OECD: Positive Global Growth

Today the OECD (Organisation for Economic Co-operation and Development) has published its release showing that its 30 members have emerged from the recession; this is the first time that the OECD economies have expanded since the first quarter of 2008. As I have stated in my last post, the Britain economy is the only country in Europe still contracting his economy, another confirmation of this bad trend come from the OECD stating that UK was the only G7 country not to grow in the quarter. The Eurozone grew 0.4%, while the US expanded by 0.9%. I have taken in consideration various newspapers in order to analyze how they communicate the news and with which kind of emphasis.

The first article is from BBC news that it use its typical structure to communicate the news. The first part is providing an overview, stating facts and figures: “Japan delivered the strongest growth, expanding by 1.2%, while the UK posted the weakest, contracting by 0.4%”. This strategy enable the readers to have a wider idea of what it is explaining and moreover to give them the chance of a better understanding of the second part that usually is based on a specific issues regarding the argument. In this case the second part is discussing about the effect of the unemployment from this “actual” recovery, the outcome is not positive at all: “however, it predicted that even with the return to growth, unemployment rates will continue to rise until the end of next year”. It is really clever in my opinion writing about this kind of consequences because due to its ambiguous and strange outcome could generate curiosity and therefore attracting more readers. At the end I always appreciate their clear and objective style of writing that provides the reader with a good generalist overview of the news with a brief article.

After this, I have analyzed an article from the Wall Street Journal. For the first since I am reading this newspaper, I did not appreciate the way is written and explained the article. Usually the WSJ is a specific financial newspaper that is providing detailed information with technical and deep analysis; in this case this article is really similar to the previous one or even worst. It is absolutely too short and not with a level of accuracy that characterized this newspaper, it is just giving a brief idea of the figures released by the Organization for Economic Cooperation and Development and nothing else. If I wanted to read a brief article I would have preferred Reuters or a simple daily newspaper.

The last article is from the Times and it has to be considered the most accurate and detailed out of the all three newspapers. It is noticeable from the title “UK economy is the 'sick man' as rivals recover” that is empathizing the bad economic results of Britain and could be interpreted as a critic to the strategies adopted by the government. It is a well structured article, beginning with fact and figures: “the 30 countries in the OECD had shown no economic growth in the second quarter, but recorded growth of 0.8 per cent in the third quarter”. Then analyzing in details the argument: “The eurozone’s dominant service sector grew at its fastest pace in two years in November, with Markit’s Index of activity rising to 53.2 in November, from 52.6 in October, to reach its highest since November 2007”. Concluding with future forecast from economists “However, analysts remained cautious about the outlook for the eurozone.”. The best and complete article taken into consideration in my analysis.

In conclusion I would like to state that this kind of figures does not give us the real situation of the economy because are not taking in consideration a vast variety of variable aspects that could bring us back into the crisis. These variable aspects could be: high level of unemployment or high level of debt of companies. Therefore they are positive signs that have be considered as a starting point and not as an arrival.

BBC News:

http://news.bbc.co.uk/1/hi/business/8374042.stm

Wall Street Journal

http://online.wsj.com/article/SB125897414003560355.html

Times:

http://business.timesonline.co.uk/tol/business/economics/article6928233.ece

Growing European economies leave Britain lagging

Two weeks ago I wrote about the difficult economic situation in United Kingdom, focusing on different aspects that are impeding UK to overcome the crisis and begin a process of full recovery; in past day in the major newspapers was published the European economics results that show good reaction from the crisis and give a positive impression for the future.

The Financial Times article is clear and straight forward transmitting all the key facts and figures to the reader in order to let them understand the topic: “Euro zone gross domestic product expanded by 0.4 per cent compared with the previous three months, after having previously contracted for five consecutive quarters, according to official figures on Friday”.

