Global central banks announced coordinated action

Fed, central banks slash dollar borrowing costs

Lower price on dollar swap lines as Europe tensions rise

Global central banks announced coordinated action on Wednesday to shore up liquidity in the financial system as Europe’s banking system showed growing signs of stress.

The moves were announced in statements issued simultaneously by the U.S. Federal Reserve, the European Central Bank, the Bank of England, the Bank of Japan and the Swiss National Bank.

“The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity,” the banks said.

The central banks agreed to lower the pricing on existing temporary U.S. dollar liquidity swap arrangements by 50 basis points, putting the new rate as the U.S. dollar overnight index swap rate plus 50 basis points.

The pricing will apply to all operations beginning Dec. 5. Access to the swap lines has been extended until Feb. 1, 2013.

The announcement lifted European equities and triggered a surge by U.S

“The extension of the dollar swap lines essentially means that dollars will be available cheaply and on request for the next 15 months to Europe’s troubled financial sector, which will probably greedily eat them up after being starved of much-needed dollar funding since the summer.”

The ECB said it will regularly conduct U.S. dollar liquidity-providing operations with a maturity of around one week and three months at the new pricing. A schedule for the operations will be released later Wednesday, the ECB said.

The ECB added that the initial margin for three-month U.S. dollar operations will be reduced from 20% currently to 12%.

In the operations, the ECB will effectively meet all requests by institutions for one-week or three-month dollar loans in return for collateral.

The move comes as European banks scrambled to acquire dollars. The cost of swapping euros for dollars via implied one-month cross-currency basis swaps rose to its highest level in three years on Tuesday.

Other indicators of stress in Europe’s interbank market have been on the rise, while the inability of the European Central Bank on Tuesday to fully offset bond purchases in a weekly money-market operation offered a further sign that European banks have been hoarding cash amid worries over the spread of the debt crisis and other factors.

The central banks said they also agreed to establish temporary bilateral liquidity swap arrangements in order to allow liquidity to be provided in each jurisdiction in any of their currencies if market conditions warrant.

“At present, there is no need to offer liquidity in non-domestic currencies other than the U.S. dollar, but the central banks judge it prudent to make the necessary arrangements so that liquidity support operations could be put into place quickly should the need arise,” the banks said.

Employment in the private sector rose by 206,000 jobs in Novembe

Growth in private-sector payrolls sharply accelerated in November, led by the service-producing sector and small businesses, according to the ADP employment report released Wednesday.

Employment in the private sector rose by 206,000 jobs in November — the largest gain since last December and almost twice the average increase in recent months. The October level was revised up to 130,000 from a prior estimate of 110,000.

“November’s increase in employment normally would be associated with a decline in the unemployment rate. An acceleration of employment is consistent with data showing that GDP growth, which slowed sharply around the turn of the year, is gradually recovering,” said Joel Prakken, chairman of Macroeconomic Advisers, which produces the report from anonymous payroll data supplied by Automatic Data Processing Inc.

Employment rose 178,000 in the service-providing sector, and 28,000 in the goods-producing sector. Employment rose 110,000 at small businesses, 84,000 at medium businesses and 12,000 at large businesses, according to ADP.

While economists have noted a divergence between estimates from ADP and the government, markets look to ADP’s report on private-sector payrolls to provide some guidance on the U.S. Labor Department’s jobs estimate, which will be released Friday and includes information on both private- and public-sector payrolls.

Economists polled by MarketWatch expect the Labor Department to report rising employment, with overall nonfarm payrolls up 125,000 in November, compared with 80,000 in October. Analysts also expect the unemployment rate to remain at 9.0%

Third-quarter productivity lowered to 2.3%

U.S. workers were not as productive in the third-quarter as originally believed, according to revised government data.

The increase in productivity was revised down to 2.3% from an initial reading of 3.1%, the Labor Department said Wednesday. The combination of slower output in goods and services and more hours worked accounted for the downward revision.

n its second and final report on third-quarter productivity, the government said inflation-adjusted output rose 3.2% instead of 3.8% as originally estimated.

