15 - 21, 2001
US lifts ban on computer export
US President Bill Clinton has decided to ease controls on
high-performance computer hardware exports because technological progress has
made such restrictions largely ineffective, the White House said on Wednesday.
The decision will allow a number of countries, including
Pakistan, India, former Soviet Union countries, China, Vietnam, and many Middle
Eastern nations to import computers under 85,000 MTOPS (millions of theoretical
operations per second) without licence.
Currently, the United States restricts acquisition of such
technology by rivals or foes by limiting exports of high-performance computers
to certain countries.
Nations classified as Tier 1 nations, including US allies
such as Japan and Western Europe, face no restrictions, while Tier 4 countries,
whose governments allegedly sponsor terrorism, face a virtual embargo on
Tiers 2 and 3 face licensing requirements based on a measure
of computer performance called MTOPS.
But this method is "already ineffective and it will be
increasingly so within a very short time frame" due to the easy
availability of high-performance computers from non-US sources, White House
chief of staff John Podesta said.
So the US administration will loosen the standard on hardware
— the sixth such easing since 1993 — but beef up restrictions on
"critical software applications, such as nuclear, military, (and) radar
cross-section applications," said Podesta.
"Software cannot be produced overnight," emphasized
Deputy Defence Secretary Rudy DeLeon, who said the decision came after a review
undertaken in 1999.
"With this revised strategy, we will ensure that those
high performance computing capabilities that are critical to the national
security of the United States continue to be effectively protected," he
Germany grew 3.1% in 2000
The German economy grew 3.1 per cent in 2000 as the euro's
weakness and strong demand for its exports fuelled its fastest expansion in a
The growth rate was at the upper end of the range of
economists' forecasts, which averaged 3.0 per cent.
"The economic conditions for a continuation of the
upturn remain favorable," the German finance ministry said in a statement
Thursday as it published the official figures.
"At the same time the momentum is likely to lessen
slightly this year due to the weakening of foreign demand, the fading effects of
the euro's weakness and tight monetary policy in Europe," the ministry
The ministry said German tax cuts, which took effect at the
start of 2001, are kicking in at the right time to sustain economic growth.
The ministry offered no data on the performance of Europe's
biggest economy in the final quarter of 2000, but recent data suggest growth
started slowing toward the end of the year.
"If you look at the 3.1 per cent rate for the full year,
this implies a fairly strong fourth quarter, which doesn't fit at all with the
data we have so far, so they must have revised earlier quarters," said
Ralph Solveen, an economist at Commerzbank.
"We still expect the fourth quarter to be somewhat
weaker than the third quarter, because private consumption didn't develop too
"We assume the first half of 2001 will be stronger than
the second half of last year, as tax reform and oil price declines have their
effect. But there also will be a tendency toward dampening later, from weakness
in the U.S. and a strengthening euro."
Many forecasters are predicting 2001 growth of between 2.5
per cent and 2.7 per cent.
Exports grew 12.9 per cent last year, more than double the
5.1 per cent increase seen in 1999. Imports were up 10 per cent, accelerating
from a growth rate of 8.1 per cent in 1999.
Three-day rally for Nasdaq
The Nasdaq composite index surged more than 4 per cent
Thursday, as technology stocks were snapped up amid investor belief that much of
the negative news about profit growth has been factored into the sector.
The Nasdaq composite index rallied 116.39 to close at
2,640.57. But the markets could be setting up for a rough opening — after the
On the New York Stock Exchange, advancers beat decliners
1,646 to 1,256, as more than 1.35 billion shares were traded. Winners topped
losers on the Nasdaq 2,753 to 1,159, as more than 2.8 billion shares changed
In other markets, Treasury securities were mixed. The dollar
fell against the euro but rose versus the yen.
Asian markets rise
Gains on the U.S. Nasdaq in conjunction with specific,
national issues helped spark momentum for markets in Asia by midday Friday.
In Tokyo, the Nikkei 225 was up 1.45 per cent at 13,392.38.
In Hong Kong, the Hang Seng Index was trading up one per cent at 15,243.40.
