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krisluke
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09-Oct-2011 17:59
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Putin's China visit watched for strategic signals
Russian Prime Minister Vladimir Putin chairs a meeting on the defensive-industrial complex on his 59th birthday in Moscow
MOSCOW (Reuters) - Vladimir Putin visits China on Tuesday in his first foreign trip since revealing plans to reclaim Russia's presidency, addressing a challenging relationship with a giant neighbour whose growth is both an opportunity and a potential threat for Moscow. For Putin, whose main focus has been domestic in nearly four years as prime minister, the trip sets in motion a return to forefront of Russian foreign policy ahead of a March election in which he is expected to win a six-year term as president. Beneath talk of strategic relations and shared stances on world affairs, wrangling over a gas pact worth a potential $1 trillion (642 billion pound) points up the tough issues he will confront in dealing with Russia's far more populous, faster growing neighbour. China, facing its own leadership transition next year, may try to gauge Putin's plans for what could be 12 years at the helm of a country whose natural resources and nuclear arms make it a factor in Beijing's economic and geopolitical strategies. " The significance of this trip exceeds that of a normal prime minister-level visit," said Zhao Huasheng, director at the Centre for Russia and Central Asia Studies at Shanghai's Fudan University. Putin will bring an army of executives including the CEOs of state-controlled energy firms Gazprom and Rosneft and aluminium producer UC RUSAL, all eager to exchange their wares for Chinese cash. His meetings with Chinese President Hu Jintao and Prime Minister Wen Jiabao will feature warm affirmations of friendship and solidarity on big global issues between two countries that often move in lockstep to counter the United States and Europe. VETO Their double veto last week of a European-drafted, U.S.-backed U.N. Security Council resolution to condemn Syria's crackdown on pro-democracy protesters was a warning against Western meddling in their own countries and others worldwide. Putin may use the trip to show the West an emphasis on China as Russia's geopolitical partner and a customer for its energy. He did just that in a televised meeting with Gazprom CEO Alexei Miller on October 3, pointedly ordering him to prepare proposals on expansion into Asian markets, seen as a way to diversify Russian energy exports away from stagnant Europe. President Dmitry Medvedev has not been cool to China since Putin steered him into the Kremlin after his own 2000-2008 presidency, but his emphasis has been on presenting a friendlier face to the West and improving ties with the United States. Putin's meeting with Miller followed European Commission raids on offices of Gazprom subsidiaries in Europe that underscored persistent tensions over the continent's heavy reliance on Russian gas, which EU members want to reduce. But China's friendly political ties with Russia, and their partnership in the loose BRIC grouping that also includes India and Brazil, do not make Beijing less of a tough customer when it comes to energy deals. GAS DEAL Putin will likely seek to resolve the price disagreements that have prevented Russia nailing down a 30-year deal to supply China with up to 68 billion cubic metres of gas per year. But Gazprom's export chief told Reuters last month that the five-year-old negotiations might not end this year, pushing back initial deliveries beyond the latest target of 2016. Meanwhile, China is cultivating other sources of energy supplies, particularly in ex-Soviet Central Asia. A report this month by the Stockholm International Peace Research Institute (SIPRI) said China was gaining the upper hand in the relationship as it becomes less reliant on Russia for advanced weapons and looks elsewhere for some of its energy. It said Russia's significance to China would continue to diminish in the coming years, and that " there are strategic planners in Beijing and Moscow who view the other side as the ultimate strategic threat in the long term. While Putin may use China as a foil against the West, the pragmatic former KGB officer is well aware of such concerns. As he prepares for what could be two six-year terms as president, " the risks from China's growth will be watched more closely than the opportunities," said Fyodor Lukyanov, editor of the journal Russia in Global Affairs. At an investor conference on Thursday, Putin used a joke to play down the challenge posed by China's faster growth after TPG Capital co-founder David Bonderman outlined China's path to becoming the world's largest economy. " He got me worried. He said that the United States is so far the world's biggest economy but China will undoubtedly take over. So we now need to keep our foreign currency reserves in yuan while the Chinese will keep them in dollars," Putin said. " That will be an interesting Russian doll." |
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krisluke
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09-Oct-2011 17:57
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BOE'S WEALE SAYS CAN'T SEE ANY REASON WHY SHOULD BE CASE THAT QE
BOE'S WEALE SAYS CAN'T SEE ANY REASON WHY SHOULD BE CASE THAT QE TRANSLATES DIRECTLY INTO INFLATION WITHOUT GROWTH
BOE'S WEALE TELLS SKY MOODY'S DOWNGRADING OF BANKS WAS NOT A REF
BOE'S WEALE TELLS SKY MOODY'S DOWNGRADING OF BANKS WAS NOT A REFLECTION OF PROBLEMS WITH BRITAIN'S BANKS
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krisluke
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09-Oct-2011 17:55
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BOE'S Weale says evidence shows QE supports economy
LONDON, Oct 9 (Reuters) - Evidence shows that quantitative easing does support the economy and there is no reason to believe that it feeds directly into inflation without supporting growth, Bank of England policymaker Martin Weale told Sky News on Sunday.
