QUICK READS

Swiss Exporters Mull Euro Wages to Ease Franc Gain  Swiss companies are taking matters into their own hands as the central bank shows little willingness to weaken the franc after it surged to a record.

[SWISS]

Europe Rates Resume Climb By Monday afternoon, Spain’s debt was being traded at a yield of 6%, or 3.24 percentage points above the rate on German bonds, seen as a risk-free investment. The rate represented an upswing from 5.7% last Thursday, just as news of the new bailout deal for Greece began to emerge. On July 18, the rate hit 6.3%. Italy was paying 5.5%, up from 5.2% on Thursday, but down from 5.8% on July 18.

[EUDEBT]

RBI Raises Key Rate to Fight Inflation India’s central bank raised its interest rates by 0.5 percentage point Tuesday, tightening more aggressively than expected in an effort to get a grip on an inflation problem that it warned could grow worse. The RBI lifted its lending rate, or the repo rate, to 8.00% from 7.50%, the 11th increase since it began tightening policy in March 2010.

Drought Withers Smallest Hay Crop in Century to Boost Beef Costs The smallest U.S. hay crop in more than a century is withering under a record Texas drought, boosting the cost of livestock feed for dairy farmers and beef producers from California to Maryland.

China Pork Prices Fall for First Time Since April, Aiding Inflation Fight  The price of the Chinese staple dropped 0.2 percent in the week ended July 24 from the previous week as supplies increased and demand slowed, the Ministry of Commerce’s said on its website today. That was the first decline since the week ending April 8, according to data compiled by Bloomberg.

U.K. Ekes Out Feeble Growth The U.K’s economic growth slowed in the second quarter as the royal wedding and Japanese tsunami dented production, increasing pressure on the government to soften its austerity program.

Dallas-Area Manufacturing Improves but Still Contracting The Federal Reserve Bank of Dallas reported Monday that its index of general business activity for factories moved to -2.0 from -17.5 in June. The production index hit 10.8, from 5.6. The report’s new orders index was 16.0, from June’s 6.4, while employment index was 12.1, after 5.3 in June, signaling faster hiring.

At Least Three More Years Before Home Construction Gets Back to Trend If house prices are able to stabilize and appreciate, and the inventory of foreclosed properties shrink, then 2014 will be the year that home-building activity gets back to its “long-run average”.

When the Levy Policy Breaks at Amazon Amazon.com may want to embrace the tax man. The common thinking is that Amazon’s tax-free sales give it as much as a 10% pricing advantage in high sales-tax states. Credit Suisse estimates the company would lose 2.7% of its North American sales, which were $18 billion in 2010, if Congress passed far-reaching federal online sales-tax-collection legislation. But collecting sales taxes nationwide could have benefits.

[DEBTHERD]

Hong Kong’s new mortgage loans fall 9.4% in June The Hong Kong Monetary Authority said on Monday that new mortgage loans fell 9.4 percent from May to HK$24 billion ($3.08 billion) in June. The number of new applications also decreased 30.3 percent to 11,913. The authority said the fall reflects the lower transaction volume following the latest round of tightening of the underwriting standards of mortgage lending introduced on June 10. New loans approved in June fell 16 percent to HK$26.6 billion. Approvals for primary market transactions and secondary market transactions declined 33.7 percent and 11 percent respectively.

Developing World Oil Demand Steadily Rising

 

QUICK READS

Euro area inflation estimated at 2.7% in June.  It was 2.7% in May.

IMF Forecasts Slow U.S. Growth, Warns on Debt The International Monetary Fund Wednesday forecast a slow pick up in U.S. growth over the next half-decade, with continuing housing market woes, high unemployment and its budget problems weighing on the economy. The IMF is expecting the U.S. economy to grow at a rate of 2.5 per cent this year, accelerating to 2.7 per cent in 2012 and 2013. In the fund’s annual review of the U.S. economy, the IMF also warned the U.S. risks losing credibility in the debt markets, potentially causing a sudden spike in the cost of debt and a downgrade by rating agencies. Besides reining in entitlement spending and reducing tax expenditures, the fund also proposes that the U.S. raise revenues through a national tax.

