Thetrader.se
Investors are once again forced into going long the market. With both Bernanke and the HFT distorting the market, hedge funds are now going all in long. With every fund manager now front running the QE, this market is starting to show some peculiar signs. Maybe after all, we have found the perfect trade, where the economy slumps, Fed does the QE, funds front run the Fed, more QE and so on? Welcome to everybody (soon) long market. If unsure what to buy, just load up on Apple. By Bloomberg,http://www.thetrader.se/2012/03/26/hedge-funds-capitulating-buy-most-stocks-since-2010-this-time-is-different/ Ft.com
To listen to many eurozone policymakers, one would imagine all is now well with their two-year long struggle with the sovereign debt crisis. Progress on plans for a beefed-up “firewall” to bail out distressed countries, which now have Germany’s backing, are cited in support. Not so fast, say the markets. Sure, everyone is agreed that things feel better than they did at the end of last year. But many investors also say that little has changed fundamentally. A good example of that is the apparent willingness of Germany and Finland to allow the temporary eurozone rescue vehicle, known as the European financial stability facility, to run alongside the soon-to-be-launched permanent one, the European stability mechanism. But a headline lending figure of €940bn for the two soon fizzles out as at least €200bn is already committed and the EFSF’s €440bn is likely to end next year.http://www.ft.com/intl/cms/s/0/c1ad2b64-775b-11e1-827d-00144feab49a.html#axzz1qCBjoSth
Wsj.com
Asian stock markets rose Tuesday as sentiment was buoyed by dovish remarks from Federal Reserve Chairman Ben Bernanke, sparking a sharp rally for cyclical stocks, and sending the Tokyo bourse to its highest point for the year. Japan’s Nikkei Stock Average rose 1.7% to 10,186.91, after earlier reaching 10,193.04, its highest intraday mark for 2012. Australia’s S&P/ASX 200 gained 0.8%, South Korea’s Kospi Composite climbed 0.8% and New Zealand’s NZX-50 tacked on 0.2%. Dow Jones Industrial Average futures were up four points in screen trade.http://online.wsj.com/article/SB10001424052702303404704577306420412673112.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews
Federal Reserve Chairman Ben Bernanke said the central bank’s easy-money policies are still needed to confront deep problems in the labor market, moving to reinforce his plan to keep interest rates low for years. His comments, at a conference near Washington of the National Association for Business Economics, were striking after several months of improvement in the jobs market. The comments also ran counter to a view that has emerged in financial markets recently that the Fed could back away from its low-interest-rate policies by next year. http://online.wsj.com/article/SB10001424052702303404704577305253971815684.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews
The U.K. needs to make further progress on rebalancing its economy, the Bank of England’s chief economist said Tuesday, as a central bank analysis highlighted the potential pitfalls policy makers may face when such economic shifts are underway. Spencer Dale said in a foreword to the central bank’s latest quarterly bulletin, a collection of research articles on central banking and economic issues, that the financial crisis that gripped the U.K. and the world during the past few years has prompted some rebalancing in the economy, but added “more will be required at some point.”http://online.wsj.com/article/SB10001424052702303404704577305452636522944.html?mod=WSJEurope_hpp_LEFTTopStories
Chancellor Angela Merkel dashed hopes that Germany would support a major increase in Europe’s rescue funds, proposing instead a temporary boost that critics worry will do little to prevent another flare-up of the region’s debt crisis. Ms. Merkel suggested lifting the capacity of the euro zone’s bailout facilities to €700 billion ($929 billion) from €500 billion until next year. Germany had for months opposed any increase at all, but Ms. Merkel’s proposal is still a far cry from the nearly €1 trillion fund proposed by the European Commission. http://online.wsj.com/article/SB10001424052702303404704577305262641910648.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews
