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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (24717)	3/2/2005 7:12:32 PM
From: RealMuLan	Respond to of 116555

Briefly: Inflation in China may gather speed Bloomberg News Thursday, March 3, 2005 Inflation in China may gather speed . Inflation in China may accelerate to 2.5 percent in the first quarter, driven by increases in energy and transport prices, the nation's top economic planning agency forecast Wednesday. . Bottlenecks in raw materials like coal are worsening while a cold spring will increase storage and transport costs for vegetables, the National Development and Reform Commission said in a report published in the China Securities Journal. . Inflation was 1.9 percent in January, the slowest in more than a year. . Hopewell profit jumps . Hopewell Holdings, which operates one of the busiest toll roads in southern China, said first-half profit doubled because of surging earnings from its highway business and gains from the sale of assets. . . Net income for the six months that ended Dec. 31 rose to 1.27 billion Hong Kong dollars, or $163 million, the Hong Kong-based company said. . Noble to sell bonds . Noble Group, which supplies about a 10th of Chinese iron-ore imports, said it was selling $500 million of bonds maturing in 10 years to spread out its debt payments. . The Hong Kong-based Noble will market the U.S. dollar-denominated bonds, which it can redeem in the fifth year, from Thursday, according to an e-mail message sent to investors by the sale's arranger, J.P. Morgan Chase. . Telstra rules planned . Telstra, the largest Australian telephone company, will be required by law to maintain a presence in regional Australia, the government said. . The government is seeking support for the planned sale of its 35 billion Australian dollar, or $27 billion, stake in the company. . Legislation to be introduced in Parliament next week will require Telstra to maintain personnel and services outside major cities as part of its licensing conditions, Communications Minister Helen Coonan said during a tour of regional Queensland with the Telstra chairman, Donald McGauchie. . Retailer cuts forecast . Fast Retailing, a Japanese company that operates the Uniqlo clothing store chain, lowered its forecast for full-year net income to ¥36.8 billion, or $352 million, from ¥40.8 billion, as seasonal clothing sales fell. . The company cut its sales forecast for the year ending Aug. 31 to ¥376.6 billion from ¥384.8 billion. iht.com

To: mishedlo who wrote (24717)	3/2/2005 7:57:36 PM
From: CalculatedRisk	Read Replies (1) \| Respond to of 116555

Another FED paper on the Current Account Deficit ... Will an Adjustment in the Current Account Deficit Lead to a Recession? calculatedrisk.blogspot.com The paper I reference reviews historical periods of CAD adjustment. The authors conclude: "a significant subset of the adjustment episodes we studied were associated with substantial declines in GDP growth ... Thus, the fear that current account adjustment might be associated with recession is not entirely without basis." BUT ... "[O]ur second main finding is that the shortfall in growth experienced in the contraction episodes appears to reflect the playing out of standard cyclical developments rather than a response to current account adjustment." MY COMMENT: My interpretation of their conclusion is that a CAD adjustment doesn't necessarily cause a recession, but a recession cures a CAD problem. Is that good news or bad?

To: mishedlo who wrote (24717)	3/2/2005 8:01:46 PM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

I agree with him that the extremely high commodity price is not sustainable, but it is hard to say about the asset price, especially in those couple of big cities like Shanghai or Beijing. The matter of the fact is a lot of Chinese (maybe even some non-Chinese) all over the world would like to own a decent apartment in those couple of big Chinese cities, plus a lot of wealthy Chinese from other Chinese cities, so the demand is definitely there. Plus the land is controlled by the gov., and it is in very short supply. High demand + low supply, this should be a perfect equation for high asset price. There might be a couple of pocket housing bubbles somewhere in some cities, but in a long run, I mean a couple of decades down the road, the asset price in big cities in China will only go up. I know Andy Xie has been singing the blue of housing price in Shanghai will collapse for the last 4 some years. But the fact is that he has been wrong up to now. And my guess is that he will be wrong until 2009 (the world Expo). >>In summary, the global financial markets are speculating in China-related assets, in the belief that Chinese prices will rise to OECD levels. I believe that OECD prices are more likely to fall towards Chinese levels.<< I think neither is right<g>. OECD price and China’s price will find a middle ground somewhere in the next couple of decades<g>