China's Foreign Trade Indicators for June

 China's export dropped 3.1 percent year on year in June to 174.32 billion U.S. dollars, while import down 0.7 percent from a year earlier to 147.19 billion U.S. dollars, new data showed Wednesday.

Total foreign trade volume declined 2 percent year on year to 321.51 billion U.S. dollars in June, the General Administration of Customs said on Wednesday.

Source: Xinhua

Japan is concerned about China's foreign policy

Japan is concerned that China's potentially dangerous maritime activities could lead to a "contingency situation" and Beijing should act according to international rules rather than by using force, the Defense Ministry said Tuesday in its white paper for 2013.

The white paper also expressed concern over North Korea's nuclear and missile development programs, saying the country's ballistic missiles are potentially capable of reaching the U.S. mainland -- a sign that the missile program has entered a new stage.

The annual report is the first to be published under the government of Prime Minister Shinzo Abe and emphasizes key issues that could threaten Japanese sovereignty and security in view of an increasingly assertive China and defiant North Korea.

Petrobras problems with populist local low fuel prices

    According to the WSJ, Petrobras should be seeing a bright future,controlling the world's biggest offshore discovery in decades. But surging local fuel demand, spurred in part by tight state control of domestic prices, is savaging the company's earnings.
 Petroleo Brasileiro must pay global prices in U.S. dollars for fuel imports but sell domestically in local currency at artificially low prices. In the last two years alone, after-tax losses in the company's domestic refining and marketing operations were $17.4 billion. 
A series of government-sanctioned fuel-price increases starting last spring seemed to help. But the Brazilian real's slump, down about 12% against the dollar in just two months, has undone this. Meanwhile, stubborn inflation and recent protests mean the government likely won't help with further fuel increases, possibly until after October 2014 elections.
These losses, plus sagging output at existing fields and cost overruns in its massive offshore projects, have taken their toll. Dollar-denominated investors in Petrobras suffered the worst returns of any large, integrated oil company in 2011 and 2012—and are on track to make it three years in a row.
 There is light at the end of the tunnel: By 2015 or so, Brazil should become a net oil exporter, and Petrobras could be far more profitable. That is only if Brazil's government doesn't strangle its golden goose further, though.

Source: WSJ

China´s exports unexpectedly fell 3.1% in June

 China´s exports fell 3.1 percent in June from a year earlier, the first decline since January 2012, while imports dropped 0.7 percent, severely missing market expectations and reinforcing signs of a economic slowdown in the second quarter.

The downbeat trade data follow the government's crackdown on the use of fake export shipment documents to close a loophole for short-term money inflows which had exaggerated China's export performance.

Economists had expected exports to grow 4.0 percent and imports to rise 8.0 percent last month.

China's exports to the United States - the country's biggest export market, fell 5.4 percent in June from a year earlier, while export to the European Unison dropped 8.3 percent, according to the customs.

China had a trade surplus of $27.1 billion in June, the customs administration said in a news briefing, largely in line with $27.0 billion expected by economists.

China's trade data are volatile and distorted by speculative capital flows across the country's border. Doubts about the accuracy of the figures have abated slightly since the customs office and top foreign exchange regulator launched a campaign in May to crack down on fake export claims.

China's reform-minded new leaders have shown a great tolerance of slower growth, although they still need to avoid widespread job losses that could threaten social stability.

 This trade data  should mean a weaker second quarter growth.

Source: Reuters

China's Gold Imports at unprecedented levels

Chinese gold imports plus its domestic production will, this year, account for comfortably over 50% of global new mined gold output, which is currently estimated at around 2,700 tonnes annually... But what will this huge dominance of gold demand by China mean for the gold price?  Perhaps not a lot initially failing some significant announcement that the country has been quietly increasing its gold reserves substantially.  Increased demand from China is, at least to an extent, currently being offset by falling demand from India and liquidation of holdings out of the big gold-backed ETFs, although other significant gold buying countries in other parts of Asia, Russia and the Middle East are also seeing substantial increases in imports and holdings, but these do tend to pale into insignificance when set against the enormous Chinese demand.
But if the demand continues at this kind of level, with stocks of physical gold continually moving from  vulnerable western hands to more stable eastern  ones then at some stage there will be a very apparent shortage of physical metal in the West.  Increasingly gold trading will move from exchanges like COMEX to Shanghai and Hong Kong.  COMEX may become an effective irrelevance in the gold market dealing only in `paper' gold (which it effectively is already) and the physical gold price momentum will move to the east.

