Fed unveils Plan B for withdrawing QE

November 8, 2013 9:07 am

Fed unveils Plan B for withdrawing QE

By Michael Mackenzie in New York

‘Optimal Control’ keeps rates lower for longer to anchor bond yields

The bond market has been buzzing this week following the publication of two papers* from staff at the Federal Reserve that could provide officials a possible way out of their quantitative easing box. The papers, presented at a conference this week hosted by the International Monetary Fund, suggest a lower unemployment rate of 5.5 per cent before triggering a tightening of policy, while also tolerating a higher rate of inflation of around 2.5 per cent. It is a framework that entails the Fed keeping its key overnight rate near zero into 2017 in order to get the economy moving. Such a commitment to keeping overnight interest rates lower for longer, known as forward guidance in central bank speak, should in theory anchor long term bond yields and facilitate a taper of QE. But will it work? Read more of this post

South Koreans cram for dream jobs at Samsung; “I want to get into Samsung so my mother will be able to boast about her son.”

Updated: Friday November 8, 2013 MYT 12:44:42 PM

South Koreans cram for dream jobs at Samsung

BUSAN, South Korea: In a cram school in the South Korean port city of Busan, 70 college students packed into a classroom, chanting “We can do it!” as they studied for an exam they hope will guarantee them a job for life with Samsung Group <SAGR.UL>. The promise of Samsung, whose sprawling business empire spans consumer electronics to ships, offers not only a good salary and benefits but also holds the key to a good marriage in this Asian country where Confucian traditions run deep. Read more of this post

Lotte Group is moving to create two separate holding companies ㅡ each in Korea and Japan ㅡ to dispel concerns about its vague governance systems

2013-11-08 17:10

Two heirs set to divvy up Lotte

Group may set up holding firms each in Korea, Japan
By Yi Whan-woo
Lotte Group is moving to create two separate holding companies ㅡ each in Korea and Japan ㅡ to dispel concerns about its vague governance systems, industry sources said Friday. The measure came amid the Korean government’s toughening stance on the practices of inter-affiliate shareholding in chaebol, which enables owners and their family members to control the entire group with only small stakes. Read more of this post

Foreign dining brands flourish in Korea; Family restaurants, led by Outback Steakhouse, are recording stellar growth even amid the economic recession in Korea. What is the secret behind their success?

2013-11-08 14:52

Foreign dining brands flourish

By Kim Hye-sung
Family restaurants, led by Outback Steakhouse, are recording stellar growth even amid the economic recession in Korea. What is the secret behind their success?
Global brand companies such as Outback Steakhouse, TGIF, and Baskin Robins’ 31 have succeeded in glocalization: partnering with local agents, diversifying its products to suit Korean consumer’s needs, and marketing its products through aggressive advertisement. Read more of this post

Australia’s Central Bank Cuts Growth Estimate; RBA Warns Mining Investment May Drop More Sharply Than Expected

Australia’s Central Bank Cuts Growth Estimate

RBA Warns Mining Investment May Drop More Sharply Than Expected

DAVID ROGERS and SHANI RAJA

Nov. 8, 2013 12:10 a.m. ET

SYDNEY—Australia’s central bank lowered its growth forecast for next year, saying mining investment may drop off more sharply than expected and that an elevated local currency was likely to hurt sales of manufactured products. The Reserve Bank of Australia lowered its economic growth estimate for the coming calendar year to 2% to 3% from an August forecast of 2.5% to 3.5%. It maintained its gross domestic product growth estimate for this year at 2.25% and for 2015 at 2.75% to 4.25%. Read more of this post

China extends graft investigations to shipping industry

China extends graft investigations to shipping industry

7:41am EST

By Yimou Lee

HONG KONG/SHANGHAI (Reuters) – China’s investigations aimed at rooting out corruption have now extended to the shipping industry, with China COSCO Holdings (1919.HK:Quote, Profile, Research, Stock Buzz)(601919.SS: Quote,Profile, Research, Stock Buzz) saying that one of its top executives is the subject of government inquiries. Read more of this post

Human cost of China’s hukou system

November 8, 2013 9:03 am

Human cost of China’s hukou system

By Lucy Hornby in Beijing

Bored and unsupervised by his barely literate grandparents, 16-year-old Yang Hui started hanging out with other dropouts in the streets of dusty Zhangjiachuan in Northwest China. His posts on Weibo, the Chinese equivalent of Twitter, were increasingly laced with profanity and street talk. Police questioned him as a witness to a motorbike theft. His grades fell. Read more of this post

Plugged into the party: The era in which US banks turned to well-connected Chinese ‘princelings’ to help win lucrative deals is ending

November 7, 2013 7:55 pm

Finance: Plugged into the party

By Henny Sender and Tom Mitchell

The era in which US banks turned to well-connected Chinese ‘princelings’ to help win lucrative deals is ending

In the early 1990s, Donald Tang was sent to Hong Kong to open an office for Bear Stearns, the US securities firm. It was a heady time: China had just discovered the capitalist practice of publicly listing shares and the Shenzhen and Shanghai stock markets were in their infancy. Competition to sell shares in Chinese companies was fierce. Read more of this post

Could China’s Farmers Become Landowners?

