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Courtesy of ZeroHedge. View original post here.

Submitted by thetrader.

Simply the world’s best hedge fund manager, Mr Dalio. From the Economist.

“THE most beautiful deleveraging yet seen” is how Ray Dalio describes what is now going on in America’s economy. As America has gone through the necessary process of reducing its debt-to-income ratio since the financial crash of 2008, he reckons its policymakers have done well in mixing painful stuff like debt restructuring with injections of cash to keep demand growing. Europe’s deleveraging, by contrast, is “ugly”. Dalio-Man and Machine

The largest debt restructuring in history was heading for a successful outcome last night as Greece looked set to see a participation rate of close to 95 per cent for its €206bn bond exchange, the FT reports

The London Stock Exchange is close to agreeing a takeover of LCH Clearnet, with an announcement possibly as early as Friday morning, the WSJ says. Talks between the two have been difficult and could still founder at a late stage.

George Osborne is looking to raise taxes on the pension contributions of the highest earners in this month’s Budget, in a move which will release funds to help low earners escape the tax system but antagonise some Tory MPs,

Deutsche Bank, whose chief executive decried the stigma of tapping ECB three-year liquidity last month, has borrowed at least €5bn and as much as €10bn from the latest LTRO, the FT reports. Investors briefed by the bank’s finance director and investor relations executives say it was persuaded by the economics of the financing to abandon its concerns.


Chinese inflation increased at its slowest pace since June 2010 in February, reports Bloomberg. Consumer prices rose 3.2 per cent, both below Bloomberg’s 3.4 per cent forecast and compared to January’s 4.5 per cent rise. Inflation peaked at an annualised rate of 6.5 per cent in July last year and has been steadily moderating since then,

Emirates Airline, the world’s largest operator of Airbus’s A380 superjumbo, has lambasted the aircraft maker and plans to seek compensation after complaining of widespread disruption to the carrier following the discovery of wing cracks on the jet,

China, the biggest consumer of cotton, has lodged a formal protest against India’s ban on cotton exports amid signs that India is rethinking the ban that was implemented a few days ago, the FT reports.

Japan’s Y437bn current account deficit in January, the biggest monthly shortfall since comparable records began in 1985, defied even the more pessimistic assessments of the world’s third-largest economy,

Mario Draghi took on his critics at the Bundesbank on Thursday, warning Germany’s central bank against public expressions of concern over his actions to combat the eurozone debt crisis, which the European Central Bank president insisted had been “an unquestionable success”,

A flood of corporate bond sales showed no sign of abating on Thursday as companies rushed to sell dollar-denominated debt in what is shaping as the busiest week for investment-grade issuance in three years. Hewlett-Packard, Mississippi Power and Century Link an internet, television and voice services provider were among investment-grade companies that sold debt this week, pushing total issuance to $39.1bn as of Thursday.
Asian stock markets were higher Friday, with Tokyo’s Nikkei Stock Average breaking above the key 10000 mark for the first time since Aug. 1 as investors took heart from a weakening yen and positive signs from Europe. Also helping shares around the region was slowing inflation in China, which raised hopes of further monetary easing in Asia’s biggest economy. In addition to the Nikkei, up more than 2%, South Korea’s Kospi Composite rose 0.9% and India’s Sensex was 1.8% higher. Hong Kong’s Hang Seng Index rose 1.1%, while China’s Shanghai Composite was up 0.4%. Australia’s S&P/ASX 200 finished the day up 1%. Dow Jones Industrial Average futures were flat in screen trade.

European Central Bank President Mario Draghi signaled that, despite signs that the euro-zone economy may contract this year, further interest-rate cuts and other stimulus measures are unlikely as the bank confronts stubbornly high inflation. The ECB’s harder anti-inflation stance came as Mr. Draghi sought to defuse signs of a rift with Germany’s conservative central bank over the ECB’s crisis measures. “I really cherish the culture and tradition of the Bundesbank of maintaining price stability,” Mr. Draghi said at a news conference after the central bank’s monthly meeting. Euro-zone inflation will stay above 2% this year “with upside risks prevailing,” Mr. Draghi said. Officials voted to hold their main policy rate unchanged at 1% for a third straight month, as widely expected, after lowering rates in November and December.

The American and Jordanian militaries are jointly developing plans to secure what is believed to be Syria’s vast stockpile of chemical and biological weapons, said U.S. and Arab officials briefed on the discussions. The groundwork comes amid mounting concerns about Damascus’s arsenal of nerve agents and mustard gas at a time of growing instability in the country. One plan would call for Jordanian Special Operations units, acting as part of any broader Arab League peacekeeping mission, to go into Syria to secure nearly a dozen sites thought to contain weapons, these officials said.

