News That Matters (September 8, 2011)

FT.com
Fitch Ratings warned on Thursday that it might downgrade the credit rating of China within two years, Reuters reports, and there was a greater than even chance of a downgrade of Japan’s credit status. Andrew Colquhoun, http://ftalphaville.ft.com/thecut/2011/09/08/672126/fitch-warns-of-downgrades-for-china-and-japan/

National retail chains are deserting high streets in the north of England en masse, the FT reports, calling into question the long-term viability of once-vibrant shopping destinations, according to research. Vacancy rates in many town centres in the north and Midlands are now approaching 30 per cent, http://ftalphaville.ft.com/thecut/2011/09/08/672181/viability-of-town-centres-uncertain/

Japan’s machinery orders fell the most in 10 months in July, Bloomberg reports, as the yen’s gain to a postwar record eroded company profits and discouraged investment. Factory orders fell 8.2 per cent from June to July, http://ftalphaville.ft.com/thecut/2011/09/08/672141/japanese-machinery-orders-fall-sharply/

Treasury 10-year note yields fell, Bloomberg reports, on expectations that Federal Reserve chairman Ben Bernanke will on Thursday signal that policy makers will consider further stimulus measures to spur the economy. Yields on 10-year notes fell three basis points to 2.01 per cent, http://ftalphaville.ft.com/thecut/2011/09/08/672151/twist-anticipation-grows-ahead-of-bernanke-speech/

David Cameron has given the strongest signal yet that he will back recommendations to build a firewall around Britain’s retail banking operations, the FT says, but he wants to delay the implementationhttp://ftalphaville.ft.com/thecut/2011/09/08/672091/cameron%e2%80%89drops%e2%80%89strongest%e2%80%89hint%e2%80%89of-support-for-banking-firewall/

China is for the first time to give formal backing to moves by British banks to turn the City of London into an offshore trading centre for the renminbi, UK government officials have told the FT. As George Osborne, http://ftalphaville.ft.com/thecut/2011/09/08/672051/chinese-officials/

Financial markets are forecasting interest rate cuts in the eurozone as early as November, says the FT, in a sharp reversal of monetary policy expectations due to a deterioration in confidence surveyshttp://ftalphaville.ft.com/thecut/2011/09/08/672031/ecb-tipped-for-november-rate-cut/

Scandinavian currencies have taken over the Swiss franc’s mantle of haven currencies of choice following the Swiss National Bank’s decision to attempt to put a ceiling on the value of the franc, the FT says. Since the SNB announced its move on Tuesday, http://ftalphaville.ft.com/thecut/2011/09/08/671996/scandanavian-currencies-now-a-popular-haven/

The European Union should appoint a new budget tsar with powers to dictate taxes and spending in eurozone countries and who could ultimately adjudicate whether countries should be kicked out of the euro, the Dutch prime minister has argued. Writing in the Financial Times, Mark Rutte and his government’s finance minister, Jan Kees de Jager, said the new “commissioner for budgetary discipline” should be given the authority to impose a gradually more painful series of penalties on profligate eurozone countries, including the withholding of EU development funds. http://www.ft.com/intl/cms/s/0/e420064a-d971-11e0-b52f-00144feabdc0.html#axzz1XKlN2XFx

WSJ.com
Asian shares were mixed on Thursday, retracing early gains after worse-than-expected regional economic data rekindled investor concerns over the uncertain growth outlook, with the Australian dollar and Sydney stocks falling after a surprisingly weak jobs report. Australia’s S&P/ASX 200 shed 0.1% after earlier trading up as much as 0.8% before the release of data showing the jobless rate in August rose to 5.3%, compared with an expected 5.1%. Japan’s Nikkei Stock Average trimmed morning gains of 1.3% and was up 0.2%, while South Korea’s Kospi Composite was 0.8% higher. Hong Kong’s Hang Seng Index was down 0.8%, while China’s Shanghai Composite was off 0.1%. Dow Jones Industrial Average futures were down 37 points in screen trade.http://online.wsj.com/article/SB10001424053111903285704576557401504197290.html?mod=WSJASIA_hpp_LEFTTopWhatNews

