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Ft.com

The government of Mongolia has backed down from its demand for a larger share of Oyu Tolgoi, one of the world’s biggest new copper mines, in an about-turn that boosted the share price of Rio Tinto, the FT reports. In a joint statement, http://ftalphaville.ft.com/thecut/2011/10/07/695851/mongolia-retreats-on...

 

Banks based outside the US could be dragged into the American “Volcker Rule”, which bans proprietary trading, according to the latest draft of the rule and lawyers that were ploughing through leaked copies on Thursday, http://ftalphaville.ft.com/thecut/2011/10/07/695801/volcker-rule-draft-c...

 

George Soros, the billionaire hedge fund manager, has lost a case at the European Court of Human Rights to have his criminal conviction for insider dealing quashed, the FT reports. The failed appeal at announced http://ftalphaville.ft.com/thecut/2011/10/07/695776/soros-fails-to-quash...

 

A real-estate fund run by Goldman Sachs has walked away from a $1.26bn deal with Lehman Brothers Holdings to buy a portfolio of 10 office buildings in a suburb of Washington, the WSJ reports. A lawsuit filed Thursday with the US Bankruptcy Court in Manhattan shows Lehman is seeking $100m in damages from the Goldman-run US Real Estate Opportunities fund,http://ftalphaville.ft.com/thecut/2011/10/07/695756/goldman-sued-over-le...

 

 

 

Sony is nearing a deal to buy out Ericsson’s stake in their mobile-phone joint venture, the WSJ says, citing people familiar with the matter. By wresting full control of Sony Ericsson, a 50-50 joint venture created in 2001 that is the world’s sixth-largest cellphone manufacturer, http://ftalphaville.ft.com/thecut/2011/10/07/695686/sony-shares-fall-on-...

 

Nervousness is growing in Whitehall that the government might have to inject further capital into RBS as part of a European effort to recapitalise the continent’s banking system, the FT reports, quotinghttp://ftalphaville.ft.com/thecut/2011/10/07/695636/whitehall-fears-anot...

 

Europe’s covered bond market is to be shored up by a €40bn purchase programme in a move to boost the continent’s economy and provide extra financing for banks, reports the FT. Thursday’s decision by the European Central Bank comes 14 months after the end of its last covered bond-buying foray, http://ftalphaville.ft.com/thecut/2011/10/06/695611/european-central-ban...

 

Rising Chinese labour costs are changing the economics of global manufacturing and could contribute to the creation of 3m jobs in the US by 2020, according to a study being released on Friday. The Boston Consulting Group analysis says the new jobs will be generated by a “re-shoring” of manufacturing activity lost to China over the past decade. “Re-shoring is part of a broad trend that will emerge as … production gradually swings back to the US,” Hal Sirkin, a senior partner at the consultancy, told the Financial Times. http://www.ft.com/intl/cms/s/0/e5b774ca-f037-11e0-96d2-00144feab49a.html...

 

The orderly break-up of Dexia began to take shape on Thursday as the ailing Franco-Belgian bank announced it was in advanced talks to sell its Luxembourg unit.  The lender’s shares were suspended in the afternoon, having fallen a further 17 per cent, to €0.85. Dexia said Belgian regulators asked for the suspension, which will last until Monday, after extreme trading volatility in recent days and uncertainty over the steps to be taken. http://www.ft.com/intl/cms/s/0/01de8d9c-f014-11e0-bc9d-00144feab49a.html...

 

Wsj.com

Taking a cue from Wall Street’s third consecutive rally Thursday, Japan’s Nikkei Stock Average rose 1.1%, Australia’s S&P/ASX 200 climbed 2.0%, South Korea’s Kospi Composite jumped 2.5% to a one-week high, and New Zealand’s NZX-50 added 0.9%. Dow Jones Industrial Average futures were down 28 points in screen trade. http://online.wsj.com/article/SB1000142405297020347680457661592223019104...

 

The Bank of Japan on Friday kept its monetary policy on hold, opting to proceed with its easing steps taken in August as the strong yen and uncertainty about the health of the global economy have yet to derail the nation’s recovery. The BOJ maintained the size of its asset buying program–regarded as the central bank’s primary weapon for credit easing amid virtually zero interest rates– at ¥50 trillion ($652 billion). http://online.wsj.com/article/SB1000142405297020338880457661597190832258...

