Dec 26, 2011
MarketWatch | Caixin online: China to ease bank reserves soon, analysts say -UBS economist tips cut before late-January holiday
By Li Yuqian
BEIJING ( Caixin Online ) — Speculation is mounting that Beijing will further cut bank reserve requirement ratios, as inflationary pressure is easing while overall growth in the economy is slowing.
Earlier this month, the People’s Bank of China cut commercial bank reserve requirements by half a percentage point, the first such decrease in three years. Many analysts expect more cuts to come next year, but the nation’s massive money supply will become an issue.
This year, new loans are set to approach 7.5 trillion yuan ($1.19 trillion), twice the amount in 2007 and 50% more than in 2008. The amount of social financing, a broader gauge of money supplies than M2, was even larger, given that a growing percentage of the money supply now comes from sources other than bank loans.
According to the central bank, in the first three quarters, yuan-denominated bank loans accounted for only 58% of all social financing, which stood at 9.8 trillion yuan. Other forms of financing include trust products, corporate bonds and non-financial institutions’ stocks.
Analysts say the government needs to be wary of the risks from rapidly escalating bank loans. The central bank now has less leeway in relaxing credit controls as current loan-growth rates and money supplies remain relatively high to nominal GDP growth.
UBS chief China economist Wang Tao said cutting the reserve requirement ratio by another two percentage points would lead to double-digit growth for bank loans, even without any increase in foreign reserves next year. She expects the central bank to lower bank reserve requirements one more time before the Spring Festival [Chinese New Year] late next month.
Research director of Bank of China’s securities investment unit Cheng Manjiang suggested that monetary policy adjustment needs to be accompanied by industrial policy reforms, otherwise government-backed investments will continue to squeeze small- and medium-sized companies out of the financing market.
Foreign institutional investors also expect China to free up more bank reserve money.
Nomura Securities, for example, suggested that the central bank will cut reserve ratios and the benchmark interest rate, respectively, by two percentage points again in the first half of next year and a quarter percentage point within the first three months.
Source : MarketWatch.com
The Australian resources company at the centre of fatal
anti-mining protests in Indonesia says it has informed the ASX of the
deaths of two protesters.
The NRMA wants the consumer watchdog to investigate why it has
been difficult to predict the petrol pricing cycle in the past few
Retailers across the country are breathing a sigh of relief after the first day of Boxing Day sales.
Sony is facing a class action lawsuit in the US over its terms and
conditions which allegedly force users to give up legal rights.
By MICHAEL S. SCHMIDT and JACK HEALY
Sadrists called on Monday to dissolve the Iraqi Parliament and to hold early elections, a potentially fatal blow to a power-sharing government that has teetered on collapse.
By KAREEM FAHIM
At least 20 people were killed in fighting in the rebellious Syrian city of Homs on Monday, as human rights activists urged Arab League observers to visit the city.
By ERIC SCHMITT
The delays - by two different officers - raise questions about whether a faster response by NATO could have spared the lives of some Pakistani soldiers
By PATRICIA GOSSMAN
In firing an outspoken critic, Karzai seems intent on hiding the truth about Afghanistan's brutal past.
By CHOE SANG-HUN
Kim Jong-un met on Monday with a private delegation of South Koreans, his first encounter with visitors from the outside world since assuming the top spot.
By EDWARD WONG
China and Japan have agreed to start direct trading of their currencies, a move among several that emerged from Japan's prime minister's visit to China on Monday.
By ETHAN BRONNER
The Israeli parliament on Monday held its first public debate on whether to commemorate the Turkish genocide of Armenians a century ago, a politically fraught topic.
Latest Business News
1:06 PM ET
By NELSON D. SCHWARTZ
European regulators have ordered banks to raise capital and shrink their balance sheets, leading to the sale of assets to American businesses and financial firms.
By HIROKO TABUCHI
In a bid to streamline its money-losing television business, the Japanese technology giant is turning over production capacity to its South Korean partner, Samsung.
