The Dow dived below 9700, oil plunged to around 72 and the euro surged back to 1.25 last week, surprising pundits and straights alike. Attitudinally, nothing has changed for US while for EU everything has changed and BRICs are enjoying the sunshine like never before. Japan seems to have gone spiritual, devoid of desire by design. Ideological divides are sharpening by the day. Domestic opposition to Angela Merkel has become strident, UK is busy preparing for fall out of the BP fiasco and perhaps Sarkozy is waiting to guess the direction from which he will be attacked. Politically, one never knows what will happen when and why. Only two things are clear – the consumer is trying to save more and cash hoard with trade and industry is growing.
US wages are declining as the 7 mn unemployed are offering to work more for less. Savings are rising slowly but steadily and yet flows to the St are slowing. Sales of automobiles in China are likely to exceed US sales pre-Lehman. GM is selling more cars in China than at home. China and Taiwan have cut tariffs on imports from each other. Hedge funds have started closing shop in Europe. The Swiss are trying hard to contain the rising franc as it has started hurting exports. As governments across europe cut spending and curb speculation, the EU economic climate is beginning to stabilise.
South Africa expects the World Cup to add 0.4% to its GDP, Hong Kong’s retail sales are growing at nearly 20%, and Russia continues to amass petro dollars/euros, maintaining output at nearly 10 mn bpd. Australia has adjusted super profits tax on mining after fears of decline in investments rose. In Pakistan, the army, the supreme court and the presidency, along with other state bodies owe an estimated $2 bn to the national power company.
God will not abandon the people affected by the oil leak, said a priest last week, even if BP and Obama do. Still nobody knows how much oil is leaking. Fed is examining whether BP’s collapse could cause a major crisis on the St; UK and US say they want a strong and stable BP. Russians say nuke the well (they have done that successfully in the past) to plug it. Seafood prices are rising and tourists are abandoning beaches. However, despite the leak continuing and the supposedly magnificent recovery of developed economies, oil plunged again last week to around 72.
Apple’s iPhone4 has antenna problems; some customers have sued, alleging Apple was aware of defects before launch. Microsoft, after having shelved tablet PC, has withdrawn its Kin smartphones also. Google seems to be making up with China, of course on China’s terms; it has stopped redirecting Chinese users to its Hong Kong site. China Mobile has started looking for overseas takeover opportunities. Yahoo has launched a $3 bn stock repurchase plan that would run for 3 years.
Amazon has started expanding its Internet-based retail operations selling food and wine in Germany also. Dell wants to move upmarket and compete with IBM, HP, etc. It has bough a software firm.
Spanish bank Santander’s US unit is going all out for expanding auto loans in US; it has bought $3.2 bn of auto loans from Citi. Barclays is moving to consolidate units in Spain, Portugal and Italy and has entered India, Pakistan, Russia and Indonesia. AIG has decided to sell its two Japanese units for about $5 bn; its deal with Pru for Asian unit is almost dead now.
Teijin and Toray may witness some explosive growth if automakers developing electric cars achieve reasonable success as most of them are looking at carbon composites as the key to reducing weight while maintaining strength. Teijin has signed a 15 year deal with Airbus to supply carbon composites. Toshiba is developing lithium batteries with Mitsubishi.
Air China is to buy 20 Boeings for $1.4 billion, Celgene Corp (pharma) is buying Abraxis for $2.9 bn, and Malaysian sovereign fund Khazanah is competing with Fortis of India for controlling equity in Parkway hospitals operator of Singapore. Sanofi has completed acquisitions worth $17 bn since 2008 and is reportedly negotiating a $20 bn deal in US. It generated $10 bn of cash last year. Sumitomo is to acquire 30% of iron ore mining unit of Usiminas of Brazil for $1.93 bn. Gas storage facilities of a Exxon-Shell JV in Germany are up for sale.
A US report says clandestine sales of data amounted to $1 tn last year, surpassing revenue of the drug trade. The Chinese are figuring out ways of helping single soldiers find love. A cat has been successfully fitted with prosthetic limbs in UK and can now walk on all its four. The US Supreme Court has rejected a company’s plea for patenting the structure of a hedge deal. Larry King has decided to hang his boots after a glorious 25 years as the world’s most popular talk show host.
A lock of Napoleon’s hair has fetched US$13,000. Luanda (Angola) has become the world’s costliest city for expatriates and Ndjamena (Chad) has ranked third. A Swiss company has developed a fabric that can soak oil up to seven times its own weight. US scientists have developed engineered lung tissue that may be used for transplants and elsewhere researchers say genes can tell who is likely to live 100 years or more.
Warren Buffet is transferring his wealth to the Bill & Melinda Gates Foundation at a steady pace, giving away $1.6 bn this year. A fourth of inmates of all jails in Russia are businessmen and professionals, half of whom are to be released shortly. Russia did not qualify for the World Cup and yet a poll last week said 8% of Russians expect their country to win the World Cup.
