Malaysians Brace for Shift to Austerity as Najib Cools Spending

Malaysians Brace for Shift to Austerity as Najib Cools Spending

Malaysian Prime Minister Najib Razak returned to power this year with the help of a spending spree that boosted consumption. Now voters could feel the pinch as he tries to appease a different group: rating companies. Najib’s government raised subsidized fuel prices for the first time since 2010 this month and has said it will delay some infrastructure projects, seeking to contain the budget gap and shore up the current account after Fitch Ratings cut Malaysia’s credit outlook to negative in July. It is also considering a goods and services tax in the 2014 fiscal plan due Oct. 25. Read more of this post

Singapore’s Home Sales Rebound to Be Short-Lived; “Supply is a very real thing, so seeing spanking new buildings coming up with no real demand will see some price correction and some pain for developers as well.”

Singapore’s Home Sales Rebound to Be Short-Lived: Southeast Asia

Singapore’s jump in private home sales last month was only a temporary reprieve for developers as the government’s cooling measures take root and mortgage rates begin to rise. The city’s housing sales climbed 54 percent to 742 in August from July, when they fell to 482, the lowest in almost four years, according to government data. With nine rounds of cooling measures since mid-2009, the increase will be short-lived, according to Mizuho Bank Ltd. and UOB Kay Hian Pte. Monthly sales averaged about 1,700 units in the first six months of the year. Read more of this post

The battle to secure German shipping lender HSH

The battle to secure German shipping lender HSH

1:13am EDT

By Laura Noonan

HAMBURG (Reuters) – Once the beacon of a brave new future for Germany’s publicly-owned regional banks, HSH Nordbank is now a focal point of concern over the sector. The Hamburg and Kiel-based bank earned its trail-blazer status by attracting 1.25 billion euros from US investor J.C. Flowers in 2006 and touting plans to list a significant minority of its equity on the stock market. Now it is blazing a very different trail – the first Landesbanken to return to the European Commission for approval after it regretted a 2011 decision to hand back some of its original post-crisis bailout and asked for it to be re-instated. Read more of this post

Regulators Should Draw a Line Between Finance and Commerce

Sep 16, 2013

Regulators Should Draw a Line Between Finance and Commerce

FRANCESCO GUERRERA

To be or not to be a bank?

The Federal Reserve, Congress and some of the world’s largest financial institutions are about to tackle the existential issue of what a bank is. The narrow version of the debate is whether J.P. Morgan ChaseJPM +1.05% & Co., Goldman Sachs Group Inc.GS +1.85% and Morgan StanleyMS +2.13% should continue to own, store and transport commodities such as oil, copper and electricity. But its ramifications reach into a cornerstone of modern U.S. financial architecture: the separation of finance and commerce. Read more of this post

TIPS Extend Record Loss to Almost 10% Before Consumer Prices

TIPS Extend Record Loss to Almost 10% Before Consumer Prices

Treasury Inflation Protected Securities are extending this year’s record loss to almost 10 percent before a government report economists said will show the annual increase in the cost of living slowed in August. TIPS have declined 9.5 percent in 2013, the most since they were first sold in 1997, based on Bank of America Merrill Lynch data. The Federal Reserve will probably reduce its monthly bond purchases to $75 billion from $85 billion after a two-day meeting concludes tomorrow, according to a Bloomberg News survey of economists on Sept. 6. Read more of this post

Refinancings Plummet After Worst Losses in 14 Years: Muni Credit

Refinancings Plummet After Worst Losses in 14 Years: Muni Credit

U.S. localities are scaling back refinancing by the most since 2006 as the worst municipal bond losses in 14 years push up borrowing costs. With yields near a 29-month high, refinancings shriveled to just $81 billion this year through Sept. 11, out of $229 billion of total sales, Citigroup Inc. data show. That’s down 29 percent from last year’s pace, when localities refunded the most since at least 2003. Read more of this post

Preferred Stocks: Less Volatile Than Stocks, More Liquid Than Bonds?

