Hugo Chavez Wants Pot Bellies For His Countrymen as He Orders to Nationalize Cargill

Adonde supuede arroz por aqui?

CARACAS, March 4 (Reuters) – Venezuelan President Hugo Chavez on Wednesday ordered the nationalization of a local unit of U.S. food giant Cargill, ramping up a battle with the private sector over rice production.

Chavez ordered the takeover because Cargill does not produce basic rice that is subject to government price controls. Cargill is the the largest privately owned U.S company.

It was not clear if Cargill’s other Venezuelan food units would be affected

ZIRP here we come

March 5 (Bloomberg) — The euro fell, snapping two days of gains versus the yen, on speculation the European Central Bank will cut interest rates today and signal further reductions in borrowing costs to counter the region’s deepening recession.

The euro also headed for a fourth weekly loss versus the dollar before a report from the European Union’s statistics office that economists say will reiterate the region’s economy shrank the most in at least 13 years last quarter. The yen traded near the weakest in four months against the dollar after a government report showed Japanese companies slashed spending at the fastest pace in a decade.

ECB President Jean-Claude Trichet “may say he’ll cut rates again in the future,” said Michiyoshi Kato, senior vice president of foreign-currency sales in Tokyo at Mizuho Corporate Bank Ltd., a unit of Japan’s second-largest bank by assets. “This would likely cause selling of the euro.”

The euro declined to $1.2603 as of 11:19 a.m. in Tokyo from $1.2661 late in New York yesterday. The European currency dropped to 125.16 yen from 125.52. The yen traded at 99.31 versus the dollar from 99.15 yesterday when it touched 99.49 yesterday, the weakest level since Nov. 10. The U.S. currency was at $1.4145 per pound from $1.4194, and advanced to 1.1726 Swiss francs from 1.1676.

The ECB will cut its 2 percent target lending rate by a half-percentage point to the lowest level since the 16-nation currency was introduced in 1999, according to the median forecast of analysts surveyed by Bloomberg News. The Bank of England will halve its main rate to 0.5 percent at a separate meeting today, according to another Bloomberg survey.

Investment Slump

The ECB left borrowing costs unchanged at its most recent policy review on Feb. 5. The euro weakened as much as 0.4 percent against the dollar and 1 percent against the yen when the ECB reduced rates by half a percentage point on Jan. 15.

The yen fell for a third day versus the dollar after the Ministry of Finance said spending by Japanese businesses on capital equipment excluding software slid 18.1 percent in the fourth quarter, the steepest drop since the three months ended Dec. 31. 1998. That was the seventh straight decline.

“Recently the sensitivity is high to bad data so the yen will be under pressure and the risk is for the downside,” said Masafumi Yamamoto, head of foreign-exchange strategy for Japan at Royal Bank of Scotland Group Plc in Tokyo and a former Bank of Japan currency trader. “The yen bear trend will continue” and the currency may test 100 per dollar today, he said.

Monthly Loss

Japan’s currency fell 7.9 percent versus the dollar in February, the biggest monthly decline since August 1995, after reports showed the economy shrank last quarter by the most since 1974 and the trade deficit increased in January to the widest since at least 1980.

The decline in the yen against the greenback may be limited as a technical indicator showed the 8.2 percent slide in Japan’s currency over the past month is excessive.

“Even if the dollar goes up to 100, there’ll be profit- takers, or a strong resistance,” said Satoru Ogasawara, foreign-exchange analyst and economist in Tokyo at Credit Suisse Group AG. “At this point, the long positions of the yen have been unwound, so any declines won’t be that significant.”

The dollar’s 14-day relative strength index versus the yen, a comparison of magnitudes of gains and losses, climbed to 75.2 today, above the 70 level that signals the currency may have risen too quickly and is poised to decline.

The yen is likely to strengthen to 93 per dollar by the end of June, according to the median estimate in a weighted Bloomberg survey of economists and analysts.

China Stimulus

Gains in the dollar may be tempered after Premier Wen Jiabao said China will “significantly increase” investment to tackle the impact of the global economic slowdown, damping demand for the safety of the greenback.

The Dollar Index, which tracks the U.S. currency against those of six major trading partners, may decline for a third day after Wen said China’s public spending will more than double this year to 908 billion yuan ($133 billion). In his report today to the National People’s Congress in Beijing, equivalent of a U.S. State of the Union speech, Wen also reiterated an 8 percent growth target for this year.

“This shows that they are quite determined to make sure the economy continues to grow and is positive for risk-taking appetite,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “This may be negative for the dollar and the yen as haven currencies.”

Dollar Index

The Dollar Index, which the ICE uses to track the U.S. currency against the euro, yen, pound, Swiss franc, Canadian dollar and Swedish krona, traded at 88.757 from 88.577 yesterday when it reached 89.624, the highest level since April 2006.

