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The Trader

Many traders in today’s investment marketplace have negative psychological traits that can work against them. As prevalent as these traits can be, traders may not even be aware of how such negative traits can prevent them from making bigger returns.
George Osborne said he had no intention of easing the government’s deficit reduction plan on Wednesday after the economy plunged into a double-dip recession and the longest downturn for more than a century.  With economic woes adding to the long list of troubles for the coalition, the chancellor blamed the eurozone for Britain’s economic plight, which has left output 4.3 per cent below the 2008 peak and rejected Labour’s claim that the new recession was “made in Downing Street”.

Federal Reserve officials left monetary policy unchanged as they upgraded their forecasts for US economic growth for 2012, predicted lower unemployment rates and suggested the appropriate time for interest rate hikes was sooner than previously thought. US central bankers are expecting growth in gross domestic product between 2.4 and 2.9 per cent this year, higher than the 2.2 per cent to 2.7 per cent projections published in January.

Executives from many of Italy’s most powerful companies are being forced to resign their board seats by a law that takes aim at the culture of cross-shareholdings which the government considers a threat to financial stability.  Analysts say the move is one of the biggest shake-ups in Italian corporate life since the second world war. The law passed by Mario Monti’s technocratic government and included in his “Save Italy” liberalisation decree is due to come into force on Thursday. It bans executives from holding a board seat in more than one financial institution operating in the same market.
Most Asian stock markets were modestly higher Thursday as the Federal Reserve left the door open for more stimulus measures ahead, while the earnings season continued to have a mixed impact across the region. Tech plays and resources stocks were generally higher although buyers were cautious amid persistent worries about the global economic outlook.  Japan’s Nikkei Stock Average was flat, Australia’s S&P/ASX 200 added 0.4%, South Korea’s Kospi Composite gained 0.2%, China’s Shanghai Composite Index shed 0.2%, Hong Kong’s Hang Seng Index was rose 0.5% and India’s Sensex rose 0.2%. Dow Jones Industrial Average futures were up seven points in screen trade.

The European Union said it is willing to start formal financial-support talks with Hungary, easing a monthslong standoff over an aid request that has become tangled in a broader battle between Brussels and Budapest over democratic checks and balances. Before any loan deal can be signed, however, the EU on Wednesday said Hungary must enact proposed amendments to its central-bank law and also fix legislation that the European Commission for Democracy Through Law, a panel of the Council of Europe that vets national laws and constitutions, found threatens the independence of judges and fairness of trials. The thaw followed a meeting Tuesday between Hungarian Prime Minister Viktor Orban and José Manuel Barroso, president of the European Commission, the EU’s executive arm, in which Mr. Orban pledged to make changes to address EU concerns about his nation’s central bank and court system.

A chorus of European leaders on Wednesday called for strategies to bolster the region’s faltering growth, in comments reflecting the growing unease about the austerity medicine being applied to heal the region’s economic woesbut their similar rhetoric hid widely divergent policy prescriptions. European Central Bank President Mario Draghi embarked on the theme by saying euro-zone nations needed a “growth pact” to complement their existing agreements to enforce fiscal discipline, saying nothing that suggested he would support loosening budget restrictions.

A pledge by European Union governments to bring their swollen budget deficits back in line with EU rules by the end of 2013 is causing economic pain and political discontent across Europe, prompting officials to begin a politically sensitive discussion on how the goal could be changed to avoid driving the Continent further into turmoil. The target, set in 2009, is still seen as an important signal that the budget rules won’t be flouted as they were in the past. But meeting the 2013 goal, which for most countries was a deficit of 3% of gross domestic product, will entail more spending cuts or tax increases by governments across the EU.

Greece said Wednesday it had completed the mammoth debt restructuring demanded by its international creditors in exchange for its new €130 billion ($172 billion) bailout, but it remains unclear what the country will do with the small group of dissenters who have refused to voluntarily sign up to the deal. In the weeks leading up to the announcement, Greece has been talking tough, saying it won’t give more favorable terms to investors that have snubbed the deal. But the prospect of forcing a restructuring on unwilling bond holders will raise questions about the precedent it sets for European government debt markets.

