News That Matters

Ft.com
Australia’s agricultural commodities market resumed trading on Wednesday morning, a day after ASX, the exchange operator, shut it down in the wake of the collapse of MF Global, the FT reports. The exchange had said it took the decision on Tuesday to close the grain and wool markets “until further notice” given the large amount of outstanding contracts held by the US broker,http://ftalphaville.ft.com/thecut/2011/11/02/720671/australia-grain-and-wool-futures-resume-trading/

Regulators should have powers to limit banks’ ability to pay bonuses and dividends if they run into severe financial difficulties, according to the chief executive of HSBC. The FT reports Stuart Gulliver told a panel of parliamentary members that it would be “absolutely reasonable” for the Bank of England’s new financial policy committee to control such payments in extreme circumstances,http://ftalphaville.ft.com/thecut/2011/11/02/720611/hsbc-chief-backs-tighter-regulation/

John Paulson’s investors have signalled confidence in his ability to recover from severe losses in his flagship hedge funds, with the great majority choosing to keep their money with a manager who personally oversees $30bn in investments, http://ftalphaville.ft.com/thecut/2011/11/02/720581/most-investors-sticking-by-paulson/

The government of Prime Minister George Papandreou teetered on the verge of collapse on Tuesday, the NYT reports, as opposition to his surprise plan for a referendum on the new bailout threatened Greece’s adherence to the terms of the deal. An emergency cabinet meeting convened by Mr Papandreou ended at nearly 3am on Wednesday, http://ftalphaville.ft.com/thecut/2011/11/02/720381/turmoil-over-greek-bailout-vote/

The southern Chinese city of Zhuhai has introduced restrictions on housing purchases in a sign of the government’s resolve to rein in the property market, reports the FT. The move on Tuesday came even though prices have started to decline across much of the country. Similar restrictions have been rolled out in other big cities since last year, http://ftalphaville.ft.com/thecut/2011/11/01/720241/china-imposes-curbs-on-buying-property/

The UK economy grew faster than forecast in the third quarter as manufacturing and services industries rebounded from disruptions during the previous three months, data from the Office of National Statistics showed on Tuesday. http://ftalphaville.ft.com/thecut/2011/11/01/718891/uk-economy-grows-faster-than-forecast-in-q3/

European leaders are racing to save the latest rescue plan for the eurozone after financial markets reeled on Tuesday on fears that Greece’s proposal to hold a referendum on its second bail-out package could lead to a disorderly default by Athens. Reacting with scarcely disguised anger to Athens’ unexpected move, Angela Merkel, Germany’s chancellor, and Nicolas Sarkozy, France’s president, summoned George Papandreou, Greek prime minister, to emergency talks in Cannes on Wednesday with Christine Lagarde, managing director of the International Monetary Fund, and the heads of the leading European institutions, to buttress the eurozone’s position on the eve of the G20 summit of world economies. http://www.ft.com/intl/cms/s/0/4df3962e-04ae-11e1-b309-00144feabdc0.html#axzz1cWYs0oy8

Nomura and Credit Suisse became the latest banks to announce swingeing cost cuts as Europe’s sovereign debt crisis and a dearth of corporate dealmaking continue to batter the investment banking industry. Nomura, the Japanese brokerage that bought Lehman Brothers’ European and Asian operations at the height of the financial crisis, signalled the end of its audacious attempt to break into the global investment banking elite in announcing it would slash costs by $1.2bn, including significant cut backs to its European business. http://www.ft.com/intl/cms/s/0/99c89e6a-04a3-11e1-91d9-00144feabdc0.html#axzz1cWYs0oy8

When Ben Bernanke, chairman of the Federal Reserve, emerges from his meetings with the Federal Open Market Committee, he addresses the media in that most Delphic of dialects – “Fedspeak.” Like any good central banker, he is careful to preach the piety of price stability. Even if he believes that more inflation could help the US economy, he would be hard pressed to admit it. His allies on the FOMC, however, have more leeway. Charles Evans, president of the Chicago Fed, for instance, has openly declared his desire for more inflation. “Given how badly we are doing on our employment mandate, we need to be willing to take a risk on inflation,” he said on October 17. For Evans, this would entail keeping rates near zero until unemployment dips below 7.5 per cent or inflation rises above 3 per cent. http://www.ft.com/intl/cms/s/0/d206efd0-047f-11e1-ac2a-00144feabdc0.html#axzz1cWYs0oy8

