News that Matters



The Crown Estate made a record profit in its last financial year, the FT reports, with net profit rising 9.6 per cent for the year to March 31 to £230.9m. The record profits came ahead of proposals that would give the royal family a direct cut from the revenues of the £7.3bn ($11.7bn) property portfolio


A small team of officials at the US Treasury is looking at ways to avoid default if Congress fails to raise the debt limit by August 2, Reuters says, despite senior officials including Timothy Geithner repeatedly saying there were no contingency plans.


Citigroup has scaled back the planned sale of its former CitiFinancial unit as part of negotiations with Centerbridge and Leucadia, as potential buyers grapple with how to fund the business as a standalone entity. Citi is discussing a sale of about $9bn in assets,


As concerns over the outlook for the Chinese economy intensify, currency traders have scaled back their bets that the renminbi will continue to strengthen against the dollar, writes the FT. Investors


The price of iron ore will remain above $150 a tonne for at least the next five years, according to Vale, the top miner of the commodity. The bullish prediction by Guilherme Cavalcanti, finance director of the mining group,


Senior European officials lashed out at Moody’s on Wednesday, questioning the timing of the debt rating agency’s downgrade of Portuguese bonds this week and threatening new regulatory action against all three major rating agencies,


China has raised interest rates for the fifth time in eight months, indicating the country’s leaders are still focused on taming politically sensitive inflation, the world’s second-biggest economy is slowing


Sugar output in Brazil, the world’s biggest exporter, is set to fall for the first time in five years, the country’s industry association has told the Financial Times, raising the possibility of a sharp rise in prices that would stoke fears over food security.

Asian stock markets were mostly lower Thursday after China’s interest rate increase Wednesday, while Samsung Electronics fell in Seoul after forecasting dour second quarter earnings. Japan’s Nikkei Stock Average fell 0.1%, Australia’s S&P/ASX 200 slid 0.3%, South Korea’s Kospi Composite rose 0.4% and New Zealand’s NZX-50 fell 0.4%. Dow Jones Industrial Average futures were up 28 points in screen trade.


European governments’ plan for private-sector creditors to help Greece’s next bailout without triggering a default were thrown into doubt Wednesday, as senior German officials resurrected a once-rejected proposal that would cost investors more. The German proposal—calling for investors to be encouraged to swap Greek government bonds for new bonds—had been ditched a month ago after strong opposition from the European Central Bank and governments including France, because it would lead to Greece being called in default by rating agencies.


Nearly one-third of 91 European banks undergoing the latest round of public stress tests could need external support to be brought up to scratch, Moody’s Investors Service said Wednesday, as the sector braces for the results of the tests to be published next week. The ratings agency said its assessment that around 26 banks “have a heightened risk of needing extraordinary external support” is based on credit-strength


U.S. and Chinese officials will restart talks next week on a potential deal to allow U.S. examiners to inspect auditing firms based in China amid heightened concern about Chinese “reverse merger” companies using backdoor methods to tap the U.S. capital markets.


Australia’s labor market remained one of the strongest in the world in June, with the country adding another 23,400 jobs in the month and the unemployment rate holding steady at 4.9%. Economists on average had expected an unemployment rate of 4.9% in June, with the number of employed up 15,000.


Goldman Sachs Group Inc. borrowed $15 billion from the Federal Reserve in late 2008, the biggest single loan in a crisis-era program for which previously secret details were disclosed Wednesday. The Fed reported loan-by-loan data for what were called single-tranche term repurchase agreements. The loans, which had to be repaid in 28 days, were made from March 2008 to December 2008.


Pyeongchang, South Korea, on Wednesday defeated two European cities to win the right to host the 2018 Winter Olympics, bringing the Winter Games to Asia for only the third time in history.Pyeongchang won in the first round of voting, beating out Munich, Germany, and Annecy, France, a resort town in the French Alps. After the International Olympic Committee President Jacques Rogge announced the result, a few dozen South Korean delegates elatedly waved their national flags.


President Juan Manuel Santos has surprised friends and foes alike during his first year in office by distancing himself from his onetime boss, former President Álvaro Uribe, and setting an ambitious agenda to try to repair the damages from a long-running civil war. With approval ratings at over 75% and a solid majority in congress, Mr. Santos has secured a package of groundbreaking laws, including one to return nearly 16 million acres of land—equal to West Virginia—taken from peasants during the war.

China will likely be given a senior-level position within the International Monetary Fund for one of its nationals, according to reports Thursday, saying a fourth deputy-managing director slot will be created to accommodate the plan.


A slowdown in second-quarter euro-zone growth and ongoing uncertainty over the region’s long-running debt crisis won’t be enough to stop the European Central Bank from hiking its key lending rate on Thursday, economists said. Worries about above-target inflation and a reluctance to be seen maintaining an overly loose monetary policy at the same time that the euro zone’s core countries are putting together an additional bailout for Greece will likely ensure policy makers follow through on the rate hike signaled by ECB President Jean-Claude Trichet at his June news conference.