Australia’s unemployment rate rose to its highest level in almost a year in August with the job markets in the major mining states of Queensland and Western Australia hardest hit, building the case for a cut in interest rates. Unemployment rose to a higher-than-expected 5.3% in August from 5.1% in July, while the number of employed fell 9,700, the Australian Bureau of Statistics said Thursday. Economists had expected 5.1% unemployment and 11,000 new jobs. http://online.wsj.com/article/SB10001424053111903285704576557501973243470.html?mod=WSJASIA_hpp_LEFTTopWhatNews

The Bank of Korea on Thursday kept its benchmark interest rate on hold for a third straight month, citing greater growth uncertainties for Asia’s fourth-largest economy. “The (Monetary Policy) Committee sees the domestic economy keeping up its long-term trend of growth going forward, but judges uncertainty as to its growth path to have intensified due to the impact of external risk factors,” the BOK said in a statement, after it held its policy rate steady at 3.25%. http://online.wsj.com/article/SB10001424053111903285704576557492765115376.html?mod=WSJASIA_hpp_LEFTTopWhatNews

U.K. business leaders on Thursday called on the Bank of England to restart a stimulus program known as quantitative easing to ward off the threat of a double-dip recession. The call comes amid an intensifying debate in the U.K. about how it can shore up its stalling economy, with an increasing number of economists also calling for another round of easing, or bond purchases using freshly created money.  The call from the Institute of Directors, or IOD, to respond to grim economic conditions comes on the same day the bank’s monetary policy committee concludes its monthly rate-setting meeting.http://online.wsj.com/article/SB10001424053111903285704576556461320545504.html?mod=WSJEurope_hpp_MIDDLTopStories

German industrial production increased far more than expected in July compared with the previous month, data from the economics ministry showed Wednesday. Total production increased 4% month-to-month in adjusted terms, well above the 0.5% rise analysts expected. June’s monthly change was revised up slightly to a drop of 1%. All sectors except energy showed gains in monthly terms. Broken down by category, manufacturing production grew by 4.5% month-to-month. Within these, basic goods increased by 2.3%, while capital goods grew by 7.5%. Construction production increased by 3.2%.http://online.wsj.com/article/SB10001424053111904836104576556182569125962.html?mod=googlenews_wsj

Federal Reserve officials are considering three unconventional steps to revive the economic recovery and seem increasingly inclined to take at least one as they prepare to meet this month. Worries about inflation at the Fed have receded in recent weeks and economic data have worsened, putting officials on the lookout for ways to spur economic growth and improve financial conditions.  Chairman Ben Bernanke speaks Thursday in Minneapolis, and is likely to reiterate that the central bank is studying all its options, before officials meet Sept. 20 and 21.http://online.wsj.com/article/SB10001424053111904103404576556943051259236.html?mod=WSJ_hp_LEFTTopStories

The Labor Department is investigating pay practices at many of the top companies in home building, hitting them with a broad demand for records that has led to complaints of regulatory overreach.Recipients of the letters include PulteGroup Inc.,Lennar Corp., D.R. Horton Inc. and KB Home, according to people familiar with the matter. A Labor Department spokeswoman confirmed the investigation but declined to discuss details. A copy of one letter, dated Aug. 1 and reviewed by The Wall Street Journal, said the department was opening a probe under the Fair Labor Standards Act, which governs matters such as overtime pay and limits on using teen workers. http://online.wsj.com/article/SB10001424053111904103404576556991282742996.html?mod=WSJ_hp_LEFTWhatsNewsCollection

Facebook Inc. is continuing its rapid pace of growth, with the social network doubling its revenue to $1.6 billion in the first half of 2011 from about $800 million a year earlier, said a person familiar with the matter. Facebook’s improving financial performance comes as speculation has swirled over its plans for an initial public offering. The company hasn’t made any formal announcements around an IPO but has said it will http://online.wsj.com/article/SB10001424053111904836104576556773663005068.html#ixzz1XKmHlQRG

