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India crisis threatens big hit on banks; NPLs stand at about 9% of assets and could reach 15.5 per cent over the next two years, according to Morgan Stanley

September 4, 2013 10:28 am

India crisis threatens big hit on banks

By James Crabtree in Mumbai and Victor Mallet in New Delhi

The arrival of Raghuram Rajan at the Reserve Bank of India has been eagerly awaited by investors anticipating what monetary steps he will take to rescue the rupee, restore economic growth and curb inflation. On his first day as central bank governor, however, Mr Rajan postponed comment on monetary policy until September 20, just after the US Federal Reserve policy meeting, and spoke almost entirely about his plans for liberalising the banking sector, which he regards as essential for poverty alleviation and long-term growth in one of the world’s most underbanked economies. Read more of this post

Falling Economic Tide in India Is Exposing Its Chronic Troubles

September 4, 2013

Falling Economic Tide in India Is Exposing Its Chronic Troubles

By KEITH BRADSHER

MUMBAI — India had seemed tantalizingly close to embarking on the same dash for economic growth that has lifted hundreds of millions of people out of poverty in China and across East Asia. Its economy now stands in disarray, with the prospect of worse to come in the next few months. Vinod Vanigota, a Mumbai wholesaler of imported computer hard drives, said sales dropped by a quarter in the last two weeks. The rupee, India’s currency, has been so volatile in recent days that he began revising his price lists every half-hour. Business activity at Chip Com Traders, where he is the managing director and co-owner, has slowed so sharply that trucking companies plead for business. “One of the companies called today and said, ‘Don’t you have a parcel of any sort for us to deliver today?’ ” Mr. Vanigota said. Read more of this post

Hong Kong’s Property Curbs Hurt Furniture Sales

September 4, 2013, 4:52 PM

Hong Kong’s Property Curbs Hurt Furniture Sales

For a sense of how Hong Kong’s overheated property market is slowing, look no further than furniture sales. Census data this week showed the city’s sales volume of fixtures and furniture—including things like lamps and sofas—slumped 12% in July from a year earlier. That was the biggest decline in a year, and followed a 3% drop in June. Wong Cheung-choi, 60, who has run a furniture shop in Hong Kong’s Western district for the past 13 years, said he has noticed a slowdown in sales this year. Mr. Wong blamed the decline in sales on the city’s aggressive property cooling measures, and said his business is having the toughest year in more than a decade. Read more of this post

U.S. Treasuries rout may be far from over

U.S. Treasuries rout may be far from over

1:19am EDT

By Luciana Lopez and Jennifer Ablan

NEW YORK (Reuters) – It has already been a horrid year for investors in U.S. Treasuries – and it could easily get much worse. U.S. government bonds ended August with their fourth straight monthly loss, down 3.43 percent on a total return basis in the four months, their worst such stretch since 1996, according to the Barclays Aggregate U.S. Treasury Index .BCUSATSY. Yields on benchmark 10-year Treasury notes have surged by 1.29 percentage points since their low-water mark around 1.6 percent in early May. But even at 2.89 percent on Wednesday, yields could move even higher, and prices lower, when the U.S. Federal Reserve pulls back on its $85-billion-a-month buying of Treasuries and mortgage-backed securities, a process largely expected to begin with the September 17-18 meeting of the Federal Open Market Committee. “I don’t know what the magic number is, but Treasury yields will be much higher than they are now by year-end,” said Dan Fuss, vice chairman and portfolio manager at Loomis Sayles, which has $190 billion in assets. Read more of this post

U.S. Can Catch Emerging Nations’ Malaise; Developing Markets Not Only Are Much Bigger Today but Also Are Potentially a Leading Indicator, Not a Lagging One

September 4, 2013, 6:16 p.m. ET

U.S. Can Catch Emerging Nations’ Malaise

Developing Markets Not Only Are Much Bigger Today but Also Are Potentially a Leading Indicator, Not a Lagging One

SPENCER JAKAB

There’s no place like home. That is the message from most, but not all, economic data lately. It is also what global stock markets are saying. The S&P 500 is off its record high but is still up nearly 16% year-to-date—12.5 percentage points more than the Dow Jones Global Ex-U.S. Index. Strip out a resurgent Japan, and the gap would be bigger. Expectations are that Thursday’s closely watched nonmanufacturing index from the Institute for Supply Management will continue the hit parade. Economists polled by Dow Jones Newswires see a reading of 55, which is strongly in expansion territory. It would follow a surprisingly good 55.7 reading in the manufacturing index released Tuesday.

