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The Chinese financial system faces “a steady build-up in vulnerabilities” that require the government to relax its grip on banks, the exchange rate and interest rates, the International Monetary Fund said in its inaugural evaluation of China’s financial sector,


UniCredit, Italy’s largest bank by assets and one of the more weakly capitalised of Europe’s big banks, has announced plans to boost its capital with a €7.5bn rights issue, while scaling back its investment banking business and slashing 6,200 staff,


Angela Merkel, the German chancellor, called on Monday for Europe to build a “political union” to underpin the euro and help the continent emerge from its “toughest hour since the second world war”,




European banks were in focus as US stocks tumbled after Credit Suisse was warned on a possible credit downgrade, while Italian debt investors failed to be soothed by the appointment of a reform premier,


China’s success in starting construction on 10m units of affordable housing this year has been stripped of some lustre by an admission that a third of the projects are little more than holes dug in the ground,


Coca-Cola, the world’s largest soft drinks company by revenues, said on Monday that it would invest $2bn in India over the next five years, as it looks to deepen its presence in fast-growing emerging markets amid slowing US demand for carbonated beverages,


With France’s economy poised on a knife-edge, growth figures for the third quarter due out on Tuesday will be watched with more than usual concern. President Nicolas Sarkozy’s centre-right government has twice had to introduce emergency budget packages in the last three months in response to flagging growth, the latest unveiled a week ago. It is caught in a Catch-22: lower growth prompts tougher measures to convince nervous financial markets that fiscal consolidation, aimed at reducing the budget deficit from 5.7 per cent this year to 3 per cent in 2013, will be carried through. But markets fret that the extra savings will further damage what little expansion there is in output.


Greece has met financial requirements for an €8bn loan payment but still has to reassure “taxpayers abroad” that it is fully committed to implementing the terms of an international bail-out, the country’s new premier told parliament on Monday. Lucas Papademos, a former central banker serving as caretaker prime minister, said ahead of a confidence vote on Wednesday that his government aimed to be “a bridge that supports a passage to conditions of fiscal balance and viable development”.

Asian stock markets were lower and the euro remained weak Tuesday as growing uncertainty over whether newly formed governments in Italy and Greece can contain their countries’ debt crisis kept many investors on the sidelines.  Japan’s Nikkei Stock Average fell 0.8%, Australia’s S&P/ASX 200 slid 0.6%, South Korea’s Kospi Composite lost 1.3% and India’s Sensex slipped 0.2%. Hong Kong’s Hang Seng Index declined 1.1%, while China’s Shanghai Composite fell 0.1%.  Dow Jones Industrial Average futures were down 27 points in screen trade, while copper was off nearly 0.5%.


Europe’s fragile economy showed deepening distress as industrial production dropped across the euro zone, dimming hopes the region’s leaders will be to resolve a debt crisis that German Chancellor Angela Merkel on Monday called Europe’s “most difficult hours since World War II.” Italy was forced to pay its highest interest rate since the euro’s creation to sell five-year bonds—a sign of skepticism that new governments in Italy and Greece will be able to simultaneously boost economic growth and reduce high public-debt levels.


India’s once-highflying airline industry is encountering serious financial turbulence. The rapid expansion of the commercial-aviation sector in India during the past decade has symbolized the nation’s economic progress. But a dire dire combination of rising costs, sinking ticket fares and high levels of debt has left left carriers reeling and looking for government help. The most pressing crisis surroundsKingfisher Airlines Ltd., which faces a cash crunch. The carrier, controlled by billionaire liquor tycoon Vijay Mallya, will release quarterly results Tuesday. It has grounded dozens of flights in recent days to reduce costs, and is engaged in talks over how to raise capital and pare back its $1.2 billion in debt.


For a clue as to why copper is lagging behind many other commodities, investors could look to Wenzhou, China. A recent government crackdown on predatory lending in the coastal city has upended a flourishing market: borrowing on margin to buy and then resell copper. The business of flipping copper in China has grown in recent years amid easy credit and soaring copper prices. The market helped create a virtuous circle for copper, as rising prices enticed more people to borrow and make bullish bets.


European officials believe the European Union is near to clinching a pact to end extraordinary fees for flights that cross Siberian airspace, EU officials said, five years after Russia shelved the agreement. In a letter to EU Trade Commissioner Karel De Gucht dated Nov. 7, viewed by The Wall Street Journal, Russian Minister of Economic Development Elvira Nabiullina pledged to put into force an agreement struck in 2006 that until recently appeared dead.


Singapore state investment company Temasek Holdings Pte. Ltd. and some Chinese institutional firms are among a group of investors in talks to buy the 10.4 billion shares in China Construction Bank Corp. that Bank of America Corp. is selling, people familiar with the sale said Tuesday.  Late Monday, Bank of America said it was selling the shares in CCB, China’s

Logging solid first-half earnings, Japan’s three main banks appear unscathed so far from the European debt crisis that has been pummelling their Western peers.  Mitsubishi UFJ Financial Group Inc. announced the healthiest profits of the three, logging a 95% surge in net income for its fiscal first half ended Sept. 30, thanks to bond-trading gains and lower credit costs. The results prompted the bank to raise its full-year outlook.  Net profit at both Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. fell 25% from the previous year, as both banks were hit by valuation losses on shareholdings and smaller gains from bond trading from a year ago.


