India’s Economy Expands 7.9%; Fastest in Six Quarters (Update2)

via India’s Economy Expands 7.9%; Fastest in Six Quarters (Update2) – Bloomberg.com.

Job Losses, Manufacturing Probably Eased: U.S. Economy Preview

via Job Losses, Manufacturing Probably Eased: U.S. Economy Preview – Bloomberg.com.

A suivre cette semaine, le chômage américain et le PIB européen

via A suivre cette semaine, le chômage américain et le PIB européen.

Une semaine marquée par la forte hausse du chômage en France

via Une semaine marquée par la forte hausse du chômage en France.

Dubai Debt Leads Bloomberg Week in Review

via Dubai Debt Leads Bloomberg Week in Review – Bloomberg.com.

Wall Street réagit à son tour aux craintes sur Dubaï

via Wall Street réagit à son tour aux craintes sur Dubaï.

Dubai Crisis May End in ‘Major’ Default, BofA Says (Update3)

via Dubai Crisis May End in ‘Major’ Default, BofA Says (Update3) – Bloomberg.com.

Japan’s Finance Minister, Hirohisa Fujii, has said that the high value of the Yen is harming the Japanese economy.

He is wrong.

The US economy is unbalanced, because it runs a continual trade deficit. The Japanese economy is unbalanced too, because it relies on exports, and runs a continual trade surplus. Japan, like Germany and China, is addicted to exporting – just as the US (and the UK) are addicted to spending and importing.

These imbalances harm the world economy and lead to pressure for trade barriers, which would harm us all.

While the Japanese Finance Minister was bemoaning the high value of the Yen, the Japanese trade figures for October showed a surplus of 807 billion Yen (£5.6 billion). Exports fell by 23.2% compared with a year earlier, while imports fell by 35.6%. So that trade surplus was in fact even higher than a year ago.

Japan cannot continue expecting others in the world to buy all its production. The Japanese government has run big budget deficits in an attempt to boost domestic demand, with little success. It has also kept interest rates low for many years. But still the Japanese keep saving, and not spending.

A more credible strategy for the Japanese would be to start dismantling their trade barriers that keep out cheaper foreign-made goods.

Japan is a notoriously expensive place to live. Prices are high there because the Yen is undervalued. The Yen needs to rise much further. Japan actually needs a flood of cheap foreign imports to rebalance its economy, to increase the standard of living of its people, and to encourage them to feel good again, so that the recession ends.

Japan has been a seige economy for decades. It is time it was opened up to free trade.

The comments of their Finance Minister are unhelpful and ridiculous. The rebalancing of world trade doesn’t just mean deficit countries like the US and the UK cutting back. It also means the surplus countries need to start being willing to buy things made by foreigners.

Dubai Shows Limits of Government Rescues, Roubini’s Das Says

via Dubai Shows Limits of Government Rescues, Roubini’s Das Says – Bloomberg.com.

La società, controllata dal governo di Dubai, ha contratto un debito per 59 miliardi di dollari. Panico nelle borse, durante la giornata di ieri, ed anche oggi sembra continuare l’andamento negativo su tutti i mercati.

Dall’emirato non arrivano voci chiare sull’entità della situazione, anche perchè tutto è chiuso per la festa religiosa di Eid al-Adha.

Qui il link all’articolo

L'économie du Japon montre de timides signes de reprise

via L’économie du Japon montre de timides signes de reprise.

Yen Strengthens to 14-Year High on Risk Aversion, Stock Losses

via Yen Strengthens to 14-Year High on Risk Aversion, Stock Losses – Bloomberg.com.

Yen Strengthens to 14-Year High on Risk Aversion, Stock Losses

via Yen Strengthens to 14-Year High on Risk Aversion, Stock Losses – Bloomberg.com.

 A fall in Japan’s jobless rate pointed at recovery in the world’s number two economy Friday, but the government fretted that the surging yen could again derail the export-reliant economy.

