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.