Wall Street Week ahead

Monday, 3 September, 2012

NEW YORK

AGENCIES

On Friday, U.S. Federal Reserve Chair-man Ben Bernanke said that the centralbank stands ready to bolster the economyif necessary, although he stopped short ofgiving an explicit signal of more mone-tary easing.

U.S. stocks rallied after Bernanke’sspeech to an annual conference of centralbankers in Jackson Hole, Wyoming, withmajor indexes gaining more than 1 per-cent in the late morning session. At theend of the day the Dow Jones industrialaverage .DJI was up 0.7 percent, while

the Standard & Poor’s 500 Index .SPXwas up 0.51 percent and the NasdaqComposite Index .IXIC up 0.6 percent.

“This (Bernanke speech) was in linewith what we were expecting. He left thedoor open but didn’t announce anythingexplicit. He doesn’t intend to front-run hisown FOMC (policy)meeting,” said Liz AnnSonders, New York-based chief invest-ment strategist at Charles Schwab Corp,which has $1.6 trillion in client assets.

Investors are now awaiting commentsfrom European Central Bank PresidentMario Draghi after the bank’s meeting onThursday. Many investors will look to theECB meeting to glean strong clues onwhat to expect from the Federal OpenMarket Committee’s own policy meetingthe following week on Sept 12-13. “Be-tween now and mid-September, we’ll befocusing on the ECB, though the nextFOMC meeting is also around the timethat the German court meets, so we’ll begetting news on both those fronts. Anynews from Europe will drive marketsmore than domestic news, with the excep-tion of the payroll report,” Sonders said.

The all-important U.S. non-farm pay-rolls report is due on Friday. WithBernanke citing poor improvement in thelabor market as part of the reason theU.S. economy faces “daunting” chal-lenges, Friday’s data could be a gamechanger, according to market partici-pants. In the euro zone, following the Eu-ropean Central Bank policy meeting onSeptember 6, a German ConstitutionalCourt will rule on the euro zone’s perma-nent bailout fund on September 12, whichmay affect the ECB’s bond-buying plans.

But there was further uncertaintywithin the ECB over President MarioDraghi’s bond-buying plan on Fridayafter German central bank chief JensWeidmann reportedly threatened to re-sign, piling pressure on Draghi to mollifyopposition. There are “growing hopesthat Draghi has overcome Bundesbankopposition to announce a bond buyingplan at next Thursday’s ECB meeting,”said Andrew Wilkinson, chief economicstrategist at Miller Tabak & Co.

But “what Draghi may have put infront of Weidmann is the notion that no

actual purchases may ever occur as longas the market understands what it is upagainst in terms of coordinated, decisivepolicy response from the ECB.”ALL ABOUT THE JOBS: In a holidayshortened week, with U.S. markets closedon Monday for the Labor Day holiday,Friday’s employment report will be thefinal major economic report to impact theresults of the upcoming FOMC meeting.

“Unless there is a sharp weakening inthe labor markets, something our data donot indicate, the Fed will sit on the side-lines at the ready to act only if things getreally bad,” said Steve Blitz, Chief Econ-omist at ITG Investment Research inNew York. A Reuters survey forecast non-farm payrolls rose by 125,000 for themonth of August.

In July, nonfarm payrolls added163,000 workers, breaking three monthsof job gains below 100,000 and offeringhope for the ailing economy. At the sametime, a rise in the unemployment rate to8.3 percent kept alive the possibility thatthe Federal Reserve could provide addi-tional stimulus to the economy.

“The Beige Book prepared for theSeptember 12-13 meeting of the FederalOpen Market Committee (FOMC) offeredlittle evidence of a material improvementin broad labor market conditions throughAug 20,” Wilkinson said.

“Indeed, the trend in jobless claimshas largely moved sideways over the sum-mer. We forecast that total nonfarm pay-rolls increased by 110,000 in August,with the unemployment rate holdingsteady at 8.3 percent,” he said.