Source: Mineweb

Doug Noland: Mispricing Risk

"I believe we have commenced a "repricing" process that will unfold over weeks, months and years - with vast ramifications and unknown consequences. With this in mind, let's at least contemplate a few near-term issues. 
Various reports claim the strong market reaction to Federal Reserve chairman Ben Bernanke's policy statement caught the Fed by surprise. Despite attempts by various officials to calm the markets, bond yields have just kept rising. As such, it's now reasonable to suggest the Fed did not anticipate being on the wrong side of a spike in market yields. How much higher do Treasury bond and MBS yields need to rise before the Fed is held to account - and forced to explain - the large losses suffered in its $3.4 trillion (and ballooning) portfolio? At this point, the Federal Reserve is akin to a novice trader who keeps adding to a losing position. 
Could mounting losses on its holdings play a role in the Fed's "tapering" timeline? Keep in mind the market perception that any jump in Treasury yields would likely ensure the Fed's ongoing QE support. Now much too complacent? What if the markets begin fretting that escalating losses on Fed holdings might become part of the debate - and provoke a less cavalier approach by our central bank - and others - in managing risk? In a way, Fed critics finally have a concrete issue to build their case around. 
Assuming the Fed cannot keep purchasing Treasuries and MBS forever, perhaps there is now added impetus for investors, hedge funds, foreign central banks, sovereign wealth funds and others to push liquidations forward. If money managers now realize they are holding higher risk exposures than desired, it might be advantageous to make necessary portfolio adjustments prior to the Fed winding down its QE operations. 

If foreign central banks have begun a process of reducing bond holdings, does this accelerate hedge fund selling? Are the sophisticated players now anxious to reduce holdings before the next wave of bond fund redemptions and ETF-related selling? How does it work when the "Masters of the Universe" - having accumulated Trillions of assets under management by adeptly playing a most-protracted market bubble - find themselves on the wrong side of rapidly moving markets? 

I am intimately familiar with the bull story for US equities. Corporate profits are strong and stock valuations are attractive. Bond yields are rising because of the underlying strength of the US economy. The "great rotation". The US economy remains the most vibrant in the world. US equities are the preferred asset class for the current environment. 

Well, the US stock market is an integral facet of the greater credit bubble. Massive federal deficits, ultra-loose financial conditions and artificially low borrowing costs have been instrumental in inflating profits. mis-priced debt and meager risk premiums have been instrumental in myriad financial engineering mechanisms that have inflated corporate earnings and stock prices. Abundant cheap finance has fueled a powerful global mergers and acquisition boom. If the bond bubble is indeed bursting, the markets are only in the earliest phase of re-pricing risks and asset prices. 

 With fixed income in some serious trouble, the equity market game becomes all the more critical for all the players. And perhaps this is an important "mis-pricing risk" associated with the Fed's ongoing quantitative easing: investors hit with unexpected bond losses now increase their bets on inflated stock prices. After leading unsuspecting savers into the wild world of mis-priced fixed-income instruments, the Fed will apparently ensure the public becomes overly exposed to unappreciated risks in the US equity market. 

As noted in my "Issues 2013" CBB from early January: A market bubble implies bipolar outcome possibilities. Either the entrenched bubble bursts or it becomes an issue of "how crazy do things get?" If the US stock market has evolved into the speculative bubble of choice, there are a couple things the Fed might want to contemplate. First, QE may now work to spur similar late-cycle speculative excesses that are now coming home to roost throughout the fixed-income universe. Second, inflating stock prices may work to pull additional liquidity away from an already liquidity-challenged bond market. It is, after all, the nature of liquidity to seek the inflating asset market". 

Source :AsianTimes
             Doug Noland

Marc Faber Thoughts

Marc Faber, managing director of Marc Faber Limited and the author of the widely read monthly investment newsletter “Gloom, Boom & Doom” report, said weakness in China’s economy could spell big trouble global markets.

