Peru Still Attractive As An Investment ?

Despite the recent Latin American sell-off the region as a whole is still in decent economic shape. Peru is a prime example of this. In their most recent policy announcement, the Central Bank of Peru kept rates at 4.25%. Here is how they described their economy.

The Board of the Central Reserve Bank of Peru approved to maintain the monetary policy reference rate at 4.25 percent.

This decision is based on that economic growth in the country is close to the economy’s potential level of growth, inflation expectations remain anchored within the target range, the rate of inflation has been affected by temporary factors on the side of supply, and international financial conditions are still uncertain, even though some positive signals have been observed in the developed economies.

Their overall annual growth rate is printing between 4.6% and 6.9% over the last nine months. 

The Peruvian market fell sharply during the late spring and summer, as the market sold-off in reaction to the announcement of the Fed's potential tapering. However, prices broke out of their channel in early September, rallying through the shorter EMAs. Now prices are weakening a bit, probably to test lows.

      

Source: SeekingAlpha

Latin American stocks reversed losses after

Latin American
stocks reversed losses while currencies gained on Wednesday
after the U.S. Federal Reserve surprised investors by announcing
it would keep its bond-buying program unchanged at $85 billion
per month.

 The MSCI Latin American stock index soared
2.7 percent to 3,428.45 following the announcement after having
spent most of the session near unchanged territory.
    Brazil's real  jumped 2.49 percent to 2.2030
per dollar while the benchmark Bovespa stock index swung
into positive territory, rising 1.22 percent.
    Mexico's peso strengthened 1.84 percent to 12.6910
per dollar as the IPC stock index climbed 1.24 percent. 
    Chile's market was closed for a national holiday.
    Latin American currencies had suffered steep losses since
May on concerns a withdrawal of Fed stimulus and higher rates in
the United States could spur a stampede for the exits by
investors who had piled into the region's assets in recent
years.

Reuters

Precious Metals Prices Futures 2.38 p.m. Eastern Time

Gold Price Future     3 months      US$   1,359.84


Silver Price Future    3 months      US$       22.99

Federal Reserve FMOC Statement

Excerpts of  the Federal Reserve's Statement

Information received since the Federal Open Market Committee met in July suggests that economic activity has been expanding at a moderate pace. Some indicators of labor market conditions have shown further improvement in recent months, but the unemployment rate remains elevated.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline toward levels the Committee judges consistent with its dual mandate.

The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished, on net, since last fall, but the tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market.

The Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy.

However, the Committee decided to await more evidence that progress will be sustained before adjusting the pace of its purchases. Accordingly, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction.

Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative, which in turn should promote a stronger economic recovery and help to ensure that inflation, over time, is at the rate most consistent with the Committee's dual mandate.

Source: Associated Press

Harnessing Natural Resource Wealth for Inclusive Growth and Economic Development

•  Dependence on natural resource endowments can be a mixed blessing. We are all familiar with the “resource curse” and the historic experience in many resource rich countries of boom-bust cycles, debt crises, and poor governance that have led to the persistence of poverty and lack of inclusiveness.
• In this regard, I am pleased to note that this conference focuses on the key challenges faced by all countries in ensuring that resource wealth contributes in a sustained and inclusive fashion to growth and higher living standards for all. With this in mind, we have deliberately highlighted two key areas; macro-fiscal issues and ways to promote economic diversification
• We focus on the important role of fiscal policy in the economic management in natural resource rich countries, where the government typically plays a dominant role in the economy through its control of natural resources and associated income. Decisions regarding taxation, expenditures—importantly including public investment, the appropriate fiscal deficit, savings mechanisms such as the role of sovereign wealth funds and the governance framework will have enormous consequences—not just for today, but also for future generations—with the potential to ensure successful development or alternatively to destabilize the economy.
• Diversification is an absolutely key area especially given the simple facts that the natural resource sectors in themselves typically employ very few people, and that the resource is exhaustible. Clearly also, it is every challenging. For inclusive growth in addition to wise use of the resources it is imperative that backward and forward linkages are developed between the natural resource sector and the wider economy. Achieving this objective involves financial sector deepening, building infrastructure, enhancing human capital, and promoting the agricultural sector.

