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"The point is ladies and gentlemen that greed, for lack of a better word, is good."
Gordon Gekko
FT.com
Christophe de Margerie, chief executive of Total, the French oil group, is to be questioned in court over allegations of corruption linked to the UN oil-for-food programme in Iraq, the FT reports. A French justice official said that a decision to refer Mr de Margerie and 18 other individuals to the Paris courts had been made by Serge Tournaire http://ftalphaville.ft.com/thecut/2011/08/03/641556/total-chief-faces-grilling-over-oil-for-food/
China’s central bank governor urged Washington on Wednesday to act responsibly to deal with its debt issues, saying uncertainty in the US Treasuries market will undermine the international monetary system and hamper global growth, http://ftalphaville.ft.com/thecut/2011/08/03/641536/chinas-central-bank-chief-warns-us-on-debt/
Spanish and Italian politicians rushed to formulate a fresh response to the debt crisis engulfing the two countries as their borrowing costs hit euro-era highs, the FT reports. José Luis Rodríguez Zapatero, http://ftalphaville.ft.com/thecut/2011/08/03/641456/spain-and-italy-face-fresh-crisis/
The spectre of an imminent US default on its debt disappeared as legislation to increase America’s borrowing authority cleared its last remaining hurdle in the Senate and was signed by President Barackhttp://ftalphaville.ft.com/thecut/2011/08/03/641431/us-formally-retreats-from-brink-of-default/
The United States had its triple A rating confirmed by Moody’s and Fitch on Tuesday but threats of future downgrades remain, says Reuters. Moody’s Investors Service maintained the US Aaa rating, but assigned a negative outlook, http://ftalphaville.ft.com/thecut/2011/08/03/641436/moodys-and-fitch-affirm-us-ratings/
Syrian opposition activists are stepping up their lobbying for international sanctions against the oil industry to deprive the regime of a crucial source of revenue and cripple its ability to finance the mounting repression of popular protests. But while the activists are finding willingness for action in the US, the European Union remains reluctant to broaden its sanctions beyond specific officials and businesses that have direct links to the regime of Bashar al-Assad. http://www.ft.com/intl/cms/s/0/9e735f18-bd22-11e0-9d5d-00144feabdc0.html#axzz1TkVnqGOp
Brazil has stepped up its fight against cheap imports from Asia, strengthening border controls and increasing antidumping measures, as well as offering $16bn in tax breaks to revive the country’s own flagging manufacturers. Despite enjoying one of the highest growth rates in the world, Brazil has seen its industry shrivel over recent months as a result of the surging local currency, which has made exports less competitive and encouraged cheap imports, mainly from China. http://www.ft.com/intl/cms/s/0/ea4d41d0-bd2f-11e0-9d5d-00144feabdc0.html#axzz1TkVnqGOp
WSJ.com
Asian shares tumbled Wednesday on renewed concerns over the global economic outlook, with the Australian market skidding to an 11-month low. Japan’s Nikkei Stock Average fell 1.8%, Australia’s S&P/ASX 200 lost 2.0%, South Korea’s Kospi Composite fell 2.6% to its lowest level in more than a month and New Zealand’s NZX-50 was 0.8% lower. Dow Jones Industrial Average futures were down seven points in screen trade. http://online.wsj.com/article/SB10001424053111903341404576485004189582640.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews
As the specter of the Swiss franc reaching parity with the euro looms ever larger, the alarm bells and calls for help from Switzerland’s businesses are growing more shrill. The franc hit all-time highs versus the euro and dollar on Tuesday as markets eyed widening Spanish and Italian bond yields and rushed to the safety of the Swiss currency. The euro was trading at around 1.1057 francs during European afternoon trading, off an earlier all-time low at 1.0985 francs. http://online.wsj.com/article/SB10001424053111903341404576483692219113326.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews
The chance that financial distress could spread from smaller, fiscally troubled euro-zone economies to a larger member state, such as Spain or Italy, bounced back to investors’ worry list Tuesday. The yields on ten-year Italian and Spanish debt accordingly rose, to euro-era record levels, at 6.22% and 6.41%, respectively. Many market watchers say 7% for 10-year yields is a line beyond which these countries would start to experience funding problems, said Simon Penn, a strategist at UBS in London. Seven percent was, after all, the point at which Greece, Ireland and Portugal finally threw in the towel and asked for help. That level is getting rather close for Rome and Madrid, too, especially if investors are in the mood to test those governments. http://online.wsj.com/article/SB10001424053111903341404576483832152216742.html?mod=WSJEurope_hpp_LEFTTopStories