" The work that the bank has done on the issue has suggested quantitative easing does support the economy," he told the broadcaster. When asked if the state of the economy would have been worse if 200 billion pounds had not been pumped in, he said: " I think so. Obviously there is uncertainty about the exact impact, and equally we don't know whether the impact in the future will be similar to what we think it was in the past. " But I have not heard anyone suggesting that quantitative easing actually inhibits the growth of the economy, that it fails to provide support. " Some people have suggested that it translates fairly directly into inflation without supporting economic growth, and I can't see any reason why that should be the case, I haven't heard of a convincing mechanism why that should be the case." The BoE voted on Thursday to buy 75 billion pounds more in assets to shield Britain's economy from the euro zone debt crisis and keep the faltering recovery going. (Reporting by Avril Ormsby Editing by Ed Lane) |
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krisluke
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09-Oct-2011 17:54
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China marks century-old revolution amid controversy
By Chris Buckley
BEIJING (Reuters) - China's Communist Party elite on Sunday marked a century since the revolution that ended millennia of rule by emperors, a date that has stoked warnings by critics that the party must tackle deeper reforms or also risk losing power. China's calendar is speckled with anniversaries heavy with political symbolism, and even the distant events that triggered the fall of the Qing dynasty and birth of a republic in 1911-12 have become a focus for controversy about the country's future. President Hu Jintao said China's history since the toppling of the Qing dynasty showed that one-party rule remained vital to the nation's hopes for economic prosperity and political unity, including reunification with self-ruled Taiwan. " To achieve the great revival of the Chinese nation, we must certainly firmly uphold the leadership of the Chinese Communist Party," Hu told hundreds of officials gathered in the cavernous Great Hall of the People in central Beijing in a nationally televised keynote speech celebrating the " Xinhai Revolution." But the party's version of the fall of the dynasty has been challenged by critics who say the chaotic chain of coups and insurrections that toppled the corrupt empire and subsequent violent faction conflicts and invasion by Japan are a reminder of the need for democratic reform in the present. China again faces a dangerous confluence of official corruption, volatile public discontent and stalled reform, Zhou Ruijin, the former deputy editor-in-chief of the People's Daily newspaper said in a recent essay about the 1911 revolution. " Grievances, distrust and rancour that have accumulated over many years have reached a period when they break out," Zhou wrote in a Beijing magazine. In past months, authorities have shown how sensitive they are about liberal intellectuals using the events of 1911 as a mirror to criticise or cajole the government. Some seminars and debates about the anniversary have been cancelled. " For us, China's Xinhai Revolution is still not dead history, it still has a strong resonance with present-day realities," said Lei Yi, an historian at the Chinese Academy of Social Sciences in Beijing. " A key lesson of the revolution is that the country's fate depends on whether the rulers make the right choices about advancing reforms. Above all, there's still the issue that a modern China needs a modern form of government -- constitutional government." The 1911 revolution has also been celebrated in television dramas and a movie whose stars include Jackie Chan, a martial arts actor better know for high kicks than high politics. President Hu is due to leave office from late next year, when a Communist Party congress will install a new leadership. The 1911 Revolution gave birth to the Republic of China in early 1912 under President Sun Yat-sen. Taiwan is still formally called the Republic of China after Nationalist forces fled there in 1949 to escape advanced Communist forces. Hu used his anniversary speech to warn Taiwan against ever pursuing outright independence and to call for closer ties with the island, which holds a presidential election in January. Among the guests in the Great Hall was 85-year-old former president Jiang Zemin, making a rare public appearance after widespread speculation in July that he was in failing health, even near death, after a heart attack. |
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krisluke
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09-Oct-2011 17:52
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Latam stocks fall as downgrades revive EU fears
* Spain, Italy downgrades weigh on riskier assets
* Investors eye weekend meeting on backing up EU banks * Brazil's Bovespa down 2 pct Mexico's IPC 0.8 pct (New throughout) By Rachel Uranga MEXICO CITY, Oct 7 (Reuters) - Latin American stocks fell on Friday after Fitch Ratings downgraded Italy's and Spain's credit ratings, spooking investors who fear Europe's sovereign debt could set off another global financial crisis. Stock markets in Brazil, Mexico and Chile jumped in early trading on a stronger-than-expected U.S. monthly employment report, but the region ended in the red. Fitch cut Italy's sovereign credit rating by one notch and Spain's by two, underscoring the vulnerability of the euro zone, already struggling to contain worries of a default by the far smaller Greek economy. For more, see: [ID:nL5E7L72KC] Slumping prices for European bonds are hurting major banks. Investors cut exposure to riskier assets ahead of a weekend meeting between the leaders of France and Germany on how to strengthen shaky euro zone banks. Germany is reticent to use EU funds to back banks. [ID:nL5E7L714R] " A lot depends