news That Matters

The president of the European Council said Friday that a new intergovernmental treaty meant to save the single currency will include the 17 eurozone states plus six other European Union countries – but not all 27 EU members,


China’s annual inflation fell in November to 4.2 per cent, the lowest level in more than a year, reports Reuters, fuelling expectations of further monetary policy easing. The rate has dropped rapidly since hitting a three-year high of 6.5 per cent in July.


Distressed debt investors are circling a number of European companies that have run into trouble as the continent’s mounting economic woes put pressure on smaller businesses that are often highly leveraged,
The Markets tanked today. On Monday we wrote “We are approaching short term resistance levels, everywhere.” Well, we reached resistance, they tried to push it higher on no volumes, but the market decided to sell off, with decent volumes. As we still think the market lacks real power and determination to start an aggressive move and break down, people will probably once again sell the lows and add to shorts before the market bounces yet again. We are still structurally (and technically) bearish, but investors must get even more frustrated, before we get the real move in the market


What would happen if the euro collapses as in collapses? Despite all the Economic effects, that wouldn’t be offset by the fees lawyers would collect, we could even get the blame game escalating into war. Below are Citi’s bullet points to remember should the political experiment fail, courtesy James Pethokoukis.


The US has sought to reassure China that its recent diplomatic and military initiatives in Asia were not directed against Beijing, reports the FT. “The US does not seek to contain China, we do not view China as an adversary,” said Michele Flournoy,


A significant order from a Chinese buyer for new crude-oil tankers has fuelled speculation that China is preparing a series of huge ship orders, reports the FT. The orders would support employment in the country’s shipbuilding industry but flood struggling shipping markets with excess capacity.


Germany’s banking system was shown to be far weaker than previously thought in a new round of European stress tests, raising the prospect of further taxpayer bail-outs, reports the FT. The European Banking Authority said late on Thursday that German banks had a capital shortfall,


David Cameron and Nicolas Sarkozy are locked in a confrontation in Brussels over Britain’s demand that any new treaty to enforce eurozone fiscal discipline should also include “safeguards” for the City of London.  The row, which stretched into the early hours of Friday morning, added to a pessimistic mood as 27 European leaders arrived in Brussels for an EU summit intended to arrest the crisis in the eurozone;. the French president, had set the tone warning that Europe risked “disintegration”.



Hedge funds are set to rack up their second-worst year in two decades after taking a beating from the eurozone crisis and an unexpected slowing in global economic growth. The average hedge fund manager has lost 4.37 per cent in the year to the end of November, according to data just released by Hedge Fund Research – losing money in six of the past seven  months. Only in 2008, following the collapse of Lehman Brothers, did the industry fare worse.
Asian stock markets came off sharp early lows Friday and the euro regained some lost ground as investors digested news of a fiscal-union pact for the 17 euro-zone members, although the European Union leaders summit was still fleshing out details. Stocks initially traded sharply lower, weighed by declines in exporter and resources stocks, and the euro fell after the European Central Bank Thursday disappointed expectations for aggressive new bond purchases. Japan’s Nikkei Stock Average was down 1.6% after trading down as much as 1.9% earlier, while Australia’s S&P/ASX 200 was off 1.5% after falling as much as 2.2% earlier. India’s Sensex was down 1.5% and South Korea’s Kospi Composite was off 1.9%. Hong Kong’s Hang Seng Index was down 2.6%, while China’s Shanghai Composite was off 0.8%. Dow Jones Industrial Average futures were 27 points higher in screen trade.


A significant change in trading of China’s yuan is sending signals that investors and companies expect China to halt the appreciation of its currency, despite heightened pressure from Washington. Traders have pushed the currency to the bottom of its daily trading band for seven sessions in a row, a sharp deviation from its trading patterns this year. Currency trading within China is limited to a band controlled by the People’s Bank of China. The bank sets the daily rate for the yuan against the U.S. dollar, and the currency is permitted to trade no more than 0.5% above or below that rate.


