China Moves to Help Local Governments Roll Over Debt

China Moves to Help Local Governments Roll Over Debt

Change Will Allow More Short-Term Debt Issues

Oct. 23, 2013 12:14 p.m. ET

SHANGHAI—China took a significant step Wednesday to deal with an explosion of borrowing among local governments by allowing more of them to issue short-term debt to help pay off maturing bonds and loans, according to a person with direct knowledge of the matter. Economists estimate local governments may have borrowed as much as $5 trillion in recent years to  und projects and keep the economy humming as Beijing scaled back the stimulus efforts it had undertaken following the global financial crisis. Concerns are rising that the buildup of debt has been too rapid and that local governments will be unable to pay the money back. Beijing has warned, too, about the potential risks, and is trying to understand and contain any potential problem. Read more of this post

Beijing Air Worse Than Official Standard 62.5% of Last Quarter

Beijing Air Worse Than Official Standard 62.5% of Last Quarter

Air quality in the Chinese cities of Beijing, Tianjin and the surrounding province of Hebei failed to meet government standards on 62.5 percent of days in the third quarter, the nation’s environmental ministry said. Seven of 10 Chinese cities with the worst air pollution during the three-month period ended in September were in Hebei, the Ministry of Environmental Protection said in a statement posted to its website yesterday. The other three were Tianjin, Jinan and Zhengzhou, while Beijing wasn’t among them. Read more of this post

Aging Population Could Trim 3% Off China GDP Growth

October 23, 2013, 2:25 PM

Aging Population Could Trim 3% Off China GDP Growth

China’s one-child policy has hastened such a big slowdown in China’s working-age population that the country’s demographic future is starting to look a lot more like that of rich nations—and that’s bad news for China. According to two Citigroup economists, Nathan Sheets and Robert A. Sockin, China’s “deteriorating demographics” are likely to trim 3.25 percentage points off China’s annual growth rate between 2012 and 2030, compared to its double-digit growth of past decades. While industrialized nations face similar demographic challenges, they have a deeper cushion of wealth to rely upon (witness Japan.) China needs to continue to grow rapidly if it’s ever to reach the fat-and-happy stage. Read more of this post

Gold Leaves on Australian Trees Seen Curbing Costs for Miners; gold is likely to be toxic to the plant and is moved to the leaves and branches where it can be released or shed to the ground

Gold Leaves on Australian Trees Seen Curbing Costs for Miners

Miners looking for gold in Australia may be able to cut exploration costs after the discovery of bullion particles on leaves and branches of trees in Western Australia that may indicate deposits, scientists say. Eucalyptus trees in the state’s Kalgoorlie region, about 595 kilometers (370 miles) east of Perth, have been found to draw up water containing gold particles that are one-fifth the diameter of a human hair, the Commonwealth Scientific and Industrial Research Organisation said in a statement. The gold is likely to be toxic to the plant and is moved to the leaves and branches where it can be released or shed to the ground. Read more of this post

Ending World’s Longest Nonstop Flight Adds Five Hours; “SIA got greedy. It became less popular when SIA configured the cabins to all-business, instead of the business-super economy mix when it was first launched. It’s pretty much a fuel tanker in the air”

Ending World’s Longest Nonstop Flight Adds Five Hours

The end of the world’s longest nonstop commercial flight, a 19-hour slog between Singapore and New York, is bad news for Chia Teck Fatt. Passengers like Chia who are used to making the 9,000-nautical mile journey from Singapore to Newark, New Jersey, will instead fly to New York’s John F. Kennedy International Airport via Frankfurt starting next month, adding five hours to their journeys. Singapore Airlines Ltd. is stopping its services from Singapore to Newark with its all-business class four-engine Airbus SAS A340-500 after ending the second-longest flight from Los Angeles to the island city yesterday. “I’m looking for another way to travel to New York,” said Chia, after checking-in at the business-class lounge at Singapore’s Changi Airport dressed in casual pants, t-shirt, a jacket and loafers. Read more of this post

Toyota Secret Weapon Is Financing Arm Detroit Can’t Match

Toyota Secret Weapon Is Financing Arm Detroit Can’t Match

Toyota Motor Corp.’s in-house lender is leveraging the automaker’s AA- credit rating and cash to offer low rates and keep customers coming back. Toyota’s $37 billion cash pile and credit ratings that outrank General Motors Co. and Ford Motor Co. enable its Toyota Financial Services unit to offer more loans and take on riskier borrowers. The operation, with $95 billion of assets, handles more of affiliated dealers’ direct loans and leases in the U.S. than any other automaker’s captive lender, or wholly owned finance arm. Toyota also uses intense data systems to keep buyers from straying to GM or Ford. Read more of this post

