Oct 3. Daily Briefing prepared using big data: Russia future at risk, Draghi-nomics likely to succeed

La Rédaction

il y a 10 ans

London, October, 3rd 2014

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SNBDL Daily Briefing

Report prepared using big data solution Quid

Our take away from the last 24 hours news

ECB President Draghi revealed the details of his stimuli plan. It did not include any outright sovereign bond QE for now as we were expecting. This disappointed both carry-trade bugs and EU-Skeptics, for obviously different reasons. The former wanted to continue to enjoy moral hazard profits (profits which are quickly disappearing) while the latter wanted to increase tension within EU by giving food for two thoughts: 1) German taxpayers are paying for “lazy” French, Italians etc. (in EU-Skeptics parlance), and 2) France, Italy, Spain youth are leaving in difficult conditions because of “austere Germany” (I cannot use the words they use, but our readers knows that some folks are referring to the “N-word”).

President Draghi, as a great European and Central Bankers (history may remember him as the European Alexander Hamilton) is doing “whatever it takes” to avoid the EU-Skeptics hoped tension, while playing by BIS rules to reduce moral hazard and monetary excesses. President Draghi pushed back against the idea that there is a secretive grand bargain. But this grand bargain is in fact the natural state which will make EUR fly (remember Draghi’s July 2012 speech he said it all at that time).

EUR rebounded yesterday. The carry-trade biased journalism explains the rebound from the angle that ECB refuses to push its balance sheet size up, therefore QE will not work, ECB is doomed etc. But the most important sentence in Draghi’s press conference was “the EUR is here to stay”. As France is heading to vote on budget, structural reforms, the likelihood of EUR to survive its existential threats is going up dramatically from the 75% probability we’ve assigned last August.

France MPs have, in the coming days, a choice between making history and helping EU to reform or listening to EU-Skeptics (financed, supported and marketed by Putin fight to make Eurasia happen and those who does not want good governance for there own personal interest). Should they follow the later, I have no definition to the MPs action but Treason. Calling it treason differ from refusing to accept democracy. We can accept democracy but when 40 MPs can push 65 millions French citizens lives, wealth, economy, jobs, prosperity and children future over a cliff. This is NOT democracy, it’s dictatorship. Does anyone believe one second that Putin wants any good to EU?

What make us confident? We will circulate our SNBDL Ltd. launch letter in the coming days (we are excited and thank everyone for your very kind comments and help). It will explain the way we think, what are our values, and why we are passionate about this business all together. We are confident because economic agents (lawmakers, business leaders, philosophers etc.) are leaving too many data which explains the posturing they have in the on-going game theory. It’s like playing poker while telling your opponents the cards you hold. This leads mathematically to play a collaborative game because the cost of the un-collaborative game is very high (specifically if one player have a hidden agenda).

We are not dismissing people anger in Naples, Catalonia, and Hong Kong. These represent the threats which push lawmakers and central bankers to adapt, improve our governance. But ISIL and Gold bugs (the other vigilantes) differs from the first category in the sense that they believe that our End is near (the FALSE idea that a meteor will stuck our little fragile planet and destroy human life is widely spread amongst our youth and in every place in the internet – this with the view that our institutions are rotten to the core are widely used in Jihadists hiring forums – We have been doing quite extensive research on this matter but SNBDL values refrain us from sharing the material because it helps Terrorists agenda: spread their message of hate -).

Alain Juppe, Fmr. French PM and candidate for 2017 Presidency, stressed that he wanted media to be fact checked. I support this idea. By fighting disinformation, we will defeat ISIL, reduce the outbreak of the Ebola virus, as well as accelerate the pressure on policymakers to improve governance. The pictures of some Chinese lawmakers expensive luxury watches was the trigger of the genuine actions taken, since 2013 CPC, by President Xi administration, to improve governance and reduce corruption in China.

Fed: Bullard is right, in our view, supporting what the Fed, and FOMC did to avoid the doom scenario. The recent data show that not only US deficit is reduced (which help improve solvency and avoid hyper-inflation) but also that the Fed balance sheet risk is coming down substantially. The recent inflation break-even development is the last nail in the fixed income doom scenario coffin. We continue to see USD depreciating in the near term while EUR, RMB and JPY narrative will move toward reflecting the renaissance of Europe, China and Japan economic story (which again our daily briefings are explaining every day).

NFP day: We see wage inflation to continue to indicate that there is no need for the Fed to act quickly. The recent geopolitical tensions as well as the USD strength are becoming headwinds to the US economy. The market is coming close to recognise it.

Development in Japan is heading toward the scenario we described in our Japan Update note. BoJ is staying calm, PM Abe continues to push for structural reforms, while market is starting to realise that, even in the history no country have escaped the condition Japan was in before PM Abe, this time might be different should Japan sticks to the plan. The likelihood of this scenario is greater than 75%.

Ebola:

CDC estimated to 100 the number of people who might have been affected by Patient 1. These are called Patients 2 (or the inner circle). This number is likely to increase in the coming day, before it decelerated. This is the Contagion effect as know in Mathematics – which works exactly the same way a Cat video become viral (change the verb “share it” by “infect” because in mathematical terms it does not really matter). In order to avoid the paranoia, the CDC, as we were expecting, have used the power of social media and @twitter, to : improve the information (fight disinformation) and spur the motivation for social media to help reduce the outbreak. The most widely spread FALSE belief is that Ebola can mutate easily. This is possible but highly unlikely. In films and TV-shows, scenarist like to make their stories appealing but the reality is sometimes (fortunately) less scary.

From our yesterday daily

Days after the WHO and the CDC revised upward their estimates for the development of the outbreak to as high as 1.4 millions by beginning 2015, the First Ebola case has been diagnosed in Texas. The 1st patient (i.e. 1st person known affected in a region – not brought affected from other places -) arrived to the US in September 20th from Liberia. The CDC has started an intensive search for anyone who might have come in contact with the patient while the person was infectious. While the spread of Ebola is less viral than Cat pictures on the internet, the fear is likely to edge up before CDC and WHO will show how capable and efficient are these two institutions. We have been discussing Apps and big data which would help report any symptoms to the public. Japan nationals and internet have been very effective mapping real-time the consequence of March 2011 Fukushima nuclear catastrophe. The same tools can be used today, although a very wide understanding of the symptoms is genuinely and urgently needed to make it succeed. We have been saying that even a non-lethal epidemic can spur fear, confidence collapse and economic headwinds. Unlike in the very good film “Contagion”, the tech tools and social media help can be very effective in reducing the spread of the disease and reporting the infectious agents. Doctors, which have been affected in Africa and brought to the US, have been saved. The experimental vaccine, which has a 100% hit ratio for primates, is likely to limit the casualties. Our only genuine fear, is that one of the affected has a political or ideological agenda and tries to spread the disease more widely. To our readers, there is no need to be stressed but please stay safe.

