36 WEDNESDAY, OCTOBER 7, 2009 THE WALL STREET JOURNAL. Leading the News: Turkey, Armenia move closer to border-opening deal HEARD ON THE STREET VOL. XXVII NO. 173 WEDNESDAY, OCTOBER 7, 2009 Email: [email protected] Financial Analysis and Commentary More at WSJ.com/Heard EUROPEEUROPE europe.WSJ.com Australia reacts to asset prices China’s capacity problem Demonstrators protest IMF, World Bank meetings China’s leadership has company profits fell 10.6% The Australian central country fretting about asset delay hiking too long and been celebrating 60 years of on year through August, Œ3 What’s bank’s decision to raise inter- Target rates prices. The Norwegian cen- much tougher action may be the People’s Republic. But with state-owned industrial Sterling looks est rates Tuesday marks a sig- tral bank has voiced similar required later on. there are signs it’s not quite company profits off 25.2%. Current benchmark rates - Germany 7 7 kr 29 News nificant moment in the evolu- convinced of the economic The evidence underscores Œ3 in selected countries: concerns. Global excess liquid- The snag is that rate in- tion of the global financial ity also looks to be fueling po- creases by smaller econo- course it has engineered. the discrepancy between cau- An unexpected increase in 6.0% Just before the Oct. 1 fes- tion at home and overseas - France crisis. Not just because Aus- tentially destabilizing asset mies will make little differ- - Sweden Australian interest rates re- tralia is the first G-20 coun- surges in several Asian econo- ence to the global excess li- tivities, China’s State Coun- optimism about China’s ex- Œ3 vived hopes of economic re- ready to join Œ3.20 try to tighten monetary pol- mies, including India, South quidity that is fueling asset- cil slipped out plans to slash pansion and ability to sup- covery, sending stocks in Eu- 4.0 - Spain icy this year, following the Korea and Taiwan. The mar- price inflation around the overcapacity in key indus- port the global economy. It rope and the U.S. sharply - Finland Bank of Israel’s rate increase ket expects these countries to world. That will depend on tries, including aluminum, also shows Beijing’s chal- higher, and pushed gold to a steel and cement. lenge in keeping growth in the summer. More intrigu- raise rates early next year. the actions of the major Dkr 25 record. Asian gains were ing were the likely reasons 2.0 But following Australia’s deci- economy central banks. The plans underline a di- steady into the future. Œ3.32/Sk 100 more muted. Pages 23, 26 the sick list lemma facing China: While Chinese Premier Wen Jia- for the 0.25 percentage point sion, they may feel tempted Given the size of their cur- n - Denmark Boeing set a $1 billion rise, which could have impli- to move earlier to lean rent output gaps, which monetary and fiscal stimulus bao recently warned that the - Slovakia By Neil Shah Œ3 charge on its 747-8, another 0 have supported growth rates pickup in growth this year cations for the global rate- against the wind and try to should keep a lid on infla- Kc 110 China Euro U.K. U.S. blow to its commercial-air- Pounded tightening cycle expected to tame some of the exuberance. tion for the foreseeable fu- around the 8% annual target “remains unstable, unconsoli- After wobbling for the past Australia zone craft business in the wake of Over the past year, the yen, begin in earnest next year. ture, and the fragility of this year, they have also dated, and imbalanced.” - Portugal few weeks, the British pound True, breaking away deepened excesses. Optimists, looking ahead, Dreamliner troubles. Page 11 euro and U.S. dollar have Source: Trading Economics Zl 12 nose-dived in the wake of Most economists pre- early from what Morgan their banking systems, the been gaining strength According to government suggest a recovery in ex- - Czech Republic dicted Australia would raise U.S. Federal Reserve, the Eu- n The soaring euro is threat- weaker-than-expected eco- Stanley dubs the monetary figures, some industries are ports and rising household against the pound rates this year, but few had prices, particularly houses. policy peloton isn’t without ropean Central Bank and the - Poland ening the ECB’s efforts to nomic news, raising the pros- awash with capacity. If all consumption will keep the HRK 22 expected it so soon, with in- The Reserve Bank of Austra- risks. Most major economies Bank of England are unlikely keep the economic recovery pect that the U.K. currency planned cement projects Chinese economy buoyant. Nkr 29 flation still just 1.5%, well be- lia had previously voiced aren’t expected to start rais- to raise