The first part is focusing on broad description of the results comparing Euro zone with United Kingdom and US: ” The US economy expanded by 0.9 per cent in the third quarter, although the UK was still in recession”. The main body of the article is describing the temporary factor that have brought European countries to this positive results: “So far the Euro zone recovery has been driven by temporary factors – less aggressive de-stocking by industry and emergency stimulus measures – as well as a pick-up in exports on the back of stronger global demand”. Another highly important issue raised in the article is the opinion and forecast from major macroeconomics bodies such as the International Monetary Fund, European commission; all these institution are warming from excess of positivism: “if the banking sector does not repair its balance sheet, the credit channel is likely to remain impaired, posing a major downside risk to the sustainability of the recovery”.

The Guardian s approach to the news is completely different, it focus more on the comparison between United Kingdom and Eurozone without explaining in deep and with accuracy the results.

Most of the article is based on interviews with different economists and politicians that are all explaining their point of view and forecast for the future; The Conservatives seized on the data to criticise government policies. "Far from 'leading the world out of recession' as Gordon Brown has claimed, the evidence shows how his economic policies have failed," said shadow chancellor, George Osborne or Vince Cable, the Liberal Democrat Treasury spokesman, said the data was further evidence of how hard Britain has been hit by the financial crisis “"While in the short term the combination of a weak pound and a return to growth in the Euro zone is good for our exporters, consumers will feel the pinch from the increasing cost of imports”.

At the end there are some forecast from economists warning from celebration and to continue to work hard because “ The economy remains in a fragile state, and is recovering mainly because of government stimulus and temporary inventory effects. A sustained recovery is likely to require that consumer spending and business investment be the primary drivers of new economic activity."

The main difference with the financial times is the objectivity and awareness of communicating the news; the Guardian is not clear structured and does not appear to give a wide explanation of the fact. In my opinion it wanted to show the EU positives figures in despite of UK, therefore accuse Gordon Brown policies and strategies in order to arise in the reader a sentiment of anger and revenge; that strategy is a simple strategy to sell more copies.

The last article taken into consideration is from The Times that uses a third different approach to the news. It is focusing on the best country that has reacted to the crisis in order to analyze the facts and figures: “Germany, the zone’s biggest economy, confirmed its recovery, after exiting recession in the second quarter, when it said that GDP increased by 0.7 per cent in the third quarter. France also underlined its recovery, with 0.3 per cent growth.” The rest of article is mainly the same of the other two articles; using interviews to justify this result in comparison with the UK and to forecast future prospects.

Europe is recovering from the crisis thanks to the right strategies undertaken from the different governments and thanks to all the workers that in this period have worked double to help their countries to overcome this difficult period.

All of us are hoping that this is a sustainable recovery based on real economy and not just on stimulus packages and illusions. The governments have the chance to regain the trust of the citizens, are they working to do so? I really hope so.

Times:

http://business.timesonline.co.uk/tol/business/economics/article6915468.ece

The Guardian;

http://www.guardian.co.uk/business/2009/nov/13/eurozone-growth-beats-uk-recession

The Financial Times

http://www.ft.com/cms/s/0/08ab0f42-d02c-11de-a8db-00144feabdc0.html

Allianz back in profit as sales beat forecasts

The actual situation in the economy, it is really confused, there is no right forecast or assumption in order to determine whether the market is recovering or is still in the crisis.

Every week reading the financial news, it is easy to have different impressions and point of view depending of which article is taken into consideration. After several weeks of writing different post, I realized that usually on averages the news, coming from a macroeconomics aspects, are often negative regarding the economy; on the other side generally in this period news regarding the quarter results are showing the positive effect of the recovery on companies.There is a contradiction that is showing the different way of interpreting the actual situation; this week and decided to critically analyze the news of Allianz ‘s quarter results.

The Wall Street Journal uses its classical approach to the news; objectivity and awareness about the facts and figures.

The article is well structured and gives a clear idea of what are the reasons of this incredible result. In doing so it uses key elements of the financial statement such as operating profit or total revenue in order to give to everyone, not just to specialized readers, the chance to understand the financials data of the article: “Net profit for the three months to Sept. 30 was €1.32 billion ($1.96 billion), compared with a loss of €2.02 billion a year earlier. The year-earlier figure included a €2.6 billion hit from its Dresdner Bank arm, which the company sold to Commerzbank AG for around €5.1 billion in the first quarter” or “Operating profit in the third quarter rose 23% to €1.93 billion from €1.56 billion, boosted by strong contributions from its life-health insurance and financial services businesses”.

