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Developing countries should take steps to plan for a global economic meltdown on a par with 2008-09 if the European sovereign debt crisis escalates, the World Bank warned on Wednesday. The FT reports the World Bank is forecasting significantly slower global growth in 2012 than it expected last summer even if the eurozone muddles through its crisis,

An administrator of MF Global’s UK arm has warned some customers of the failed futures broker might not see all their money returned. Richard Heis, joint special administrator at KPMG, told the FT that his firm had recovered some £594m or 82 per cent of customer funds held in so-called segregated accounts,

Central banks increased the amount of gold they lent for the first time in a decade in 2011, as they used their bullion reserves to help commercial banks raise US dollars, says the FT. Thomson Reuters GFMS,

Spain’s new government is pressing for Bankia, a group of savings banks listed last year, to seek a merger with another Spanish bank in a deal that would create the country’s largest domestic lender by assets if it materialised,


DS Smith, the UK-based maker of recycled packaging, is to buy Swedish rival SCA Packaging in a €1.6bn deal that some bankers hope will boost confidence in mergers and acquisitions in Europe, says the FT.

Greek officials are due to meet with private international creditors on Wednesday afternoon, reports Reuters, after talks broke down on Friday over the interest rate Greece will offer on new bonds and a plan to enforce investor losses.

Indian billionaire Anil Ambani has secured a $1.2bn loan from a trio of Chinese state-backed banks, underlining how Indian companies are being forced to look beyond western lenders for new sources of finance. Reliance Communications, the mobile telecoms arm of Mr Ambani’s heavily indebted Relianceconglomerate, will use the loan to refinance a $1.2bn convertible bond, due to be repaid at the start of March.
Most Asian stock markets turned higher after a tentative morning session Wednesday, with the material sector leading gains amid pockets of weakness among exporters and financial stocks. Japan’s Nikkei Stock Average rose 1.3%, Australia’s S&P/ASX 200 rose 0.2%, South Korea’s Kospi Composite fell 0.2%, Hong Kong’s Hang Seng Index gained 0.3%, China’s Shanghai Composite Index lost 0.3% and India’s Sensex was up 0.1%. Dow Jones Industrial Average futures were up 36 points in screen trade.

Average property prices in 70 Chinese cities covered in a government survey fell in December from the previous month, marking the third straight monthly decline, while the year-to-year growth rate slowed, after developers cut prices to boost flagging sales as Beijing’s two-year tightening campaign to cool the property market continues. The National Bureau of Statistics said in a statement Wednesday that prices of newly built homes in 52 of 70 large and medium-sized Chinese cities it surveyed fell in December on a sequential basis, up from 49 cities in November.

The European Central Bank is looking for a possible alternative to its bond-buying program, ECB Governing Council Member Ewald Nowotny said in an interview. Though Mr. Nowotny wasn’t specific on what alternatives are under consideration, his comments on Monday are the first from a top ECB official suggesting the bank is actively exploring ways to exit the controversial  program. Critics, particularly in Germany, equate central-bank purchases of bonds with financing governments, eroding the ECB’s independence and risking a potentially dangerous inflation spiral. ECB President Mario Draghi has repeatedly stressed the temporary nature of the program since taking office in November.

The U.S. is rapidly losing high-technology jobs as American companies expand their research-and-development labs in China and elsewhere in Asia, the National Science Board said Tuesday. Global, U.S.-based companies such as 3M Co., Caterpillar Inc. and General Electric Co. have spent billions of dollars in recent years to expand their overseas research labs. Such companies aim to tap a broader pool of scientific talent, tailor products to overseas markets and curry favor with foreign governments by doing more research abroad.

After a rocky start, UniCredit SpA’s €7.5 billion ($9.5 billion) share sale has gained some positive momentum as more investors wade in, highlighted by a big investment in the Italian bank by an Abu Dhabi-based fund. The share sale, known as a rights issue, is being watched as a barometer of investors’ willingness to recapitalize Europe’s troubled banking sector. Although UniCredit has guaranteed access to the proceeds through agreements with underwriters, any large-scale unwillingness by its shareholders to pony up more cash would send a chilling signal to other banks that need to raise billions to meet new European capital