Could China’s Farmers Become Landowners?

Land Reform Is on Agenda at Communist Party Meeting

RICHARD SILK

Nov. 8, 2013 4:52 a.m. ET

BEIJING— Wang Xunmei is proud of his small farm just outside Beijing, where he raises 145 sheep and two dozen wild boar and grows strawberries and rice in hothouses through the freezing north China winter. The business is doing well but Mr. Wang faces a problem common to farmers across the country: he doesn’t own the land—and that’s reducing his incentive to build the business. Read more of this post

China’s Party Platter of Reforms: Will China’s Leaders Save the Economy From Itself?

China’s Party Platter of Reforms: Will China’s Leaders Save the Economy From Itself?

ALEX FRANGOS

Updated Nov. 7, 2013 11:24 p.m. ET

China’s Communist Party leaders are great talkers, and they’ll do plenty of gabbing behind closed doors this weekend at their “third plenum” in Beijing. The question is whether the talking at this potentially pivotal meeting turns into political momentum needed to save China’s economy from itself. The urgency is high. The economy continues to be driven by a dangerous combination of high debt, overinvestment and distortions in the way the country’s deep pool of savings is allocated toward state-owned companies and away from households. Read more of this post

China still awaits genuine reform; Change can only come if Communist party loosens its grip

November 7, 2013 6:05 pm

China still awaits genuine reform

Change can only come if Communist party loosens its grip

It has been nearly a year since Xi Jinping led the seven-strong standing committee on to the stage of the Great Hall of the People as the new head of China’s Communist party. At the time there was much speculation, partly encouraged by Mr Xi’s more down-to-earth manner, about whether his appointment might herald a fresh attempt toimplement economic and political reform. Those hopes have not yet been answered. Mr Xi has shown himself rather more adept at consolidating his grip over the Communist party than at opening up either China’s economic or political system. He has brought cadres to heel with an anti-corruption campaign, established what looks like a firm grip on the People’s Liberation Army and launched a campaign against bloggers in order to stifle criticism of the party. He has even revived sloganeeringreminiscent of the Mao era. Some speculate that Mr Xi has tacked to China’s political left in order to provide cover for market-oriented reforms. But if he is a closet reformer he has a funny way of showing it. There have been intimations of changes to policy – a liberalisation of banking licences here, the announcement of a free-trade zone there. But nothing that amounts to much. Read more of this post

Wei Chuan Foods (味全食品) Chairman Wei Ying-chung (魏應充) has been released on a bail of NT$10 million but is restricted from leaving the country over suspected involvement in fraudulent actions

Wei Chuan Foods’ chairman out on NT$10 mil. bail

By Joy Lee, The China Post
November 8, 2013, 12:22 am TWN

TAIPEI, Taiwan — Wei Chuan Foods Corporation (味全食品) Chairman Wei Ying-chung (魏應充) has been released on a bail of NT$10 million but is restricted from leaving the country over suspected involvement in fraudulent actions after being questioned by prosecutors, the Taipei District Prosecutors’ Office (TDPO) announced yesterday. Read more of this post

Trickle down economics doesn’t work; Finance Minister Yair Lapid: Israel’s economy grew by 26.8% in the past ten years, but Israelis’ salaries rose by just 2.1%

Lapid: Trickle down economics doesn’t work

Finance Minister Yair Lapid: Israel’s economy grew by 26.8% in the past ten years, but Israelis’ salaries rose by just 2.1%.

7 November 13 09:49, Yossi Nissan

“When I entered the Ministry of Finance, I was surprised that Israel had no economic strategy,” said Minister of Finance Yair Lapid at the Caesarea Forum this morning. “After months of work, I want to state the Ministry of Finance’s economic strategy for the coming years in two sentences: we want Israelis to earn more and have a better quality of life. How will we do this? We’ll create an innovation-based economy. Read more of this post

The surprise decision by the European Central Bank to cut interest rates means there’s now about an even chance that the euro, this year’s best performing major currency, erases all of its gains in a matter of months

Euro Bulls Crack as Odds of Return to 2013 Lows Jump: Currencies

The surprise decision by the European Central Bank to cut interest rates means there’s now about an even chance that the euro, this year’s best performing major currency, erases all of its gains in a matter of months. There is an almost 50 percent probability the euro, which has risen more than 5 percent against the greenback since reaching a 2013 low in April, will give back its increase by mid-2014, according to data compiled by Bloomberg. The odds are the highest in seven weeks and up from 37 percent prior to the ECB lowering its key rate yesterday to a record. Read more of this post