 

The European Banking Authority said Thursday it can’t rule out launching a new round of stress tests on Europe’s banks, but denied having already done so. Separately, European Commission President José Manuel Barroso said Europe’s banks may need recapitalization and work is already underway on some aspects of this.  An EBA spokeswoman said “the situation has evolved rapidly and dramatically” since the EBA published the results of its stress tests in July, adding that the body, “as a technical authority, will of course assess all the alternatives.” http://online.wsj.com/article/SB1000142405297020347680457661449015080479...

 

Portugal is trying to prove to creditors that it can cut its budget to the bone, but the governor of this tiny island has plans to keep spending. Despite Lisbon’s calls for austerity, Alberto João Jardim, Madeira’s governor since it gained autonomy in 1976, vowed more building when he spoke late last month at the opening of a €1.1 million ($1.5 million) road linking a small neighborhood to a new church in the rural district of Calheta. http://online.wsj.com/article/SB1000142405297020483130457659488182469828...

 

Italian Prime Minister Silvio Berlusconi set off a political firestorm on Thursday by quipping that he would name a new political party after a slang term for female genitalia. Speaking with lawmakers inside the Chamber of Deputies, the lower house of Italy’s parliament, Mr. Berlusconi dismissed rumors that he planned to launch a second political party by joking that, if he did, the group would be named after the sexually explicit word, according to Italian media reports that were confirmed by an aide to the premier. http://online.wsj.com/article/SB1000142405297020429450457661508230785456...

 

Bargain hunters propelled retail sales in September, as chains used deep discounts to clear out back-to-school merchandise ahead of the holidays. While the results were better than expected, the industry remains concerned about its prospects for the key year-end shopping season, when stress on consumers and weaker traffic are expected to blunt sales growth. FedEx Corp., which sees a lot of holiday traffic, expects slower growth this year. Chief Executive Fred Smith said Thursday he expects holiday shipments to climb by 2.5% to 3%, compared with growth of 4.3% in 2010.http://online.wsj.com/article/SB1000142405297020338880457661465313286620...

 

U.S. leaders took swipes at China on Thursday, as the Senate voted to advance a bill to penalize countries said to be manipulating their currencies and President Barack Obama accused the country of manipulating the yuan. U.S. Trade Representative Ron Kirk separately demanded that China disclose details to the World Trade Organization on a large number of government subsidies to ensure it is complying with global trade rules. The U.S. notified the WTO of almost 200 subsidy programs China has failed to disclose, as well as 50 India measures.http://online.wsj.com/article/SB1000142405297020347680457661485227471912...

 

Reuters.com

Gold headed for its biggest weekly gain in a month as equities regained strength after fresh efforts by Europe to resolve its debt crisis eased nagging worries about a global recession, while purchases from jewellers offered additional support. Gold added $7.44 to $1,656.79 an ounce by 0313 GMT, still down from a lifetime high of around $1,920 hit in early September. U.S. gold futures were steady at $1,658.1 an ounce. http://www.reuters.com/article/2011/10/07/us-markets-precious-idUSTRE78M...

 

President Barack Obama launched an onslaught against banks and Republicans on Thursday for working to block financial reform, using a populist tone amid public anger over Wall Street practices. Obama, a Democrat who is fighting for re-election in 2012 against a backdrop of high unemployment, said his Republican opponents’ primary plan to boost the economy involved rolling back Wall Street regulationhis administration fought to pass. http://www.reuters.com/article/2011/10/06/us-obama-idUSN1E7950UK20111006

 

European Union moves to shore up ailing banks moved into higher gear on Thursday as President Barack Obama urged European leaders to act faster to tackle a sovereign debt crisis that threatens global economic recovery. The EU’s executive arm said it would present a plan for member states to coordinate a recapitalization of their banks, as regulators met in London to reassess the capital buffers of stressed lenders that received a clean bill of health in July. http://www.reuters.com/article/2011/10/06/us-eurozone-idUSTRE7953D520111...

 

Bloomberg.com

Vietnam’s central bank increased its refinancing rate for the first time since May, as the nation tries to steady its currency and tame Asia’s fastest inflation. The State Bank of Vietnam raised the refinancing rate to 15 percent from 14 percent, effective Oct. 10, it said in a statement on its website yesterday. The central bank weakened the dong’s reference exchange rate for the third straight day today, to 20,653 per dollar from 20,648 per dollar. http://www.bloomberg.com/news/2011-10-06/vietnam-central-bank-raises-ref...

