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Bank Of Korea Delivers The Latest Surprise Interest Rate Cut This Week

"The Bank of Korea just unexpectedly cut its key interest rate to 2.5% from 2.75%. This is pretty remarkable, considering that market economists have already been surprised by two other central bank rate cuts this week. On Monday, the Reserve Bank of Australia unexpectedly lowered its key interest rate to 2.75% from 3%. Earlier Wednesday, the National Bank of Poland unexpectedly cut its key interest rate to 3% from 3.25%. These three surprise rate cuts follow the ECB and the Reserve Bank of India last week. Global growth slowdown, 'currency wars,' etc. – call it whatever you'd like, but it seems to really be getting going now." Continue reading →

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Chinese Women Aren’t Taking Buffett’s Advice on Gold

"In China, where gold has long been a national obsession, a mid-April record crash in global gold prices has been seen as an unprecedented buying opportunity. According to reports in China, Chinese have purchased 300 tons of gold worth more than $16 billion since the crash. Photos of crowds packing jewelry shops and emptying their shelves are now regular features in the news media. China’s voracious appetite for gold is long-standing. At Chinese jewelry stores, the spot price for gold is always prominently displayed. Calculators and scales are never out of a customer’s reach." Continue reading →

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China Opens New Front in Currency War as Yuan Speculation Distorts Export Data

"The move came as April exports blew past expectations, which appeared on the surface to indicate that both China's economy and global demand were on the mend. But economists were quick to suspect the figures were artificially inflated by investors who were disguising speculative bets on the yuan currency as trade payments. Faced with the risk that such inflows could cause the yuan to appreciate so quickly that it destabilizes exports and the broader economy, the People's Bank of China (PBOC) has begun intervening heavily in the domestic currency market this year, buying up dollars and selling yuan." Continue reading →

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Eric Holder defends prosecution against Megaupload founder Kim Dotcom

"US Attorney General Eric Holder on Thursday denied allegations from Kim Dotcom that the prosecution against the Internet tycoon was launched to appease Hollywood moguls concerned about online piracy. Holder rejected the accusation, saying intellectual property theft was 'something that we take very seriously'. 'That’s not true,' he told Radio New Zealand when asked if the administration was pressing the prosecution to keep Hollywood on side." Continue reading →

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U.S. citizens ditch passports in record numbers

"The latest bold-faced names to relinquish their U.S. citizenship include Mahmood Karzai, a brother of Hamid Karzai, the president of Afghanistan, according to federal data released Wednesday. Also on the list, published quarterly by the Internal Revenue Service, is Isabel Getty, the daughter of jet-setting socialite Pia Getty and Getty oil heir Christopher Getty. In total, more than 670 U.S. passport holders gave up their citizenship -- and with it, their U.S. tax bills -- in the first three months of this year. That is the most in any quarter since the I.R.S. began publishing figures in 1998." Continue reading →

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Companies Cook the Books to Meet Tough Targets: Survey

"Hard-pressed company bosses across much of the world are under so much pressure to deliver on growth that many have resorted to cooking the books, Ernst & Young said in a survey Tuesday. One in five of almost 3,500 staff quizzed in 36 countries in Europe, the Middle East, Africa and India said they had seen financial manipulation in their companies in the last 12 months, the accounting and consultancy firm said. In addition 42 percent of board directors and top managers questioned in the fraud survey said they were aware of 'some type of irregular financial reporting.'" Continue reading →

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This Is Your S&P; This Is Your S&P Without Tuesdays

"Since the mid-November lows, the S&P 500 has gained a remarkable 268 points on the back of faith, hope, and Bernanke/Kuroda charity. But perhaps what is more mind-numbing is that this efficient market has given us more than 50% of those gains on Tuesdays. With 17 up-days in a row, Tuesday is the Monday dip-buyers dream. Since 1/18, absent Tuesdays, the S&P 500 has gone nowhere. Maybe Bob Geldof needs to write a new song for the US investor 'I do like Tuesdays', or at least a slightly revised cover version of the Bangles' 'Manic Tuesday'. What would we do without Tuesdays?" Continue reading →

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The Pension Rate-of-Return Fantasy

"In June of 2012, Calpers lowered the expected rate of return on its portfolio to 7.5% from 7.75%. Calpers had last dropped the rate in 2004, from 8.25%. But even the 7.5% return is fiction. Wall Street would laugh if the matter weren't so serious. And the trouble is not just in California. Public-pension funds in Illinois use an average of 8.18% expected returns. The 100 top U.S. public companies with defined benefit pension assets of $1.3 trillion have an average expected rate of return of 7.5%. Three of them are over 9%. (Since 2000, these assets have returned 5.6%.) Who wouldn't want 7.5%-8% returns these days? Ten-year U.S. Treasury bonds are paying 1.74%." Continue reading →

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Moody’s: ‘Strategic Default’ Viewed as Less Taboo by Cities

"The number of defaults from U.S. municipal issuers rated by Moody’s Investors Service has more than tripled to 4.6 per year since 2007, showing willingness to pay can’t be taken for granted, the company said in a report. Five municipalities rated by Moody’s defaulted last year, including Stockton, California, which became the biggest U.S. city to seek Chapter 9 bankruptcy protection in June. Wenatchee, Washington, failed to honor a guarantee on an interest payment for a sports arena. The figure doesn’t include issuers such as Vadnais Heights, Minnesota, which 'selectively defaulted' on contingent liabilities, the report said." Continue reading →

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