It hasn’t taken long for the euro zone’s new tough budget rules to face their first big test. Spain’s stand-off with Brussels over the size of its 2012 budget deficit has presented officials in the city with a dilemma: How do they preserve the credibility of the tighter fiscal rules without triggering a Greece-style downward economic spiral by forcing Spain to slash its deficit too vigorously? Spanish Prime Minister Mariano Rajoy formally opened the issue last week when he announced that Spain’s new budget-deficit target would not be the 4.4% that his predecessor agreed last year with the European Commission in Brusselsbut 5.8%.

Abundant liquidity, much of it from the European Central Bank, has worked wonders to tame Italian government-bond yields. Now Italy wants its own people to show some conviction. Maria Cannata, the head of the Italian Treasury’s Rome-based debt-management agency, is launching a special government bond for individual investors.  The four-year, inflation-linked Buono del Tesoro Poliennali, purchasable online with no commission charges, goes on sale March 19.

Pakistan has charged Osama bin Laden’s three widows with illegally entering and living in the country, the interior minister said Thursday. The three women have been in Pakistani detention since May last year, when U.S. commandos raided the house where they, bin Laden and several of their children were staying. The commandos shot and killed bin Laden, and then buried his body at sea. Interior Minister Rehman Malik said the three had been charged in court, but he didn’t say when. It was unclear if they had a lawyer. He said their children were free to leave Pakistan, but could stay with their mothers for the duration of the trial.

Former Hong Kong Financial Secretary Henry Tang, a contender in the race to be the city’s next chief executive, didn’t rule out adjusting the Hong Kong dollar’s trading band against the U.S. dollar if he is elected, but affirmed the need to maintain the U.S. currency peg.  “The peg with the U.S. dollar has actually served Hong Kong well for nearly 30 years. We have had the stability…that [has] facilitated many of our exporters so that they don’t have to account for exchange risks,” Mr. Tang said in an interview with The Wall Street Journal.
The U.S. labor market appears to be picking up speed, but the pace of job growth is neither turtle nor hare. In the past three months, the economy has gained an average of 201,000 jobs, marking the second-best stretch of employment growth since the recession ended in mid-2009. Similar growth is expected when the government issues its February jobs report on Friday. Economists surveyed by MarketWatch project the U.S. added 213,000 last month. The economy gained a preliminary 243,000 jobs in January and 203,000 in December, though both of those numbers will be revised.

Gold futures broke through the $1,700-an-ounce level in electronic trading on Friday, as optimism about a Greek debt deal helped spur buying across commodity and equity markets. Gold for April delivery gained $7.80, or 0.5%, to $1,706.50 an ounce on the Comex division of the New York Mercantile Exchange during Asian trading hours.
Brent crude rose above $125 a barrel on Friday, posting its sixth weekly gain in seven, as Greece successfully closed its bond swap offer for creditors, a key step towards securing an international bailout to avoid a messy default. Brent crude, which is set to rise more than 1.5 percent this week, inched up seven cents to $125.51 a barrel by 0339 GMT. U.S. crude was up 26 cents at $106.83.
New South Wales
faces at least two more weeks of flooding with 75 percent of Australia’s most populous state still “under water” and areas of the capital of Sydney now under threat, according to emergency services. “There are 15 evacuation orders in place for the whole state,” NSW State Emergency Services spokeswoman Jacqueline Sergeant said in a phone interview today. “The water is very slow moving. The town of Hay in the state’s south is due for major flooding about March 24.”

Britain’s Engineering Employers Federation cut its 2012 economic growth forecast as the crisis in Europe weighs on demand, though prospects for manufacturers point to a pickup later this year. Gross domestic product will expand 0.2 percent this year, down from a December projection of 1 percent, the group said today in an e-mailed statement. A gauge forecasting manufacturing output in the coming quarter rose to 28 percent from zero, the highest since the first three months of 2011.

China should maintain its property curbs as any relaxation may result in a “chaotic” housing market, said billionaire developer Vincent Lo, also a member of the government’s advisory board. Home prices may post a “single-digit” decline this year, said Lo, chairman of Shui On Land Ltd. (272), a Shanghai-based developer. Property values in the nation’s city centers will hold up, he said, adding that he doesn’t expect a property crash this year.