Asian stocks rose, with the Nikkei 225 Stock Average adding 2.7 percent and the MSCI Asia Pacific Index of regional shares gaining 2.2 percent. The VIX volatility index, a Chicago Board Options Exchange gauge reflecting expectations for stock-market price changes that is used as a measure of risk aversion, fell 6.6 percent yesterday, the most in more than a week, to 47.56.

In so-called carry trades, investors get funds in a country with low borrowing costs and invest in another with higher rates. The risk is exchange-rate fluctuations can erode those profits. The overnight lending rate in Japan is 0.1 percent, compared with 3.25 percent in Australia and 3.5 percent in New Zealand.

Spend, spend, spend:

March 5 (Bloomberg) — Premier Wen Jiabao said China will “significantly increase” investment in 2009, widening efforts to meet the 8 percent economic growth target that it says is needed to protect jobs.

“We face unprecedented difficulties and challenges,” Wen told delegates to China’s parliament in Beijing today. The nation needs to “reverse the economic slide as soon as possible,” he said, without announcing an increase to the government’s 4 trillion yuan ($585 billion) stimulus package.

China’s export collapse has dragged the economy to its weakest growth in seven years and cost the jobs of 20 million migrant workers, adding to the risk of social unrest. The Shanghai Composite Index rose 0.7 percent as of 9:55 a.m. local time, extending the biggest rally in four months.

“There will be a sizable stimulus occurring in the economy this year,” said Glenn Maguire, an economist at Societe Generale SA in Hong Kong.

Wen’s report to lawmakers, the equivalent of a U.S. State of the Union speech, reiterated the 8 percent growth target. That’s more optimistic than the International Monetary Fund’s forecast that the nation’s economy will grow 6.7 percent, the least in almost two decades.

The 2009 budget deficit was set at 750 billion yuan, widening to a record 950 billion yuan including local-government bonds, as the slowdown cuts revenue and the government spends to revive the economy. The deficit will be within 3 percent of gross domestic product.

Fiscal Spending

Fiscal spending will rise 22 percent this year to 7.62 trillion yuan ($1.1 trillion), a smaller increase than last year’s actual 25.4 percent gain, Wen said.

Public spending, mostly on infrastructure, will more than double in 2009 to 908 billion yuan.

Social welfare spending will rise 17.6 percent, he said. Science and technology investment climbs 25.6 percent. The government is more than doubling a development fund for small businesses to 9.6 billion yuan.

China is targeting inflation of 4 percent, compared with an actual rate of 5.9 percent in 2008, Wen’s report showed. Weaker growth and falling commodity prices have increased the likelihood of deflation for part of this year.

The global financial crisis “is still spreading and is yet to bottom out,” said Wen, adding that a trend towards global deflation was becoming more obvious. Trade protectionism is rising, the premier said.

Still Growing

While China’s economy is the only one of the world’s five biggest still growing, the pace has slowed for six straight quarters. The expansion in the three months through December was 6.8 percent from a year earlier, compared with 13 percent for all of 2007.

Wen’s report contrasted with a year earlier, when he pledged to rein in lending and growth in money supply to cool inflation and prevent the economy from overheating. This year, the government spurred a record jump in new loans in January by pressing banks to support the stimulus program.

The stimulus package announced in November spans spending through 2010 on public housing, railways, highways, airports, power grids and reconstruction work after last year’s earthquake in Sichuan province.

The Communist Party’s Politburo pledged last month a “massive” increase in government investment this year and Standard Chartered Bank Plc said this week that the stimulus package could be doubled.

Bridge, Rail Links

The central government spent 100 billion yuan in the fourth quarter of last year and will add 130 billion yuan this quarter. A railway between Shanghai and Nanjing, a Xiamen-Zhangzhou cross-sea bridge, and a high-speed rail link between Datong and Yucheng in Shaanxi are among the projects, according to a summary by Standard Chartered Bank Plc.

Besides spurring investment, policy makers need to revive a sagging property market and boost consumption as the global recession smothers demand for exports of toys, textiles and electronics.

The fastest contraction in the U.S. since 1982 is taking a toll on Chinese exporters including Lenovo Group Ltd., the world’s fourth-biggest personal-computer maker, which reported its first quarterly loss in three years and cut jobs.

With 20 million rural laborers who previously found jobs in cities now unemployed, and 7.1 million college graduates seeking work, authorities are alert to the danger of social unrest.

“Mass incidents” may jump this year, the official Xinhua News Agency’s Outlook Magazine reported in January, employing communist code for riots and civil disorder. Last month, a clash between police and about 1,000 protesting workers from a textile factory in Zigong City, Sichuan province, left six demonstrators injured, rights group Chinese Human Rights Defenders reported.