The second part is dedicated to the forecast and historical company with 2008 with citation of the Chief Financial Officer words regarding future prospects of the company: “Allianz is well capitalized and prepared for delivering solid earnings even in the challenging market environment ahead, due to its high-quality investment portfolio and conservative risk management approach.”

The second of article taken into consideration is from Bloomberg. The news is divided in three parts focusing of major aspects: the introduction, not yet satisfactory and solvency ratio.

All three are mainly based on interviews of executives or specialized analyst of the market.

The introduction gives a wider idea of the news showing and explaining key figures and facts citing Allianz declaration: “Reliable statements about future profit levels aren’t possible, Allianz said citing risks to the economic recovery and capital market volatility”. It is possible to notice from this part the objectivity and complexity of this article; Bloomberg give insight of the market to specialized readers that want technical analysis and explanations.

The last two parts analyse the most important aspects to be taken in consideration: “We achieved a reasonable result in the property and casualty business, given the still challenging market environment, but the operating result isn’t yet satisfactory,” said Chief Financial Officer Oliver Baete and “Allianz is “well capitalized” with a so-called solvency ratio, a measure of its ability to absorb losses, of 164 percent, including the dividend accrual”.

The last article is from the Il Sole24ore, the Italian specialized financial newspaper. Il Sole24ore could be compared to Reuters in somehow in this type of news. Both news are reliable and well written giving a wider idea to reader about the topic; they never enter in details or explanation. Therefore it could be considered a quick flash of the news, well structure with all key elements.

Allianz is the example of good strategy to overcome the crisis; it has sold Commerzbank that was losing money in order to avoid bankruptcy and to focus on the core business insurance. Companies should focus on core business and sell not pertinent business, in my opinion it is fundamental to focus “on what it could be done better and more efficiently”.

Wall Street Journal:

http://online.wsj.com/article/SB125775073100937989.html?mod=googlenews_wsj#articleTabs%3Darticle

Bloomberg:

http://www.bloomberg.com/apps/news?pid=20601100&sid=a5JZ_.5_pFgk

Il Sole24ore

http://www.ilsole24ore.com/art/SoleOnLine4/Finanza%20e%20Mercati/2009/11/Allianz-trimestre.shtml?uuid=77d70d46-cd0a-11de-855c-28baee80fb19&DocRulesView=Libero

Reuters:

http://uk.reuters.com/article/idUKL940580420091109

EU unemployment worst since 1999

The majority of the economists are assuming that the crisis is over and the world economy is recovering, nobody has secure empirical evidence in order to ensure and add value to their thesis. One aspect this week seems quite clear: European economy is facing the consequences of the financial crisis in form of unemployment. This recession has changed the world and the job market with it, it will delay the recovery limiting the consumer spending on goods and services.

The first article on the topic that I have taken into consideration is from the Wall Street Journal; it is absolutely the best article in terms of clarity, objectivity and awareness on the topic. From the first few paragraphs it is giving a clear way of viewing and interpreting the news with facts and figure; the first sentence of the article is explanatory of my point of view and a clear statement of the actual European economy: “with job losses continuing to mount, euro-zone consumers are unlikely to support the currency area's nascent recovery by spending heavily in the months ahead”. The second part of the article is dedicated to the interviews that state what will happen in the following months: "Underlying inflationary pressures are likely to remain extremely low for some considerable time to come due to large output gaps, intense competition, high and rising unemployment, and the strong euro, "There is no room for complacency, particularly in view of the increase in unemployment levels…The incipient recovery needs close monitoring and the supporting policies should not be withdrawn until the recovery is fully secured."

This newspaper uses always the same technique to communicate the news: being direct, clear and precise in order to give the readers the possibility to create its own ideas.