Read more of this post

The Swiss Stairway to (Monetary) Heaven; As central banks offer cheap credit, Switzerland cashes in along with corporations

WEDNESDAY, SEPTEMBER 4, 2013

The Swiss Stairway to (Monetary) Heaven

By RANDALL W. FORSYTH | MORE ARTICLES BY AUTHOR

As central banks offer cheap credit, Switzerland cashes in along with corporations.

According to the old (pre-PC) joke, heaven is where the police are British, the cooks are French, the mechanics are German, the lovers are Italian and everything is organized by the Swiss. Hell is where the police are German, the cooks are British, the mechanics are French, the lovers are Swiss and everything is organized by the Italians. To update to the 21st century, heaven for managing a nation’s money is Switzerland, which knows a bit about the subject, even more than making chocolates, running the elite ski resorts or world-class pharmaceutical companies. Management of wealth seems embedded in the nation’s genome as nowhere else (although Singapore seems to have absorbed much of the same facility.) So it should come as little surprise the citizens of Switzerland were among the big winners Tuesday when Nokia exploded higher following news that Microsoft (ticker: MSFT) would buy its handset business and patents. The Finnish telecom’s American depositary receipts (NOK) surged over 30% Tuesday on the news. Read more of this post

Nearly 5 mln Britons earn below living wage: survey

Nearly 5 mln Britons earn below living wage: survey

(Xinhua)    20:30, September 04, 2013

Britain now has 4.8 million people, which represents 20 percent of the total employees inBritain, earning below the living wage, a surge from 3.4 million in 2009, according to asurvey released by think tank Resolution Foundation on Wednesday. The Low Pay Britain 2013 report said the economic downturn pushed a further 1.4 millionemployees below the living wage, a basic standard necessary for living, calculated at 7.20pounds (11.25 U.S. dollars) an hour outside London and 8.30 pounds in London in April2012. Read more of this post

McDonald’s Dollar Menu is primed for inflation

McDonald’s May Revamp Dollar Menu After Pressure

By Leslie Patton – Sep 4, 2013

McDonald’s Corp.’s (MCD) Dollar Menu is primed for inflation. The burger chain is testing a new version, dubbed Dollar Menu and More, that includes items selling for as much as $5. The new lineup is being tested in five markets in the U.S., Ofelia Casillas, a spokeswoman for the Oak Brook, Illinois-based company, said in an e-mail. One test includes $1, $2 and $5 fare; another has $1, $1.79 and $4.99 items. “It just sounds like they’ll be raising prices,” Peter Saleh, a New York-based analyst at Telsey Advisory Group, said in an interview. The industry’s “definition of value has moved up from the Dollar Menu to $1.50 or $2.” Read more of this post

Interest rates on mortgages for pricey homes have dropped below those on smaller mortgages, an event that lending executives say has never happened before.

Updated September 4, 2013, 7:43 p.m. ET

‘Jumbo’ Mortgage Rates Fall Below Traditional Ones

A Flip That Hasn’t Happened Before, Say Lending Executives

NICK TIMIRAOS

Interest rates on mortgages for pricey homes have dropped below those on smaller mortgages, an event that lending executives say has never happened before. Borrowing rates for so-called jumbo mortgages, which are too big for government backing, historically have been set higher than rates on what are known as conforming loans, which are backed by Fannie Mae, FNMA +1.60% Freddie MacFMCC +1.77% or government agencies. Read more of this post

Germany’s Energy Poverty: How Electricity Became a Luxury Good

09/04/2013 07:15 PM

Germany’s Energy Poverty: How Electricity Became a Luxury Good

By SPIEGEL Staff

Germany’s agressive and reckless expansion of wind and solar power has come with a hefty pricetag for consumers, and the costs often fall disproportionately on the poor. Government advisors are calling for a completely new start.

If you want to do something big, you have to start small. That’s something German Environment Minister Peter Altmaier knows all too well. The politician, a member of the center-right Christian Democratic Union (CDU), has put together a manual of practical tips on how everyone can make small, everyday contributions to the shift away from nuclear power and toward green energy. The so-called Energiewende — literally “energy turnaround” — is Chancellor Angela Merkel’s project of the century. Read more of this post

Germany is being crushed by its export obsession; The country’s recent success has been based on cutting wages, writes Adam Posen

September 3, 2013 5:29 pm

Germany is being crushed by its export obsession

By Adam Posen

The country’s recent success has been based on cutting wages, writes Adam Posen

If Germany’s economic model is the future of Europe, we should all be quite troubled. But that is where we seem to be going. The apparently successful re-election campaign of Angela Merkel, the Christian Democrat chancellor, promises “Germany’s future in good hands”. More, in other words, of the same. The policy response to the eurozone crisis is likely to remain a programme to induce member states to follow Germany’s path to competitiveness: cutting the cost of labour. Make no mistake; that has been the basis of the nation’s export success in the past dozen years; and exports have been its sole consistent source of growth in that period. But low wages are not the basis on which a rich nation should compete. Read more of this post

