News That Matters

By www.thetrader.se

Ft.com
The failed German Bund auction on Wednesday dampened sentiment in Asian stock markets on Thursday, particularly in Japan where the Nikkei 225 in the morning hit its lowest level since April 2009, reports the FT. http://ftalphaville.ft.com/thecut/2011/11/24/761231/bund-auction-reverbe...

Investors paid record amounts to protect themselves against the risk of default by Bank of America on Wednesday, as fears grow over US banks’ exposure to the eurozone debt crisis, says the FT. Credit default swaps on BofA rose as high as 495 basis points, http://ftalphaville.ft.com/thecut/2011/11/24/761211/us-bank-credit-defau...

The Brazilian government has suspended Chevron’s drilling rights in Brazil until it clarifies the causes of an offshore oil spill, reports Reuters. Brazil’s National Petroleum Agency said it decided to halt Chevron’s drilling rights after determining that there was evidence that the company had been “negligent” http://ftalphaville.ft.com/thecut/2011/11/24/761241/brazil-suspends-chev...

The Irish government wants European authorities to share the cost of Ireland’s €63bn ($84bn) bank bail-out because “reckless lending” by international banks to Irish banks contributed to their collapse, http://ftalphaville.ft.com/thecut/2011/11/24/761181/ireland-seeks-eu-hel...

George Osborne wants to tempt UK pension funds, oil-rich Gulf states and other sovereign wealth funds to pay for new roads, railways, housing and other projects with a national infrastructure plan to be released next week, http://ftalphaville.ft.com/thecut/2011/11/24/761151/osborne-plans-to-att...

The Chinese renminbi could pose a threat to the international dominance of the US dollar within five to 10 years, the US-China Economic and Security Review Commission warned this month in its annual report to Congress, http://ftalphaville.ft.com/thecut/2011/11/23/761071/renminbi-threat-to-d...

China is facing its worst wave of labour unrest since a series of wildcat strikes at Japanese-owned car plants last year, as declining export orders force factories to reduce worker pay, reports the FT.http://ftalphaville.ft.com/thecut/2011/11/23/761051/china-labour-unrest-...

French and Belgian government bonds were lower for a third day running after De Standaard newspaper said Belgium was seeking to negotiate the break-up plan for lender Dexia, Bloomberg reported. Italian and Spanish securities also dropped amid concern a new credit line announced yesterday by the International Monetary Fund wouldn’t be big enough to support the nations,http://ftalphaville.ft.com/thecut/2011/11/23/759701/french-belgian-bonds...

Eurozone banks raised sharply their borrowing from European Central Bank on Tuesday, with lending hitting a new high for the year amid signs banks are being shut out of private markets, the FT reports. http://ftalphaville.ft.com/thecut/2011/11/23/759621/ecb-lending-to-euroz...

A Brussels proposal for a joint “eurobond” to steady sovereign debt markets has drawn a frosty reception from some of the most creditworthy eurozone states, with Germany attacking the idea as “troubling” and possibly counterproductive.  José Manuel Barroso, European Commission president, on Wednesday unveiled long-awaited plans to curb the excesses of profligate eurozone governments and introduce common “stability bonds” to replace national debt issuance. http://www.ft.com/intl/cms/s/0/c7323b36-15dd-11e1-a691-00144feabdc0.html...

Wsj.com
Most Asian stock markets were slightly higher Thursday, with several exchanges reversing morning losses amid a rise in U.S. stock futures, even as many investors remained cautious after Germany’s failure to auction all the bonds it offered Wednesday.  The euro stabilized after slumping Wednesday, while the Tokyo stock market came off its lowest level since 2009, which it tapped earlier Thursday. http://online.wsj.com/article/SB1000142405297020463090457705681166738241...

Germany has lowered its gold reserves for the first time in almost a year, selling 150,000 troy ounces in October while central banks of developing economies continued to beef up their bullion holdings in a bid to diversify their foreign reserves. Bundesbank, the central bank of Germany, reduced its reserves to 109.194 million ounces in October, from 109.344 million ounces in September, according to International Monetary Fund data seen by Dow Jones Newswires. http://online.wsj.com/article/SB1000142405297020445210457705634081953294...

The Japanese government held on to its view that the nation’s economy “is expected to continue to pick up” in its report for November, despite signs of sputtering growth due to the European sovereign debt crisis. Among the biggest risks are “further slowing down of less resilient overseas economies, volatile fluctuations in exchange rates and stock prices due to the euro-zone debt crisis, and the flood disaster in Thailand,” the monthly report released Thursday showed. http://online.wsj.com/article/SB1000142405297020463090457705719028419864...