Commodities prices lost ground as fears over the sovereign debt crisis reared their head once again following Greece’s surprise announcement of a referendum on the eurozone deal, while weak economic data from China and the US also depressed sentiment. The strength of the dollar also prompted profit taking, while the bankruptcy of broker MF Global which was prominent in some commodities trading, also hit sentiment. http://www.ft.com/intl/cms/s/0/721eee12-0473-11e1-b309-00144feabdc0.html#axzz1cWYs0oy8

Wsj.com
Most Asian stock markets dropped Wednesday, as Greece’s plan to hold a referendum on its newly crafted bailout package rattled investors, sending the Tokyo market to a three-week low and denting oil prices. Japan’s Nikkei Stock Average was down 1.8% after earlier hitting a three-week low, while Australia’s S&P/ASX 200, after briefly falling as much as 2% to a one-week low, was down 0.8%. South Korea’s Kospi Composite and Hong Kong’s Hang Seng Index were both down 0.9%, China’s Shanghai Composite Index was off 1% and India’s Sensex was flat. Dow Jones Industrial Average futures were up 20 points in electronic trading. http://online.wsj.com/article/SB10001424052970204394804577012742327923650.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews

Faced with sharp jumps in its sovereign borrowing costs, Italy’s government on Tuesday promised “rapidity” in its actions to shore up the euro zone’s most sluggish economy.  But Prime Minister Silvio Berlusconi took another shot at external culprits, saying he had “no doubts” that the Greek government’s surprise plan to hold a referendum on austerity plans had caused Italy’s public debt to suffer another brutal day. That outburst came after he called the euro a “strange currency that nobody is convinced by” on Friday. http://online.wsj.com/article/SB10001424052970204528204577011862395226158.html?mod=WSJEurope_hpp_LEFTTopStories

Federal Reserve officials are poised to downgrade their outlook for the U.S. economy, a shift that will play an important role in the debate about whether the Fed should do more to spur growth. Officials don’t seem ready to do more just yet. They are more likely to spend much of their two-day policy-making meeting, which ends Wednesday, discussing what measures they might take if the economy falters again, as it did this summer. http://online.wsj.com/article/SB10001424052970203707504577012151015493234.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews

More than half of China’s millionaires are either considering emigrating or have already taken steps to do so, according to a survey that builds on similar findings earlier this year, highlighting worries among the business elite about their quality of life and financial prospects, despite the country’s fast-paced growth. The U.S. is the most popular emigration destination, according to the survey of 980 Chinese people with assets of more than 10 million yuan ($1.6 million) published on Saturday by Bank of China and wealth researcher Hurun Report.http://online.wsj.com/article/SB10001424052970204394804577011760523331438.html?mod=WSJAsia_hpp_LEFTTopStories

Australia’s 18-month drive to introduce a controversial mining tax hit a fresh snag as it was introduced to parliament Wednesday, with a key independent lawmaker warning that he wouldn’t support the law until further research was done on the environmental impact of the coal seam gas industry. Tony Windsor—whose New England electorate covers an area of New South Wales state where companies including Santos Ltd. and the Royal Dutch Shell PLC-PetroChina Co. Arrow Energy joint venture hold rights to explore for petroleum—said development work should stop while scientific research was done on the environmental effects of the industry. http://online.wsj.com/article/SB10001424052970204394804577012671481845272.html?mod=WSJASIA_hpp_LEFTTopWhatNews

