- 22, 2001
Bush fleshes out $2 trillion budget
US President George W. Bush on Monday reveals the details of
his nearly $2 trillion budget request for fiscal 2002, featuring cuts in areas
including police hiring and a renewed call for a $1.6 trillion tax cut.
White House officials said the budget would maintain Bush's
proposed 10-year, $1.6 trillion tax cut, which the Senate rejected on Friday in
favuor of a $1.2 trillion compromise proposal that includes an additional $85
billion for an immediate tax stimulus this year.
That ($1.6 trillion) is what the president thinks is the
right amount to have as a tax cut, and that's what he is going to present to the
Congress in his detailed budget, White House budget office spokesman Chris
Ullman told Reuters on Sunday.
The $1.9 trillion fiscal 2002 budget will be released on
Monday. It provides line-by-line details to flesh out a budget outline Bush
proposed on Feb. 28, less than six weeks after taking office. The 2002 fiscal
year begins on Oct. 1, 2001.
The budget seeks to limit the growth in discretionary
spending to 4 per cent, or $26 billion, compared with 8.7 per cent in fiscal
Among the most notable cuts is a scaling back of former
President Bill Clinton's pet programme to hire 100,000 new police officers, and
changes in health programmes for the poor and uninsured, as Bush reshapes
assistance in this area to tax credits.
But White House officials said they were not taking a big
axeDaniels told Reuters on Thursday. We didn't propose to zero out any
department. There are no major reductions anywhere.
While critics will pore over the budget looking for cuts,
Daniels said. The examples that have so far emerged, they are almost laughably
Clashes at Turkish crisis rally
Turkish police have used batons, water cannons and tear gas
as violence broke out at a huge demonstration over the country's financial
A group of protesters broke away from the 50,000
demonstrators gathered in Ankara's Tandogan Square and threw stones and sticks
at police before attempting to storm the parliament.
The protesters, who were mainly small trade businessmen, were
calling for the resignation of Prime Minister Bulent Ecevit and his government
amid accusations of economic mismanagement.
A number of people were injured in the demonstrations, the
biggest and most turbulent since Ecevit's public disagreement with his
president, Ahmet Necdet Sezer, in February sparked the financial crisis.
The Turkish lira collapsed, falling by 45 per cent against
the dollar, and an $11 billion International Monetary Fund reform plan had to be
abandoned after the currency was floated.
The government is currently renegotiating a package, and new
economic chief Kemel Dervis is expected to announce a new economic programme at
the end of the week.
The government announced plans to ease the burden on small
traders on Monday, including an extension of the period in which to apply for
phased payments of unpaid taxes and to keep interest rates on loans from the
state-run Halkbank at pre-crisis levels.
Turkey's military said on Wednesday it had postponed 32
modernisation projects worth $19.5 billion to try to ease the financial crisis,
NTV television said.
The spending plans of the military, NATO's second largest,
include purchasing 1,000 tanks and 145 attack helicopters.
The protests are being led by tradesmen and small business
owners angry at soaring prices, rising unemployment and the collapse of
businesses in Turkey. Trade unions have called for further demonstrations on
EU, U.S. end banana row
The United States will lift $191 million in sanctions on
European Union exports under an agreement to end a long-running trans-Atlantic
banana war, the EU said Wednesday.
The agreement should end an eight-year row over the EU's
banana import rules, which Washington says favour growers in EU territories and
former European colonies in the Caribbean over Latin American producers and U.S.
marketing companies such as Chiquita Brands International (CQB: Research,
Estimates) and Dole Food Co. (DOL: Research, Estimates).
On July 1, the United States will suspend punitive duties it
imposed on $191 million of EU exports in 1999 after it won a World Trade
Organization case against the EU's banana import rules. The sanctions have hit
European goods ranging from handbags, cardboard boxes, bed linen and batteries.
ECB holds interest rates
The European Central Bank on Wednesday left its key interest
rate unchanged at 4.75 per cent.
The ECB, the guardian of the euro, has been holding out on a
rate cut, even as central banks in the UK, U.S. and Japan lowered the cost of
borrowing in recent months.
Officials from the European Central Bank, which sets interest
rates for the 12 nations that make up the eurozone, had been giving mixed
signals, leading many analysts to forecast a cut in interest rates as early as
Bundesbank President Ernst Welteke on Tuesday said in the
foreword to the Bundesbank's annual report that eurozone monetary policy was not
restrictive and that he favoured "a steady hand policy" on rates.
Other bank officials had expressed concern that eurozone inflation remains above
its 2.0 per cent target.
But Bank of France governor Jean-Claude Trichet, meanwhile,
had said that there is less upward pressure on prices.
Singapore cuts GDP forecast
Singapore has been forced to slash its full-year economic
forecast for 2001 as the worsening global economic slowdown hits its
In its flash estimate for first quarter gross domestic
product growth issued on Tuesday, the Ministry of Trade and Industry surprised
market observers with a figure of 4.6 per cent year-on-year growth in the first
The Singapore dollar was at 1.8147 late on Tuesday, having
fallen to a one-week low of 1.82 on the growth data earlier.
