Copper prices fell after China's decision to cut copper production capacity

Copper prices futures fell -2.5% today and closed at US$ 3.10 per lb, locking their second straight weekly drop.

Investors and analyst say copper's latest leg lower was prompted by China's decision overnight to shut down 654,400 metric tons of outdated copper-production capacity by the end of September. The move is part of a broader government effort to upgrade and consolidate Chinese industry.

China accounts for about 40% of the world's copper demand, and investors have been worried that slower purchases by factories and copper refiners there will lead to lower global prices of the industrial metal.

China spends well over 40% of its healthcare budget on medicines expenditure

While most Western countries spend 10-12 percent of their healthcare budget on medicines, in China it is well over 40 percent, a disparity that goes to the heart of Beijing's crackdown on the industry.

A promise this week by GlaxoSmithKline to make its drugs more affordable in China in the wake of a bribery scandal is an important lever Chinese authorities may now use to start redressing the balance.

Britain's biggest drugmaker has given no details on the size of the price cuts it will consider, but an examination of its discounts in other emerging markets suggests there may be scope for reductions for some medicines of a third or more. Other pharmaceutical firms might have to follow suit.

Chinese police have detained four Chinese GSK executives in connection with allegations the drugmaker funneled up to 3 billion yuan ($489 million) to travel agencies to facilitate bribes to doctors and officials to boost sales and raise the price of its drugs.

The powerful National Development and Reform Commission said it was examining pricing by 60 local and international pharmaceutical companies.

Data from the World Health Organization (WHO) and other groups shows how China's drugs market has   not worked well  with a system that effectively encourages public hospitals to prescribe large amounts of expensive medicine to earn revenue, given cuts in government subsidies over 30 years.

China's government has also faced criticism that some drug prices are higher than in South Koreaand Taiwan, both developed economies.

"You have to question why the Chinese government is buying high-priced originator brands for off-patent medicines. It's clear they could treat many more patients, without any increase in expenditure, if they only procured lower-priced, quality-assured generics," said Margaret Ewen, coordinator for global pricing at Health Act International.

The Chinese healthcare system should be reformed, hospitals get 40 percent of their income from prescribing drugs, giving doctors an incentive to use costly products and creating a fertile seedbed for corruption.

The most recent edition of the WHO's World Medicines Situation report, issued in 2011, said that in China "even in the most basic primary care level institutions, patients are frequently provided with unnecessary and expensive drugs".

As a result, medicines account for nearly half, or 43 percent, of China's total health expenditure, the WHO said.

Source: Reuters

Oil prices fell on concerns over the slowdown of China's economic growth

 Oil prices dropped Friday as worse-than-expected Chinese manufacturing data sparked concerns over the slowdown of China's economy growth.

Light, sweet crude for September delivery went down 0.79 U.S. dollars to settle at 104.7 dollars a barrel on the New York Mercantile Exchange.

Source: Xinhua

Marc Faber: Investors should pay more attention to Chinese economic indicators rather than focus on what Ben Bernanke says.

Which economies within the emerging market pack look more attractive and why?

Marc Faber : I am not yet sure what I will buy. As mentioned earlier, I would prefer to wait and see how economic developments and policies shape up. In fact, investors should pay much more attention to the economic developments in China rather than focus on what Ben Bernanke says.

My sense is if the Chinese economy slows down, the whole of Asia will slow down very meaningfully. Besides, other emerging economies that supply resources to China will also be severely impacted.

So overall, between the EM pack and the developed world, which economies would you bet on from a 6 – 12 month perspective?

Well relatively speaking, I think that the US may outperform the EM pack but it doesn’t imply that the US will go up. It may actually go down less than the EMs. I prefer to hold cash and will invest in EM economies only if there is a good opportunity. - 

Interview of Sprott Management News

World Gold Council China could overtake India as the world's largest gold market.