Gold and euro are the in the eye of the same storm and automobiles and cash are equally starved of safe parking space. Follow Tony Hayward. Forget worries and watch the World Cup.
xxxxx
Showing posts with label India. Show all posts
Showing posts with label India. Show all posts
Sunday, 20 June 2010
The world is looking for a currency other than the dollar, without much success. Every time there is even a hint of trouble in world markets, the dollar surges, reminding the euro and the yen that they are nowhere near the Almighty. That has not prevented Russia from joining the ranks of those aspiring for global acceptance of their currencies. Gold keeps rising and slipping on and off, though some insist it can only go up. China has reportedly decided to let the yuan appreciate to some extent. Meanwhile, US keeps admonishing other countries for fiscal and external deficits and surplus.
Moody’s cut Greece’s rating to near junk last week and the euro surged to over 1.23. The future of Europe and the euro continues to be viewed as uncertain. Austerity plans are being followed up with higher taxes and increases in retirement age. EU, as well as the euro zone do not have significant external deficits and the austerity wave can only help restore fiscal balance. Europe was generally less boisterous than the Americans during the heydays of 2003-2008 and seems to have started settling down with its own new-normal, i.e. lower living standards. If that is what Soros calls a prolonged recession, well, so be it.
What is happening in the US economy remains unclear but it is absolutely clear that US (and Japan) have no intention of raising rates in the foreseeable future. Both continue to look at government spending as the only way to boost employment and keep the economy going. There is little hope of any drastic changes in the financial system as thousands of lobbyists are registering silent successes in blunting most of the proposed amendments. The real problem is that America wants to do nothing more than managing other people’s money.
Switzerland has finally agreed to provide details of 4450 clients suspected of tax evasion to the US. Greece continues to face flak for profligacy, particularly pensions (only 1.7 workers per pensioner) which add up to an eighth of GDP.
Ghana’s economic woes appear to be peaking and considering the increasing attention Africa as a whole is receiving from investors, it may be in for massive investments. Afghanistan’s estimated mineral wealth includes iron ore and copper deposits worth $421 bn and $273 bn, respectively, besides significant deposits of gold, molybdenum and silver. Chinese firms have already committed investment of $ 4 bn in copper mines.
Taiwan has drawn a billion dollar plan to develop its own cloud computing. Romania is asking its citizens to donate cash for keeping deficit within limits agreed with IMF under a $25 bn aid package. Russia has developed a new fighter jet that it plans to produce jointly with India. Putin says it matches F-22 of US and will cost less than a third.
Obama fumed and fretted from the Oval office last week, vowing to make BP pay, but the very next day BP’s CEO Hayward used “I don’t know” 66 times when deposing before the US Congress. Nobody knows how and when the spill estimate rose from 5,000 to 60,000 barrels a day as media, politicians, lobbyists, bankers, investment firms and even oil companies are having a field day figuring out ways of making money from the disaster. Nothing is clear, except that continued gushing of oil in the Gulf of Mexico has fathomed crude prices successfully, at least for the time being.
Fannie Mae and Freddie Mac, which together either own or have guaranteed about three fourth of all US housing mortgages ($10 tn plus) continue to receive significant government aid for writing off bad loans. One reason is that foreign governments own their bonds to the extent of over $900 bn. Citi plans to raise $3 bn for funding PE and hedge businesses. AgBank of China (24,000 branches) is once again preparing to launch its massive $23 bn IPO, the biggest ever in the world.
Facebook surprised markets last week by announcing 2009 revenue of $800 mn; its COO Sheryl Sandberg insists email is on the road to extinction as only 11% of teens use email, the rest opting for texting. Apple sold 600,000 units of its new iPhone4 on the very first day. Sony, Nintendo and Microsoft are upbeat on prospects of video games and are now talking in terms of cloud gaming which would let consumers hire, instead of buying.
Boehringer has been refused approval for its female version of Viagra by the US FDA. Nestle is suing Sara Lee for patent infringement. Genting, debt free Malaysian casino operator having $1.7 bn in cash, is planning to set up shop in US. Toyota has suspended production at its main unit in China because of a strike at a parts supplier. NewsCorp controls BskyB but wants full control and is willing to pay $12 bn for the remaining 61% stake. FedEx says healthcare and pension costs will pinch profits in 2011; revenue rose 20% to $9.43 bn last quarter.
Women’s groups in France are aggressively moving to raise the number of women on company boards; some wore fake beards last week to tell a French water company that they resent the board having only one woman. Soccer continued to dominate lives last week. Lightning destroyed a 62 foot Jesus statue in Ohio last week.
