NEWS,18.01.2013

US consumer sentiment hits record low

US consumer sentiment unexpectedly deteriorated for a second straight month to its lowest in over a year in January, with many consumers citing the recent fiscal cliff debate in Washington, a survey released on Friday showed.The sharp drop in sentiment over the last two months coincides with rancorous federal budget negotiations that have led to higher taxes for many Americans.Just weeks after that deal, President Barack Obama and Republican lawmakers are expected to enter another tough round of negotiations over spending cuts, which could dent consumer confidence still further."The handling of the fiscal cliff talks and the realization that paychecks are going to be smaller due to the sunset of the payroll tax holiday are probably weighing on consumer attitudes at the moment," said Thomas Simons, a money  market economist at Jefferies & Co. in New York. "With the debt ceiling yet to be tackled and more political acrimony on the way, we suspect that confidence has room to deteriorate further."The Thomson Reuters/University of Michigan's preliminary reading on the overall index of consumer sentiment came in at 71.3, down from 72.9 the month before. The index was at its lowest since December 2011. It was also below the median forecast of 75 among economists polled by Reuters."The most unique aspect of the early January data was that an all-time record number of consumers - 35% - negatively referred to the fiscal cliff negotiations," survey director Richard Curtin said in a statement. "Importantly, the debt ceiling debate is still upcoming and could further weaken confidence," he said.House Republicans signaled on Thursday they might support a short-term extension of U.S. borrowing authority when the government exhausts that capacity sometime between mid-February and early March. A failure by Congress to raise this debt ceiling could result in a market-rattling government default. US stocks remained little changed after the data. The S&P 500 hit a five-year high in the last session. But on Friday, a weak outlook from Intel offset encouraging data out of China and a fourth-quarter profit at Morgan Stanley So far there has been a disconnect between what consumers say and do. US retail sales increased a better-than-expected 0.5% in December. But given the recent weakening in sentiment investors will be watching for any signs that spending is starting to slip."The impact on consumers will be from the hike in the social security tax. That is undoubtedly going to hit discretionary spending. So this may be a signal of things to come," said Michael Woolfolk, a senior currency strategist at BNY Mellon in New York.The consumer survey's barometer of current economic conditions fell to 84.8 from 87.0 and was below a forecast of 88.0. The gauge hit its lowest since July.The survey's gauge of consumer expectations also slipped, hitting its lowest since November 2011 at 62.7 from 63.8, and was below an expected 65.2.The survey's one-year inflation expectations rose to 3.4% from 3.2%, while the survey's five-to-10-year inflation outlook was at unchanged at 2.9%.

China's growth slows in 2012

China's economy grew at its slowest pace in 13 years in 2012, though a year-end spurt supported by infrastructure spending and a jump in trade signalled the foundation for the stable growth path Beijing says is vital for economic reform may be in sight.Evidence of a burgeoning recovery in exports, stronger than expected industrial output and retail sales, together with robust fixed asset investment, all indicated that Beijing's pro-growth policy mix has gained sufficient traction to underpin a revival without yet igniting inflationary risks.Year-on-year growth of 7.9% in the fourth quarter beat a consensus forecast of 7.8% in a Reuters poll and snapped a streak of seven consecutive quarters of slowdown.The performance was at the upper end of the 7%-8% rate economists reckon is needed to deliver on reforms essential to China's long-term development after three decades of red-hot, double-digit growth.Full year growth of 7.8% was also just ahead of the poll's 7.7% call and, although the weakest since 1999, comfortably ahead of the government's 7.5% target, which just months ago seemed to some economists to be in jeopardy."It's kind of like a golden spot - stronger growth, but not strong enough to trigger a lot more inflationary concern. That's perfect for equity markets." said Dariusz Kowalczyk, Asia ex-Japan senior economist and strategist at Credit Agricole CIB in Hong Kong."What everybody wants is growth that's strong enough to give us peace of mind that revenues will increase and there is no hard landing risk, but not excessive, not strong enough to trigger inflation. And this is what I think we are getting. I'm bullish on China still."Market reaction was generally upbeat, with Asian shares advancing and platinum and palladium following suit, while oil traders took the opportunity of data confirming the recovery to book profits after two sessions of steep rises.China's new leaders must stabilise the economy this year to keep employment high while avoiding a surge in housing prices and inflation that could undermine reforms needed to overhaul the country's export-oriented growth model.Without stability, incoming President Xi Jinping and Premier Li Keqiang, who are set to be confirmed in March, have no chance of delivering a slew of reforms they say are needed to tackle a host of financial, industrial and income imbalances that threaten China's future.China's statistics chief, admitting the country's wealth gap was "relatively large", released a recalculated indicator of economic inequality on Friday, the first time in several years that officialdom has addressed the sensitive issue head-on. China's Gini coefficient stood at 0.474 in 2012, down from 0.477 in 2011 and from a peak of 0.491 in 2008, Ma Jiantang, the head of the National Bureau of Statistics, told reporters at a press conference on 2012 economic performance. The index ranges from 0 to 1, with the 0.4 mark viewed by analysts as the point at which social dissatisfaction may come to a head. China's leaders say rebalancing the economy to consumption and away from the investment and export model followed for the last 30 years holds the key to tackling inequality, but detailed data on Friday underlined the scale of that task. While consumption made the biggest contribution to growth in 2012, with a 51.8% share, Q4 marked the third consecutive quarter of decline. The fall has been driven by the government's focus on using investment spending as the main expedient to underpin an economy still levered to external demand. Exports generate about a third of economic activity and sinking demand from foreign customers in struggling European Union and United States economies dragged on growth in 2012. Net exports made a negative 2.2% contribution, data showed. ith China's consumers still relatively poor - average annual urban disposable income was just 21,810 yuan ($3 500) in 2011 - it remains too hard for the government to rely on them to help compensate for any shortfall from the export sector. "There's just not enough money," said Liu Jiongda, 35, a manager at a Shanghai logistics company who earns just over 11,000 yuan ($1 500) per month, more than half of which goes straight into a mortgage on a property he bought in 2009. "If the government wants a so-called consumer culture, they have to cut the amount of tax I have to pay. That is simple. If I have more money then I'll be willing to spend more." Investment meanwhile, at 50.4%, has picked up as the new leadership has looked to underpin a recovery with spending on infrastructure a tried and tested method. Quarter-on-quarter growth of 2.0% was below the market's expectation of a 2.3% rise, which was taken as a sign that the recovery's momentum is not strong enough to worry the authorities into pre-emptive action to snuff out any whiff of inflation - China's long term policy pre-occupation. The People's Bank of China, which cut interest rates twice in mid-2012 and cut banks' reserve ratios (RRR) three times since late 2011, has since switched to short-term cash injections via open market operations to guide monetary policy, apparently wary of fanning price pressures or encouraging a property bubble."We need to keep vigilant against inflation," NBS chief Ma Jiantang told a news conference on Friday. The risk of policy tightening looms as growth gathers pace, leaving Beijing with a fine line to tread to ensure the recovery continues without reigniting speculative activity in the key area of real estate. Data released alongside GDP numbers on Friday showed home prices extending a slow rise in December, with an average rise of 0.3% month-on-month in 70 major Chinese cities, the fifth month in the last six to show an increase, despite government efforts to temper prices. Real estate investment, which accounted for 13.8% of China's gross domestic product in 2012, rose 16.2% last year from a year earlier and remains a key component of overall fixed asset investment - the cornerstone of Beijing's recovery strategy. Annual fixed asset investment (FAI) growth was 20.6% in 2012, versus the 20.7% forecast in the Reuters poll. "Typically FAI falls off at the end of the year - on average December FAI is 1 percentage point lower than November, but this time there was only a 0.1% edge off," said Ken Peng, an economist at BNP Paribas in Beijing, highlighting the strength of investment spending and the risk that it could be fuelling renewed speculation. Investment spending was the key near-term concern of Ren Xianfang, senior analyst at IHS Global Insight in Beijing. "We have to watch the investment numbers especially because China has started (to put) controls on local financing, so this could limit fund raising and investment by local governments," she said. "So far it's just talk, but if they implement measures like the sharp tightening in 2011 the impact on growth could be very substantial," Ren added, highlighting Beijing's policy dilemma. Other data released alongside GDP showed industrial output grew 10.3% in December from a year ago, versus expectations of 10.1%.Retail sales in December rose 15.2% on a year ago versus an estimated 14.9% in a Reuters poll.A fourth-quarter recovery had been heralded by an acceleration in industrial output in October and November and a jump in exports in December, although some analysts believe last month's sharp expansion in trade could be a blip.China's exports grew 14.1% last month compared with a year earlier, racing past market expectations of 4% and November's 2.9% pace. Ting Lu, chief China economist at Bank of America/Merrill Lynch in Hong Kong, was confident that the data would not change the near term policy stance. "Maintaining stable growth is the new leadership's key policy mandate in 2013," Lu wrote in a note to clients, adding that he expected a growth target of 7.5% to be adopted for 2013 and policy calibrated to delivering it."Pro-growth policies in 2012 will be extended into 2013, and big-bang stimulus will be avoided unless there is another global financial crisis. Within 2013, policy will likely be marginally tightened towards the second half of 2013 on concerns of rising inflation, rising home prices, investment overheating and financial system risks," Lu said.

