Finance Blog number 1

Japan and Canada agreed Sunday to formally start talks aimed at forging a free trade agreement between the two countries.

If established, the pact would be Japan’s first with a country from the Group of Eight major economies.

Japanese Prime Minister Yoshihiko Noda and his Canadian counterpart, Stephen Harper, said they would also seek to boost economic, energy and security relations between the two countries.

“This is a truly historic step that will help create jobs and growth in both countries,” Harper told a joint news conference. “The negotiations we are announcing today complement Canada’s ambitious trade agenda.”

Japan is Canada’s fourth-largest export market, and a free trade deal could potentially increase that “by as much as two-thirds,” Harper said.

Japan’s main exports to Canada are cars, machinery and other industrial products. Its chief imports from Canada are natural resources and agricultural products including soybeans and pork. Both countries are seeking to join the U.S.-led trans-Pacific multilateral trade pact known as TPP. Japan’s highly protected farm sector is seen as a main obstacle.

Noda stressed the importance of accelerating private-sector cooperation on the trade of natural gas and other energy resources.

Japan is struggling to secure a stable supply of energy resources due to concerns about a serious power crunch stemming from the nuclear crisis set off by last year’s massive earthquake and tsunami paydayloans.

The March 11, 2011, disasters destroyed power and cooling functions at the Fukushima Dai-ichi nuclear power plant, sending three reactors into meltdown and forcing 100,000 people to relocate.

The crisis also raised public concerns and opposition to restart reactors idled for regular safety checks. Only two of Japan’s 54 reactors are currently running, with all of them expected to go offline by the end of April if none are resumed by then.

During the talks Sunday, Japan and Canada also agreed to strengthen cooperation in defense and security in the Asia-Pacific region, Noda said. The two leaders are heading to Seoul to attend this week’s Nuclear Security Summit.

“We reaffirmed the importance to tackle outstanding global issues, particularly the issues surrounding North Korea and others in the Asia-Pacific region, as we cooperate as partners,” Noda said.

North Korea says it will launch an observation satellite on a long-range rocket next month. Japan shares fear by the U.S. and South Korea that Pyongyang wants to test long-range missiles that could eventually deliver nuclear warheads.

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President Barack Obama countered Republican attacks on his trade record with China by filing a complaint seeking to stop Beijing

New Zealand may for the first time since 1982 pick a central bank veteran to lead the institution, as the nation contends with slower global growth and the fastest exchange-rate gains among most-traded currencies the past year.

Reserve Bank of New Zealand Deputy Governor Grant Spencer, 59, has the best chance of getting promoted, nine of 10 economists surveyed by Bloomberg News said, with the analysts covering the RBNZ at three of the country

BlackRock president Robert Kapito is walking the firm’s talk.

Kapito, who helped found the world’s largest asset management firm, now has about 70% of his investment assets in dividend-paying global companies, and 30% in high-yield corporate bonds.

Those are both cornerstones of BlackRock’s new "Investing in a New World" initiative, which encourages investors to get out of idle cash and find assets that generate income in a slow-growth, low-rate environment.

Americans had a record $10 trillion deposited in their bank accounts at the end of 2011, noted Kapito. And with the Federal Reserve holding interest rates near historic lows, that cash is earning virtually nothing.

"People need to rethink the cost of cash, and think about income," said Kapito. "They’re worried they don’t earn enough and won’t have enough to retire on, but the longer they sit in cash, the longer they’ll have to work and they won’t be able to retire when they want to."

Century-old IBM hits fresh all-time high

Kapito said investors are much better off investing in dividend-paying stocks, which return between 3% and 5% a year, and so-called junk bonds, which yield between 5% and 6%. Both offer better returns than Treasuries, he added. The 10-year government note currently pays only about 2%.

High-yield bonds have been extremely popular among income-hungry investors this year. BlackRock’s iShares iBoxx High Yield Corporate Bond ETF () has raked in more than $3 billion so far in 2012, almost as much at the total amount of assets it brought in during all of 2011.

For dividend-paying stocks, Kapito said investors can gain exposure through individual companies, like AT&T (, Fortune 500), Pfizer (, Fortune 500), Verizon (, Fortune 500) and Johnson & Johnson (, Fortune 500), or buy shares of an ETF like the iShares High Dividend Equity Fund (), which launched last year and includes all of those companies and others like Procter & Gamble (, Fortune 500), Merck (, Fortune 500) and Intel (, Fortune 500).