Faber said that if the Chinese economy grows at 3 or 4 percent—or even not at all, which he sees as a possibility—it will have a huge, negative affect on industrial commodities and the incomes of countries that produce them. In turn, he said, if countries such as Russia, Brazil or nations in Africa, Central Asia or the Middle East have less income, they’ll buy less from China, Western Europe and America, leading to very little earnings growth or an earnings contraction for those more prosperous economies.

Source: CNBC Interview

Marc Faber Thoughts

Faber said it’s a good idea to take money out of the stock market.

“I don’t think there is a lot of upside potential, but I think there is considerable downside,” he said.

However, he said that markets are now seeing emerging markets and their currencies go lower, and “It could be that all the money in the world flows in to U.S. stocks and avoids emerging markets.”

Gold can eventually be a source of profit, according to Faber. He said it’s possible the price of gold can go somewhat lower, even though he thinks it’s now at a reasonable level. “I keep on buying gold and I have faith that gold prices will eventually be higher,” Faber said.
Faber said that, in general, corporate earnings will disappoint.
“They may not collapse, but I don’t think they will be as a good as expected,” Faber said. He said cyclical stocks, such as semiconductors and materials companies, will have tough time matching earnings expectations. - in Yahoo Finance

Source: Yahoo Finance Interview

South Korea Sluggish indicators despite Stimulus

South Korea's economy remained sluggish despite stimulus measures such as the extra budget plan and policy rate cut, a government report showed Tuesday.

"Some economic indicators showed growth amid stable consumer prices, but industrial production, consumption and construction investment reduced, with employment slowing down," the Ministry of Strategy and Finance said in Green Book, the monthly report assessing economic conditions.

Output in the service sector increased 0.2 percent in May from a month earlier, but production in the mining and manufacturing industries fell 0.4 percent. Retail sales declined 0.2 percent over the same period, and construction investment sank 4.3 percent.

Consumer prices rose 1 percent in June from a year earlier, staying at the lowest level in 14 years for two straight months.

Exports, which account for around half of the economy, dipped 0. 9 percent in June from a year earlier amid weak demand from Japan, whose currency fell against the U.S. dollar and the South Korean won amid the aggressive monetary easing.

Downbeat economic data came despite stimulus measures such as the supplementary budget plan of 17.3 trillion won (15 billion U.S. dollars) unveiled in April and the central bank's policy rate cut by 25 basis points in May.

The ministry said there remained downside risks to the economy such as risks over the U.S. quantitative easing and delayed recovery in Europe, noting that it will continue its policy response to stimulate the economy.

FMI: Cuts estimate growth for Brazilian Economy in 2014 to 3.2%

O Brasil é o país com o maior corte na projeção do FMI (Fundo Monetário Internacional) para crescimento econômico em 2014 dentre as nações monitoradas pela instituição: redução de 0,8 ponto percentual.

Apesar disso, a estimativa do FMI de expansão do PIB (Produto Interno Bruto) brasileiro para o ano que vem ainda é de 3,2%, acima de boa parte das projeções do mercado brasileiro sobre a economia. Antes, a projeção do FMI era de 4%.

A economia global crescerá 0,2 ponto a menos do que o antes previsto, tanto neste ano quanto no próximo.

Neste ano, em relação ao Brasil, a revisão foi de 3% para 2,5%. Em entrevista à imprensa na sede do FMI, o diretor do Departamento de Pesquisas do Fundo, Olivier Blanchard, disse que o nível de investimentos no Brasil é ainda baixo e que a redução do crescimento chinês afeta o preço das commodities, atingindo países exportadores de matérias primas como o Brasil.

"O Brasil tem gargalos de infraestrutura e de mão de obra e já está acima da inflação estimada, o que limitou o crescimento nos últimos dois anos", afirmou Thomas Helbling, chefe da Divisão de Estudos Econômicos.

Os países emergentes, em conjunto, tiveram as projeções revisadas 0,3 ponto percentual para baixo, tanto em 2013 quanto em 2014.

Em média, o crescimento dos países emergentes será de 5% neste ano. Rússia e África do Sul terão altas de 2,5% e 2%. O PIB chinês deve crescer 7,8% e o da Índia, 5,7% (abaixo das previsões anteriores, de 8,1% e 5,9% respectivamente).