on this meeting," said Rodolfo Navarrete, head of analysis at brokerage Vector in Mexico City. " The financial situation in Europe is worsening and if they do not manage to recapitalize the banks, there could be another banking crisis." The MSCI Latin American stock index < .MILA00000PUS> rose 0.85 percent, but markets in major Latin American countries fell. Brazil's benchmark Bovespa stock index < .BVSP> dropped 2 percent, nearly erasing gains made in the previous session. Shares of state oil company Petrobras < PETR4.SA> lost 2.92 percent while Vale < VALE5.SA> , the world's biggest iron miner, shed 2.52 percent. Mexico's IPC index < .MXX> lost 0.83 percent as broadcaster Televisa < TLVACPO.MX> lost 3.82 percent and bottler FEMSA < FMSAUBD.MX> fell 1.42 percent. The market shrugged off data showing U.S. employers hired more workers than expected in September, which suggested the labor market in Mexico's biggest trading partner could be improving. [ID:nOAT004877] Chile's IPSA index < .IPSA> dipped 0.60 percent as retailer Falabella < FAL.SN> shed 2.43 percent and airline LAN < LAN.SN> dropped 3.15 percent. (Reporting by Rachel Uranga Editing by Dan Grebler) |
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krisluke
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09-Oct-2011 17:50
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Business jet industry looks to 2012 for growth
* Spending clampdowns, tight credit weigh on orders
* Larger jets for the super-rich fare better * Manufacturing capacity could shrink at lower end By Karen Jacobs Oct 8 (Reuters) - The business jet industry is expecting 2012 to mark its first year of growth in deliveries since the financial downturn, but more pain could still be ahead for the low end of the segment that has been hardest hit. " 2011 did not play out as we expected to see the growth and orders being placed, so we're shifting our hopes to 2012," said Jens Hennig, vice president of operations at the General Aviation Manufacturers Association, a Washington, D.C.-based international group that tracks noncommercial aviation. Honeywell International < HON.N> , maker of avionics and engines, also thinks better times are coming. " We believe 2011 will be the low point," said Rob Wilson, president of Honeywell's business and general aviation unit. Unit deliveries will rise 3 to 5 percent in 2012 as new models such as the long-range Gulfstream G650 enter service, Honeywell projected in its annual business aviation outlook released on Saturday. Demand for business jets fell in 2009 after five years of growth in deliveries as companies clamped down on spending after the global financial crisis peaked in 2008 and tighter credit made purchases difficult. Business jet shipments fell again in 2010 and were down about 27 percent through the first six months of this year, according to GAMA data on worldwide deliveries. (For a graphic of shipments click on http://link.reuters.com/pyq34s ) Volatile financial markets and fears that the economy could get worse are weighing on buyers. " The classic indicator for business jet deliveries is corporate profits, which are at record levels," said Richard Aboulafia, an aerospace analyst with Teal Group. " The problem is that people are reluctant to spend." Larger jets, used by bigger companies and extremely wealthy individuals, have fared better than smaller ones whose chief clients include small business customers that have been pinched in the downturn. Deliveries of large jets rose 13 percent from 2008 to 2010, while light-jet shipments fell 61 percent during that time, according to data from the manufacturers' association. Companies that offer larger business jets include General Dynamics' < GD.N> Gulfstream unit. Those that cater to the smaller end of the market include Textron Inc's < TXT.N> Cessna and privately held Hawker Beechcraft. " The larger the jet, the more positive the market feeling is," said Eddy Pieniazek, director at the global aviation consultancy Ascend. " That small end is bouncing along the bottom and requires some more consistent economic growth to push it forward." The lower end of the market could see more restructurings or consolidation if a recovery takes longer to play out, some said. " There's too much private jet manufacturing capacity, and I don't think it all survives," said Kenneth Ricci, principal at Directional Aviation Capital, a private investment firm. " I don't think we have all this production capacity five years from now." Slumping orders and rising cancellations led smaller-jet makers such as Cessna, Hawker and Bombardier < BBDb.TO> to cut U.S. jobs in recent years. GAMA said its members have laid off 20,000 people in the United States since the fall of 2008. Companies that specialize in smaller aircraft will have difficulty in the longer term and could see significant structural changes, Ricci said. " I think there'll be mergers, there'll be consolidation," said Ricci. " The net result will be less manufacturing capacity for the private aircraft business, less supply and I think ultimately that will then drive the recovery." Teal Group's Aboulafia also said the smaller-jet sector could be in for more pain. " If there isn't some kind of recovery, then something needs to happen," said Aboulafia. " Either you'll see growth or someone needs to go." (Reporting by Karen Jacobs Editing by Tim Dobbyn) |
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krisluke
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09-Oct-2011 17:47
