Lagarde says IMF looking for "real fix" on Greek debt | Former IMF chief John Lipsky is upbeat on U.S. economy | U.S. retail sales ease 0.3% in October, including storm effect
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November 15, 2012
CFA Institute: Financial NewsBrief - Aisa Pacific Edition
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September eurozone factory output falls sharper-than-expected 2.5%
Reuters
Amid spotty protest strikes across Europe over austerity measures, the EU statistics office reported a 2.5% decline in eurozone factory output in September from August, wider than the 1.9% forecast by economists. Meanwhile, surveys of businesses point to the worst downturn in the eurozone since 2009. Reuters (11/14), Financial Times (tiered subscription model) (11/14), The Economic Times (India)/Reuters (11/14)
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Lagarde says IMF looking for "real fix" on Greek debt
A "real fix," not a "quick fix," is what the International Monetary Fund wants for the Greek economy, IMF chief Christine Lagarde said at a conference in Malaysia. Lagarde has disagreed with others in the eurozone calling for a two-year extension for Greece to meet creditor targets. But on Wednesday she said that "all partners share the same objectives and have the same concern to make sure that Greece is back on track and returns to economic stability and reaccess market as soon as possible." Xinhuanet.com (China) (11/14)
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Former IMF chief John Lipsky is upbeat on U.S. economy
Source: Fox Business
"It seems most likely" that Washington will find a way to avoid the "fiscal cliff," said John Lipsky, former acting managing director of the International Monetary Fund. Given the alternative and the likelihood of ensuing recession, Lipsky said, politicians will be motivated to respond. As for the U.S. economy, a number of signs are pointing up, and the "immediate outlook ... is a bright one indeed," Lipsky said. Fox Business (11/13)
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U.S. retail sales ease 0.3% in October, including storm effect
Reuters
Slowed by the aftereffects of Hurricane Sandy and a general wariness on the part of consumers, U.S. retail sales edged down 0.3% in October, the Commerce Department reported. Auto sales were down a sharp 1.5%. "There was relatively broad-based weakness in this report," said Robert Kavcic, an economist at BMO Capital Markets. The Denver Post/The Associated Press (11/14)
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China congress names Central Committee without central banker
China's 18th Party Congress appointed members of its Central Committee and Central Commission for Discipline Inspection on Wednesday before formally closing. Notably missing from the Central Committee was People's Bank of China Governor Zhou Xiaochuan, in a sign Zhou is nearing retirement. The absence raises the question of who will succeed him as the central bank assumes an ever greater role on the world stage. The Wall Street Journal (tiered subscription model) (11/14), The Wall Street Journal (tiered subscription model) (11/14)
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Japan to hold general election in December
In a move that could signal a shift to more nationalism and stronger action to combat the country's deflation, Japan's government has agreed to a December general election. Financial Times (tiered subscription model) (11/14)
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U.K. labor situation deteriorates; shrinking economy is seen
In an early indication of how U.K. employers are expected to respond to a bleak economic outlook, claims for jobless benefits rose in October at their fastest rate in more than a year as the rate of job creation eased. Meanwhile, the governor of the Bank of England said the U.K. economy may be contracting this quarter. Bloomberg Businessweek (11/14)
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Raghuram Rajan points to hopes, possible perils in global economy
Source: OpenMarkets
Unevenly growing emerging economies are a question mark when it comes to expectations that they can now step forward to lead a global recovery, observes Raghuram Rajan, former economic adviser to India's prime minister. In further remarks at the Global Financial Leadership Conference, Rajan said France might soon pose a new danger in the struggling eurozone, and he noted China's progression toward a more domestically driven economy as its labor costs rise. OpenMarkets.com (11/13)
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Goldman chief advises caution for financial industry in job cuts
The uncertain economic situation is no reason for the financial industry to be overzealous in cutting jobs, advises Goldman Sachs chief Lloyd Blankfein. Financial Times (tiered subscription model) (11/13)
