China's MMG confirms in talks to buy Glencore's Peru copper mine

China's MMG Ltd confirmed on Wednesday it was in talks with Glencore Xstrata  to buy the Las Bambas copper mine in Peru, an acquisition expected to cost more than $5 billion, but said there was no guarantee a deal would be agreed.

MMG, the Australia-based offshore arm of Chinese state-owned Minmetals, said it was bidding alongside China state-owned giant CITIC Group and Hong Kong-registered Guoxin International Investment Corp.

"No binding agreement has been reached in connection with the acquisition as of the date of this announcement," MMG said in a statement on Wednesday to the Hong Kong stock exchange.

Sources told Reuters on Monday that the Chinese consortium's representatives were set to meet with a Glencore delegation in London, and an agreement could be reached as soon as this week.

Swiss-based Glencore was required to sell Las Bambas to win approval from Beijing for its $46 billion takeover of Xstrata last year, as China, the world's biggest copper user, feared the merged heavyweight would have too much control over the metal.

If the long-awaited deal goes through, it would be China's biggest mine acquisition worldwide and would help satisfy the country's hunger for the metal used in everything electrical and in plumbing as its cities rapidly expand.

The acquisition would be key to meeting MMG's target of becoming a top mid-tier diversified miner within the next few years.

Las Bambas is expected to produce around 450,000 tons of copper a year for the first five years. By comparison, MMG last year produced 188,000 tons of copper from its mines inAustralia, Laos and the Democratic Republic of Congo.

Glencore spent $1.7 billion on construction at Las Bambas in 2013 and has forecast a further $2.4 billion would need to be spent ahead of first production in the second half of 2015.

Source: Reuters

Yellen suggests Fed rate hike could come in spring of 2015

• Yellen spoke for an hour, but the market only heard three words: “around six months.”

  "She was asked how long the Fed would wait after the tapering ends before it begins to raise interest rates.

  Her answer: “So the language that we used in the statement is considerable period. So I, you know, this is the kind of term it’s hard to define. But, you know, probably means something on the order of around six months, that type of thing.”

  She added lots of qualifiers to that, including the assessment of the labor market and the inflation outlook, but the markets only heard “around six months.”

  Which would mean the first rate hike could come in the middle of next year, rather than toward the end of the year as implied by the Fed’s “dot plot.”

  Did Yellen mean to be that specific? No, but she’s now the Fed chair, and markets will react to what she said, not what she means".

  Source: Marketwatch

Reuters: What is Alibaba worth?

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Fed cuts bond purchases again, alters 'forward guidance'

 The Federal Reserve on Wednesday voted 8-1 to reduce its bond-buying stimulus program for the third straight meeting, to $55 billion a month from $65 billion starting in April. The central bank also shifted its so-called forward guidance on how long it plans to keep short-term interest rates at zero. The Fed said it will now consider a "wide range" of factors instead of relying mainly on the unemployment rate. The Fed statement also stressed that the bank could keep short-term rates below what is viewed as "normal" even if employment levels and inflation hit its targets. The bank wants investors to know it will keep rates low for quite some time and has no plans to quickly raise them. Most Fed officials - 13 of 16 - don't expect the first rate hike until 2015, with rates rising somewhat faster in 2016. Minneapolis Fed chief Narayana Kocherlakota dissented. In its latest economic forecast, the Fed also trimmed its estimate of U.S. growth in 2014 and predicted unemployment would fall quicker than it previously expected. The bank now sees the U.S. growing no faster than 3.0% this year instead of 3.2% under its December forecast. U.S. unemployment is projected to fall to 6.1% to 6.3% by the end of 2014 vs. the prior estimate of 6.3% to 6.6%. The jobless rate now stands at 6.7%. The Fed's forecast on inflation was little changed. 

Source:  Marketwatch

Several experts Warning of a Market Crash

"It is only a matter of time before the stock market plunges by 50% or more, according to several reputable experts.