Finance Minister Hirohisa Fujii did not signal imminent plans to intervene in currency markets but stressed that Tokyo was watching closely and could take steps for the first time in five years if the situation worsens.

Fujii was speaking as the dollar traded around 85 yen, its lowest level since the mid-1990s, raising fears that Japanese exporters such as Toyota, Honda and Sony will lose competitiveness in overseas markets.

Using more strident language than usual, the minister said the yen’s rapid rise was “harmful”, a day after Prime Minister Yukio Hatoyama said the government must take measures to avoid a double-dip recession.

“If this kind of situation is sustained, I think that it would be something abnormal … it would be possible for us to take” steps under such conditions, Fujii said, according to Dow Jones Newswires.

“We should take appropriate action against disorderly movements in order to stabilise international financial markets,” Fujii said, adding however that he needed time to “look at the situation a bit more”.

Japanese shares fell 1.81 percent in the morning as traders worried the strong yen would hurt Japanese exporters.

Commenting on the Japanese currency’s rise against the dollar, Fujio Mitarai, the head of main business lobby Keidanren, warned that amid the gradual recovery “this could throw cold water on the economy”.

Japan, Asia’s biggest economy, sank into its worst post-war recession in the second quarter of 2008 as the global downturn devastated demand for its cars, electronics and other exports.

It gradually recovered this year, boosted by rebounding exports and stimulus measures, expanding in the July-September quarter by 4.8 percent on an annualised basis, the best growth in more than two years.

New jobs data Friday showed that the unemployment rate fell to 5.1 percent in October from 5.3 percent in September, improving for a third consecutive month and beating market expectations of a 5.4 percent rate.

Another survey, by the labour ministry, showed there were 44 job offers for every 100 jobseekers in October, slightly up from 43 in the previous month. Related article: Japan’s jobless rate falls to 5.1pct

In other data suggesting a gradual rebound, average monthly household spending rose by a price-adjusted 1.6 percent in October from a year earlier, well above a rise of 0.6 percent the market had expected.

Renewed deflation, however, is still seen as a threat to the recovery, because falling prices hurt corporate earnings and dampen consumption as people delay spending in hopes of further price drops.

Shoppers pass through Tokyo’s Ginza district.

Japan’s core consumer prices fell 2.2 percent in October from a year earlier, marking the eighth straight month of drops, government data showed.

The drop in core prices, which exclude volatile fresh food, was slightly less than September’s 2.3 percent drop and in line with market expectations.

“Deflationary pressure remains,” even if the speed of price drops has slowed, said Hiroshi Watanabe, an economist at Daiwa Institute of Research.

“The economy has picked up since February thanks to an upturn in exports and production. The effect is now belatedly felt on prices and employment.”

But hhe warned: “If the yen rises further, it would dampen exports, which are the main driving force of the Japanese economy. It would weigh down the Japanese economy as its recovery is feeble.”

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The strong yen is harming Japan’s economy, its finance minister says, as the US dollar continues to sink…. From BBC News. Full story

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Macro

The Sick Chinese

China is set to become the next Asian super-economy after Japan, but do not be tempeted into making too many direct comparisons. Culturally, the two countries could not be more different and these characteristics seem to, somewhat superficially, manifest themselves within the political arena too. As a cultural tourist in Asia, I’ve often felt that (controversially, perhaps) Japan comes across more culturally socialistic than even communist China. In China, healthy aspirations for wealth, risk-taking and a lustful speculative urge combined with materialism and deep-rooted superstition are potentially lethal ingredients for a central government devoted to focusing the individual whims of 1.3 billion people on more economically constructive activity. I’ve said before; it may be that communism in China is needed as much as it is desired, to quell the destructive elements of ravenous capitalism lurking beneath. A controversial generalization, some might say, but it is just an opinion which helps me to differentiate investment attributes in a macroeconomic sense. I have a couple of questions: why does young Macau already generate more gambling revenues than even Las Vegas and why do you think gambling is banned on mainland China?

