Tampa Bay Business Journal 7/14 (Tampa Bay Business Journal, July 14, 2010, “Small business optimism dips”, http://www.bizjournals.com/tampabay/stories/2010/07/12/daily32.html, LS)
A new survey from the National Federation of Independent Business shows that small business owners are becoming less confident in the economy. The group’s monthly Index of Small Business Optimism lost 3.2 points in June, falling to 89, after posting modest gains for several months.
The index has been below 93 every month since January 2008, and below 90 for 23 of those months, all readings typical of a weak or recession-mired economy. The survey, conducted throughout June, represents 805 small-business owner respondents. Seventy percent of the decline in June resulted from deterioration in the outlook for business conditions and expected real sales gains. Owners also have very little confidence that policies from the federal government will fix the economy. “The U.S. economy faces hurricane-force headwinds, and the government is at the center of the storm, making an economic recovery very difficult,” said William Dunkelberg, NFIB’s chief economist.
Economy’s down. Multiple indicators show declining growth and confidence.
Yesalavich and Russolillo 7/17 (Donna Kardos Yesalavich, reporter for Dow Jones Newswire, and Steven Russolillo, General Assignment Reporter at Dow Jones Newswires, 7/17/10, “Optimism Fades, as Do Stocks”, http://online.wsj.com/article/SB10001424052748704913304575370584279739608.html?mod=loomia&loomia_si=t0:a16:g2:r1:c0.0153682:b35798376, LS)
After resisting for much of the week, the stock marketfinally toppled under a barrage of disappointing economic news and mixed earnings reports. The Dow Jones Industrial Average on Friday sank 261.41 points, or 2.5%, to 10097.90, its lowest since July 7. It was the worst one-day selloff since June 29. The Nasdaq Composite Index fell 70.03 points, or 3.1%, to 2179.05, its lowest since July 8. The Standard & Poor's 500-stock index fell 31.60 points, or 2.9%, to 1064.88. Every Dow component was down. The least-bruised names were relatively defensive companies like AT&T and Procter & Gamble, each down about 1%. The worst performers were Bank of America and General Electric, down 9% and nearly 5%, respectively. Each reported second-quarter earnings that beat Wall Street forecasts, but also declines in revenue at an inopportune moment, just when the economy seems to be losing momentum. The latest evidence of that came from the University of Michigan, which reported its consumer-confidence index dropped in July to its lowest level since last August. Economists expected a much smaller decline.The report followed a string of downbeat data throughout the week, including a second consecutive monthly decline in retail sales, which caused research firm Macroeconomic Advisors to cuts its estimate of annualized second-quarter economic growth to 2.1% from 3.2%. Until Friday, the stock market had weathered the bad news, thanks to some solid earnings reports. Many observers had hoped that the market had put in its lows for the year during its late-June swoon. But Friday's selloff erased all of the gains the market had madeduring the week and left its future course again in doubt. The Dow ended the week down 1%. "There is a high likelihood that we'll see quite bit of weakness going into the end of the year and into 2011,"said Peter Cecchini, chief strategist at BGC Capital. "The S&P below 1000 by the end of the year would not be surprising to me." Financial shares were among the day's worst performers, defying expectations that the settlement of the government's civil case against Goldman Sachs Group and passage of financial-regulatory overhaul would lift the clouds hanging over the industry. Citigroup and Wells Fargo each fell about 6%, though Goldman shares rose 0.7%. Google shares tumbled 7% a day after the tech bellwether reported disappointing results. Market-anxiety indicators edged up. The cost of protecting against an investment-grade corporate-bond default rose nearly 5%, according to Markit. The Chicago Board Options Exchange volatility index, or VIX, rose more than 4%. Treasury debt again benefited from a flight to safe-haven assets. As prices rose, the 10-year Treasury yield dropped to 2.943%, the lowest since July 6. The two-year-note yield held steady at a record low. Gold prices fell, however, losing more than 1% to retreat below $1,200 a troy ounce. Crude-oil prices fell 61 cents, to $76.01 a barrel.
High – general
South Korean regional economy stays strong—growth forecast jumps to 5.8 percent
Wassener 7/9 (Bettina—writer for The New York Times, former correspondent for the Financial Times and BusinessWeek, Germany News Editor for CNBC Europe, analyst for a political and security risk consultancy, and emerging markets reporter for a business newswire; MSc in European politics and a BSc in International Relations from the London School of Economics, “With Its Economy Strong, South Korea Raises Rates,” 7/9/10, http://www.nytimes.com/2010/07/10/business/global/10won.html?src=mv)
HONG KONG — Barring any surprises, interest rates in the United States and much of Europe look set to stay steady until next year. But in fast-growing Asia, the cost of borrowing has begun to creep up again. Foreign currency dealers at the Korea Exchange Bank. South Korea on Friday became the latest country to raise interest rates from the lows of the financial crisis, joining a host of others in the region in gradually normalizing borrowing costs. The increase was slight — the benchmark seven-day repurchase rate was nudged up by a quarter of a percentage point, to 2.25 percent — but the timing surprised many analysts, who had not expected the Bank of Korea to act until next month. Less than 24 hours earlier, the central bank in Malaysia also staged a quarter-point rate rise — its third this year — again surprising observers, who had mostly forecast no further move for the time being. The overnight policy rate in Malaysia now stands at 2.75 percent. And the previous Friday, India announced an unexpected rate increase, its third this year. Vietnam, Taiwan, New Zealand and Australia also have started to return rates toward more normal levels, in Australia’s case with a string of increases that started last October. Collectively, the moves are testimony to the region’s economic strength. The Asia-Pacific region was spared major banking failures, and its governments and households are far less indebted than those in Europe and America. That, along with stimulus spending and sharply lower interest rates last year, allowed the region to escape the global downturn relatively unscathed, despite a sharp decline in exports as global demand plummeted in 2009. As a result, the region’s developing countries could see growth of 9.2 percent this year, according to the International Monetary Fund’s latest projections, published this week. That compares with 3.3 percent and 1 percent, respectively, for the United States and Europe. South Korea last month raised its official growth forecast for 2010 to 5.8 percent, from 5 percent. Fast growth has brought inflation pressures, which the region’s central banks are seeking to combat with their gradual rate increases. The Bank of Korea said Friday that although the economy was on track for solid growth, inflation threats were set to mount. “Consumer price inflation has so far remained in a range of somewhat above 2 percent but a little below 3 percent,” the central bank said in a statement accompanying its rate decision. But it added that “upward pressures are expected to build continuously” because of the continued upturn in economic activity. The bank pledged to maintain an “accommodative policy stance” to aid the economic recovery, but some analysts projected further small increases could be in the offing. “Pending the release of further guidance, we are inclined to keep our call for an August rate hike, for now,” commented Wai Ho Leong, a regional economist at Barclays Capital in Singapore, in a note, citing the central bank’s apparent concern with inflation, and continued strong growth.