October 17, 2011   82 notes

Obama cautious on currency bill


Obama stopped short of explicitly backing legislation that calls for U.S. tariffs on imports from countries with deliberately undervalued currencies, and he restated concerns that any measure must comply with global trade rules.Still, in his toughest language on China to date, the president echoed sponsors of the bill, which is heading toward a final Senate vote that could come later on Thursday. The measure, which has drawn warnings from Beijing that it could trigger a trade war, is widely expected to pass.”China has been very aggressive in gaming the trading system to its advantage and to the disadvantage of other countries, particularly the United States,” Obama told a news conference focused on his bid to revive a weak U.S. economy.”Currency manipulation is one example of it,” he said.Obama, who faces a tough bid for re-election next year, did not say whether he would sign or veto the legislation if it reached his desk. Both the Senate and the House of Representatives would have to approve the measure first.”My main concern … is whatever tools we put in place, let’s make sure that these are tools that can actually work, that they’re consistent with our international treaties and obligations,” Obama said.”I don’t want a situation where we’re just passing laws that are symbolic knowing that they’re probably not going to be upheld by the World Trade Organization,” he said.The authors of the bipartisan Currency Exchange Rate Oversight Reform Act insist the bill complies with WTO rules.BOEHNER CALLS BILL “WRONG” AND “DANGEROUS”Many economists say China holds down the value of its yuan currency to give its exporters an edge in global markets. China says it is committed to gradual currency reform and notes that the yuan has risen 30 percent against the dollar since 2005.The Senate voted 62-38 on Thursday to curtail debate and send the bill toward a final vote in that chamber.Supporters say that decision, which required a super-majority of 60, virtually guarantees Senate approval, but the bill faces stronger opposition in the House and may never be brought to a vote.”For the Congress of the United States to pass legislation to force the Chinese to do what is arguably very difficult to do I think is wrong, it’s dangerous,” House Speaker John Boehner said on Thursday.”You could start a trade war,” he warned.Some bill supporters, such as Senator Sherrod Brown, a Democrat from Boehner’s home state of Ohio, say that won’t happen because China can’t afford a trade war with a country that annually buys more than $300 billion of its goods.Others argue the United States is already in a battle for its economic life and not doing enough to defend itself.”We’re in a trade war,” said Brian O’Shaughnessy, chairman of 210-year-old Revere Copper in Rome, New York, a maker of copper and brass products used in electrical, construction and other markets, who backs the legislation. “We’re in an economic war for jobs and we’re not fighting it. We’re losing it.”Boehner has the power to block the bill in his chamber, even though backers of the legislation say it has 225 House co-sponsors, including 61 Republicans — enough for passage if it came to a vote.House Democratic Leader Nancy Pelosi lost no time in stepping up pressure on Boehner.”Now is the time for the House Republican leadership to stand with American workers by allowing the House to pass the bipartisan China currency bill, and put more Americans back to work,” she said in a statement.”We are in a very abusive relationship with China,” that is costing the United States more than 1 million jobs, Pelosi told reporters later.Obama touted his administration’s record on pursuing trade cases before the World Trade Organization with the Chinese. He also noted he had taken great pains to stabilize ties with China that have been dogged by disputes over trade, human rights and U.S. arms sales to Taiwan.VOTES VS. DIPLOMACY DILEMMAIf the House were to pass the bill, Obama would face a dilemma. Signing it would anger China, whose cooperation the United States needs both on the economic front and in global hot spots such as North Korea.But vetoing the bill would not play well in industrial heartland states like Ohio and Michigan, which Obama likely needs to win a second term. A leading Republican candidate, Mitt Romney, has vowed to crack down on China over currency.”I think Obama would prefer not to take a position, but if he wants to be consistent with his past policies and statements, he will sign the bill,” said Scott Paul, executive director of the Alliance for American Manufacturing.Obama said he believed “a win-win trading relationship with China” was possible.But he said competing with the world’s second-biggest economy requires Washington to “make sure that we’re aggressive in looking out for the interests of American workers and American businesses and that everybody is playing by the same rules and that we’re not getting cheated in the process.”Underscoring that stance, U.S. Trade Representative Ron Kirk on Thursday accused China of flouting WTO rules by failing to notify the world trade body of nearly 200 Chinese government subsidy programs.”The situation was simply intolerable,” Kirk said in a statement, which also scolded India for being delinquent with the subsidy reports.

October 14, 2011   54 notes

Apple to hold private memorial to Jobs Sunday -WSJ


According to the invitation, guests have been asked to RSVP to Emerson Collective, a philanthropic organization founded by Jobs’ wife, Laurene Powell Jobs.An Apple spokesman did not immediately return calls seeking comment.The event is separate from an Oct. 19 celebration that Apple plans for all its employees at its Cupertino campus.

