In Case You Missed It: Business News Round-Up

Beth 005Contributed by Beth Collinge of CTG – a division of ILX Group plc.

This week’s news was dominated by the G20 meeting in Seoul, increasing concern over Irish debt, Europe’s inability to agree on its 2011 budget and an EU-wide patent, problems in both Boeing and Airbus aircraft engines, and the release of Aung San Suu Kyi, the Burmese opposition leader.

Economic Backdrop

  • Global equities fell from recent highs, due to tensions in the eurozone and the increased possibility of further Chinese interest rate rises.
  • The euro dropped 2.4 per cent to $1.3691, the biggest weekly loss since August on concern that so-called peripheral European countries will struggle to repay their bondholders but made small gains at the end of the week on speculation the European Union will bail out Ireland. The yield difference, or spread, between Irish 10-year securities and comparable bunds reached 652 basis points, or 6.52 percentage points, the highest ever. The spread on 10-year Portuguese notes and bunds rose to a record 484 basis points.
  • US Treasuries rallied after the Federal Reserve Bank of New York said it would purchase $105bn of bonds by December 9, reversing an earlier sell-off. The purchase amount, the first of a massive monetary easing programme dubbed “QE2”, was in line with many analysts’ expectations but still provided a boost to US Treasuries. The $105bn includes both new purchases and reinvested cash.
  • Sugar fell 23.5 per cent at the end of the week as speculators pulled out of the market.
  • Copper prices hit an all-time high of nearly $9,000 a tonne, driven by Chinese buying.
  • Gold reached a new nominal high during the week, as Robert Zoellick, the president of the World Bank, suggested “employing gold as an international reference point of market expectations about inflation, deflation and future currency values.” and added that markets are “using gold as an alternative monetary asset today.”
  • The Bank of England increased its inflation forecast last week. In its quarterly inflation report the Bank said inflation, which hovers at 3.1 per cent as measured by the consumer price index (CPI), is expected to rise to about 3.5 per cent by the end of the year, before falling back towards the end of next year. It forecast that growth would reach about 2.2 per cent next year and then rise to three per cent by 2012. Yields on ten-year gilts jumped 14 basis points to 3.18 per cent from 3.04 per cent before the report was released and sterling rallied to over $1.60 against the dollar and to over €1.17 against the euro, as the markets priced in lower expectations of further quantitative easing (QE).

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In Case You Missed It: Business News Round-Up

Beth 005Contributed by Beth Collinge of CTG – a division of ILX Group plc.

The US Federal Reserve confirmed a much-anticipated expansion of its asset purchase programme with a second round of quantitative easing – dubbed QE2 – when it said it would buy $600bn of longer-term Treasury securities by mid-2011. Interest rates rose in both Australia and India, while the Bank of England, the Bank of Japan, and the European Central Bank left interest rates unchanged.

Economic Backdrop

  • Improving economic data from the US, China and the UK were released this week.
  • America’s economy grew by an annualised rate of 2% in the third quarter, according to the first official estimate, up from 1.7% in the second quarter. Consumer spending, the biggest component of demand in America, also rose again but still at a much slower rate than after previous deep recessions. Data from the Institute for Supply Management, also showed the manufacturing sector growing faster, as the PMI rose from 54.4 in September to 56.9 in October. Factory goods orders climbed by 2.1 per cent in September, the biggest increase since January.
  • The US jobs market showed signs of improvement in October, with total non-farm payrolls (which excludes public sector workers) rising by 151,000, higher than the 70,000 increase expected. The unemployment rate, however, remained at 9.6 per cent for the third consecutive month.
  • In Europe, the UK also published strong PMI figures. It reported a rise from 53.5 to 54.9, suggesting that growth was unlikely to slow further this year. ‘Flash’ indicators from the eurozone last month also showed an improvement in business activity among manufacturers, especially in Germany.
  • The European Central Bank (ECB) left its monetary policy unchanged on Thursday and Jean-Claude Trichet, ECB president, made relatively hawkish comments. The Bank of England and the Bank of Japan also left interest rates unchanged.
  • The official PMI measure released by the China Federation of Logistics and Purchasing, rose to a six-month high of 54.7 in October from 53.8 in September, beating economists’ expectations of a slowdown. Indian manufacturing PMI data were also strong.
  • Investors have started putting money back into equity funds in the US and Europe in a tentative sign of risk appetite increasing. Last week, global equity and commodity prices reached multi-month peaks. The FT 100 finished at a 29-month high, and the S&P 500 reached a two-year high. Gold soared to an all-time nominal high of $1,397.85 a troy ounce – up 2.9 per cent on the week. Silver, platinum, palladium and copper hit their highest prices in years. The rubber price has tripled in two years and major tyre companies have raised their prices by 5-15 per cent. Orange juice prices reached their highest point in three years, after news that the Brazilian orange crop will fall, and sugar is at 30-year high, also due to forecast reduced crops. Oil touched its highest level since 2008.
  • Over the week, the dollar dropped 0.9 per cent to $1.4079 against the euro and lost 1.2 per cent to $1.6240 against the pound. The Australian dollar surged through parity against the US dollar to hit its highest level since it was floated in 1983, when the Reserve Bank of Australia unexpectedly raised interest rates by 25 basis points to 4.75 per cent after its policy meeting on Tuesday.

