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Industrial Bank of Korea
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01 марта 2016, 19:00

Federal Reserve Board issues enforcement action with Industrial Bank of Korea, and announces termination of enforcement actions with CSRA Bank Corp., and FMB Equibanc, Inc.

Federal Reserve Board issues enforcement action with Industrial Bank of Korea, and announces termination of enforcement actions with CSRA Bank Corp., and FMB Equibanc, Inc.

14 апреля 2014, 15:39

Citigroup: Client data leaked at Korean consumer credit unit

Authorities have found 17K instances of leaks of information, including names and phone numbers, says Citigroup Korea (C) in an emailed statement to Bloomberg, and was informed of the breach two months ago. The same number of leaks occurred at a unit of Industrial Bank of Korea.A local news outlet reports employees at the two companies may have been involved and both banks say they're waiting for results of the prosecutors' investigation.Citigroup's Q1 results are due in about 20 minutes.Last week: Citi to shutter about one-third of Korean branches Post your comment!

27 ноября 2013, 11:30

Утренний брифинг от Saxo Bank: обзор рынков на 27 ноября 2013 года

Форекс: Евро торгуется с повышением  Этим утром евро торгуется с повышением относительно большинства своих главных конкурентов после того, как федеральный канцлер Германии Ангела Меркель (Angela Merkel) и социал-демократы пришли к соглашению о формировании коалиционного правительства. Между тем, сегодняшние данные по уверенности потребителей в Германии от Gfk и голосование в Сенате о статусе Сильвио Берлускони будут представлять интерес для инвесторов. В США внимание участников рынка будет сосредоточено вокруг очередной серии экономических данных, в том числе заказов на товары длительного пользования за октябрь. Кроме того, окончательный показатель по настроению потребителей от Reuters/Michigan также станет немаловажной информацией, учитывая вчерашнее его значение, свидетельствовашее об ухудшении. В 6 часов утра по GMT евро прибавил 0,2 процента и 0,1 процента против американского доллара и британского фунта, торгуясь по цене 1,3593 доллара и 0,8381 фунта соответственно. Японская иена снизилась на 0,5 процента и 0,2 процента по отношению к евро и доллару США соответственно. Европа: Торги большей частью в «плюсе» Открытие германского фондового индекса DAX и французского CAC ожидается на 23-25 пунктов и 9-10 пунктов выше соответственно. Индекс Британской фондовой биржи FTSE100 откроется понижением на 0-4 пункта. Публикация германского индикатора потребительской уверенности от Gfk; индикатора потребления от UBS Швейцарии; индекса уверенности потребителей Франции; объёма розничных продаж Испании; а также ВВП, объёма розничной торговли от Конфедерации британской промышленности и индекса деловой активности в сфере услуг Великобритании запланирована на сегодня. LEG Immobilien AG (LEG), GK Software AG (GKS), Compass Group (CPG), Royal Mail (RMG), United Utilities Group (UU/), Shaftesbury (SHB), Hogg Robinson Group (HRG), Telford Homes (TEF) и Findel (FDL) отчитаются о результатах своей деятельности сегодня. По данным издания «Nikkei», ThyssenKrupp AG (TKA) продаст свой сталелитейный завод в США консорциуму ArcelorMittal SA (MT) и японской компании Nippon Steel & Sumitomo Metal Corporation приблизительно за два миллиарда американских долларов. Electricite de France (EDF) объявила о продаже со скидкой своего полного пакета акций компании Veolia Environnement SA (VIE). Согласно информации «Reuters», в понедельник BP (BP/) завершила запуск новой установки коксования с объёмом переработки 102 тысяч баррелей в сутки на её НПЗ Whiting в штате Индиана. Британское Бюро по борьбе с мошенничеством в особо крупных размерах планирует провести уголовное расследование в отношении Royal Bank of Scotland (RBS), который, по их мнению, систематически вводил в заблуждение участников малого бизнеса, подводя их под банкротство с целью получения более высоких комиссионных и установления контроля над их активами, – пишет «The Financial Times». BT Group (BT/A) подверглась обвинениям со стороны её конкурентов TalkTalk и British Sky Broadcasting Group (BSY) в использовании «бухгалтерских уловок», чтобы переложить часть затрат этого финансового года в сумме 120,0 миллионов британских фунтов на своих потребителей, – сообщает «The Telegraph». По словам «The Times», AMEC (AMEC) думает о поглощении своего конкурента Foster Wheeler AG, что позволит ей создать пятимиллиардную группу компаний (в британских фунтах) в области энергетики. Азия: Рынок торгуется смешанно Этим утром азиатские рынки торгуются разнонаправленно. В Японии Mitsubishi UFJ Financial Group (8306) и Mizuho Financial Group (8411) зафиксировали убытки. Однако, Panasonic (6752) выросли на фоне сообщений о продаже компанией трёх своих японских заводов полупроводников израильской фирме TowerJazz. Nippon Steel & Sumitomo Metal (5401) продвинулись вперёд после того, как компания объявила о желании объединиться с ArcelorMittal в целях приобретения американского завода фирмы ThyssenKrupp AG приблизительно за два миллиарда долларов США. Rakuten (4755) подорожали ввиду повышения компанией годовых дивидендных выплат. В 6 часов утра по GMT индекс Токийской фондовой биржи Nikkei 225 торгуется на 0,2 процента ниже на отметке 15481,5 пункта. В Китае акции финансового сектора Sinolink Securities (600109) и Sealand Securities (000750) пошли вверх вслед за заявлением главы Центрального банка страны Чжоу Сяочуаня (Zhou Xiaochuan) о том, что Китай снимет ограничения по объёму иностранных инвестиций. В Гонконге Chow Tai Fook Jewellery Group (1929) поднялись благодаря чистой прибыли за первое полугодие, оказавшейся выше рыночного консенсуса. В Южной Корее GS Home Shopping (028150) и Hyundai Home Shopping Network (057050) показали повышение. Тем не менее, Industrial Bank of Korea (024110) опустились по причине продажи правительством Южной Кореи доли в компании в 4,2 процента за 250,0 миллионов американских долларов. США: Фьючерсы торгуются выше В 6 часов утра по GMT фьючерсы на S&P 500 торгуются на 0,6 пункта выше. Публикация индекса настроения потребителей от Reuters/University of Michigan, объёма заказов на товары длительного пользования, числа первичных и повторных заявок на получение пособия по безработице, индекса национальной деловой активности от Федеральной резервной системы Чикаго, индекса деловой активности Национальной ассоциации менеджеров в Чикаго, индекса ведущих экономических индикаторов и числа запросов на ипотечное кредитование от Ассоциации ипотечных банков (МВА) планируется на сегодня. Golar LNG (GLNG) и Shanda Games (GAME) объявят о своих результатах сегодня. Во вторник в рамках продлённой торговой сессии Hewlett-Packard (HPQ) выросли на 5,4 процента благодаря доходу и прибыли за четвёртый квартал, оказавшихся выше рыночного консенсуса. Durata Therapeutics (DRTX) подскочили на 8,4 процента после того, как заявке компании на регистрацию нового препарата Dalvance, предназначенного для лечения больных с острой бактериальной инфекцией кожи, Управлением США по пищевым продуктам и лекарственным средствам был предоставлен статус приоритетного рассмотрения. Analog Devices (ADI), напротив, отступили на 3,5 процента в силу неудовлетворительных данных по доходу за четвёртый квартал и более низкого, чем ожидалось, прогноза дохода и прибыли на первый квартал. Infoblox (BLOX) подешевели на 17,9 процента по причине слабого прогноза дохода и скорректированной прибыли на второй квартал. Пессимистичный доход третьего квартала и низкий прогноз прибыли на четвёртый квартал привели к падению Tilly's Inc. (TLYS) на 21,3 процента. Во время вчерашней регулярной торговой сессии американский фондовый индекс S&P 500 завершил свои торги почти без изменений. Tiffany & Company (TIF) подорожали на 8,7 процента вслед за позитивными итогами третьего квартала и увеличением прогноза прибыли на полный год. Ценные бумаги сектора недвижимости Lennar (LEN), D. R. Horton (DHI) и PulteGroup (PHM) пошли вверх на 5,1 процента, 4,6 процента и 4,4 процента соответственно на сообщениях компании о неожиданном росте числа выданных разрешений на строительство в октябре. Превзошедшие ожидания результаты четвёртого квартала и повышение годовых дивидендных выплат обеспечили рост Hormel Foods (HRL) на 5,9 процента. J.C. Penney (JCP) прибавили 1,9 процента после объявления компании о приобретении главным исполнительным директором Майроном Ульманом (Myron Ullman) 112 тысяч акций фирмы. CenterPoint Energy (CNP) уменьшились на 5,2 процента в связи с тем, что Enable Midstream Partners LP, совместная с OGE Energy (OGE) компания, подала заявку Комиссии по ценным бумагам и биржам США на первичное публичное размещение. Акции компаний добывающего сектора Newmont Mining (NEM) и Cliffs Natural Resources (CLF) потеряли 3,2 процента и 1,6 процента соответственно. Сводка последних новостей Меркель формирует коалиционное правительство с СДПГ Канцлер Германии Ангела Меркель (Angela Merkel ) и левоцентристская Социал-демократическая партия (СДПГ) договорились о формировании коалиционного правительства и увеличении минимальной заработной платы в стране, а также повышении расходов на выплату пенсий и развитии инфраструктуры без повышения налогов. C. Шираи: Банк Японии может не достичь целевого уровня инфляции Член правления Банка Японии Саюри Шираи (Sayuri Shirai) выразил озабоченность по поводу того, что центробанк может не достичь целевых двух процентов инфляции к запланированной дате, ссылаясь на преобладание понижательных рисков для японской экономики над повышательными. Новозеландский торговый дефицит неожиданно пошёл вниз В октябре торговый дефицит Новой Зеландии неожиданно сократился до самого низкого месячного уровня почти за два десятилетия – 168,0 миллионов новозеландских долларов, тогда как в предшествующем месяце показатель дефицита был равен 216,0 миллионам новозеландских долларов. Прогноз по деловому настроению для обрабатывающего сектора Южной Кореи ухудшается С учётом сезонной корректировки прогноз делового настроения для сектора фабричного производства Южной Кореи на декабрь опустился до 82,0 по сравнению с 86,0 пунктами ноября. Материал предоставлен Saxo Bank http://ru.saxobank.com