Germany’s supreme court ruled that the financial bailouts of Greece and other struggling euro members are legal, dismissing complaints that they violate Germany’s constitution and removing a potential threat to Chancellor Angela Merkel’s handling of the euro-zone debt crisis. But the Federal Constitutional Court also said Ms. Merkel’s government needs to seek permission from parliament when taking on further financial burdens in Europe, potentially making future bailout decisions more complicated. Plaintiffs including a lawmaker from Ms. Merkel’s own center-right coalition had challenged the legality of taxpayer bailouts of Greece and other indebted euro-zone countries. http://online.wsj.com/article/SB10001424053111903285704576555961131733324.html?mod=WSJEurope_hpp_MIDDLTopStories

Troubled Swedish car maker Saab Automobile made a last-ditch move to avoid extinction, filing for protection from creditors as it struggles to raise fresh funds from Chinese investors. After a five-month production halt and tens of millions of dollars in unpaid supplier bills and worker payrolls, Saab’s move came as little surprise. The filing for a court-overseen reorganization could allow the ailing Swedish car maker to fend off a forced bankruptcy threatened by Saab’s unions, which are seeking funds for unpaid workers. http://online.wsj.com/article/SB10001424053111904836104576555840665613766.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews

Marketwatch.com
As the sovereign-debt storm grew to engulf ever more of Europe and recession fears sent stock markets tumbling, a surprising winner emerged from the turmoil of recent weeks: Ireland. The country may still be struggling with an unemployment rate of well over 14% and a housing market that has plunged more than 40% from its peak, but evidence from bond markets suggests Dublin’s recovery plan is seen as a lot more credible than those of Portugal and Greece.  As of Monday’s close, the spread between Irish 10-year bonds and German bunds — the extra yield that investors demand to hold the far riskier Irish debt— had narrowed to around 6.5 percentage points from over 10.5 percentage points in mid-July, according to data from the electronic trading platform Tradeweb. http://www.marketwatch.com/story/emerald-isle-shows-tentative-green-shoots-2011-09-07

Sweden’s central bank Wednesday left its key interest rate unchanged and lowered its forecasts for the rate in coming years as it responded to a worsening outlook for global growth. The Riksbank held the repo rate steady at 2.0%, in line with market expectations, bringing a year-long series of rate hikes to an end. It said it now forecasts the repo rate will average 2.4% in the third quarter of 2012 compared with 2.9% forecast in July. In the third three-month period of 2013 the central bank said it expects an average key rate of 3.0% compared with 3.4% seen earlier. http://www.marketwatch.com/story/swedens-central-bank-keeps-key-rate-on-hold-2011-09-07

Reuters.com
Gold prices rebounded more than 1 percent on Thursday following a drop of 3 percent in the previous session, as sharply lower prices attracted bargain hunters, but improved risk appetite is likely to cap gains. Spot gold rose as much as 1.5 percent to $1,842.89 an ounce after its most volatile day in two weeks, with a trading band of more than $80. It had pared some gains to $1,830.72 by 0410 GMT. The most-active U.S. gold futures contract rose 1.6 percent to $1,846.6, before easing to $1,833.80. http://www.reuters.com/article/2011/09/08/us-markets-precious-idUSTRE78401J20110908

Anyone expecting Federal Reserve Chairman Ben Bernanke to outline bold new measures to boost flagging U.S. growth on Thursday is likely to come away disappointed. Bernanke, who speaks at 1:30 p.m. Eastern, no doubt will nod to the drumbeat of disappointing news on the recovery, but he will likely avoid getting out in front of what is shaping up to be an epic brawl among Fed officials who differ widely over the need for further monetary easing. http://www.reuters.com/article/2011/09/08/us-usa-fed-idUSTRE7870W120110908