French magistrates charged Dominique Strauss-Kahn with “aggravated pimping,” placing the former International Monetary Fund chief under preliminary investigation for his alleged involvement in a French prostitution ring, prosecutors said. The magistrates on Monday ordered Mr. Strauss-Kahn to refrain from communicating with plaintiffs as well as with anyone else being prosecuted in the investigation, prosecutors from the northern French city of Lille said in a statement. Mr. Strauss-Kahn, who wasn’t detained or arrested, was also ordered to pay a €100,000 bail ($133,500).http://online.wsj.com/article/SB10001424052702304177104577305782807859986.html?mod=WSJEurope_hpp_LEFTTopStories
Abu Dhabi’s sovereign-wealth fund said it would invest $2 billion to buy into the sprawling business empire of Brazil’s richest man, Eike Batista, a move that could lead to further investments by the Gulf state in Brazil and Latin America. The transaction “marks our first significant direct investment into one of the fastest-growing markets and is an important step in [the] development of strategic opportunities in Brazil and Latin America,” said Khaldoon Khalifa Al Mubarak, chief executive of Mubadala Development Corporation, the Abu Dhabihttp://online.wsj.com/article/SB10001424052702303816504577305574015159802.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews
Japanese Finance Minister Jun Azumi called Tuesday on the ruling Democratic Party of Japan to decide quickly on its final stance regarding raising the consumption tax as time runs out ahead of an end-of-month deadline for achieving cabinet approval and submitting the legislation to parliament. “I certainly want them to finalize it soon,” Mr. Azumi said at a regular news conference after a cabinet meeting. Mr. Azumi noted that Seiji Maehara, the DPJ party official in charge of putting together the party’s final position on the proposed legislation, has said that he would have it ready Tuesday. “I hope so,”http://online.wsj.com/article/SB10001424052702303816504577306422159449072.html?mod=WSJASIA_hpp_LEFTTopWhatNews
Swedish housewares chain IKEA plans to enter Indonesia, the latest attempt by an international company to tap the country’s growing middle class. Indonesia’s PT Hero Supermarket, one of the country’s three largest retailers by sales, said Monday that it had signed a franchise agreement with Inter IKEA Systems BV. The agreement will run from 2014 through 2021, Hero said. The company didn’t elaborate on …http://online.wsj.com/article/SB10001424052702303816504577305221461283592.html?mod=WSJASIA_hpp_LEFTTopWhatNews
Marketwatch.com
China Life Insurance Co. , the nation’s biggest life insurer by premiums, said Monday its 2011 net profit plunged 45% because China’s stock market losses battered the company’s investment performance. The stock market rout, coupled with slower premium growth, made last year particularly tough for Chinese insurers. But the situation is on the mend as a mild easing in China’s monetary policy has lifted share prices and may help boost savings-based insurance product sales.http://www.marketwatch.com/story/china-life-2011-profit-falls-45-on-stock-losses-2012-03-26
Reuters.com
Brent held steady above $125 on Tuesday as comments from the U.S. Federal Reserve indicating easy monetary policy would remain in place for some time raised investors’ appetite for riskier assets. Brent crude fell 10 cents to $125.55 by 0302 GMT after gaining 52 cents to settle at $125.65 a barrel on Monday. U.S. crude edged down 5 cents to $106.98.http://www.reuters.com/article/2012/03/27/us-markets-oil-idUSBRE82B04920120327
Gold edged down on Tuesday as it consolidated after its biggest daily gain since late January in the previous session when the U.S. Federal Reserve signaled it would keep interest rates low. Gold fell $3.85 an ounce to $1,687.89 by 0237 GMT, having risen to $1,693.39 on Monday, its strongest since March 13, on safe-haven buying driven by Bernanke’s comments. Bullion struck a record around $1,920 an ounce last September. http://www.reuters.com/article/2012/03/27/us-markets-precious-idUSTRE82403220120327
China’s industrial firms suffered a rare annual drop in profits in the first two months of 2012 mainly in petrochemicals, metals andauto companies, the latest signs of weakening momentum in the world’s No. 2 economy. Profits fell 5.2 percent so far in 2012, according to the industrial profitability indicator, published by the National Bureau of Statistics (NBS) every month. The indicator of year-to-date profits covers industrial firms with annual revenue above 20 million yuan and showed a downward trend of industrial profitability in China.http://www.reuters.com/article/2012/03/27/us-china-economy-profits-idUSBRE82Q01O20120327
Bloomberg.com
