Obama and the public are on different pages, if not different in books.
By PEGGY NOONAN
The first thing I learned in journalism is that every story has a name. At WEEI News Radio in Boston, the editor would label each story with one word, called a "slug," and assign a writer to write it for air. This week's devastating earthquake would be slugged "Haiti." A story about a gruesome murder might be "Nightmare."
We're at the first anniversary of the inauguration of President Barack Obama, and the slug, the word that captures its essence, is "Disconnect."
This is, still, a surprising word to use about the canny operatives who so perfectly judged the public mood in 2008. But they haven't connected since.
There is a disconnect, a detachment, a distance between the president's preoccupations and the concerns of the people. There's a disconnect between his policy proposals and the people's sense, as expressed in polls, of what the immediate problems are.
I'm not referring to what is being called the president's rhetorical disconnect. In this criticism, he is not emotional enough when he speaks, he doesn't wear his heart on his sleeve, he is aloof, like a lab technician observing the movements within a petri dish called America. It may be true that this doesn't help him, but so what? In a successful presidency, his cool demeanor would be called an interesting facet, not a problem. And we don't really need presidents to move us, when you think about it. We need them to lead, and in the right direction.
Nor am I referring to an iconic disconnect. In this criticism, the president refuses to or is unable to act as a paternal figure. "A president is a father," say these critics. "He must comfort us." But, actually, your father is your father. Voters didn't hire Mr. Obama to play the old dad in the MGM movie. In any case he always seemed like the bright older brother, not the father. At the end of the day you, being a grownup, don't need him to be your daddy, do you?
You want a competent chief executive with a deep and shrewd sense of the people. Americans want him to be on the same page as they are. But he's on a different page, and he may in fact be reading a different book. Thus the latest Quinnipiac poll, which puts his approval/disapproval at a descending 45% to 45%. Pure hunch: The approval number is probably slightly high because people don't want to disapprove of their new president—the stakes are so high!—and don't like telling pollsters they disapprove of him.
The real story is that his rhetorical and iconic detachment are harped on because they reflect a deeper disconnect, the truly problematic one, and that is over policy. It doesn't really matter how he sounds. It matters, in a time of crisis, what he does. That's where the lack of connection comes in.
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The people are here, and he is there. The popularity of his health-care plan is very low, at 35% support. Someone on television the other day noted it is as low as George Bush's popularity ratings in 2008.
Yet—and this is the key part—the president does not seem to see or hear. He does not respond. He is not supple, able to hear reservations and see opposition and change tack. He has a grim determination to bull this thing through. He negotiates each day with Congress, not with the people. But the people hate Congress! Has he not noticed?
The people have come alive on the issue of spending—it's too high, it threatens us! He spends more. Everywhere I go, I hear talk of "hidden taxes" and a certainty that state and federal levies will go up, putting a squeeze on a middle and upper-middle classes that have been squeezed like oranges and are beginning to see themselves as tired old rinds. Mr. Obama seems at best disconnected from this anxiety.
The disconnect harms him politically, but more important it suggests a deepening gulf between the people and their government, which only adds to growling, chafing national discontent. It also put the president in the position, only one year in, only 12 months into a brand-new glistening presidency, of seeming like the same old same old. There's something tired in all this disconnect, something old-fashioned, something sclerotic and 1970's about it.
And of course the public is reacting. All politicians are canaries in coal mines, they're always the first to feel the political atmosphere. It was significant when the Democrats lost the governorships of Virginia and New Jersey two months ago. It is significant that a handful of House and Senate Democrats have decided not to run this year. And it is deeply significant that a Republican state senator in Massachusetts, Scott Brown, may topple the Democratic nominee to fill Ted Kennedy's former seat, Martha Coakley. In a way, the Republicans have already won—it's a real race, it's close, and in "Don't blame me, I'm from Massachusetts"!
Mr. Brown's whole story right now is not about disconnect but connect. Massachusetts has an 8.8% unemployment rate, and graduates of the commonwealth's great universities can't find work. An old Boston Republican hand said of the race, "It's 100% about policies—health care, taxes, what's the plan on the economy?" Mr. Brown charges that Ms. Coakley's support for cap and trade and health care will amount to $2 trillion in taxes in the next five years.