October 12, 2011   21 notes

Lipper-Emerging market funds top and tail performance tables


LONDON Oct 12 (Reuters) - While the world fretted about Europe and its debt crisis, the biggest market swings during September were in emerging economies, sending Turkey-focused funds to the top of performance rankings and China to the bottom, according to Lipper data.The worst performing equity fund last month out of more than 3,400 vehicles available for sale in the UK was the Henderson HF China A2 USD fund , which dropped by a third, according to figures from Thomson Reuters funds research firm Lipper.Also near the bottom was the Atlantis New China Fortune fund , down nearly 25 percent.”September was a very bad month for Chinese stocks,” said Maarten-Jan Bakkum, emerging market equity strategist at ING Investment Management.”The whole year people were already concerned about China - the structural issues, the banking problems, local government debt, that kind of stuff. Now in September you clearly saw people were starting to adjust their growth forecasts.”The Chinese authorities intervened to support the country’s ailing stock market on Monday, with the country’s sovereign wealth fund increasing its stakes in its “big four” banks.”As always with China, the challenge is to distinguish between cyclical threat and long term opportunity,” said Merrill Lynch Wealth Management in a note to clients this week.”Bottom line, China will see growth ease towards 7 to 8 percent in the coming decade as against the 11 percent pace enjoyed in 2003-10 but will reflect a maturing economy rather than a cyclical collapse.”Other emerging markets such as Russia were also well represented towards the lower end of the fund performance tables, meanwhile.Equities in developing countries fell around the world throughout September, largely on fears that the European debt crisis would result in weak demand in developed economies which are major export destinations for emerging market economies.The MSCI Emerging Markets Index fell around 15 percent during the month, compared with a drop of less than 7 percent for the S&P 500 .Bucking this trend was Turkey which saw its market rebound during September and pushed funds focused on the country to the top of the performance table.Three out of the five best performing funds were Turkey-focused during September, according to Lipper data.Top of the table was the Magna Turkey fund , up by 12 percent, followed by HSBC’s GIF Turkey Equity fund and BNP Paribas’ L1 Equity Turkey fund .Investors attributed this to a bounce-back after a slump rather than fundamental economic prospects, however.”The Turkish market relative to other emerging markets bottomed in mid August. So when the correction in emerging marekts became heavy, Turkey did better,” said Bakkum.

October 12, 2011   6 notes

UPDATE 5-Alcoa profit hurt by slowdown, recession fears


* Profit and sales slip from Q2* Shares fall about 5 pct in after-hours tradingBy Steve JamesOct 11 (Reuters) - Alcoa Inc , the largest U.S. aluminum producer, said an economic slowdown hurt demand and knocked prices for the metal lower, denting its third-quarter profit and sending its shares down in after-hours trading.CEO Klaus Kleinfeld warned of weak economic conditions through the year, particularly in Europe, “as confidence in the global recovery faded.”That sapped aluminum demand from the automotive, industrial products, construction and packaging sectors since the second quarter, with only the aerospace and transport sectors growing.The third-quarter profit jumped from a year ago, but was lower than the second quarter and fell short of Wall Street expectations, which had already been lowered because of a slump in global metal prices.Chief Financial Officer Chuck McLane said worries about Europe’s debt crisis had prompted customers there to reduce orders.Kleinfeld said that battered confidence was the biggest problem. “We’ve seen strength in many of our markets, despite the sharp slowdown in Europe that hurt our sequential results and I’m more concerned about lack of confidence than about market fundamentals.”It almost looks like the world is worrying itself into another recession and that should not be allowed to happen,” he told Wall Street analysts on a conference call.”I think the problems that we have today … those fears, not a shrinking market, were the main reason for the weak quarter.”Kleinfeld said Alcoa stuck with its forecast for global aluminum demand growth of 12 percent this year, although it expected a decline in Europe, North America and Brazil.But that decline will be made up by strength in emerging markets and he increased the growth forecast for China from 15 percent to 17 percent.Still, one analyst said things could get worse. “There’s a bigger decline in price so far in the fourth quarter and seasonally it’s worse,” said Charles Bradford of Bradford Research in New York.”You get the holidays toward the end of the year and that slows everybody down. It’s going to be much worse.”EARNINGS LAGAlcoa, the first Dow component company to report third-quarter results, said net earnings were $172 million, or 15 cents per share, compared with $61 million, or 6 cents per share, a year earlier.The Pittsburgh-based company said income from continuing operations was also 15 cents per share, but down from 28 cents per share in the second quarter. Analysts on average were expecting earnings of 22 cents per share, according to Thomson Reuters I/B/E/S.Alcoa said revenue rose 21 percent to $6.4 billion from a year earlier, but was 3 percent lower than the second quarter of this year as metals prices slumped sharply.Aluminum prices fell almost 20 percent in the third quarter on global economic concerns and Alcoa’s share price fell 41 percent during the same period.In his call with analysts, Kleinfeld blamed the price drop on, “very offensive short-selling going on by speculators.”They are betting against aluminum as a proxy for betting against the global economy,” the CEO said.Still, aluminum prices could easily rebound if the sentiment around the European economy shows any improvement, analysts said, which would immediately benefit Alcoa.”Visibility is very low, so it’s hard to know what’s around the corner, but even with earnings coming in below consensus, we shouldn’t overreact,” said Bridget Freas, an analyst with Morningstar in Chicago.”It’s a canary in the coal mine as far as economic activity. In terms of Q4, if the economy turns around and does better, I think Alcoa will turn around and do better,” said Stephen Massocca, fund manager with Wedbush Morgan in San Francisco.Alcoa stock was down 4.6 percent to $9.83 in after-hours trading on the New York Stock Exchange.