Marketwatch.com
The deal agreed last week by euro-zone members to help solve Greece’s sovereign debt problems and prevent them from spreading to other nations in the currency bloc are the best way to handle the country’s crisis, the European Commission and the European Council said in a joint statement on Tuesday. “We take note of the intention of the Greek authorities to hold a referendum. We are convinced that this agreement is the best for Greece. We fully trust that Greece will honour the commitments undertaken in relation to the euro area and the international community,” European Council President Herman Van Rompuy and European Commission President Manuel Barroso said in a joint statement. http://www.marketwatch.com/story/eu-and-ec-say-euro-deal-best-solution-for-greece-2011-11-01

Reuters.com
Greek Prime Minister George Papandreou fought off a barrage of criticism to win the backing of his cabinet Wednesday to push ahead with a referendum the government said would take place as soon as possible on a European Union debt bailout deal. Some of his party lawmakers called for him to quit for jeopardizing Greek euro membership with his shock decision to call a popular vote, a move that pummeled the euro and global stocks, but the cabinet support at least gives him a stay of execution before a confidence vote in parliament Friday. http://www.reuters.com/article/2011/11/02/us-greece-referendum-idUSTRE79U5PQ20111102

U.S. banks have not done enough to ensure they are well capitalized, and getting back to a system where retail and investment banking are separated would be attractive in terms of reform, Bill Gross, manager of the world’s largest bond fund, said on Tuesday. “Do we have a better example today than MF Global in terms of the mingling of those two particular aspects of capital allocation,” Gross, who runs the $242.2 billion PIMCO Total Return portfolio, said at Charles Schwab Corp’s IMPACT conference in San Francisco. “So the closer we get back to separating the two, I suppose the better from the standpoint of reform.” http://www.reuters.com/article/2011/11/02/us-pimco-gross-idUSTRE7A10HA20111102

Auto sales rose in October due to pent-up demand for cars and trucks although the gains failed to offset concerns that financial crisis in Europe could derail the industry’s slow recovery. Shares of General Motors Co (GM.N) fell nearly 10 percent, more sharply than other auto stocks, as the top American automaker posted sales growth of 2 percent, slower than some analysts had expected. Ford Motor Co’s (F.N) 6 percent sales growth was in line, though its shares ended 5 percent lower amid a broad sell-off in auto stocks triggered by concern about the possible collapse of a bailout deal for Greece and the risk that that could undercut a slow-but-steady gain in U.S. vehicle demand. http://www.reuters.com/article/2011/11/02/us-autos-idUSTRE7A03M120111102

Bloomberg.com
Greek Prime Minister George Papandreou told his ministers in Athens today that his plans for a referendum would confirm Greece as a member of the European Union and the euro area and send a clear message. “The dilemma isn’t ‘this or another government’,” Papandreou told his ministers in Athens today, according to an e-mailed transcript of his statements. “The dilemma is ‘yes or no to the loan accord’, ‘yes or no to Europe’, ‘yes or no to the euro’.”  Papandreou said resorting to early elections would be “shirking responsibility”. http://www.bloomberg.com/news/2011-11-01/papandreou-says-plans-for-referendum-will-confirm-greece-as-a-euro-member.html

Japan’s government faces almost 40 trillion yen ($512 billion) in losses from intervening in the foreign-exchange markets to stem the yen’s advance, according to estimates by JPMorgan Chase & Co. Valuation losses on Japan’s foreign-exchange reserves minus yen liabilities totaled 35.3 trillion yen at the end of 2010, according to Finance Ministry data. The losses may swell further as the yen is projected to climb to 72 versus the dollar by September 2012, said Tohru Sasaki, head of Japan rates and foreign-exchange research at JPMorgan Chase in Tokyo. http://www.bloomberg.com/news/2011-11-02/japan-faces-510-billion-losses-from-yen-sales-jpmorgan-says.html

Cnbc.com
Japanese Finance Minister Jun Azumi said on Wednesday the Greek prime minister’s call for a referendum on the EU bailout plan would likely be a topic at this week’s G20 meeting. Azumi told reporters everyone was bewildered by Greece’s referendum call, adding that it was not in “the program”, an apparent reference to the bailout. Greek Prime Minister George Papandreou said on Wednesday he would push ahead with a referendum on an EU bailout deal, defying demands from lawmakers of his own party that he quit for jeopardising Greek membership of the euro. http://www.cnbc.com/id/45127089

