Europe is Jiggerypokered!

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News and Views in brief

Economy

German Chancellor Angela Merkel said on Monday that Europe could be living through its toughest hour since World War Two as new leaders in Italy and Greece rushed to form governments and limit the damage from the euro zone debt crisis.

Financial markets on Monday took heart on relief that a key Italian bond auction drew decent demand from investors and hopes that new leaders in Greece and Italy would take decisive action to breathe new life into their sick economies.

"Europe is in one of its toughest, perhaps the toughest hour since World War Two," Merkel told her conservative party in Leipzig, saying she feared Europe would fail if the euro failed and vowing to do anything to stop this from happening.

But in a one-hour address to the Christian Democrats (CDU), Merkel offered no new ideas for resolving the crisis that has forced bailouts of Greece, Ireland and Portugal, and has raised fears about the survival of the 17-state currency zone.

"If the euro fails then Europe fails, and we want to prevent and we will prevent this, this is what we are working for, because it is such a huge historical project," Merkel said in the east German city of Leipzig. http://www.reuters.com/article/2011/11/14/us-eurozone-idUSTRE7AC15K20111114

President Barack Obama kept up his pressure on China's foreign-exhange policy and trade practices, saying “enough’s enough” on what the U.S. views as a too-slow appreciation of the yuan.

While there's been a “slight improvement,” China’s exporters “like the system the way it is” and are resistant to any moves to loosen the reins on the yuan, Obama said.

“Changes are difficult for them politically, I get it,” Obama said at a news conference concluding a summit with Asia- Pacific leaders in Hawaii yesterday. “But the United States and other countries, I think understandably, feel that enough’s enough.”

As he seeks to reassert U.S. interests in Asia, Obama is using increasingly strong language on China’s trade, currency and intellectual property policies. The U.S. contends China’s currency is kept artificially low, putting American businesses at a disadvantage and driving up Chinese trade surpluses. http://www.bloomberg.com/news/2011-11-14/obama-says-enough-s-enough-on-china-s-undervalued-yuan-as-hu-pushes-back.html

Indexes

U.S. stock futures fell, following a two-day rally for the Standard & Poor’s 500 Index, as a surge in Italian borrowing costs at an auction deepened concern Europe will struggle to contain its debt crisis.

Morgan Stanley and Citigroup Inc. (C) retreated at least 0.6 percent, following losses in European lenders. Schlumberger Ltd. (SLB) and Freeport-McMoRan Copper & Gold Inc. (FCX) paced declines in commodity producers. Boeing Co. (BA) rallied 3.4 percent after securing a record $26 billion order with Emirates. International Business Machines Corp. (IBM) added 0.9 percent after Warren Buffett said his Berkshire Hathaway Inc. bought about $10.7 billion in the company’s shares.

S&P 500 futures expiring in December lost 0.4 percent to 1,256.6 as of 8:13 a.m. New York time. The benchmark gauge had rallied 2.8 percent over the previous two days. Dow Jones Industrial Average futures slipped 9 points, or 0.1 percent, to 12,104.http://www.bloomberg.com/news/2011-11-14/u-s-stock-index-futures-fluctuate-boeing-alcoa-gain-in-european-trading.html

U.S. companies are buying back the most stock in four years, taking advantage of record-high cash levels and low interest rates to purchase equities at valuations 15 percent cheaper than when the credit crisis began.

Corporations have authorized more than $453 billion in repurchases this year, putting 2011 on track for the third- highest annual total behind 2006 and 2007, data compiled by Birinyi Associates Inc. show. Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) bought shares for the first time, and Amgen Inc. (AMGN) sold debt to fund its buyback. U.S. companies spent 70 percent more on their stock last quarter than a year ago, according to financial filings as of Nov. 11.

Market bulls say the rise shows executives are confident the U.S. economy will avoid a recession. While the Standard & Poor’s 500 Index peaked the last time buybacks were this high, companies in the gauge are generating three times as much cash, price-earnings ratios are lower and 10-year Treasury yields are around 2 percent. Bears say the increase means companies lack better uses for capital. http://www.bloomberg.com/news/2011-11-14/buybacks-surging-to-four-year-high-with-s-p-500-valued-15-below-2007-peak.html

Currencies

The euro fell against the dollar on Monday as tentative optimism about prospects for crisis-fighting reforms under new governments in Italy and Greece gave way in the face of the huge debt problems still plaguing the euro zone.

Italy sold 3 billion euros of five-year bonds at yields which, while down from last week's record market highs, were elevated enough to underscore the challenges the country's new technocratic government faces to restore market confidence, leaving many investors bearish on the single currency.Former European Commissioner Mario Monti was appointed on Sunday to head a new government in Italy charged with implementing urgent reforms to end a crisis that has endangered the whole euro zone.