The United States and Japan should take steps to boost growth while Europe should focus on shoring up its financial sector and resolving its sovereign debt crisis, a senior U.S. Treasury official said on Wednesday. The official said a key focus for a Group of Seven finance ministers meeting in France this weekend will be to discuss ways to rebuild confidence in Europe, including recapitalizing banks where necessary. http://www.reuters.com/article/2011/09/07/us-g7-usa-idUSTRE7865M620110907

Adding still more monetary stimulus could help keep the ailing U.S. economy from worsening and possibly even set it on a path to better health, a top Federal Reserve official said on Wednesday. “The real threat is an economy that is at risk of stalling and the prospect of many years of very high unemployment, with potentially long-run negative consequences for our economy,” San Francisco Federal Reserve Bank President John Williams said in remarks prepared for delivery to the Rotary Club of Seattle. http://www.reuters.com/article/2011/09/07/us-usa-fed-williams-idUSTRE7866OG20110907

Bloomberg.com
Chinese officials told European Union business executives that the yuan will achieve “full convertibility” by 2015, EU Chamber of Commerce in China President Davide Cucino said.  “We were told by those officials by 2015,” Cucino told reporters in Beijing yesterday, declining to identify the government departments involved. He said the step-by-step process was indicated at a meeting in the last several weeks. http://www.bloomberg.com/news/2011-09-08/yuan-to-be-fully-convertible-by-2015-eu-chamber.html

CNBC.com
The U.S. economic outlook has “clearly” deteriorated this year, and the continued softness of economic indicators shows that the headwinds facing the country are even stronger than thought, Chicago Federal Reserve President Charles Evans said on Wednesday.  “Conditions still aren’t much different from an economy still in ,” Evans, speaking at a seminar in London said. He said the Fed significant challenges in overcoming the obstacles left behind by the financial crisis. http://www.cnbc.com/id/44421047

The Swiss central bank’s decision to set a limit on how much the Swiss franc can appreciate against the euro is “a huge mistake,” investor Jim Rogers, chairman of Rogers Holdings, told CNBC.com on Wednesday. e move “will work for a while, but the market will have more money in the end than the SNB,” Rogers, who was the co-founder of the Quantum Fund with George Soros, told CNBC.com. The Swiss central bank risks losing “a lot of money buying up lots of foreign currencies which they will eventually sell at a loss,” he explained. Another risk is that the central bank will “totally debase the Swiss franc trying to keep Switzerland ‘competitive’ which will then destroy the traditional Swiss financial industry,” Rogers said. http://www.cnbc.com/id/44419647

USAtoday.com
Despite the turmoil that shook the financial markets last month, the Federal Reserve says its 12 bank regions grew modestly this summer because consumers spent more in most parts of the country. The Fed survey noted that growth was mixed and some regions reported weaker expansion. But the survey appeared to be an improvement from the previous report, which said growth had slowed in eight of its 12 regions in June and early July. The survey released Wednesday looked at economic conditions around the country from mid-July through Aug. 26. It was based on reports provided by the Fed’s 12 regional banks. The regional outlook will help shape the discussion at the central bank’s next meeting on Sept. 20-21. http://www.usatoday.com/money/economy/story/2011-09-07/Federal-Reserve-says-12-regions-grew-modestly-this-summer/50301022/1

Telegraph.co.uk
It chose to avert Götterdämmerung. The nexus of bail-outs already agreed for Greece, Portugal and Ireland are allowable under Germany’s Basic Law – or Grundgesetz – because there is no “automatic” transfer of money beyond the Bundestag’s control. Germany may participate in Europe’s €440bn (£388bn) bail-out fund (EFSF).  Yet euphoria is surely misplaced. The court’s president, Andreas Vosskuhle, cautioned Chancellor Angela Merkel and Brussels to watch their step. “This was a very tight decision. But it should not be mistakenly interpreted as a constitutional blank cheque authorising further rescue measures,” he said. http://www.telegraph.co.uk/finance/financialcrisis/8748393/German-court-curbs-future-bail-outs-bans-EU-fiscal-union.html

