News That Matters

I was struck by the frenzy at one of the Nespresso stores the other day. Hysteric buyers of luxury coffe, sweating to buy their lifestyle coffee, willing to spend hundreds of USD on coffee. If Nespresso was listed, one should probably load up on the stock (the listed Nestle contains many other brands). It all felt like an Apple store hysteria. People almost in fighting mood to get the latest gadget. Meanwhile, the hedge funds have all loaded up on Apple stock and just waiting patiently for the parabolic move to continue. Whether Apple is going to 1k, 2k or 13k is impossible to say, and no we don’t suggest shorting Apple here, but some caution ahead, as the stock is “unstoppable”. Some charts of Apple below;
Last year was the first year in decades that no new bank was created in the United States, the FT reports. Three ‘new’ banks were created from the takeover of failed lenders, but no so-called ‘de novo’,

Banks including Barclays, Lloyds and Credit Agricole will use funds they borrowed from the ECB’s three-year liquidity operation to prop up subsidiaries in the economies of the eurozone periphery, the WSJ reports.

Vladimir Putin has claimed victory in Russia’s presidential elections, although the opposition has denounced the fairness of the vote and vowed to continue protests, reports the FT. ”We have won in an open and fair fight,”

Tesco is set to announce that it will create 20,000 jobs in the UK in the next two years, equal to seven per cent of its current British workforce, the WSJ reports. Plans to open new stores and upgrade existing ones in Britain account for the hiring increase.


China’s government is to target 7.5 per cent economic growth, dropping the eight per cent goal maintained since 2005, Bloomberg says. The official inflation rate target of four per cent will remain unchanged.

Greece’s €206bn debt swap rests on a knife-edge this week, after signs of lacklustre participation by bondholders so far, the FT says. The government’s tender offer has got off to a slow start, with its advisers trying to round up non-institutional bondholders and even Greek investors showing reluctance to sign up quickly,

The fear of an Iranian nuclear bomb has been at the centre of Israeli government thinking for more than a decade. Until recently, however, Israel itself was never at the centre of the international effort to halt Iran’s nuclear programme. For all their concerns, Israeli leaders knew that the campaign to curb Iran’s nuclear ambitions through diplomacy and sanctions was best left to others. Its involvement in sabotage and covert operations aside, a supporting role made sense to Israel: Framing the issue of an Iranian nuclear bomb as a standoff between Israel and Iran would have damaged the international consensus. No less important, it would also have drawn unwanted attention to Israel’s own nuclear capabilities.
Japan’s Nikkei Stock Average fell 0.5%, Australia’s S&P/ASX 200 was down 0.4% and South Korea’s Kospi Composite declined 1.0%. Hong Kong’s Hang Seng Index lost 1.1%, while China’s Shanghai Composite fell 0.1% and India’s Sensex was 1.1% lower.  Dow Jones Industrial Average futures were down 21 points in screen trade.

India’s federal government said it has raised 127.7 billion rupees ($2.57 billion) from the auction of 420.3 million shares of state-run explorer Oil & Natural Gas Corp. The number of shares sold fell short of the government’s target of 427.77 million shares, but the money raised exceeded the initial aim of 124.05 billion rupees. The auction–among the top five share sales in the history of India’s capital markets–was held during market hours Thursday.

Some very large banks are clashing with the Federal Reserve over how much detail the central bank will reveal about them when it releases the results of its latest stress test. The 19 biggest U.S. banks in January submitted reams of data in response to regulators’ questions, outlining how they would perform in a severe downturn. Now, citing competitive concerns, bankers are pressing the Fed to limit its release of informationexpected as early as next weekto what was published after the first test of big banks in 2009.