The Reserve Bank of Australia decision to cut interest rates earlier this month was based on global economic weakness and reduced domestic inflation pressures, according to the minutes from the RBA’s latest policy meeting, released Tuesday. The central bank lowered the official cash rate by 25 basis points to 4.5% at its Nov. 1 meeting. “The case for an easing in policy was that there had clearly been material changes to the recent course of, and outlook for, underlying inflation over recent months, while the downside risks for the global economy had increased,” the minutes said. The RBA noted some global macroeconomic improvements in the month of October, but added: “It was likely that economic conditions in Europe would weaken further over the period ahead. … as a result, the risks to the global economy still seemed to lie predominantly on the downside.”

Spot gold prices inched down on Tuesday, as investors unnerved by an Italian bond auction focused on the scope of the task faced by new governments in Italy and Greece in keeping the region’s sovereign debt crisis under control. Spot gold edged down 0.2 percent to $1,776.44 an ounce by 0307 GMT, extending losses from the previous session. U.S. gold was little changed at $1,778.10.


The capital of Pennsylvania will let the state or a federal bankruptcy judge determine how it will get out of $318 million in debt after missing the last deadline on Monday to come up with a solution of its own. Harrisburg, which incurred the liability after it renovated its troublesome incinerator, had until 5 p.m. on Monday to come up with an agreement with creditors to avoid a state takeover. A deal was never struck. City Council President Gloria Martin Roberts said a majority of city council members backed out of an agreement reached behind closed doors early on Friday.

Prime Minister Julia Gillard is seeking to overturn a ban on Australian uranium exports to India, risking a battle with her Labor Party and the Greens as she tries to strengthen diplomatic ties and boost the economy.  “Selling uranium to India will be good for the Australian economy and good for Australian jobs,” Gillard told reporters in Canberra today. She called on Labor members to back the policy shift at the party’s national conference next month.


Greek Prime Minister Lucas Papademos, charged with securing international financing to avert a collapse of the economy, said keeping the euro is the only way forward for the country. “Our membership of the euro is a guarantee of monetary stability and creates the right conditions for sustainable growth,” Papademos told lawmakers late yesterday at the start of a three-day debate on a confidence motion in his new government. “Our membership of the euro is the only choice.”

Greece’s conservatives vowed on Monday to reject any new austerity measures in return for the aid that is keeping Athens from bankruptcy, signaling a new coalition government may not enjoy the kind ofcross-party support its lenders demand.  New technocrat Prime Minister Lucas Papademos said Greece had no choice but to remain inside the euro zone, telling lawmakers reforms were the only way to mitigate painful austerity measures which had deepened the recession Euro zone leaders are demanding the conservative New Democracy and its two coalition partners — the Socialists and the right-wingLAOS party — sign pledges that they will do what is necessary to make a new, 130 rescue loan package work.

The Asian Development Bank has called for India and China to be ready to help rescue the eurozone from its sovereign debt crisis to avoid a long-term downturn that will stunt the growth of Asian economies. Rajat Nag, the managing director of the Manila-based ADB, said the world’s two fastest-growing large economies had to “do all they can” to speed the recovery of the the currency bloc either through the International Monetary Fund or direct bilateral arrangements. He warned against Bric [Brazil, Russia, India, China] countries looking at Europe’s difficulties in a “dispassionate way” and said that Asian financial assistance alongside European leadership and resources would help avoid a long-term breakdown in the global economy.

Britain will lose the “safe-haven” status it has enjoyed this year as an improving US economy proves a bigger attraction for investors, UBS has warned.  The Swiss bank is forecasting the American economy will expand faster than any other developed rival next year, offering appeal both for those after higher returns as well as a shelter from Europe’s debt crisis. While US gross domestic product will expand by 2.3pc in 2012, Britain will muster growth of just 0.7pc, according to the bank.


Spain and Italy’s borrowing costs soared as economists warned that Europe is sliding into recession and Angela Merkel defied intense pressure and ruled out issuing European-guaranteed debt. Instead Ms Merkel said she would push for changes to European treaties to introduce sanctions for financially lax countries and the adoption of a financial transaction tax – with or without Britain.

The global economy is still slowing, according to a new report from the Organisation for Economic Co-operation and Development, fuelling fears that countries such as the UK are heading back into recession.  The Paris-based organisation says that every country it monitors experienced a slowdown in economic activity during September, according to its composite of leading economic indicators (CLIs). “Compared to last month’s assessment, the CLIs point more strongly to slowdowns in all major economies,” the OECD said.  The latest survey shows the UK, France, Germany, Italy, Canada, China, India and Brazil all falling below their long-term trend (indicated by a CLI index reading of 100).

