“We can’t afford to have wild risk-taking on Wall Street,” said Obama last week, on the day a Congressional committee approved new rules for the nearly $500 tn OTC derivatives markets. The idea of a transaction tax in the US has started gaining acceptance and it may turn out to be the only way to regulate trading in derivatives, though whether Europe will follow is an open question. Perhaps Philips should rethink its plans to market its EmoBracelet with partner ABN Amro, which is designed to measure stress levels of dealers and traders working in highly charged environments.

With the Euro now costing $1.49, possibility of the US letting the dollar slide to unimaginable levels can hardly be ruled out. One prediction says the greenback would buy no more than 50 yen next year! The Dollar Index is down 15% since August 2008 but unbridled speculation and meaningless movement of money across the Atlantic has rendered the benchmark almost totally irrelevant.

‘Trends’ have sort of become passe. Nobody would be surprised if the dollar rises back to 1.30 tomorrow. However, latest reports say in Q2 share of the dollar in new forex holdings of sovereigns slipped to 37% and that does say a thing or two about the way things are likely to shape.

The trillion dollar leap in US budget deficit (in year to Sep 09) and oil jumping to $78 last week had little impact on equities, either way. Markets of all hues are becoming more unpredictable than before.

At the moment, China is keeping RMB anchored firmly and Japan is letting its yen move to a limited extent but managing exchange rates may become a lot more difficult if Uncle Sam decides to stop pestering China to let RMB appreciate and opts to let the dollar slide against the Euro. US trade gap with China was $144 bn in Jan-Aug. How different would it have been, had a dollar been worth only RMB 5? And at what point would Europe feel compelled to shore up the dollar?

In Jan-Sep companies worldwide issued investment grade corporate bonds worth an astounding $2.3 tn, for loosely defined purposes that included everything, except any concrete investment plans in real production of real goods and services. The IPO boom is still in its initial stages. Obviously, the big boys wouldn’t be needing banks in the near future and the possibility of profligacy spreading again can hardly be ruled out.

China’s exports and imports, both were down about 21% in Jan-Sep, while trade surplus declined 26%. US manufacturing is said to be looking up but imports of semis were down $120 bn in Jan-Aug. Consumer goods imports in this period were down by $46 bn, which perhaps translate (or at least should) into retail sales of at least $150 bn. Incidentally, the US army now has no difficulty in recruiting as many soldiers as it wants, because of the widespread unemployment.

Russia has signed oil contracts worth $100 bn with China this year and relations between the two giants appear to be strengthening. BRIC has been in the air for sometime now and US and EU should perhaps worry about a BRIC version of Airbus Industrie taking shape in the near future.

Green energy, in which George Soros intends to invest a billion, is changing the global economic and financial scenario. Led by Germany and China, the world seems to be determined to convert sunshine into energy to a level where deserts like Sahara may become cool places to hang around. New York is working to plant a million new trees by 2017.

A German firm says in offpeak hours, when energy supply exceeds demand, overheat the swimming pools or overcool the cold stores! In Russia, a man has become millionaire by collecting glass bottles from the streets. The recycling industry has far to go.

Liz Claiborne has decided to sell its brand exclusively at J. C. Penney, ending its parallel relationship with Macy’s. LVMH has reported a 42% plunge in sales of wines and spirits, but is planning to acquire some perfumes and cosmetics brands, and is not cutting investments in new stores. Versace, however, is closing all stores in Japan.

Intel has reported good sales for Q3, suggesting that computers have become as essential for businesses as food is for humans. Apple has started impacting sales of the likes of Nokia and is rolling out its iPhone in China this month. Sony Ericsson has reported loss for five consecutive quarters now. Users are apparently happy with Microsoft’s Windows 7, Google recorded revenue of $4.38 bn for Q3, and Facebook expects revenue of $500 mn this year.

JPMorgan and Goldman Sachs buoyed spirits by announcing profits of $3.6 bn and $3.19 bn respectively for Q3 but BofA spoiled the party by posting a billion dollar loss, despite Merrill Lynch having earned $2.2 bn in the quarter as it had to set aside $11.7 bn for covering bad loans.

Johnson & Johnson sales of prescription drugs and heart stents weakened in Q3,
Pfizer (Pharmacia & Upjohn unit) has been asked to pay penalties of $1.3 bn for misbranding of painkilling medicines and BNP of France is being accused of having breached securities rules in Japan.

A state in Malaysia is offering free honeymoons to curb the growing number of divorces, number of abortions worldwide is still around 40 mn a year, despite contraceptives having become so routine and affordable, Madoff’s beach house has been sold for $9.41 mn, and global population of the malnourished is expected to exceed one billion this year.

The world is apparently moving towards conservatism, if not socialism. US administration has actually started encouraging savings and the number of operational credit cards in the US has plunged from 425 to 344 mn over the last one year or so. The crescendo of economic power shifting to Asia may take a break as the spendthrifts are learning to save and the habitual savers are becoming enthusiastic spenders.

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