Mitt Romney has regained the lead in the Republican presidential contest thanks to new support from conservatives, while evidence emerges that the bitter nomination fight has damaged the GOP candidates’ standing among the wider public, a new Wall Street Journal/NBC News poll finds. The resurgence of Mr. Romney, who hadn’t led the Journal poll since November, lays the path for a potential matchup against a president whose own position is strengthening. President Barack Obama’s approval rate hit 50% in the poll, its highest since last May, as more voters expressed confidence in the economy.
Gold prices hovered largely unchanged around $1,710 an ounce on Monday after suffering their biggest weekly loss in more than two months, supported by resilient demand for bullion while the strong U.S. dollar put off some investors. “We are likely to see gold seesaw in the $1,700 and $1,800 range in the short term, as investors wait for a new stimulant,” Hou added. Spot gold was little changed at $1,712.79 an ounce by 0331 GMT. U.S. gold edged up 0.3 percent to $1,714.20.
Iran’s biggest Indian oil client, Mangalore Refinery and Petrochemicals Ltd (MRPL) (MRPL.NS), plans to cut its annual import deal with Tehran by as much as 44 percent to 80,000 barrels per day (bpd) in 2012/13, two sources said, as western sanctions make trade more difficult. The cuts in oil imports from Iran by Mangalore Refinery and Petrochemicals Ltd (MRPL) would imply a reduction of more than 20 percent in India’s total purchases of Iranian oil in the next fiscal year, according to Reuters’ estimates. MRPL plans a hefty cut in imports of Iranian oil in the next fiscal year beginning April, said the sources, who are both familiar with the company’s crude import plans. “There will be a drastic reduction in volumes from Iran,” said one of the sources.

Carlos Slim, the telecommunications tycoon who controls Mexico’s America Movil SAB (AMXL), is the richest person on Earth, according to the Bloomberg Billionaires Index, a daily ranking of the world’s 20 wealthiest individuals. The 72-year-old’s net worth fell $478.4 million in a day to $68.5 billion as of the close of markets on March 2, as U.S. moguls Bill Gates and Warren Buffett placed second and third on the list compiled by Bloomberg News. Brazil’s Eike Batista, who ranks 10th, still covets the top spot after vowing a year ago that he’d become the world’s wealthiest man by 2015.

Asian exporters, battling a slump in demand, are calling for their central banks to intervene after capital inflows contributed to the best start to the year on record for the region’s currencies. Executives at LG Chem Ltd., South Korea’s biggest chemicals maker, and Bangkok-based Chengteh Chinaware (Thailand) Co. said policy makers should curb volatility, while TLtek Co., an exporter of auto-part making machines based on the outskirts of Seoul, cites the won’s strength against the euro for its currency losses. The chairman of the Malaysian American Electronics Industry, which represents U.S. companies such as Motorola Inc., and Dell Inc., said the central bank should “stabilize the ringgit.”

Mukesh Ambani is Asia’s richest person with a net worth of $26.8 billion, even after his shares in India’s top company by market value slid 18 percent over the past 12 months, according to the Bloomberg Billionaires Index. Hong Kong’s Li Ka-shing, nicknamed “Superman” by the local media for his investing prowess, ranks second in Asia, with a $25.8 billion fortune. Lakshmi Mittal, the Indian-born chairman of ArcelorMittal, the world’s biggest steelmaker, is the third wealthiest Asian with a net worth of $23.6 billion.

Automobile sales in China, the world’s biggest car market, may be having their worst start in seven years as a slowing economy and record gasoline prices keep consumers away from dealerships. Deliveries of passenger autos, including sport-utility vehicles and light-goods vans, in the first two months of 2012 fell 3 percent from a year earlier, based on the median estimate of five analysts surveyed by Bloomberg. That would be the biggest drop since 2005, when they fell 8.9 percent, according to the China Association of Automobile Manufacturers, which will release industry data later this month.