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Getting Personal at The Women’s Conference

michellemaria

Photo via The Women's Conference

By Melissa J. Anderson (New York City)

Wednesday marked the last day of The Women’s Conference, a gathering of 14,000 women at the Long Beach Convention Center in California – plus several smaller teleconferenced gatherings around the globe. The annual event, now twenty-five years old, was hosted by California’s First Lady, Maria Shriver – who encouraged women to be Architects of Change.

She said she had “a simple and profound message: we are the leaders we have been waiting for.”

In New York, over 500 women attended the Conference virtually as part of the Satellite Summit. Marie Wilson, Founder of The White House Project, opened the Summit saying, “We sit at the nexus of business, politics, and media. The comfort level of us as leaders is changing.”

Wilson encouraged all of the attendees, in the next twenty-four hours, to call a woman and encourage her to lead. She said, “It is our time, and we can’t do a democracy with only half of the resources.”

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This Year’s UN Report on the World’s Women: The Rundown

coverWW2010By Melissa J. Anderson (New York City)

Last Wednesday, in recognition of World Statistics Day, the UN released The World’s Women 2010. The report covers a broad range of data and trends on women around the globe – 284 pages of data, in fact – so we’ve put together a review of the most salient information to be useful and easily accessible for you, our readers.

  • Still Plenty of Work to Do
    In his opening letter, UN Secretary-General Ban Ki-Moon writes, “The World’s Women 2010 is intended to contribute to the stocktaking being done to mark the fifteenth anniversary of the Beijing Conference. …It finds that progress in ensuring the equal status of women and men has been made in many areas, including school enrolment, health and economic participation.”

    But, he continued, “At the same time, it makes clear that much more needs to be done, in particular to close the gender gap in public life and to prevent the many forms of violence to which women are subjected.”

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Nordic Countries Top Gender Equality List: What Are They Doing Right?

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Confident business woman with other employee's at the backBy Melissa J. Anderson (New York City)

The World Economic Forum has just released its Global Gender Gap Report [PDF] for 2010. And for the second year in a row, Iceland topped the list as having the smallest gender gap. The report ranks countries based on gender balance related to economic participation and opportunity, educational attainment, health and survival, and political empowerment.

The report showed that across most countries, the gender gaps in heath and education are nearly closed, but parity is a long way off for economic and political attainment. The report says:

“However, the gap between women and men on economic participation and political empowerment remains wide: only 59% of the economic outcomes gap and only 18% of the political outcomes gap has been closed.”

The continued gap in these areas is a serious problem. When women across the globe are not considered as valuable as men economically or politically, we are ignoring half of our best and brightest individuals. It follows that companies and countries are only performing at half capacity. Vineet Nayar, Chief Executive Officer, HCL Technologies, said:

“The Global Gender Gap Report highlights serious gender inequities that need to be rectified. But just as important, it shines a light on the squandered resources that result from our failure to leverage female human capital. The report’s message is one that businesses must heed — not just out of fairness but because companies are wasting talents and skills that can generate significant competitive advantage.”

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In Case You Missed It: Business News Round-Up

Beth 005Contributed by Beth Collinge of CTG – a division of ILX Group plc.