“We have no right to be surprised by a severe and imminent stock market crash,” explains Mark Spitznagel, a hedge fund manager who is notorious for his hugely profitable billion-dollar bet on the 2008 crisis. “In fact, we must absolutely expect it."

Unfortunately Spitznagel isn’t alone.

“We are in a gigantic financial asset bubble,” warns Swiss adviser and fund manager Marc Faber. “It could burst any day.” 

Faber doesn’t hesitate to put the blame squarely on President Obama’s big government policies and the Federal Reserve’s risky low-rate policies, which, he says, “penalize the income earners, the savers who save, your parents — why should your parents be forced to speculate in stocks and in real estate and everything under the sun?” 

Billion-dollar investor Warren Buffett is rumored to be preparing for a crash as well. The “Warren Buffett Indicator,” also known as the “Total-Market-Cap to GDP Ratio,” is breaching sell-alert status and a collapse may happen at any moment". 

Source: Moneynews

Buffett's favorite market metric, Is the U.S. Stock Market overvalued?

In interviews with Fortune in 1999 and 2001, Buffett said that determining whether the market is expensive or cheap doesn't have to be complicated at all. His metric:

The market value of all publicly traded securities as a percentage of the country's business -- that is, as a percentage of GNP. The ratio has certain limitations in telling you what you need to know. Still, it is probably the best single measure of where valuations stand at any given moment.

Basically, Buffett divides the total market capitalization of the U.S. stock market by gross national product, or GNP. Not to be confused with gross domestic product, GNP measures the value of goods and services that a country's citizens produced regardless of where they live -- including what American companies produce abroad.

So when does the metric tell whether the stock market is expensive? Buffett again:

If the percentage relationship falls to the 70% or 80% area, buying stocks is likely to work very well for you. If the ratio approaches 200% -- as it did in 1999 and a part of 2000 -- you are playing with fire.

Where is the stock market trading today?At the end of February, the total market capitalization of U.S. markets, as reported monthly by the World Federation of Exchanges, was $24.6 trillion. The S&P 500 has risen 0.5% since then.

The Federal Reserve Bank of St. Louis, meanwhile, includes most U.S. economic data, though we won't get a report on GNP until the second revision of GDP on March 27. The most recent GDP data we have, for Q4 2013, is $17,080 billion. GNP has averaged $250 billion more than GDP for the past four quarters, so we shall assume Q4 2013 GNP is $17,107 billion.

Dividing the total market capitalization by GNP gives us a percentage of 142%, which, according to Buffett, indicates that the market is overvalued.

Templeton Fund Increasing their stake at Qantas

China's yuan slides to near one-year low as economic risks mount

China's yuan fell beyond 6.20 to the dollar on Wednesday for the first time since April last year amid market speculation the central bank will keep the currency weak as economic growth slows.

The yuan has tumbled 0.8 percent so far this week after the People's Bank of China (PBOC) on Saturday doubled the daily trading band allowed for the currency to 2 percent from the mid-point that it sets each day.

Spot yuan briefly fell as low as 6.2040 in early afternoon trade before ending at 6.1965. That marked a 0.07 percent loss on the day from Tuesday's close, and a fall of 1 percent from the mid-point.

"We see risks of further near-term yuan weakness, but do not expect this to extend beyond the second quarter. It is not in the PBOC's interests to have a sustained depreciation in the currency, as this will increase financial stability risks," economists at ANZ said in a research note.

Other analysts agreed that allowing the yuan to weaken too far, too fast would only increase the stresses on Chinese companies and the broader economy.

ANZ expects the currency to return to a modest appreciation trend in the second half, but still end the year weaker for the first time since Beijing unshackled it from its fixed exchange rate to the dollar in 2005.

The currency has risen more than 30 percent since then, attracting a growing number of global investors, big and small, many of whom have come to see it as a one-way appreciation bet.

ANZ like many other market watchers has now dialed back expectations for the yuan, revising its year-end yuan forecast to 6.08 from 5.98.

