A number of banks (JPM, HSBC, BoA, GS) believe that the latest Chinese interest rate hike will be the last for 2011, a change from previous forecasts – confusing signals recently from China, but I believe that the banks are right. Premier Wen wrote in the FT recently (pre yesterdays rate hike) that “The overall price level is within a controllable range and is expected to drop steadily”. However, a number of analysts forecast that Chinese June CPI (to be released shortly) will exceed 6.0% (5.5% in May), though they also suggest that this will represent the peak or very close to the peak for 2011;

The US SEC is in negotiations with Chinese counterparts to investigate Chinese auditors based in China, as a result of the many recent scandals, involving reverse takeovers by Chinese companies which are listed on US exchanges. It will be interesting to see what the outcome will be. Chinese auditors are allowed to sign off on IPO’s in Hong Kong, by the way;

Gaddafi’s days seem to be numbered – good news. However, the Oil infrastructure in the country is likely to have been damaged and, in addition, much needed foreign expertise that operated the industry have left the country, suggesting that a resumption of supplies may well take time;

The EU is apoplectic with rage over recent (negative) decisions by the 3 credit agencies – what do they want – well to agree with them, off course – and misguide investors?. Come now. OK, you could argue that the credit agencies have taken fright, post their dreadful decisions during the recent crisis, but don’t shoot them, come up with a sensible plan. Does the EU want to set up their own credit agency – well, they might, but I for one (and I suspect most others) wont use it;

Category: MacroNotes

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One Response to “China Rate Hikes, Reverse Mergers, EU Credit, Gaddafi”

  1. Dennis954 says:

    A European rating agency would not be any less credible than the American ones, especially after demonstrating a blatant cconflict of interest during the subprime boom days when they stamped all that trash AAA. One has to question who they are working for now.