Tensions are rising once again between China and its regional neighbors. With tensions already strained between Japan and China, one might have assumed that Beijing’s leaders would look to avoid stirring up any more tensions. Now, however, Chinese Premier Li Keqiang has warned several countries it is currently in dispute with not to provoke China as The Philippines apparently did with its legal challenge to China’s disputed claims over the South China Seas.
Chinese aggression could spur ASEAN unity
China has one major advantage over its rivals. With the exception of Japan, most of the other nations with territorial disputes with care are smaller ASEAN nations. ASEAN refers to the collective of South East Asian nations and provides a loose regional coordination structure for all member states. So far, China has been very effective in using the divide and conquer strategy to keep ASEAN nations from banding together and presenting a united front to Chinese aggression.
China has thus far looked to resolve issues one-on-one with ASEAN nations. Meanwhile, China has used members of ASEAN not involved in the dispute, such as Cambodia and Laos, to hold up any attempts at unified action within the framework of ASEAN. - (Valuewalk)
BERLIN (AFP) - The outlook for the crisis-battered eurozone brightened Thursday as Germany’s leading economic think tanks raised their growth forecast for Europe’s top economy this year and next year.
Throughout the long crisis, the German economy has managed to escape with only a few bruises.
And now with a tentative recovery in the single currency area as a whole gradually firming and gaining momentum, buoyant domestic demand in Germany should enable Europe’s biggest economy to expand by 1.9 percent in 2014 and then 2.0 percent in 2015, the country’s top four institutes predicted in their spring report.
That would mark a big increase from 0.4 percent in 2013.
The government is pencilling in growth of 1.8 percent for this year, while both the German central bank or Bundesbank and the International Monetary Fund are expecting growth of 1.7 percent.
- ‘Momentum will remain high’ -
"For more than a year now, output has been on the up, employment growth is accelerating and sentiment among consumers and businesses is improving sharply," the institutes wrote.
Nevertheless, the think tanks were critical of new economic policies drawn up by the new left-right coalition government under Chancellor Angela Merkel.
"Economic policy will provide headwind for growth," they complained, describing the decision to lower the retirement age to 63 in certain cases as a "step in the wrong direction."
The introduction of a fixed national minimum wage from 2015 would also “put the brakes on employment growth,” the institutes warned.
Merkel and her conservative CDU-CSU parties reluctantly agreed to a minimum wage of 8.50 euros per hour in order to coax the Social Democrat SPD party into a power-sharing coalition.
The institutes also estimated that the crisis in Ukraine could also have a negative impact on German growth.
Russia is being threatened with economic sanctions in Europe following its annexation of Crimea.
And a drop of around 4.0 percent in Russian gross domestic product (GDP) would shave between 0.1-0.3 percentage point off German growth, the institutes said. - (AFP)
(Reuters) - As economic prospects in western Europe improve, French companies whose shares are still reeling from the euro zone debt crisis are enjoying rock-bottom financing costs, a boost to their bottom lines that has yet to be fully reflected in their stock prices.
However, the borrowing binge has left French firms with a hefty debt burden, hovering near record highs just below 70 percent of the country’s GDP, according to the Bank of France data.
Economists warned that this could pose a refinancing challenge several years down the line when interest rates start rising. For the short to medium term, however, the issue is not seen as a risk, as companies take advantage of lower rates to gradually refinance their debt and dramatically lower interest expenses.
Meanwhile cheaper funding costs are already having other effects.
Beyond their positive impact on balance sheets and indirectly on companies’ return on equity, the lower cost of capital has started to fuel corporate activity.
"The very low rates paid by companies is a serious boost for M&A and you already see it in France," said Xavier Lespinas, head of equities at Swiss Life Banque Privee. "This will prompt more and more companies to make bold moves." - (Reuters)
Laurence Fink, chief executive officer of Blackrock Inc., the world’s largest money manager with more than $4 trillion in assets, recently issued a warning to U.S. companies: Stop focusing on short-term returns at the expense of longer-term investments.
“It concerns us that, in the wake of the financial crisis, many companies have shied away from investing in the future growth of their companies. Too many companies have cut capital expenditure and even increased debt to boost dividends and increase share buybacks.”
Stock buybacks and cash dividends totaled $214.4 billion in the fourth quarter of 2013. That is the highest level since the record high of $233.2 billion in the final quarter of 2007, according to the Wall Street Journal. Compare that to the second quarter of 2009, when buybacks and dividends totaled a mere $71.8 billion.
Buybacks tend to boost per-share earnings as corporate net income is applied to a smaller base of stock outstanding. Higher earnings per share can justify an increased stock price. In an era of low bond yields, dividends are an income stream that also gives the investor potential capital appreciation.
Both of these forms of financial engineering have helped to drive U.S. equity prices higher. However, unless a company wants to go private, it can’t buy back its stock forever. Dividends are limited by a company’s earnings.
Companies only have a finite amount of cash to invest. Whatever gets spent on buybacks and dividends is that much less available to be spent on investments in employees, research and development, and capital expenditure. It’s basic arithmetic.
When will the next round of capital investment begin in earnest? As soon as you figure out the answer to that question, you will have gained significant insight into the direction of the economy as well as the next phase of this stock-market rally. - (Bloomberg)
The institution however emphasized that the fiscal deterioration of many Latin American countries in recent years has left the region more vulnerable to shocks stemming from the reduction in US stimulus.
It said the rise in foreign currency debt sales by banks and non-financial companies has also left many countries more exposed to shocks this time around than during the 2008 global financial crisis, it referred to as the “Great Recession.”
Still, the regional bank says Latin America is for the most part able to withstand capital fluctuations resulting from the drawback of asset purchases by the US Federal Reserve and slowdown of the Chinese economy.
During the 2008 financial meltdown, the region poured tens of billions of dollars into their economies to bolster activity, shore up employment and help local banks. Since then, many of those countries left the fiscal tap open despite the recovery, raising debt levels and diminishing their fiscal arsenal to battle another round of market turbulence.
“Fiscal balances have continued to deteriorate, and tighter fiscal management and restoring policy buffers remain key policy priorities,” the IADB warned in its report.
Rebuilding fiscal buffers is specially key now that the region’s economy is expected to grow between three and 3.5% in the next two years, at near potential but well below the 5% seen before the 2008 crisis, the IADB said.
For the typical country in the region, overall fiscal balances remain three percentage points of GDP below pre-crisis levels, with only three out of 21 countries improving their fiscal position in 2013 from 2012, the report said.
