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krisluke
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08-May-2011 21:37
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Scepticism in Pakistan over bin Laden's alleged role
Video frame grab of Osama bin Laden videos released by the Pentagon
  CHAK SHAH MOHAMMAD, Pakistan (Reuters) - Pakistani security officials reacted with scepticism on Sunday to a U.S. assertion that Osama bin Laden was actively engaged in directing his far-flung network from his compound in Abbottabad where he was killed on May 2.   Washington said on Saturday that, based on a trove of documents and computer equipment seized in the raid, bin Laden's hideout north of Islamabad was an " active command and control centre" for al Qaeda where he was involved in plotting future attacks on the United States.   " It sounds ridiculous," said a senior intelligence official. " It doesn't sound like he was running a terror network."   Pakistan, heavily dependent on billions of dollars in U.S. aid, is under intense pressure to explain how the al Qaeda leader could have spent so many years undetected just a few hours' drive from its intelligence headquarters in the capital.   Suspicion has deepened that Pakistan's pervasive Inter-Services Intelligence (ISI) spy agency, which has a long history of contacts with militant groups, may have had ties with bin Laden -- or that at least some of its agents did. The agency has been described as a state within a state.   Pakistan has dismissed such suggestions and says it has paid the highest price in human life and money supporting the U.S. war on militancy launched after bin Laden's followers staged the September 11, 2001, attacks on America.   The Obama administration has seen no evidence Pakistan's government knew bin Laden was living in that country before his killing, the U.S. national security adviser said on Sunday.   Prime Minister Yusuf Raza Gilani is scheduled to " take the nation into confidence" in parliament on Monday, his first statement to the people more than a week after the incident embarrassed the country.   Pakistani officials said the fact that there was no internet connection or even phone line into the compound where the world's most-wanted man was hiding raised doubts about his centrality to al Qaeda.   Analysts have long maintained that, years before bin Laden's death, al Qaeda had fragmented into a decentralised group that operated tactically without him.   " It's bullshit," said a senior Pakistani security official, when quizzed on a U.S. intelligence official's assertion that bin Laden had been " active in operational planning and in driving tactical decisions" of the Islamist militant group from his secret home in the town of Abbottabad.   On Saturday, the White House released five video clips of bin Laden taken from the compound, most of them showing the al Qaeda leader, his beard dyed black, evidently rehearsing the videotaped speeches he sometimes distributed to his followers.   None of the videos was released with sound. A U.S. intelligence official said it had been removed because the United States did not want to transmit bin Laden's propaganda. But he said they contained the usual criticism of the United States as well as capitalism.   While several video segments showed him rehearsing, one showed an ageing and grey-bearded bin Laden in a scruffy room, wrapped in a blanket and wearing a ski cap while watching videotapes of himself.   " This compound in Abbottabad was an active command and control centre for al Qaeda's top leader and it's clear ... that he was not just a strategic thinker for the group," the U.S. intelligence official said in Washington.   " He was active in operational planning and in driving tactical decisions."   DUELLING NARRATIVES   The duelling narratives of bin Laden reflect both Washington's and Islamabad's interests in peddling their own versions of bin Laden's hidden life behind the walls of his compound.   Stressing bin Laden's weakness makes his discovery in a garrison town just a few minutes' walk from Pakistan's military academy less embarrassing for Pakistan, but playing up his importance makes the U.S. operation all the more victorious.   The competing claims came as senior Pakistani officials said bin Laden may have lived in Pakistan for more than seven years before he was shot dead, a disclosure that could further strain relations between the two countries.   One of bin Laden's widows, Amal Ahmed Abdulfattah, told investigators bin Laden and his family had spent five years in Abbottabad.   Abdulfattah, along with two other wives and several children, were among 15 or 16 people detained by Pakistani authorities at the compound after the raid.   She said that before Abbottabad, bin Laden had stayed in a nearby village for nearly two-and-a-half years.   Residents of the village of Chak Shah Mohammad, at the end of a bumpy road flanked by fields of wheat, were both puzzled and a little scared to find themselves at the focus of the investigation.   " Everyone in the village knows when a cow has a calf so how could bin Laden and his family hide here?" Mohammad Naseer, a 65-year-old retired soldier, said as he took a break from working his fields. " I can say for sure he wasn't here."   The village is made up of about 120 small, brick buildings, homes and sheds, and has a population of about 400 people, although many have left for work in cities.   Pakistani security agents have been going house to house, searching for clues.   " Police never used to come to our doors but now these guys are turning up all suspicious of us," said school teacher Ahmed Sultan.   " My young kids are asking 'Dad what happened, what did you do?'" he said. " We have nothing to do with bin Laden. We're Pakistani ... We don't feel anything for him." |
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krisluke
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08-May-2011 21:34
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This Week's Crude Oil Plunge Has Everyone Fantasizing About Lower Gas Prices Gas prices, which have been surging in recent weeks, will fall off this summer, according to a report from the AP.
" It's going to be $3.50 per gallon this summer," oil analyst Andrew Lipow said. " At the very least, you can expect prices to fall 40 cents or so over the next several months."
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krisluke
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08-May-2011 21:32
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European Leaders Agree: Greece Needs A New Bailout Plan That Could Include Restructuring European leaders have concluded that Greece needs changes to its bailout program that could include the restructuring of its debt, according to Reuters sources.
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krisluke
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08-May-2011 21:31
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Ireland To Get Interest Rate Cut On Its Bailout Loan Without Sacrificing Its Low Tax Rate IRELAND WILL GET a one per cent interest rate cut on the loan element of its €85 billion bailout from the EU and IMF without making concessions on corporation tax. The Sunday Times (subscription required) cites government sources and reports what the BBC had yesterday revealed- that a special written procedure will be adopted next weekend that will declare support for Ireland’s current average interest rate of 5.8 per cent being cut and that agreement will be sought from other member states at a two-day meeting of EU finance ministers on 16 May. The cut to the current average interest rate could be worth €400 million to the Irish exchequer. Some concessions will have to be made but these will not include Ireland’s low corporation tax rate of 12.5 per cent. The paper speculates that the issue of the common consolidated corporation tax base (CCCTB) – which provides an EU-wide common basis for taxing profits – is still up for discussion. Meanwhile, the Irish Mail on Sunday reports that a senior government minister has told the paper that Ireland will not be able to repay the €250 million in total it has borrowed from the EU and IMF and that the government expects Ireland’s debt will be restructured within three years. It follows yesterday’s opinion piece by economist Morgan Kelly in the Irish Times in which he warned that Ireland faces bankruptcy unless it walks away from the bailout package. Kelly’s views make the front page of the Sunday Independent, the Sunday Times and the Irish Mail on Sunday. |
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krisluke
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08-May-2011 21:29
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There's A Bloody Border Dispute Between Two Asian Emerging Markets Happening Right Now   Thailand and Cambodia are currently fighting over a border region between the two countries, and the regional organization ASEAN has failed to calm tensions between the two sides, according to Reuters.
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krisluke
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08-May-2011 19:15
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The Best iPhone And iPad Apps You Missed Out On This Week We picked out some extraordinary apps for iPhone and iPad that have been getting tons of buzz this week.
  We have an app to track your kids on a map (that won't kill your phone battery), an app to make sure you won't forget anything (no matter which device or computer you're using), and an app to visualize your music taste as a solar system. Pretty amazing. |
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krisluke
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08-May-2011 19:12
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The ULTIMATE Proof That Silver And Gold Mania Has Gone Insane
If you thought that gold-dispensing ATMs were a sign of a top to the precious metals bubble, think again.