Some are hoping China will become the worlds growth engine again

March 5 (Bloomberg) — Asian stocks gained for a second day, led by commodity and financial companies, on speculation an expanded economic stimulus plan in China will spur demand for raw materials and machinery.

BHP Billiton Ltd., the world’s biggest mining company, soared 6.3 percent in Sydney after copper jumped to a three month high in New York and the Reuters/Jefferies CRB Index of 19 commodities had its biggest rally this year. Mizuho Financial Group Inc., Japan’s second-biggest listed bank, jumped 4.4 percent after setting the terms for the delayed merger of its two brokerage affiliates.

“People are keen to see how much more money China will pump into its economy,” Mitsushige Akino, who oversees about $615 million at Tokyo-based Ichiyoshi Investment Management Co., said in an interview with Bloomberg Television. “If the country doubles its planned spending, the impact will be huge.”

The MSCI Asia Pacific Index gained 0.9 percent to 72.93 as of 9:09 a.m. in Tokyo. Three stocks rose for each one that fell. The gauge has slumped 49 percent in the past year as the financial crisis dragged the world’s largest economies into recession.

Japan’s Nikkei 225 Stock Average climbed 1.1 percent, while Australia’s S&P/ASX 200 Index rose 1.3 percent. All markets open for trading in the region advanced.

China will “significantly increase” investment in 2009 to counter a slowdown in the world’s third-biggest economy, Premier Wen Jiabao said in a work report presented to the National People’s Congress in Beijing today.

Reversal

The MSCI Asia Pacific yesterday reversed a 1.6 percent decline to end the day 0.7 percent higher after a former Chinese statistics bureau head told reporters the premier would announce a new economic package on top of a 4 trillion-yuan ($585 billion) spending plan. China’s parliament convenes its annual meeting today, and Wen will give his annual address to the nation’s legislature.

Futures on the Standard & Poor’s 500 Index added 0.2 percent. The U.S. gauge climbed 2.4 percent in New York yesterday, breaking a five-day losing streak, while Europe’s Dow Jones Stoxx 600 Index leapt 3.9 percent, the most since Dec. 8.

Governments from the U.S. to China and Australia have sought to introduce policies this year to ease the financial crisis and bolster their economies. India’s central bank yesterday cut its key interest rate to a record low.

Commodities Surge

Speculation China’s economy will pick up steam drove up commodity prices. Crude oil for April delivery surged 9 percent to $45.38, the highest settlement since Jan. 26. Copper futures for May delivery leapt 5.6 percent.

BHP Billiton jumped A$1.71 to A$28.82. Rio Tinto Group, the world’s third-largest miner, surged 5.3 percent to A$45.79. Komatsu Ltd., the world’s second-biggest maker of earthmoving equipment, climbed 5.7 percent in Tokyo to 1,095 yen.

Mizuho rose 8 yen to 188 after saying yesterday it will hold 58 percent of the company to be created through the merger of Mizuho Securities Co. and Shinko Securities Co. Shinko surged 6.9 percent.

Canon Inc., which gets a third of its sales from the Americas, added 1.1 percent to 2,330 yen after the yen depreciated against the dollar to as much as 99.49 yesterday, the weakest level since Nov. 5, from 98.44 at the 3 p.m. close of stock trading in Tokyo.

The company’s operating profit rises by 9.1 billion yen ($92 million) for every 1 yen decline, according to its earnings report on Jan. 28.

100 % in hours <

On CNBC’s “Closing Bell” FM contributor Jon Najarian told Dylan Ratigan he sees a catalyst out there that could lift banks [XLF 6.89 -0.09 (-1.29%) ] as much as 100% – and as soon as next week.

The catalyst involves mark-to-market accounting; which has been blamed for forcing banks to record billions of dollars in writedowns.

According to Reuters, a U.S. House Financial Services subcommittee is expected to hold a hearing on mark-to-market accounting rules as soon as March 12. The SEC’s chief accountant and the chairman of the Financial Accounting Standards Board, will be asked to testify, the report said.

If that meeting results in the government relaxing mark-to-market rules, Najarian thinks the stock market could explode.

He says, “if the government relaxes mark-to-market for 12 to 18 months you could see financials move 100% in a matter of hours.”

And he goes on to say, “In fact, I hope you’ll replay the soundbite because if the government relaxes mark-to-market accounting a number of banks stocks will be unbelievable values at these levels.”

But that’s not all. Najarian thinks the move could not only light a fire under banks, but the entire market. “If that Reuters report above is right there’s a very good chance the entire market will get a big lift.”

Again, the date to watch is March 12th.

Gio posted this just after it aired. This is really informative. Enjoy !