Ed’s Daily Notes for July 30th   6 comments

The Guardian: China’s central bank injects 17bn yuan into markets

China’s central bank injected funds into the money markets on Tuesday for the first time since February, easing fears of a repeat of the panic in June when cash markets were squeezed.

The People’s Bank of China pumped 17bn yuan (£1.8bn) into markets through seven-day reverse bond repurchase agreements.

The bank made the liquidity injection after allowing a credit crunch to happen in late June as a warning against risky lending practices.

It set the reverse rate to be paid at 4.4%, much higher than the last official guidance of 3.35%.

Don’t confuse this with quantitative easing. While it does provide liquidity like a QE program, they are doing it at a higher rate to be repaid. Truth be told, I like this better than the “free-for-all buffet” style of the Federal Reserve’s QE programs.

Reuters: Obama to propose ‘grand bargain’ on corporate tax rate, infrastructure

President Barack Obama will propose a “grand bargain for middle-class jobs” on Tuesday that would cut the U.S. corporate tax rate and use billions in revenues generated by a business tax overhaul to fund projects aimed at creating jobs.

His goal, to be outlined in a speech at an Amazon.com Inc facility in Chattanooga, Tennessee, is to break through congressional gridlock by trying to find a formula that satisfies both Republicans and Democrats.

…Obama wants to cut the corporate tax rate of 35 percent down to 28 percent and give manufacturers a preferred rate of 25 percent. He also wants a minimum tax on foreign earnings as a tool against corporate tax evasion and increased use of tax havens.

The new twist is that in exchange for his support for a corporate tax reduction, he wants money generated by the tax overhaul to be used on a mix of proposals such as funding infrastructure projects like repairing roads and bridges, improving education at community colleges, and promoting manufacturing, senior administration officials said.

Obama’s proposal would generate a one-time source of revenue, for example, by reforming depreciation or putting a fee on accumulated foreign earnings.

While it is an interesting proposal, as always with politician’s ideas, the devil is in the details.

Financial Times: When gravity is no obstacle

Above is a fascinating article on space travel and the private sector businesses forming around it. It is definitely something to keep in mind for future investing opportunities.


Posted July 30, 2013 by edmcgon in Economy, Federal Reserve, Market Analysis, News, Politics

6 responses to “Ed’s Daily Notes for July 30th

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  1. NEWS ALERT!!!!!!

    Shares of Mosaic Co tumbled 23.2 percent in premarket trading after Russia’s Uralkali dismantled one of the world’s largest potash partnerships by pulling out of a venture with its partner in Belarus, a move it expects will cause global prices to plunge by 25 percent. U.S-traded shares of Potash Corp fell 23.8 percent and Agrium lost 14.7 percent.

  2. interesting. I did not realize that there was such an over supply of Potash. I am amazed they were able to keep prices elevated as long as they did. The spillover to CF (which is a different fertilizer) seems pretty muted (down 1.4% after up 10% yesterday).

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