  We've found the ultimate. On eBay, you can find people selling 1 lb. ingots of .999 pure ... copper! That's right. Obsession with collective metals has reached its absurd conclusion of people thinking that this purely industrial metal is somehow a collective because it's stamped out into gold-like bars. Even more hysterical? The seller advertises copper as " the New Silver." (Gold is so old hat). And even more hysterical than that. The scarcity value is completely undermined by the seller's line: " There is no limit to how many you buy!" |
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krisluke
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08-May-2011 19:09
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We Need To Cut The Deficit Right Now -- And Doing It Is Going To Clobber The Economy This week I finish the two-part letter on the Endgame and give you my thoughts on the economy and how it all plays out over the next five years.
  This is the second part of a speech I gave last week at the Strategic Investment Conference in La Jolla. It is a rather bold forecast, and fraught with peril and likely errors, but that is my job here. Damn the torpedoes, etc. I must offer one large caveat! If the facts change so will my forecast, but this is the view into my very cloudy crystal ball as I see it today. As always, remember that those of us in the forecasting world are often wrong but seldom in doubt. Read accordingly. But before we get there, two quick things. I want to really show my strong appreciation for the work done by my co-hosts, Altegris Investments, at the 8th annual Strategic Investment Conference. We had a packed house with almost 500 people come to see what I think was the best line-up at an investment conference this year. Each year we say there is no way to get any better, and each year we somehow manage to do so. And that is due in no small part to the considerable effort of the team at Altegris. I am proud to be associated with them. This year we did video many of the speakers and panels, and over time we will figure out how to make some of this available. I will keep you posted. Enemy of SpainSecond, Endgame continues to do well, so thanks to those who have purchased it, and if you haven’t already got your copy you should go to www.amazon.com and do so! And quick kudos to my co-author, Jonathan Tepper, brilliant young Rhodes scholar and head analyst at Variant Perception. Apparently, he’s on a small but prestigious list of enemies of Spain, according to El Mundo, one of the biggest Spanish newspapers, for the sin of pointing out that Spain is in a crisis (we have a whole chapter on Spain on the book). Their article appeared in print in the weekly finance edition, but is not online. Other papers have been called by government officials and asked not to quote him. Oddly, the people who helped inflate the enormous construction bubble and the incompetent government officials who denied for years there were any problems are not enemies of Spain. Go figure. I guess if you have to be on an enemies list, you could do worse than Spain (where, oddly enough, Jonathan spent most of his childhood growing up in a drug-rehab facility). Congratulations, young man! (Oh, and a publisher in Korea picked up the Endgame Korean-language rights, so we will soon be in bookstores in Seoul.) And now to the second part of the Endgame. And for those who want to review the first part, you can read it here.   The Endgame, Part 2There is an argument that the US should pursue a strong growth and jobs policy as its #1 goal and that growth, along with spending cuts and/or tax increases (depending on your views), will bring us out of the current doldrums and help us solve the budget deficit. I set the table in both the book and last week’s letter that the US is going to be growth challenged for years to come. Let me review a few items in brief and add a few more, then we will get to my predictions of what the next five years will look like. Don’t jump ahead. Without understanding the elements that are lining up to retard growth, the forecast will not make much sense. First, job #1 MUST be to reduce the deficit below the nominal growth rate of GDP. Period. The level of debt threatens to overwhelm everything else, and at some point can produce a crisis like those evolving in Europe and Japan. I have outlined the reasons for this in depth, so here I merely make the assertion. As I explained at length, if you increase government spending it will increase GDP IN THE SHORT TERM. The economic literature suggests this effect lasts about 4-5 quarters. Further, tax cuts will produce a growth in GDP of roughly 1 to 3 times the total amount of the cut over the next few years (depending on whose research you read, but the consensus is clearly that tax cuts make a difference). It sadly follows that increasing taxes will have a negative effect of roughly the same amount. Now, basic economic accounting shows that if you reduce government spending you are going to reduce GDP over the short term by a rough equivalent (GDP = Consumption (C) + Investments (I) + Government Spending (G) + (Net exports)). Therefore, the first headwind to economic growth over the next five years is the reduction of the deficit. While there is a longer-term difference between tax cuts and tax increases, in the short term (4-5 quarters) there is a simple drag effect. And we are going to need to cut government spending by about 1.5% of GDP per year every year for five years (allowing for some growth) to get the deficit to a manageable level. Below is a chart I used last week that is from my friend Rob Arnott at Research Affiliates (and to whose annual conference I am flying to as I write this letter), but it bears looking at again. The chart needs a little set-up. It shows the contribution of the private sector and the public sector to GDP. Remember, the C in the equation is private and business consumption. The G is government. And G makes up a rather large portion of overall GDP. The top line (in dark blue) is real GDP per capita. The next line (yellow) shows what GDP would have been without borrowing. So a very real portion of GDP the last few years has come from government debt. Now, the green line below that is private sector GDP. This is sad, because it shows that the private sector, per capita, is roughly where it was in 1998. The growth of the “economy” has come from government spending. Private-sector spending is where it was almost 13 years ago, accompanied by no growth in median real income and no growth since 2000 in the actual number of jobs, even as population grew by 30 million. As we bring government spending down, unless it is accompanied by private-sector growth, we will see overall real GDP shrink. That is just the how it works. Now, in the fullness of time (or a few years), the smaller government expenditures and deficit will mean more money for private-sector investment and productivity growth, but the process of simply getting the deficit under control is going to mean slower growth. Wrap your head around that. While Republicans (including me) want to control Congress and the presidency in 2012, the policy choices made in 2013 will not be met with a robust return to 4% growth and immediate jumps in employment levels. It is going to take a lot of education to convince voters that there is no magic in spending cuts (or even tax increases) and that we will need to stay the course, even while there is a general malaise in the economy. My advice to my fellow Republicans? Do not sell the concept that voting Republican will provide a quick fix. It will get you slaughtered in 2014. More on why below, in the conclusions. Let’s quickly list other headwinds. · The next headwind we will face, in 2012, is a tax increase of about 2% for almost everyone, as we lose the reduction in Social Security taxes that was passed to 2011 as part of the Bush tax cut extension. This means less money in the pockets of everyone making below about $100,000, which is significant in terms of the drag on GDP. · The stimulus package of 2009 is fading from view. There is little reason to think any of it will come back. Look at that graph again and see how much worse GDP would have been without it. But for all that, we are watching growth soften of late, with the economy now down to 1.8%. We didn’t get the organic growth in the economy that the Keynesians promised. Where is that multiplier effect? It actually seemed to be a negative multiplier, which Austrian economics suggested it would be. Score one for von Mises and Hayek. · QE2 is stopping in June. The hope at the Fed is that the economy can take over from there. But