October 4, 2011: Some News That Matters

girl reading newspaper

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US car sales rose strongly in September, with gloom over economic prospects offset by consumers’ need to replace old vehicles, easier credit conditions and an improved supply of Japanese vehicles, the FT reports . According to preliminary data, http://ftalphaville.ft.com/thecut/2011/10/04/691716/us-car-sales-rebound-strongly-in-september/

China’s foreign ministry said it “adamantly opposes” a bill being pushed by the Senate to allow the United States to impose duties on countries that undervalue their currencies, Reuters reports. In a statement posted on China’s official government website on Tuesday, http://ftalphaville.ft.com/thecut/2011/10/04/691691/china-criticises-us-currency-bill/

Eurozone finance ministers gave a clear indication they were preparing to paper over Greece’s failure to hit international lenders’ mandated budget targets for 2011, saying they would now evaluate Athens’ performance based on goals that combine both this year’s and next year’s finances, http://ftalphaville.ft.com/thecut/2011/10/04/691651/eurozone-ministers-to-reset-greek-goals/

Global stocks fell to a 15-month low on Tuesday, Reuters reports, pinning Asian stocks near a 16-month low, as investors shed riskier assets on growing doubts over Greece’s ability to avoid default, fuelling fears of global financial turmoil and recession. http://ftalphaville.ft.com/thecut/2011/10/04/691656/stocks-hammered-by-eurozone-and-growth-fears/

And much more below.

The global manufacturing sector is in the worst shape since the summer of 2009 as slowing economic growth and the deepening eurozone crisis take their toll on the world’s factories, reports the FT. Purchasing managers’ index surveys released on Monday indicated global manufacturing activity weakened slightly last month to the lowest level since June 2009, http://ftalphaville.ft.com/thecut/2011/10/03/691576/gloom-prevails-in-manufacturing-surveys/

Qatar Holding, an arm of the gulf state’s sovereign wealth fund, is planning to create a standalone investment vehicle to buy stakes in, or take over, gold companies, reports the FT. According to several people familiar with the fund’s plans, http://ftalphaville.ft.com/thecut/2011/10/03/691556/qatar-holding-to-create-standalone-investment-vehicle/

People familiar with the matter said Dexia, which has €20.9bn ($27.6bn) in sovereign debt issued by troubled eurozone countries, held talks to consider quarantining troubled assets in a “bad bank”, “Nothing is off the table,” said a senior executive in the Brussels-based group, one of the first European banks to be bailed out in 2008. “There is a call for state guarantees, so nothing can be off the table.” Eurozone finance ministers also gave a clear indication they were preparing to paper over Greece’s failure to hit budget targets in 2011, saying that they would set new goals that would combine both this year’s and next year’s financial numbers. http://www.ft.com/intl/cms/s/0/fddebe40-eddb-11e0-a491-00144feab49a.html#axzz1Zgu7c53P

Eurozone finance ministers gave a clear indication they were preparing to paper over Greece’s failure to hit international lenders’ mandated budget targets for 2011, saying they would now evaluate Athens’ performance based on goals that combine both this year’s and next year’s finances.  The decision came a day after Greek finance minister Evangelos Venizelos acknowledged Athens would miss the 2011 benchmarks, which the European Union and the International Monetary Fund had set as a prerequisite for disbursing an essential €8bn bail-out payment that is already past due. http://www.ft.com/intl/cms/s/0/162d842e-ee1b-11e0-a491-00144feab49a.html#axzz1Zgu7c53P

India has offered to train Afghan police to help them prevent future terrorist attacks in a move likely to be seen as highly provocative by long-time rival Pakistan. Over recent weeks, Islamabad has rebuffed accusations from senior US and Afghan officials that its allies in Afghanistan are responsible for a spate of attacks. A move by New Delhi, which has long accused Pakistan of backing terror groups operating in India, to train Afghan police for the first time would risk raising the temperature further in one of the world’s most volatile regions. http://www.ft.com/intl/cms/s/0/e2b84378-edd3-11e0-acc7-00144feab49a.html#axzz1Zgu7c53P