For all the concern that the $10 trillion market for Treasuries is dependent on Federal Reserve purchases to absorb a continually expanding supply of debt, the amount held by investors outside the U.S. has grown even more. Foreigners increased their holdings of U.S. government debt by $1.84 trillion to a record $5 trillion since the Fed began the first round of Treasury purchases in May 2009, taking their stake to 60.5 percent of the securities not held by the central bank, government data show. The Fed added $1.18 trillion during that period, to $1.65 trillion, or 16.8 percent of the total, from 7.6 percent.
Benchmark crude oil prices will likely extend their losses this week as investors questioned whether the recent rally which sent Brent crude to a multi-year high is warranted by the fundamentals, CNBC’s weekly survey showed. Ten out of 14 respondents expect prices to fall this week while the remaining four expect prices to rise. Balance of opinion in last week’s survey called for prices to rise but the bulls were wrong-footed by the pullback in Brent , which fell 2 percent for the week after five straight weekly gains, while its U.S. counterpart fell 2.8 percent, snapping a string of three higher weekly finishes.
China plans to boost its official defence budget by 11.2 per cent this year as Beijing is balancing the modernisation of its armed forces against the need to keep military spending in line with economic development. Defence expenditure is budgeted to rise to Rmb670.247bn ($110bn) in 2012, Li Zhaoxing, spokesman of the National People’s Congress, told reporters a day before China’s rubber stamp parliament opens to hear premier Wen Jiabao’s budget report.
Australian consumer prices rose 0.1% in February, according to a monthly survey compiled by TD Securities and the Melbourne Institute. Price rises for fruit and vegetables, alcohol and tobacco, and automotive fuel were behind the rise in the inflation rate for February, according to the survey. On an annual basis, consumer inflation ran at 2%, the survey showed. The gauge climbed 0.2% in January and 0.5% in December.
So naturally, everyone wants to know what Robert Shiller thinks of today’s stock prices, now perched at a four-year high. Or about the direction of home prices. Keep your hopes in check. Shiller is disinclined these days to offer specific predictions about the direction of stocks, home prices or any other asset whose prices can surge or plunge before we can fully grasp what’s going on.
Moody’s has cut Greece’s credit rating again, citing a risk of default despite a recent debt write-off deal. Moody’s cut Greece’s rating to “C” from “Ca”, the lowest level on its scale. The firm said on Friday: “Today’s rating decision was prompted by the recently announced debt exchange proposals for Greece, which imply expected losses to investors in excess of 70%.”

Spanish Prime Minister Mariano Rajoy has said his country will miss its budget deficit target for this year, just as EU leaders agree a new treaty to enforce budget discipline. Mr Rajoy said Spain’s deficit would be 5.8% of total economic output in 2012, higher than its agreed target of 4.4%.  He said the higher target still represented “significant austerity”. The Netherlands also said it would miss its budget target for this year, with a deficit of 4.5%.
Investors in Greek debt have just four days to sign up to the largest debt restructuring in history and save the country from default. The heavily-indebted country needs 75pc of its private bondholders to accept a £172bn bond swap deal by Thursday evening so it can secure a €130bn (£108bn) international bail-out package. If too few agree to exchange their bonds for a package of new debt and cash that will knock around €100bn off Athens’ debt pile, the country faces the real possibility of becoming the eurozone’s first sovereign default. Greek politicians have signalled they are prepared to use controversial collective action clauses to impose the restructuring deal. Standard & Poor’s, the credit rating agency, has warned, however, that it would treat any attempt to force bondholders into a deal as a “selective default”.

The Government should use some of the money created from quantitative easing to create and part fund a £30bn National Infrastructure Bank, a new report suggests today. The study from local government think tank Localis and Lloyds Banking Group makes the new bank a key recommendation among proposals to kickstart the Coalition’s planned £250bn of infrastructure spending over the next five years. Such investment, which is expected to feature strongly in this month’s Budget, is a major plank of the Government’s growth strategy.  The study argues that the new bank would “lend to the private and public sectors to fund the construction of new infrastructure”, invest directly in projects and “using the Green Investment Bank model, guarantee other banks’ loans to fund infrastructure”.

