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JPMorgan Chase
is investigating whether London-based traders hid the extent of losses on credit derivatives positions, according to people familiar with an internal probe followinglast week’s revelation of $2bn losses. The investigation comes as Jamie Dimon, chief executive, took to US television to say he was “dead wrong” to have dismissed questions over the risk-taking of his chief investment office. The futures of the trading unit a subset of the CIO that incurred the losses and people who work there are under question, with departures possible in the next 24 hours, people familiar with the matter said.

Eurozone central bankers have talked publicly for the first time of managing a possible Greek exit from Europe’s monetary union as stalemate in Athens talks on a coalition government raises the prospect that Greece will renege on the terms of its international bailout.  The comments by members of the European Central Bank’s governing council indicate that the risk of eurozone fragmentation is being taken increasingly seriously by the region’s policymakers.

Angela Merkel’s centre-right Christian Democratic Union suffered a bruising defeat on Sunday night in the election of a new parliament in North Rhine-Westphalia, Germany’s most populous state, when the centre-left opposition of Social Democrats and Greens won a clear majority. The vote for the CDU slumped to just 26 per cent, according to the first exit polls, by far its worst result in the state in the post-war period, and a serious setback for the German chancellor.

Even though gold has already enjoyed an 11-year bull run we still think that it’s a good investment. Here we present a few charts that suggest that the current gold price is actually quite cheap! There are three simple (but apparently elusive) charts that indicate the cheap valuation placed upon gold at present. [Note: We'll be updating these charts every week so that you can track their progression over time.] wave of foreign investment into the UK, including billions in M&A deals, has contributed to sterling’s rise to multi-month highs, say foreign exchange bankers. Overseas investors have acquired more UK assets than in any comparable period since 2008 so far this year,with $32.6bn-worth of inbound mergers and acquisitions announced, according to figures from Dealogic.While global M&A volumes have dropped continuously over the past five quarters and remain far below the market’s 2007 highs, foreign companies are buying more assets in the UK than domestic companies are abroad for the first time in four years. Analysts and traders say this has helped buoy the pound.
Asian markets were mixed in early trading Monday, with Greece’s failure to form a government and a state election defeat for German Chancellor Angela Merkel adding downward pressure to the euro. Japan’s Nikkei was up 0.4%, while Australia’s S&P ASX 200 and Korea’s Kospi were both flat. After mixed trading in the U.S. and Europe on Fridaythe Dow Jones Industrial Average was down 0.3% and the FTSE 100 gained 0.6%regional markets were trading in narrow ranges following a weekend of political uncertainty in Europe.

Greece’s party leaders failed Sunday to bridge differences in a marathon effort to form a coalition governmentspurring the president to call a last-ditch meeting for Monday that will attempt to break a week-long political impasse that has reignited fears that the country may soon be forced out of the euro zone.  President Karolos Papoulias called for the fresh talks with the leaders of the country’s three top political parties plus the head of the small, moderate Democratic Left party, a person in Mr. Papoulias’s office said in the early hours Monday. That capped a day of fruitless meetings that were aimed at forestalling new elections, by seeking a way to piece together a coalition government from an array of bitterly divided parties. The core division is whether Greece should continue to pursue the painful austerity agenda demanded by its European partners in exchange for that €130 billion ($168 billion) bailout that was agreed in March and is designed to keep the country afloat and inside the euro zone.

Romania’s new left-leaning premier pledged to stick to strict spending limits while trying to revive growth, as he seeks to balance the demands of deficit-averse investors with the desires of his austerity-weary constituents. “I wish to send the markets a signal of stability and responsibility,” said Victor Ponta, who became prime minister last week after the collapse of the country’s previous government, which had become deeply unpopular because of its budget-cutting policies. The 39-year-old Social Democrat emphasized in written responses to questions from The Wall Street Journal that Romania would honor the stringent terms of its precautionary loan agreements with the European Union and International Monetary Fund.

Commodities fell to nearly two-year lows last week, measured by a widely used benchmark, prompting investors to ponder whether the massive rally that began in 1999 may be faltering. China is cooling down at the same time the U.S. is struggling to heat up, clouding the outlook for the world’s two biggest consumers. And producers of some raw materials have ramped up supplies enough to create at least temporary gluts, particularly if appetites falter. After a strong start to the year, prices for crude oil and gold have slumped by double-digits in percentage terms from their 2012 highs, and copperan

Germany is facing a unique dilemma as many euro-zone counterparts debate how much fiscal belt-tightening their citizens can withstand to restore sound public finances: how much inflation it can stomach to help its southern neighbors. On Friday, Germany’s central bank rejected speculation that it is softening its anti-inflation rigor, as its leader tried to keep a largely economic debate about restoring growth in Southern Europe from damaging the Bundesbank’s cherished reputation in Europe’s largest economy.  “The citizens can rely on the vigilance of the Bundesbank,” its president, Jens Weidmann, told the German daily Süddeutsche Zeitung. He called the debate over whether the bank would let inflation gain a foothold as part of a broader economic rebalancing in Europe “absurd.”