The latest report from the World Gold Council said that China's gold demand could hit 1000 tons this year, overtaking India as the world's largest gold market. India's average yearly imports of should be 963 tons. According to the Council, "China will probably be the world's biggest gold consumer this year for the first time on an annual basis" as driven by "both jewelry and investment demand. Jewelry will be the biggest overall demand segment, but investment will grow fastest". Meanwhile, it also expected that jewelry demand would "increase globally this year as a proportion of overall gold demand for the first time in 12 years".

Government Bonds

Government Bonds

                                                                                        Price          Yield
                                                                                      Change           %
                                                                                       

U.S. 5 Year			0/32	1.380
U.S. 10 Year			1/32	2.569
U.S. 30 Year			6/32	3.630
Germany 2 Year			-0/32	0.163
Germany 10 Year			2/32	1.670
Italy 2 Year			-0/32	1.978
Italy 10 Year			-5/32	4.410
Japan 2 Year			0/32	0.134
Japan 10 Year			3/32	0.794
Spain 2 Year			-2/32	1.909
Spain 10 Year			5/32	4.613
U.K. 2 Year			1/32	0.294

Source: The Wall Street Journal                                                                                      

Japan needs amphibious units and surveillance drones.Call of the Ministry of Defense.

Japan needs amphibious units and surveillance drones to protect its outlying islands, the defense ministry said Friday.

In a paper that had been widely reported on Thursday, the ministry said it was necessary to boost the strength and range of forces that could be used to protect Japan’s far-flung territories.

“To deploy units quickly in response to a situation, it is important… to have an amphibious function that is similar to U.S. Marines,” capable of conducting landing operations on remote islands, it said.

The interim report, which was approved by a high-level defense meeting on Friday, also advocates the introduction he phraseology reflects an on-going debate among politicians about the need to re-interpret aspects of the pacifist country’s military stance, defense officials told reporters, and steered clear of any mention of “first strike”.

“We are not talking about pre-emptive attack. That’s not good,” a defense official said.

“We have this awareness that given changes in the security environment surrounding Japan, we have to discuss whether it is enough for us to depend on US forces in terms of capability to attack enemy territory,” he told reporters.

Japan and the U.S. have a security treaty that binds Washington to coming to Tokyo’s defense if it is attacked. a drone reconnaissance fleet that could be used to monitor distant islands.

WSJ EU Zone Closer to Stabilization

''The  Center for Economic Policy Research(CEPR) and the Bank of Italy said Friday the Eurocoin indicator rose to minus 0.09% in July from minus 0.18% in June to reach its highest level since the first half of 2012.

The rise in the index, one of the earliest measures of economic activity in the currency area, is consistent with other recent surveys and indicators in recording an improvement in the EU economy, although it is at odds with manufacturing and services purchasing managers' surveys in that they pointed to an expansion this month for the first time since early 2012.

Those favorable signs continued to arrive Friday, as the results of a monthly survey conducted by France's national statistics agency showed consumers became more optimistic about their prospects in July. Insee's headline measure of consumer confidence rose to 82 from 79 in June. That follows improvements in measures of business confidence in Germany, the Nederlands and Belgium and consumer confidence in Italy''.

Precious Metals Quotes

Gold Price Futures       3 months     US$ 1,326.25

Silver Pices Futures     3 months     US$     19.97

Japan: CPI in June +0.3% highest rate since 2008

Consumer prices in June rose the most since 2008, 0.4 percent from a year earlier, an early sign that Japan's economy may be starting to shake off deflation, the Internal Affairs and Communications Ministry said Friday.

The median estimate of 29 economists was for a 0.3 percent gain, excluding fresh food, a Bloomberg News survey showed. Excluding energy as well, prices dropped 0.2 percent, continuing more than four years of declines.

As Prime Minister Shinzo Abe's policies weaken the yen and energy costs rise, the increase in prices points to a gradual shift away from the deflation that has dragged on the economy for 15 years. With the Bank of Japan rolling out unprecedented monetary easing from April, the next challenge for Abe is to loosen constraints on the labor market and companies to achieve sustained growth and the BOJ's 2 percent inflation goal.