China's Economy is Under Performing-Whats the Outlook



China's Economic Growth or Demise



The risks associated with the US 'Fiscal Cliff' to take $600 Billion out of the economy in January 2013 coupled with a slower than anticipated recovery and all the European debt problems are impacting export growth from China to 2.9% last month instead of a predicted growth of 9%.



Although exports have been steadily declining imports of commodities: crude oil, iron ore and copper surged; this activity confused analysts to believe that higher imports of these commodities would lead to increased exports of finished products such as mobile phones which currently account for about a billion gadgets a year. But domestic growth is still rallying at a pace so far of 14% in retail sales and 20% in building infrastructure such as factories, bridges and hospitals. But the cost of vegetables rocketed by 14% which will eventually impact domestic sales of finished products.

It may be said that China's internal market is still lagging behind the affects of recession and austerity measures imposed in the Western World. Despite the gloomy outlook for Europe and America the OECD are predicting 8.5% growth in China's economy next year. However as retail prices rise and exports slow down forecast growth may be down-graded. Another factor to watch is the fact that mobile phones are an important export driver which may be impacted by businesses moving their manufacturing operations back to the U.S. as middle income wages decline and the political climate goes against firms who out source manufacturing overseas for example Apple Iphones.

It may be argued that as China's economy tracks the economic woes of America and Europe over a protracted period resulting in higher property and retail prices social unrest may lead to political instability. Perhaps this is why the Bank of China released a 1.2 Trillion Yuan lending stimulus package.

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Reuters

Market News - U.S. Tax Negotiations Weighs

European Factors to Watch - Shares seen a shade lower on U.S. budget unease | Reuters

After a stormy week where markets have been dampened by 'Fiscal Cliff' negotiation rumours and the entrenched positions of the Republicans and Democrats about raising tax thresholds for Americans who earn more than $250,000 a year to a maximum of about 39% and extending tax cuts worth on average $1000 for the rest of the national work force. Against that background here is Reuters view about how the markets will open today.

 

 

LONDON, Nov 16 (Reuters) - European stocks are seen opening fractionally

lower on Friday, within their recent range, as investors position defensively

for the start of budget talks in the United States and Europe's poor economic

prospects. 

 

Financial spreadbetters expected Britain's FTSE 100 to open 6 to 8

points lower, or as much as 0.1 percent, Germany's DAX to open 14 to 16
points lower, or as much as 0.2 percent, and France's CAC 40 to open 7
points lower, or as much as 0.2 percent.
   

The Euro STOXX 50 index fell 11 points, or 0.5 percent, to

2,461.63 points on Thursday after data showed the euro zone had slipped into
recession, amid fears of a deadlock in U.S. talks aimed at avoiding a 'fiscal
cliff' of automatic spending cuts and tax hikes.
   

President Barack Obama and Republican and Democratic leaders of Congress

meet later on Friday for deficit reduction talks.
    "This week's earlier verbal skirmishes have painted a particularly hard line
stance on both sides so if the talks prove to be as equally uncompromising
markets could take another leg lower," Jonathan Sudaria, a dealer at Capital
Spreads, said.

   

The Euro STOXX 50 was keeping within the 60-point range it has traded in

since last Friday and hovering around 2,462, the neck-line of a reversal

chartist pattern known as a 'head and shoulders', consisting of a major rally

between two smaller spikes.

   
A close below 2,462 would could see the index test support at 2,400, which
triggered a rebound last Friday and in October.

iPhone 5 launched: Apple redesigns New-Smarter and Faster

iPhone 5 launched: Apple redesigns its hit smartphone - Yahoo! News UK

The iPhone 5 also has LTE technology for surfing the web at 4G speeds.

Apple confirmed it will work with the UK's first 4G network, due to be launched this year by EE.

The iPhone 5 camera remains eight megapixel in quality but Apple has made enhancements to the lens in order to improve the overall appearance of snaps, especially in low light conditions.

The camera also allows for panoramic photos to be created by sweeping the handset from left to right. The iPhone will also tell you if you're moving it too fast to capture the best image.

The iPhone 5's A6 processor is twice as fast as the previous chip with twice the graphics performance.

Apple also launched a redesigned iTunes store and new iPods. The 7th generation iPod nano now has a bigger screen at 2.5 inches and is just 5.4mm thin - 40% thinner than what's come before.

Phone retailers predict that the new handset will be a smash hit.

Andrew Harrison, Carphone Warehouse CEO said: “We know that huge numbers of customers have held back from upgrading their smartphones in anticipation of Apple’s big reveal. Indeed, we estimate that up to 15% of mobile phone users in the UK will upgrade to a smartphone in the next 3 months and we predict that more consumers than any other handset launched this year will purchase the iPhone 5."

