NEW$ & VIEW$ (12 Oct. 2011)

Surprised smile   S&P 500 Rallies 12% From Brink of Bear Market as Index Approaching 1,220  The threat of a U.S. bear market is receding after the Standard & Poor’s 500 Index rallied the most in 31 months, leaving the gauge about 1 percent away from a level where two advances have stopped since August. A pundit said:

I’m not sure the world has changed that much in the last five or six days that 10 percent is really a reasonable change in the price of those risky assets.

Doubtful? Read on!

Confused smile   “THE COMPREHENSIVE PACKAGE”   Slovakia will soon vote for the EFSF bailout fund (Slovakia Set to Approve European Bailout Fund). But as Ambrose Evans-Pritchard writes in the UK Telegraph:

The traumatic affair almost brought down the German government. It has in fact brought down the Slovak government. You can’t keep doing this. Democracies are not to be toyed with.

This political revolt matters a great deal because Europe will soon have to come back for more money and bigger bail-outs. The EFSF’s €440bn firepower – or €300bn after Greece, Ireland, and Portugal have taken their bites – is not enough. So even when the Slovaks fall on their sword, nothing will have been resolved.

A reluctant ECB will remain the only credible lender-of-last resort standing behind EMU, in breach of the Lisbon Treaty. Its actions already face a challenge at the European Court.

(German finance minister Wolfgang Schäuble) was forced to give categorical assurances to the Bundestag that the bail-out fund will not be enlarged further. Most people understood him to mean that it will not be “leveraged”. Pledges to parliaments have consequences. And as Mr Schäuble himself said, the September ruling by the German Constitutional Court has blocked off any possibility of eurobonds.

Pointing up   Just to be clear, the Merkel-Sarko “comprehensive package” is much easier said than done. How to backstop risky EU debt with the rich neighbor money?

Deutsche Bank Chief Executive Josef Ackermann:

On the one hand it [the debate] sends the signal that a [debt] haircut is more likely, and on the other because the resources for recapitalisation will surely not come from private investors, but rather states would ultimately have to raise the funds themselves, thereby worsening their debt levels. The key to the problem therefore lies with governments to restore trust in the solidity of state finances.

High five   THE ECB IS AGAINST A BIGGER HAIRCUT: ECB warns against PSI role in bail-outs:

Such moves “may put at risk the financial stability of the currency area as a whole” and trigger a need for “large scale” bank recapitalisation steps, the ECB warned in its monthly bulletin on Thursday.

Its comments reflect the central bank’s alarm at eurozone leaders’ attempts to oblige banks to contribute more to Greece’s rescue – which it fears is sending a disastrous signal to investors in other crisis-hit eurozone countries. (…)

(The ECB) said it has “strongly advised against all concepts that are not purely voluntary or that have elements of compulsion, and has called for the avoidance of any credit events and selective default or default.”

It adds: “All euro area governments need to demonstrated their inflexible determination to fully honour their own individual sovereign signature, which is a decisive element in ensuring financial stability in the euro area as a whole.”

US ECONOMY

Storm cloud   I HOPE YOUR NOT SURPRISED!  Job Openings Fell in August  Given the summer political brawl, this is not surprising. The number of positions waiting to be filled dropped imageby 157,000 (4.9%) to 3.06 million, from a downwardly revised 3.21 million in July. The number of private sector openings fell 5.1%. Hiring increased by 38,000 to 4.01 million. Employers discharged 1.66 million workers in August, down from 1.69 million in July. There were more than four people vying for every opening, up from about two when the last recession began in December 2007. (Chart from Haver Analytics)

Sad smile   “SELF-CONFIDENCE IS THE FIRST REQUISITE TO GREAT UNDERTAKINGS” (Samuel Johnson). Not much of that in America these days. Consumer confidence is in the pits, small businesses confidence is in the pits, Fed officials are generally downbeat about the economy (even admitting “significant” downside risks to their outlook), and now CEO confidence is in the pits. (Chart from BMO Capital).