Obama sends message with new cabinet

A dearth of diversity in Barack Obama's top picks for his new cabinet is overshadowing signs of intent the US president is sending with his freshened team ahead of his second term.Obama takes the oath of office on Sunday ahead of four more years in the White House, a watershed moment that will see familiar faces, led by Hillary Clinton, depart and new blood ushered in to implement the president's political agenda.His personnel decisions, both at the cabinet level and in a rejigging of his White House inner circle, presage a fierce defence of Obama's political legacy at home and abroad in his second term.While posts in a president's cabinet are highly sought after, the centralisation of power in the White House often leaves the secretaries of top government departments chafing at a lack of clout.But several of Obama's top cabinet picks - like Chuck Hagel, John Kerry and Jack Lew, his nominees to run the departments of Defence, State and Treasury - clearly reflect the president's worldview and may wield significant influence.Some cabinet members who are staying on, like Health and Human Services Secretary Kathleen Sebelius - in charge of implementing Obama's top domestic achievement health care reform - will also play key roles.Senator Kerry and ex-senator Hagel, Vietnam veterans both, are sceptical of US military adventures abroad, and backed a fundamental project of Obama's presidency - getting troops home from Iraq and Afghanistan.They are also wary of embroiling the United States in another war over Iran's nuclear programme, though they will publicly back Obama's position that he is ready to use force as a last resort should diplomacy fail.Sebelius will be entrusted with ensuring that ObamaCare, which has yet to be fully implemented, is irrevocably embedded in the fabric of US life by the time the president hands over the keys to the White House in January 2017.Media buzz surrounding Obama's second cabinet has focused mainly on the fact that the first African American president, who won power thanks to a diverse racial and gender coalition, picked middle aged white men for top cabinet jobs.In fact, but for winning a majority of votes among women back in November, Obama might not be living in the White House at all.Aides dismiss the idea that Obama has fallen short of diversity goals, pointing out that his two Supreme Court picks have been women, one a Hispanic, and that he has many females in positions of power around him.Perhaps Obama's closest adviser is Valerie Jarrett, a mentor who followed his family from Chicago to the White House, and he was brought up by strong female role models in his mother and grandmother in the absence of his father.Eric Holder, the African American attorney general, is also staying on.Obama had been expected to name UN Ambassador Susan Rice, an African American, as secretary of state, but her chances of Senate confirmation evaporated amid Republican outrage over the aftermath of the raid on the US mission in Benghazi, Libya on 11 September."I think his record demonstrates the value he places on diversity," White House spokesperson Jay Carney said, adding that more diverse appointments could be expected with remaining open cabinet posts.Obama also addressed the issue during a press conference last week."I think until you've seen what my overall team looks like, it's premature to assume that somehow we're going backward. We're not going backward, we're going forward." Thomas Mann, a political scholar at the Brookings Institution in Washington said that once Obama's full cabinet is announced  with expected or announced openings in big departments like Interior, Energy and the Environmental Protection Agency - the picture could be more diverse.But Obama's new cabinet will differ from his first term, in dispensing with the "Team of Rivals" approach that included his former Democratic primary foe Clinton and Republican secretary of defence Robert Gates, who had served under George W Bush's administration.The selection of Clinton, which surprised senior aides, turned out to be a masterstroke, as the former first lady proved to be a political asset at the State Department, and Obama in effect removed a potential critic from the fray.Few insiders expect Kerry and Hagel, substantial figures in their own right, to be shrinking violets, but they are expected to keep any policy differences inside the Obama administration tent.Some Obama critics question whether the president, who tends to stick to aides who have been with him for years for his White House kitchen cabinet, will get enough outside advice.In one promotion from inside, Deputy National Security Adviser Denis McDonough is expected to succeed Lew for the crucial post of chief of staff.

Tight security plans for Obama swearing-in

Crowds may be smaller on Monday than when Barack Obama was first sworn into office in 2009, but security is as tight as ever, with experts warning a "lone wolf" would pose the greatest threat.Between 500 000 and 800 000 people are expected to pass through the National Mall, the immense greenway that leads up to the Capitol, compared to the 1.8 million spectators who came to applaud Obama four years ago.Thousands of police  the official figure has not been made public  will fan across the area, with several posted at every street corner.Airspace over Washington will be under tight surveillance, as will the Potomac River that runs along the city.Teams on horseback and with bomb-sniffing dogs will crisscross the city looking for potential explosive devices.More than 13 000 soldiers will attend the parade, behind a security cordon, to escort President Obama and to keep watch on the Capitol, the seat of Congress where he will be officially sworn into office.There will be cameras everywhere surveillance, media and tourist alike - a number of roads around the Mall will be closed to vehicles and spectators will be thoroughly searched, controlled and screened at each checkpoint.On the roofs of the main buildings in the area, snipers will stand watch."We're prepared for a variety of threats," said US Capitol Police spokesperson Shennell Antrobus.He expressed confidence in the force's "robust, multi-task security plan" that has been in the works for months.Michael Clancy, deputy assistant director of the FBI's counterterrorism division, said "the bigger threat, the thing that keeps you awake at night, are the lone offenders, regardless of their affiliation"."Those are the ones that scare me the most, folks that we don't have on our radar. It's the Timothy McVeighs of the world," Clancy added in an interview.He was referring to an American former soldier turned political extremist whose 1995 bomb attack on an Oklahoma City federal building killed 168."It would be crazy for anybody to try anything because of the law enforcement in the area, but those are concerns," said Stephen Somers, vice president of operations for AlliedBarton Security Services, one of the private security firms tapped to support the force."Any lone wolf is a tremendous threat that's why security is so tight," added Somers, whose staff will be dispatched to the World Bank and International Monetary Fund."Everybody needs to be on top of their game that day."Worried about any leaks, officials have kept a tight lid on details about the security precautions.At an undisclosed location in the suburbs of Washington, a command centre will monitor in real time any developments in and around the proceedings. On the big day, agents will monitor a collage of massive flat screens and cutting-edge surveillance, while staying in contact with teams on the ground. Each one of the 42 agencies involved in security - headed by the US Secret Service that provides protection for the president will have representatives at the headquarters, the convergence of 94 bases spread across the city.Secret Service spokesperson Brian Leary said the Multi Agency Communications Centre "really gives us the ability to monitor and co-ordinate security from a central location".Antrobus, of the US Capitol Police, said this partnership helps ensure that everyone can "enjoy the democratic process and this historic day".Officials are also keen on avoiding a repeat of the planning mishaps of 2009, when thousands of spectators were stuck in a massive freeway tunnel for hours in the freezing cold, and missed Obama's speech.Survivors of the ordeal dubbed it the Purple Tunnel of Doom.