Oil prices settled near flat on Wednesday, buffeted in low-volume trade as an interest rate hike by China and Europe’s debt woes kept demand concerns in focus ahead of weekly reports expected to show a drop in U.S. crude stocks. China’s rate rise, the third in 2011, reinforced concerns about demand, especially in the short term, and the late Tuesday cut of Portugal’s credit rating by Moody’s underlined worries over the sputtering global economy.


Gold prices held steady on Thursday following three days of gains, supported by inflation concerns that are pushing central banks to raise rates, while an ongoing debt crisis in the euro zone also underpinned sentiment. U.S. gold was little changed at $1,529.60.


(UK) The government plans further talks with trades unions on pensions reform after the two sides met on Wednesday for the first time since a walkout last week by some 300,000 teachers and civil servants. “We have had another constructive meeting today as part of the ongoing talks the government has committed to with the TUC (Trades Union Congress) on public service pensions,” a Treasury spokeswoman said.


Growth in the U.S. economy’s vast services sector remained sluggish in June as new orders fell, but economists said a steady employment reading pointed to job growth later in the year. Wednesday’s picture of labor market conditions in the Institute for Supply Management’s services sector data comes two days ahead of a key U.S. jobs report that is expected to show non-farm payrolls rose modestly last month after slumping in May.

China may limit interest-rate increases for the rest of this year as Premier Wen Jiabao bets that a slowing economy will help tame inflation after five moves since mid-October. A quarter-point boost to one-year lending and deposit rates was announced late yesterday, effective from today. That may be the last for 2011, according to JPMorgan Chase & Co., HSBC Holdings Plc and Bank of America Merrill Lynch. Nomura Holdings Inc. predicts one more move, this quarter.


Japan’s machinery orders rose at the fastest pace in four months in May, a sign companies are increasing spending to restore businesses and production disrupted by the March 11 earthquake and tsunami. Factory orders, an indicator of capital spending in three to six months, increased 3 percent in May from April, the Cabinet Office said today in Tokyo, matching the median forecast of 31 economists surveyed by Bloomberg News.


Samsung Electronics Co., the world’s largest maker of televisions, posted a 26 percent drop in second-quarter profit after a slump in sales of flat screens masked a surge in demand for smartphones and tablet computers. Operating profit in the three months ended June fell to about 3.7 trillion won ($3.5 billion), compared with 5.01 trillion won a year earlier, the Suwon, South Korea-based company said in a statement today, without giving an explanation. That compared with the 3.8 trillion won average of 25 analyst estimates compiled by Bloomberg.


Greek creditors may be willing to risk a planned and managed default to help resolve the nation’s debt crisis, said the head of the world’s biggest group of international financial companies. “It may well be that some rating agencies reach judgements that involve a selective default,” Charles Dallara, the managing director of the International Institute of Finance,


Lehman Brothers Holdings Inc.brokerage borrowed as much as $18 billion in four separate loans from a previously secret program of the U.S. Federal Reserve in June 2008, three months before its parent filed the biggest bankruptcy in U.S. history. The program, which peaked at $80 billion in loans outstanding, was known as the Fed’s single-tranche open-market operations, or ST OMO. It made 28-day loans to units of 19 banks from March 7, 2008, to Dec. 30, 2008.

Weakening economic conditions will come together in 2013 and create a “perfect storm” of global weakness, economist Nouriel Roubini told CNBC. Known for his generally dour outlook that helped him see the financial crisis before it hit in 2008, Roubini said the US, European nations and others have become adept enough at forestalling their problems that a true crisis won’t hit until 2013.


The June employment report due Friday will show an increase of 125,000 jobs, Jan Hatzius told CNBC Wednesday. The Goldman Sachs chief U.S. economist said last month’s Labor Department report, showing an increase of 54,000 jobs in May, was not representative of the labor market, he said. there are growing signs that China’s long-running economic boom could be undermined by these building binges, which are financed through heavy borrowing by local governments and clever accounting that masks the true size of the debt. The danger, experts say, is that China’s municipal governments could already be sitting on huge mountains of hidden debt — a lurking liability that threatens to stunt the nation’s economic growth for years or even decades to come.


After steadily climbing for several years, the number of Americans filing for bankruptcy is on the decline, though that is not necessarily an indicator of an improving economy. The number of bankruptcy filings in June was 120,623, or an average of 5,483 a day, a drop of 6.2 percent from May, when filings totaled 122,775, or 5,846 a day, according to a report from Epiq Systems,

Volkswagen opened a plant in Tennessee last month with 2,000 workers. Honda is hiring 1,000 in Indiana to meet demand for its best-selling Civic. General Motors is looking for 2,500 in Detroit to build the Chevy Volt. Two years after the end of the Great Recession, the auto industry is hiring again — and much faster than the rest of the economy. As an employer, it’s growing faster than airplane manufacturers, shipbuilders, health care providers and the federal government.