Other economic data next week in-clude the Institute for Supply Manage-ment manufacturing survey andconstruction spending on Tuesday; non-farm productivity and labor costs onWednesday; the ADP private-sector em-ployment report and weekly joblessclaims on Thursday. For the week theDow was down 0.5 percent, while theS&P 500 was down 0.3 percent and theNasdaq was down 0.1 percent. For themonth, the Dow rose 0.6 percent, theS&P 500 gained 2 percent and the Nas-daq climbed 4.3 percent, its best monthlyperformance since February.

PESHAWAR

ONLINE

FPCCI Acting President Zubair AliKhan rejected an unnecessary increasein oil price and urged government towithdraw the current rise in oil prices.Three times increase in oil prices only

in the August reflects the government as failure ofits wrong based on anti-people friendly.

In a press release issued by the Head office ofFPCCI, FPCCI Acting President further stated thatrise in oil prices would not only create inflation, itwould also impact negatively on trade and industry.He said, “Unfortunately, our country is already fac-ing a crisis in term of closure of industries due tobad law and order situation and shortage of gas andelectricity, resulting flight of capital and massiveunemployment and decline in government rev-enue.” The continuous rising of oil price was unfa-vorable towards the sustainability of economy, as itseverely affect the industrial sector growth. Headded that our manufacturing sector grew by 2 to 3percent in last two years, whereas it used to grow 14to 15 percent in 2004 and 2005. He further statedthat POL prices have been revised upward threetimes in a month, and its prices have been increasedto 23 percent rise in the last two months.

He further stated that petroleum prices not onlyreduced the foreign direct investment, it also shiftedthe domestic investment to other countries, which in-creased the unemployment in the country and risingbudget deficit to 8.5 percent of GDP, which also indi-cated the alarming situation for the government. Hesaid it was high time that government gave relief toindustries specially Khyber Pakhtunkhwa and FATAindustries, but government is doing the opposite. Hesaid, the rising of oil price also reduces the competi-tiveness of country and creates inflation in the coun-

try, which Pakistan already faces in double digit since2008. Reduction of interest rate by 150 basis pointswas a good measure of State Bank of Pakistan, butrise of oil price don’t allow us to make new invest-ments in the country. Without investment in manu-facturing sector, the growth and development ofPakistan was not possible. FPCCI Acting Presidentsaid that, in the current time there was a dire needthat government should concentrate on inflation, un-employment and bad law and order situation, but ourgovernment focus on rising of oil price. FPCCI urgedthe government to withdraw this rise of oil price andfix it for medium to long term to create economic sta-bility in country.

End of summer to

It was unnecessary!

Marking the end of the summer doldrums, WallStreet is likely to kick off September with heavytrading volume while it hopes that the EuropeanCentral Bank will hint at further stimulusmeasures to boost the global economy.

bring volume; all eyes on ECB

Unnecessary increase in petroleum and CNG prices be withdrawn: FPCCI

Traders rejectincrease in POLprocess

KARACHI

NNI

Traders in Karachi gave 48-hour ultimatum totake back decision of hike in petroleum prices.Karachi Traders Association Action Committeetermed the hike in POL prices unjustified anddemanded of the government to take back thisdecision otherwise the traders will launch aprotest. Karachi Traders Action Committee,Chairman, Sadeeq Memon, in his statementsaid that the in Karachi will observe a shutterdown strike on September 4 if the decision ofincrease in petroleum prices was not takenback by the government.

‘Greek Euroexit may help’ Leaving the euro zone could help

Greece to recover economically and

prevent the region’s debt crisis from

spreading, the head of German

drugmaker Bayer (BAYGn.DE) was

quoted as saying in a newspaper.