12 сентября 2013, 21:11

North Korea: Outsourcing Giant

Follow ZeroHedge in Real-Time on FinancialJuice If there’s one country in the world that you might not think would be at the top of the outsourcing list and the place to send orders to be fulfilled from the West, it would probably have to be North Korea. The world’s most closed economy, that Communist dictatorship. It’s the place where doing business would be as volatile as the guy that leads the country in a patriarchal dynasty handed down from his father and in which the Supreme Leader of the Democratic People’s Republic of Korea, Kim Jong-un, is elevated to the rank of demi-god, alive and kicking. But, is the economy of North Korea as closed as we have all seemed to believe for decades now? North Korea and Freedom North Korea is an economy that is more and more closely tied to the economic expansion of China. It might be the totalitarian dictatorship and ultra-communist of the world, but it is getting overspills from the Chinese economy and despite what the West might be saying there are companies that are already outsourcing there. The dictatorship that has come on from the cold? Or the economy that is too good a deal for the West to override and ignore? Maybe a bit of both, six of one and half a dozen of the other. North Korea might be the stalwart enemy of the self-proclaimed democratic West, but it’s the destination for the outsourcers. It’s cheap, it’s high-tech and it’s the new place to be. It’s the Costa del Sol of Spain of the 1970s for the flocking German tourist and the Brits abroad: cheap and an opportunity that can’t be missed, but you’ll certainly come home with a Delhi belly. Data might remain a challenge to collate and whether we can believe what can be found in an economy that chose to try to isolate itself from the world. The economic freedom score is only 1.5 on the 2013 scale. But that is an improvement on the score of 2012 which stood at just 1. The Index of Economic Freedom is an annual ranking that is created by the Wall Street Journal and the Heritage Foundation. Hong Kong is considered to be the freest country economically-speaking in the world yet again in 2013, closely followed by Singapore. Both have a score close to 90 out of 100. The US comes in 10th after Australia, New Zealand, Denmark and Canada to name just a few with a score of 76(down 0.3 on 2012 score). Long gone are the days when the US was up in the top five back in 2005. The type of things that are taken into consideration when calculation the rankings are: Business freedom and the ability to set up a company or start a business. The absence or presence of trade barriers. Fiscal freedom and the tax burden on the population. Property and the right to freely own. Financial freedom or the independence of the banking system and freedom from state control. Corruption and the effects on the economy. Labor freedom and the ability to change jobs, demand redress and obtain legal regulation. North Korea and China Perhaps some of the elements in the list above might be telling signs of the reason why certain economies are not as free as we might think in some places in the world. North Korea might be 177th and last country on the economic freedom index with the wooden spoon presented in great pomp and ceremony (or at least, the famous Korean steel chopsticks). North Korea is supposed to have a level of Gross Domestic Product which amounts to $40 billion, a GDP-growth rate of 8.75% for 2012. GDP per capita stands at $1, 800. Its main export partners are China, accounting for 67.2% of its exports. South Korea, despite all their differences accounts for 19.4% of its exports. It imports roughly the same amount (from china: 61.6% and from South Korea: 20%). China was at the origin of a state development bank in North Korea since the Chinese were fed up with the corruption in the country. Now, that’s pretty rich! But there is an increasingly blurry line that is appearing between state activities and private incoming-generating ones. Today there is a strong demand still for working for the state and securing a government position. But, what has changed according to new research is that it’s not for the same old reasons. Today, it’s because being part of the elite means access to business platforms, a springboard for getting ahead and striking it rich (through corruption perhaps, but a different type of corruption to the purely political kind). North Korea and the West Today there are companies in France, Germany, the Netherlands and not just China that are outsourcing the production of particularly clothes in North Korea. The garment industry has found its outsourcing replacement for Bangladesh that has grown too publicized for its dangerous sweatshops. Moving to North Korea might just mean that nobody will know anything. What goes into North Korea rarely comes out. Some of the clothes that Europeans could be walking around in might just have been made in North Korea, the Hermit Kingdom dictatorship. The comic-book caricature doesn’t hold anymore and North Korea is not as Hermit-like as the West may make us all believe. The investment might most definitely be high-risk, but the returns and yield on that investment might be a way to strike it rich. The masterplan of North Korea seems like it is to woo the West to manufacture there. They couldn’t get us by ideology, so the North Koreans are playing us at our own game now. North Korea may indeed have very little to do (if anything) with the USA, but the rest of the world hasn’t turned its back on the country and it’s far from being hermit-like at all. There are thousands of North Koreans that work in China, thousands that go overseas to study on bilateral exchange agreements with foreign universities and there are companies from the West that are starting to outsource their manufacturing there. Naturally, there’s no suggesting that the economy of North Korea is going to suddenly explode into a market economy ready to embrace capitalism and free-market economics. Liberalism hasn’t arrived in North Korea quite yet. But, there are pockets of what resembles capitalist money-oriented enterprises. It is still a repressed economy and it is military might that embodies the state, the songun policy. But, that is changing and it looks as if the West has something to say in the matter. We are overlooking the dictatorship just as soon as we can and anyhow freedom gets put on the back burner these days where money is concerned.  Septaper Will Open Floodgates | How Sinister is the State? | Food: Walking the Breadline | Obama NOT Worst President in reply to Obama: Worst President in US History? New Revelations: NSA and XKeyscore Program | Obama's Corporate Grand Bargain Death of the Dollar | Joseph Stiglitz was Right: Suicide | China Injects Cash in Bid to Improve Liquidity Technical Analysis: Bear Expanding Triangle | Bull Expanding Triangle | Bull Falling Wedge | Bear Rising Wedge | High & Tight Flag         

11 сентября 2013, 10:10

Утренний брифинг от Saxo Bank: обзор рынков на 11 сентября 2013 года

Форекс: Евро торгуется в основном с понижением  Этим утром евро торгуется преимущественно с понижением относительно большинства главных валют в то время, как внимание рынков сосредоточено на данных по инфляции потребительских цен в Германии, которые, согласно ожиданиям, останутся на прежнем уровне в августе. Кроме того, сведения по рынку труда Великобритании будут также в центре внимания участников биржевой торговли. Между тем, президент США Барак Обама (Barack Obama) попросил конгресс отложить голосование в отношение американской военной атаки против Сирии во время работы по дипломатической резолюции, обязывающей правительство Сирии отказаться от своего химического оружия. Так, в 5 часов утра по GMT евро потерял 0,1 процента против обоих – американского доллара и британского фунта, торгуясь по цене 1,3254 доллара и 0,8429 фунта соответственно. Австралийский доллар пошёл вниз на 0,3 процента в сравнении с американским долларом. Данные, опубликованные сегодня, показали, что индекс уверенности потребителей Австралии от Westpac увеличился в сентябре до трёхлетнего максимума. Европа: Рынок откроется в «плюсе» Открытие Французского фондового индекса CAC и британского FTSE100 ожидается на 4-5 пунктов выше каждые. Индекс германской фондовой биржи DAX откроется повышением на 20-23 пункта. Публикация данных по индексу потребительских цен в Германии и Португалии; числу занятых вне сельскохозяйственном секторе и балансу счёта текущих операций во Франции; изменению уровня безработицы, изменению числа получающих пособие по безработице, уровню безработицы от ILO, числу получающих пособие по безработице, размеру средней заработной платы без и с учётом премий и индексу ведущих экономических индикаторов от Совета национальной промышленной конференции (CB) в Великобритании запланирована на сегодня. Orpea SA (ORP), Korian SA (KORI), Synergie SA (SDG), Kingfisher (KGF), Barratt Developments (BDEV) и African Minerals (AMI) объявят о своих результатах сегодня. Главный исполнительный директор Bayerische Motoren Werke AG (BMW) Норберт Райтхофер (Norbert Reithofer) указал, что компания решит вопросы поставок к концу сентября 2013, которые привели к задержке доставок запасных частей во всём мире. Deutsche Bank AG (DBK) на своём заседании на этой неделе примет решение о целесообразности продления договора с его со-исполнительным директором Юргеном Фитченом (Juergen Fitschen), который действует до 2015 года, – пишет немецкая газета «Sueddeutsche Zeitung» По данным информационного агентства «Bloomberg», BP (BP/) прекратила работу каталитической крекинг-установки по производству бензина в объёме 400 000 баррелей в день на очистительном заводе Whiting, а также установки коксования, перерабатывающей 160 000 баррелей/день на Toledo в связи с плановым техническим обслуживанием. Управление по контролю за продуктами и лекарствами США проголосовало в пользу одобрения рекомендаций медикамента по лечению заболеваний лёгких Anoro Ellipta, совместно разработанного GlaxoSmithKline (GSK) и Theravance Inc. Азия: Торги в основном в «зелёном» Этим утром азиатские рынки торгуются преимущественного на положительной территории после того как американский президент Обама приостановил военное нападение на Сирию. В Японии Softbank Corporation (9984) пошли верх ввиду возобновления брокером покрытия на акции с рейтингом «Over-weight». Toyota Motor (7203) поднялись в цене на фоне сообщений о возобновлении выплат дивидендов в размере 30,0 процентов от доходов на акцию. Yakult Honsha (2267) подорожали ввиду повышений брокера. Акции экспортного сектора Mitsubishi Motors (7211), Nintendo (7974) и Komatsu (6301) торгуются с повышением. В 5 часов утра по GMT индекс токийской фондовой биржи Nikkei 225 прибавил 0,8 процента, торгуясь на отметке 14535,3 пункта. В Китае CSR Corporation Limited (601766) выросли в цене после того, как компания сообщила, что она заключила ряд крупных контрактов с Китайской железнодорожной инвестиционной корпорацией на продажу грузовых вагонов. China CSSC Holdings (600150) выросли на сообщении компании о своих планах привлечь около одного миллиарда долларов США через частную продажу акций. В Гонконге PetroChina (857) и CNOOC (883) продемонстрировали падение. В Южной Корее акции поставщиков Apple — LG Display (034220) и SK Hynix (000660) упали в цене после неудачной попытки Аpple впечатлить инвесторов своими новыми версиями iPhone. Korea Zinc (010130) пошли вниз по причине падения цен на золото. Фондовые рынки США: Фьючерсы торгуются ниже В 5 часов утра по GMT фьючерсы на S&P 500 торгуются на 1,2 пунктa ниже. Публикация данных по объёму оптовых запасов и числу запросов на ипотечное кредитование от Ассоциации ипотечных банков МВА планируется на сегодня. Men’s Wearhouse (MW), Vera Bradley (VRA) и Evolution Petroleum (EPM) объявят о своих результатах сегодня. Во вторник в рамках продлённой торговой сессии SYNNEX Corporation (SNX) выросли на 8,8 процента после согласия компании купить корпорацию IBM (IBM), аутсорсингового бизнеса по обслуживающую клиентов по всему миру по оказанию бизнес-услуг и бизнес-процессов, приблизительно за 505,0 миллионов долларов денежными средствами и акциями. International Paper (IP) подорожали на 1,2 процента вслед за повышением квартальных выплат дивидендов. Best Buy (BBY), напротив, отступили на 0,2 процента после того, как главный исполнительный директор Хьюберт Джоли (Hubert Joly) продал акции в компании на сумму около 10,4 миллиона долларов. Restoration Hardware Holdings (RH) уменьшились на 4,3 процента несмотря на оптимистичные данные второго квартала и позитивного прогноза дохода и прибыли на полный год. Во время вчерашней регулярной торговой сессии американский фондовый индекс S&P 500 прибавил 0,7 процента вслед за благоприятными данными по объёму промышленного производства и розничным продажам в Китае за август, а также на фоне ослабления напряженности вокруг Сирии. Goldman Sachs Group (GS), Visa (V) и NIKE (NKE) пошли вверх на 3,5 процента, 3,4 процента и 2,2 процента соотвественно после заявления S&P Dow Jones Indices LLC о замене ими Bank of America (BAC), Hewlett-Packard (HPQ) и Alcoa (AA) соответственно в Dow Jones Industrial Average уже после закрытия торгов 20 сентября 2013 года. Bank of America (BAC) поднялись на 0,9 процента на сообщениях о планах компании сократить почти 2 100 рабочих мест и закрыть 16 ипотечных офисов по причине ослабления кредитного спроса. Цена на бумаги Netflix (NFLX) возросла на 6,4 процента после заключения компанией контракта с Virgin Media, в котором последняя будет предоставлять потоковое телевидение Netflix и кино-услуги своим клиентам. McDonald's (MCD) подскочили на 0,5 процента вследствие превзошедших более высокого, чем прогнозировалось, объёма сосоставимых продаж за август. Сводка последних новостей Обама удерживает военное нападение США на Сирию В своём выступлении на национальном телевидении президент США Барак Обама (Barack Obama) заявил, что он попросил конгресс отложить голосование, санкционирующее применение военной силы против Сирии. Вместе с тем отметил, что он приказал американским военным оставаться на своих текущих позициях, чтобы оказать давление на президента Сирии Башара Асада (Bashar Assad) пока он стремится работать с Россией, Китаем, Великобританией и Францией по резолюции Совета безопасности ООН, требующей от Сирийского правительства сдать своё химическое оружие. Экспорт должен усилить поддержание восстановления экономики Член правления Банка Японии Кодзи Ишида (Koji Ishida) указал, что японский экспорт должен начать вносить свой вклад в экономический рост страны, что необходимо для сохранения нынешних темпов экономического восстановления. Далее он заявил, что «существует высокая вероятность» того, что Банк Японии достигнет своих целевых 2,0 процентов инфляции в период с октября 2014 года по март 2016 года. Рост внутренних оптовых цен в Японии отстаёт от прогнозов Индекс внутренних оптовых цен в Японии поднялся в августе на 0,3 процента в месячном исчислении по сравнению с пересмотренными в сторону понижения данными, зафиксировавшими рост до 0,6 процента. Настроение в деловых кругах крупных производственных компаний Японии повышается Согласно бизнес-исследованию, индекс деловых настроений в крупных производственных компаниях Японии вырос в третьем квартале 2013 года к отметке 15,2 пункта, самому высокому уровню за последние четыре года, тогда как во втором квартале того же года показатель достигал 5,0 пунктов. Уверенность потребителей Австралии характеризуется улучшением Индекс уверенности потребителей Австралии от Westpac увеличился в сентябре до трёхлетнего максимума 110,6 пунктов против значения в 105,7 пунктов, зафиксированных в предыдущем месяце. Снижение уровня безработицы в Южной Корее Скорректированная на сезонность безработица в Южной Корее упала в августе до 3,1 процентов относительно снижения до 3,2 процентов в июле. Материал предоставлен Saxo Bank http://ru.saxobank.com