Fears that the holding company for American Airlines, the fourth-biggest US carrier by passenger miles, would file for bankruptcy sent shares in AMR Corporation tumbling by a third on Monday.  Management at AMR, which owns the regional airline American Eagle as well as American, strongly denied the claims. American is the only big US carrier not to have passed through a Chapter 11 bankruptcy filing in the past decade. That has led to suggestions the company would voluntarily file for bankruptcy to renegotiate labour – and in particular pilot – costs, despite holding a cash pile of about $5bn. http://www.ft.com/intl/cms/s/0/0ce9b2c6-ede3-11e0-a491-00144feab49a.html#axzz1Zgu7c53P

Brazil was braced for the release of industrial production figures for August that economists expected to show a stagnant or contracting manufacturing sector in the third quarter. Economists expected the figures, to be released on Tuesday, to indicate that industrial production in Brazil shrank in August, with Goldman Sachs forecasting a 0.25 per cent decline compared with July and Barclays Capital a 0.1 per cent contraction. http://www.ft.com/intl/cms/s/0/9a0daf4a-ee06-11e0-a491-00144feab49a.html#axzz1Zgu7c53P

Asian stock markets tumbled on Tuesday amid worries of a Greek debt default and a looming global recession, with the South Korean market dropping over 5% to one-year lows. Regional currencies, including the Korean won and Australian dollar, slumped to fresh 2011 lows, while copper dropped more than 2.0%. Oil prices fell over $1.0.  Japan’s Nikkei Stock Average lost 1.8%, while South Korea’s Kospi fell 5.3% to around one-year lows as the market played catch up after a public holiday on Monday. Australia’s S&P/ASX 200 fell 0.5% and New Zealand’s NZX-50 dropped 0.4%. DJIA futures were up two points in screen trade. Stocks in Seoul suffered a broad selloff reflecting the local economy’s sizable exposure to offshore markets. Data earlier showed local manufacturing activity contracted in September added to the gloom. http://online.wsj.com/article/SB10001424052970204524604576609704175890800.html?mod=WSJASIA_hpp_LEFTTopWhatNews

Australia’s central bank kept interest rates on hold at 4.75% on Tuesday, playing a cautious hand against growing concerns of a looming global recession and mounting sovereign-debt risks in the European Union. The decision was widely expected by economists. Money markets had priced in just a 25% chance of a cut. The Reserve Bank of Australia last raised interest rates last November. It has held them steady in the months since as the world economy slowed and weakness in parts of the domestic economy emerged. Still, the case for a rate cut hasn’t yet fully materialised. The country’s booming mining sector threatens to keep inflationary forces alight, with a wage-pressuring wave of mining investment expected over the next year. http://online.wsj.com/article/SB10001424052970204524604576609920269269358.html?mod=WSJASIA_hpp_LEFTTopWhatNews

Gone are a U.S. student-loan business, a U.K. online bank and a Japanese brokerage operation. Citigroup Inc. cast them off as it undertakes a housecleaning. The sales have paid off for the third-largest U.S. bank, shrinking a pool of unwanted assets that Citigroup executives no longer see as central to the company’s main business of corporate and consumer banking, securities trading and cash management for large companies. http://online.wsj.com/article/SB10001424052970203791904576609113582257774.html?mod=WSJASIA_hpp_LEFTTopWhatNews

Asian currencies were under pressure on Tuesday in Asia amid the continuing European sovereign debt crisis and concerns over a global economic slowdown, prompting some regional currency authorities, according to traders, to defend their own currencies. Korean and Malaysian central banks were suspected to have intervened in the currency market, buying their own currencies against the dollar above 1,200.00 won and at 3.2130 Malaysian ringitts, respectively, traders said. The greenback is at 1,205.80 won and 3.2266 ringitts as of 10:50am local time.http://online.wsj.com/article/SB10001424052970204524604576609813297388114.html?mod=WSJASIA_hpp_LEFTTopWhatNews