Australia needs key commodity prices to be as much as 70% above 20-year average levels to gain net revenues from a planned mining tax that has cost the country a prime minister and left the Labor party clinging on to a minority government, according to analysis of the measure conducted by The Wall Street Journal.  The Minerals Resource Rent Tax, or MRRT, to come into force in July next year, is likely to earn the government no more than two billion Australian dollars (US$2.03 billion) annually under most scenarios, the analysis shows. That could make Australia’s budget and broader economy


South Korea’s central bank Friday lowered its economic growth forecasts for this year and 2012 due to a significant slowdown in the global economy and Europe’s sovereign debt crisis, fueling market expectations that the central bank will start monetary easing in the near future to support growth.  The South Korean economy, Asia’s fourth-largest, will likely expand 3.7% in 2012, slowing from an estimated 3.8% rise this year, the BOK said in its 2012 economic outlook report.  The BOK’s latest forecast is much lower than its projections made in July of


A significant change in trading of China’s yuan is sending signals that investors and companies expect China to halt the appreciation of its currency, despite heightened pressure from Washington. Traders have pushed the currency to the bottom of its daily trading band for seven sessions in a row, a sharp deviation from its trading patterns this year. Currency trading within China is limited to a band controlled by the People’s Bank of China. The bank sets the daily rate for the yuan against the U.S. dollar, and the currency is permitted to trade no more than 0.5% above or below that rate.
Chinese inflation fell sharply in November, cooling at a faster-than-expected rate on the back of falling food and commodity prices, and raising the prospect of further monetary easing by the central bank.  The monthly consumer price index rose 4.2% from the year-ago period, reflecting a huge easing from October’s 5.5% increase. The producer price index, which reflects wholesale prices, eased even more steeply to 2.7% from a 5% increase in October.

Japan revised its economic growth lower for the third quarter to 1.4% , from an original reading of 1.5%, according to Cabinet Office data released Friday. The revisions incorporated new methods for compiling the data and the revisions were expected by analysts. On an annualized rate, gross domestic product growth was marked down to 5.6% from the first reading of 6.0%. Private consumption rose a revised 0.7% in July-September, while overall domestic demand was up a revised 0.8%, against 1.0% originally reported.
Brent crude fell below $108 on Friday, on growing concern that European policy makers will fail to deliver a concrete plan to tackle the euro zone debt crisis at a key meeting, an outcome likely to hurt prospects for demand. Hopes for a resolution to the region’s debt woes dwindled after the European Union (EU) failed to secure backing from all 27 countries to change the EU treaty, despite sealing a new fiscal pact ensuring tougher budget discipline at the summit on Friday.
U.K. Prime Minister David Cameron said a new euro accord reached by European Union leaders wasn’t in Britain’s interest so he didn’t support it. The new deal won’t be presented to the British parliament, Cameron told reporters in Brussels today.  Cameron said he wished the euro nations well as they work to tackle the debt crisis.


European Union leaders dropped their demand that investors share the cost of future bailouts as Germany abandoned a campaign that helped deepen the two-year-old financial contagion. Limiting so-called private-sector involvement to the terms accepted in International Monetary Fund bailouts was part of a package agreed upon in Brussels last night as leaders met to forge tighter economic bonds to stem the crisis.


Gold traders are more bullish as investors buy metal at the fastest pace in a year to protect their wealth from Europe’s escalating debt crisis. Eighteen of 26 surveyed by Bloomberg expect the metal to advance next week, the highest proportion since Nov. 11. Holdings in exchange-traded products backed by gold rose 108.6 metric tons to a record from the start of October, the most since the second quarter of 2010, data compiled by Bloomberg show. The extra bullion is valued at $5.99 billion.


Hong Kong may need to stand behind some banks and deposits should Europe’s sovereign debt crisis worsen and cause the global economy to slump, said Nigel Chalk, the International Monetary Fund’s China mission chief. In a “very bad scenario” the government may have to “perhaps guarantee some of the deposits in the banking system as they did in 2008 in the wake of Lehman Brothers,” Chalk said in a Bloomberg Television interview from Washington. The fund sees a low probability of such a situation, it indicated in a report released today.