The Conference Board Measure of CEO Confidence™, which had declined in the second quarter, fell further in the third quarter. The Measure now stands at 42, down from 55 last quarter (a reading of more than 50 points reflects more positive than negative responses).

imageCEOs’ appraisal of current economic conditions turned even more pessimistic, with only 11 percent saying conditions are better compared to six months ago, down from 33 percent last quarter. In assessing their own industries, business leaders were also considerably more pessimistic. Now, about 19 percent say conditions have improved, compared with 40 percent in the second quarter of 2011.

CEOs’ optimism about the short-term outlook also deteriorated sharply. Currently, about 19 percent of business leaders anticipate an improvement in economic conditions over the next six months, down from 43 percent in the second quarter. Expectations for their own industries are also quite negative, with approximately 22 percent of CEOs expecting conditions to improve in the months ahead, down from 44 percent last quarter.

(Survey results were fielded from mid-August to mid-September)

Winking smile   COUNT ONE MORE PESSIMIST:  Pimco’s Gross makes U-turn on Treasuries  Fund manager lays big bet on lower long-term rates.

Crying face   I CAN’T GET NO … Satisfaction Remains Low, Economic Concerns High

1979-2011 trend: In general, are you satisfied or dissatisfied with the way things are going in the United States at this time?

In November 1979, 19% of Americans were satisfied with the way things were going in the United States, the last Gallup reading before Jimmy Carter’s defeat in 1980. Also, in August 1992, 22% were satisfied prior to George H.W. Bush’s unsuccessful re-election bid.

Satisfaction levels were higher when Ronald Reagan (48% in September/October 1984), Bill Clinton (39% in October 1996), and George W. Bush (44% in October 2004) all won re-election.

Snail   13 months to go, Mr. President!

EUROPE

Smile   France’s core inflation rate was unchanged in September and is up 1.1% YoY. The harmonized CPI, comparable to other Eurozone inflation rates, was also unchanged but is up 2.4% YoY. German harmonized inflation was +0.1% MoM and 2.9% YoY. Ex-energy -0.1% and +1.5%.

Storm cloud   Carrefour Cuts Profit Target  The WSJ: French retail giant Carrefour cut its full-   year profit target for a second time in a few months, battered by see-sawing on its core strategy and increasing worries about consumer spending. Consumer confidence has weakened in Carrefour’s home market, a trend that also impacted competitors such as Groupe Casino SA, which cited a slow-down in sales of nonfood items in its hypermarkets. Carrefour is present in countries such as Spain, Greece and Italy which are suffering from the sovereign-debt crisis.

 

Storm cloud   And if you doubt the big slowdown in China,

The performance in China was blighted by rocketing inflation which has slowed consumption, Mr. Sivignon said. Sales increased by 3.1%, but Carrefour witnessed a sharp drop of 11% in nonfood sales.

Storm cloud   WALMART CEO MIKE DUKE  said at yesterday’s annual meeting:

We don’t have a staff of economists but we have over 200m customers around the world to get perspective from. I can’t tell you that I see it getting better.

Storm cloud   Turkey Revises Growth Forecast   Mr. Babacan, the ruling AK-party’s most senior economic policy maker, upgraded Turkey’s growth forecast this year to 7.5% from 4.5% but lowered the government’s 2012 prediction to 4% from a previous expectation of 5%. Turkey’s ballooning current account will hit 9.4% of gross domestic product this year and ease only moderately to 8% next.

Storm cloud   Greece Budget Deficit Widens 15%  Greece’s budget deficit for the first nine months of the year widened 15.1% from a year earlier to $26.05 billion, the Finance Ministry said .

Laughing out loud Laughing out loud Laughing out loud   Berlusconi Calls for Confidence Vote  Mr. Burlesquoni, who knows something about rituals, said

Financial markets are too volatile for Italian political rituals.