BBC News uses a completely different approach to the news: the entire article is based on numbers and comparison between different countries. The use of subtitle makes the structure clearer and more comprehensive to the reader, it mainly focus on three aspects: youth unemployment, future forecast and the risk of inflation. As the article from the WSJ, they have interviewed various economists to have a wider idea of what will come after: "The unemployment rate will continue to rise in coming months… What you tend to see in Europe is that labour market adjustments take some time, especially compared to the US, where jobs are slashed much more quickly."

As it possible to notice from the simplicity of the article, BBC targets middle-class man with not direct interest in the matter that want to be well informed without entering too much in details.

In order to understand how is presented, in each country, this news; the third article analyzed was gathered from the Italian financial newspaper Il Sole 24 Ore. Also this article is based on comparison as an approach to the news but from the historic point of view comparing the 2008 and 2009 figures and explaining the consequences of the rise in the unemployment. It dramatizes the news in order to attract and frighten more readers exaggerating with figures without giving them a clear explanation. Unfortunately also this article is expecting unemployment will peak at around 11% at the end of 2010, transmitting to the readers a really bad future scenario.

As I wrote in my last post the crisis has moved from the financial sector to the service and industrial sector generating more than five million unemployed in less of a year

Nowadays the world is happy because “our moneys” are again safe in bank without the risk of bankrupt anymore. Nobody have realized that now the “real economy” is suffering and struggling; this is a way more bigger problem because the industrial and service sector were the one of creating new job, product and add value to the economy.

At this point who is in charge of helping small and medium company to overcome this period? Hopefully not the banks.

Wall Street Journal:

http://online.wsj.com/article/SB125689689146418275.html

Il Sole 24 Ore:

http://www.ilsole24ore.com/art/SoleOnLine4/Economia%20e%20Lavoro/2009/10/disoccupazione-eurostat-record.shtml?uuid=08f916f0-c53d-11de-a806-5c548b4990d3&DocRulesView=Libero

BBC News:

http://news.bbc.co.uk/1/hi/business/8333841.stm

UK recession is the longest since records began

In all my posts, I have always focused my attention on positive news coming from the market beginning with the rise in the real estate sector ending with Google’s quarter results. My analyses were always critical about the approach too optimistic of transmitting the news and the way of giving a too positive economical scenario to the readers.

Today I will discuss about the GDP result published on Friday by the Office of National Statistics in London, showing that the economy is not recovering at all, on the contrary the Gross domestic product “contracted by 0.4 percent from July through September from the previous three months, and it shrank by 5.2 percent from a year earlier”.

In the past days the majority of the analysts were predicting a positive figure for the UK economy and as a consequence all newspapers were publicizing with enthusiasm the optimistic forecast; on Friday they communicated the results with surprise and shock.

The International Herald Tribune is stating a clear title and summary of what is going to discuss, giving the reader, even before reading the article, a broad understanding of the facts. It is basing its judgment on a comparison between the Euro land and the UK showing the different economy results over the past three months.

The first part is explanatory of the figures and forecast; the following paragraphs, through the chief European economist at Standard & Poor’s, try to underline the causes of this bad GDP outcome, citing consumer indebtedness as the main factor undermining a recovery in Britain:

“U.K. consumers are coming out of a period of very significant leveraging, and the process of unwinding that is long and painful”.

A simple question come to my attention at this point: why the prediction was based “on recent improvements in housing statistics, purchasing managers’ indexes and the wilting pound” and not on the consumer indebtedness?

The approach used by Bloomberg is completely different, is not just communicate the news, but it is also gathering the causes in different sectors of the UK’s economy.

The all article is based on different interviews with both analyst and politicians, in common they have the shock and the surprise of this unpleasant result: from an economist at Citigroup Inc. saying that “The surprise is across everything,” to the chief economist at the Chartered Institute of Personnel and Development stating “This is desperately disappointing news, especially given that it was hoped that a modest recovery had begun … The U.K. economy is continuing to shrink, with six quarters of contraction in output making this recession look more like a depression.”

Bloomberg is attracting potential readers by dramatizing the news, mostly of the people interviewed, prefer to express their shock instead of communicate their point of view on the fact and their possible solution.