FRANKFURT

AGENCIES

The comments from Bayer CEO Marijn Dekkers add toa growing chorus of influential Germans speculatingabout the possible exit of Greece from the euro zone,despite Chancellor Angela Merkel’s request forcompatriots to tone down their rhetoric. “Greece’s exitfrom the euro may be better for all parties involved,”Dekkers said, according to the Rheinische Post. Withits own currency, Greece might stand a better chance ofescaping its economic slump, while keeping the eurostrong would prevent a domino effect that could hitSpain and Portugal, Dekkers was quoted as saying. Healso said that if the drugs Bayer is developing are assuccessful as planned the company might become a topten pharma company worldwide. As a result, thecompany had no need to make a large takeover ormerge with a competitor, he said. Dekkers would

neither sell nor seekto merge theBayer Material

Science unitwith Lanxess(LXSG.DE)

or EvonikEVON.UL, he

was quoted assaying.

petrol

105.00

97.00

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02

Monday, 3 September, 2012

Business

MADRID

AGENCIES

Rajoy said he wanted to see details of the Eu-ropean Central Bank’s (ECB) program to buydebt of euro zone countries with high borrow-ing costs before deciding whether to proceedwith a request.

“If I believe it is good for Europe as awhole, for the euro, and for Spain, I will do it,and if not, not,” Spanish daily ABC quoted himas saying, regarding seeking more aid forSpain. ECB board member Joerg Asmussensaid on Thursday the ECB should only buy sov-ereign bonds of troubled euro zone states if theInternational Monetary Fund was involved insetting conditions.

Spain is already struggling to implementausterity measures to reduce its debt burdenand rescue banks hit by a collapse in propertyprices and Rajoy is reluctant to undertake anymore for fear of being caught in a recessionaryspiral. But Germany fears the bond buying planto help Spain and other indebted euro zonecountries lower their borrowing costs will ex-pose it to too much risk, leaving the ECB witha delicate negotiating task.

German central bank chief Jens Weidmannwas reported on Friday to have threatened toresign over the bond-buying plan. He has de-clined to comment on the report. ECB Presi-dent Mario Draghi is trying to hammer out a

deal before an ECB policy meeting on Septem-ber 6. Rajoy’s comments, made on Wednesday,came ahead of a scheduled visit by GermanChancellor Angela Merkel later this week to theSpanish capital and as a Spanish request for aEuropean rescue package is seen as increas-ingly inevitable.

“The looming challenge is to resolve theproblems of the euro’s instability and to ad-vance European integration,” he told Frenchnewspaper le Journal du Dimanche. “I sensethat Merkel is ready to take it on.”

To receive aid from the European rescuefunds, the existing EFSF or the pending ESM,he said Spain did not need to meet any furtherconditions than it already is under the terms ofthe banks rescue and the excessive deficit pro-cedures. “Spain, of course, is going to complywith them. It already is. And it’s not easy,” hesaid. “We are doing reforms. That is what theEuropean Council said that countries have todo to go to the EFSF or the ESM to seek help tostabilize the euro.”PRAISES MERKEL: Rajoy said he felt ECBPresident Mario Draghi agreed with him thatSpain’s high borrowing costs were related to in-vestor fears over the euro rather than the fun-damentals of the Spanish economy.

He said the current situation in which someEuropean countries financed themselves atnegative rates and others paid “unsustainablyhigh rates” had to end.

“The current situation cannot be sustainedover a longer period of time,” he was quoted assaying in German daily Bild. “Therefore we mustsolve the problem of divergent yields now.”Rajoy said measures had to be taken to dispel“with all clarity and decisiveness the doubts overthe continued existence of the euro.”

In a sign he hoped Merkel would persuadereluctant German officials to back the ECBplan, he praised her as someone who governed“with great soundness.”

The Draghi plan involves any countrywanting the ECB to buy its bonds to seek helpfrom the euro zone rescue funds first — towhich conditions would be attached.

It is aimed at buying the euro zone govern-ments time to negotiate legal and political hur-dles to a longer-term response to the euro zonecrisis. Three euro zone sources have toldReuters Spain was already negotiating witheuro zone partners over conditions, though thecountry has not made a final decision to re-quest a bailout. Spain’s borrowing costs remainpainfully high though they have recoveredsomewhat from a peak hit in July. The yield onthe benchmark 10-year bond remains justbelow 7 percent, a level seen as unsustainablein the medium term. Despite the high prices itis paying to sell bonds, Spain has stuck to its is-suance schedule this year. The Treasury facesa hump of 27.5 billion euros in debt maturingin the last 10 days of October.