The single currency was last down 0.75 percent versus the dollar at $1.3648, with gains following Italy's debt auction short-lived. It was well below a high around $1.3815 hit on EBS trading platform after a modest rally in Asian trade.http://www.reuters.com/article/2011/11/14/markets-forex-idUSL5E7ME2KK20111114

Commodities

France may lose its place as the second-biggest wheat exporter after failing to win more than a dozen tenders in Egypt, the world’s biggest buyer, as shipments from Russia, Ukraine and Kazakhstan overwhelm markets.

Egypt favored cheaper supply from the Black Sea region in the past 17 tenders and cargoes to northern Africa from France’s Rouen, Europe’s biggest grain-export hub, fell to a four-month low in the week ended Nov. 2, port data show. France’s crop office expects a 23 percent drop in shipments in the 12 months ending in June, the most in at least a decade.

That’s reversing last season’s trend, when French cargoes jumped 16 percent to a record as Russia and Ukraine cut sales to ensure domestic supply. Prices that reached a three-year high in February are plunging after both countries eased restrictions. Output is also expanding elsewhere and the United Nations expects the biggest-ever global harvest. Wheat may drop another 20 percent in Paris by May, said Greg Grow, director of agribusiness at Archer Financial Services Inc. in Chicago.http://www.bloomberg.com/news/2011-11-14/wheat-shippers-battle-for-sales-as-global-grain-glut-expands-commodities.html

Goldman Sachs Group Inc. lowered its forecast for commodity gains in the next year to 15 percent after correctly predicting the climb in prices since the beginning of last month.

The S&P GSCI Enhanced Commodity Index will be led by gains in industrial metals in the next year, Jeffrey Currie, a Goldman analyst in London, wrote in a report today. The bank, which lowered its commodities forecast from 20 percent last month, says copper will gain 22 percent and London oil 10 percent.

Goldman correctly advised investors to sell oil and copper in April and turned more bullish the following month before prices rebounded. It lowered its commodities outlook after the GSCI Enhanced gauge jumped 15 percent since Oct. 4. Raw materials have gained as European leaders attempted to contain the region’s debt crisis and the Federal Reserve signaled more stimulus may be available to spur growth.http://www.bloomberg.com/news/2011-11-14/goldman-lowers-12-month-forecast-for-commodity-gains-to-15-led-by-metals.html

"Europe is in one of its toughest, perhaps the toughest hour since World War Two," Merkel told her conservative party in Leipzig, saying she feared Europe would fail if the euro failed and vowing to do anything to stop this from happening.

But in a one-hour address to the Christian Democrats (CDU), Merkel offered no new ideas for resolving the crisis that has forced bailouts of Greece, Ireland and Portugal, and has raised fears about the survival of the 17-state currency zone.

"If the euro fails then Europe fails, and we want to prevent and we will prevent this, this is what we are working for, because it is such a huge historical project," Merkel said in the east German city of Leipzig. http://www.reuters.com/article/2011/11/14/us-eurozone-idUSTRE7AC15K20111114

President Barack Obama kept up his pressure on China's foreign-exhange policy and trade practices, saying “enough’s enough” on what the U.S. views as a too-slow appreciation of the yuan.

While there's been a “slight improvement,” China’s exporters “like the system the way it is” and are resistant to any moves to loosen the reins on the yuan, Obama said.

“Changes are difficult for them politically, I get it,” Obama said at a news conference concluding a summit with Asia- Pacific leaders in Hawaii yesterday. “But the United States and other countries, I think understandably, feel that enough’s enough.”

As he seeks to reassert U.S. interests in Asia, Obama is using increasingly strong language on China’s trade, currency and intellectual property policies. The U.S. contends China’s currency is kept artificially low, putting American businesses at a disadvantage and driving up Chinese trade surpluses. http://www.bloomberg.com/news/2011-11-14/obama-says-enough-s-enough-on-china-s-undervalued-yuan-as-hu-pushes-back.html

Comments

[He_Who Carried ...]

You're just a bunch of Sissies! All of you.

[Imminent Crucible]

"Holy crap!" said Chinese president Hu Jintao on Monday. "Obama has said Enough is Enough. We did not expect this level of savage rhetoric, and while we regret Mr. Obama's intemperate tone and harsh wording, China realizes that we are out-verbosed and out-telepromptered. We cannot stand up to this level of public criticism.

"Accordingly, I have ordered the People's Bank of China to begin selling U.S. dollars and buying renminbi until the two currencies reach approximate parity. At that point, we will re-evaluate our vendor-financing model with the board of directors of Wal-Mart Corporation and its public sector subsidiary, the Geithner Treasury."

Other than that, words fail me.