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Foreign maids snubbing SingaporeKuala Lumpur (The Star/ANN) - The new generation of Indonesian and Filipina maids, who are better educated and have a higher expectation of life, prefer to work in Hong Kong and Taiwan as their take-home pay is much higher due to minimal tax. The era of cheap maids streaming into Singapore to find work, particularly from Indonesia and the Philippines, may be coming to an end. With South-East Asia enjoying better living, Singaporeans - who are among the world's biggest employers - may soon find this supply becoming scarcer and more expensive. The new generation of Indonesians and Filipinas, including the rural women, is better educated and has a higher expectation of life. Indonesia, in particular, has been growing at a steady pace during the past 20 years and to a lesser extent, the Philippines, as well. With the rise of global jobs and budget travel, their people have more job opportunities at home and abroad. Many maids have become salesgirls, hairdressers, office assistants, etc, thrown up by an expanding middle class. More are seeking training to move into higher-paying jobs in healthcare, computers and tourism. Recently, I attended a Buddhist funeral rite, in which the monks who performed it had the help of a woman who hailed from Java. She had been with the troupe for nearly 10 years, speaking and chanting prayers in Chinese. On the last night, she was helped by a second lady, a Filipino woman. Their salaries were several times higher than what a maid would get. Globalisation never ceases to amaze! In Singapore, many employers have not realised the extent of some of these changes in the region. The older ones still see the maid as an unchanging person left behind by progress, an agency representative said. " They don't realise there is a big difference between the young maids who come to our shores today and those who arrived a generation earlier," she added. It is not unlike the gap between two generations of Singaporeans, she said. Today's maid from the Philippines or Indonesia is no longer the same as older ones who came in the 70s or 80s. She is generally better schooled, has higher ambitions and is probably less deferential to orders rudely given. The agency representative said: " You can't work her like you could her mother!" Dwindling supply is, however, not the only worry. For years, they have been losing the competitive edge against Hong Kong and Taiwan employers because of a special S$345 (US$265) monthly levy they need to pay for hiring a maid. This means that, although the monthly costs add up about the same for the three countries, the maid in Singapore takes home only half of what she gets elsewhere. Effectively, a maid who works in Hong Kong and Taiwan has a much higher take-home pay because the tax is minimal. For example, a fresh Indonesian maid currently earns S$380-$400 a month, depending on age and experience. It is higher than the official recommended salaries of S$280-$320 a month. The first blow to the employers here was harder-and-costlier-to-get English-speaking Filipinos, who are widely sought after in not only Asia but also the Middle East. When the Manila embassy demanded a minimum pay of about S$520 a month, many employers turned to Indonesia. Today, the circle has turned. Many Indonesians who have completed a two-year contract are quick to move to Hong Kong and Taiwan, where their earnings just about doubled. A Javanese girl who has learned enough English to leave, told a friend: " Sorry ma'am, in Hong Kong I can earn in 12 months what it takes two years to make in Singapore." She uses a smart-phone and aspires to buy a tablet. " I can't afford that in Singapore," she added. Her sister had worked in Bahrain and is now going home to open a small restaurant there. This trend is inevitable and a long time coming. In the early 80s, former prime minister Lee Kuan Yew had warned that the easy supply of maids would dry up once the neighbours became more prosperous. The pace of arrivals has matched, as well as fuelled, Singapore's economic growth. By 1988, there were already 40,000 of them, a figure that rose four-fold to 160,000 by 2005 and 201,000 last year. The number of Indonesian maids alone today totals 90,000. Seven in 10 new arrivals are from its hinterland. In recent years the pressure has forced Singaporeans to seek maids from Myanmar, India and Bangladesh. " I doubt if these countries can train enough maids to meet our demand," an agent told a reporter. Steadily the noose of high cost is tightening. The Philippine government has stipulated a minimum salary of about S$500 a month, which turned the demand to Indonesia. And now the wheel turns again. Jakarta wants to see a minimum of S$450 as a starting monthly pay - and employers and the government are reluctant to comply. Recently, the government fined 16 employment agencies more than S$150,000 for collectively fixing the pay of new Indonesian maids, raising it from S$380 to S$450. They were charged under the city's price-fixing laws, turning down arguments that the hike was a necessary market response to free up supply of maids. The next move may be Indonesia's. It is increasing pressure to protect the interests of its workers abroad. A Jakarta official reportedly indicated that his government may be considering cutting off supply to Singapore - until it agrees on the minimum pay of S$450 a month. That could bring the cost of a maid to about S$900-S$1,000 all-in - a monthly sum that could push out many Singaporeans from the market. Some see it as a delaying action to postpone the inevitable. With the global trends moving at such fast pace, the history of the maid in South-East Asia may end in the longer term. |
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krisluke
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08-Oct-2011 22:29
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 Pivot: 2650 Our preference: Short positions below 2650 with targets @ 2500 & 2400 in extension. Alternative scenario: Above 2650 look for further upside with 2735 & 2800 as targets. Comment: the RSI is mixed and calls for caution. Key levels 2800 2735 2650 2640 last 2500 2400 2315 |
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krisluke
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08-Oct-2011 22:27
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Update on supports and resistances.