The euro zone’s beleaguered government bond markets enjoyed a day of respite Tuesday, as several debt sales went fairly well, and as negotiators confirmed that talks over a voluntary Greek debt restructuring would resume Wednesday. The euro zone’s bailout fund, the European Financial Stability Fund, managed a successful sale of short-term debt on Tuesday, selling its full target amount of €1.5 billion ($1.9 billion) of six-month bills at very low interest rates. The sale came just a day after Standard & Poor’s Ratings Services stripped the EFSF of its triple-A rating.
Republican Mitt Romney acknowledged Tuesday that his income tax rate is “probably closer to 15 percent than anything,” suggesting that one of the wealthiest people to ever run for U.S. president pays a much lower rate than most Americans. His comment, a day after Romney agreed for the first time to release his tax returns — but not until April when they are generally filed — added fuel to his Republican rivals’ calls for him to be more transparent about his finances.

Front-month Brent crude rose 52 cents to $112.05 a barrel by 0500 GMT, after touching an intraday peak in the previous session that was above the contract’s 200-day moving average of $112.45. U.S. oil gained 67 cents $101.38.

Spot gold was little changed at $1,650.84 an ounce by 0312 GMT, after rising for two consecutive sessions. U.S. gold edged down 0.3 percent to $1,651.20. Technical analysis suggested that spot gold could decline to $1,625.20 an ounce during the day, Reuters market analyst Wang Tao said.
Samsung Electronics Co. (005930), the world’s No. 2 handset maker, said it isn’t interested in buying Research In Motion Ltd. (RIMM), denying a report that fueled an 8 percent surge in the BlackBerry maker’s shares.  Samsung has “never” considered buying the Canadian mobile-phone maker, and there has been no contact between the two companies, James Chung, a Seoul-based spokesman for Samsung, said by telephone. Samsung also isn’t interested in using RIM’s software through a licensing deal, he said.

Bank of Canada Governor Mark Carney prolonged a record period of low interest rates to support an economy that he said would be hobbled by slowing growth in China, Europe and the U.S. Carney kept his benchmark overnight rate at 1 percent for the 11th straight time today, the longest stretch since the central bank began targeting that rate in 1994. Growth in Canada and the U.S. will be “more modest” than forecast in October as European leaders struggle to contain a debt crisis, the Ottawa- based bank said in a statement today.

Foreign direct investment in China fell for the second straight month in December as global financial turmoil dimmed companies’ appetite for spending. Investment from overseas fell 12.73 percent to $12.24 billion last month from a year earlier, the Ministry of Commerce said in a statement in Beijing today. For the full year, spending rose 9.72 percent to a record $116 billion, the data showed. Investment fell 9.8 percent in November, the first decline since 2009.
Greece goes head to head with its creditors on Wednesday in a renewed attempt to break a deadlock in negotiations to slash the country’s debt and stave off default. International private sector creditors represented by the Institute of International Finance (IIF) were set to meet the government in the afternoon. Talks broke down on Friday over the interest rate Greece will offer on new bonds and a plan to enforce investor losses.

The downgrade of much of Europe’s credit ratings demonstrates in perhaps the bluntest terms so far the collapse of any lingering — if lazy — assumptions that developed states are somehow “safer” than emerging counterparts.  In the years to come, investors may make much harder-nosed assessments of how much to lend Western nations and how cheaply to do it, scrutinizing their economics, demographics and particularly politics much more sharply.
Taking direct aim at hedge funds and other private holders of Greece’s debt, Prime Minister Lucas Papademos says he will consider legislation forcing the creditors to take losses on their holdings if no agreement can be reached in critical negotiations scheduled to resume Wednesday. In a wide-ranging, 90-minute conversation on Monday night, his first with a newspaper since he came to office in November, Mr. Papademos also called on Greek politicians to pass the economic measures demanded by Greece’s foreign lenders in exchange for bailout aid, saying vested interests with political ties had helped to block the changes needed to revive the country’s rigid and moribund economy.
The Westpac Melbourne-Institute Australian consumer sentiment index rose 2.4% to 97.1 in January on a seasonally-adjusted basis. In the previous month, the index fell 8.3% to a reading of 94.7. Consumer sentiment improved in all groups, the survey showed.
Jet Airways (India) Ltd. led gains by Indian carriers in Mumbai trading on speculation they may win investment after the aviation and finance ministries recommended allowing foreign airlines to buy as much as 49 percent of local operators. Jet Airways, the nation’s biggest airline, surged as much as 14 percent, the most in intraday trading since June 24, to 268.9 rupees and changed hands at 258.9 rupees at 10:12 a.m. Kingfisher Airlines Ltd. and discount carrier SpiceJet Ltd. each advanced as much as 10 percent. A proposal to relax the investment rule will soon be sent to the cabinet for final approval, Aviation Minister Ajit Singh said yesterday. The move may help local airlines access cash and expertise amid industrywide losses and give an opportunity for overseas carriers to get a slice of the Indian market, where domestic traffic is forecast to surge fourfold by 2020.
Inflation fell sharply in December on the back of lower fuel and clothing prices. Consumer Prices Index (CPI) inflation in the UK fell to 4.2% in December, down from 4.8% in November, according to the Office for National Statistics (ONS). Retail Prices Index (RPI) inflation – including mortgage interest payments – fell to 4.8% from 5.2%. It backs Bank of England predictions that inflation will be 2% by late 2012.
Greek government and international officials have signalled they will yield to the demands of banks and hedge funds in order to secure a bond deal before the end of the week. Amid fresh warnings of Greek default, Charles Dallara, director of the Institute of International Finance (IIF), flew from Washington to Athens on Tuesday night to try to agree a deal before the European finance minister’s summit on Monday.