For almost a century, Canada’s economy has been firmly tethered to its much larger southern neighbor. Now, Canadian officials and executives also are betting their future on China. Canada’s economic reliance on the U.S. has ebbed for decades amid sporadic efforts to diversify. But weak demand from a prolonged economic downturn south of the border has accelerated the move, sending Canadian companies looking for new markets. Climbing oil production in the U.S. is upending American demand for Canadian hydrocarbons. That has spooked Ottawa, suddenly worried about finding buyers for its own growing crude exports, almost all of which now flows to the U.S.

Global gold prices have declined more than 10% since the end of February, but that hasn’t whetted the appetite of the world’s largest gold consumer. India accounts for 27% of the world’s demand for gold jewelry and investment, according to the World Gold Council. Gold is widely purchased before weddings and festivals in India. But protests, boycotts, new taxes and, most important, a decline in India’s currency, the rupee, have kept domestic gold prices high and consumers on the sidelines. Such weakness in Indian demand weighs on world gold prices.
China’s central bank on Saturday lowered the level of reserves that banks must hold, a move to support growth after a spate of data earlier this week revealed weakening economic momentum. The People’s Bank of China said Saturday it will cut the reserve-requirement ratio by 0.5 percentage points, effective from May 18, which will free up funds to be loaned out by the banking system.  It is the third cut in the reserve ratio so far in the current cycle of monetary-policy loosening, with the previous two cuts in November and February.

China may lower banks’ reserve requirement ratio further, following a cut on Saturday, to achieve a stable increase in economic growth and sizeable credit supply this year, the state-run China Securities Journal wrote in a commentary Monday. Boosting domestic demand should become Beijing’s focal point in setting economic policies, the paper said. China should cut interest rates to stimulate the economy when needed, while adjusting banks’ reserve requirement ratio and open market operations will remain the central bank’s main monetary policy tools, it said. “It may become a norm that the central bank uses repurchase agreements and reverse repurchase agreements to reduce volatility in money market rates,” it said.
Top crude exporter Saudi Arabia wants an oil price of around $100 a barrel and would like to see global inventories rise before demand picks up in the second half of the year, Oil Minister Ali al-Naimi said on Sunday. International Brent crude settled at $112.26 on Friday, well off a peak of over $128 in March. Brent has mostly traded above $100 since early 2011, keeping fuel costs high and threatening to damage a fragile global economy. “We want a price around $100, that’s what we want,” Naimi told reporters ahead of an industry event in Australia. “A $100 price is great.”
’s budget deficit has swelled to $16 billion after tax collections trailed projections amid the tepid economic recovery, Governor Jerry Brown said in a comment on his Twitter post. The shortfall has widened from the $9.2 billion Brown estimated in January, after lawmakers resisted the Democrat’s call for cost cuts, the federal government blocked other reductions and April income-tax revenue missed budget forecasts by $2 billion. On May 14, he’s set to unveil a revised spending plan and to say how he would erase the gap.

Greece’s possible exit from the euro area moved to the center of Europe’s debt-crisis debate, with officials beginning to weigh the fallout of a withdrawal even as authorities in Athens struggled to form a government. Meetings brokered by Greek President Karolos Papoulias are set to continue today after Syriza, the largest anti-bailout party, rejected a unity government following last week’s inconclusive elections. The country where the 2 1/2-year-old crisis began moved closer to a new vote, and to the possibility of a euro-area exit that was once a taboo among policy makers.

Apple Inc. (AAPL) co-founder Steve Wozniak said he will buy shares in Facebook Inc. (FB) when the social networking company sells stock to the public in what may be a record initial public offering for an Internet business. Wozniak, who built the first Apple computer with Steve Jobs and co-founded the company with him in 1976, said he would buy Facebook’s stock regardless of its valuation. Facebook plans to raise as much as $11.8 billion in an IPO scheduled for May 17 in what would be the biggest in history for an Internet company. The company is offering 337.4 million shares to the public at $28 to $35, giving it a market value at the top of the range of $96 billion.