After turning in the worst quarter since the financial crisis, U.S. stocks started the new one by approaching the level considered a bear market. The Dow Jones Industrial Average tumbled 2.4% Monday, leaving the index down 16.8% from its April high, 3.2 percentage points away from the 20% decline that many analysts believe signals that a bear market is under way. The broader Standard & Poor’s 500-stock index also fell sharply and is even closer to bear-market territory, down 19.4% since April. The indexes are at their lowest closing levels in more than a year. http://online.wsj.com/article/SB10001424052970204524604576609354170378860.html?mod=WSJ_hp_LEFTTopStories

Millions of current and former homeowners will have a chance to get their foreclosure cases examined to determine whether they should be compensated for banks’ mistakes, under a wide-ranging review being planned by federal regulators. The review process, which could be unveiled in the next few weeks, will be open to borrowers who were in some stage of foreclosure in 2009 or 2010. Estimates prepared by the Office of the Comptroller of the Currency, which will oversee the review, indicate that 4.5 million borrowers could be eligible for review.http://online.wsj.com/article/SB10001424052970203791904576609310331811594.html?mod=WSJ_hp_LEFTWhatsNewsCollection

U.S. auto sales climbed nearly 10% in September from a year ago as richer discounts and strong demand for larger pickup trucks and sport-utility vehicles helped the industry sidestep economic malaise. General Motors Co., Nissan Motor Co. and Chrysler Group LLC each reported U.S. auto sales last month climbed at least 20% from a year ago. Ford Motor Co. said its sales rose 8.9%. In contrast, Toyota Motor Corp and Honda Motor Co., still hurting from limited inventories, said sales fell 17.5% and 8%, respectively. http://online.wsj.com/article/SB10001424052970204524604576608594202667616.html?mod=WSJ_hp_LEFTWhatsNewsCollection

India’s economy is poised for a further slowdown as moderating external demand clouds export prospects and prolonged monetary tightening continues to crimp manufacturing activity, two separate data releases showed Monday. Exports in August climbed 44.3% from a year earlier to $24.3 billion, but this was about 17% lower than July, when exports shot up a staggering 80%, which many economists said was an aberration and unsustainable. http://online.wsj.com/article/SB10001424052970204612504576608063519596144.html?mod=WSJAsia_hpp_LEFTTopStories

Australia’s seasonally-adjusted trade surplus increased to 3.1 billion Australian dollars ($2.95 billion) in August, from A$1.8 billion in July, the Australian Bureau of Statistics said Tuesday. Exports rose to A$28.4 billion from A$26.3 billion in July, while imports increased to A$25.3 billion from A$24.4 billion. Economists had been expecting a trade surplus of A$2.0 billion according to a Dow Jones Newswires survey, while a Reuters survey had tipped a A$1.9 billion surplus. In separate data, the bureau reported residential building approvals jumped a seasonally adjusted 11.4% in August, blowing past a forecast for a 0.3% rise, according to a Dow Jones Newswires survey. http://www.marketwatch.com/story/australia-aug-trade-surplus-rises-to-a31-billion-2011-10-03

Members of the euro zone will do everything to avoid a Greek debt default, Jean-Claude Juncker, prime minister of Luxembourg and president of the Eurogroup of finance ministers said Monday. Speaking at a late-night news conference broadcast over the Internet, Juncker said no euro-zone country advocated that Greece default on its debt or that it be ejected from the euro. Juncker said a decision on whether to award Greece the next tranche of aid under a European bailout would be made after the Eurogroup received a report from auditors from the European Union, the European Central Bank and the International Monetary Fund, or the so-called troika. He said the Eurogroup did not expect the report before Oct. 13. http://www.marketwatch.com/story/eu-determined-to-avoid-greek-default-juncker-2011-10-03