That was still the fastest pace since the fourth quarter of 2010, however. Productivity fell in the first six months of this year.

Hours worked, meanwhile, rose 0.8% last quarter instead of an initial reading of 0.6%. That also contributed to lower productivity growth.

Unit-labor costs, which posted the biggest decline in a year and a half, were little changed. The government said they fell 2.5% instead of 2.4% as initially reported.

Economists were expecting unit-labor costs to be revised to a decline of 2.3%.

Unit-labor costs reflect how much it costs a business to produce one unit of output, such as a bushel of wheat or a ton or coal. In the past 12 months, unit-labor costs have risen a scant 0.4%.

Despite higher productivity workers haven’t actually increased their standard of living as would typically be the case. Wages adjusted for inflation fell 3.2% in the third quarter, reflecting higher prices for gas, food and many other consumer items.

The decline in real wages was initially reported as 2.4%.

Higher productivity is usually the linchpin of a strong economy. When workers produce more, companies earn higher profits and they can pay higher wages.

Yet sometimes productivity rises when companies buy more labor-saving devices or reduce staff while producing the same amount of goods and services. And even if higher productivity translates into higher wages, the gains for workers could be offset by higher inflation.

In the past 12 months productivity has risen at a 0.9% rate.

Euro trimmed losses after China cut reserve Ratio

Dollar up, euro steadies on China reserves move

Euro-zone finance ministers seek IMF role in addressing crisis

The U.S. dollar gained ground versus most major rivals Wednesday, while the euro trimmed losses after China cut reserve ratio requirements for banks.

The euro lost ground in earlier activity, with a sharp drop in Chinese equities serving to undercut overall risk appetite, said Adam Cole, global head of foreign exchange at RBC Capital Markets. China’s Shanghai Composite Index fell 3.3%

The euro regained its footing in subsequent action as news reports said China’s central bank cut the reserve requirement ratio for its banks by 50 basis points, the first reduction in nearly three years. The cut marks a swing to easier monetary policy amid rising global market turmoil.

But strategists said homegrown problems will continue to be the key driver of action for the euro.

As expected, the finance ministers from the 17 euro-member countries approved the release of Europe’s portion of Greece’s 8 billion euro ($10.7 billion) aid tranche. They also agreed on a plan to leverage the funds of the €440 billion European Financial Stability Facility, or EFSF, to give the bailout fund more firepower and said it would be operational by mid-January. As planned, the fund would offer guarantees on 20% to 30% of first losses on designated sovereign bond sales.

“The problem ... is that the market sees [the enhanced EFSF] as DOA [dead on arrival],” said Steven Barrow, currency strategist at Standard Bank. “Foreign sovereign wealth funds have not shown much interest in contributing to the fund and bond-market weakness has meant that insurance guarantees have had to be increased, with the result that the leverage involved does not seem likely to take the fund above €1 trillion.”

Meanwhile, data showed Germany’s seasonally-adjusted unemployment rate fell back to a 20-year low of 6.9% in November from 7% in October. Euro-zone figures, meanwhile, showed that the region’s unemployment rate ticked up to a 13-year high of 10.3% from 10.2%.

The dollar index , which measures the U.S. unit against a basket of six major rivals , traded at 79.011, up slightly from 78.990 late Tuesday.

The British pound traded at $1.5633, up from $1.5610, a day after Chancellor of the Exchequer George Osborne’s autumn budget statement. Osborne said Britain’s economy wouldn’t fall into another recession despite downgraded growth projections and higher forecasts for public borrowing.

“Sterling was quite resilient to a fairly depressing autumn statement, mainly because there wasn’t much in the statement that could be considered new,” wrote strategists at Lloyds Bank. “However sterling, like the euro, looks likely to continue to struggle against any currencies where there are decent growth prospects if there is any moderation in market concern about the euro-area debt crisis.”

Italy is at risk of insolvency

European finance ministers meeting on Tuesday evening were told Italy is at risk of insolvency, with a potential devastating impact on the euro and big economies of Germany and Spain, according to a confidential report obtained by the Guardian newspaper.

