Overnight Markets-Leading News

 Wen Complains About Chinese Banking Hegemony and Amount of Money they make

Notice big 4 Chinese banks earn 2x as much as Big five USA banks. Chinese real economy, is >> than USE (USA economy)!!

http://www.reuters.com/article/2012/04/04/us-china-banks-wen-idUSBRE83308T20120404

Austria Rejects Bank Bonds Backed by Rescued Euro Members

The Austrian Central Bank will join Germany’s Bundesbank in rejecting as collateral bank bonds guaranteed by member states receiving aid from the European Union and the International Monetary Fund.

“We will do that as well,” Christian Gutlederer, a spokesman for the Vienna-based institution, said by phone today. “We are talking about minimal amounts. It will have very little impact on overall collateral.”

The Bundesbank was the first of the region’s central banks to make use of a change in European Central Bank collateral rules announced on March 23. The ECB no longer obliges members to accept bank bonds guaranteed by governments “whose credit assessment does not comply with the benchmark for establishing its minimum requirement for high credit standards…..

http://www.businessweek.com/news/2012-04-04/austria-rejects-bank-bonds-backed-by-rescued-euro-members

Euro Falls On Spain Auction-EU Credit Markets

The euro lost the most in almost a month against the dollar after demand declined at a Spanish bond auction, adding to concern the region is struggling to overcome its sovereign-debt crisis.

The 17-nation currency weakened after the European Central Bank kept its benchmark rate at a record low and President Mario Draghi said the economic outlook remained subject to “downside risks.” The yen and dollar strengthened versus all their most- traded counterparts tracked by Bloomberg amid demand for the relative safety of the nations’ debt. Australia’s dollar dropped to an 11-week low after the nation unexpectedly reported a trade deficit…

http://www.bloomberg.com/news/2012-04-04/euro-falls-3rd-day-as-demand-falls-at-spain-auction-before-ecb.html

Draghi Tested as German Pay Deals Add to Euro Divergence

Wage moderation in Germany may be coming to an end at precisely the wrong time for European Central Bank President Mario Draghi.

As nations from Greece to Spain battle recessions and record unemployment, workers in Germany are winning some of the biggest pay increases in two decades, with public service staff set to gain 6.3 percent more by the end of next year. That’s widening the gaps between Europe’s largest economy and its euro- area peers, making the ECB’s one-size-fits-all monetary policy less effective…

http://www.bloomberg.com/news/2012-04-03/draghi-tested-as-german-pay-deals-add-to-euro-divergence-threat.html

Monti Reaches Deal with Parties on Labor Reform

http://www.bloomberg.com/news/2012-04-04/monti-reaches-deal-with-main-parties-on-italy-labor-law-overhaul.html

Rajoy Sends Out Distress Signal

Prime Minister Mariano Rajoy said Spain’s situation is one of “extreme difficulty” and signaled that his budget cuts are less painful than a bailout would be, as demand for the nation’s debt slumped at an auction.

“Spain is facing an economic situation of extreme difficulty, I repeat, of extreme difficulty, and anyone who doesn’t understand that is fooling themselves,” Rajoy told a meeting of his People’s Party today in the southern coastal city of Malaga. (this is the ‘ultimate party town in Spain, it is like going to Malibu to hold a conference about how tough life is-zgr)

Rajoy raised the threat of an international bailout for the second time this week as he sought to defend the deepest austeritymoves in at least three decades. While “no one likes” the budget presented last week, he said “the alternative is infinitely worse.”

Spain sold 2.59 billion euros ($3.4 billion) of bonds today, just above the minimum amount it planned for the auction and below the 3.5 billion-euro maximum target. The average yield on the bonds due in October 2016, which act as the five-year benchmark, rose to 4.319 percent from 3.376 percent at last month’s sale. Secondary-market yields rose to 4.48 percent…

http://www.bloomberg.com/news/2012-04-04/rajoy-says-spain-in-extreme-difficulty-as-bond-demand-drops.html

German Factory Orders Increased Less Than Forecast in February

German factory orders increased less than economists forecast in February as countries outside the euro region barely offset a drop in European demand.

Orders (GRIORTMM), adjusted for seasonal swings and inflation, increased 0.3 percent from January, when they fell a revised 1.8 percent, the Economy Ministry in Berlin said today. Economists forecast a gain of 1.5 percent, according to the median of 35 estimates in a Bloomberg News survey. From a year ago, orders dropped 6.1 percent when adjusted for work days….

http://www.bloomberg.com/news/2012-04-04/german-factory-orders-increased-less-than-forecast-in-february.html

Draghi, unlike the no inflation and call Blythe Masters to Sell Silver FED admits there is Inflation in the pipe…no kidding!

European Central Bank President Mario Draghi comments on inflation, monetary policy and the region’s debt crisis.

He made the remarks at a press conference in Frankfurt today after the ECB kept its benchmark interest rate unchanged at a record low of 1 percent.

On the ECB’s long-term loans:

“The projections that we have discussed don’t take into account the impact of the second LTRO.” It is “a partial analysis.”