 

Mortgage rates in the U.S. fell, sending longer-term borrowing costs below 4 percent for the first time on record, as stricter credit standards and the slowing economy hold back a housing rebound. The average rate for a 30-year fixed loan dropped to 3.94 percent in the week ended today from 4.01 percent, Freddie Mac said in a statement. That’s the lowest in the McLean, Virginia- based company’s records dating back to 1971. The average 15-year rate declined to 3.26 percent from 3.28 percent last week. http://www.bloomberg.com/news/2011-10-06/mortgage-rates-in-u-s-decline-w...

 

A toilet shortfall in Bangladesh that enables diarrheal and other disease-causing germs to spread costs the nation about $4.2 billion annually, a study found. Economic losses tied to inadequate sanitation amounted to 6.3 percent of Bangladesh’s gross domestic product in 2007, highlighting an urgent need to invest in better hygiene, a report by the World Bank’s Water and Sanitation Program said.http://www.bloomberg.com/news/2011-10-07/toilet-shortfall-costs-banglade...

 

Cnbc.com

While economists have made no secret of their fears that another recession is about to strike, the real danger could be worse.  Instead, the country could be headed for a 21st century version of a depression, an economic term that, unlike a recession, defies a standard definition but instead conjures images of soup lines, 25 percent unemployment and a devastated economy. http://www.cnbc.com/id/44802751

 

For all the confidence in China’s resilience to global economic shocks over the past decade, some investors are now starting to worry about a hard landing for the high-flying economic giant.  Fears of a Chinese growth shock are compounding a broader sell-off bedevilling emerging markets, prompting many to raise cash levels and reposition portfolios to cope with an end to the China-driven commodities boom and a resurgent dollar. Beyond the obvious impact on Asian markets, commodity-exporters South Africa and Brazil are seen as vulnerable while India and Turkey have been identified as relative beneficiaries should long-gestating fears over China be realised. http://www.cnbc.com/id/44809640

 

Foxbusiness.com

Greece said on Thursday it concluded talks with the IMF on a vital tranche of aid but inspectors said negotiations on the bailout were continuing and that there was no final conclusion with any party. Inspectors from the European Union, the International Monetary Fund and European Central Bank — known as the troika — resumed their review of Greece’s progress on a bailout deal last week, and an IMF official said the Fund’s latest review of Greece’s loan program will be completed within days. The Finance Ministry issued a statement saying Minister Evangelos Venizelos had finalized bailout talks with the IMF and would resume talks with the European Commission on Friday. http://www.foxbusiness.com/markets/2011/10/06/greece-bailout-talks-not-e...

 

USAtoday.com

The federal government will disburse just $432 million from a $1 billion program to help unemployed homeowners avoid foreclosure, a government official said Thursday. The rest of the money will return to the U.S. Treasury because the Emergency Homeowners’ Loan Program has ended, and not enough people were approved in time to receive aid. The funding provided forgivable loans up to $50,000 to temporarily help unemployed or underemployed people avoid foreclosure in 32 states and Puerto Rico. http://www.usatoday.com/money/economy/housing/story/2011-10-06/foreclosu...

 

BBC.co.uk

Bank of England governor Mervyn King has said this financial crisis could be the worst the UK has ever seen. His comments came after the Bank authorised the injection of a further £75bn into the economy through quantitative easing (QE). Explaining the move Sir Mervyn told Sky News: “This is the most serious financial crisis we’ve seen at least since the 1930s, if not ever.” http://www.bbc.co.uk/news/business-15210112

 

The Bank of Japan (BOJ) has extended its loan scheme for banks operating in areas affected by the earthquake and tsunami by six months.  The central bank had offered 1tn yen ($13bn, £9bn) in special loans to banks to ensure liquidity for reconstruction efforts after the natural disasters. The loan scheme was due to expire at the end of this month. BOJ also left its interest rate unchanged at 0.1% in a bid to boost growth amid uncertain economic outlook. http://www.bbc.co.uk/news/business-15210097

 

German factories recorded a 1.4% drop in industrial orders over the month of August, according to government data. It is the second month in a row that demand has weakened, casting further gloom over the prospects for Europe’s largest economy. Economists had expected no change after July’s 2.6% fall. The German economy ministry blamed “special factors”. It said the decline was driven by a fall in domestic demand during the summer holidays. http://www.bbc.co.uk/news/business-15196904

 

Telegraph.co.uk

The Bank of England may have to inject as much as £500bn into the economy to rescue Britain’s faltering recovery, economists warned after the central bank shocked markets by restarting its money printing programme.  Sir Mervyn King, Governor of the Bank, unveiled plans to increase quantitative easing (QE) from £200bn to £275bn – a sum equivalent to a fifth of the UK economy, as it held rates at 0.5pc. The Bank was taking the “pre-emptive action to prevent the slowdown becoming too serious”, he said. http://www.telegraph.co.uk/finance/economics/8812210/Bank-of-Englands-QE...