Source: Folha de Sao Paulo

Pour une Economie de Bonheur

Le Cercle des économistes a invité cent étudiants de 18 à 28 ans à participer aux 13es Rencontres économiques d'Aix-en-Provence qui se sont déroulées du 5 au 7 juillet. Ils ont été sélectionnés parmi les centaines d'étudiants de toute formation, de tout niveau, de toute région, qui ont participé à l'initiative "Inventez 2020, la parole aux étudiants", lancée par le Cercle. Il leur était proposé de rédiger un texte de réflexion prospective de 15 000 signes maximum sur leur vision du monde en 2020. Voici celui de Hugo de Gentile, étudiant à l'EM Lyon.

"Dans quel monde voudrions-nous vivre en 2020 ? De but en blanc, et tous en choeur, nous dirions : un monde plus compréhensible, moins verrouillé, plus souriant. Oui, plus souriant. Nous sommes unanimes : le commandant de bord a perdu de vue la finalité de notre voyage. La croissance ? Non, justement, le bonheur. Et le commandant de bord, qui est-il ? Qui tient les rênes ? A dire vrai, nous n'en savons rien. Mais formuler notre malaise, c'est déjà trouver des réponses. Je souhaite avant toute chose décrire notre perception du monde actuel et nos insatisfactions. Neuf propositions de réponses viendront en seconde partie de texte.

Au fil du temps, nous avons cherché un moyen de maximiser le bonheur individuel et collectif. Nous en sommes arrivés à un système de production, deconsommation, et d'échanges perçu comme le moins pire de tous : le capitalisme. Financier, qui plus est.

Pourtant, si la recherche du bonheur nous a conduits à préférer ce système économique, en aucun cas sa conséquence directe (la recherche de la croissance) n'embrasse en totalité sa cause première (la recherche du bonheur). Rationnellement, donc, ce serait une erreur de confondre les deux : il n'y a pas de réciprocité dans cette relation de causalité. Pourtant, l'amélioration de nos conditions de vie est longtemps allée de pair avec la croissance économique, si bien que nous avons fait l'amalgame. Mais nous entrons dans une phase de renversement, due notamment au rééquilibrage progressif des rapports de force géoéconomiques, à l'intérieur de laquelle se battre pour des dixièmes de point de croissance peut engendrer une perte significative de bien-être social. Nous ne sommes peut-être pas si Homo economicus que cela.*

En effet, quel est le but des Rencontres économiques d'Aix-en-Provence ? Historiquement, la réponse est "stimuler le débat économique". On pourrait ainsipenser que la finalité est scientifique, que ces Rencontres ne sont qu'un grand remue-méninges autour d'un sujet cloisonné : l'économie.

Ce serait faux. La question posée ici aux 18-28 ans est "Dans quel monde aimeriez-vous vivre ?" En d'autres termes, vous nous demandez de décrire l'espoir que nous avons d'être heureux dans la société de demain. Le sujet sous-jacent de ces Rencontres économiques est donc bien ce projet de recherche du bonheur collectif. Et pourtant, il n'est fait mention ni du bonheur, ni du "bien-être social", ni de la qualité de vie dans les 23 sessions des Rencontres. Alors que tous les regards sont tournés vers vous sur ces sujets.

Au risque de paraître primaires, nous, les "djeuns", voulons sourire ! Nous voulons être heureux ! Nous voulons une économie du bonheur et non pas seulement une économie de la croissance ! Nous voulons un modèle durable afin de se sentir en sécurité.

Source: Le Monde

Pourquoi le supercycle des matières premières n'est pas terminé?

"Avec la stagnation des cours des matières premières depuis plus de deux ans, les économistes commencent à s'interroger sur la pérennité de ce qu'ils appelaient le "supercycle" des matières premières.

Ce terme visait à qualifier la hausse spectaculaire des cours à partir de 2004 pour le pétrole, de 2006 pour les métaux industriels et de 2008 pour les produits agricoles. Cette notion renvoyait autant à l'amplitude de la hausse des cours qu'à la durée attendue de cette tendance haussière.