The stock market largely shrugged off the lower growth
estimates to focus more on the U.S. earnings reporting season. The key share
index ended the day up 10.17 points at 1605.12.
Despite the muted immediate reaction to the Tuesday figures,
stock market analysts expect further weak data in coming months to weigh on the
bourse, which is at its lowest level in more than two years.
Chips keep Tokyo on a high
Tokyo stocks ended higher for a second straight day on
Thursday, powered by Advantest Corp and other chip-related firms after a rally
in their U.S. peers.
The benchmark Nikkei average finished 1.35 per cent, or
177.51 points, higher at 13,352.44, after jumping 2.11 per cent earlier in the
session. The capital-weighted TOPIX index gained a more modest 0.82 per cent, or
10.60 points, to 1,301.33.
Elsewhere in the region, markets in Korea, Australia, Hong
Kong and Taiwan all ended higher.
In Hong Kong, the Hang Seng index ended 283.04 points higher
at 12989.47, with modest gains across the board.
In Australia, the benchmark S&P/ASX200 was up about 0.5
per cent, gaining 17.2 points to 3276.8. Bluechip BHP and retailers Coles and
Woolworths made gains, while leading telco Telstra ended the day unchanged at
Nasdaq shines on Wall St.
The Nasdaq composite index capped off its best week this year
Thursday as investors shrugged off three economic reports and went on a buying
spree, betting the worst may be over.
The Nasdaq composite index gained 62.46, or more than 3 per
cent, to 1,961.41. The indicator is up 241 points, or 14 per cent, for the week.
From the start of the year, the Nasdaq is still down more than 20 per cent.
And the Dow Jones industrial average surged 113.47, or more
than 1 per cent, to 10,126.94. The blue chip index is up 335 points, or 3.4 per
cent, for the week. From the start of the year, the Dow is down 6.1 per cent.
The Standard & Poor's 500 gained 17.62 to 1,183.51 and is
up 55 points, or 4.8 per cent, for the week. From the start of the year, the
S&P is down 10 per cent.
A $300 million World Bank poverty reduction loan due to be
released to Indonesia at the end of last year, will not be disbursed as most of
the projects it was earmarked for have ended , a Bank official said on Thursday.
It was a joint decision between Indonesia and the World Bank
and was made because the loan was linked to a number of programmes that ended on
December 31, 2000, the official, who declined to be identified, told.
Oil firms sign gas deal
Three foreign oil companies signed production sharing
contracts (PSC) for a prospective gas block in Bangladesh on Wednesday after
protracted negotiations, energy officials said.
They said Chevron Corp and Texaco Inc of the United States
and Tullow Oil Plc of Ireland signed the deal for Block 9 with Petrobangla,
Bangladesh's state-owned oil and gas company giving them a 30-per cent stake
each. The remaining stake was owned by state-owned Bangladesh Petroleum
Exploration Company (BAPEX).
Mergers & Acquisitions
DBS—Dao Heng: Singapore-based DBS Group will buy a
controlling stake in Dao Heng Bank in a deal that values the Hong Kong bank at
Crown—Hallmark: Crown Media Holdings Inc. said Thursday
it plans to acquire a majority of the titles in Hallmark Entertainment Inc.'s
film library for about $820 million.
Volvo —Mitsubishi: Swedish carmaker Volvo confirmed on
Wednesday it would sell its 3.3 per cent stake in Japanese car maker Mitsubishi
Motor Corp. to DaimlerChrysler AG for $297 million.
SocGen—TCW: French bank Societe Generale said on
Wednesday it was buying 70 per cent of California fund manager TCW Group to give
it global reach in the asset management business.
Napster—Gigabeat: Internet song-swapping service
Napster said Tuesday it has acquired the technology of Gigabeat to add new music
search and indexing features to Napster's service.
AIG—AGC: Prudential PLC vowed Tuesday to remain in the
race for American General Corp., even as American International Group was set to
begin merger talks with AGC that will pave the way for a $23 billion takeover.
Kana—Broadbase: E-business software maker Kana
Communications Inc. and Broadbase Software Inc. on Monday announced a definitive
merger agreement valued at about $75.8 million in stock.
Calif.—Edison: California Governor Gray Davis and
Southern California Edison reached an agreement Monday on the state's bid to buy
the cash-strapped utility firm's transmission lines for $2.76 billion.
ABB—Entrelec: Swiss-Swedish engineering group ABB said
it offered 310 million euros ($280 million) to acquire French factory automation
GE—NBCi: General Electric Co. said Monday it is buying
the portion of Internet portal NBCi that it does not already own for $85
Powergen—E.ON: German utility E.ON has made an agreed
bid for its British counterpart Powergen, valuing the UK company at 15 billion
euros ($14 billion).
Swiss Sulzer—InCentive Capital: The battle for
Switzerland's Sulzer intensified on Monday as the engineering group urged
shareholders to reject a hostile bid by Swiss investment company InCentive
Treasurys fall again
Shorter-dated U.S. Treasury bond prices fell for a fourth
straight day Thursday as investors, shrugging off a slew of economic reports
pointing to a weakening economy, sold bonds and bought technology stocks.