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krisluke
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08-Oct-2011 22:21
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Pivot: 297.5 Our preference: Long positions above 297.5 with targets @ 305 & 309 in extension. Alternative scenario: Below 297.5 look for further downside with 295 & 290 as targets. Comment: the RSI has just landed on its neutrality area at 50% and is turning up. Key levels 311.5 309 305 301.1 last 297.5 295 290 |
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krisluke
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08-Oct-2011 22:17
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Deutsche Bank: Here's Why The US Economy Is Nothing Like Japan'sWith yields on 10-year U.S. treasuries following a similar pattern to 10-year Japanese government bond yields during the Japanese recession, many economists are drawing parallels between the two countries. Nomura's Richard Koo has repeatedly pointed out such parallels between the two economies. But a new Deutsche Bank report says beyond the similarity in bond yields, there isn't much else that the two economies have in common. First, the U.S. monetary policy adapted faster and more aggressively to changes in its economy, moreover, the U.S. economy is far more flexible than Japan's. We've pulled together six charts from the report that point out the differences in the two. Japan's central bank was very slow in responding with rate cuts given the economic slowdown Source: Deutsche Bank While the U.S. had the benefit of learning from Japan's experience, and responded with deeper and faster cuts Source: Deutsche Bank But a low Feds fund rate is stimulative to the economy " Since then the spread between nominal GDP growth and the fed funds rate has remained comfortably wide. This tells us that economic activity should continue to expand as the spread between interest rates and nominal GDP is a useful leading indicator of economic activity."
U.S. companies better at cutting costs, saw their corporate profits recover faster than Japanese companies " US corporate profits bottomed in Q4 2008 …and they accelerated sharply thereafter. In essence, companies cut costs so aggressively that even without any top line growth, corporate profitability stabilized. …In Japan, a combination of tight monetary policy and a less flexible labor market helped push corporate profits lower—they did not bottom out until Q4 1993 or two and half years after the onset of recession."
Which makes sense because the U.S. labor market adjusted to the recession much faster than Japan " Basically, the labor market adjustment in the US was brutal: the rate increased to more than twice its cyclical trough in less than half the time compared to what happened in Japan, where the rate rose by only 60% from its cyclical trough."
U.S. households deleveraged faster than their Japanese counterparts freeing up money for them to spend Source: Deutsche Bank Read on for a counter perspective from Richard Koo... |
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krisluke
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08-Oct-2011 22:13
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9 Key Points On The Currency Confrontation Between The US And ChinaThis week, the U.S. Senate considered a bill that threatens to impose broad-ranging sanctions on China unless it revalues its currency. The Senate vote on the bill — which looks like it may have enough support to pass — had been planned for Thursday evening, but ran into partisan maneuvering, and is now expected to take place early next week. If it does pass, attention would then shift to the House of Representatives, where there is mounting pressure to vote on the measure, and then on to President Obama, who would face the uncomfortable decision whether to veto the bill or sign it into law. For those interested in exactly what the bill does, you can find a good summary here. The bill the Senate is currently considering is the latest incarnation in a series of proposals put forward by Senator Chuck Schumer (D-NY) over the past several years, which have waxed and waned in support in line with the level of frustration felt in Washington with China’s on-again off-again moves to permit a stronger yuan. (This time around, the situation is a little different. China has actually been allowing the RMB to gradually appreciate, by 5.2% over the past 12 months, which along with mounting Chinese domestic inflation means that Chinese goods are at least 10% more expensive than they were a year ago. The motivation in Congress this year has less to do with Chinese inaction than with growing election-year frustration over persistently high U.S. unemployment.) Although the current bill does not actually single out China, or impose any sanctions directly, its provisions would place significant pressure on the President to start sanctioning China in various ways or explain why he isn’t. It also would set the stage for similar action against any other country with a fixed or semi-fixed exchange rate whose currency policy the U.S. doesn’t like. Anyone who has heard my frequent calls for China to allow its currency to appreciate might be surprised to learn that I’m opposed to this bill (and was heartened to see that my old boss, House Speaker John Boehner, opposes it too, despite considerable political pressure to “get tough” on China). If you want to understand my position on the subject, you can read my argument here, or watch me talk about it on Chinese TV here. Yesterday, CNN’s Jaime FlorCruz interviewed me about the Senate debate, and the broader issue of what’s causing the trade imbalance and what China and America should be doing about it. I’ve posted it here, and you can also access the original version here. (You can also check out what I had to say in Thursday’s Washington Post.) 1) How serious is the U.S. trade deficit with China? U.S. trade deficit with China has steadily grown over the past decade. In 2010, it reached $273 billion, over 40% of America’s global trade deficit, but still amounted to less than 2% of GDP. In fact, America’s global trade deficit peaked in 2006 and has declined substantially, largely due to expanding exports. The real problem isn’t so much the absolute size of the U.S.-China trade imbalance, but the struggle to find sources of growth in a stagnant global economy. 