Venezuela Authorities temporarily halted the trading of government bonds

CARACAS, Venezuela  Authorities temporarily halted the trading of government bonds on Tuesday and said they would seek to control Venezuela’s currency exchange rates by setting a range of permitted prices in the bond market.National Securities Commission President Tomas Sanchez said that bond trading is being suspended while new regulations are established following the approval last week of legislation increasing the Central Bank’s control over currency trading.

The government also plans to seize control of brokerage firms suspected of conducting “speculative operations,” Sanchez said.

Central Bank President Nelson Merentes, meanwhile, announced a plan to establish a band with maximum and minimum prices in bond trading, which until last week had been an important outlet for Venezuelans to obtain U.S. dollars.

President Hugo Chavez is seeking to crack down on currency speculation that he blames for soaring inflation and the decline of Venezuela’s bolivar currency on the unregulated market. The embattled bolivar reached 8.30 bolivars to the dollar on the so-called parallel market on Tuesday – almost twice the official exchange rate of 4.30 applied to nonessential goods.

The government is worried because the rising price of dollars on the parallel market increases the cost of consumer goods in Venezuela, which imports more than half the products it consumes despite Chavez’s efforts to boost domestic production.Roughly 30 percent of imports and 70 percent of capital repatriation traditionally occurs through the government bond market, according to the Caracas-based Ecoanalitica think tank.

Consumer prices jumped 5.2 percent in April alone, driving the annual inflation rate to 30.4 percent – the highest in Latin America – according to the Central Bank and National Statistics Institute.

Planning Minister Jorge Giordani accused brokerge firms and Venezuela’s media of trying to drive up the cost of the bolivar on the parallel market, and he warned they could face criminal charges “if they continue this perverse game of creating expectations” within the market.”The Attorney General’s Office will have to take action,” Giordani said.It remains unclear how local brokerages will continue turning a profit.

Maria Fernandez, a local banking analyst, predicted the new regulations would lead some brokerage firms to bankruptcy.Many brokerages will be forced to impose “a significant reduction of employees” in order to survive, but others probably will close because the business “is no longer viable” for them, Fernandez said in a telephone interview.(AP)

Wall Street's unexplained plunge last week and Greece's debt problems posed systemic risks

Wall Street’s unexplained plunge last week and Greece’s debt problems posed systemic risks and underscored the need for financial regulatory overhaul, a top U.S. lawmaker said on Sunday.GreeceSenate Banking Committee Chairman Chris Dodd told CBS’s “Face of the Nation” program that authorities had not yet figured out the events of last Thursday, which saw the Dow Jones industrial average tumble nearly 1,000 points.

“We need some answers pretty soon. This is an issue that raises systemic risk. The problems in Europe raise system risk,” Dodd said. “We need to get in place a bill, have the president sign it so that we have tools to protect our economy from these kinds of events.”Market participants have speculated high-frequency and algorithmic trading magnified the wild swing. The debt problems in Greece have raised fears of contagion to other nations in the euro area with budget problems.These fears overshadowed a string of robust U.S. economic data, including a 290,000 gain in nonfarm payrolls in April.

“What you’re getting is finance is getting detached from the real economy. You are getting some of this casino environment that is appearing in our markets. It does not reflect what is going on in the real economy,” Dodd said.”Clearly the Securities and Exchange Commission needs to act, they need to step up very quickly and let us know what happened here and what steps need to be taken. I don’t think you need legislation in this area. You need the regulators to step up.”(Reuters)

Stock prices fluctuated sharply, as they often do the day after a big slide. The Dow Jones industrial average was down about 100 points

Stock prices fluctuated sharply, as they often do the day after a big slide. The Dow Jones industrial average was down about 100 points in early afternoon trading, having been down as much as nearly 280 points earlier. Traders remained anxious amid questions about what caused Thursday’s sudden drop, which sent the stocks of several companies briefly to almost zero.The market looked past a surprisingly strong report on the U.S. jobs market and focused instead on Europe’s spreading debt crisis and Thursday’s plunge. The Dow was down nearly 1,000 points Thursday afternoon — its largest one-day drop — before recovering two-thirds of its losses.

