The financial services industry in the United States and Europe is still reeling from the financial crisis, shedding tens of thousands of jobs each month – even a year after the crisis hit its apex.

However, recent evidence suggests that the financial services industry in Asia – particularly China, which was largely isolated from the toxic assets that caused the crisis – is starting to rebound.

Indeed, many global financial firms are picking up hiring in Asia even as broad unemployment continues to rise. The reason: These financial firms want to be most active in the region of the world that has the best potential for growth, as well as the best opportunities for profit.

“The death of the industry has been greatly exaggerated,” Matthew Hoyle, founder of Matthew Hoyle Financial Markets, a Hong Kong-based headhunter for the banking and hedge fund industries, told the New York Times. “I am actually quite excited about the prospects for the rest of the year,” adding that “Things have picked up here — unlike in Europe and the United States, where that’s absolutely not the case,” he added.

Financial firms slashed 19,000 jobs in August – the 21st consecutive monthly drop for the industry, according to payroll processing firm Automatic Data Processing (ADP). The finance and insurance sector has shed 332,000 jobs since the recession began in December 2007. And the losses will likely keep piling on.

Labor Department data set to be released today (Friday) is expected to show the U.S. unemployment rate surged to 9.6% in August after dipping to 9.4% in July. From December 2007 to July 2009, the economy as a whole shed 6.7 million jobs.

“There’s a gradual improvement in labor markets underway in the sense that the monthly losses are diminishing,” said Joel Prakken, chairman of Macroeconomic Advisors LLC and an ADP spokesman. “The disappointing news it that we have several more months to go of job losses.”

There’s a similar story unfolding in Europe, as well. The unemployment rate across the 27 European Union countries rose to 9% in July from 8.9% in June, while the unemployment rate for the 16 countries that use the euro jumped to 9.5%, according to Eurostat.

As in the United States, many of the job losses have been sustained in the financial services sector. European banks and financial firms have cut 140,000 jobs since the third quarter of 2007, according to data compiled by Bloomberg.

About 84,000 European finance jobs are expected to hit the chopping block this year, according to a recent report by City of London Corp.That’s nearly ten times the number of finance jobs the region lost in 2008.

As the Europe’s largest employer of financiers, the United Kingdom will be most affected. It is expected to lose up to 35,000 finance jobs this year.

Employment at British, French and German financial services firms won’t return to its early-2008 highs until at least 2013 the report said. Even then, the United Kingdom will have 10,000 fewer finance jobs than it did in 2008.

The EU financial services industry employed about 1.4 million people and was worth about $315 billion (219 billion euros) at its peak in 2008, according to City of London. However, the entire industry will shrink 6.2% in 2009 and not return to growth until 2011.

“I’m fairly optimistic on the financial sector returning to profitability, but that won’t necessarily feed through to dramatic employment growth,” Alistair Milne, a senior finance lecturer at London’s Cass Business School, told Bloomberg.

Financial firms will be focused on “growth efficiency” over the next four years and “earning money out of the staff they’ve got at traditional businesses” such as fixed income, equity trading and derivatives trading, Milne said.

Asian Growth a Beacon for Financial Firms

While the financial services sectors in the United States and Europe continue to shrink, finance firms operating in Asia are already rebuilding.

Standard Chartered Bank said last month that it would recruit 850 bankers in the next 12 to 18 months. The majority of those hires will take place in China, but significant numbers will also to be added in Singapore and Malaysia.

“We have aspirations to double the industry growth rate and double our customer numbers in three years,” Foo Mee Har, Standard Chartered’s global head of premium banking, told the Telegraph.

Household wealth in Asia, outside Japan, was expected to grow by 12% annually until 2012, she added.

Meanwhile, HSBC Holdings PLC (NYSE ADR: HBC) said last week that it is recruiting more than 100 staff members in Hong Kong, and it plans to add 1,000 employees in mainland China this year.

Vincent Cheng Hoi-chuen, chairman of HSBC’s Asia-Pacific unit, even said that his company hopes Shanghai will grow into a financial center that rivals Hong Kong.

“I sincerely hope that Shanghai will become a financial center, as China is able to have two centers, given its size,” he said. “There should be enough capacity for companies to list in both or either market at the same time, despite more and more companies planning to go public in the capital market.”