A clear example of fiscal slippage is Brazil where the country’s primary budget surplus, or excess revenue prior to debt interest payments, has plummeted from 3.11% of GDP in 2011 to 1.9% last year.
That rapid fiscal deterioration and lackluster economic growth prompted Standard & Poor’s to cut Brazil’s debt rating closer to junk territory last Monday.
A recent rise in the issuance of dollar-denominated debt by Latin American banks and companies has also increased vulnerabilities if the region’s currencies depreciate too rapidly, the report warns. - (Mercopress)
By David Brunnstrom WASHINGTON (Reuters) - China should not doubt the U.S. commitment to defend its Asian allies and the prospect of economic retaliation should also discourage Beijing from using force to pursue territorial claims in Asia in the way Russia has in Crimea, a senior U.S. official said on Thursday.
Daniel Russel, President Barack Obama’s diplomatic point man for East Asia, said it was difficult to determine what China’s intentions might be, but Russia’s annexation of Crimea had heightened concerns among U.S. allies in the region about the possibility of China using force to pursue its claims.
Yep saw something along these lines coming. See page 2.
China will not resort to short-term stimulus measures in the face of temporary fluctuations in growth, Premier Li Keqiang pledged on Thursday, as monthly trade figures showed fresh signs of stress in the world’s second-largest economy.
Chinese imports and exports in March both contracted compared with a year earlier, adding to concerns about the slowdown in an economy that has been the biggest contributor to global growth since the 2008 financial crisis.
In a speech to a forum on the tropical Chinese island of Hainan, Mr Li acknowledged some of the challenges facing the economy but insisted his government was capable of propping up growth while implementing difficult reforms to put it on a more sustainable base.
“The upturn of the Chinese economy is not yet on a solid footing. Downward pressure still exists and difficulties in some fields must not be underestimated,” Mr Li said. But “there are conditions in place for the Chinese economy to achieve sustained, sound growth”, he added. “We have the capabilities and confidence to keep the economy functioning within the proper range.”
On Thursday, Mr Li said the government’s target of “about” 7.5 per cent GDP growth this year was flexible, and Beijing would not act to pump up growth as long as “there is fairly sufficient employment and no major fluctuations”.
Since taking over the government last year, Mr Li’s administration has downplayed traditional GDP targets, with job creation and reform of China’s growth model at the top of the agenda.
In recent weeks, the government has announced a series of initiatives to boost infrastructure spending to prop up flagging growth but has refrained from the kind of massive stimulus it revealed in the wake of the global financial crisis.
“We will not resort to short-term stimulus policies just because of temporary economic fluctuations and we will pay more attention to sound development in the medium to long run,” Mr Li said on Thursday.
Trade figures released on Thursday showed that Chinese exports fell 6.6 per cent in March from a year earlier, missing forecasts for a 4.9 per cent rise.
Imports fell even further, contracting 11.3 per cent from a year earlier and sending jitters through global equity and commodity markets.
In his speech, Premier Li championed the quick implementation of the Regional Comprehensive Economic Partnership as a way to boost growth in China and the broader region.
The RCEP is intended to create a trade zone extending from New Zealand to India and taking in China, Japan, Korea, Australia and the 10 Association of South East Asian Nation member countries.
Many see it as a competing initiative to the Trans-Pacific Partnership, which is being championed by the US and has effectively excluded China. - (FT)
I certainly hope officials have things under control. You see smoke but they say there is no fire. Perhaps it’s just a barbecue.
The Chinese government was unable to sell all the bonds offered at an auction on Friday, its first such failure in nearly a year amid concerns about slowing growth in the world’s second-largest economy.
The failed bond auction raises the stakes for Beijing as it tries to rein in debt levels, illustrating that even the state will have to pay a higher cost for funding as banks focus more on investment risks and demand improved yields.
Traders said there was strong appetite for the government bond but only at rates above what the finance ministry was willing to pay to borrow money.
The bond failure followed inflation data that showed prices fell in China last month, reinforcing the picture of a sluggish economy weighed down in part by government efforts to squeeze leverage out of the financial system.
Weak trade figures and industrial data, junk bond defaults and big declines in property sales have also added to a disappointing first quarter for China.
Analysts have rushed to downgrade their forecasts for Chinese growth and predict that the economy will expand 7.4 per cent this year, its softest in more than two decades.
The downturn has fuelled expectations that the government will prop up growth, but Li Keqiang, the premier, on Thursday rebuffed calls for a stimulus. “We have the capabilities and the confidence to keep the economy functioning within a proper range,” he said.
But some analysts believe the government runs a risk of being too slow to counter the deterioration of China’s growth prospects.
“It’s high time for the government to ease fiscal and monetary policy. I wouldn’t think of it as a policy stimulus. Policy has been too tight since last year,” said Shen Jianguang, an analyst with Mizuho Securities.
Last year’s failure was a precursor to a cash crunch that roiled global markets when Chinese money market rates spiked to double-digits.
Bond traders said the situation was different this time, with liquidity conditions healthier and the central bank determined to avoid a repeat of the cash crunch. But with market rates climbing in recent weeks and traders expecting the tightening to continue, banks demanded a higher yield from the finance ministry.
“Rates have to stay relatively high to force deleveraging. Yields should be higher,” said a trader with a bank in Shanghai. “Everyone is suffering from the deleveraging process, even the finance ministry.”
Debt in China has risen to about 220 per cent of gross domestic product, compared with 130 per cent in 2008. The International Monetary Fund and global rating agencies have said such a rapid increase in debt can endanger a country’s financial stability.
Since the middle of last year, the government has taken increasingly aggressive steps to slow the build-up of debt, making it harder for banks to obtain cheap financing and clamping down on shadow banking activity. But these tightening measures have also taken a toll on growth, as highlighted by the subdued inflation.
Looking at price figures for the first quarter as a whole, the weakness is apparent. The consumer price index rose an average of just 2.3 per cent in the first quarter compared with the same period last year. That is down from 2.9 per cent in the final quarter of 2013 and it is also well below the government’s target of 3.5 per cent inflation this year.
For industrial companies, the trend is even grimmer. Prices of goods as they leave their factory gates fell an average of 2 per cent in the first quarter from a year earlier. Although producers have faced deflation for 25 months, the situation had previously looked to be improving with declines narrowing at the end of last year.