the last time QE was stopped, in 2010, the results were not impressive and now we can look across the pond to England to see what is happening as they are about 6 months further along in their ending of QE. It is hard to get encouraged from the data, as it looks like growth in England has slowed. And the real effects of their new austerity pursuits have not really been felt. Can the Fed start up again? Or more apropos might be the question, “Will the Fed start another round of QE?” My answer is that, when they see the economy slip into recession, they will use the only real tool they have left, and that is to inject liquidity into the economy. · A McKinsey study on the aftereffects of debt crises (in numerous countries) that require deleveraging in one form or another, is that for the first two years there is a significant slowing of GDP, and the slower growth does not dissipate for 4-6 years. We have not started deleveraging as a nation. The real work now looks like it will be done in 2013 and thus the real pain, the study suggests, is in our future. · Unemployment is back at 9%, rising this morning another 0.2%. The real level is easily above 10% if you count people who were in the work force as recently as 2008. Five percent of the nation’s workers are not paying income, Social Security or Medicare taxes. Many of them are on food stamps and unemployment, which are driving deficits at the federal and state levels higher. It is hard to imagine a robust economy that does not somehow figure out how to drive the unemployment level down, yet economic growth of 3% or more is required. We are simply not there. · I noted above that private-sector jobs have gone nowhere for 11 years. But transfer payments as a percentage of private-sector income and wages have risen inexorably for the past 50 years. Below is a chart from Madeline Schnapp, the chief economist of Trimtabs. Let me quote from the email she sent me along with the chart: “Here is the graph which generated a HUGE amount of controversy when published awhile back. For lack of a better term, I called the ratio the " TrimTabs Dependency Ratio." What it is, using BEA data, is a ratio of ‘BEA's government social benefits to persons’ divided by ‘BEA's wages and salaries.’ “While wages and salaries are about 50% of total personal income (other sources of personal income are benefits, interest, dividends, etc.), it is the largest bucket of income that produces revenue for the government via our tax structure. Therefore wages and salaries are currently the engine of support for the government’s social programs. “FYI, the BEA's definition of government ‘Social Benefits to Persons’ includes Social Security, Medicare, Medicaid (the biggies), unemployment insurance, supplemental nutrition (SNAP, formerly food stamps), veteran's benefits, etc. “For the ratio to go back to something sustainable, e.g. 20%, either wages and salaries need to rise, benefits need to be trimmed, or taxes need to go up. “Be careful not to confuse ratio with proportion. In this chart, I am comparing the size of one thing to the size of another (backpacker analogy) it is not a proportion, e.g. one thing as a part of another. “Another useful analogy is: “There is the engine (wages and salaries) pulling rail cars up a hill. In those cars are the Defense Department, the EPA, government social benefits to persons, etc. Since 1960, the size of the social benefits rail car has grown from 10% the size of the engine, to now 35%. The ‘Little Engine that Could’ is rapidly becoming the ‘Little Engine that Couldn't.’” · I showed two charts and research last week that clearly demonstrates that at some point the size of government becomes a drag on the economy. That may seem contradictory to my first point in this letter (reducing government spending will reduce GDP), but it is not. The first point was a short-term effect, and the size of government is a longer-term effect. We now have a government that is too large, and it acts as a headwind to growth. · The research of Rogoff and Reinhart clearly shows that, as the debt-to-GDP level of a country approaches 90%, there seems to be a slowing of potential GDP growth by about 1%. This is an observation of the data, not a theory. And this graph from David Walker suggests we are getting there. Notice it does not include state and local debt, which it should. We are very close to this level, if not there already. Muddle Through, or Crisis?Betting against the power of the free-market economy in the US is generally a bad idea. Yet when I suggested back in 2003 that we would see a slow-growth Muddle Through Economy for the remainder of the decade, it turns out I was right. We only grew at 1.9% last decade, which was the worst performance since the Depression. Ugh. So where are we for the next five years? I think we have two choices as a country. We can elect to deal with the deficit proactively, or wait until there is a crisis and react. And make no mistake, there is a an approaching Endgame, with regard to how much debt the market will let us have. We don’t know that point now, but if it happens it will be quite a “surprise!” What happens if we make the choice to get the deficit under control? What that really means is that we have to decide how much health care we want and how we want to pay for it. Let’s forget for the moment how that happens. Let’s just be optimistic and say we do make those decisions. For me, that is the best-case scenario. But it means a slow-growth, Muddle Through Economy for quite some time, perhaps as long as 5-6 years, though getting better as time goes on. It also means it is highly likely we will have at least one recession during that period, as growth will be close to “stall speed” and any exogenous shock could tip us into recession. Recessions mean higher unemployment, lower tax revenues, and an even deeper hole that will require more fiscal discipline and work. It will make maintaining corporate earnings growth at today’s expected levels more difficult, which puts a headwind to the US-based equity markets. Of course, a recession will mean (on average) a 40% retrenchment of US equities. It will also mean another deflation scare and a likely QE3. Bernanke can bring back and polish his “helicopter” speech, but this time he will be able to tell us what happened. Then there is the crisis scenario. Let’s assume we do not deal with the deficit in any meaningful way. Eventually the debt will rise to epic, Greek proportions. The bond vigilantes arise from the dead and start to push up interest rates. Interest as a percentage of government spending rises, crowding out other government expenses or increasing the debt still further. Then we have a crisis. We are FORCED by the bond market to get the deficits under control, but now we are doing so in a crisis. Health care will have to be slashed by far more than it would in a more controlled scenario. Tax increases will be brutal. You think Social Security is untouchable? Not in this crisis world. Means testing and spending freezes will be the rule of the day. Military cuts will seem draconian. Our allies who depend on us for a defense shield will not be happy. Education? On the chopping block. The economy will not be Muddle Through, but Depression 2.0. Unemployment will go north of 15%. What’s my basis for this? History. This movie has played over and over again in various countries in modern history. While we may be the world’s superpower, we are not immune from the laws of economic reality. In such a scenario, I expect QE 3-4-5-6. Could the Fed literally monetize the debt and then “poof” it? When our backa are against the wall, don’t assume that what has been seen as normal will be the reigning paradigm. Let me jump out on a real limb. I was having dinner last Monday with Christian Menegatti, the #2 economist at friend Nouriel Roubini’s economic analysis shop. We were comparing notes (imagine that), and he said their opinion is that the US has until 2015 before the bond market really calls the deficit hand. Knowing that Nouriel is seen as the ultimate bear, it makes me nervous to put out my own even more bearish analysis. I think the crucial point will be reached in late 2013. If the bond market sees a serious move to control the deficit, I think they let us “skate.” Then we Muddle Through. But if not, I think we begin to see some real push-back on rates then. Why so early? Because bond investors are going to be watching the slow-motion train wreck that is happening in Europe and especially Japan. It is one thing for Greece to default (which they will in one form or another, with lots of rumors flying this morning), yet another for Japan to do so. Japan