He also said that if his government does fall, the country will need to hold early elections.

CANADA

Smile   CANADIAN ECONOMY LOOKS OK: Total hours worked declined 0.3% decline in Canada in September. But, as BMO Capital notes,

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the bigger picture is that hours worked popped at a 4.7% a.r. for all of Q3,
and are still up at a 2.7% clip in the past six months. While not perfectly in synch with real GDP, the hours worked data are far from sending any serious warning signals about the broader economy. In contrast, the deep dive in late 2008 did give an excellent heads up to the trauma ahead for GDP (as the figures are released almost two months earlier than GDP).

ASIA

Ghost    CHINESE GHOSTS  China’s debt spree returns to haunt   Bail-outs are coming thick and fast in China. In less than a week the authorities have had to step in to prop up the banks, rescue the insolvent railway system and save the near bankrupt city of Wenzhou from a spectacular debt crash. (By UK Telegraph’s Ambrose Evans-Pritchard)

Star   Add the rising problem with shadow banks“:

With the new government crackdown on underground lending, analysts say there is now a risk that this source of credit could dry up, bringing down even thriving companies, with ripple effects on the formal banking system.

Shadow finance in China has been around for years, but the recent surge in such lending is unprecedented, analysts say. The lightly regulated underground lenders pool money from property developers, coal miners or other cash-rich individuals hunting for higher returns.

A significant portion of shadow lenders’ funds comes from the banks themselves. Shadow lending has become sizable enough to challenge the government’s tight control of credit and interest rates, two critical tools for steering the world’s No. 2 economy.

How big is the problem? Huge!

The IMF calculates that the stock of domestic loans, including those both on and off banks’ books, reached 173% of China’s gross domestic product as of the end of June.

In an indication of how much lending isn’t reflected on banks’ books, credit extended through banks, but moved off their balance sheets, stands at roughly 12 trillion yuan ($1.9 trillion), UBS economists say. Total loans outstanding , both on and off banks’ balances sheets, stood at 55.7 trillion yuan as of August.

Pointing up   How does that impact monetary policy?

Dragonomics, a Beijing-based research and advisory firm, estimates that shadow finance accounted for more than 40% of new loans issued in the first half of this year. Much of this kind of informal lending actually is conducted by, or through, the major state banks.

The woes of the private sector also raise fresh doubts about China’s ability to use bank lending to pump up the economy, as it did during the global financial crisis two years ago. “We think the bigger risks are credit withdrawal in both the formal and informal lending market and contagion,” Wang Tao, China economist at UBS, said in a recent note.

How do you feel now? Sick smile 

 

[CHINAHERD]Storm cloud    China Trade Surplus Narrows  China’s trade surplus narrowed in September to $14.51 billion from $17.76 billion in August, with exports +17.1%, down from +24.5% in August and the slowest gain in 7 months. Exports to the EU rose only 9.8%. Imports rose 20.9%, a big slowdown from August’s 30.2% increase. Domestic demand is waning fast while China’s appetite for natural resources may be declining. Copper imports during the first nine months of this year are down 18 per cent compared with a year earlier, although they rose 3% YoY in September. See below.

 

Confused smile   COPPER: China has for the first time revealed the estimated size of its copper inventories, shedding light on one of the commodity market’s biggest mysteries. Chinese copper inventories stood at 1.9m tonnes at the end of 2010, more than the US consumes in a year, according to estimates by the state-backed China Non-Ferrous Metals Industry Association. The estimate is significantly higher than the 1.0m-1.5m tonnes range that foreign executives have assumed in the past.

The estimates, which were announced at a recent meeting of the International Copper Study Group but have not been made public, imply that real Chinese copper demand may have been lower than thought in recent years. (FT)

 

Money   ASIAN CASH LOOKING FOR HOME:   Yen’s Rise Piques Appetite for Deals

The head of Japan Bank for International Cooperation signaled that the country’s cash-rich firms are ready to take advantage of the stronger yen to pursue overseas buyouts, saying the state-backed lender hopes to finance its first deal under a special government facility by the end of the year.