Rajoy says Spain already meets conditions for aidSpain will consider seeking extra aid from Europe on top of a Euro 100billion rescue of its financial sector but does not see any need for newconditions, Prime Minister Mariano Rajoy said in an interviewpublished in European newspapers on Sunday.

BERLIN

AGENCIES

LAST week, a U.S. court ruled Sam-sung’s Android devices were vio-lating Apple patents - a majorblow to the leading mobile soft-ware platform because it could

lead to sales bans and high licensing fees.The impact could also hit smaller vendors

that use Android like HTC, ZTE, and Sony. An-droid is used in more than two thirds of smartphones. Huawei, Sony, Lenovo and ZTE - whichall use Android extensively - told Reuters theywere continuing to bet on the Google’s platformdespite the ruling. “(The ruling) is not relevantto what we are doing,” said Chris Edwards, chiefof ZTE’s business development in Europe.

But as the mobile market matures and morepatent cases look likely, some makers are look-ing at the alternatives. Samsung, which has useda number of platforms but now mostly uses An-droid, announced a new phone running on Mi-crosoft’s new Windows Phone 8 software at aconsumer technology conference on Wednes-day, sneaking ahead of a hotly-anticipatedlaunch of a Nokia-Windows phone due nextweek. Shares in Nokia, which has partneredwith Windows and is its main user, jumped afterthe Samsung ruling on expectations it might bea safer legal bet than Android makers.

The California jury said Samsung infringedsix of seven Apple patents in the case, includingtechnology that recognizes whether one or twofingers are on the screen, the front surface ofthe phone and the design of screen icons, whichis a clear reference to Google’s technology.

After the verdict, Google said that most ofthe patents involved “don’t relate to the coreAndroid operating system.”

Android was used in 68 percent of allsmartphones sold last quarter, with Samsungmaking almost half of them, while Microsofthad 3 percent market share.

The balance of power is unlikely to shiftquickly as this season’s new phones were allmade before the ruling. Sony launched three An-droid phones this week at IFA, Europe’s largestconsumer electronics fair. Chinese phone makerHuawei launched four. “We have made ourchoice,” said Lars-Christian Weissewange, vicepresident at Huawei’s phone unit, adding thatconsumers were making the platform choice forthem by picking Android phones. Sony said theruling was not impacting its business.BEHIND CLOSED DOORS: But behindclosed doors, companies are looking at alterna-

tive routes should the ruling impact ripplewider out, said several industry insiders.

“Today, all Android vendors are consideringtheir software options,” said Pete Cunningham,an analyst at research firm Canalys.

Samsung’s brief, surprise launch onWednesday of the world’s first smartphone run-ning on Windows Phone 8, should be inter-preted as muscle flexing, analysts said.

However, it should not be seen as a firmmove away from Android as the model willlikely struggle to stand out even among theother Windows phones, said Malik Saadi, ana-lyst at research firm Informa. Illustrating thehigh interest at stake are the behind-the-scenemeetings of Google’s and Apple’s chiefs LarryPage and Tim Cook on the patents.

Despite its small market share, WindowsPhone is still the largest alternative to Androidas Apple and Blackberry maker RIM have notmade their platforms available for other hand-set makers. At the same time, vendors arepretty much stuck with Android as Windows isway behind in terms of applications on offer, of-fering just 100,000 apps against half a millioneach on Android and Apple. “Microsoft needsto create a developer environment for the Win-dow Phone, which is growing, but still trails be-hind the others,” said Roberta Cozza, analyst atGartner. Attracting developers is difficult withtiny market shares. Navigation firm TomTomlaunched an app running on Android this weekbut said it was not planning a Windows app.