is big and makes a difference. Japan could start to go as early as the middle of 2013. As I have said, Japan is a bug in search of a windshield. Whenever this happens, 2013 or a year or so later, it is going to spook the bond market. The normal indulgence that a superpower and reserve-currency country would be accorded will become much more strained. It will seemingly happen overnight. Think Lehman Brothers on steroids. I think the chances we will deal with this potential crisis are about 75%. Not doing so is such a horrific outcome that I think politicians will do the right thing. See, I am an optimist. (What was it Winston Churchill said? “You can always depend on the Americans to do the right thing, after they have exhausted all the other possibilities.”) And let me note that I have had some rather at-length, high-level (but very off-the-record) discussions with politicians on the right in recent weeks. More and more of them are really getting it. But as one said to me, “John, I can’t run on that platform.” And that is the reason that I give it a 25% chance that we’ll wait until a crisis hits us. If the “good guys” (my view, not yours, gentle reader – I know many of you are of the more liberal persuasion) need a real push to act correctly, we are not in good shape. I totally recognize it will not be easy to fix it. It will probably mean tax increases, which will not be good for the economy. And spending cuts that will be painful. I get all the consequences. I have written about them. But the goal is to get rid of the cancer of the deficit. It could truly destroy our economic body. Sometimes, if you have cancer, you take very ugly chemicals into your body, which have very serious side effects. The prospect does not make me happy at all, but we have made bad choices as a country for decades, and now we have to pay the price. Just a few more thoughts. Republicans should demand a total restructuring of the tax code in return for any tax increase. I would opt for lower corporate rates to help make us competitive (say 10-15%) and include all foreign corporate income, and get rid of the mass of exemptions. Lower personal rates and a consumption tax would suit me just fine, as both an economist and a businessman but I know that’s not some people’s cup of tea. Just saying. I like David’s Walker’s thoughts about $3 of spending cuts for every $1 of tax increases. And can we get rid of some of the “tax expenditures,” like mortgage interest deductions? We all pay 4% in income tax so that a minority can have interest-rate deductions. (I have written about efforts we need to undertake that would more than offset any hit to real estate.) At least reduce it for mortgages over $1 million. If you can afford a mortgage that big, you don’t need the deduction. Every one of those tax expenditures is someone’s else tax break that is vital to the future of the Republic, but if we got rid of all tax expenditures in one massive move (or over time) we could simplify the tax code and come within a few hundred billion of balancing the budget. Walker says the breaks total $1.2 billion. Basically, these are goodies that Congress hands out to get votes. Get rid of them all, I say. It will be politically difficult, but we need drastic action. And I might suggest that Democrats should come to the table this year rather than waiting until 2013. If unemployment is north of 8% next election, as I think likely, you will lose more seats and (probably) the White House, given today’s polls. Why not negotiate now when you have the Senate and can get what you can? Maybe “my guys” are being obstinate, but the sooner we do this the sooner we get through it. And that is my point. We do get through it, either as adults or forced to do so by the bond market. One way or another, by the latter part of this decade, in the fullness of time, this too shall pass. The eternal optimist in me wants to quickly point out that neither scenario is the end of the world. Yes, we may have to tighten our belts, some more than others, but life goes on. We all figure out our own paths. While investing has been more difficult the last five years, we are all still alive, celebrating birthdays and grandchildren. New businesses that will dramatically change our lives are being formed every day. There are lots of opportunities for business and investment, perhaps just not the traditional ones we are used to. Maybe gold goes to $5,000, but I hope it goes to $500. Either way I will still buy some physical gold every month as insurance, with the dream that I’ll give it to my great-great grandchildren as a novelty from the days when we thought gold had value. But I will still buy, just in case. I simply don’t completely or naively trust the & *%@^& ’s who are running the place. Seriously, I expect that, beginning later this decade we will see the secular bear crawl back into hibernation and a roaring secular bull market cycle come charging out. We will all get to once again be geniuses. The book I am starting to write this month (finally!) will be called The Millennium Wave, in which we’ll look at what our world may be in 2032. The journey there will be bumpy, but what a world it will be! So, over the next few months and quarters, we will keep our eye on the politicians and see what happens. I will be looking for good hedges and places to invest that don’t depend on Washington DC or the other capitals of the world. And I will keep on writing to you, gentle reader, every week. Last thought: I encourage you to get involved in the process in whatever way you deem correct. This is going to be the most important national conversation we have had in a long time, and you should be a part of it. Make your voice and vote count!   Philadelphia, Boston, Trequanda, Kiev, Geneva, and LondonI am in Laguna Beach at the Montage this afternoon for Rob Arnott’s annual client conference. He has an outstanding lineup of speakers: Lacy Hunt, Jim Bianco, Professors Burton Malkiel of Princeton and Nobel laureate Harry Markowitz, along with Rob and his associate Jason Hsu. They are known for the creation of Fundamental Indexes. This has become a (deservedly) amazing story of growth over the last few years. I remember writing about it and saying something like “This would be the fastest idea to grow to $100 billion in assets in history.” They are over halfway there, taking assets from what the research and results say is the inferior performance of cap-weighted indexes. I fly back on Sunday and am home for two whole weeks in my own bed, then I fly to Philadelphia for a conference with the Global Interdependence Center. To find out more you can go to http://www.interdependence.org/Event-05-24-11.php. Then it’s to Boston for some business and a little relaxation, before flying on Sunday to Italy to stay for three weeks in a small village in Tuscany called Trequanda, where most of my kids will be for the first week or so, and then it will be a working vacation with Tiffani, while friends come to see us. Vacation for me is being in the same place for a few weeks. Then I’m off to Kiev for the weekend for a reunion of my classmates at Singularity University, then to Geneva for a few days and London for one day, where I will guest-host CNBC Squawk Box, which is always a few hours of fun. Then back home, and I’ll get to be in Texas for most of the summer – at least that’s how it looks now. I feel somewhat awkward of late, going through airports and meetings wearing a large cast on my right foot, trying to keep it immobile to let the inflammation go down from doing too many lunges and straining the tendon. I can feel it helping, but it there is a long way to go. This next week should be fun, as I will be taking a girls championship softball team to see the Texas Rangers. Most of them have never been to a professional game. Then good friend Cliff Draughn is in town, then (maybe) game six of the Mavericks-Lakers series, more family, and no alarm clocks. I need the rest. This last week, with cancelled flights and early mornings, has frankly been tiring. I really must get the schedule under better control. Speaking of “brutal,” it is time to hit the send button. Rob’s conference starts with a soiree on the lawn and always features some mighty fine wine. I must go and indulge, while promising to get to bed early! Have a great week! Your quite sure we get through all this analyst, John Mauldin John@FrontlineThoughts.com |
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krisluke
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08-May-2011 19:04
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YES !! Sembmar offers higher chances than keppel corp. my view.