Bahrain fostered a culture of fear in its brutal crackdown on antigovernment protesters earlier in the year, using excessive force and widespread torture to extract false confessions, a panel investigating abuses said. The release of the report Wednesday underlines the challenge the tiny Gulf state faces to repair its battered image and to hold those responsible for the torture and violence to account. http://online.wsj.com/article/SB1000142405297020463090457705615288403218...

One year after it was forced to seek financial help from the European Union and the International Monetary Fund, the Irish government believes that in being required to repay debts incurred by the country’s banks, it is bearing an “unfair burden,” and is seeking to ease that imposition. With the cost of its borrowings from the bond markets soaring, the Irish government asked for a €67.5 billion ($91.2 billion) bailout from the IMF and EU in November 2010. The government continues to meet the terms of that bailout, including targets for cutting its budget deficit and recapitalizing the stricken banking system. http://online.wsj.com/article/SB1000142405297020463090457705607254949512...

The head of Greece’s opposition New Democracy party sent a letter to European leaders on Wednesday affirming his commitment to the Greek government’s reform agenda, in an effort to unlock a slice of badly needed aid for the country.  Disbursement of €8 billion ($10.8 billion) in loans from Greece’s euro -zone partners and the International Monetary Fund had been put in doubt after European leaders demanded written pledges from Greece’s political party chiefs to back agreed reforms. Without that aid, Greece is expected to run out of money by mid-December. http://online.wsj.com/article/SB1000142405297020463090457705565226941983...

Marketwatch.com
Over the past few years Brazil has seen itself catapulted onto the world stage thanks to its booming economy and dynamic growth trajectory. With a GDP predicted to total $2.4 trillion for 2011, the Latin American giant looks set to overtake the U.K. to become the world’s sixth largest economy by the end of the year.  However, fortune has not always favored Brazil.http://www.marketwatch.com/story/brazil-emerging-no-more-seeks-to-cement...

Treasury prices rose Wednesday, driving yields down, after the U.S. Treasury Department auctioned 7-year notes at a record-low yield.  The Treasury Department sold $29 billion in 7-year notes at a yield of 1.415%, the lowest on record for an auction of the notes. The previous low yield at an auction was 1.496% in a September sale. Yields on the 7-year note, which move inversely to prices, fell nearly 6 basis points to 1.346% by late afternoon after the auction. They had been hovering around 1.412% just before the auction. A basis point is one hundredth of a percentage point.http://www.marketwatch.com/story/us-treasurys-fall-after-weak-german-bon...

Reuters.com
Moody’s Investors Service on Wednesday warned that its top credit rating for the United States could be in jeopardy if lawmakers backtrack on $1.2 trillion in deficit cuts planned over 10 years. The ratings firm said the failure of a U.S. congressional committee to reach an agreement on deficit reduction did not affect the Aaa rating, but any pullback from agreed automatic cuts to take effect starting in 2013 could prompt it to take action. http://www.reuters.com/article/2011/11/23/us-usa-moodys-committee-idUSTR...

Brent crude rose above $107 on Thursday as potential strong winter fuel demand and turmoil in the Middle East offset fears that a global economic slowdown could hurt consumption. Crude stockpiles in the United States fell more than expected last week as refinery rates rose and crude imports fell. A botched German bond sale on Wednesday raised alarm that the crisis could hit even Europe’s largest economy. http://www.reuters.com/article/2011/11/24/us-markets-oil-idUSTRE7AD06820...

Gold steadied on Thursday but declines in equities blamed on the euro zone crisis could prompt investors to sell bullion to cover losses, while a firmer U.S. dollar also put pressure on prices, which have slipped more than 10 percent since hitting record.Spot gold eased 0.04 percent to $1,692.09 an ounce by 0242 GMT, having slipped on Wednesday on falling equities, weak Chinese factory data and a contracting euro zone economy. Bullion struck a record of around $1,920 in September. http://www.reuters.com/article/2011/11/24/us-markets-precious-idUSTRE7AK...

Bloomberg.com
India’s central bank loosened rules for companies to borrow abroad and raised the interest rate on bank deposits by its citizens living overseas to help stem the decline in Asia’s worst-performing currency. Companies borrowing abroad can now pay as much as 3.5 percentage points over the London Interbank Offered Rate for loans longer than three years and up to five years, raising the cap by 50 basis points, or 0.5 percentage point, according to a central bank statement in Mumbai yesterday. For non-resident Indians, the spread over Libor was increased between 25 basis points and 100 basis points for two different deposit plans. http://www.bloomberg.com/news/2011-11-23/india-relaxes-rules-to-boost-do...

