News roundup

Just a few of the stories from the last few days

CANADA BECOMES THE FIRST COUNTRY TO QUIT KYOTO

TruthDig,

13 December, 2011

From its perch above one of the world’s biggest polluters, Canada’s conservative government decided it would be too expensive and pointless to meet its obligations to the Kyoto Protocol.

Neither the U.S. nor China, who provide much of the world’s greenhouse gas emissions, are signatories and the new climate agreement in Durban may have made it easier for Stephen Harper’s government to push the eject button.

BBC:

“Canada’s Minister of the Environment Peter Kent] said meeting Canada’s obligations under Kyoto would cost $13.6bn (10.3bn euros; £8.7bn): “That’s $1,600 from every Canadian family—that’s the Kyoto cost to Canadians, that was the legacy of an incompetent Liberal government”.

He said that despite this cost, greenhouse emissions would continue to rise as two of the world’s largest polluters—the US and China—were not covered by the Kyoto agreement.

South Korea Slashes Growth Forecast on Euro Crisis

Wall Street Journal,

12 December, 2011

The South Korean government Monday slashed its growth forecasts for 2011 and 2012 and acknowledged that risks related to growth now outweigh those linked to inflation, as the deepening euro-zone crisis undercuts the export-driven country's momentum.

But Finance Minister Bahk Jae-wan said chances remain low that the global and Korean economies are heading for a hard landing, and said the government won't go beyond spending more of its budget in the first half of 2012 in the absence of sharply weaker growth—a reiteration of the government's desire to preserve firepower and its strong sovereign rating.

The Ministry of Strategy and Finance now expects the economy to grow 3.8% this year and 3.7% in 2012, down sharply from 4.5% growth tipped for both years previously. The government also raised its 2012 inflation outlook slightly to 3.2% from 3.0% previously.

For article GO HERE

NZ: 200,000 affected by power cut at Huntly

NZ Herald,

14 December, 2011

Technicians at Huntly worked overnight to reroute circuits around a fault lurking somewhere between the plant's generators and their connection to the national grid just outside the property boundary.

The fault yesterday set off a series of automatic triggers that rippled across the country, cutting electricity to 200,000 customers before drawing on reserves at other stations.

The outage joins other incidents in recent years when national infrastructure faltered to highly localised issues - in one case a single metal shackle that blacked out half of Auckland, in another a wayward forklift that bumped into a power circuit.

Electricity was cut to homes and businesses throughout the North Island, including Auckland and Wellington, after a fault at the Huntly power station about 12.38pm.

Reserve power is being used until the problem is fixed

For article GO HERE

India’s First Industrial Output Drop Since 2009 Sends Rupee Lower: Economy

Bloomberg,

12 December, 2011

India’s industrial output shrank for the first time in 28 months, pushing stocks and the rupee lower on concern faltering growth will force the central bank to suspend its fight against the fastest inflation in BRIC nations.

Production at factories, utilities and mines fell 5.1 percent from a year earlier in October, the government reported today. The slide exceeded the median of 24 estimates in a Bloomberg News survey for a 0.7 percent drop. Output was down 3.3 percent from September, the third decline in four months.

The slump reflects deepening fallout from Europe’s two-year sovereign-debt crisis, which has led policy makers across Asia to cut or hold borrowing costs in an attempt to protect their economies. Chinese export growth was the weakest since 2009 in November, giving officials at a work conference in Beijing this week more reason to shift policy focus toward boosting expansion next year, from curtailing inflation.

For article GO HERE

Intel says sales hit by hard drive shortage

Intel Corp warned that hard-disk drive supply shortages would hurt its current-quarter revenue, the latest heavyweight in the PC industry to caution about the effects of flooding that has crippled factories in Thailand.

Reuters

The warning sent shares of the world's top chipmaker down 4.8 percent and weighed on Wall Street.

Hundreds of people have died in flooding in Thailand that has caused billions of dollars in damages since late July and disrupted international supply chains in the PC and automobile industries.

PC makers have been scrambling to buy increasingly scarce hard drives after the flooding shut down factories in the country, which is the world's No 2 exporter of the components.

For article GO HERE

Butter shortage in Norway as Christmas looms

City TV

The soaring popularity of a fat-rich fad diet has been blamed for depleting stocks of butter in Norway, creating a looming Christmas culinary crisis.

Norwegians have eaten up the country's entire stockpile of butter partly as the result of a "low-carb" diet, which emphasizes a higher intake of fat, sweeping the Nordic nation.

With butter sold out in the shops, Thomas Willoch had to get butter by other means.

"When we visited Germany some days ago we bought butter," he said.

For article GO HERE

Greek 5 Year CDS Over 10,000 bps (100%)

Zero Hedge,

12 December, 2011

For anyone wondering why CDS pricing shifts to a points upfront methodology from running spread once said spread passes 1000 or so bps, look no further than the Greek 5 year today, where the 5 Year CDS is shown with a mid-price of 10,115 bps, being offered at 10,418. 

Now if there was a one to one equivalency on the CDS and bond curve, this would imply a bond price in cash terms that is negative. 

And since this would be quite impossible to be achieved, even for Greece, this is a perfect example of why spread in CDS terms becomes promptly irrelevant due to the shapeshift in the default curve past the 16% or so discount from par threshold. 

And while in practice this means that CDS could in theory go up without an upside limit, for all intents and purposes this is irrelevant as the DV01 in the 100% range approaches zero.