Le "supercycle" a débuté avec la formidable accélération de la croissance économique dans les grands pays émergents. Les cours de matières premières devaient donc continuer à progresser tant que durerait la transformation de ces pays en économies développées. Finalement, le "supercycle" des matières premières ne devait être que l'un des avatars de la mondialisation.

La crise économique, la contraction du commerce mondial et le ralentissement de la croissance chinoise auraient-ils transformé ce "supercycle" avant même qu'il ne devienne "super" ? En effet, si d'aventure cette phase de hausse des cours devait s'arrêter, comme c'est le cas depuis deux ans, elle n'aurait au final duré qu'à peine cinq ou six ans, et ne serait donc pas si différente d'un cycle conjoncturel classique.

Par essence, les "supercycles" sont longs, donc rares. On n'en compte que trois depuis la révolution industrielle. Le premier a duré de 1870 à 1914 et le deuxième de 1946 à 1973, soit des cycles de trois ou quatre décennies. Le troisième est donc celui qui fait débat aujourd'hui.

La prévision la plus structurante pour la poursuite de ce "supercycle" n'est pas tant que la population mondiale passe de 7 milliards d'individus aujourd'hui à 8,5 milliards en 2030, mais surtout que la "classe moyenne" mondiale augmente de 2 à 5 milliards sur la même période. C'est à la satisfaction des besoins en biens etservices collectifs et individuels de ces 3 milliards de nouveaux consommateurs solvables que le secteur des matières premières va devoir faire face".

Source: Le Monde

             Frederic Lassere

Pakistan: IMF loan agreement of US$ 5.3 billions to prevent Balance of Payments Crisis

The International Monetary Fund (IMF) has agreed to sign a fresh loan agreement worth US$5.3 billion with Pakistan to prevent a balance of payments crisis as the country's current account deficit continues to widen and its foreign exchange reserves decline. The deal comes after failure to implement in full an $11.3 billion IMF loan program agreed to in 2008. 

Finance Minister Ishaq Dar and the visiting IMF Mission headed by Jeffrey Franks in Islamabad reached a deal last week for a fresh bailout in a bid to rebuild the country's foreign exchange reserves. The Pakistan-IMF talks for a new loan concluded at a time when the country's central bank has around $6 billion left inreserves, enough to cover less than six weeks of imports. 

"We are entering into a fresh program with IMF to not only retire past liabilities but also to bring about structural reforms in the country," AFP reported Dar as telling a press conference in Islamabad last week. "We have successfully agreed over a program that is home-grown and consistent with the new government's policies." 

Source: AsiaTimes

Government Bonds Quotes

Government Bonds			PRICE CHANGE	YIELD%
U.S. 5 Year			0/32	1.499
U.S. 10 Year			0/32	2.638
U.S. 30 Year			-9/32	3.653
Germany 2 Year			0/32	0.085
Germany 10 Year			13/32	1.658
Italy 2 Year			-3/32	1.973
Italy 10 Year			-7/32	4.401
Japan 2 Year			0/32	0.137
Japan 10 Year			4/32	0.871
Spain 2 Year			-2/32	1.939
Spain 10 Year			-4/32	4.672
U.K. 2 Year			2/32	0.346
U.K. 10 Year			12/32	2.438

 Source:  WSJ

India's Current Account Deficit is not because of Gold Imports

"A surprise improvement in India's balance of payments in the fourth quarter of the fiscal year that ended in March, with a rise in exports and decline in imports, was not enough to prevent the full-year current account deficit rising to a historic high compared with gross domestic product (GDP). 

The full-year current account deficit (CAD) to GDP ratio hit 4.8%, up from 4.2% in the year to March 2012, even after a near 6% rise in exports in the fourth quarter from a year earlier and a 1% fall in imports. That brought the Q4 CAD deficit to 3.6% of GDP, down from 6.7% in the previous quarter. 

The government singled out gold imports as the most important reason for the ballooning CAD, and there is a grain of truth in the assertion. Gold imports have risen since 2010-11. Yet this phenomenon can be attributed mostly to high inflation in India, resulting in the real rate of interest in India being negligible and even negative. It is therefore natural for domestic savers to turn to gold for succor.
Having said that, gold imports in the 12 months to March this year actually declined 4.75% from the previous year, falling in all but the third quarter on an annualized basis. For the full year, India's non-gold imports remained stagnant. 