 

“Surveys of both economists and market participants suggested that most thought the Bank would wait until November at least,” Goldman Sachs pointed out. “The £75bn is also larger than expected: we had expected only £50bn.”  The pound fell 0.41 cents against the dollar. The FTSE 100 jumped 3.7pc. Gilt yields fell on the prospect of the Bank buying roughly £5bn a week for four months from next Monday. Sir Mervyn King, the Bank’s Governor, couldn’t have asked for a better reception. http://www.telegraph.co.uk/finance/economics/8812020/Shock-and-awe-may-b...

 

The revelation came as the Office for National Statistics (ONS) unexpectedly downgraded its estimate of economic growth for the three months to June from 0.2pc to 0.1pc as part of a major recalculation of historical data. At the same time, it revised down its estimate for the three months to March from 0.5pc to 0.4pc. http://www.telegraph.co.uk/finance/economics/8807874/Recession-was-deepe...

 

From autumn 2008, a number of us on the Shadow Monetary Policy Committee, which is run by the Institute for Economic Affairs, advocated QE. The goal at that time was to prevent the money stock collapsing following the 2008 banking crisis and the regulatory response to it, thus preventing deflation from getting out of control, driving up the burden of household debts and inducing mass defaulting, which would drag down the banking sector even further. http://www.telegraph.co.uk/finance/financialcrisis/8811210/Quantitative-...

 

Smh.com.au

Housing starts are predicted to drop 20 per cent over the year to June 2012, as the sector faces nervousness among buyers and weaker industry conditions. Investment bank Merrill Lynch believes new home commencements will drop to 134,000 in the year to June 2012, from a peak of 167,000 in the year to June 2011, with a risk they could fall further. The grim assessment of the housing sector activity – an important employer for construction but also for real estate and finance industries – comes as a key reading on housing sector activity fell to the lowest level in 31 months in September.http://www.smh.com.au/business/more-gloom-ahead-for-housing-sector-20111...

 

Xinhuanet.com

Judging from many text message in-boxes in China, real estate developers and sales agents are hungry, if not desperate. “On the very first day of the National Day holiday, more than 30 spam text messages swarmed into my mobile phone. By 3 pm today (Tuesday), I had been bombarded by 187 messages,” a netizen writing as “Blue Sky” wrote on a local forum in Zhenjiang, East China’s Jiangsu province. Most of the messages the netizen posted were promoting real estate projects. Each included a hotline number at the end. “I am wondering, have these real estate developers become insane?”http://news.xinhuanet.com/english2010/china/2011-10/06/c_131176788.htm

 

Thehindu.com

Industry body Associated Chambers of Commerce and Industry of India (Assocham) on Thursday said implementation of the Goods and Services Tax (GST) is expected to push the country’s economic growth up by 1.4 per cent to 1.6 per cent.  The chamber added that GST might add Rs.1.50-lakh crore annually to the government’s revenues. “The GST, likely to be introduced next year, will lead to buoyancy in government revenues by Rs.1.50-lakh crore and increase the country’s GDP by 1.4-1.6 per cent,” it said. http://www.thehindu.com/business/Industry/article2515550.ece

 

Buoyed by increasing sales of its compact car Figo in overseas markets, Ford India is planning to expand its reach to 50 countries by the end of this year or early 2012. The company is currently exporting its global car, which made its international debut in India in March 2010, to 27 countries. “Exports has been a real joy for us. In September, we exported 2,469 cars. We are quite happy that the number is growing,” Ford India Executive Director (Marketing, Sales and Service) Nigel E Wark told PTI. Asked if the rising export numbers of Figo have encouraged the company to explore new markets, he replied in affirmative. http://www.thehindu.com/business/companies/article2514456.ece

 

The Finance Ministry believes that fears about the fiscal deficit getting out hand during current fiscal 2011-12 are unwarranted. The Government estimates the fiscal deficit to be 4.6 per cent of the GDP but various rating agencies like Moodys’ think it would be around 5 per cent. Some fear that it may even be in the 5.5-6 per cent range. Analysts sounded the alarm when the Government announced an additional borrowing of Rs 52,872 crore for the second half of the current fiscal starting October 1. Some analysts feared that the additional borrowing could touch Rs 1 lakh crore.  The Government currently aims to borrow Rs 4.70 lakh crore as against the budgeted Rs 4.17 lakh crore http://www.thehindubusinessline.com/industry-and-economy/article2515015....