In early afternoon trading the Dow fell 96.28, or 0.9 percent, to 10,424.04. It had been down as much as 279 in earlier trading, and at a few points recouped all its losses for the day before slipping again in the early afternoon.The Standard & Poor’s 500 index fell 11.56, or 1 percent, to 1,116.59, while the Nasdaq composite fell 32.70, or 1.4 percent, to 2,286.94.Falling stocks outpaced gainers two-to-one on the New York Stock Exchange, where volume was a heavy 1.1 billion shares.

Technology stocks were particularly hard hit following reports that Nokia Corp. was broadening its legal fight against rival cell phone maker Apple Inc. to include the iPad, Apple’s new hit product. Apple shares fell 2.6 percent in heavy trading.Meanwhile Europe’s debt problems again weighed on stocks. Germany’s parliament approved Berlin’s share of the rescue package after a boisterous debate. However, investors still fear that Greece may not make a May 19 deadline to make a debt repayment.

Investors’ concern goes far beyond Greece, the smallest economy in the European Union. A further loss of confidence in European government debt could have an impact on other weak countries like Portugal, potentially requiring another difficult bailout process. The debt crisis has already badly undermined Europe’s shared currency, the euro.

“You’re not concerned about the kid with the cold, but how he spreads it to the rest of the class,” said Len Blum, a managing partner at investment bank Westwood Capital. Blum noted that Greece’s debt problem could be similar to the subprime mortgage meltdown in the U.S., which quickly spread to other parts of the financial system.Friday’s trading left the Dow down about 4 percent for the week and barely in the black for the year. The S&P was also down about 5 percent, while the Nasdaq was off 6 percent. The S&P and Nasdaq were also both still positive for 2010.The week’s losses would put the market about halfway through what experts call a “correction,” usually defined as a drop of between 10 percent and 20 percent following a sustained rise.

Stocks have been on a nearly uninterrupted upward path since March of last year, when indexes hit 12-year lows. Analysts have been predicting a correction for months, only to see the market bounce back after brief periods of decline.Long-term market watchers actually welcome occasional pullbacks in the market, saying that gives investors opportunities to pick up shares at bargain prices.”A corrective phase is in play,” said Rob Lutts, president and chief investment officer at Cabot Money Management.

If he’s right, this correction would be far faster than the historical average. “We used to take weeks and months to do what we now do in days,” Lutts said.In economic news, the Labor Department reported that employers added 290,000 jobs last month, far more than expected and the biggest jump in four years. However the jobless rate rose to 9.9 percent from 9.7 percent as more people looked for work.

The big improvement in the jobs report brought some clarity to the biggest question remaining for the U.S. economy: When employers would start hiring again. Despite positive signs in manufacturing and housing, job creation has been lagging far behind other sectors of the economy, a worrisome point for economists. Friday’s report may help change that perception.”It’s a good-size number and it had a lot of breadth,” said John Silvia, chief economist at Wells Fargo. “There isn’t a double-dip out there. The employment situation suggests that we have a sustained economic recovery in the U.S. Companies are hiring people.”

Apple fell $6.37, or 2.6 percent, to $239.88.Oil fell, and gold rose. The dollar was mostly lower against most currencies. The euro clawed back some ground against the dollar after several days of declines.European markets were broadly lower.The declines were deepest in France, where the CAC-40 index tumbled 4.6 percent. Germany’s DAX fell 3.3 percent and Britain’s FTSE 100 fell 2.6 percent. Japan’s Nikkei fell 3.1 percent.

United States Steel Corp. continues to see improved demand for steel used in products such as appliances, automobiles and heavy industrial equipment

DENVER United States Steel Corp. continues to see improved demand for steel used in products such as appliances, automobiles and heavy industrial equipment.That improvement is slowly working its way to the steelmaker’s bottom line.The Pittsburgh manufacturer reported a narrower loss for the first three months of the year and its best result since it reported a profit in the last quarter of 2008. The company predicted more improvement in the current quarter as shipments increase and prices rise, although it cautioned that raw materials also continue to rise.

U.S. Steel is the latest steel maker to note a gradual improvement in business after struggling through a difficult 2009 when recession-battered customers cut back on orders.”Our operating results have been making a slow and steady recovery since hitting a low point in the first quarter of 2009 until this quarter, when the benefits of improved utilization rates and selling prices began to be realized in a more significant way,” John P. Surma, chairman and CEO, told analysts during a conference call.