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krisluke
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08-May-2011 19:02
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Commodities OutlookCommodities Fundamentals for the week ending May 6, 2011 Commodities rebounded after a huge sell off in European session Friday. Prices gained in the NY session on US payroll data that beat expectations. The USD rose against Japanese Yen and particularly commodity currencies (eg: AUD, NZD and CAD) on improved employment data. It was impressive that Gold and other commodities rose against USD’s strength. The Precious Metals rose along with the broad-based recovery in the commodity sector. Despite the recent weakness, Gold’s decline was limited Friday. Unlike other commodities, the precious Yellow metal held above Thursday’s low. With that action I now believe the next objective is to regain 1500, the psych mark. The central banks are buying Gold. Mexico’s central bank said that it is buying Gold to get ‘the best risk-return balance’ in investments’. Note that the recent performance in Gold indicates that such investments do provide ‘higher return without much risk’. The reaction of Gold’s price today suggests to me that recent Long liquidation in the metal is losing momentum. The fact is that I am not worried about the correction these days as reserve managers will probably use this as an opportunity to accumulate Gold. Silver is a different story. Silver failed at below 49.8, the Key resistance, reversed and fell to close at 35.63. My initial bias is now to the downside this week for a move to the medium term trendline support, now at 31.4, or further to the 61.8% retracement of 14.65 to 49.82 at 28.085. In the Crude Oil complex, the front-month contract for WTI Crude Oil fell to 94.63, the lowest mark in over than 3 months, before bouncing back above 100 and fading to 97.17, -2.62, the biggest weekly decline since Y 2008. Brent Crude also fell with the Benchmark contract moving to as low as 105.15 before reversing. The contract settled at 110.80, – 1.67 on the day. In the US, the number of non-farm payrolls rose 244K in April, following an upwardly revised 221K in the previous month. The market had anticipated a ease to +190K addition. The data was encouraging, but the jobless rate climbed +0.2% to 9%, the 1st increase in 5 months. Stay tuned… |
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krisluke
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08-May-2011 19:01
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Wall St SummaryRed’s Bull Trader Alert: A pleasing payrolls report supported a positive tone among playes on the 1st anniversary of the “flash crash.” Stocks responded by rising more than 1%, but a loss of momentum lead to a drift lower in afternoon trade. The S& P 500 fell in each of this week’s 1st 4 sessions for a loss of close to 2%, but players came back into the action on news that US nonfarm payrolls rose by 244,000 and private payrolls ose by 268,000 during April. Economists had expected respective increases of 185,000 and 200,000. The Strong increase overshadowed the Headline unemployment rate, that came in at 9.0% exceeding the 8.8% consensus. S& P 500 rose on broad buying interest 1% to reclaim about 50% of what it had lost earlier on the week, but buying interest began to flag at midday. Energy stocks saw dramatic movement. Given that the sector had dropped almost 7% during the 4 prior sessions, as many players moved in for bargain buying and finished in the Green. US Stocks: Jobs data lifts Wall An Strong report on US payrolls drove stocks higher Friday for the 1st time this week. The largest boost to US equities on Friday was a US government report showing non-farm payrolls increased by 244,000 in April, the most in 11 months and well above economists’ expectations. Stocks came off highs after a German news report, that later was denied, said that Greece had raised the possibility of leaving the EuroZone. On the Week: the DJIA was down 1.3%, the S& P 500 was down 1.7% and the NAS was off 1.6%. On the Day: The DJIA .DJI closed up 54.57 pts, or 0.43%, at 12,638.7, the Standard & Poor’s 500 .SPX closed up 5.10 pts, or 0.38%, at 1,340.20, and the NAS Composite .IXIC closed up 12.84 pts, or 0.46%, at 2,827.56. The S& P 500 held above a important technical levels with the week’s low just below 1,330, and Friday’s close above the 1,340 mark. Watching the VIX: the CBOE volatility index .VIX rose 1.1% to 18.40, its highest closing level since March 28. The gauge rose 24.7% on the week, its biggest weekly percentage gain in almost a year. A rise in the VIX means investors will pay more for protection against their equities exposure. Volume and Breadth: Friday about 8.24B/shrs traded on the NYSE, AMEX and NAS, below last year’s estimated daily average of 8.47B/shrs but above the year’s daily average. Advancers outnumbered decliners on the NYSE by 2 to 1, and on the NaS, about 3 stocks rose for each 2 that fell Commodities had another volatile session that finished with the Crude Oil price off 2.25 to 97.55 bbl after trading up early and near the Neutral line for the session . Nat Gas price fell about 0.03 to finish at 4.30. The Silver price extended its fall to finish with a 0.78 loss to 35.52 oz. June Gold gained 12.40 to finish at 1494 oz, despite a stronger USD. |
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krisluke
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08-May-2011 19:00
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May is Time to BuyIs this action an opportunity? “Sell in May and Go Away” is on most players minds and lips over the last few days. Major markets in the US and around the World appear to have been caught excessively Long risk assets: stocks, commodities, and metals and Short USD, which Shayne and I believe was the Key driver of last week’s decliner. There were some setbacks in the fundamental outlook for the Global recovery, but nothing at all to justify double-digit percentage declines in many markets, except for excessive positioning. Example: many point to the sharp drop in the April US ISM non-manufacturing index from 57.3 to 52.8 as a dreary sign for the US recovery, and by extension the Global rebound. But, the ISM services index is a volatile series and prone to being over shot. Other US data during the week indicated the US recovery is continuing it slow pace, bu not stalling: April ADP +179K private jobs added April NFP +244K total jobs added and April ICSC chain store sales up +8.5% -Y , prior +2.0%, despite higher gasoline prices. So, we believe that fear about a big slowdown in the US recovery is overblown in here, and that the attendant risks to the Global recovery are also overstated, and if stock sell down again next week a buying opportunity. Growth and demand in Asia remain solid, China data this week will be an important barometer, and we think the sell-offs in risk assets is primarily a positioning exodus. That said, my work is showing a subtle shift in momentum between the US on one side and the UK and Europe, which are showing signs that recent growth has likely peaked, especially so in the UK on the other. Keeping im mind the POV that the Global recovery is ongoing, I expect the commodity currencies, AUD, CAD, NZD, and NOK, to remain resilient against the majors USD, GBP, EUR, and JPY, and for the USD to perform a bit better against the other majors. This view suggests looking for opportunities to sell those majors against the commodity currencies at advantageous levels, for example, selling EUR/AUD, GBP/CAD, and EUR/NOK. The sharp rise of commodities in April has been undone during in the 1st week of May. If you wish to know where commodities are headed, keep your eyes on Silver, it led both moves, higher in April and lower in May. During last week the action in Silver is summed up in 1 word, “Wild”, as at 1 point it was down over 30%. Here is what happened IMO in a effort to dampen volatility, the Chicago Merc (CME) has been raising margin requirements in Silver. Typically over the past 6 months, the higher margin would lead to a mild correction, and thus presenting players with an opportunity to establish their Bullish bias at better levels. But, this time the CME continued raising margins, 5 times to the tune of 84% over a 2 week period. So, on April 25th the initial margin requirement stood at US$8,700, effective Monday May 9th, this coming Monday, the CME is set to raise it to US$16,000. This resetting of the margin was the most likely the catalyst that led to the sell-off in Silver. Thursday’s I said to Shayne it may be prudent to wait for the fall to end, rather play in this action After Friday’s strong US employment report it appears commodities may have done just that, hit the floor, as the price action in Silver saw an hourly RSI positive divergence into the lows. And Gold bounced off longer-term trend-line support Friday around 1460/65 and failed to make a lower low on the day. But, while commodities appear to have stopped their swift decline, it does not mean players are ready to jump back in the actio right away. So, at the end of the day, rather than trying to pick the bottom, I prefer to watch for