Brazil Says Interest Rate Cuts are Now on Hold
Italian, Spanish, and French Yields Climb While German Yields Fall
Australian CDS Traders Demand Higher Premiums Due to the Sovereign Debt Crisis in Europe
European Banks Have No White Knights; So They Must Turn to Government for Funding
Moody’s To Review EU Credit Ratings
Now that the sovereign debt crisis summit is over Moody’s said they will begin to reevaluate EU credit ratings.
Comments »Wall Street Comments on Friday’s EU Budget Proposal
Bond Purchase Have a Dual Effect on the Market Place
A new study out on the effects of major bond purchasing programs by the FED and the BoE….
Comments »Russian Protestors Turn Up the Heat on Scumbag Putin
ens of thousands of Russians turned out in central Moscow and across the country Saturday to protest what they believe were rigged parliamentary elections.
United Russia, the party of Prime Minister Vladimir Putin, suffered big losses in the election, but retained its parliamentary majority. On Saturday, protesters chanted “Putin out,” according to a correspondent from state-run RIA Novosti news agency.
Between 20,000 and 25,000 protesters had gathered in the capital, Moscow, Ria Novosti said Saturday, citing police. There have been no reports of unrest and security has been tight.
Comments »Germans split on euro, European unity
Comments »(CNN) — Almost half of German people believe that their country’s economy would be in a better position today if it hadn’t joined the euro, according to the findings of a survey commissioned by CNN.
About the same number of Germans is also opposed to a more tight-knit “United States of Europe,” along lines favored by their leader, Chancellor Angela Merkel. The concept enjoys stronger backing in poorer countries such as Spain and Greece, the study found.
The research conducted by ComRes and released on a day that saw European leaders agree to strengthen financial ties to ward off financial crisis, shows opinions broadly divided along lines of national wealth across the continent.
Moody’s downgrades 3 leading French banks
Comments »PARIS (AP) – The Moody’s rating agency downgraded three leading French banks on Friday, saying that the spiraling debt crisis in Europe was making it hard for them to get loans and that the situation may get worse.
After a review, Moody’s lowered the overall financial strength ratings of BNP Paribas, Societe Generale and Credit Agricole SA. The banks’ long-term debt ratings were also downgraded, saying they were “affected by the fragile operating environment for European banks.”
Banks are at the front-line of the debt crisis raging across the 17-country eurozone that has threatened to drag the global economy back into recession.
It took action a day after a regulator said European banks have to raise about €115 billion ($154 billion) — more than expected — to meet a new standard meant to shore up the lenders against market turmoil.
China growth slowest in two years
Comments »BEIJING (Reuters) – China’s industrial output growth dropped in November to its slowest pace in more than two years and inflation tumbled as economic conditions deteriorated, raising expectations that Beijing will pursue a more pro-growth policy to support jobs.
Easing inflation pressure on consumers at the same time as data signals a serious risk of a sharp industrial slowdown is potentially perilous for policymakers trying to engineer a soft economic landing against a backdrop of a deepening crisis in China’s main export market — debt-ridden Europe.
“The sharp contraction in the real economy, the external uncertainties lingering on, plus the easing inflationary pressure all point to a larger scope for further policy easing. So the basic tone of the macro policy will lean towards the pro-growth side,” said Nie Wen, analyst at Hwabao Trust in Shanghai.
A deluge of data on Friday showed China’s annual consumer inflation rate tumbled in November to 4.2 percent, the lowest level since September 2010 and slightly below expectations. It was the first time since February it had fallen below 5 percent.
Inflation has dropped from a three-year high of 6.5 percent in July, allowing Beijing to shift its policy stance towards offering support for the economy, especially as CPI is now closer to the full-year government target for 2011 of 4 percent.
EU Leaders Agree on Fiscal Pact, ECB Douses Hopes
(Reuters) – European Union leaders agreed on new fiscal rules enshrining tougher budget discipline on Thursday, an EU official said, after the European Central Bank doused hopes of dramatic action on its part to arrest the euro area’s debt crisis.
The 27 EU leaders, meeting in Brussels, agreed on automatic sanctions for euro zone deficit offenders unless three-quarters of states vote against the move, and approved a new fiscal rule on balanced budgets to be written into national constitutions.
“There is a deal between leaders on the new fiscal compact,” an EU official told reporters after four hours of talks.
However, they were still debating how to strengthen their future permanent rescue fund and whether to give it a banking license, and had not yet broached the vexed question of whether the new pact requires major changes to the EU treaty.
