From Bloomberg:
European stocks rallied for their longest stretch of gains in seven weeks as the Federal Reserve and five other central banks lowered the cost of dollar funding and China cut its reserve ratio for banks.
The Fed, Bank of Canada, Bank of England, Bank of Japan, European Central Bank and Swiss National Bank agreed to reduce the interest rate on dollar liquidity swap lines by 50 basis points and extend their authorization through Feb. 1, 2013.
Finance ministers of the 27-nation European Union are meeting in Brussels today to seek agreement on how to temporarily guarantee banks’ bond issuance in order to improve funding conditions for lending. EU leaders agreed last month to provide the guarantees to restore investor confidence in banks.
http://www.bloomberg.com/news/2011-11-30/european-stock-index-futures-decline-on-s-p-downgrades-of-global-banks.html
Wednesday, November 30, 2011
China Starts Monetary Easing: Cut Reserve Ratio by 50 Basis Points
From Reuters:
China's central bank cut the reserve requirement ratio for its commercial lenders on Wednesday for the first time in nearly three years to ease credit strains and shore up an economy running at its weakest pace since 2009.
Purchasing managers' data on Thursday could confirm the pressure on China's manufacturers from the global slowdown after a flash PMI from HSBC last week suggested the sector was shrinking.
As recently as the middle of 2011, China was still tightening monetary policy to combat stubbornly high inflation, which rose in July to a three-year high of 6.5 percent.
However, as the economy felt the chill of a slowdown in global activity and inflation eased, Beijing adopted a policy of "fine tuning," which targeted parts of the economy, such as loosening credit for cash-starved small firms.
The cut in the reserve ratio was the first since December 2008 and marks a monetary policy shift to an easing bias.
http://www.reuters.com/article/2011/11/30/us-china-economy-rrr-idUSTRE7AT0TK20111130?feedType=RSS&feedName=businessNews&utm_source=dlvr.it&utm_medium=twitter&dlvrit=56943
China's central bank cut the reserve requirement ratio for its commercial lenders on Wednesday for the first time in nearly three years to ease credit strains and shore up an economy running at its weakest pace since 2009.
Purchasing managers' data on Thursday could confirm the pressure on China's manufacturers from the global slowdown after a flash PMI from HSBC last week suggested the sector was shrinking.
As recently as the middle of 2011, China was still tightening monetary policy to combat stubbornly high inflation, which rose in July to a three-year high of 6.5 percent.
However, as the economy felt the chill of a slowdown in global activity and inflation eased, Beijing adopted a policy of "fine tuning," which targeted parts of the economy, such as loosening credit for cash-starved small firms.
The cut in the reserve ratio was the first since December 2008 and marks a monetary policy shift to an easing bias.
http://www.reuters.com/article/2011/11/30/us-china-economy-rrr-idUSTRE7AT0TK20111130?feedType=RSS&feedName=businessNews&utm_source=dlvr.it&utm_medium=twitter&dlvrit=56943
Korean Big Listed Firms’ Q3 Net Drops Nearly 40 Percent
From Yonhap:
Consolidated earnings for South Korean listed companies fell nearly 40 percent on-year in the third quarter of the year amid unstable economic conditions and slowing exports, a report showed Wednesday.
The combined net profit of 147 big firms with assets over 2 trillion won (US$1.8 billion), such as Samsung Electronics Co. and Hyundai Motor Co., totaled 14.2 trillion won in the July-September period, compared with 22.6 trillion won a year earlier, according to the report by the Korea Exchange and the Korea Listed Companies Association.
The report said the weaker bottom line came as companies' profitability slipped amid global uncertainties stemming from the eurozone debt crisis and a slowing U.S. economic growth. Declining demand for South Korean information technology (IT) products as well as a rise in commodity and oil prices also ate into their earnings, it added.
Tech heavyweight Samsung Electronics topped the list of profitable firms, followed by industry leaders SK Innovation Co., Hyundai Motor, LG Chem Co. and Hyundai Heavy Industries Co.
The average debt ratio of the tallied big firms came to 133.84 percent as of end-September, growing from 131.48 percent from the end of last year, according to the report.
http://english.yonhapnews.co.kr/business/2011/11/30/24/0501000000AEN20111130004851320F.HTML
Consolidated earnings for South Korean listed companies fell nearly 40 percent on-year in the third quarter of the year amid unstable economic conditions and slowing exports, a report showed Wednesday.
The combined net profit of 147 big firms with assets over 2 trillion won (US$1.8 billion), such as Samsung Electronics Co. and Hyundai Motor Co., totaled 14.2 trillion won in the July-September period, compared with 22.6 trillion won a year earlier, according to the report by the Korea Exchange and the Korea Listed Companies Association.
The report said the weaker bottom line came as companies' profitability slipped amid global uncertainties stemming from the eurozone debt crisis and a slowing U.S. economic growth. Declining demand for South Korean information technology (IT) products as well as a rise in commodity and oil prices also ate into their earnings, it added.
Tech heavyweight Samsung Electronics topped the list of profitable firms, followed by industry leaders SK Innovation Co., Hyundai Motor, LG Chem Co. and Hyundai Heavy Industries Co.