The Obama administration is trying to make it easier for homeowners who lose their jobs to keep their homes. The administration today will announce that two programs providing unemployed homeowners a few months’ forbearance on their mortgages will be extended to 12 months, said three administration officials speaking anonymously because the program has not been announced. Thousands of homeowners could benefit from the additional time, although not all jobless homeowners will be eligible.

The chairman of the latest rescue talks on Greece says he is positive a way of supporting Greece will be found. International monetary authorities and eurozone governments are trying to build a new rescue package for Greece. For the first time they want private lenders to contribute and lenders have been meeting in Paris to work out how they can contribute to a new bail-out.

House prices rallied 1.2pc in June on the previous month, Halifax reported, offering a glimmer of hope for the market which has seen prices sliding steadily downwards. The average price of a house rose £2,010 to £163,049, representing the fastest monthly rise since October, according to the mortgage lender’s price index. The quarterly rate of change, seen as a better indicator of the underlying trends, showed that prices were 0.5pc lower over the three months to June than in the previous quarter. The quarter-on-quarter fall was 1.1pc in May.

Mixed signals from the housing and new car markets reinforced market expectations that the Bank of England will leave interest rates on hold at 0.5 per cent and continue to pause its quantitative easing (QE) programme when it unveils its next move at noon today.

The Forbes magazine has ranked the South Caucasus country of Armenia as the second worst economy in the world this year, after having analyzed the macro-economic indicators of 177 countries and regions over the past three years. Other data used by Forbes for its analysis included the per capita gross domestic product growths as released by the International Monetary Fund (IMF), the IMF-forecast inflation rates in the coming 2012 and the current account balances.


The State Council, or the Cabinet, said Wednesday that local government debt is relatively heavy and has potential risks, which needs high attention.
Local governments have amassed a relatively large amount of debt and the ability of certain regions and industries to repay the debt is weak, the State Council said in a statement released after an executive meeting presided over by Premier Wen Jiabao.

After peaking in June at around 6. 2 percent, China’s inflation is likely to stabilize in the second half of 2011, said China Construction Bank International Securities Ltd. (CCBIS), a professional brokerage, here on Wednesday. Surveys and analysis indicated that liquidity in China is sufficient to support economic growth, and a strong consumption trend and robust loan demand will continue, with destocking in many industries possibly ending soon, said CCBIS in its 3Q 2011 outlook on the mainland and Hong Kong markets.


The number of New Zealanders receiving unemployment benefits has fallen for a fifth consecutive month, Social Development Minister Paula Bennett said Thursday. “I’m delighted to see nearly 800 fewer people on unemployment benefits since May and 94 percent of that reduction is of young people,” said Bennett. It was the first time the unemployment benefit rate had decreased in the month of June for four years, she said.

Goldman Sachs’ Jim O’Neil, credited with coining the moniker BRICs to showcase the best growing parts of the global economy, is not as bullish about the ‘I’ in it, meaning India, as the rest of BR and C are better off. Inflation that ruined the party for India this year may begin to ease in the second half, says O’Neil, chairman ,

The government on Wednesday released the draft Micro Financial Sector (Development and Regulation) Bill, 2011, which seeks to make it mandatory for all microfinance institutions to be registered with the Reserve Bank, making it the sector regulator.  The Bill in its earlier avtar had proposed that the National Bank for Agriculture and Rural Development (NABARD) will be the regulator of the sector.

South Korea’s ministries and agencies requested a 7.6 percent hike in their budget for next year as they want to spend more on research and development (R&D), welfare and foreign affairs, the finance ministry said Thursday. About 50 ministries and agencies are seeking to spend a combined 332.6 trillion won (US$312.6 billion) for next year, compared to the 309.1 trillion won set aside for their 2011 budget, according to the ministry.

A 44-year border dispute between Russia and Norway in the icy expanses of the Barents Sea was finally laid to rest Thursday as a new delineation treaty entered force. The agreement opens up a previously untouched 175,000-square-kilometer area for exploration, estimated to contain up to 6.8 billion tons of oil and gas.

The latest proposal from the Finance Ministry calls for federal spending to increase 10.5 percent next year over this year’s amount, a senior government official said Wednesday. Next year’s budget, which the Cabinet will consider Thursday, foresees spending 12.2 trillion rubles ($435 billion), the official said on customary condition of anonymity for pre-Cabinet briefings. Windhoek – An estimated 11 billion barrels in oil reserves have been found off Namibia’s coast, with the first production planned within four years, mines and energy minister Isak Katali announced Wednesday. The finding could put Namibia on par with neighbouring Angola, whose reserves are estimated at around 13 billion barrels and whose production rivals Africa’s top producer Nigeria.

Dubai World announced on Wednesday that it had signed agreements setting out the terms to separate its property units Nakheel and Limitless in order to transfer them to the Dubai government as part of a complex and protracted restructuring process.



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