China Gets Real on Growth
China gets real with growth: China cut its 2012 growth target to 7.5 percent, its lowest in eight years. Gross domestic product growth in the fourth-quarter of 2011 was 8.9 percent. This seems to be merely a response to slower global growth, but it will also force the Chinese to look at stimulating their internal demand.
Chinese premier Wen Jiabao flatly stated that the Chinese government “will improve policies that encourage consumption.”
You can expect to hear less about inflation and quashing the real-estate bubble from Chinese leaders.
Regardless: Material stocks such as Rio Tinto, , and CF Industries are down about 2 percent pre-open on concerns about slower growth in China.
1) Crunch time on the Greek private-sector deal. Private holders of Greek debt have until Thursday evening to decide if they want to voluntarily participate in the bond swap deal.
The Greek government has said they are looking for 90 percent participation; any less than that will not be deemed "voluntary" and they have said they will enforce the decision through a Collective Action Clause (CAC) that forces the minority to go along with the majority decision.
However, that CAC could only be enforced if 66 percent vote for the deal. If the participation is less that, the deal craters, the body language from European Union leaders is that there will be no last-minute bailout; Greece will default on its debt.
Using the CAC would constitute a technical default and trigger credit default swaps (CDS) . Is this good or bad for the market? Most traders feel that a complete cratering of the deal (less than 66 percent voting for the deal, a full default occurring) is NOT priced into the market. But anything short of that — including triggering the CAC and the CDS — has been largely telegraphed. But it does make you a bit nervous.
2) BP shares rise 1.2 percent pre-open, nearing a 52-week high, after the oil company announced it had reached a $7.8 billion settlement with victims of the 2010 Gulf of Mexico oil spill. BP said it anticipates the money will come from a $20 billion compensation fund it has set up and will cover a wide range of claims including property damage, lost wages and loss to businesses. BP also pledged to pay $105 million to improve health care around the Gulf region.
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