EU clamps down on money market funds to tame a fund sector that lubricates financial markets with short-term money but worries regulators by offering banklike promises that are vulnerable to investor panics

September 4, 2013 11:11 am

EU clamps down on money market funds

By Alex Barker in Brussels

Regulatory divisions over reining in “shadow banking” were laid bare by a Brussels clampdown on money market funds that falls short of Franco-German demands for a “brutal” ban yet still riles the industry and goes beyond US proposals. The European Commission proposal unveiled on Wednesday aims to tame a fund sector that lubricates financial markets with short-term money but worries regulators by offering banklike promises that are vulnerable to investor panics. Read more of this post

Don’t blame the Fed for emerging market woes

September 4, 2013 9:24 am

Don’t blame the Fed for emerging market woes

By Patrick Zweifel

Emerging market stocks began to lose steam as far back as 2010

When in doubt, blame a central banker. For investors burnt by the decline in emerging market stocks, it is tempting to point the finger at US Federal Reserve Chairman Ben Bernanke. Had the Fed chief refrained from laying out a timetable for the withdrawal of monetary stimulus, developing world equity markets would surely have avoided a pernicious sell-off. The trouble with this neat theory is that it quickly unravels under scrutiny. The Fed’s role in the latest chapter of the emerging market story, while influential, has been somewhat overstated. The real villains of the piece are to be found elsewhere and they have been shaping events for some time. Read more of this post

Big Mergers Often Don’t Produce the Desired Gains Advocates Predict

September 3, 2013, 6:42 p.m. ET

History Isn’t on Side of Microsoft-Nokia Tie Up

Big Mergers Often Don’t Produce the Desired Gains Advocates Predict

SCOTT THURM

In business, struggling firm plus struggling firm rarely equals success. So say students of corporate strategy, who are skeptical that Microsoft Corp.MSFT -2.15% can rejuvenate its lagging mobile-phone efforts through its planned acquisition of Nokia Corp.’s NOK1V.HE +0.50% handset business. “The evidence suggests that combining two weaklings doesn’t create a strong player,” says Robert Bruner, dean of the Darden School of Business at the University of Virginia, and a longtime student of mergers. Read more of this post

Record radiation readings near Fukushima contaminated water tanks – Now High Enough To ‘Kill An Unprotected Person Within Hours’

Record radiation readings near Fukushima contaminated water tanks — Now High Enough To ‘Kill An Unprotected Person Within Hours’
12:10am EDT

By Aaron Sheldrick and Mari Saito

TOKYO (Reuters) – Radiation readings around tanks holding contaminated water at the crippled Fukushima nuclear plant have spiked by more than a fifth to their highest levels, Japan’s nuclear regulator said, heightening concerns about the clean-up of the worst atomic disaster in almost three decades. Radiation hotspots have spread to three holding areas for hundreds of hastily built tanks storing water contaminated by being flushed over three reactors that melted down at the Fukushima Daiichi plant in March 2011. The rising radiation levels and leaks at the plant have prompted international alarm, and the Japanese government said on Tuesday it would step in with almost $500 million of funding to fix the growing levels of contaminated water at the plant. Read more of this post

China Record Drop in Credit Growth Puts Momentum at Risk

China Record Drop in Credit Growth Puts Momentum at Risk

China’s leaders are extending a clampdown on credit, prompting analysts from JPMorgan Chase & Co. to Societe Generale SA to caution that the economy is vulnerable to weakening after the pickup so far this quarter. New yuan loans were probably little changed in August, after aggregate financing, the broadest measure of credit, posted a fourth straight drop in July, the longest streak in 11 years of data. Analysts’ median estimates point to the fastest industrial-output gain since December and the slowest producer-price decline in six months. Read more of this post

PetroChina’s days of super-charged spending may be over as the Chinese national oil giant seeks to steer clear of the legacy of former chairman Jiang Jiemin, now under an official corruption probe

Updated: Wednesday September 4, 2013 MYT 11:18:49 AM

Under New Management, Scandal-Hit PetroChina Changes Course

HONG KONG: PetroChina Co Ltd’s days of super-charged spending may be over as the Chinese national oil giant seeks to steer clear of the legacy of former chairman Jiang Jiemin, now under an official corruption probe. PetroChina will likely record an annual drop in capital spending for 2013, according to company officials and industry specialists. That would be its first such decline since its Hong Kong and New York stock market listings in 2000. Read more of this post