By THE ASSOCIATED PRESS
Chinese and Japanese leaders have unveiled initiatives to tighten financial links between East Asia's economic giants - measures that could expand use of China's tightly controlled currency abroad.
By NICOLE PERLROTH
In a sinister Christmas message, the Anonymous hacking collective penetrated the site of Stratfor and began sending donations from people in its database to diverse charities.
By JOHN BIGGS
A lawsuit filed this summer could answer the growing question of whether a company can claim ownership of an employee's social media account.
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Stocks and Markets in the News | Europe Markets: Europe stocks log gains ahead of holidays - MarketWatch
DECEMBER 26, 2011
12/23/2011 12:32 PM ET
European stocks advance to cap off a bullish week, led by Roche and BP, although trading volumes are light ahead of the long holiday weekend and bond yields tick higher in Italy.Spain's finance minister predicts downturn
12/26/2011 8:04 AM ET
MADRID (MarketWatch) -- Spain's newly appointed Economics Minister, Luis de Guindos, said Monday that the country will see negative economic growth in the final quarter of 2011 and the first quarter of the new year, technically putting it back into recession. De Guindos made the comments at an inauguration ceremony of new officials at the ministry, according to media reports. He said the next two quarters will be complicated for the country, in terms of growth and employment. Spain has the highest unemployment rate in the euro region.U.S. businesses eye distressed European firms: NYT
12/26/2011 4:11 AM ET
MADRID (MarketWatch) -- U.S. businesses and financial firms are taking advantage of the European sovereign debt crisis to make loans and pick up assets owned by cash-strapped regional banks, according to a report in the New York Times on Monday. An estimate from Morgan Stanley expects European financial institutions, largely under pressure from regulators, to shed up to $3 trillion in assets over the next 18 months. An example of this, the article states, is a private company in Greece that in December saw visits from a team of three bankers from the London office of buyout group Kohlberg Kravis Roberts. KKR bankers have also been looking for deals in Spain and Portugal. Experts expect deals to jump ahead of the January deadline from the European Banking Authority for banks to raise more than €114 billion in new capital, the article said.Euro inches higher in quiet holiday trade
12/26/2011 12:09 AM ET
The euro edges upward in mostly quiet action, with the dollar slightly weaker against most of its major rivals.Gorbachev calls on Putin to resign
12/24/2011 12:35 PM ET
Former Soviet leader Mikhail Gorbachev has called on Russian Prime Minister Vladimir Putin to step down amid a series of protests across the country. Gorbachev, who left office 20 years ago, told Ekho Moskvy radio Saturday that if Putin quits now, he would still be remembered for the positive things he has accomplished in during his 12 years as president and later as premier, the Associated Press reported.Massive anti-Putin protest in Moscow
12/24/2011 11:36 AM ET
Tens of thousands reportedly demonstrate against Russian Prime Minister Vladimir Putin in a protest larger than a similar one two weeks ago.Risks of French breast implants debated
12/24/2011 10:53 AM ET
Tens of thousands of women with breast implants made by a French company shut down last year are getting conflicting signals, according to media reports.MarketWatch top 10 stories Dec. 19 - 23
12/23/2011 4:40 PM ET
The following are the top ten stories of the week, selected by MarketWatch editors in New York.Friday's biggest gaining and declining stocks
12/23/2011 4:36 PM ET
MarketWatch's daily rundown of shares that made sizable moves in the U.S. stock market.Dollar gains as Italy's yields top 7%
12/23/2011 3:05 PM ET
The dollar edges up, although moves are muted and volumes reportedly thin.Gold closes lower on stronger U.S. dollar
12/23/2011 1:24 PM ET
Gold futures extend recent declines and as the U.S. dollar strengthens a little after mixed U.S. data.Gold futures close at $1,606 an ounce
12/23/2011 12:58 PM ET
NEW YORK (MarketWatch) -- Gold futures fell slightly on Friday in holiday-thinned volume, mostly tracking moves in the U.S. dollar. Gold for February delivery fell $4.60 to $1,606 an ounce, after topping $1,615 an ounce in early action. The market closed early for Christmas.Efforts to reach new EU pact expose rifts
12/23/2011 12:41 PM ET