01 сентября 2013, 21:08

September Starts with a Bang

The summer lull is surely over. In the week ahead no fewer than six G10 central banks The summer lull is surely over. In the week ahead no fewer than six G10 central banks meet and a host of important economic data is slated for release. The US employment data at the end of the week is seen by many as critical for the one major central bank that is not meeting, the Federal Reserve. None of the central banks meeting, which includes Australia, Canada, Japan, Sweden, England and the ECB, are expected to alter their monetary policy stances. And the economic data are unlikely to alter market perceptions that China is stabilizing, Europe reflating, even if unevenly and the Japanese economy is sufficiently strong to allow for the implementation of the controversial retail sales tax hike next April, although with likely additional fiscal support. Barring a significant surprise, the US jobs report is unlikely to spur any one to change their outlook for Fed policy.  Although weekly initial jobs claims seem to reflect improvement in the labor market, the more authoritative monthly employment report shows nothing of the kind.   The six month average net private sector employment gain stands at 200k, but only because of the out sized gain in February and this will be dropped out of the six-month average with the August jobs report at the end of the week.  Moreover, February was the only month this year that the private sector grew 200k or more jobs.  Even if the August figures comes in at 200k, which would be above the consensus,  the 6-month average will fall to levels not seen since late last year.  The 3-month average has been trending lower since March and has been below 200k since May. Nor has there been much improvement in other measures, like hourly earnings or the work week.    Many people say that the Fed's decision to taper is highly data dependent, but precisely what this means is rarely addressed.  The decision to taper is most certainly not a technocrat response to some predetermined set of economic variables.  Indeed, a dispassionate review finds that the Fed has over-estimated growth and price pressures.   The pace of improvement in the US labor market remains painfully slow and does not appear to have accelerated in any meaningful way.  At the same time, the Fed's preferred inflation measure is low (closer to 1% on the monthly calculus than 2%, while the GDP measure is below 1%) and has not shown any predilection of moving back towards the Fed's target.   Meanwhile, even with the upward revision in Q2 GDP figures, the Fed's forecast for growth still seems high and could be trimmed as early at this month's FOMC meeting when many expect the tapering decision to be made.   While we don't think that central bank meetings nor the economic data will challenge the generally held views, there are a six items we would highlight:  In particular, we note that politics may trump economics in the week ahead.   First, Japan's corporate spending report on Monday.  It is important because it will help shape the revision to Q2 GDP (Sept 9).  This in turn will be used in the debate over the retail sales tax.  It may help shape the discussion of the supplemental budget,or other measures, that may mitigate some of the short-run impact. Second, on Tuesday the Reserve Bank of Australia is likely to keep its cash rate at the record low 2.5%. We expect the RBA's statement to keep the door ajar for an additional rate cut, but not necessarily October. The RBA meeting is ironically small beer ahead of the September 7 national election.  The polls point to a Liberal-National victory over the Labour Party, which has suffered many self-inflicted injuries.  The next prime minister is likely to be Tony Abbott, who has promised, among other things, to abolish the controversial carbon and mining tax.   This has the potential to alter the investment calculus.   Third, the stronger the UK economic data, the less credible the Bank of England's forward guidance is likely to be perceived, though it is difficult to imagine the UK economy accelerating more from its current pace. Unlike the US and the euro area, where inflation is low in what may be economic acceleration, the UK's headline rate did not get very low during the stagnation phase, so the recovery is commencing with relatively firm price pressures.  It is not clear whether Carney will make a post-meeting statement.  Under King, when the BOE did nothing, it said nothing besides confirming the continuation of the policy.  This will be Carney's third meeting  He spoke after the first, but not the second.   Barring significantly worse than expected data, the economy may be eclipsed by UK politics.  The defeat last week by the government over Syria may have been some payback for Blair's Iraq decision, in some bizarre way, but the ramifications for the Tory-led government are serious.  It could produce a shake-up in the government, especially with the parliamentary team.  It appears to have been a poorly worded motion and most importantly, poorly executed, but the damage is done.   Ultimately, the road Cameron is leading the UK down is arguably one of marginalization, as the non-binding parliament vote, neuters its voice in the UN Security Council.  And this is even before, the referendum promised by Cameron (after the next election, in the run-up to which Carney has conditionally promised to keep rates low) on whether the UK should remain an EU member.    Fourth, Draghi's press conference will be more important than the ECB meeting, which is unlikely to take fresh action.  The region's economy is recovering as the ECB expected, but it seems too early to conclude that the two-part forward guidance (rates will remain at current levels or lower for an extended period) is no longer needed or that the ECB is about to move away from "or lower" part of the construction.     With money supply growth slowing and private sector lending contracting at an accelerated speed (June and July have seen the biggest contractions in EMU's short history), there is not reason to encourage a rise in interest rates, which is what would likely happen if the ECB so signaled.  In addition, the excess liquidity in the system is gradually falling as banks payback their ECB borrowings.  EONIA may face upward pressure in the months ahead.   Separately, the ECB looks to be close to allowing minutes from its meeting to be published, as many other central banks do.  The minutes are expected to be similar to FOMC minutes, where individual names are associated with particular comments, for fear to curtailing a forthright discussion.  Nevertheless, the central bank minutes should be understood as a channel of communication more than a precise record.  Under current conditions of forward guidance, central bank communication is arguably more important than ever.  It makes no sense for the ECB to deny itself a useful channel.  Fifth, at the end of next week, China has signaled it will re-open its bond futures market, which has been closed since a three-year experiment ended in 1995.  Initially, the futures on the 3% 5-year note, will be limited in its movement to 2% on either side of the previous day's settlement.  This is an important step in China's financial liberalization and follows the July move to abolish the floor on borrowing costs which had been previously set at 30% below the benchmark. Foreign investors are increasingly able to access China's bond market through its Qualified Foreign Institutional Investor (QFII) and Renminbi Qualified Foreign Institutional Investor (RQFII) programs.   Chinese officials have expanded the quotas under QFII and have expanded the RQFII program to allow all qualified asset managers incorporated in Hong Kong to participate. We note that China' official manufacturing PMI was released over the weekend.  It rose from 50.3 in July to 51.0 in August.  The consensus had expected an increase to only 50.6, perhaps restrained by the preliminary HSBC/Markit measures that showed improvement to 50.1.   The final report will be released early Monday in Beijing. Economists had previously cut their growth forecasts for China and now news reports suggest several are raising their forecasts.  The PMI report forward looking components, new orders and new export orders rose impressively.  At 52.4, new orders are at their high reading since April 2012.  New export orders rose above 50 for the first time since March.  The HSBC/Markit preliminary measure had shown a decline in export orders. Incidentally, though perhaps not unrelated, over the weekend South Korea reported its August exports rose twice what economists had expected (7.7% vs 3.8%).  This is the biggest increase since January. Separately, we note that Taiwan's export growth is expected to have accelerated.  It reports its August trade figures on September 9.   Hong Kong imports and exports accelerated markedly in July.   These developments would lend credence to the official PMI data.  The convergence between the two measures is for the HSCB/Markit measure to move toward the official one, rather than the other way around.   Sixth, the G20 meeting begins Thursday.  The debate over Syria is likely to over shadow economic issues. Still, efforts on to curb some forms of tax evasion will continue to make slow progress.     The OECD's interim economic assessment of the G7 countries and China (to be published Tuesday) will provide a backdrop.   Representative from the emerging markets are likely to press their case to the major economies, especially that the US, should take their interests into account when conducting monetary policy. Emerging markets have been hit by several shocks this year, and concern about retaliation against Syria is only the latest.  The depreciation of the yen exposed many emerging market countries, especially in Asia, balance of payments weakness, especially in the context of a slowdown in China.  Speculation of tapering by the Fed has exposed the vulnerability of many emerging markets to a reversal of portfolio flows. It is not coincidental that US Treasuries just finished their fourth consecutive month lower, the longest losing streak since 1996, while Asian equities (MSCI Asia-Pacific Index) finished their fourth consecutive month down.  August was the sixth consecutive month that the JP Morgan EMBI premium over Treasuries rose. The only thing more disruptive than being inundated with capital inflows for many emerging market countries is seeing the capital leave.  The industrialization of the US, Europe and Japan occurred under a regime of restricted capital movement.  In recent years, even the IMF has warmed to the idea of targeted capital controls under certain circumstances. There has been some discussion, spurred by a paper discussed at Jackson Hole, that many countries can pursue independent monetary policies if and only if their capital account is managed directly or indirectly.  If a country manages its capital account and the flow of international capital is driven in good measure by the monetary policies of another country (or countries), say QE in the US and Japan, it is not clear how independent of a monetary policy it can pursue.  While recognizing the symbols of monetary independence, we suspect that on closer examination, monetary independence is not quite what it pretends to be. Part of the rationale for the massive expansion of central bank reserves since the emerging market debt crisis, beginning in mid-1990s in Mexico and culminating the Asian Financial Crisis 1997-1998,was to serve as a type of self-insurance--to help smooth the adjustment process.  Investment capital primarily lent to emerging markets during a period of strong commodity prices, and unusually weak growth and low interest rates among the high income economies.   That period appears to be coming to an end.     

