• Credit is needed to encourage entrepreneurs to invest
• Spanish banks are carrying assets at inflated values
• Must take bad assets off bank’s books
• No country matched Spain’s job creation during the boom
• Spain’s policy should avoid worsening the recession

Bloomberg reporting

BANGKOK (MNI) – Chicago Federal Reserve Bank President Charles
Evans said Monday that the global economy can’t rely on the spending of
U.S. consumers to pull it out of the current downturn.

“I just have to tell you – if you don’t know this already, if you
haven’t heard enough, that that American consumer doesn’t exist anymore.
The American consumer is challenged by a reduction in resident house
prices that one way or another has taken on more mortgage debt or they
did through bad planning, moral hazard or bad luck and they face
employment risk,” he said in a question and answer session after
giving a speech at the Sasin Bangkok Forum here.

“The chances they are going to expand their purchasing in order to
apply a noticeable (push) to the world economy is not there any more.
And so then the question is what keeps the world economy chugging in
the circumstances?”

Evans said policymakers around the world are trying to work out the
answer to that question. But “business models that worked for countries
in the past are going to be challenged in this case.”

[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$,M$X$$$,M$A$$$,MI$$$$,M$$CR$]

• Govt refinancing ‘biggest problem’ in Europe
• ECB role on banks to be clarified this year
• Must keep monetary policy, bank oversight seperate
• ECB under ‘time pressure’ on bank oversight role
• ‘Concerned’ about ‘standstill’ in Greece
• ECB rate cut was ‘important contribution’
• Central banks need ‘sense of proportion’ on rates
• Europe has ‘execution problem’ on its own actions
• ESM was supposed to be active already but isn’t
• ECB never pre-commits on rates
• Negative deposit rates wouldn’t have much effect
• Central banks shouldn’t use all firepower at once
• Rate cut will have effect through cheaper credit

Bloomberg reporting.

Reuters consensus was for an improvement to -26.7

Some talk that an Australian corporate just gave it a bash lower from the  1.0180′s to  1.0161, tripping a few sell stops through 1.0170, but think we’re also seeing some profit taking after Friday and this morning collapse in the cross to around the 1.2010 level.

More AUD/USD bids sit down at 1.0150/60

EUR/AUD’s attempting to get a foothold above Friday’s 1.2086 highs, but hourly trendline resistance comes in around the 1.2105/10 area which really has to be breached for an extended move up to the 1.2170 area.

The cross is  heavily oversold at the moment but the down trend is strong and yield support the move. The  assault on the 1.2000 barrier can’t be ruled out  especially if there’s more negative EUR sentiment  building. A clean break of 1.2000 can then target a fibonnacci projection around 1.1885/90.

AUD’s sitting  around 1.0165 with the cross around 1.2080

Ughh

EUR/USD wallowing around 1.2280, having run into sell orders on a peek over 1.2300 earlier (those mentioned on Pete’s orderboard)

Cool hats!!

Decent length read (two pages) Will give ya something to do amid the usual Monday morning torpor.

EUR/USD sits at 1.2288, up 3 pips from when I arrived around three and a half hours ago. Cack just doesn’t begin to describe the lack of activity during European morning sessions of late.

Apparently its all linked to talk that Qatar Investment Authority (QIA) and Abu Dhabi Investment Authority (ADIA) are bidding to buy up 42 Marriott hotels in England.

Talk is that RBS is administering the deal which could raise up to £700 million.

The news was broken by Bloomberg yesterday, but  it looks like  its now getting an airing from the other journals

More…..

Cable popped up to a day’s high of 1.5514 in recent trade before easing back under 1.5500

BERLIN (MNI) – German Economics Minister Philipp Roesler warned in
a newspaper interview published Monday that the Eurozone debt crisis is
increasingly weighing on the German economy.

“Many firms become more cautious and hold back orders,” Roesler
told the German daily Bild.

The head of Germany’s metal-working and engineering industry
association Gesamtmetall, Martin Kannegiesser, said last week that
investment in the important sector was being postponed due to the
uncertainties from the debt crisis.

Germany cannot be isolated from the crisis in the rest of Europe
over the long run, Kannegiesser said: “Sooner or later we will feel the
crisis even stronger. This moment is getting closer.”

Roesler warned in the Bild interview that the Eurozone should not
overburden Germany in its effort to overcome the debt crisis. The
minister urged member states to do more on their own to get their public
finances in order and regain more economic competitiveness.

Roesler, who is also vice chancellor and head of the FDP, the
junior partner in Chancellor Angela Merkel’s government coalition, said
he expected the coalition to last for the full legislature until autumn
2013 despite some tensions.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

[TOPICS: M$X$$$,MGX$$$,M$$CR$,M$G$$$]

Near Poronaysk according to USGS.

Bloomberg reporting.

The rush to put first elements of the ESM in place by next year may come too late.