NEWS,09.12.2012

World week ahead: heading for a cliff

As investors return to their screens in anticipation of the Federal Reserve's final meeting of the year, time is running short on a budget deal in the US.On Friday, Wall Street received a boost from better-than-expected jobs data, which more than offset even more doom and gloom from House Republican leader John Boehner on the prospects of reaching a tax and spending accord.Employment in the US advanced by a better than expected 146,000 in November, the Labor Department said. The unemployment rate dropped to 7.7%, the lowest in four years, as some people stopped looking for work. Economists had braced for a tougher report in the wake of Superstorm Sandy's late October devastation.But there wasn't good news everywhere. Consumer confidence went south, according to the Thomson University of Michigan preliminary index, also released on Friday. Sentiment for December dropped more than expected to 74.5 from 82.7 the previous month.Sideways appeared to be the best description of where the US budget talks stood heading into the weekend. Boehner said on Friday that the White House had "wasted another week".Investors will be eyeing a two-day meeting by Fed policy makers starting on Tuesday for fresh guidance on the outlook for the world's biggest economy and its stimulus efforts.Operation Twist, in which the Fed buys longer-dated Treasuries and sells some of its shorter-dated ones in an effort to stimulate the economy by lowering longer-term borrowing costs, is scheduled to end this month."The real question is whether the November jobs data changes the Fed's attitude toward more stimulus. It doesn't remove the need for stimulus but might convince the Fed to opt for a smaller program," Kathy Lien, managing director of BK Asset Management in New York.Some believe that if Republicans and Democrats fail to reach a budget deal in the coming days, the odds of triggering about US$600 billion in automatic tax increases and spending cuts on January 1 are significantly higher. The result: shares are in line for a hit."After the FOMC meeting, I think it's going to be downhill from there as worries about the fiscal cliff really take centre stage and prospects of a deal become less and less likely," said Mohannad Aama, managing director of Beam Capital Management in New York."I think we are likely to see an escalation in profit-taking ahead of tax rates going up next year." Meanwhile, the US Treasury is scheduled to auction US$66 billion in Treasuries in the coming days. It is offering US$32 billion in three-year notes, US$21 billion in 10-year debt and US$13 billion in 30-year bonds. Additional clues on the US economy will arrive in reports on international trade, retail sales as well as the producer price index and the consumer price index.In the past five days, the Dow Jones Industrial Average climbed 1%, while the Standard & Poor's 500 Index eked out a 0.1% gain. The Nasdaq Composite Index, however, shed 0.4% for the week, dragged lower by a drop of almost 9% in Apple's shares.In Europe, the Stoxx 600 Index rose 1.2% in the past five days.The US needs a balanced, comprehensive approach to tackle its fiscal woes that should include a mix of spending cuts and revenue increases, said International Monetary Fund managing director Christine Langarde.My view, personally, is that the best way to go forward is to have a balanced approach that takes into account both increasing the revenue, which means, you know, either raising taxes or creating new sources of revenue, and cutting spending," she said.America is more vulnerable to its own domestic troubles than to anything else happening in the Eurozone or China, she said. 

Skycrapers go green, slash energy costs

Chicago's skyline is going green, as property managers install energy efficient tools like motion-detectors on office lights, in a project officials hope will inspire changes across the United States.At the riverside Sheraton hotel, chief engineer Ryan Egan cannot get over what his new thermostats can do or the $136 000 a year in savings they are producing.First off, they're tied into the booking management system, which means he can let the room temperature drift beyond standard comfort levels until the moment a guest checks in.An infrared sensor means the savings don't stop there. Once the guest leaves the room, the temperature starts to drift again, giving the heating or cooling system a break until it's needed again.It's not a random drift the thermostat is programmed to only allow the room to warm up or cool down to the point where it can get back to the pre-set temperature within 12 minutes of the guest's return."The brains behind how much it can drift is really interesting," Egan said. "If you're on the shady side (in the summer) it'll drift more because it knows it can recover faster."The Sheraton is one of 14 major commercial buildings that signed onto the Retrofit Chicago challenge to cut energy use by 20% over the next five years, for savings estimated at more than $5m a year.If they succeed, it will be like taking 8 000 cars off the road."The fact that this is the city that built the first skyscraper, we love that we're trying to green the skyline," Karen Weigert, chief sustainability officer for the city of Chicago, told AFP.Some 70% of greenhouse gas emissions in the Windy City come from the electricity and gas used to heat, cool and power homes, businesses, schools and other government buildings.In addition to the greening in commercial buildings, the city plans to cut energy use by 20% in hundreds of municipal buildings, for an estimated monetary saving of $20m a year and emissions savings equivalent to taking about 30 000 vehicles off the road.It has also launched a program to help retrofit residential properties and expects more big commercial buildings to join the challenge."Fighting climate change can take all sorts of forms. This one happens to also save building owners a lot of money," said Rebecca Stanfield, a senior energy advocate for the Natural Resources Defense Council."We're excited about the potential for big property owners who are in the Chicago initiative to use what they learn here in buildings across the country."A similar program is being promoted by the Department of Energy, which has racked up commitments from schools, cities and businesses to reduce energy use by 20% in 2 billion square feet."They used to run heating and cooling all year"AT&T, the first company to sign up for Chicago's challenge, is testing out a host of new energy efficiency technologies at its downtown office tower.It's just one test kitchen for the telecom giant, as it searches for best practices in its quest to cut emissions company-wide by 20% by 2020.The results so far have been impressive.They've swapped out ceiling lights with more efficient bulbs and set up motion detectors so the lights aren't burning when technicians and sales staff are away from their desks.They've put insulated shutters on the air intake system to keep the chill out in winter and the heat out in summer.They've installed regulators on the big fans that push heated or cooled air through the 1960's era building so they only operate when needed instead of running all day and most of the night.They've even swapped out the belts on the fan's motors to cut down on energy-sucking slippage. "There's no question we've identified enough opportunities to save 20%," said John Schinter, AT&T's executive director for energy.All the improvements tested in Chicago will pay for themselves in three years or less, and most will be rolled out to the 1 000 corporate and 500 retail buildings that AT&T is targeting in its sustainability plan, Schinter said."If a project doesn't have scalability for an enterprise as large as ours, we don't spend much corporate time on it," he said in an interview.Jim Javillet is amazed at how attitudes have changed in the 43 years he's been managing buildings like the AT&T tower. "In the 60s and 70s they used to run (both) heating and cooling all year why not," he recalled.Another big advance came when buildings installed systems to turn most overhead lights off at a set time so they didn't burn all night.Now, even in the middle of the day, he can see who's away from their desks by the dark spots in the room. And when he walks down an empty hall, he creates a tunnel of light.These types of innovations are common in countries like Spain and Japan, where energy is more costly and governments have been more aggressive in pushing energy efficient building codes.But Americans are ready to accept change, said Dan Tishman, whose realty company owns the Sheraton Chicago and nine other major US hotels."Consumers in this country are comfortable with motion detectors on lights and other technologies that save energy, like low flush toilets or green roofs, and they appreciate it," said Tishman, who is also chairman of the National Resource Defense Council and heads a leading construction firm."I do think that when we implement the changes we are planning, we will be successful and other large hotel properties will follow suit."