But more importantly, the first US case is likely to intensify, the global coordinated response which have started during the recent weeks. We have highlighted that the global coordination has been intensifying to: 1) fight disinformation (we were talking about it in our recent daily briefings), 2) provide short term medical assistance (France, US, Israel, etc.) with the help of military expertise – when numerous Western African countries are indicating the lack of medical personnel – , 3) provide financial support (wealthy donors, government funding, NGO help etc.), and 4) fast track the Ebola drug trial (the drug has had a very good result in the experimental tests).
Notwithstanding the on-going difficulties, and the short term negative economic effect, we continue to believe that the fight against Ebola will succeed and will clear the way to the increase in Africa investment and economic support (cf. our note “This time for Africa” which stressed that Africa is heading to experience the same development China had experienced when it joined the WTO in 2001 with positive consequences for both Africa and the world economy). The global coordination triggered by the response to the terrorist risk might help responding to the Ebola risk as well (due to the threat a dirty weapon using Ebola virus constitute). We disagree with the bet of Cocoa upward spiral because many analysis assumes the doom-and-gloom scenario which is unlikely to happen. We see the intensification of the worrying rhetoric as a part of the genuine action to keep the subject high in the leaders to do list.

Israel and Palestine continue to head into the right direction. PM Netanyahu said it all during his visit: a nuclear Iran should not come with an increase in the existential threat to Israel. While we are heading to a peace process, Israel needs to secure the goldilock conditions of such a scenario. This goes through a genuine commitment by Ayattolah Khamanei that Israel should continue to flourish in peace, leaving the existential threat to ISIL and the Califat-of-Paper Abu Bakr El Baghdadi. Make no mistake : Israel will never be destroyed. Because, Israel is one of the greatest idea, in my opinion, which human brain invented during our common 13.8bn years history in creating institutions and laws to reduce universe entropy. It has nothing to do with religion or ideology, this is just pure rational thinking and science. The idea of Israel remains me that while facing adversity one move on an try to empower himself to bring: prosperity (in our parlance: jobs, growth, adequate inflation, wealth, solvency etc.). This is what, I believe, Abraham did: creating the promised land of prosperity and peace. This is why Israel can never be destroyed. Even Hitler failed, Abu Bakr El Baghdadi is doomed and Ayattolah Khamanei have to play his cards well now. He can empower his people, improve Iran economy and growth, by recognising the obvious. In 20years finance careers I’ve never seen an investment as obvious as this one. [Don’t hesitate to ask for details as usual]

The likelihood of defeating ISIL continue to increase. Turkey decided to join the 40 countries coalition to fight ISIL. We were skeptical a couple of days ago on the timing of this event but we were convinced that Erdogan will seize the opportunity to make a historical breakthrough by becoming a new Ottoman Califat offering a modern Islam, more adapted to the XXI Century. We were saying that Herve Gourdel beheading and the Philippines militant threat to ham a German were sufficiently evil behaviour in 2014 to create the wake up call that each of us should make something to stop these unacceptable atrocities. How Russian media can argue that in this War against ISIL we should play by the international laws? Really?! According to Theresa May, ISIL could acquire a dirty weapon. I am scared by how evil El Baghdadi can be while Muslims are heading to the Hajj – Pilgrimage -.Muslims have the opportunity this year to explain Islam and pledge to save this peaceful religion. Should all muslims – Shia, Sunni, Maliki, Wahabi etc. – say in sync #NotInMyName, media should change ISIL name by Murderers In Iraq & Syria. Because what we commonly name ISIL is not Islam (not I) and not a state (not S). Let’s replace these two letter by “M” for Murderers. I bet that the Jihadists hiring will collapse after this simple action. The fight against the Murderers will be easy should we decrease the number of their new followers. This work like contagion or viral system. The final fight will come along with the genuine actions G-20 is saying it will undertake in Australia. This time there is no way to escape with half-backed solution: let get rid of bad governance. We discussed it since 2009, we have increase the data to track this bad governance since 2012. This power have moved from states to the public. Fortunately, anecdotal evidences (from UK to China) indicate that lawmakers have the same goal reducing bad governance. This is not because that’s a nice thing to do but because this were profits, shareholders values, pensioners interests, workers interests, consumer interests are. Again physically we tend to reduce Entropy, this since our first day 13.8 billions years ago (Oil prices development and the number of violent deaths are an amazing reflect this fact).

While Russia continue to prepare its isolation (VTB’s says consider that capital control is not the end of the world), Putin stays put and keep his narrative: the cost will be more harsher for EU than for Russia. Unfortunately, for President Putin, facts have no religion. Russia economy is collapsing and the Saudi oil prices cut, Iran negotiation amongst other thing are pushing oil prices to a free fall spiral and threatening the stability of the government (an Oil price at $75 will push Putin out). In our Energy Update (our call that oil might go as low as $80 for WTI) we’ve highlighted the trends we observe now. These are not only providing a boost to EU (currently mistakenly analysed by many XX Century economists as a deflationary risk) but also increasing the current Russian administration existential threat. We forecasted last February that Russia will have to go through a period of isolation, will create Eurasia by annexing Eastern Europe (we still unsure where the division will take place). We stick to this scenario. However, we are working on an alternative scenario, where the speed of oil prices collapse may over through Putin administration and oligarchs before President Putin reached his messianic goal (many economists agree with the view that some of Russian President speeches are messianic – 2007 Munich is a very telling speech-).

Ukraine President is taking the “good governance bill” to the floor. This on one hand increase the likelihood of our scenario that Ukraine – West will become a new Poland but it increases short term the risk of more actions of “bad governance agents: the self designated Eastern Republics”). I wonder what kind of economic prospect will have these Russian federation satellite.

Because we are an advisory company, here is our free advise to FSB and Putin administration : change your methods there are too obvious in the face of big data because these have been built for the XX Century.

Hong-Kong political reforms protest: Events are developing as we were expecting

Pro-democracy protests gained more traction this weekend. Mainland sticks to its view that any political reform should bind by the “basic law”. We do not see HK and Mainland China governments to accept any substantial change in the short term.

However, unlike with Tian’anmen square protest, we see Chinese leadership being less “harsh” fighting the protests, as we acknowledge Chinese leader fear vis-a-vis social media power. In the medium term, we see China devoting more democratic say in HK. Our forecast is built on the view that the Chinese government is fearing a HK political change to threat its reform agenda. President Xi wants to be seen as the strong man to fight conservatism push back to the reform, specifically ahead of the IV-th Plenum, which will focus on improving governance (which creates an important shift of power from “princelings” to the reformists). After the IV-th Plenum we see President Xi and HK government coming with a middle ground solution, which could take the form of a split designation of leaders. Democracy comes with cost and responsibility. We consider that President Xi long-term objective of political reform to be intact, but he fears that “House of Cards” like politics could jeopardise his aim to avoid the middle-income trap risk should interest groups (Raymond Tusk character in the TV-show) to derail his genuine fight against conservatism and vested interests.