The report from the European Commission and the European Central Bank said Italian Prime Minister Mario Monti would need to take deeper steps to combat his country's crisis, such as fighting tax evasion.

The report said that without a determined policy response, risks of a full-blown sovereign liquidity crisis could ramp up. "Persistently high interest rates increase the risk of a self-fulfilling 'run' from Italy's sovereign debt.

A liquidity crisis could then turn into a solvency crisis, whose repercussions for other large euro-area countries would be very acute given their exposure to the Italian economy," the report said, according to the newspaper. Spokespersons from the ECB and EC did not immediately return calls for comment

China cut the banks’ reserve-requirement ratio- Reason Behind This Step

Mainland Chinese and Hong Kong property stocks traded mostly lower Wednesday after fresh doubts surfaced that real-estate prices in the region will be able to escape the global maelstrom in 2012.

The stocks’ slide coincided with a new report by Credit Suisse which forecast office rents in Hong Kong to drop by 25% next year and then stay flat in 2013.

The report, which summed up the view as “bleak but not doomed” in a subsection, was distributed to the media after the close of trading on Tuesday.

Meanwhile, media reports cited People’s Bank of China adviser Xia Bin as saying Wednesday that the overall direction of property-market regulations will remain in place

Xia, speaking at a forum in Beijing, said the PBOC’s efforts at supplying credit to some hard-hit sectors of the economy shouldn’t be seen as a sign that authorities are about to reverse controls designed to curb price rises on the property market.

On the bright side for local commercial-property developers, Credit Suisse said the supply-to-demand outlook was supportive, as relatively few new releases of office property were due out in the coming year.

The shortfall, it said, should help guard against a steeper decline in rental rates for top-rated office property.

Still, Credit Suisse said rising funding costs were a concern. Hong Kong’s dozen or so biggest property developers would need to reduce their invested capital collectively by 584 billion Hong Kong dollars ($75 billion), it said.

“Hong Kong property companies are way too big and have tied up way too much funding on assets that are not producing sufficient returns,” Credit Suisse analysts said in the note.

Cheung Kong Holdings Ltd. was a noteworthy exception, being one of the few major real-estate groups which wasn’t flagged as heavily extended.

Credit Suisse said Hong Kong property was entering a “consolidation phase” rather than a major correction, with prices set to drop by 10% next year.

As such, the outlook was better than Barclays Capital’s Nov. 4 report that Hong Kong property prices were likely to fall in a deflationary spiral that would knock residential prices 25% to 30% lower through between 2012 and 2013.

Residential prices across the city have been under pressure since the second half, with prices for the bulk of the market, excluding luxury units, easing 3% to 4% since June, according to Citigroup data.

Profits feel the pinch

Credit Suisse said its recent talks with listed mainland Chinese developers added to concern that profits margins are dropping sharply as real-estate price cool.

It said an average price decline of 10% would translate into a 28% fall in developer’s profits, and reaffirmed its negative view on the sector.

Meanwhile, Standard Chartered, in research released Tuesday, said its survey of residential developers focused on China’s lesser-known cities found many were struggling with rising inventories and disappointing sales.

However, the situation was far from dire, it said, adding there were no hints of any serious deterioration in financing conditions in the survey, which was conducted during October and November.

There was also little evidence of widespread “fire sale” price discounts on the part of developers, with most appearing fairly confident apartments would be snapped up if prices were to drop 20% from current levels, according to Standard Chartered.

“Developers are now feeling the pinch, but relatively few are on the verge of collapse, it seems,” Standard Chartered analysts said in the note.

In Wednesday afternoon market action, Hang Lung Properties Ltd. traded down 4.1%, while Cheung Kong Holdings lost 3%, and Henderson Land Development Co.fell 3.4%

Among mainland Chinese developers, shares of Agile Property Holdings gave up 3.3%, while China Resources Land Ltd. dropped 1.9%, and Greentown China Holdings Ltd. plunged 7%

China’s central bank Move- Chance For Out From Long Position ?

European stock markets turned around a losing session in the afternoon to push higher after reports that China’s central bank cut banks’ reserve requirements for the first time in three years, driving up stocks dependent on the global-growth picture.