The Telegraph is transmitting astonishment for the bad results; it is critical with the prime minister saying that “The news is a major blow to Gordon Brown…” and it communicating to the readers that “Britain looks increasingly likely to be the only major economy not to have emerged from recession by the end of September”. It is admitting that the rise in the house prices and the profits of City institution “had buoyed hopes that the worst was over” but the figures are really disappointing and the crisis is going to be longer than it was expected.

It is a simple article, well-written, clear ideas with a critical analysis of what it is happening, examining different aspects of the news.

In conclusion the prediction was wrong and based on wrong sources even though the Bank of England warned earlier this month that the strength of a rebound remains 'highly uncertain' and I cannot find an explanation of why everything is astonished about the result.

We have faced and we are partially still facing the biggest financial crisis of the modern era with complicated consequences and implications.

The crisis for the financial sector is over and it has moved in the industry and service sector that are struggling in order to overcome this period; after recovering these sectors it will be finished or “who will be the next?”

The Telegraph:

http://www.telegraph.co.uk/finance/financetopics/recession/6414147/Britain-is-still-in-recession-decline-continues.html

Bloomberg:

http://www.bloomberg.com/apps/news?pid=20601068&sid=aA4yuANivXCQ

International Herald Tribune:

http://www.nytimes.com/2009/10/24/business/global/24euro.html?em

Google: Worst behind us

In the past few weeks, mostly of the financial medias have communicate that the crisis is passing over and the companies are facing a positive phases thanks to the fact that the market is recovering and giving positive messages to the investors. During this period most of the companies traded on the stock exchange are publishing their third-quarter financial results, therefore it is possible to distinguish which companies have adopted the right strategy in order to overtake the crisis and others that have failed. Google is always been considered a crown jewelry company on the stock market: a healthy company with a strong financial statement. It was created just to improve the world of research online but it has also found the way to make huge profit undertaking a unique advertisement strategy. Two days ago Google published its astonishing financial result that was above every prediction.

The first article analyzed was taken from an Italian financial newspaper Il Sole 24 ore. It is presenting the news clearly with objectivity and awareness with a copious use of figures on how Google is performing on the market and key numbers published on the financial statement. This Italian newspaper is using a clear and unique methods of communicate the news: it is neither too technical nor too simple; it has a good mix of specific analysis and easy explanation.It always has sources from reliable and well know analysts and important companies’ executive: in this article for example is using the CEO quotes to support their point of view with a reliable source.

The Financial Times article is stating the news with a deep explanation of facts and figures. It is giving facts and figures in detail in order to give to the readers all the instruments to have a personal opinion at the end of the lecture. All the news facts are described clearly analyzing the different reasons of this kind of result such as “the amount advertisers pay each time a user clicks on their ads rose 5 per cent compared with the second quarter of this year, though the figure was still 6 per cent lower than a year before” and “The decline in the dollar since the end of June contributed to the rebound from the preceding quarter, since it raised the value of the 53 per cent of Google’s revenues that are earned outside the US”

The Business week is structuring and stating the news in a completely different way. It divides the article in four parts: the first one broadly explains the actual news and the other three focus on the key aspects of Google financial results (A revival for online AD spending; Expansion could curb margins; and Open to strategic acquisition). Comparing the Business week with the other articles, it is noticeable that is using a different approach in the way of explaining news; it takes in consideration the industry overall and specific analysis in order to judge Google performance. This kind of method facilitates the readers to create their own well-informed point of view on the news and on the market.

For some industry the crisis is over and are ready to invest again on innovation, expansion and hiring. It is noticeable that companies recovering from the crisis are just a few and caught my attention that all of them are those companies that have always based their revenues on tangible business and real economy avoiding conflicts with structured finance.It is my opinion that the finance world should learn from these healthy companies that add value to the economy and understand that maybe the period of high leverage and risks is over and it is time to “come back to basics”.