Like it or not, the euro zone will have to break up, and the euro’s days are numbered. When it was created more than a dozen years ago, the euro seemed to be an idea whose time had come. It was to be a common currency for all the countries in the European Union, permitting business and travel to occur seamlessly from Spain, to Italy, to France, to Germany and Belgium, among others. The ultimate goal of the euro’s creators was to enable members of the European Union to better compete with the United States and other countries around the world. But the euro was seriously flawed from day one.http://www.marketwatch.com/story/euro-outlook-breaking-up-is-hard-to-do-2011-10-04

U.S. gold futures jumped 1 per cent on Tuesday as investors dumped equities and turned to bullion on growing fears that a Greek default could trigger another global recession. U.S. gold futures added $10 to $1,667.7 an ounce by 0304 GMT, having hit a high of $1,674.4 an ounce. Spot gold rose $8.99 at $1,665.39 an ounce — well below a lifetime high around $1,920 struck in early September.http://www.reuters.com/article/2011/10/04/us-markets-precious-idUSTRE78M11C20111004

Brent crude fell more than a dollar to below $101 a barrel, pressured by growing fears of a Greek default and a stronger dollar. Brent crude for November delivery dropped to an intraday low of $100.51 a barrel, down $1.20 in early Asia trading and within striking distance of an eight-week low. U.S. crude slipped $1.35 to $76.26 a barrel by 0042 GMT (8:42 p.m. EDT). http://www.reuters.com/article/2011/10/04/us-markets-oil-idUSTRE7922QH20111004

Apple Inc looks set to unveil a new iPhone on Tuesday after a 15-month hiatus, hoping to fend off hard-charging rivals running Google Inc’s Android and safeguard its lead with the fifth incarnation of the iconic device. Newly appointed CEO Tim Cook will do the honours this time from Apple’s headquarters, running the first major product launch in years without impresario Steve Jobs as he tries to take Apple to still-loftier heights.The iPhone 5 — expected to be faster, thinner and larger-screened — would arrive just in time for the crucial holiday shopping season. It should sustain Apple’s smartphone momentum and help ward off a challenge from close runner-up Samsung Electronics. http://www.reuters.com/article/2011/10/04/us-apple-iphone-idUSTRE7930HE20111004

Euro zone finance ministers are reviewing the size of the private sector’s involvement in a second international bailout package for Greece, a move that could undermine the aid program and hasten the threat of a Greek default. Ministers also agreed after a meeting in Luxembourg that Greece could wait until mid-November until it receives the next instalment from its existing emergency aid program, piling more pressure on Athens to tackle its debt problems. Jean-Claude Juncker, the chairman of the Eurogroup ministers, said they were reassessing the extent of the private sector’s role in the planned second package for Greece, a centrepiece of the deal struck on July 21 to rescue Athens. http://www.reuters.com/article/2011/10/03/us-eurozone-idUSTRE79211720111003

Japanese Finance Minister Jun Azumi urged Europe on Tuesday to come up with a transparent scheme to resolve the Greek debt crisis, to help stabilise the world economy and keep the euro from weakening too much against the yen. Azumi, speaking to reporters after a cabinet meeting, said he had told European Central Bank member Christian Noyer in a meeting on Monday that Europe must swiftly implement measures agreed in July to beef up Europe’s bailout fund. http://www.reuters.com/article/2011/10/04/us-japan-economy-azumi-idUSTRE7930A820111004

Goldman Sachs Group Inc. cut its global growth forecast for this year and next, predicting recessions in Germany and France as the European economy stalls and the risk of a contraction in the U.S. grows. The world economy will probably expand 3.8 per cent this year and 3.5 per cent in 2012, compared with earlier predictions of 3.9 per cent for 2011 and 4.2 per cent for next year, Goldman Sachs economists Jan Hatzius and Dominic Wilson wrote in an Oct. 3 report. The company lowered its forecast for earnings growth in Asia excluding Japan in a separate report today. http://www.bloomberg.com/news/2011-10-04/goldman-cuts-global-gdp-estimate-sees-german-french-recessions.html