“These downward pressures are particularly pronounced in the sphere of heavy industry, which is both most exposed to lower raw commodity prices and also overexposed to overcapacity issues,” said Louis Kuijs, an economist with RBS.
The weak inflation data weighed heavily on Chinese markets on Friday. Shares in Chinese companies listed in Hong Kong fell 1.85 per cent, underperforming the wider market, which was down 0.8 per cent. - (FT)
As we reported last Friday, a second US warship, the destroyer Donald Cook, crossed the Bosphorus last week and entered the Black Sea at precisely the time when NATO was arguing that its encroaching presence around Russia should not spook anyone.
Apparently it spooked someone, namely Russia, which over the weekend decided to give the Americans a warm welcome.
As AP reports, “A U.S. military official says a Russian fighter jet made multiple, close-range passes near an American warship in the Black Sea for more than 90 minutes Saturday amid escalating tensions in the region.”
(Reuters) - The White House warned Russia on Monday that it would face further costs over its actions in Ukraine and said U.S. President Barack Obama would speak with Russian President Vladimir Putin soon.
U.S. officials stopped short of announcing a new set of sanctions against Russia but said they were in consultations with European partners about the prospect.
The European Union agreed on Monday to step up sanctions against Moscow by expanding a list of people subjected to asset freezes and visa bans.
"Russia continues to engage in provocative actions in Eastern Ukraine. The mere presence of the troops, in addition to what else they’ve done inside Ukraine, creates a threat of destabilization within Ukraine," White House spokesman Jay Carney told reporters.
"I can assure you that Russia’s provocations - further transgressions and provocations will come with a cost. And I’m not here to specify what cost will come from which specific action, but there have already been costs imposed on Russia; there will be further costs imposed on Russia."
The next round of U.S. sanctions, which would be the fourth imposed since the Ukrainecrisis began, is likely to target Russians close to Putin as well as Russian entities, three sources familiar with the discussions said on Sunday.
U.S. State Department spokeswoman Jen Psaki noted that the United States was prepared to impose sanctions on individuals and entities in the financial services, energy, metals, mining, engineering and defense sectors.
The sanctions have been the most visible sign of U.S. anger at Russia’s annexation of the Crimea region in southern Ukraine last month, reflecting the deepest plunge in U.S.-Russian relations since the Cold War.
Obama spoke to French President Francois Hollande about the crisis on Monday and praised Ukraine’s government for showing “great restraint” and working to unify the country, the White House said.
Carney also confirmed that the director of the U.S. Central Intelligence Agency, John Brennan, had been in Kiev over the weekend and decried what he called “false claims” leveled at the CIA by Russian authorities.
Head of the CIA in Kiev this weekend. Fishy business abounds.
WASHINGTON — At the World Bank and International Monetary Fund annual spring meetings, concerns about crisis have given way to concerns about complacency.
The euro zone has re-emerged from recession. Emerging-market jitters have quieted. The fiscal battles in the United States have abated.
But the recovery remains fragile and in many cases, growth remains sluggish, leaving a jobs gap of 62 million.
“The overriding topic for discussion will be the topic of growth, quest for higher growth, better quality growth, more inclusive growth and sustainable growth,” said Christine Lagarde, the managing director of the fund, speaking with reporters on the eve of the weekend conference. “We need to act now.”
“We are monitoring the economic situation in Ukraine, mindful of any risks to economic and financial stability, and welcome the I.M.F.’s recent engagement with Ukraine,” said a communiqué from the Group of 20, which consists of the world’s biggest economies.
The fund is preparing a financial rescue package for Kiev that would come with stringent conditions, including tax increases and cuts in government spending.
Finance ministers and central bankers also discussed the possibility of new penalties for Russia, said Jacob J. Lew, the Treasury secretary. “There is broad and strong unity within the G-7 on increasing the sanctions and costs in response to escalating action from Russia,” he said, referring to the Group of 7, meaning Britain, Canada, France, Germany, Italy, Japan and the United States. “There was no dissent in the room that it was essential that there be unity in taking action if necessary.”
(RCS): On the 2010 reforms:
At the meetings, the United States also took heated criticism for Congress’s failure to agree to a 2010 reform package that would give emerging-market countries more say within the fund. The Obama administration has repeatedly urged leaders on Capitol Hill to ratify the package, which requires no new money from the United States, to no avail. “The end of the year for me is the final limit,” said Guido Mantega, Brazil’s finance minister, according to Reuters. “Four years waiting for me is just too much.”
The Group of 20 gave a year-end deadline for Congress to act — saying that at that point, the monetary fund might move on without the United States’ assent. It gave no further details. “If the 2010 reforms are not ratified by year-end, we will call on the I.M.F. to build on its existing work and develop options for next steps,” a communiqué said.
At a meeting in Sydney at the end of February, members of the Group of 20 major economies — which include rich countries like Canada and developing economies like Brazil and China — agreed to commit to policies to increase growth. The specific target is to lift economic output 2 percent beyond its current trajectory over the coming five years. - (NYT)
Philippine and U.S. negotiators reached agreement on key points of a pact to boost the American troop presence as the Southeast Asian nation seeks to counter China’s push for control of disputed South China Sea territory.
Representatives of both nations finished the eighth round of “very productive” negotiations in Manila, the Philippine defense and foreign affairs departments said in a joint e-mailed statement today. A draft of the defense cooperation agreement will be submitted to President Benigno Aquino for approval, the departments said.
The pact is part of Aquino’s plan to shore up military ties with allies such as the U.S., which is treaty-bound to defend the country in case of conflict. It also aids the U.S. strategic rebalancing toward Asia pushed by President Barack Obama as China’s leaders seek a greater role for their country in the region. The agreement is likely to be signed before Obama’s visit to the country this month during his Asian tour, Philippine foreign affairs spokesman Charles Jose said by phone.
The draft deal respects Philippine sovereignty and prevents the permanent stationing of U.S. troops and the U.S. having military bases or weapons of mass destruction in the country, according to the statement. U.S. access to and use of Philippine military facilities will be at the invitation of the Philippines and with full adherence to its laws, the defense department said.
China will make “no compromise, no concessions” in disputes over territory and resources with Japan and the Philippines, and is ready to fight and win any battle, General Chang Wanquan said April 8 at a briefing in Beijing alongside his visiting U.S. counterpart, Defense Secretary Chuck Hagel.