And Australia and New Zealand Banking Group, which competes with Standard Chartered, expects to increase its staff in the retail banking business in China more than 10-fold to over 500 by 2012. The company is currently moving ahead with a plan to open more than 20 branches in the country by 2012, up from three currently.

In addition to these recently released plans:

• Bank of America Corp. (NYSE: BAC) added five senior staff to its Asia Pacific Commodities team and JP Morgan Chase & Co. (NYSE: JPM) added seven members to corresponding Asia commodities unit.
• Credit Suisse Group AG (NYSE: CS) added nine specialists to its Asia sales and trading business. (Credit Suisse’s Asia-Pacific operations are on track to contribute 25% of the firm’s total revenue in coming years.)

• And Citigroup Inc. (NYSE: C) said it plans to expand its commodity team in Asia at a “double-digit” pace in a bid to capitalize on rising demand for raw materials.

“Asia will be the biggest contributor to growth in commodity consumption,” Ananth Doraswamy, regional head of commodities, toldBloomberg in an interview from Singapore. “We will need more people in energy trading and metal sales, as well as agricultural products.”

A survey by Singapore-based recruiting firm Robert Walters showed that job advertisements in Hong Kong, Singapore, China and Japan jumped 6.4% in the April-June quarter from the three months prior, the New York Times reported.

That’s not surprising considering that unemployment in Hong Kong, Singapore, and Japan – at 5.4%, 3.3%, and 5.7% respectively – are still relatively low when compared to the United States and Europe. And while unemployment is still an issue in China, that country’s economy expanded by 7.9% in the second quarter, exceeding most analysts’ expectations, and lending credence to Beijing’s goal of 8% annual growth.

Indeed, the finance industry seems to have found greener pastures in Asia, where economic growth is still taking place.

“Asia is seen as a growth market,” Robert Walters’ Mark Ellwood toldThe Times. “Companies are not going out all guns blazing again, but there is once again an appetite to hire in certain areas.”

Finance Jobs Going Where the Growth Is – Asia ]]> http://www.contrarianprofits.com/articles/finance-jobs-going-where-the-growth-is-%e2%80%93-asia/20377/feed 0 http://www.contrarianprofits.com/articles/why-minimum-wage-represents-maximum-stupidity/19030 http://www.contrarianprofits.com/articles/why-minimum-wage-represents-maximum-stupidity/19030#comments Mon, 13 Jul 2009 16:09:13 +0000 Peter D. Schiff http://www.contrarianprofits.com/?p=19030 In a free market, demand is always a function of price: The higher the price, the lower the demand. What may surprise most politicians is that these rules apply equally to both prices and wages. When employers evaluate their labor and capital needs, cost is a primary factor.

When the cost of hiring low-skilled workers moves higher, jobs are lost. Despite this, minimum wage hikes, like the one set to take effect later this month, are always seen as an act of governmental benevolence. Nothing could be further from the truth.

When confronted with a clogged drain, most of us will call several plumbers and hire the one who quotes us the lowest price. If all the quotes are too high, most of us will grab some Drano and…

I don’t think I have to tell you how bad this could be. The market is already on shaky ground, and a week full of disappointing reports could plunge us back below the 7200 level.

With such a full week, I will briefly touch on a few of the more important reports.

Both the ISM Index and ISM Services reports are expected to show a drop for February. With a reading of 34 on the ISM, and 41.3 on the Services, both are indicating further contraction.

On Tuesday, the Pending Home Sales report for January is released, and is expected to show a decline of three percent. I actually expect this report to beat expectations with all the foreclosures and distressed sales in the markets.

The Fed Beige Book comes out Wednesday. While this only gives an overview of labor markets, wages, manufacturing, etc, in each of the Fed regions, it could give an early insight into whether any regions are seeing any sort of turnaround.

January Factory Orders are announced on Thursday, and no real surprise here. The decline is expected to continue, albeit less than the December report. Plain and simple, manufacturing is getting decimated.

The real blow this week could come on Friday when the Non-Farm Payroll report for February is announced. Expectations are for a loss of 615k jobs. If this is an accurate reading, that means that in the first two months of the year, the economy will have shed over 1.2 million jobs. That means in the first two months of the year, we will have lost half the amount of jobs the country lost all of last year.

Source: Employment Data Could End A Scary Week Of Reports

The monthly ADP Employer Services (ADP) survey – which tracks private non-farm payroll employment – stunned economists, showing a surprising increase from the 476,000 jobs lost in November.

