World important news by Fannie

China trade momentum softens in face of global woes

Thu, 13 Oct 2011 00:01:23 -0400

Exports increased 17.1 percent last month from a year ago, slowing from a 24.5 percent gain in August, and imports increased 20.9 percent, compared with August’s 30.2 percent rise, the customs office said on Thursday.That created a trade surplus of $14.5 billion in September, compared with $17.8 billion in August and $31.5 billion in July. The rolling 12-month trade surplus reached $180.3 billion in September, dipping from $182.7 billion in August.”Export growth in September was much lower than market expectations, showing the sputtering external economy, and we expect the slowing export trend to continue in the coming months,” said Wang Hu, an analyst for Guotai Junan Securities in Shanghai.Economists surveyed by Reuters had expected Chinese exports to grow 20.7 percent in September and imports to rise 24.5 percent, bringing the monthly surplus to $16.3 billion.”Going forward, the effect of weakening external demand will slow export growth to mid- to lower teens. We export import growth to hold up better,” Jian Chang, an economist for Barclays in Hong Kong said in response to the latest data.”The trade surplus is narrowing on a trend basis. I think this shows that the Chinese economy is (in the midst) of rebalancing.”China could point to a reduced trade surplus as evidence that it is moving to deal with economic imbalances that have riled lawmakers in the United States.The U.S. Senate approved a controversial bill on Tuesday aimed at forcing Beijing to push the yuan higher against the dollar, which supporters argue would reduce a U.S. trade deficit with China of more than $250 billion.”The shrinking trade surplus and easing imported inflation may reduce some pressure for Beijing to quicken the pace of yuan appreciation,” said Du Zhengzheng, an analyst at China Development Bank Securities in Beijing.”With exports growing at a slower-than-expected pace, I think Beijing could slow down the pace of nudging up the yuan in the coming months for fear of hitting its exports too much, especially when the external demand is weakening.”But the main direction for Beijing’s yuan regime reform would not be changed, which is to widen the trading band and guide two-way movements.”In month-on-month terms, exports fell in September after calendar adjustment by 2.1 percent, versus a decline of 3.3 percent in August and a rise of 5.4 percent in July.That suggested the world’s No. 2 economy is feeling the pinch of Europe’s worsening debt crisis and slowing growth in the United States.China’s trade surplus with the European Union was $12.9 billion in September, down from $19.4 billion in August. China’s export growth to the 27-member EU bloc grew 9.8 percent in September in month-on-month terms, down sharply from the 22.3 percent growth recorded in both August and July.Although the fate of the U.S. currency bill is uncertain, it has drawn sharp rebukes from Beijing. The central bank argued that a stronger yuan would not on its own reduce the bilateral trade imbalance nor save American jobs.China’s overall balance of trade with the United States, however, remained unchanged in September from August; in both months China recorded a $10.1 billion surplus.But Beijing is unlikely to begin immediately loosening domestic policy settings in the face of the tepid trade outlook, said Shi Lei, an analyst for Pingan Securities in Beijing, noting that the trend was no shock to policy-makers.”As falling external demand is expected by Chinese policymakers, any broad-based loosening of the monetary policy is unlikely in the short term until we see a clear fall in inflation,” said Shi.”The window for possible policy easing is around November and December.”