China widened efforts to support cash-strapped companies in Zhejiang and rural areas hit by a credit squeeze that’s slowing the second-largest economy just as Europe’s debt crisis saps export demand. The People’s Bank of China cut the reserve ratio for more than 20 rural credit cooperatives nationwide by half a percentage point, according to an announcement from its Hangzhou branch in Zhejiang, where small businesses have complained about lack of access to credit. Bank of America Merrill Lynch predicts officials will lower the ratio for large commercial banks early in 2012. http://www.bloomberg.com/news/2011-11-23/china-central-bank-lowers-reser...

Standard and Poor’s said Japanese Prime Minister Yoshihiko Noda’s administration hasn’t made progress in tackling the public debt burden, an indication it may be preparing to lower the nation’s sovereign grade. “Japan’s finances are getting worse and worse every day, every second,” Takahira Ogawa, Singapore-based director of sovereign ratings at S&P, said in an interview today. Asked if this means he’s closer to cutting Japan, he said it “may be right in saying that we’re closer to a downgrade. But the deterioration has been gradual so far, and it’s not like we’re going to move today.” http://www.bloomberg.com/news/2011-11-24/s-p-says-may-be-right-it-s-clos...

Bank of England policy maker David Miles said there’s a risk a country may leave the 17-nation euro area and that the threat from the region’s crisis has increased uncertainty about the outlook for the U.K. economy.  “I don’t think any of us can feel confident one way or another about whether all the countries that are currently in the euro zone will still be in it,” Miles said in an interview on ITV broadcast late yesterday. In the U.K., “the return to more normal rates of growth is something that is going to be a gradual process over the course of the next two years,” Miles said. “There’s plenty of risks and that might turn out to be too optimistic, that might turn out to be too pessimistic.” http://www.bloomberg.com/news/2011-11-24/boe-s-miles-sees-risk-a-country...

Chinese banks are “extremely fragile” because the lenders don’t have enough capital to offset bad loans, said Jim Chanos, president and founder of the $6 billion hedge fund Kynikos Associates Ltd. Chinese lenders are saddled with non-performing loans accumulated in the late 1990s and early 2000s, Chanos, the short seller who predicted the collapse of Enron Corp. in 2001, said in an interview on Bloomberg Television yesterday. The banks are failing to recognize the losses on the bad loans and have carried out a lending binge since 2008, said Chanos.http://www.bloomberg.com/news/2011-11-23/chinese-banks-built-on-quicksan...

Foxbusiness.com
China’s central bank confirmed Wednesday it had lowered the reserve requirement ratio for six rural banks in Zhejiang province, cutting the ratio of funds that need to be set aside with the People’sBank of China as reserves to 16% from 16.5%, effective Friday. The adjustment rolls back a 0.5% penalty that was levied on the banks following a review last November. The PBOC was cited as saying in a report by the state-run Xinhua news agency that the reserve ratio was increased last year as a way of punishing banks for not lending enough to rural farming businesses. The lowering of the reserve requirment shouldn’t be seen as a policy easing move, the report quoted the PBOC as saying. http://www.foxbusiness.com/markets/2011/11/23/china-confirms-reserve-rat...

USAtoday.com
The average rate on the 30-year fixed mortgage hovered above its record low for a fourth straight week. But cheap mortgage rates have done little to boost home sales or refinancing. Freddie Macsays the rate on the 30-year fixed loan fell to 3.98% percent from 4% the previous week. Seven weeks ago, it dropped to a record low of 3.94%, according to the National Bureau of Economic Research. The average rate on the 15-year fixed mortgage edged down to 3.3 percent from 3.31%. Seven weeks ago, it too hit a record low of 3.26%.http://www.usatoday.com/money/economy/housing/story/2011-11-23/mortgage-...

Washingtonpost.com
The nation’s savings rate has dwindled as consumers try to juggle rising prices and stagnant wages. According to government data released Wednesday, the national savings rate was 3.5 percent in October, a slight improvement from the previous month but significantly below the 5 percent rate seen for most of the past two years. During the throes of the recession, the savings rate had skyrocketed above 8 percent. “They spent it. That’s the short answer,” said Paul Dales, senior U.S. economist for Capital Economics. “It might be a lot of households don’t have a choice.”http://www.washingtonpost.com/business/economy/higher-prices-stagnant-wa...

