Wednesday, May 29, 2013

China Growth Outlook Cut by IMF as 'Decisive' Reforms Urged

The IMF (International Monetary Fund) has lowered its forecasts for China’s growth and they said that they are making “decisive” policy changes that would put the economy on a more sustainable path.

The expansion will be 7.75 percent this year and next, David Lipton, first deputy managing director of the IMF, said at a press briefing in Beijing after concluding an annual review of China. In April, the IMF forecast growth of 8 percent this year and 8.2 percent expansion in 2014.

China has assured the IMF that reining in credit is a priority, said Lipton, the No. 2 official at the Washington-based fund.

Rapid growth in financing raises questions over the quality of investment and the repayment ability of companies and local governments, Lipton said.

Curbing credit expansion may slow growth in the short term while putting the economy on a more sustainable path, Lipton said.

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Saturday, May 18, 2013

China Home Prices Increase

China’s new home prices rose including Beijing and Shanghai as buyers defied the government’s latest round of property measures. Prices increased in 68 of the 70 cities the government tracked last month from a year earlier, the National Bureau of Statistics said in a statement today.

Thirty-five provincial-level cities have issued details of property curbs by an April 1 deadline in response to the central government’s measures imposed in March. Only the capital city of Beijing issued the toughest measures, raising the down payment on second homes and strictly enforcing a 20 percent capital gains tax on existing homes, according to Centaline Property Agency Ltd., the country’s biggest real estate agency.

“Home prices continued to climb because the direct impact of the curbs is hitting on home sales, while it’ll take several more months to slow the prices,” said Lan Shen, a Shanghai-based economist at Standard Chartered Plc. “Policies haven’t been strictly enforced on the local level.”

US Consumer Sentiment increased to 83.7

Thomson Reuters and University of Michigan index of consumer sentiment increased to 83.7 from 76.4 in April, it is the highest since July 2007. Separately, the Conference Board’s gauge of the economic outlook for the next three to six months climbed 0.6 percent in April, more than forecast.

The gain in confidence shows Americans are overcoming the effects of higher taxes and a package of federal spending cuts, known as sequestration, that threatens to take a toll on jobs. Stocks rallied as the reports underscored forecasts for a pickup in the economic expansion later this year.

The Standard & Poor’s 500 Index jumped 1 percent to a record 1,666.12 at the close of trading in New York. The Dollar Index climbed as much as 0.9 percent to 84.371, the highest level since July 2010, before trading at 84.261 at 4:07 p.m. New York time, up 0.8 percent. The yield on the 10-year Treasury note climbed to 1.95 percent from 1.88 percent late yesterday.

A report from the Labor Department showed payrolls climbed in 30 states in April, while the unemployment rate dropped in 40, showing the labor market strengthened across the country.

The economy is projected to grow at a 1.6 percent annual rate in the second quarter, down from a 2.5 percent annual rate in the first three months of the year, based on the median forecast in a Bloomberg economist survey from May 3 to May 8. The expansion is then projected to accelerate to a 2.6 percent pace in the fourth quarter.

Source Bloomberg

Tuesday, May 14, 2013

Import prices are down as well as oil prices that will help households

WASHINGTON (Reuters) - Costs of oil fell that causes import prices to drop in April, that is a great news for household.

Import prices slipped 0.5 percent last April, it is the biggest decline since December, according to the Labor Department. March's data was revised to show a 0.2 percent decline instead of the previously reported 0.5 percent drop.

Economists had expected prices to fall 0.5 percent last month. In the 12 months to April, import prices fell 2.6 percent.

Stripping out petroleum, import prices dipped 0.1 percent.

The tame inflation environment should allow the Federal Reserve to stay on its ultra-easy monetary policy course as it tries to nurse the economy back to health.

At its policy meeting earlier this month the central bank decided to continue buying $85 billion worth of bonds every month to push long-term interest rates downward.

At the same time, the economy has lately shown signs of resilience despite austerity measures enacted this year by Washington.

The National Federation of Independent Business said on Tuesday its gauge of confidence for small U.S. businesses rose in April to its highest in six months.

Lower oil prices are also helping household finances. The United States imports much of the fuel it consumes. Last month, imported petroleum prices fell 1.9 percent.

The Labor Department report also showed export prices fell 0.7 percent last month, the largest decline since June.

Tuesday, May 7, 2013

US Internet sales tax passes Senate

The Senate passed a bill on Monday that gives the states an easier process to collect sales taxes for online purchases, but its final prospects remain uncertain.

Even so small online retailers are already thinking about the bill's potentially large impact on their operations.

Nancy Mashragi would seriously consider reducing her sales to less than $1 million a year so she'd be exempt from collecting sales tax from customers.

Mashragi sells refurbished electronics through her eBay store, Concept Electronics. Last year she sold roughly $3 million worth of merchandise. But if the Senate passes the Marketplace Fairness Act tonight, she may cut iPads, which have a high cost but low profit margin, from her inventory so she'd fall within the proposed $1 million small-seller exemption.

"That's something off the bat we'd cut out because it's not worth it for us," says Mashragi, who is based in Clearwater, Fla., and collects sales taxes for purchases made by Florida residents. "Why would we go through the hassle of going over that threshold and being responsible for all those taxes on something that has a very low profit margin?"

It's a concern she and other small online retailers share. The bill, which passed the Senate 69-27, now heads to the House, where it faces an uncertain future because some Republicans view it as a tax increase. President Obama has said he supports the bill.

The act would overturn decades-long precedent and leave many small online sellers with the task of figuring out how to manage collecting and remitting sales tax to nearly every state.

Full Story on USA Today:

HSBC Shares Rise as Profit Beats Expectations

HSBC underlying profit before tax increase by 34% over the same period last year they reported it at $7.6 billion. HSBC cut costs and reduced charges for bad debts.

The shares were 1.8 percent higher after the earnings release.
"We've had a good start to the year, with growth in reported and underlying profit before tax. These results demonstrate our progress in implementing the strategy we set out in May 2011," CEO Stuart Gulliver said.

"Loan impairment charges were lower in every region, notably in North America. Our continued focus on cost management contributed to an improvement in our underlying cost efficiency ratio," he added.

Paul Kavanagh, partner and senior market strategist at Killick & Co. told CNBC it was all about controlling costs as the bank undertakes a three-year restructuring plan and

HSBC reported profit before tax of $8.43 billion for the first quarter, better than the $8.1 billion expected by analysts. But according to Kavanagh, the underlying profit was more relevant for investors because it excluded one-off items.

HSBC also said its core tier-one capital ratio had strengthened to 12.7 percent from 12.3 percent.

source CNBC news