French presidential candidate François Hollande Wednesday provided further detail on how, if elected, he would push for austerity policies to be counterbalanced by growth policies in Europe. Mr. Hollande also reiterated his desire to see the European Central Bank involved in supporting euro-zone countries more directly as they look for more growth. Mr. Hollande has vowed to revise the European compact on fiscal discipline by putting more emphasis on growth if he beats incumbent president Nicolas Sarkozy in elections on May 6.

Not long ago, Asia Pacific was all but a footnote in the financial statements of technology juggernaut Apple Inc. But no more. Apple’s sales in the fast-growing region, fueled largely by China, more than doubled and represented 26% of its $39.2 billion in sales for the first three months of the year. Asia Pacific came within striking distance of becoming Apple’s largest revenue source in the fiscal second quarter. The company took in $10.2 billion in sales for the region for the first three months of the year, compared with $13.2 billion for the Americas, long its biggest source of
South Korea’s gross domestic product rose 0.9% during the first quarter, a 2.8% gain from the year-earlier period, as manufacturing expanded and exports swung to growth, the Bank of Korea said Thursday. The results were close to median expectations from a Dow Jones Newswires poll of economists, which had tipped a 0.8% gain, or 2.9% year-on-year. In the fourth quarter, GDP grew 0.3%, and the first-quarter result was the best in a year. On the expenditure side, investment in facilities rose 10.8% during the January-March period, “with increased investment in semiconductor manufacturing equipment,” the central bank said. Construction fell by 0.7%, and exports of cars and petrochemical products rose, offsetting drops in mobile-phone and steel shipments, to clock a 3.4% gain for all exports. In the fourth quarter of 2011, exports had contracted 2.3%. On the production side of the economic ledger, manufacturing was up 2.2%, while services gained 0.9%.

Japan could face rolling backouts and forced usage cuts this summer if temperatures are above-average, as the nation is set to shut its last operating nuclear plant next month, Economy Minister Yukio Edano said in an interview with the Nikkei newspaper, published Thursday. Edano said the government would announce its power supply-demand forecasts in early May and could begin seeking conservation efforts that month. In the short term, Edano said, “the government will tap nuclear reactors if necessary while placing a maximum emphasis on safety,” but over the coming decades, Japan “should move away from its reliance on nuclear power as quickly as possible.” Last summer — the first following Japan’s Fukushima nuclear disaster — Japan forced large electricity consumers to cut usage by 15% and sought voluntary conservation from the public

Standard & Poor’s on Wednesday said it lowered its outlook on India’s long-term credit rating to negative from stable, citing concerns over the country’s economic growth and its “large fiscal deficit and debt.” The rating agency affirmed India’s BBB- long-term and A-3 short-term unsolicited sovereign credit ratings. “A downgrade is likely if the country’s economic growth prospects dim, its external position deteriorates, its political climate worsens, or fiscal reforms slow,” Standard & Poor’s analyst Takahira Ogawa said.
New Zealand
’s central bank left interest rates at a record low, citing benign inflation, and signaled that the rising currency may delay an increase in borrowing costs. “The New Zealand dollar has stayed elevated despite recent falls in commodity prices,” Governor Alan Bollard said in a statement in Wellington today. “For now, it is appropriate for the official cash rate to remain at 2.5 percent. Should the exchange rate remain strong without anything else changing, the bank would need to reassess the outlook for monetary policy settings.”

Pakistan’s Supreme Court ruled Prime Minister Yousuf Raza Gilani guilty of contempt for not obeying its order to reopen corruption cases against the president, a verdict that could oust him from office and prolong political turmoil in a key U.S. ally.