British councils and the UK bank bail-out fund will defend their right to get back the entire £5bn they lost in the Icelandic banking crash against a group of hedge funds and other creditors who claim they should get a share of the money. Bondholders owed $4bn (£2.5bn), including hedge funds Arrowgrass, GLG and Varde, are challenging the “priority” status awarded to the local councils and the bail-out scheme by one of the banks, Landsbanki, in a test case due to start on Thursday in the Supreme Court of Iceland. http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8748142/UK-fights-bondholders-to-retain-priority-status-over-5bn-Iceland-cash.html

A slowdown in Britain’s industrial sector in July reinforced the view that the economy is stalling and raised expectations that the Bank of England will take further action to boost activity.  dustrial production was down 0.2pc compared with June according to the Office for National Statistics, as oil and gas extraction was held back by extended North Sea maintenance work. Economists had expected a modest rise of 0.2pc. http://www.telegraph.co.uk/finance/economics/8746745/Weak-industrial-sector-builds-on-gloomy-picture-of-UK-economy.html

The London property bubble could be about to burst, with the number of “distressed” sellers in the capital rising for the first time, according to one property company. PPR Estates said it had seen rising number of inquiries from property owners in London looking for a quick sale below the current market price. It said rising unemployment, an increase in the number of company liquidations and a collapse in buyer interest – particularly in areas hit by the recent riots – were to blame. Nick Hopkinson, the director of PPR Estates, said that over the past few years there had been a rising number of “distressed” sellers in other parts of the country, but London had appeared to be immune as prices continued to rise. http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/8746833/London-property-bubble-about-to-burst.html

Independent.co.uk
Britain has moved up the rankings on the global competitiveness league, according to the World Economic Forum (WEA). The UK is ranked in 10th position in the 2011 table, up from 12th last year. The strengths of Britain were judged to be an efficient labour market, a sophisticated and innovative business sector and a large domestic market. The weaknesses identified were a large budget deficit and rising public debt. http://www.independent.co.uk/news/business/news/uk-climbs-in-global-competitiveness-rankings-2350918.html

Britain’s biggest banks benefited from an implicit subsidy worth nearly £45bn last year because they are too big too fail, according to new figures published ahead of the final Vickers Commission report on banking reform next week. Building on previous research from the Bank of England, the New Economics Foundation (NEF) think-tank said the biggest banks were able to borrow money at lower interest rates because of the implicit understanding “that the Government will step in” if they fall into trouble. http://www.independent.co.uk/news/business/news/banks-got-16345bn-subsidy-because-theyre-too-big-to-fail-2350913.htmlGuardian.co.uk

Smh.com.au
Amidst the mostly good news in yesterday’s national accounts figures, there was one potentially worrying chart – the history of quarterly GDP movements plotted against the trend figure for hours worked. Given today’s uptick in unemployment, it was a very timely reminder of the labor force implications of even a mildly slower rate of economic growth. Superficially, the chart above confirms what everybody knows about employment being a lagging indicator, but a closer look shows it’s a little more complicated than that. Employment (or at least hours worked) lags more on the upside than it does on the down.http://www.smh.com.au/business/clockwatching-the-threat-in-hours-worked-20110908-1jz05.html#ixzz1XKskLzO8

Crude oil climbed the most in four weeks in New York as a weather system threatened to reduce US production from the Gulf of Mexico, where shut-ins from last week’s storm probably curbed stockpiles.Crude oil for October delivery rose $US3.32 to settle at $US89.34 a barrel on the New York Mercantile Exchange. It was the biggest gain since Aug. 10. Oil has gained 21 per cent in the past year. Brent oil for October settlement advanced $US2.78, or 2.5 per cent, to $US115.67 on the London-based ICE Futures Europe Exchange. The European benchmark contract was at premium of $US26.33 to US futures, compared with yesterday’s record $US26.87 based on settlement prices. http://www.smh.com.au/business/markets/oil-higher-as-storm-threaten-gulf-prodution-20110908-1jybf.html#ixzz1XKswb9eV

