8 percent in 2009 -- the biggest annual contraction on record. The government had forecast contraction of 4.75 percent in 2009, followed by growth of 1.0-1.5 percent this year.

The economy has shrunk by 6.0 percent over the last six quarters.

The IMF, however, sounded a more positive note Tuesday, saying the global economy was making a stronger recovery than expected.

It projected growth of 3.9 percent in 2010 which would mark a dramatic turnaround from a 0.8 contraction last year, in an update of its twice-yearly World Economic Outlook report published on October 1.

UN: 27 million people became unemployed in 2009

Date Jan 27 2010 14:41:14 Source:Associated Press

DAVOS, Switzerland – Twenty-seven million people around the world lost their jobs in 2009, the U.N. labor agency said Wednesday, warning of a jobless recovery in a report released on the opening day of the World Economic Forum.

About 12 million of the newly unemployed were in North America, Japan and Western Europe, the International Labor Organization said. The jobless jumped by nearly four million in both Eastern Europe and Latin America, while unemployment rates were more stable last year in Asia, Africa and the Middle East.

The figures point to the need for a "global jobs pact" to boost employment around the world, the ILO said.

"Avoiding a jobless recovery is the political priority of today," ILO chief Juan Somavia said. "We need the same policy decisiveness that saved banks now applied to save and create jobs and livelihoods of people."

In an 82-page report, the Geneva-based agency said it expected unemployment to remain high through 2010, with perhaps an additional 3 million people in the rich world losing their jobs or unable to find employment as they enter the job market.

Not all the unemployed were fired from jobs. The ILO said youth unemployment has increased by over 10 million in the last two years, the worst surge since the agency began compiling global statistics in 1991.

To address the problem, the ILO wants governments to adopt a two-pronged approach of employment creation and better unemployment benefits, even if the latter may prove a disincentive for some people looking for jobs.

It said the global unemployment rate was 6.6 percent last year, but that the true scope of the problem was much worse because over 600 million workers and their families were surviving on less than $1.25 a day. Another 200 million were hovering just above the international poverty line.

And while many workers in the United States and rich nations may fret over their next paycheck, their conditions are invariably better than in other places in the world. The ILO said working conditions were deteriorating especially in areas of low labor productivity, such as sub-Saharan Africa.

The ILO timed its report for Wednesday''s start of the World Economic Forum''s annual meeting in Davos, where 2,500 business and political leaders will spend five days debating financial reforms, job creation strategies and other key elements of economic recovery.