Weekend Report: A Hint at Recovery, From Japan

Also, Iran says it will back efforts to raise oil prices, on one condition.
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This weekend's revelations weren't unlike the rest of the year: Generally bad news from Japan, confounding information from the commodities producers and good news from a large blue-chip stock.

Equity weakness in Japan could cause problems for U.S. stocks heading into the early part of the week. Then again, since traders have been completely ignoring the rest of world, the good feelings leftover from the stellar performance on Wall Street last week could push stocks higher anyway.

For a while, it seemed like the least likely parts of the global economy to even hint at recovery were the Japanese economy and oil prices. (For each, 1998 prolonged a slump.) But rare concessions and bold predictions made this weekend could get the wheels turning.

Eisuke Sakikabara

, Japanese vice finance minister for international affairs, said today that he expects the Japanese economy to begin turning around by the second quarter of the Japanese fiscal year: June to September. "The banks are finally being forced into full-fledged restructuring," he said. The Nikkei 225 average lately was up 60 points at 13,857.

On Friday, officials at the Economic Planning Agency surmised that Japan's economy is near the bottom, but recent data betray that outlook and Sakikabara's assertions. According to

Dow Jones

, the country's Ministry for International Trade said industrial output dropped 2% in November, compared with a 1.1% drop in October. The unemployment rate rose to 4.4%, on a par with the United States, and the demand for labor declined as well. Analysts said a 16.65 trillion yen ($143 billion) stimulus package from last summer isn't having the desired effect of spurring a recovery.

The country's Financial Supervisory Agency said Friday that problematic loans at Japan's 17 major banks amounted to 5.4 trillion yen more than the banks originally assessed.

At least bonds offered a glimmer of hope, trading higher on Friday. When the Japanese Finance Ministry's trust fund said about a week ago that it would halt purchases of Japanese government bonds, or JGBs, it shocked the Japanese bond market into a weeklong sell-off that pushed yields back to 1.9%. The worry: that higher interest rates would hinder the Japanese economic recovery.

Japan approved an 81 trillion yen budget on Friday that would increase spending by 5.4% to stimulate the economy, including 86 billion yen in public works spending and 78 billion yen in tax cuts. The government will sell twice as many JGB's in 1999 than they did in 1998 to fund this spending.

Meanwhile, Japan's

Yasuda Mutual Life Insurance

and

PaineWebber

(PWJ)

announced Friday that they will set up a joint venture investment trust company in Japan.

Iran said today that it would back

OPEC's

efforts to raise oil prices by cutting supply. However, Iranian officials warned the other nations that it's own cuts must come from a higher baseline than its current export figure. When other nations attempted to force through cuts last year, Iran expressed displeasure. The price of February brent crude closed at $10.11 Thursday, near all-time lows.

DaimlerChrysler

said initial earnings estimates showed 1998 sales rising by 13%, to about $155 billion. In a statement, the company chairmen said next year's results would reveal the first affects of the 1998 merger of Daimler-Benz and Chrysler.

Good news for shareholders of

TWA

(TWA)

. A judge ordered the flight attendants back to work after a so-called "sick-out" that forced at least three to four dozen flights canceled both Thursday and Friday. Contract talks will begin again next month.

Korn/Ferry International

, the largest recruitment firm in the country, announced plans to go public with an offering of 12.5 million shares, or 35% of the company. Shares of the company, which initially planned to go public in September, are set to trade under the symbol KFY on the

New York Stock Exchange

.

A story on the front page of

The New York Times

Sunday explores the flagging interest in themed restaurants owned by celebrities that wouldn't get within 500 yards of any one establishment after the opening ceremonies.

Planet Hollywood

(PHL)

,

The Official All-Star Cafe

, the

Fashion Cafe

, and others are shutting restaurants because of declining sales.