Theglobeandmail.com
Statements from the central banks of Canada and the United States paint a troubling outlook, particularly for the European and U.S. economies. But even emerging markets will be held back, hit by the weakness in the more advanced economies. This outlook prompted the Bank of Canada Wednesday to signal an extended period of borrowing costs at near-emergency lows, as the shaky global landscape lessens the need to make it harder to borrow and spend. The central bank held its benchmark rate at 1 per cent for the eighth time in a row, and economists expect it won’t hike again until the second half of next year. The Bank of Canada outlook, coupled with a regional report from the Federal Reserve, suggest there’s no quick fix as Europe struggles through a debt crisis and the United States grapples with slow growth, high debts and millions of unemployed, threatening a prolonged period of pain and angst that will span the globe. http://www.theglobeandmail.com/report-on-business/economy/interest-rates/no-quick-economic-fix-in-sight-boc/article2156284/

Canada has continued its slide in business competitiveness, falling to 12th place from 10th last year in a World Economic Forum ranking of countries around the globe.  The Conference Board of Canada, which prepared the data for Canada’s ranking, said Canada has slid steadily from 9th place in 2009 because other countries are improving their competitiveness while Canada’s score has remained almost identical over the past three years. http://www.theglobeandmail.com/report-on-business/economy/growth/canada-falls-from-competitiveness-top-10/article2156400/

Xinhuanet.com
China’s competitiveness ranking improved this year from 27th to 26th among 142 economies in the world, continuing to lead the way among large developing economies, the World Economic Forum (WEF) announced in an annual report released Wednesday. Switzerland, Singapore and Sweden top the Global Competitiveness Report 2011-2012 ranking, and the United States continues the decline it began three years ago, falling one more place to the fifth position. http://news.xinhuanet.com/english2010/business/2011-09/07/c_131114462.htm

Over half the world’s Christmas decorations and gifts come from Yiwu, and this eastern Chinese city is exporting even more in 2011 — but its profits have been dragged down by inflation and wage rises. As the world economy struggles to recover, consumers are buying more low-end goods, said Chen Jinlin, secretary-general of the association of Yiwu Christmas goods businesses. With this year’s ordering season coming to an end in September, Yiwu’s exports of Christmas decorations and gifts have increased 5 to 10 percent year-on-year, Chen said. http://news.xinhuanet.com/english2010/china/2011-09/07/c_131114230.htm

The Hong Kong Monetary Authority Wednesday announced that the city’s official foreign currency reserve assets amounted to 279.4 billion U.S. dollars at the end of August, up 600 million U.S. dollars over July. Including unsettled forward contracts, the foreign currency reserve assets of Hong Kong at the end of August stood at 279.4 billion U.S. dollars, the authority said.http://news.xinhuanet.com/english2010/china/2011-09/07/c_131114166.htm

Slow-down of Chinese economy from an over-heated growth is good news for China, Fan Gang, director of China’s national economic research institute, said here Wednesday. Speaking at a forum held by “Asia Society”, an educational organization dedicated to furthering the understanding of the countries and cultures of Asia, Fan said that the slow-down of Chinese economy in long-run from an average annual growth rate of more than 9 percent is inevitable. But it is still possible, theoretically and by historical comparison, for China to maintain around 7 percent of high growth for next 20 to 30 years.http://news.xinhuanet.com/english2010/china/2011-09/07/c_131114183.htm

Private sector economists have downgraded their forecasts for the gross domestic product (GDP) growth of Singapore, the Monetary Authority of Singapore said in finds of a quarterly survey published on Wednesday. The economists now expect the Singapore economy to expand by 5.3 percent this year, down from 6.2 percent for the previous survey. The economists lowered their forecasts for most of the sectors, with the manufacturing sector expected to grow 5.3 percent, down from 8 percent for the previous survey. The forecasts for the construction sector was also cut from 3.5 percent to 2.1 percent.http://news.xinhuanet.com/english2010/business/2011-09/07/c_131111810.htm