The decline was the worst in the history of the survey, which began reporting in 2001. And if the findings are matched by the official government jobs report, due out Friday, it would be the biggest employment drop since the U.S. recession of 1975.

“This is an eye-poppingly bad number,” Art Hogan, the New York-based chief market analyst at Jefferies & Co. (JEF), told Bloomberg News. “The economy is in very difficult shape and that’s been proved out over the economic data from the past month.”

In fact, the numbers echo a trio of downbeat economic reports from the manufacturing, housing and service sectors reported by Money Morning just yesterday. Those numbers very graphically portray the severity of the current recession.

The economy has shed 1.9 million jobs this year as payrolls have dropped the last 11 straight months. U.S. companies slashed 533,000 jobs in November, according to the U.S. Commerce Department, and the unemployment rate grew to 6.7%, its highest level since 1974.

Unemployment numbers are considered by economists to be a snapshot of the health of both the labor markets and broader economy.

Job losses of this magnitude have a profoundly negative impact on the U.S. economy – and major ripple effects on economies worldwide – because jobless consumers are forced to cut back on spending. Fully 70% of all domestic economic activity is powered by consumer spending.

Stocks Can’t Weather the Storm

In response to the latest news, U.S. stocks slid and experienced their worst losses in two weeks, reversing a pattern in which investors seemed to be ignoring bad news as they bid up shares and notched steady gains.

The Dow Jones Industrial Average fell 245.16 points, or 2.72%, to close at 8,769.94. The Standard & Poor’s 500 Index declined 28.05 points, or 3.0%, to close at 906.65. The tech-focused Nasdaq Composite Index fell 53.32 points, or 3.23%, to end the day at 1,599.06.

Intel Corp. (INTC) and Alcoa Inc. (AA) exacerbated the slide, providing still more evidence of declining corporate revenue and layoffs. Intel projected that fourth-quarter revenue would fall 23% from 2007 levels because of weak demand, while Alcoa announced it will eliminate 13,500 jobs, or 13% of its work force.

Intel shares dropped a little more than 6.0% yesterday, while Alcoa shares shed more than 10% of their value.

“These are extraordinary times, requiring speed and decisiveness to address the current economic downturn,” Alcoa’s Chief Executive Officer Klaus Kleinfeld told MSNMoney.

The hardest-hit U.S. business sector was the service sector, which lost 473,000 jobs in December. The two other hard-hit sectors were consumer goods, which shed 220,000 jobs, and manufacturing, which jettisoned 120,000 workers.

“December does typically see seasonal hiring for the holiday season and plainly the anticipation of poor Christmas sales has played a major role in pushing down the adjusted numbers,” Alan Ruskin, an analyst at RBS Global Banking & Markets (ADR: RBS) told The Financial Times.

Official Government Report on Tap Friday

All eyes now turn to the afore-mentioned official government labor report, due on Friday. If the results match it would represent yet another historic number, making it the biggest employment drop since the 1975 recession.

ADP collects a wealth of information as it processes 500,000 payrolls for U.S. companies with aggregate employment of more than 24 million. It issues its report two days prior to the government report.

After it significantly undershot the government labor report in November, ADP changed its methodology “to improve the correspondence between nonfarm private employment estimates, and estimates published in the government report,” according the company’s website. Even so, some economists are revising their forecasts upwards.

“The drop in ADP employment in December is staggering and suggests that our original projection of a 500,000 decline in payrolls in December is too small,” RDQ Economics economists John Ryding and Conrad DeQuadros wrote in a research note.

The official employment numbers on Friday could show that as many as 700,000 jobs were lost in December, according to Ian Sheperdson, chief economist at High Frequency Economics. That would be the biggest drop in 59 years.

“This is shockingly awful,” Mr Sheperdson said. “We await Friday with trepidation.”

Source: Stocks Fall as ADP Report Says U.S. Shed 693,000 Jobs in December

Initial applications for jobless benefits climbed by 58,000 to 573,000 in the week ended Dec. 6, upwardly revised from 515,000 the previous week, the U.S. Labor Department reported yesterday (Thursday).  The figure was the highest since 1982, and far exceeded the median projection of 525,000 put forth by 39 economists surveyed by Bloomberg News.

The increase was due, in part, to a bounce from the week before, which was shorter because it included the Thanksgiving holiday. Government offices were open only four days that week.