Foxbusiness.com
France and Germany on Tuesday said they were determined to see last week’s agreement on Greece’s debt problems enacted as quickly as possible. “France and Germany are determined to ensure, with their European partners, the complete implementation, as quickly as possible, of the decisions adopted by the summit, which are today more necessary than ever,” a statement by French President Nicolas Sarkozyand German Chancellor Angela Merkel said. The statement, on the French presidency’s website, said the two countries were convinced that the deal agreed by the euro zone’s members would allow Greece to return to lasting economic growth. http://www.foxbusiness.com/markets/2011/11/01/france-germany-want-euro-deal-on-greece-enacted/#ixzz1cWcnnvDX

USAtoday.com
The United States doesn’t plan to offer financial help at this week’s G-20 summit to European leaders wrestling with a government debt crisis that threatens the global economy. Instead, U.S. officials said, eurozone countries have the capacity to help themselves — and if they need assistance, they can turn to developing countries led by China as well as the International Monetary Fund. “Europe has substantial resources that it can bring to bear,” Lael Brainard, Treasury undersecretary for international affairs, said Monday on the eve of this week’s G-20 summit in Cannes, France.http://www.usatoday.com/money/economy/story/2011-10-31/g-20-summit/51020572/1

Washingtonpost.com
State Bank of India, the nation’s largest lender, will get a capital infusion of more than 30 billion rupees ($609 million) from the government to bolster capital as concern that loans may sour mounts. The funds are a part of the 140 billion rupees that the government plans to invest in state-run lenders, a finance ministry official said in New Delhi yesterday, declining to be identified citing government policy. The money is in addition to a 60 billion rupee investment planned for the year to March 31 and will ensure the banks have a Tier 1 capital ratio of more than 8 percent, said the official.http://washpost.bloomberg.com/story?docId=1376-LTZGG56TTDWB01-6ENT9BE2VP5I8VO1KUPO0NDIV2

BBC.co.uk
Companies from Russia and China are most likely to pay bribes when doing business abroad, a survey suggests. The two scored worst out of 28 countries in a poll of 3,000 business executives conducted by anti-corruption group Transparency International (TI). The Netherlands and Switzerland came top, while the UK ranked eighth, just ahead of the US and France. http://www.bbc.co.uk/news/business-15544841

The Argentine government has imposed new restrictions on the purchase of US dollars, in an attempt to reduce capital flight and tax evasion.  People wanting to exchange Argentine pesos for dollars must now explain where they got the money, and show they have paid their taxes.  Currency trading in Buenos Aires on Monday was much reduced as a result. Many Argentines buy dollars to protect their wealth from inflation – thought to be higher than officially stated. http://www.bbc.co.uk/news/world-latin-america-15532101

Telegraph.co.uk
Italy a bigger threat to UK than Greece, warns FSA chairman Lord Turner. Italy’s debt problems pose an even greater risk to the British economy than a Greek default, according to Lord Turner, the chairman of the Financial Services Authority.  Giving evidence to the Treasury Select Committee on Tuesday, Lord Turner said that while the direct exposure of British banks to Italy was not large, the country’s financial crisis, if it got worse, would be more damaging to the UK than those of Greece, Ireland and Portugal. “Italy is the most concerning. That is the most important thing for us to focus on,” he said.http://www.telegraph.co.uk/finance/financialcrisis/8863394/Italy-a-bigger-threat-to-UK-than-Greece-warns-FSA-chairman-Lord-Turner.html

UK recovery slowest in 100 years despite 0.5pc growth. Britain is now officially stuck on a slower recovery path than after the Great Depression of the 1930s despite better growth in the three months to September than expected. GDP rose by 0.5pc in the third quarter, beating the 0.1pc in the previous three months and the 0.3pc widely predicted, according to the Office for National Statistics (ONS). However, dismal manufacturing data took the gloss off the figures, leading to warnings of a double-dip recession. http://www.telegraph.co.uk/finance/economics/8863374/UK-recovery-slowest-in-100-years-despite-0.5pc-growth.html

