Yearly Archives: 2013
$BA Looking for a Huge Rock: Another Dreamliner Grounded in Second Incident
“A Japan Airlines Boeing 787 that was to fly to Tokyo was grounded in Boston Tuesday following a fuel spill, one day after another plane of the same type suffered a fire, government officials said.
“Japan Airlines flight 7 was leaking fuel as it was about to take off,” said Matthew Brelis, a spokesman for Massport, the local airport authority. Around 40 gallons of fuel spilled, according to Brelis.
Since the incident around midday, the spill has been stopped and the tarmac cleaned up, Brelis added.
The plane is currently being analysed and the reasons for the problem are not yet known, said a spokesperson for JAL….”
Comments »Pondering the Unthinkable: How A Chinese Economic Crisis Would Unfold
“Improving Chinese economic data have many experts saying that the economy has bottomed out, and that the possibility of a hard economic landing is off the table.
Societe Generale’s Wei Yao expects Chinese GDP to increase 7.4 percent this year.
However, Yao thinks there still is a “non-negligible risk” of a hard landing in which GDP growth falls to less than six percent. Remember a hard landing refers to four consecutive quarters of below six percent growth – which is the minimum needed for a stable job market and to avoid “systemic financial risk”.
In a new report titled “What If China Lands Hard?” Yao writes that clients they surveyed expect growth of between 5.5 – 7.0 percent in the worst reasonable case. Yao thinks it could drop much lower to about 4 percent.
So what would could cause a hard landing? According to Yao, a major trade shock, inadequate government investment from Beijing, or a sharp property market correction prompted by tight policies could all send China’s economy spiralling.
And how would this scenario play out? From Yao…”
Comments »The World’s Top 28 Banks Will Be Given 3 More Years to Address Transparency Regarding Risks on the Books
“LONDON (Reuters) – The world’s top banks have three years to build up a single picture of all their risks to help make the wider financial system safer, global regulators said on Wednesday.
“The financial crisis that began in 2007 revealed that many banks, including globally systemically important banks (G-SIBs), were unable to aggregate risk exposures and identify concentrations fully, quickly and accurately,” the Basel Committee on Banking Supervision said in a statement.
G-SIBs refers to the world’s top 28 banks like Goldman Sachs, HSBC, Deutsche Bank and Morgan Stanley which are required to undergo closer scrutiny and hold extra capital from 2016.
Such banks operate globally with many branches and subsidiaries, making it harder and costlier to have a single snapshot of risks.
The Basel Committee, which groups regulators and central bankers from 27 financial centers, set out principles these banks must implement in full by January 2016 to strengthen their aggregation of data on risks.
“These principles are a significant step towards improving banks’ risk management capabilities and they will also contribute to G-SIBs’ resolvability, hence reducing the potential recourse to taxpayers,” Basel Committee chairman Stefan Ingves said.”
Comments »$GOOG & $FB May Face New Restrictions in Euroland on Mining and Selling Customer Data
“BRUSSELS (Reuters) – Internet companies such as Facebook and Google may have to get more permission to use information if European Union lawmakers give users more control over their personal data.
EU lawmakers want to limit companies’ ability to use and sell data, such as internet browsing habits, to advertising companies, especially when people are unaware their data is being used in such a way.
“Users must be informed about what happens with their data,” said Jan Philipp Albrecht, a German Member of the European Parliament who is driving the reform. “And they must be able to consciously agree to data processing – or reject it.”
Facebook and Google, who were among the first to profit from users’ data, have been lobbying against the curbs. Other data-reliant sectors such as health services, rail and smart-meter makers have also voiced concerns.
Albrecht, a Green politician, plans to announce on Wednesday a plan to make sure users of search engines and social networks can control how much of their data is sold to advertisers.
A report he produced, which was seen by Reuters, builds on a proposal announced by the European Commission last January for tougher data protection….”