European Council President Herman Van Rompuy, the summit chairman, wants all 27 EU states to agree to the rule changes via a minor adjustment to a treaty protocol that could be implemented quickly without requiring full ratification. But German Chancellor Angela Merkel demanded a fully fledged treaty change to give the measures extra weight.
“The Germans are obsessed with how we are going to do things, saying we have to change the treaty. They are totally obsessed. That’s why it can get difficult,” an EU diplomat said.
ECB President Mario Draghi earlier spooked financial markets by discouraging expectations that the bank would massively step up buying of government bonds if EU leaders agreed on moves towards closer fiscal union.
As soon as the draft summit agreement leaked, a senior German official rejected key measures including letting the future rescue fund, the European Stability Mechanism, operate as a bank, borrowing from the ECB, and a long-term goal of issuing common euro zone bonds.
Draghi said the bloc’s existing bailout facility should remain the main tool to fight bond market contagion, despite its clear limits. It was illegal for the ECB or national central banks to lend money to the IMF to buy euro zone bonds, he said, appearing to veto one firefighting option under consideration.
The ECB did take unprecedented action to support Europe’s cash-starved banks with three-year liquidity and cut interest rates back to a record low 1.0 percent to counter a forecast recession brought on by widespread austerity measures.
The euro and world shares briefly rallied on news of the draft summit conclusions, only to fall back on the German rejection. Investors are increasingly convinced only the ECB has the power to protect the euro zone, and were disappointed by Draghi’s caution on bond-buying.
“One step forward, two steps back,” said Alan Clarke, UK and euro zone economist at Scotia Capital. “The euro zone leaders might as well not bother. Pack their bags, go home, enjoy the weekend and do their Christmas shopping.”
French President Nicolas Sarkozy dramatized the danger facing the 17-nation single currency area hours before their eighth crisis summit of the year in a speech to European conservative leaders in the French port city of Marseille.
“Never has the risk of Europe exploding been so big,” he said. “If there is no deal on Friday there will be no second chance.”
France and Germany used the Marseille meeting to lobby for their plan to amend the European Union treaty to toughen budget discipline, which they want to have ready by March. But several countries are skeptical of full-blown treaty change.
Merkel said on arrival in Brussels: “The euro has lost credibility and this must be won back. We will make clear that we will accept more binding rules.”
The new ECB chief said his remark last week that “other elements” might follow if euro zone leaders agreed to seal tougher new budget rules had been overinterpreted as hinting the bank could step up bond purchases.
“I was surprised by the implicit meaning that was given,” Draghi said, without offering an alternative interpretation.
The ECB cut its main rate by a quarter-point and flagged a strong chance of recession next year. Draghi admitted the central bankers had been divided even on that decision.
The plight of Europe’s banks was also thrown into sharp relief. The European Banking Authority told them to increase their capital by a total of 114.7 billion euros, significantly more than predicted two months ago.
A Reuters poll of economists found that while 33 out of 57 believe the euro zone will probably survive in its current form, 38 of those questioned expected this week’s summit would fail to deliver a decisive solution to the debt crisis.
Read the rest here.
Comments »Cyber Attacks Could Wreck Global Oil Supply
Hackers are bombarding the world’s computer controlled energy sector, conducting industrial espionage and threatening potential global havoc through oil supply disruption.
Oil company executives warned that attacks were becoming more frequent and more carefully planned.
“If anybody gets into the area where you can control opening and closing of valves, or release valves, you can imagine what happens,” said Ludolf Luehmann, an IT manager at Shell Europe’s biggest company .
“It will cost lives and it will cost production, it will cost money, cause fires and cause loss of containment, environmental damage – huge, huge damage,” he told the World Petroleum Congress in Doha.
Computers control nearly all the world’s energy production and distribution in systems that are increasingly vulnerable to cyber attacks that could put cutting-edge fuel production technology in rival company hands.
“We see an increasing number of attacks on our IT systems and information and there are various motivations behind it – criminal and commercial,” said Luehmann. “We see an increasing number of attacks with clear commercial interests, focusing on research and development, to gain the competitive advantage.”
He said the Stuxnet computer worm discovered in 2010, the first found that was specifically designed to subvert industrial systems, changed the world of international oil companies because it was the first visible attack to have a significant impact on process control.
But the determination and stamina shown by hackers when they attack industrial systems and companies has now stepped up a gear, and there has been a surge in multi-pronged attacks to break into specific operation systems within producers, he said.
