CSRCs Guo Says Intervention in Stock Market Necessary: Xinhua

Not that a stock market is ‘necessary’. And not to forget that a 30% corporate income tax, as in the US, is at least as good as owning 30% of all taxable enterprises. If govt, want’s a larger share of corporate profits, it can just hike the tax rather than buy the stock.

If govt cares about stock prices, the question has to be why. If it’s because lower stock prices cause people to spend and consume less out of fear, you’d think cutting taxes on people working for a living would be more attractive than the govt buying stocks? If it’s due to an attack on a fixed fx currency, like HK, I’d rather float the currency than buy stocks.

CSRCs Guo Says Intervention in Stock Market Necessary

January 22 (Bloomberg) — China Securities Regulatory Commission Chairman Guo Shuqing said at the national securities
and futures supervision meeting that its necessary to intervene in Chinas stock market at key moments, the official Xinhua
News Agency reports.

* Chinas stock market is not mature, Guo was cited as saying

BOJ Adopts Abes 2% Target in Commitment to Ending Deflation

This of course fundamentally does nothing of consequence for aggregate demand or the level of the currency. The extra deficit spending due to start in April is what will help a bit.

BOJ Adopts Abes 2% Target in Commitment to Ending Deflation

By Toru Fujioka and Masahiro Hidaka

January 22 (Bloomberg) — The Bank of Japan set a 2 percent inflation target and shifted to Federal Reserve-style open-ended asset purchases in its strongest commitment yet to ending two decades of deflation.

World Unemployment to Hit Record High in 2013

World Unemployment to Hit Record High in 2013: ILO

By Katy Barnato

January 22 (CNBC) — World unemployment could top record levels this year and continue rising until 2017, the International Labour Organization (ILO) said on Tuesday in its annual employment report.

2009 currently stands as the worst recorded year for world unemployment, with 198 million people across the globe without work.

In its 2013 Global Employment Trends report, the ILO forecasts unemployment numbers will rise by 5.1 million in 2013 to reach 202 million, topping 2009’s record.

The report also predicts unemployment will rise further in 2014 to reach 205 million.

Friday update

So just like Japan, as soon as the economy starts doing a bit better we hike taxes. Still too early to say how the FICA hike will impact sales and profits, but it will. And spending cuts are on the way, though they may be delayed.

Not to forget the debt ceiling thing about to be kicked 3 months down the road as it stands guard to ensure ‘meaningful’ spending cuts.

Oil firm, but can still go either way. WTI converging to Brent indicates the seaway pipeline capacity increase may be enough to drain the surplus at pad 2, bringing wti up to brent, but too soon to tell for sure. And looks like the demand for saudi crude is dropping some, but not enough to dislodge them from being
swing producer/price setter.

Looks to me like the whole world is becoming ‘more competitive’ so it all cancels out. Bad for people, ok for stocks, with profits running at record highs as a % of GDP. Meaning the federal deficit has to be that much higher, all else equal, to fill the output gap.

The yen keeps going down. Looking more and more to me it’s off the radar screen intervention by the likes of insurance co’s, pension funds, and other quasi govt agencies got the note to buy fx denominated bonds in size. Not sure how far they will take it, but they have a serious herd instinct that has formed serious multi year bubbles in the past.

Europe? They fixed the solvency issue, sort of, and now just have the economy thing to deal with. Problem is the ECB grants solvency only with conditionality. Good luck to them.

Oil Settles Higher After Saudi Arabia Cuts Output

As the article states, production fell because demand fell. If anything that would be oil unfriendly as the Saudis can only cut maybe another 5 million bpd without ‘permanent’ cutbacks, at which point they lose control of price on the downside.

Market price action, however, might be telling us the cutbacks were due to production issues in which case the risk is loss of control of price on the upside.

Oil Settles Higher After Saudi Arabia Cuts Output

January 10 (Rueters) — Oil futures rose on Thursday on news that top world oil exporter Saudi Arabia had cut back production in response to flagging demand, and after China reported strong demand for its exports.