BBC.co.uk
After much speculation, the head of India’s largest microlender, SKS Microfinance, has stepped down. Vikram Akula resigned after the board of India’s only listed microfinance company met in Mumbai. SKS was once one of the sector’s top for-profit companies, attracting major investments. However, microlenders in India have been struggling after their business models and practices caused a backlash. http://www.bbc.co.uk/news/business-15866827

Telegraph.co.uk
The Bank of England’s Monetary Policy Committee is unlikely to inject a further dose of new money into the ailing economy until at least February, minutes of the November meeting suggested. The committee judged there was “little merit in fine tuning” at the current time, after restarting quantitative easing in October when it announced a further £75bn of asset purchases, on top of the £200bn already made during the height of the recession. The November minutes revealed the nine-strong committee voted unanimously in favour of leaving policy unchanged, with interest rates held at 0.5pc and a total of £275bn of quantitative easing maintained. http://www.telegraph.co.uk/finance/financialcrisis/8909061/Bank-of-Engla...

The average UK worker has seen their pay fall by more than 3pc in real terms since 2010 as the rate of inflation surges ahead of salary increases. The Annual Survey of Hours and Earnings from the Office for National Statistics (ONS) shows that the average gross salary for full-time employees was £26,200 in 2011, an increase of 1.4pc from 2010.  But in the face of CPI inflation rates above 5pc this represents a fall of over 3pc in real terms. Those in lower-paid jobs saw the lowest wage increases between 2010 and 2011. Hourly earnings, excluding overtime, for the lowest-paid 10pc of full-time workers grew by just 0.1pc to £7.01, while earnings for the highest-paid 10pc saw growth of 1.8pc to £26.75 per hour.http://www.telegraph.co.uk/finance/economics/8909797/Average-salary-fall...

Guardian.co.uk
Global financial markets prepared for the euro’s endgame after the sovereign debt crisis spread to Germany, the “stability anchor” of the single currency, and investors shunned its government bonds. Europe‘s biggest economy suffered what analysts called a “complete and utter disaster” as it managed to sell only two-thirds of its 10-year bonds at auction. “It’s a vote of no confidence in the entire  eurozone,” one said. Stock markets slumped, the euro fell to a recent low and France came under renewed pressure after it emerged it could be forced by Belgium to pump more emergency aid into rescued lender Dexia. Both countries were forced to deny reports that a €90bn restructuring plan for Dexia was being renegotiated.http://www.guardian.co.uk/business/2011/nov/23/eurozone-doomed-without-c...

Smh.com.au
Australian costs to lock in fixed rates are dropping by the most in the developed world as investors wager the central bank will cut borrowing costs because a slowdown in China will sap demand for commodities. Australia’s three-year swap rate plunged 160 basis points since December 31, the biggest slide among 24 developed markets tracked by Bloomberg. New Zealand’s rate has fallen 132 basis points in the second-largest drop. A Credit Suisse Group AG index shows the Reserve Bank of Australia will cut its 4.5 per cent benchmark by 166 basis points to a record within a year. http://www.smh.com.au/business/markets/swap-rates-plunge-as-rba-seen-lop...

Almost 60 per cent of Chinese companies that sold bonds in the past six months invest in the property market, undermining government efforts to limit real estate fundraising and curb inflation. Seventy-four of 121 companies that filed bond prospectuses since May with Chinabond, the nation’s clearinghouse, count one of their main businesses as real estate, have property subsidiaries or invest in the market. Engine maker Zongshen Power Machinery Co. said its parent company is involved in development. Kangmei Pharmaceutical Co., which makes medicine to treat high blood pressure, invests in real estate. http://www.smh.com.au/business/world-business/bonds-show-60-of-chinese-c...

The euro zone has sunk into recession, a leading international banking organisation said Wednesday, adding that conditions in the 17-nation bloc had deteriorated swiftly. ‘‘The situation in the euro area has taken a serious turn for the worse in the past month,’’ the Institute of International Finance (IIF) said in global outlook report. ‘‘The economy has tipped into what we believe to be a recession, which will only serve to widen budget deficits and weaken bank asset quality further,’’ the IIF said. http://www.smh.com.au/business/world-business/euro-zone-already-in-reces...