2) The U.S. will hold a presidential election next year. How is the trade dispute with China playing out in America? The number one election issue is going to be jobs, so every politician wants to show that they’re doing something about jobs. China’s trade imbalance with the U.S. is a real issue: If China’s markets were more open, if it was encouraging consumer demand instead of piling up reserves, it could help boost job growth in the U.S. So there’s a temptation to seize on China’s currency policy as a “silver bullet” that will solve this concern, by making U.S. goods cheaper and Chinese ones more expensive, even though the real problem is more complex than that. 3) What impact will the Senate bill have if passed? The immediate concern would be retaliation, provoking a trade war with China. Even if China didn’t opt for actual retaliation, it could challenge the U.S. sanctions with the World Trade Organization, and China might very well win. One of the reasons the U.S. has always hesitated in slapping sanctions on China over currency is the fear that we might be shooting blanks. 4) Why so? It’s far from clear that twisting China’s arm to strengthen its currency will have the effect we might hope. We’ve actually seen this movie before. In the Plaza Accord in 1985, Japan agreed, under considerable U.S. pressure, to strengthen its currency in order to combat the growing U.S. trade deficit. The yen doubled in value, but to everyone’s surprise, it had virtually no impact on the trade balance, because there were subsidies, trade barriers, and other policies in place in Japan that countered the stronger yen and prevented an adjustment from taking place. Back China into a corner and force it to accept a stronger yuan, without embracing the kind of economic adjustment that really requires, and I’m afraid we’ll see a replay of the Plaza Accord. 5) What is the fundamental reason causing the trade deficit? The cheap yuan is one factor, but it’s only one piece of the puzzle. Other factors include obstacles to market access, China’s failure to protect intellectual property rights, export tax rebates, subsidized inputs, subsidized credit, and soft budget constraints for Chinese state-owned companies. There are a whole host of factors in the Chinese economy besides currency that distort price signals in favor of exports and discourage imports. To their credit, American negotiators have been placing more and more emphasis on these issues lately, rather than focusing exclusively on currency as some kind of “silver bullet.” 6) Why should China revalue the renminbi? When China intervenes to keep the yuan from rising, in order to protect export growth, it ends up accumulating trillions of dollars in official reserves that it has to somehow invest, leaving it exposed to losses. It also injects trillions of yuan into its domestic economy, fueling inflation and asset bubbles. The fact is, when you run massive trade and investment imbalances, as China is doing, you’re going to get an adjustment, one way or the other. It’s either going to take place through external prices (exchange rates) or internal prices (inflation). 7) What will be the pros and cons for China? There will be losers. Some Chinese exporters, especially those with razor-thin margins and no reliable competitive advantage, may lose their markets and go out of business. But there will be winners too. A stronger yuan would give the average Chinese citizen greater buying power and an improved standard of living. 8) Some observers argue that, if the renminbi revalues and the Chinese exports to the U.S. become expensive, the American consumers will have to pay more for them — and thus will be hurt too. Your view? That’s absolutely true. Just as a stronger yuan will mean that Chinese consumers will enjoy greater buying power, American consumers will lose some of the buying power they’ve enjoyed over Chinese goods. Their dollars will buy less. But the focus in America right now is on jobs, not buying power. The problem this past decade is that Americans’ buying power has led us to consume more than we produce, which means more than we could ultimately afford, and as we’ve all come to learn, that’s just not sustainable. 9) Will further revaluation of the renminbi help stop the loss of jobs in the U.S.? A stronger yuan is not going to bring back jobs in labor-intensive, low-tech industries where the U.S. has no real competitive advantage. Those jobs will go to Bangladesh or Vietnam before they come back to the U.S. But a Chinese consumer with greater buying power — if accompanied by greater openness and fairer treatment for American companies in the Chinese market — will translate into more opportunities and more jobs in sectors where the U.S. has a real advantage. Twisting China’s tail won’t get us there, however. A market-based exchange rate has to be part of a more comprehensive win-win solution. |
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krisluke
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08-Oct-2011 22:08
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Now Here's The Hot Theory About What Is Going To Happen To The EconomyEarlier we laid out the hot buzz about what's happened to the economy over the last few months. It goes like this: The debt ceiling fight caused a major confidence shock, prompting some dreadful market performance and economic data to come out in August. Thus, September hasn't been so horrible because a) things are not that bad and b) the confidence shock is wearing off. So what's coming next? Well obviously a lot of folks are calling for a double-dip recession, including the highly esteemed ECRI, whose chief Lakshman Achuthan made his big prediction last Friday, September 30. But even Achuthan doesn't see a huge recession, and indeed this is the hot sub-meme: If we get a double-dip, it won't be that deep. Why? Well, basically because it can't be. That point was recently articulated by Goldman's Jan Hatzius in a note called How Much Downside? Whiel his " base case" is still that there won't be a recession, his note applied a " stress test" to the economy, asking how bad things could get if the various components of GDP dropped to floor levels. His money point: Low cyclical activity and moderate inventory stocks are compelling reasons to expect a milder downturn. For example, current housing investment is mostly covering wear and tear. We estimate that in a “stress test” scenario, GDP would likely contract by about 1.5%—or less than in an average recession. A deep recession looks unlikely given already- low cyclical activity.