German May Retail Sales Drop 2.8% German retail sales dropped in May MoM despite expectations of an increase, in a sign that household demand remains fragile despite an improving labor market. Real sales had increased 0.6% in April.

German jobless rate dips to 6.9% The unadjusted jobless rate was down from 7 per cent in May, and the number of people registered as unemployed was 2.893 million – the lowest figure for June since 1992. The total was 67,000 lower than the previous month and down 255,000 from a year earlier.

U.K. Services Sector Contracts Output in the U.K.’s services sector plunged in April due to the impact of the royal wedding and an extra holiday, prompting economists to warn about the prospects for second-quarter economic growth.

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BOE Warns of Rising Loan Defaults U.K. lenders expect defaults on loans to homeowners and small businesses to rise in the third quarter of 2011, the Bank of England said Thursday.

BofA Haunted by Countrywide Deal Bank of America will take $20.6 billion in charges in the second quarter after settling claims by investors who lost money on mortgage-backed securities.

[Bofaherd]

Lloyds Banking to Cut 15,000 Jobs Lloyds Banking Group will cut 15,000 jobs, simplify its business and focus on four key U.K. units as it seeks to cut annual costs by $2.41 billion within three years, Chief Executive Antonio Horta-Osorio said in a strategy review.

Goldman Warns of Layoffs Goldman Sachs Group Inc. has notified the New York State Department of Labor that the investment bank could lay off 230 employees, citing economic reasons.

US pending home sales rise 8.2% in May Increase in signings could support prices. The National Association of Realtors (NAR) reported that pending sales of existing single-family homes rose 8.2% last month after a little-revised 11.3% April decline. Despite the monthly improvement sales this quarter remained down 5.4% versus Q1.

Despite Fears, Owning Home Retains Allure, Poll Shows About nine in 10 Americans see owning a home as part of the American dream, even as many doubt their home is a good investment, according to the latest New York Times/CBS News poll. Forty-five percent of the respondents say the government should be doing more to improve the housing market, while 16 percent say it should be doing less. On the politically contentious issue of direct financial assistance to those having trouble paying their mortgages, slightly more than half of those polled, 53 percent, say the government should help. And almost no one favors discontinuing the mortgage tax deduction, a prized middle-class benefit that has been featured on some budget-cutting proposals.

Beijing issues pay rise guidelines for this year Enterprises in Beijing are advised to give their employees a wage rise of about 10 percent and no less than 5 percent this year, according to a living cost adjustment guide issued on Wednesday by Beijing Bureau of Human Resources and Social Security.

Low-wage earners to pay fewer taxes China raised the monthly tax exemption threshold from 2,000 yuan to 3,500 yuan.

A report by Capital Economics pegs Canada’s housing prices as 25% overvalued relative to disposable income – “approaching the level of excess that the U.S. market reached at its peak in 2006.” Like the U.S. the coming downturn in prices “will lead to a marked decline in housing-related activity and employment.

David Rosenberg:  Supply shortage of long duration product? The share of Treasury debt outstanding that is 10 years and higher in maturity is less than 10% – half what it was a decade ago.

Rome set to back austerity package Savings of €47bn aimed at reassuring markets

1t yuan for urban rail China hopes to invest more than 1 trillion yuan ($155 billion) by 2015 for 96 planned urban rail lines covering 2,500 kilometers, the Beijing Morning Post reported.

Turkey’s Economy Expands 11.0% Turkey’s economy again accelerated more rapidly than expected in the first quarter, underlining the emerging economy’s strong growth momentum but feeding fears that the economy is overheating.

California Online Tax Law Pressures Amazon Two law professors who specialize in such tax issues, Richard Pomp of the University of Connecticut and John Swain of the University of Arizona, said Amazon could make a case against the bill in court. At issue is whether the state can force Amazon to collect taxes even though A2Z’s parent company, Amazon.com, has no presence in California because its operations in the states are run by subsidiaries. But both Mr. Pomp and Mr. Swain say the bill appears valid. “I would bet in favor of a court upholding, rather than against a court upholding,” Mr. Pomp said. Said Mr. Swain: “It’s an uphill case” for Amazon.

