US Vehicle Sales Worse Than Expected In April

DETROIT -- U.S. vehicle sales turned out even worse than expected in April, muting optimism that the auto market is poised to rebound even with General Motors Corp. and Chrysler LLC on the ropes.

Auto makers blamed the high-profile troubles at GM and Chrysler, which sought bankruptcy protection on Thursday, for dragging down sales last month across the industry.

"We've been fighting all these rumors left and right and it doesn't help," GM sales chief Mark LaNeve said. "I thought we were going to close much better than we did."

Shaky consumer confidence and high unemployment levels also offset benefits of increased credit availability, deep auto discounts and U.S. government backing of warranties on GM and Chrysler vehicles.

April sales totaled 819,540 cars and light trucks, a decline of 34% from a year earlier, according to market research firm Autodata Corp. The seasonally adjusted, annualized sales pace was 9.32 million vehicles, down from March's 9.86 million rate.

"Industrywide, April felt more like a dust bowl than a spring garden for new car sales," Jim O'Donnell, North American president for BMW AG, said in a prepared statement.

Every major auto maker reported dramatic declines from year-earlier levels. Toyota Motor Co., with a 42% slide, fell behind Ford Motor Co. in the monthly tally for the first time since early 2008 even as Ford's sales fell 32%. GM sales dropped 33% and Chrysler registered a 48% decline. Honda Motor Co. saw its U.S. sales drop 25% and Nissan Motor Co. was off 38%.

Sales had gotten off to a solid start in April, but anxiety around a Chrysler bankruptcy filing grew relentlessly. GM's plans to exact more painful cost-cutting in its bid to survive also contributed to the unease among car buyers.

The Obama administration has given GM until June 1 to present a convincing restructuring plan or file for bankruptcy protection. Chrysler is working to emerge from Chapter 11 in no more than two months.

Chrysler Vice Chairman Jim Press denied that the auto maker's troubles contributed to its sales decline. He said it stemmed from reduced liquidity at Chrysler Financial.

Chrysler plans to take out full-page newspaper ads next week to restore confidence among consumers, letting them know, "We're still here," Chrysler sales chief Steven Landry said.

Auto makers have heaped on incentives, which increased by 29%, or $680 per vehicle, last month compared to a year earlier, according to car-shopping site Edmunds.com.

But deals weren't enough to help even healthier, foreign-based auto makers. Toyota sales are off 38% year-to-date. The company predicts 2009 auto sales will come in around 10 million sales, which would mark a 24% decline from last year, when sales fell to a 15-year low. Toyota said Friday it plans to increase production of select vehicles after inventory levels dropped to a point that dealers stepped up orders.

"Although our April sales weren't much to call home about, there are signs that the industry sales contraction is nearing its end," Toyota division executive Bob Carter said in a conference call. "We are also encouraged by several economic indicators that point toward a modest recovery."

While companies said they see signs of an impending rebound, more turmoil lies ahead as GM and Chrysler race to remake themselves. The auto makers recently announced plans to idle most manufacturing for two months this summer in an effort to bring down inventories.

GM, planning to shed its Saab, Hummer, Saturn and Pontiac brands, is trying to clear out as many vehicles as possible. The auto maker would have to buy back many unsold vehicles as dealerships for those brands go out of business.

Personal Finance An Overview

Income Tax :-

Taxation according to a person’s ability to pay is universally accepted principle, and income is considered a satisfactory though not a sufficient index of such ability to pay. Income Tax is, therefore, generally recognized as a highly equitable form of taxation. A tax levied on income can nor normally be shifted to others and thus its incidence is on those for whom it is intended. Since income tax is progressive in nature, it tends to reduce economic disparity. Tax rates and method of calculating taxable income varies with fiscal status of the tax payer. Following are the broad categories of taxpayers:-

Companies:

·  Non Salaried Individuals, Association of Persons (AOP), · Hindu undivided families(HUF)  · Salaried individuals

Wealth Tax: -

is levied on that wealth of individuals which exceeds their liabilities on the valuation date. Firms and limited companies pay Wealth Tax on value of immovable properties held for construction and sale or letting out.

Capital Value Tax :-

It is payable by individuals, firms and companies which acquire an asset by purchase or a right to use for more than 20 years.

Workers Welfare Fund: -

It is levied @ 2% of the income where the taxpayer owns an industrial establishment and his income is Rs. 500,000 or more.

Corporate Asset Tax: -

It is levied through section 12 of the Finance Act, 1991. This is one time levy payable by a company as defined in Companies Ordinance, 1984, on the value of fixed assets held by the company on the "specified date".