These Chinese superstitions are forged from a culture with huge populations without basic support systems (like the safety nets of financial and health infrastructure), thus “luck” was a major factor in how one’s life turned out. Hence the superstitions surrounding names and numbers (the number 8 is considered to mark good prosperity, for example) and the number of business establishments in Hong Kong with the word “lucky” in the title! These highlight similar reasons why Chinese do not consume as much as their Western counterparts. When analyzing this consumption conservatism, many point to the cultural differences and wrongfully compare China to Japan in this respect. I think it has more to do with the lack of support system which forces people to hoard cash as a “bad luck hedge”. If one loses a job or a family member gets sick, one has the ability to pay for a solution or buy time. But there is catch-22 to this predicament the developing World knows all too well; in order to afford the infrastructure and expertise one needs to grow, but in order to achieve balanced, sustainable growth one needs the infrastructure.

Many people unfamiliar with Asian culture also wrongly extrapolate China’s growth trajectory down the same track as Japan’s. This is a common mistake. The cultural differences alone (never mind physical, demographic, geographical, political, historic, environmental, economic etc) suggest to me that China’s pattern will be far different. For one, there is a trend I find very interesting in the service industry – it’s growing. Much like London and New York, Chinese Cities like Hong Kong and Shanghai will become the commercial centres of Asia (see that PwC table I sent on 23rd November). People communicate with the Chinese partly because they simply have to and partly because, culturally, Chinese people tend to be much less socially conservative than their Japanese counterparts – one striking example to me is readiness the Chinese have to adopt parts of Western culture over their own traditional habits.

This degree of extroversion reminds me of American culture and lends itself well to applications in the service industry – especially with the World’s most ferocious economic growth engine powering beneath you. The service industry is a sector I feel the, relatively isolated, North Pacific Island of Japan could not develop with the same penetration - as it requires a degree communicative involvement not inherent to Japanese history or indeed its geographic location. Let me put it another way, a ubiquitous language is an extremely powerful lubricant for economic expansion. Many people look to learn English for example, as many major modern global influences (not just political or economically but also even industries like media, software development, entertainment) are from English speaking origins. Now think about this: 3 times as many people know how to speak Chinese as English. It’s not just China; many of China’s neighbouring countries have dialects descended or mutated from Putonghua (the main Chinese dialect) so communication, a vital component of trade, is relatively easy. There is a strong sense that other Asian nations (and increasingly non-Asian nations!) look to China as the “economic playmaker”, quarterbacking the economic strategy for the region as a whole.

In particular, I noticed the following piece in The Daily Reckoning: Five Reasons China Is Not a Bubble By Romeo Dator, Co-manager, China Region Fund. Here is an excerpt.

 We’re seeing a transition to a service-related economy. The service industry is the fastest-growing sector (roughly 20 percent faster than construction) and now accounts for one-third of China’s workforce.

Source: Daily Reckoning

In general, the size of the service sector is directly correlated to the amount of goods and services an economy consumes. This is why the government has spent such a large amount of the stimulus on areas that benefit the domestic market – that’s where it thinks the economy is headed.

In order for China to succeed in managing a maturing manufacturing base, while keeping inflation and social stability in check, she needs to take the next crucial step towards a more balanced economy. The misguided “savings glut alliance” say that the Chinese need to consume more – as if it were a switch one could just flick. But for reasons I have highlighted, it is just not as easy as that. It’s difficult, indeed irresponsible, for the state to convince individuals to consume when it has provided no support structure to replace the “bad luck hedge” safety net Chinese savers currently hold. Although I do find it interesting that the Chinese Government is openly encouraging savers to hold Gold to preserve their wealth!

