Knowledge is Power:The Weakest US Banks Edition

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1. China is well placed to continue its strong development as the global crisis eases, helped in part by using its vast surpluses in massive labor-retraining programs. Low wages paid to trainees have the added benefit of maintaining the country’s cost advantages.China prepares for next surge

2. US Treasury Secretary Timothy Geithner claims he is not seeking “to sustain weak banks at the expense of strong”. Yet the biggest five lenders in the US, led by JPMorgan Chase and Bank of America, are the weakest, holding 96% of US bank derivatives positions and almost all the net credit-risk exposure. And they are dictating federal government policy. Geithner’s dirty little secret

3.Its golden days of shipping vast loads of grain eastward and of steamers brimming with iron ore and steel westward to booming steel mills and car factories may be gone, but the St. Lawrence Seaway Management Corp., which celebrates its 50th anniversary next month, has not sunk into irrelevance. But it does have to reinvent itself, Seaway officials concede. St. Lawrence Seaway turns 50

4. Business leaders and heads of development banks today said they perceive good opportunities for private investment in Latin America and the Caribbean, even amid the worst economic crisis the world has seen in seven decades.Businesses, development banks see opportunities, despite global crisis

5.Bailouts, rescue plans, stimulus packages … Like most of us, Aida Edemariam didn’t understand where the money was really going. So she asked the experts to explain. Very slowly.The incredible shrinking economy

OECD: GDP To Fall and Unemployment To Soar

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According to the OECD’s Economic Outlook Interim Report released today GDP is expected to fall by 4.3% in the OECD countries in 2009. Unemployment rate is projected to soar to double digits by the end of 2010.

Some of the key takeaways from this report are:

  • International is projected to fall by 13% this year
  • US GDP is expected to drop by 4% this year and remain flat in 2010
  • US unemployment rate will peak at 10.5% in 2010
  • Due to shrinking exports, Japan’s economic economy is expected to fall 6.6% in 2009
  • Euro area will perform worse than the US with the output falling 4.1% this year and 0.3% in 2010
  • Among the BRIC countries, Brazil will perform much better than the other three as the report says “Brazil’s GDP is expected to decline by 0.3 percent in 2009 while Russia’s is projected to fall 5.6 percent. Growth in India will ease back to 4.3 percent this year and in China to 6.3 percent.”
  • On the real estate front, Residential starts in Spain, Norway and UK are down by over 50% from October’08  t0 January’09
  • Due to the collapse of East European countries, the banks of Austria, Italy, Sweden and Belgium face further losses due to their exposure to these economies
  • While private consumption is expected to decrease this year and next year, public consumption (demand for goods and services by the government) is projected to increase
  • A staggering 12% of all mortgages in US were delinquent or in foreclosure at the end of 2008
  • On Timothy Geithner’s Public-Private Investment Program(PPIP), the OECD says:”To ensure that the Plan is more effective in helping to overcome the financial crisis, the Administration should clarify implementation details (such as how long banks would be given to raise private capital) and make it clear that it will not hesitate to restructure systemically important but fragile financial institutions, even if that entails taking control of them, putting them into receivership, removing bad assets, and recapitalizing the remaining “good bank” with public funds.” (emphasis added)
  • On US foreclosures, the report warns “a more comprehensive plan is needed to more effectively induce lenders to reduce outstanding debt for homeowners owing more than what their homes are worth.”

To download the full OECD’s Economic Outlook Interim Report 2009, go here.

Knowledge is Power:The New “New Deal”? Edition

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1.Emerging market equity funds took in $2.3 billion in net inflows last week, according to EPFR Global, amounting to the largest inflow since mid-December. Year-to-date high for emerging market inflows

2. The US, encouraged by the likes of President Barack Obama’s advisor Larry Summers, has for decades mismanaged its finances by exploiting the hegemonic character of the dollar in international trade. Beijing, for one, needs to forge an economic strategy independent of Washington’s. – By Henry C K Liu
The New Deal dollar and the Obama dollar

3. GRENOBLE, France (AFP) — Angry workers on Tuesday detained five managers at a plant run by US firm Caterpillar to protest plans to slash hundreds of jobs, in France’s latest case of “bossnapping”.