UPDATE 1-Wall St firms went bearish...just before stocks rebound

Wed, 12 Oct 2011 04:24:40 -0400

* Biggest shift for Morgan Stanley Smith Barney since 2009By Jessica ToonkelOct 11 (Reuters) - Clients of some big Wall Street firms have probably missed out on a sharp recovery in stocks over the past few days.The firms, who were cautiously optimistic or bullish through the summer selloff, have turned bearish just as the market seems to be clawing back.Between Sept. 18 and Oct. 6, several Wall Street houses who mostly stood pat through months of market volatility and heavy declines finally decided enough is enough.Morgan Stanley Smith Barney, Wells Fargo Advisors and UBS have scaled back their portfolios’ exposure to equities in the past three-and-a-half weeks, shifting away from stocks and into fixed income and cash.Meanwhile, the S&P 500 Index had its biggest rally in nearly six weeks on Monday and has gained 8.8 percent in the past six trading days.Despite that, investment officers at the firms say they don’t don’t believe governments in Europe and the U.S. are doing enough to address the crushing debt undermining their financial systems.Investment managers said they believe the ongoing uncertainty and wild market swings are here to stay. What’s more, the volatility suggests to some investment strategists that another recession is increasingly likely.European leaders have been meeting for months to address the debt crisis plaguing the continent. What little progress there has been is not happening fast enough, said Jeff Applegate, chief investment officer at Morgan Stanley Smith Barney, the brokerage arm of Morgan Stanley .European Central Bank President Jean-Claude Trichet warned on Tuesday that the crisis had “reached a systemic dimension.”At the same time, in the U.S. the government has been unable to get much accomplished, Applegate said. For example, President Obama’s jobs-creation package was defeated in the U.S. Senate on Tuesday.”You have seen a lot of change since August,” Applegate said. “And the policy responses have not been been swift enough or large enough.”On Oct. 6, Morgan Stanley Smith Barney shifted the allocation of its portfolios from overweight on global equities, commodities and real estate investment trusts to underweight, while going overweight from underweight on cash and global bonds.BIG SHIFT”This is a big shift for us, the biggest we have made since April 2009,” Applegate said. At that time the firm shifted to overweight equities as the markets rebounded after the financial crisis.One major factor in Morgan Stanley Smith barney’s decision to cut back on risk was a Sept. 21 report by the Economic Cycle Research Institute predicting a recession. ECRI has successfully predicted the past four U.S. recessions.On Oct. 1, Wells Fargo Advisors, the brokerage arm of Wells Fargo & Co. went from neutral to underweight on its equity exposure in its cyclical asset allocation portfolios.Wells, which reevaluates its portfolios on a quarterly basis, first reduced its equity exposure slightly in April, but cut exposure even further this month due to fears about the European debt crisis, said Stuart Freeman, chief equity strategist at Wells Fargo Advisors.The firm in April shifted its moderate growth & income portfolio to 58 percent in equities from 63 percent. This month, the fund decreased its share of equities again, to 45 percent.Wells Fargo Advisors now predicts a 35 percent chance for a U.S. recession, up from a 20 percent chance four months ago, Freeman said. The chances of a recession in Europe, according to the firm: 40 percent, up from 25 percent a few months ago.Similarly, UBS shifted its portfolios from neutral to underweight equities on Sept. 18.”We felt that the fundamental issues affecting the markets had not been resolved,” said Mike Ryan, head of research for wealth management at UBS. Ryan doesn’t think the United States is necessarily headed for a recession.”We think you will see choppy, sluggish growth,” he said.Of course, not every firm is scaling back on equities. Equity strategists at Bank of America Merrill Lynch - whose logo is a bull — are maintaining their overweight position on equities, albeit a “moderate” overweight position, said Kate Moore, global equity strategist at Bank of America Merrill Lynch.She said that too many investors have held too small a position in equities since the market crash of 2008 and missed the rally. Furthermore, she said she believes Europe is closer to coming up with a solution for its problems.”We are seeing a willingness of policy makers in Europe to put things together,” she said.Bank of America Merrill Lynch’s economists forecast U.S. GDP growth of 2.5 percent for the third quarter, she said.”That’s a far cry from the two quarters of negative GDP growth that define a recession,” Moore said.