European shares hit 14-mth high, more gains likely | Reuters

European shares hit 14-mth high, more gains likely | Reuters

European shares hit a 14-month high on Wednesday after Germany's top court allowed the ratification of the euro zone's new bailout fund under some conditions, with analysts saying that the market had potential to move substantially higher from here.

The court said Germany could ratify the European Stability Mechanism (ESM) and budget pact as long as it could guarantee there would be no increase in German financial exposure to the bailout fund without parliament's approval.

Approval of the ESM is a vital part of a European Central Bank plan to defuse the debt crisis by buying struggling peripheral countries' bonds in the secondary market. Shares have surged about 10 percent since ECB President Mario Draghi pledged in July to take all necessary steps to protect the euro zone.

"It's a confirmation that Germany is engaged in the project to rebuild and reconstruct Europe. There is a kind of Draghi economics going on. There is a clear receding risk of a euro break up and people are readjusting their portfolios," said Didier Duret, chief investment officer at ABN-AMRO Private Banking, which manages more than $200 billion.

ABN-AMRO adjusted its portfolio on Friday to have an "overweight" stance on global equities by mostly investing its cash holdings to buy European financials and industrials.

It changed its stance to became "neutral" on European financials from "underweight" and strengthened its "overweight" position on industrials. Its balanced portfolio now accounts 46 percent bonds, 35 percent equities and 6 percent cash.

Duret saw an 8 to 10 percent upside potential for the euro zone's blue chip Euro STOXX 50 index by the end of the year. The index was up 0.8 percent at 2,577.60 points.

Analysts at Goldman Sachs also said markets could rise from current levels, thanks to policymaker support, but were unlikely to do so if economic data failed to show signs of improvement.

At 1112 GMT, the FTSEurofirst 300 index of top European shares was up 0.3 percent at 1,109.93 points after rising as far as 1,115.90, its highest since July 2011.

Germany's DAX was up 0.7 percent, Spain's IBEX rose 0.8 percent and Italy's FTSE MIB gained 1.1 percent following the German court ruling.

No Spanish Bailout Decision- Maybe in October?

No Spanish Bailout Decision For At Least A Month - More on Yahoo! Finance UK

The Spanish Prime Minister announced today that he has no immediate plans to seek an ECB bail-out if a decision is made by a German Court to not oppose the bond buying rescue plan. Which is intended to create a level playing field without interest rate distortions for E.U. members who have introduced austerity measures. This announcement follows a similar interim decision on Saturday by the Italian premier, Mario Monti who said that he would not be accessing the ECB fund anytime soon.

Both leaders used language that did not rule out the opportunity being offered help despite the fact that if the new rescue plan is ratified tomorrow it should calm the high interest rates in the bond markets by relieving uncertainty. It may be said that the two countries are attempting to calm voters nerves ahead of two crucial votes tomorrow in Germany where there is strong opposition and at the ECB. They may also be playing politics with there own electorate; Spain is having elections in October and is trying to solve or at least contain its economic problems through austerity measures. And Italy hopes to grow its economy out of problems despite having the largest EU debt of $2,2 Trillion. Perhaps we are observing a juggling act of sound economics versus political survival but tomorrow promises to be a make or break time for the Euro..

ECB Defies German Bail Out Opposition

The ECB have now confirmed that unlimited funds will be in place to buy bonds on behalf of stricken economies to curtail distortions of interest rates that are based of anticipated fears of what could happen to a country and not hard facts. This strategy is called: Outright Monetary Transactions (OMT) and is designed to stop for example Greece being charged 23% interest and Spain 7% on hundreds of billions of euros. When Germany is paying a fraction of 1% for a similar facility.

This news will be very welcome for all the Mediterranean countries but most especially Italy whose debt far exceeds that of Spain, Portugal and Greece combined; standing at approximately 2.2 Billion Euros.

The UK banking sector responded favorably with strong gains as well as all major indices including Americas DOW30..

Nokia's new Windows phones, key to its future, disappoint | Reuters

Nokia's shares fell almost 14% to $2:80 and are perhaps tittering close to the edge of collapse after sustaining heavy losses in the last quarter earnings report.

Their new product called Lumina looks like a poor relation to the smart phones of Samsung and Apple. But Nokia may be able to market this anticipated cheaper version successfully to Asia, Africa and Latin American countries. But that can only materialise through a carefully planned marketing and pricing strategy; which it currently appears to have lacking as no prices or marketing plans for the product have been forthcoming at it's launch yesterday.

Perhaps Nokia's new smart phone will be perceived as a cheaper and less capable version of Android. Expect Nokia to down-size until it comes up with more original ideas to WoW this extremely volatile consumer market.