Hennes & Mauritz AB (HMB), Europe’s second- largest clothing retailer, plans to step up the expansion of its new brands in Asia, anticipating that Chinese consumers will favour more-expensive labels such as Monki and COS. H&M is looking at locations in Hong Kong for the upmarket COS brand, Pernilla Wohlfahrt, head of new business at Stockholm-based H&M, said in a telephone interview. Hong Kong “could be a testing ground for China,” she said. http://www.bloomberg.com/news/2011-10-03/h-m-targets-expansion-in-asia-for-fast-growing-monki-cos-upmarket-brands.html

China’s service industries expanded at a faster pace last month, rebounding from a deceleration in August, a pickup that may ease concern the world’s second- largest economy is slowing. A purchasing managers’ index rose to 59.3 from 57.6 in August, driven by retail spending, the China Federation of Logistics and Purchasing said on its website yesterday. HSBC Holdings Plc and Markit Economics said a separate index gained to 53 in September from a series-record low of 50.6 the previous month http://www.bloomberg.com/news/2011-10-02/china-manufacturing-gain-negates-hard-landing-as-price-pressures-moderate.html

European governments dropped clues that bondholders may have to take bigger losses on Greek debt in a second aid package, as Greece’s deteriorating economic outlook forces bolder steps to quell the fiscal crisis. Finance ministers considered reshaping a July deal that foresaw investors contributing 50 billion euros ($66 billion) to a 159 billion-euro rescue. That private sector involvement, or PSI, includes debt exchanges and rollovers. http://www.bloomberg.com/news/2011-10-03/eu-signals-investors-may-have-to-take-bigger-losses-in-second-greek-rescue.html

Drowning in red ink, Greece has nowhere to turn to revive the economic growth that might put its debt on a sustainable trajectory, reassure angry foreign creditors and offer hope to its recession-weary citizens. Instead, the country finds itself in a vicious circle—a death spiral, some would say—in which it is borrowing ever more to keep up on its existing debts, crushing growth in the process and thereby worsening its all-important ratio of debt-to-gross domestic product. http://www.cnbc.com/id/44758520

Possible OPEC supply cuts, the delayed return of Libyan oil and peak winter heating fuel demand may provide pockets of support to benchmark crude oil prices during an otherwise grim final quarter plagued by global growth concerns, CNBC’s weekly survey showed. Eight out 12 respondents, said prices would fall this week. “$70 is the new $90,” said Peter McGuire, CEO of FX Global Capital, referring to a downside target for U.S. crude oil futuresthat may be tested if global investors continue to flee assets closely correlated to the economy. U.S. crude futures broke below $80 last week and fell 17 per cent in the third quarter marking the worst performance for U.S. crude since the height of the financial crisis in late 2008. In London, ICE Brent crude fell $9.72, or 8.64 per cent for the third quarter, the biggest percentage loss since the second quarter of 2010. http://www.cnbc.com/id/44766772

Tokyo Electric Power Co. plans to raise as much as 2.4 trillion yen ($31 billion) selling bonds to repay debt securities due by March 2021, according to a government panel investigating the utility’s finances. Tepco, as the company is called, aims to raise the funds to cover bonds maturing after April in either 2015 or 2016 through the year ending March 2021, the panel said in a report released yesterday. Tepco had 4.7 trillion yen of domestic and foreign currency bonds outstanding at the end of July, the report said. The utility hasn’t been able to issue new bonds since the March 11 earthquake and tsunami knocked out its Fukushima Dai- Ichi plant, causing the worst nuclear crisis in 25 years and exposing the company to trillions of yen in damage claims. http://washpost.bloomberg.com/story?docId=1376-LSINPQ07SXKX01-6P0IVLE7GE52K7F9N7ROIH3IOJ

Billionaire investor George Soros says he can sympathise with the ongoing protests on Wall Street, which have spread to other US cities. He said he understood the anger at the use of taxpayers’ cash to prop up stricken banks, allowing them to earn huge profits. A large rally is planned for Wednesday in New York City, with backing from union groups. More than 700 protesters were arrested on Saturday on Brooklyn Bridge.  The demonstrations – based at Zuccotti Park, near Wall Street and the Federal Reserve – are now entering their third week. http://www.bbc.co.uk/news/world-us-canada-15155046