Gold is set to power to a new record above $2,000 (£1,300) in the next year or so, but the fresh peak will come as it nears the end of a decade-long bull run, experts say. As the global economic backdrop improves and investment in the “safe haven” metal wanes – “probably some time next year” – the price will retreat, according to respected metals consultancy GFMS. Worries over nations’ debt problems and currency devaluation have helped gold rise more than 600pc over the past 10 years, passing $1,920 an ounce in September.

IKEA has become too big and should be broken up, the former chief executive of the world’s number one furniture retailer has said. Anders Dahlvig, the flat-pack pioneer’s boss from 1999 until 2009, said IKEA faced the prospect of slowing growth and rising costs. He said the chain had struggled under his watch to come to terms with its scale and develop the processes required to manage a company with £20bn of revenue and operating in 41 countries.
Bank of England governor’s comments to the Treasury select committee will add pressure on the major banks to restrict bonus payments to senior staff due to paid in the next few weeks. The Bank of England governor, Sir Mervyn King, has warned the UK’s leading banks to rein back on bonus payments or risk a backlash from the public. King said market capitalism should not only work efficiently but should be seen to be fair; huge bonus payments in a time of austerity and declining average incomes would be viewed as unfair by most people.
Sales of new motor vehicles fell 2.9 per cent in December, declining for a second month due to a pullback in sports utility and other vehicles including panel vans and utilities. Data from the Australian Bureau of Statistics out today showed 84,403 vehicles were sold on a seasonally adjusted basis last month, down from 86,948 in November. Sales were down 3.0 percent on the same month last year. While sales of passenger vehicles were little changed in December, those of sports utilities fell 1.6 per cent and other vehicles dropped 12.4 per cent.

The Bank of Italy forecast Tuesday an economic contraction of between 1.2 and 1.5 per cent this year depending on borrowing costs, a much sharper decline than the government’s estimate of 0.4 per cent. “The uncertainty that surrounds the medium-term perspectives of the Italian economy … are extraordinarily high and are directly linked to the evolution of the eurozone debt crisis,” the central bank said in its economic bulletin. The bank advanced two scenarios, each based on interest Italy must offer to borrow on sovereign bond markets.
Finance Minister Jim Flaherty says he stands ready to intervene in the housing market again, just as a mortgage price war breaks out among Canada’s major banks. Mr. Flaherty said Tuesday that he’s watching the market closely, although he has no plans to tighten the market again at this point. His comments came on the same day that the Bank of Canada projected that the debt burden on households will continue to rise, a troubling sign that means stretched consumers are vulnerable to shocks in this climate of heightened economic uncertainty.
Directors of the International Monetary Fund gave the Fund’s management the go-ahead on Tuesday to begin seeking more money, amid increasing worries over the fallout from the euro zone crisis. IMF managing director Christine Lagarde said the executive board had recognised the importance of making sure the Fund had enough resources ‘to help defuse the current global economic weaknesses and regional challenges.’
Bolivia’s mining exports reached a record high of 3.398 billion U.S. dollars in 2011 against 2.405 billion dollars in 2010, the Bolivian Mining and Metallurgy Ministry said Tuesday. Mining exports increased by 993 million dollars, up 41 percent from 2010, Mining Minister Jose Pimentel said. “Last year was a good year for mining because exports grew by a large percentage due to the high prices,” Pimentel said, adding that he hoped the trend would continue as it promotes the growth of the country’s economy.

