Good morning

The headlines:
  1. Good news: the IMF has increased its global economic forecasts and Spain sold more debt than expected. And as I see most mornings, this has affected Asian Stock Markets (which makes sense – I do these posts first thing on a South African morning, so I get the Asian news). Spain’s debt auction exceeded its maximum target of 3 billion euros, with bids of 3.18 billion euros being made. Link: Spain beats target. So the market seems to be pretty sure that a default in the short-term is unlikely. Nice.
  2. And on the IMF front, the global forecast growth rate has been increased to 3.5%, up from 3.3% in January. Apparently, this is largely on the back of improvements in the US economy. My question: can you ever really trust US economic outlooks in an election year? My (borrowed) money is on short-term recovery tactics. Other than America, the IMF folk see less risk in the Eurozone than in January, and they don’t see China having that “hard landing”. Link: IMF Raises Global Forecast.
  3. Berkshire-Hathaway has announced that Warren Buffett has been diagnosed with Stage 1 Prostate Cancer. The end. Link: Buffett has non-life-threatening prostate cancer.
  4. Citigroup Investors have rejected a Compensation Plan for Executives. Apparently, the plan made getting bonuses too easy. The analogy being thrown around is “would you offer the manager of the New York Yankees an incentive bonus if he wins one-third of his games?” The correct answer is not “obviously not”. If the whole of New York has been subject to a flu pandemic and your players have been constantly sick – maybe winning a third of the games is way impressive. It’s all relative. On the other hand, Citigroup is being outstripped by the other banks (that’s the way it sounds), and then there was that awkward Fed Stress Test fail. Link: Citigroup Shareholders give a nought for performance.
  5. Japan is about to no longer be in deflation. That’s according to Nomura Holdings. The story is that a strengthening yuan will increase China’s buying power, fueling Japanese production and causing prices to rise. China is moving away from its export emphasis toward more focus on domestic consumption. Which makes a lot of sense – as the last few months have shown, the export focus makes the Chinese economy exposed to the vagaries of political policy in their customer countries. And from what I can tell, that’s not something that the Chinese appreciate. In theory, heightened domestic consumption would result in a rise in imports, some of which would come from Japan. At the same time, a strengthening yuan would make Japan more internationally competitive. Link: Japan Poised for Inflation.
  6. And the African Business News in brief. Link: ABN Briefs. The highlights:
    • The Kenyan Government has cut its subsidies to Kenya’s sole oil refinery in order to force efficiencies. At the same time, marketers now have the option of sourcing product externally.
    • The IMF announced that growth in Sub-Saharan Africa is set to increase to around 5.4% as a result of new mineral and oil production and the increase of exports to countries outside of Europe.
    • The African Union has suspended Guinea-Bissau after a military coup removed constitutional control two weeks before the second round of presidential elections. Do African armies just get overly excited at election time? First Mali, now Guinea-B. 
That’s all for now.
Have a good day.