         Source: IMF

                     Anoop Singh

                     Director of the Asia and Pacific Department, International Monetary Fund

Jean-Marc Ayrault : la pause fiscale ne "sera effective" qu'en 2015

La pause fiscale promise par François Hollande, dans un entretien en août auMonde, pour 2014 ne sera finalement "effective" qu'en 2015, a reconnu le premier ministre Jean-Marc Ayrault dans une interview publiée, mardi 17 septembre, sur Metronews.

Il justifie ce revirement dans le but de "préserver notre modèle de solidarité", ce qui implique de demander "un effort aux Français [...] notamment mais pas seulement, à ceux qui ont des revenus plus élevés". Le premier ministre ajoute que cette décision n'a pas été actée "pour boucher les trous d'un budget mais pour mettre ces nouvelles recettes au service d'un objectif", à savoir "augmenter le moins possible les prélèvements."

Mi-septembre, François Hollande avait tenté de rassurer sur le "ras-le-bol fiscal" des Français. Reconnaissant qu'il "y a eu des augmentations d'impôts depuis deux ans", il avait assuré que "les dépenses de l'Etat vont baisser en 2014, une première depuis ces trente ou quarante dernières années". Et de marteler qu'"en dehors de la TVA et du plafond du quotient", il n'y aurait "plus de hausses d'impôts".

Le Monde

Interview a James O'Neill l'ex-chef économiste de la banque d'affaires Goldman Sachs

Les États-Unis et l'Europe misent beaucoup sur la consommation dans les BRIC pour soutenir leurs exportations. De ce point de vue, le ralentissement n'est-il pas inquiétant ?

Si la demande intérieure dans les BRIC baissait sur une longue période, alors oui, cela pourrait être très gênant pour les Etats-Unis et l'Europe. Mais encore une fois, j'insiste : nous avons affaire à une "nouvelle Chine". Ce qui est important pour les Etats-Unis et l'Europe, ce n'est pas le taux de croissance de la Chine, mais le niveau de la consommation. Et cet indicateur est encourageant.

Quand on compare, mois après mois, la courbe de la consommation avec celle de la production pour jauger le rééquilibrage de l'économie chinoise, on constate que cela va dans la bonne direction. Les salaires augmentent, les droits des migrants vers les villes progressent et le gouvernement décourage l'épargne excessive. Selon moi, la consommation en Chine, mais aussi dans l'ensemble des BRIC, sera la grande aventure économique de la prochaine décen

Le Monde

Les investisseurs attendent les décisions de la Fed sur son programme monetaire

"Tous les yeux seront braqués, mercredi 18 septembre, sur les annonces de la banque centrale américaine, réunie depuis mardi en comité de politique monétaire. Les investisseurs attendent une décision sur son programme de "quantitative easing" ("assouplissement monétaire"). Pourquoi tant d'attention pour une décision dont on connaît d'ores et déjà la teneur ? Davantage qu'une banque centrale, les orientations de la Fed ont un impact bien au-delà des frontières américaines. 

Le rôle de la Fed s'organise autour de deux axes. En tant que banque centrale, elle est chargée de superviser et de réguler le système bancaire américain, de sorte àgarantir la stabilité du système financier.

Elle définit également la politique monétaire du pays, via les taux directeurs qui orientent le marché monétaire au jour le jour, et ce, en fonction de trois objectifs : le plein emploi (ou chômage incompressible : arrêt de travail entre la fin d'un emploi et le début d'un autre... On considère traditionnellement qu'un taux tournant autour des 5 % reflète une économie de plein emploi), la stabilité des prix (l'objectif d'inflation est fixé à 2 %) et le maintien de taux d'intérêt à long terme 

modérés. 