Rupee remains unchanged versus dollar in the kerb market

Demand of US currency remained low as rupee stood unchanged in the kerb dealings today. The greenback commenced day’s trading at Rs.80/60, did not show any change and closed the day at the same price at close of markets on Saturday. On the international desk, the yen declined to a two-week low against the euro while the dollar dropped as signs of recovery in manufacturing in the U.S. and China sapped demand for the currencies as a refuge.

Australia’s dollar rose for a ninth week against the greenback and the rand gained today versus all of its major counterparts on speculation investors will buy higher-yielding assets. The dollar advanced against the yen as the yield premium of 10-year Treasuries over comparable Japanese debt increased this week to the highest level since November.

“There’s renewed optimism about the global economy,” said Samarjit Shankar, director of strategy for the global markets group in Boston at Bank of New York Mellon, the world’s largest custodial bank, with about $20 trillion in assets under administration. “Money is coming from the sidelines. For now, risk appetite is weighing on the yen, and the dollar remains on its back foot.”

The euro rose 1 percent to 131.77 yen at 4:20 p.m. in New York, from 130.52 yesterday, and reached 132.35, the highest level since April 14. The yen declined 0.7 percent to 99.30 against the dollar, from 98.63. It touched 99.58, the weakest level since April 17. The euro appreciated 0.3 percent to $1.3270 from $1.3230.

Japan’s currency fell 2.3 percent versus the euro and 2.2 percent against the dollar this week, the first declines in a month. The dollar dropped versus the euro for a second week, losing 0.2 percent

Low volume and range trading characterized Friday

The Dow Jones Industrial Average transit between gains and losses during the trading session and finally ended up 0.5%; for the week gained 1.7%. In Forex activity was characterized by low volume and range trading; with no mayor moves across the board. 

USD/JPY ended the American session lower but above 99.00. GBP/USD rose after starting at a session low at 1.4825. The pair moved in an up trend constantly but with quiet moves topping at 1.4920. EUR/USD rose slightly for the day spending most of the session in a range between 1.3250 and 1.3275. During the week the pair was able to recover early losses as risk aversion eased. This movement also favored GBP and CHF, who also gain against the dollar for the week. 

The Psychological Factors of the Forex Market

There are so many factors that influence a currency's worth from the economic, political, and even social status of the country at hand. As opposed to other global markets, the Forex market is so big, no one person can have any serious affect on the rise or decline of any currency. 

However, the opposite is not true. Many different aspects of the Forex market can influence Forex traders and how and what they decide to trade. Before we get into the psychological factors that influence Forex traders, we should talk a little bit about the primary means by which traders decide what to trade.

Forex analysis is of utmost importance when deciding what position to open or close. Analysis is of course categorized into two types: Technical and Fundamental. Most Forex traders use technical analysis and view the same charts, which leads to many traders around the globe trading in the same way and thereby causing a trend.

Fundamental analysis, however, should not by any means be ignored. Current events such as terrorist acts, war, big political or financial announcements can also take a big toll on the direction in which the market moves.

Rumors vs. Real Developments 
As we said, the world's current events must not be ignored when trading Forex, as it can affect the market as much as anything else. Many traders have a news website open aside their trading platform, so they stay on top of world events. However, when paying attention to world events, it is very important to differentiate between real accurate news and fabricated rumors reported on the various media channels.

Many financial institutions will deliberately release a news report about a financial development, with the intention of making the market move up or down, depending on a current position. Before acting on a piece of news, verify that it is in fact real, then after you established that it is, check again!

Intervention and the Resulting Fear
As we have said, since the Forex market is so big, no one person or institution can have a real impact on the price of currencies. However, temporary fluctuations have been known to occur as a result of intervention by one institution or another.

Just to site an example, In 2002 the Bank of Japan watched the USD depreciate at a rate they believed was too rapid. They worried about the effect this would have on the competitiveness of Japanese exports to the US. The Japanese government decided to get involved and buy large sums of USDs, sometimes reaching numbers as high as 10 billion at a time. The market did not sit by quietly when one of these orders were placed. The USD would jump up to 150 pips within a few minutes. The Japanese government employed this tactic more than once and at different prices every time.

Now here is where it gets interesting. It was not the 10 billion USDs that made the market jump, what is 10 billion in a market of 4 trillion? What caused this fluctuation was the fear or emotional reaction that traders had to any talk of intervention on the part of the Japanese government.

The first piece of advice any Forex expert will tell you is, when trading Forex, leave all emotion out of the equation.

Follow the Leader Mentality
Many traders make the error of following a lead and assuming that if so many people are doing it, it must be the right move. What they do not realize is that those “so many people” had the same thought just moments before. Now this can work to your advantage if you get in in the beginning of such a trend, but if you join late, it might work against you. So if you see such a trend, check the news and the technicals to see what might have caused such a thing and decide whether you want in.

