Overseas Headlines – April 11, 2017


Yellen Says Fed’s Focus Has Shifted to Holding Growth Gains
Federal Reserve Chair Janet Yellen said the U.S. central bank’s task has shifted from a post-crisis exercise of healing the economy to one aimed at holding on to progress made. “Before, we had to press down on the gas pedal trying to give the economy all of the oomph that we possibly could,” Yellen said Monday in Ann Arbor, Michigan. The Fed is now trying to “give it some gas, but not so much that we’re pushing down hard on the accelerator.” Yellen and her colleagues are aiming to ease back significantly this year on the level of support the central bank is providing the U.S. economy as they close in on their goals of full employment and 2 percent inflation. Policy makers have penciled in two additional rate hikes this year, on top of one executed in March. Minutes of their March meeting showed that most Fed officials also expect to begin shrinking the bank’s $4.5 trillion balance sheet later this year, gradually reversing emergency bond purchases made during the recession and recovery. “The appropriate stance of policy now is closer to, let me call it neutral,” Yellen said in response to questions during an event at the Gerald R. Ford School of Public Policy at the University of Michigan.


Euro zone Feb industry output falls, largely due to energy
Euro zone industrial output declined in February, against market expectations of a slight increase, largely due a sharp drop of energy production, dampening prospects for robust economic growth after bullish sentiment indicators. The European Union’s statistics office Eurostat said on Tuesday that industrial production in the 19-country single currency bloc fell by 0.3 percent from January, but rose by 1.2 percent year-on-year. Both figures were lower than market expectations of increases of 0.1 percent in the month and of 2.0 percent from a year earlier. January’s output numbers were also cut to 0.3 percent month-on-month from an initially reported 0.9 percent and to 0.2 percent year-on-year from the 0.6 percent published a month ago. The tepid production numbers contrast with bullish sentiment indicators.


Fitch: China Retail Recovery Encouraging but Uncertainty Remains
HONG KONG, April 11 (Fitch) The initial signs of a recovery in consumer spending for traditional Chinese retailers are encouraging, but the sustainability and degree of the turnaround remains uncertain, says Fitch Ratings. Retailers such as Golden Eagle Retail Group Limited (BB-/Negative) and Parkson Retail Group Limited (B-/Negative) have observed better sales after years of decline due to China’s challenging department store environment since 2014, which was brought about by changing consumer shopping channel preferences and a lack of store differentiation. Same store sales growth for Parkson turned positive in 4Q16 at +1.4%, after reporting a decline of 9.0% in 9M16 and a consecutive decline since 2013. Same store sales for Golden Eagle only declined by 4% for full-year 2016, compared with a 9% decline in 1H16. Fitch believes the recovery is partly driven by consumers bringing back some overseas spending. Cosmetics, sportswear and outdoor as well as children’s wear and toys product categories have performed well, while the outlook for apparel remains challenging. A pick-up in luxury spending has also been observed, with watch retailer Hengdeli Holdings Limited (B+/Rating Watch Negative) benefiting from its China retail segment turning positive in 2H16, compared with a decline of 8.9% in 1H16 following declines since 2013.