Surma said all of the company’s operating segments should be profitable in the second quarter, a little sooner than Wall Street had been expecting.”Gradually improving business conditions should be reflected in our operating results,” he said in a statement.The results are an indication of both an improving global economy and a slow turnaround in the U.S., Argus Research analyst Bill Selesky said.He noted U.S. Steel is increasing production at some facilities. “They would not do that unless they thought they had a window here where demand was going up,” he said.

U.S. Steel reported a loss of $157 million, or $1.10 per share, for the quarter. A year ago, it lost $439 million, or $3.78 per share.Revenue rose 42 percent to $3.9 billion from $2.75 billion.Prices for flat-rolled steel, used in everything from automobiles to appliances, fell to $654 a net ton from $715 a net ton a year ago. But they improved from the fourth quarter.Prices also fell year over year in U.S. Steel’s European operations and in the tubular business, which produces pipe products.

Yet companywide, overall shipments jumped 67.5 percent from a year ago.Analysts polled by Thomson Reuters, on average, had predicted a loss of $1.43 a share on revenue of $3.75 billion. Such estimates typically exclude one-time items.U.S. Steel said cost-cutting measures that it has taken in the past year have made operations more efficient.

In the months ahead, the company expects to see higher costs for coal used in the steelmaking process and iron ore for its European operations. Although U.S. Steel has its own iron ore source for North American operations, it expects to pay more for the raw material in Europe.Manufacturers that buy iron ore in the marketplace are expected to pay more because of a new international system that allows prices to be set quarterly instead of annually.

Shares fell $3.44, or 5.7 percent, to close at $56.63.U.S. stocks fell overall after Standard & Poor’s downgraded the debt of Greece and Portugal. The move intensified investors’ fears that Europe’s debt problems are spreading.(AP)

German Parliament at the end of last week approved the budget for 2010, with record levels of new loans

BERLIN German Parliament at the end of last week approved the budget for 2010, with record levels of new loans. This was done because the largest countries in Europe were trying to bounce back from last year’s recession the worst in six decades.As quoted by the AFP, Saturday (20/3/2010), 313 votes from MPs who agreed to 256 for the new budget. Where in the budget will be adan new debt worth 80.2 billion euros (USD108, 3 billion), which is two times the amount of loans obtained in Germany in 2009 and then.

Germany’s budget deficit this year is a maximum of twice as much as permitted by the EU fiscal rules, which increased to as much as six percent of gross domestic product (GDP) of Germany which for 3.3 per cent in 2009.Although demiikian, Finance Minister Wolfgang Schaeuble insisted he will bring the German deficit back below the upper limit of three percent in 2013.

He said that if Germany fails to comply with the rules, then the Germans will collapse, along with their European single currency, the euro. The current budget must be approved by the upper house of parliament, the Bundesrat.In 2009, the German economy experienced a contraction of five percent. Berlin hopes for the economy can grow as much as 1.4 percent this year.

Greece must take further measures to reduce the deficit or it will face sanctions, Eurogroup chairman Jean-Claude Juncker

ATHENS Greece must take further measures to reduce the deficit or it will face sanctions, Eurogroup chairman Jean-Claude Juncker was quoted as saying by a Greek newspaper.Greece has until March 16 to convince EU finance ministers and the executive European Commission that proposed measures to cut its budget shortfall this year to 8.7 percent of gross domestic product from 12.7 percent in 2009 are sufficient.”Greece must intensify its efforts and move to further actions to reduce its deficit,” Juncker, who heads the Eurogroup of euro zone finance ministers, told Eleftherotypia newspaper.