“Cyber crime is a huge issue. It’s not restricted to one company or another it’s really broad and it is ongoing,” said Dennis Painchaud, director of International Government Relations at Canada’s Nexen Inc. “It is a very significant risk to our business.”
“It’s something that we have to stay on top of every day. It is a risk that is only going to grow and is probably one of the preeminent risks that we face today and will continue to face for some time.”
Luehmann said hackers were increasingly staging attack over long periods, silently collecting information over weeks or months before attacking specific targets within company operations with the information they have collected over a long period.
“It’s a new dimension of attacks that we see in Shell,” he said.
NOT IN CONTROL
In October, security software maker Symantec Corp said it had found a mysterious virus that contained code similar to Stuxnet, called Duqu, which experts say appears designed to gather data to make it easier to launch future cyber attacks.
Other businesses can shut down their information technology (IT) systems to regularly install rapidly breached software security patches and update vulnerable operating systems.
But energy companies cannot keep taking down plants to patch up security holes.
“Oil needs to keep on flowing,” said Riemer Brouwer, head of IT security at Abu Dhabi Company for Onshore Oil Operations (ADCO).
“We have a very strategic position in the global oil and gas market,” he added. “If they could bring down one of the big players in the oil and gas market you can imagine what this will do for the oil price – it would blow the market.”
Hackers could finance their operations by using options markets to bet on the price movements caused by disruptions, Brouwer said.
“So far we haven’t had any major incidents,” he said. “But are we really in control? The answer has to be ‘no’.”
Oil prices usually rise whenever tensions escalate over Iran’s disputed nuclear program – itself thought to be the principal target of the Stuxnet worm and which has already identified Duqu infections – due to concern that oil production or exports from the Middle East could be affected by any conflict.
But the threat of a coordinated attack on energy installations across the world is also real, experts say, and unlike a blockade of the Gulf can be launched from anywhere, with no U.S. military might in sight and little chance of finding the perpetrator.
“We know that the Straits of Hormuz are of strategic importance to the world,” said Stephan Klein of business application software developer SAP.
“What about the approximately 80 million barrels that are processed through IT systems?,” said Klein, SAP vice president of oil and gas operations in the Middle East and North Africa.
Attacks like Stuxnet are so complex that very few organizations in the world are able to set them up, said Gordon Muehl, chief security officer at Germany’s SAP said, but it was still too simple to attack industries over the internet.
Only a few years ago hacking was confined to skilled computer programmers, but thanks to online video tutorials, breaking into corporate operating systems is now a free for all.
“Everyone can hack today,” Shell’s Luehmann said. “The number of potential hackers is not a few very skilled people — it’s everyone.”
Comments »Citi: Euro Collapse Would Spark Global Depression, Push Unemployment Above 20%
In one of the gloomiest predictions about the fallout from a breakup of the euro, Citigroup’s chief economist on Thursday warned a collapse of the currency will result in years of a global depression that could send unemployment spiking above 20% in the West.
The comments, from Citigroup chief economist Willem Buiter, underscore the growing concern that policymakers won’t be able to forge a credible solution that will keep the currency union intact.
Buiter, previously a professor at the London School of Economics, said the ensuing chaos caused by the unlikely event of a disorderly sovereign default and exit by all five periphery nations would trigger a financial catastrophe and global depression. The disaster, he said, would send GDP plummeting more than 10% and unemployment in the West surging to 20% or more.
“If Spain and Italy were to exit, there would be a collapse of systemically important financial institutions throughout the European Union and North America and years of global depression,” Buiter wrote.
Thankfully, Buiter sees little chance of these worst-case scenarios actually coming to fruition. He forecasts a 5% or lower chance of a disorderly default and exit by all five periphery states.
Likewise, Buiter believes the likelihood of an exit by Germany and other fiscally strong countries is even less likely, attributing a less than 3% probability of such an event. That’s a good thing because he believes this outcome would perhaps be even more disastrous and extremely messy from a legal standpoint.
Still, the financial markets appear to be bracing for at least the possibility that the eurozone will no longer have 17 nations.
Hurt by comments from the ECB, the euro slumped nearly 1% against the dollar and fell below $1.33 on Thursday. Individual European bank stocks like Deutsche Bank (DB: 28.25, -1.28, -4.32%) and Barclays (BCS: 11.36, -0.67, -5.57%) suffered steep selloffs as well.