China's factory output jumps to new high

 

Growth in China's factory output and retail sales jumped to eight-month highs in November as consumer inflation bounced off 33-month lows in the latest sign that its economy is snapping out of a protracted slump.Analysts said Sunday's data showed China is enjoying an enviable mix of benign inflation and rebounding economic growth that allows Beijing to stand still on monetary and fiscal policies, or switch to an easier stance if needed. "The Chinese economy is now in a sweet spot and can stay in the sweet spot through the first half of 2013," said Ting Lu, an economist at Bank of America-Merrill Lynch. "Beijing will be happy to sustain the current policy stance."Data from the National Bureau of Statistics showed output from Chinese factories beat forecasts to climb 10.1% in November from a year ago, its best performance since March.Annual growth in retail sales also surprised by jumping 14.9% in November, while fixed asset investment rose 20.7% in the first 11 months of the year, a shade below forecasts.The batch of activity data came after an inflation report out earlier on Sunday showed China's consumer price index rose 2% in November from a year ago just under forecasts for a 2.1% gain as vegetable prices soared.But economists said the rise in consumer prices from near three-year lows was far from worrying, especially since it is well under Beijing's annual 4% inflation target."We expect consumer inflation to not see a big rebound until the first quarter of next year," said Jiang Chao, an analyst at Guotai Junan Securities in Shanghai."Therefore, the central bank may stick to its current policy stance and we see little chance of further (policy) loosening towards the year end.""Durable recovery"China's economy has slowed for seven consecutive quarters, hurt by wilting export growth and lackluster domestic demand. Growth hit a low of 7.4% between July and September and is poised this year for its weakest annual showing since 1999.But things are looking up, due in part to policy easing by the central bank.The People's Bank of China cut interest rates twice in June and July and lowered banks' reserve requirement ratio (RRR) three times since late 2011, freeing an estimated 1.2 trillion yuan ($193bn) for lending."We expect such (economic) recovery to be durable and will at least extend into the first half of next year, though the pace of recovery will remain mild," said Sun Junwei, an economist at HSBC in Beijing.As growth revives, the central bank is keeping an eagle eye on inflation, its policy priority in normal times.It has not cut interest rates or RRR since July and has instead added short-term cash to the banking system through open market operations, a move analysts say underlines its worries about consumer and property price inflation.As China's economy breaks away from central planning and as wages rise on average at least 10% each year, the central bank has warned inflation will be the biggest long-term risk, a point reiterated by Governor Zhou Xiaochuan last month.Indeed, November's data showed price momentum was gathering even in factories.Factory-gate prices fell 2.2% in November from a year earlier, its ninth straight month of declines but easing from October's 2.8% annual drop, boding well for firms struggling with falling profits.

Libya eyes olive oil

Libya is turning to olive oil the green gold of the Mediterranean - to compete with its North Africa neighbours, conquer European markets and diversify its hydrocarbon-dependent economy."Libya has decided to promote the quality of its olive production to make its olive oil more competitive and increase exports to Europe," an official of the export promotion centre in Tripoli told AFP."The centre's new strategy involves all stakeholders in the production chain of the olive tree, particularly the private sector to boost its productivity and conquer foreign markets," said Taher al-Zweibek.Libya ranks as the world's 12th largest olive oil producer, accounting for 0.25% of global production, according to the UN Food and Agriculture Organisation (FAO).The North African nation lags well behind the world's top producer Spain (43%) and its regional neighbours Morocco (4th, 10.6%), Tunisia (6th, 4.4%) and Algeria (8th, 1.7%).It has 8 million olive trees and produces 160 000 tons of olives for 32 000 tons of oil, according to figures provided by the country's agriculture ministry.Libya, a desert country with an area of 1.76 million square kilometres (680 000 sq miles), has 3.6 million hectares (8.9 million acres) of arable land, just two percent of the total area of the country.But the olive tree, a traditional crop of the Mediterranean region which easily tolerates spells of drought, is a perfect fit for the arid Libyan climate.The North African nation is currently experimenting with a new kind of olive imported from Spain, the Arbequina, which is famous for its highly aromatic fruit, said agriculture ministry official Saad al-Kunni.Introduced in Europe during the 17th century, this variety is mostly grown in Spanish Catalonia. "After an experiment that yielded encouraging results, some 1 900 hectares were planted with this variety in two agricultural projects," added Kunni.Libya, which relies exclusively on the export of hydrocarbons for its revenues, has failed to diversify its economy despite sectors with enormous potential for development such as tourism and fisheries.Both the former regime of Moamer Kadhafi, who was toppled and killed last year, and the new authorities have repeatedly expressed the desire to diversify Libya's revenues without implementing specific strategies.Speaking on the sidelines of a Tripoli exhibition of Libyan dates and olives, Zweibek noted that the new strategy also focuses on improving the packaging of finished products to make them more attractive."A national label will be created and used to identify Libyan products in order to facilitate marketing while establishing a relationship of trust with the consumer," he said.The new authorities, Zweibek added, are trying to break away from the policies of the Kadhafi regime, during which bureaucracy prevented the promotion of any exports other than hydrocarbons.Until now, the exportation of olive oil was the initiative of a few individual farmers and owners of olive presses.Zweibek stressed that the state "will become more involved in assisting the whole production chain, from making the choice of which variety to plant to the transformation of the packaging process.""The centre will also conduct studies on the European market and ensure the collection of data for the benefit of Libyan exporters to help them conquer these markets," he said.

NEWS,21.09.2012

What Business Is Wall Street In? 