rates until the sec- on track. Page 2 could be in for a renewed bout 45% were implemented, annual If those supporting fac- - Croatia ond half of 2010. of weakness against major cur- low the 2%-3% target. Austra- concerns that interest rates ing rates until at least the output would rise to 2.7 bil- tors don’t come quickly, Œ3 n Australia became the first lia may be one of the only of just 3%, down 4.25 per- second half of 2010. Coun- For investors, an uncoor- - Norway rencies. lion tons a year, against do- there will be pressure to sup- Œ3 G-20 country to raise inter- yen economies in the world fore- centage points from their tries that make an early dinated monetary-policy exit est rates since the financial 30 mestic demand of 1.6 billion plement the fiscal stimulus, - Belgium cast by the International Mon- peak in March 2008, were break run the risk that strategy could open up prom- tons, the State Council said. especially with the Chinese Œ3 crisis, making it easier for Currency moves etary Fund to grow this year, fueling excessive house- higher rates and a stronger ising trades, particularly in others to follow. Page 23 euro Beijing is aware of the government—on the surface - Netherlands n Asian central banks act.25 ........ £1.50 but at 0.7% growth, output price inflation. House prices currency will choke off the foreign-exchange markets. Œ3 15 problem, warning that ex- at least—enjoying relatively n Iceland is closer to agree- n Fujii defends the dollar.28 .......... remains below potential and were up 8% in the first eight recovery. The Australian dol- With the dollar the obvious dollar cess capacity would lead to low debt levels. Squaring ing on loan terms to repay unemployment is still rising. months of this year, accord- lar, already up 23% this year funding currency, that declining profits and, in that with the overcapacity the U.K. and Netherlands, its U.K. industrial production ing to the RP Data-Rismark means more short-term pres- 0 What appears to have against the U.S. dollar, appre- turn, company closures and issue will then become a - Luxembourg finance minister said. Page 2 declined in August, undercut- swayed the central bank is Home Value index. ciated further after the rate sure on the greenback. unemployment. The signs knottier challenge. – United Kingdom ting optimism about a swifter- 2008 ’09 the huge rally in asset n SocGen will repay govern- Australia isn’t the only increase. On the other hand, —Simon Nixon are there: Chinese industrial —Andrew Peaple $2.20 L£ 6000 than-expected economic re- ment funds it received at the Source: WSJ Market Data Group covery. That news helped peak of the financial crisis via - Lebanon drive share prices higher, a rights issue that will raise Œ3 partly on the expectation that sorted good banks from bad around $7 billion. Page 23 - U.S. Military (Eur) policy makers would have to banks earlier this year, foreign- - Italy Œ3 n Tesco reported a slight first- keep monetary conditions ex- exchange buyers are starting U.S. pay czar: Cut cash salaries U.K. parties promise cuts TL 4.5 half profit increase, helped cessively easy for some time in to sort strong currencies from By Deborah Solomon ple said. Such a move, the most intru- Chrysler LLC and Chrysler Financial. Continued from first page one of the key Conservative by improvement in the U.K. order to ensure economic re- weaker currencies. The pound sive yet into corporate compensa- The move will further reshape aged by a deep economic recession. pledges—an early rise in the retire- - Turkey and growth in Asia. Page 6 covery. That domestic stance, appears to be joining the dol- tion, would mark the government’s pay at those companies and could He said the Conservatives would ment age—would raise far less than - Ireland (Rep.) of course, undercuts the attrac- lar in the weak camp. Both WASHINGTON—The Obama ad- S£ 210 n Saudi King Abdullah ministration’s pay czar is planning to first effort to curb the take-home complicate efforts by some of those cut the cost of central government the £13 billion a year Conservatives Ft 650 tiveness of the pound to for- countries have near-zero inter- makes his first trip to Syria clamp down on compensation at com- pay of everyone from auto execu- seven companies to attract top exec- bureaucracy by at least a third, sav- estimate. “We were told his speech - Syria eign-exchange investors. est-rate targets, an aggressive this week, hoping to build panies receiving large sums of gov- tives to financial traders. utives and employees. ing roughly £3 billion a year by 2015. would tell us everything we needed SF 5 The tough U.K.