Recession Looms On the heels of Merrill Lynch, Wall Street investment firm Goldman Sachs has forecast a U.S. recession for 2008. In the wake of this prediction, the Federal Reserve cut benchmark lending rates to 2.5 percent by the third quarter.
In a research note to clients, Goldman Sachs economist Jan Hatzius indicated that the predicted recession will last “two to three quarters” and “should be relatively mild by historical standards, with a cumulative decline in real GDP of only about .5 percent (not annualized).”
The catalyst for this prediction was the recent rise in unemployment to 5 percent, a trend Goldman Sachs believes will continue in 2009, when it predicts unemployment will grow to 6.5 percent from 6.25 percent at the end of 2008. Other red flags were the decline of the housing and credit markets. The firm forecast that real gross domestic product (GDP) would rise only 0.8 percent this year and contract by 1 percent on an annualized basis for both the second and third quarters. It expects consumer spending, which accounts for over two-thirds of the economy, to remain flat for the first three months of the year and also contract in the following two quarters. The final quarter of 1991 marked the last time spending decreased on a quarterly basis.
In response to these conditions, the Federal Reserve reduced its benchmark federal funds rate by 0.75 percentage points to 3.5 percent on January 22. This represents the broadest cut since 1990. President Bush announced that single consumers who earn less than $75,000 and married couples who earn less than $150,000 could receive one-time cash rebates of $600 and $1,200, respectively.
India’s Polished Imports Jump in 2007
India’s polished diamond export trade shifted in 2007, as polished imports rose markedly in response to the weaker dollar. The result was a significant decline in the country’s net diamond account during the calendar year.
While polished exports grew 21 percent to $13.02 billion during 2007, polished imports jumped 132 percent to $3.97 billion. As a result, India’s net polished exports — exports less imports — were flat at $9.04 billion in 2007.
Rough imports increased 12 percent to $9.4 billion, and rough exports grew 6 percent to $502.53 million. India’s net rough imports — imports minus exports — increased 12 percent to $8.89 billion. At year’s end, India’s net diamond account was 86 percent less than the 2006 level at $147.05 million.
In December 2007, polished exports grew 44 percent to $899.69 million, while polished imports jumped 270 percent to $545.09 million. The country’s net polished exports fell 26 percent to $354.6 million in the same month.
December rough imports rose 8 percent to $989.48 million, and rough exports declined 14 percent to $42.66 million. Net rough imports therefore grew 9 percent to $946.82 million.
India’s December net diamond account — net polished exports less net rough imports — dropped 52 percent to $592.22 million.
Israel’s Imports RiseIsrael’s December polished imports grew 16 percent to $596.18 million, keeping net polished exports — polished exports less imports — in the red by $272.54 million, or 46 percent more than December 2006.
Rough imports rose 12 percent to $593.69 million, while rough exports increased 54 percent to $265.67 million. Net rough imports — rough imports minus exports — fell 8 percent to $328 million.
Israel’s polished exports fell 2 percent to $323.64 million in December, the Ministry of Industry, Trade and Labor reported. By volume, however, exports grew 3.7 percent to 235,544.55 carats for the month, meaning that the price per carat dropped 5 percent to $1,374.02 per carat.
Israel’s December net diamond account — net polished exports less net rough imports — fell 10 percent to remain in the red at $600.56 million.
The calendar year 2007 as a whole looked brighter for Israel, showing a significant rise in its net diamond account. Annual polished exports rose 7 percent to $7.07 billion, while polished imports grew 13 percent to $4.55 billion. Net polished exports fell 3 percent to $2.51 billion.
Rough imports for the year increased 8 percent to $5.08 billion, and rough exports jumped 25 percent to $3.38 billion, as net rough imports dropped 16 percent to $1.69 billion. Israel’s 2007 net diamond account grew 42 percent to $819.21 million and its strategic focus on the Far East was evident in the figures as polished exports to Hong Kong rose 32 percent to $1.31 billion.
Japan’s Jewelry Store Sales FallSame-store sales at department stores across Japan experienced, on average, their eleventh consecutive annual decline. The Japan Department Store Association reported today that same-store sales fell 0.5 percent to $72 billion (JPY 7.7 trillion).