Treasury Secretary Timothy F. Geithner said the U.S. faces risks from the crisis in Europe while the confrontation with Iran has helped drive up oil prices. “We still face some risks ahead,” Geithner said to the Portland City Club today. “We still live in a dangerous and uncertain world, with Europe confronting a severe and protracted crisis. The world is engaged in a critical struggle with Iran, which has added to upward pressure on oil prices.”
After two disappointing reports, traders are watching Thursday’s weekly jobless claims to see if higher numbers are a trend or just a temporary phenomenon. Good U.S. corporate earnings reports could also be a balance for any negative headlines out of Europe. There are dozens of reports expected Thursday, including oil giant ExxonMobil and consumer-products giant Pepsico. For jobless claims, the consensus estimate is for 376,000, down from last week’s 386,000. The number is released at 8:30 ET. “We’ve had two high ones now, and my guess is it will come down a little bit, but not all at once,” said Stephen Stanley, chief economist at Pierpont Securities.

Treasury Secretary Timothy Geithner expressed confidence in the resilience of the U.S. economy despite Europe’s woes, slammed Mitt Romney’s approach to China policy and dismissed as “remarkably hackish” a Romney adviser’s critique of President Obama’s tax policy. Geithner spoke in an interview with CNBC near Portland after touring a plant that manufactures street-cars, and as he prepares for an address in San Francisco tomorrow on economic relations with China.
Spain, already struggling to contain its public debts, may need to pump more taxpayer money into its ailing banks to clear away tens of billions of dollars in bad real estate loans, the International Monetary Fund reported on Wednesday. In an overview of the country’s financial system, the IMF said that despite extensive restructuring, Spain’s banking sector “remains vulnerable.” It needs more capital and a strategy for quickly clearing away the legacy of a collapsing property bubble.
The European Commission has called for a 6.8% rise in the EU’s budget for 2013, saying investment is “desperately needed” to revive growth. The proposals will be a starting point for negotiations with the EU’s 27 national governments and the Euro MPs.  Some EU members, including the UK, have consistently urged the Commission to scale down its spending plans. But the Commission says it has to fund previously agreed commitments. It says EU staff posts will not be increased. Under the Commission plan the budget total is set at 138bn euros (£113bn; $182bn).

A former Morgan Stanley executive, Garth Peterson, has pleaded guilty to bribing a Chinese official in exchange for business and personal gain. US authorities alleged that Mr Peterson paid money to the official to win investments for the bank. Mr Peterson, who was head of the bank’s real estate investments division in China, is also accused of secretly acquiring valuable property in China. He faces up to five years in prison and a fine of $250,000 (£155,000).
Nicolas Sarkozy has promised to hold a referendum on Europe’s fiscal pact, dealing a hammerblow to Angela Merkel’s “non-negotiable” plans to impose austerity on the eurozone. The French president, who is struggling in his bid to be re-elected, said he intended to insert the “balanced budget” rule into the French constitution, as agreed in the pact. But in a concession that will dismay the German Chancellor, he said he was prepared offer the electorate a say on the controversial issue. “If the Senate were to block the rule’s adoption, then before the end of 2012 I would organise a referendum to ask the French people what they think,” he said. Ms Merkel has said that the pact, which binds eurozone countries to keeping their deficits below 3pc, was “non-negotiable” and would “last forever”.

American taxpayers will not see a profit from the $700bn (£433bn) bail-out that Congress passed at the height of the financial crisis, a government watchdog has warned. The current estimate of the eventual loss that taxpayers will be left with from the Troubled Asset Relief Program (TARP) is $60bn, according to a report from the watchdog for the programme. “It is a widely held misconception that TARP will make a profit,” said Christy Romero, the inspector general for TARP. Taxpayers are still owed $119bn from TARP, with the majority of that still tied up in the rescue of insurer AIG, carmaker General Motors and mortgage lender Ally Financial. The figure fell $133bn in January, according to the watchdog’s quarterly report