 

Economictimes.com

India and Iran are working on a long-term solution to settle payments for crude oil imports from the Gulf nation through banks in South Korea and Russia after New Delhi managed to pay long pending dues to Tehran through Turkey’s Halkbank.  At a bilateral meeting held in the Indian capital on Wednesday, the two sides have decided that both governments will also explore other stable payment options such as through won and rouble, government officials with direct knowledge of the matter said. http://economictimes.indiatimes.com/news/economy/foreign-trade/india-ira...

Yonhapnews.co.kr

The South Korean economy is likely to grow at a slower pace than the central bank’s earlier forecast of 4.3 percent this year amid dimmer global economic outlooks, its chief said Friday. “The growth of the South Korean economy is expected to be lower than 4.3 percent this year, but it will be higher than 4 percent,” Bank of Korea (BOK) Gov. Kim Choong-soo told lawmakers. Kim said the economic growth in the third quarter seemed to be “not that high.” The BOK earlier said that the quarterly growth would reach around 1.5 percent in the third and fourth quarter, respectively.http://english.yonhapnews.co.kr/business/2011/10/07/85/0503000000AEN2011...

 

South Korea’s auto exports jumped 14 percent on-year in September thanks to greater demand for fuel efficient vehicles and improved quality of locally made cars, an industry report showed Friday. The report by the Korea Automobile Manufacturers Association (KAMA) said domestic carmakers shipped out 249,342 vehicles last month, up from 218,649 units a year earlier. In the first nine months of the year, exports rose 13.7 percent to more than 2.27 million vehicles, from 1.99 million vehicles in the same period of 2010. “Spikes in fuel prices around the world sparked demand for small, fuel efficient cars, while sharp improvements in quality and performance also contributed to the greater numbers,” the association said. http://english.yonhapnews.co.kr/business/2011/10/07/46/0501000000AEN2011...

Themoscowtimes.com

Russia’s services sector activity picked up slightly in September from the year-low growth rate posted in August, but the rise in new business eased for the sixth straight month, clouding the economic growth outlook, the HSBC Purchasing Managers Index indicated Wednesday. The headline figure inched up to 53.3 in September from 53.2 in August, holding above the 50 mark that separates expansion from contraction. “The … survey for September reflected growing downside risks for the economy,” said Alexander Morozov, chief economist for Russia and the CIS at HSBC.http://www.themoscowtimes.com/business/article/services-follow-manufactu...

Thetrader.se

With Manic Markets, it is crucial to evalue both long and short term charts and levles often. We wrote of the Squeeze set up three days ago. Once again, the markets bounced off the support levels, and fooled too many of the new “smart” shorts. Our long term scenario is intact, and we still believe the big dynamics on the downside will evolve later this autumn. There is a big risk of a Collapse happening, just when everybody is sucked into the long trade, and shorts have given up. For now, let’s review the short term charts, all hitting resistance levels. Let’s just wait for Biggs to turn bullish, again.http://www.thetrader.se/2011/10/06/essential-chart-update/

 

While majority of Investors lost huge sums in August, and some lost it all, there are the “free thinkers” out there producing extraordinary returns for their clients. Bloomberg reports on Taleb and his crew: Mark Spitznagel pushes the throttles on his new twin-engine Chris-Craft Corsair 28, slicing through Grand Traverse Bay in northernMichigan on a warm day in late July. As the speedboat reaches more than 50 miles per hour, Spitznagel’s blond hair flying in the wind, he churns up a big wake. http://www.thetrader.se/2011/10/06/black-swan-manager-returning-23/

 

As HFT churn this no liquidity market, we present you thoughts on the Future of Computer Trading in Financial Markets. Computer based trading has transformed how our financial markets operate. The volume of financial products traded through computer automated trading taking place at high speed and with little human involvement has increased dramatically in the past few years. For example, today, over one third of United Kingdom equity trading volume is generated through high frequency automated computer trading while in the US this figure is closer to three- quarters.http://www.thetrader.se/2011/10/06/future-of-hft/

 

 

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