Brazil’s benchmark IPCA inflation rate rose to 7.23 percent year-on-year during the past 12 months, the highest since 2005, the country’s official statistics agency IBGE reported Tuesday. The rate far surpassed the country’s target of 4.5 percent and was above the 6.5-percent government ceiling. During the first eight months of this year, the IPCA rate reached 4.42 percent, from 3.14 percent in the same period last year. According to the report, the high IPCA rate was mainly due to the rise in food prices, which accounted for almost half of the inflation. http://news.xinhuanet.com/english2010/business/2011-09/07/c_131109952.htm

Cs.com.cn
The Greek government’s new pledge for speeding up painful structural reforms in order to address a severe debt crisis has drawn fierce reactions from opposition parties and strike warnings from labor unions. Under the increasing pressure of the European Union (EU) and International Monetary Fund (IMF) lenders which over the past few days linked the disbursement of the next aid tranche to Athens to the progress of unprecedented reforms, Greek Deputy Prime Minister and Finance Minister Evangelos Venizelos pledged accelerated changes this fall. http://www.cs.com.cn/english/ei/201109/t20110908_3049558.html

The growth rate for China’s 2010 gross domestic product (GDP) has been revised, with an increase of 0.1 percentage points to a rate of 10.4 percent, the National Bureau of Statistics (NBS) announced Wednesday. After the revision, China’s 2010 GDP now stands at 40.12 trillion yuan (6.27 trillion U.S. dollars), up by 321.9 billion yuan from the previous figure released in February, the NBS said in a statement on its website. The revision was based on verified analyses of the country’s annual reports, financial statements and random surveys by the NBS, according to the bureau.http://www.cs.com.cn/english/ei/201109/t20110908_3049460.html

China plans to beef up investment and offer tax incentives to increase the annual output of its advanced materials industry to 2 trillion yuan (313 billion U.S. dollars) by 2015, said an official with the Ministry of Industry and Information Technology (MIIT) on Wednesday. The target figure is about 5 percent of China’s 2010 gross domestic output, as the world’s second largest economy looks to emerging industries like advanced materials to pursue a more technology-driven, low-carbon and sustainable growth. http://www.cs.com.cn/english/ei/201109/t20110908_3049352.html

Thehindu.com
As developed economies in the West continue to struggle due to uncertain economic environment, Planning Commission Deputy Chairman Montek Singh Ahluwalia on Wednesday said it would be a challenging task to achieve 9 per cent growth during the XII Plan (2012-17).  “Nine per cent growth target for the XII Plan is not going to be easy…what will be easy is somewhere around 7-7.5 per cent.  “We should start with 7 per cent growth and gradually go up to 9 per cent over the five-year period. We should not be worried by short-term problems,” Mr. Ahluwalia said while addressing the annual summit of the Society of Indian Automobile Manufacturers (SIAM). http://www.thehindu.com/business/Economy/article2433059.ece

German luxury car maker Audi today reported an over two-fold increase in its sales to 510 units in August this year, compared to the same period previous fiscal. The company had sold 250 units in August 2010. For the period January-August 2011, the company sold 3,655 cars, a growth of 95 per cent over the same period last year, Audi said in a statement. “…India is well ahead of other growth markets for Audi globally, and we are confident that we are on track with our vision of being the No 1 luxury car manufacturer in India latest by 2015,” Audi India Head Michael Perschke said.http://www.thehindu.com/business/companies/article2429915.ece