Xinhuanet.com
China’s annual GDP growth is expected to reach 9.2 percent this year and continues to experience a moderate cooling in 2012, a senior official said on Thursday. Expansion of the country’s industrial production in 2012 will also witness a growth pace that is one or two percentage points lower compared with this year, Huang Libin, an official with the Ministry of Industry and Information Technology said at a press conference. http://news.xinhuanet.com/english2010/china/2011-11/24/c_131266979.htm

Cs.com.cn
Beijing is finally seeing a turning point for sky-high housing prices following the implementation of tightened property market control policies, said property market observers. With the tightening policies and rises in unsold housing supplies, the property market in China is now experiencing apparent price reductions, Zhang Dawei, an analyst with Centaline Property Agency, said Wednesday. More Chinese cities posted monthly housing price declines in October. Over 40 cities with purchasing control policies have seen average housing price declines of about 0.21 percent from September to October, said a newly released report conducted by Centaline Property Agency. http://www.cs.com.cn/english/ei/201111/t20111124_3141231.html

Thehindu.com
Asserting that India’s growth fundamentals are strong and look more attractive in a world beset with problems, Finance Minister Pranab Mukherjee on Wednesday ascribed the massacre in the stock markets to a number of global factors. “India’s growth fundamentals are strong and they look more attractive in a world confronting problems,” said a Finance Ministry statement quoting Mr. Mukherjee.  The official statement came in the wake of a bloodbath on the domestic bourses with the Bombay Stock Exchange sensitive index (Sensex) witnessing a 587-point free fall in intra-day trade before recovering some lost ground to close 365 points lower at 15,699.97. The National Stock Exchange’s Nifty also breached the psychological barrier of 4,700 to touch 4,640.95 and ended the day’s trading at its two-year low at 4,706.45. http://www.thehindu.com/business/markets/article2653134.ece

Yonhapnews.co.kr
South Korea’s economy is expected to grow 3.7 percent next year, slowing from the 4.5 percent expansion projected by the government this year, due to worsening global economic conditions, a state-run think tank said Thursday. Expansion of the country’s gross domestic product “will reach 3.7 percent next year due to the slowing down of the global economic recovery from the second half of this year and growing financial uncertainties brought on by the crisis in the Eurozone and other advanced countries,” the Korea Institute for Industrial Economics and Trade (KIET) said in a report. http://english.yonhapnews.co.kr/business/2011/11/24/67/0503000000AEN2011...

Themoscowtimes.com
President Dmitry Medvedev warned Wednesday that Russia would quit the New START nuclear arms reduction pact with the United States if America continues plans to deploy a missile defense shield in Eastern Europe. If Washington and Brussels do not cooperate with Moscow on the matter, it could also result in Russia targeting shield sites in Europe with its own ballistic missiles, Medvedev said. The threats, which come days before Russian parliamentary elections, endanger the “reset” in bilateral relations that was started with the New START treaty. Russian analysts called Medvedev’s promises “adequate,” given the United States’ reluctance to compromise, but some also voiced doubts that added pressure would solve the impasse. http://www.themoscowtimes.com/news/article/reset-is-threatened-with-miss...

Fin24.com
The eurozone is unlikely to survive its sovereign debt crisis in its current form, according to a majority of leading economists and former policymakers polled by Reuters. Fourteen out of 20 prominent academics, former policymakers and independent thinkers polled over the last 10 days agreed the eurozone’s make-up would change.  A new “core” eurozone with fewer members received qualified backing from 10 economists as a possible solution, with seven of them saying Greece should be excluded from it.  Six expected the currency bloc to survive as it is although Europe’s leaders have yet to settle on measures needed to solve the debt crisis, which is choking funding for Italy and Spain, the third and fourth largest eurozone economies which Europe can ill afford to bail out. http://www.fin24.com/Economy/Eurozone-unlikely-to-stay-intact-experts-20...

Thetrader.se
With markets closing on the lows, as SPX “collapsed” 1% during the last minutes before the close, we suddenly start feeling that deja vú of the flash crash. With liquidity drying up, and HFT dominating the markets, this could well turn into another Black Swan event. While majority of investors being prepared for a quite week, we have witnessed quite the contrary. German bond auctions not going well, Groupon a “failed” IPO, and now topped with Syria soon to be invaded, is creating a very volatile environment. What’s next, Iran getting involved? Stay tuned, as the week is not over yet, and Black Friday, might turn into a Black Monday. http://www.thetrader.se/2011/11/24/whats-after-black-friday-black-monday...

Comments

[disabledvet]

Interesting that the only paper that "gets it" is the Guardian. Everyone else is "ho-humming" the biggest collapse in economic history--insofar as the "cover" is concerned. Needless to say it's the exact opposite on-line. At least it's "case closed" on who to listen to when you want learn something about what's going on in the world of money. With the exception of Jim Cramer...and me...of course.

[onlooker]

Better than Drudge which has been my first read of the day

[PulauHantu29]

Happy Thanksgiving.