Aquino is also seeking to boost military ties with Japan, which is locked in a separate dispute with China over islands in the East China Sea. Two Japanese destroyers and two helicopters visited Manila early this month, and Japan will encourage more joint training with the Philippine military, Captain Hideto Ikeda, commander of the Japan Maritime Self-Defense Force’s 13th Escort Division, said on April 2. - (Bloomberg)
Investors flocked to buy $4.2 billion of government bonds. The sale marks some hope that Greece will implement new reform laws, especially those aimed at cutting the number of public workers. The government of Prime Minister Antonis Samaras has already improved the pension system and collection of property taxes. It now reports the first budget surplus in a decade. And in 2014, the economy is expected to grow after shrinking in previous years.
Greece’s progress has been enough for the chief architect of the eurozone’s recovery, German Chancellor Angela Merkel, to pay a visit to the country Friday. In a sort of a short victory lap, the leader of Europe’s strongest economy praised Greeks for making it through a difficult first phase. The country, she said, now “harbors boundless possibilities still to be exploited.” She announced $139 million in loans to finance small businesses in Greece.
Ms. Merkel noted the Greeks’ personal sacrifices – 27 percent unemployment – but suggested that every country in the eurozone had to go through belt-tightening. “This path could only have been taken because there was solidarity in Europe,” she said.
Paying off the biggest debts in Europe’s most troubled economies will take years. Much depends on whether voters continue to elect leaders who trim spending and help small businesses grow. - (Christian Science Monitor)
Last Monday, on China’s first aircraft carrier, the relationship took an unusual, and perhaps promising, turn. As part of his first visit to China, U.S. Defense Secretary Chuck Hagel was invited to be the first foreign visitor to go aboard the aircraft carrier, which China has spent a decade refurbishing. The Liaoning was originally a rundown Soviet-era carrier purchased from Ukraine, but now it is seen as a central part of the expanded Chinese navy.
The last time the Americans came in contact with the Liaoning was in December, early in its trials in the South China Sea, when it nearly collided with a U.S. navy cruiser. Had that happened, it would have been the most serious confrontation between China and the U.S. in years.
At issue for the Americans is China’s claim over islandscontested by Japan and the Philippines — two allies tied by treaty to the U.S.
But there was no sign from China of any interest in a deal: “On this issue, we will make no compromise, no concession — not even a tiny violation is allowed,” warned Chinese Defence Minister Chang Wanquan.
But many observers were not surprised by the heated rhetoric. After all, that is what military people, defending their national interests, are expected to say. What is more significant and encouraging, according to U.S. journalist and foreign affairs analystRobert D. Kaplan,is that they are meeting in the first place, and at a very high level. - (thestar.com)
Here’s a more sanguine view of the recent Hagel China visit. The author points out that the stage is set over water as opposed to land in Europe during the conflicts in the prior century.
Three Chinese government ships have sailed through disputed waters in the East China Sea on Saturday, the Japanese coastguard said.
US Defence Secretary Chuck Hagel held talks with his Japanese counterpart Itsunori Onodera last week and warned China against unilateral action to resolve a territorial dispute with Japan or other Asian countries.
China’s defence minister, defending his country’s claim, said on Tuesday that Beijing would not act first to “stir up troubles” over island disputes with its neighbours.
Meanwhile, a Japanese cabinet minister has visited a controversial war shrine in Tokyo, in a move likely to cause anger in China and South Korea, which see it as a symbol of Japan’s past militarism.
The Minister for Internal Affairs and Communications, Yoshitaka Shindo, paid homage on Saturday morning at the Yasukuni shrine, Jiji Press and the Yomiuri Shimbun said.
China and South Korea see it as a brutal reminder of Tokyo’s imperialist past and wartime aggression, and its failure to repent for its history.
In December, Japanese Prime Minister Shinzo Abe made his first visit as premier to the shrine, which honours Japan’s war dead including several high-level officials executed for war crimes after World War II.
Mr Abe’s visit prompted angry responses from Beijing and Seoul, while the United States said it was “disappointed” by the prime minster’s decision as it would raise regional tensions. - (Australia Network News)
Fitch on Friday switched the outlook on Portugal’s BB+ rating from “negative” to “positive”, a month before the eurozone nation exits its international bailout, raising the prospect it may soon rejoin investment-grade ranks.
Fitch said the upgrade to the ratings outlook is justified by Lisbon’s progress in repairing public finances as well as the overall recovery of the economy three years after its EU-IMF bailout.
"Portugal is making good progress in reducing its budget deficit," the ratings agency said in a statement.
The economy took a big step towards emerging from its debt bailout and regaining investor confidence late last month by beating its budget target by a wide margin.
Portugal, still struggling to overcome its debt crisis, to pull away from recession and overcome public anger at tough austerity measures, turned in a budget overshoot equivalent to 4.9 percent of output last year.
That marked a huge reduction from a public deficit of 6.4 percent in 2012.
But despite this marked progress in reducing the annual deficit, the gap between spending and revenues, the public debt of accumulated past deficits rose to 129.0 percent of output last year from 124.1 percent in 2012.
The debt now amounts to 213.63 billion euros ($297 billion), the statistics office INE said.
Portugal is scheduled to exit next month its three-year 78-billion-euro EU-IMF bailout, under which it has been required to enact deep structural reforms to correct public finances and raise efficiency in the economy.
"The slow response of the ratings agencies could still make Portugal’s bailout exit in May more difficult," said Schulz.
The sub-investment grade rating is a key reason Portugal still pays more to borrow than Italy and Spain, and complicates ECB support measures, he added. - (Bangkok Post)
WASHINGTON (Reuters) - China’s ambassador to the United States on Thursday played down the tense exchange this week in Beijing between Defense Secretary Chuck Hagel and his Chinese counterpart and praised the frank talk between the two countries.
Ambassador Cui Tiankai spoke after Hagel’s meeting on Tuesday with Defense Minister Chang Wanquan, who called on the United States to restrain Japan and chided another U.S. ally, the Philippines.
"He had a very substantive and direct exchange with his Chinese counterpart," Cui said. "I think maybe this is not a bad thing. Maybe this is a good thing."
Hagel’s trip to China exposed tensions over its territorial disputes with regional U.S. allies, including the Philippines and Japan. China is at odds with Japan over uninhabited islets in the East China Sea that are administered by Tokyo. China claims most of the South China Sea. The Philippines, Malaysia, Vietnam, Brunei and Taiwan also claim parts of those waters.
Cui, who was China’s ambassador to Japan in 2007-09, said there was no room for concessions on territorial integrity and urged “mutual respect” from Washington over its interests.