Britain faces slow growth but no double dip, says BCC. The UK is on course to avoid a double-dip recession but faces a year of low growth, the British of Chamber of Commerce has warned. The BCC lowered its growth forecasts for 2012 from 0.8pc to 0.6pc in its latest quarterly survey, predicting the economy will grow by 1.8pc next year. However, the business group warned that “anaemic growth” could lead to the UK missing the net debt target and result in government debt rising. The BCC said it expected UK GDP to record “very little growth” during the first two quarters, before recovering in the second half of the year. John Longworth, director general, said: “The government must stick to Plan A, but also stimulate growth within the economy. There is room within the current spending envelope for measures that will encourage firms to export, invest and grow.”
The German government has run out of patience. It was obvious at the EU summit on Friday when the German delegation let it be known that the second rescue package forGreece must be the final word. If it proves too small, and Greece cannot afford to pay public sector wages, then it must default on its debts. Talking to senior German negotiators last week, I found a change in attitude that was shocking for its clear and cold-hearted resolution. Not so long ago Berlin was concerned to be viewed as a champion of European unity. There was a genuine fear that a Greek default would terminate 50 years of building towards a European super state.
The Reserve Bank governor Glenn Stevens no longer has his finger poised over the proverbial interest rate cut button – although that’s more a sign of receding fears about a European crash than a robust local economy. Just five weeks ago, investors were betting the RBA would cut its key cash rate by a full percentage point to 3.25 per cent by January next year. Now there’s only a sixty per cent chance of two rate cuts by then, including a barely one-in-ten chance of a cut at the central bank’s rates meeting tomorrow. Figures out today underscore the patchy state of the Australian economy.

Greece might need a third international rescue package worth 50 billion euros ($61.4 billion) in 2015, the German weekly magazine Spiegel said on Sunday. The troika of creditors – the European Union, the European Central Bank, and the International Monetary Fund – is said to have expressed strong doubt in a preliminary report that Greece would be able to return to the international money markets to borrow in 2015. By then Athens is likely to require 50 billion euros to repay international loans. Spiegel claimed Germany requested that this part of the report be edited out.
There is almost no chance that Bank of Canada Governor Mark Carney will use a decision this Thursday to break what has become the longest stretch without an interest rate hike since the 1950s. But even though higher rates are the last thing struggling provinces like Ontario need, if the global backdrop continues to stabilize Mr. Carney’s first step off of the sidelines could come sooner than many think. Mr. Carney has long pointed to the Canadian dollar’s “persistent strength” and “competitiveness challenges” faced by exporters as reasons to keep monetary policy looser for longer. Traditional markets and key sectors are still in recovery mode, and an easier lending climate gives manufacturers a much-needed buffer which could, in theory, minimize the gulf between Central Canada and provinces that are benefiting from booming demand for oil and other commodities.
Bank of China Ltd (601988.SH), one of the country’s big four lenders, along with medium-sized Huaxia Bank (600015.SH) are now offering a 10 percent discount on loans for first home buyers, and Agricultural Bank of China Ltd (601288.SH) 5 percent, some anonymous bankers told China Securities Journal recently. Chinese banks restart to offer preferential loan rates for first-home buyers. And there are still no signs the government was ready to ease other property restrictions, including a requirement for non first-home buyers to pay cash for at least 30 percent of the total value of a new home, analysts added.