Catalonia: We were saying “calls for independence referendum is increasing pressure on both Madrid and EU to move forward to offer better conditions and better narrative to the public. We see PM Rajoy taking constitutional actions to deter Catalonia from conducting the referendum, at a moment where more the referendum is gaining support from the independence forces all over the world. Madrid may accept to open discussion to devote additional autonomy to Catalonia in order to reduce the pressure. This story is likely to push EUR existential threat higher short term, but we consider that EUR is likely to rebound by the end of this year, when these threats will be repriced as less likely.” (daily briefing Sept. 30 2014). Catalonia decision to suspend formal campaign is the first step in our constructive scenario.

In February 2014, at Sunnylands, Presidents XI and Obama had a 15minutes talk in private. Since then, I was questioning what two of the most influential leaders of the world can exchange in 15minutes? I imagined then, that they’ve decided: “let’s make a better future by improving governance now”. This “dream” is starting to be an overwhelmingly reality as indicated by subsequent events, actions etc. This future seem to be heading toward a multi-regional coordinated global governance. FM Wang Yi visit to the US is another piece of this scenario. China is improving the governance for its own good (as well as the world economy good) in change it wants a share as a reserve currency, take it time when reforming its political system (deal with Hong Kong) and manage the peace equilibrium in Asia. This is increasing the pressure on Japan to deliver its reform agenda to improve its economy and take the other side of the balance of power in the region.

President Obama gave a speech on the Economy to help Democrats to keep the Senate majority. The speech did not come with any new news. However, the agenda presented could be derailed and even create a doom scenario should GOP won the Senate majority. It would jeopardise reforms (when China and EU are reforming) such as immigration, education, infrastructure etc. The doom scenario would take place should they resumed their aim to impeach the US President. We are not siding here against GOP from any ideological prospect. We do believe that it’s in GOP interest to loose, to focus on it’s internal civil war against the Tea Party. The GOP without Tea Party can be a very important driver to bi-partisan reforms agenda. With the Tea Party, not only GOP threatens the US economy but it does also threaten its own future. Remember : GOP abolished slavery. It’s now seen as in a War against Women.

EU: the glass half empty view is that unemployment rate is still very elevated (23.3% in August) but it’s coming down, even before EU Commission President elected Juncker’s infrastructure plan, digital initiative, EU Council President elected Tusk’s energy union, are not in place. Though this story combined with Catalonia independence can lead, mistakenly, people to believe that “la Bastille” will be taken in days, we disagree with this view, as those who see a bloody revolution are being hired by ISIL and alike, while the overwhelming youth are working genuinely to improve their lives (alike their ancestors, Youth are adapting to the XXI Century to survive).

From another subject, Russia continue to dream that it’s communication, it’s EU-skeptics allies in the parliament and its fake-cease-fire in Ukraine will help lift sanctions. But the Chancellor Merkel said it all “Merkel Evokes Cold War in Warning of Long Ukraine Crisis”. Chancellor Merkel description is very important because she is amongst the few EU leaders which have experienced the cold war from inside the other camp, she speaks Russian and has a deep understanding of KGB methods.

France starts to reveal 2015 budget measures. Local municipalities spending to be reduce by 3.7bn. More news are due in the coming days, we will keep you posted as the information is announced. Designated Economy Commissioner Moscovici Vows to Objectively Examine France’s Budget Deficit. Although the French Assemblee Nationale vote will be close, MPs will do the necessary to avoid the nuclear threat of a “dissolution” (even Fmr. Pres. Sarkozy does not want it because it could trigger a political crisis). The threat is genuinely coming from FN Marine Le Pen which could provide a considerable help to Russia in its struggle to lift sanctions.

Disinformation about China actions in Africa is on the rise. We have indicated, in our research notes, that China objectives are to invest in Africa, help improve potential growth, increase education, bring prosperity in exchange of delocalising labor intensive manufacturing in Africa. Instead of focusing on the fact that the global economy is heading to “discover” two new continents : sub marine and Africa, with a genuine win-win scenario, every news media is comparing China to the US in the XVII century. In order to improve it narrative, China will have to deal with Dalai Lama and Tibet issue. We were saying that it will take place though we think this will take time, because it represent the latest step toward democratisation. Even in countries like France which has a long history of democracy, Marine Le Pen followers and MPs are vocal of their objective to destroy “immigrants” (a name given to French citizen with color skin).

RBA is working to reduce housing asset price frothiness through macro prudential actions. This is in line with the views we’ve expressed recently. But Australia continues to be seen, by markets, as a derivative to the old Chinese model (i.e. commodity provider). This view explains the high beta between Australian assets and commodity prices (or China demand for commodities). Banks shares are suffering from the combination of the increase perception of increase in risks and additional macro prudential constants to curb housing prices frothiness. Small business defined the “goldilock range” for AUDUSD to be [.90-.94]. This level is much higher than RBA own assessment (based on PPP models). We have been criticising PPP models because they do not factor any structural changes. These assume that neither China nor Australia are conducting their rebalancing agenda. We do believe that the current weaknesses offers genuine opportunity to benefit from the other drivers to the Australian economy which are not related to commodities. We see the current Australian Dollar weakness to continue at least until the USD start to weaken again when markets will realise that it has beaten too much on a quick rate normalisation. Meanwhile, from our previous daily briefing, we have gathered sufficient support to the view that the drivers of the Australian GDP are moving toward: 1) education, health and finance services provider to Asian neighbours, 2) innovation and digital sector, 3) energy resources export to Japan (the later contributes to our constructive view that the current negative Japan Energy Trade deficit will rebalance in the medium term – reducing Japanese Government bonds solvency risk – ).

New Zealand: Fontera payout cuts fuel concerns over NZ economic prospects. This increases the pressure on new PM Key Cabinet to accelerate rebalancing the economy and reforms. We have been indicating that NZ has already started a genuine shift toward new Tech agriculture, health and education services directed to Asian neighbours. The fact that PM Key secured another term supports our constructive scenario on NZ.. This constructive scenario narrative is currently overshadowed by the “search for yield” (or interest rates differential) and RBNZ fight against excessive carry trade effects.

Japan: inflation softening along with economic downgrade was widely expected as a result of the 1st VAT hike (cf our strategic note Dec 26th 2013). We see BoJ to keep the bazooka of QQE-2 un-tested until the JPY excessive depreciation and JGB solvency risk came down * investors are still short JGB expecting a Japan crisis *. The 2nd VAT hike will require some stabilisation at the current levels, though we expect that PM Abe will undertake the 2nd hike in steps, because BoJ is unlikely to be sufficiently confident to move ahead with more QQE while JPY is accelerating its depreciation. PM Abe voiced concerned over the JPY rapid depreciation, as he pointed (rightly in our opinion) to the increase in energy cost, which deteriorate further the energy trade deficit – and increase the risk of JGB solvency -. The Prime Minister confirmed in his Diet address to pursue Abenomics 3rd arrow.

