Wednesday, July 17, 2013

Today's Headlines

Posted by Gary .....at 3:28 PM
Bloomberg:
  • China’s Richest Man Sees Economic Growth Slowing in Second Half. China’s richest man Zong Qinghou said the nation’s growth will slide further in the second half of the year and proposed cutting taxes and breaking up monopolies to drive an economic recovery. “People will only invest if there is prospect of making a profit,” Zong said in an interview in Beijing yesterday. “Medium and small companies are not willing to take loans. If they can’t make a profit, why bother taking a loan?” “Economic growth will slow down again in the second half because there have been no major economic policies rolling out,” he said. Zong’s prescription for driving a Chinese recovery is in line with Premier Li Keqiang’s call for a reduced role for the state in the economy, with the billionaire urging the breaking up of monopolies and easier administrative approvals from the government. Zong was pessimistic about the world outlook, saying “the global economy is declining.” China will recover faster than other countries, he predicted.
  • China Won’t Have Large Stimulus This Year, Finance Minister Says. Chinese Finance Minister Lou Jiwei said the nation won’t use “large-scale fiscal stimulus” measures this year, adding to signals that the government will tolerate a slowdown in the economy. China will promote growth and boost employment while fine-tuning policies and keeping the fiscal deficit unchanged, and will also avoid big adjustments to short-term macroeconomic policies, Lou said in July 11 comments in meetings with U.S. officials in Washington.
  • Bernanke Says Fed Bond Purchases Not on ‘Preset Course’. Federal Reserve Chairman Ben S. Bernanke said the central bank’s asset purchases “are by no means on a preset course” as he sought to tamp down an increase in borrowing costs that threatens to slow the economic expansion. “We’re going to be responding to the data,” Bernanke said today to the House Financial Services Committee. “If the data are stronger than we expect, we’ll move more quickly” to reduce purchases. If data “don’t meet the kinds of expectations we have about where the economy’s going, then we would delay that process or potentially increase purchases for a time.”
  • Putin Warns U.S. Russia Won’t Back Down on Snowden Asylum. President Vladimir Putin warned the U.S. that Russia won’t yield to pressure to hand over Edward Snowden, while insisting he won’t allow the fugitive American to poison ties between the former Cold War foes. “We won’t behave like many countries are behaving,” Putin told reporters in the Siberian city of Chita, a day after the former U.S. security contractor bid for temporary asylum in Russia. “We are an independent country and we have an independent foreign policy and we will carry it out. I hope our partners understand this and respond calmly.” 
  • Currency to Oil Rates Targeted for Tougher Rules After Libor. Benchmarks underpinning markets from oil to currencies face tougher oversight under plans by global regulators to prevent any repeat of Libor-style fraud. Rates should be based as much as possible on real transaction data, rather than estimates, and banks should tackle conflicts of interest, the International Organization of Securities Commissions, a Madrid-based group that harmonizes global market rules, said in guidelines published today. 
  • Fed’s Raskin Urges Higher Bank Capital Standards to Avert Crises. Federal Reserve Governor Sarah Bloom Raskin said regulators should prevent asset-price bubbles by boosting the amount and quality of capital required of banks. Officials also should continue stress testing of lenders, restrain banks from “excessively” extending loans, and reduce “overreliance on unstable short-term wholesale funding,” Raskin said in a speech prepared for delivery today in Washington. She did not comment on the outlook for the economy or monetary policy in her prepared remarks.
  • Egypt Bond Yields, Default Risk Rise as Islamists Shun Cabinet. Egypt’s benchmark bonds fell, pushing the yield to a week high, after Islamists boycotted the transitional government and called for renewed protests. The country’s default risk advanced for a third day. The yield on the government’s 5.75 percent notes due in April 2020 increased seven basis points, or 0.07 percentage point, to 8.54 percent, the highest on a closing basis since July 10, at 2:25 p.m. in Cairo, according to prices compiled by Bloomberg. Five-year credit default swaps climbed 50 basis points to 725, according to CMA data.
Wall Street Journal: 
  • Violent Protests Follow India School-Lunch Poisonings. Free Food Was Provided Under Government's Midday-Meal Program. The food that killed at least 22 children in eastern India was apparently contaminated with a chemical compound used in pesticides, a state official said Wednesday, as hundreds of villagers protested the worst by far in a spate of health scares linked to a public school-lunch program. The children, aged between 8 and 12, became sick, with some vomiting, fainting and foaming at the mouth, after lunch Tuesday at an elementary school in Gandaman, a village about 65 miles from Patna, the capital of Bihar, one of India's poorest states.
Fox News:
