Fed underlying message,economic recovery is weak

The euphoria with which investors in the U.S. stock market greeted the Federal Reserve's decision to stick with its easy-money policy has begun to evaporate, as the message the Fed was sending about a less-than-stellar economy sinks in.

An economy still in need of a safety net may be too weak to produce robust earnings growth, meaning that the Standard & Poor's 500 valuation, now at its most expensive on a price-to-earnings basis since 2010, becomes harder to justify.

The Standard & Poor's 500 is up 20 percent so far this year and hit new highs last week, boosting the index's forward p/e ratio to 14.94, its highest since early 2010. At that time, though, company earnings were improving more rapidly than now as business activity rebounded from the depths of the recession and financial crisis in 2007-2009.

Profit growth for 2013 is expected at about 6 percent, a far cry from the 31 percent achieved in 2010. That undermines the case for further gains in stock prices and has led some investors to consider reducing their earnings forecasts.

Source: Reuters

Farmer Mac is trying to convince investors .

Farmer Mac - the farm loan equivalent of its cousins Freddy Mac and Fanny-Mae

owes its existence to the last time a U.S. farm bubble burst. Now, the company is trying to convince investors it would survive another one.

The market isn't giving the company a vote of confidence yet. Just five years ago, Farmer Mac had to be rescued by its creditors after its large positions in Lehman Brothers and Fannie Mae went sour. Now, the revived company must prove to skeptical investors that it can withstand a sharp decline in the price of farmland that analysts expect to come in the next year. That open question - and the inability of Congress to pass an updated five-year farm bill, which provides crop insurance and other subsidies that farmers rely on - has been weighing on the company's stock price.

Shares of Federal Agricultural Mortgage Co.- a government-sponsored enterprise that functions as a secondary market for farm, rural utility and rural development loans - are up approximately 6 percent for the year and 35 percent over the last 12 months. This year has seen a widespread market rally that has pushed the benchmark Standard and Poor's 500 index up more than 20 percent.

After collapsing to around $3 in late 2008, the stock price has since recovered to pre-crisis levels of around $34. Still, the stock trades at a price to earnings ratio of 5.5, close to half the valuation of small lenders like PennyMac Financial Services  and of its own five-year average P/E of 10.1, according to Thomson Reuters data.

Source: Reuters

Domanda chiave: Quanto vale Cinese Tencent?

E’ cinese, si chiama Tencent (dieci centesimi) ma in Borsa vale molto di più: questa settimana ha superato i 100 miliardi di dollari. Un servizio dell’Economist si chiede però se valga davvero così tanto. Da dove nasce loscetticismo del settimanale inglese, che riporta una più generale perplessità dei mercati?
 Tencent vuol dire al tempo stesso social network e videogiochi online. Come altre Internet company a Pechino e dintorni, ha cominciato il suo percorso copiando successi occidentali. Qq, il suo servizio di instant messaging, era un clone di Icq, un’azienda israeliana acquisita dall’americana Aol. Ma, diversamente dai giganti della Rete come Google e Twitter, ricava i suoi guadagni dal suo (immenso) mercato interno.

Al momento, Tencent ha volumi e profitti superiori a quelli di Facebook: nei primi sei mesi del 2013, un fatturato di 4,5 miliardi di dollari e utili lordi di 2,5 miliardi di dollari contro, rispettivamente, i 3,3 e gli 0,9 della rivale fondata da Mark Zuckerberg.

L’azienda cinese fa una cosa parzialmente diversa. Prima, anch’essa regala i servizi: Qq è usato da 800 milioni di persone e così pure il suo WeChat, una app di social networking che assomiglia molto a Whatsapp. La differenza arriva dopo. Una volta che l’utente è “agganciato” in un videogioco, Tencent lo convince a pagare i “servizi a valore aggiunto”, che possono essere armi virtuali, costumi bizzarri per i loro avatar o stanze da Vip, naturalmente online. E mentre Google, Facebook e soci traggono i profitti dalla pubblicità, Tencent guadagna da questi “kit” digitali.

 I principali rivali di Tencent in la Cina  sono Baidu, che domina le ricerche online aiutata dalla soppressione governativa di Google, e il colosso dell’ecommerce Alibaba. Nella corsa al dominio del mercato, tutt’e tre hanno fatto acquisizioni costose, ciò che ha intensificato la preoccupazione tra gli investitori sui costi di questa gara.

Tencent, scrive l’Economist, potrebbe avere una posizione di vantaggio nell’mcommerce grazie alla vasta popolarità di WeChat, usato sugli smartphone.Per accrescerla, spende molto: giorni fa ha annunciato l’acquisto di una grossa quota di Sogou, con l’obiettivo di creare un colosso dei motori di ricerca attraverso una fusione con la sua Soso. 

Da qui la domanda chiave: quanto vale, veramente, Tencent? Forse 100 miliardi di dollari sono troppi,
scrive l'Economiste.