“If it doesn’t convince us then it will possibly face sanctions. Greece must understand that the taxpayers in Germany, Belgium or Luxembourg are not ready to fix the mistakes of Greece’s fiscal policy,” Juncker said.”Euro zone finance ministers have agreed that more efforts are required from Greece,” he said.Juncker, who is also Luxembourg’s prime minister, said euro zone finance ministers had discussed ways to help Greece.”Luxembourg is also ready to help Greece on a bilateral level, if Athens asks for it. We must first be convinced that the measures are serious and tough. The Greek government must focus on further spending reduction and on the ways to increase revenues,” he said.(Reuters)

World markets fell Friday after the U.S. Federal Reserve unexpectedly raised interest rates for emergency bank loans

LONDON  World markets fell Friday after the U.S. Federal Reserve unexpectedly raised interest rates for emergency bank loans, triggering fears that regular borrowing costs could also move higher soon, slowing the recovery in the world’s largest economy.The central bank said Thursday it will bump up the “discount” lending rate by one-quarter point to 0.75 percent effective Friday, part of a pullback of the extraordinary aid it provided to fight the financial crisis.Although the Fed said the step should not be seen as a signal that it will soon boost interest rates for consumers and businesses, markets were spooked.After sharp drops in Asia, Germany’s DAX stock index was down 0.2 percent at 5,671.28 and Britain’s FTSE 100 was flat at 5,326.84. France’s CAC-40 fell 0.2 percent to 3,742.09.Wall Street was also expected to fall on the open. Dow Jones industrials futures were down 50 points at 10,325.00 and Standard & Poor’s 500 futures were 8.2 points lower at 1,097.40.

Growing optimism about the strength of the U.S. economy had helped boost the Dow Jones industrial average rise by 3 percent over the past three days. But the surprise Fed announcement after Wall Street trading closed left traders wondering whether the so-called “exit strategy” from a loose monetary policy could come faster than expected and stifle U.S. consumer demand.”It begs the questions of why this was not done, or at least signaled at a regular Federal Open Market Committee meeting,” said Marc Ostwald, strategist at Monument Securities in London.”It certainly is the case that the Fed wants to see how money markets function without so much of the liquidity life support that the Fed has been providing, and as such one can term this a form of ‘kite flying’,” said Ostwald.The Fed move, which doesn’t change consumer borrowing rates, also helped boost the U.S. dollar and push the euro below nine-month lows – a sign traders may be turning away from higher-risk investments, analysts said.The euro fell to $1.3504 from $1.3529 late Thursday after trading at nine-month lows below $1.3400. After rising against the Japanese yen, the dollar was flat at 91.75 yen.

The euro has been under pressure in recent months over worries about the debt problems of Greece and other countries in Europe, such as Portugal and Spain. Although the EU said it was committed to helping Greece in case of a default, it did not provide any concrete plans for a bailout but limited itself to demand more spending cuts.Economic data in Europe, meanwhile, failed to shore up investor sentiment. The purchasing managers’ survey of the eurozone, an economic indicator published by Markit research group, was stable in February, suggesting the recovery from recession has stagnated somewhat.A rise in the manufacturing reading offset a drop in the services sector, providing “little hope that the much-needed domestic recovery is beginning to materialize,” said Ben May, European economist at Capital Economics in London.Markets in China and Taiwan are closed this week for the Lunar New Year holiday.Earlier in Asia, Hong Kong’s Hang Seng stock index led decliners, diving 528.13, or 2.6 percent, to 19,894.02 while Japan’s Nikkei 225 stock average dropped 212.11, or 2.1 percent, to 10,123.58.”As the dollar strengthens, we see less appetite for riskier assets such as Asian stocks.” said Jit Soon Lim, head of equity research for Southeast Asia for Nomura in Singapore. “We’re bullish on the region’s economic growth, but bearish on risk.”

South Korea’s Kospi declined 27.29, or 1.7 percent, to 1,593.90. India fell 1 percent and Indonesia dropped 0.5 percent.Singapore’s stock measure retreated 0.9 percent despite an increase of the government’s 2010 economic growth forecast to between 4.5 percent and 6.5 percent from 3 percent to 5 percent.In the U.S. on Thursday, the Dow rose 83.66, or 0.8 percent, to 10,392.90 while the broader Standard & Poor’s 500 index rose 7.24, or 0.7 percent, to 1,106.75. The Nasdaq composite index rose 15.42, or 0.7 percent, to 2,241.71, its fifth straight advance.Oil prices slid to near $78 a barrel after the Fed’s rate hike sent the U.S. dollar higher.Benchmark crude for March delivery was down 90 cents at $78.16 in electronic trading on the New York Mercantile Exchange. The contract added $1.73 to settle at $79.06 on Thursday.(AP)