One step at a time; first, China needs to reform… sorry, I mean, China needs to form its financial system (in particular its pension system) to give consumers a sense of certainty regarding their personal economic future. Also, China desperately needs to confront the healthcare challenges which await. You think The West has an ageing population problem? Magnify that by a number of times and you have a sense of the scale of this challenge, an entire generation born into a strictly enforced one-child policy in the World’s most populous nation sets the scene for the demographic monster lying in wait for China over the next 20 years.  Healthcare in China has been a niggling thorn in my side when trying to understand what the future holds for the region as a whole.

It first occurred to me, when gawping at an hour-long queue for Pizza Hut in Xian (yes, a queue for a Pizza Hut), I realized the extent to which just nutritional balance alone had changed for literally hundreds of millions of Chinese in the space of less than one generation. The trend is not limited to Western Food, I noticed, but, for newly urbanized workers, used to struggling for calorific intake, the local Macdonald’s-equivalent or fast-food look-alikes are a tempting substitute.

On a more sinister note, though, Diabetes and Heart Disease are not the only diseases exploding in China. A healthcare journalist pointed out this South China Morning Post article to me, while also reminding me that products of the prostitution trade like: syphilis, hepatitis and HIV are practically on exponential trajectories. All this is occurring at a time when repercussions from an industrial-led growth boom are all too apparent. Be it in Air, Soil, Water, Ecology of the Middle Kingdom, the environmental toll is so large it is almost impossible to quantify. How many people in Guangzhou will die from lung cancer or respiratory disorders as a result of poisonous Air pollution – in many cases multiples above the WHO guideline? Some say that the national figure approaches half a million premature deaths a year. I have no idea, but I’m inclined to be bid on that number and these are only a fraction of the health issues coming due.

But an emerging behemoth of a Chinese middle class, with higher standards and an emerging tendency toward lifestyle benchmarks in the developed World, will demand answers and, most urgently, the infrastructure when the time comes. And the time is now – which is why I find it interesting that China announced it will Cut Emissions Gases by 45% ove the next 10 years, there will be more to come from China over the next decade for one reason: there simply has to be. The new-found attentiveness toward environmental issues in The East is long overdue, if China does not take care, very soon its economic aspirations will be cut short by the unviable social and environmental consequences.

How do we invest profitably from all this? Well, I’m still trying to figure that one out. In many respects China is behind the curve, the seeds for a problematic future have already been sown. Perhaps I should set up a fitness gym in Shanghai!

On a separate note, I find it amusing that, after I talked about how China was using currency policy to control inflation on 25th November, Vietnam devalued its currency, the Dong (the name always makes me chuckle), to “control inflation”. Bizarre statement, given that a devaluation would actually increase import prices. I think this move to devalue the currency, while simultaneously hiking interest rates, was more about managing currency outflows and trying to prevent the economy from destabilizing. To quote from the Bloomberg Article on the subject:

“The State Bank of Vietnam wants to control inflation and the trade deficit, but by devaluing the dong, higher import prices will put pressure on inflation,” said Nguyen Van Hoang, chief investment officer at Saigon Asset Management in Ho Chi Minh City. “They might not get what they expected.”

It’s an interesting move in a World where everyone is calling for undervalued Asian currencies to appreciate, not depreciate, against the Dollar.

Macro Data to Watch:

• Expecting a quiet day after the US still is digesting its turkey!
• Japanese jobs data – already out – roughly in line but CPI shows deflation is still entrenched at -2.5% YoY
• Eurozone Consumer Confidence
• Swedish GDP 

Markets

Well the Dollar got spanked yesterday. But has managed a bit of a rebound off the lows. There continue to be volatile moves in the Yen, graph of the day shows how the Dollar-Yen crashed through the lows over the last 48 hours.

The banks got crushed yesterday as Dubai looked precariously close to defaulting on its debt after they delayed debt payments to investors – see the FT article. European Banks are now feeling each other out, trying to decipher who has the most exposure. But despite a bad day in the office for all stocks, the volatility index (VIX) barely budged an inch.

Japanese 5 year interest swap rates hit another low.