Ratings agency Standard & Poor’s has confirmed the UK’s AAA credit rating. S&P said that despite sluggish growth, the UK’s “diversified” economy and “flexible” fiscal and monetary policy would enable it to weather a slowdown.  The news will be welcomed by Chancellor George Osborne, who on Monday told the Conservative Party conference that he would not change economic course. S&P said its AAA rating could be re-evaluated if the government weakened its resolve to reduce public debt. http://www.bbc.co.uk/news/business-15151005

Josef Ackermann, the chief executive of Deutsche Bank, has attacked European politicians for failing to get to grips with the region’s debt crisis, saying they risked upsetting the West’s “social fabric”.  Rounding on those who think the crisis will be short-lived, Mr Ackermann warned the problem would extend into the “medium-term”. “Many have lived beyond their mean for years, if not decades. The ageing of societies – with the ensuing consequences in terms of higher public spending on pensions and health care – will only compound the debt problem. Many politicians still shy away from consolidation, not least because an ageing electorate is less inclined to support cuts in social welfare expenditure,” said Mr Ackermann, speaking to an audience in Stockholm. http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8804848/Deutsche-Bank-chief-Josef-Ackermann-says-politicians-risk-upsetting-Wests-social-fabric.html

The Government is planning to lend billions of pounds of public money directly to British businesses in a radical move designed to by-pass banks that are blocking credit lines. George Osborne used his speech at the Conservative Party Conference to announce plans for “credit easing” – which is a form of quantitative easing for businesses. The Chancellor said: “I have set the Treasury to work on ways to inject money directly into parts of the economy that need it such as small business. It is known as credit easing. It is another form of monetary activism,” he said. “It is similar to the national loan guarantee scheme we talked about in opposition.” http://www.telegraph.co.uk/finance/financialcrisis/8804180/Chancellor-by-passes-banks-to-ease-business-credit.html

Banks are suffering a severe slowdown after a torrid few months on global financial markets, according to a survey for the CBI. The downturn could lead to further job cuts in the next quarter. The business lobby group warned that the mood in the industry had darkened, with worries about the fate of the eurozone and falling global demand for banking services. http://www.guardian.co.uk/business/2011/oct/03/financial-services-job-losses

Prime Minister Julia Gillard says changes to Australia’s tax system must meet the challenges of an ageing population, a long-running resources boom and incentives to increase work participation. But reform should not hurt the nation’s poorest citizens, and must be sustainable and costed. “We are a labour government and that means that we will never agree with increasing the tax take or tax burden on the poorest in our community. Never have, never will,” she said. “No proposition that advocates for that will be taken forward by this government.” http://www.smh.com.au/business/australias-tax-system-challenged-gillard-20111004-1l618.html#ixzz1ZmsnUusL

The Italian government will present new stimulus measures in a few weeks to get the economy growing and so shield the country from the eurozone debt crisis, Prime Minister Silvio Berlusconi said Monday. “The government and the majority (in parliament) are working on a new decree of concrete and effective measures which wil boost confidence … We will submit it in the middle of the month, as we said we would,” Berlusconi said in a statement. http://www.smh.com.au/business/world-business/italy-to-announce-new-stimulus-measures-20111004-1l5pq.html#ixzz1Zmsvy7nS

A bear market six months in the making officially bared its teeth Monday, as fears of a slowing global economy took another bite out of the Toronto Stock Exchange. The S&P/TSX composite index (TSX-I11,251.84-372.00-3.20%) plunged 372 points to a 13-month low of 11,251.84 as worry grew over a possible Greek default and purchasing managers’ indexes pointed to anemic worldwide growth.http://www.theglobeandmail.com/globe-investor/the-bear-market-is-back-tsx-swoon-tops-20/article2189668/