Europe (minus Germany) looks more like post-bubble Japan each month. The long-feared credit crunch has mutated instead into a collapse in DEMAND for loans. Households and firms are comatose, or scared stiff, in a string of countries. Demand for housing loans fell 70pc in Portugal, 44pc in Italy, and 42pc in the Netherlands in the first quarter of 2012. Enterprise loans fell 38pc in Italy. The survey took place in late March and early April, and therefore includes the second of Mario Draghi’s €1 trillion liquidity infusion (LTRO). The ECB said net demand for loans had fallen “to a significantly lower level than had been expected in the fourth quarter of 2011, with the decline driven in particular by a further sharp drop in financing needs for fixed investment.” Demand fell 43pc for household loans, and 30pc for non-bank firms.
Oil has fallen in Asian trade as a larger than expected rise in US crude inventories eroded overnight gains sparked by Fed forecasts of a pick-up in growth, analysts said. New York’s main contract, light sweet crude for delivery in June, fell 10 cents to $US104.02 per barrel. Brent North Sea crude for June delivery shed 20 cents to $US118.92.

Gold held above $US1644 on Thursday after the US Federal Reserve’s meeting on interest rates offered few surprises, but gains in equities and expectations the central bank could do more if necessary to lift the economy may eventually spur buying from investors. Gold was little changed at $US1644.46 an ounce, having fallen to a low of $US1641.15. It hit a low at $US1623.90 on Wednesday in a knee-jerk sell-off after the Fed disappointed investors who had hoped for another round of asset purchases.
It is a short trip from tech sector darling to doghouse. Just ask LG Electronics. Now the South Korean technology giant that isn’t Samsung hopes to please with an analyst estimate-beating return to profit. That is a start, but the company will have to work much harder to match its larger rival in investors’ eyes.  LG’s bottom line makes the turnround appear strong. The group returned to earnings of Won243bn in the first quarter improving on full-year losses in 2011. But this is not quite the back-to-black story the company is promoting: sales dropped a tenth from last quarter and 7 per cent from this time last year. The return to profit was the result of (admittedly welcome) margin improvements. Applying this year’s operating margins to the fourth quarter of 2011 would have nearly trebled full-year operating income – and a turnround in investment income that covers debt payments.
The economy still faces downward pressure and domestic and external situations are “grim” as industrial output posted its slowest growth in nearly three years, the Ministry of Industry and Information Technology warned on Wednesday. Difficulties faced by companies and the consequences of sustained “sluggish” external demand should not be underestimated, Zhu Hongren, the ministry’s chief engineer, said. Industrial output grew by 11.6 percent year-on-year in the first quarter of 2012, the slowest growth since July 2009, according to figures released by the National Bureau of Statistics. The figure hit 20 percent a year ago.

South Korea’s consumer confidence rose for three straight months in April due to recovery in the real economy and stable consumer prices, the central bank said Wednesday.  The consumer sentiment index (CSI), which gauges consumers’ overall economic outlook, stood at 104 in April, up 3 points from a month earlier, according to the Bank of Korea (BOK). The April figure posted the third straight month of gain.  The CSI is based on survey response from 2,052 households in 56 cities conducted between April 12 and 18. The reading above 100 means optimists outnumbered pessimists. The April advance was mainly attributed to improved economic conditions as well as stable consumer prices which fell below the 3 percent level for the first time in 19 months in March.”Improved consumer confidence came after our real economy such as production and consumption was enhanced. Consumer prices that slipped into the 2 percent range also contributed to the sentiment enhancement, “said an official at the BOK.
India’s mission to sit at the high table of global finance is going to cost a pretty packet. The government will shell out over $11 billion to buy a bigger quota in the International Monetary Fund, or IMF. This will give India a greater say in the affairs of the multilateral lender. Meanwhile, India continues to battle slowing capital flows and a growing fiscal deficit. Experts say though costly, this is a money well spent. “This money is an investment,” said Nagesh Kumar, chief economist with UN-Escap. “India is a responsible nation with a growing clout, so it will also have to share some global responsibility.”