A round of aggressive budget cuts will hamper the British military’s ability to act and reduce the influence abroad of the U.S.’s biggest military ally, a report by a parliamentary defense committee said. The report said the U.K. Armed Forces are in danger of falling below the minimum size and capability required to deliver on their current military commitments and will face significant challenges between 2015 and 2020, after the budget cuts take place. http://online.wsj.com/article/SB10001424053111903341404576484560905589844.html?mod=WSJEUROPE_hpp_MIDDLESecondNews
Chancellor of the Exchequer George Osborne should relax his tough austerity regime to boost sagging demand in the U.K. and not rely on the Bank of England to rescue the economy with more quantitative easing, a leading U.K. research group said Wednesday. The National Institute of Economic and Social Research said fiscal policy in the U.K. is too tight and Mr. Osborne should consider temporary tax cuts for the low paid to spur demand for goods and services, which has collapsed as a consequence of stagnant wage growth, high inflation and high household debt.http://online.wsj.com/article/SB10001424053111903341404576484201469463560.html?mod=WSJEUROPE_hpp_MIDDLESecondNews
The auto industry staggered through another sluggish month in July, as General Motors Co. and Ford Motor Co. posted modest sales gains while Toyota Motor Corp. and Honda Motor Co. suffered big declines because of shortages. Chrysler Group LLC was alone among the major car makers in posting a significant U.S. sales increase, logging a 20% gain. In total, auto makers sold 1,059,601 cars and light trucks, just 0.9% more than a year earlier, according to Autodata Corp. The total translated to an annual rate of 12.23 million vehicles. That was up from June’s rate of 11.56 million vehicles andhttp://online.wsj.com/article/SB10001424053111903341404576484103864570320.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews
Americans stepped up saving in June and cut spending, in a broad retrenchment that is both a cause of the slowing economic recovery and a reaction to it. Consumer spending, which accounts for 70% of economic activity, decreased 0.2% in June, the biggest drop since September 2009, compared with a 0.1% increase in May, the Commerce Department said Tuesday. Personal income increased a scant 0.1%, while the wages and salaries that are the fuel of consumer spending declined slightly. With hiring slow and unemployment at 9.2%, people whohttp://online.wsj.com/article/SB10001424053111903520204576483882838360382.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews
Gloom in Australia’s retail sector deepened in June with sales falling unexpectedly, with the outcome further eroding support for the Australian dollar, which touched its lowest levels since mid-July. Australian retail sales fell 0.1% to a seasonally adjusted 20.54 billion Australian dollars (US$22 billion) in June from A$20.57 billion in May, the Australian Bureau of Statistics said Wednesday. Economists expected a rise of 0.3% on the month. Sales rose 0.3% in the second quarter from the first in chain volume terms, meeting expectations. http://online.wsj.com/article/SB10001424053111903520204576485073452571538.html?mod=WSJASIA_hpp_LEFTTopWhatNews
The annual rate of inflation across developed economies eased in June, the first decline since November 2010. If sustained, that drop in the inflation rate could make easier the job of policy makers, who had faced balancing surging commodity prices and fragile economic recovery. However, the inflation rate decline may also reflect a slowdown in the global economy. The Organization for Economic Cooperation and Development released data Tuesday showing consumer prices in its 34 member countries rose 3.1% in the 12 months to June, having risen 3.2% in the year to May. http://online.wsj.com/article/SB10001424053111903341404576483661437991664.html?mod=WSJASIA_hpp_LEFTTopWhatNews
Marketwatch.com