"The yuan may not appreciate this year given China's weak economy," agreed one trader in Shanghai. "The return of yuan strength will not only rely on when the economy bottoms out, but when fresh long yuan funds come in."

While the recent slide in the yuan is widely seen as a move engineered by the central bank to punish speculators, it has coincided with heightened anxiety among global investors that long-standing risks in China may be coming to a head.

The economy clearly lost steam in the first two months of the year and rising debt worries following the country's first domestic bond default are adding to pressure on its currency and stock markets. A flurry of local media reports of troubled steel and property companies have compounded market jitters.

Some traders suggested the yuan's decline may reflect policymakers' desire to offer some help to the sluggish economy, by effectively easing monetary conditions, while others said that may only be a welcome side-effect of the PBOC's move to deepen market reforms.

Speculation that Beijing may soon announce stimulus measures for the economy has grown since data last week showed growth in investment, retail sales and factory output all falling to multi-year lows.

"The currency band widening at this moment has two advantages. One is to signal that the reform agenda will not be easily given up despite weak economic condition. Second, while band widening itself has little impact on the economy, the possible consequence could be used to stabilize growth," said Zhu Haibin, an analyst at JP Morgan.

Source: Reuters

Big Investors Bet on a Boom in Corporate Travel

Big companies will be dispatching even more executives on globetrotting missions for business, and many will rely on corporate travel agents. That’s the simple assumption behind the $900 million deal for a 50 percent stake in the American Express Global Business Travel division, which will become a separate company this year co-owned by BlackRock (BLK), Certares International Bank, Macquarie Capital, and a fund controlled by the Qatari government.
U.S. spending for business travel is expected to rise 6.6 percent this year, to $290 billion, after a 3.8 percent increase last year, according to data from the Global Business Travel Association. The forecast sees a 6.1 percent increase in 2015.

Glenn believes U.S. and European multinationals locating their businesses closer to customers in emerging markets will also fuel the corporate travel boom. “Our plans are very much to make sure that we’re solidified and to expand our footprint globally,” he said in an interview Tuesday.

Still, commissions and fees have been steadily declining for travel agents as airlines push to reduce distribution costs. The travel business has also migrated online, with road warriors demanding assistance en route and a range of digital tools to alter their trips as needed. American Express cut 5,400 jobs last year, and those reductions fell heavily in the increasingly automated travel division. Those cuts have been completed, and Glenn said his company’s workforce of 14,000 would remain stable.

“You shouldn’t just equate online with lower margins,” Glenn added. “There’s premium service that needs to take place,” given the huge sums of money spent by wealthy travelers on personalized service. “Not everything’s going to be online, and there’s premium travel out there.”

Source: BloombergBusinessWeek

WSJ: Macro Horizons: Markets Pause, But in Laid-Back Mood Over Crimea, Fed

           The Wall Street journal reports,"After two days of gains and a remarkably laid-back response to Russia’s announcement that it would annex Crimea, stock markets are now slotted into a familiar holding pattern ahead of the Federal Open Market Committee’s policy announcement at 2 pm. EDT.

It’s a mark of how the Fed has achieved policy predictability with its informal signaling channels – including via some recent Congressional hearings by new Chairwoman Janet Yellen – that markets are so comfortably prepared for this meeting. A $10 billion cut in monthly bond-buying is widely expected, as are FOMC’s members’ preferences for holding rates near zero even if the unemployment rate gets below 6.5%. There’s no great mystery here, so once this is out of the way, many believe a market that “wants to go higher” will easily continue doing so. Whether that makes sense is another matter. (MC)

UKRAINE: After Russian President Vladimir Putin signed treaties to annex Crimea Tuesday, markets seem mostly unfazed by it.

Investors seem to have largely decided that Russia’s annexation of Crimea and continuing turbulence in Ukraine is a regional issue. Yes, it gives western politicians a chance to grandstand. But given Europe’s dependence on Russian gas and oil, there’s very little will to push back at Mr Putin. So a few cosmetic economic measures are being imposed amid the wider expectation that the whole situation will fade into the backdrop sooner rather than later".