Interest Rate Cuts

BorgWarner Sees Robust China Growth – Analyst Blog

Filed in Gold Prices, Interest Rate Cuts, silver by on March 23, 2010 0 Comments

BorgWarner Inc. ( BWA ) expects that it will be able to sustain its 2000−2009 compound annual sales growth of 45% till at least 2014 in China . This was driven by the government’s policy aimed at promoting the automotive sector. In 2009, China’s auto sales surpassed that of U.S. by growing 45% to 13.6 million units, driven by government incentives such as sales tax and interest rate cuts as well as subsidies to trade in older cars. A faster economic recovery has also helped the world’s biggest auto market to uphold its position. Sales in the U.S. fell 21% to 10.4 million vehicles in 2009, which was a 27-year low. BorgWarner generates about 12% of its global sales in China. The company expects the ratio to go up to 15% by 2014, about half of its expected sales in Asia . Asia contributed 23% of the company’s global sales in 2009. BorgWarner has an ever-growing clientele in China in addition to its global clients such as General Motors, Ford Motor ( F ) and Volkswagen AG. Its clientele in China includes SAI C Motor Corp, FAW Group and Chery Automobile. BorgWarner reported a profit of 42 cents per share (before special items) in the fourth quarter of 2009 compared to a breakeven result in the prior-year quarter. The profit was double the Zacks Consensus Estimate of 21 cents per share and was driven by the sales growth and the lean cost structure of the company. The automotive components manufacturer anticipates sales to grow 15%–19% in 2010, while earnings are expected in the range of $1.40–$1.70 per share. A recovery in North America along with a strong growth in the Asian businesses driven by higher production levels and new program launches in China, India, Korea and Japan are expected to drive growth for the company. Read the full analyst report on “BWA” Zacks Investment Research

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Today in Russian Business – Feb 19, 2010

Filed in Gold Prices, Interest Rate Cuts, silver by on February 19, 2010 0 Comments

On the decline of Rusal’s shares following its January IPO. Efforts by the ‘Innovation Delegation’ of officials and executives from the US to meet with Russian officials have suffered traffic delays and scheduling problems. The New…

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Are Russia’s Consumers Getting “Carried Away” With Themselves?

Are Russia’s Consumers Getting “Carried Away” With Themselves?

blockquote“Cutting rates by 50 basis points here and there is not going really diminish the appeal of the ruble,” said Manik Narain, an emerging markets strategist at Standard Chartered Bank Plc in London. “In terms of nominal interest rates Russia (at 9% as of 24 November) is still offering the highest yields in the emerging market space and in an environment where oil prices are remaining relatively well supported we think that the ruble will continue to be seen as an attractive way to position for global recovery,” /blockquotepbr /The world’s central banks are having a hard time of it these days, having just gotten through the worst banking and financial crisis in living memory they now face a growing dilema between continuing to give support to the developed economies (which are yet to recover from those early hammer blows) and the danger of creating fresh global asset price bubbles in emerging economies, asset bubbles which could easily be being fuelled by low US interest rates and a weak dollar. The latest warning in this respect comes not from Nouriel Roubini (or even from me, a href=”http://fistfulofeuros.net/afoe/economics-country-briefings/the-dollar-as-a-funding-currency/”but see this post/a, and a href=”http://www.forexblog.org/2009/11/interview-with-edward-hugh-the-dollars-demise-is-vastly-overstated.html”this recent interview I gave on Forex Blog/a), rather it emmanates from Germany’s new finance minister, Wolfgang Schäuble. His comments – which were a href=”http://www.ft.com/cms/s/0/4ec41a1a-d616-11de-b80f-00144feabdc0.html”cited in last Saturday’s Financial Times/a – highlight official concern in Europe that the exceptional steps taken by central banks and governments to combat the crisis carry with them a series of undesireable side effects.br /br /Such openly expressed concerns only add further weight to a href=”http://www.ft.com/cms/s/0/85f1fac2-d1dc-11de-a0f0-00144feabdc0.html”recent statements made in China/a, where only a week ago the banking regulator Liu Mingkao explicitly criticised the US Federal Reserve for indirectly fuelling the “dollar carry-trade” – a process whereby investors borrow dollars at ultra-low interest rates in the United States and the invest them in higher-yielding assets abroad.br /br /Wolfgang Schäuble went even further, saying it would be “naive” to assume the next asset price bubble would look just like the last one. “More likely today is a scenario in which excess liquidity globally creates a new [sort of] asset market bubble.” he said, and the fact “ that low interest rate currencies such as the US dollar increasingly being used as a basis for currency carry trades should give pause for thought. If there was a sudden reversal in this business, markets would be threatened with enormous turbulence, including in foreign exchange markets.”br /br /As I argued in my last post on the carry trade, the danger of a short term sudden reversal may be being overstated at this point, since exit from emergency life support will be at best slow and measured in the United States, while ample funding will continue to remain available in Japan, where the central bank a href=”http://www.ft.com/cms/s/0/c3a3be3e-d608-11de-b80f-00144feabdc0.html”has now formally recognised that the economy is once more back in deflation/a (officially it exited in 2006, and the Bank did manage to summon…

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