It is an urgent issue for the financial institutions to serve the real economy, serve the small and micro firms, the SSE is preparing for the launching of high yield bonds, it would manage to start the first high yield bond in the first half of year, Geng Liang, president of the Shanghai Stock Exchange (SSE), said Sunday. Geng Liang is alos a member of the national committee of CPPCC. He said the planned high yield bonds would set up a financing platform for the high-tech and innovative small and micro companies.
The Centre on Monday banned with immediate effect exports of raw cotton, catching shippers, industry and growers by surprise. In a notification issued early in the morning, the Directorate General of Foreign Trade said even exports of cotton for which registration certificates have been issued will not be allowed.  The ban follows registration of over 12 million bales (of 170 kg each) of cotton for exports.  At a meeting last week, when the issue cropped up, the textile industry said that it had no problem in such large exports since it was facing recession. Textile mills in the South, particularly Tamil Nadu, have been affected badly by power shortage. Cotton production this season ending September is projected to be a record 35.5 million bales against 32.5 million bales last year.
The government has decided to throw its might behind private purchases of farm land overseas to ensure food security for India. The agriculture ministry has sought views from other ministries on an institutional mechanism to extend sovereign support to India Inc’s acquisition of farm land abroad that could include guaranteed buyback of harvest from the cultivation overseas. Agriculture secretary PK Basu said that the proposal is in a nascent stage. “We had asked Indian Institute of Foreign Trade to conduct a study. As of now there is a debate going on whether the government should get into it or not,” he said without revealing if a concrete proposal is under consideration.
Higher oil prices could push up South Korea’s interest rates as the South Korean economy is greatly affected by the price of oil, a Goldman Sachs report said Monday. Kwon Goo-hoon, an economist at Goldman Sachs, said in the report that the U.S. investment bank will give a more hawkish rate outlook in South Korea if the average price of Dubai crude, which accounts for the bulk of South Korea’s oil imports, goes beyond US$130 per barrel. “If oil prices rise further together as global activities improve, we believe authorities will focus further on inflation, with rate hikes possibly brought forward to the second half of 2012,” Kwon said.
Prime Minister Vladimir Putin has promised that privatizations of state assets will be carried out more properly than those in the 1990s, with the companies’ stakes to be sold “at a real price.” But having vowed to review the results of “unfair” privatizations in the 1990s as part of measures to increase trust in business, Putin has confessed that he doesn’t know yet how to do it.  “Frankly speaking, I don’t have a recipe yet. We can consider this problem, but I don’t know whether we’ll be able to create such a mechanism, with which society would agree,” Putin told a group of chief editors of foreign media, whom he invited to his Novo Ogaryovo residence late Thursday.
The effectiveness of an EU embargo on Iranian oil imports has been cast into doubt by growing evidence of a rise in shipments from the Islamic republic arriving in the Mediterranean. The apparent surge comes even though tough sanctions are supposed to be stemming the flow.  The latest shipment data show that most oil loaded on to tankers in Iran during the first two weeks of February was bound for Ain Sukhna in Egypt. Analysts from Lloyd’s List Intelligence noted that the Gulf of Suez port was a terminal for the SuMed pipeline, feeding oil north to the Mediterranean.

Iran and South Africa held talks in Tehran on Saturday to explore ways to circumvent the western sanctions on oil trade with the Islamic Republic, Mehr news agency reported. Iranian oil minister Rostam Qasemi met with South African Energy Minister Dipuo Peters, to come to an agreement on how to sell oil to the African country.  South Africa imports some 100,000 barrels of Iranian crude per day, making it Iran’s biggest African customer and its ninth largest in the world after China, India, Japan, South Korea, Turkey, Italy, Spain and Greece. Iran accounts for 25 percent of South Africa’s oil imports.
India’s exporters have begun receiving the first rupee payments from Iran, Indian government and trade sources said on Thursday, kicking off a mechanism to skirt Western sanctions which have made doing business with Tehran tougher.  About $3 billion in Iranian import arrears have accumulated since December 2010 when a previous payment conduit was closed under pressure from Washington, which is using sanctions to try to stop Tehran’s contentious nuclear programme. Payments to Indian exporters are being remitted through Iran’s Bank Parsian which has opened an account with India’s UCO bank, the sources said. Bank Parsian is among private Iranian banks that are free from sanctions against Iran’s state-owned banks.