New Fed chairman Bernanke signals continuity with Greenspan's policies
Washington, USA: New Federal Reserve Chairman Ben Bernanke said Wednesday the economy is on track for good growth this year. In his debut congressional testimony as Fed chairman, Bernanke signaled that the central bank, which has raised interest rates 14 times since June 2004, stood ready to boost rates further, if needed, to combat inflation.

Bernanke said future rate hikes would depend on incoming economic data. But he said despite last year's surge in energy prices and the devastation from the Gulf Coast hurricanes, recent information showing strong employment growth and retail sales in January "suggests that the economic expansion remains on track.."

In his testimony, the new Fed Chairman stuck closely to predecessor Alan Greenspan's script, though analysts noted one big difference, in that, his comments were much easier to understand.

Investors and private economists, who had been apprehensive that Bernanke might sound a tougher line on inflation than Greenspan, said Bernanke kept very much to the promise he made at his confirmation hearing that he would maintain continuity with Greenspan.

Wall Street took Bernanke's testimony in good spirit with stocks ending the day up slightly. According to preliminary calculations, the Dow Jones industrial average rose 30.58 points to close at 11,058.97 after rising 136 points Tuesday.

Though more direct than Greenspan, Bernanke skillfully avoided being led into areas where he did not want to state an opinion. Democrats tried several ways to get Bernanke, who served last year as Bush's chief economist, to criticize the president's drive to make the tax cuts permanent at a time of high budget deficits, without success.

The Jan. 31 Fed meeting was the last presided over by Greenspan, who stepped down that day after 18½ years as Fed chairman to be succeeded the next day by Bernanke.

Private economists predicted the central bank will raise its target for the federal funds rate, the interest that banks charge each other, by another quarter point to 4.75 percent at Bernanke's first meeting on March 27-28. They said a final hike that would push the funds rate to 5 percent could occur at the following meeting on April 10.
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China asks US to ease curbs on high tech exports to cut trade deficit
Beijing: In an apparent reaction to renewed pressure from Washington over trade issues, a senior Chinese economist Chen Wenjing in Beijing, has asked the United States to ease curbs on high-technology sales if it wants to reduce its trade deficit with China, rather than ratcheting up rhetoric. Wenjing, vice president of the Chinese Academy of International Trade and Economic Cooperation, the Commerce Ministry's think-tank made his comments on Wednesday.

Wenjing was reacting to comments made by the Bush administration on Tuesday that it would exert more pressure on China to adhere to global free trade rules. Wenjing urged the United States to give up its "Cold War" attitude toward China. Speaking to Reuters, Wenjing said that the United States needed to abandon its discriminatory policy towards China and give up its Cold War mentality by removing the restrictions on high-tech exports to China. He was referring to a ban by the United States that denies technology to the Chinese military.

Though couched in stern language, a report on Tuesday by the U.S. trade representative, Rob Portman, did not ask for or threaten any specific sanctions against the Chinese, however.

The US trade representative's report came just four days after the United States announced a record trade deficit of US$201.6bn with China for 2005. That report further heated up a debate about the role that free trade has played in the loss of U.S. manufacturing jobs caused by companies shifting production to lower-cost factories in places like China.

At a news conference on Tuesday, Portman registered concern about China's enforcement of intellectual property rights and the lack of openness of its markets to U.S. goods and services, a reference to Chinese restrictions on certain foreign investments and trade in financial and other professional services.
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Merrill says deal with Black Rock 'just the start'
New York, USA: Merrill Lynch's chief executive Stanley O'Neal said yesterday that the company's deal with Black Rock could be just the first in a string of agreements. O'Neal yesterday announced the creation of one of the world's largest money management firms with more than US$1,000bn in assets.

Under the deal, Merrill will inject its Investment Managers business (MLIM) into Black Rock in return for a 49.8pc stake in the combined company and two seats on the board. BlackRock founder and chief executive Laurence Fink will continue to run the business.

According to Merrill Lynch, the deal would free up US$2bn of equity capital that it could use for acquisitions, reinvest in Merrill's core businesses, or put towards a share buyback programme. O'Neal said he was looking at larger acquisitions but cautioned analysts against looking out for anything "transformational".