In a mountain village where Greeks began their liberation from Ottoman Turks two centuries ago and now go to ski, Dimitris Lourantakis says he’s proud to be among voters pushing to throw out Greece’s political ruling class. Lourantakis, who lives in Kalavryta, two hours’ drive west of Athens, never voted for a party other than the Socialist Pasok until May 6. He cast his ballot last week for an eight- year-old party named Syriza that says it would renege on the bailout agreements that have secured Greece’s place in the euro until now.
The situation in the euro zone has become so bleak that it is giving rise to the most improbable rumours. The latest to make the rounds of European hedge fund managers suggests that the euro will be tied to the dollar at close to parity, a dramatic fall from its current level of just under $1.30 and one that would involve the printing of hundreds of billions of euros. However unlikely, the speculation is an indication of Europe’s plight in a world with little growth and every government looking at exports as a way to grow. A cheap currency giving an artificial boost to competitiveness is more palatable than austerity.
About one in five U.S. households owe more on credit cards, medical bills, student loans and other debts that aren’t backed by collateral so not including car loans than they have in savings, checking accounts and other liquid assets, according to a new University of Michigan report. “Some families have not been able to make substantial headway,” said Frank Stafford, an economist at the U-M Institute forSocial Research and co-author of the report, in a statement.
German Finance Minister Wolfgang Schaeuble has indicated interest in becoming chairman of the eurozone finance ministers’ regular meetings. It is a key position that involves coordinating policy among the 17 countries that use the euro. Known as the Eurogroup, it holds its next meeting on Monday. In an interview with a German newspapers Mister Schaeuble said he could not exclude the possibility of being its next chairman.
Chief executives of some of Britain’s biggest companies will today tell the Prime Minister that he must to do more to support growth, with a warning that the UK is showing them an increasingly “toxic” attitude. Members of the Prime Minister’s business advisory group, which was set up to improve relations between the City and the Coalition, will say that the atmosphere towards business in the UK is becoming “quite poisonous”. Mr Cameron’s face-off with the chief executives of companies such as J Sainsbury, Centrica and the Prudential comes at a time when relations between the private sector and the Government are under strain.

Germany has drawn up plans to make Britain pay a share of the multi-billion pound clean-up costs if Greece is ejected from the euro, risking a clash with Downing Street. A finance ministry draft shows that Berlin is preparing a fresh bail-out to stabilise the Greek economy and stem EMU-wide contagion after a return to the drachma, should the country reject EU austerity demands. The funds would come from Europe’s rescue machinery but costs would be shared among all 27 EU members – not just the eurozone – on the grounds that Greece has a right to Brussels crisis funds, like any other member state with its own currency.  The scheme aims to contain fallout from a Greek exit and “limit the losses of the European Central Bank” on the country’s bonds.

Sir Mervyn King, the Governor of the Bank of England, is expected to signal on Wednesday that interest rates will not rise from their record low until late 2013 at the earliest, as the UK’s growth disappoints. The base rate is projected to remain on hold as the central bank once again uses its quarterly inflation report to cut its forecast for the UK’s economic activity and brace for higher-than-expected inflation. “It is odds-on that the new forecasts contained in the report will be the all too familiar and dispiriting mix of reduced growth but higher inflation expectations,” said Howard Archer, chief UK economist at IHS Global Insight.
The International Monetary Fund (IMF) has been warned by its internal research team that there could be a permanent doubling of oil prices in the coming decade with profound implications for global trade. “This is uncharted territory for the world economy, which has never experienced such prices for more than a few months,” the report warns. The new IMF “working paper” come as the value of crude on world markets remains at the historically high level of $113 a barrel and just after the International Energy Agency reported that consumption would accelerate for the rest of this year in line with a wider economic recovery. Undertaken amid mounting concerns about “peak oil”, the IMF study does not presume that there is a constraint on how much oil can be taken out of the ground. It prefers to believe that extraction rates will depend on the price that will be able to be charged for the final product.
Chinese price watchdog announced on Wednesday to cut gasoline and diesel prices for the first time since last October, which has fuelled mixed voices to reform current pricing mechanism for refined oil products. Gasoline and diesel prices will be reduced by 330 yuan (52.38 U.S. dollars) and 310 yuan per ton respectively from Thursday, the National Development and Reform Commission (NDRC) said in a statement on its website. The adjustments will lower the benchmark retail price of gasoline by 0.24 yuan per liter and diesel by 0.26 yuan per liter.

The Chinese currency Renminbi, or the yuan, lost 88 basis points to 6.3040 against the U.S. dollar on Monday, according to the China Foreign Exchange Trading System. In China’s foreign exchange spot market, the yuan is allowed to rise or fall by 1 percent from the central parity rate each trading day. The central parity rate of the yuan against the U.S. dollar is based on a weighted average of prices before the opening of the market each business day.