 

Wall Street doesn't know what business it is in. Regulators don't know what the business of Wall Street is. Investor/shareholders don't know what business Wall Street is in.The only people who know what business Wall Street is in are the high frequency and automated traders. They know what business Wall Street is in better than everyone else. To traders, whether day traders or high frequency or somewhere in between, Wall Street has nothing to do with creating capital for businesses, its original goal. Wall Street is a platform. It's a platform to be exploited by every technological and intellectual means possible.The best analogy for traders? They are hackers. Just as hackers search for and exploit operating system and application shortcomings, high frequency traders do the same thing. A hacker wants to jump in front of your shopping cart and grab your credit card and then sell it. A high frequency trader wants to jump in front of your trade and then sell that stock to you. A hacker will tell you that they are serving a purpose by identifying the weak links in your system. A trader will tell you they deserve the pennies they are making on the trade or the rebate they are getting from the exchange because they provide liquidity to the market.I recognize that one is illegal, the other is not. That isn't the important issue.The important issue is recognizing that Wall Street is no longer serving the purpose that it was designed to. Wall Street was designed to be a market to which companies provide securities (stocks/bonds), from which they received capital that would help them start/grow/sell businesses. Investors made their money by recognizing value where others did not, or by simply committing to a company and growing with it as a shareholder, receiving dividends or appreciation in their holdings. What percentage of the market is driven by investors these days?I started actively trading stocks in 1992. I traded a lot. Over the years I've written quite a bit about the market. I have always thought I had a good handle on the market. Until recently.Over just the past five years, the market has changed. It is getting increasingly difficult to just invest in companies you believe in. Discussion in the market place is not about the performance of specific companies and their returns. Discussion is about macro issues that impact all stocks. And those macro issues impact automated trading decisions, which impact any and every stock that is part of any and every index or ETF. Combine that with the leverage of derivatives tracking companies, indexes and other packages or the leveraged ETFs, and individual stocks become pawns in a much bigger game that I feel increasingly less comfortable playing. It is a game fraught with ever increasing risk.So back to the original question. What business is Wall Street in?Its primary business is no longer creating capital for business. Creating capital for business has to be less than one percent of the volume on Wall Street in any given period. (I would be curious if anyone out there knows what percentage of transactions actually return money to a company for any reason). It wouldn't shock me that even in this environment that more money flows from companies to the market in the form of buybacks (which I think are always a mistake), than flows into companies in the form of equity.My two cents is that it is important for this country to push Wall Street back to the business of creating capital for business. Whether it's through a use of taxes on trades (hit every trade on a stock held less than one hour with a 10 cent tax and all these problems go away), or changing the capital gains tax structure so that there is no capital gains tax on any shares of stock (private or public company) held for one year or more, and no tax on dividends paid to shareholders who have held stock in the company for more than five years. However we need to do it, we need to get the smart money on Wall Street back to thinking about ways to use their capital to help start and grow companies. That is what will create jobs. That is where we will find the next big thing that will accelerate the world economy. It won't come from traders trying to hack the financial system for a few pennies per trade.And solutions won't come from bureaucrats trying to prevent the traders from hacking the system. The only certainty when bureaucrats step in is that the law of unintended consequences will smack us all in the head and the trader/hackers will find new ways to exploit the system that makes them big money and even more money for the big institutions that develop products for the other institutions that are desperate to play the game.Regulators have got to start to recognize that traders are not investors and vice versa and treat them differently. Different regulations. Different tax structure. Different oversight. Individual investors and the funds that just invest in stocks and bonds are not going to crash the market. Big traders who are always leveraging up and maximizing the number of trades/hacks theymake will always put the system at risk. We need to recognize that they do not serve much of a purpose other than to add substantial risk to the global economy. That their stated value add of liquidity does not compensate the U.S. and world economy nearly enough for the risk of collapse they introduce into the system.Wall Street as a whole needs to be in the business of creating capital for companies and selling shares to investors who believe they are shareholders. The government needs to create simple and obvious incentives for this business and extract compensation from the traders/hackers for the systemic failure risk they introduce.There will be another flash crash, and probably a crash far worse than the May 2010 flash crash simply because there are too many players looking for the trillion dollar score. They can't all win, yet how many do you think wouldn't risk everything, even what is not theirs, for that remote chance to score big? Put another way, there is zero moral hazard attached to any trade. So why wouldn't traders take the biggest risk possible? There is value to trading automation. It is here to stay. There is absolutely NO VALUE to high frequency trading. None. We need to bring our markets back to their original goals of creating capital for business. It's impossible to guess how many small to medium size companies have been held back from growing and creating jobs and wealth because of lack of access to capital from the stock market. It's not impossible to know that our economy has suffered because Wall Street equity markets are no longer a source of equity for helping companies grow, it is not a platform for hackers and that needs to change. Quickly.

Iran parades military, warns Israel

Iran warned Israel and the United States against any aggression, as it proudly paraded its troops and military hardware on Friday under the gaze of President Mahmoud Ahmadinejad and top brass.The Tehran parade, involving thousands of military personnel, dozens of tanks and missiles borne on trucks, marked the anniversary of the start of the 1980-1988 Iran-Iraq war.Ahmadinejad, in a speech broadcast on state television, said that Iran was using "the same spirit and belief in itself" shown in that war to "stand and defend its rights" today against pressure from world powers.Top Iranian generals said the show of military might should be digested by Israel, which in recent weeks has ramped up threats that it could hit Iranian nuclear facilities."We do not feel threatened by the nonsense uttered by that regime's leaders," the chief of Iran's armed forces, General Hassan Firouzabadi, told the Fars news agency, adding that Iran's response to any attack would be "immediate and unstoppable".General Ataollah Selehi, the commander of Iran's army, told the ISNA news agency that "us holding a military parade is for deterrence and not a threat".US Navy war games He and other military leaders renewed their pledge that Israel would be annihilated if attacked.The head of the Revolutionary Guards' aerospace division in charge of missile defence, Brigadier General Amir Ali Hahjizadeh, repeated Iran's promise to close the strategic Strait of Hormuz if the Islamic republic were attacked or Western sanctions halted its crude exports."If one day the Strait of Hormuz has no benefit for us, then we will deprive others from benefiting from it," he said.However he added that "under current conditions, there is no problem".Hahjizadeh also dismissed navy war games currently being held by the United States and 30 other nations in the Gulf as "no threat to us".Iran is locked in a showdown with the UN Security Council over its controversial nuclear programme.Ahmadinejad on anti-Islam filmThe West, led by the United States, has tightened the vice on Iran by implementing crippling economic sanctions, while Israel - the Middle East's sole if undeclared nuclear weapons state - has underlined its threats of possible air strikes on Iranian atomic facilities, with or without US help.In his speech, Ahmadinejad also touched on an anti-Islam film made in America by an extremist Christian group that has fuelled violent protests in parts of the Muslim world.He said US government claims it could do nothing to censor the film was a "deception" exploiting the pretext of freedom of expression.He called the film an Israeli-hatched plot "to divide [Muslims] and spark sectarian conflict".Ahmadinejad implicitly referred to his often expressed opinion that the Holocaust never happened to lambast the West for perceived selective censorship."They stand against a question about a historical incident... they threaten and put pressure on nations for posing the question while at the same time in regards to the obscenest insults to the human sanctities and prophets... they shout adherence to freedom [of expression]," he said.Ahmadinejad's stance challenging the facts surrounding the killing of six million Jews by the Nazi regime during World War II is shared by Iran's supreme leader, Ayatollah Ali Khamenei, who is the country's commander-in-chief.Early this week, Khamenei told naval cadets: "In some Western countries, no one dares to question the unknown incident of the Holocaust or for that matter some of the morally obscene policies like homosexuality... but insulting Islam and its sanctities under the pretext of freedom of expression is allowed."

