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China’s state-owned enterprises may unilaterally terminate commodities contracts as they try to cut massive losses from financial derivatives, an industry source told Caijing on August 28.

According to the source, China’s State-owned Assets Supervision and Administration Commission (SASAC) has sent notice to six foreign financial institutions informing them that several state-owned enterprise will reserve the right to default on commodities contracts signed with those institutions.

Most investment banks may “just swallow” any losses arising from canceled contracts, the executive said, adding that any losses are usually made up for with compensating trades.

Source: Caijing.com.cn

An index of economic indicators rose in July for a fourth straight month, in another sign that the recession is bottoming, said a report released Thursday.

The Leading Economic Index rose 0.6% in July, after a 0.8% increase the previous month, according to a report from the Conference Board, which has a membership of executives from around the world.

Source: CNNMoney

In America today, prices are just as likely to be falling as rising. For the first time since the 1950s, consumer prices are actually lower than they were a year earlier.

Source: MarketWatch

Sales at U.S. retailers unexpectedly fell in July, raising the risk that a lack of consumer spending will temper a recovery from the worst recession since the 1930s.

Source: Bloomberg

“Chinese stock and property markets have bubbled up again. It was fueled by bank lending and inflation fear. I think that Chinese stocks and properties are 50-100% overvalued. The odds are that both will adjust in the fourth quarter. However, both might flare up again sometime next year. Fluctuating within a long bubble could be the dominant trend for the foreseeable future. The bursting will happen when the US dollar becomes strong again. The catalyst could be serious inflation that forces the Fed to raise interest rate.” - Andy Xie, former Morgan Stanley Analyst

Source: Ritholtz.com, my1510.CN

A part of the U.S. production capacity and labor market will have to be permanently laid off if nominal gross domestic product growth can’t be kept around 5%, bond-fund king Bill Gross says.

Source: MorningStar

~News submitted by upthecreek

The composite second-quarter earnings for companies in the Standard & Poor’s 500 Index are expected to drop 31% from a year earlier, compared with a decline of 35% predicted last week.
Declines are expected in nine of the 10 sectors in the S&P 500 Index from a year earlier. The health-care sector is the only one expecting an increase in earnings, of 2%.

Source: WSJ

“Congress has increased the cost of unskilled labor by 10.7% in the middle of the worst recession since the early 1980s. The unemployment rate is 9.5%. It is unclear how this is supposed to help the economy – unless you are Labor Secretary Solis or the Economic Policy Institute. The claim is that this will produce $5 billion in increased income and spending. One simple question – where does this $5 billion come from? ” ~ William Dunkelberg, Economics Professor, Temple University

Source: CNBC

Venture capital investment fell 51 percent in the second quarter as firms coped with the recession and a drought in initial public offerings, bringing funding for startups to the lowest level in 15 years.

Source: Bloomberg

After more than three months of greed, fear is returning to global financial markets. Amid growing nervousness about the economy’s prospects, the Dow Jones Industrial Average fell 161.27 points, or 1.94%, on Tuesday, to 8163.60, its lowest close since April 28. It still is up almost 25% since beginning a sharp rebound from a 12-year low on March 9, but it had been up as much as 34% a month ago.

Source: WSJ

U.S. and European stocks tumbled, sending the Standard & Poor’s 500 Index down the most in two months, as the World Bank said the recession will be deeper than previously forecast.

Source: Bloomberg

The Labor Department’s monthly jobs report, scheduled for June 5, may show payrolls at companies and government agencies shrank by 520,000 in May and unemployment rose to a 25-year high of 9.2 percent.

Source: Bloomberg

President Barack Obama said General Motors Corp. will reemerge from financial turmoil a “strong company” and that permitting it and Chrysler LLC to collapse could have triggered an economic depression.

GM got $4 billion in additional assistance to continue operations. Chrysler is reorganizing in a Chapter 11 bankruptcy.

Source: Bloomberg

Planned job cuts announced by U.S. employers totaled 132,590 in April, a 12 percent drop from the 150,411 layoffs recorded in March.