08 марта 2013, 17:28

World Shares Hit 5-Year High

* European shares rise further, MSCI world index hits 4-3/4 yr high * U.S. jobs data eyed, China exports beat forecasts * Dollar touches 3-1/2-year peak against yen LONDON, March 8 (Reuters) - World shares hit their highest level since June 2008 and the dollar set a fresh 3-1/2-year high against the yen on Friday, ahead of U.S. jobs data expected to point to a continuing pick up in the world's biggest economy. With U.S. payrolls figures due at 1330 GMT expected to show firms added 160,000 jobs last month versus 157,000 in January, Wall Street was expected to open higher again following this week's record highs for the Dow Jones Industrial Average. China also gave markets a boost as official data showed February exports grew 21.8 percent versus a year ago, more than double the expected rise. European shares, which have rebounded strongly after last week's Italian election and U.S. spending cuts related wobble, were up 0.5 percent ahead of the jobs data and on track for their best week since the start of the year. Japan's Nikkei had hit a 4-1/2 year high in Asian trading and 0.3, 0.9 and 0.6 rises by London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX helped MSCI's world share index to its highest level since late June 2008. "There appears to be a strong risk-on mood in the market at the moment," said Ken Wattret, co head of European market economics at BNP Paribas. "The negativity from the Italian elections was shrugged off pretty quickly, the Fed has made it clear that its policy will remain accommodative. If we get a get a good set of payrolls numbers, that will further fuel that sentiment." MSCI's world index tracks 9,000 stocks in 45 countries. Its rise illustrates how investors have returned to stocks and other "risk" assets over the last eight months as slowly improving world growth and the European Central Bank's pledge to prevent a break-up of the euro, have combined to bolster sentiment. Friday's U.S. payrolls report is key to gauging the Federal Reserve's policy course going forward. The bank has promised that as long as inflation doesn't pose a threat, it will keep interest rates near-zero until unemployment falls to 6.5 percent. DOLLAR STRENGTH In the currency market, the sudden spike in tensions on the Korean peninsula added to the more dominant U.S. growth-led demand for the dollar. Having said earlier in the week it was scrapping its armistice with South Korea, North Korea threatened the United States on Thursday with a preemptive nuclear strike after accusing it of warmongering. The dollar was up 0.2 percent against a basket of major currencies ahead of the jobs data but most of the focus was on its continued rise against the yen after it hit a 3-1/2 year high of 95.75 yen. If the Bank of Japan's new leaders expands its stimulus programme next month as expected, the dollar could trade in the 95-98 yen area or even open the way for a test of 100 yen, said Ronald Ip, Director of Wealth Solutions Group for HSBC Global Markets. The euro, meanwhile, shrugged off some early weakness to climb back above $1.31 and hold on to the bulk of previous day's gains after the ECB wrong-footed investors who had been expecting more of a signal on rate cuts from Mario Draghi. Fresh euro zone data continued to support the calls for a cut that some of the ECB's members had pushed for on Thursday. Although it was slightly better than had been expected, Spain's industrial output fell 5 percent year-on-year in January, the seventeenth month of declines. France's central bank also maintained its view that its economy will only just dodge recession this quarter, while even Germany saw its muscular industrial sector stall in January. GRADUAL GAINS With demand for low-risk assets cool ahead of the U.S. data, German Bund futures edged lower to 142.70 having fallen the previous day after the ECB's less dovish than expected tone. Italian bonds continued to slowly claw back ground they lost after last week's inconclusive election result re-ignited concerns about its fiscal rehabilitation programme. The stronger dollar and the bright Chinese data were also the focus of commodity markets. Most of the world's raw materials are bought and sold in dollars so its movements can have a strong influence on prices. Oil prices steadied above $111 a barrel, leaving them almost bang in line with where they started the year after an up and down few weeks. Copper and gold were both little changed but on course for their first weekly gains since mid-February. After a week which has seen five the world's top 10 central banks decide to leave policy unchanged in the face of a very modest global growth outlook, expectations for gradual gains in riskier assets are unchanged. "We continue to look for ways to gradually build risk rather than reduce, and what we're seeing from the central banks leaves us unchanged in that view," Johan Jooste, chief market strategist at Merrill Lynch Wealth Management said. "It's not like we're sittings on our hands. What we're doing is, at the margin, adding risk rather than piling straight into it at these levels."

07 марта 2013, 17:56

Trade Deficit Snaps Back In January, Larger Than Expected

So much for that December plunge in the US trade deficit, which plunged from $48.6 billion to three year low of $38.5 billion supposedly on a drop in energy imports, but in reality was due to a drop in broad imports as the US economy ground to a halt ahead of the Fiscal Cliff. In January, or after the stop gap measure to allow the economy to continue, things went back to normal, with the US returning to doing what it does best: importing, especially importing expensive energy, and sure enough the deficit spiked promptly back to $44.4 billion - it recent long-term average - as exports were $2.2 billion less than December exports of $186.6 billion while January imports were $4.1 billion more than December imports of $224.8 billion. Immediate result: look for banks to trim 0.2-0.3% GDP points from their Q1 GDP forecasts. Drilling down some more: The December to January decrease in exports of goods reflected decreases in industrial supplies and materials ($2.6 billion) and other goods ($1.0 billion). Increases occurred in capital goods ($0.7 billion); foods, feeds, and beverages ($0.4 billion); consumer goods ($0.3 billion); and automotive vehicles, parts, and engines ($0.2 billion).   The December to January increase in imports of goods reflected increases in industrial supplies and materials ($4.0 billion); other goods ($0.7 billion); and capital goods ($0.5 billion). Decreases occurred in consumer goods ($0.9 billion) and automotive vehicles, parts, and engines ($0.7 billion). Foods, feeds, and beverages were virtually unchanged.   The January 2012 to January 2013 increase in exports of goods reflected increases in foods, feeds, and beverages ($1.2 billion); capital goods ($1.1 billion); consumer goods ($1.0 billion); and other goods ($0.3 billion). Decreases occurred in industrial supplies and materials ($0.3 billion) and automotive vehicles, parts, and engines ($0.3 billion).   The January 2012 to January 2013 decrease in imports of goods reflected decreases in industrial supplies and materials ($4.2 billion); automotive vehicles, parts, and engines ($0.3 billion); and foods, feeds, and beverages ($0.2 billion). Increases occurred in consumer goods ($1.4 billion); capital goods ($1.3 billion); and other goods ($0.3 billion). As for the geographic focus, here is which countries were the biggest January trading partners: The January figures show surpluses, in billions of dollars, with Hong Kong $2.7 ($4.0 for December), Australia $1.2 ($1.7), Singapore $0.7 ($1.1), and Brazil $0.9 ($1.3). Deficits were recorded, in billions of dollars, with China $27.8 ($24.5), European Union $8.6 ($8.7), OPEC $6.4 ($3.4), Japan $6.1 ($5.7), Canada $4.9 ($3.6), Germany $4.2 ($5.4), Mexico $3.6 ($3.9), Korea $2.1 ($1.1), Venezuela $2.0 ($1.3), Ireland $1.9 ($1.5), Saudi Arabia $1.9 ($1.7), and India $1.5 ($0.5) And as much as it hurts us to crush idiotic memes, the January data shows that rather than indicative of US "energy independence" leading to a trade surplus, and a soaring USD, any times soon, the December plunge in the deficit was merely a politically-driven fluke. Source: Census