Media reports said the People’s Bank of China has cut the reserve ratio for all banks by 0.5 percentage point, starting Dec. 5. It’s the first cut in that rate since December 2008.

But We forget all Worries about euro Debt Problems i think this rally is good opportunity to Exit form long positions and wait for more upside then short in market that's the stagy these few days not create any long position just wait for market to go more up then create shorts for more return in equity market because china's central bank moves shows problem in china also this time which we not see but Chinese central bank see this problems so Be Aware for That time

China’s Central Bank Cut Banks’ Reserve- Boost Sentiments

European stock markets turned around a losing session in the afternoon to push higher after reports that China’s central bank cut banks’ reserve requirements for the first time in three years, driving up stocks dependent on the global-growth picture.

The reversal came as China’s central bank said it would lower banks’ reserve-requirement ratio by 0.5 percentage point in an attempt to boost the economy.

“We are looking at easier money within the global economy and that obviously is positive for equities,” said Peter Cardillo, New York-based chief market economist at Rockwell Global Capital.

“Given lower growth out of China and out of India, it is just a matter of time before we get back into a global easing policy,” said Cardillo, who expects the European Central Bank to cut interest rates next week.

Data released Wednesday showed that the Indian economy grew 6.9% year-on-year in the third quarter, its slowest rate in more than two years.

Stock futures had fallen earlier after Standard & Poor’s Ratings Services late Tuesday lowered its ratings on more than a dozen global banks, as the ratings company applied its revised criteria to 37 banks in total.

Investors will continue to watch developments in Europe closely. In Brussels, euro-zone finance ministers agreed late Tuesday to approve the next disbursement of aid to Greece. They also agreed to expand the euro-zone bailout fund, but didn’t provide a specific figure on its projected size.

Meanwhile, finance ministers from all 27 European Union member nations are meeting in Brussels on Wednesday.

“The markets are still pretty much tied to the daily headlines out of Europe, although we are getting closer and closer to Europe fixing its problems,” Cardillo said. “Eventually, the European Central Bank will be the lender of last resort. We are headed in that direction.

Media reports said the People’s Bank of China has cut the reserve ratio for all banks by 0.5 percentage point, starting Dec. 5. It’s the first cut in that rate since December 2008.

The move is aimed at helping boost liquidity and support for China’s economy amid the debt crisis in Europe that is wreaking havoc across the globe, along with gloomy global-growth forecasts.

There is A Heart Somewhere

For Every Beauty There is Eye Somewhere To See It

For Every Truth There is An Ear Somewhere To hear It

For Every Love There is A Heart Somewhere To Receive It

Just look at the S&P's performance over the past ten years.

The global financial system is in dire straits. Resuscitation now looks doubtful.

Debt burdens are at epic proportions on every level - global, national, state and local.

one can't ignore the current failures that are the direct result of the 'prosperity boom' that began in the 1980's. This 'prosperity boom' came on the backs of ever-expanding credit and debt

Ireland, Spain, Portugal, Greece and now the seventh largest economy, Italy; all are in trouble. The top five largest economies, including the U.S. are not far behind.

Those in the know realize the collapse is imminent and they are not hiding their opinions. Bernanke and friends essentially told the global market that U.S. growth would be stagnant for several years as the fed planned to keep interest rates low through 'at least' mid-2013.

Maybe the fed said 'at least' because they really can't afford to admit that they agree with the International Monetary Fund's recent assessment that global debt issues would persevere for ten years, or more. Director Christine Lagarde warned of the risk of a 'lost decade' for the global economy unless nations act together to counter threats to growth.

"In our increasingly interconnected world, no country or region can go it alone," Lagarde said in a speech to a forum in Beijing several weeks ago. "There are dark clouds gathering in the global econo

But haven't we already experienced a lost decade?

Just look at the S&P's performance over the past ten years.

And now that the U.S. and other leading economies have exhausted every effort to inject life into the global economy, we are left with bleak GDP growth and inevitable inflation woes.

Yet, with bonds of leading economies becoming ever riskier, the world is still looking to the U.S. for a stable return - or what many on Wall Street call 'the safety trade.'