However, BoJ might do some adjustment to its monetary program but nothing excessive. The news flow out of this weekend G20 meeting shows that the global community is gently pressing the government and the BoJ to pursue structural reforms, economic rebalancing, solvency improvement (through VAT 2nd hike commitment) and adequate monetary policy (not too hot – to avoid a crisis – not too cool – to avoid derailing the on-going portfolio rebalancing approach -). Japan continues to face heavy public pressure to rebalance its energy reliance to nuclear. While we believe that Japan will continue to press for reopening nuclear plants (when Nuclear Watchdog gives his green light), the medium to long term trend is that Japan will use Trade negotiation with neighbours to secure new energy sources while using this pressure to deregulate and move forward with Abenomics 3rd arrow (please see our Japan update for more on our views). We are not surprise by the fact that Russian news media are reporting the pushback to reopening nuclear plans, ahead of Japan-Russian talks (about sanctions, energy agreement, and disputed territories).

Central banks News

Euro Jumps Most in 7 Months on Lack of ECB Details; Dollar Drops

Andrea Wong and Rachel EvansOct 02, 2014 5:13 pm ET

Oct. 2 (Bloomberg) — The euro climbed the most since March as the European Central Bank failed to provide details on the size of a plan to buy private debt, curbing bets it would expand the ECB’s balance sheet enough to weaken the currency.

The yen advanced as Japanese Vice Finance Minister Nobuhide Minorikawa said weakness in the currency is hurting some companies by driving up energy prices. Australia’s dollar rebounded from an eight-month low, while the pound fell and the U.S. currency declined. The euro gained from almost a two-year low as ECB President Mario Draghi unveiled plans to buy covered bonds and asset-backed securities for at least two years.

“It’s probably a relatively short-lived rally,” Jennifer Vail, head of fixed income at U.S. Bank Wealth Management in Minneapolis, said in a phone interview. “The next negative economic print is going to weigh on the euro again. I don’t think it has substantial legs. It’s kind of bouncing off the bottom.”

The euro jumped as much as 0.6 percent, the biggest intraday increase since March 6, to $1.2699 before trading at $1.2669 at 5 p.m. New York time, up 0.4 percent. It touched $1.2571 on Sept. 30, the lowest level since September 2012.

ECB Leaves Questions About Stimulus Size

European Central Bank head Mario Draghi underlined the bank’s willingness to step up its economic stimulus efforts — but left open questions about the size of upcoming measures after the bank’s meeting Thursday.

Markets fell after his statements, as some investors were hoping for a stronger commitment to more stimulus.

Germany’s main index declined 2 percent, France’s 2.8 percent and Italy’s a whopping 3.9 percent. The euro rose to $1.2654 from $1.2630 earlier in the day, a sign that currency traders were scaling back their expectations for future monetary stimulus.

Draghi warned that the economic recovery in the 18 euro countries « weak, fragile, and uneven » and held out the eventual prospect of doing large scale bond purchases, or quantitative easing, later on if the economy gets even worse.

Yet his remarks during a press conference mostly focused on stimulus programs the ECB has already unveiled in June and September and will carry out in coming months. They include ultra-cheap loans to banks and purchases of bundles of bank loans.

Central Bank may introduce income limits for mortgages

The Central Bank of Ireland is considering imposing limits on the income multiples financial institutions here use when giving residential mortgages.

It is understood that the regulator will issue a consultation paper this month on the imposition of limits as it seeks to gather views from the banking sector and other interested parties.

This move comes as property prices begin to soar again, with Dublin prices up 25 per cent in the year to August.

Bullard Says Fed Is ‘Patient’ Given Progress on Unemployment

Federal Reserve policy makers are being “very patient” about raising interest rates, considering that they are ahead of schedule on driving down unemployment, St. Louis Fed President James Bullard said.

The Fed’s asset purchases have been far more successful than expected in reducing the jobless rate, as the central bank prepares to halt bond buying at the end of this month, Bullard said in a presentation today in Tupelo, Mississippi.

Bullard also said officials are behind the schedule they envisaged for raising interest rates when the Fed announced the campaign two years ago.

“A policy rate liftoff in the first quarter of next year would exhibit considerable patience relative to the plans laid out in September 2012,” he said in prepared remarks.

Most U.S. Stocks Rise Amid Small-Cap Rally; Brent Tumbles

Most U.S. stocks rose, as small cap shares rebounded on speculation selling was overdone and as concern over Europe’s stimulus plan faded. Brent tumbled to the lowest since June 2012.

The Standard & Poor’s 500 Index was little changed at 4 p.m. in New York, erasing an earlier slide of 1 percent. The Russell 2000 Index (RTY) jumped 1 percent as small caps rebounded from a selloff yesterday. The Stoxx Europe 600 Index sank 2.4 percent, the most since June 2013. The euro rose as much as 0.6 percent, advancing for the first time in three days versus the dollar. Treasuries weakened after gaining the most in more than eight months yesterday.

The European Central Bank left its main refinancing rate at 0.05 percent at its meeting today in Naples, Italy. Draghi said the central bank will buy assets for at least two years to boost inflation and economic growth in the euro area. U.S. jobless claims unexpectedly dropped last week. Pro-democracy leaders in Hong Kong said they will escalate protests if their demands aren’t addressed.

Economic News

Yen squeezes higher as disappointing PMIs dim mood, euro eyes ECB

(Reuters) – The safe-haven yen held onto solid gains early on Thursday after disappointing manufacturing surveys from around the globe triggered a run on risk, while the euro stayed defensive as a policy review by the European Central Bank loomed.

The euro slid to a three-week low of 137.39 yen EURJPY=R, the dollar retreated to 109.08 JPY= from a six-year peak of 110.09, while the Australian dollar briefly dipped below 95.00 AUDJPY=R for the first time in seven weeks.

Investors warmed to the Japanese currency after a slew of surveys showed German factory activity shrank for the first time in 15 months, China’s manufacturing sector barely grew, while the United States slowed more than expected.

METALS-Copper slides to 5-month low as ECB fails to impress

* Aluminium falls to weakest in three months

* Investors worry about growth in Europe, China

* Dollar seen extending rally, weighing on commodities (Updates with closing prices)

LONDON, Oct 2 (Reuters) – Copper and aluminium slid to fresh multi-month lows on Thursday after the European Central Bank’s monthly meeting failed to inspire confidence about future growth, stoking fears about metals demand.

Prices were also vulnerable to further pressure from a strong dollar as data showed that the U.S. economic recovery gained pace, supporting the case for a rise in interest rates.

Benchmark copper on the London Metal Exchange (LME) closed down 1.2 percent at a five-month low of $6,600 a tonne.