ASB Biodiesel Opens Waste Oil Plant to Supply Hong Kong Drivers

ASB Biodiesel Opens Waste Oil Plant to Supply Hong Kong Drivers

ASB Biodiesel (Hong Kong) Ltd., a manufacturer of biodiesel from waste cooking oil, said it plans to source used oil locally and from countries in Southeast Asia to feed a new $165 million plant. The Hong Kong plant, opened today, can produce 100,000 metric tons of biodiesel a year from waste cooking oil, the company said in a statement. That would offset 257,000 tons of carbon dioxide emissions, or 3.6 percent of the city’s annual emissions, it said. “The biodiesel produced by the plant can be blended with fossil diesel fuel, with enough capacity existing to provide every diesel vehicle on the road in Hong Kong with a 10 percent biodiesel blend,” Chairman Abdulla Saif said at the plant. ASB Biodiesel collects cooking oil and as much as 550 tons of grease waste a day from around 4,000 local restaurants including outlets of Maxim’s Caterers Ltd. and Cafe De Coral Holdings Ltd. (341) to feed the plant, Saif said. It will get about 20 percent of its waste oil from Hong Kong initially, rising to around 45 percent, and will also import waste oil from countries including Singapore and Malaysia, said Chief Executive Officer Anthony Dixon. Read more of this post

Tyson Chases Hormel by Targeting Moms With Burritos; “Tyson wants to increase their value-added and prepared-foods business to become more like Hormel to get to the higher multiple”

Tyson Chases Hormel by Targeting Moms With Burritos: Commodities

Hidden away in one of 19 test kitchens in Tyson Foods Inc. (TSN)’s headquarters, Greg Luchak wraps a Lady Aster cheese omelet and Wright brand bacon into a Mexican Original tortilla. Voila — the breakfast burrito. Luchak, a Tyson principal food scientist, then demonstrates to a visitor a prototype flat-bread ham sandwich topped with lettuce, pickles and crispy onions. The scene may surprise those who know Tyson as the largest U.S. commodity beef and chicken supplier, whose slaughterhouses process an average 132,000 head of cattle and 41.4 million chickens weekly. Read more of this post

P&G Lafley, under pressure to revive the consumer-products giant, may have a willing buyer for its Iams pet-food unit in Meow Mix maker Del Monte Foods

P&G Seen Enticing Del Monte Foods to Iams Deal: Real M&A

Procter & Gamble Co. (PG) Chief Executive Officer A.G. Lafley, under pressure to revive the consumer-products giant, may have a willing buyer for its Iams pet-food unit in Meow Mix maker Del Monte Foods Co. P&G, which brought back Lafley as CEO in May amid calls from investors to improve sales, could boost its share price by selling assets including the Iams division, said shareholder HighMark Capital Management Inc. Del Monte Foods is now a logical buyer of Iams, said Exane BNP Paribas, because the private-equity owned-company is seeking to expand its pet products business after agreeing this month to sell its canned peaches and corn division for $1.68 billion. Read more of this post

Cosmetics Talks Turn Ugly; Industry Group Backs Off of Plan With FDA to Tighten Safety Regulations

Cosmetics Talks Turn Ugly

Industry Group Backs Off of Plan With FDA to Tighten Safety Regulations

THOMAS M. BURTON

Oct. 23, 2013 6:02 p.m. ET

Some of the world’s biggest cosmetics makers have backed out of a proposed plan to tighten U.S. regulation and increase safety tests, potentially jeopardizing the effort. Some cosmetics makers have pushed for a deal—which would affect things like hair dyes, shampoo, mascaras and skin creams—preferring a single national standard to patchwork regulation by 50 states. Proponents of tighter regulation hope to ease consumer concerns about chemicals found in cosmetics and hair-care products. But the Personal Care Products Council, an association of large cosmetics makers that participated in talks, told the Food and Drug Administration it couldn’t accept the deal being negotiated, according to a letter by FDA commissioner Margaret Hamburg dated Sept. 26. Read more of this post