Selon les minutes de la dernière réunion du comité monétaire de l'institution, mercredi 21 août, plusieurs membres estiment qu'il faudra "bientôt" ralentir ce dispositif de soutien à l'économie américaine en diminuant le rythme de ses achats d'actifs. La Fed laisse entendre depuis plusieurs mois déjà qu'en raison de la consolidation de la reprise, cette politique dite accommodante devrait s'arrêter ou, du moins, fortement ralentir dans les mois à venir.

Dans les pays émergents. Certains d'entre eux (Inde, Turquie) font face à des sorties massives de capitaux. Rassurés par les signaux positifs venus des économies occidentales,les investisseur commencent en effet a redistribuerllesdans les pays développés, et particulièrement les Etats-Unis 

 (où les marchés battent des records), les fonds qu'ils avaient investis au plus fort de la crise sur les Bourses émergentes, qui surperformaient.

Les plus exposés sont les pays dont les comptes courants sont déficitaires, et qui sont donc particulièrement dépendants des investissements étrangers, comme l'Inde, l'Indonésie, le Brésil et la Turquie. Mais ce "retour de bâton" est également dû aux faiblesses structurelles de ces économies en construction, qui doiventtrouver d'autres relais de croissance".

U.S. must cut $2 trillion over 10 yrs to stabilize debt

U.S. lawmakers are far from finished with the job of deficit-cutting, the Congressional Budget Office warned on Tuesday, saying that $2 trillion in additional savings is needed over the next 10 years just to stabilize long-term U.S. debt.

In new long-term forecasts that will intensify the fiscal debate in Washington as critical deadlines loom, the CBO said U.S. public debt will balloon to 100 percent of the nation's economic output in 25 years if no action is taken, increasing the risk of another financial crisis.

That's up from about 73 percent this year and a 40-year historical average of about 38 percent. And the picture looks worse if Congress does away with the "sequester" across-the-board spending cuts now in place, the non-partisan CBO said.

Revenue growth from a recovering U.S. economy and a January tax increase on the wealthy are helping to shrink near-term deficits, but this is not enough to overcome the rising pension and health care costs associated with the aging Baby Boom generation, CBO director Doug Elmendorf said.

In order to cut U.S. debt levels significantly, CBO said it would take an additional $4 trillion worth of cuts over the next decade. That would shrink U.S. public debt in 2038 to 31 percent of gross domestic product (GDP), below the 40-year average.

Source: Reuters

India's central bank chief seen hawkish

New Indian central bank chief Raghuram Rajan makes his first monetary policy statement on Friday with expectations he may scale back some of the emergency measures that have helped the rupee bounce from a record low.

But in a reflection of the policy challenges faced by the former IMF chief economist who has been dubbed "The Guv" by the Indian media, Rajan is likely to strike a hawkish tone on inflation.

With price pressures rising but economic growth running at a decade low, Rajan must find a fine balance in central bank policies to support economic activity without adding fuel to inflation and giving investors fresh reason to sell the currency.

Source: Reuters

Gold Prices Futures 8.33 a.m. Eastern Time

Gold Price Futures          3 months    US$  1,296.95


Silver Price Futures         3 months    US$      21.41

U.S. Economic Indicators, MBA mortgage applications and Housing Starts

Seasonal adjustments failed to smooth out big swings in Mortgage Bankers Association's applications data where the refinancing index is up 18 percent in the September 13 week following a 20 percent plunge in the shortened September 6 week. The purchase index is up 3.0 percent in the latest week vs a 3.0 percent dip in the prior week. The report notes that the purchase index is close to where it was before the holiday-related gyrations set in which points to flat results for underlying home sales. Rates have been on the rise but did move lower in the latest week, down 5 basis points to an average 4.75 percent for conforming loans ($417,500 or less).

Housing starts rose in August but only because July was revised down. Housing may be flattening. Housing starts in in August advanced 0.9 percent after rebounding 5.7 percent in July. The August starts annualized level of 0.891 million units fell short of expectations for 0.915 million units and was up 19.0 percent on a year-ago basis. July was revised down to 0.883 million units from the original estimate of 0.896 milllion.