The average price of China’s exports is rising as export quantity growth slows, according to customs data. Meanwhile, the nation’s foreign trade gains more momentum with countries such as India, ASEAN members, Russia, Brazil and South Africa. Customs data shows that the average price of Chinese exports rose 10.3 per cent during the first eight months of this year, in comparison with the same period last year. The figure was 9.1 percentage points higher year-on-year. However, export amount slowed by 21.8 percentage points to 12.1 per cent. http://news.xinhuanet.com/english2010/china/2011-10/04/c_131173715.htm

Brazilian Central Bank on Monday injected 5.3 billion U.S. dollars into local financial markets to bolster the local currency, the real, against a stronger U.S. dollar. As concerns over the faltering Greek economy led to another weakening of the real early Monday morning, the Brazilian monetary authority sold 5.3 billion dollars in “swap contracts,” the biggest such operation seen this year, to halt the depreciation of the real.  The Central Bank’s intervention came as the real was quoted at 1.92 per dollar just before 15:30 local time (1930 GMT) and supported the real to regain some strength to close at 1.802 reals per dollar. http://news.xinhuanet.com/english2010/business/2011-10/04/c_131173981.htm

South Korea’s consumer prices growth slowed to 4.3 per cent in September due to a fall in agricultural product prices, a government report showed Monday. Consumer prices rose 4.3 per cent in September from a year earlier, sharply down from a 5.3 per cent on-year surge in August, according to the report by Statistics Korea. From a month before, consumer prices increased 0.1 per cent last month, slowing from a 0. 9 per cent on-month gain the previous month. The September reading was sharply lower than a month earlier, but it breached the upper ceiling of the Bank of Korea (BOK)’s inflation target band 2-4 per cent for the ninth straight month. http://news.xinhuanet.com/english2010/business/2011-10/04/c_131173575.htm

Fitch ratings revised down its growth forecast for all major advanced economies Monday. The revision is a result of the weaker second quarter 2011 outturns compared with previous forecasts. According to the latest quarterly Global Economic Outlook (GEO), the world growth is revised down to 2.6 per cent in 2011 compared with 3.1 per cent in the previous edition of the GEO, 2.7  per cent in 2012 compared with 3.4 per cent previously, and 3.1 per cent in 2013 from 3.4 per cent previously. In the report, the intensified financial market volatility increased the likelihood of a recession, as it could further amplify risk aversion behaviour and lead to tighter credit conditions. http://news.xinhuanet.com/english2010/business/2011-10/03/c_131173253.htm

Communications and IT Minister Kapil Sibal on Monday unveiled the draft National Policy on Electronics, 2011, aimed at achieving a turnover of $400 billion for the sector by 2020, which involved investment of about $100 billion, besides creating employment for 2.8 crore people. The final policy is likely to come by December this year. “At the current rate of growth, the domestic production can cater to a demand of only $100 billion in 2020 as against demand of $400 billion and the rest would have to be met by imports…a demand-supply gap of nearly $300 billion. Unless the situation is corrected, it is likely that by 2020 the electronics import may far exceed oil imports,” Mr. Sibal said after unveiling the draft. http://www.thehindu.com/business/Industry/article2509699.ece

India and Indonesia will begin talks on Tuesday for a Comprehensive Economic Cooperation Agreement (CECA) with an aim to take forward the economic cooperation to a new level by achieving a bilateral trade target of $25 billion by 2015. Union Commerce and Industry Minister Anand Sharma on Monday reached Jakarta to launch the formal negotiations with Indonesian Trade Minister Mari Elka Pangestu.  Trade and investment between India and Indonesia had seen a massive rise in the last few years with investment by Indian companies having touched $3.50 billion and another $25-billion worth of investments in the pipeline. http://www.thehindu.com/business/Economy/article2509700.ece

Even as the trade deficit widened, India’s export continued its upward trend, posting a 44.2 per cent year-on-year growth at $24.3 billion in August despite slowdown in economic activity in the traditional Western markets and the eurozone. According to data released by the Commerce Ministry on Tuesday, imports grew by 41.8 per cent to $38.4 billion during the month, translating into a trade deficit of $14 billion. The Commerce Ministry has already warned that growth in exports in the coming months could be hit on account of uncertainty in Western markets. Oil imports were valued at $10.3 billion in August, translating into a growth of 48.7 per cent compared to the corresponding month last fiscal, while non-oil imports rose to $28 billion, an expansion of 39.4 per cent.http://www.thehindu.com/business/Industry/article2508520.ece