As Europe's self-imposed deadline for producing a new treaty meant to quell a stubborn debt crisis draws near, concerns are growing that agreement on new pact is out of reach and that even if passed the deal is so flawed that it may even make things worse.Moody's backs Austria's triple-A credit rating
12/23/2011 10:56 AM ET
LONDON (MarketWatch) -- Moody's Investors Service on Friday backed Austria's triple-A credit rating, saying it considered the government's financial strength to be very high. Moody's also cited the country's low unemployment rate and diversified economy. The outlook for Austria's triple-A rating is stable, the rating's firm said. But this is "dependent on a resolution of the wider euro-zone crisis," Moody's said.Italy's 10-year yield tops 7%; euro slips
12/23/2011 10:38 AM ET
NEW YORK (MarketWatch) -- Yields on Italy's 10-year bonds topped 7% on Friday, continuing a steady rise after the European Central Bank's long-term liquidity operation earlier this week. "Yields moving up shows Italian banks that took that capital are not reinvesting it in sovereign debt, and that's a concern," said Christopher Vecchio, a currency analyst at DailyFX. Above 7%, "rates are unsustainable. Countries won't be able to fund themselves in the future. The euro still can't find traction if Italian bonds aren't improving." Italy's 10-year yield tested 7%, Vecchio said, and lately traded down a little under that threshold. The euro slipped to $1.3041, from $1.3053 late Thursday. The dollar index , which tracks the U.S. unit against six other currencies, traded at 79.982, up from 79.929 in late North American trade Thursday.Europe's Week Ahead: France, Spain in Focus
12/23/2011 10:04 AM ET
Next week in Europe, markets will be watching France for any news related to a potential downgrade for the nation, and Spain's new prime minister is expected to give more details about the government's plans to reduce the country's budget deficit. MarketWatch's Clare Hutchison reports.Pre-holiday U.K. stocks rise, led by BP, utilities
12/23/2011 9:25 AM ET
British stocks finish higher, led by strong gains for the utilities sector, in a shortened session of trading in London.Gold edges up after U.S. orders, spending data
12/23/2011 8:43 AM ET
NEW YORK (MarketWatch) -- Gold futures recovered a small gain on Friday after a report said U.S. durable-goods orders rose 3.8% in November, more than many economists expected. Personal spending rose 0.1% last month, a little less than forecast. Gold futures for February delivery added 60 cents to $1,611.20 an ounce, and from $1,619.90 an ounce before the data. Analysts also noted that volatility may be higher because of very thin trading volume, potentially exaggerating moves that may otherwise be of minimal significance.Treasurys pare loss, dollar down after U.S. data
12/23/2011 8:38 AM ET
NEW YORK (MarketWatch) -- Treasury prices pared a small decline and the dollar remained under pressure on Friday after a report said U.S. durable-goods orders rose 3.8% in November, more than many economists expected. Personal spending rose 0.1% last month, a little less than forecast. The dollar index , which tracks the U.S. unit against six other currencies, traded at 79.868, from 79.855 before the data and down from 79.929 in late North American trade Thursday. The euro traded at $1.3063, compared to from $1.3053 late Thursday. Yields on 10-year notes , which move inversely to prices, rose 1 basis point to 1.97%, after being up 2 basis points earlier. CRT Capital Markets noted that overnight bond trading volumes are at their weakest since last year just after Christmas and about 10% of the recent average volume, which has been falling. Bond markets are expected to close at 2 p.m. Eastern time.Santa Mario comes to town
12/23/2011 7:56 AM ET
Mario Draghi, the European Central Bank president, says there's no way he can play Santa Claus to save the euro this Christmas. In reality he's giving away presents by the sackload, writes David Marsh.
|Retailers post brisk trade despite Tube strike|
|LONDON (Reuters) - Retailers in London's prestigious West End shopping district reported brisk trading on Boxing Day - one of the key dates in the year for the sector - and added that a London tube strike had not made much of a dent to their business. | Full Article|
MIAMI, Fla. (MarketWatch) — I have two friends, one a doctor and the other ex-military, who believe that the U.S. stock market is going to crash. People will riot in the streets, we’ll run out of food and crime will spiral out of control.