Ms. Coakley has the advantage—Massachusetts is the heart of blue-state America—but in a way her advantage is her curse. Because she is the candidate of a party that for 40 years has been used to winning, reigning and winning again, she looks like the same old same old, a standard old-line liberal, the frontwoman for a machine, a yes woman for the Obama-Pelosi era.
It is interesting that Ms. Coakley, too, has been told by pundits the past week that her problem is that she's not emotional enough. She should show passion and fire! She should cry like Hillary!
This comes not only from pundits but normal people, and if you contemplate the meaning it is, weirdly: You're not good enough at manipulating us! We want more theatrics!
Both national parties are trying to pour in money and resources, but the most obnoxious intrusion must have been the fund-raising letter this week from New York's Sen. Charles Schumer, who tried to rouse the troops by calling Mr. Brown a "far-right teabagger." Does that kind of thing even work anymore? Doesn't name calling put off anyone not already predisposed to agree with it?
In a time when the people of Massachusetts have real concerns about their ability to make a living, stuff like the Schumer letter is just more evidence of a party's disconnect.
Politics is about policy. It's not about who's emotional and who cries or makes you cry. It's not about big political parties and the victories they need in order to rule. It's not about going on some ideological toot, which is what the health-care bill is, hoping the people will someday see and appreciate your higher wisdom.
In a way, Mr. Obama's disconnection is a sign of the times. We are living in the age of breakup, with so many of the ties that held us together loosening and fraying. If the president wants to lead toward something better, he should try listening. If you can't connect through the words you speak, at least you can do it through your ability to hear.
He’s Not Steve Jobs
Commentary by William Pesek
Jan. 18 (Bloomberg) -- If you think nothing ever changes in Japan, consider Naoto Kan and Kazuo Inamori.
Kan is the new finance minister and Inamori is Japan Airlines Corp.’s new chief executive officer. Both men have three notable things in common. One, neither is a natural choice for the task at hand. Two, both hold the outlook for Asia’s biggest economy in their hands. Three, the odds are stacked firmly against either succeeding.
Japan is turning to Kan and Inamori in a sign of change, and it’s a good one. So let’s consider what could be if things break their way.
Kan’s job has “impossible” written all over it: boost growth and avoid a downgrade to Japan’s Aa2 credit rating. Rating companies are registering their dismay that Japan has had six finance ministers in 18 months. Such “revolving-door” leadership “doesn’t engender confidence,” says Thomas Byrne, senior vice president of Moody’s Investors Service.
The good news is that Kan, 63, is breaking the mold of the typical keeper of Japan’s all-powerful Ministry of Finance. Staffers are abuzz that he hasn’t visited the place much since getting the job on Jan. 6. There’s a reason for that. Kan wants to yank control over an economy heading in the wrong direction from the shadowy bureaucrats who run it.
It’s not the kind of revolution that lends itself to television-news reports, but it’s a huge one. Out of the gate, Kan told staffers that “the minister is not a representative of the ministry. He is a representative of the people.”
Arm’s Length
It’s not just semantics. Kan has a track record as a political rebel. By limiting his time at MOF headquarters, Kan is signaling that he plans to keep the bureaucrats at arm’s length. This is a big deal in change-averse Japan and it has the political class chattering.
Inamori’s job would seem equally impossible. Beleaguered JAL soon may file for what would be the nation’s sixth-biggest bankruptcy. The former flagship carrier holds a key place in the Japanese psyche. A few decades ago, its high level of service represented Japan’s rise from the ashes of World War II. Now it’s a national punch line and a reminder that Japan’s zombie- company problem lives on.
As deflation returns and pessimism about the future grows, JAL’s prognosis weighs heavily on the nation’s 126 million people. Just as U.S. President Barack Obama helped General Motors Co. to support consumer sentiment, Yukio Hatoyama must ensure JAL is handled skillfully for a change. That can be seen in how Prime Minister Hatoyama’s Democratic Party of Japan is breaking with the tradition of bailing out JAL every few years.
Seniority-Obsessed Japan
Enter tycoon Inamori, one of Japan’s most celebrated entrepreneurs. In few countries could a 77-year-old wear that moniker. In seniority-obsessed Japan, he’s that and more. Inamori founded electronics company Kyocera Corp. and set up one of the three companies that merged in 2000 to become KDDI Corp., Japan’s second-biggest wireless operator.