Weak US employment data – non-farm payrolls unexpectedly fell by 95,000 last month – emphasized the fragile nature of the economic recovery in the US. Talk of currency wars resulted in high volatility in foreign exchange markets and protectionism as countries are trying to boost their exports at the expense of others. The dollar weakened against the yen – the most closely watched indicator of the week. The B of E, the ECB, and the Reserve Bank of Australia kept rates on hold – and the Bank of Japan lowered rates.

Economic Backdrop

  • Low demand in rich countries is prompting fears of a global currency war. The Bank of Japan intervened to hold down the yen in foreign exchange markets. Brazil doubled taxes on capital inflows to stop the real surging. India and Thailand warned that they too might act. Washington and Brussels identified undervalued currencies such as the renminbi as a prime cause of global macroeconomic imbalances. Wen Jiabao, the Chinese prime minister, retorted that an unstable yuan put the global economy in peril. Dominique Strauss-Kahn, managing director of the International Monetary Fund, voiced his concern during IMF meetings in Washington at the weekend. Finance chiefs including U.S. Treasury Secretary Timothy F. Geithner and Brazilian Finance Minister Guido Mantega said the IMF should help formulate initiatives on how countries can promote their economies without damaging others.
  • In the US there was more speculation that the Federal Reserve would announce a further round of quantitative easing (QE) at the November 3 Federal Open Market Committee meeting, after Friday’s weak US employment report highlighted the fragile nature of the economic recovery. Non-farm payrolls unexpectedly fell by 95,000 last month – while private sector payrolls, seen by many people as a better gauge of the health of the labour market, rose by 64,000, against a rise of 93,000 in August and below expectations. The unemployment rate held steady at 9.6 per cent.
  • A survey by Citigroup published this week showed that 90 per cent of investors expect the Fed to announce a second asset purchase scheme on November 3. It showed that, on average, investors expect the central bank to increase its balance sheet by $535bn.

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In Case You Missed It: Business News Round-Up

Beth 005Contributed by Beth Collinge of CTG – a division of ILX Group plc.

While US investors focused on the prospects of more quantitative easing (QE2), in Europe attention remained fixed on sovereign debt concerns and fiscal austerity. Ireland was the centre of unwelcome attention, as credit rating agencies lowered their ratings of Irish banks and the potential cost of bailing out the banks rose to 50 billion Euro, which would increase the budget deficit to around 32% of GDP.

Economic Backdrop

  • Data released last week ranged from an upbeat survey of China’s manufacturing sector, to UK and eurozone factory activity slowing, with an unexpected drop in German retail sales during August. Nevertheless, consumer and business confidence rose in the euro area in September, with Germany leading the economic-sentiment indicator for the 16-member currency union close to a three-year high.
  • Americans were not as optimistic, as job and wage concerns drove the consumer-confidence index down. The US Institute for Supply Management’s manufacturing composite index eased as expected to 54.4 in September from 56.3 in August.
  • The euro surged to a six-month high of $1.3767 last week as the prospects of further quantitative easing from central banks other than the European Central Bank lifted the single currency and allowed it to shrug off persistent concerns over the fiscal health of countries, such as Spain and Ireland, on the periphery of the eurozone. The euro also rose 2 per cent to a four-month peak of £0.8695 to the pound, as Adam Posen, a member of the Bank of England’s monetary policy committee called for further quantitative easing to stimulate the UK economy.

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Dodd-Frank and Diversity – Will It be a Game Changer?

Young business womanBy Kelly Tanner (New York City)

Would greater diversity in financial institutions strengthen or, as some have charged, destroy them? Next year, we may find out.

The recent financial reform legislation is making new waves recently due to a provision buried 454 pages in that requires 30 federal agencies to create an Office of Minority and Women Inclusion, in order to “take affirmative steps to seek diversity in its workforce at all levels of the agency consistent with the demographic diversity of the United States and the Federal Government.

Each office is required to appoint a Director, who must be at senior staff level and report regularly to the agency administrator, ensuring that this new office cannot be tucked safely away into some basement corner and ignored. The Director holds the power to cancel contracts with companies that do not show a good faith effort to actively promote diversity. The bill calls out the agencies in question, including the FDIC, Department of the Treasury, Federal Reserve banks, and the SEC.