“I have a big bucket of (research and de-velopment) and if I had to decide where toput my money, I want to wait first to seewhether Windows is a success,” said co-founder Corinne Vigreux.

Misha Lakhani debuts her elegant Pre-Fall 2012 collection KARACHI: MishaLakhani launched hernamesake debut collec-tion and boutique on E-Street Clifton, Karachion Thursday. The labelis comprised of ready-to-wear and couture.pRess ReleAse

Pakistan, Mauritius to extend cooperationin the field of Higher EducationIslAMABAD: Higher Education Commission HEC has ap-proved Memorandum of Understanding (MOU) with TertiaryEducation Commission (TEC) Mauritius in the meeting of theCommission recently held at Islamabad. pRess ReleAse

BATA B-first back to school campaign- A splendid successlAHORe: Keeping intradition, Bata Pak-istan again wentahead with its ‘backTo school’ campaignfor this year’s sum-mer vacations inwhich a lot prizeswere included forchildren’s interest.pRess ReleAse

LOVENGERS- Usama Qazi to rock againA film financially backedby the biggest mafiaboss having personal in-terests of convertingblack money to whiteand propagating a softimage of himself. Lastminute replacements ofactors and showing upof Wadera Sayeen for apolitical speech resultsin conflict of interests and madness! - Usama Qazi has onceagain come up with an entertaining plot to entertain thetheatre lovers with his original Urdu musical comedy withsuper hit Bollywood songs of 60’s and 70’s being played andsung live! pRess ReleAse

Ufone offers unlimited calls to ‘Ufone, PTCL and Vfone’ numbersIslAMABAD: In order to provide economical package to itsprepaid customer base of well over 23 million customers,Ufone has now offered unlimited calls to all Ufone & millionsof PTCL and Vfone numbers across Pakistan between 9amto 5pm. pRess ReleAse

Abdullah Hussain Haroonrejuvenates IoBM orientationKARACHI: Addressing a big gathering of students and fac-ulty at the Orientation Program of the Institute of BusinessManagement (IoBM), Abdullah Hussain Haroon highlightedthe importance of education in consonance with our valuesystem and contemporary demands and that education be-comes the most important aspect of our regeneration andrebirth. pRess ReleAse

CORPORATE CORNER

Head of consumer sales Anwar Khan with Wateen Telecom’s sales team at theprize distribution for the recovery competition.

Chief Operating Officer TEVTA visited Govt. College of Technology to overviewthe steps taken regarding celebration of Dengue Day-2012. District ManagerMuhammad Tahir Afzal, principal Muhammad Islam and others are also seen inthe picture.

The group of USAID Deputy Mission & Director Mr.Edward Birgells, Ms.Sharmaine Hidayatullah andShaheen Zamir, and others on the occasion ofCertificate Distribution Ceremony of First Women BankLtd Gender Equity program supported by USAID.

FMC MD Farooq Shahid pakistan presenting the chequeof $20,000 to Mr Amjad Ali noon president of pakistanSquash Association.

Possibilities

Pakistan organizes

College Fair 2012

LAHORE: Possibilities Pakistan is anonprofit organization that extends freecollege counseling to all Pakistanistudents who aspire to attenduniversities at home and abroad.It’s third event, this year the fair washosted by Lahore Grammar School,Paragon and was expected to surpassthe response from the previous events.The auditorium at LGS Paragon hadbeen prepared to accommodaterepresentatives volunteering to be theface of their universities and over 200students who would come to meetthem. Among the universities beingrepresented, there were renowned onesincluding Harvard, Yale, Stanford,University of Oxford, University ofCambridge, Imperial College,University of Waterloo, NationalUniversity of Singapore etc. Localcolleges included LUMS, AGA KHAN,GIKI, LSE, KE etc. prESS rELEASE

Android phone makersback platform but considerother options

Industry watchers say, some phonemakers are

quietly exploringalternatives to the Android

operating system despite public statementsthat they are sticking with

the technology.

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