Global - Economy Inflation-wary Bank of England to halt money-printing press LONDON - The Bank of England looks set to call a halt to its asset-buying programme on Thursday, despite the economy having slipped into recession and renewed risks rising from the euro zone debt crisis, as UK inflation remains stubbornly high.
Euro zone agrees to make 5.2 bln euro payment to Greece BRUSSELS - Euro zone governments kept Greece afloat on Wednesday after agreeing to authorise a payment of 5.2 billion euros from the region's bailout fund, despite opposition from some member states following the Greek election results.
Greece's departure from euro wouldn't be catastrophic, investors say Reuters - If Greece withdraws from the euro, the eurozone could manage the departure in an orderly way, investors and banks said. There was a sell-off of Italian and Spanish bonds immediately after Greek election results were announced Monday, but the bonds largely recovered by the end of the day. "Unless you have strong contagion into Spain and Italy, it's unlikely to be really an issue that would undermine the whole eurozone," said Valentijn van Nieuwenhuijzen, ING Investment Management's head of strategy.
Moody's downgrades of bank ratings will threaten growth Bloomberg - Moody's Investors Service is scheduled this month to downgrade the credit ratings of BNP Paribas, Deutsche Bank and other major financial institutions. Industry experts said the move could threaten economic growth as it drives up banks' funding costs and forces them to rein in lending. "I'd like to say the views of the rating agencies don't matter anymore but, unfortunately, they do," said PIMCO executive Philippe Bodereau. "This is a setback for the banks, particularly when you consider how much progress they have made in making themselves safer and more transparent."
IMF relaxes its stance demanding fiscal austerity International Monetary Fund Managing Director Christine Lagarde called for a "prudent" approach to bringing down government debt, rather than holding rigidly to targets as economies decline. "If growth is worse than expected, they should stick to announced fiscal measures, rather than announced fiscal targets," she said. "In other words, they should not fight any fall in tax revenues or rise in spending caused solely because the economy weakens." Reuters
European voters reject austerity, but future is unclear Voters in France, Greece and Italy rejected austerity measures in favor of promises of growth plans, but clear, effective ideas have yet to emerge. "This is going to force some rethinking" about how to resolve the sovereign-debt crisis, said Laura Gonzalez, a finance professor at Fordham University. "That is good for everybody." Meanwhile, Germany is confident that its approach to Europe's debt crisis will not change. U.K. Prime Minister David Cameron is expected to reiterate a need to stick with austerity measures.
Greek voters reject parties that supported austerity measures Greece faces an uncertain future after voters turned against parties that backed EU-imposed austerity measures. Results indicate that at least seven political parties will have members in Parliament, with a coalition of hard-left parties becoming the second-largest voting block.
Disability compounds U.S. unemployment problem Americans receiving disability payment are increasing, and the longer they stay out of the workforce, the less likely it is that they will return, experts said. People getting disability payment account for 5.6% of the working-age population, compared with 4.5% in 2007
High rent affects Americans hurt by foreclosure The foreclosure crisis that drove millions of Americans out of their homes has put them into an increasingly competitive market for rental units. In the first quarter, the average monthly rent for apartments reached $1,008, an all-time high, according to RealFacts.
U.S. consumer spending edged up in March at a slower pace Consumer spending in the U.S. rose 0.3% in March, a slower increase than the 0.9% gain in February, the Commerce Department said. Incomes rose 0.4% in March, but the advance was 0.2% when adjusted for taxes and inflation. Analysts expected sales at major U.S. chain stores to increase 1.5% in April, but the growth was a much weaker 0.8%, compared with a year earlier, according to a Thomson Reuters survey. Sales at 53% of retailers fell short of their projections.
U.S. businesses added 119,000 employees in April Businesses in the U.S. added 119,000 employees in April, the smallest number in seven months, according to a survey by Automatic Data Processing. Service companies did all of the hiring, while construction and manufacturing firms reduced workforces
Eurozone joblessness climbs to an all-time high Unemployment in the eurozone rose to 10.9% in March, the highest rate since the eurozone was established in 1999. Joblessness was highest in Spain, where the rate reached 24.1%
Manufacturing growth in U.S. accelerates to fastest rate in a year A flood of orders at factories drove the pace of expansion in the U.S. manufacturing sector last month to its highest rate in almost a year, according to the Institute for Supply Management. The trade group said its factory index surged to 54.8 in April, well above the most optimistic forecast
Unemployed living with parents is a big drag on U.S. economy
The spectacular drop in the rate at which Americans form households, triggered by the recession, is a major drag on the U.S. economy, experts said. About two-thirds of excess vacant housing inventory in the U.S. is the result of reduced demand caused by the recession, according to the National Association of Home Builders.
================> Emerging Markets <=================
China: April PMI edged up, but may not be sustainable
The official headline PMI for April rose to 53.3, up 0.2pp from March's level. The rise reflected the government's increased selective easing measures in particular the resumption of lending to some qualified local governments' infrastructure investments. But outside of local government projects, the interest in private sector investments remains low.