"Our relations with Japan are much longer than your relations with Japan," Cui gently chided moderator Stephen Hadley, national security adviser to former President George W. Bush.
Similarly, the ambassador deflected questions about China’s troubled relations with some of its other neighbors: “We have so many neighbors. You only have two.” - (Reuters via Chicago Tribune)
…”maybe it’s a good thing”? Doesn’t inspire much confidence. Tensions remain. What was interesting was the reiteration from China that there is no room for concessions with regards to territorial disputes with Japan.
Japan starting up the nuclear reactors despite high public opposition. This makes sense given that without home grown nuclear power, the country’s debt dynamic situation becomes extremely precarious. The leadership knows that without nuclear power, Japan could face a financial bond meltdown at some point in the future.
The last article is rather bearish on whether the atomic industry in Japan can pick itself up.
“A recent Reuters analysis shows as many as two-thirds of the country’s 48 idled nuclear reactors may have to be left closed because of the high cost of further upgrades, local opposition or seismic risks.” - (Reuters)
Philippine navy will soon return to a South China Sea island it lost to Vietnam 40 years ago to drink beer and play volleyball with Vietnamese sailors, symbolising how once-suspicious neighbours are cooperating in the face of China’s assertiveness in disputed waters.
Diplomats and experts describe the nascent partnership as part of a web of evolving relationships across Asia that are being driven by fear of China as well as doubts among some, especially in Japan, over the U.S. commitment to the region.
When U.S. President Barack Obama visits Asia this month he will see signs that once-disparate nations are strategising for the future, even though he will likely seek to shore-up faith in America’s “pivot” back to the region.
Among the new network of ties: growing cooperation between Japan and India; Vietnam courting India and Russia; and Manila and Hanoi, the two capitals most feeling China’s wrath over claims to the potentially energy-rich South China Sea, working more closely together. The Philippines and Vietnam are also talking to Malaysia about China.
"We are seeing a definite trend here, one that is likely to accelerate," said Rory Medcalf, a regional security specialist at Australia’s independent Lowy Institute for International Policy in Sydney.
"It is quite a creative dance as countries hedge and try to cover themselves for multiple possible futures."
I wrote before how a withdrawal of US support from Asia would not be disastrous. In fact, it seems to have had the opposite effect. Countries that didn’t deal with each other are finding a common reason to do so, I’d venture to say that questionable US support has actually increased cooperation/peace in the region.
Greece’s first bond sale since its bailout in 2010 will raise 3 billion euros ($4.15 billion) at a yield of 4.95%, according to media reports Thursday, citing people familiar with the matter. The demand came in at more than EUR20 billion, helping push the yield lower than what was expected by Greek officials ahead of the sale. Reuters said on Wednesday Greece initially priced the sale at a yield between 5% and 5.25% and aimed at raising EUR2.5 billion. With the five-year bond sale, Greece returns to the capital markets for the first time since it was bailed out by international lenders in 2010 and agreed to the biggest sovereign-debt restructuring in history in 2012.
This is another feather in the cap for the Eurozone bulls. This event marks the remarkable change in sentiment that has taken place over the past 1.5 years. Investors see the eurozone crisis as past news.
Low inflation in the euro zone is good news, but not if critics keep sounding the alarm about it. That’s the view of a top euro-zone finance official, Jeroen Dijsselbloem….
“What I’m worried about is that if all of us keep talking about and warning about the risk of deflation, it will become a self-fulfilling prophesy,” Mr. Dijsselbloem said. “Because if you keep telling people and investors and companies that there will be a long-term low inflation or even deflation, that could influence their behavior.”
Many in the eurozone’s crisis countries complain that the source of their suffering is a rigid economic-austerity regime – including reductions in wages and pensions, tax increases, and soaring unemployment – imposed on them by Germany. Hostility against Germany has reached a level unseen in Europe since the end of World War II
And yet, despite this antagonism, loud calls for Germany to assume “leadership” in Europe can also be heard.
Complaints about the imposition of a “teutonic regime” and appeals for German leadership seem to contradict each other – a kind of continent-wide cognitive dissonance. In fact, the complaints and calls for leadership are mutually reinforcing. The implementation of austerity policies in the periphery has caused these countries to ask for help and request that Germany take the lead by putting more money on the European table.
Nobody would deny that Germany has an interest in preserving the euro. So why shouldn’t it support its partners with financial help to overcome the crisis?
Such support can already be found via the various rescue mechanisms – above all, the European Stability Mechanism and the implicit guarantees of TARGET 2 – that have been erected since the crisis began. But these mechanisms must be distinguished from a regime of more or less automatic, permanent transfers.
As long as a fully-fledged political union remains a vision for the future, fiscal transfers must be legitimised by national parliaments. For now – and probably for a long time to come – the eurozone will continue to be a union of sovereign states, with each country responsible for its own policies and for their outcome. The no-bailout clause that was included in the monetary union’s founding treaty is an indispensable corollary. Eurobonds, for example, would not only create moral hazard; “taxation without representation” would also violate a fundamental tenet of democracy and undermine support for the European idea.
The creation of a European banking union is another area in which misguided calls for solidarity prevail. Establishing a single supervisory authority and a resolution mechanism are valid proposals. But asking others to pay for the legacy of banks’ past irresponsible practices is hard to justify.
What would be the reaction if, say, Italian or Spanish taxpayers were asked to pay for the reckless behavior of the German IKB or HRE banks? Who would not find such a request inappropriate, to say the least? And yet when the bailout is presented the other way around, with German taxpayers asked to backstop reckless Italian or Spanish banks, somehow it is supposed to be an act of solidarity. Legacy problems in national banking systems should be solved at the national level before the banking union moves forward.
Bailing out governments and banks is not the direction in which Germany should lead. If Germany should lead at all, it should do so by providing a model of good economic policies for others to emulate. It should lead by respecting the commitments enshrined in the European treaties.
Walter Hallstein, the first president of the European Commission, repeatedly stressed that the union is based on the principle of a community of nations under the rule of law (Rechtsgemeinschaft). Today, credibility can only be restored if treaties and rules are respected again.
Those who are concerned about permanent German dominance of the European “club” can rest easy. Having emerged from the position of the sick man of Europe only a decade ago, Germany is now willfully, if thoughtlessly, undoing the reforms that had so strengthened its economy. By reinforcing already-strict labour-market regulation, pursuing a misguided energy policy, and reversing pension reform, Germany is undermining its current economic position and will move in the direction of problem countries.
