Random Interesting Stories This Morning

Some interesting stuff on Bloomberg this morning....

I like to talk about how computers really run the Street nowadays... a few interesting facts I did not know

• Hedge fund assets have swelled to $1.87 trillion, almost four times more than in 2000, according to Chicago-based Hedge Fund Research Inc.
• Referring to the slowing economy, he said ``the effect is going to be very muted by the fact that a large part of the participants right now don't really care whether the market is going up or down.''
• Citadel Investment Group LLC -- Kenneth Griffin's Chicago- based hedge fund named to suggest a stronghold in volatile markets -- uses mathematical models and advanced computer systems to make investments that translate into about 5 percent of U.S. equity trading. (Citadel is one of the most amazing stories ever; a story about them here - but I did not realize they literally own 5% of all trades, wow)
• D.E. Shaw & Co., which oversees $35 billion, relies on automated, 24-hour-a-day strategies that exploit shifts in asset prices around the world. The New York- based fund accounts for between 1 percent and 2 percent of trading at the NYSE.

No surprise with the Chinese storms but inflation is now highest in China in 11 years. Keep in mind this is WITH price controls rampant in this society; and also keep in mind food is a huge proportion of expenses for the vast majority in this country. We hear about the rising middle class in China constantly, but the great majority are still rural poor.

• China's inflation accelerated to the quickest pace in more than 11 years after the worst snowstorms in half a century disrupted food supplies.
• Consumer prices rose 7.1 percent in January from a year earlier, the statistics bureau said today, after gaining 6.5 percent in December. That was more than the 7 percent median estimate of 23 economists surveyed by Bloomberg News.
• Food prices soared 18 percent after blizzards paralyzed transport systems and destroyed crops. The government faces the challenge of curbing inflation without derailing the expansion of the world's fastest-growing major economy.
• ``Inflation is likely to have further legs to run even after the snowstorm effects subside because of fast growth in money supply,'' said Liang Hong, senior economist at Goldman Sachs Group Inc. in Hong Kong. February's rate ``might even get close to double-digit levels.''
• Pork climbed 59 percent, edible oil rose 37 percent and vegetables jumped 14 percent. Inflation has soared since last year on food and fuel costs and a surging money supply poses the risk of broader price gains.
• Soaring prices have the potential to lead to social instability, as illustrated by the Tiananmen Square protests and crackdown of 1989. The World Bank estimates 300 million Chinese people live in poverty.
• ``Periods of significant social instability in China have always been prefaced by sustained food inflation,'' said Glenn Maguire, Hong Kong-based chief Asia economist at Societe Generale SA. ``Food inflation and its consequences are most acute in low-income rural areas and the inland mega-cities.''
• There's pressure for prices to keep rising. Producer prices, the cost of goods as they leave the factory, jumped 6.1 percent in January, the biggest gain in more than three years, on oil and raw materials.
• The trade surplus rose more than forecast in January and money supply grew at the quickest pace in 20 months.

China Central Bank is thinking of new innovations to combat inflation. What a problem to have - way too much money is coming into the country :)

• China's central bank said it will increase innovation in monetary-policy tools after a report showed that inflation surged to an 11-year high. China's economy faces ``prominent'' problems such as imbalanced international payments and excess liquidity, the People's Bank of China said.
• China will explore more channels for investing the world's biggest foreign-currency reserves, aiming for ``higher returns,'' the report said.
• China will further develop the debt market, especially corporate bonds, according to the statement. It will encourage securities backed by mortgage loans (uh oh!) and by projects and explore the sale of municipal bonds to fund public works.

Bank of France Says Fed Overreacted to Market Declines. Oh, *snap* central bank on central bank sniping? Who says there is no excitement & drama in economics?

• The Bank of France said the U.S. Federal Reserve may have cut interest rates too much and too quickly in response to financial-market declines. An unsigned article in the Paris-based bank's monthly bulletin, published today, said new financial products have amplified asset price swings.
• The unusual criticism by one central bank of another may reflect the European Central Bank's reluctance to follow its U.S. and U.K. counterparts in cutting rates to cushion against an economic slowdown.

Australia has been raising rates to fight inflation, and it considered even stronger measures as inflation becomes very worrisome.

• Reserve Bank of Australia board members considered raising the benchmark interest rate by 50 basis points for the first time in eight years this month to cool the fastest inflation in almost two decades.
• February's increase was the bank's 11th quarter point move since May 2002, which has lifted the rate from 4.25 percent. ``The Reserve Bank is now realizing that the slow and steady tightening path it has followed for the past six years has not been sufficient to contain inflationary pressures,'' said Tony Pearson, head of Australian economics at Australia & New Zealand Banking Group in Melbourne. ``The message is clear -- more rate rises are coming.''