The gain in starts was led by the single-family component which increased 7.0 percent after declining 3.0 percent the prior month. The volatile multifamily component declined 11.1 percent after jumping 28.7 percent in July.

By region, the rise in August starts was seen only in the South (the largest Census region), up l2.0 percent for the month. Declining were the Northeast, down 8.2 percent; Midwest, down 3.3 percent; and West, down 10.9 percent.

Forward momentum is slipping. Permits fell 3.8 percent after a 3.9_ percent rebound in July. August's annualized pace of 0.918 million units was up 11.0 percent on a year-ago basis. Analysts called for 0.950 million units for August permits. Weakness for the latest month was in the multifamily component.

Housing may be slowing although it is a tough call since weakness in August was in the volatile multifamily component. Determining the true trend is going to take more data.

Source: Schwab

U.K. Wednesday Newspapers Roundup

Retail investors are likely to be able to join in the next sale of the government's stake in Lloyds, the Chancellor said yesterday. Flush from the success of the government's inaugural sale of some of its shares for 3.2bn pounds, George Osborne said: "I will consider all options for later sales of our shareholding in Lloyds, including a retail offering to the public." The sale of 4.28bn pounds of the government's shares in about three hours on Monday evening at 75p each was 2.8 times covered by demand, market sources said. Temasek, the Singaporean sovereign wealth fund, was the single largest subscriber, buying just under 200m pounds of shares, The Times says.

Residential prices soared in China's biggest cities in August, raising the possibility that the government will take fresh measures to cool the red-hot market. Prices for new homes in Beijing, Shanghai and Shenzhen - the country's three largest cities - surged 18-19% year-on-year, accelerating from previous months. Nationwide, new homes prices increased 8.3% year-on-year, up from 7.5% in July, the Financial Times writes. 

Average house prices in England surpassed their all-time peak of January 2008 to a new record high in July in a further sign the property market is heating up, official figures showed today. Home values rose 3.3% over a year ago but 2.5% of that gain was driven by the property market in London and the South East. In the capital properties were worth nearly 10% (9.7%) more in July than a year earlier. The surge prompted one economist to forecast house prices would grow by seven per cent next year and added to fears that Government efforts to boost mortgage lending are creating a housing bubble, according to The Daily Mail. 

Jack Lew, the US Treasury secretary, said on Tuesday that the administration would not negotiate over congressional approval to lift US borrowings, drawing a line in the sand ahead of high-stakes budget talks with Republicans in coming weeks. Yet after a fortnight in which President Barack Obama has zigzagged between diplomacy and military action on Syria, and backed away from nominating Lawrence Summers to head the Federal Reserve, Republicans plan to test the president's resolve, The Financial Times writes. 

Source: LiveCharts

Fed likely to reduce bond buying

 The U.S. Federal Reserve is expected to begin its long retreat from ultra-easy monetary policy on Wednesday by announcing a small reduction in its bond buying, while stressing that interest rates will remain near zero for a long time to come.

Most economists expect the Fed to scale back its monthly purchases by a modest $10 billion, taking them to $75 billion and signaling the beginning of the end to an unprecedented episode of monetary expansion that has been felt worldwide.

Fed Chairman Ben Bernanke, in what is likely his penultimate news conference before stepping down in January, is expected to reinforce the central bank's commitment to keep overnight rates near zero for a long time to come as a way to temper any jitters the bond market may feel.

The forward guidance on rates is aimed at holding down longer-term borrowing costs, which encompass investors' views on the path of short-term rates.

Source: Reuters

Precious Metals Prices Futures 17.09.13 11.16 p.m. Eastern Time

Gold Price Futures    3 months   US$  1,297.89

Silver Price Futures   3 months   US$      21.44

iPhone 5s stock in China sells out almost instantly

Unlike the rest of the world, China and Hong Kong can reserve the iPhone5 starting today . However, just minutes after the phone became available, most models and colors sold out across the country.