According to The Wall Street Journal even some central banks are take precautionary steps to prepare for life without the euro, including central banks in Ireland, Greece, England and Switzerland.
If the only nation to leave the currency and suffer a disorderly sovereign default was Greece, Buiter said it would be “manageable” because it accounts for just 2.2% of euro-area GDP.
Ultimately, Buiter said the potential for economic ruin should present a compelling argument for keeping the eurozone intact as much as possible.
“The case for keeping the Euro Area show on the road would seem to be a strong one: financially, economically, and politically, including geopolitically,” he wrote.
Read more: http://www.foxbusiness.com/economy/2011/12/08/citi-euro-collapse-would-cause-global-depression-send-unemployment-above-20/#ixzz1fy0fqlhN
FLASH: ECB Will Offer 36 Month Refi Loan Operations; Futures Gap Up on the News
DOW futures up 75
Comments »Australia Had its Worst Job Growth Data in 15 Years; Doves Cry Rate Cut
Europe May Throw a Bone to Banks Through a IMF Loan
There is rumor of rumors involving the EU tossing in 150 billion Euros to the IMF to leverage. What ever the amount below 1 trillion euros; it will not be enough to impress markets.
Comments »Give It Some Time; Type 5 Trades Will Rule Soon
I’m looking for an outside chance of 1325 S&P. Of course 1265 and 1280 must be breached in a meaningful way. Or The PPT needs to give us a overbought reading on the SPY. Either way I’m stalking the market.
At any rate, get this take on Europe…
Comments »FLASH: Apple Loses iPad Trademark Case in China
SOURCE: http://trade.cc/ois
Apple could face disruption to its iPad sales in China after a court rejected its claim to own the iPad trademark in the country and a rival sought to halt sales of the tablet device in two Chinese cities.
The developments are the latest in a long-running dispute between Apple and Proview Technology (Shenzhen), a struggling Taiwanese-owned company that registered trademarks for the name IPAD in many countries long before Apple conceived its smash hit tablet computer.
Normally, Apple is on the receiving end of intellectual property rights infringements in China, with counterfeits extending even to copies of its flagship stores. The US company has nonetheless reported soaring sales over the past three quarters, following a push started last year under which it has so far built four Apple stores in Beijing and Shanghai and 1,000 resellers across the country.
“Apple is such a Goliath and has a good image, so people wouldn’t imagine that Apple could possibly infringe on our intellectual property rights,” said Xiao Caiyuan, a lawyer for Proview at Guangdong Guanghe law firm. “People always think it’s small companies infringing upon large companies’ IPR.”
“We hope that this decision will make our negotiations with Apple a bit easier,” said Li Su, a representative of Proview.
Proview, a flatscreen contract manufacturer, made an unsuccessful attempt to sell a tablet computer in 2000, and registered trademarks for the IPAD name in the EU, China, Mexico, South Korea, Singapore, Indonesia, Thailand and Vietnam between 2000 and 2004, according to trademark databases.
In 2006, Proview Electronics (Taiwan) agreed to sell Apple the “global trademark” for the IPAD name for £35,000, according to Proview, but the two companies have subsequently disagreed about whether that deal included China.
Apple applied to have ownership of the two relevant Chinese trademarks transferred to its name before it began selling the iPad in China early last year. The Chinese trademark office rejected the application because the trademarks are owned by Proview Technology (Shenzhen), another affiliate of Proview International, the group’s Hong Kong-listed holding company, and not the Taiwan unit.
Apple then sued Proview Technology (Shenzhen), asking the court to declare the US company the rightful owner of the IPAD trademarks in China. The Shenzhen Intermediate People’s Court rejected that request earlier this week in a ruling that Apple can appeal.
At the same time, Proview Technology (Shenzhen) has sued Apple resellers in the southern Chinese cities of Shenzhen and Huizhou, seeking an immediate block on sales of iPads. The Shenzhen Futian District Court is due to start hearing one case on December 30, and the Huizhou Intermediate People’s Court has scheduled a hearing in the other for January 7.
“We are starting with these two cities, and if we are successful in getting iPad sales stopped, we will consider going after Apple resellers elsewhere in China,” said Xie Xianghui, a lawyer with Grandall, another Chinese law firm working for Proview. Apple declined to comment.
The China trademark lawsuit comes at a time when Apple is engaged in a number of patent battles globally against Samsung Electronics and HTC, two other smartphone makers. Those cases, which span markets including the US, Germany and Australia, have so far mostly been decided in favour of Apple.
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