the establishment of a Bullish bias upon a break back above the top of the Ichimoku Cloud around 36.55/65 in Silver, looking for a move back towards 40-42. In this way it will lend more confidence and show that a meaningful bottom has formed. On the other hand, there is a risk of a continuation lower should Gold break below its trendline support which rises to 1470 Monday. Lots of factors may contributed to Thursday’s Crude Oil market decline that saw prices print their 2nd largest USD denominated loss to date -9.44 to 99.80 bbl and -10.39 to 110.90 bbl in WTI and Brent, respectively. The USD bounce played played a prominent role in Crude Oil’s dramatic swing lower and broader commodity sell off as Trichet’s exclusion of the term ‘vigilance’ injected doubt into the market in terms of the timing of the central bank’s next move that sent EUR-USD pair South towards the 1.4500 and even lower to around 1.4380. Demand destruction on the back of higher prices was also suggested as a reason for the deep drop in Crude Oil. Higher interest rates alongside inflationary concerns and its chilling effect on Chinese and Indian Crude Oil demand has been a concern for some time, and may have added momentum to Thursday’s price decline. Add to that the rumor of higher CFTC margin requirements for Crude Oil, like those recently placed on Silver, made the rounds adding fuel to the ‘Crude sell off’ fire. The rumor has not been substantiated, but folks would be foolish to dismiss the potential for this rumor to become the fact. All of the above are legitimate calls for Thursday’s Crude Oil decline, I believe the extreme swings are overdone technical trading and the main driver of price action. That said, any continued declines in Crude may be Short lived as there has been no real shift in the fundamental Crude Oil market structure and may provide attractive risk reward value for Long players. The 100 Day SMA in WTI Crude Oil looks Key as the moving average has provided decent support since Q-4 2010. WTI has only just managed to dip below the 100 Day SMA, currently around 97 bbl, by approximately 2 before resuming its up-trend since. Therefore, the longer term Crude Oil up-trend remains intact for now, and I believe prices will trade within a 95/105 and 105/115 range for WTI and Brent, respectively, in the coming weeks. Some Key data to watch this week United States: Tuesday Apr. Import Price Index, Mar. Wholesale Inventories, Fed’s Lacker Speaks, Wednesday Mar. Trade Balance, Fed’s Lockhart & Kocherlakota Speak, Thursday: Weekly Initial Jobless Claims, Apr. PPI, Retail Sales, Mar. Business Inventories, Fed’s Plosser Speaks, Bernanke Testifies at Senate, Friday Apr. CPI, May preliminary U. of Michigan Confidence EuroZone: Monday: German Mar. Trade Balance figures, May Sentix Investor Confidence, Wednesday: German Apr. final CPI, Apr. Wholesale Price Index, ECB’s Orphanides & Bini Smaghi Speak, Thursday: EZ Mar. Industrial Production, ECB’s Gonzalez-Paramo Speaks, Friday: German Q-1 preliminary GDP, EZ Q-1 advance GDP, ECB’s Trichet, Bini Smaghi, & Stark Speak United Kingdom: Monday: Apr. BRC Sales, RICS House Price Balance Wednesday: Mar. Trade Balance figures, Bank of England Quarterly Inflation Report, BOE’s Paul Tucker speaks Thursday: Mar. Industrial Production, Manufacturing Production, Apr. NIESR GDP Estimate Japan: Sunday: BOJ Minutes of April 6-7 Meeting Wednesday:Mar. preliminary Leading & Coincident Index, Thursday Mar. Trade Balance figures, Apr. Eco Watchers Survey results, Apr. preliminary Machine Tool Orders Canada: Monday: Apr. Housing Starts, Wednesday: Mar. Int’l Merchandise Trade, Thursday: Mar. New Housing Price Index. Australia and New Zealand: Monday: AU Apr. ANZ Job Advertisements, Tuesday: NZ Apr. Card Spending, AU Mar. Trade Balance, Apr NAB Business Conditions & Confidence, Thursday: NZ Apr. Business NZ PMI, Food Prices, AU Apr. Employment report China: Wednesday: Apr. Trade Balance, CPI, PPI, Industrial Production, Retail Sales, Fixed Asset Investments, Friday: Mar. Conference Board Leading Economic Index |
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rotijai
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08-May-2011 14:18
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will they give the contract to keppel or semb marine instead ? :P
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krisluke
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08-May-2011 14:07
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Noble sues Marathon for $752mNoble is suing Marathon Oil over its cancellation of a four-year, $752 million contract for a rig in the Gulf of Mexico.   Marathon cancelled the contract for the Jim Day in January, saying Noble failed to meet the criteria needed for Marathon to receive the newly built deep-water rig by the deadline of 31 December last year, Reuters reported. " We believe the rig was ready to commence operations and should have been accepted by Marathon," Noble said in a quarterly filing with US financial regulators at the Securities and Exchange Commission (SEC), released today. Marathon had also cited a force majeure condition for the contract because of a lack of deep-water permits in the Gulf of Mexico following last year's disastrous well blow-out and oil spill. Force majeure clauses relieve a company from liability when it cannot fulfill contractual obligations because of natural and unavoidable catastrophes. Noble said it filed its lawsuit in Texas in March. According to Marathon, the lawsuit in the District Court of Harris County seeks an unspecified amount of damages and alleges breaches of contract and of the duty of good faith and fair dealing, and negligent misrepresentation. In its own quarterly SEC filing today, Marathon said it filed a response in April, arguing that Noble failed to comply with material obligations, to mitigate alleged damages and to provide the rig, according to the contract requirements. " We are vigorously defending this litigation," Marathon said, adding that the ultimate outcome of the lawsuit was uncertain, so it could not estimate any potential losses. A Marathon spokeswoman added that the lawsuit was " without merit." A Noble spokesman had no further comment. The case is No. 201117919, Noble Drilling vs Marathon Oil, Court 215 of the Harris County District Court in Houston. |
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krisluke
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08-May-2011 13:56
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US Fed’s St Louis Chief Bullard talks inflationUS Fed’s St Louis Chief Bullard talks inflation targets Rising commodity and energy prices do not constitute a significant macroeconomic shock, US Federal Reserve Bank of St. Louis President James Bullard said Friday, but inflation targeting should be used to anchor price expectations. Mr. Bullard said that despite price pressures, inflation remains relatively low by historical standards. He downplayed the idea that commodities, whose prices vary in the market, can be linked to the currency, as in the Gold standard of decades ago that tied the USD to a tangible asset to contain price pressures. Mr. Bullard called that idea “questionable”, but said inflation targeting was a better way to “force accountability” on central banks for vigilance on price pressures. In a presentation to a banking association, Mr. Bullard discussed Crude Oil shocks and surging commodity prices. He stated that neither are likely to have a sustained impact on the economy, given that similar price rises have occurred in the past without lasting effects on the economy. “This gives me some confidence that the US can weather the current price shock without a significant slowdown,” he added. Citing research, Mr. Bullard said the current price of Crude Oil, which has fallen sharply in the last few days from its 3 yr high above 100, differed from the energy shocks of the 1970’s that sent inflation soaring and stagnated economies around the World. “Not all Crude Oil price increases are created equal,” the Fed official said. Even as he called current Crude Oil prices “unpleasant,” he downplayed the likelihood of a ” Oil shock”, which he characterized as 200 bbl over the course of several Quarters. |
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krisluke
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08-May-2011 13:55
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  World Markets Snap Shot The World Markets Snap Shot US Stocks: Jobs data lifts Wall St An Strong report on US payrolls drove stocks higher Friday for the 1st time this week. The largest boost to US equities on Friday was a US government report showing non-farm payrolls increased by 244,000 in April, the most in 11 months and well above economists’ expectations. Stocks came off highs after a German news report, that later was denied, said that Greece had raised the possibility of leaving the EuroZone. On the Week: the DJIA was down 1.3%, the S& P 500 was down 1.7% and the NAS was off 1.6%. On the Day: The DJIA .DJI closed up 54.57 pts, or 0.43%, at 12,638.7. The Standard & Poor’s 500 .SPX closed up 5.10 pts, or 0.38%, at 1,340.20. The NAS Composite .IXIC closed up 12.84 pts, or 0.46%, at 2,827.56. Commodities had another volatile session that finished with the Crude Oil price off 2.25 to 97.55 bbl after trading up early and near the Neutral line for the session . Nat Gas price fell about 0.03 to finish at 4.30. The Silver price extended its fall to finish with a 0.78 loss to 35.52 oz. June Gold gained 12.40 to finish at 1494 oz, despite a stronger USD. |