U.S. stocks have an edge in 2012 , says Liz Ann Sonders, Charles Schwab's chief strategist.
ronically, everything they fear did happen this year in some form — just in other countries.
Although I don’t agree with most of my friends’ predictions, it makes sense to be prepared in case they are right. After all, 2012 could be a rough year, what with a no-holds-barred U.S. presidential election and the Mayan calendar’s December 21 end date.
Like all prophecies, these latest ones and others will play havoc with people’s emotions and portfolios. Even if the predictions are wrong, your finances could still be at risk. Read more: 8 reasons why investors are selling into 2012.
To help you prepare for worst-case scenarios, here are nine steps to consider:
1. Get ready mentally and physically for a dangerous year
Don’t lose your head when others are losing theirs. Read books such as “The SAS Survival Manual” by John Wiseman. In 2012, get in physical shape and focus on helping family and friends. Do not panic or become too emotional. Listen to advice, but do your own research before following anyone. Also, be flexible in case events unfold differently than you think.
2.Stock up on canned goods, water, batteries, and a backup generator
Even if dire predictions don’t come true, many people think they will. This could create a run on essential items, similar to what happens before a hurricane.
3. Prepare for a stock market crash
If too many investors believe the market will crash, it could. Use put options to protect major stock positions, and have cash on hand to re-enter the market after the crowd sells in a panic. If the market crashes based on emotion, not fundamentals, it could be a fantastic buying opportunity, but the timing won’t be easy. It’s never easy to buy when everyone else is selling.
4. Buy gold and silver
If people get nervous about the U.S. dollar and the economy, especially if the U.S. election is tight, they’ll buy gold and silver. Just be careful. It’s possible that gold could end its 11-year bull market with a sudden spurt of irrational exuberance. If gold soars too high and too fast, prepare to sell.
5. Keep money outside of the U.S.
Consider opening a second bank account in a stable country such as
Canada. You never know when you might need to transfer cash assets to a foreign bank. Anything less than $10,000 can be done with ease, although you have to open the account in person.
6. Stash cash
Always have spare cash available if the ATMs stop working. If you’re really expecting the worst, you can purchase gold coins.
If It really gets crazy
If you truly believe that 2012 will be a catastrophe, consider these steps:
7. Own a ‘safe house’
If you have the money, you could build a “safe house” in the U.S. or in another country that will be stocked with all the essentials. Also consider a farm stocked with seeds, fertilizer, canned food, medicine, and clothes.
8. Wilderness survival
If you can’t afford a farm or safe house, prepare to go camping: stockpile freeze-dried food, a portable stove, tents, a hand-crank radio, and rechargeable batteries, to name a few items you’ll need. My ex-military friend suggests that people buy, and learn how to use, a firearm.
9. Leave the country
If the most extreme doom and gloom predictions come true (which seems unlikely), there could be an economic depression or even a breakdown of civilization, including a collapse of the U.S. banking system and perhaps a dollar meltdown. In that case, gold would soar and we’d probably revert to a barter system. You then might want to move to neutral countries such as the Dominican Republic, Brazil or Costa Rica until world order is restored.
By the way, have a happy new year!
Michael Sincere (www.michaelsincere.com) is the author of Understanding Stocks, Understanding Options, and a new novel, The Last Au Pair.
Michael Sincere (www.michaelsincere.com) is the author of "Understanding Options," "Understanding Stocks," and "Start Day Trading Now."
Video: The year ahead in politics
Our correspondents discuss the international events set to hit the headlines in 2012