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Market Activities
INTERNATIONAL MARKETS OVERVIEW
European and U.S. shares declined Wednesday over the usual worries associated with the U.S. "fiscal cliff" and the eurozone crisis, but the U.S. market took a sharper downturn as fighting broke out between Israeli and Hamas forces in Gaza. The Stoxx Europe 600 lost 0.91% to 268.14, and the S&P 500 fell 1.39% to 1,355.49. Here is a continuously updated list of global stock indexes. The Wall Street Journal (tiered subscription model) (11/15), The Wall Street Journal (tiered subscription model) (11/14), CNNMoney (11/14)
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Financials lift Asian shares
Financial shares led most Asian markets higher Wednesday. The Hang Seng ended the day with a strong 1.20% gain to 21,441.99, the Kospi added 0.23% to 1,894.04, the ASX rose 0.20% to 4,388.40, and the Nikkei was basically unchanged at 8,664.73. Bloomberg Businessweek (11/14)
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Economic Trends & Outlook
China investment spending delays a needed turn to less export reliance
China's recently stabilized economic growth has come largely through a reacceleration of infrastructure spending, a political move that only delays the necessary transition to a more balanced economy driven by domestic demand, writes Tom Orlik. The International Monetary Fund agrees, with its senior resident representative in China, Il Houng Lee, arguing that the danger of a hard landing grows with prolonged reliance on investment spending. China Daily (Beijing) (11/14), The Wall Street Journal (tiered subscription model) (11/14)
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India's wholesale inflation rate eases
Reuters
Annualized growth in India's wholesale price index pulled back to 7.45% last month from 7.81% in September, but the move is considered unlikely to persuade the central bank to ease policy. Indian industry used the latest figure to press its case for a rate cut while also noting sluggish growth indicators. The Hindu (India) (11/14)
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Equity write-downs weigh on Japanese banks
Write-downs totaling more than US$7.5 billion on equity holdings were recorded by Japan's three leading banks in the fiscal first half ended Sept. 30 as the country's electronics manufacturers were hit especially hard. As a result, two of the banks -- Mitsubishi UFJ Financial Group and Mizuho Financial Group -- posted lower net profits. The Wall Street Journal (tiered subscription model) (11/14)
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South Korean banks scale back foreign exchange borrowing
Reuters
Upgraded sovereign credit ratings and plenty of foreign exchange liquidity in local markets have allowed South Korean banks to sharply reduce their mid- to long-term forex borrowings despite the global slowdown, according to the Financial Supervisory Service. Separately, Statistics Korea said the nation's jobless rate eased to 2.8% in October but job creation was down. MK.co.kr (South Korea) (11/14), The Korea Herald (Seoul)/Yonhap News Agency (11/14)
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Singapore business outlook dims
With conditions worsening in the third quarter, Singapore business sentiment followed suit, according to the latest Business Times-UniSIM Business Climate Survey. Meanwhile, economists predict new figures will show that Singapore's economy contracted at a 2.9% pace in the quarter, nearly double the previously reported 1.5%. The Business Times (Singapore) (11/14), The Business Times (Singapore) (11/14)
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Australian consumers turn positive on economy
For the first time in eight months, a measure of Australian consumer sentiment shows more optimism than pessimism. Analysts credit recent rate cuts by the central bank. "Finally, we are seeing some traction on confidence from the rate cuts over the last year. Households are becoming more comfortable with the global outlook," said Westpac chief economist Bill Evans. The Sydney Morning Herald (Australia) (11/14)
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Capital Markets & Financial Products
China's QFII quotas reach a record US$2.75 billion in October
A record total of US$2.75 billion in Qualified Foreign Institutional Investor quotas were granted by China last month, topping the previous high of US$2.1 billion in March. The big opening by the State Administration of Foreign Exchange indicates China is accelerating its plan to pull more foreign money into its capital markets. AsianInvestor.net (11/14)
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