He stressed there had been no regulatory pressure to pursue a separation of asset management from the company's broker network.
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Airlines used 9/11 as excuse to overcharge for freight
Washington, USA: It would appear that competition authorities are acting on the charge that airlines around the world used the September 11 terrorist attacks as a pretext for overcharging cargo customers by imposing unnecessary surcharges to cover "security" costs.

The Scandinavian airline SAS disclosed that the inquiry revolves around levies imposed on cargo by dozens of airlines around the world, which were attributed to the soaring cost of fuel and of clearing stringent security hurdles, particularly of the sort introduced by the US government.

The Office of Fair Trading confirmed yesterday that its staff in London were assisting the European commission and the US department of justice in a price-fixing investigation into major carriers. Competition authorities as far a field as Canada and South Korea are also taking part.

Virgin Atlantic revealed that it had received a request for information about its cargo operation. Its involvement came a day after raids took place on British Airways' offices in London and New York.

Reports quoting an SAS spokesman, say that the allegation is that these surcharges were introduced at simultaneous moments, at simultaneous levels. The spokesman defended the airlines' conduct saying that in a certain way, that was logical since all the airlines were facing the same situation. The spokesman said that it however didn't necessarily mean that all the airlines acted together.

Singapore Airlines, Cathay Pacific and Japan Airlines confirmed they had been questioned by authorities. Korean Airlines, one of the world's biggest cargo carriers, said its executives had been interviewed by South Korea's fair trade commission and its rival Asiana said its premises had been searched. Others admitting that they had been approached by investigators include Air Canada, Air France KLM, Lufthansa, Japan Airlines, Swiss International and Luxembourg's Cargolux.

In the wake of September 11, BA joined other carriers in introducing an "exceptional handling charge" of 9p a kilogram of freight, which was justified by the need for greater security. It has added a fuel levy that is linked to oil prices through a sliding scale and which currently stands at 34p a kilogram. Both measures have become common in the industry.

The Freight Transport Association, which represents shippers, welcomed the investigation and said that its members had complained of surcharges amounting to half the overall cost of cargo transport.
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Mittal says profit drops 58 per cent
Rotterdam, Netherlands: Mittal Steel Co., currently engaged in a US$23.1bn hostile bid for Arcelor SA, has posted a 58 per cent decline in fourth-quarter profit on higher costs and lower prices, and said no turnaround is likely for months.
Net income dropped to US$650mn from US$1.55bn a year earlier, the Rotterdam- based company said in a statement today.

Chairman Lakshmi Mittal today will address Arcelor shareholders to try to convince them to back his Jan. 27 hostile bid. A takeover would create a steelmaker three times bigger than its nearest rival and increase clout with customers such as Ford Motor Co. Steel prices, which were 9 per cent lower in the quarter, are likely to be unchanged this quarter, Mittal said.

``Overall average selling prices are expected to remain flat, and cost of sales are expected to increase,'' billionaire Lakshmi Mittal said in today's statement. ``We expect operating income to be higher as compared to the fourth quarter of 2005.''

Sales rose 14 percent to $7.05 billion, Mittal said. The company bought Richfield, Ohio-based International Steel Group Inc. from financier Wilbur Ross for $4.5 billion in April 2005. Steel shipments rose 35 percent to 13.64 million metric tons, from 10.1 million tons a year earlier. Costs were 15 percent higher.

Mittal also agreed with Senegal's government to explore for iron ore in the West African nation. Senegal's Faleme region has about 700 million tons of iron ore reserves, Mittal said.

Mittal signed a 5 billion-euro (US$6bn) credit line with Goldman Sachs Group Inc., Citigroup Inc. and Societe Generale SA on Jan. 30 to finance its acquisition of Arcelor.

Mittal agreed with the same banks to re-finance an existing loan, used to finance the acquisition of Ukraine's Kryviy Rih. Mittal's debt was $6.2 billion on Dec. 31, 2005, from $1.7 billion on Sept. 30, because of acquisitions.

Arcelor is being advised on Mittal's bid by Morgan Stanley, BNP Paribas SA, Deutsche Bank AG, UBS AG and Merrill Lynch & Co.
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