This is an idea we've been touching on a lot lately. We pointed out this week the surprising strength in both car sales and construction spending, as evidence of this theme that there are some sectors of the economy that are so beaten down, they're almost a-cyclical, in the sense that they can recover even if the big headline numbers stall out. BTW: did you see that construction employment grew again in that jobs report out yesterday? Now often when you say something like about an area being so low, that it can't go anywhere but up, people scoff at that. But it's important to re cognize that there's a big difference between housing and cars vs., say, Swiss watches. We absolutely are going to need more houses and cars in the future, as existing ones break down and the population grows. We could theoretically go forever, as an economy, without buying another expensive watch. So this is what people are talking about: If there is a recession, it almost has to be a shallow. Two big questions that we'll just throw out, then, without answer: 1) Can the recovery (or stability) in housing and cars offset weakness elsewhere? 2) What about a big shock, like a disorderly blow to the global banking system, perhaps emanating out ot Europe? |
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krisluke
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08-Oct-2011 22:03
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Wall St Week Ahead: Earnings on deck as Europe eyed
By Chuck Mikolajczak
NEW YORK, Oct 7 (Reuters) - Investors tiring of the euro zone's debt crisis dragging the market all over the place are hoping to focus on something else next week -- earnings. But will third-quarter results be enough to drive the S& P 500 higher? Or will Europe's woes get in the way? The unofficial start of earnings season begins on Tuesday, when Dow component Alcoa Inc reports third-quarter results after the close of trading. The earnings and guidance that may follow could give investors some clues on the health of the global economy, including any impact the euro-zone debt crisis has had and might continue to have on profits. But even if earnings paint a rosier picture than anticipated, stocks may face a stiff test in climbing much further, as analysts pointed to the declining 50-day moving average as a key resistance point that could limit gains. That level now sits around 1,178. This week's sharp gains were built on improved hopes that European officials will get a handle on the euro-zone debt crisis. That fed a massive bout of short-covering as those betting against stocks were forced to buy shares to avoid losing money. The benchmark S& P 500 index rose 2.1 percent for the week, buoyed by a 6 percent jump mid-week, as it appeared plans in the euro zone to get a grip on the debt crisis were moving forward. The region remains a wild card, which could cause any gains to quickly vanish. " For the next three weeks, in this country, earnings will be the focus and the subplot is going to be Europe -- Europe is always going to be just under the surface," said Ken Polcari, managing director at ICAP Equities in New York. " But if all of a sudden in the middle of next week, some catastrophe happens in Europe, the focus is immediately going to be headline driven and goes back to Europe." Other companies expected to post quarterly results next week include PepsiCo Inc, tech giant Google Inc, JPMorgan Chase & Co and toy maker Mattel Inc. KEEPING THE BAR LOW Clouding the picture for profits is the fact that many earnings estimates have been trimmed by analysts in light of the turmoil in Europe, a staggering global economy and other events which resulted in a more cautious forecast. " You've got to remember what was going on in July with the debt-ceiling crisis, credit default -- companies were not willing to go out on a limb and make any big expectations," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co. in San Francisco. " So they were conservative going in, and we have not seen a whole lot of downward revisions, which suggests companies are probably going to be able to make those numbers." The economic calendar for next week includes the FOMC minutes from the two-day meeting in late September, along with import prices and retail sales for September, in addition to the preliminary reading on October consumer sentiment from the Thomson Reuters/University of Michigan surveys. Economic data of late has been better than expected, helping to quell fears that the economy was headed for a double-dip recession. Once again, that leaves the euro-zone crisis as a potential landmine to disrupt a slow move higher. " The reason we have lifted in the past week is the rhetoric has improved and we are seeing progress, not necessarily a plan, but you are getting countries to admit to the problem, and that is a step in the right direction -- you have to seek help before you can get help," Pado said. " That is all we really need in order to get beyond this, and start focusing on the future and focusing on our own data. We have plenty of data that suggests slow growth, but nothing that suggests waving the red flag like a crazy person saying, 'How can you not see this?'" (Wall St Week Ahead runs every Friday. Questions or comments on this column can be e-mailed to: Charles.Mikolajczak(at)thomsonreuters.com) (Reporting by Chuck Mikolajczak Editing by Jan Paschal) |
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krisluke