At the time of writing, only the 16 GB ‘space grey’ SKU’s remain available for reservation. All other models have sold out and are “currently unavailable” according to the online store. Sina reported on the phenomenon, noting that the gold model, in particular, was in high demand…

The rate at which the 5s sold out in China does not bode well for the rest of the world, as it suggest that overall supply in general of the 5s is low. Therefore, customers in the rest of world wanting to grab an iPhone on launch day will need to set the alarmsto have any chance of ordering an iPhone online on September 20th. The alternative is queuing for the iPhone, but with such short supply, it will still be necessary to get in line many hours before 8am, when the iPhone officially goes on sale in Apple Stores and other retail outlets.

Meanwhile, stocks of 5c have generally held up well, lasting throughout launch weekend with supplies only now are drying up. Interestingly, it seems that some preorders for the 5c have already been honoured as the first unboxing video of the device has appeared online.

Source: Nine to Five Mac

Carrier Sources Say iPhone 5s Inventory on Friday Will Be “Grotesquely” Low

Sources at multiple U.S. carriers said that the inventory of the new iPhone 5S is significantly less than expected.

“We will have grotesquely unavailable inventory,” was how one carrier source put it.

A source at a second carrier also complained of extremely disappointing shipments from Apple, but said that demand for the high-end iPhone may also be slightly less than initially thought, too. Apparently it is the colors of the iPhone 5c that seem to have captured more customer’s eye.

The iPhone 5s and 5c are both slated to go on sale Friday at AT&T, Sprint, T-Mobile and Verizon Wireless. Apple only took preorders for the iPhone 5c, and carriers said supply there appears to be significantly better.

China Adds U.S. Mortgage, Agency Bonds

According to an article published today in the Wall Street Journal,

"China, the biggest foreign buyer of U.S. debt, in July bought a record amount of U.S. government agency debt and mortgage-backed securities, even as it sold Treasurys, according to data from the Treasury Department.

China's purchases are the latest sign the country hasn't stepped away from funding the U.S. even as prices on Treasurys and mortgage debt fell sharply this summer, sending yields higher and diluting the value of investors' fixed-income holdings, said analysts. China was a net buyer of Treasury notes and bonds in May and June when many other investors cut back their holdings amid signs that the Federal Reserve was weighing reducing its bond purchases.

In July, China increased its holdings of high-grade securities sold by government-sponsored enterprises such as Fannie Mae and Freddie Mac and securities backed by home mortgages guaranteed by the U.S. agencies, by $20.2 billion, according to the Treasury Department data on capital flows. and its China's overall holdings of Treasury debt actually rose by about $1.5 billion to near a record high of $1.277 trillion thanks to its purchases of shorter-term U.S. Treasury debt called bills, which mature in a year or less.Japan, the second-largest foreign owner of Treasury debt after China, boosted its overall holdings by a record $52 billion in July to $1.135 trillion".

Hawk PM Abe seeks debate over self-imposed ban on collective self-defense

Prime Minister Shinzo Abe called Tuesday for the groundwork to be laid for a review of the government's current interpretation of the Constitution to enable Japan to exercise the right of collective self-defense.

Abe issued the call as a government panel of experts on security matters resumed discussions after a seven-month hiatus, as he aims to redefine the country's defense posture amid security challenges such as China's maritime assertiveness and North Korea's nuclear ambitions.

The panel, headed by Shunji Yanai, a former ambassador to the United States, is expected to consider which countries under armed attack Japan would defend and where the Self-Defense Forces could be deployed overseas for that purpose.

S. Korea opposes Japan's proposal for new World Heritage site

South Korea has told Japan it opposes the latter's move to have old industrial facilities where Koreans were pressed into slave labor during World War II entered on UNESCO's list of World Heritage cultural sites, a source well-versed in bilateral relations said Tuesday.

The source's remarks came after Japan's top government spokesman Yoshihide Suga earlier in the day said the Japanese government will seek to have the so-called "Sites of Japan's Meiji Industrial Revolution" entered on UNESCO's list in 2015.