Growth in China’s service-sector moderated for a second month in July due to a weaker rate of increase in new business, according to the results of a survey released by HSBC Wednesday. The seasonally adjusted business activity index dropped to 53.5 in July from 54.1 in June, HSBC said. “Backlogs of work in the Chinese service sector fell during July, suggesting limited pressure on firms’ capacity amid below-par growth of incoming new business,” HSBC said. It added that while employment in the service sector grew in July, the pace of job creation “was only modest, and eased to the slowest since May 2009.” Inflationary http://www.marketwatch.com/story/chinas-service-sector-growth-eased-in-july-hsbc-2011-08-02
Chinese credit-rating agency Dagong Global Credit Rating Co. on Wednesday again downgraded U.S. sovereign debt and warned of further such moves, the state-run Xinhua news agency reported, though the action was unlikely to affect markets. Dagong cut U.S. Treasurys to A from A+, with a negative outlook, saying growth in U.S. debt is still outpacing revenue growth. The latest move followed a Dagong downgrade of U.S. debt from AA to A+ in November, citing the launch of the Federal Reserve’s second round of quantitative easing. http://www.marketwatch.com/story/chinese-agency-cuts-us-debt-rating-again-2011-08-02-2155480
Reuters.com
Gold hit a record high on Wednesday as investors made a beeline for bullion to shelter from the impact on financial markets of the deteriorating outlook for the global economy and Europe’s worsening debt crisis. Spot gold rose to an all-time high of $1,661.14 in early Asian hours, hitting its ninth record in 16 trading sessions and up nearly 17 percent so far this year. It was trading at $1,657.88 by 0424 GMT, little changed from the previous close. U.S. gold gained nearly 1 percent to $1,660.6. It rose to a high of $1,664.2, just 30 cents off the record set on Tuesday. http://www.reuters.com/article/2011/08/03/us-markets-precious-idUSTRE7592IU20110803
Russian Prime Minister Vladimir Putin accused the United States Monday of living beyond its means “like a parasite” on the global economy and said dollar dominance was a threat to the financial markets. “They are living beyond their means and shifting a part of the weight of their problems to the world economy,” Putin told the pro-Kremlin youth group Nashi while touring its lakeside summer camp some five hours drive north of Moscow. http://www.reuters.com/article/2011/08/01/us-russia-putin-usa-idUSTRE77052R20110801
Bank of Japan Governor Masaaki Shirakawa said on Wednesday the central bank will need to carefully examine economic and price developments with an eye on the effect of recent yen rises. Shirakawa said there were some merits to a strong yen for companies http://www.reuters.com/article/2011/08/03/japan-economy-boj-idUST9E7IS01620110803
Pressure will build among Federal Reserve policymakers at a meeting next week for measures to pep up a stumbling recovery with a stronger commitment to rock-bottom interest rates. The Fed is not expected to announce any new measures at its meeting on Tuesday. But behind closed doors, policymakers could be setting the stage for further action, most likely some form of communication that would bolster a promise of low interest rates as far as the eye can see. http://www.reuters.com/article/2011/08/03/us-usa-fed-idUSTRE76Q5EQ20110803
Bloomberg.com
Crude for September delivery dropped as much as 69 cents to $93.10 a barrel in electronic trading on the New York Mercantile Exchange, and was at $93.53 at 2:27 p.m. Sydney time. It’s the longest losing streak since the five days of declines to May 6. The contract yesterday slid $1.10 to $93.79. Prices are 13 percent higher in the past year. http://www.bloomberg.com/news/2011-08-02/oil-declines-for-fourth-day-in-new-york-after-u-s-personal-spending-drops.html
Glenn Stevens signaled he will raise interest rates when global risks dissipate, a message dismissed by a bond market seeing an escalation in risks among the nation’s trading partners. Stevens held the overnight cash rate target at 4.75 percent yesterday and for the first time since October — a month before the last increase in borrowing costs — cited in his statement the prospect of raising the benchmark. He indicated an “acute sense of uncertainty in global financial markets” had stayed his hand. http://www.bloomberg.com/news/2011-08-02/australia-s-rate-increase-signal-goes-unheeded-by-bond-market.html
Hong Kong developers are poised to snap up land in China at a time when their mainland rivals’ finances are being sapped by government property curbs. Builders including Sun Hung Kai Properties Ltd. (16) and Cheung Kong (Holdings) Ltd. took in HK$66 billion ($8.47 billion) from new apartment sales in the six months ended June, a first-half record, according to Centaline Property Agency Ltd. Chinese developers face a shortage of credit and higher interest rates, prompting Standard & Poor’s to cut its outlook on the sector. http://www.bloomberg.com/news/2011-08-02/china-beckons-to-hong-kong-builders-as-mainland-firms-squeezed.html