Apple Inc. (AAPL)said it plans to make greater investment in China as Chief Executive Officer Tim Cook visited the world’s most populous country, where store openings have trailed a forecast from the company two years ago. Cook had “great meetings” with Chinese officials, Carolyn Wu, a Beijing-based spokeswoman, said by telephone yesterday, without identifying the people. Cook posed for photos earlier in the day with customers at Apple’s store in the Joy City Mall in Beijing’s Xidan shopping area.http://www.bloomberg.com/news/2012-03-26/apple-plans-further-china-investment-as-cook-visits-beijing-1-.html
The gap between traders’ estimates of U.S. corn reserves, the world’s second-biggest, and official figures have reached the size ofRussia’s annual consumption, increasing price swings at a time of near-record food costs. Analysts and traders missed numbers reported by the U.S. Department of Agriculture by 225 million bushels (5.7 million tons) on average in the past seven quarters, according to data compiled byBloomberg. That’s twice as much as in the previous five years and about equal to 12 months of Russian demand. The USDA releases its next quarterly inventory report March 30. http://www.bloomberg.com/news/2012-03-26/russia-sized-mistakes-driving-corn-prices-to-limit-commodities.html
Cnbc.com
Japan is on an unsustainable path of a strong yen and deflation. The unprofitability of Japan’s major exporters and emerging trade deficits suggest that the end of this path is in sight. The transition from a strong to weak yen will likely be abrupt, involving a sudden and big devaluation of 30 to 40 percent. It will be a big shock to Japan’s neighbors and its distant competitors like Germany. The yen’s devaluation in 1996 was a main factor in triggering the Asian Financial Crisis. Japan’s neighbors must have a strong banking system to withstand a bigger devaluation of the yen. http://www.cnbc.com/id/46863460
A third round of Treasurys purchase is not necessary unless the U.S. economy deteriorates further, according to James Bullard, president of St Louis Federal Reserve Bank. Recent economic data have signaled that the U.S. economy is doing better than economists think, Bullard told CNBC Tuesday, and a third round of bond buying by the Fed – in a program known as quantitative easing , or QE – is not needed. “I think QE3 would require the economy to deteriorate somewhat from where it is right now,” Bullard said. “The basic story on the U.S. economy is that we’ve had good news over the last six months or so, especially compared to the recession scenario that was being painted in the August-September time period of last year.”http://www.cnbc.com/id/46862674
Cnn.com
Kenya has finally struck oil after decades of exploration, the country’s president announced Monday. President Mwai Kibaki called the discovery a “major breakthrough,” though it will take more than three years before the country can become an oil producer. “This is the first time Kenya has made such a discovery and it is very good news for our country,” Kibaki said at a state function in Nairobi. British-based Tullow Oil said it established more than 20 meters (65 feet) of net oil pay, which refers to the depth of the oil reservoir. http://edition.cnn.com/2012/03/26/world/africa/kenya-oil/index.html?hpt=ibu_c2
Foxbusiness.com
More Americans are living in cities now than a decade ago, according to U.S. Census data released on Monday. The most urban state is California – one that dominates the popular imagination as a land of empty deserts, open beaches and thick redwood forests – the Census numbers showed. In 2010, a total of 80.7 percent of Americans lived in urban areas, up from 79 percent in 2000. Conversely, 19.3 percent of the U.S. population lived in rural areas in 2010, down from 21 percent in 2000.http://www.foxbusiness.com/economy/2012/03/26/more-americans-take-up-city-living-in-past-decade/#ixzz1qI2fbJLy
USAtoday.com
A historic drop in interest rates is helping save U.S. households more than $3,000 a year on average, allowing consumers to spend more even as their earnings fall, a USA TODAY analysis finds. Americans spent 5.8% of their after-tax income paying interest on mortgages, credit cards, car loans and other debt, according to the latest data from the Bureau of Economic Analysis. That’s the smallest share since 1977 and a steep drop from a record high of 9.1% in 2007. The result: Low interest rates are reshaping household budgets and consumer spending, showing the economic force of the Federal Reserve’s unprecedented effort to reduce mortgage and other long-term rates to restore an economy that was near collapse four years ago.http://www.usatoday.com/money/economy/story/2012-03-26/interest-rates-falling/53793162/1
BBC.co.uk