British candy maker Cadbury PLC was thrown further into doubt Tuesday when a major Kraft Foods Inc

Kraft Cadbury

LONDON The battle for British candy maker Cadbury PLC was thrown further into doubt Tuesday when a major Kraft Foods Inc. shareholder voted not to endorse the U.S. company’s hostile takeover bid, even as Kraft sweetened its offer with more cash.Billionaire Warren Buffett’s Berkshire Hathaway Inc. said it had voted against Kraft’s proposal to issue 370 million shares to finance its 10.3 billion pound ($16.5 billion) bid, saying it was worried Kraft would raise the bid even higher.Kraft earlier Tuesday increased the cash part of its offer after agreeing to sell its North American pizza business to Nestle for $3.7 billion. Nestle also said it wouldn’t be making its own offer for Cadbury, as some analyst had speculated.That leaves Kraft the sole bidder for now, though the British maker of Dairy Milk chocolate and Dentyne gum has said it has received expressions of interest from The Hershey Co. of the United States and Italy’s Ferrero International SA.

Cadbury dismissed Kraft’s plan to use the money raised from selling brands such as Tombstone and Jack’s to increase the proportion of cash in its offer as “tinkering.”Shares in the British maker of Dairy Milk chocolate and Dentyne gum were down 3.7 percent at 775 pence, after briefly diving to 764.4 pence following Berkshire Hathaway’s announcement.Berkshire Hathaway, which holds 9.4 percent of Kraft’s stock, said that the share issue would give Kraft “a blank check allowing it to change its offer to Cadbury in any way it wishes.””And we worry very much that, indeed, there will be an additional change from the revision announced this morning,” it added. “To state the matter simply, a shareholder voting “yes” today is authorizing a huge transaction without knowing its cost or the means of payment.”

Kraft, based in Northfield, Illinois, could not immediately be reached for comment on Berkshire Hathaway’s move.Kraft, whose brands include Philadelphia cream cheese and Oreo cookies, earlier said its change to offer reflected calls by some Cadbury shareholders to have more of the offer in cash and “to be more sparing in its use of undervalued Kraft Foods shares as currency for the offer.””Kraft Foods continues to believe that its share price is depressed as a consequence of a number of short term factors which it believes will dissipate once the uncertainty surrounding its offer for Cadbury is resolved,” the company said in a statement.

Kraft said Tuesday it will use an amount equivalent to the net proceeds from the pizza sale, which it estimates to be 60 pence per Cadbury share, to fund a partial cash alternative to its offer.It also extended the deadline for shareholders to accept its bid until Feb. 2 – the last day in the 60-day timetable set by the U.K. Takeover Panel.It has until Jan. 19 to revise its offer further.Berkshire said it will vote to issue shares only if it does not think the final offer hurts value for Kraft shareholders.

Cadbury’s share price is still well above the original 742 pence value of Kraft’s offer – 300 pence in cash and 0.2589 Kraft shares for each Cadbury share – reflecting the odds that changing the cash component is unlikely to be enough to win over shareholders who are seeking a higher overall price.Cadbury, which recently outlined its credentials as a stand-alone company by raising its long-term performance targets and producing better-than-expected profit margins, said the offer continued to undervalue the British company.

“Kraft has once again missed the point,” it said. “Despite this tinkering, the Kraft offer remains unchanged and derisory with less than half the consideration in cash.”Cadbury is due to provide a trading update, including the key Christmas season, next week.Nestle’s earlier decision to rule itself out of the bidding settled rumors that the Swiss maker of Nescafe coffee and KitKat chocolate was gathering a war chest for a rival bid after it agreed to sell off its 52 percent stake in eyecare company Alcon for $28 billion and announced it would spend less cash on share buybacks.

Some analysts still believe that another suitor may emerge.”We think that Hershey is keen to make a deal with Cadbury,” analysts at Numis stockbrokers wrote in a research note. “In reality Nestle is acting as a fund provider to the Cadbury deal and we would not be surprised to see the Swiss group play that role again by buying assets from Hershey, the Kit Kat brand in the U.S. being an obvious candidate.”

