A Krugman or a Soros one doesn’t have to be, to understand that appreciation of the Chinese yuan can only push inflation in US and actually exacerbate Uncle Sam’s problems in several ways. To what extent the diatribe is political gimmickry will perhaps never be known, though one must grant that China’s share in US non-oil trade deficit did leap to uncomfortable levels last year.

Perhaps Obama is trying to convince the 15 mn plus unemployed that the root cause of their plight is the yuan, not the St. The problem is the trade gap, not trade gap with China, and solace lies in either producing more or consuming less, and the US (govt) seems interested in neither. US trade deficit nearly halved in 2009, from $700 bn in 2008, implying the consumer is indeed spending less, but govt insists retail sales remained unchanged.

US bank lending declined 7.4% in 2009 as ‘rated’ bonds kept scoring over loan requests that need laborious evaluation. Bank failures in 2010 are expected to exceed 2009 and yet the five big ones have derivatives exposure of nearly 300 trillion. Bankers are busy lobbying against the proposed consumer protection office that would prevent them from charging a penalty of $25 for overdrafts of $5; 800 bankers told legislators that a consumer watch dog is good for all products except banking services. After sugar, the US is now focused on cutting consumption of salt, whereas what it really needs to cut is gasoline and ATF. Until Harvard and Yale keep competing for earning better yields on their corpus investments, education standards cannot recover.

Greece receded to back pages of newspapers but differences between EU and US+UK on financial regulations are growing. Germany even wants to involve its spy agencies for tracking speculators targeting currencies.

Exports of Swiss watches (industry revenue $35 bn) fell 22% last year and Omega and Rolex are slugging it out in the market place; exports to US dived 38% last year. Australia is upbeat about the new gas fields being developed by the likes of Shell, which plans to have a vessel larger than an aircraft carrier to ferry LNG to Japan and China.

Gross revenue of the booming casino industry in Macao rose 10% to nearly $15 bn last year. Russia remains focused on expanding international trade despite forex reserves hovering close to $400 bn (on the back of high oil prices) and has started softening its stand on Iran, in the hope of entering WTO. Korea is looking closely at what it calls the MICE (Meetings, Incentives, Conventions and Exhibitions) industry. Undaunted by the quake, Chile has decided to go ahead with a $3.2 bn dam project to ease energy shortages, and Mexico’s earnings from drugs are growing but that has started impacting tourism.

The same fiber-optic networks are now carrying Internet, as well as TV. Verizon (mobile telephony) says set top boxes being imported by Cablevision violate its patent rights. What will happen when the wire that brings electricity to your house is able to carry TV and Internet signals also? theflyonthewall.com, a portal that provides equity research reports the moment they are ready, has been ordered by a court to delay pasting, in response to a lawsuit by Merrill Lynch, Barclays and Morgan Stanley. Somebody would start tweeting these reports. Meanwhile, analysts say mobile carriers can forget growth as most in the world already have phones.

PepsiCo is to buy back shares worth $15 bn. Wal-Mart has rolled back prices of 10,000 items, mostly food and consumables, sending other US grocers in a tizzy. It is also considering issuing yuan denominated bonds in Hong Kong. San Miguel of the Philippines is continuing to sell stakes in food, packaging and even liquor (excluding beer) businesses to fund acquisitions in energy and gas. In quarter to 28 Feb, revenue of Fedex and Nike was up 7% each.

Panasonic is boisterous at having acquired battery maker Sanyo Electric last December as most expect demand for batteries to keep rising, and Sony continues to earn hefty profits from sales of Michael Jackson albums. Porsche has started marketing a classy mobile phone that would be offered exclusively to Porsche owners. Be ready to recognize a Porsche owner by suit, tie, shoes and jewelry.

Wells Fargo owned Wachovia Bank has agreed to pay $160 mn to settle allegations it helped Mexican drug lords launder money; it admitted failure to monitor transactions worth $420 bn. E&Y seems to be in a cleft stick because of having taken a benign attitude towards Lehman (before failure) and some believe it may go the Arthur Anderson way.

Lehman is moving to come out of bankruptcy proceedings; it paid over $600 mn in professional fees last year. Lloyds Bank, after incurring a loss of $9.6 bn last year, hopes to almost return to profits in 2010; its advances at the end of 2009 were 169% of deposits. Facebook has overtaken Google in terms of weekly hits registered by the site.

Teva of Israel is taking over Ratiopharm (generic drugs) of Germany; combined sales will be $16 bn. Samsung and LG together have a 30% share in world mobile phones market but smartphones are already altering equations. Toyota seems on way to recovering lost sales in US, suggesting the consumer isn’t impressed by the drama being enacted in Washington.

A Lockheed F-35 jet successfully landed vertically last week, German scientists have finally developed a 3-D technology that can make an object invisible, Somali rebel groups are using Internet effectively to raise funds, and Twitter is being used by 3,000 mobile food vendors of NY to communicate with their customers. Incidentally, small offices in India have been placing orders with food vendors by making ‘missed’ calls on mobile phones for years.

Currencies remained largely stable and equities displayed buoyancy last week, which should actually frighten sane minds because stability at unrealistic levels can only lead to problems later on.

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