India Raises Import Tax on Gold

“India, the world’s largest bullion buyer, increased taxes on gold imports to reduce a record current-account deficit and moderate demand for the precious metal that’s rallied for 12 straight years.
The duty on gold and platinum imports was raised to 6 percent immediately from 4 percent, Economic Affairs Secretary Arvind Mayaram told reporters in New Delhi yesterday. A levy on gold ore, concentrate and so-called dore bars for refining will be doubled to 4 percent, and an excise tax on refined gold will climb to 5 percent from 3 percent, the customs said on its website. The tariff will be reviewed if imports moderate, Mayaram said.

Increased taxes may reduce demand in Asia’s third-largest economy after prices jumped 7.1 percent in 2012 as investors and central banks boosted purchases. About 80 percent of India’s current-account deficit, the broadest measure of trade, tracking goods, services and investment income, is due to gold imports, according to the Reserve Bank of India….”

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“Euro-area finance ministers staked out their turf in a brewing battle over bank rescues amid German and Austrian warnings that direct bailouts won’t be widely available.

Ministers seek an agreement in the first half of this year on how and when the 500 billion-euro ($668 billion) European Stability Mechanism can bypass governments and provide direct help to banks. Ireland and France led calls at a meeting of euro finance chiefs in Brussels yesterday for work to proceed quickly so the new tool can be ready as quickly as possible.

Some creditor nations countered that direct bank aid shouldn’t start until the European Central Bank takes up its new role as single supervisor within the currency zone, which isn’t expected until 2014. In the meantime, the ESM needs to leave its resources free to be a lender of last resort, German Finance Minister Wolfgang Schaeuble said.

“One has to damp further-reaching expectations because that would completely overburden the ESM,” Schaeuble told reporters after the meeting. He urged the euro area not to “repeat earlier mistakes” by raising hopes of aid that won’t materialize.

“We mustn’t relapse to create incentives that fall under the heading of moral hazard,” Schaeuble said. “We must keep decision-making power and liability close together…”

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“International investors are the most bullish on stocks in at least 3 1/2 years, with close to two- thirds planning to raise their holdings of equities during the next six months, according to a Bloomberg survey.

As the global financial and business elite gather in Davos for their annual forum, 53 percent of respondents to the Bloomberg Global Poll also say equities will offer the highest return in the next year. That’s a 17 percentage point jump from the last poll in November and the most since the quarterly survey of investors, analysts and traders who subscribe to Bloomberg began in July 2009….”

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“German investor confidence increased to the highest in 2 1/2 years in January, adding to signs that Europe’s largest economy may gather momentum.

The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, jumped to 31.5 from 6.9 in December. That’s the highest since May 2010 and the biggest gain in 11 months. Economists forecast an increase to 12, according to the median of 39 estimates in a Bloomberg News survey….”

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Brent is currently up $0.27 while WTI is down $0.20…

“Brent crude advanced to the highest level in more than a week as Japan’s central bank said it will expand asset purchases to lift the world’s third-biggest oil consumer out of the recession.

Futures rose as much as 0.7 percent to the highest since Jan. 10. The Bank of Japan (8301)will introduce open-ended asset purchases from January 2014 to boost the economy. Euro-area finance ministers yesterday approved a payout of 9.2 billion euros ($12.3 billion) to Greece this month.

“Expectations for stimulus in Japan have been propping up markets in otherwise thin trading,” said Andrey Kryuchenkov, an analyst at VTB Capital in London who predicts Brent may find resistance at $112.50 a barrel this month.

Brent for March settlement climbed as much as 77 cents to $112.48 a barrel, and traded for $112.18 as of 12:22 p.m. on the ICE Futures Europe exchange in London. The average volume of all contracts was 17 percent higher than the 100-day average. The benchmark was at a premium of $16.24 to New York crude futures. The spread was $15.16 on Jan. 17, the narrowest level based on closing prices since July 24.