  • UN nominee Power refuses to answer Rubio on US ‘crimes’. U.N. ambassador nominee Samantha Power faced a largely friendly audience at her confirmation hearing on Wednesday, but had a rocky and at-times awkward exchange with Sen. Marco Rubio as he pressed her on past comments suggesting the U.S. should apologize for its "sins." The Florida Republican repeatedly asked Power for examples of crimes "committed or sponsored" by the United States. Her response was that "the United States is the greatest country on earth" and she "would never apologize for America."  Rubio, pausing, said: "So your answer to whether we committed or sponsored crimes is that the United States is the greatest country on earth." Power ultimately did not say whether she thought the U.S. has committed crimes. Instead, she cited "mistakes" like the abuse at the Abu Ghraib prison in Iraq. She also cited her past criticism of the Clinton administration's inaction with regard to the Rwandan genocide. 
MarketWatch: 
CNBC:
  • For Richard Perry, Japanese bonds are the new subprime. Corporate bond buyers in Japan today are a lot like investors in subprime mortgage-backed securities during the housing bubble, hedge fund manager Richard Perry said at the Delivering Alpha conference. Perry Capital is shorting Japanese corporate bonds, looking to profit on a decline in the price of the bonds. "People don't do the credit work," Perry said. "People rely on credit agencies." Perry said that one indicator that the market was not paying enough attention to risk in the Japanese bonds was the fact that bond prices had held steady while the equities had declined sharply.
  • Watch Bharara warn Wall Street: ‘People should be afraid’. (video) In an interview at Delivering Alpha, a conference presented by CNBC and Institutional Investor, US Attorney Preet Bharara tells Jim Cramer that anyone on Wall Street who has broken the law shouldn't think they will escape prosecution because a lot of time has passed or they are using a secretive technology to communicate.
  • Thanks to QE, bubble of 2000 looks like 'day at beach’. Even as global markets continue to be held hostage over the prospect of the unwinding of the U.S. Federal Reserve's massive monetary stimulus, Hans Olsen, chief investment officer of Americas at Barclays, argues that the tapering has to happen, and the sooner, the better.
Zero Hedge:
Business Insider:
New York Times:
  • I.M.F. Tells China of Urgent Need for Economic Change. China’s growth has slowed significantly in recent months. But even its current pace of expansion may be unsustainable unless the country starts making significant and systemic changes to its economy, and soon, the International Monetary Fund warned Wednesday. “Since the global crisis, a mix of investment, credit and fiscal stimulus has underpinned activity,” the I.M.F. said in a major annual assessment of the Chinese economy. “This pattern of growth is not sustainable and is raising vulnerabilities. While China still has significant buffers to weather shocks, the margins of safety are diminishing.” The report emphasized downside risks to the Chinese economy, touching on familiar themes though imparting more of a sense of urgency than it has in the past.
Reuters:
  • METALS-Copper hits week low after Bernanke, rise in mine output. Copper slipped to its lowest price in a week on Wednesday after the dollar strengthened on fresh comments about scaling back the U.S. stimulus programme and following news of an sharp increase in output at the world's biggest copper mine. Three-month copper on the London Metal Exchange closed down 1.5 percent at $6,890 a tonne and touched a session low of $6,867.25, the weakest since July 10.
FINalternatives:
Telegraph:
Les Echos:
  • France Allows Counties to Raise Property-Transaction Tax. The French government yesterday raised the so-called DMTO tax ceiling to 4.5% in 2014 and 2015 from 3.8%.
Valor Economico:
Restructuring: Flowers slams Europe over inaction
While we want you to share, we ask you use the functions on-site rather than copy/paste. See T's & C's for details. http://www.euromoney.com/Article/3211790/CurrentIssue/88924/Restructuring-Flowers-slams-Europe-over-inaction.html?copyrightInfo=true
  • Brazil May Face Higher Inflation, Slower Growth in 4Q13. Govt economic team and President Dilma Rousseff's aides are preparing for slower economic growth and another inflation hike in the 4Q, citing a govt official.
Echoing fears that European policymakers remain in a state of cognitive dissonance – recognizing the need for root-and-branch overhaul of peripheral banks, but backtracking on joint liability plans – Christopher Flowers, the legendary FIG investor who now runs the £2.3 billion ($3.5 billion) private equity group JC Flowers, sounded the alarm over the negative sovereign-bank feedback loop. In a shot across the bows of market bulls, who cite the return of capital flows to weaker eurozone states, Flowers issued a stark warning: "There is a scenario where we have a Lehman-type event: we wake up some Thursday and a big country is in trouble. "And the ECB will have to decide to support banks x, y, z. And then the ECB will, in fact, decide to own bank x, y, z.
While we want you to share, we ask you use the functions on-site rather than copy/paste. See T's & C's for details. http://www.euromoney.com/Article/3211790/CurrentIssue/88924/Restructuring-Flowers-slams-Europe-over-inaction.html?copyrightInfo=true

Xinhua:

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