Global Stocks to Watch:

• All the banks – especially HSBC in Hong Kong (stock led the drop in London)
• Still watching this B-share market in Shanghai

Well, I found a place here in town that actually sells the type of memory stick the PSP requires. However it’s around 50$ and I only have around 37$ for another couple days.

My visual novel project is advancing very slowly. Far too slowly I doubt I’ll finish for the 30th like was planned in the “competition.” But then I was only halfway aiming for that. If I miss the deadline oh well it gives me all the time I need to relax and toy with the script.

I should really get back to reading Human All too Human.  More recently I’ve been hung up reading comics I’ve recently “acquired” starting with the entirety of Wolverine. A series I tried to follow a while back but I was a kid who rarely ever had money. Not to mention the area I lived in didn’t always get it, and sometimes when they did they only got two issues that sold out before I got there. -.-;

Pretty well the same thing that’s happening here and now. I was buying Yen+ regularly then the store stopped carrying it. They started stocking Shounen Jump and Shoujo Beat. So I was buying Shoujo Beat regularly and now they only stock Shounen Jump… well that and some anime magazine that I won’t bother buying because it likely only has info on “brand new” series I started watching last year. And whilst they do stock a few Marvel titles, not Wolverine or Deadpool.

Though I could probably just order Yen+ by mail. Which would solve my problem.  I probably wouldn’t get Shoujo Beat if only because their alternating light red and light blue ink irritates me.

Stocks Tumble, Bonds Rally on Dubai; Credit-Default Swaps Soar

via Stocks Tumble, Bonds Rally on Dubai; Credit-Default Swaps Soar – Bloomberg.com.

AFP – The dollar slumped to a 14-year low point against the yen on Thursday, prompting fears that a further surge could hurt a fragile recovery in Japan, the world’s second largest economy. Gold scored yet another record high, breaching 1,195 dollars an ounce as the US currency waned. During Asian trading, the dollar slid to 86.28 yen, the lowest level since July 1995.

In later European deals, the dollar stood at 86.64 yen compared with 87.38 yen late on Wednesday in New York. The euro fell to 1.5085 dollars from 1.5127 dollars late Wednesday.

Responding to the yen’s surge, Japan’s Prime Minister Yukio Hatoyama said his government must take measures to avoid a double-dip recession.

“We must take measures so that the economy will not fall into a double-dip” recession, said Hatoyama, without specifying what measures his government may take to boost the world’s second largest economy.

The premier stressed that “rapid and drastic movements in foreign exchange are not desirable” but added that the day’s fluctuations were due mainly to the fall of the dollar rather than a rise of the yen.

More

L'euro sur la barre de 1,51 dollar

via L’euro sur la barre de 1,51 dollar.

The US dollar has hit a 14-year low against the Japanese yen with low interest rates in the US making the greenback less attractive to investors.

The dollar slipped to 86.5 yen, its lowest level since July 1995.

The US has indicated it is unconcerned about the dollar’s slide, and will not intervene to strengthen it.

Many traders are swapping dollar holdings for gold as a safer investment in the current uncertain economic climate.

The price of gold is currently at a record high of $1,194.5 an ounce.

Close watch

“This yen strengthening is caused by dollar selling rather than yen buying, so this is not something Japan can handle itself,” said Yutaka Miura at Mizuho Securities.

“This trend will continue unless the Japanese government takes action, in co-operation with the US.”

In the short term at least, analysts said such intervention was unlikely.

Finance Minister Hirohisa Fujii said that he was keeping “close tabs” on the yen and would take “appropriate measures” if exchange rates “moved abnormally”.

But his comments did little to ease worries among investors.

“He is finance minister, so of course he should be monitoring foreign exchange closely,” said Tsuyoshi Segawa at Mizuho Securities.

The strengthening yen relative to the dollar caused Japanese shares to fall, with the main Nikkei 225 index dragged lower by major exporters, whose products become more expensive in the US as the yen strengthens.

The dollar has also fallen significantly against the pound and the euro this year.