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.

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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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