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In Case You Missed It: Business News Round-Up

Beth 005Contributed by Beth Collinge of CTG – a division of ILX Group plc.

Tough rules to clamp down on the use of privately-traded derivatives and speculation in shares by short-selling were unveiled by European Commission in bid to tame the “wild west” of financial markets. The central bank in Japan intervened to force the yen lower. Mixed economic data in the US and talk on a further quantitative easing pushed gold prices to record highs.

Economic Backdrop

  • Economic data from the US were mixed last week. Positive numbers from US initial jobless claims were then offset by downbeat Philadelphia Fed data, which showed factory activity on the US east coast contracting for a second month. US consumer sentiment unexpectedly fell to its weakest level in more than a year in September, while the consumer price index showed that inflation was muted in August. The equity markets were driven by speculation about further asset purchases by the US Federal Reserve.
  • In the UK the number of people in employment for the quarter rose by 286,000 to 29.16m. This is the biggest quarterly rise since 1971. The figure was boosted by 166,000 part-time jobs, continuing a trend during the year for employers to rely increasingly on part-time workers. Part-time workers now account for 27.2 per cent of total employment.
  • The annual rate of consumer price inflation remained at 3.1 per cent in August, having declined from a peak of 3.7 per cent in April. Inflation as measured by the retail price index fell from 4.8 per cent to 4.7 per cent. Core inflation, which cuts out volatile food, tobacco, alcohol and energy prices, rose to 2.8 per cent from 2.6 per cent, as price pressures in consumer services grew to their highest in 18 months. Retail sales on Britain’s high streets unexpectedly fell in August after strong growth earlier in the summer, fuelling fears of a slowdown in the sector.
  • The eurozone’s economy (as measured by gross domestic product)will grow this year at at 1.7 per cent in 2010 up from the 0.9 per cent forecast in May, according to the Economic and Financial Affairs directorate of the European Commission, mostly because of the growth spurt the region experienced in the second quarter. However, European Union economists warned of “a moderation of growth” in the second half of the year.
  • Gold prices hit an all-time high, rising 16.35 per cent since January, due to investor concerns about the global economy, rising fiscal deficits, renewed US dollar weakness against the euro and talk of another round of quantitative easing by the US Fed. This also led to a further fall in 10-year US bond yields, to 2.74 per cent.
  • The Japanese stock market rose after the Japanese central bank intervened unilaterally to force the yen lower: the yen fell nearly 2 per cent against the dollar.

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Are Quotas the Answer in the EU and UK?

Elegant leaderBy Cleo Thompson (London), Founder of TheGenderBlog

Three years ago, Professor Lynda Gratton of the London Business School used the phrase the “leaking pipeline,” when she declared:

“… across most industrial sectors, while 50 per cent of graduates recruited are women, only 30 per cent of managers are women and about 15 per cent of senior executives are women. Clearly, there is a leak in the pipeline that filters out many women en route to the corporate suite. Many reasons for this leak have been explored. Women fail to see role models at the top and leave to find a better working situation or create one of their own. They might also leave because they feel forced to choose between work and home. Only 48 per cent of female team leaders we surveyed have children, while 96 per cent of their male colleagues are fathers. A worrying trend is that more women are leaving. Without swift action, the 50:30:15 ratios will continue to be a drain on talent and a negative pull on performance.”

As the global economy slowly emerges into a brave new post-credit crunch world, statistics from Catalyst, McKinsey, the University of Cranfield and others indicate that the last three years have seen little change for women in business, and there is certainly still no evidence that the leaking pipeline will fix itself – so has the time now come for more direct action?

Time for Quotas in the EU?

Viviane Reading, who heads up equality and equal rights in her role as the European Union’s Fundamental Rights’ Commissioner, seems to think so. She has warned that, unless more board room seats are filled by women by the end of 2011, she will use new powers under the Lisbon Treaty to impose gender quotas at the European level, meaning that privately owned British companies (and others from countries which fall under EU legislation) would be required to more than double women’s representation from the current 1 in 10 number of seats now occupied by female board members.

Quoted in the Daily Telegraph, the Commissioner hopes that her ultimatum will change both the European business culture and the gender mix and has suggested that she does not “… rule out the possibility of legislation in this area.”

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