 

 

 

NEWS,17.09.2012

Billionaires score over millionaires

Many millionaires got poorer in the last year, but billionaires did just fine, using their heavyweight money management teams to ride out market and economic turmoil that hit the lesser rich, research company Wealth-X said on Monday.The ranks of people with at least $30m edged up to 187 380 but their total wealth fell 1.8% to $25.8 trillion - still a sum bigger than the combined size of the US and Chinese economies, Wealth-X said in a report.Hardest hit globally were those in the $200m to $499m range, whose numbers dropped 9.9% and whose fortunes shrank 11.4%, the World Ultra Wealth Report said, using data for the year through July 31.But the really, really rich got even richer as the number of billionaires rose 9.4% to 2 160 people and their wealth grew 14% to $6.2 trillion."Even at a billion or two billion, they have a much larger entourage, they have much more in the way of investment advice. They certainly get the attention of every major bank," Mykolas Rambus, Wealth-X's chief executive officer, told Reuters. "This was the issue about that mid tier, the $100m to $500m risk land. I don't think it appears these guys employ enough talent to help their own portfolios plus their holding companies to be successful."As Europe struggles and the US economy recovers fitfully, the affluent are shifting away from speculative investments into private companies, commodities and property, said Wealth-X, a Singapore-based firm that provides intelligence on the ultra-rich to banks, fundraisers and luxury retailers.Asia suffered the worst regional loss of wealth, with a fall of 6.8% to $6.25 trillion due to weaker equity markets and lower export demand from the West, it said.While wealth also shrank in Europe, Latin America and the Middle East, the rich saw their fortunes grow in North America (up 2.8% to $8.88 trillion) and Oceania (up 4.4% to $475bn) - much of that in Australia.But Asia's rich cannot be discounted, Wealth-X said, as the fall in wealth in Japan, China and India - home to 75% of ultra high net worth (UHNW) Asians - will reverse, based on the strength of the region's financial systems and economies."Total Asian UHNW wealth is forecast to surpass the US combined wealth by 2020," it said.

Private banks target the super rich

 

What do you get the client who has everything? An evening at a sleep school to get tips on how to beat insomnia? A chance to play cricket with former England star Andrew Flintoff? Advice on finding the right school?These are just some of the services offered by Barclays in its "Little Book of Wonders," underscoring the lengths to which the bank is prepared to go to win the custom of the super-wealthy at a time when its traditional businesses are struggling with weak economies and tougher regulators."There is more to wealth than managing one's assets," said David Hughes, Head of Affinity Partnerships at Barclays, which oversees the Little Book of Wonders. "This is a complement to the financial advice we give clients and a recognition of the world in which our clients exist."Attracting the business of wealthy clients, worth an estimated $42 trillion globally, is critical for banks seeking not only to maintain their profitability, but also to diversify their sources of funding and reduce their reliance on capital markets."Private banking, given the relatively lower capital requirements and the fee based nature of revenue is an area of growth and competition which is expected to increase," Jill Zucker, a partner at McKinsey's, told Reuters.Private clients pay on average 1 percent of assets under management in fees to their wealth managers each year, estimates specialist wealth management consultant Scorpio Partnership.Banks are keen to attract such fees as profits remain squeezed in other parts of their business, from high street lending to commercial and investment banking.For example, Barclays reported a 38 percent rise in adjusted pre-tax profit in its wealth and investment management division in the first 6 months of the year compared with a 15 percent rise in its retail and business banking and 11 percent rise in corporate and investment banking.Coutts, the 300-year old British bank which counts Britain's Queen Elizabeth among its clientele, is beefing up its non-financial services to hold onto elite customers.Ian Ewart, head of product, services & marketing, said the bank still loved to whisk away clients on horseracing jaunts and to a welter of events hosted in the social calendar of the glitterati - including the Cowes Quarter Ton sailing regatta and annual British Academy of Film and Television Arts awards bash.But as entrepreneur clients start to outnumber heirs and heiresses, who tend to have a different outlook, Coutts is spending more time, effort and money satisfying a thirst for intellectual "entertainment" and high-level networking in a business world where success increasingly depends as much on 'who you know' as 'what you know'.A new thought leadership series called Futurescope has been designed to help the bank's entrepreneurial customers analyse future macroeconomic issues and identify moneymaking opportunities in this decade and the next."Our clients can buy whatever they want for the most part. What they cannot buy - which is also what they really need - is to connect with people like them, to hear new ideas. The experience is far (more) important than a luxury freebie," he said.Tale of two millionaires But in expanding the breadth and depth of services offered, private banks will have to make sure the extra cost is worth their while as profit margins in wealth management buckle under the increasing cost of regulation, compliance and technology.The global wealth management industry is now paying $8 to generate every $10 of income, calculates Scorpio Partnership in its closely watched annual health check of the global private banking sector in July."The question of how you can continue to cater for clients that might be less profitable for you in the future is a difficult one," Coutts' Ewart said.In the case of its Little Book of Wonders, Barclays declined to disclose the cost of building and maintaining the online portal, saying it was part of its overall investment in its wealth management platform.In an attempt to offset the costs of providing the service, the bank has offered the luxury brands the opportunity to advertise, for a fee, on its Little Book of Wonders portal.Banks will pitch services such as Futurescope or the Little Book of Wonders to a select set of clients depending on their wealth and how they've made their money rather than offering blanket invites, to preserve the exclusivity of the offers.But as clients question the fees they pay, especially in an environment where investment assets are delivering lacklustre returns due to ongoing economic uncertainty, additional services not seen as essential to business needs might raise eyebrows."If there are fancy chandeliers and teacups, some clients might assume they are paying too much in fees," said Zucker.Such services are often tailored to the ultra high net worth individuals, with assets greater than $25 million, who are not only costing the banks more but are also not necessarily the most profitable.So-called 'Core Millionaires', with assets of between $1 million and $10 million, generate investment revenue margins on average two to three times higher than their wealthier counterparts, making greater use of more profitable banking and lending products, a survey by McKinsey estimates.These Core Millionaires are also projected to generate 60 percent of asset growth amongst all households with more than $1 million in assets by 2015."They're a bit of a lost set of clients," said Zucker. "Banks need to tailor their offering so there is growth in different market segments."So, where does this leave the Little Book of Wonders?A junior member of one of Britain's most successful entrepreneurial families, whose mother recently switched private banking allegiance, was sceptical that affluent individuals would be tempted to change banks based on free offers."Would clients be impressed by that? No way," said the family member, who declined to be named. "They just want to make sure that their banking is done, that their transfers happen, that they can speak to someone when they need to," he said.