Boom time for SATS-Marina Bay cruise hub; Singapore Cruise Centre (SCC) at HarbourFront has seen falling passenger numbers

Boom time for Marina Bay cruise hub

Thursday, Oct 24, 2013

Jessica Lim

The Straits Times

SINGAPORE – Singapore’s newest cruise terminal is seeing a boom, with passenger numbers expected to exceed 530,000 this travel season – more than double last season’s. This surge is due to more large ships docking at the $500 million Marina Bay Cruise Centre Singapore (MBCCS), as well as ships moving over from the only other cruise terminal at HarbourFront. MBCCS, which began operations in May last year, has lined up 110 ship calls between April 1 and the end of March next year, about 20 per cent more than in the same period last year. Read more of this post

Why There’s No Financial Advice for Most Americans

Why There’s No Financial Advice for Most Americans

America’s middle class needs a lot of help managing its finances. The financial industry isn’t providing much. The latest failed experiment in bringing affordable financial advice to the masses is online platform Nestwise. The startup was shut down on Sept. 1, despite backing by the U.S.’s largest independent broker-dealer, LPL Financial Holdings Inc. A statement by LPL said its resources “can be more effectively deployed in other areas of the business.” Read more of this post

Why Public Pension Funds Are Embracing Wall Street; Public pension funds like to portray themselves as battlers for the little guy; hedge funds levy sizable fees that often go into the pockets of rich people

Pension Funds Love Wall Street

Public pension funds have been moving huge amounts of money into alternative investments managed by Wall Street. According to a recent report by Cliffwater LLC, an adviser to institutional investors, from 2006 to 2012 state pension funds more than doubled their allocations to alternative investments, which include private equity, real estate, hedge funds and commodities. Totaling almost $600 billion, these nontraditional investments now constitute 24 percent of public pension fund assets. In contrast, the funds dropped their investments in stocks to 49 percent from 61 percent over the six-year period. Read more of this post

Turkey Adrift: Ankara’s decision to buy a weapons system from a Chinese company signals that Turkey has lost its way on foreign policy

OCTOBER 23, 2013, 8:28 AM

Turkey Adrift

By ANDREW FINKEL

ISTANBUL — Turkey’s announcement last month that it would buy a long-range defense system from a Chinese company is the latest sign that Ankara’s attempts to strike an independent foreign policy have gone wrong. To its credit, Turkey’s Justice and Development Party (A.K.P.) has tried during its decade in power to play a constructive role in the region — as a mediator between its NATO allies and Turkey’s troubled neighbors. The so-called zero problems policy seeks to deal pragmatically with Syria and Iran, to resolve its long-standing dispute with Armenia, and come to terms with problems at home, mainly the demands of its own Kurdish population. In 2008, Turkey even tried to broker a deal between Israel and Hamas in the Gaza strip. Read more of this post

The Dark Side of Fat Profit Margins

The Dark Side of Fat Profit Margins

JUSTIN LAHART

Oct. 23, 2013 11:39 a.m. ET

It’s natural to worry about what might happen if companies’ extraordinarily high profit margins slip. The more troubling thought may be what happens if they don’t. Never before have American companies seen so much of their sales drift down to the bottom line. In 12 months that ended in the second quarter, U.S. after-tax corporate profits as a share of gross domestic product, a measure of profit margins across the entire economy, came to 10.9%, according to the Commerce Department. That was the highest level according to records going back to 1929. Nor are there signs of erosion: S&P Dow Jones Indices estimates profits at companies in the S&P 500 as a share of sales hit a high in the third quarter. Read more of this post

Oman Shuns Hedge Funds as Sovereign Investor Targets Equities

Oman Shuns Hedge Funds as Sovereign Investor Targets Equities

Oman, the largest oil producer in the Arabian Peninsula that’s not a member of OPEC, said it’s shunning hedge funds and alternative assets to invest directly in emerging market equities and real estate in stable countries. Oman Investment Fund, the sovereign wealth fund, manages almost all its assets internally and would only consider external managers because it could be “resource-intensive” to follow hundreds of stocks on a daily basis, Chief Executive Officer Hassan Al Nabhani said in an e-mailed response to questions, his first such interview in at least seven years. Read more of this post

Manhattan’s Vanishing Gas Stations; Perhaps there is no clearer sign that Manhattan space has reached a high premium than the continuing disappearance of gasoline stations at main intersections.