This could last for several months, if not several years. And with more money piling into U.S. Treasuries, interest rates could push even lower.

Just look at what effect 'the safety trade' has had on U.S. bond prices. Remember that as yields fall, bond prices rise.

Fortunately for the bond bulls, given all of the world's troubles, 'the safety trade' still looks intact. But, how much longer can rates stay at record lows? Realistically, the reward is now to the downside.

Why People Not Follow The Law Of Demand In Equity Market

First Of all we Know that what is the Law of Demand Say's

"The law of demand states that people will buy more at lower prices and buy less at higher prices, other things remaining the same"

"Other things remaining the same, the quantity demanded increases with every fall in the price and decreases with every rise in the price"

Exceptions of Law of Demand

Price expectations: If people expect a further rise in the price particular commodity, they may buy more in spite of rise in price. The violation of the law in this case is only temporary...

Now when Equity market up we buy more and more equity or company shares in expect a further rise in price and sell all their holdings in downtrend of equity market

so we not follow Law of Demand

But one group follow this laws these are big traders or big fish when market down they buy more and more and when market up they sell their holding to us in high price and we buy all in expect a further rise in price

So these Big fishes eat all small fishes

so these big traders eat all small investers money . So just think many times before invest in equity market at what level you invest and which level you exit from the indices

Whose Next - China ... Next Danger Signal For World Eco

When Every thing was Good till 2008 then all World shocked with US economy Cris's

we face still US economic slow down , after that Europe Join with US and last 2 Years

all bad news out from Europe related to Debt Cris's and situation is more bad and bad

everyday.

Now new worries starts from Asia . Japan not in good condition and big threat

related to China .

If we see World Indices market from last 10 years we find that world indices below that level . US Dow , France , Germany , UK all below That levels

Now I come to Future worries about China

The bad news coming out of China’s economy in recent days has been more a series of thuds than a trickle.

HSBC’s widely watched preliminary manufacturing Purchasing Managers Index fell under 50 last month to reach a 32-month low, while foreign reserves are now falling, as well as property prices.

But the silver lining in this downbeat news could be an early Christmas gift for equity investors in the form of a decisive loosening of monetary policy. China could be ready to unleash its own big bazooka, giving equity markets a lift.

Following the move last week to ease the reserve ratio requirements (RRR) for twenty rural co-operative banks 50 basis points to 16%, expectations are growing this is the forerunner of a more general easing.

IHS Global Insight released a note last week titled “And now the deluge? – China starts loosening policy in earnest.” They say last week’s initial cuts demonstrate a clear shift in policy bias and to expect a headline RRR cut around the end of the year

Tinkering with RRR requirements for banks has been a key monetary policy tool for mainland authorities in recent years. Since January 2010 the Peoples Bank of China (PBOC) lifted the RRR twelve times to 21.5%.

This did not prove to be particularly effective in controlling inflation, but it certainly coincided with some dismal performances in the equity market.

Could a reversal in this policy also be a catalyst for mainland equities? Some analysts appear to think so.

According to new research from Sean Darby global equity strategist at Jefferies, the rolling over in foreign exchange reserves last month and the collapse in PBOC bond yields sets the stage for a relaxation in RRR. He has now turned bullish on Chinese markets, since November 7th.

While there is no official word of a change in policy, signs that hot money flows into China are reversing give authorities new room to maneuver with the RRR. It has been kept high in an effort to absorb the excess liquidity coming into the economy. Latest statistics showed the foreign exchange reserve increment in the third quarter shrunk by $50.9 billion from the second quarter.

This trend can be explained as money was attracted into China in part by expectations of both currency appreciation and asset (property) price inflation, as well as an interest rate premium over the U.S. The first two factors now appear to be reversing.

Commercial banks will welcome any reduction in the amount of money they have to keep on deposit at the central bank, which has become increasingly costly. Banks only get 1.6% on their reserves, while the benchmark deposit rate they must pay is 3.5%, leaving a negative spread.

Darby at Jefferies also sees other factors supporting mainland equities. For one, asset allocators are looking for asset classes that are uncorrelated in the current environment. Avoiding contagion from any euro fallout is a priority and here China with its closed capital account is relatively insulated.