This regression will take time, but it will happen. Accordingly, calls for German leadership will disappear and its strained public finances will suppress requests for financial transfers. One wonders how the discussion about “leadership” for Europe will look then? - (Project Syndicate via Economia)
Germany and France, rather than the European Central Bank, made the decision that Irish taxpayers should bail out the banks, states a new book.
The claim that Berlin and Paris initiated the move against Ireland, rather than the ECB, is made in a newly published book, Europe’s Puppet Master. It has caused some upset in the capitals and in Brussels as it is based on confidential reports made by diplomats who attended the EU leaders’ summits during the crisis and is supported by insights from insiders.
Their account calls into question the independence of the ECB.
U.S. retail sales increased in March by the most since September 2012 as Americans bought more cars, clothing and garden supplies, helping the economy recover from a weather-depressed start to the year.
Economic rebound continues. I’d like to see the YoY numbers though. Will post those soon.
Reforming China’s economy begins with the banking system. Except the banking system might not be ready.
…there are significant problems in implementing changes.
First, China’s economic model requires keeping China’s cost of capital low to facilitate its investment strategy. Reform would increase capital costs as credit risk would be priced correctly, undermining the low profitability and solvency of many businesses. Higher rates would stress many borrowers.
Second, Chinese banks need to manage rising bad debts. Rating-agency Fitch Ratings has argued that Chinese banks may have unrealized losses in excess of that reported due to improper treatment, such as restructuring loans to avoid recognizing them as non-performing. These losses may be greater than the total capital and reserves of Chinese banks.
Third, Chinese banking crises resulting from bad debts is traditionally dealt with by maintaining access to deposits, low rates and a guaranteed wide spread between borrowing and lending costs. Deregulation would destabilize this process.
These factors dictate that any reform will be slow, at best.
China’s capital account is partially open. Foreign direct investment by “qualified” investors, including for short-term periods, is allowed within specified limits. In addition, local and foreign businesses and investors have access to a variety of unofficial techniques to undertake capital transfers, although these are slow, cumbersome, expensive and potentially illegal.
This creates tensions between domestic policy objectives and the management of the value of the currency. Large foreign capital inflows require the People’s Bank of China (PBOC), the central bank, to undertake money-market operations to remove excess liquidity while maintaining the desired value of the currency.
Like deregulation of interest rates, Chinese authorities have committed to the removal of controls on capital flows, albeit on an unspecified time scale. But the risk of deregulation is significant. Reforms may affect the flow of credit in the economy and negatively impact domestic demand. Capital flows also affect the ability of the PBOC to use the level of the yuan as a policy tool.
…speculative capital inflows have been strong, seeking to benefit from the perceived undervaluation of the yuan. However, Chinese authorities fear destabilizing outflows if the capital account is liberalized and the yuan trades at fair value. Outflows might be exacerbated by flight capital. Trapped domestic savings may exit the country as investors seek alternatives to low-yielding bank deposits or speculative property, or in order to diversify their investments or seek protection against political and social instability.
These risks are exacerbated by the increasing scale of the China carry trade. Investors have purchased yuan investments financed in foreign currency to benefit from higher Chinese interest rates. Chinese domestic borrowers have increasingly borrowed in foreign currency (U.S. dollars DXY +0.30% , yen USDJPY +0.13% and euroEURUSD -0.18% ) to reduce interest costs. Both investors and corporations have also sought to benefit from the expected appreciation of the yuan. In addition, myriad derivative strategies to take advantage of the carry and the currency movements have also been implemented.
Interestingly, the Bank for International Settlements has warned that China’s banking system has large and rapidly growing net foreign liabilities.
Large capital outflows would result in these strategies suffering losses and being reversed. This would result in the tightening of domestic liquidity and higher interest rates, setting off financial instability and a domestic contraction. - (Marketwatch)
HONG KONG (Reuters) - China has issued stricter guidelines governing trust companies, two sources with direct knowledge of the rules told Reuters on Monday, in a bid to counter systemic risks posed by the biggest players in the country’s shadow-banking sector.
Trust companies are non-bank lenders that raise funds by selling high-yielding investments known as wealth management products (WMPs) and use the proceeds to fund loans to risky borrowers such as property developers, local governments and others to whom banks are reluctant to lend.
The new rules from the China Banking Regulatory Commission (CBRC) aim to reduce liquidity risks associated with off-balance-sheet WMPs by forbidding trusts from operating so-called “fund pools” that enable them to fund cash payouts on maturing products with the proceeds from new WMP sales. China’s securities regulator has compared such practice to a “Ponzi scheme”.
Regulators want trusts to strictly match each WMP with a specific set of underlying assets, rather than pooling cash and assets from different products together into common pools.
Trusts face pressure to use fund pools because doing so allows them to offer more attractive yields on the WMPs they sell. Such products typically carry a maturity of a year or less, even as the assets underlying such products are often longer-term loans that can’t be easily sold when the WMP matures and cash is due to investors.
Such risks came to the fore last June, when a nasty liquidity squeeze roiled China’s interbank money market, sending short-term borrowing rates as high as 30 percent. Money-market traders at the time cited the concentration of maturing WMPs as one factor contributing to excess cash demand.
Trust companies and banks often rely on borrowing from money markets to fund payouts on maturing WMPs for a few days until they complete fundraising on new products. - (MSN)
The IMF again sounded the alarm bell at the weekend over low global inflation. But has the worst of anemic price rises already passed the world economy? That, at least, is the view of J.P. Morgan & Chase economists.
In its weekly roundup of global economies, J. P. Morgan said it believed inflation has reached a low point after two-and-a-half years of falling price growth.
The bank noted that global consumer prices grew just 2% on year in February, their slowest pace since late 2009. Slowing growth in emerging markets, notably China, added to sluggish price growth in the U.S. and Europe.
But J.P. Morgan now expects inflation to pick up. There are a few factors at play.
1. Global growth is picking up, with the U.S. economy leading the way. This should “gradually turn the tide away from global disinflation,” the bank said.
2. Agricultural commodity prices are firming this year after a 23% slide from their June 2012 peak. Partly this is due to dry weather, which has hurt global cereal crop output.
3. Japan’s sales-tax increase on April 1 is also likely to add to the uptick in global prices in the short term, the bank said.
That doesn’t mean the specter of disinflation has disappeared. It remains a risk in Europe, where J.P. Morgan noted the central bank has been reluctant to use additional stimulus despite low inflation.