“An invisible financial wall, potentially as dangerous as the Iron Curtain that once divided eastern and western Europe, is slowly going up inside the euro area.” says Paul Taylor  of Greece’s ekathimerini

–Adds 2Q Results For Industry Profits, Construction And Wholesaling,

PARIS (MNI) – French economic activity contracted slightly in 2Q
and is unlikely to recover in the near term, the Bank of France
estimated Monday, citing the results of its monthly business survey.

The central bank confirmed its previous projection for a 0.1% GDP
dip in 2Q. Last month, the national statistics Institute Insee had hoped
for another quarter of stability, banking on a pick-up in investment to
offset a downturn in private consumption.

The central bank’s latest survey indicated that industry output was
“overall stable in June, the decline in the automotive sector being just
about offset by an improvement mostly in the pharmaceutical sector and
in the agri-food industry.”

Sector capacity utilization recovered from 76.8% in May to 77.3%
but was still well below average. Finished goods inventories rose and
order books contracted further. Prices were little changed.

After a one-point downward revision for May, the central bank’s
sector climate indicator, based on the latest three months’ results,
slipped another point to 91, the lowest level in nearly three years.

Manufacturers’ overall production outlook for July slipped back two
points to zero, pointing to “stability” in the short term, the central
bank said.

Other leading indicators for industry also point to weak activity
ahead. Insee’s index of own-company expectations is far below normal and
the factory PMI remains deep in contraction territory, up just a half
point (45.2) from the three-year low in May, with new orders even weaker
(43.0).

France’s services sector contracted slightly in June in the face of
waning demand, despite a reduction in fees charged, the BoF survey
showed. Sector payrolls were overall stable. The services climate index
dropped two points to a 29-month low of 90.

The outlook for services activity in July was overall unchanged at
-1. With expectations across branches quite mixed, the central bank
signaled “uncertainty” over prospects for the months ahead.

France’s services PMI bounced back 2.8 points in June (47.9) from a
seven-month low, but continued to signal shrinking activity and new
business (46.8). Insee’s sector survey showed a further marked decline
in company expectations in June.

The quarterly supplement to the central bank’s survey showed cash
holdings of industry firms recovering slightly for the second quarter in
a row after a steep slide over the past year. But profit margins and
operating profits continued to decline. GDP data for 1Q showed total
business margins at their lowest level since the end of 1985. Industry
investment slowed as well in 2Q, in contrast to company expectations.

In construction, activity was overall flat in 2Q. Despite declining
orders in the building branch, companies expected a slight upturn in
activity in the short term.

Wholesale purchases and turnover retreated in 2Q, following the
trend in orders and inventories. Yet the outlook for 3Q rebounded six
points to +5, which the central bank interpreted as a signal of “slow”
growth.

–Paris newsroom +331 4271 5540; e-mail: ssandelius@marketnews.com

[TOPICS: M$F$$$,M$X$$$,M$$EC$,MT$$$$,MGX$$$]

PARIS (MNI) – French economic activity contracted slightly in 2Q
and is unlikely to recover in the near term, the Bank of France
estimated Monday, citing the results of its monthly business survey.

The central bank confirmed its previous projection for a 0.1% GDP
dip in 2Q. Last month, the national statistics Institute Insee had hoped
for another quarter of stability, banking on a pick-up in investment to
offset a downturn in private consumption.

The central bank’s latest survey indicated that industry output was
“overall stable in June, the decline in the automotive sector being just
about offset by an improvement mostly in the pharmaceutical sector and
in the agri-food industry.”

Sector capacity utilization recovered from 76.8% in May to 77.3%
but was still well below average. Finished goods inventories rose and
order books contracted further. Prices were little changed.

After a one-point downward revision for May, the central bank’s
sector climate indicator, based on the latest three months’ results,
slipped another point to 91, the lowest level in nearly three years.

Manufacturers’ overall production outlook for July slipped back two
points to zero, pointing to “stability” in the short term, the central
bank said.

Other leading indicators for industry also point to weak activity
ahead. Insee’s index of own-company expectations is far below normal and
the factory PMI remains deep in contraction territory, up just a half
point (45.2) from the three-year low in May, with new orders even weaker
(43.0).

France’s services sector contracted slightly in June in the face of
waning demand, despite a reduction in fees charged, the BoF survey
showed. Sector payrolls were overall stable. The services climate index
dropped two points to a 29-month low of 90.

The outlook for services activity in July was overall unchanged at
-1. With expectations across branches quite mixed, the central bank
signaled “uncertainty” over prospects for the months ahead.

France’s services PMI bounced back 2.8 points in June (47.9) from a
seven-month low, but continued to signal shrinking activity and new
business (46.8). Insee’s sector survey showed a further marked decline
in company expectations in June.