US PMI Manufacturing Index Flash Index 52 8 for August

Composite growth in the manufacturing sector is slowing this month according to the PMI flash index for mid-September which is at 52.8 vs 53.1 for the final August reading and vs 53.9 for the mid-month August reading. Especially soft is the leading component of the composite, that is new orders which is at 52.7 vs 55.7 in August and 56.5 at mid-month August. This is the lowest rate of order growth in Markit's sample since April.

Other readings on orders are mixed with new export orders falling into contraction, to 49.1 and down nearly 3 points from August for the lowest reading since June. But on the plus side is total backlog which moved back into the growth column to 50.6 for a 1 point gain. 

A strength in today's report is output which is up nearly 3 points to 55.3 for the best rate of monthly growth since March. This reading hints at a September gain for the manufacturing component of the industrial production report which surged in August.

Other readings include slowing in employment growth and steady and mild pressure for both input and output prices. Inventory data show easing rates of destocking.

There are more negative than positive indications in today's report as the slowing in new orders points to slowing for future output, though current output looks very solid. Next manufacturing data on the Econoday calendar will be tomorrow with the Richmond Fed report for September followed on Wednesday by the durable goods report for August.

Source:Bloomberg

BP is set to gain from the reopening of a North Sea gas field

BP is set to gain from the reopening of a North Sea gas field that has lain dormant for three years because of international sanctions against Iran, the Mail on Sunday reported. The Rhum gas field is jointly owned by BP and National Iranian Oil and once supplied 5% of UK gas output. With UK-Iran relations thawing, the Government is close to agreeing a sanctions waiver for the field, giving a multi-million pound boost to BP and the Iranian company.

Source: The Daily Telegraph

Chinese VP stresses peaceful use of space

Chinese Vice President Li Yuanchao on Monday called for peaceful exploration and use of space so as to serve the interests of people and countries all over the world.

Addressing the opening ceremony of the 64th International Astronautical Congress (IAC 2013), Li said space resources are the common wealth of mankind, and various countries enjoy equal rights to use such resources.

It would be a blessing for mankind if space technologies are used for peace; if they are used for war, it would be a human disaster, he said.

China is willing to share experiences with other countries in using space technologies to boost economic development, according to the vice president.

Adhering to the concept of cooperative space exploration, China will boost international exchanges and cooperation so as to achieve peaceful use of space and common development of humankind, he vowed.

The conference is scheduled to run from Sept. 23 to 27.

With its theme "Promoting Space Development for the Benefits of Mankind," the event has attracted around 3,600 people including leading space scientists, academics, researchers, industry and commerce executives, students and young professionals from 74 countries and regions.

The IAC, organized by the International Astronautical Federation (IAF), the International Academy of Astronautics (IAA), and the International Institute of Space Law (IISL), is the largest space-related conference world-wide. China hosted the 47th IAC in Beijing in 1996.

A record total of 3,600 scientific papers were submitted to the IAC this year. A total of 318 papers will be presented on posters, among which 217 are from China.

Source: Xinhua

China, Venezuela agree to extend economic ties

Venezuelan President Nicolas Maduro has begun his first state visit to China since taking office in April. He has held talks with his Chinese counterpart Xi Jinping in Beijing. Earlier he met with leaders from Chinese companies, witnessed the signing deals on energy, agriculture and public welfare projects.

President Maduro has been posting his blog about his meetings with Chinese company leaders and described the morning as "fruitful". He announced on his micoblog that "I have met with leaders of China National Petroleum Corporation. We have agreed to start a joint venture to drill in Junin 10. And we have agreed on the preliminary output."

Other deals have been signed covering agriculture, water conservation, public transportation, and telecommunication and housing construction.

Relations between China and Venezuela strengthened greatly during Maduro’s nearly seven-year stint as foreign minister during Chavez’s administration.

Trade between the two countries reached almost 24 billion US dollars in 2012. Venezuela is now China’s fourth largest trading partner in Latin America.

Source:  Xinhua

Eurozone modest recovery: The Markit Eurozone PMI Composite index hit a 27-month high

The Eurozone recovery gathered steam in September and employment may be poised for a turnaround, according to the Markit Purchasing Managers' Index (PMI) data published for the region on Monday.

The Markit Eurozone PMI Composite index hit a 27-month high, signaling the largest rise in activity since June 2011. It rose to 52.1, from August's reading of 51.5, beating the consensus forecast of 51.9. 

Markit noted that business activity has now risen for three consecutive months and that September rounded off the strongest quarterly expansion since the second quarter of 2011. 

Worth noting, the PMI manufacturing indicator actually dropped slightly from 51.4 to 51.1, missing expectations for an increase to 51.7. Readings above 50 imply an expansion in the sector. 

Also on the negative side, employment continued to fall although the decline was the smallest since employment began falling in January 2012.

"It is particularly encouraging to see the business situation improved across the region," Markit Chief Economist Chris Williamson said, adding that even though Germany continued to lead the recovery, the euro area's second largest economy France saw the first increase in business "since early 2012 (while) elsewhere growth was the strongest since early-2011". 

Williamson noted the continued drop in employment but found it "reassuring that the rate of job losses eased to only a very modest pace, suggesting that employment could start rising again soon". 

In any case, Williamson admitted that the overall growth rate remained "modest" .

Source: LiveCharts