The Ministry of Industry and Information Technology announced Friday that the country’s gold output in the first three months of the year reached 80.8 tonnes, up 10 percent year on year. In March alone, gold output hit 29.8 tonnes, compared to 26.2 tonnes in the same period last year, a statement on the ministry’s website said. During the first three months, the nation’s top 10 gold companies produced 41.3 tonnes of finished gold, accounting for 51.1 percent of total output, the statement said.

The number of Australian home loans approved in March rose 0.3 percent, compared with February, figures released on Monday by the Australian Bureau of Statistics (ABS) showed. The number of commitments for owner occupied housing finance rose to 46,275 in March, from 46,117 in February, the ABS said. Economists had forecast a 2.0 percent fall in housing finance commitments for March.
Exports from Tamil Nadu, during 2011-2012, crossed $33.50 billion, 26 per cent higher than the previous year’s export, according to the Federation of Indian Export Organisations (FIEO). The State’s share in 2011-2012 was 11 per cent of the country’s exports. The growth rate registered by the State is higher than the national growth rate of 21 per cent, according to M. Rafeeque Ahmed, president of the FIEO.

On the back of a bundle of indicative woes afflicting the economy such as high inflation, widening current account deficit and a depreciating rupee that the government is yet to effectively address, has come a dismal set of IIP (index of industrial production) numbers depicting the sorry plight of the manufacturing sector at the end of fiscal 2011-12.  The IIP data released by the Central Statistics Office (CSO) here on Friday revealed that for the first time in five months, industrial production contracted 3.5 per cent in March, 2012, as compared to a robust growth of 9.4 per cent achieved during the same month a year ago.  What came as a further surprise was the fact that the IIP’s foray into negative territory at the fag end of the fiscal year was preceded by a positive growth of 4.1 per cent in February, which is a clear reflection of a drying up of the investment tap, ostensibly owing to India Inc.’s perception of interest rates being still too high.

Expressing concern over the drop in industrial output, Reserve Bank of India Deputy Governor Subir Gokarn, on Friday, said the slow growth rate could be on account of the decline in industrial production. Addressing the media, after an interactive session organised by the Confederation of Indian Industry (CII) Southern Region here, Mr. Gokarn said the efforts to moderate inflation could have led to the slowdown in industrial growth. He was commenting on the drop in industrial output, which had contracted by 3.5 per cent in March as compared to last year. Mr. Gokarn said the growth rate came down from 8.5 per cent to sub-7 per cent during the last fiscal and many considered this to be the new growth trend for the country.
China aims to strike a free trade deal with South Korea within two years, the country’s top state planner said Monday, stressing it will spur the pace of economic integration in Northeast Asia. Earlier this month, the two neighboring countries announced the start of free trade negotiations, setting in motion a process to tear down trade barriers between two of Asia’s biggest economies. The first round of talks on a bilateral free trade agreement (FTA) will take place later this month.”At present, China and South Korea are going through economic transformations and upgrading to a higher stage of development,” China’s National Development and Reform Commission said.
South Africa has some of the busiest ports on the continent but no commercial ships, but officials hope a new tax regime may give it an entry into the multi-billion-dollar industry. The flight of merchant ships from the national register started in the early 1980s, with companies citing uncompetitive tax regulations. But it was not until 2005 that government tabled the tonnage tax bill – a taxation regime used by the majority of maritime nations, and preferred by ship owners. “The research and consultation process has been finalised. The tonnage tax regime will kick in in 2013. We hope this will attract merchant vessels back into the country,” SA Maritime Safety Authority chief executive Tsietsi Mokhele told AFP.
An Iranian energy official says the Islamic Republic will start exporting 50 megawatts (MW) of electricity to Lebanon and Syria as of next week. Iran is fully prepared to export electricity to Lebanon and Syria and power transfer to these countries will officially start as of next week, Abdolhamid Farzam, Iran Energy Ministry’s official in charge of foreign exchanges said on Sunday. According to Farzam, electricity export to Lebanon and Syria is taking place as part of an agreement reached between energy ministers of Iran, Iraq, Syria and Lebanon in February.

Iranian President Mahmoud Ahmadinejad said his government plans to increase the country’s annual steel production to 48 million tons during the next five years, the English-language satellite Press TV reported, according to the official Xinhua News Agency. Xinhua said that Ahmadinejad, said Iran’s annual steel production, currently at 14 million tons, should reach 48 million tons in a period of four to five years, according to the report. As a major steel producer in the region, Iran has boosted its steel mills to different parts of the country in recent years, with central Isfahan and southwestern Kouzestan provinces remaining the major steel producers in the country.