Last week, Forbes magazine named Inamori Japan’s 28th- richest man. It’s not his money that intrigues people, though. It’s his role as a business philosopher and writer -- a kind of Japanese Jack Welch. In a Nov. 2 column, I postulated that JAL needed a Steve Jobs -- a creative multitasker with uncanny business acumen. Inamori isn’t the Apple Inc. CEO, but he may do.
It’s strangely fitting that Inamori also is an ordained Buddhist priest. He may need more than good karma to tame the unholy alliance of labor unions, bankers and politicians standing in his way. Then again, Inamori is thought to have something equally useful: the support of the prime minister.
Airport Fetish
The idea that JAL is an independent company is rubbish. Technically privatized in 1987, it has never been allowed to run itself for one reason: The Liberal Democratic Party, which ran Japan virtually uninterrupted for 54 years until last August, had an airport fetish. The LDP built white-elephant terminals and runways all over the nation to create construction jobs.
Then, it browbeat JAL’s compliant executives into utilizing them. It left JAL with a stable of unprofitable routes -- not unlike Amtrak in the U.S. A key task for Inamori is halting those flights, a radical step that will require political support at the highest levels.
I don’t feel terribly bad for all of JAL’s shareholders. For the retirees about to see their investments vanish, one has to have more sympathy. The many investors out there targeting JAL as a “moral hazard” strategy bet on bailouts for years. It’s about time the government ended the JAL gravy train.
That phenomenon is at the core of Japan’s two-decade-long economic funk. Japan Inc. picks corporate winners and then coddles them into complacency. And so, Hatoyama isn’t exaggerating when he says: “The revival of Japan Airlines is deeply connected to the revival of the Japanese economy.”
There’s wisdom in putting the economy and JAL into fresh and unpredictable hands. Yes, it may be business as usual and history might show little was achieved by Kan and Inamori. It’s also possible the reform that investors have waited for in Japan for decades is suddenly afoot.
Yen Carry Trade’s Appeal
By Matthew Brown
Jan. 18 (Bloomberg) -- Currency strategists are more in sync than any time since the depths of the financial crisis, increasing incentives to bet against the yen after the carry trade lost money in December for the first time in 10 months.
Forecasts for the euro, yen and Swiss franc from 61 Bloomberg survey contributors are within 9 cents of the mean on average, down from 11 cents a year ago. They haven’t been so unified since Lehman Brothers Holdings Inc.’s 2008 bankruptcy. The predictions’ so-called standard deviation fell 16 percent last quarter, the biggest drop in at least two years, after jumping 48 percent in the three months after Lehman’s demise.
The growing consensus signals that foreign-exchange swings will decline, luring investors to sell currencies from countries with lower interest rates to buy higher-yielding ones. That may weaken the yen and franc, and rein in the resurgent dollar. Japan’s currency, which fell 6.6 percent since its 14-year high of 84.83 per dollar on Nov. 27, may be the biggest loser as Prime Minister Yukio Hatoyama fights deflation and a recession.
Declining volatility and the rising U.S. currency means “people are thinking about alternatives to the dollar as a funding vehicle, and the yen is the obvious candidate,” said Richard Franulovich, a strategist in New York at Westpac Banking Corp., Australia’s second biggest bank. “Not only do they already have low rates, the authorities are talking about a new quantitative-easing program. There’s a big fiscal expansion playing out under the new government, and the currency had a big rally last year.”
Carry Returns
Westpac was one of 2009’s 10 best yen forecasters, data compiled by Bloomberg show. Selling yen to buy Australian and New Zealand dollars, Norwegian krone and Brazilian reais returned 33 percent last year. Using the dollar earned 31 percent.
Funding the carry trade with the greenback lost money in December for the first time since February as the U.S. currency gained 4.8 percent against the euro amid growing confidence in the U.S. economy and expectations that the Federal Reserve will raise borrowing costs by June. Futures trading on Dec. 31 suggested a 62 percent chance the Fed would increase its benchmark to at least 0.5 percent by mid-year from a range of zero to 0.25 percent, up from 30 percent in November, Bloomberg data show. The Bank of Japan’s target rate is 0.1 percent.
Buying and selling high- and low-yielding currencies to take maximum advantage of global rate moves gained 19 percent from February to November, the carry trade’s best nine months since 2003, a Royal Bank of Scotland Plc index shows. The index fell 0.9 percent in December.
‘U-Turn’
“The U-turn in the dollar led to a reverse carry trade in December where people were selling the commodity currencies,” said Theodore Chen, a quantitative analyst at RBS in London who oversees the index.