Oil & Natural Gas Corp. (ONGC) is set to lead India’s top state resources companies in paying a record dividend as Prime Minister Manmohan Singh seeks to use part of their $27 billion cash hoard to fund his government’s deficit. Eight energy, mining and metals companies will likely pay at least 157.1 billion rupees ($3.1 billion) to the government for the year ending March 31, based on interim payouts and Bloomberg forecasts for special and final dividends. That’s 6.7 percent higher than the amount that ONGC, Coal India Ltd. (COAL), Oil India Ltd. (OINL), NMDC Ltd. (NMDC), GAIL India Ltd. (GAIL), NTPC Ltd., Steel Authority of India Ltd. andBharat Heavy Electricals Ltd. (BHEL) paid in the previous fiscal year.

China’s inflation eased more than forecast to the slowest pace in 20 months, giving policy makers more room to stimulate the world’s second-biggest economy as investment and export growth weaken. Consumer prices rose 3.2 percent in February from a year earlier, the National Bureau of Statistics said today. That was less than a median estimate of 3.4 percent in a Bloomberg News survey of 35 economists and January’s 4.5 percent rate. Data in the first two months of the year are distorted by a weeklong Chinese holiday.

The Bank of Japan (8301) will expand monetary stimulus at next week’s policy meeting to show a commitment to ending deflation, according to the only analyst in a Bloomberg News survey who predicted last month’s easing. “There will be a big disappointment if they don’t do anything this time,” Hiromichi Shirakawa, chiefJapaneconomist at Credit Suisse Group AG in Tokyo and a former BOJ official, said in a phone interview yesterday. “The BOJ knows the market is gauging its seriousness at the next meeting and it wants to show it is really stepping up to end deflation.”
U.S. Treasury Secretary Timothy Geithner said on Thursday that he saw no risk to the U.S. dollar from China’s efforts to encourage other emerging market economies to use the yuan more in international trade. “What you’re seeing China do is gradually dismantle what were a comprehensive set of very, very tight controls on the ability of countries to use their (the Chinese) currency,” Geithner told an event at the Dallas Regional Chamber.

It’s a fallacy that private creditors to Greece taking a massive “haircut” on their investment as part of a debt-restructuring deal are losing out while the official sector’s holdings are protected, Nouriel Roubini, chairman of Roubini Global Economics, wrote in the Financial Times. The world-renowned economist argued Thursday that the Private Sector Involvement (PSI) deal agreed to as part of Greece’s 130 billion euro ($172 billion) bailout which sees private bond holders take losses of 53.3 percent, is actually a very good deal.
For more than three years, ordinary investors disgusted with wild swings have pulled money out of stocks. They’ve missed a breathtaking bull market: The Dow Jones industrial average has almost doubled from its low point during the Great Recession on March 9, 2009. In the meantime, corporate America has racked up double-digit profit gains. If investors valued stocks at normal historical levels based on profits, we would be celebrating Dow 15,000, not Dow 13,000.
Australia posted a seasonally-adjusted trade deficit of 673 million Australian dollars ($717.2 million) in January, the Australian Bureau of Statistics said Friday. Economists had been expecting a surplus of A$1.5 billion, according to data compiled by Dow Jones Newswires. In December, the country recorded a trade surplus of A$1.15 billion. Exports fell 8% to A$25.4 billion in January, while imports declined 1% to A$26.0 billion, the ABS figures out Friday showed.
Fixed mortgage remain a bargain at the start of the spring-buying season: The average rate on the 30-year mortgage dipped this week, while the 15-year loan fell to a new record low. Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan ticked down to 3.88%, from 3.90% the previous week. That’s slightly above the 3.87% average rate hit three weeks ago, which was the lowest since long-term mortgages began in the 1950s.
Germany’s monetary doyen slams ECB’s ‘shocking’ balance sheet. The doyen of German monetarism has denounced the stimulus policies of the European Central Bank as a dangerous leap into the unknown, giving voice to growing misgivings among the German policy elite.  Jurgen Stark, the ECB’s former chief economist and Germany’s board member until two months ago, said the blitz of lending had corrupted collateral standards and risked inflation. “The balance sheet of the euro system isn’t just gigantic in size but also shocking in quality,” he said. Unlimited lending to banks for three years has pushed the ECB’s balance sheet to over €3 trillion (£2.5 trillion), overtaking the US Federal Reserve to become the world’s most activist bank.