West Texas Intermediate for February delivery, which expires today, was at $95.49 a barrel, down 7 cents, in electronic trading on the New York Mercantile Exchange. The more active March contract was at $95.97. Yesterday’s transactions will be booked with today’s trades for settlement purposes as there was no floor trading because of the Martin Luther King Jr. Day holiday in the U.S….”

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“Rio Tinto Group, the world’s second- biggest mining company, is considering a sale of all or part of its coal business in Mozambique after last week flagging a $3 billion writedown for the assets, a person familiar with the matter said.

The London-based company has begun a review of the assets acquired in 2011 for A$3.9 billion ($4.1 billion) with the purchase of Riversdale Mining Ltd. and all options are being examined, the person said, declining to be identified because the information is private. The person said no timetable has been set for the completion of the review.

The Australian Financial Review reported today that Rio was conducting a review of its Mozambique coal business, to examine export transport options, potential joint ventures or asset sales, citing unnamed sources.

Chief Executive Officer Tom Albanese and head of strategy Doug Ritchie, who led the acquisition of Riversdale, stepped down last week after Rio (RIO) said it would book charges totaling $14 billion. The company said the Mozambique asset writedown was unacceptable, citing transport constraints and a cut to recoverable coking coal estimates.

Rio will also assess options of boosting coal exports by co-operating with potential parties on rail and port infrastructure, the person said. Other companies with coal mines near Rio’s in the Moatize Basin include Vale SA (VALE3) and Anglo American Plc. (AAL)…”

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“The yen strengthened the most in eight months against the dollar after the Bank of Japan said it will wait a year to begin open-ended asset purchases aimed at boosting the economy. The euro gained and stocks pared losses after German investor confidence climbed to a 2 1/2-year high.

Japan’s currency climbed 1.2 percent to 88.58 per dollar at 7:25 a.m. in New York. The euro appreciated 0.2 percent to $1.3343 after falling as much as 0.4 percent…”

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“The Bank of Japan made its strongest commitment yet to end two decades of stagnation, shifting to Federal Reserve-style open-ended asset purchases while disappointing investors by delaying the program until next year.

Governor Masaaki Shirakawa and six of nine board members voted for a 2 percent inflation target, to be achieved “at the earliest possible time” — a pace not sustained in Japan since the early 1990s. While judging that the economy is “relatively weak,” and that consumer prices will be flat for the time being, the BOJ refrained from adding immediate stimulus.

With a planned 13 trillion yen a month ($145 billion) in extra securities buying on hold until January 2014, the yen rose and stocks fell. The currency has slid and shares climbed the past 10 straight weeks in anticipation of the BOJ joining Prime Minister Shinzo Abe’s administration in strengthening measures to lift the economy out of its third recession in five years.

“What disappoints me was we can see the BOJ’s hesitance to step up monetary stimulus,” said Takahiro Sekido, a strategist in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd. who formerly worked at the Bank of Japan. (8301) “Abe will keep pressing the BOJ but today’s decisions indicate that Abe will probably wait for the next governor to make a significant shift in monetary policy….”

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World Markets

Currencies

Commodities

USD Libor

Euribor

Yields for Italy, Spain, France,  and Germany …

http://www.youtube.com/watch?v=iGn4o1Lb6L0

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Source

“Wasteful spending on Afghanistan’s security has continued to plague the U.S. government, with the latest revelation of nearly $7 million spent to maintain police vehicles that either were destroyed or inoperable.

The Special Inspector General for Afghanistan Reconstruction (SIGAR) conducted an audit of a $350 million contract awarded to the Dubai-based firm Automotive Management Services (A-M-S). SIGAR uncovered $6.8 million was reportedly spent performing maintenance on 7,324 Afghan police vehicles that were not in service.

SIGAR did not report finding evidence of willful misreporting, “a common occurrence in Afghanistan, which is among the world’s most corrupt countries,” wrote Ernesto Londoño in The Washington Post.

“The taxpayers and the success of our mission are at risk when contracts such as this are executed without proper planning and oversight,” SIGAR chief John F. Sopko said in a statement….”