September 9, 2013

Less Volatile Than Stocks, More Liquid Than Bonds

By JOHN F. WASIK

AS hybrid securities, preferred stocks fill a useful niche between stocks and bonds, paying high dividends. Yet they are often ignored when building an income portfolio. As interest rates have climbed in recent months, though, you have to be careful about buying preferred shares. While they are worthwhile additions to retirement portfolios, you have to be aware of their risk profile. Read more of this post

Navigating the financial labyrinth of Germany’s Landesbanken

Navigating the financial labyrinth of Germany’s Landesbanken

1:13am EDT

By Laura Noonan

HAMBURG (Reuters) – To the casual observer, the Landesbanken’s results for the first half of this year might suggest Germany’s publicly-owned regional banks are in rude financial health. But the headline numbers belie a more complex reality. Four of the five major Landesbanken boasted improvements in profits for the first half of 2013, sometimes quite dramatic, like the 400 percent increase in pre-tax profits at Hamburg and Kiel based shipping lender HSH Nordbank. <SEE FACTBOX> Read more of this post

Martin Feldstein: How to Create a Real Economic Stimulus

September 16, 2013, 7:08 p.m. ET

Martin Feldstein: How to Create a Real Economic Stimulus

Entitlement reform is key to shrinking the ratio of debt to GDP and making room for pro-growth tax cuts.

MARTIN FELDSTEIN

Earlier this year, former U.S. Treasury Secretary Larry Summers expressed doubts about the Federal Reserve’s quantitative easing policy of buying $85 billion a month of government bonds and other long-term assets. His skepticism antagonized some Fed insiders and liberal Democrats, who recently opposed his consideration by President Obama as the next Fed chairman. When Mr. Summers on Sunday withdrew his candidacy for the chairman’s job, there was one immediate benefit: Now Larry Summers will be free to voice an even clearer and stronger critique of current policy. Read more of this post

Fed Faces Tough Sell on Low-Rate Strategy

September 16, 2013, 2:21 p.m. ET

Fed Faces Tough Sell on Low-Rate Strategy

Steadying Economy Poses Test on Key Easy-Money Policy

JON HILSENRATH

Federal Reserve officials face a communication challenge explaining their interest-rate plans when they gather for a policy meeting this week. Their updated economic projections could show an economy that appears back to normal by 2016, but their projections of where short-term interest rates will be could show rates still quite low by then. Their challenge: How to justify the low interest-rate plan when their own estimates suggest an economy regaining its health. Read more of this post

Bionic Fed is No Match for Bond Market

Updated September 16, 2013, 8:04 p.m. ET

Bionic Fed is No Match for Bond Market

Tame inflation expectations don’t jibe with surging bond yields. The incoming Fed Chair will have a struggle on his or her hands keeping the Treasury market from choking off the recovery.

SPENCER JAKAB

Steve Austin, eat your heart out. The Six Million Dollar Man could have a second bionic arm installed and still not hold a candle to Janet Yellen, the $600 billion woman. That was the approximate gain in global stocks Monday morning after the Federal Reserve’s vice chair became the presumptive nominee for the top job. Even a better, stronger and faster chairman than Ben Bernanke won’t have the power to hold off the bond market forever, though. Under the past five months of his term, the yield on the benchmark 10-year Treasury note has surged an eye-watering one-and-a-quarter percentage points. Read more of this post

Affluent investors bet on farms, rail cars amid hunt for yield, income; reminscent of 1980s collapse of farmland values?

Affluent investors bet on farms, rail cars amid hunt for yield, income

Risk assets used mainly by pensions, endowments being pitched to rich investors

Sep 15, 2013 @ 2:13 pm (Updated 2:43 pm) EST

Ken Slater says he was a novice at growing corn and soybeans when he asked Bank of America Corp.‘s U.S. Trust unit to purchase the first of three farms for him in the past two years. A millionaire living in Palm Beach, Florida, Slater was looking for a place to put his money that would provide income, diversify risk and offer capital appreciation. He wasn’t thrilled with the returns of corporate and municipal bonds, so he put 5 percent of his portfolio in real assets such as farmland and timber. Read more of this post

Bernanke’s Maradona swerve hits bonds; how the Federal Reserve chairman has managed to tighten US financial conditions by more than 100 basis points without touching the Fed funds rate

September 16, 2013 8:43 am

Bernanke’s Maradona swerve hits bonds

By Steven Major

Clues to Fed chairman’s plan were in ‘term premium’ talk

Has Ben Bernanke delivered a modern version of the Maradona effect? It may help to explain how the Federal Reserve chairman has managed to tighten US financial conditions by more than 100 basis points without touching the Fed funds rate. The analogy, first applied to monetary policy by Sir Mervyn King, former Bank of England governor, refers to the ability of famed Argentine footballer Diego Maradona to clear a path to goal by wrongfooting opposing players as they tried to anticipate his next move. The bond market may not have been wrongfooted by Mr Bernanke’s swerve if it had paid better attention to what he said in March this year. We are used to thinking of his May 22 comments on the phasing out of US quantitative easing as this year’s key event for financial markets. It marked the start of the sell-off in US Treasuries, which contributed to big ructions in many emerging markets. But it was the earlier speech that provided some clues. Speaking about long-term interest rates on March 1, Mr Bernanke mentioned the phrase “term premium” no less than 28 times. Read more of this post