Employees barricaded their bosses in an office to demand new negotiations on 733 layoffs at the factory in the southern city of Grenoble. French workers hold managers at Caterpillar

4.OK, so you’re one of millions of investors impatiently waiting on the sidelines, sitting with $2.5 trillion cash under your mattress, waiting for the right moment, that signal screaming: “Bottom’s in, start buying!” Yes, it’ll go down again, but the bottom’s in, thanks to a great March, possibly the third best month since 1950, so it’s time to jump back in and buy, buy, buy! Six reasons for calling a bottom

5.Dubai has the most competitive economy in the Middle East and ranks higher for its competitiveness than Japan, Germany, France and New Zealand, according to a new study.Dubai has most ‘competitive’ economy in ME

6.Ireland’s credit rating has been downgraded amid concerns about its surging levels of debt. Ireland in crisis as global credit rating cut

7.The Prime Minister used a speech at St Paul’s Cathedral to appeal for greater moral values to be applied to the financial system… Banks need family values says Brown

8.A series of developments in the U.S. could help put acquisitions back on the agenda for Canadian banks.. U.S. buys may be back on cards for Canada banks

9.Or is it close to becoming one? That, at least, seems to be what some US government officials and quite a few journalists think. The answer, of course, depends on your definition of a failed state. Is Mexico really a failed state?

10.The world is at a crossroads as it faces its greatest economic crisis in 60 years, IMF Managing Director Dominique Strauss-Kahn says during a trans-Atlantic video news conference. G-20 leaders who meet in London on April 2 have the opportunity to spur a recovery next year if they take the right action. World Faces Crisis Crossroads at G-20 Summit, Says IMF

Energy Companies Dominate The Top Rankings At NYSE

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Global energy companies now dominate the list of top ten companies list based on their market capitalization as of March 27,2009.

The Top Companies Listed in New York Stock Exchange (NYSE):

[TABLE=146]

Chart :

Largest Companies NYSE

Note: Berkshire Hathaway Inc at $138.8B may have been listed at number 10. But it has  been left out since Berkshire is a unique company and specializes in varied sectors.

Financials such as Citibank(C), Bank of America (BAC) and industrials such GE used to the largest companies. Due to the current credit crunch these companies have been replaced by both foreign, energy and personal goods companies.

In the top 10 list shown above, half of them are oil companies. Even with the price of crude falling to much lower levels than the $140 last year, the global companies still command a huge premium and have seen their shares rise year over year in the past 5 years. Exxon Mobil ‘s nearest competitor is Wal-Mart but with a much lower market capitalization.While companies such as Royal Dutch Shell and Chevron, can be expected in the top list,new entrants such as PetroChina of China (PTR) and Petroleo Brasileiro(PBR) of Brazil are growing much faster than the well-established giants. The presence of these energy companies at the top show their importance for the global economy and the potential for future growth.PTR and PBR also show the growing influence of emerging market firms.

US firms such as AT&T, Johnson & Johnson, P&G, Walmart are perennial favorites among many investors. In the past few years P&G had a lower market cap. However in recent times the rush to safety sectors has helped maintain P&G’s stock at relatively higher levels. AT&T is emerging as a strong player in the telecom field. Walmart will continue to be in the top for the foreseeable future since cash-strapped consumers prefer Walmart stores over other stores.

Knowledge is Power: Economics is Useless? Edition

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1.The economics profession must bear a lot of the blame for the current crisis. If it is to become useful again it must undergo an intellectual revolution—becoming both broader and more modest. Goodbye, homo economicus

2.By one definition, a 21% rise in the Dow index makes this a three-week old bull market. The rapid change of heart might indicate that lessened financial stress will soon bring happier times. But even if panic is no longer called for, sharp profit falls could restrain enthusiasm. Bull market looks premature (Registration Required)

3.While we routinely mourn the disappearance of the small storefront, we rarely ask what happens to the texture of a city when a big-box store closes shop.What should we make of empty big-box stores?

4.Times are tough in Korea and they are bound to get even tougher as the country gets whiplashed by the global financial crisis. Kim Bong Suk, the chief economist at Shinhan Bank’s Future Strategy & Business Development Institute, discusses with The Asset what this means in terms of capital…  In dire straits

5.The world’s 11th-largest economy is still attracting international interest, though not everyone is dancing for joy as Brazil poises for more growth. Emerging markets: The Brazilian play

Photo: A beach in Maldives