The two-year-old U.S. recovery’s staying power may be diminishing as consumers and the government pare spending, say five of the nine economists on the academic panel that dates recessions. “This economy is really balanced on the edge,” Harvard University economics professor Martin Feldstein, a member of the Business Cycle Dating Committee of the National Bureau of Economic Research, said yesterday in an interview on Bloomberg Television’s “Surveillance Midday” with Tom Keene. “There’s now a 50 percent chance that we could slide into a new recession. Nothing has given us much growth.” http://www.bloomberg.com/news/2011-08-02/feldstein-recession-panel-members-see-rising-odds-of-a-renewed-u-s-slump.html
CNBC.com
The bear market is on its way back, economist and contrarian investor Marc Faber, the editor and publisher of The Gloom Boom & Doom Report told CNBC Tuesday. “The bear market is starting. When you compare equities to bonds and cash I don’t think equities are very positive,” Faber said in an interview. Markets have been more turbulent in recent months as debt crises in both the US and the euro zone threatened to damage growth there. http://www.cnbc.com/id/43983284
The US is only a few years away from reaching the same debt levels that pushed Greece to the brink of ruin, former comptroller general and head of the Comeback America Initiative David Walker said. As the ratio of its debt to gross national product eclipsed 100 percent and surged toward 150 percent, Greece has twice in the last two years nearly defaulted on its debt. Only successive bailout packages from the European Union and International Monetary Fund prevented catastrophe. http://www.cnbc.com/id/43984077
Europe is a “train wreck” and on the “brink of a major financial crisis,” Scott Minerd, CIO of the fixed-income firm Guggenheim Partners, told CNBC Tuesday. The way Europe is operating right now, it’s what I called recently ‘cognitive dissonance,’” Minerd said, or “basically doing the same thing thinking they’re going to get a different outcome.” http://www.cnbc.com/id/43988195
WashingtonPost.com
“In Russia, it’s a status thing now,” Jorge Uribe, a real estate agent with One Sotheby’s International Realty Inc. in Coral Gables, Florida, said in a telephone interview. “If you’re wealthy and you say you have a place in Miami, it’s like saying back in the old days, ‘I own a place in Ibiza or Monaco.’ It’s a cocktail conversation thing.” International investors are buying some of the priciest homes in America as the broader housing market slumps and a weak dollar makes U.S. property more of a bargain. Sales of residences above $20 million are rising in New York, California and Florida, which are popular business and vacation destinations for foreigners, according to Miller Samuel Inc., DataQuick and real estate brokers who cater to luxury buyers. http://washpost.bloomberg.com/story?docId=1376-LP2CNP1A1I4J01-4P86QP4513IDAINGRT4C31RB0F
BBC.co.uk
The UK’s construction industry continued to grow in July, a survey of the sector has indicated. The Markit/Cips construction purchasing managers’ index (PMI) was virtually unchanged at 53.5 points in July from 53.6 points in June. A number above 50 indicates growth in orders. But employment in the sector in the sector fell for a second month. The data comes after a similar survey of manufacturing on Monday showed its first contraction in two years. http://www.bbc.co.uk/news/business-14376540
Telegraph.co.uk
Reporting pre-tax profits down 33pc to £2.64bn in the six months to June 30, Bob Diamond, chief executive of Barclays, said the bank had already cut 1,400 jobs in 2011 and that redundancies this year are likely be more than double this number. The drop in profits was lower than the market had been expecting and was largely the result of a £1bn provision against the cost of compensating customers mis-sold payment protection insurance and a fall in the value of the bank’s gain on its holdings of its own debt. http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8676483/Barclays-profits-fall-sharply-warns-of-3000-jobs-cuts.html
Guardian.co.uk