CHINA is also clearly on the hunt for FDIs with over $3T in foreign reserves destined to lose value as the Yuan keeps appreciating. China ranked 4th in FDI outflows in 2010 ($68B), slightly exceeding Japan.

Pizza   BRAZIL: The first wave of work stoppages under President Dilma Rousseff has disrupted mail and banking services as unions demand wage hikes above inflation. Workers at oil giant Petrobras want some, too.

Auto    OIL: THE CHANGING OF THE GUARD   Airplane

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THIS AND THAT

Red rose   Steve Jobs: How to live before you die   Red rose

 
Steaming mad   The inkblot protests

A new generation takes to the barricades. They should pay more attention to the ballot box.

Embarrassed smile   SEEN BEFORE AT A STOCK EXCHANGE NEAR YOU!  The Guardian found evidence that the Journal had been channelling money through European companies in order to secretly buy thousands of copies of its own paper, misleading readers and advertisers about the Journal’s true circulation.

Devil   Jail Time for Inside Trading Is Climbing  People convicted of insider trading are facing harsher sentences than in the past, according to a Wall Street Journal analysis.

 

QUICK READS

GOP Balks at Taxes to Pay For Jobs Plan The prospects for Obama’s jobs plan grew dimmer as he unveiled the fine print of how it would be paid for—primarily through tax increases that Republicans said would destroy jobs, not create them.

Tax break cuts linked to Obama jobs plan President proposes to limit mortgage deduction. Jack Lew, White House budget director, said the president was proposing to cover the cost of the short-term stimulus for the ailing US economy with $467bn in additional revenues over the next 10 years. Most of the savings – worth about $400bn – would come from limits to the ability of American households earning more than $250,000 per year to deduct items such as mortgage interest and charitable donations from their taxes.

Obama Moots Limits on Tax Breaks for Muni Bonds President Barack Obama proposed curbing the amount of interest from municipal bonds that top earners can exclude from their taxable income, a step that may diminish demand for state and local-government securities.

Congressional Job Approval at 15% These results are based on interviews conducted in a Sept. 8-11 Gallup poll, as President Barack Obama urged Congress to pass his newly announced major jobs plan legislation.

Do you approve or disapprove of the way Congress is handling its job?

Italian Bond Auction Disappoints Italy paid sharply higher yields than at previous auctions to sell five- to nine-year government bonds, and garnered disappointing demand, selling below the maximum targeted amount.

Italy in Talks With China on Bonds Italy’s Finance Ministry has held talks with China’s sovereign-wealth fund and other Chinese officials in a bid to persuade Beijing to buy large amounts of Italian bonds, a person familiar with the matter said, as Rome searches for ways to meet its financing needs and pull the peninsula out of the euro-zone debt crisis.

Italian Industrial Output Slumps Italian industrial output fell much more than expected in July due to the sharpest contraction of consumer-goods production in more than two years. Industrial output in the euro zone’s third-largest economy fell 0.7% from June on a seasonally adjusted basis. Istat also revised down its June data, saying industrial output actually fell 0.8% that month from May, worse than the disappointing 0.6% drop reported on a preliminary basis last month. As a result, Italy’s industrial production is back at its lowest level since January.

Greece’s Efforts Fail to Calm Investors flooded into the safe arms of German bonds, and European banks dialed back lending to their riskier peers, in a clear sign that fears of a destabilizing collapse in Greece persist despite fresh efforts to shore up its finances.

Europe and 2011 Are Not Working Out So Well

OPEC Hints at Output Cuts OPEC hinted that some of its members could reduce production as a slowing economy is expected to dent oil demand and Libya resumes exports more rapidly than expected. Libyan oil production should resume within days and could reach one million barrels a day, around two-thirds of pre-war levels, within six months, it said.