What is significant is the increase in oil imports, which rose 10.11% during this period, even as India recorded its lowest GDP growth in a decade ... 
The rising volumes of oil and coal imports are two major reasons why India's CAD deteriorated to worrying levels. 
The drastic increase in import of these two components can be linked to the woes faced by India's power industry. During 2012-13, India's average monthly deficit between production and supply of power was as high as 7,244 GWh, the highest in three years, with the states of south India accounting for more than 50% of the deficit. 
In India, thermal power plants account for 55% of total installed capacity and the country is facing an acute shortage of domestically available coal, despite having virtually 10% of global coal reserves. According to Ministry of Power data, India experienced a shortfall of approximately 46.75 billion units of power in the past four years due to the coal shortage, of which around 12.25 billion units were lost during 2012-13. It is, therefore, natural for coal imports to rise. 
When the power deficit widens and is sustained at high level, it is natural that manufacturers resort to generating their own power rather than idle plants and risk facing even larger losses. It is not a surprise, therefore, that diesel demand has shot up. 

Another policy issue that hobbled India during 2012-13 was the virtual collapse of the mining sector, afflicted by widespread corruption, land and environment issues and virtual policy paralysis. Not surprisingly, iron ore exports fell 65% during 2012-13 to a mere US$1.6 billion, the lowest since 2003-04. 

In such circumstances, it is not a surprise to see deterioration in the current account deficit. For the government, shifting the blame to gold imports is a convenient way of deflecting scrutiny from its own inefficiency and economic mismanagement". 

Source:AsiaTimes

Alibaba stocks up on mobile deals before share sale

Chinese e-commerce giant Alibaba Group, which is said to be preparing for a public share sale that might be worth more than US$70 billion, is building up its mobile Internet business with a rash of acquisitions as the country's Internet users increasingly switch to mobile-phones and tablets rather than office-bound computers and home laptops. 

The move to build up its mobile interests coincides with the transition to a new group chief executive, with Jack Ma, who helped found the company in 1999, stepping aside this month to be succeeded by Jonathan Lu after announcing his intention in January. Ma will continue with the company as executive chairman. 

Last month, China e-commerce giant Alibaba Group acquired an 18% stake in Sina Weibo, one of the country's largest social network sites, for US$586 million. The deal also gave Alibaba the option to further increase its holding in Sina Weibo to 30%. Other targets include UCweb, China's leading mobile browser, Meituan, a leading group-buying company in the country, Momo, a popular mobile social networking app, and many more. 

The purpose of behind the rash of purchases by Hangzhou-based Alibaba may be to beef up its business before the IPO, according to some speculation, while others view the goal as development of a mobile Internet empire that will bolster its present core e-commerce dealings. (Alibaba has two major businesses. Alibaba.com is its business-to-business marketplace and Taobao, which at present earns more than Alibaba.com, is its consumer-to-consumer marketplace. 

The market believes Alibaba is aiming for a United States share listing this year. On May 14, investment bank Goldman Sachs wrote in a report on Yahoo, that it had increased Alibaba's valuation to US$70 billion, from US$35 billion. US Internet firm Yahoo owns 24% of Yahoo. 

If Alibaba is listed, it might become the most valuable China Internet company in the public market. US-listed Baidu, China's leading search engine, which is worth about US$33 billion. Hong Kong listed Tencent, which has built its Internet empire with instant messaging service QQ is valued at about US$69 billion. 

Alibaba's acquisitions may, however, be intended to build up its mobile Internet business, say some business insiders. As smart phones become increasingly popular, people's online habits are also changing, with less time spent on computers and more on their mobile phones. 

Source:  Asia Times

RIO TINTO: Starts Production at Oyu Tolgoi mine in Mongolia

MELBOURNE, Australia—The first convoy of trucks has left Rio Tinto PLC's $6.2 billion Oyu Tolgoi mine in Mongolia's southern Gobi Desert carrying copper to China, an important milestone for the operation and a sign tensions between the government and the mining company have eased since the incumbent president won a second term in office.