Comments »As Consumer Consumption Slows, So Does the Need to Build Strip Malls Everywhere
“Retailer demand for space at U.S. shopping centers slowed in the fourth quarter amid sluggish economic and employment growth, Reis Inc. (REIS) said.
Occupied space at neighborhood and community shopping centers rose by a net 2.25 million square feet (209,000 square meters), down from 4.12 million square feet a year earlier, the New York-based real estate research firm said today. While it was the sixth consecutive quarter of positive net absorption, “demand remains incredibly weak,” Reis said in its report.
Slow growth in the U.S. economy and an unemployment rate stuck at almost 8 percent are leading to smaller declines in retail-center vacancies. Gross domestic product growth of about 2 percent last year was “a clear disappointment,” Reis said. Until economic growth and labor-market gains shift into a “higher gear,” consumer spending will be muted, said Ryan Severino, a Reis senior economist.
“There’s a dearth of demand out there,” he said in a telephone interview. “It’s difficult to be more optimistic.”
Shopping-center (BBRESHOP) vacancies dropped to 10.7 percent in the fourth quarter from 10.8 percent in the previous three months and 11 percent a year earlier, Reis said. The fourth-quarter figure was the lowest in three years. Effective rents, or what’s paid after any landlord discounts, averaged $16.59 a square foot, up from $16.51 a year earlier….”
Comments »$AAPL Said to Develop Cheaper IPhone Model for Late 2013
“Apple Inc. (AAPL) plans to sell a smaller, cheaper version of the iPhone as soon as this year, said a person familiar with the plans, part of a push to gain customers in developing nations.
Apple, which had been working on a more affordable smartphone since at least February 2011, is weighing retail prices of $99 to $149 for a device that would debut in late 2013, at the earliest, according to the person, who asked not to be named because the negotiations are private. Apple has spoken to at least one of the top U.S. wireless carriers about its plans, the person said yesterday.
Executives at Apple have been particularly interested in building a lower-cost model with less-expensive components as a way to appeal to customers in emerging markets, another person has said. More affordable iPhones would help Apple play catch-up with smartphone makers such as Samsung Electronics Co. (005930) using Google Inc. (GOOG)’s Android mobile software system. Android made up 75 percent of smartphone shipments in the third quarter, compared with 15 percent for Apple, according to IDC….”
Comments »MBA Index Shows a Rebound in Mortgage Applications
“NEW YORK (Reuters) – Applications for U.S. home mortgages rebounded last week after three straight weeks of declines, even as interest rates jumped, data from an industry group showed on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, surged 11.7 percent in the week ended Jan 4.
The index of refinancing applications jumped 12.1 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, climbed 9.6 percent.
The refinance share of total mortgage activity held steady at 82 percent of applications….”
Comments »Black Gold Stands Still Looking for Risk on Traders
“Oil switched between gains and losses in London amid signs of rising inventories in the U.S., the world’s biggest crude-consuming nation.
Brent futures were little changed after adding 0.5 percent yesterday. U.S. crude supplies increased 2.4 million barrels last week, according to the American Petroleum Institute. An Energy Department report today may show inventories rose 2 million barrels, a Bloomberg News survey of 11 analysts showed. Gasoline and distillate stockpiles also climbed, the API said.
“Inventories will likely rise in the spring,” said Andy Sommer, a senior oil analyst at Axpo Trading AG in Dietikon, Switzerland, who predicts Brent will remain at about $110 this month. “Supply and demand in the market are pretty much balanced, with a slight deficit, but that is a normal seasonal pattern. We see downside risk once we come into the spring.”
Brent for February settlement on the London-based ICE Futures Europe exchange increased 13 cents to $112.07 a barrel as of 1:06 p.m. local time. The North Sea crude was at a premium of $18.86 to U.S. benchmark, West Texas Intermediate. The spread widened for the first time in four days yesterday to $18.79.