The Bank of Japan also is expected to ease further this year as consumer demand fades in the wake of the sales-tax hike. Asia’s poor exports performance, and concerns over Chinese growth, add to the worries. - (WSJ)
China’s controversial air defense identification zone (ADIZ) in the East China Sea is an important strategic move to improve national defense and regional stability, according to a commentary published Monday in the Global Times, a tabloid under the auspices of the Communist Party mouthpiece People’s Daily…
…The nationalistic Global Times, however, has hit back at the criticism by claiming that the biggest threat to stability in the East China Sea is not the ADIZ, but rather the military bases the United States has been setting up all over the region and particularly in areas surrounding China.
The commentary says the US military has situated itself at the edges of China’s airspace and can use its AGM-86 subsonic air-launched cruise missile to strike China’s economic heartland, the part of the country stretching from northeast Heilongjiang province to southwest Yunnan province. This territory represents 36% of China’s land mass but accounts for 94% of the country’s population.
The Global Times commentary defended China’s new ADIZ on the basis that it is a tactic employed by more and more countries to improve their air defense position through extrapolating the range of enemy air raids and securing more valuable air defense warning time.
Further, the ADIZ also strengthen’s China’s ability to limit America and Japan’s aerial reconnaissance, Global Times said. Currently, US and Japanese drones have a radar imaging distance of about 200km and can conduct reconnaissance missions as far as China’s eastern inland provinces of Anhui and Jiangxi. But with the introduction of the ADIZ, China’s southeast coast is not within range for the drones.
The paper also accused US defense secretary Chuck Hagel of employing double standards when he slammed China for establishing the ADIZ with “no collaboration, no consultation” during his visit to Beijing last week. Japan had previously expanded its own ADIZ on two previous occasions, including as far as the vicinity of Taiwan’s territorial waters, but the US simply chose to remain silent, Global Times said.
Far from causing “misunderstandings” as Hagel had suggested, China’s ADIZ actually benefits the maintenance and promotion of national interests of countries in the East China Sea and improves regional stability, the commentary concluded. - (Want China Times)
(Reuters) - Activity in China’s services industry rose to a four-month high in March, a private survey showed on Thursday, even as persistent weakness in manufacturing has reinforced fears of a sharper-than-expected economic slowdown.
The Markit/HSBC Services Purchasing Managers’ Index (PMI) increased to 51.9 in March from February’s 51.0, buoyed by strong employment, a second successive rise taking it further above the 50 level that separates expansion from contraction.
"The HSBC ChinaServices PMI suggests a modest improvement ofbusinessactivities in March, with employment expanding at a faster pace,” HSBC chief China economist Hongbin Qu said in a statement accompanying the release.
On Wednesday, China’s cabinet said it would accelerate constructionof rail projects and cut taxes for small firms, in what appear to be the first steps it has taken this year to steady theeconomy.
The Markit/HSBC PMI found that service-sector firms remained very optimistic in March, generally expecting businessactivity to be higher than current levels in one year.
Services made up 46.1 percent of gross domestic product in 2013, having overtaken manufacturing as China’s biggest employer in 2011. It has weathered the global slowdown much better than the factory sector. - (Reuters)
This data, in addition to firmer energy consumption numbers in February, imply that the China is not crashing and is cause for optimism.
Mazda is recalling 42,000 vehicles to check for yellow-sac spiders that block fuel lines and bite people.
While a spider-infested car does seem problematic, the creepy factor isn’t the impetus for the recall. Attracted to the fuel, the spiders get into and block the fuel line, pressure builds, the tank starts leaking, and the gas catches on fire. In short, a bunch of baby spiders may literally blow up your Mazda. The company is recalling 42,000 vehicles to check for insects—all Mazda6 sedans built from 2009 to 2011—and this isn’t even the first time this problem has surfaced. After a 2011 recall of 52,000 vehicles, Mazda installed a special spider-blocking spring, but the little eight-eyed gas huffers found a way around it. Spiders 2, Mazda engineers 0. — (Bloomberg)
This is pretty ridiculous and gave me a good laugh.
Reported Apr 2. (Reuters) - Brazil raised interest rates for the ninth straight time on Wednesday, prolonging one of the world’s longest-running monetary tightening cycles after a surge in food prices stoked already high inflation in an election year.
Although another rate hike in May has not been ruled out, the statement signaled that the bank would be very sensitive to upcoming economic and inflation indicators to decide whether to continue raising borrowing costs or end the cycle.
Many analysts have said the bank could very well end the tightening cycle in May to avoid hampering the growth of an economy that has been stuck in a rut for the last three years.
The central bank will have to find the right balance that allows it to ease inflation and avoid further slowing growth as President Dilma Rousseff prepares to run for re-election in October.
Another inflation bout caused by a rise in food prices as a severe drought hit crops in southeastern Brazil has threatened to push inflation above the ceiling of the official target range of between 2.5 and 6.5 percent. - (Reuters)
Brazil’s industrial production in February rose for the second straight month, as the central bank continues to boost rates to combat above-target inflation in the world’s second-biggest emerging market.
A third straight month of growth would turn “the outlook for the rest of the year suddenly a lot brighter,” said Daniel Snowden, emerging marketsanalyst at Informa Global Markets, by phone from London. “It’s good we had another positive month, and the year-on-year pace of 5 percent is something we hadn’t seen for a long time.”
“We had a disastrous end to 2013 for industry, and a strong start to 2014,”Neil Shearing, chief emerging markets economist at Capital Economics, said by phone from London. “But the strong start only reversed last year’s fall. It doesn’t look like very strong growth, but by the same token things aren’t collapsing.” - (Bloomberg)
Automakers said Tuesday that new car and truck sales picked up speed halfway through the month, culminating in a strong final weekend. Toyota dealers had their two best sales weekends of the year at the end of the month, the company said.
"We’re optimistic that momentum will spring us into April," said Bill Fay, who manages the Toyota division in the U.S. - (ABC News)
This was certainly a bullish print and gives solid footing to the bullish “weather induced crappy economic data” thesis.
(Reuters) - Unemployment in the euro zone declined slightly in February, although the rate remained at 11.9 percent after downward revisions of the past few months, the European statistics office Eurostat said on Tuesday.
Eurostat, which had initially reported a figure in January of 12.0 percent, said the rate had been stable since October 2013.