India Factory Output Growth Slows In yet another sign that India’s economy is cooling, the government said the country’s industrial output growth slowed more than expected in July to 3.3% from a year earlier.

The Dark Side of Brazil’s Rise Brazil’s boom has downsides. The abundance of cash from overseas investors has helped fund riskier bank loans and fueled a potential real-estate bubble.

[BOOM_p1]

BofA to Cut $5 Billion Bank of America will cut $5 billion in annual costs by the end of 2013 and slash 30,000 jobs out of its consumer-oriented businesses, part of an important trimming program.

Nomura to Cut About 5% of Jobs in Europe Fewer than 400 positions will be eliminated globally, with the majority in Europe, one of the people said.

U.K. Inflation Rises The consumer-price index rose 4.5% in the 12 months through August, up from 4.4% in July. In monthly terms, overall consumer prices rose 0.6%. So-called “core inflation”, which strips out volatile food and energy prices, remained steady at 3.1 per cent in August.

UK inflation

China’s Lessons From Mexico and Japan Is China the next Japan, or the next Mexico? Its real-estate bubble and bad loans at banks make it similar to Japan, but its failure to focus on education invites comparisons with Mexico and is a more serious threat.

[CHINAHERD]

 

QUICK READS

Trichet Says ECB Reassessing Inflation Risks “Risks to the medium-term outlook for price developments are under study in the context of the ECB staff projections that will be released early September,” Trichet told the European Parliament’s economic committee in Brussels today. The comment contrasts with Trichet’s last policy statement on Aug. 4, when he said risks to the inflation outlook were “on the upside.”

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Canada GDP Unexpectedly Contracts Gross domestic product declined 0.1% from the first quarter, for an annualized contraction of 0.4%.

Portugal promises biggest cuts in decades Lisbon aims to trim deficit to 0.5% by 2015

Brazil Surprises With Rate Cut Brazil slashed its overnight lending rate in a surprise move Wednesday that is likely to spur questions about the government’s commitment to fighting inflation—as well as the independence of its central bank. Brazil’s central bank cut the overnight rate by half a percentage point to 12%, still among the highest rates in the world. In a statement, the central bank said weakening economies in the U.S. and Europe would take pressure off Brazilian inflation, reducing the need for its high rates.

Switzerland Slashes Stimulus Package The Swiss government surprised markets Wednesday by more than halving the size of its stimulus package for the country’s economy, worrying exporters and raising doubts about the economy’s capacity to weather the franc’s strength.

Portugal Warns of Further Austerity Portugal’s government outlined a slew of new austerity measures for 2012 to control its accounts, increasing pressure on an economy already in contraction but putting the country close to a budget balance by 2015.

Martin Wolf in the FT:  (…) In neither the US nor the eurozone, does the politician supposedly in charge – Barack Obama, the US president, and Angela Merkel, Germany’s chancellor – appear to be much more than a bystander of unfolding events (…). Both are – and, to a degree, operate as – outsiders. Mr. Obama wishes to be president of a country that does not exist. In his fantasy US, politicians bury differences in bipartisan harmony. In fact, he faces an opposition that would prefer their country to fail than their president to succeed. Ms Merkel, similarly, seeks a non-existent middle way between the German desire for its partners to abide by its disciplines and their inability to do any such thing. The realisation that neither the US nor the eurozone can create conditions for a speedy restoration of growth – indeed the paralysing disagreements over what those conditions might be – is scary. (…)

 

ONE MORE WOUNDED: BRAZIL ECONOMY DECLINES IN JUNE

Brazil’s economic activity fell in June for the first time since December 2008, the central bank said on Wednesday, adding to signs of a steeper-than-expected slowdown in Latin America’s biggest economy.