Il Sole 24 Ore:

http://www.ilsole24ore.com/art/SoleOnLine4/Finanza%20e%20Mercati/2009/10/google-trimestre-eric_schmidt.shtml?uuid=b63f0fdc-ba1f-11de-8daa-d0ad6a308883&DocRulesView=Libero

Financial Times:

http://www.ft.com/cms/s/0/17bc7acc-b9c8-11de-a747-00144feab49a.html?nclick_check=1

The Business Week:

http://www.businessweek.com/technology/content/oct2009/tc20091015_635656.htm

Gold hits fresh record high

Over the past year, through the crisis, the financial world should have understood that the peaks of the market are not always synonymous of a good investment; mostly of the time this “peaks” are exaggeration and do not reflect the right and real value on the market.

The articles that I took into consideration are all explaining the incredible rise of the gold over the past months therefore a simple question caught my attention: is gold peak another market bubble or is a justified raise in price of a commodity?

The first article analyzed is from the Financial Times: clear structure and sophisticated overview of the argument. As always FT have interviewed the best expert in the market to give the readers a depth understanding of the facts, analyst from HSBC and Barclays Capital. The first part is based on future forecast as “We believe gold has a significant upside potential into 2010…” while the last few paragraphs are characterized by an accurate explanation of the gold trend. The reader is no influenced by any comments of the journalist but surprise me the interview with Ashraf Laidi, chief market strategist at CMC Markets that seems justifying the gold record, focusing on historic data and therefore trying to reach the readers attention to communicate them: gold is still a good investment.

Bloomberg uses a more technical approach to the news. It is a complicated article made for specialist readers that already know the news and want to have specific details of the rise and technical overview of the matter such as “Gold for immediate delivery gained as much as 2.6 percent to a record $1,043.78 an ounce yesterday, and traded at $1,038.46 at 10:35 a.m. in Singapore”. The last paragraphs are based on assumption of the global head of technical analysis at Barclays Capital that is explaining that the gold rise is “by no means unstoppable, as none of the charts show prices concurrently pressing against their respective all-time highs,”. All the facts and figure are described with absolute objectivity basing all the comments and forecast on technical analysis.

From a completely different point of view is the piece of work of The Guardian that is focusing on the correlation between the raise of gold and the declining power of dollar “fresh speculation about the declining power of the dollar as the world's reserve currency sent the greenback sliding and gave the precious metal a boost”

The Guardian is using its typical approach of communicating the news, giving the reader a broad understanding in the easiest way as possible. It interviewed well-know analyst and instead of analyzing the datas (as FT and Bloomberg) is trying to forecast the phenomenon through the losing power of dollar "as long as we don't see a sustainable rally in the dollar, I don't think the rise will stop." From the reader side is a well-structured article but does not appear objective at all; it tries to transmit the euphoria of the new record without taking into consideration the possibility of negative aspects and implications.

At the end The Telegraph that in three paragraphs resumes the whole news with explanation, analysis and forecast gives a well-written flash of the gold news.

It is an easy reading article with good and sophisticated assumptions based in the inflation “The gold price is still significantly below its inflation-adjusted high. The price hit $850/oz in January 1980, which represents a price today of about $2,300/oz when adjusted for inflation”.A short article but with all the information needed to understand the news.

After having analyzed all four articles it comes to my attention that none of them have never mentioned a possible negative impact of the rising of gold or put on the readers attention that this peaks could be generate by the crisis. After a long period of depression financial media could finally write about good news coming from the market and seems to me that are trying to reassure the public with positive assumption and approach forgetting to speak about negative implications.

This way of transmitting the news could create confusion and misunderstanding between the readers and lead to have a too shiny point of view of the market that unfortunately on my opinion is not shining at all.

Financial Times:

http://www.ft.com/cms/s/0/04c1aa8a-b33a-11de-ac13-00144feab49a.html

Bloomberg:

http://www.bloomberg.com/apps/news?pid=20603037&sid=a0m8QhfjdEG4

The Guardian

http://www.guardian.co.uk/business/2009/oct/07/gold-prices-rise-dollar-decline

The Telegraph:

http://www.telegraph.co.uk/finance/personalfinance/investing/gold/6269593/Gold-hits-fresh-record-high.html