Home demand to drive Japan growth

Domestic demand will fuel economic growth in Japan in the next financial year, its government has said.

The economy is forecast to expand by 2% in the 12 months from April 2008, although the government warned that a US slowdown could jeopardise this.

However, government minister Hiroko Ota said that in the current financial year, Japan would see GDP growth of 1.3% - lower than previously forecast.

The Bank of Japan is this week expected to peg interest rates at 0.5%.
Lacklustre growth and lingering deflationary pressures in the world's second largest economy mean that the bank is expected to refrain from raising its key rate until the latter half of 2008, analysts say.

Mrs Ota said that while domestic demand would be playing a key role in boosting the nation's economy, growth in consumption would be limited because "wage increases will likely continue to be moderate".

She also warned that if the slowdown in the US - Japan's largest export market - continued then next year's growth "may be lower than the projection".

Higher crude oil prices could also have an impact, Mrs Ota said.

Investors enter 2008 in fog of uncertainty

By Jeremy Gaunt - Analysis
LONDON Will the U.S. economy fall into recession and spread its woes elsewhere? Will financial markets dry up in a cash drought brought on by the subprime debacle?

With such Rumsfeldian "known unknowns" as a backdrop, global investors are heading into 2008 with less certainty and less consensus about what to do with their money than has been the case for some half a decade.

Consider the case of Legal & General Investment Management and Morley Fund Management, two large British investors.

L&G is looking to 2008 to produce what it calls "sogflation" -- soggy growth with persistent inflation. The result: It expects cash to outperform equities. Accordingly, it is underweight equities and neutral to overweight bonds.

Not far away across central London, meanwhile, Morley is expecting economies to rebound after a recent slowdown and for central banks to contain the credit crisis. The result: It is overweight equities and underweight bonds.

"Although we recognize the risks ... we expect economies to pick up steam from here," said Morley senior economist John Ip.

Such divergence should not, perhaps, be surprising given the kind of volatile year financial markets have had in 2007. After rising steadily for most of the year, major equity markets began ebbing and flowing sharply in summer.

On a year-to-date basis, for example, MSCI's main world stock index .MIWD00000PUS was up nearly 13 percent in July, down 1.5 percent in August, up 16.5 percent in November and is heading into the last weeks of 2007 up around 7 percent.

Time names Putin "Person of the Year"

WASHINGTON Russian President Vladimir Putin was named Time magazine's "Person of the Year" for 2007 Wednesday for bringing his country "roaring back to the table of world power."
Putin, a former KGB official who was picked from obscurity in 1999 by then-president Boris Yeltsin, will appear on the cover of Time as the person the editors believe had the greatest impact on events this year, for better or worse.

"He's not a good guy, but he's done extraordinary things," said Time managing editor Richard Stengel, who announced Putin's selection on NBC's "Today Show."

"He's a new tsar of Russia and he's dangerous in the sense that he doesn't care about civil liberties; he doesn't care about free speech; he cares about stability. But stability is what Russia needed and that's why Russians adore him."

The choice came days after Putin announced a plan to hold onto power after his term ends. Putin said Monday that if his close ally, Dmitry Medvedev, wins next year's presidential vote, he would serve as Medvedev's prime minister.

The Russian president beat out several rivals for the Time distinction, including former U.S. Vice President Al Gore, British author J.K. Rowling, Chinese President Hu Jintao and U.S. Commander in Iraq Gen. David Petraeus.

Peres, Abbas sign industrial zone deal

resident Shimon Peres and Palestinian Authority President Mahmoud Abbas signed an agreement Tuesday paving the way for the establishment of two new industrial zones in the West Bank.

Peres, Gul and Abbas at the meeting of the Ankara Forum of Israeli, Palestinian and Turkish industrialists. Photo: GPO
The agreement was signed as part of a meeting of the Ankara Forum of Israeli, Palestinian and Turkish industrialists established two years ago to create economic opportunities in the Palestinian territories. The Forum is led by Turkish President Abdullah Gul.

"New markets will be accessible throughout the region and the world due to the establishment of the new zone," Gul said.

Abbas said the new industrial zones would be built near Jenin and in Trakumiya, located near Hebron.

Peres said the signing of the agreement Tuesday did not come to replace the planned Middle East conference in Annapolis, Maryland set for later this month, but was "in addition to it". He added that economic improvement was vital for achieving peace with the Palestinians. "This agreement is for Israel a win-win situation," Peres said.

Abbas concluded his remarks expressing hope that by this time next year, Peres, Gul and he himself would be sitting in a larger forum, signing a peace agreement between Israel and Palestinians.

At a joint news conference with Peres, Abbas said Israel will live in peace if it ends its occupation of Arab lands. "If peace comes and the occupation comes to an end, Israel will live in a sea of peace," he said.

The PA president added that his administration was preparing for the Annapolis conferece. "We are working with our full force to ensure that the meeting in Annapolis is a success," he said.
Later in the afternoon, Peres was slated to become the first Israeli president to speak before the legislature of a Muslim country. Abbas was also expected to address the Turkish Parliament.

Oil back above $96 after respite

Disruption to North Sea supplies has sent prices upwardsOil prices have rebounded above $96 in Asian trading as concerns about global supplies linger.