The benchmark Nikkei 225 average was up 191.31 points at
13,392.38, while the broader TOPIX index rose 9.21 points or 0.75 per cent to
1,239.31. Blue-chip technology stocks advanced broadly, encouraged by gains in
their U.S. counterparts.
In Hong Kong, the Hang Seng Index was trading up one per cent
The Taiwan Weighted Index was down 59.97 points, or 1.12 per
cent, to close at 5,309.27.
The South Korea KOSPI rose 3.47 per cent, or 19.48 points, to
581.27 in early trade. Hyundai Motor rose 550 won to 12,650. SK
Australian shares climbed in early trade on Friday. The
benchmark ASX/S&P 200 index was 17.6 points, or 0.55 per cent, higher at
3,243.2 in early trade.
Tech lift revives Europe
Europe's markets closed higher Thursday as telecom stocks
rallied in London and Frankfurt's index got a lift from banks and continued
gains for software maker SAP.
London's benchmark FTSE 100 index closed up 55 points, or 0.9
per cent, at 6,114.9.
In Paris, the blue-chip CAC 40 also ended up 0.9 per cent,
rising 49.43 points to 5,702.78.
In Frankfurt, the Xetra Dax closed up 145.14 points, or 2.3
per cent, to 6,465.21.
In other European markets, Amsterdam's AEX index added 1.1
per cent, and Zurich's SMI gained 0.2 per cent. In Milan, the MIB30 rose 1.6 per
The broader FTSE Eurotop 300 index, a basket of Europe's
largest companies, rose 0.95 per cent, with the technology hardware sub-index
climbing 4.3 per cent thanks in part to a 6.4-percent gain for Finnish mobile
phone maker Nokia and a 7.1-percent gain for Swedish rival Ericsson.
Mergers & Acquisitions
GlaxoWellcome—Smithkline Beecham: Nearly four years
after Glaxo married Wellcome — the drug giant GlaxoWellcome ultimately
completed its merger deal with Smithkline Beecham plc in the UK, just before the
dawn of the new year. This has gone to create GlaxoSmithKline plc billed as
"one of the world's leading research-based pharmaceutical and healthcare
AOL—Time Warner: America Online and Time Warner
consummated their multibillion-dollar merger Thursday after the Federal
Communications Commission gave it conditional approval — clearing the way to
combine their vast print, television, movie and Internet holdings into the
world's largest media company.
The decision, more than a year after the deal was announced,
represented the final hurdle to creating a company with more than $34 billion in
annual revenues and a wealth of brand name properties such as Time Magazine,
Warner Brothers film studio, CNN and the AOL Internet service.
UPS—Fritz: In a move to expand the international
services it can offer customers, United Parcel Service Inc. said Wednesday it
will acquire Fritz Cos. Inc., a freight forwarder and customs broker, for about
$450 million in UPS stock.
Chase—Advanta Corp.: Chase Manhattan Mortgage Corp.
signed a definite agreement Monday to purchase Advanta Corp.'s $16 billion
mortgage business, significantly bolstering a loan servicing business that
already is one of the nation's largest.
Lafarge—Blue Circle: France's Lafarge agreed to buy
rival cement maker Blue Circle in a £4.8 billion ($7.2 billion) transaction
Monday, resuscitating a deal that died last year.
Zero GDP growth seen
The U.S. economy will stop growing in the first quarter of
this year, breaking its record decade-long expansion, Credit Suisse First Boston
(CSFB) and Banc of America Securities forecast this week.
CSFB slashed its gross domestic product (GDP) forecast late
Wednesday for the first quarter from 2.2 per cent growth to zero. Banc of
America Securities, meanwhile, chopped its forecast to -0.2 per cent from 1.7
per cent for the first three months of 2001.
The two firms joined investment banks Goldman Sachs and
Morgan Stanley Dean Witter and New York research firm ISI Group, which earlier
this week also predicted an end to the U.S. expansion by the first quarter.
Morgan Stanley last Monday went one step further and forecast
a full-blown recession — defined as two successive quarters of economic
contraction — in the first half of 2001.
U.S. Treasurys dip
Treasury bonds were lower Thursday, as new corporate debt
sales and a third day of gains in technology stocks led investors away from
Two-year Treasury notes were up 1/32 to 100-22/32, yielding
4.75 per cent. Five-year notes were even at 103-29/32, yielding 4.83 per cent.