The central bank’s IBC-Br economic activity index BRIBC=ECI fell 0.26 percent in June from May, the first sequential drop since the country fell into recession at the height of the global financial crisis.(…)

The bank also revised down growth in May from April to 0.05 percent from a previously reported 0.17 percent.(…)

Full Reuters article

 

QUICK READS

U.S. Debt Deal Advances President Obama and House Speaker Boehner are moving toward a deficit-reduction deal that could cut $3 trillion in spending and overhaul the tax code to raise up to $1 trillion.

Debt Ceiling. What ceiling?

US National Debt in Tonnes of Gold

Markets Rally on Greek Aid Deal Europe’s financial markets modestly welcomed the latest euro-zone agreement on a new $157 billion financing package for Greece.

Mohamed El-Erian Execution is the issue in Greece deal  European leaders took a big and important step towards dealing properly with the eurozone debt crisis at their summit on Thursday. This required courageous compromises on the part of many, most importantly Germany and the European Central Bank. But further design enhancements and skilful execution will be required if yesterday’s decisions are to translate into the durable restoration of growth and financial stability to the region’s troubled peripheral economies.

Europe’s Biggest Banks Face $30B Greek Writedown Banks will voluntarily agree to write down the value of their Greek securities by 21 percent as part of the bond exchange and debt buyback program, the Institute of International Finance said in a statement today. Europe’s 90 biggest banks hold about 98 billion euros of Greek debt, according to the European Banking Authority.

Fitch has already warned this morning that Greece would be rated as “Restricted Default” should the plan be carried through. “The proposed debt exchange implies a 20 percent net present value loss for banks and other holders of Greek government debt…..An exchange that offers new securities with terms that are worse than the original contractual terms of the existing debt and where the sovereign is subject to financial distress constitutes a default event under Fitch’s ‘coercive debt-exchange criteria’ “.

Jobless Claims Jump New claims for jobless benefits rose last week following two declines and remain above 400,000, a setback for a sector that hasn’t been producing many jobs.

U.S. Leading Economic Indicators Increase Moderates The Conference Board reported that its Leading Economic Indicators index rose 0.3% last month following an unrevised 0.8% May increase. The breadth of increase among the components, measured by the 1-month diffusion index, fell back to 50%, reversing most of its prior improvement. Money supply growth and a steeper interest rate yield spread made the largest contributions to the June increase. Lower consumer expectations and shorter weekly hours worked made the largest negative contributions.

Yield Curve Says no Recession in Sight

Yield Curve Says Recession is Far Off

German business morale at 9-month low  Ifo survey shows growth slowing in Europe’s main economy

Canadian Inflation eases to 3.1 per cent in June Annual rate declines from May’s 3.7 per cent, Statscan says. Core inflation +1.4% YoY.

Brazil Signals Fifth Rate Increase May Be Last as Global Outlook Worsens Policy makers, led by central bank President Alexandre Tombini, increased the Selic rate by a quarter point to 12.50 percent yesterday. In a one-sentence statement accompanying the decision, which was expected by all 57 analysts surveyed by Bloomberg, policy makers withdrew a commitment made in April and June to raise rates for a “sufficiently long” period.

The strangest study ever of penis size (and the economy) “(…) whether and how strongly the average sizes of male organ are associated with GDPs between 1960 and 1985? It is argued here that the average size – the erect length, to be precise – of male organ in population has a strong predictive power of economic development during the period. The exact causality can only be speculated at this point but the correlations are robust.”
 

QUICK READS

Europe Wrangles Over Greece European finance ministers remained divided over the details of extending Greece a giant new aid package that would support the nation for years to come.

German Producer Prices Unchanged in May German producer prices were unchanged on a monthly basis in May. Excluding energy, factory-gate prices rose 0.2% on the month and 3.8% on the year. Intermediate goods were flat on the month and rose 5.7% on the year. Consumer goods were up 0.6% on the month and rose 4.3% on the year.

Brazil credit bubble fear as defaults rise Estimated level of loans 90 days overdue by year end is 8%.

China to cut tax on luxuries – report The move is to encourage wealthy local shoppers to buy more pricey items at home.