Unemployment eased slightly in Spain to 25.6 percent from 25.8 percent, while France,Italy and the Netherlands saw minor increases in the number of unemployed people.
For job seekers under the age of 25, the situation improved in February, with a youth unemployment rate of 23.5 percent in the euro zone from 23.6 percent in January.
The number improved most markedly in Austria and Spain, while those under the age of 25 seeking jobs in Portugal increased from the previous month.
In the 28-member European Union, overall unemployment decreased to 10.6 percent in February from 10.7 percent in January. - (Reuters)
The tick down is certainly a step in the right direction but the journey out of the crisis remains fraught with risks. I remain pessimistic and see persistently high unemployment contributing to increasing political risk over the coming months. May’s a coming and will be a flashpoint in elevated political risk in the region.
BRUSSELS (AP) — The European Central Bank on Thursday dismissed fears that consumer prices might fall in the 18-nation eurozone, a situation that would drag down the economy. It stressed, however, that it is ready to counter that threat in new ways if needed.
Another drop in the inflation rate in March, to 0.5 percent, raised concerns the eurozone might slip into deflation, when consumers put off purchases in hopes of bargains later and companies cut prices to entice buyers. Such a downward spiral can snuff out economic growth for years.
After the ECB decided to leave its main interest rate at a record-low 0.25 percent Thursday and not provide any further stimulus, President Mario Draghi noted the inflation figures are consistent with the bank’s forecasts of a ‘‘prolonged period of low inflation.’’
But to show it is not complacent about the danger, the central bank beefed up its rhetoric.
Draghi said the ECB’s governing council is unanimous in its determination to maintain a highly accommodative monetary policy stance and is ready to swiftly use ‘‘unconventional measures … to cope with the risk of a too-prolonged period of low inflation.’’
Such measures could include a new round of cheap loans to banks or large-scale purchases of financial assets, the so-called ‘‘quantitative easing’’ the U.S. Federal Reserve has been doing. That would increase the amount of money in the economy and aim to lower market interest rates and stoke inflation. But such a move faces legal, political and technical obstacles.
The ECB could also trim its deposit rate below zero, effectively penalizing banks for holding money at the ECB instead of lending it out.
Draghi said unlike in its previous monthly meeting, all measures within the ECB’s mandate — including quantitative easing — were discussed.
Analysts said the ECB’s statement showed it is increasingly worried about the stubbornly low inflation, but is not at a point yet where it would act.
Carsten Brzeski of ING Bank noted Draghi’s tone clearly indicates it’s ‘‘on even higher alert than before.’’
While quantitative easing still seems unlikely, Brzeski said, the ECB made it clear that such measures were now backed by all ECB members — including the German central bank governor Jens Weidmann, who had opposed such ideas in the past.
He noted the unexpectedly low inflation data for March was also influenced by seasonal factors, meaning the rate may well rise next month.
In a rare public rebuke, Draghi rejected advice by International Monetary Fund chief Christine Lagarde that the ECB should ease its monetary policies to boost inflation.
Draghi grinned as he took a question on Lagarde’s comments, causing laughter during the press conference in Frankfurt.
‘‘The IMF has been of recent extremely generous in its suggestions on what we should do or not do,’’ he said, adding that the ECB’s views ‘‘are in essence different.’’ - (AP via Boston.com)
Before the ECB was mentioning that the core CPI was remaining resilient and was a reason for not taking action. A decrease from 1% to 0.8% in this measure takes out this leg of the stool. As I covered in my macro commentary a couple of months back, Draghi’s playing a dangerous game here.
Europe’s two-speed economy was underscored in data today showing strengthening in the German labor market just as Italy’s jobless rate reached a record.
In Italy it rose to 13 percent, while inGermany the locally defined jobless rate for March stayed at the lowest in at least two decades.
“While we might be seeing a recovery more generally in the euro area, the pace of that expansion is unlikely to be sufficiently strong to make a serious dent on the unemployment picture,” said Timo del Carpio, an economist at RBC Capital Markets in London.
International investors are returning to the euro, including to nations that received bailouts in the depths of the crisis. U.S. exchange-traded funds show net inflows of $634 million into Spain this year, marking an increase of 71 percent, according to data compiled by Bloomberg. Flows into Greece have increased 77 percent to $102 million.
Still, Europe’s fragile labor market remains a concern for its leaders with February unemployment rates varying from a low of 4.8 percent inAustria to 25.6 percent in Spain. Greece, which last reported in December, had a jobless rate of 27.5 percent. Among people under the age of 25, unemployment in the 18-nation currency bloc stands at 23.5 percent. — (Bloomberg)
New orders rose strongly, but export orders rose modestly.
Backlogs increased as well
Suggests further strength ahead over the immediate term. Firms still are waiting to see if the recovery has legs, caution reflected in only marginal increases in employment. Nonetheless it’s a step in the right direction.
CHICAGO—Federal Reserve Chairwoman Janet Yellen offered new assurances the Fed intends to keep interest rates low, describing in unusually personal terms why the economy needs these policies to support a weak job market.
"She doesn’t want to get the market overly concerned that she’s going to tighten anytime soon, because she’s not," said Doug Cote, chief market strategist at ING Investment Management. "She said she has an extraordinary commitment to boost the economy in a still-struggling labor market. I think it put the market at ease."
While Ms. Yellen’s underlying message on Fed policy was unchanged, her delivery was striking. Central bankers tend to speak in terms of economic theory and statistics, in jargon better understood by investors and other economists than the broader public. Ms. Yellen instead exhibited a personal touch Monday by coloring her comments with experiences of three people who had struggled to gain full-time work.— (WSJ)
I do like the personal touch she brings. Makes me think that they have some idea what the regular person is going through. It ain’t fun, that’s for damn sure.
Despite the crisis in Ukraine, euro-zone surveys of confidence and activity in the first three months of 2014 have been encouraging. The European Commission’s economic-sentiment indicator, based on what both businesses and consumers are reporting, rose in March to 102.4, the highest since July 2011 and a little above the long-term average of 100 since 1990; at the worst of the recession in late 2012 it had fallen to 85.8. The indicator tends to track growth, which suggests that it is picking up. That chimes with surveys of manufacturing, compiled by Markit, a data provider, which show the sector in the first quarter at its healthiest since the spring of 2011. - (The Economist via Business Insider)
Eurozone still faces a s*&^load of problems, but at least we are continuing to see signs of firming growth. Furthermore, periphery yields just keep plunging and is a testament to investors’ confidence that the project will not fall apart.