The more than 20 facilities, mostly located in Kyushu and neighboring Yamaguchi Prefecture in Honshu, include the Yawata Steel Works in Fukuoka and a shipyard in Nagasaki where scores of Koreans were forced to labor without pay during the 35-year period of Japanese colonial rule of Korea, which ended in 1945.

NewsOnJapan

Japan's Economy,Trade and Industry Minister hints corporate tax cuts

Japan's Economy, Trade and Industry Minister Toshimitsu Motegi has hinted at a possible corporate tax cut if the government's considered incentives for capital investment are not enough to boost the economy.

The tax breaks and incentives for capital investment are considered one of the pillars of the Abe government's growth strategy.Motegi gave a speech to Japanese and foreign investors in Tokyo on Tuesday.
He expressed hope of boosting capital investment to more than 700 billion dollars in the next 3 years. That's the level prior to the collapse of US investment bank Lehman Brothers 5 years ago.

SOurce: NewsOnJapan

Japan negotiators leave for U.S. to attend TPP talks

A group of about 10 Japanese negotiators for Trans-Pacific Partnership free trade talks, led by chief negotiator Koji Tsuruoka, left Japan on Tuesday to attend a meeting of TPP top negotiators in Washington.

In the run-up to the summit meeting in October of the countries involved in the TPP talks, "we will work to achieve real results," Tsuruoka told reporters at Narita International Airport near Tokyo.At their meeting, to be held for four days from Wednesday, the chief negotiators will speed up talks on 21 areas of trade, with an eye to reaching a broad agreement at the TPP summit in Bali, Indonesia, on Oct. 8.

NewsOnJapan

Yahoo Japan unveils 3D printing technology

Internet firm Yahoo Japan has developed technology to produce solid plastic objects with 3D printers based on computer searches.

If the word "horse," for example, is spoken into the machine, it searches for a drawing of the animal on the Internet. In about 15 minutes, it produces a solid, three-dimensional horse-shaped object that fits in the palm of a hand.Yahoo Japan plans to install the equipment at a school in Tokyo for people with special needs.
The company wants to study how visually impaired children make Internet searches.
It plans to set up a website on objects about which children are particularly curious.
Only about 100 3D data models are available online.

NewsOnJapan

China's home prices continue to rise in August

New home prices continued to rise in most Chinese cities in August, according to official data released on Wednesday.

Of a statistical pool of 70 major Chinese cities, 66 saw month-on-month new home price rises, with the highest growth rate at 1.7 percent, the National Bureau of Statistics (NBS) announced.

In July, 62 cities recorded month-on-month increase in new home prices, with the highest rate at 2.2 percent.

U.S. and Chinese Think Tanks : China-U.S. Cooperation, Key to the Global Future

China and the United States can and must broaden cooperation and build a new type of major country relationship, according to a joint report released on Tuesday here by U.S. and Chinese think tanks.

"China-U.S. Cooperation: Key to the Global Future", a joint report developed by a China-U.S. working group organized by the Atlantic Council and China Institute of International Studies, focuses on long-term global trends and their implications for the China-U.S. relationship and global future.

The report found that the global future, which is "increasingly interconnected and extraordinarily turbulent", will face a sharply rising demand for food, water and energy, as well as a climate crisis, a growing global middle class and an unprecedented technological revolution.

"When China and the United States cooperate to meet looming challenges, both countries benefit. When they fail to cooperate and pursue narrow interests or win-lose or zero-sum outcomes, both countries lose," the report concluded following depiction of different scenarios and outcomes.

Among a series of recommendations for policymakers in both countries, the working group in particular called for the establishment of a U.S.-China joint "vision group" composed of senior nongovernment and former government leaders to develop recommendations for both nations to cooperate bilaterally and join other nations to tackle critical global challenges.

Tung Chee Hwa, founding chairman of China-U.S. Exchange Foundation which supported the report, noted that the two countries are stakeholders that share a lot of common concerns.

"It is important that the misunderstanding and mistrust be addressed, differences be managed and contained, and under no circumstances should they affect the overall U.S.-China relationship," he said.

Source: Xinhua