UPDATE 2-IMF warns of « mediocre » growth, calls for coordinated action

WASHINGTON, Oct 2 (Reuters) – The global economy could be stuck on a ‘new mediocre’ growth path with high debt and unemployment unless policymakers open up labor markets, invest in infrastructure and reform fiscal policies, the head of the International Monetary Fund warned on Thursday.

Speaking after European Central Bank President Mario Draghi announced a plan to buy bundled debt in order to boost Europe’s flagging economy, Christine Lagarde said the euro zone in particular risks sinking into a morass of low growth as it grapples with high unemployment and low inflation.

The United States is a rare bright spot, though its recovery from the 2007-09 recession is its slowest since World War Two. Japan’s « Abenomics » is also struggling after second-quarter GDP in the world’s third largest economy shrank by an annualized 7.1 percent, showing the mounting risks to the global economy ahead of the fund’s fall meetings next week.

Ebola

Ebola:

From our yesterday daily

Family that hosted Ebola patient confined to home

October 2, 2014 8:09am DALLAS (AP) — About 80 people are now being monitored for symptoms of Ebola in Texas, a Dallas County Health and Human Services spokeswoman said Thursday.

Texas Ebola patient, Thomas Eric Duncan, may have had contact with up to 100 people

Public health officials in Texas said Thursday that as many as 100 people may have had contact with the Liberian man diagnosed with Ebola. Four of those people, at least two of whom are family members, have been ordered to remain at home in an attempt to prevent the spread of the disease.

Still, authorities continued to stress that only Thomas Eric Duncan, the first person to be diagnosed with Ebola in the United States, had exhibited any symptoms of the disease.

“The only person who’s had symptoms is Mr. Duncan, who’s in the hospital,” Dallas County Judge Clay Jenkins said during

a news conference Thursday, where county officials provided an update on their response. Jenkins is the top elected official in Dallas County.

Nephew of US Ebola Patient Forced to Call CDC to Get Action Taken: Reports

MOSCOW, October 2 (RIA Novosti) – The first person diagnosed with the Ebola virus in the United States did not receive proper help before his nephew personally urged the US Centers for Disease Control and Prevention (CDC) to take action, NBC News reported Thursday.

« I called CDC to get some actions taken, because I was concerned for his life and he was not getting the appropriate care. . . I feared other people might also get infected if he was not taken care of, and so I called them to ask them why is it a patient that might be suspected of this disease was not getting appropriate care? » Josephus Weeks, nephew of the first US Ebola patient, is cited as saying by NBC News.

The first case of Ebola virus infection was confirmed by the US Centers for Disease Control and Prevention (CDC) and Texas Health Department in Dallas on Tuesday. The patient was later identified by officials in Liberia as Thomas Eric Duncan, a resident of Monrovia.

Ebola crisis: US cameraman diagnosed with virus; Liberia to prosecute patient in Texas

A 33-YEAR-OLD American working in Liberia as a freelance cameraman for NBC News has been infected with Ebola and will be flown back to the US, the network says.

“The freelancer came down with symptoms on Wednesday, feeling tired and achy. As part of a routine temperature check, he discovered he was running a slight fever,” said NBC’s website on Thursday.

“He immediately quarantined himself and sought medical advice.”

The man, who was only hired on Tuesday, went to a Medecins Sans Frontieres (MSF) treatment centre to be tested on Thursday, and the positive result came back just under 12 hours later.

Ebola stabilising in Liberia, doomsday forecasts wrong -president

DAKAR Oct 2 (Reuters) – Liberia’s President Ellen Johnson Sirleaf says the Ebola crisis is stabilising in her country and new data will soon prove that warnings from U.S. and U.N. experts of tens of thousands of cases were « simply wrong ».

The comments, made to France 24’s English news channel late on Wednesday, follow forecasts from the World Health Organisation that 20,000 people could be infected with Ebola by early November. The U.S. Centers for Disease Control has warned of hundreds of thousands of cases if swift action is not taken.

« We are beginning to see a stabilisation even in Monrovia which has been hit the hardest, » Johnson Sirleaf said, referring to Liberia’s capital city.

The worst Ebola outbreak on record was first confirmed in Guinea in March but it has since spread across most of Liberia and Sierra Leone, killing more than 3,300 people, overwhelming weak health systems and crippling fragile economies.

Liberia has recorded the most deaths – nearly 2,000 – and aid agencies say they still need hundreds of beds for Ebola patients in the capital. The lack of beds means Ebola patients are being turned away and sent back to their communities, further spreading the infection.

Air industry battles Ebola with heat scans and handwash

* Emirates chief says demand to Africa from Asia suffering

* IATA says air travel safe, transmission risk onboard low

* Passengers undergo temperature scans at African airports

* Brussels, Royal Air Maroc still flying to crisis areas

BERLIN, Oct 2 (Reuters) – Airlines and airports handling travel to countries worst hit by the Ebola epidemic are trying to prove that flying to West Africa is safe, following concerns that the first case diagnosed in the United States could curtail worldwide services.

Some airlines have already suspended or cut back flights since the summer, and only one European carrier now offers direct services to Guinea, Sierra Leone and Liberia. However, those still operating have taken measures to protect passengers and crew, along with airports in the region and beyond.

Gaza

Netanyahu warns Obama: Don’t let Iran ruin what you worked so hard to put in place

Banner Icon A NUCLEAR IRAN? A skeptical Israeli Prime Minister Benjamin Netanyahu on Wednesday directly warned US President Barack Obama not to accept any Iran deal that would allow Tehran to become a « threshold nuclear power. »

US anger at new Israeli settlements and Israel’s skepticism over American nuclear diplomacy with Iran stirred new discord Wednesday between President Barack Obama and Prime Minister Benjamin Netanyahu as they met for White House talks.

Several hours after Netanyahu emerged from the White House after 90 minutes, the White House publicly rebuked the Israelis over a plan for 2,600 new settlements in annexed east Jerusalem.

Netanyahu had earlier used a photo-op with journalists in the Oval Office to deliver a broad hint that his government remained concerned about the direction of talks between Iran and world powers on constraining the Islamic Republic’s nuclear program.

The leaders were meeting for the first time since their subordinates swapped some of the most pointed rhetoric in years between the allies, over the Gaza crisis.

While stressing the « unshakeable » bond between Israel and the United States, Obama and Netanyahu have often struggled to keep their differences on key issues under wraps, and Wednesday was no different.

Palestinians draft U.N. resolution on ending Israel occupation

(Reuters) – The Palestinians have drafted a U.N. Security Council resolution calling for an end to Israeli occupation by November 2016, which they have shared informally with Arab states and some council members, U.N. diplomats said on Wednesday.

The text has not been formally circulated to the full 15-nation Security Council, a move that can only be done by a council member, said the diplomats, speaking on condition of anonymity. As a result, it remains unclear when, and if, it will be put to a vote.