“In France, news that an apartment measuring less than 17 square feet had been rented out for 15 years is being cited as proof of an overly expensive real estate market in Paris. A 50-year-old man identified only as “Dominique” had been paying rent of 330 euros, or about $442, to live in the apartment.

The story was highlighted by the housing advocacy group Fondation Abbe Pierre, after the man asked for help dealing with his landlord. He had been living in a space that measured 1.56 square meters — or about 16.8 square feet.

“I come home, I go to bed,” Dominique told the French website and radio stationRTL, describing how he coped with living in the space….”

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Crazy story….

Article and video

“* Richmond Fed’s Lacker resurrects 2007 allegation

* Geithner said in 2007 that claim was not accurate

* U.S. Treasury declines comment on latest Lacker statement

* Disclosure of rate cut plans would be highly unusual

By Alister Bull

WASHINGTON, Jan 18 (Reuters) – In the summer of 2007, as storm clouds gathered over the world’s financial system, then-New York Federal Reserve President Timothy Geithner allegedly informed the Bank of America and other banks about the possibility the U.S. central bank would lower one of its critical interest rates, according to a senior Fed official.

Jeffrey Lacker, the head of the Richmond Fed, originally raised the allegation during a Fed conference call in August 2007, and he stuck to his 5-year-old claim against the current U.S. treasury secretary in a statement provided to Reuters on Friday.

“From conversations I had prior to the video conference call on August 16, 2007, I was aware of discussions among a few large banks about borrowing from their discount windows to support the asset backed commercial paper market,” Lacker said in the statement. “My understanding was that (New York Fed) President Geithner had discussed a reduction in the discount rate with these banks in connection with these initiatives.”

According to transcripts of the call released by the Fed on Friday, Geithner at the time denied that banks knew the Fed was considering cutting the discount rate. The Fed regularly releases transcripts of its policy meetings with a five-year lag.

“We don’t have any comment beyond the transcript,” said Treasury spokesman Anthony Coley. The Treasury declined to make Geithner available to comment.

Information about any planned interest rate move by the Fed is among the most sensitive as it can have a huge impact on a range of financial markets worldwide. That was particularly the case in the summer of 2007 when there were growing concerns about financial stability as a crisis that would reach fever pitch just more than a year later began to build….”

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“The world is awash in capital whether you know it or not.

The total value of capital in seen going from $600 trillion in 2010 to over $900 trillion by 2020, which will be here before we know it.  A report released in November by management consulting firm Bain & Company suggests that the era of capital superabundance means a number of things to worry about for corporate and portfolio investors. But one of the biggest risks in a world awash in capital is bubbles.  The world’s bubble economy is going to get even bubblier.

Bubbles are everywhere, and hard to avoid. Take for example, Brazilian government bonds. Currently, one of the big buyers of Brazilian government bonds outside of its own banking sector is Japan.  Japanese investors seeking higher yield trade yens for Brazil reals and get an easy five percent return. Some day in the not-so-distant future, China will do the same thing. Their government will allow for regular investors to put money overseas and when China becomes part of that particular carry-trade it will drive up the price of Brazilian bonds as investors chase yield but end up creating bubbles….”

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“The Republican-controlled House will vote next week to permit the government to borrow more money to meet its obligations, a move aimed at heading off a market-rattling confrontation with President Barack Obama over the so-called debt limit.

Full details aren’t settled, but the measure would give the government about three more months of borrowing authority beyond a deadline expected to hit as early as mid-February, No. 2 House Republican Eric Cantor of Virginia said Friday. (Read More: GOP May Seek Short-Term Debt Limit Extension)

The legislation wouldn’t require immediate spending cuts as earlier promised by GOP leaders like Speaker John Boehner of Ohio. Instead, it’s aimed at forcing the Democratic-controlled Senate to join the House in debating the federal budget. It would try to do so by conditioning pay for members of Congress on passing a congressional budget measure.

“We are going to pursue strategies that will obligate the Senate to finally join the House in confronting the government’s spending problem,” Boehner told GOP lawmakers at a retreat in Williamburg, Va. “The principle is simple: `No budget, no pay.”‘

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We all need more paper…

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