HYPERLINKexports grew faster than economists estimated in October as sales of commodities and energy products surged, a pace that may ease as the threat of a global recession curbs demand in coming months.  Overseas shipments climbed 15.8 percent to a record 63.6 billion ringgit ($20 billion) from a year earlier after gaining 16.6 percent in September, according to a trade ministry statement today. The median estimate of 18 economists in a Bloomberg News survey was for a 7.3 percent gain.


European leaders added 200 billion euros ($267 billion) to their crisis-fighting warchest and tightened anti-deficit rules, seeking to lure the European Central Bank into stepping up its rescue operations. In an accord hailed by ECB President Mario Draghi, the leaders laid out a new “fiscal compact” to prevent future debt runups, accelerated the startup of a planned 500 billion-euro rescue fund and scaled back bondholder loss-sharing provisions.


Samsung Electronics Co. (005930) can get its rival to Apple Inc.’s iPad 2 on Australian store shelves before Christmas after the country’s highest court denied the U.S. company’s bid to maintain a ban on Samsung Galaxy tablets. Chief Justice Robert French, on behalf of the three-judge High Court panel, said today that Apple failed to persuade them that it could win on appeal and denied the company a hearing. He reinstated an appeal court judgment lifting the ban on the Galaxy 10.1 tablets in Australia.


Japan’s opposition-controlled Upper House censured two of Prime Minister Yoshihiko Noda’s ministers and threatened to boycott the next Diet session unless they are fired, a move that could slow disaster rebuilding efforts. The chamber today passed the non-binding motions against Defense Minister Yasuo Ichikawa and Consumers Affairs Minister Kenji Yamaoka submitted by the Liberal Democratic Partyand New Komeito party. Ichikawa cut his salary this week to take responsibility after a deputy compared the planned move of a U.S. military base on Okinawa to rape.
European Central Bank President Mario Draghi has almost completely closed-off the prospect of aggressive bond buying from the European Central Bank or the prospect of “quantitative easing” Not only did he say that he was surprised that some media outlets had inferred from his comments to the European Parliament last week that “other elements” might follow a sequence of events from Europe’s politicians, he said that there was “no high probability of deflation” in the Euro Zone.
Two economic reports out Thursday suggest the job market is improving while companies are rebuilding inventories in anticipation of stronger sales in coming months. U.S. wholesale companies increased their stockpiles of autos, paper, and other goods in October by the most in five months, a sign they expect consumer demand to rise.
Tesco is shifting its currency exposure, holding cash and refusing to sign long-term supply contracts in the face of the eurozone crisis. Britain’s biggest retailer said it was taking the risk of a eurozone break-up “seriously” and had taken steps to reduce its exposure to such an event. Laurie McIlwee, Tesco’s finance director, said of a possible break-up: “Of course we’ve looked at it. Any business has got to take disruption in the eurozone seriously”.


The Bank of England held interest rates at a record low of 0.5pc and decided against more stimulus for the economy but more quantitative easing is expected in 2012. Thursday’s decision was not unexpected and most economists are forecasting an increase in asset purchases early next year. The Bank said in a statement the scale of “the programme will be kept under review”, and economists said more QE was likely in February, once the current £75bn of asset purchases had been completed. At that point the Bank will have undertaken a total of £275bn of QE.
The Productivity Commission’s final report on the state of the retail sector, released this morning, has failed to recommend that the government drop the GST-free threshold on goods purchased from overseas websites by Australian shoppers, shooting down local retailers’ hopes the tax loophole would be closed. Penned by presiding commissioner Philip Weikhardt, the report has stopped short in calling for the tax-free threshold to be lowered, arguing it should not be done until it can be proved the move would be cost effective.