The average debt ratio of the tallied big firms came to 133.84 percent as of end-September, growing from 131.48 percent from the end of last year, according to the report.
http://english.yonhapnews.co.kr/business/2011/11/30/24/0501000000AEN20111130004851320F.HTML
BOJ Chief: Japan Facing Severe Situation
Regardless of what the BOJ governor warns, the bottom line is Japan can no longer fund itself.
From Japan Today:
Bank of Japan governor Masaaki Shirakawa warned Monday that the country would continue to face a “severe situation” as Europe’s debt crisis and a strong yen weigh on its post-quake economic recovery.
“Japan’s economy is likely to continue to face a severe situation for the time being, especially with respect to exports,” he said in a speech to business leaders in the central city of Nagoya.
Japan fell into a trade deficit in October, reversing a year-earlier surplus, with record flooding in Thailand pounding the operations of Japanese automakers and electronics firms that have plants in the country.
Toyota and others withdrew earnings forecasts as they assess the scale of disruption, which came as Japanese firms were near to restoring output to normal levels at home after the March earthquake and tsunami shattered component supply chains.
Japan’s economy has “recovered faster than expected” following the natural disasters and a subsequent nuclear crisis, Shirakawa said, but added Europe’s fiscal woes and a strong currency would continue to dent Japanese exports.
Earlier this month, Japan’s central bank left its key interest rate unchanged at between zero and 0.1%, while in October it announced further easing measures to help safeguard a fragile economic recovery.
The bank said it would boost its asset buying program by 5 trillion yen to 55 trillion yen, with the extra money earmarked for the purchase of Japanese government bonds.
By pouring liquidity into the market, the BOJ hopes to improve flows to help encourage investment and boost business.
http://www.japantoday.com/category/business/view/japan-economy-faces-severe-situation-warns-boj-chief
From Japan Today:
Bank of Japan governor Masaaki Shirakawa warned Monday that the country would continue to face a “severe situation” as Europe’s debt crisis and a strong yen weigh on its post-quake economic recovery.
“Japan’s economy is likely to continue to face a severe situation for the time being, especially with respect to exports,” he said in a speech to business leaders in the central city of Nagoya.
Japan fell into a trade deficit in October, reversing a year-earlier surplus, with record flooding in Thailand pounding the operations of Japanese automakers and electronics firms that have plants in the country.
Toyota and others withdrew earnings forecasts as they assess the scale of disruption, which came as Japanese firms were near to restoring output to normal levels at home after the March earthquake and tsunami shattered component supply chains.
Japan’s economy has “recovered faster than expected” following the natural disasters and a subsequent nuclear crisis, Shirakawa said, but added Europe’s fiscal woes and a strong currency would continue to dent Japanese exports.
Earlier this month, Japan’s central bank left its key interest rate unchanged at between zero and 0.1%, while in October it announced further easing measures to help safeguard a fragile economic recovery.
The bank said it would boost its asset buying program by 5 trillion yen to 55 trillion yen, with the extra money earmarked for the purchase of Japanese government bonds.
By pouring liquidity into the market, the BOJ hopes to improve flows to help encourage investment and boost business.
http://www.japantoday.com/category/business/view/japan-economy-faces-severe-situation-warns-boj-chief
Tuesday, November 29, 2011
Is It Finally Japan’s Turn?
Data points indicate that the Japanese economy is unraveling while this process takes time. And yet, Japan has a cohesive culture and identity, which will be a plus over the coming years.
From Zero Hedge:
Japan is starting to heat up a little in terms of risk and we hope that Noda is watching carefully. While the strengthening trend in USDJPY and JGBs has been a long one, the last few days are starting to worry some traders and most notably, Bloomberg points out that not only are FX options the most USD bullish-biased (JPY-bearish) in seven years, swaptions (bearish rate bets) have screamed to their highest in over seven months at 54bps. The growing concern that the European crisis will spread to Japan is extremely evident in these option bets, supporting the sentiment of S&P's recent 'downgrade' chatter, Bass's grave concerns, and the IMF's decidely negative perspective on fiscal sustainability as Japan's 'savior' trade-surplus is expected to drop significantly. Perhaps the sad inevitability of the real endgame of Richard Koo's balance sheet-recessionary view of Keynesianism is closer than many believe.
http://www.zerohedge.com/news/it-finally-japans-turn
From Zero Hedge:
Japan is starting to heat up a little in terms of risk and we hope that Noda is watching carefully. While the strengthening trend in USDJPY and JGBs has been a long one, the last few days are starting to worry some traders and most notably, Bloomberg points out that not only are FX options the most USD bullish-biased (JPY-bearish) in seven years, swaptions (bearish rate bets) have screamed to their highest in over seven months at 54bps. The growing concern that the European crisis will spread to Japan is extremely evident in these option bets, supporting the sentiment of S&P's recent 'downgrade' chatter, Bass's grave concerns, and the IMF's decidely negative perspective on fiscal sustainability as Japan's 'savior' trade-surplus is expected to drop significantly. Perhaps the sad inevitability of the real endgame of Richard Koo's balance sheet-recessionary view of Keynesianism is closer than many believe.
http://www.zerohedge.com/news/it-finally-japans-turn
S&P Downgrades 37 Global Banks
From the Wall Street Journal:
Standard & Poor's Ratings Services on Tuesday downgraded dozens of large financial institutions, including Bank of America Corp., Barclays PLC and Citigroup Inc., citing a new methodology that reflects weaker confidence in governments' willingness and ability to bail out banks in trouble.