WTI crude for February delivery was at $93.23 a barrel, up 8 cents, in electronic trading on theNew York Mercantile Exchange. The contract settled at $93.19 on Jan. 7, the highest since Sept. 18. Prices dropped 7.1 percent last year for the first decline in four years.
RSI Resistance…”
Comments »Brazil Swap Rates Fall on Slower Inflation; Currency Declines
“Brazil’s swap rates dropped after a report showed inflation slowed more than forecast, fueling speculation that the central bank will keep borrowing costs at record lows to support the economy.
Swap rates due in January 2015 fell one basis point, or 0.01 percentage point, to 7.78 percent at 10:12 a.m. in Sao Paulo after rising nine basis points yesterday, the most this month. The real slid 0.1 percent to 2.0437 per dollar.
The IGP-M price index increased 0.41 percent in the 10 days through Dec. 31 from a month earlier after climbing 0.69 percent in the prior period, the Getulio Vargas Foundation reported today. The median forecast of 14 analysts surveyed by Bloomberg was for a 0.5 percent advance. The gauge is composed of 60 percent producer prices, 30 percent consumer prices and 10 percent construction costs.
“Local swap rates should be responding to the inflation indicators,” Octavio de Barros, an economist at Banco Bradesco SA, wrote in an e-mailed report today.”
Comments »Nestle to Sell $1B in Latin American Assets
“Nestle SA (NESN) is working with Rothschild to sell Latin American assets valued at more than $1 billion to win regulatory approval for its purchase of Pfizer Inc. (PFE)’s nutrition unit, three people with knowledge of the matter said.
The company, based in Vevey, Switzerland, is in the early stages of a process to sell the Latin American assets, said one of the people, who asked not to be named because the plans are private. The assets may draw interest from H.J. Heinz Co. (HNZ), Danone (BN) SA, Abbott Laboratories (ABT), Mead Johnson Nutrition Co. (MJN) and Grupo Lala SA, two people said….”
Comments »European Markets Rise on $AA Earnings Report
“European stocks rose for the first time in three days as Alcoa Inc. began the U.S. earnings season by posting sales that beat estimates, outweighing a report on German industrial production that missed estimates. U.S. index futures were little changed, while Asian shares climbed.
Telecom Italia SpA led a gauge of telecommunications companies higher after a report that mobile-phone operators discussed sharing their infrastructure across Europe. Delta Lloyd NV jumped 6.7 percent after Aviva Plc (AV/) sold its stake in the Dutch insurer. J Sainsbury Plc (SBRY) dropped 2.8 percent after reporting the slowest sales growth in eight years.
The Stoxx Europe 600 Index (SXXP) advanced 0.3 percent to 287.01 at 11:55 a.m. in London. The benchmark gauge last week surged to the highest level since February 2011 after U.S. lawmakers agreed on a compromise budget. Standard & Poor’s 500 Index futures increased less than 0.1 percent today, while the MSCI Asia Pacific Index added 0.4 percent.
“Alcoa’s results were good, especially the revenue numbers and forward guidance, as was the comment that demand inChina is coming back,” said Manish Singh, who helps manage more than $2 billion as head of investment at Crossbridge Capital in London. “U.S. earnings will probably beat expectations and this should lift European stocks.”
Alcoa, the largest U.S. aluminum producer, unofficially kicked off the earnings season late yesterday as it reported fourth-quarter sales of $5.9 billion, beating the $5.6 billion average analyst estimate in a Bloomberg survey….”
Comments »Economists and Analysts Warn Merkel Not to Ignore an Ailing Economy as it is the Growth Engine of Europe
“German Chancellor Angela Merkel’s economic machine is beginning to show signs of neglect.
As the continent’s growth engine and self-appointed fiscal paragon orders budget cuts for its peers, investors, economists and policy makers are starting to warn Germany is turning a blind eye to its own weaknesses. Joerg Asmussen, a European Central Bank board member nominated by Merkel, has gone as far as to predict a return to the status of “Sick Man of Europe” should they go unfixed….”