New Zealand Winemakers Seek Protection for Local Labels

Updated September 16, 2013, 5:40 a.m. ET

New Zealand Winemakers Seek Protection for Local Labels

LUCY CRAYMER

MARLBOROUGH, New Zealand—When the first winemakers harvested grapes here in the 1970s, they joined an army of New World vintners taking on established producers such as France and Spain. Now, New Zealand’s winemakers are resorting to an Old World tactic to fend off a challenge from newer rivals—regional trademarks. As wine consumption booms in countries such as China and Russia, entrepreneurs are setting up vineyards there, raising fears among New Zealand growers about knockoff wines posing as premium labels exported from regions like Marlborough and Central Otago. New Zealand winemakers are lobbying for the same legal protection for their brands that French producers won for Champagne two decades ago. Read more of this post

A renewed attack on social media by the Chinese leadership isn’t just an offensive against bloggers and activists. It’s also an assault by the Communist Party on its own shortcomings

September 16, 2013, 12:44 PM

The Other Side of China’s Social Media Crackdown

By Russell Leigh Moses

A recently renewed attack on social media by the Chinese leadership isn’t just an offensive against bloggers and activists who dominate the daily online discourse in China. It’s also an assault by the Communist Party on its own shortcomings. The sweeping political strategy towards social media that’s been taking shape here began before President and Party chief Xi Jinping left for this year’s G20 summit in Russia, and it picked up speed and suspects while he was away.  That’s a clear sign that there’s consensus in the Party leadership about how to handle dissent. The first part of the attack strategy involved the coordinated clampdown on leading microbloggers and social celebrities whose followings often sideline messages from state authorities. Read more of this post

Japanese tofu prices are going up 20% because of Abenomics

Japanese tofu prices are going up 20% because of Abenomics

By Adam Pasick @adampasick 4 hours ago

Japan’s tofu manufacturers are planning to jack up prices by 20% this autumn—the first markup in 15 years—as a response to the rising price of American soybean imports, caused in part by a stronger Japanese yen. Prime Minister Shinzo Abe has pushed a series of reforms designed to rid the economy of deflation, but the policies have had harsh consequences for industries that must import dollar-denominated commodities like oil, natural gas, and soybeans. Japan is the biggest per capita consumer of soy foods—not just in tofu but in soy sauce, miso, edamame, and the smelly fermented delicacy known as natto—with the average adult consuming 24.3 kilograms per year. The country is reliant on imports for about three-quarters of its supply, according to the US Department of Agriculture; that percentage rose even higher after the Fukushima nuclear disaster, which rendered 22% of domestic supply unusable (pdf, pg 2) because of radiation fears. Yasuo Hachijin, head of an industry group in the Kinki region and president of Kyoto-based Global Protein Foods Inc., said the price of raw materials has climbed 20% over the last five years. He told the English-language Japan Times, that “the hike will not be enough to fill the gap and that the industry will have consider another one.” The Japanese tofu industry’s woes have been exacerbated by drought conditions in the American Midwest, which resulted in six weeks of rising soy prices through Sept. 16—the longest run of rising prices since 2009. Prices eased slightly this week due to reports of much-needed rain—a relief to US farmers, if not necessarily to their clients in Japan’s tofu factories. Read more of this post

China eyes private funds to tackle bad-debt buildup, avoid bailout

China eyes private funds to tackle bad-debt buildup, avoid bailout

5:23pm EDT

By Gabriel Wildau

SHANGHAI/BEIJING (Reuters) – Faced with a chorus of warnings that China risks choking on bad debts, Beijing is pushing banks to raise private capital in an effort to head off the need for a second government bailout in as many decades. The hangover from a credit binge that powered China’s swift recovery from the global financial crisis, combined with the economy’s slowdown, has prompted expectations of a repeat of the early 2000s, when Beijing shored up its major banks with hundreds of billions of dollars. Right now, however, authorities appear focused on pushing banks to bolster their balance sheets by aggressively enforcing new international bank capital requirements, known as Basel III. Read more of this post

China banks urged to note risks when making new products, adding that it would tighten controls on banks’ leverage level

China banks urged to note risks when making new products

1:32am EDT

BEIJING (Reuters) – China’s banking watchdog has told banks to be cautious in financial product innovation to head off possible risks in the sector, adding that it would tighten controls on banks’ leverage level. “A lesson from the global financial crisis tells us the overlapping of different businesses may intensify hidden risks,” Shang Fulin, the chairman of the China Banking Regulatory Commission, said in a statement on the commission’s website.