October 22, 2013

Manhattan’s Vanishing Gas Stations

By C. J. HUGHES

Perhaps there is no clearer sign that Manhattan space has reached a high premium than the continuing disappearance of gasoline stations at main intersections. Spurred by the recession and now the recovery’s development clamor, service stations popular among New York cabbies and motorists are literally losing their ground to apartments, stores and offices. Rezoning of these sites for residential use has also spurred development. Read more of this post

How ‘smart beta’ ETFs turned closet indexing into a winner

How ‘smart beta’ ETFs turned closet indexing into a winner

Some active managers are making small bets and beating the benchmark

By Jason Kephart   |  October 23, 2013 – 9:53 am EST

Actively managed equity mutual funds that don’t make big bets versus their benchmarks have been shunned by investors, but a handful of funds that rely on factors, or “smart beta,” have proved that you don’t need to make big bets to outperform. The common refrain among researchers and pundits these days is that the only actively managed funds worth investing in are the ones with a high active share, which is a measure of how much a fund differs from its benchmark. Read more of this post

Housing Bubbles Upend Central Bankers’ Rate Plans: Nordic Credit

Housing Bubbles Upend Central Bankers’ Rate Plans: Nordic Credit

Central bankers in Sweden and Norway are finding their efforts to steer inflation are being disrupted by a persistent threat of housing bubbles. While policy makers in both countries will keep interest rates unchanged tomorrow, according to economists surveyed by Bloomberg, distortions in the two nations’ property markets are adding a layer of uncertainty to outlooks. Read more of this post

German Pilots Grounded as $92,000 Tuition Can’t Buy Cockpit Seat

German Pilots Grounded as $92,000 Tuition Can’t Buy Cockpit Seat

Oct. 23 (Bloomberg)– Christopher Siem is spending 70,000 euros ($92,000) out of his own pocket to train as a pilot, a job where the unemployment rate is twice the German average. Siem, 24, is among Germany’s aspiring pilots whose dreams of a career in the cockpit have been dented as the country’s airlines slash their fleets. Deutsche Lufthansa AG (LHA), which has about 5,500 pilots, will limit its fleet to 400 planes and cut 3,500 jobs, while Air Berlin Plc (AB1) is also curbing crew numbers as it pares the aircraft roster by 27 over two years. Read more of this post

Fidelity late but not too late with new ETFs

Fidelity late but not too late with new ETFs

Pricing strategy called ‘punch in the face’ to Vanguard

By Megan Durisin   |  October 23, 2013 – 12:39 pm EST

Fidelity Investments is making its first big leap into the exchange-traded fund arena Thursday with the launch of 10 sector ETFs, but the question remains: Is it too little, too late? Several analysts are saying, “No.” “ETFs still have a long way to go before they catch up to mutual funds, and there’s still room for entrants,” said Mike Rawson, an analyst at Morningstar Inc. “I think we should wait a few years to see what else Fidelity is able to do.” Ten years ago, Fidelity launched its first and only ETF: the $262 million Fidelity Nasdaq Composite Tracking ETF (ONEQ). It hasn’t launched another since and has largely missed out on the ETF boom. Read more of this post

Euro’s Best-Rated Nation Loses Jobs as Finnish Firms Suffer

Euro’s Best-Rated Nation Loses Jobs as Finnish Firms Suffer

Finland’s efforts to protect its stable AAA rating and keep borrowing costs down aren’t helping its businesses, which say they need to cut jobs even as the rest of Europe surfaces from its crisis. While the government in Helsinki is pegging its recovery hopes to fiscal restraint, Finland’s biggest hurdle is its failure to adequately diversify its industries, according to Tiina Helenius, chief economist at Svenska Handelsbanken AB in Helsinki. Read more of this post

Alcoa and Rusal, Two of the world’s largest aluminum makers, reaped an estimated $1.4 billion in revenues from higher fees amid a logjam at London Metal Exchange warehouses

Alcoa and Rusal Are Beneficiaries of Warehouse Logjam

Alcoa and Rusal Have Objected to Proposal Aimed at Easing Bottleneck

MATT DAY

Updated Oct. 23, 2013 9:06 p.m. ET

Two of the world’s largest aluminum makers reaped an estimated $1.4 billion in revenues from higher fees amid a logjam at London Metal Exchange warehouses, according to an analysis by The Wall Street Journal. The two companies, Alcoa Inc. AA -0.96% and United Co. Rusal, 0486.HK +1.68% have emerged as some of the most vocal opponents of an LME proposal aimed at easing bottlenecks at warehouses. Read more of this post