Economictimes.com
The Reserve Bank of India will not target any specific level for the rupee, said a top RBI official, even as Swiss central bank has moved to a pegged or fixed exchange rate from a floating rate in response to turbulence in its real economy due to fluctuations in the capital flows.  RBI deputy governor Subir Gokarn said: “We are not going to target the exchange rate. Great pressure of any kind that disrupts activity in the real sector will invite an intervention. We have not faced such a situation so far.” http://economictimes.indiatimes.com/news/economy/finance/rbi-not-to-target-any-specific-level-for-rupee-subir-gokarn/articleshow/9905512.cms

India’s policy makers will discuss next week a proposal mooted by corporate chiefs to float a sovereign wealth fund (SWF), which would potentially invest in overseas projects and companies to secure access to natural resources for one of the fastest-growing economies in the world. A committee headed by Reserve Bank of India Governor D Subbarao will discuss the merits of the proposal on September 15, according to senior officials. The committee operates under the umbrella of the Financial Stability and Development Council, or FSDC, a forum of regulators monitoring financial stability and interregulatory co-ordination. http://economictimes.indiatimes.com/news/economy/policy/india-may-soon-join-sovereign-fund-club-fund-to-fuel-natural-resources-acquisitions-overseas/articleshow/9904185.cms

Fin24.com
A meeting of Group of Seven finance chiefs on Friday will discuss the struggling world economy and progress in regulating the financial sector but a coordinated action plan to calm markets is unlikely. Delegates at the one-day gathering in the Mediterranean port city of Marseille will seek to emphasise their commitment to preserving the fragile global recovery while avoiding promoting a one-size-fits-all approach, G7 sources say. http://www.fin24.com/Economy/G7-action-plan-unlikely-20110907

Tehrantimes.com
Iran extended its growth in competitiveness by rising 7 places in the World Economic Forum’s rankings. According to the Global Competitiveness Report 2011-2012, Iran rose 7 places in comparison to the last year report, reaching to the 62nd place among 142 countries. Iran’s rank in the report of the last year was 69 among 139 countries. According to the report, Iran’s competitiveness score rose from 4.1 in the last year to 4.3 in the current year. World Economic Forum ranks countries Competitiveness score between 1 (the worst) and 7 (the best) point. http://www.tehrantimes.com/index.php/economy-and-business/2331-irans-competitiveness-rank-up-7-places-wef-

Khaleejtimes.com
The UAE non-oil private sector grew at the slowest pace in 15 months in August, a survey conducted by HSBC Bank and Markit Economics revealed on Wednesday. The purchasing managers index (PMI) for the non-oil private sector dropped to 50.9 in August from 53.3 in July. A PMI reading above 50 indicates expansion in the sector, while one below suggest decline. The latest reading was the lowest in 15 months. “Underlying the weaker headline figure were slower rises in both new business and employment, a stagnation of output and a fall in input stocks,” the bank said. http://www.khaleejtimes.com/biz/inside.asp?xfile=/data/uaebusiness/2011/September/uaebusiness_September19.xml&section=uaebusiness

Thetrader.se
The SPX has met our projected bounce target at 1230 and after the subsequent reversal and generating fresh momentum short signals, the market is back in short mode. Last week’s reaction high represents a new pivotal level, so as long as the SPX trades below 1230 the US market remains short biased. We are sticking to our comment from last week. The sentiment is still too complacent and divergences in our key indicators are missing, so we have no evidence that the August 9 low at 1102 represents an important market bottom. Apart from any short-term bounces we continue to see the risk of more downside and a break of 1102, which would call for a move down to 1050/1032 in the next 2 to 3 weeks. http://www.thetrader.se/2011/09/07/new-short-signal-in-place-ubs-technical-analysis/

For the last 2 years, if the Eye on the Market had a single dominant theme, it was that a common monetary policy does not by itself create a durable monetary union; that European asset markets were not adequately pricing in the risk that the European Monetary Union could fail, or require massive transfers to save it; and that austerity with no FX devaluation is doomed to failure. During this time, our skepticism about the EMU and European asset markets has been rewarded at every turn. For those interested, here’s the latest grisly news of the week http://www.thetrader.se/2011/09/07/jpm-explains-the-euro-situation-by-using-lego/