Stuck in third: Daimler is set to keep chugging down the Autobahn behind BMW and Audi

Stuck in third: Daimler is set to keep chugging down the Autobahn behind BMW and Audi

Nov 9th 2013 |From the print edition

AS A corporate motto, “The best or nothing” has a timeless quality. Gottlieb Daimler pasted it on the wall as he went about inventing the modern car in the late 19th century. In 2010 the firm that bears his name adopted it as a slogan. It was as badly timed as a misfiring engine. Mercedes-Benz, Daimler’s car division, already trailing BMW in terms of sales and profitability, saw another Geman premium carmaker, Audi, also start to pull away in the same year (see chart). Yet this year Daimler’s shares have surged by 40%, persuading optimists that the firm is catching up. This week it said its worldwide sales in October had risen 15% year-on-year to a new record. Read more of this post

Paul Krugman: The Mutilated Economy; The long-term costs of short-run failure are piling up and up and up and up

November 7, 2013

The Mutilated Economy

By PAUL KRUGMAN

Five years and eleven months have now passed since the U.S. economy entered recession. Officially, that recession ended in the middle of 2009, but nobody would argue that we’ve had anything like a full recovery. Official unemployment remains high, and it would be much higher if so many people hadn’t dropped out of the labor force. Long-term unemployment — the number of people who have been out of work for six months or more — is four times what it was before the recession. Read more of this post

Danger: US mortgage market whiplash risk; IMF points to M-Reits as source of potential instability

November 7, 2013 12:49 pm

Danger: US mortgage market whiplash risk

By Gillian Tett

IMF points to M-Reits as source of potential instability

This week, the US government was handed one small reason to smile. A survey by the National Association of Realtors suggests house prices rose in nine out of 10 US cities in the year to October, growing on average by 14 per cent. This represents the most broad-based increase seen since 2007. And since it comes hard on the heels of other upbeat housing data, there is growing optimism in some policy quarters that the scars from the 2007 housing crash may be healing, boosting overall economic growth. Read more of this post

Big consulting and accounting firms are making a risky move into strategy work; “operations consultants sit at the front of the classroom. Strategy consultants stay in the back, not paying attention, throwing paper airplanes. But they still get the girls and get rich.”

Big consulting and accounting firms are making a risky move into strategy work

Nov 9th 2013 | NEW YORK |From the print edition

“OPERATIONS consultants sit at the front of the classroom,” says a partner at a strategy consultancy. “Strategy consultants stay in the back, not paying attention, throwing paper airplanes. But they still get the girls and get rich.” Like so many caricatures, this one is cruel but contains a grain of truth. Operations consultants—the fine-detail guys who tinker with businesses’ internal processes to make them run better—generally do not enjoy the same glamour or financial rewards as strategy specialists, whose job is to advise firms on make-or-break deals, adopting new business models and other big stuff. Read more of this post

Bumi says has no proof Bakrie family has cash for split

Bumi says has no proof Bakrie family has cash for split

10:11am EST

LONDON (Reuters) – London-listed coalminer Bumi Plc (BUMIP.L: Quote, Profile, Research, Stock Buzz) will press ahead with a December vote on a planned split with the Bakrie family, its Indonesian co-founders, despite having no guarantees the family can finance the deal, the company said on Friday. Bumi was created in 2010 to bring Indonesian mining assets to London investors but has faced bitter shareholder battles against the background of tumbling thermal coal prices. Read more of this post

Gas boom to reshape US role in Asia: study

Updated: Friday November 8, 2013 MYT 1:24:40 PM

Gas boom to reshape US role in Asia: study

WASHINGTON: A boom in gas production will reshape the US role in Asia and could fuel new tensions with a growing, energy-hungry China, a new report says.
US foreign policy has historically been based largely on demand for outside energy, with Washington closely allying itself with oil-rich Arab monarchies.
But a major increase in gas production – in part through the controversial practice of “fracking” deep underground – has given the United States the prospect not just of energy independence but of playing a Middle Eastern-style strategic role as an exporter, according to industry forecasts. Read more of this post

What LME bazooka means for aluminium trade

November 8, 2013 8:54 am

What LME bazooka means for aluminium trade

By Jack Farchy in Abu Dhabi

Some traders believe the premiums may even rise

Boom! Charles Li just fired his bazooka. After a two-week dramatic pause that kept the market on tenterhooks, the London Metal Exchange on Thursday announced its solution to the thorny issue of warehousing: the LME will cap queues at 50 days and to arm itself with a range of punishments for badly-behaving warehouses. One question hangs over the market. What does Mr Li’s bazooka (which the chief executive of LME’s owners,Hong Kong Exchanges & Clearing, has recently rebranded “Chinese medicine”) mean for aluminium premiums? Read more of this post