06 марта 2013, 18:53

Guest Post: This Time Is Different 2013 Edition

Submitted by John Aziz of Azizonomics blog, A small note on the frankly hilarious news that the Dow Jones Industrial Average smashed through to all-time-highs. First of all, while stock prices are soaring household income and household confidence are slumping to all-time lows. Employment remains depressed, energy remains expensive, housing remains depressed, wages and salaries as a percentage of GDP keep falling, and the economy remains in a deleveraging cycle. Essentially, these are not the conditions for strong organic business growth, for a sustainable boom. We’re going through a structural economic adjustment, and suffering the consequences of a huge 40-year debt-fuelled boom. While the fundamentals remain weak, it can only be expected that equity markets should remain weak. But that is patently not what has happened. In fact, it has been engineered that way. Bernanke has been explicitly targeting equities, hoping to trigger a beneficent spiral that he calls “the wealth effect” - stock prices go up, people feel richer and spend, and the economy recovers. But with fundamentals still depressed, this boom cannot be sustained. There are several popular memes doing the rounds to suggest, of course, that this time is different and that the boom times are here to stay, including the utterly hilarious notion that the Dow Jones is now a “safe haven”. They are all variations on one theme - that Bernanke is supporting the recovery, and will do whatever it takes to continue to support it. Markets seem to be taking this as a sign that the recovery is real and here to stay. But this is obviously false, and it is this delusion that - as Hyman Minsky clearly explained last century - is so dangerous. There are many events and eventualities under which throwing more money at the market will make no difference. Central banks cannot reverse a war, or a negative trade shock, or a negative production shock, or a negative energy shock simply by throwing money at it. And there are severe limits to their power to counteract financial contractions outside their jurisdiction (although in all fairness the Federal Reserve has expanded these limits in extending liquidity lines to foreign banks). Sooner or later the engineered recovery will be broken by an event outside the control of central bankers and politicians. In creating a false stability, the Federal Reserve has actually destabilised the economy, by distorting investors’ perceptions. But, of course, some analysts think that this time really is different. Here’s a chart from Goldman showing the S&P500 by sectoral composition: The implication here is clear - with no obvious sectoral bulge like that of the late 1970s, the tech bubble, and the financial bubble - there is no bubble. But what if the bubble is spread evenly over multiple sectors? After all, the Federal Reserve has been reinflating Wall Street in general rather than any one sector in particular. Wall Street leverage is, unsurprisingly, approaching 2007 levels: Is this the final blowout top? I’m not sure. But I would be shocked to see this bubble live beyond 2013, or 2014 at the latest. I don’t know which straw will break the illusion. Middle eastern war? Hostility between China and Japan? North Korea? Chinese real estate and subprime meltdown? Student debt? Eurozone? Natural disasters? Who knows... The wider implications may not be as bad as 2008. The debt bubble has already burst, and the deleveraging cycle has already begun. Total debt is slowly shrinking. It is plausible that we will only see a steep correction in stocks, rather than some kind of wider economic calamity. On the other hand, it is also plausible that this bursting bubble may herald a deeper, darker new phase of the depression. With every day that the DJIA climbs to new all-time highs, more suckers will be drawn into the market. But it won’t last. Insiders have already gone aggressively bearish. This time isn’t different.

25 февраля 2013, 16:50

Key Macro Events In The Coming Week

Next week’s calendar is packed with important events and releases, aside of course from the biggest event of the week which are the Italian elections. In fact we already got the first one in the form of China's disappointing HSBC flash PMI which consensus expectations would print stable yet which dropped to a 4 month low. On Friday, the ISM is expected to come out mildly softer vs last month’s strong 53.1 print and consensus at 52.5. Chicago PMI will also be followed by markets on Thursday. On the central bank front markets will be primarily looking for further news on the BOJ leadership succession front. From the perspective of Fed speakers, Chairman Bernanke’s testimony ahead of the Senate Banking Committee will also be followed as markets continue to track the Fed’s assessment of the economic recovery. In the global currency warfare front, the Bank of Israel is expected to cut policy rates by 25bps on Monday, as well as the National Bank of Hungary on Tuesday. Monday February 25 China Flash PMI: Consensus expectations are for a read of 52.2, almost flat from last month’s 52.3 Israel MPC: Consensus expectations are for no change from the current level of 1.75%. Goldman sees a 25 bps cut. Also interesting: Mexico Current Account, Singapore CPI Tuesday February 26 Hungary MPC: Consensus expects the Central Bank to cut the policy rate by 25 bps to 5.25%. US Consumer Confidence: Consensus forecasts an improvement in US consumer confidence in February from 58.6 to 62.0. US Case Shiller Home Price Index: Consensus expectations are for an increase of 0.5%, down from 0.6% from the last report. US New Home Sales: Consensus at 3.0% better than last month’s -7.3% reading. Fed Chairman Bernanke testifies at the Senate Banking Committee Also Interesting: US Richmond Fed, Mexico Trade Balance, Taiwan Export Orders, Japan Retail Sales Wednesday February 27 US Durable Goods Orders: Consensus at -4.0% on a plunge in airrcraft orders, after a strong December read of 4.3%. Also interesting: Euro Area Consumer Confidence, UK Q4 revised GDP Thursday February 28 US Q4 GDP (Second Estimate): Consensus at 0.5% up substantially from the first estimate at -0.1% US Chicago PMI: Consensus at 54.1 down from last month’s 55.6 US Initial Jobless Claims: Consensus expects 360,000, stable from last month’s 362,000. Also interesting: Germany Retail Sales, Euro Area HCPI, Japan Unemployment Rate, Japan/South Korea Industrial Production, India Q4 GDP Friday March 1 US ISM Manufacturing Index: Consensus at 52.5 down from last month’s 53.1. US U. Michigan Consumer Sentiment: Consensus expects no change from last month’s read both at 76.3. US Personal Spending: Consensus expects an increase of 0.2%, stable from last month. US Personal Income: Consensus expects a 2.0% decline. Russia MPC: Central Bank expected to be on hold. Global PMIs Also Interesting: US Construction Spending, Euro Area Unemployment rate, Korean Exports, Canada GDP, Brazil Trade Balance, Chile MPC minutes, Polish Q4 GDP. Visually from SocGen: And also from SocGen, top issues for the week ahead: TOP ISSUES FOR THE WEEK AHEAD UK DOWNGRADE ON WEAK GROWTH OUTLOOK Citing the “continuing weakness in the UK's medium-term growth outlook” and the challenges that this poses to the government's fiscal consolidation, Moody’s Friday lowered the UK’s rating from Aaa to Aa1. Moody’s now have a stable outlook on the UK, suggesting no further downgrade is imminent. S&P and Fitch (both still attribute a triple-A rating to the UK) have a negative outlook. Over the weekend, Chancellor Osborne stated that the change in rating would not trigger any change in policy, but politically the downgrade does bring a setback. The UK’s loss of a full suite of triple-A ratings follows those of the US and France as recent examples. Debt sustainability is the big picture issue, and while the Fed and the BoE have been able to deliver financial repression offering some relief on debt snowballs, the situation for the European periphery clearly remain a far greater challenge. As we have highlight on numerous occasions, the ECB’s OMT brought the final brick in effectively addressing the issue of funding. Solvency, however, requires economic growth. We’ll be writing more about this next week, but this is where we see the much greater challenge. This week in the UK, the upwards revision to construction output and industrial production offer the possibility of what would be a welcome upside revision to the preliminary Q4 GDP report at ?0.3%, but our baseline is for unchanged. The breakdown is set to show weak consumer spending in Q4, albeit partly related to Olympic driven swings. A modest improvement in the CBI distributive trades survey will offer some encouragement on the UK consumer, but the overall picture remains weak. The February PMI survey at the end of the week, however, is set to see a modest pullback to 50.3 from MARKET ISSUES: Lacklustre data will keep hopes of the “Carney put” active. 1 MARCH US SEQUESTER DEADLINE Unless Congress decides otherwise, 1 March will see $85bn worth of spending cuts strike government programs (with about half on defence spending). Based on recent developments the sequester is likely to kick in on Friday. If not subsequently reversed, our Chief US Economist, Aneta Markowska, estimates that this would take 0.2pp off GDP for the remainder of this year. The next key date on the US budget agenda then is the 27 March expiration of current continuing resolutions. At this stage, the GOP do not intend to shutdown government and we believe they will be happy to extend funding. Should Congress fail to agree a budget blueprint by 15 April, then legislators would see pay withheld. Finally, on 18 May, the temporary removal of the debt ceiling ends. MARKET ISSUES: Uncertainty on the budget outlook is set to remain for now, but once lifted this alone should prove a positive. MIXED GLOBAL SENTIMENT A flurry of sentiment data will hit the tapes this week from across the world. Last week’s advance manufacturing PMI for the euro area declined to 47.8, and this despite gains in Germany and France. The implication is further weakness on the European periphery and we look for weaker sentiment readings in both Italy and Spain for February. In the UK, we also look for modest decline to 50.3. Turning to the US the February PMI should see the third consecutive monthly gain, climbing to 54. In Asia, we expect PMI in China to post a modest gain to 51 after 50.4. A bounce in the Bank of Korea’s business confidence for March will add confidence to the cyclical recovery in Asia, albeit in part related to seasonal factors. MARKET ISSUES: The global economic picture remains divided and with that the debate on the next steps on policy action. While the QE exit debate dominates in the US, the question remains whether the ECB and BoE can and will do more. A NEW BOJ GOVERNOR This week could see a new BoJ governor nominated as Mr Shirakawa prepares to step down on 19 March. According to press, the most likely  candidate is Asian Development Bank President Mr. Kuroda. Mr. Kuroda has been supportive of Abenomics, and this suggests further BoJ easing on the cards. The government will consult with opposition parties before officially presenting the nominee to the Diet, since both the lower and the opposition-lead upper house must confirm the nomination. MARKET ISSUES: With the G20 critical of currency interference, the new BoJ leadership will be careful to communicate any policy easing as having a domestic focus (perfectly mirroring the Fed’s communication on QE).