Smh.com.au
US crude fell for a fourth day on Wednesday, the longest losing streak since August, as renewed concerns about Greece’s debt crisis and a slowdown in China’s manufacturing drove investors to assets such as the dollar and gold. US crude on the New York Mercantile Exchange fell 78 cents, or 0.9 per cent, to $US91.41 a barrel, extending declines from the previous session. Brent crude lost 50 cents, or 0.5 per cent, to $US109.04 a barrel. Brent prices rose 6.6 per cent last month. http://www.smh.com.au/business/markets/oil-extends-slump-on-greek-worries-20111102-1muct.html#ixzz1cWfFFurZ

Gold advanced for a second day as concern that a Greek referendum will threaten Europe’s plan to end the region’s debt crisis spurred demand for a haven. Immediate-delivery bullion rose as much as 0.5 per cent to $US1728.10 an ounce, and was at $US1726.03. December-delivery gold gained for the first day in four, climbing as much as 1 per cent to $US1729.40 on the Comex. http://www.smh.com.au/business/markets/gold-gains-as-crisis-increases-haven-demand-20111102-1mucy.html#ixzz1cWfKrhei

THE International Labour Organisation has warned that a jobs crisis caused by the slowdown in the global economy threatens a wave of social unrest engulfing both rich and poor countries. Highlighting the darkening prospects for employment, the Geneva-based ILO said policymakers were running out of time to head off a double-dip recession in labour markets. http://www.smh.com.au/business/ilo-warns-of-jobs-crisis-20111101-1mttu.html#ixzz1cWfPOwTX

Theglobeandmail.com
Bank of Canada Governor Mark Carney said the Greek government is right to seek broad democratic support on whether it should accept the financial-rescue plan on offer from its partners in the euro area, so he respects Prime Minister George Papandreou’s plan to hold a referendum. Speaking to the House of Commons Finance Committee Tuesday morning, Mr. Carney notes that it is “imperative that there is widespread support” for tough decisions to implement major fiscal austerity measures, because they will unfold over a long period. http://www.theglobeandmail.com/report-on-business/economy/carney-says-greece-right-on-referendum/article2220900/

Xinhuanet.com
Cs.com.cn
Farm produce prices in China continued to fall for a third week, according to a report released by the Ministry of Commerce yesterday. In the week ending on Oct. 30, the wholesale prices of 18 staple vegetables dropped by an average of 2.2 percent from the previous week, the report said. Pork prices have dropped 4.7 percent since mid-September, the report said. The prices of rice and flour both rose 0.2 percent, and edible oil prices maintained stable from a week ago, according to the report. http://www.cs.com.cn/english/ei/201111/t20111102_3112754.html

The big 4 banking giants issued new loans more than 140 billion yuan by the date of October 27, a Beijing-based banker told China Securities Journal yesterday. The big state-owned listed banks, including Industrial and Commericial Bank of China, the Agriculture Bank of China, the Bank of China and the China Construction Bank, issued more than 60 billion yuan surprisingly in five working days (from October 21 to 27), the banker added. http://www.cs.com.cn/english/ei/201111/t20111102_3112596.html

China’s foreign exchange regulator said Monday that the total surplus of Chinese banks’ foreign exchange from bank-to-client transactions reached 26 billion U.S. dollars in September. In September, institutional and individual clients sold 142.6 billion U.S. dollars in foreign currencies to banks while purchasing 116.6 billion U.S. dollars, the State Administration of Foreign Exchange (SAFE) said in an online statement. http://www.cs.com.cn/english/ei/201111/t20111101_3109553.html
Thehindu.com
Prime Minister Manmohan Singh on Wednesday expected the Summit of the world’s 20 leading economies (G20) to signal a “strong and coordinated approach” to put the global economy back on track, while addressing medium term structural issues. Dr. Singh also underscored the need for swiftly taking the difficult decisions to address the economic challenges in Europe and elsewhere against the backdrop of the sovereign debt crisis in Eurozone. http://www.thehindu.com/news/national/article2591059.ece?homepage=true