Rapid exchange-rates swings tend to erode the carry trade’s profits. Greater certainty about the direction of currencies this year may help damp volatility, reducing the chances of a repeat of December’s turnabout.
Risk returns have shifted in favor of the yen since late last year, as measured by the Sharpe ratio, a gauge of gains that takes volatility into account. In the year ending Nov. 30, selling the dollar versus the currencies of Australia, New Zealand, Norway and Brazil had a risk-premium ratio of 2.31, compared with 1.24 for the yen. Since then, the ratios are 2.71 for the yen and less than zero for the dollar.
‘Faster Pace’
“Yen volatility can come down at a faster pace than dollar or Swiss crosses, making it more useful as a funding source going forward,” said Paul Mackel, the director of currency strategy at HSBC Holdings Plc in London. “There’s going to be a reflating of the yen carry trade.”
Analyst forecasts on the yen against the dollar varied from the mean by 9 cents at the end of last week, compared with 10 cents at the end of 2008, Bloomberg data show. Dollar forecasts against the euro also had a standard deviation of 9 cents last week, down from 12 cents. For the Swiss franc, the figure fell to 8 cents, from 11 cents. The Swiss National Bank’s key rate is 0.25 percent.
JPMorgan Chase & Co.’s index of volatility in the Group of Seven currencies has fallen 12 percent this year, the most since the two weeks beginning March 27, 2009.
Yen Forecasts
Carry-trade returns will benefit this year from the yen weakening 7.2 percent to 98 per dollar from 90.93 today, according to the median forecasts in Bloomberg surveys. The franc is predicted to weaken 4.8 percent to 1.08 per dollar.
The dollar has the least bearish outlook -- a 1 percent decline to $1.45 per euro, from $1.4362. Bets on gains for the IntercontinentalExchange Inc.’s Dollar Index -- a gauge against the euro, yen, pound, Canadian dollar, franc and Swedish krona - - outnumber bearish wagers by 6 to 1, the most since March.
Even assuming stable currencies, buying 12-month bills in reais, kronor, Australian and New Zealand dollars with Japanese yen will return 5.2 percent more than holding equivalent- maturity Japanese bills, compared with 5 percent for the same trade with the dollars.
‘Disastrous Strategy’
Selling the yen against that basket of currencies lost investors 34 percent in 2008 as volatility on the Japanese currency against the dollar rose to 26 percent in December, the most since at least 1991. Using the dollar as the funding currency lost 17 percent.
“The carry trade works under conditions of low volatility, which is why it was the most disastrous strategy in 2008,” said Stuart Thomson, a Glasgow-based fund manager at Ignis Asset Management, which oversees $100 billion.
Yen volatility is likely to decline as the Bank of Japan keeps its benchmark rate on hold through next year as it battles deflation, according to median forecast of 28 economists.
Japanese consumer prices are forecast to fall 1.3 percent in 2009, by the same amount in 2010 and a further 0.3 percent in 2011, according to median economist forecasts in Bloomberg surveys. The country’s economy will expand 1.4 percent in 2010, after contracting 5.3 percent last year, the estimates show.
In Switzerland, inflation will hold at 0.6 percent through 2010, the Bloomberg survey shows. In the U.S., there is an 80 percent chance the Fed will raise its key rate to at least 0.5 percent by the end of the year, futures trading shows. The U.S. economy will grow 2.7 percent this year, according to the median of 57 economists’ forecasts compiled by Bloomberg.
Brazil, Norway
In Brazil, the central bank will increase its rate to 10.5 percent from 8.75 percent as growth accelerates to 4.75 percent from 0.2 percent in 2009, according to Bloomberg surveys. Norway will lift its rate to 3 percent from 1.75 percent, and Australia’s will rise to 5 percent from 3.75, the polls show.
Japanese Finance Minister Naoto Kan said Jan. 14 there are “still various policy measures that can be taken,” signaling the Bank of Japan will take further action to aid the economy. Morgan Stanley, Goldman Sachs Group Inc. and Pacific Investment Management Co. analysts said this month the central bank may increase the amount of money it adds into the economy through purchases of government bonds to combat deflation.
The Democratic Party of Japan’s popularity has slid since it came to power for the first time four months ago promising to end 20 years of economic stagnation. Prime Minister Hatoyama’s approval rating was at 56 percent this month, compared with 75 percent when he took office, the Yomiuri newspaper said Jan. 11, without giving a margin of error.