Comments »$TRP To Build a $5B Liquid Natty Gas Terminal
“TransCanada Corp. (TRP) agreed to design, build, own and operate the C$5 billion ($5.1 Billion) Prince Rupert natural gas transmission project.
The pipeline will transport gas from the North Montney gas- producing region in British Columbia to the Pacific Northwest LNG export facility near Prince Rupert, British Columbia, according to a statement today.
Progress Energy Canda Ltd. selected TransCanada for the project, according to the statement. Progress and TransCanada expect to finalize the definitive agreement early in 2013.
The proposed pipeline will be the second such project for TransCanada in western Canada, Chief Executive Officer Russ Girling said in the statement.”
Comments »Iron Ore Recovery Expected to Continue As China Restocks Supply
“Iron ore, which posted the biggest quarterly climb on record in the final three months of 2012, may extend gains from a 14-month high as Chinese mills restock, then tumble into a bear market, according to Deutsche Bank AG.
Prices may rise to $170 a ton in the first half on demand in the biggest buyer, before falling to less than $120 as supply expands, Deutsche Bank said in a report. Ore with 62 percent content delivered to Tianjin rose to $158.50 a dry ton yesterday, the highest since October 2011, according to data from the Steel Index Ltd. A drop from $170 to $120 implies a 29 percent fall, more than the 20 percent that typically defines a bear market…”
Comments »The Aussie Dollar Falls on Weaker Than Expected Retail Sales, Kiwi Rises
“Australia’s dollar snapped a three- day gain after government data showed the nation’s retail sales unexpectedly declined.
The country’s bonds advanced amid speculation the Reserve Bank of Australia will cut interest rates by March to support the economy. New Zealand’s dollar rose against all its major counterparts after data showed building approvals for detached houses surged to the highest in more than two years.
“The Aussie is struggling to rise,” said Satoshi Okagawa, a senior global markets analyst in Singapore at Sumitomo Mitsui Banking Corp., a unit of Japan’s second-biggest financial group by market value. “I can’t see an immediate pickup in corporate confidence or retail sales.”
The Aussie was unchanged at $1.0503 as of 4:55 p.m. in Sydney after rising 0.4 percent in the past three days through yesterday. New Zealand’s currency climbed 0.2 percent to NZ$1.2524 per Australian dollar and rose 0.2 percent to 83.86 U.S. cents.
Australian retail sales fell 0.1 percent in November from the prior month, the Bureau of Statistics said today, while economists estimated a 0.3 percent increase. Job vacancies dropped 6.9 percent the same month, a separate report showed.
The yield on Australia’s three-year note slid four basis points to 2.8 percent. New Zealand’s two-year swap rate was little changed at 2.75 percent.
Traders see a 60 percent likelihood that the RBA will cut its benchmark rate to 2.75 percent or lower by March, according to overnight index swaps data compiled by Bloomberg. The key rate currently stands at 3 percent….”
Comments »Loan Funding as a Share of The Economy Has Fallen to Record Lows in China, Credit Risks Loom
“China’s bank loans as a share of funding in the economy may have fallen to a record low, highlighting the growth of alternative financing channels that have prompted warnings of rising credit risks.
New yuan loans probably dropped 14 percent last month from a year earlier, according to the median projection in a Bloomberg News survey of 37 analysts ahead of data due by Jan. 15. That would give bank lending a 55 percent share of aggregatefinancing for 2012, based on UBS AG estimates, the least in figures dating to 2002.
The decline underscores the waning ability of official loan data to capture the scale of debt in the world’s second-largest economy as borrowers and investors turn to less-regulated, higher-return shadow-banking products. The People’s Bank ofChina is putting greater emphasis on aggregate financing and the International Monetary Fund says the growth of nonbank credit poses “new challenges to financial stability.”