Nestle, meanwhile, is gaining a pizza business that includes the Tombstone and Jack’s brands in the U.S., the Delissio brand in Canada and the California Pizza Kitchen trademark license. It also includes two Wisconsin manufacturing facilities in Medford and Little Chute, Wisconsin.Nestle said the acquisition will add a “new strategic pillar” to its frozen food portfolio in the U.S. and Canada, making it a significant player in the $37 billion a year pizza market. Nestle is already represented in the U.S. with brands such as Stouffer’s, Lean Cuisine, Buitoni, Hot Pockets and Lean Pockets.Shares in the Swiss company rose 1.5 percent to 50.95 Swiss francs.About 3,400 employees are expected to transfer to Nestle.(AP)

Oil prices fell below $75 a barrel Monday as the dollar strengthened

Oil prices

Oil prices fell below $75 a barrel Monday as the dollar strengthened and several OPEC ministers said they don’t expect their group to change production levels at a meeting later this month.By early afternoon in Europe, benchmark crude for January delivery was down 67 cents to $74.80 in electronic trading on the New York Mercantile Exchange. The contract lost 99 cents to settle at $75.47 on Friday.

Top oil officials from Libya, Kuwait, Algeria and Qatar said Saturday that the Organization of Petroleum Exporting Countries, which supplies about 35 percent of the world’s crude, will likely leave output levels unchanged at the group’s next policy meeting on Dec. 22.

Saudi Arabia’s oil minister, Ali Naimi, said Saturday that oil prices, which have bounced around the high $70s for about two months, were “perfect.”

“Crude oil prices have been in a downtrend since Oct. 21,” said a report from Sucden Research in London. “Given the high levels of crude inventories as well as views that OPEC will keep the output quotas unchanged … it looks likely that fundamentals do not support higher crude oil prices.”

Oil traders are also eyeing the U.S. dollar as some investors buy crude as a hedge against inflation and a weaker U.S. currency. When the greenback strengthens, however, oil becomes more expensive for investors holding other currencies, like the euro or the Japanese yen.

On Friday, crude fell to a seven-week low after the Labor Department said the unemployment rate fell to 10 percent in November from 10.2 percent a month earlier, sparking a rally in the dollar. On Monday, the euro was down to $1.4785 from $1.4851 on Friday, near its lowest point in about a month.

Analysts at U.S. energy consultancy Cameron Hanover said the dollar’s rise was taking away “the best source of buying for the oil complex” and putting some of the focus back on the fundamentals of supply and demand.

“This could be the beginning of the end for the so-called ‘carry’ trade … the whole process of borrowing money at negligible interest costs and then ‘investing’ it in anything with a market pulse,” Cameron Hanover said. “It completely disregards supply and demand and it has been the guiding force behind higher prices in commodities in 2009.”

Many experts say that the uncertainties of the economic recovery and the high inventories of crude and fuels in the United States do not justify oil prices near $80.

While Friday’s unemployment figures were encouraging, analysts warned that its was too soon to judge their impact on oil consumption.

Olivier Jakob of Switzerland’s Petromatrix said U.S. oil demand was still at least 2 million barrels a day lower than two years ago.

“The job losses are getting narrower but the number of unemployed remains astronomically high,” Jakob said. “A lot still needs to happen before the situation moves from less bad to much better on the employment front and really starts to have an impact on U.S. oil demand.”

In other Nymex trading in January contracts, heating oil fell 1.01 cents to $2.0167 and gasoline slipped 1.28 cents to $1.9622. Natural gas jumped 16.5 cents to $4.751 per 1,000 cubic feet.In London, Brent crude for January delivery lost 46 cents to $77.06 on the ICE Futures exchange.

Copenhagen have summit a new topic to discuss a new agreement

There have been concerns that the Copenhagen summit will not bear a strong agreement.But analysts assess the presence of so many heads of state that will change the estimates.The UN’s annual meeting to discuss the climate is usually attended by environment ministers.Delegated ari 192 countries will attend the summit are trying to design a new climate treaty to replace the 1997 Kyoto Protocol.

British Prime Minister Gordon Brown who will be attending the summit said the new agreement will be born if the head of government support.maybe now it could happen.But Chinese leaders, the United States and India called the state’s biggest maker of pollution are not included in the list will be present.But the BBC’s  environment correspondent Roger Harrabin said, the move will undoubtedly increase the political influence.(BBC’s)