"With continued development, Oyu Tolgoi will generate wealth for many decades to come," Jean-Sebastien Jacques, chief executive of the Anglo-Australian mining company's copper division, said in a statement Tuesday.Oyu Tolgoi is central to Rio Tinto's efforts to source new mineral supplies in developing resource hotspots and to reduce its dependence on iron ore, which accounts for about 80% of its earnings. It is also vital to Mongolia. Rio Tinto says the mine will likely account for more than 30% of the country's gross domestic product when it reaches full production in 2020.

The first copper concentrate was produced at Oyu Tolgoi in January. Rio Tinto had forecast commercial output would begin by the end of June, provided it could resolve several issues with Mongolia's government. A ceremony to mark the inaugural shipment set for June 21 was canceled the evening before at the request of Mongolia's government, leaving bagged concentrate waiting to be loaded onto trucks that would take it from the mine, which is less than 100 kilometers north of the Mongolia-China border.

The company and the government have for months been trying to settle a dispute over costs and financing. A person familiar with the matter said the government more recently had raised concerns over banking arrangements for Oyu Tolgoi.

Mr. Jacques said all permits are in place, and the mining operation has approval from Oyu Tolgoi's board, which includes representatives from the government, to continue selling copper concentrate. Rio Tinto's Turquoise  Hill Resources Ltd. unit owns 66% of Oyu Tolgoi, while the government controls the remainder.

Source: The WSJ

IMF: Emerging Market Slowdown Adds to Global Economy Pains

The global economy is growing more slowly than expected, with risks to that growth increasing especially in emerging markets, says the IMF in an update to its World Economic Outlook (WEO). Global growth is now projected at 3.1 for 2013 and 3.8 percent for 2014, a downward revision of ¼ percentage point each year compared with the forecasts in the April 2013 WEO.

Global growth increased only slightly in the first quarter of 2013, instead of accelerating further as expected at the time of the April 2013 WEO. The underperformance was due to continuing growth disappointments in major emerging market economies, a deeper recession in the euro area, and a slower U.S. expansion than expected. By contrast, growth was stronger than expected in Japan.

Looking ahead, the IMF expects the brakes behind the recent underperformance to ease, but only gradually. Growth in the United States is forecast to rise to rise from 1¾ percent in 2013 to 2¾ percent in 2014, as fiscal consolidation slows and private demand remains solid. In Japan, growth in 2013 is now expected to be 2 percent, up ½ percent from the last WEO, reflecting the boost to confidence and private demand from recent accommodative policies. The euro area is forecast to remain in recession in 2013 before growing again in 2014. Activity in the region continues to suffer from the combined effects of low demand, depressed confidence, financial market fragmentation, weak balance sheets, and fiscal consolidation.

Growth in emerging market and developing economies is expected to moderate to 5 percent in 2013 and about 5½ percent in 2014, some ¼ percentage point lower than projected in the April 2013 WEO. The weaker prospects reflect, to varying degrees, infrastructure bottlenecks and other capacity constraints, lower export growth, lower commodity prices, financial stability concerns, and, in some cases, weaker monetary policy support. In China, growth will average 7¾ percent in 2013–14, ¼ and ½ percentage point lower in 2013 and 2014, respectively, than in the April 2013 forecast.

Precious metals Quotes

Gold Price  3 months Futures         US$ 1,256.13

Silver Price 3 months Futures        US$      19.32

Central Banks Taking Effective Tools to Pop Bubbles

According to The Wall Street Journal central banks are using different tools to curb lending t o the housing sector. In South Korea Goverment curbed real-state lending after prices increased 25% a
year.In Toronto housing prices reversed their upward course, when Government increased monthly
payments in new loans.
Central bankers everywhere else are watching these experiments closely, among them Ben Bernanke, chairman of the U.S. Federal Reserve. He and his counterparts around the world, seared by the worst financial crisis in 75 years, are searching for ways to halt borrowing binges before they morph into bubbles, and to push lenders to shore up their defenses before the next crisis arrives.
"Lifting interest rates to discourage borrowing has long been considered a blunt but effective weapon. But that isn't a step central banks are eager to take when inflation is low or unemployment is high—as they are in many places now.

So some central bankers are experimenting with targeting only pockets of financial excess. Because financial bubbles so often involve real estate—and because that sector was at the center of the last crisis—many are focusing on ways to control booms in housing prices by curbing mortgage lending.