It calls for « the full withdrawal of Israel … from all of the Palestinian territory occupied since 1967, including East Jerusalem, as rapidly as possible and to be fully completed within a specified timeframe, not to exceed November 2016. »

The draft, which was obtained by Reuters, is likely to be met with opposition from veto-wielding member the United States, a key ally of Israel.

Analysis: Netanyahu adopts hopeful tone with US president

WASHINGTON – Prime Minister Binyamin Netanyahu’s address to the UN this week was long on talk of regional threats and dangers, and short on words of hope. His short statement alongside US President Barack Obama on Wednesday was reversed: Long on hope and short on talks of threats and fears.

The prime minister knows his audience.

“I remain committed to a vision of peace of two states for two peoples, based on mutual recognition and rock-solid security arrangements on the ground,” Netanyahu said. “And I believe we should make use of the new opportunities, think outside the box, see how we can recruit the Arab countries to advance this very hopeful agenda.”

Iraq & Syria

Turkey approves military operations in Iraq, Syria

ANKARA, Turkey (AP) — Turkey’s parliament gave the government new powers Thursday to launch military incursions into Syria and Iraq, and to allow foreign forces to use its territory for possible operations against the Islamic State group.

Iraq Security Forces Violate Int’l Law in Operation Against IS: UN Report

MOSCOW, October 2 (RIA Novosti) – Iraqi security forces (ISF) have violated international human rights law in their efforts to combat Islamic State (IS) militants, which led to a number of civilian deaths, a UN report published Thursday revealed.

« An increasing number of civilian casualties have been attributed to airstrikes carried out by ISF. While there is no evidence that ISF have deliberately targeted civilians, the strikes have nonetheless resulted in in significant civilian deaths and injuries and destruction of civilian infrastructure, » the 29-page report produced jointly by the UN Assistance Mission for Iraq (UNAMI) and the Office of the UN High Commissioner for Human Rights said.

« These included air strikes and shelling as well as conduct of particular military operations or attacks that may have violated the principles of distinction and proportionality under international humanitarian law, » it added.

The report, based on nearly 500 interviews and covering the period from July 6 to September 10, also details gross abuses of human rights that have been perpetrated by the IS in Iraq.

« These include attacks directly targeting civilians and civilian infrastructure, executions and other targeted killings of civilians, abductions, rape and other forms of sexual and physical violence perpetrated against women and children, forced recruitment of children, destruction or desecration of places of religious or cultural significance, wanton destruction and looting of property, and denial of fundamental freedoms, » the report said.

ISIS war crimes in Iraq include mass executions, sex slavery, UN says

Islamic State in Iraq and Syria insurgents have carried out mass executions in Iraq, abducted women and girls as sex slaves, and used child soldiers in what may amount to systematic war crimes that demand prosecution, the United Nations said on Thursday.

In a report based on 500 interviews with witnesses, also said Iraqi government air strikes on the Sunni Muslim militants had caused « significant civilian deaths » by hitting villages, a school and hospitals in violation of international law.

Turkey steels for action as Islamic State advances on Syrian border town

(Reuters) – Turkey’s parliament authorized the government to order military action against Islamic State on Thursday as the insurgents tightened their grip on a Syrian border town, sending thousands more Kurdish refugees into Turkey.

The vote gives the government powers to order incursions into Syria and Iraq to counter the threat of attack « from all terrorist groups », although there was little sign that any such action was imminent.

The mandate also allows foreign troops to launch operations from Turkey, a NATO member which hosts a U.S. air base in its southern town of Incirlik, but which has so far resisted a frontline role in the military campaign against the insurgents.

« The rising influence of radical groups in Syria threatens Turkey’s national security… The aim of this mandate is to minimize as much as possible the impact of the clashes on our borders, » Defense Minister Ismet Yilmaz told parliament.

Russia

UPDATE 12-Oil prices deepen slide on glut worry; U.S. crude bounces

* Saudi oil price cuts may signal war for market share

* Fall in Cushing stocks, unemployment claims boosts WTI

* Some in OPEC talk of cuts, Gulf members see winter rebound

* Some expect price bounce after 3 months of losses (Recasts lead, adds Cushing data para 2)

NEW YORK, Oct 2 (Reuters) – Global oil prices deepened a three-month rout on Thursday to hit their lowest since mid-2012, fuelled by growing concerns over weak demand, abundant supply and signs that Saudi Arabia is in no hurry to cut output.

U.S. crude rebounded after falling below $90 for the first time since April last year as traders focused on data showing a sharp drop in stocks at the Cushing, Oklahoma, pricing hub as well as a reported decrease in U.S. unemployment claims.

Brent crude for November delivery also ended well off the day’s low, settling 74 cents lower at $93.42. It earlier sank to $91.55, its lowest since June 2012.

Daimler cuts car market forecast as Europe wobbles

(Reuters) – German luxury automaker Daimler (DAIGn.DE) has cut its growth forecast for the global car market, blaming cooler demand in emerging markets and a plunge in Russian sales which has put a fledgling European industry recovery in jeopardy.

Speaking as the Paris auto show opened to the media on Thursday, Daimler chief executive Dieter Zetsche said he now expected the global car market to grow by 3-4 percent this year, down from a previous forecast of 4-5 percent.

Other executives shared his caution, particularly over Europe where a six-year sales slump has left demand around 20 percent below pre-crisis levels and sluggish economies have put a question mark over whether the gap will close anytime soon.

« Perhaps we will arrive at 13 million or 13.5 million (overall vehicle sales in Europe). But the market won’t return to (the pre-crisis level of) 15.5 million, I’m sure of it, » Martin Winterkorn, the chief executive of Europe’s biggest carmaker Volkswagen (VOWG_p.DE), said on the eve of the show.

Putin Trumpets Economic Strength, but Advisers Seem Less Certain

MOSCOW — President Vladimir V. Putin did his best to paint a rosy picture of the Russian economy in a speech to business leaders on Thursday, saying the country remains “open to the world” and has a plan for growth in spite of American and European sanctions.

Appearing relaxed and joking with the financiers gathered for a banking conference, Mr. Putin tried to soothe worries that Russia is hemorrhaging money in capital flight, headed into a deep recession with rising inflation and a collapsing ruble and, according to stubborn rumors, preparing to impose capital controls if investors continue to take money out of the country.

Russia is well prepared to hold out against hard times, he said, because of its still-sizable foreign currency reserves of about $460 billion. To attract investment, he said jokingly as he began a question-and-answer session, “all I have to do is smile and show the devil is not as frightening as he seems.”

VTB’s Soloviev Says Capital Controls Not ’End of World’

Returning to capital controls in Russia eight years after the country lifted curbs on outflows would not be “the end of the world,” said the second in command at VTB Group, a state-owned lender hit by sanctions over Ukraine.

“If you look at most of the emerging markets, most of them do — in India, China and Brazil — have some sort of capital controls. Everyone is happy, lives there and invests there,” Yuri Soloviev, VTB’s first deputy president, said in an interview yesterday at a Moscow investment forum.