As news of record food grain production trickled from the corridors of the agriculture ministry, officials of the storage wing in the adjoining food ministry began working overtime to save the department the embarrassment of plenty. Food minister KV Thomas is under pressure to ensure that the toil of farmers is not wasted. “It’s my duty to make sure that food grains don’t rot. We are on our way to create enough storage capacity to accommodate the brimming production,” he said.

The Centre has assured Trinamool Congress that deregulation of diesel prices would not be carried out soon, advertising its lack of resolve for tough reform measures. A Trinamool Congress leader told ET that minister of state in the PMO V Narayansamy has conveyed to the party that de-regulation of diesel was not government’s priority. State-controlled oil companies had lost Rs 80,000 crore in the year ended March 31 on account of selling diesel below market prices. According to the latest estimates, oil companies have under-recoveries of Rs 1,38, 400 crore.
Even VTB executives admit that they never expected to attract a client base of French pensioners.  But the quadrupling of income received by the bank’s foreign retail business in 2011 included a substantial jump in the amount deposited by French and German citizens. French pensioners were particularly keen on the Russian state-controlled giant. Though its presence outside Russia is still largely confined to the countries of the former Soviet Union, VTB like its main Russian rival Sberbank has been expanding its international presence in recent years. German and French clients deposited 20.9 billion rubles ($712 million) with VTB’s retail operations in those countries in 2011, the bank said Wednesday in material distributed to reporters. That amouned to 38 percent of the total deposits made with VTB 24’s foreign operations in 2011. VTB 24 also has operations in Ukraine, Armenia, Belarus, Georgia and Kazakhstan and is looking at moving into Azerbaijan.
A joint development bank planned by the Brics group of major emerging economies will be officially launched in South Africa early next year, Foreign Minister Maite Nkoana-Mashabane said on Wednesday. Leaders from Brazil, Russia, India, China and South Africa met last month in New Delhi to discuss setting up the bank, which would fund infrastructure and act as an alternate lender to the World Bank and other finance bodies. “We are looking forward to this historic moment where we will have an opportunity to launch the Brics development bank in the first quarter of the year,” Nkoana-Mashabane told journalists. She offered no details on funding. For years the Brics countries have demanded more influence on global financial institutions long controlled by the United States and Europe.

Global food prices are rising again, pushed higher by costlier oil, strong demand from Asia and bad weather in parts of Europe, South America and the United States, the World Bank said on Wednesday.
The latest World Bank food price index showed the cost of food rose 8% between December and March. In the previous four months, prices had declined. Even after the latest rise, food prices remain 1% below a year ago and 6% below the February 2011 historical peak, the World Bank said.
India, the second-largest consumer of Iranian oil after China, said it was now importing 14 million tons of crude from Iran.  “We are buying Iran oil,” Indian Finance Minister Pranab Mukherjee told reporters on Sunday after a group of 20 finance minister meetings in Washington.  The pending U.S. penalties and a European embargo on Iranian oil starting from July has helped push oil prices above $110 a barrel. Mukherjee said the high oil prices has “caused immense problems” to the Indian economy.

Indian shipping firms will continue to transport Iranian crude even if limited insurance coverage due to tightening Western sanctions leaves them financially exposed to a spill or accident, a top executive and industry sources said. Tough new European Union sanctions aimed at stopping Iran’s oil exports to Europe also ban EU insurers and reinsurers from covering tankers carrying Iranian crude anywhere in the world from July. Around 90 percent of the world’s tanker insurance is based in the West, so the measures threaten shipments to Iran’s top Asian buyers China, India, Japan and South Korea. Shipping Corp of India , which is the country’s largest shipping firm, Great Eastern and other Indian tanker firms have asked state insurers to step in and provide up to $50 million in third-party liability coverage per tanker voyage.