Russia banned consumption of vodka at a top conference last week; only wine was allowed. A convict was executed by a firing squad in Utah in response to his own wish. A recent survey found that obesity results in less sex, more sexual diseases and more unplanned pregnancies. Warren Buffett and Bill Gates, together worth about 100 bn, are asking other American billionaires to give away at least one half of their wealth to charities under a campaign they call the Giving Pledge. A management guru says the ability to sleep in planes is a major prerequisite for success in the corporate world.
xxxxx
Moody’s cut Greece’s rating to near junk last week and the euro surged to over 1.23. The future of Europe and the euro continues to be viewed as uncertain. Austerity plans are being followed up with higher taxes and increases in retirement age. EU, as well as the euro zone do not have significant external deficits and the austerity wave can only help restore fiscal balance. Europe was generally less boisterous than the Americans during the heydays of 2003-2008 and seems to have started settling down with its own new-normal, i.e. lower living standards. If that is what Soros calls a prolonged recession, well, so be it.
What is happening in the US economy remains unclear but it is absolutely clear that US (and Japan) have no intention of raising rates in the foreseeable future. Both continue to look at government spending as the only way to boost employment and keep the economy going. There is little hope of any drastic changes in the financial system as thousands of lobbyists are registering silent successes in blunting most of the proposed amendments. The real problem is that America wants to do nothing more than managing other people’s money.
Switzerland has finally agreed to provide details of 4450 clients suspected of tax evasion to the US. Greece continues to face flak for profligacy, particularly pensions (only 1.7 workers per pensioner) which add up to an eighth of GDP.
Ghana’s economic woes appear to be peaking and considering the increasing attention Africa as a whole is receiving from investors, it may be in for massive investments. Afghanistan’s estimated mineral wealth includes iron ore and copper deposits worth $421 bn and $273 bn, respectively, besides significant deposits of gold, molybdenum and silver. Chinese firms have already committed investment of $ 4 bn in copper mines.
Taiwan has drawn a billion dollar plan to develop its own cloud computing. Romania is asking its citizens to donate cash for keeping deficit within limits agreed with IMF under a $25 bn aid package. Russia has developed a new fighter jet that it plans to produce jointly with India. Putin says it matches F-22 of US and will cost less than a third.
Obama fumed and fretted from the Oval office last week, vowing to make BP pay, but the very next day BP’s CEO Hayward used “I don’t know” 66 times when deposing before the US Congress. Nobody knows how and when the spill estimate rose from 5,000 to 60,000 barrels a day as media, politicians, lobbyists, bankers, investment firms and even oil companies are having a field day figuring out ways of making money from the disaster. Nothing is clear, except that continued gushing of oil in the Gulf of Mexico has fathomed crude prices successfully, at least for the time being.
Fannie Mae and Freddie Mac, which together either own or have guaranteed about three fourth of all US housing mortgages ($10 tn plus) continue to receive significant government aid for writing off bad loans. One reason is that foreign governments own their bonds to the extent of over $900 bn. Citi plans to raise $3 bn for funding PE and hedge businesses. AgBank of China (24,000 branches) is once again preparing to launch its massive $23 bn IPO, the biggest ever in the world.
Facebook surprised markets last week by announcing 2009 revenue of $800 mn; its COO Sheryl Sandberg insists email is on the road to extinction as only 11% of teens use email, the rest opting for texting. Apple sold 600,000 units of its new iPhone4 on the very first day. Sony, Nintendo and Microsoft are upbeat on prospects of video games and are now talking in terms of cloud gaming which would let consumers hire, instead of buying.
Boehringer has been refused approval for its female version of Viagra by the US FDA. Nestle is suing Sara Lee for patent infringement. Genting, debt free Malaysian casino operator having $1.7 bn in cash, is planning to set up shop in US. Toyota has suspended production at its main unit in China because of a strike at a parts supplier. NewsCorp controls BskyB but wants full control and is willing to pay $12 bn for the remaining 61% stake. FedEx says healthcare and pension costs will pinch profits in 2011; revenue rose 20% to $9.43 bn last quarter.
Women’s groups in France are aggressively moving to raise the number of women on company boards; some wore fake beards last week to tell a French water company that they resent the board having only one woman. Soccer continued to dominate lives last week. Lightning destroyed a 62 foot Jesus statue in Ohio last week.
Russia banned consumption of vodka at a top conference last week; only wine was allowed. A convict was executed by a firing squad in Utah in response to his own wish. A recent survey found that obesity results in less sex, more sexual diseases and more unplanned pregnancies. Warren Buffett and Bill Gates, together worth about 100 bn, are asking other American billionaires to give away at least one half of their wealth to charities under a campaign they call the Giving Pledge. A management guru says the ability to sleep in planes is a major prerequisite for success in the corporate world.
xxxxx
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