“Even if the central bank would consider capital controls, it’s not the end of the world,” Soloviev said.

German Chancellor urges Russian president to use influence over Ukraine rebels

JPMorgan: Information on 76 mn households hit in data breach

NEW YORK: JPMorgan Chase said Thursday that information such as names and addresses for 76 million household customers and seven million businesses was compromised in a data breach this summer.

But the largest US bank said there was no evidence that critical account information such as account numbers, user identities or social security numbers were stolen by the hackers.

The bank « continues not to have seen any unusual customer fraud related to this incident, » JPMorgan said ..

Hong Kong

Hong-Kong political reforms protest: Events are developing as we were expecting

HONG KONG PROTESTERS SET FOR TALKS; GOVT HQ SHUT

HONG KONG (AP) — Hong Kong protest leaders on Friday welcomed an offer by the territory’s leader of talks to defuse the crisis over demonstrations seeking democratic reforms, though they continued to demand he resign and maintained barricades around government headquarters, frustrating staff going to work.

Student protesters had threatened to surround or occupy government buildings if Chief Executive Leung Chun-ying did not step down by midnight Thursday, and police had warned of serious consequence for the protesters, who have grown into the biggest challenge to Beijing’s authority since China took control of the former British colony in 1997.

Hong Kong protesters poised to occupy buildings if leader won’t budge

Hong Kong’s leader is willing to let pro-democracy demonstrations blocking large areas of the city go on for weeks if necessary, a source close to him said, while defiant protesters vowed they would not budge.

Hong Kong’s streets were calm early on Thursday while police largely kept their distance from the tens of thousands of mostly young people keeping up protests, now nearly a week old, in the heart of the global financial hub.

The protesters want Hong Kong’s leader, Leung Chun-ying, to step down by the end of Thursday and have demanded China introduce full democracy so the city can freely choose its own leader. Leung, appointed by Beijing, has refused to stand down, leaving the two sides far apart in a dispute over how much political control China should have over to Hong Kong.

Hong Kong chief vows to remain as tensions deepen with pro-democracy protesters

Catalonia

US News

[Please see other paragraphs for economic analysis]

Chinese Foreign Minister Wang Yi visits U.S.

BEIJING, Oct. 2 (Xinhuanet) — Chinese Foreign Minister Wang Yi has held talks with senior U.S. officials in Washington. They exchanged ideas on various regional and international issues. And the foreign minister asked the United States not to meddle in China’s internal affairs.

Raising the issue of Hong Kong first, U.S. secretary of state John Kerry called for restraint.

« As China knows, we support universal suffrage in Hong Kong in accordance with the basic law. And we believe in open society with the highest possible degree of autonomy, governed by the rule of law is essential for Hong Kong’s stability and prosperity. And we have high hopes that the Hong Kong authorities will exercise restraint and respect protesters right to express their views reasonably, » John Kerry said.

Foreign Minister Wang Yi responded, saying Hong Kong was a local issue.

‘Let’s do this,’ Obama tells supporters regarding his goals on issues

EVANSTON, Ill. — President Obama assured an audience peppered with old friends and colleagues that he wasn’t making a campaign or political speech.

And then he did.

In a speech grounded in the economy and the gains it has made in recent years, Obama touched on his goals for issues including immigration reform, education, infrastructure, clean energy, equal pay for women and high-quality preschool. He repeatedly punctuated his views on them with “Let’s do this,” a forward-looking refrain to propel those initiatives — and Democrats — across the finish line in November and for the rest of Obama’s term. The speech came shortly after Obama hit the campaign trail for the first time, appearing at private events for Illinois Gov. Pat Quinn, who is embroiled in a tough re-election fight.

The speech is a return to Obama’s theme of economic populism — one that Democrats have asked him to reprise ahead of the midterm elections.

“I am not on the ballot this fall. Michelle’s pretty happy about that. But make no mistake: these policies are on the ballot. Every single one of them,” Obama said. “This isn’t some official campaign speech or a political speech, and I’m not going to tell you who to vote for — even though I suppose it is kind of implied.”

Europe News

Draghi Says ECB Not Guilty as Protesters Target Austerity

President Mario Draghi said the European Central Bank is not responsible for causing the economic woes that brought protesters into Naples’ streets as the institution’s leaders met in the southern Italian city.

“We have an understanding for the reasons that are behind these protests,” Draghi said during a news conference after today’s meeting. “What I find in need to be corrected is the perception that the ECB” is “guilty and is at the origin of this situation.”

Earlier today, hundreds of people marched through rainy Naples to protest against austerity policies as central bank chiefs from the 18-nation euro area met nearby inside a former royal palace. Some of the protesters scuffled with police.

Draghi Opens Door to Buying $18 Billion of Portuguese, Greek ABS

Mario Draghi’s decision to allow the European Central Bank to buy asset-backed securities from junk-rated nations gives him an extra 14 billion euros ($18 billion) of debt for his purchase program.

The ECB President’s ruling allows him to buy as much as 11.2 billion euros of ABS from Portugal and 2.7 billion euros from Greece, according to data compiled by JPMorgan Chase & Co. Both nations hold sub-investment grade rankings.

The central bank will buy assets for at least two years, with purchases of covered bonds starting this month followed by asset-backed notes later this quarter, Draghi said at a press briefing in Naples, Italy. The plan is designed to boost inflation and economic growth in the euro area.

“If the ECB aims to provide funding to the real economy it makes perfect sense,” said Matthias Wildhaber, a money manager at Swiss & Global Asset Management AG in Zurich. “That is where their measures will have the biggest impact. Buying AAA rated German auto ABS for example would not really help the economies in southern Europe.”

Sarkozy bid divides Chirac couple over 2017 election

The prospect of Nicolas Sarkozy returning as candidate for the French presidency in 2017 has split opinion between former President Jacques Chirac and his wife Bernadette.

Mr Chirac, who makes no secret of his distaste for Mr Sarkozy, has endorsed a different man for the ticket, choosing former Prime Minister Alain Juppe.

But Mr Chirac’s wife went on air to disparage Mr Juppe’s appeal to voters.

Only last week, Mr Sarkozy launched his political comeback.

At a rally in the northern city of Lille, he opened his campaign for the leadership of his centre-right party, the UMP, seen as a step towards winning the party’s eventual primaries for 2017.

Clean-Energy Spending at $175 Billion on Chinese Rise

About $175 billion was spent globally on renewable energy projects during the first three quarters, up 16 percent from the same period last year, with Chinese solar investment at a record, according to a Bloomberg New Energy Finance report.

Spending in the third quarter gained 12 percent to $55 billion from $48.9 billion a year earlier, the London-based research company said today in statement. Almost $20 billion of that was in China, where solar investing soared to $12.2 billion from $7.5 billion.

The world’s largest solar market may add 14 gigawatts of capacity this year, almost a third of the global total, as more large-scale projects are built, BNEF said. Japan, the second-biggest solar market, increased spending 17 percent to $8.6 billion in the third quarter.