Korea: April CPI, March Industrial Production
CPI inflation continued to stay moderate at 2.5% yoy in April, weaker than the consensus expectation. On both an adjusted and non-adjusted basis, CPI remained flat in the month. Core inflation was at 1.8% yoy and is estimated to have risen 0.2% mom (sa). Exports and imports disappointed again in April, contracting 4.7% yoy and 0.2% yoy, respectively. Although the global economy is likely to continue on a moderate growth path, the actual data from Korean trade seem to suggest a stronger-than-anticipated impact on its external trade sector.
Taiwan: 1Q 2012 Real GDP
1Q12 advanced GDP growth was at 0.4% yoy, below consensus expectations of a 0.91% increase. On a sequential basis, GDP rose 0.3% (1.1% annualized). The good news is that Taiwan has moved out of technical recession, but unfortunately the recovery is so far proving very muted
Industrial production was up a mere 0.3% yoy in March and fell 3.4% mom (sa). The weak March figure should be seen partly in the context of the what were a couple of very strong figures previously. Nevertheless, the outlook is not all that encouraging
South Africa's unemployment rate increased to 25.2% in 1Q 2012 from 23.9% in 4Q 2011.
The unemployment rate in 1Q 2012 was higher than that recorded in 1Q 2011, when it was 25.0% According to data published yesterday by Statistics South Africa, 75,000 jobs were cut in 1Q 2012, mainly in the manufacturing and construction sectors. In year-on-year growth terms, total employment was up 304,000 (or 2.3%) but the labour force increased by 466,000 (or 2.7%) over the past year. Total unemployed in 1Q 2012 increased by 162,000 yoy (or 3.7%) to 4.5mn
March industrial output seen slowing further: Reuters Poll
BANGALORE - India's industrial output grew at a sharply slower pace in March thanks to a cooling infrastructure sector, a Reuters poll showed, underscoring the wider economic gloom in the country.
RBI deputy: pressure on food inflation strong
HYDERABAD -Pressure on food inflation in India is still very strong, said Subir Gokarn, a deputy governor of the Reserve Bank of India.
Brazil's secret fiscal weapon: the tax 'lion'
BRASILIA - In Brazil, groups of armed agents fly around the country by helicopter, pounding on doors and instilling fear in the hearts of those who break the law. They're not the police - they're from the tax agency. The Federal Revenue Service, which has gained global renown for its tough and creative tactics, will be one of the most important keys to Brazil's economic prospects in 2012. President Dilma Rousseff is counting on the agency's tax-collecting prowess to help her government meet ambitious budget targets without smothering the country's suddenly brittle economy. The agency, known as "The Lion" for its official emblem as well as its ferocious pursuit of tax dodgers, deploys everything from gun-toting operatives to meters on beer kegs in breweries to ensure that individuals and companies fully declare, and pay, their share to the government.
Russia: Inflation eased further in April and was marginally better than expected by the market. Monthly inflation, reported on Friday, 4 May, came out at 0.3% mom, below our own and market consensus estimates of 0.4% mom; Year-on-year inflation edged down to 3.6% from 3.7% in March, a fresh all-time low. Inflation slowed in late April in particular (inflation for 24-28 April was reported at zero, the lowest reading this year). Both the year-on-year change in core CPI and its momentum (annualized 3mma average) declined further in April, suggesting that inflation pressures are staying low for now.
RBI further eases norms on FX deposits
REUTERS - The Reserve Bank of India (RBI) eased restrictions on the usage of foreign currency deposits on Wednesday, just days after its move to relax the interest rate ceiling on such deposits. The RBI has allowed banks to use funds from foreign currency non-resident deposits as collateral against lending to related local residents.
India to incentivise foreign banks to set up subsidiaries
NEW DELHI - India said on Monday it would exempt foreign banks from paying tax for setting up local units as it looks to ring-fence such units against external economic shocks.
U.S. oil companies are still eager to do business in Argentina
Argentina's nationalization of a controlling stake in the oil company YPF may not be enough to discourage U.S. energy firms from making deals there, economists and oil analysts said. There is so much money to be made from the development of Argentina's petroleum resources that international oil companies can't afford to stay away, they said.
Global – Markets and Investment Themes
Medicare could be next growth opportunity for financial advisers
Financial advisers might be able to boost their business significantly by helping affluent clients make the best possible use of Medicare benefits. Almost half of high-net-worth Americans nearing retirement said they are "terrified" of what health care costs could do to their plans for retirement, according to a survey by Nationwide Financial.
IBM sets record-low coupon for 7-year corporate note
IBM set an all-time low for the coupon rate on a seven-year corporate note. The coupon priced at 1.875%, 65 basis points more than a comparable U.S. Treasury security.
Facebook IPO stock prices in the $28 to $35 range
When it launches its initial public offering, Facebook expects to get between $28 to $35 a share, according to documents filed with the Securities and Exchange Commission. The pricing range puts to rest speculation that the offering could establish a value for the company as high as $100 billion.
Bonds emerge as only investment delivering positive returns
For the first time since early 2008, bonds became the only financial investment to produce positive returns in April. Bank of America Merrill Lynch data show that fixed-income assets gained 0.7%. U.S. dollars, fuels, metals, agricultural products and the MSCI All-Country World Index of stocks all delivered losses