Billionaire Anthony Pratt has called on Australia to quadruple its food production to help meet the global food security challenge. Speaking at a conference on food security in Shepparton today, Mr Pratt, son of the late cardboard box mogul Richard Pratt, said: “We have what it takes to feed 200 million people, to quadruple food manufacturing, and that should be our goal.” Mr Pratt outlined a five-point plan to quadruple food production, including accelerated depreciation for new investments in food manufacturing; continuing funding for innovation and research in food production; reform of anti-dumping laws, to put the onus of proof on the dumper facing an anti-dumping allegation, as in America; suspension of payroll tax for food manufacturers, and; ensuring competition laws allowed consolidation among food companies.–food-production-boost-20111115-1nglm.html#ixzz1dklWCEEP

World leaders, including U.S. President Barack Obama and British Prime Minister David Cameron, have urged the ECB to take a bigger role in ending the European debt crisis, which is sending bond yields up in almost every euro-zone country, including France, as the contagion spreads. In his parting TV appearance Saturday night, former prime minister Mr. Berlusconi also called upon the ECB to become the lender of last resort to keep the euro-zone debt markets from collapsing. However, the bond sale came amid evidence that the ECB, led by Italy’s Mario Draghi, has been an unenthusiastic buyer of the sovereign debt of the most deeply indebted euro-zone countries, among them Italy and Spain.

China’s currency should play a greater role in a possible future international monetary system that could be developed after eliminating the “wild swings” of the U.S. dollar and euro, Robert Mundell said Monday. “As the largest trading nation, the second largest national economy and the third largest currency area, China should have an influence in the international monetary system second only to the United States and Europe,” the Nobel-laureate economist said in an interview with Xinhua. Mundell said China could make the dollar-euro duet into a trio once its currency becomes convertible and China agrees to bring its balance of payments into equilibrium.


The gloomy global economy is forecast to have impact on Indonesia’s exports but it will not deepen further as the country has diversified markets and most of its exports comprising basic needs, director at the central bank said here on Tuesday. The statement was made amid concern that the slowing economy in the United States and Europe could trim demand of products from Indonesia. “The further weakening of the exports (after being impacted) is predicted not to happen,” said Perry Warjiyo director of economic research and monetary policy of the bank said at a seminar in Nikko Hotel here. The director said that the growing role of emerging market had helped ease the impact of the crisis, taking China and India as examples, which have been among the main destination for the

India’s inflation rose just a tad in October, offering respite to policy makers and raising hopes that it may have hit a cyclical high. The slower rise is, however, unlikely to prod the Reserve Bank of India to loosen its monetary policy anytime soon as inflation remained in the distress zone of 9% for the 11th month in a row.  Headline inflation, as measured by the Wholesale Price Index, rose 9.73% in October from a year ago as against 9.72% in the previous month, data released by the commerce and industry ministry on Monday showed.


The government has made a strong pitch for an upgrade of the country’s sovereign rating with the international ratings firm Moody’s, outlining a clear road map for how it plans to rein in subsidies through the unique identity framework to improve government’s fisc. Unfortunately, for New Delhi the review comes at a time when the country is likely to miss its fiscal goal posts and the current account deficit may worsen.  “India’s credit strengths are much more than most ‘Baa’ rated sovereigns,” said a finance ministry official.

South Korea’s import prices of key raw materials dropped for the third straight month in October on a steady decline of metal prices, a trade association said Tuesday. The Korea Importers Association (KOIMA) said its price index for imported commodities stood at 371.9, down 17.28 points from the previous month. The index fell in August after a 10-month rising streak. Using 1995 as the base year, the benchmark index covers 56 key imported raw materials, ranging from corn and soybeans to crude oil and aluminum scraps.

Russia cleared a major hurdle toward opening up its huge oil-driven economy Thursday, with negotiators agreeing to final terms that would allow it to join the World Trade Organization after an 18-year effort.  The deal is expected to quickly inject 4 billion euros ($5.45 billion) a year into the ailing European economy by boosting European Union exports.  The 27-nation bloc is Russia’s biggest trading partner. EU nations imported 158.6 billion euros worth of goods — mostly oil and gas — from Russia last year, while exporting 86.1 billion euros worth of machinery, automobiles and farm products.

Pacific Investment Management Co. Co-Chief Investment Officer Bill Gross and Chief Executive Officer Mohamed El-Erian, talk about the European sovereign-debt crisis and its impact on the U.S. economy and the role of Germany in resolving the turmoil. Despite having underperformed for a short time, when these gentlemen speak, one should listen. Video with the world’s biggest bond managers.


What’s the focus of investors in this market? The stock market has been living it’s own dream, while many of the credit markets imply a slightly different picture of the Economy. Today we got the Spanish rates trading above the 6% level again. Italian rates are also spiking higher again, and we expect the 7% level to be breached shortly. Irrespective of what you think about the market here, people have clearly woken up to that yields do matter.

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Grand Supercycle's picture

NASDAQ megaphone pattern on daily chart indicates a big move lies ahead.

SP500 monthly chart remains bearish and USDX weekly remains bullish, so it’s only a matter of time until the market makes its move.