“The patterns of investment are different geographically, with China taking more of a role and other parts of Asia coming on strong, particularly Japan,” Ethan Zindler, a BNEF analyst based in Washington, said in an interview yesterday. “The makeup is really quite different compared with as recently as 2011 or 2012, when Europe accounted for a major share of the total.”

China News

Zuma accused of selling SA’s sovereignty to China

The Dalai Lama on Thursday accused South Africa of “bullying a simple person” after authorities there failed to give him a visa to attend a summit of Nobel peace laureates.

His comments, at a ceremony to mark the 25th anniversary of his 1989 Nobel peace prize, followed claims that the summit of laureates had been cancelled after several other laureates pulled out in protest.

“The Nobel Peace Summit scheduled to be held in South Africa to honour the legacy of our fellow laureate, the late Nelson Mandela, has been cancelled as the South African government wouldn’t allow me to attend it,” the Dalai Lama said in a speech in the northern Indian town of Dharamshala where he is based. “This is sort of bullying a simple person.”

South Africa has been criticised in the past for refusing to grant the Dalai Lama a visa, reportedly under pressure from China. This year a number of laureates pulled out of the summit, scheduled to be held next week in Cape Town, in protest at South Africa’s failure to grant the Dalai Lama a visa.

Australia News

The RBA Is Preparing To Act To Fix ‘Unbalanced’ Investor Activity In Australia’s Housing Market

An influx of investors in Australia’s property sector is throwing the housing and mortgage market off balance and he Reserve Bank is threatening action.

Speaking at the inquiry into affordable housing, the RBA’s Assistant Governor Malcolm Edey today said: “The composition of housing and mortgage market activity is becoming unbalanced.”

National housing prices have been rising at a rate of around 10% over the 12 months, and around 15% in Sydney.

But it’s the jump in investor finance which is outpacing the growth in household incomes and the sticking point that investor loans currently making up almost 50% of new housing loan approvals that has got the RBA worried.

Investor loan approvals have increased by about 90% over the past two years in NSW alone.

“Prices have continued to rise significantly faster than incomes, and this has been associated with strong growth in investor activity,” Edey said.

How RBA can take heat out of housing market

The Reserve Bank could use tougher rules governing bank loans to take the heat out of the housing market, after indicating it may take steps before the end of the year to crack down on risky lending.

Policy makers are looking for ways to keep the housing market from overheating while at the same time keeping interest rates low to help the rest of the economy – and so-called « macroprudential » measures may help them to do that.

Nationally, housing prices have grown at 9.3 per cent over the past year and investor loans now make up nearly half of new housing loan approvals. With interest rates forecast to remain on hold until at least 2015, there has been plenty of discussion in economic circles about whether the RBA needs to open its « macroprudential toolbox » to tackle risky lending.

Broadly, the macroprudential measures under discussion refer to tougher rules on housing loans. They would be designed to stop banks making the riskier loans which can fuel any housing market bubble and subsequent crash.

Tony Abbott steps in to have Parliament House burka restrictions overturned

Prime Minister Tony Abbott is calling for the Speaker to back down on plans to ban women who cover their faces from sitting in Parliament’s main public galleries.

The Speaker and the Senate President will still make the final decision about security arrangements in Parliament House.

But the ABC understands Mr Abbott will tell Bronwyn Bishop that « common sense should prevail » when it comes to public access to Parliament House, including the galleries of the House of Representatives and the Senate.

It is believed Mr Abbott will argue that if people have been appropriately screened on the way into the building, including perhaps being asked to show their face, then they should be allowed to cover their faces and go about the public areas like anyone else.

Australian parliament to create a separate ‘burqa box’ in parliament in name of security

The Australian parliament has announced a set of security rules including one that means people wearing the Niqab, which covers part of the face, or the burqa, will need to sit in a closed part of the parliament behind glass when visiting.

The plans were revealed when Latika Bourke, an Australian political reporter, posted a copy of the email explaining the rules on Twitter. The controversial plan, being dubbed ‘BurqaBox’ has caused outrage on social media.

The email reads: « The Presiding Officers have indicated that their first priority is the safety of Parliament House, particularly its occupants… Persons with facial coverings entering the galleries of the House of Representatives and Senate will be seated in the enclosed galleries. This will ensure that persons with facial coverings can continue to enter the Chamber galleries, without needing to be identifiable. »

New Zealand News

Japan News

Fukoku Mutual Stops Buying Treasuries as Mitsubishi UFJ Adds

Fukoku Mutual Life Insurance Co. is postponing its Treasury purchases until yields rise. Mitsubishi UFJ Asset Management Co. bought last month and predicts a rally.

The difference underscores the debate among investors over how fast the Federal Reserve will increase interest rates amid an uneven U.S. economic expansion. Treasuries rallied the most in eight months yesterday on signs of slowing manufacturing growth in the U.S. and Europe. The advance came to a halt today on speculation a government report tomorrow will show hiring accelerated last month.

“I’m bearish,” said Yoshiyuki Suzuki, fixed-income head in Tokyo at Fukoku, which oversees the equivalent of $57.5 billion. “The Fed will increase the interest rate sometime next year. If so, the 10-year yield should be much higher.”

Exclusive: North Korea envoy says door is open on nuclear issues, rights, abductees

(Reuters) – North Korea is ready to resume six-party talks on its nuclear program but must maintain its readiness in the face of joint U.S.-South Korean military exercises, a senior envoy in Geneva said on Thursday.

So Se Pyong, the Democratic People’s Republic of Korea’s (DPRK) ambassador to the United Nations in Geneva, told Reuters that his country was not planning a nuclear or missile test.

In a wide-ranging interview, he said that reports about the ill health of its leader Kim Jong Un were « fabricated rumors » and that it was not clear whether the United States was willing to negotiate the release of three detained Americans.

Russian Foreign Minister Sergei Lavrov said after talks with North Korea’s foreign minister in Moscow on Wednesday that he saw a possibility that stalled talks on Pyongyang’s nuclear program could resume, but it would take time.

Weather hits recovery of bodies from erupting Japanese volcano

Tokyo (CNN) — The search for bodies from an erupting volcano in central Japan was suspended Thursday as weather conditions deteriorated.

Officials are concerned that heavy rainfall could increase the threat of an avalanche of accumulated ash on Mount Ontake.

As of Thursday morning, 47 bodies had been recovered from the mountain, with 42 people identified so far, according to Nagano prefectural police.

Ontake unleashed a huge cloud of ash late Saturday morning that billowed down the mountainside and engulfed hikers in its path. Witnesses described hearing a sound like thunder when the eruption began.

Authorities estimated there were 200 to 250 hikers in the area at the time of the eruption. Most of them were reported to have managed to make the long trek down the mountain.

But some people remained trapped in several lodges on Ontake, and others were missing altogether, local authorities said.

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