Brazilian families’ economic vulnerability indicator fell 14 percent in six years, indicating significant advances in several aspects, a study said Tuesday. According to the Brazilian Families’ Vulnerability study released on Tuesday by the Institute of Applied Economic Research (Ipea), the country’s vulnerability indicator dropped from 27 percent in 2003 to 23.1 percent in 2009. The indicator measures struggles related to several aspects of the families’ lives, such as getting jobs, having access to schools, better housing and conditions to raise kids.
Farm produce prices rose for an eighth consecutive week last week, while the prices of producer goods remained unchanged, the Ministry of Commerce said Tuesday.  Because of strong demand pushed up by the upcoming Spring Festival, the wholesale prices of 18 staple vegetables rose 4.9 percent week-on-week, the ministry said in a statement on its website.  Prices of balsam pears, peppers and eggplants increased 9.8 percent, 9 percent and 8.7 percent, respectively.
Consumers will have to shell out more for gold and silver jewellery, bars and coins. The cash-strapped government on Tuesday raised import and excise duties on gold and silver, hoping to mop up about 600 crore in additional revenue and contain its burgeoning current account deficit as the financial year draws to a close. Platinum and diamonds, too, will now attract an import duty of 2%.
A government notification said customs and excise duties would be levied on the value of gold and silver instead of a fixed amount.

Though the country’s industrial output bounced back in November with 5.9 per cent growth, a slowdown in investment and the weak sentiment will restrict expansion in factory production to below 5 per cent in the rest of the fiscal, research firm Dun & Bradstreet has said. “The Index of Industrial Production (IIP) is expected to remain subdued and register below 5 per cent growth during the remaining months of FY’12 as production activity continues to be impacted by the slowdown in investment demand and the weak business and consumer sentiment,” D&B said in the latest issue of its ‘Economic Observer’ report.
South Korea’s central bank said Wednesday that it has won approval from China to invest in yuan-denominated stocks and bonds, joining a string of local financial institutions seeking direct investment in the world’s No. 2 economy. The Bank of Korea (BOK) received the qualified foreign institutional investor (QFII) license from the China Securities Regulatory Commission, which allows the central bank to invest in stocks and bonds traded in Shanghai and Shenzen stock markets, it said in a statement. The license allows the BOK to invest up to US$1 billion, according to a bank official. The BOK applied for the license in October to diversify the country’s foreign exchange reserves.
South Africa’s index closed at its highest level ever, boosted by platinum miners such as Impala and Anglo American. The All Share ended the session 0.66 percent stronger at 33 424.73, its highest close ever.
The UK could face losing up to a half of its gas imports if Iran is hit with an international oil embargo and closes a vital shipping route of Strait of Hormuz, an academic warned. Closing the Strait of Hormuz would block a trade route through which 46 percent of Britain’s gas imports pass route from Qatar, while 84 percent of the UK’s Liquefied Natural Gas imports use the same route.  Professor Paul Stevens, a senior research fellow at think-tank Chatham House, said it was ‘extremely unlikely’ Tehran would not retaliate against crippling sanctions.  The UK could face losing up to a half of its gas imports if Iran does carry through its threat to close a vital shipping route, he warned.
The global economy will grow by only 0.5 per cent in 2012, effectively shrinking on a per capita basis, unless there is rapid action to create jobs, prevent sovereign debt distress and shore up fragile banks, a United Nations study said on Tuesday. The annual UN World Economic Situation and Prospects report forecast average economic growth of 2.6 per cent in 2012 and 3.2 per cent in 2013, assuming what it said were benign conditions in a “make-or-break year” for economic recovery.
So far, so right. With the SPX hitting 1300 today let’s review Mr Bulls view. Goldman’s O`Neill talks about the growth outlook for China and the impact on the global economy, the European sovereign debt turmoil and currency markets. Bloomberg video below.

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847328_3527's picture

Very Bullish according to Wall Street's Broken Window Theory:

Developing countries should take steps to plan for a global economic meltdown on a par with 2008-09 if the European sovereign debt crisis escalates, the World Bank warned on Wednesday."

disabledvet's picture

"Saliency" posted. Appreciate your news.