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krisluke
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08-May-2011 13:52
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Thai, Cambodian leaders meet on border dispute at ASEAN summit
Leaders of Southeast Asian nations and their spouses pray before their dinner in Jakarta
  JAKARTA (Reuters) - The prime ministers of Thailand and Cambodia met on Sunday after pressure from other regional leaders to end deadly border skirmishes, but there was no sign of a breakthrough to resolve Southeast Asia's bloodiest conflict in nearly a quarter century.   The clashes around crumbling Hindu temples in disputed border areas are getting in the way of an annual meeting of Southeast Asian leaders and damaging the credibility of the region's pledge to forge a united economic community by 2015.   Thai Prime Minister Abhisit Vejjajiva and his Cambodian counterpart Hun Sen offered no comment after a meeting brokered in Jakarta by Indonesia's president to seek a solution to a conflict that has killed 18 people in recent weeks.   " It is very important that we hold together," President Susilo Bambang Yudhoyono told the region's leaders ahead of the meeting at an annual two-day regional summit, adding the group faced enormous challenges.   The 10-member Association of South East Asian Nations (ASEAN), a collection of authoritarian states and nascent democracies, has a policy of non-interference in each other's domestic affairs, so is struggling to resolve a spat fuelled by domestic nationalist sentiment ahead of likely Thai elections.   " They need to ponder how badly the ill will generated would impede ASEAN collaboration on projects... An ASEAN disunited will be taken less seriously by investors," said Singapore's state-controlled Straits Times newspaper in an editorial.   The conflict is the deadliest between countries in the region since Thailand and Laos fought a border war in 1988.   Singapore leader Lee Hsien Loong did not attend the summit, staying at home for general elections that saw the ruling People's Action Party easily returned to power as expected. But the foreign minister lost his seat in a landmark vote for an opposition bolstered by a more sceptical younger generation.   SECURITY CHALLENGES   The rest of the region's leaders, meeting in a cavernous conference centre with an intricately carved wooden ceiling, have also struggled to engage the region's 500 million people in a project to build an economic community with free movement of people and goods by 2015.   In a venue patrolled by hundreds of police and military personnel after worries over reprisal attacks by Islamists in Indonesia following the killing of Osama bin Laden, leaders were discussing security challenges such as food and energy supply.   The group ranges from oil and gas-rich Indonesia, Malaysia, Brunei, Vietnam and Malaysia, and the world's top rice exporter Thailand, to port trading centre Singapore and resource-scarce Laos, Cambodia and the Philippines.   The fast-growing region has again become a magnet for emerging market investors and is trying to grow its $1.8 trillion economy by negotiating bilateral trade deals with the European Union and improving transport links with key trading partner China.   Previous meetings have often been overshadowed by controversy over member Myanmar, which wants to host the gathering in 2014. A Myanmar ASEAN presidency would almost certainly attracted howls of protest from the West, further denting the bloc's credibility. |
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krisluke
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08-May-2011 13:51
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Libyan forces destroy Misrata fuel tanks -rebels
By Lin Noueihed
  TRIPOLI (Reuters) - Libyan government forces destroyed four fuel storage tanks and set several others ablaze in rebel-held Misrata, dealing a blow to the port city's ability to withstand a government siege, rebels said on Saturday.   The attack on the western city came as artillery rounds fired by forces loyal to Muammar Gaddafi fell in Tunisia in an escalation of fighting near the border with rebels trying to end Gaddafi's rule of more than four decades.   Misrata, the last remaining city in the west under rebel control, has been under siege for more than two months and has witnessed some of the war's fiercest fighting.   Rebels gave varying accounts of the bombardment but said it hit fuel used for export as well as domestic consumption.   " Four (fuel) tanks were totally destroyed and a huge fire erupted which spread now to the other four. We cannot extinguish it because we do not have the right tools," rebel spokesman Ahmed Hassan told Reuters.   " Now the city will face a major problem. Those were the only sources of fuel for the city. These tanks could have kept the city for three months with enough fuel," he said by telephone.   Video of the incident posted on YouTube by Libyan students in Misrata showed firefighters turning water hoses on a raging fire in a vain attempt to extinguish it.   Government forces last month flew at least one helicopter reconnaissance mission over Misrata, according to rebels.   NATO coalition aircraft have been bombing Libyan government military targets and enforcing a no-fly zone under a U.N. resolution. Western and Arab countries this week agreed to provide rebels with millions of dollars in non-military aid to help them keep services and the economy running.   Rebels have long been demanding more heavy weapons to take on the Libyan leader's better-armed and trained forces.   The head of the rebel forces in eastern Libya retracted an assertion by a rebel spokesman that Italy had agreed to supply them with weapons to help in their fight to oust Gaddafi.   " We have not received any weapons, not from Italy nor from any other country," Abdel Fattah Younes told al Jazeera television. " Maybe one of the brothers failed to express himself properly ... we apologise to Italy on behalf of the brothers in the National Council."   A spokesman for the rebels' Transitional National Council had told a news conference in Benghazi earlier in the day that weapons would be provided to the insurgents soon.   In Rome, a Foreign Ministry spokesman said no such agreement had been reached.   Italy has backed the rebels, formally recognising the transitional council as the only legitimate representatives of the country, but it is unlikely it would go further than other countries in the anti-Gaddafi coalition.   BORDER FIGHTING   Fighting has intensified in Libya's Western Mountains region as Gaddafi loyalists and rebels backed by NATO bombing reached stalemate on other fronts in the civil war.   Government forces surrounding rebel-held Zintan fired 300 rockets into the town on Saturday, rebel spokesman Abdulrahman al-Zintani said. He gave no details of casualties in Zintan, which is largely empty of civilians.   " NATO aircraft can be heard but there have been no air strikes," al-Zintani told Reuters.   The Tunisian town of Dehiba has been hit repeatedly by stray shells in recent weeks, and on Saturday Tunisia condemned the " extremely dangerous" shelling and said it would take all necessary measures to protect its sovereignty.   The Libyan government denied targeting Tunisian soil deliberately.   " We said this (shelling) was an error and we have apologised that this took place and have asked the military forces to ensure this doesn't happen again," Libyan Prime Minister Al-Baghdadi Ali al-Mahmoudi told a news conference in Tripoli.   The battle is over the Dehiba-Wazzin border crossing, whose control gives the rebels a road from the outside world into strongholds in the Western Mountains region. Gaddafi's forces control a far bigger crossing to the north.   On Saturday Dehiba's schools were evacuated and residents scurried for safety as nearly 100 mortars and missiles fell. The crackle of small arms fire and larger weapons could be heard about 4 km inside Libya, a Reuters witness on the border said.   " We are very afraid. The missiles are falling right around us, we don't know what to do," said Tunisian Mohammed Naguez, a resident of Dehiba. " Our children are afraid. The Tunisian authorities have to stop this."   Most Western Mountains residents belong to the Berber ethnic group and are distinct from other Libyans. They rose up two months ago and say towns like Zintan and Yafran, often bombarded by Gaddafi's forces, are short of food, water and medicine.   The civil war over Gaddafi's rule has split the oil-producing desert state into a government-held western area round the capital Tripoli and an eastern region held by ill-disciplined but dedicated rebel forces.   The revolt is the bloodiest yet against long-entrenched rulers across the Middle East and North Africa, which saw the overthrow of the veteran presidents of Tunisia and Egypt.   (Reporting by Joseph Nasr in Berlin, Matt Robinson and Tarek Amara in Dehiba and Mariam Karouny in Beirut Writing by Matthew Bigg and Sonya Hepinstall editing by Tim Pearce) |