E-retalier gets tax bill, triggers debate An online retailer in Central China’s Wuhan was ordered Tuesday to pay 4.3 million yuan ($665,830) in taxes, the first such case disclosed in China.

 

QUICK READS

Japan in desperate bid to cool reactors Government warns time running out to avert a nuclear accident.
Hit to economy ‘limited’, says Yosano  Spending on rebuilding effort to shore up output

Bahrain Arrests Opposition Leaders Bahrain arrested several opposition leaders and activists in dawn raids on their homes, as the government continued its attempt to stifle the recent uprising on the strategic Gulf island.

Libyans Scramble in Face of Onslaught Col. Moammar Gadhafi’s forces attacked the last rebel-held major city in western Libya and expanded territory near the eastern rebel capital of Benghazi, as the government gained momentum in its bid to reassert control. The Libyan leader’s son, Saif al-Islam Gadhafi, said military operations against the rebels would be over within 48 hours.

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Approvals halted for new nuclear plants China will suspend approval of new nuclear power stations and assess all nuclear projects, including those under construction, in the wake of the Japan crisis, the State Council said on Wednesday.

Nuclear’s loss not a worry; the new world power is gas With Japan’s catastrophe causing a new distaste for atomic energy, the cheapness of natural gas should allay concerns for the future.

Swiss Raise 2011 Forecast The Swiss government agency Seco said it expects the country’s gross domestic product will expand by around 2.1% this year, up from a previous estimate of 1.5%. It maintained its GDP growth forecast for next year at 1.9%. Consumer price inflation is expected at 1.0% in 2011 and at 0.9% next year, compared with 0.7% and 0.8% respectively in the previous forecast.

Indian inflation

Holdings of US debt cut by $5.4 billion China trimmed its holdings of US debt in January, it’s the third straight month of net selling after China’s holdings of US debt reached a peak of nearly $1.18 trillion in October 2010.

Few Britons Plan to Seek Pay Rise The U.K. public’s inflation expectations rose to their highest in more than two years in February but fewer than one in 10 people would push for higher wages to compensate, according to a Bank of England survey.

Tax Plan Aims for 25% Cap The chairman of the House Ways and Means Committee wants to cut the top U.S. tax rate to 25% for individuals and corporations, and cut or eliminate many popular deductions.

Retailers Push Amazon on Taxes Wal-Mart, Target and other large retailers are ratcheting up a political campaign to force Amazon to collect sales taxes, sensing opportunity in the budget crises gripping statehouses nationwide.

On average, US public pension funds expect to generate an 8% average annual return. This despite the fact stock markets have essentially flat-lined over the past decade, bond yields are at historic lows, and prior gains were in many cases because of the Internet, housing and credit bubbles.

OECD calls for rapid rise in retirement age Action urged to ensure pensions are sustainable
 

QUICK READS

Tokyo Falls 6.2%; Other Markets Mixed Investors dumped Japanese shares Monday, sending the main index down 6.2% amid concerns about a nuclear emergency and earthquake damage. Other Asian markets were mixed.

BoJ makes $265bn available to support system Central bank’s largest ever liquidity operation

Rebels Lose Ground in Libya Forces loyal to Col. Moammar Gadhafi pressed their offensive further into eastern Libya on Monday, as warplanes struck weapons depots in the rebel-held city of Ajdabiya and forces moved closer to the rebels’ de facto capital city of Benghazi.

“Let them eat iPad.” That was the cry Friday after William Dudley, head of the Federal Reserve Bank of New York, acknowledged to an audience in Queens, N.Y., that food prices had gone up before adding that some prices are lower. “Today you can buy an iPad 2 that costs the same as an iPad 1 that’s twice as powerful.”(WSJ)

Berkshire Hathaway To Buy Lubrizol Buffett’s Berkshire Hathaway is buying specialty-chemicals company Lubrizol for about $9 billion in cash, making it one of the biggest acquisitions in Berkshire’s history.

[ONLINEHERD]