Another plus for China is that countries running current account surpluses should be favored as they will be less exposed to sovereign credit market conditions and have more flexibility in policy response.

Darby has in the past been among the first to highlight how a change in mainland monetary policy can have a big impact on equities.

Back in 2009 he highlighted how the state decreed lending spree was effectively quantitative easing mainland-style and was likely to boost equities as it sought to raise asset prices.

The argument was it is possible to have a horrible economy and still have good asset markets. This did indeed lead to a temporary surge in mainland equities.

Despite this, it is hard to ignore the various overhangs facing the economy and stock market.

One worry is the extent of unseen bad loans in the banking system, especially if the property market does tip decisively downwards. Then, much of the respite banks get from reduced reserve requirements could be wiped out by ballooning bad loan provisions, making expanded lending more difficult.

Meanwhile authorities are still not out of the woods with inflation. While inflation has eased in recent months it is still running at 5.5%, and food inflation is over 12%. Any sharp reduction in reserve ratios runs the risk of reviving inflationary expectations.

In its analysis, IHS add a caveat that a sharper-than-expected slowdown in the next two months may lead to a policy overreaction by authorities pushing China into another detrimental boom and bust cycle.

That said, in the short term at least the market could run with the theme of monetary easing. But we will need to see concrete signs a change in policy is real and not just a good sales bite.

Europe Recover From Low's This Time But Not Sure Reovery

Italian bond sale boosts stock rally

The euro has risen to its highest level in a week against the dollar and the region’s bourses are rallying after Italy completed a €7.5bn bond sale.

For the time being, at least, traders are ignoring the punishingly high yields

Rome was forced to pay and instead focusing on the decent appetite for the bonds.

Italy sold three-year bonds at a gross yield of 7.89 per cent and 10-year bonds at a cost of 7.56 per cent.

Most analysts believe yields above 7 per cent are unsustainable in the long run.

The euro is up 0.6 per cent, having earlier touched a high of $1.3442, while the FTSE Eurofirst equity index is also up 0.6 per cent.

“Markets are clearly giving the policymakers the benefit of doubt, and in the process shaking off any negative news and are latching onto even small positive catalysts,” say currencies analysts at BNP Paribas.

The focus is squarely on Europe after Moody’s said it was considering a downgrade of the subordinated debt of 87 European banks – primarily in Spain, Italy, Austria and France. Furthermore, talk that France’s sovereign debt rating could be put on “negative” outlook by Standard & Poor’s is also hurting sentiment.

Later, traders will be watching a meeting of eurozone finance ministers in Brussels, where they plan to agree the details of the expansion of the European Financial Stability Fund.

Rome’s auction was the second of a series of big eurozone sovereign bond auctions this week. On Thursday, France and Spain plan to tap the market.

But sovereign debt fears are also making themselves felt beyond the eurozone. A move overnight by Fitch, the rating agency, to put the US triple A credit rating on “negative” watch has reminded traders that the eurozone is not the only part of the world where governments are heavily indebted and facing low growth. In the UK, chancellor George Osborne’s autumn statement at 12.30 GMT may further reinforce that message.

In a statement after the US market closed, Fitch Ratings said it had “declining confidence that timely fiscal measures necessary to place US public finances on a sustainable path and secure the US triple A sovereign rating will be forthcoming”.

Asian stocks extended their gains in Tuesday’s session, although with a little more trepidation than on Monday. Japan’s Nikkei 225 Stock Average advanced 1.6 per cent, even as the country’s jobless rate rose for the first time in three months. South Korea’s Kospi Composite jumped 2.3 per cent, Hong Kong’s Hang Seng index advanced 1.2 per cent and China’s Shanghai Composite index added 1.2 per cent.

Commodities markets are taking their lead from equities. Nymex WTI oil, the US benchmark, is 59 cents higher at $98.80, while Brent, its European counterpart, rose above $110 for the first time in a week. Gold is marginally higher at $1,714 a troy ounce and copper is 0.9 per cent stronger.