Nevertheless, the four-week average, which smooths out fluctuations, stood at 540,500.  That’s the biggest number of jobless claims filed since December 1982, when the economy was also mired in a deep recession. By comparison, there were 337,000 initial claims last year.

Workers claiming continuing jobless benefits also blew through economists’ projections, jumping by 338,000 to 4.4 million, the Labor Department said. Economists had expected 4.1 million. Continuing claims lag initial claims by one week.

“Stepping back from the short-term noise … it is very clear that the underlying trend in claims is still rocketing, as companies throw in the towel and prepare for a long, deep recession,” Ian Shepherdson, chief U.S. economist for High Frequency Economics, wrote in a research note to clients, MSNBC News reported.

Jobless claims are considered by economists to be a snapshot of the health of the labor markets and broader economy.

The U.S. economy has shed 1.9 million jobs so far this year, with payrolls having now dropped for 11 straight months. U.S. companies slashed 533,000 jobs in November, and the unemployment rate grew to 6.7% , the highest since 1974, the government said last week.

“The labor market is facing its worst crisis since 1982, and it is certainly not over yet,” said Harm Banholtz, a U.S. economist at UniCredit Markets and Investment Banking in New York, told Bloomberg News. “One of the most important tasks of the newly elected government is, therefore, to help distressed homeowners and to stimulate the labor market.”

More companies added to the malaise  yesterday as additional layoffs were announced. New Britain, Conn.-based toolmaker Stanley Works (SWK) plans to lay off 2,000 workers and close three manufacturing plants.  Illinois-based foodmaker Sara Lee Corp. (SLE), said it had outsourced 700 jobs overseas, and Office Depot Inc. (ODP) is adding 2,200 cuts of its own over the next three months. The office-products firm is closing 112 stores – about 9% of those in the North American market – and six of its 33 distribution centers.

Looming over the jobless picture is the uncertainty surrounding the $14 billion automakers bailout bill, currently being mulled in the Senate.  But even with a bailout, one – or even all three – of America’s “Big Three” carmakers may fail.
If a bailout doesn’t materialize – or fails to have the desired impact – the results will be catastrophic, according to the Center for Automotive Research.  The Ann Arbor, Mich.- based nonprofit told The Associated Press that if Detroit’s Big Three stopped making cars today and returned to 50% production in 2010 and 2011, it would still wipe out nearly 2.5 million jobs next year.
Job losses of that magnitude would have a profoundly negative impact on the U.S. economy – with horrid ripple effects worldwide – because of the plunge in consumer confidence the resultant job losses and loss of confidence that would result. Fully 70% of all domestic economic activity is powered by consumer spending.  And with the cutbacks some doomsayers foresee, even exporters in developing markets as far away as China and India would feel the squeeze.

Here at home, the mere threat of job losses is being felt on Main Street. According to an Associated Press-GfK poll released Wednesday, 53% of shoppers say they expect to spend less on holiday gifts than they did last year, while 40% will spend the same.

In other words, more than 90% of American shoppers are resisting the urge to splurge and spend more this year than last on friends and family during the holiday period, a time retailers depend on for  as much as 40% of their revenue for the year. That spells big trouble for retailers nationwide, with the possible exception of Wal-Mart Stores Inc. (WMT) , and other large discounters.

Also buttressing the curtailed spending argument is a new poll that says just 20% of shoppers plan to use credit cards for holiday purchases.  That’s down a whopping 33% from 2004. And two-thirds of the consumer surveyed said they would pay off the full balance owed when the bills come due in January, the poll found.

Source: U.S. Companies “Throw in the Towel” – Pushing Jobless Claims to a 26-Year High

However, “There was some ‘just-in-case’ position squaring overnight,” wrote David Watt, of RBC Capital Markets. “The market is poised to jump on any sign of a pause and elevated inflation concerns to justify the exceptionally premature speculation about a rate hike by year end.”

The Fed’s rhetoric will be scrutinized almost as much as what it does, since inaction now won’t be taken as an end to falling rates unless the Committee is decisive about it.

“We’re not calling the end of the rate cuts,” wrote Ashraf Laidi, chief foreign exchange strategist at CMC Markets US.

“Regardless of whether the Fed holds rates unchanged in June, we expect the easing campaign to resume” in the third quarter, Laidi said, citing a persistent credit crunch, slack labor markets and the continued slowdown in housing.