Liberia ends peaceful vote, braces for results

Wed, 12 Oct 2011 03:47:45 -0400

The vote pitted newly named Nobel peace laureate President Ellen Johnson-Sirleaf against former U.N. diplomat Winston Tubman and 14 others, and came as investors planned to sink billions of dollars into the country’s mining and oil sectors.”I vote today, I’m happy, I’m happy,” shouted Cecilia Weah, dancing outside a polling station in the capital Monrovia . “I want free movement. I want all that has ever been sweet Liberia!”Voters queued calmly, at times under pouring rain, to cast their ballots, and international election observers said they had received no reports of problems at the nation’s polling stations.Passions have run high in the contest that some forecast will go to a second-round run-off between Johnson-Sirleaf and Tubman. The results of the first-round vote are expected within 15 days according to Liberia’s electoral law.Many voters recall how a dispute over the outcome of the 2005 election led to days of rioting in Monrovia.”From what I see there is no worry,” said Speciosa Wandira Kazibwe, head of the African Union observer delegation. “If the leaders take the results there will be no chance for violence.”Eight years into peace, Liberia has seen growing investment in its iron and gold mines and has convinced donors to waive most of its debt, though many residents complain of a lack of basic services, high food prices, rampant crime and corruption.Unemployment remains high, war-wounded beg on the streets and average income stands at $300 a year — below the $1-a-day benchmark for extreme poverty.”Ellen done nothing, I seen nothing,” said Anthony, an 18-year-old resident of West Point, a Monrovia slum where raw sewage trickles between a crush of makeshift brick and tin dwellings, home to many of the civil war’s ex-child soldiers.Others in West Point credited her with paving their main road and building a school and said they had voted for her.Johnson-Sirleaf initially ruled out a second term, but has since said she needs one given the huge challenge. Her jocular campaign slogan — “Monkey Still Working, Baboon Wait Small” — urges Liberians to have a bit more patience.”DIFFICULT TO GOVERN”Campaigning for the election has been mostly calm, though scuffles erupted between rival supporters in Monrovia during final rallies at the weekend.The election will be Liberia’s first locally organized presidential poll since the end of the 1989-2003 conflict that killed nearly a quarter of a million people. Johnson-Sirleaf became Africa’s first freely elected female head of state in the 2005 election that was organized by the United Nations.Tubman, whose running mate is ex-soccer star George Weah, is expected to give Johnson-Sirleaf her toughest challenge.Analysts say Johnson-Sirleaf’s Nobel Peace Prize, awarded jointly with Liberian activist Leymah Gbowee and Yemeni rights activist Tawakul Karman last week, could give her the edge by galvanizing the female vote in her favor.A Harvard-educated former U.N. diplomat, Tubman told Reuters on Saturday he is certain he will win and issued a veiled warning that his supporters could make it “difficult to govern” for anyone else.Casting his vote on Monday, he said: “I will tell them (my supporters) to accept it if the election is free and fair … I expect it will be.”Johnson-Sirleaf, voting in her hometown of Fee Fee about two hours drive from the capital said she was also confident. “I am optimistic, I think the Liberian people will do the right thing.”The United Nations said the return of mercenaries from a four-month civil war in Ivory Coast this year could be a threat though there has been no evidence of plans to disrupt voting.Citing violent crime, instability in Ivory Coast and trafficking of drugs and arms across the region, the U.N. Security Council extended the mandate of the 9,200-strong peacekeeping mission UNMIL last month.”I hope everybody, as I have appealed and appealed, will proceed peacefully and accept the results according to the rules,” Special Representative to the U.N. Secretary General Ellen Margreth Loj told Reuters as she visited a peacekeeper headquarters in the center of Monrovia.A peaceful, free and fair election could bolster growing investor confidence in the country, which is rich in iron ore deposits and has promising agriculture and energy sectors.Miners ArcelorMittal and BHP Billiton and oil companies Anadarko, Tullow and Chevron are already active in the country.The head of Liberia’s National Oil Company, Christopher Neyor, predicted an offshore oil find is likely “pretty soon” and said majors Exxon Mobil, France’s Total, and Brazil’s Petrobras had made inquiries about acreage.