“The LTROs are powerful and complex measures” and have “affected all the funding channels. We have to look at exactly what is happening here.”

“These two operations have helped avoid a major credit crunch.”

“We don’t see any sign that banks are being addicted to the ECB.”

“The two LTROs are a window of opportunity for governments to undertake fiscal consolidation and structural reforms.”

“Banks need to deleverage in an orderly fashion.”

“Let’s keep in mind this is not capital, this is liquidity we provide banks with. If banks don’t have capital, better raise it now.”

On timing of ECB exit:

“We have to assess month by month the outlook for price stability.”

Any talk of an exit strategy “for the time being is premature.”

“There are inflationary pressures coming from higher oil price but inflation expectations are anchored for the medium term.”

“There wasn’t any discussion about interest-rate changes” at today’s meeting. Draghi also said today’s decision was unanimous.

On inflation:

“The information that has become available since the beginning of March broadly confirms our previous assessment.

‘‘We expect price developments to remain in line with price stability.’’

‘‘Inflation rates are likely to stay above 2 percent for 2012 with upside risks prevailing.’’

This is ‘‘owing mainly to recent increases in energy prices as well as rises in indirect taxes.’’

‘‘We will pay particular attention to any sign of pass through from energy prices to wages.’’

‘‘Underlying price pressures should remain limited.’’

‘‘All the necessary tools are available to address upside risks to price stability in a firm and timely manner.’’

‘‘Risks to outlook for HICP inflation rates in coming years still remain broadly balanced.’’

On the ECB’s monitoring of inflation:

‘‘We do look at numbers obviously but the thing we look at mostly at is pass through.’

‘‘You can have high energy prices, but we don’t see the pass through.’’

On ECB’s language on inflation:

‘‘Don’t think I’m stepping up my rhetoric on inflation.”

“The ECB has always said that exogenous increases ought to be contrasted to the extent that they pass through.”

“I won’t comment on any individual wage settlement,” he said when asked about wage deals in Germany.

“We also have to take into account productivity. Our primary mandate is to maintain price stability.”

On the economic outlook:

“Growth has stabilized at low levels” and a “moderate recovery is expected in course of the year.”

“The economic outlook is subject to downside risks.”

“We continue to expect the euro-area economy to recover gradually in the course of the year.”

“The remaining tensions in euro area sovereign-debt markets are expected to dampen economic momentum.”

“Downside risks also relate to further increases in commodity prices.”

On credit growth:

“Money and credit growth confirm the broad stabilization of financial conditions.”

“Financing conditions for bank have generally improved.”

“Demand for credit remains weak in light of ongoing subdued economic activity.”

The “full supportive impact of the eurosystems non- standard measures will need time.”

“It is essential for banks to strengthen their resilience further.”

“The two LTROs were conceived and designed so that banks that are close to” small and medium sized enterprises “can access this money.”

“We aren’t sure this money is closer to the SMEs yet, you need time.”

On government budgets:

“In order to support confidence, sustainable growth and employment, the governing council calls on governments to restore sound fiscal positions.”

“National policy makers need to fully meet their responsibility.”

“Countries which have suffered losses in cost competitiveness need to ensure sufficient wage adjustment.”

“Fiscal consolidation will eventually stabilize financial conditions.”

“That’s why we said all along that structural reforms are essential to produce long-term sustainable growth.”

“Much of the growth in countries that are now experiencing contraction will have to come from supply reforms.”

On ECB measures:

“All our non standard measures are temporary in nature.”

On Greek banks:

“We are assessing the positions of the Greek banks.”

“There will be a decision on which Greek banks are viable as counterparties for monetary policy operations and which are not viable. This process is taking place right now.”

“We have a 50 billion-euro recapitalization fund. Twenty five has become available to allow recapitalization of Greek banks.”

“Everything will happen in an orderly fashion, according to the plan agreed with the troika.”

On ECB, national central bank collateral rules:

“These are banks’ bonds. Bonds issued by banks and guaranteed by national governments.”

“These banks can hand these bonds to their central banks as collateral to their” national central banks and the ECB.

“Sometimes it happens that they give this collateral to NCBs in other countries.”

“It’s natural that we grant NCBs freedom, since they’re the ones talking risk.”

“When all this is said and done, we are really talking about peanuts.”

“Unfortunately there was a big confusion in communication. We are talking about a very narrow and restricted set.”

“It was way overblown in communication terms.”

On Ireland:

“Ireland has undergone a very hard and harsh fiscal consolidation program. From all angles they deserve to be praised for their efforts.”

On ECB covered-bond program:

“Demand for these kinds of bonds went up.”

“This is why we monitor the program to judge whether it is appropriate in present monetary conditions.”

“We’ve slowed down the program, and we’re monitoring the appropriateness of the program in present market conditions.”

“We have not done quantitative easing, we are not purchasing bonds outright.”

http://www.bloomberg.com/news/2012-04-04/ecb-s-draghi-says-there-are-upside-risks-to-inflation-outlook.html

This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *

fifteen + 10 =

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>