20 февраля 2013, 16:12

Rajoy Summarizes Overnight (And Recurring) Sentiment: "There Are No Green Shoots, There Is No Spring"

In the aftermath of yesterday's surge in German hopium measured by the ZEW Economic Survey which took out all expectations to the upside, it was inevitable that the other double-dipping country, France, telegraphed some optimism despite a contracting economy and would follow suit with a big  confidence beat, and sure enough the French INSEE reported that February business sentiment rose from 87 to 90, on expectations of an unchanged number. And the subsequent prompt smash of investor expectations in Switzerland, where the ZEW soared from -6.9 to +10.0 tells us that something is very wrong in the Alpine country if it too is trying so hard to distract from the here and now. And while one can manipulate future optimism metrics to infinity, it is reality that is proving far more troublesome for Europe, as could be seen by the Italian Industrial Orders print which crashed -15.3% Y/Y on expectations of a smooth -9.5% drop, down from -6.7% previously. Since industrial orders are a proxy for future demand, a critical issue as Italy enters 2013 after six consecutive quarters of economic contraction and with no relief on the horizon, it is only fitting that Italy should shock the world with an off the chart confidence beat next. In bond news, Spain said it would impose a yield ceiling on new bond sales by region, even as it prepared to launch new 5 year benchmark USD denominated bonds: there was a time when Europe was the US' dumb money. How quickly things have flipped. And while Spain was being bid, Germany was not, and following today's 10 Year Bund auction the 10 year yield rose another 5 bps to 1.67%. Finally, in a rare moment of reality, Spanish PM Rajoy said at the State of the Nation debate. “It is not enough, there are no green shoots, there is no spring,” adding that Spain’s economic situation is "terribly hard." It was confusing that this being corruption scandal-ridden Rajoy, he did not add that "except for all that things that are terrible, things are doing great." The US does it day after day. Some more overnight highlights via BBG: New Zealand’s central bank governor said he’s ready to intervene in foreign-exchange markets, the latest in a string of countries from South Korea to Brazil warning their currencies are too strong Japan’s Abe will be accompanied by his top currency official when he visits the U.S. to meet with Obama, as Japan tries to limit international friction over a weakening yen Spain is imposing yield limits on debt sales by its 17 semi-autonomous regions that would shut most of them out of markets in an effort to curb the country’s borrowing, two people familiar with the matter said Bank of England officials considered options including a rate cut and expanding the range of assets purchased at their February meeting FOMC minutes to be released today won’t suggest Fed is ready to slow $85b/month pace of Treasury and MBS purchases, DB said yesterday U.K. jobless claims fell more than twice as much as forecast in January as job creation surged BofAML Corporate Master Index OAS holds at 147bps as $10.05b priced yesterday. Markit IG at 85bps, matching YTD low. High Yield Master II OAS narrows 3bps to 492bps; $1b priced Tuesday. CDX High Yield gains to 102.86 Nikkei rises 0.8%%. Germany’s DAX lower, FTSE higher. U.S.  equity-index futures rise. Italian and Spanish bonds gain, bunds and gilts fall. Energy, previous metals mostly lower A recap of European markets: Spanish 10Y yield down 4bps to 5.16% Italian 10Y yield down 2bps to 4.38% U.K. 10Y yield up 2bps to 2.2% German 10Y yield up 4bps to 1.67% Bund future down 0.32% to 142.36 BTP future up 0.2% to 112.37 EUR/USD up 0.06% to $1.3396 Dollar Index up 0.06% to 80.51 Sterling spot down 0.76% to $1.5308 1Y euro cross currency basis swap up 1bp to -19bps Stoxx 600 down 0.15% to 289.58 A more detailed recap from DB The market yesterday caught the mood of the London weather as Europe had one of its best days this year. The DAX and CAC added +1.62% and +1.88% respectively, only second to the +2.19% and +2.55% rally on the first day of 2013. In the US we saw the S&P 500 (+0.73%) hit fresh 5 year highs whilst the Dow Jones also reached a new cyclical high at 14035. The VIX index fell further to 12.31 reaching the lowest close since April 2007. Treasuries had a softer session with the 10-year yield creeping back above 2% helped by some chatter that the FOMC minutes later today will shed some light on the timing of stimulus withdrawal. The stronger-than-expected German ZEW Economic Sentiment survey (48.2 v 35.0) was cited as the main catalyst of yesterday’s moves, which helped cushion a mildly disappointing NAHB housing market headline in the US (46 v 48). The main event at the end of the week, namely the Italian elections, are hardly being discussed. We thought that the prospect of them and the associated uncertainty would encourage some risk reversal in February before a March rebound after a pro-reform coalition was formed. However although many risk assets have been treading water in February it’s still net net been a better month than we expected. Tomorrow's flash PMIs in Europe (and elsewhere) are the next main hurdle. A continued steady improvement will support risk further. Back to markets, Asian equities are trading with a firm tone, helped by the positive US lead. Overnight gains are being led by the ASX200 +0.33%), Hang Seng (+0.15%) and KOSPI (+1.76%). The Nikkei is up 0.72% and the yen is marginally stronger (+0.3%) against the dollar in overnight trading on relatively limited news flow. The Yen showed some weakness initially after Japan’s January trade deficit came in at a record JPY1.63trn, driven by higher than expected imports (+7.3%yoy vs 2.1% expected) – no doubt driven to some extent by the yen’s recent depreciation. The 'J-curve' analysis from A-Level Economics is flooding back into memory. Asian credit spreads are tighter as technicals are now better following a large bond redemption with supply generally being more subdued than expected. Briefly returning to US markets, investors have been mulling the return of M&A activity. Indeed $158bn in deals have been announced in the year-to-date, which is more than double the activity in the same period last year according to Reuters data. Office Depot and OfficeMax are the latest companies in the M&A spotlight with reports suggesting that two companies are in discussions to merge (Bloomberg). With the US spending sequesters scheduled to come into effect in a matter of days, Obama held a press conference yesterday to turn up the pressure on the GOP to accept his alternative deficit-reduction plan that includes both spending cuts and new revenues through closing tax loopholes. Obama will reportedly hit the road again next week for campaign-style events to build support for his plan. Also yesterday, Democrat Erskine Bowles and Republican Alan Simpson released a “version 2” of their deficit reduction plan calling for a reduction in government spending of $2.4trn over 10 years. Deficit reductions would come from lower payments to Medicare and Medicaid providers and higher Medicare premiums for top earners. Additional savings would come from using a “chained-CPI” gauge in Social Security cost-of-living payments. On the revenue side, a series of tax exemptions and deductions will be removed with part of the savings used for deficit reduction and the rest to reduce income tax rates (Bloomberg). Simpson and Bowles remained pessimistic about the chances of avoiding the sequester however, reflecting the general mood in both the Democrat and Republican camps. Turning to the day ahead, the Bank of England will be releasing minutes from their last meeting. The UK’s latest labour report is also scheduled today. In the US, the focus will be on the FOMC minutes which will be closely examined in light of the recent discussions on the appropriate timing to reduce asset purchases. In terms of US data, January housing starts, building permits and PPI are the main highlights.

04 февраля 2013, 05:01

Bill Frezza: To Save the Republic, Republicans Must Slash Defense Spending

For those who believe we can still recover from our fiscal and economic death spiral, the time for hard choices has come. I'm talking to you, staunch Republican defenders of the military-industrial complex. I am begging you to rethink your priorities. What good will it do to preserve a military second to none if there is nothing left worth defending? Through a century of wars, both cold and hot, America's brave men and women in uniform successfully protected us from the external threats of fascism and communism. But the greatest threats facing America today don't come from foreign enemies. They come from within. An economic catastrophe brought about by the destruction of the dollar and the bankruptcy of federal, state, and local governments will not lead America back to its roots as a constitutionally limited republic of strictly enumerated powers. A thriving free market will not rise from the ashes of an economy ravaged by crony capitalism, too-big-to-fail rogue banks, overregulation, excessive taxation, and runaway federal spending that perpetuates dependency on handouts. If we don't mend our ways and the inevitable collapse follows, the last vestiges of our unique American experiment will be swept away in a populist call for more of what killed us. So stop and think. Freedom is about to make its last stand right here at home. Shouldn't defending it be our first priority? It's not like we couldn't see it coming. Remember George Washington's warning about standing armies in his "Sentiments on a Peace Establishment." Consider Dwight D. Eisenhower's well-informed advice about the military-industrial complex in his farewell address. Recall John Quincy Adams's admonishment that "America does not go abroad in search of monsters to destroy." These are deeply conservative American principles, which genuine conservatives need to champion. The Constitution makes it crystal clear that one of the federal government's essential functions is to provide for the national defense, but nowhere does it call for Americans to defend everyone in the world against every possible threat. The burden that fell on us at the end of the Second World War must now be laid down. Pax Americana may once have paid dividends, but those are no longer commensurate with the costs. The Democratic Party's tax, spend, borrow, and print mentality cannot be effectively challenged by an opposition party that clings to its own kind of pork. Compromise only means one thing in Congress: You vote for my spending initiatives and I'll vote for yours. This is what got us into the mess we are in today; it cannot possibly get us out of it. To be effective, Republicans must make a principled stand that reduces the size and scope of government in all spheres -- including defense. That does not mean that spending should be slashed blindly, although the modest cuts in the recently postponed sequestration are as good a place to start as any. Our military needs to be right-sized for the right mission with a laser-like focus on return on investment. We also need to step away from missions that are not rightfully ours. This begins with ending the provision of free defense services to allies that are perfectly capable of defending themselves. If Japan or South Korea or Europe or any other ally with an advanced economy wants to avail themselves of our defense capabilities, we should send them a bill sufficient to make it worth our while. If they don't pay up, our troops should come home and our money-losing foreign bases should be closed. Maintaining a navy large enough to patrol the high seas is a core responsibility of the military. A credible nuclear deterrent is a must. But there is no reason to maintain the capability to invade foreign countries. Yes, wicked governments around the world continue to prey on their own people, but no, it is not our job to rescue them despite heartbreaking images on the news. Nor does it make any sense to give advanced weaponry to unstable regimes that could turn these weapons against us in a heartbeat. Only a fool or a defense contractor believes we will ever go to war with Russia or China. We won the Cold War when Soviet communism collapsed under the weight of its own inherent contradictions. Today, Russia is a crony capitalist oligarchy exporting natural gas, not an expansionist communist menace violently exporting a dangerous ideology. China, Inc. has become one of our most important trading partners as well as our biggest international creditor. The Chinese leadership knows that a war with the U.S. would mean widespread domestic unemployment, likely followed by revolution. Our enemies today are failed states and Islamist terrorists. They have neither modern air forces nor significant navies. Their weapons systems are primitive. They fight asymmetric warfare with the goal of forcing their enemies to consume disproportionate resources. Let's fine-tune our military to bomb them back to the Stone Age on an as-needed basis, but as soon as we're done it is time to come home. Nation building in corrupt, tribal societies is expensive, counterproductive, and just plain idiotic. Yes, a retreat from being the world's policeman still leaves us with two big wild cards -- a nuclear North Korea and a soon-to-be nuclear capable Iran. I have no easy answers for these, and neither does anyone else. But we do know one thing: Bankrupting the U.S. will not make insane paranoid dictators or jihad-preaching mullahs disappear. Our strongest defense is taking care of business at home. And that won't happen unless Republicans in Congress stop pursuing business as usual and boldly gain negotiating leverage by agreeing to cuts in the military budget as the first step toward overhauling our bloated entitlement programs.