The UK government is in talks to sell a significant stake in the Royal Bank of Scotland (RBS) to Abu Dhabi, the BBC has learned. The government, which controls 82% of RBS, has for months been negotiating with Abu Dhabi sovereign wealth funds. It could sell up to a third of its stake to Abu Dhabi, one of the seven states of the United Arab Emirates. This is likely to to be a loss-making sale, as RBS shares trade at much less than the UK government paid in 2008. http://www.bbc.co.uk/news/business-17514390
The US has suspended preferential tariffs for Argentina, saying the country has failed to pay penalties it owes US companies. US President Barack Obama said it had not paid $300m (£188m) in compensation awards in two disputes involving US investors. He has suspended the South American country from the US Generalized System of Preferences (GSP) programme. The GSP waives import duties on certain goods from developing countries. The suspensions will take effect in 60 days.http://www.bbc.co.uk/news/business-17517838
German Chancellor Angela Merkel has told the BBC it would be a huge political mistake if debt-stricken Greece was allowed to leave the euro. In an exclusive Newsnight interview, she said Germany would do everything it could to keep the eurozone together. She also calmed fears of further bailouts for eurozone countries, saying important lessons had been learned. And she applauded the UK government’s austerity programme, saying “no country can live beyond its means” Greece recently won approval for a second bailout of 130bn euros ($173bn; £110bn) intended to help keep it afloat until 2014.http://www.bbc.co.uk/news/world-europe-17497656
Telegraph.co.uk
The Spanish ruling party’s failure to win control in a key state election is a “serious setback” that casts doubts over the government’s ability to stick to its financial reforms, economists have warned. Traders were alarmed by signs that Mariano Rajoy was losing popular support for his programme to reduce Spain’s burgeoning debts, without which the country may need a Greek-style bail-out. The prime minister’s PP party won 50 seats in the crucial Andalusia elections but failed to win a majority as the opposition leftist PSOE party won 47 seats. http://www.telegraph.co.uk/finance/financialcrisis/9168201/Spanish-PM-Mariano-Rajoys-election-defeat-fuels-bail-out-fears.html
Guardian.co.uk
The game of rent rises continues as estate agent figures show the value for let homes in Britain has soared 42% to £840bn A side-effect of the Bank of England‘s monetary policies over the last four years has been to protect property values. Some of that can be seen in figures from the estate agents Savills, which says the value of rented homes in Britain has soared by 42% to £840bn. Everyone wants to rent properties for a living. It’s easier than working and seems to bring in a guaranteed income. The mania for buying and selling homes for magical profits was supposed to be a thing of the past. If the crash taught us anything, it was that flippin’ flats after a quick makeover for big bucks was the nation’s downfall. But here we are, supping from the property gravy train again.http://www.guardian.co.uk/business/blog/2012/mar/27/rental-property-gravy-train-needs-derailing
Smh.com.au
The dollar is at levels consistent with Australia’s strong terms of trade, Reserve Bank assistant governor Guy Debelle says. Mr Debelle told a conference in Sydney today that changes in the composition of capital flows, including bank funding sources, had affected the value of the currency. Because of that, it was hard to tell whether the currency was overvalued or not. But “the exchange rate is in the ballpark where you’d expect it to be given the rise in the terms of trade,” he said. While Australia’s terms of trade, or the ratio of export prices to import prices, peaked last year, it is expected to stay at very high levels.http://www.smh.com.au/business/dollar-exchange-rate-in-the-ballpark-rba-20120327-1vvj0.html#ixzz1qI4gR5Co
The good news: China’s government will engineer a soft landing. The bad news: Even a soft landing is painful for industries that have become dependent on the world’s fastest-growing major economy as their main profit engine. Analysts at Deutsche Bank AG, Nomura Holdings Inc. and Daiwa Capital Markets raised forecasts this month for 2012 expansion to as high as 8.6 per cent, partly on anticipation of looser monetary policy. The projections, still below last year’s 9.2 per cent rate, offer little comfort for Australian mining company BHP Billiton Ltd., seeing slower steel production in China, or German automaker Daimler AG, whose Mercedes dealers in the nation are giving record discounts. http://www.smh.com.au/business/world-business/china-soft-landing-may-hurt-commodity-exporters-20120327-1vv4d.html#ixzz1qI4mPY7i