Japanese Exporters
A weaker yen will benefit Japanese exporters, including Toyota Motor Corp., the world’s largest manufacturer of automobiles, and Sony Corp., which is forecasting a second annual loss. Japan exports more than it imports, giving it a current-account surplus every year since at least 1986, when Bloomberg began collecting the data. Exports accounted for 14 percent of Japanese gross domestic product in the third quarter, compared with 11 percent in the U.S.
The policies of the government and central bank are “a signal to the market, saying ‘Hey, use the yen as a carry trade because we’ll be back into the market printing lots of yen to push the currency lower,” said Axel Merk, president of Merk Investments LLC in Palo Alto, California, and manager of the $477 million Merk Hard Currency Fund.
Some analysts predict the yen will rise against the dollar as the U.S. currency suffers more from a global slowdown. Eisuke Sakakibara, formerly Japan’s top currency official, said the global recovery may slow in the second quarter, pushing Japan into a double-dip recession and weakening the dollar to 85 yen from 90.85 today.
“Should the U.S. experience a relatively weak rebound from spring to summer there’s a high possibility the dollar will drop,” said Sakakibara in a Jan. 15 interview in Tokyo.
Google Says It’s in Talks With China
By Mark Lee
Jan. 18 (Bloomberg) -- Google Inc. said it has begun talks with the Chinese government about the company’s plan to stop censoring results from its search engine, after saying it may quit the country because of cyber attacks.
Google will hold more talks with Chinese authorities “in the coming days,” it said in an e-mailed response to questions today.
The operator of the world’s most-popular search engine last week said it plans to operate an unfiltered search-engine service in China -- a move that may lead to the company closing down its offices in the country -- pending talks with the government. The Mountain View, California-based Internet company said its computer system faced a series of “highly sophisticated” attacks that originated in China.
“The key swing factor is the negotiation between Google and the Chinese government,” Credit Suisse Group AG analysts Wallace Cheung and Sharon Jing wrote in a report today. “Next week will be crucial for resolution of the issue,” said the analysts.
An exit from China would leave Google, whose revenue growth slowed during the U.S. recession, on the sidelines of the world’s biggest Internet market by users. The number of Chinese Web users will grow to 840 million, or 61 percent of the population, by 2013, according to EMarketer Inc. in New York. That’s up from 396 million last year.
Blog Posting
Google said Jan. 12 in a blog posting that it had been subjected to cyber attacks that originated from China and had targeted Chinese human rights campaigners’ Gmail e-mail accounts. It wanted to reach an agreement with the Chinese government to allow unfiltered Internet searches, and would be removing restrictions in coming weeks, the company added.
China said it welcomed global Internet companies provided they obey laws that restrict their content.
The Chinese service started by Google in 2006 limits search results to comply with the Chinese government’s rules to restrict access to information censors deem inappropriate. Its Google.cn Chinese-language site is still operating in compliance with local regulations, Google said in today’s statement.
Local online operator Baidu Inc. will pick up “the lion’s share” of Google’s search business should the U.S. company leave, Nomura Holdings Inc. analyst Jin Yoon wrote in a Jan. 13 report. Tencent Holdings Ltd., operator of China’s biggest online chat service, and Sohu.com Inc. also will gain, Yoon said.
Google’s China operations may be “officially terminated” in February, leading the government to block the company’s main site, Credit Suisse’s Cheung and Jing wrote.
“Post Google’s China shut down, China government is likely to frequently block the Google.com Web site,” they wrote, without saying who gave them the information. “Without stable Web site access, Google will likely lose traffic and even revenue” to Baidu and other search-engine providers.
Stocks Rise in Europe
By Justin Carrigan and David Merritt
Jan. 18 (Bloomberg) -- Stocks in Europe rose on speculation mergers and acquisitions will rebound this year as the global economic recovery gathers pace. The pound strengthened after a survey showed U.K. house prices increased in January.
The Dow Jones Stoxx 600 Index rebounded from its first weekly loss in a month to rise 0.6 percent as of 13:48 a.m. in London. The pound strengthened to a four-month high against the common European currency. Greece’s Athens Stock Exchange General Index sank 1.7 percent as European finance ministers scrutinized plans to curb the nation’s budget deficit. U.S. markets are closed today for the Martin Luther King Jr. holiday.