A barrel of US light crude was worth $96.46, up $1, having fallen to $95.46 on Thursday on pessimistic comments by Federal Reserve boss Ben Bernanke.

His forecast for slower economic growth may have meant weaker demand as firms reined in spending, analysts said.
But disruption to oil output in the North Sea from BP and ConocoPhillips rigs helped to support crude prices.

'Tight market'

Platforms pumping more than 200,000 barrels of oil a day in the North Sea were closed due to bad weather, exacerbating concerns about the availability of crude.

Prices hit a record high above $98 a barrel of Wednesday, leading many analysts to speculate that it was only a matter of time before the $100 mark was breached.

But prices then fell back sharply after US crude inventory figures showed a smaller than expected weekly fall.

Analysts still expect oil to break $100 a barrel
The weaker dollar has been driving up oil prices as investors have been using the commodity as an alternative to holding dollars.

"Markets have probably rethought how tight the market is and might be in the near term and that has caused an upward adjustment," David Moore, a commodity strategist at the Commonwealth Bank of Australia, said of Friday's price jump.

Oil prices have now risen by 60% this year but prices have still not reached a record high if inflation is taken into account.

Adjusting for inflation, US light crude's record peak of $101.70 came in 1980 against a backdrop of war between Iraq and Iran.

The dollar's current weakness has also seen prices of other commodities rise sharply, most notably gold, which is continuing near 27-year highs.

U.S. slaps new sanctions on Iran

U.S. Secretary of State Condoleezza Rice and Treasury Secretary Henry Paulson on Thursday announced new economic sanctions against Iran's Islamic Revolutionary Guard Corps and its Quds Force.

Treasury Secretary Henry Paulson, left, listens to Secretary of State Condoleezza Rice.

The Revolutionary Guard Corps is being designated by the United States as a proliferator of weapons of mass destruction and the Quds force as a supporter of terrorism.
The sanctions mean that no "U.S. citizen or private organization will be allowed to engage in financial transactions with these persons and entities," Rice said. "In addition, any assets that these designees have under U.S. jurisdiction will be immediately frozen."

The United States also designated three Iranian state-owned banks for sanctions, two of them "for their involvement in proliferation activities" and the other "as a terrorist financier," Rice said.

"Iran funnels hundreds of millions of dollars each year through the international financial system to terrorists," Paulson said. "Iran's banks aid this conduct using a range of deceptive financial practices intended to evade even the most stringent risk management controls."
"The Iranian government continues to spurn our offer of open negotiations, instead threatening peace and security by pursuing nuclear technologies that can lead to a nuclear weapon; building dangerous ballistic missiles; supporting Shia militants in Iraq and terrorists in Iraq, Afghanistan, Lebanon and the Palestinian territories; and denying the existence of a fellow member of the United Nations, threatening to wipe Israel off the map," Rice said.

The Quds Force is blamed by the U.S. military for training and arming Shiite militias in Iraq and smuggling highly lethal explosives into Iraq, where they are used to attack coalition forces. Iran denies the charge.

Previous sanctions imposed by the United States have been tied to Iran's nuclear program. The United States believes Iran is pursuing a nuclear weapon, a claim that the Islamic republic denies, saying its program is for peaceful purposes only.

Don't Miss

Last month, representatives of world powers announced that unless a November report shows a "positive outcome" of talks with Iran about its uranium enrichment program, they will move ahead with plans for a resolution imposing additional sanctions on the country.

The announcement came out of a meeting of what the participants termed the "P5 plus two." The meeting included Rice and the foreign ministers of the other four permanent members of the U.N. Security Council -- Britain, China, France and Russia -- along with the foreign minister of Germany and Javier Solana, the European Union foreign policy chief who has held nuclear talks with Iran.

The Security Council has repeatedly demanded that Iran suspend enrichment of uranium and has imposed limited sanctions on Tehran for refusing to comply. The United States has been trying to cut Iran off from the international financial system and the European Union is weighing its own unilateral sanctions.

BARON CONFERECENCE THE ART OF SUCCESSFUL INVESMENT

October 22, 2007 · Metropolitan Club · New York City

For years, Barron's Roundtable has kicked off the investing season with its publication in January. The Roundtable's legendary professional investors and Barron's world-class writers become accessible to the public. On October 22nd, Barron's presents The Art of Successful Investing, a daylong conference where a limited number of individuals can learn from the gurus of Wall Street who've sat at the Roundtable and ask questions. Participants will also be able to gain perspective from the editors and writers of Barron's.

Ed Finn, president and editor of Barron's, will interview a "Who's Who" list of top-flight market experts, including:
Oscar Schafer
Felix Zulauf
Marc Faber
Abby Joseph Cohen
Fred Hickey
Scott Black
John Neff
Dean Curnutt
Stephanie Pomboy

Plus, Barron's reporters Andrew Bary, Jackie Doherty, Jonathan Laing and Eric Savitz will talk about the great — and not so great — cover stories they've written.

The luncheon speaker will be Alan Abelson, Barron's resident market commentator, renowned for the depth of his investing insights as well as the wit and wisdom of his take on today's financial scene.

Attendees will have the opportunity to meet, learn from and question these market authorities…in the exclusive environment of this conference. Most important, they'll take away investing ideas that they can apply instantly for benefit of their own portfolios.