DOLLAR WEAKENS IN WORLD MARKET
The U.S. dollar has continued to lose strength recently, causing corresponding drops in stock and bond prices, according to Wall Street Journal reports, and investors are starting to pay attention. For the past few months, the dollar has been losing value against the mark and the yen. This, combined with higher oil and precious metals prices, has led some to predict the Federal Reserve will have to raise interest rates again in order to avoid the specter of increased inflation.
LARGE BANKS GAIN IN IST QUARTER
Analysts expecting a poor first quarter of 1995 were pleasantly surprised to note strong earnings for some of the largest banks in the U.S., with Nationsbank reporting a 6 percent net income compared with the same period in 1994, Bank of New York enjoying a 22 percent profit, and First Interstate’s profits rising 20 percent, according to reports.
On the other hand, the earnings of First Chicago Corp. were flat, and Chase Manhattan Corp.’s net income fell 28 percent. Even so, the decline at Chase was 10 percent less than predicted.
HOUSING STARTS DROP IN MARCH
Despite falling mortgage rates, U.S. housing starts dipped 7.9 percent in March to reach a two-year low, according to the U.S. Commerce Department. It may take several months for the lower rates to have an impact, say some analysts, who note that the figure may have been exaggerated due to flooding in the western U.S. which caused a 20.7 percent housing start decline.
U.S.-JAPAN TRADE TALKS
Although trade talks between the U.S. and Japan have resumed, in the face of a weak dollar against the stronger yen, both sides reportedly have low expectations. With 60 percent of its trade deficit to its Asian competitor related to the automobile trade, the U.S. is interested in introducing U.S. cars and auto parts into the reluctant Japanese market. However, some believe Japan will not change its position unless threatened with economic sanctions.
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