NEWS,01.08.2012

Record unemployment in eurozone

Joblessness in the eurozone hit on Tuesday its highest level since the single currency was born, a further sign of economic desperation as hopes erode that the bloc will be saved by its central bank this week.An additional 123 000 people were out of work in the eurozone in June, figures from Eurostat showed, bringing the unemployment rate to a record high 11.2% across the 17 countries that use the single currency.The rate hides wide divergences, with unemployment as low as 4.5% in Austria and as high as 24.8% in Spain, where a shrinking economy makes it ever more difficult to pay off debt.New data showed capital fleeing Spanish banks at a growing rate. Spain has come dangerously close to losing affordable access to financial markets, raising the prospect of a bailout that would swamp the euro zone's hastily erected defences. If Spain goes, Italy, with an economy twice the size, could follow.Eurozone leaders have spent the past week issuing statements promising to take whatever steps are necessary to rescue the currency, but none have raised expectations as much as Mario Draghi, head of the European Central Bank.His announcement last Thursday that the ECB would do whatever within its mandate to rescue the currency raised expectations that he will deliver forceful new steps this week to lower Spanish and Italian borrowing costs.But market sentiment has since soured, showing that investors doubt whether he can deliver.Germany, which says it is illegal for the ECB to bankroll government borrowing, squelched talk of any easing of its opposition to letting the eurozone's rescue fund borrow from the ECB so it could buy almost unlimited quantities of government bonds.Italian Prime Minister Mario Monti, who has campaigned for concerted action by the eurozone's rescue funds and the ECB to bring down ruinous borrowing costs for Spain and Italy, struck an optimistic tone."It is a tunnel but ... some light is appearing at the end of the tunnel. We and the rest of Europe are approaching the end of the tunnel," he told RAI public radio before talks in Paris with French President Francois Hollande.Monti said decisions taken at an EU summit last month were starting to bear fruit. "We are now seeing the results both in the willingness of European institutions as well as from the governments of individual countries, including Germany," he said.After lunching with Hollande, he said there was no time to lose and they had discussed deadlines, adding: "We cannot afford even a minute of distraction." The ECB's Draghi promise last week to act to preserve the euro raised investors' expectations of a resumption of a long-suspended government bond-buying programme. Investors are waiting to see what the ECB announces at a meeting of its policy-setting Governing Council on Thursday."Today will probably be a quiet last day of the month. Everybody is waiting for Thursday to see if Draghi can deliver," said Lex van Dam, hedge fund manager at Hampstead Capital, which manages $500m of assets."He'd better pull a big rabbit out of his hat."However, central bank sources cautioned against expecting dramatic action, saying bold moves could be at least five weeks away because other elements must first fall into place.They said Spain would first have to formally request a eurozone assistance programme, which it has so far resisted doing, and eurozone governments would have to agree to use their rescue funds to buy bonds in tandem with the ECB.Safe-haven German government bonds rallied on Tuesday and European shares fell as scepticism over the prospect of bold ECB action set in and Berlin repeated its opposition to a banking licence for the rescue fund. Monti, who will also visit Finland and Spain, said he was confident Spanish Prime Minister Mariano Rajoy would be able to tackle the country's problems.The scale of Rajoy's challenge was highlighted on Tuesday when figures showed that capital flight from Spain accelerated in May, the month when Madrid was forced to nationalise the fourth biggest lender, Bankia, and before eurozone countries agreed to help bail out Spanish banks. Capital outflows in the first five months of this year totalled €163.2bn - equivalent to about 16% of economic output. The same period last year saw a net inflow of €14.6bn.Spanish retail sales fell by 5.2% year-on-year on a calendar-adjusted basis in June, separate data showed, marking a 24th straight month of declines. Near-bankrupt Greece meanwhile reported that it is fast running out of cash as it awaits the next instalment of aid from international lenders. Deputy Finance Minister Christos Staikouras said that in the absence of €3.2bn needed to repay an ECB bond on August 20, Athens would lack the money to pay everyday public expenses ranging from police and other public service wages to pensions and welfare benefits."Cash reserves are almost zero," he told state NET television. "It is risky to say until when (they will last) ... but we are certainly on the brink."Speaking to reporters in London on Monday evening, Hollande voiced support for Monti's campaign to persuade euro zone leaders and institutions to act to reduce Italian and Spanish borrowing costs."European solidarity is of course about laying down discipline, but it's also about allowing countries that made hard choices to be rewarded with lower interest rates," Hollande said during a visit to the Olympic Games. "If countries undertake austerity measures and still have very high interest rates, how can they win the trust of their people?" he said.Monti spoke by telephone over the weekend with German Chancellor Angela Merkel, who is holidaying in northern Italy.Berlin agreed in principle at an EU summit in June that the eurozone rescue funds could buy bonds of countries that risk losing market access, but was angered when Monti said that such support should not entail any stricter economic conditions or international monitoring.There has also been renewed pressure from France, Italy and some central bankers to give the eurozone's future permanent rescue fund a banking licence so it can borrow money from the central bank to fight bond market contagion.The Sueddeutsche Zeitung said supporters of the idea were gaining ground in the eurozone, but the German Finance Ministry reiterated its opposition on Tuesday, sending markets down.A legal opinion commissioned by the ECB in March 2011 concluded that such a move would breach an EU treaty ban on monetary financing of governments. 

Eurozone factory downturn takes root

The eurozone’s manufacturing sector contracted for the 11th straight month in July as output and new orders plummeted, a business survey found on Wednesday. The data, which showed the downturn is deepening its roots in the core, will provide grim reading for policymakers who are battling to contain a debt crisis that has raged across the continent. Markit’s Eurozone Purchasing Managers’ Index (PMI) for the manufacturing sector fell to 44.0, the lowest reading since June 2009 and below a flash reading of 44.1 and June’s 45.1. The output index sank to 43.4, the lowest since May 2009, under June’s 44.7 and an earlier flash 43.6. Markit said it was in line with the official measure of production falling at a quarterly rate of over 1%. “The eurozone manufacturing sector’s woes intensified again in July. Manufacturing therefore looks to be on course to act as a major drag on economic growth in the third quarter, as the eurozone faces a deepening slide back into recession,” said Chris Williamson at Markit. After stagnating in the first quarter, narrowly avoiding a technical recession, a raft of gloomy data pushed economists in a Reuters poll last month to predict a contraction in the second and third quarters. In a bid to spur growth the European Central Bank cut interest rates to a record low of 0.75% in June and is expected to cut them again to 0.5% before the year is out. At its policy meeting on Thursday, it is expected to restart its dormant government bond buying programme with the aim of lowering Spanish and Italian government bond yields, which have reached levels unsustainable in the long-term. Bank President Mario Draghi vowed last week that “the ECB is ready to do whatever it takes to preserve the euro”.Earlier data from Germany, Europe’s largest economy, showed its manufacturing sector contracted at its fastest pace in three years last month and it was a similar story in neighbouring France. Spain, which slid deeper into recession in the second quarter, saw the 15th straight month of contraction, while Italy chalked up a year in contractionary territory. The PMI for Greece, where the debt crisis began, has been below 50 since September 2009. Ireland was the only country to show signs of emerging from the downturn, Markit said, where its PMI was above 50 for the fifth month. Factories across the eurozone cut prices at the fastest pace since early 2010, but the new orders index still fell to 42.8 from the previous month’s 43.5 and has only been lower once in over three years. New export orders were at an eight-month low. “The current weakness of global economic growth suggests that all producers face a challenging environment in export markets as well as at home,” Williamson said. Some of the output was generated by firms running down backlogs for the 14th consecutive month and workforces were cut for the sixth month to reduce costs. Unemployment across the bloc rose to a euro-era high of 11.2% in June, official data showed on Tuesday. 

Average UK home slumps to R2.12

House prices in recession-affected Britain slid in July on an annual basis by the biggest amount in nearly three years, a survey by major home-loans provider Nationwide showed on Wednesday.The average value of a home in Britain stood at £164 389 ($257 743, R2.12m) in July - down 2.6% compared with the same month in 2011, the lender said in a statement.They meanwhile dropped by 0.7% in July compared with one month earlier, it added."UK house prices declined for the fourth time in five months in July, with prices falling by 0.7%. This pushed the annual pace of price growth down to minus 2.6%, from minus 1.5% in June - the weakest outturn since August 2009," said Nationwide chief economist Robert Gardner."The weaker price trend observed in recent quarters is unsurprising, given the disappointing performance of the wider economy. Data released last week revealed that the UK recession intensified in the three months to July."