Fitch Ratings has revised India’s GDP growth projections to 7.5 per cent from 7.7 per cent, for FY 2011-12 and to 8 per cent from 8.2 per cent for FY 2012-13 on the back of deteriorating global growth prospects. In its latest quarterly Global Economic Outlook, Fitch said that growth forecasts for all major advanced economies (MAE) were being revised downwards as Q2 2011 were weaker than previously forecast by Fitch. MAE growth has been stalling at rates not seen since 2009, the report said. http://www.thehindubusinessline.com/industry-and-economy/article2509471.ece?homepage=true&ref=wl_home

High-end real estate prices in London broke new records in September, fuelled by Russian investors animated by the situation at home, according to British realtors. The average price for a real estate object in the centre of the city is now above 3.97 million pounds sterling, according to a report by Knight Frank. This is 4.5 per cent higher than the last price peak reached in March 2008. The average price increase for the last 12 months for homes and apartments was 11.4 per cent. Foreign buyers are the source of the surge, accounting for 55 per cent of purchases in the luxury category. Especially noticeable is the increase in the number of buyers from Russia, Knight Frank’s Liam Bailey said. “Due to a degree of uncertainty, connected with the elections, people are looking for the chance to invest money abroad,” Bailey said. http://www.themoscowtimes.com/business/article/uncertainty-at-home-fueling-russian-purchases-in-london/444728.html#ixzz1Zmvy1nEo

Cape Town – The year-on-year growth rate in the First National Bank (FNB) House Price Index for September has stalled on 5.6%. “The latest results imply that, since the beginning of the big market ‘correction’, which we believe began after a real house price boom time peak in February 2008, house prices in real terms have declined cumulatively by minus 15.3% to August 2011,” FNB economist John Loos said. “However, since July 2000 when the index started, prices are still up 64.7% in real terms and 313.1% in nominal terms.” http://www.fin24.com/Companies/Property/House-prices-hit-brakes-20111003

Belarus is seeking a $400 million loan from Iran and hopes to agree a new $7 billion bailout from the International Monetary Fund, central bank’s management board Chairwoman Nadezhda Yermakova and Deputy Finance Minister Vladimir Amarin said on Monday.  “The question of raising loans worth some $400 million from Iran is under consideration. The Iranian party has already taken a decision in principle,” Yermakova told the Belarusian parliament.  “An IMF mission to assess the economic situation in the country starts work on Tuesday. Maybe this will move on to considering a new program. Its volume stands at $7 billion,” Amarin told journalists. http://www.tehrantimes.com/index.php/economy-and-business/3154-belarus-seeks-400-mln-from-iran-7-bln-from-imf

With Markets falling hard in today’s session, let’s review some important Index Charts. We wrote of the big sell formation last week. We are now trading on those support levels. Will the market fool everybody again, bounce up, and confuse both bulls and bears? As HFT are dominating all trading, we might just get that flash crash again. Market is sitting on critical levels, especially the SPX. Below charts with important levels to watch. Make or Break, yet again. http://www.thetrader.se/2011/10/03/make-or-break/

Another great report on the Great Economic Benefit of HFT….By Nanex.  On October 3, 2011 beginning at 11:10:00.450, in the stock CA Technologies (symbol CA), a bizarre interaction between multiple HFT algorithms caused a wild oscillation in the NBBO with over 1,000 trades executing in a 35 cent range. Just before and after the event, the bid-ask spread was a narrow 1 cent, and trades executed normally in a 1 cent range. Essentially HFT caused the bid-ask spread to widen from 1 cent to over 35 cents in the blink of an eye. http://www.thetrader.se/2011/10/03/high-freak-volatility/This post originally appeared at The Trader.