This marks the third consecutive decline in monthly job cuts announced and the lowest total since 112,884 cuts were announced last October, according to a report released Wednesday by outplacement consultancy Challenger, Gray & Christmas Inc.

Source: St. Louis Business Journal

The U.S. economy contracted during the first three months of the year at one of the fastest rates in 27 years and surprised analysts by nearly matching the historic decline than had been registered in the final quarter of 2008, when it was battered by the financial meltdown.

Gross domestic product, a measure of the goods and services produced across the nation, shrank at an annualized rate of 6.1 percent, according to a preliminary estimate released this morning by the Commerce Department, after contracting by 6.3 percent between September and January.

Source: Washington Post

President Obama today sought to temper recent optimism about an economic recovery, warning that the “hard times” will not end this year and there will be “more job loss, more foreclosures and more pain” before the recession ends.

While warning of future economic hardship, Obama also touted the encouraging signs in the economy as springing from the “extraordinary action” of his administration, including the $787-billion economic stimulus legislation, that he said have helped spur consumer demand and restore the flow of credit vital to businesses.

Source: LA Times

Singapore economy may shrink as much as 9 percent this year, the most since independence in 1965, as a deepening global recession drives down exports and manufacturing.

Companies probably fired more than 10,000 workers in the first three months of 2009, the Straits Times cited Prime Minister Lee Hsien Loong as saying last week.

Source: Bloomberg

An article in the Wall Street Journal suggests that, “The Obama administration should seriously consider granting resident status to foreigners who buy surplus houses in this country.”

In order to reduce the excess inventory of houses, it is suggested to “offer permanent residence status to the many foreigners who are clamoring to get into the U.S. — if they buy houses of minimal values (not shacks). They wouldn’t need to live in those houses, but in order to remove the unit from the total housing market, they couldn’t rent them.”

According to the article, “Each year, 85,000 H-1B visas are granted for foreigners with advanced skills and education, and last year, 163,000 petitions were filed in the first five days after applications were accepted. The Ewing Marion Kauffman Foundation estimates that as of Sept. 30, 2006, 500,040 residents of the U.S. and 59,915 individuals living abroad were waiting for employment-based visas. Many would buy homes if their immigration conditions were settled.

These people tend to be highly productive. In 2006, foreign nationals residing in the U.S. were listed as inventors on 25.6% of the patent applications filed in the U.S., up from 7.6% in 1998. A Council of Graduate Schools survey found that in the fall of 2007, 241,095 non-U.S. citizens were enrolled in graduate programs. Some 55% were in engineering and the biological and physical sciences, compared with only 16% of U.S. citizens. In 2007, more people on temporary visas received doctorates in physical sciences and engineering than U.S. citizens.
“

The U.S. economic magnet is losing some of its power to retain skilled immigrants from China and India, many of whom have come to Silicon Valley to study and work, according to a survey released today of more than a thousand returnees.

A powerful combination of career, family, culture and rapidly growing economies in their home countries is drawing them back, threatening U.S. supremacy in an increasingly competitive global environment.

The poll of 1,203 returnees to India and China by researchers at Duke and Harvard universities and the University of California also found the returnees thriving in their new jobs. Many rose through the ranks to senior management, with the number in high positions three to four times the number who held senior positions with their U.S. employers. About half said they planned to start a company in the next five years.

Source: San Jose Mercury News

According to HinduBusinessLine: “The collapse of the export trade in China has left millions jobless and set off a wave of violent unrest in the country. Bankruptcies, unemployment and social unrest are spreading more widely in China than officially reported, according to an independent research that paints an ominous picture for the world economy.

[...] It was found that the global economic crisis has scythed through exports and set off dozens of protests  in three provinces vital to Chinese trade - Guangdong, Zhejiang and Jiangsu are never mentioned by the state media. According to the report in the southern province of Guangdong, three jobless men detonated a bomb in a business travellers’ hotel in the commercial city of Foshan to extort money from the management.”