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08-Oct-2011 22:01
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Gold drops 1 pct after Italy, Spain downgraded
Gold Bars
* Gold up for the week, moving in tandem with risk assets * Coming up: Germany, France to discuss euro crisis Sunday (Recasts, updates comment and prices, adds link to graphic) By Frank Tang and Amanda Cooper NEW YORK/LONDON, Oct 7 (Reuters) - Gold fell around 1 percent on Friday, as bullion investors raised cash to cover margin calls amid losses in the equity markets after Fitch downgraded the credit ratings of Spain and Italy. Gold still notched its first weekly gain in a month, moving higher in tandem with risk assets. The safe-haven buying that spurred the metal's three-year rally was absent. (Graphic: http://r.reuters.com/vuw93s ) In early trade on Friday, gold climbed with Wall Street after a stronger-than-expected U.S. nonfarm payrolls report. Some investors still believe the Federal Reserve may introduce new measures to stimulate U.S. economic growth, which would underpin gold as a store of value. But others see more downside risk if investors need to sell gold to cover margin calls for losses in other financial markets. " When people need money to answer margin calls, gold is susceptible to liquidity bids from other markets. I don't know if we have seen the bottom put in for gold after this week's reversal," said Jeffrey Sherman, commodities portfolio manager at DoubleLine Capital, which oversees $17 billion in assets. Gold fell 0.9 percent to $1,633.69 an ounce by 2:27 p.m. EDT (1827 GMT). During the session, it traded as high as $1,665.99. For the week, gold was up around 0.7 percent, its first weeky gain in five weeks. Stronger physical demand boosted gold after the precious metal fell 20 percent from its record of $1,920.30 in early September. U.S. December gold futures settled down $17.40 at $1,635.80. Trading volume was thin for a third consecutive session, suggesting recent gains could be short-lived. Silver was down by 2.3 percent at $31.17 an ounce. Even though U.S. employers hired more workers than expected in September, the unemployment rate remained stuck at 9.1 percent for a third straight month. That kept pressure on President Barack Obama and the U.S. Federal Reserve to do more to spur a stronger recovery. Michael Lewis, analyst at Deutsche Bank, said the payrolls data was not strong enough to change the low interest-rate environment which has benefited gold. EUROPE DEBT CRISIS IN FOCUS Fitch cut Italy's sovereign credit rating by one notch and Spain's by two, citing a worsening euro zone debt crisis. Germany and France were split ahead of crucial talks on Sunday over how to strengthen shaky European banks and to prepare for a possible Greek default. Strong physical buying by top consumers India and China followed the price correction, which also helped lift prices for the week. Following an outflow of nearly half a million ounces of gold from global exchange-traded funds in September, ETFs have recovered nearly a quarter of that metal as investors have bought at lower levels. In platinum group metals, platinum fell by 1.1 percent at $1,489.74 an ounce, and palladium dropped 2.3 percent to $588.25. Platinum has dropped more than 16 percent over the last month, tumbling to its lowest in nearly two years. Signs of a slowing global economy and weakening industrial demand have pressured platinum, used as an autocatalyst. (Additional reporting by Lewa Pardomuan in Singapore Editing by David Gregorio) |
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krisluke
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08-Oct-2011 21:56
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Batman and Robin |
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krisluke
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08-Oct-2011 20:15
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Becos china products are famous for quality control 
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krisluke
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08-Oct-2011 20:13
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conservative investor should avoid the 4th year and Aggressive investor should act swiftly during the 4th year So my fifth year will be matched perfectly. Do note that chines dislike the pronounce of number 4
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krisluke
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08-Oct-2011 20:08
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The nos appear on my earlier posting is based on fibos Do note take it is olso taking into consideration of ideal age to start off investing. Singapore should benchmark at 55 (fibos) becos it is the cpf (for ordinary account only) pay day
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krisluke
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08-Oct-2011 20:02
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5 years stock chart explaination. 2008 till 2011, Up trend aka recovery stage (61.8) 2012 till 2013, Profit taking aka consolidation stage (38.2) 2013 till 2014, Repeated of the cycle for the direction of 5 years stock chart explaination aka participants stage (23.6) Let's see how many 5 years one's wish to commit...
Do note take 23.6 is a cna media line on gobal news... ... |
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