| Faster economic growth seen in 2nd quarter The Philippine economy was estimated to have grown faster in the second quarter than the 4.9-percent recorded in the first three months due to increased government spending and better performance of the financial market. Deputy Governor Diwa C. Guinigundo of the Bangko Sentral ng Pilipinas told reporters that the second quarter was also not beset by factors seen in the previous three-month period, notably the political turmoil in the Middle East and North Africa as well as the earthquake and tsunami in Japan. “Also, I think because of the carryover [from 2010] of the adjustment pains of the Aquino administration, there was modest spending in the first quarter of 2011,” Guinigundo said. “In the second quarter, based on the testimony of the Department of Budget and Management at the budget hearing [in Congress], there was a catch-up spending going through the second half of the year.” Guinigundo added that monetary authorities noticed in the second quarter that the inflow of foreign capital going into the stock market and bond market was supportive of growth. “Remittances from overseas Filipinos continued to be resilient in the second quarter and the business process outsourcing industry also contributed to more inflows,” Guinigundo said. BSP documents showed that remittances coursed through banks in June reached a record monthly high of $1.7 billion. This brought the cumulative remittances during the first semester to $9.6 billion, an increase of 6.7 percent over the same period last year. “All told, I think these developments will point to a better turnout in the output performance of the economy for the second quarter,” Guinigundo said. As early as May, market watcher Barclays Capital said it was maintaining its full-year growth forecast of 5 percent for the Philippines despite the first-quarter performance settling lower than the 5.1 percent it expected. Even then, the investment bank said in a research note that first-quarter GDP grew 1.9 percent compared with the previous quarter. This was “above expectations of 1.6 percent and compared with 0.3 percent previously.” On the other hand, New York-based think tank GlobalSource Partners said the Philippine economy would still grow 4.8 percent this year despite an expected “increased lethargy” in the second quarter. GlobalSource cited data on leading economic indicators from the National Statistical Coordination Board, which hinted at slower economic activity in the second quarter. |
| Stocks: Fear takes center stage NEW YORK (CNNMoney) -- Nervous investors hoping for a reprieve this week will be disappointed. The past month has been nothing but a disaster for stock market investors. The S&P posted its biggest four-week loss since March 2009. Meanwhile, safe haven plays like gold and U.S. treasuries have soared, with gold hitting a new record high day after day. This week will be fairly quiet as far as scheduled economic and company events, but fears about the U.S. possibly heading into another recession and the financial crisis in Europe are expected to weigh heavily on trading. The big event for investors will be on Friday, when Federal Reserve Chairman Ben Bernanke will give his keynote speech at the Kansas City Fed's annual retreat in Jackson Hole, Wyo. Bernanke is faced with a turbulent and declining market combined with investor fears that the U.S. economy is heading into an economic downturn, just as he was when he appeared at the same event one year ago. At the time, the Fed chairman reassured investors by raising the possibility that the Federal Reserve would do another round of quantitative easing in his speech. The central bank implemented that plan a few months later. Investors aren't sure what to expect from Bernanke on Friday. Some believe he will bring up the possibility of a third round of quantitative easing - commonly nicknamed QE3. Others think Bernanke will only re-emphasize the central bank's statement from earlier this month, when the Fed said it planned to hold interest rates at near-zero levels for at least two years. Either way, investors hope to see some sort of clear leadership from the Fed chairman. "What's worrying the markets is the perception that there isn't much more that can be done by the Fed and politicians," said Rob Lutts, chief investment officer with Cabot Money Management. "All three -- the White House, the Fed, and Congress - are in a bind that I have never seen before." Headlines out of Europe will also dominate market direction this week. Europe's financial situation is a mess, it's getting worse, and Wall Street has zero confidence that politicians will be able to fix it. Those fears have spilled over into the region's banking sector, where rumors that European banks are having trouble getting financing are stirring up ugly memories of the weeks leading up to Lehman Brothers' collapse. Many believe a default is inevitable. "Europe is at a very pivotal point right now [as far as] deciding the fate of the whole euro zone," said James Keenan, a portfolio manager with BlackRock. The major European markets fell between 5% and 8% last week. Europe's declines helped spark the massive sell-off U.S. investors saw on Thursday, where the Dow plunged more than 400 points. Investors will have a few other notable items to work through this week. The Commerce Department's durable goods orders report on Wednesday will be closely watched as will the second reading on U.S. second quarter GDP, which is out on Friday. On the Docket -- Monday -- There are no scheduled economic reports or company earnings out on Monday. Tuesday -- Investors will get the Commerce Department's new home sales report at 10 a.m. ET. Economists surveyed by Briefing.com are looking for new home sales to decline to 310,000 annualized units, from the 312,000 reported for June. In earnings, condiment and sauce company H.J. Heinz (HNZ, Fortune 500) will report before the opening bell. Wednesday -- A closely-watched piece of economic data will be the Commerce Department's report on durable goods for July, which is out at 8:30 a.m. ET. Durable goods, or items designed to last two years or longer, are typically purchased by consumers and corporations when they feel confident about the economy. Economists forecast that durable good orders rose 2% in July, up from the 1.9% reading in the prior month. Excluding volatile transportation orders, durable good orders are expected to be down 0.4%. Applied Materials (AMAT, Fortune 500) reports its quarterly results before the bell on Wednesday. Thursday -- The Labor Department's weekly jobless claims figures will be out at 8:30 a.m. ET. Investors are looking for unemployment claims to fall 8,000 to 400,000 claims. Friday -- Federal Reserve Chairman Ben Bernanke will give his speech at the Kansas City Fed's annual retreat at Jackson Hole, Wyo. Also on Friday, the Commerce Department will release its second reading on second quarter GDP at 8:30 a.m. ET, followed by the University of Michigan's consumer sentiment survey at 9:55 a.m. ET. Economists expect the Commerce Department to revise second quarter GDP down to 1.1% from a previously-reported 1.3%. The University of Michigan sentiment survey is expected to rise slightly to a reading of 55.4 from the multi-year low of 54.9 reported two weeks ago. |
| Crude Oil Falls a Third Day on Concern U.S. Economic Recovery Will Falter Oil declined for a third day in New York as investors bet that signs of a slowing U.S. economy indicate fuel demand will falter in the world’s biggest crude- consuming nation. Futures slipped as much as 0.9 percent today. Reports this week may show companies ordered less equipment in July and the economy grew at a slower pace in the second quarter than previously estimated. London-traded Brent oil reached a record premium to the U.S. contract on Aug. 19. Libyan rebels have pushed into the capital Tripoli in a drive to end Muammar Qaddafi’s regime. Crude for September delivery dropped as much as 70 cents to $81.56 a barrel in electronic trading on the New York Mercantile Exchange, and was at $81.71 at 8:34 a.m. Sydney time. The contract slid 12 cents to $82.26 on Aug. 19. Prices fell 3.7 percent last week and are down 11 percent this year. The more actively traded October contract fell 71 cents to $81.70. Brent oil for October settlement fell $1.25, or 1.2 percent, to $107.37 on the London-based ICE Futures Europe exchange. The European benchmark contract was at a premium of $25.67 to U.S. futures, compared with $26.21 on Aug. 19. A Commerce Department report on Aug. 24 may show bookings for durable goods excluding transportation fell 0.5 percent after rising 0.4 percent in June, a Bloomberg News survey shows. Data from the same agency on Aug. 26 may show gross domestic product grew at a 1.1 percent annual pace in the April to June quarter, down from the 1.3 percent estimated last month. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
BDO UNIBANK INC.
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145
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