In Florida, Banking’s Survivors Are Lending Fifty-one banks in Florida have failed since the start of 2007. Now some of the survivors are starting to make loans again, with first-quarter loan volume up by at least 5% compared with the end of 2010, in contrast to an overall decline of 1.7% in lenders nationwide.

Carrefour Tones Down Earnings Expectations French retailer Carrefour forecasts operating income in France in the first half of the year to fall 35% compared with the same period a year earlier, a company spokesman said.

Panasonic Expects 59% Drop in Profit  Panasonic expects to post a net profit of ¥30 billion ($374 million) this fiscal year, down from ¥74.02 billion in the last fiscal year ended March 31. The outlook signals a strong recovery expected in the fiscal second half starting Oct. 1, as the company forecasts a net loss of ¥70 billion for the first half from April to September.

Siemens chief warns on US skills shortage ‘Problem exposes weaknesses in education and training’

Chinese hot dog eaters to go to US contest Hot dogs, lemonade, and people wolfing down food like no tomorrow, its almost a scene right out of Nathan’s Famous Hot Dog Eating Contest in Coney Island New York, except it’s in Beijing.

 

QUICK READS

Travel on all roads and streets rose 0.9% YoY in February 2011. Cumulative Travel for 2011 rose 0.6%. March stats will be more telling since prices spiked up late in February.

Click to View

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Greek Deficit Exceeds Forecasts Greece’s budget deficit in 2010 was 10.5% of gross domestic product, significantly higher than forecast by either the Greek government or the European Union authorities.

Prices Jumping for Diapers, Other Family Basics Betting that parents are less stingy when it comes to junior’s needs, Kimberly-Clark and P&G, two of the country’s biggest makers of diapers and wipes, are pushing through price increases. Kimberly-Clark Corp. plans to raise prices on its Huggies diapers and wipes by 3% to 7% while Procter & Gamble Co. announced a 7% rise in prices for its Pampers diapers and 3% increase on wipes. Clorox Co., which reports next week, says it is raising the price of Glad trash bags by 9.5% beginning in May. The cost of some of its salad products, like Hidden Valley ranch dressing mix, will also rise.

The cost of goods sold for major beverage companies jumped 5% in the first quarter from a year ago, Goldman estimates, after declining in 2009 and increasing just 1.4% in 2010.

Quake Ripples at Ford, Johnson Reverberations from damages to Japan’s auto-parts makers are still being felt around the world. Ford idled plants in Taiwan, South Africa and China, while battery-maker Johnson Controls said the auto-makers’ cutbacks would shave third-quarter profit and sales.

Lee Warns of Further Inflation for U.S. Former Singapore Prime Minister Lee Kuan Yew said a stronger local currency could help ease inflation in the city-state, even as he warned of a continued weak U.S. dollar—and potentially more inflation—in the U.S.

Rousseff voices alarm as inflation nears bank limit Analysts warn of more rate rises. “We are immensely worried about inflation and there’s no situation under which the government would let its guard down when it comes to controlling inflation,” Ms Rousseff told reporters.

Yemen Protesters Accept Deal Yemen’s opposition coalition accepted a deal to remove President Ali Abdullah Saleh from power in exchange for immunity for himself and his relatives, clearing the way for the country’s first political transition in its modern history.

Syria Steps Up Violence At least 35 people were killed across Syria, as the government intensified its crackdown on antiregime unrest.

US policy shift builds pressure on Syria ‘Targeted sanctions’ signal change in western stance
Gideon Rachman: Egypt’s liberals are losing the battle   The crushing defeat of the liberal camp in the referendum came as a bad shock to them, since it was the first political trial of strength between Islamists and liberals since the revolution. It should serve as a wake-up call, galvanising liberals to unify and organise.

New-Home Sales Provide Small Lift New-home sales increased in March from an all-time low a month earlier, a small boost for a struggling part of the economy.

Silver: Is it different this time?