Caterpillar’s Stock Drops, and 2 Big Deals in HK ERA and Bucyrus May Be to Blame; Caterpillar: Predictably Unpredictable; The Street’s Difficulty Forecasting Caterpillar Has a Lot to Do With China

OCTOBER 23, 2013, 1:17 PM

Caterpillar’s Stock Drops, and 2 Big Deals May Be to Blame

By MICHAEL J. DE LA MERCED

Two of Caterpillar‘s biggest-ever deals may have played a role in the $3 billion of market value that the company’s stock shed on Wednesday morning. The maker of heavy equipment disclosed that its third-quarter profit tumbled 44 percent from the same time last year, while revenue fell more than 18 percent for the same period. The company said quarterly profit dropped to $946 million, as revenue fell to $13.4 billion. With the company cutting its full-year earnings forecast yet again, investors sold off shares, leading to a 6 percent drop in the stock’s price as of midday Wednesday, to $83.87. Read more of this post

As Populism Grows in Israel, Big Business Lands in the Crosshairs

As Populism Grows in Israel, Big Business Lands in the Crosshairs

Oct 17, 2013 Israel Middle East & Africa

Over the summer, Israel’s regulatory agencies unveiled a number of new directives on their charges, telling them what to do, and, especially, what not to do. The policies, which target the financial sector and others, have emerged at a time when the population is becoming increasingly restive and critical of the scions of Israel’s big business community. Now, observers are debating who will be the winners and losers in this new environment. Read more of this post

As Developing Economies Grow, Global Value Chains Reach a Turning Point

As Developing Economies Grow, Global Value Chains Reach a Turning Point

Oct 21, 2013 Operations Management Strategic Management Asia-Pacific China Middle East & Africa

In the “flying geese paradigm,” Japanese economist Kaname Akamatsu explains that companies restructure to find the cheapest labor costs by moving low-value activities to nearby less-developed countries. Today that story rings truer than ever before as global value chains (GVCs) reach a critical turning point. Simply put, GVCs take a broader look at supply chains coordinated by multinational companies, but also encompass economic analyses of the countries involved with the activities. Read more of this post

Junk Bonds to Lose 1.5 Percentage-Point QE Cushion, Fridson Says

Junk Bonds to Lose 1.5 Percentage-Point QE Cushion, Fridson Says

Investors in junk bonds will lose a yield cushion of more than 1.5 percentage points as the Federal Reserve winds down its unprecedented quantitative easing program that’s bolstered credit markets for five years, according to Martin Fridson. “Tapering has been delayed, but high-yield investors should nevertheless assume that the end of quantitative easing will eventually hurt their returns,” Fridson, chief executive officer of New York-based FridsonVision LLC, a research firm specializing in speculative-grade debt, wrote in a report yesterday. Read more of this post

Tan Sri Andrew Sheng: Financial system too short term; Some 83% of the financial system’s assets are based on short-term liabilities, financing longer-termed assets; “We are trying to solve a debt overhang, excessive leverage with more debt. Where is the asset?”

Updated: Wednesday October 23, 2013 MYT 11:51:26 AM

Sheng: Financial system too short term

KUALA LUMPUR: One of the issues that needed to be fixed in the financial system was that it was being “too short-termed”, according to Fung Global Institute Hong Kong president Tan Sri Andrew Sheng. Some 83% of the financial system’s assets are based on short-term liabilities, financing longer-termed assets, he added. “We are trying to solve a debt overhang, excessive leverage with more debt. Where is the asset?” “The answer is that this has been a wonderful opportunity for an asset shift. It’s a structural and systemic issue that we need to think about,” he said during the afternoon session at the World Capital Markets Symposium held yesterday. Meanwhile, Sheng said that the global financial crisis that happened in the United States five years ago was not because of the failure to regulate markets but rather a failure of enforcement. “You realise that regulation does not solve all problems. It is not going to be easy moving forward as the rules require us to have more and more rules and frankly speaking I have personally lost the plot,” he said. He noted that the job of a regulator today was becoming “extremely complex” in the global financial system and that there was a need to understand it further.