Greece has seven to eight months to turn around its recession-hit economy and make use of EU funds and a landmark debt rollover or market fears will return, the prime minister’s economic advisor said on Monday. “The measures we are adopting now will start to pay off” in seven to eight months, Gikas Hardouvelis, economic advisor to Prime Minister Lucas Papademos, told financial website capital.gr in an interview. “Otherwise, we might go back to where (this government) started, to a revival of fears over Greece,” he said. Greece and private investors on March 12 completed the first phase of a bond swap designed to ease debt repayment and give Athens time to rebuild its shattered economy. http://www.smh.com.au/business/world-business/greece-has-78-months-to-turn-around-economy-pm-advisor-20120327-1vv4g.html#ixzz1qI4wmRKb
Xinhuanet.com
Sri Lanka’s post-war economy recorded remarkable growth last year according to latest data released by the Census and Statistics Department here on Monday. At constant prices, the Gross Domestic Product (GDP) was worth 2.86 trillion rupees (23.83 billion U.S. dollars) in 2011, 8.3 percent increase from 2010, showed the data. The figure of 8.3 percent GDP growth revealed by the Census and Statistics Department over the weekend was above the previous forecast of 8 percent, the rate at which the Sri Lankan economy grew in 2010 as well. http://news.xinhuanet.com/english/business/2012-03/26/c_131490307.htm
The Iranian government increased the monthly cash payment to the Iranian people, Iran Independent News Service (IINS) announced on Monday. On Saturday night, the Iranian government transferred 280,000 rials, which equals to some 15 U.S. dollars, to the accounts of Iranian individuals. On Sunday, one U.S. dollar was exchanged for 19,000 Iranian rials in Tehran’s street market. The money is an additional amount to 455,000 rials, some 24 U.S. dollars, which every Iranian has already been receiving every month as a compensation for the subsidy cut launched late in 2010.http://news.xinhuanet.com/english/business/2012-03/26/c_131490213.htm
Philippine import bills declined 3. 2 percent on year to 5.13 billion U.S. dollars in January on the back of a huge decline in the purchase of electronics, the National Statistics Office said Tuesday. Payment for electronic parts, which account for about half of the country’s import, dropped 26.9 percent on year to 1.34 billion U.S. dollars. China was the biggest source of imports for the Philippines, accounting for 10.4 percent of total purchases. Other key import sources include Japan and the U.S.http://news.xinhuanet.com/english/business/2012-03/27/c_131491847.htm
Jobless rate in France inched up by 0.2 percent in February for the 10th successive month, as tepid economic growth slowed job creation in the eurozone second largest economy, official figures showed on Monday. In February, France registered 6,200 more unemployed, pulling the country’s total number of job seekers up to 2.867 million, the Labor Ministry said. Year on year, the jobless rose by 6.2 percent over the same period last year. http://news.xinhuanet.com/english/business/2012-03/27/c_131491765.htm
Cs.com.cn
China`s A-share market listed banks shows amazing performance in 2011. The 7 listed banks including China Construction Bank (CCB), the nation’s second-largest lender and China Agriculture Bank, report net profits 391.397 billion yuan totally, up 31.68 percent in 2011, according to the data compiled by Shanghai-based Wind on Monday. The 7 listed banks see total business revenues hit 1048.164 billion yuan?up 30.30% year-on-year, said Wind. The 7 banks take up half net profits of the listed companies` net profit by the date of March 27, according to Wind.http://www.cs.com.cn/english/ei/201203/t20120327_3296222.html
Call for money to be redistributed to spur domestic consumption and consequent growth Expanding China’s middle-income families is supposed to be the core to boosting domestic consumption and speeding up the transformation of the growth model of the national economy which mainly depends on exports and the State’s investment, observers say.The Chinese government has set a goal this year to create more medium earners to effectively reverse the trend of a widening income gap, said Premier Wen Jiabao in the annual government work report during the National People’s Congress earlier this month.http://www.cs.com.cn/english/ei/201203/t20120327_3296218.html