Fed Sweats Details of News Conference The Federal Reserve is doing some careful stage planning for its first-ever public news conference Wednesday afternoon following a two-day policy meeting.

US states face big pension gap Shortfall for retirement benefits put at $1,260bn

Bill Gates largest shareholder in CN The Microsoft Corp. founder now controls more than 46 million CN shares, or 10.04 per cent of the Montreal-based railway.

Barron’s Alan Abelson: Mr. Trump has chosen an auspicious moment for his political debut, what with concerns growing about the nation’s dangerous accretion of debt. For he’s the only candidate able to boast more than passing experience with bankruptcy: As we recall, one of the hotel and casino entities bearing his name has been forced to seek that ignominious refuge not once but three times when the wolves (politely known as creditors) began howling at its door.

 

QUICK READS

Oil Tops $110 The main U.S. oil contract finished above $110 a barrel for the first time in 2½ years, lifted by fighting in Libya and signs of an economic recovery in the US.

Claims for Benefits Fall Amid Job Gains The number of idled U.S. workers filing new claims for unemployment compensation fell last week more than expected, providing another sign of improvement in the jobs market.

Brazil Gives In to Surging Currency The currency climbed through a key barrier of 1.60 per dollar Thursday, a day after Mr. Mantega unveiled the latest in a string of controls designed to slow the real’s climb. It was trading at 1.59 to the dollar late in the day, up more than 40% since late 2008. As Mr. Mantega announced the controls, investors were surprised to hear him acknowledge that there are legitimate reasons for the real to rise.

[Brazil]

Brazil doubles tax on consumer credit  Guido Mantega announced late on Thursday that the government would double the tax on consumer credit for individuals to 3 per cent from 1.5 per cent, in an effort to curb spending. The levy, which takes effect on Friday, applies to loans with maturities of more than a year as well as goods bought in instalments over more than a year, but excludes mortgages.

German Exports Rebound German exports rose by 2.7% from the month earlier in February to €84.7 billion ($121.54 billion), according to calendar- and seasonally-adjusted data. This followed a 1.0% decline in January. Growth in imports outpaced export growth, rising 3.7% from the month earlier to €73.3 billion. The data follow a 2.3% import rise in January.

US Retail Sales Rose in March Retailers delivered solid March sales numbers, despite the challenges posed by a later Easter, poor weather and higher gasoline prices.

Consumers Step Up Student, Auto Loans, Cut Back on Credit Cards Overall consumer credit outstanding increased at an annual rate of 3.8%, rising $7.62 billion to $2.420 trillion. The gain was the biggest since June 2008 and the fifth in a row. Revolving credit, or credit-card use, fell $2.71 billion to $794.03 billion in February. Nonrevolving credit increased $10.33 billion, or 7.7%, to $1.626 trillion. The category includes loans for cars, mobile homes, tuition and other things.

March sees surprise jobs decline in Canada. First drop in six month, but jobless rate dips to 7.7 per cent. The net job loss of 1,500 was due to the number of part-time jobs dwindling at a slightly faster pace than the creation of full-time jobs.

March UK Output Price Inflation Highest Since Oct 08 Mar producer output prices +0.9% m/m; +5.4% y/y –Mar core producer output prices +0.4% m/m; +3.0% y/y –Mar producer input prices +3.7% m/m; +14.6% y/y LONDON (MNI) – Headline output price inflation continued to rise in March, as higher petrol prices pushed it to its highest level for nearly two and a half years, figures released by National Statistics showed Friday. Output prices rose 0.9% on the month in March and were up 5.4% on the year, the highest annual increase since October 2008.

Chevron Rekindles Texas Flame Climbing oil prices are making the aging oil fields of Texas’s Permian Basin look attractive again to some big petroleum companies.

Muni-Tax Break Under Siege A Senate bill would bar municipal borrowers from issuing tax-exempt bonds. While supporters of change face a high hurdle, the prospect appears to have broadening support among legislators trying to plug the federal budget deficit.

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