RBS’ Dutch investment banking arm returns to ABN Amro. Four and a half years on from its disastrous acquisition of ABN Amro, Royal Bank of Scotland has “sold” back to the Dutch lender parts of its businesses originally acquired in 2007.  In a memo to staff Jan de Ruiter, chairman of the state-backed lender’s Dutch business and himself a former ABN Amro executive, announced the sale of all of the bank’s investment banking operations in the Netherlands back to the Dutch lender it once owned. Mr de Ruiter said he expected the sale to be completed before the summer. No price was mentioned, however it is understood the deal involved no payment by ABN Amro.

Bank urged to take action as rates held for third year. Economists marked the third anniversary of record low interest rates in Britain by calling for radical action from the Bank of England to unblock lending to small businesses and help homeowners. Bank policymakers today voted to leave quantitative easing unchanged at £325bn and rates on hold at 0.5pc, where they have been since March 2009. The decision meant that rates have been static for the longest period in 62 years. Despite the historic effort, economists urged the Bank to take more drastic measures. The British Chambers of Commerce (BCC) joined the growing clamour of voices calling for QE to be used to buy securitised small business loans and mortgages to help credit flow to the areas of the economy currently starved of finance.

Industrial production rose by 1.6pc, following a 2.6pc contraction in the sector in December. Economists had forecast a smaller, 1.1pc increase. The German industrial sector shrank by 0.2pc in the final quarter of 2011 and the latest figures lifted hopes that the sector will grow in the first quarter of 2012 overall.  Jennifer McKeown, senior European economist at Capital Economics, cautioned however that it was not all good news.  “This does not change the fact that the industrial sector, previously the key driver of the Germany recovery, is weakening. January’s rise in output did not fully reverse the previous month’s fall and the annual growth rate is now just 1.7pc.”
The predicted slowdown in China’s economic boom could cause Australian house prices to plunge by more than 5 per cent this year, according to one of the world’s most influential credit rating agencies. Standard & Poor’s warned that efforts by the Chinese government to deliberately slow its economy over the next 12 months would have a major impact on Australia’s exports throughout Asia. Earlier this week, the Chinese government cut its gross domestic product growth target to below 8 per cent for this year. It is the first reduction in that estimate in eight years – a recognition that the country’s rate of growth is unsustainable. Yesterday, Standard & Poor’s released a report titled ”China soft landing would moderately impact Australia’s housing market”.
Fears of another global downturn have eased enough for the Bank of Canada to at least start thinking about raising interest rates after 18 months on hold. But Governor Mark Carney will proceed cautiously amid questions of whether recent signs of improvement can last and what the impact of higher borrowing costs would be on consumers who have gorged on ultra-cheap credit, economists say. Mr. Carney illustrated this on Thursday as he held his key rate at 1 per cent while voicing concern over record household debt levels, which the central bank warned is the biggest domestic risk. The central bank has flagged the debt threat before, mainly because of what would happen to consumer demand if households curbed their spending.

Vladimir Putin has a point when he says Canada is missing out on vast trade and investment opportunities in Russia. But it’s a far more complex picture than Russia’s newly returned President suggests. The country’s de facto ruler since 2000 president until 2008, Prime Minister since then, and soon to return as President after an election victory over the weekend told The Globe and Mail in an interview in Moscow last week that he is concerned about how little trade there is between Canada and Russia, given the two countries’ similarities. Each country has vast stores of oil and gas, large agriculture sectors, and large mineral reserves, such as potash.
After emerging as one of the pioneers in the investment regions of petroleum products and information technology, Andhra Pradesh is now weighing the benefits of promoting an Agribusiness Investment Region (ABIR) involving major agri clusters in three of its geopolitical regions. The proposed ABIR project in Andhra Pradesh, to be taken up in a public private partnership (PPP) model, involves setting up an integrated infrastructure for rural business and entrepreneurial development attracting total investments of around Rs 67,000 crore.

Global food prices rose in February from the previous month, driven by gains in grains, vegetable oils and sugar, the United Nations’ FAO index showed on Thursday, adding inflationary pressure. The index, which measures monthly price changes for a food basket of cereals, oilseeds, dairy, meat and sugar, averaged 215.3 points in February, up from a revised 212.8 points in January, data from the Food and Agriculture Organisation (FAO) showed.
South Korea will increase its monitoring of a price trend in the private service sector as price hikes in the segment could directly hit the livelihoods of ordinary citizens, who are bearing the brunt of tough economic conditions, the finance ministry said Friday. “In that a large portion of household expenditures is spent on buying private services, we should look into price trends in the sector for ordinary people,” the ministry said in a press release after holding an anti-inflation meeting. In a related move, the ministry added that it will establish teams tasked with monitoring service prices in a total of 16 cities and provinces as part of efforts to help the central government’s push to keep prices under control.

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