Economictimes.com
India’s exports grew by 36.3% in September 2011, demonstrating impressive growth despite a slowdown in US and Europe. Exports came in at $24.8 billion compared to $18.2 billion in the year-ago period. Imports also grew by 17.2% coming in at $ 34.5 billion. India’s trade balance ballooned a further $ 9.7 billion in September to reach $73.5 billion for the first half of the fiscal.http://economictimes.indiatimes.com/news/economy/foreign-trade/exports-up-36-per-cent-in-september-while-imports-grew-17-per-cent/articleshow/10574285.cms

India’s manufacturing activity in October rose for the first time in six months, with festive orders offering a breather to an economy besieged by dampening demand and rising costs of capital. The Purchasing Managers’ Index rose to 52 from 50.4 in September, when it hit a 30-month low, according to data released by HSBC Holdings. A reading of 50 separates growth from contraction. The index, compiled by financial information services company Markit, is based on a survey of 500 firms. http://economictimes.indiatimes.com/news/economy/indicators/finally-manufacturing-rises-after-6-months/articleshow/10573906.cms
Themoscowtimes.com
Talks between China and Russia on a huge gas export deal are developing well, with only some specific issues mainly related to the price structure remaining to be resolved, a senior Chinese diplomat said Tuesday. “At the moment, relevant companies from both sides are having working-level discussions on the important consensus reached on the gas deal during [Prime Minister Vladimir] Putin’s visit,” Chinese Vice Foreign Minister Cheng Guoping told a news briefing. http://www.themoscowtimes.com/business/article/china-gas-talks-progress-ahead-of-st-pete-summit/446963.html#ixzz1cWi6rtUb
Fin24.com
Washington – The head of the World Bank on Tuesday called on Group of 20 leaders at an upcoming meeting to find ways to deal with increased global food price volatility that is hurting poorer countries.
The call by the institution’s president, Robert Zoellick, ahead of the November 3-4 meeting in Cannes, France, comes as the World Bank’s quarterly food price index showed global food prices remain high and volatile. The index showed a small dip of 1% in September, settling at 5% below its February peak, but it is still 19% above its September 2010 levels, the World Bank said.http://www.fin24.com/Economy/World-Bank-urges-G20-to-tackle-food-prices-20111101

Tehrantimes.com
The National Iranian Gas Export Company (NIGEC) has rejected Western media allegations that the Swiss EGL Company has imposed a ban on the purchase of natural gas from Iran. “Technical issues are the main reason behind the delayed sales of [Iran's] natural gas to this European company,” NIGEC Managing Director Hossein Bidarmaghz said on Monday.  He added that Iran and the Swiss company were facing no contractual or legal problems for starting gas exports, Mehr News Agency reported. http://tehrantimes.com/index.php/economy-and-business/4159-no-swiss-ban-on-irans-natural-gas

Thetrader.se
Formally the referendum is about the bail out package, negotiated last week (remember the squeeze). In reality it is a vote on whether to stay in the Euro or not. A “no” vote would totally close Greece from refinancing it’s debt, and would cause a default and probably a goodbye to Euro. Parliament to vote on the referendum probably later this week. If referendum is rejected, we will get new elections, as the current government would resign. http://www.thetrader.se/2011/11/01/quick-facts-on-the-referendum/

Credit Markets have been implying a slightly different reality than the Equity markets, for a long time. Spreads taking new highs. If we just could persuade China to buy more Debt from Europe….Charts by McDonough. http://www.thetrader.se/2011/11/01/spreads-taking-new-highs/

Don’t forget that secular bear markets can last for a very long time. The 1907 “panic” has so far been “replicated” by the 2008 crisis (still active). The 1907 crisis lasted for a very long time. Yes, this time is different, but not everything is better now, but one thing constant is the stupidity of people. From DShort. http://www.thetrader.se/2011/11/01/the-panic-of-1907-and-2008-any-similarities/