The widely expected move didn't signal a change of any of the banks' individual credit metrics as much as a revision to the assumptions that had previously bolstered them. The new criteria affected 37 banks, most of which were immediately downgraded if not put on negative credit watch.
S&P earlier in November had promised to revise many financial institutions' ratings to better reflect how banks' creditworthiness is linked to the health of the economies in which they operate.
http://online.wsj.com/article/SB10001424052970204262304577068692845236780.html
Standard & Poor's Ratings Services on Tuesday downgraded dozens of large financial institutions, including Bank of America Corp., Barclays PLC and Citigroup Inc., citing a new methodology that reflects weaker confidence in governments' willingness and ability to bail out banks in trouble.
The widely expected move didn't signal a change of any of the banks' individual credit metrics as much as a revision to the assumptions that had previously bolstered them. The new criteria affected 37 banks, most of which were immediately downgraded if not put on negative credit watch.
S&P earlier in November had promised to revise many financial institutions' ratings to better reflect how banks' creditworthiness is linked to the health of the economies in which they operate.
http://online.wsj.com/article/SB10001424052970204262304577068692845236780.html
Monday, November 28, 2011
Jim Quinn: Comfortably Numb
Many of us have found maintaining intellectual honesty not that easy. Regardless of whether one agrees with Quinn’s argument, some data points he is presenting are compelling (although many of us have already known).
From the Burning Platform:
As I observe the zombie like reactions of Americans to our catastrophic economic highway to collapse, the continued plundering and pillaging of the national treasury by criminal Wall Street bankers, non-enforcement of existing laws against those who committed the largest crime in history, and reaction to young people across the country getting beaten, bludgeoned, shot with tear gas and pepper sprayed by police, I can’t help but wonder whether there is anyone home. Why are most Americans so passively accepting of these calamitous conditions? How did we become so comfortably numb? I’ve concluded Americans have chosen willful ignorance over thoughtful critical thinking due to their own intellectual laziness and overpowering mind manipulation by the elite through their propaganda emitting media machines. Some people are awaking from their trance, but the vast majority is still slumbering or fuming at erroneous perpetrators.
The American people are paying the price for allowing a few evil men to gain control of our government….The State grows ever more powerful.
The young people leading the protests across this land are showing tremendous courage and a tenacity of spirit that has been dormant for decades among the lethargic, distracted, over-medicated public. Despite being subjected to government education conditioning, these young people have zeroed in on the enemy. They may not have all the solutions, but they have correctly identified the corrupt banking system as the central nervous system of this vampire squid sucking the life out of our nation. I will support any effort to shine a light on our crooked system. My three young sons deserve a chance at a better life than they will get under the thumb of this oligarchic criminal enterprise. As a child I caught a fleeting glimpse of the American Dream. I turned to look, but it was gone. I choose not to become comfortably numb. I choose to do whatever it will take to renew the opportunity for my sons to achieve the American Dream.
http://www.theburningplatform.com/?p=25234
From the Burning Platform:
As I observe the zombie like reactions of Americans to our catastrophic economic highway to collapse, the continued plundering and pillaging of the national treasury by criminal Wall Street bankers, non-enforcement of existing laws against those who committed the largest crime in history, and reaction to young people across the country getting beaten, bludgeoned, shot with tear gas and pepper sprayed by police, I can’t help but wonder whether there is anyone home. Why are most Americans so passively accepting of these calamitous conditions? How did we become so comfortably numb? I’ve concluded Americans have chosen willful ignorance over thoughtful critical thinking due to their own intellectual laziness and overpowering mind manipulation by the elite through their propaganda emitting media machines. Some people are awaking from their trance, but the vast majority is still slumbering or fuming at erroneous perpetrators.
The American people are paying the price for allowing a few evil men to gain control of our government….The State grows ever more powerful.
The young people leading the protests across this land are showing tremendous courage and a tenacity of spirit that has been dormant for decades among the lethargic, distracted, over-medicated public. Despite being subjected to government education conditioning, these young people have zeroed in on the enemy. They may not have all the solutions, but they have correctly identified the corrupt banking system as the central nervous system of this vampire squid sucking the life out of our nation. I will support any effort to shine a light on our crooked system. My three young sons deserve a chance at a better life than they will get under the thumb of this oligarchic criminal enterprise. As a child I caught a fleeting glimpse of the American Dream. I turned to look, but it was gone. I choose not to become comfortably numb. I choose to do whatever it will take to renew the opportunity for my sons to achieve the American Dream.
http://www.theburningplatform.com/?p=25234
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