South Korea’s consumer confidence rose for two straight months in March due to a rally in local stocks and steady improvement in exports, the central bank said Tuesday. The consumer sentiment index (CSI), which gauges consumers’ overall economic outlook, stood at 101 in March, up 1 point from a month earlier, according to the Bank of Korea (BOK). The CSI is based on survey response from 2,084 households in 56 cities conducted between March 13 and 20. The reading above 100 means optimists outnumbered pessimists. The March rise was mainly attributed to a continued upward trend of local stocks and steady enhancement of exports, which account for more than half of the Asia’s No. 4 economy. “The upward trend in the local stock market and steady growth of exports were reflected in consumer confidence. But, it remains to be seen whether the sentiment among consumers would continue to improve due to lingering external uncertainties such as Europe’s fiscal crisis,” said an official at the BOK.http://www.cs.com.cn/english/ei/201203/t20120327_3296146.html
Thehindu.com
High tariff barriers on U.S. products can harm economic ties between India and the U.S. and prove detrimental to bilateral trade, visiting U.S. Commerce Secretary John Bryson said here on Monday Stating that import duties levied by India were ‘too high’, he sought lowering of high duties to strengthen the ties between the two economies. Mr. John is here on a five-day official visit to India. http://www.thehindu.com/business/Economy/article3248160.ece
Economictimes.com
Despite a 40 per cent decline in new home sales in 2011, new home prices in the financial capital of the country is unlikely to decline this year, according to CRISILResearch. “Notwithstanding a 40 per cent dip in sales of new homes since mid-2011, a sharp rise in construction and funding costs in addition to amendments to the Development Control Regulations (DCR), will increase costs for builders and prevent a reduction in home prices,” CRISIL Research today said here.http://economictimes.indiatimes.com/markets/real-estate/news-/no-room-for-fall-in-mumbai-home-prices-crisil/articleshow/12417691.cms
Yonhapnews.co.kr
The bad debt ratio for loans extended by local lenders rose in February as the economic slowdown and the slumping property markets spurred fresh loan delinquency, the financial watchdog said Tuesday. Local banks’ non-performing loans accounted for 1.13 percent out of their total lending as of end-February, up 0.06 percentage points from a month earlier, according to the Financial Supervisory Service (FSS). The delinquency ratio for corporate loans stood at 1.38 percent last month, up 0.05 percentage points from the previous month, and the comparable figure for household loans was 0.85 percent last month, also up 0.07 percentage points, the watchdog said.http://english.yonhapnews.co.kr/business/2012/03/27/77/0501000000AEN20120327002900320F.HTML
Themoscowtimes.com
The fulfillment of a proposal by President Dmitry Medvedev to reduce the state’s presence in the financial sector could hit the credit profile of Russia’s biggest banks, rating agency Fitch said Monday. Given the current appetite for privatization, there is a “significant probability” that the state will cut its holdings in the country’s two largest banks— Sberbank and VTB— to below 50 percent over the next six years, Fitch analysts wrote in a report. Medvedev ordered the Central Bank and the government last week to develop a proposal for turning their majority stakes in domestic banks to minority ones by Sept. 1. But such privatizations “could reduce the potential for state support” and negatively impact the ratings of the affected banks, Fitch said. Market leader Sberbank is 57.6 percent owned by the Central Bank. The government controls 75.5 percent of VTB and 100 percent of Rosselkhozbank. http://www.themoscowtimes.com/business/article/bank-privatizations-risk-downgrades/455527.html#ixzz1qI7atzcX
Fin24.com
Spending on foreign aid by the world’s main emerging economies is growing rapidly at a time when traditional donors in the West are struggling to keep up funding for global health and development programmes, a health charity said on Monday. Some of the Brics countries (Brazil, Russia, India, China and South Africa) have traditionally received aid, but fast economic growth over the past decade is turning them into new donors to the world’s poor. China and Brazil are leading the pack, increasing aid spending by more than 20% from 2005 to 2010, the GHS Initiatives global health charity said in a report.http://www.fin24.com/Economy/Brics-help-boost-donor-aid-funding-20120326