23 января 2013, 18:19

Currency Wars: Causes and Consequences

The Realist understanding of international affairs is that it is a realm of competition.  The competition is multi-faceted, taking place in politics and economics.  It has a cultural dimension.  It take place even in the writing of history.  This competition spills over into the foreign exchange market.  It did not begin with the unorthodox pursuit of monetary policy in high income countries beset with crisis.  Even at Bretton Woods countries were jockeying for advantage.  From the time that the dollar-gold standard of Bretton Woods became operational, the foreign exchange market was politicized. The US wanted the German mark and Japanese yen, for example, to be adjusted higher, rather than devalue the dollar.  The attempt to re-start Bretton Woods with the Smithsonian Agreement was shaped by the conflict of national interest. This has also been the history of the floating rate era.  The hot capital flows into Germany and Switzerland resulted in a policy response of intervention and negative interest rates in the 1970s.  Some observers attribute the 1987 equity market crash in part to Treasury Secretary James Baker threatening dollar depreciation if Germany did not stimulate its domestic economy.   When he was Treasury Secretary Llyod Bentsen threatened to allow the dollar to fall against the yen unless the Japanese government opened its markets more to US goods.  At times, the high income countries coordinated intervention such as under the 1985 Plaza Agreement.  At other times, countries, such as Japan, were forced to act alone.  Western European countries have repeatedly sought to minimize the intra-European currency fluctuations; from the Snake, through the ERM to finally getting rid of national currencies altogether.  Very few countries in the world seem to have ever felt completely comfortable with the  prices that the foreign exchange market set.  Indeed from Mexico's Tequilla Crisis in 1995/95 through the Asian financial crisis in 1997-1998, a number of semi-fixed exchange rates were broken after numerous and costly attempts to defend them.  The large build up of reserves in emerging market countries is largely, though not solely, a reflection of resistance to currency appreciation and the pursuit of neo-mercantilist developmental strategies. Most of the wealthy Mideast countries retain pegged currency regimes.  These days, it has become fashionable to talk of this pursuit of national self-interest over foreign exchange prices as a "currency war".    Although many seem to think it began with the unorthodox monetary policies pursued by the high income countries since the onset of the crisis, the tale of the tape tells a different story.    Many observers are confused by the metaphor.  They think it is real.  Currency warfare devolves into outright protectionism and, viola, Smoot-Hawley-esque protectionism, a trade war.  Then a real shooting war.  Q.E.D.  Typically central banks want the external value of their currencies to move in the same direction as monetary policy.  Given the synchronized economic downturn in the high income countries, it is not surprising that monetary policy has become synchronized and that most officials want weaker currencies.  And this is at loggerheads with the many of the leading emerging market currencies that are not willing to accept substantial currency appreciation. At the same time that Bank of England Governor King warned against competitive devaluations this week, he suggested that sterling's relative strength has not done the UK any favors.  The Bank of Canada, whose governor will soon replace King at the helm of the BOE, noted that the persistent strength of the Canadian dollar has hurt exports.   Norway and Sweden have indicated that the strength of their respective currencies could influence the course of monetary policy decisions.  Switzerland, with one of the largest current account surpluses, has effectively capped its currency. The rhetoric, much more than the action, of the new Japanese government, explicitly seeking a weaker yen, has irked many.  Former Eurogroup head Juncker was off-message when he recently said the euro was dangerously high.  German officials have been quick to clarify. First it was Finance Minister Schaeuble who was critical of Japan's "false understanding" of monetary policy.  Then is was BBK's Weidmann who warned of the risks of politicizing the exchange rate.  This was followed by Deputy Chairman of Merkel's CDU who expressed concern not just at Japan's competitive devaluation but also that if other countries follow, it could lead to a downward spiral.  Russia has recently taken exception and has threaten to raise the issue at upcoming international meetings.   South Korea has threatened to take action.  The industry association for US auto makers protests (as they have since there were more than 300 yen to the dollar).  It is unusual for Fed officials to comment on the foreign exchange market, but the St. Louis Fed President Bullard recently expressed his concern. Following the war metaphor, we have often found it helpful to understand intervention as an escalation ladder.  The lower rungs may be different ways to verbally express displeasure at market prices.  Most of the time officials stay on the lower rungs.  Despite desire for weaker currencies, neither the Bank of Canada nor the Bank of England are about to intervene materially in the foreign exchange market, for example.  And if some countries cut interest rates to offset their currencies' strength, well, that is how the adjustment process is supposed to work. The World Trade Organization also helps act like a circuit breaker of sorts.  It offers a conflict resolution mechanism to prevent trade disputes from leading to exactly the downward spiral that many observers rightly fear.  There is no sign that this firewall has been threatened. When officials talk about currencies reflecting fundamentals, they often mean external balances.  Japan has swung from a trade surplus to a trade deficit.  In fact, on a seasonally adjusted basis, it has not recorded a monthly trade surplus  since Feb 2011.  Exports have fallen on year-over year basis since May 2012 (and the December report due out first thing in Tokyo on Thurs is expected to show more of the same).  The OECD calculation of purchasing power parity has the yen about 14.6% over-valued at current levels.  Besides the relative size of the economies, it is not clear why the Swiss capping their currency has not drawn the same ire as the Japanese.    Indeed, one could argue that the Swiss move deflected more pressure to Japan and if the SNB had not pegged its currency, the new LDP government in Japan would not be talking the yen lower. While we do think Japanese officials would welcome a weaker yen, we see in the rhetoric an attempt to ease concern  that it is seeking an endless or even protracted decline.  The upcoming G20 meeting may reaffirm the commitment to market-based foreign exchange rates.  The push back may impact LDP policy intentions may making it less likely that it will seek to buy foreign bonds, which would be too close to material intervention.  A real currency war remains a remote possibility.  The recent clash is largely in the realm of rhetoric and does not appear substantially different than what has been seen through the floating rate area.  The synchronized crisis and economic weakness has produced synchronized easing of monetary policy.  Officials typically want currency to be supporting not contradicting monetary policy signals.  Lastly, it is particularly noteworthy  that Japan's largest trading partner and regional rival China, appears not to have publicly protested the yen developments.

16 января 2013, 09:00

Suresh Kumar: Global Trade: The Fierce Urgency Of Today

On a cold day some four years ago, with the economy in recession and jobs in free fall, our nation inaugurated a president with hope on our faces and change in our hearts. Since then the positions of our legislators have hardened, and their singular achievement in four years has been brinksmanship: It took a 778-point drop in the Dow Jones Industrial Average, triggered by the House's rejection of a $700-billion bank bailout, to bring Congress to its senses. Not one budget has been passed in four years. The last time the federal debt ceiling came up, Washington played chicken until a market swoon. Now we just went down to the wire on the fiscal cliff, narrowly averting disaster and still staring at the uncertainty of agreeing on a long-term federal debt ceiling. In such an environment is there a common ground, something we can agree on that helps the country as a whole? I believe there is: global trade. Though divided by ideology, we are united as Americans in our desire to restore economic growth and create jobs. Few issues bring Democrats and Republicans together as global trade does. To grow, American businesses must be more commercially engaged globally and must establish a bigger footprint in faster-growing emerging markets. Minimally we must provide at least the support that export powerhouses China, Germany and the UK provide their businesses. Ideally we should do more. This requires government support, particularly for small and medium enterprises (SME). Businesses expect predictable policy and need support to establish global partnerships, from distributorships to joint ventures. They need to be able to access competitive financing, compete in public procurement projects and consummate global deals. And this support is required now, not sometime in the future. The reality of our times is that all exporting countries are targeting the same faster-growing markets and an emerging middle class today, not in the future. The Obama administration's focus on export during the first term paid off. Exports have grown from 11 percent to 14 percent of GDP and helped create jobs. The administration secured the passage of the free trade agreements with Panama, Colombia and South Korea that were initiated under the Bush administration and established a platform for future growth. In his second term the president must emphasize execution over policy and charge his administration to work with business to help increase export revenue now. Success must be measured annually in terms of the improvement in U.S. share of global exports. This will entail redeploying resources, people and program funding in Main Street America and markets around the world, and not in the corridors of D.C. For too long, successive administrations in Washington have emphasized policy over execution, and bureaucrats have coveted the mantle of policy maker and diplomat over being "America's sales force." Germany and the UK, not to mention China, have emphasized export promotion over trade policy, pursued business deals and inward investment that create local jobs and relied on the U.S. to do the "heavy lifting" on policy issues like intellectual property rights, corruption and trade barriers. China, Germany and the UK have quietly gone about winning market share battles while letting our policy armies fight the war. With the emphasis on promotion, the UK has 2,400 trade specialists supporting business exports and securing inward foreign direct investment. Germany's public-private model allows 2,700 trade specialists to help their businesses win in the marketplace. By comparison, between the U.S. & Foreign Commercial Service at the Department of Commerce and the Foreign Agriculture Service at USDA, the U.S. has fewer than 1,800 trade specialists providing frontline support to our businesses, a number that has steadily decreased over the years. Almost 3,000 people are directly engaged in trade policy development and enforcement. How many armies do you know that have more generals than soldiers? Global trade minimally entails data collection, policy making, negotiation, financing, promotion, regulation and enforcement. Some argue that developing global markets runs the gamut of aid to trade. However we look at it, myriad government agencies touch this space, often overlapping. This presents the opportunity for a double whammy: cutting costs, program spending and duplication and beefing up business facing support. We need boots on the ground and investing in technology to reduce manpower intensity and enable a self-service portal; these help connect U.S. businesses to global opportunities and help ring transactions. Earlier this year President Obama proposed the reorganization of trade-related agencies that could save $3 billion over 10 years and eliminate 1,000 to 2,000 full-time equivalent jobs in a couple of years. Not much has happened since. When it comes to policy and negotiation, small is beautiful. The Office of the Unites States Trade Representative is successful because it is small and focused. The opportunity exists to redeploy our resources and get the better bang for the taxpayer buck not by spending more but by stewarding our resources better. We must help U.S. businesses secure revenue, profit and market share today before playing the role of global cop. We need to keep a laserlike focus on investing in programs that help put Americans back to work and help American companies grow their share of global exports. And in businesslike fashion, trade-facing agencies must annually report the exports that they directly facilitated and America's share of global U.S. exports. Global trade and a results-based approach to all trade policy and promotion spending can deliver savings and better export results. This post is part of a series produced by The Huffington Post and George Washington University that closely examines the most pressing challenges facing President Obama in his second term. To read the companion article by HuffPost's Mark Gongloff, click here. To read the companion blog post by Dennis M. Kelleher of Better Markets, Inc., click here. To read all the other posts in the series, click here.

