US ECONOMY OUTLOOK IMPROVES TO 'CAUTIOUSLY POSITIVE' - The outlook for the US economy has become 'cautiously positive' with conditions stabilising from the deep recession, the Federal Reserve said in its Beige Book report last night. The report is published eight times a year, and is made up of anecdotal information based on interviews on current economic conditions in its 12 regional federal reserves districts. Most of the 12 areas said that there was some improvement in the residential property market, despite the fact that house prices continued to slip.
Art Hogan of Jeffries and Co in Boston, says he believes 'cautiously positive' means that the US economy is seeing a gradual improvement with the 'tone' of the survey improving from the previous one in July. Noting that the improvement is scattered and uneven, he adds that in general the improvement is ongoing. He says that analysts study the Beige Book for trends in the economy, rather than a snapshot of what is happening.
The analyst says the energy industry - basic materials and early cycle industrials - seem to be showing the early signs of improvement. He says this is a logical move at this time of the economic cycle. The other area of the US economy which is showing good signs of recovery is the technology industries, with improved conditions reported in the technology rich areas like Boston and San Francisco. Again, he says this is typical at this stage of an economy emerging from recession as industries become more reliant on new technologies to become more productive.
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MORNING BRIEFS - Lloyd Blankfein, the head of Goldman Sachs, says it is appropriate and understandable that there is public anger about excessive pay and executive bonuses paid out by financial institutions, and he said that guaranteed bonuses should be banned. This is coming from the boss of the firm which was criticised recently for setting aside billions of dollars to be paid out in bonuses. Many blame excessive bonuses for the short-term risk taking that helped bring about the financial crisis.
*** The Organisation of the Petroleum Exporting Countries, or OPEC agreed to keep oil output on hold after top exporter Saudi Arabia said high oil prices of above $71 a barrel meant there was no need for action. The Saudi Oil Minister Ali al-Naimi said the current price is being driven by economic recovery and as long as economic growth is here, the price is going to go up. But he said he did not expect a re-run of the rally to nearly $150 in July last year, which was followed by a crash to just above $32 a barrel in December.
*** After pushing through the key 5,000 level yesterday, and rising over 40% since March, the FTSE 100 is set to continue its move upwards. Overnight the US indices were higher, with the Nasdaq and the S&P ending at 11-month highs as investors welcomed a Federal Reserve report that indicated the economy there is stabilising. This morning the Hang Seng and the Nikkei are both up by about 2%.
*** On the currency markets the euro is trading at $1.4572 cents and 88.04 pence sterling.