“M&A is a theme we’ve entered into our portfolios,” said Louis de Fels, a Paris-based money manager at Raymond James Asset Management International, which oversees $29 billion. “We favor stocks that will acquire sales through takeovers. This theme will develop in Europe and these stocks will continue to perform.”
Global mergers and acquisitions are poised for a “modest” rebound this year after companies cut debt and analysts trimmed earnings estimates, accounting firm KPMG said today. International Monetary Fund Managing Director Dominique Strauss- Kahn said in Tokyo it’s too early for policy makers to withdraw stimulus packages that are resuscitating global growth.
Takeover Targets
International Power Plc jumped 5.1 percent in London to its highest level since October 2008. GDF Suez SA is considering a tie-up with the biggest U.K.-based electricity producer, people familiar with the plan said. Cadbury Plc rose 1.3 percent on speculation Kraft Foods Inc. will lift its bid for the chocolate maker. Cie. Financiere Richemont SA, the world’s largest jewelry maker, added 2 percent in Zurich after sales climbed.
The MSCI Asia Pacific Index dropped 0.4 percent, snapping four weeks of gains, after JPMorgan Chase & Co. reported a loss in retail banking after Asian markets closed on Friday and U.S. consumer confidence trailed forecasts. Nissan Motor Co., which gets about 35 percent of its sales from North America, slumped 2.6 percent in Tokyo. China Mobile Ltd. declined 2.5 percent in Hong Kong, leading declines by telecommunications stocks.
The MSCI Emerging-Markets Index fell to a two week-low, declining less than 0.1 percent. Russia’s ruble weakened 0.2 percent against the dollar. Russian stocks rose, sending the Micex Index to its highest level in 17 months, as Morgan Stanley upgraded commodity producers and UBS AG said the rally in world’s best-performing equity market in 2009 has more to go.
OAO Severstal, the nation’s biggest steelmaker, and OAO Magnitogorsk Iron & Steel jumped more than 5 percent after Morgan Stanley raised price estimates for metals and mining stocks 28 percent on average.
Greek Budget Woes
Greek stocks declined, with the ASE Index posting the biggest drop among world stock indexes. Alpha Bank SA, the nation’s third-largest bank, slipped 6 percent in Athens. Hellenic Telecommunications Organization SA, Greece’s biggest telephone-services provider, slid 2 percent.
Greece is struggling to cut a 2009 budget deficit that may reach 12.7 percent of gross domestic product, the highest in the euro region. Moody’s Investors Service said on Jan. 13 the Greek and Portuguese economies may face a “slow death” as they dedicate a higher proportion of their wealth to paying off debt.
The euro fell to near its lowest level in a week against the dollar, losing as much as 0.4 percent to $1.4335, almost matching its weakest level since Jan. 8. It recently traded at $1.4375.
‘Under Attack’
“If the EU decides to bail out Greece, either via the European Central Bank or direct by other euro members, it would deliver a bad signal to other euro-zone countries,” Jennifer Underwood, a strategist at Europe Arab Bank Plc in London, wrote in a note. “Should no bailout be forthcoming and there is a Greek sovereign default, not only would the euro come under some heavy pressure on the foreign-exchange markets, the weaker euro members would come under attack.”
The yield premium, or spread, investors demand to hold Greek 10-year bonds rather than those of Germany, Europe’s benchmark borrower, narrowed 4 basis points to 269 basis points, after earlier jumping to 278 basis points, within 1 basis point of the widest level since March. The corresponding spread for Portuguese 10-year notes widened 2 basis points to 94. The gap for Spanish debt increased by 3 basis points to 73.
The pound advanced against 14 of its 16 most-traded counterparts, and traded at less than 88 pence per euro for the first time since Sept. 15, after a survey showed U.K. house prices increased in January.
Crude oil for February delivery rose 51 cents to $78.51 a barrel in electronic trading on the New York Mercantile Exchange. Platinum for immediate delivery climbed 1.1 percent to $1,615.88 an ounce after earlier trading at its highest intraday level since August 2008. Palladium added 0.6 percent to $457.65 an ounce.
The extra yield investors demand to hold European investment-grade corporate bonds rather than government debt widened to 152 basis points, from 151 basis points, near the lowest level since February 2008, according to Bank of America Merrill Lynch indexes.
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