16 января 2013, 09:00

Suresh Kumar: Global Trade: The Fierce Urgency Of Today

On a cold day some four years ago, with the economy in recession and jobs in free fall, our nation inaugurated a president with hope on our faces and change in our hearts. Since then the positions of our legislators have hardened, and their singular achievement in four years has been brinksmanship: It took a 778-point drop in the Dow Jones Industrial Average, triggered by the House's rejection of a $700-billion bank bailout, to bring Congress to its senses. Not one budget has been passed in four years. The last time the federal debt ceiling came up, Washington played chicken until a market swoon. Now we just went down to the wire on the fiscal cliff, narrowly averting disaster and still staring at the uncertainty of agreeing on a long-term federal debt ceiling. In such an environment is there a common ground, something we can agree on that helps the country as a whole? I believe there is: global trade. Though divided by ideology, we are united as Americans in our desire to restore economic growth and create jobs. Few issues bring Democrats and Republicans together as global trade does. To grow, American businesses must be more commercially engaged globally and must establish a bigger footprint in faster-growing emerging markets. Minimally we must provide at least the support that export powerhouses China, Germany and the UK provide their businesses. Ideally we should do more. This requires government support, particularly for small and medium enterprises (SME). Businesses expect predictable policy and need support to establish global partnerships, from distributorships to joint ventures. They need to be able to access competitive financing, compete in public procurement projects and consummate global deals. And this support is required now, not sometime in the future. The reality of our times is that all exporting countries are targeting the same faster-growing markets and an emerging middle class today, not in the future. The Obama administration's focus on export during the first term paid off. Exports have grown from 11 percent to 14 percent of GDP and helped create jobs. The administration secured the passage of the free trade agreements with Panama, Colombia and South Korea that were initiated under the Bush administration and established a platform for future growth. In his second term the president must emphasize execution over policy and charge his administration to work with business to help increase export revenue now. Success must be measured annually in terms of the improvement in U.S. share of global exports. This will entail redeploying resources, people and program funding in Main Street America and markets around the world, and not in the corridors of D.C. For too long, successive administrations in Washington have emphasized policy over execution, and bureaucrats have coveted the mantle of policy maker and diplomat over being "America's sales force." Germany and the UK, not to mention China, have emphasized export promotion over trade policy, pursued business deals and inward investment that create local jobs and relied on the U.S. to do the "heavy lifting" on policy issues like intellectual property rights, corruption and trade barriers. China, Germany and the UK have quietly gone about winning market share battles while letting our policy armies fight the war. With the emphasis on promotion, the UK has 2,400 trade specialists supporting business exports and securing inward foreign direct investment. Germany's public-private model allows 2,700 trade specialists to help their businesses win in the marketplace. By comparison, between the U.S. & Foreign Commercial Service at the Department of Commerce and the Foreign Agriculture Service at USDA, the U.S. has fewer than 1,800 trade specialists providing frontline support to our businesses, a number that has steadily decreased over the years. Almost 3,000 people are directly engaged in trade policy development and enforcement. How many armies do you know that have more generals than soldiers? Global trade minimally entails data collection, policy making, negotiation, financing, promotion, regulation and enforcement. Some argue that developing global markets runs the gamut of aid to trade. However we look at it, myriad government agencies touch this space, often overlapping. This presents the opportunity for a double whammy: cutting costs, program spending and duplication and beefing up business facing support. We need boots on the ground and investing in technology to reduce manpower intensity and enable a self-service portal; these help connect U.S. businesses to global opportunities and help ring transactions. Earlier this year President Obama proposed the reorganization of trade-related agencies that could save $3 billion over 10 years and eliminate 1,000 to 2,000 full-time equivalent jobs in a couple of years. Not much has happened since. When it comes to policy and negotiation, small is beautiful. The Office of the Unites States Trade Representative is successful because it is small and focused. The opportunity exists to redeploy our resources and get the better bang for the taxpayer buck not by spending more but by stewarding our resources better. We must help U.S. businesses secure revenue, profit and market share today before playing the role of global cop. We need to keep a laserlike focus on investing in programs that help put Americans back to work and help American companies grow their share of global exports. And in businesslike fashion, trade-facing agencies must annually report the exports that they directly facilitated and America's share of global U.S. exports. Global trade and a results-based approach to all trade policy and promotion spending can deliver savings and better export results. This post is part of a series produced by The Huffington Post and George Washington University that closely examines the most pressing challenges facing President Obama in his second term. To read the companion article by HuffPost's Mark Gongloff, click here. To read the companion blog post by Dennis M. Kelleher of Better Markets, Inc., click here. To read all the other posts in the series, click here.

15 января 2013, 03:40

Guest Post: Despite Sanctions, Iran's Economy Limps Along

Submitted by John C.K. Daly of OilPrice.com Despite Sanctions, Iran's Economy Limps Along In the 20th century, upright moral nations developed a new method of showing international opprobrium to rogue nations, the implantation of economic sanctions, designed to modify a recalcitrant nation’s behavior to accommodate international political mores. The most infamous example is the U.S. unilaterally imposing an oil embargo on Japan in July 1941, which most historians now agree led directly to Pearl Harbor, as energy bereft Japan, importing 4/5 of its crude oil needs from the U.S., decided to seize the oil assets of the Dutch East Indies in order to continue its imperial adventures in China and southeast Asia. Fast forward to 2013, and Washington is seeking yet again to use sanctions to influence Iran’s domestic policies, most notably its support for insurgent (terror) regimes and its civilian nuclear uranium enrichment program, which Tehran maintains is entirely peaceful, but which the U.S. and Israel assert in fact masks a covert program to develop a nuclear weapon capacity. Iran is now unique in the world that it is currently subject to a series of sanctions regimes, including those imposed by the U.S., the European Union and the United Nations Security Council. Even plucky Australia has gotten into the act, with Australian Foreign Minister Bob Carr announcing on 10 January that Canberra’s new sanctions targeted Iran’s financial, trade, energy, and transport sectors, telling reporters, "These sanctions further increase pressure on Iran to comply with its nuclear nonproliferation obligations and with UN Security Council resolutions and to engage in serious negotiations on its nuclear program." So, how effective has western pressure been in bringing Tehran’s mullahcracy to heel? On 7 January Iranian Oil Minister Rostam Qasemi told the country's budget and planning parliamentary commission that  Iran’s oil exports have plummeted by 40 percent as a result of the Western sanctions targeting the country’s nuclear program and that there had also been  “a 45 percent decrease in repatriating oil money." Qasemi’s candidness was a significant climbdown, as previously he had persistently maintained that Iran's crucial oil exports were entirely unaffected by the U.S. and EU sanctions. Whatever yardstick is used, the Western sanctions have diminished Iranian oil exports. While in 2011 the EU had purchased 18 percent of Iran's oil exports, that figure has now shrunk to zero, while other Iranian export markets, including China, Japan, South Korea, India and Turkey have  decreased Iranian crude oil imports from anywhere from 15 percent to more than 40 percent during 2012. According to the Organization of Petroleum Exporting Countries, of which Iran is the second largest producer, and the International Energy Agency, Iranian crude exports have fallen from around 2.4 million barrels per day in late 2011 to roughly one million barrels per day by December 2012. Financial analysts estimate that plummeting exports, combined with the U.S. sanctions designed to exclude Iran from using international banking transactions to repatriate oil revenues are now costing the country roughly $5 billion per month in lost revenues. On 9 January Iran’s central bank stated that by the end of 2012 the country’s annual inflation rate soared by 27.4 percent, and that in October 2012, the Iranian rial lost about 50 percent of its value in one week. Tehran refutes the nuclear allegations and maintains that, as a signatory to the Non-Proliferation Treaty and a member of the International Atomic Energy Agency, it is entitled to develop and acquire nuclear technology for peaceful purposes. So, how effective have the sanctions been in moderating Iran’s behavior up to now? Current indications are not much, despite the damage inflicted on the country’s economy. On 9 January Iranian President Mahmoud Ahmadinejad said that Iran should establish more processing industries in the oil and gas sectors to reduce dependency on exports of crude oil and that the budget plan for the next Iranian year of 1392 (to start on 21 March) envisaged less dependence on crude oil revenues as the government intends to replace crude oil exports with oil derivatives to allow the nation’s economy to participate in the oil sector’s lucrative downstream industry. An Islamic regime has controlled Iran for the last 34 years, and it is worth bearing in mind that, according to the CIA World Factbook, the median age of Iran’s population is 26, which means that half the country’s population knows no other political system. Accordingly, what is the Farsi word for “stalemate?” A regime that has weathered more than three decades of tumult in its efforts to construct an Islamic society seems unlikely in an energy-starved world to ameliorate its behavior solely to please the dictates of Washington, Brussels, the UN and Canberra. And oh, on 14 September 2012 the United States exempted Belgium, Britain, the Czech Republic, France, Germany, Greece, Italy, the Netherlands, Poland, Spain, and Japan from complying with the sanctions for another 180 days, a list that was expanded on 8 December to include China, India, South Korea, Malaysia, Singapore, South Africa, Sri Lanka, Turkey, and Taiwan. And, of course, the military option remains “on the table.”