Gold rebounded from the biggest decline in more than two weeks as European leaders worked to agree on a plan to save the euro and defuse the debt crisis. Palladium was set for a second weekly advance. Immediate-delivery gold rose as much as 0.4 per cent to $US1,715.10 an ounce and traded at $US1,713.57 at 9:18 am in Singapore, paring a weekly drop. The February-delivery contract advanced 0.2 per cent to $US1,716 an ounce on the Comex.
The Bank of Canada has a warning for condo investors – the boom times may be over.  In its December economic review, the central bank said that “certain areas” of the housing market could see prices fall as the economy weakens.  “Certain areas of the national housing market may be more vulnerable to price declines, particularly the multiple-unit segment of the market, which is showing signs of disequilibrium,” the bank warned. “The supply of completed but unoccupied condominiums is elevated, which suggests a heightened risk of a correction in this market.”
China’s retail sales grew 17 percent year-on-year to reach 16.35 trillion yuan (2.58 trillion U.S. dollars) during the first 11 months of the year.  China’s fixed asset investment rose 24.5 percent year-on-year to 26.9452 trillion yuan (about 4.3 trillion U.S. dollars) in the first 11 months of the year. China’s industrial value-added output grew 12.4 percent year-on-year in November this year. Growth in China’s producer prices decelerated to the lowest pace in nearly two years as market demand fell on future economic uncertainties. China’s Producer Price Index (PPI), a main gauge of inflation at the wholesale level, rose 2.7 percent in November year-on-year, the National Bureau of Statistics (NBS) said Friday.
With the central government’s resolute efforts, the trend of surging prices this year has been controlled, Yao Jingyuan, the former chief economist with the National Bureau of Statistics said on Thursday in Shenzhen. This round of inflation is not yet so serious in its time span, said Yao at the annual session of the China Real Estate Chamber of Commerce yesterday. With fast economic growth, China’s inflation has been comparatively low, and the galloping inflation that once appeared in 1988 and 1994 did not occur again, he said.
Microsoft India Chairman Bhaskar Pramanik, on Thursday, said India was “no longer the preferred destination” for IT multinationals (MNCs) due to a host of problems. While, he did not come clear on the problems that IT companies or MNCs were facing in terms of investments or operations, he said that “other countries” were doing “better” than India.

Much to the respite to the common man as well as the government, which has been facing Opposition flak on rising prices, food inflation fell sharply to over a three-year low at 6.60 per cent for the week ended November 26 from 8 per cent in the previous week, following a significant moderation in prices of essentials such as onions, potatoes and wheat.  As per the WPI (Wholesale Price Index) data released here on Thursday, food inflation at this level is at its lowest since August 9, 2008, when it pegged at 6.19 per cent to afford some relief in spending on edibles even as the moderation in the food price spiral appears sharp, partly owing to the effect of a higher base. Food inflation during the like week in the previous year was higher at close to 9 per cent
India Inc is in a fretful mood. Businesses fear that reforms will be pushed back till the next elections. While some hope that the government may flirt with a few measures after the Uttar Pradesh polls, there are unsaid concerns that populism will surge and fiscal deficit may shoot as the country approaches the general elections. Are companies changing tack as they read the writing on the wall? “It will be a long pause before the next elections. On every count, the process of making infrastructure investments has been decelerated,” says Ravi Uppal, CEO & MD of L&T Power. Uppal, whose company makes supercritical power turbines and boilers, puts the onus of the current dismal scenario on policy impediments, cost of funds, non-availability of coal blocks and environment policies.


The RBI will take all steps needed to ensure there is adequate liquidity in the banking system, its chief said on Thursday, even as he declined to comment on the possibility of lowering CRR to ease tight cash conditions. “There is liquidity constraint across the system or certainly for certain banks,” D Subbarao told reporters after a RBI board meeting in Kolkata. “So as necessary, we will take appropriate measures to see that the liquidity situation is eased,” he said.  The cash crunch, currently hovering around 1 lakh crore, is above RBI’s comfort zone of 1% of the total deposits in the banking system, which roughly translates to 60,000 crore at current levels. The RBI has bought back 24,300 crore of bonds out of a targeted 30,000 crore.
Thanks to South Africans buying cars, chatting more on cellphones, surfing the internet and having reduced their debts over the past year, the South African economy began to turn around in October after a three-month contraction.  Four of the five provincial economies for which Sake24 and BoE Private Clients compile barometers strengthened over the past quarter. Only the Western Cape (2.5% down on three months ago) is still in decline.  All provinces saw their trade indices rising, with Gauteng – 9.4% up year-on-year (y/y) – doing best. This index measures vehicle, petrol, retail and wholesale sales, as well as tourism.