The point of the new tools is to protect the entire financial system and economy, so economists refer to them as macroprudential. That distinguishes them from microprudential, which describes traditional oversight to assure safety and soundness of individual banks.

At the moment, such concerns are largely hypothetical for the U.S., Europe and Japan. Their central banks, for now, are trying to encourage more lending. But the Fed's pledge to keep interest rates low for a long time—as long as unemployment remains high and inflation low—has already fueled the return of some of the types of risky lending that preceded the 2008 crisis".

White House: Smaller deficit and growth in 2013

"The White House on Monday lowered its projection for economic growth this year while issuing rosier estimates on unemployment and the federal budget deficit.

In its annual "mid-session review" budget update, the White House said it expects the economy to grow 2.4% this year, lower than the 2.6% it projected in April. The White House blamed the slower projection in part on the across-the-board federal spending cuts that began in March, as well as slower growth in China and Europe.

The White House's budget assumes the spending cuts will be canceled and replaced with a combination of measures that will reduce the deficit over many years. But Congress hasn't reached any agreement over how to replace the cuts, known as the sequester, which are set to continue cutting government spending for an additional eight years.

The federal budget deficit, according to the White House, will be $759 billion this year, narrower than the $973 billion it projected several months ago. That means the deficit would be equivalent to 4.7% of gross domestic product—a broad measure of economic output—in the fiscal year that ends Sept. 30, narrower than the 6% estimated previously.The White House estimated the unemployment rate for 2013 will average 7.5%, lower than the 7.7% rate the administration previously projected. The rate was 7.6% in June".

Japan's SoftBank acquires Sprint Nextel

Sprint Nextel cleared its last hurdle in being acquired by Japan's SoftBank. The Federal Communications Commission approved SoftBank's $21.6 billion merger with Sprint Nextel and paved the way for the new entity to challenge wireless giants AT&T and Verizon.

The decision, issued Friday, also allows Sprint to purchase the remaining $3.7 billion in shares of Clearwire, which owns a large amount of wireless spectrum that the new Sprint needs to expand and improve its data network in the U.S. Sprint already owns a majority stake in the company.

"After thorough review, the Commission has found that the proposed SoftBank-Sprint-Clearwire transactions would serve the public interest," said acting FCC chairwoman Mignon Clyburn in a statement. "The increased investment in Sprint's and Clearwire's networks is likely to accelerate deployment of mobile broadband services and enhance competition in the mobile marketplace, promoting customer choice, innovation and lower prices."

SoftBank, a Japanese holding company with investments in Internet and wireless carrier businesses, initially offered to buy Sprint in October with a proposal to buy 70% of Sprint for $20 billion. But it was forced to raise its offer price after running into a competing bid from Dish Network, a U.S. satellite TV service provider that wants to enter the wireless business to diversify its offerings.

Source: NewsonJapan

Bankruptcies drop in Japan

The number of corporate bankruptcies in Japan in January-June 2013 dropped 10.9 pct from a year before to 5,620, the lowest first-half figure in 22 years and down for the fourth straight year, a private credit research agency said Monday.

China's Consumer Confidence Index drops in June

Chinese consumers, particularly those with bank cards, showed weaker confidence in consumption last month, partly due to an unfavorable economic situation, according to an index released Tuesday.

The Bankcard Consumer Confidence Index (BCCI), compiled by the Xinhua News Agency and China UnionPay, a national bank card association, dropped 0.87 points to hit 85.56 points in June from May, marking the third month-on-month decline.

The index was down 1.11 points on a year-on-year basis last month, according to a report issued along with the index. A lower reading in the index shows a decline in consumers' desire to spend.

The report partly attributed the drop to an unfavorable macroeconomic situation in China.

The purchasing managers' index for the manufacturing sector fell to 50.1 percent in June from 50.8 percent in May, according to data issued by the China Federation of Logistics and Purchasing.

The drop indicated weakening expansion in manufacturing activity and will exert downward pressure on the economy, the report said.

The report also cited plunges in the stock market as a factor that dampened consumer confidence, as the benchmark Shanghai Composite Index dived more than 13 percent last month.