–Paris newsroom +331 4271 5540; e-mail: ssandelius@marketnews.com

[TOPICS: M$F$$$,M$X$$$,M$$EC$,MT$$$$,MGX$$$]

From 92 in May.

Bank of France sees -0.1% decline in GDP in Q2, unchanged from previous estimate.

Attention-grabbing headline.

Cheerful little ditty from bloke called Wolfgang Munchau in the FT.

If you want to read the article do a google search using the above headline.

GERMAN DATA: Germany May s/a trade surplus +E15.0bln; Apr
revised +E16.2bln (+E16.1bln)

GERMANY DATA: May SA trade surpl +E15.0bn; Apr rev +E16.2bn (+E16.1bn)
–May nsa trade surplus +E15.3bn; Apr rev +E14.5 (+E14.4bn)
–May nsa c/a surplus +E9.0bn; Apr rev +E11.0bn (+E11.2bn)}
–See MNI MainWire for details

‘Premier Wen Jiabao of China warned on Sunday of “huge downward pressure” on the Chinese economy, in the clearest expression yet of concern at the top of the country’s leadership about a sharp downturn in recent months.’

Down from April revised 16.2 bln  and Reuters consensus of 15.4 bln

Adjusted May exports +3.9% m/m, imports +6.3%m/m

May C/A surplus 9 bln euros, down from  a revised 11 bln in April

By Shigeo Kodama

TOKYO (MNI) – Japan’s government is likely to stick to its official
GDP forecast for this fiscal year for a real 2.2% growth and will
probably project an expansion close to 2% for fiscal 2013, former senior
government researchers said.

The government is expected to review its economic projection for
this fiscal year and announce its forecast for fiscal 2013 later this
month or next month.

Takao Komine, a professor of economics at Hosei Graduate School of
Regional Policy Design, said that “major change is unlikely” in the
government’s projection for fiscal 2012 as the current economic
conditions are more or less in line with its scenario released in
January.

The government then said reconstruction demand will lead domestic
demand in fiscal 2012 under the assumption that the global financial
market turmoil triggered by the European debt crisis would ease.

For Prime Minister Yoshihiko Noda, achieving a 2% economic growth
goal is essential.

Last month Noda’s government reached an agreement with the two main
opposition parties — the LDP and Komeito — to hike the current 5%
consumption tax rate to 8% in April 2014 and to 10% in October 2015 on
condition that the economy is growing at a real 2% at the time.

The lower house of parliament has approved tax and social security
reform bills, paving the way for a sales tax hike aimed at funding
public pension and medical services. The bills still need to receive
approval from the upper house before becoming law.

According to the latest survey of 40 economists conducted between
May 25 and June 1 by the Japan Center for Economic Research, their
average growth estimate for fiscal 2012 ending March 2013 was +2.27%.

Koichi Haji, chief economist at the NLI Research Institute, said
the Japanese economy has been improving but warned about lingering
uncertainties arising from the European crisis, the Chinese economic
slowdown and the strong yen.

As for the fiscal 2013 outlook, Haji, a former senior official at
the then Economic Planning Agency (now the Cabinet Office), said the
government is expected to draw up a 2% growth projection.

Economists’ forecasts for the fiscal 2013 GDP averaged +1.5%,
slower than in the current fiscal year as demand for rebuilding the
earthquake-hit northeastern region is likely to wane.

But at the same time, the planned sales tax hike from the current
5% to 8% in April 2014 will prompt consumers to buy big-ticket items
such as houses and cars toward the end of fiscal 2013, Haji said.

Such rush purchases would boost fiscal 2013 GDP by 0.5 to 0.6
percentage point, he said.

Meanwhile, some market participants are concerned that the planned
consumption tax hike may push the Japanese economy into a recession in
fiscal 2014 or later, as seen in 1997, when the tax rate was raised to
5% from 3%.

The Japanese economy slipped into a downward cycle in June 1997,
following the sales tax hike two months earlier. On a yearly basis, GDP
was flat with a slight negative bias (-0.0%) in fiscal 1997 and
contracted 1.5% in fiscal 1998 before rising 0.5% in the following year.

But Komine, a former director of the Research Bureau of the then
EPA, said, “The sales tax hike alone is unlikely to cause a major
recession.”

He said the 1997 downturn was triggered mainly by the Asian
currency crisis and Japan’s bad loan problems.

He said the sales tax increase lowered Japan’s fiscal 1997 GDP by
only 0.3 percentage point, adding that the tax hike by 3 percentage
points in April 2014 would push down GDP by only 0.45 percentage point
in fiscal 2014.

According to the Cabinet Office’s economic model, the sales tax
increase by 1 percentage point will lower Japan’s GDP by 0.15% point.

skodama@marketnews.com
** MNI Tokyo Newsroom: 81-3-5403-4838 **

[TOPICS: M$J$$$,M$A$$$,MGJ$$$,MAJDS$]