To summarize, there is really no room for emotion or personal feelings when it comes to trading Forex. Make sure that as a trader, you stay completely objective and scientific or else you might see some very heavy losses. Now, the big question is how to control your personal emotions and keep them out of the trading “room”? The answer is a trading technique. Make one for yourself and stick to it, no matter what.

Observe the movements of the market both from a fundamental and technical standpoint and if something does not seem right to you, don't trade, it's as simple as that. The market is not going anywhere any time soon, come back in an hour and decide on a trade then. When trading, never trade against the trend, always remember “the trend is your friend”. If you experience a loss, do not try to overcompensate in your next trade, stick to the plan. It is all about control when trading Forex. 

USD Drifts Lower Ahead of FOMC

The dollar gave back some of its recent gains against the euro, falling to 1.3166 while dropping to 95.61 versus the yen. The FOMC kicked off its two-day monetary policy meeting earlier and will be announcing the results Wednesday afternoon. With the Fed’s benchmark lending rate already at zero, there is likely to be no change in interest rates. The key focus will be whether the FOMC will continue to ease policy through alternative measures. The policy statement will also be closely scrutinized.

US equities clawed back into positive territory following a surprise reading in the Conference Board’s survey of consumer confidence, which sharply beat expectations in April at 39.2 from a revised reading of 26.9 a month earlier. The bounce in consumer confidence marked its strongest reading since November 2008. The February Case-Shiller home price index declined by 2.2% on a monthly basis versus a 2.8% drop in the previous month, while declining by 18.63% compared with a revised 19% drop a year earlier. Also released was the April Richmond Fed manufacturing index posted a -9.0 reading compared with -20 in the previous month.

The economic calendar for Wednesday will see Q1 GDP and PCE. On an annualized basis, the economy is estimated to contract by 5.0%, versus 6.3% previously. The personal consumption index is estimated to increase by 0.9% in the first quarter compared with a 4.3% decline, while the core PCE is estimated to increase by 1.5%versus 0.9%.

South Africa Hikes Rates, but Interest Rate Differential is Preserved

Yesterday, the South African Reserve Bank (SARB) lowered its benchmark interest rate by 100 basis points to 8.5%. Since December, the Central Bank has now cut rates by 3.5%, from a high of 12%. [As an aside, the SARB uses a repo rate to conduct policy, as opposed to a discount rate. In theory, a repo rate is slightly unique in that it reflects the rate at which the Central Bank will repurchase government securities from commercial banks. The Federal Funds Rate, in contrast, "is the interest rate at which private depository institutions (mostly banks) lend balances (federal funds) at the Federal Reserve to other depository institutions." In practice, both rates function as modulators of liquidity in the financial system.]

“The outlook for domestic economic growth remains subdued, with no indications of a quick recovery,” offered the SARB as a rationale for the rate cuts. Activity in manufacturing and mining, two of the cornerstones of the South African economy, have plummeted since the inception of the credit crisis, along with exports and retail sales. As a result, “Central bank Governor Tito Mboweni said April 7 he would ‘not be surprised‘ if the nation’s economy shrank for a second consecutive quarter in the three months through March, following a 1.8 percent contraction in the fourth quarter.” Meanwhile, South Africa’s producer price index (PPI) has declined for seven consecutive months. Coupled with a moderation in food and energy prices, inflation is no longer perceived as a serious problem.

The South African Rand actually rose on the news of the rate cut, as part of a trend that has seen the currency rise nearly 40% since touching a low of 11.7 Rand/Dollar in October. In April alone, “South Africa’s rand, the laggard of 27 major world and emerging-market currencies last year, rallied 12 percent against the dollar.” This reversal of fortune is due largely to the recovery of risk appetite and consequent return of investors to the carry trade.

South Africa is especially poised to benefit from this trend for a couple reasons. Primarily, the Rand’s advantage lies in in interest rate differentials. Even if the SARB hews to economists’ predictions and cuts its repo rate by another 100 basis points, the differential will still be tremendous, as virtually every industrialized country has lowered rates close to zero. In addition, South Africa is perceived as a relatively safe place to invest, especially relative to interest rate levels. According to one trader, “We’re seeing a re-assessment of the rand’s relative valuebecause of the fact that South Africa’s economy and financial system are relatively more sound than is the case in many other countries.”

As Bloomberg News summarized, you can’t stand in front of a freight train: “Emerging-market stocks are poised for their best month in 20 years as evidence the global recession is easing spurs investor demand for higher-yielding assets.”

In the end, you can’t fool the markets and carry traders ignore fundamentals at their peril. The recent election of Jacob Zuma as South African Prime Minister “hardly adds to confidence in the South African economy.” In addition, South Africa continues to maintain a sizable current account imbalance, “at 7.4 percent of gross domestic product last year.” Despite declines in February and March, the deficit touched a “record 17.380 billion rand deficit in January” and the markets are “expecting large deficits to persist this year as exports come under pressure.”