Republicans have insisted repeatedly over the last few days that the deal does not include tax rises. But Obama, in a short statement in the Rose Garden, said the country’s huge national debt could only be reduced through a combination of spending cuts and tax rises, particularly for the wealthy and big corporations such as those in the oil industry. “Everyone is going to have to chip in,” he said. “That is only fair. That’s the principle I’ll be fighting for during the next phase of this process.” http://www.guardian.co.uk/world/2011/aug/02/barack-obama-senate-debt-deal
Xinhuanet.com
China’s consumer prices will remain high in the third quarter with July’s inflation figure forecast to be between 6 to 6.7 percent, according to analysts. The consumer price index, a main gauge of inflation, will climb to 6.5 percent year-on-year in July after hitting a three-year high of 6.4 percent in June. But this may not be the highest in the year, said Lu Zhengwei, analyst with the Industrial Bankhttp://news.xinhuanet.com/english2010/china/2011-08/03/c_131026896.htm
The Chinese economy will not experience a “double-dip” nor big fluctuations, and the government is capable and confident of keeping steady and relatively fast growth in the long-run, an official said Tuesday. China’s potential growth rate will remain at a high level in the future on the back of the deepening process of industrialization and urbanization, as well as accelerated economic restructuring, which will release huge domestic demand, said Li Pumin, spokesperson with the National Development and Reform Commission (NDRC). http://news.xinhuanet.com/english2010/china/2011-08/02/c_131025372.htm
The Organization for Economic Cooperation and Development (OECD) gave a vote of confidence for the Greek ambitious austerity plan in Athens on Tuesday, saying the country’s economy would grow by 0.6 percent in 2012. Presenting the organization’s latest economic survey of Greece, OECD Secretary General Angel Gurria expressed his optism over the prospect of the debt-ridden economy. “I am here to deposit a vote of confidence in Greece, Greek people, economy and the government,” said Gurria in a press conference at the National Bank of Greece conference hall in central Athens.http://news.xinhuanet.com/english2010/business/2011-08/03/c_131025699.htm
TheHindu.com
The Centre on Tuesday notified the removal of cap on cotton exports for the remaining period of the fibre season in the wake of abundant availability and a crash in prices. The cotton season runs from October to September. In October last year, the government had capped cotton exports at 55 lakh bales (170 kg each) to protect the domestic textiles industry in the face of rising raw material prices. An additional 10 lakh bales were permitted for export in June, after prices had corrected sharply. http://www.thehindu.com/business/Industry/article2316889.ece
EconomicTimes.com
Seeking to make a strong statement about the government’s resolve to stay within the budgeted fiscal deficit, Finance Minister Pranab Mukherjee presented a modest first supplementary for the 2011-12 fiscal. The government on Tuesday sought Parliament’s sanction for an additional 34,724 crore expenditure for 2011-12, but the net outgo was much lower at 9,000 crore. “I will keep my borrowing within limit,” Mukherjee said. http://economictimes.indiatimes.com/news/economy/finance/fm-to-keep-new-expenses-outgo-within-budgeted-fiscal-deficit/articleshow/9461183.cms
Yonhapnews.co.kr
South Korea’s exports contributed more to economic growth than domestic demand and had a positive impact on the creation of jobs in Asia’s fourth-largest economy in 2010, a think tank said Wednesday. The economic growth contribution rate of exports reached 62.2 percent last year, much higher than domestic consumption’s 37.8 percent, according to the Institute for International Trade (IIT). Without outbound shipments, South Korea’s economy would have grown in the lower 2 percent range instead of the 6.2 percent growth reached in 2010. The country exported a record US$466.4 billion worth of goods last year. http://english.yonhapnews.co.kr/business/2011/08/03/89/0502000000AEN20110803005300320F.HTML
TehranTimes.com
Iran’s petrochemical exports will amount to $14 billion by the end of the current Iranian calendar year (March 20, 2012), the National Petrochemical Company (NPC) managing director said here on Tuesday. “Iranian companies produced more than 10.2 million tons of petrochemicals in the first three months of the current year, indicating a two percent growth compared to the same period of the year before,” the SHANA news agency quoted Abdolhossein Bayat as saying. http://www.tehrantimes.com/index.php/economy-and-business/973-irans-annual-petchem-exports-to-hit-14b-
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