“China’s economic performance in 2013 will be significantly affected by how seriously Chinese regulators are going to treat non-bank financing,” said Shi Lei, a Beijing- based analyst with broker Founder Securities Co., who has provided research advice to China’s securities regulator. While a hands-off approach will help the economy, a crackdown “would be really bad for growth.”
The PBOC lending figures are among December data in the coming days that will show whether an economic rebound that began in September picked up or slowed last month after a seven- quarter growth slowdown. Trade figures due tomorrow may show exports rose at a faster pace and a Jan. 11 report may indicate inflation accelerated….”
Comments »The Yen Continues to Fall as BoJ Targets 2% Inflation
“The yen fell against the dollar, halting a two-day gain, as Prime Minister Shinzo Abe met central bank governor Masaaki Shirakawa and said he wants the Bank of Japan (8301) to double its inflation goal to 2 percent.
Japan’s currency weakened at least 0.2 percent versus all its 16 major counterparts after Shirakawa said the BOJ was in close contact with the government, adding to speculation policy makers will boost stimulus that tends to debase the currency. The euro fell for a second day against the dollar before the European Central Bank meets tomorrow to decide on interest rates. Norway’s krone weakened after Trade Minister Trond Giske said its recent strength was “worrisome.”
“There are rumors that the BOJ will be open to changing the inflation target and this is something that weakens the yen,” said Antje Praefcke, a senior currency strategist at Commerzbank AG in Frankfurt. “The trend for yen weakness should continue.”
The yen fell 0.4 percent to 87.43 per dollar at 7:02 a.m. in New York after strengthening 1.3 percent in the previous two days. Japan’s currency declined 0.2 percent to 114.07 per euro after depreciating to 115.99 on Jan. 2, the weakest since July 8, 2011. The euro fell 0.3 percent to $1.3048.
Commerzbank recommends selling the yen should it strengthen beyond 87 per dollar and predicts it will weaken to 90 per dollar, Praefcke said…..”
Comments »$AA Expects Aluminium Consumption to Rise on China Recovery
“Alcoa Inc. (AA), the largest U.S. aluminum producer, sees global demand growth for the commodity recovering to 7 percent in 2013 as China’s economic rebound drives demand for cans, transport and office buildings.
Aerospace demand will increase by as much as 10 percent as planemakers face record backlogs, the company said yesterday in its fourth-quarter earnings presentation. It also predicted aluminum consumption may climb 19 percent in China’s heavy-truck and trailer industry, while U.S. commercial building and construction expands for the first time in four years….”
Comments »Thailand Keeps Rates on Hold as Economy Improves
“Thailand kept its policy interest rate unchanged for a second straight meeting on signs of an improving outlook for exports and strengthening domestic demand.
The Bank of Thailand held its one-day bond repurchase rate at 2.75 percent, it said in Bangkok today, as predicted by all 22 economists in a Bloomberg survey. The decision was unanimous, and forecasts for growth last year and this year will be revised upward after a better-than-expected expansion in the fourth quarter, the monetary policy committee said.
Prime Minister Yingluck Shinawatra’s government has extended subsidies, raised minimum wages and increased infrastructure investments to shield growth after the floods of 2011. While weakness in Europe and Japan persist, there is a broad-based recovery in Thai exports and the performance of Asian economies has turned positive, the central bank said today.
“The unanimous decision confirms our view that the easing cycle in Thailand has drawn to an end,” said Wee-Khoon Chong, a strategist at Societe Generale SA in Hong Kong. “There seems to be no change in their view on the strong domestic demand and benign inflation. The BOT’s focus in the near-term will be on the potential impact of volatile capital flows.”
The Thai baht rose 0.2 percent to 30.38 per dollar as of 3:01 p.m. in Bangkok today, approaching a 10-month high. The benchmark Stock Exchange of Thailand index gained 0.6 percent, having surged 36 percent in 2012…”
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