Two-year Treasury notes were down 5/32 to 99-24/32, yielding
4.38 per cent. Five-year notes finished 9/32 lower at 104, yielding 4.77 per
cent, for a 0.30 per centage point, or 30 basis point, rise on the week.
Benchmark 10-year notes ended down 9/32 to 98-24/32, yielding 5.16 per cent, up
27 basis points on the week. Thirty-year Treasury bonds rose 4/32 to 96-20/32,
yielding 5.61 per cent, but their yield rose 15 basis points since last Friday.
Mortgage rates inch higher
Long-term mortgage rates were slightly higher this week as
market sentiment remains poised in anticipation of the release of key economic
data next week. One-year adjustable rate mortgages (ARMs) took a fall, dipping
to a one-year low.
The benchmark 30-year fixed-rate mortgage (FRM) averaged 7.04
per cent for the week ending April 13, slightly higher from last week's average
of 7.01 per cent. The average this week for a 15-year fixed-rate mortgage was at
6.55 per cent, up from the previous week's average of 6.54 per cent. One-year
adjustable rate mortgages (ARMs) hit a one-year low since October 1, 1999,
averaging 6.15 per cent, down from last week's average of 6.23 per cent.
Europe markets close mixed
Europe's main markets ended mixed in lacklustre trade
Thursday ahead of the holiday weekend.
London's benchmark FTSE 100 index fell 0.4 per cent, or 20.8
points, to touch 5,767.3, with network service provider Dimension Data (DDT) and
software maker Logica (LOG) the top two decliners.
In Paris, the blue-chip CAC 40 gained 0.3 per cent, or 14.65
points, to reach 5,376.18, with consumer electronics firm Thomson Multimedia
(PTMM) and the world's largest biscuit maker Danone (PBN) leading gainers.
Frankfurt's electronically traded Xetra Dax rose 0.5 per
cent, or 28.62 points, to 5,979.78, with sporting goods firm Adidas Salomon
(FADS) top of the leader board.
Amsterdam's AEX index slipped 0.2 per cent, Zurich's SMI was
up 0.2 per cent and Milan's MIB30 rose 0.5 per cent.
The broader FTSE Eurotop 300 index, a basket of Europe's
largest companies, fell 0.28 per cent.
Jobless claims rise
The number of new jobless claims in the United States rose to
its highest level since March 1996, the government reported Thursday, with the
figure topping economists' forecasts.
The U.S. Labor Department said 392,000 new claims for state
unemployment benefits were filed in the week ended April 7, up 9,000 from
383,000 in the prior week.
Biogen: Biogen Inc., reported earnings of $72 million, or
47 cents a share, compared with a profit of $64.7 million, or 41 cents a share,
a year earlier.
Juniper: Network equipment maker Juniper Networks Inc.
said its pro forma net income rose to $85.4 million, or 25 cents a share, from
$10.5 million, or 3 cents a share, a year ago.
Abbott Labs: Abbott Laboratories met first-quarter
earnings expectations Thursday. The company earned $734.9 million, or 47 cents a
share, excluding one-time charges related to the acquisition.
Willamette: Willamette Industries Inc., reported Thursday
that first-quarter earnings fell 21 per cent. Net earnings were $66.6 million,
or 61 cents per diluted share, down from $85.3 million, or 76 cents a share, in
the year-ago quarter.
Pepsi: Pepsi Bottling Group Inc. earned $26 million, or
17 cents per share, for the quarter, ended March 24 — in line with the high
end of analysts' expectations and compared with a profit of $17 million, or 11
cents a share, a year earlier.
Safeway: No. 3 U.S. grocery chain Safeway Inc. reported a
17 per cent increase in first-quarter earnings. Net income in the quarter ended
March 24 rose to $283.9 million, or 55 cents a diluted share, from $241.9
million, or 48 cents a diluted share, a year earlier.
Tesco: The UK's largest food retailer Tesco on Tuesday
posted annual pretax profits above the 1 billion pound ($1.4 billion) mark for
the first time. The supermarket chain said profit before tax for the year ended
February 24 rose 13 per cent to £1.05 billion from £933 million last year.
U.S. import prices tumble
U.S. import prices took their sharpest plunge in over eight
years in March as costs for both imported oil and other products fell, the
government said Wednesday.
The Labor Department said import prices fell 1.6 per cent in
March — the largest decline since a 1.7 per cent drop in December 1992 —
after a revised 0.6 per cent fall in February. Economists polled by Reuters had
expected a modest 0.2 per cent drop in March import prices.
German economic call
German Finance Minister Hans Eichel has said his government
will push for coordinated action by "European and international
forums" to overcome a slowdown in the world economy.
Eichel, who was reacting to a cut in a forecast for German
growth by the country's six leading economic institutes, called for action
"as soon as possible".
He did not elaborate, however, on what kind of action Germany
wanted to see.
The six earlier said they now expected Europe's largest
economy to grow by 2.1 per cent this year, compared with an earlier forecast of
2.7 per cent.