NEWS,09.07.2012

Germans prefer old school media

 

Americans love to publicly debate it, British people hardly ever pay for it online and Germans prefer to get theirs through more traditional means, according to a survey about media consumption released on Monday.The survey looked at the consumption habits in Britain, the United States, Germany, Denmark and France, and found that TV and online platforms are now the overwhelming choice for news.Although computers remain the most popular medium on which to view news, with at least 74% doing so in the last week across the board, at least 20% had used a mobile for the same purpose in the same period. Around 8.5% used a tablet computer, while e-readers and other devices remained niche products.The report pointed to a more flexible and personalised consumption model which no longer relied on home or office internet access.The increasing range of mobile devices was adding to the news experience, it said, rather than replacing other forms of access.London-based journalist Nic Newman, who wrote the study, said: "Of those surveyed, nearly eight out of 10 people accessed online news every week, but the transition from print to digital is much slower in other European countries." Germans showed the greatest allegiance to traditional forms of media for news, with only six out of 10 using online sources over the last week, compared to an average of eight of 10 everywhere else.Nearly seven out of 10 pick up a newspaper or tune in to the radio.In Britain, only four percent had ever paid for digital news, compared to 12% in Denmark, and between six and eight percent elsewhere. However tablet users, who accounted for 13% of the sample, were just as likely to shell out for news applications such as the Guardian's or the Daily Telegraph's as they were to use free ones.While traditional media brands dominated people's usage across Europe, over half of all Americans polled also cited newer sources such as Huffington Post and Gawker. Nearly seven out of 10 people in the US used polls, comment boxes and sharing functions to engage with the news, compared to roughly four out of 10 in most other countries.The survey was conducted by YouGov on behalf of the Reuters Institute for the Study of Journalism at the University of Oxford. It involved a representative sample of more than 6 000 people during April.

 

Eurozone to force Spain banks to hike capital

Eurozone finance ministers have said they will oblige Spain's battered banks to further boost the share of rock-solid core capital on their books at a meeting on Monday, the daily El Pais said."All Spanish entities will have to raise their high quality 'core capital' to 9%," the daily said, citing European sources with knowledge of the negotiations.So far, only the biggest Spanish banks have had to keep such a high ratio of core capital as a proportion of total assets.The meeting in Brussels is to discuss details of a eurozone rescue loan of up to €100bn euros ($125bn) to salvage Spain's banks, laden with loans that turned bad after a 2008 property market crash.It comes as investors show deep misgivings about Spain's finances despite the banking rescue.A European Union summit from June 28-29 had been hailed as a brekathrough for promising a eurozone bank union to keep the lenders in line and making it easier for the bloc's new bailout fund to help states in trouble.But investors' concerns have returned, in part because of doubts over the details and timetable for implementing the banking rescue and the sweeping EU summit agreements.Spanish 10 year government bond yields surged to 7.026% in morning trade from 6.912% late on Friday, a worrying sign for Madrid for future debt issues.Prime Minister Mariano Rajoy has warned that his country cannot afford to finance its operations at such high interest rates over the long term, raising the spectre of an all-out state bailout.Link Securities said it seemed that the EU summit agreements would be respected.That would allow EU rescue mechanisms to pump rescue loan money directly into Spain's banks without adding to the nation's fast-rising sovereign debt, it said.It also would ensure that the EU rescue mechanism does not take priority over other lenders for repayment in the case of a Spanish default, a prospect that had unnerved potential investors, Link Securities said."Now they have to decide when and how this plan will be implemented, and what will be asked in exchange," it said."One of the non-negotiable conditions imposed by the 'men in black' is the creation of a 'bad bank'," which would pool all the toxic property-related loans, said business daily Expansion.Analysts at Spanish brokerage Renta 4 said they did not expect any protocol to be signed at the Brussels talks on Monday. But ministers may agree on a draft deal to be signed at their next meeting July 20, they said.

 

Spanish Borrowing Costs Rise To Dangerously High Levels

 

Spain's borrowing costs rose to dangerously high levels Monday as finance ministers of the 17 countries that use the euro began to gather in Brussels to discuss terms of a rescue package for the country's stricken banks.The interest rate, or yield, on the country's 10-year bonds hit 7 percent Monday morning, a level that market-watchers consider is unaffordable for a country to raise money on the bond markets in the long term and the point at which Greece, Ireland and Portugal all sought an international bailout. Stocks on Madrid's benchmark index fell 1.7 percent. The yield later fell back down to 6.99 percent.The yield indicates the interest rate a government would have to pay to raise money from financial markets when it holds bond auctions. While Spain can afford the high rates for a few weeks at least, it would find them too expensive in the longer term.Spanish officials had originally indicated that it would decide on Monday how much the country's troubled banks would get from a €100 billion ($124 billion) lifeline from other members of the 17-country eurozone. Spain's bank industry has been struggling since 2008 under the weight of toxic loans and assets following a collapse in the country's property market.But an official with Spain' economy ministry said last week that the meeting of eurozone finance ministers was not expected to generate a figure for how much Spain would tap. Ministers planned to discuss terms of the loan and may or may not finalize some of them at the evening session, said the official, who spoke on condition of anonymity in keeping with policy.Outside auditors are expected to complete rigorous assessments of Spanish banks by July 31. Separate stress tests will also be conducted on individual lenders banks to determine how much each bank needs to strengthen its balance sheets against further economic shocks if they can't raise capital on their own, the official said. These results are due to be published in mid-September.The Spanish official's comments reflect those made by a European official in Brussels last week, who said that no numbers for the overall loan amount would be coming out until bank-by-bank stress tests had been completed. The official added that one of the aims of Monday's meeting would be to get a "political understanding" of the memorandum of understanding for Spain's loan so ministers could start paving the way in their countries to get the bailout approved. Spain's loan needs the green light from all 17 countries using the euro.Investors fear a full-blown bailout of Spanish public finances would be too large for the eurozone to handle. The country's economy is the fourth largest among the 17 nations that use the common euro currency  behind Germany, France and Italy - and it is also larger than those of Greece, Ireland and Portugal combined.The interest rate on Spanish 10-year bonds hit a eurozone high of 7.18 percent in intraday trading on June 18 before closing at 7.12 percent that day, according to financial data provider FactSet.

 

Russia's highest court backs WTO entry

 

Russia's highest court ruled on Monday that a hard-won deal to join the World Trade Organisation (WTO), that will oblige Moscow to cut import tariffs and open up key sectors in its economy to foreign investment, was in line with the constitution.The ruling, issued by the Constitutional Court in a unanimous decision from its headquarters in St Petersburg, clears the way for a final parliamentary vote to ratify entry into the 155-member global trade rules club.The vote will take place on Tuesday with a majority of lawmakers expected to rubber-stamp accession. The original deal was clinched last December after 18 years of often-difficult talks. Russia, whose $1.9 trillion economy is the largest outside the WTO, would become a full member 30 days after ratification.The court's ruling quashed a case brought by lawmakers from the opposition Communist and Just Russia parties who had unsuccessfully argued that the ratification procedure and parts of the accession deal were unconstitutional.Recently elected for a third presidential term, President Vladimir Putin had long appeared ambivalent over WTO entry but warmed to the process after Russia's economy was hit hard by the global recession of 2008-2009.According to a World Bank study, the growth uplift that Russia could expect from joining the WTO could be 3.3% over the medium term and as much as 11% in the long run.Under the deal, Russia would gradually cut averageimport tariffs to 7.8% from 10% and open up investment in sectors such as telecommunications, while shielding its banking sector from overall foreign control.Russia managed to protect hefty subsidies to promote its domestic auto industry and negotiated a long transitional period for reducing state aid to farmers.