Benchmark 10-year notes fell 5/32 to 104-22/32, yielding 5.12 per cent, while
30-year bonds dropped about 24/32 to 110-4/32, yielding 5.55 per cent.
Mortgage rates drop
Long-term mortgage rates fell this week to their lowest point
since April 1999, driven down by continuing signs of a weakening economy and
expectations that the Federal Reserve will soon cut interest rates again.
The 30-year fixed-rate mortgage (FRM) averaged 6.89 per cent,
with an average 0.9 point, for the week ending Jan. 12, 2001.
The average for the 15-year fixed-rate mortgage is 6.49 per
cent this week, with an average 0.9 point.
The rate for one-year Treasury-indexed adjustable-rate
mortgages (ARMs) averaged 6.65 per cent this week, with an average 0.9 point.
Asian free trade zone
Chinese Finance Minister Xiang Huaicheng has called for the
creation of an Asian free trade zone during a speech here, newspaper reports
said on Thursday.
Xiang said the zone should include the 10 members of the
Association of Southeast Asian Nations (ASEAN), as well as China, Japan and
Korea, The Nation newspaper reported him saying in a speech at the Bangkok Bank
Asian countries should follow the example of the European
Union and the North American Free Trade Agreement and integrate their economies,
U.S. import prices fall
Prices of U.S. imports fell modestly in December as a sharp
fall in the cost of oil more than offset price increases elsewhere, the
government said Thursday.
Import prices fell 0.5 per cent in December after a 0.1 per
cent gain in November, the Labor Department said in a report which economists
had expected would show a 0.2 per cent fall in import prices.
Import prices fell as the price of petroleum imports tumbled
9.3 per cent. Excluding petroleum, import prices rose a strong 0.9 per cent in
December after a 0.1 per cent dip in the previous month. Meanwhile, export
prices dropped 0.1 per cent in December after being unchanged in November.
U.S. jobless claims drop
The number of Americans filing new claims for unemployment
benefits fell to 345,000 for the week ended Jan. 6 from a revised 381,000 the
prior week, the government reported Thursday.
U.K. rates held at 6%
The Bank of England opted to leave its key interest rate
unchanged at 6 per cent Thursday for the 11th straight month, as expected.
Despite recent indications of slowing growth in the U.K.
economy, the bank decided to stay its hand, maintaining the longest run of
unchanged interest rates since it took on the independent authority for British
monetary policy nearly four years ago.
The news boosted the London stock market, helping the
benchmark FTSE 100 index tick up several points. Just after the announcement the
index was 0.8 per cent up from Wednesday's close at 6,100.9. Sterling was almost
unchanged against the dollar at $1.4970.
U.K. inflation has remained consistently below the bank of
England's 2.5 per cent target ceiling — it currently stands at 2.2 per cent
— giving the monetary authority freedom to maneuver.
The European Central Bank recently decided to leave its key
rate unchanged at 4.75 per cent.
ATI Tech: Graphics chip maker ATI Technologies said its
operating profit for the quarter was $11.8 million, or 5 cents per share.
Motorola: Motorola Inc. said it logged an operating
profit of $335 million, or 15 cents per share, during the quarter ended Dec. 31,
2000. That compares with operating earnings of 26 cents per share during the
same period a year earlier. Motorola's total revenue for the quarter was $10.1
Japan boosts chip output
Three top Japanese electronics companies unveiled plans
Wednesday to reinforce their semiconductor businesses, betting that demand will
remain strong for specialized chips.
Mitsubishi Electric Corp said it will build a new plant, NEC
Corp. said it will spin off a high-speed chip division, and Matsushita Electric
Industrial Co. Ltd. said it will absorb a chipmaking subsidiary.
Apple unveils new Macs
Apple Computer remedied a key deficiency in its product line
Tuesday by introducing faster Power Mac models with a drive that consumers can
use to create their own CDs.
The new Power Mac G4 line includes machines with processor
clock speeds of 466, 533, 667 and 733 MHz. The 466 and 533 models are available
immediately, while the other two will be available in February, Apple said.