U.S. light, sweet crude rose to a 14-week high of $94.70 a barrel before settling at $93.82, up 72 cents on the day. Brent crude futures rose as high as $113.29 a barrel before settling at $111.89, up 13 cents.

OPEC’s top producer slashed oil production by 700,000 barrels per day (bpd) to 9 million bpd during the last two months of 2012, according to industry sources. Major customers for Saudi crude said the cuts were driven by lower demand.

News of the Saudi supply curbs helped briefly push Brent over $113 a barrel for the first time since mid-October, well above the $100 a barrel price Riyadh has said it favors.

Oil and other markets also got a boost from Chinese trade data that showed strong export growth rebound in December, raising expectations of revived growth in the world’s No. 2 economy that could drive more fuel demand.

Crude pared some gains after the Philadelphia Federal Reserve Bank said its annual revisions showed that factory activity in the U.S. mid-Atlantic region grew at a lower pace in December than originally reported.

“The strong data from China indicates demand might be improving there and the Saudis have cut back production, but the downward revisions by the Philly Fed gave the market a little pause,” said Phil Flynn, analyst at Price Futures Group in Chicago.

Gains in U.S. crude pushed the benchmark to a level of 67 on the 14-day relative strength index. That is close to the 70 mark that, according to traders who follow technical charts, can indicate a commodity has been overbought.

U.S gasoline futures rose along with crude, but heating oil futures in the New York Harbor fell by 0.6 percent to around $3.05 per gallon.

Traders attributed the fall to speculation that cargoes of Russian gas oil may come to the Harbor. Physical oil traders told Reuters that up to six cargoes may be headed for New York.

Also helping oil’s advance on Thursday was news of a pipeline explosion in Yemen that halted most of the country’s oil exports.

Flows of oil through Yemen’s main crude export pipeline stopped on Thursday after it was blown up by unknown attackers, government and oil industry officials said.

“These three factors – Saudi Arabia, Yemen and the China data – are all helping to push up the market,” said Tamas Varga, an oil analyst at broker PVM Oil Associates in London.

Saudi Arabia says it favors an oil price of about $100 a barrel, but recent reports have suggested that the market is well supplied and that output from some regions, particularly North America, will grow rapidly over the next two years. U.S. government data showed that domestic oil output rose above 7 million barrels a day last week for the first time since 1993.

“Short term, the Saudi output figures are bullish, but longer term they are more bearish, because they suggest Saudi Arabia sees the need to cut to balance the market,” Varga said.

Check this Insanity – they want that 2% inflation

Yes!

New Govt Office To Advise Small Firms On Consumption Tax

January 16 (Nikkei) — The government plans to set up a new office to provide advice to small businesses that wish to transfer consumption tax increases to the prices of their products and services, prior to the introduction of the 8% tax rate in April 2014, The Nikkei has learned.

Subcontractors are becoming concerned that they may be pressured into not passing tax increases over to their product and service prices, as many of them do not have the advantage in price negotiations.


The new office will address such concerns by helping firms to avoid taking on excessive costs. It will accept inquiries and complaints from throughout Japan by telephone and e-mail.


The Japan Fair Trade Commission will work closely with relevant ministries to inspect companies that are suspected of having rejected requests for price increases from their suppliers. The government also plans to come up with new legislation to impose strict controls on such companies.

More Americans 75 and Older Keep Working

As previously discussed, the real answer to the ‘dependency ratio’ is in fact happening?

The trick is to let seniors collect full social security and their paychecks:

More Americans 75 and Older Keep Working

By Christine Dugas

January 1 (USA Today) — Sixty-five is the normal retirement age, but many Americans are working much later in life, and it’s not just because they need the money.

The number of workers who are 75 and older has skyrocketed by 76.7 percent in the past two decades, according to research by the AARP Public Policy Institute. “We are living longer, healthier lives,” says Kerry Hannon, author of Great Jobs for Everyone 50+. “And the types of work that people do is not as labor intensive as it was in our parents’ generation.”