December sales fell 2.3 percent to $8.2 billion (JPY 875.34 billion) across the nation, and in Tokyo sales fell 1.6 percent to $2 billion (JPY 213 billion).
For the year 2007, the category for jewelry sales, which includes art, fell 2.7 percent to $3.6 billion (JPY 388.7 billion).
Lazare Kaplan Reports Second Quarter Profit, But Sales SlideLazare Kaplan International Inc. reported improved second quarter and first half earnings for fiscal 2008 ended November 30, 2007.
Net sales for the quarter fell 4 percent to $90.53 million. Polished diamond revenue increased almost 4 percent to $43 million and reflected increased sales of branded diamonds. Rough diamond sales fell 10 percent to $47.5 million.
Lazare Kaplan reported profits of $291,000 during the quarter, up from a loss of $1.36 million one year ago. Gross margin for the quarter was 7 percent, up from 5.2 percent.
For the six-month period, Lazare Kaplan reported a profit of $711,000, up from a loss of $3.19 million. Sales fell 17 percent to $193.1 million. Polished revenue rose 4 percent to $77 million and rough sales slid 27 percent to $116.2 million.
South Africa’s Rough Exports Down 64 Percent for OctoberSouth Africa’s rough diamond exports fell 64 percent to $71.92 million (ZAR 493.38 million) in October 2007, the most recent reporting period published by the Department of Trade and Industry.
Rough imports grew 271 percent to $74.27 million dollars as net rough exports —rough exports less imports — moved into the red by $2.35 million, compared to a positive $178.52 million in October 2006.
Polished exports declined 4 percent to $54.28 million, while polished imports fell 31 percent to $12.26 million. Net polished exports — polished exports minus imports — grew 9 percent to $42 million. South Africa’s October net diamond account — net rough exports plus net polished exports — fell 82 percent to $39.66 million.
For the year to date, polished exports rose 21 percent to $529.4 million, and polished imports grew 10 percent to $101.2 million. Net polished exports fell 1 percent to $433.2 million.
Sierra Leone’s Rough Exports IncreaseRough diamond exports in Sierra Leone rose almost 12 percent to $142 million, according to the most recent figures released by the government.
The largest exporter of rough was Hussein Makie of Lebanon, who shipped 269,499 carats valued at $55 million. Koidu Holdings ranked second with 147,376 carats at $28 million. Koidu was at the heart of recent riots, however, and operations were suspended in mid-December.
Jan Jourbert, the chief executive officer (CEO) of Koidu Holdings, told Reuters the company was waiting for a government inquiry to begin before its operations could resume.
| Date |
Gold London PM |
Platinum PM |
Silver |
| 1/2/08 |
846.75 |
1541.00 |
14.9300 |
| 1/3/08 |
858.85 |
1535.00 |
15.3800 |
| 1/4/08 |
855.00 |
1545.00 |
15.2750 |
| 1/7/08 |
859.25 |
1531.00 |
15.2400 |
| 1/8/08 |
873.50 |
1543.00 |
15.4850 |
| 1/9/08 |
877.00 |
1550.00 |
16.0000 |
| 1/10/08 |
884.25 |
1538.00 |
15.6200 |
| 1/11/08 |
891.00 |
1564.00 |
16.0600 |
| 1/15/08 |
902.00 |
1577.00 |
16.5000 |
| 1/15/08 |
913.00 |
1575.00 |
16.2400 |
| 1/16/08 |
889.75 |
1561.00 |
15.8500 |
| 1/17/08 |
888.25 |
1564.00 |
15.8800 |
| 1/18/08 |
882.00 |
1560.00 |
15.8250 |
| 1/21/08 |
871.25 |
1547.00 |
15.7700 |
| 1/22/08 |
875.00 |
1538.00 |
15.5700 |
| 1/23/08 |
888.25 |
1546.00 |
15.9500 |
| 1/24/08 |
909.25 |
1591.00 |
16.3500 |
Article from the Rapaport Magazine - February 2008. To subscribe click here.