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krisluke
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08-May-2011 13:51
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CRB index posts biggest weekly fall since 2008
* Markets drop back as dollar suppresses April jobs data
  * CRB sets worst weekly performance since 2008   * Gold, Brent oil see biggest losses since 2010   * Coming up: slew of U.S. data next week, CPI on Friday (Recasts, updates prices, market activity new byline, changes dateline, previously NEW YORK/LONDON)   By Barani Krishnan   NEW YORK, May 6 (Reuters) - Commodities ended lower on Friday, retreating after a brief rebound from the previous session's plunge, and analysts said more market turbulence was in store after the steepest weekly decline since 2008.   U.S. crude oil bounced up early, but ultimately fell almost 3 percent on the day and 15 percent on the week. In dollar terms, oil posted its steepest weekly drop, $16 a barrel. Markets like corn and sugar also gave up early gains and finished lower.   The Reuters-Jefferies CRB index finished the week with a 9 percent drop. It was the biggest weekly decline since December 2008 for the CRB, which tracks 19 commodities and acts as a global benchmark for the asset class.   In early trade, news that private U.S. employers added jobs at the fastest pace in five years gave commodities a boost. But commodities erased those gains and resumed their drop as new worries about the euro zone boosted the dollar.   Investors also fretted that oil, metals and grains have more to lose after the chunk of gains made since July.   For traders watching price screens turn red in New York and Chicago, it was another surprising session, though not as shocking as Thursday's free-fall which lacked an obvious trigger.   " After yesterday's kind of historic trading day, the market's going to have increased price volatility which can lead to this kind of intraday swing, so we have to watch it," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.   Most market strategists repeated their mantra of higher commodity prices over the long term, saying this week's sell-off had changed nothing fundamentally. Yet some warned of more market swings in the days and weeks ahead.   A slew of U.S. macroeconomic data, including the Consumer Price Index or measure for inflation, is due next week.   From June 2010 to the end of April 2011, the CRB rose 45 percent. That was a bigger increase than the 30 percent CRB rise at the peak of the commodities boom between the end of 2007 and mid-2008.   The latest surge was due to loose U.S. monetary policy burgeoning demand from China, India and other developing economies and supply scares in oil, corn and other commodities.   The bullish charge came to a sudden halt this week as the herd mentality reversed direction. On Thursday, the CRB fell 5 percent, a decline exceeded only four times before, three of those in the midst of the 2008 crisis.   Silver plummeted almost 30 percent for the week, the steepest plunge of any commodity and almost twice as steep as oil's tumble.   On Friday, Goldman Sachs, the investment bank that correctly predicted in April a near-term bust in commodity prices, said it expected oil to sell off further in coming days but set new highs by 2012 as global supplies tighten.   Some analysts were not so sure, saying oil's fundamentals looked suspect especially with the dollar likely to rebound further from three-year lows if Europe's fiscal woes worsened.   The euro currency was headed for its biggest weekly drop against the dollar since January after a German news report, later denied, that suggested Greece had raised the possibility of leaving the euro zone.   " If Greece were to leave, which is not easy to do, the European banking system would be in great trouble, damaging the economy and oil demand," said Bill O'Grady, Chief Investment Strategist at Confluence Investment Management in St. Louis, Missouri.   " The oil market is worried about demand growth," he said.   U.S. crude settled down $2.62 to $97.18 a barrel. London's Brent fell $1.67 to finish at $109.13.   Corn fell 3 percent as the stronger dollar and weaker oil triggered a fresh round of liquidation. Front-month corn futures on the Chicago Board of Trade ended below $7 a bushel, falling 9.4 percent on the week for their biggest weekly drop since October. (Editing by David Gregorio) |
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krisluke
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08-May-2011 13:48
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Wall St Week Ahead: Commodities' drop curbs risk appetite
By Caroline Valetkevitch
  NEW YORK, May 6 (Reuters) - U.S. stock investors head into next week with added worries about the sustainability of the recent rally and a desire to reduce risk, as shown by the stampede out of commodities on Thursday.   Stocks also will begin to lose the support they've enjoyed from stronger-than-expected earnings since the first-quarter reporting period is almost at an end.   The drop in commodities this week spilled over into commodity-related stocks, which were among the top performers in the last two quarters.   The Standard & Poor's energy index ended the week down 7 percent, its biggest weekly drop in a year, and the iShares Silver Trust suffered its worst week of outflows ever after heavy losses in the precious metal.   While the commodities rout may be done for now, it has left many investors worried about the ramifications.   " It's hard to pinpoint the time when the bubble bursts and hard to go against the current, but when it bursts it's precipitous usually," said Natalie Trunow, senior vice president and chief investment officer of equities at Calvert Asset Management Company in Bethesda, Maryland, which manages about $14.8 billion in assets and is underweight energy.   With first-quarter earnings and also the Federal Reserve's QE2 purchasing program coming to an end, the stock market could be vulnerable to some weakness in the short term, she said.   " I wouldn't be surprised if we had a somewhat softer summer or somewhat softer next couple of months," said Trunow, who said she is still positive on the U.S. market longer-term.   The S& P 500 suffered its worst week since March, even with Friday's surprisingly strong jobs report that allowed the index to end a four-day losing streak.   It is now just above critical support at 1,330. A close below that level could " turn the intermediate-term picture bearish," according to a note from Larry McMillan, president of McMillan Analysis Corp.   SENTIMENT STILL UPBEAT   Despite this week's skittishness, sentiment for the market is positive longer term, and technical indicators do not suggest the market is overbought.   " Our view is still unchanged we still like the market," said Jeff Rubin, market strategist at Birinyi Associates in Westport, Connecticut.   Much of the fundamental picture remains bullish for stocks, said Hank Smith, chief investment officer at Haverford Trust Co. in Philadelphia.   " The economy and valuations remain attractive," he said. " We remain bullish, but with any bull market, it's healthy to have pullbacks."   Friday's Labor Department report, which showed U.S. employment increase more than expected in April and U.S. companies created jobs at the fastest pace in five years, gave evidence of the underlying strength in the economy, analysts said.   But labor has been among the weakest areas, and next week's jobless benefits claims and retail sales data will be watched for further clues on the jobs picture and health of consumer spending.   In earnings news, a number of retailers are expected to report next week, including Macy's, Nordstrom and Kohl's.   Earnings estimates have risen since the start of the reporting period. Profits for S& P 500 companies are now expected to have climbed 18 percent in the first quarter from the year before, up from an estimated 13 percent rise at the start of April, according to Thomson Reuters data.   Of the 438 S& P 500 companies that have reported so far, 69 percent have beaten analyst earnings expectations. That's roughly in line with the high rate of beats seen in recent quarters.   Adding to nervousness, a small group of European finance ministers were meeting to discuss the euro zone debt crisis, and Greece denied a media report speculating the country was considering leaving the euro zone.   The speculation caused stocks to trim some of their gains on Friday.   Friday marked the one-year anniversary of Wall Street's " flash crash" when prices suddenly plunged and nearly $1 trillion was wiped off U.S. stocks' value in a matter of minutes before the market bounced back.   The crash shook many investors' confidence, but the market regained steam and has rallied since about the start of September.   The S& P 500 is up about 28 percent since then. (Additional reporting by Doris Frankel, Editing by Kenneth Barry) |
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