Kapito said he also likes to invest in municipal bonds, particularly those issued in his current hometown of New York City, since those yield about 4% and are exempt from income taxes.  

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The global economy faces

Chancellor Angela Merkel won a parliamentary vote on Greek aid after warning German lawmakers that pushing Greece out of the euro would risk

Purchases of new homes in the U.S. probably rose in January to a nine-month high, more evidence the housing market is improving, economists said before a report today.

Sales, tabulated when contracts are signed, climbed 2.6 percent to a 315,000 annual pace, according to the median estimate in a Bloomberg News survey of 77 economists. Consumer confidence declined in February from a month earlier, separate data may show.

Beazer Homes USA Inc. (BZH) and D.R. Horton Inc. (DHI) are among builders benefiting from job gains as well as cheaper properties and lower mortgage rates that have driven affordability to a record high. At the same time, foreclosures that depress prices are a risk, one reason policy makers including Federal Reserve officials are seeking ways to bolster the industry.

Two St. Louis-area organizations, and a third group with a large office in Clayton, received a combined $230 million in federal New Markets Tax Credits, the U.S. Department of Treasury said Thursday.

The credits are designed to draw investment in businesses and real estate projects in low-income neighborhoods. Recipients - typically banks and community development groups - offer the credits as an incentive to investors in projects in qualifying Census tracts. They are worth 39 cents on the dollar, so the $230 million equates to $89.7 million.

In past years in St. Louis, these credits have been used to help fund everything from downtown office projects to equity investments in local businesses.

Recipients with local ties include:

U.S. Bancorp Community Development Corp., which is based in St. Louis but works on tax-credit financing nationwide, received a $100 million award. St. Louis Development Corp., the city-run development agency, received $50 million. Advantage Capital Community Development Fund, which is based in New Orleans but has a large office in Clayton, received $80 million.

The funds to not have to be used in a recipient’s home region - though they likely will be in the case of SLDC - and projects here have drawn New Markets credits from national lenders in the past.

This year, the awards include a set-aside to finance “healthy food” projects in so-called “food deserts” - areas with little access to quality groceries. One-fourth of SLDC’s award must go towards healthy food financing, and one-fifth of U.S. Bancorp’s.

All told, the Treasury Department awarded $3.6 billion in New Markets credits on Thursday. It received $26.7 billion worth of applications. President Obama is seeking $5 billion for New Markets Tax Credits in his 2013 budget.

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The new fund designed to spur science startups in Missouri has been declared unconstitutional by a judge in Cole County.

Circuit Judge Dan Green tossed out the Missouri Science and Innovation Reinvestment Act (MOSIRA) in a ruling Tuesday morning, saying that the way it was approved by lawmakers in last fall’s special legislative session violated the state constitution.

The measure would have dedicated some new tax revenue from science and technology companies in the state for a fund to help launch startups in those industries. Gov. Jay Nixon had proposed putting $4 million into the fund in his next budget.

But Green ruled that the bill approving it violated state law because it included a “contingency clause” saying it couldn’t go into effect unless a separate tax credit reform bill was also passed. That bill died in the General Assembly.

Right-to-Life groups that have long opposed MOSIRA over concerns that it could fund stem cell or human cloning research filed suit in December, and Green sided with them.

“Missouri Roundtable For Life is gratified that Judge Green has upheld the rule of law and protected the taxpayers and citizens of Missouri from state officials implementing an unconstitutional law,” said Fred Sauer of Missouri Roundtable For Life. “We are dedicated to ensuring that Missouri citizens understand all the details of the MOSIRA scheme, so that politicians and their special interest cronies will never try this again.”

MOSIRA has long been a top priority of the state’s high-tech and biotech industries, who say Missouri needs funds to invest in startups to compete with other states and grow jobs here. They have pushed the bill for several years now and won votes in both houses, only to see it die.

“It’s disappointing,” said Donn Rubin, president of the St. Louis biotech trade group BioSTL. “What’s frustrating is that something that is so broadly supported gets caught up in unrelated struggles over other issues like tax credit reform.”

While the ruling puts MOSIRA on ice for this year, it’s not clear what will happen next.

State officials could appeal the ruling - a spokesman for Gov. Jay Nixon did not immediately return calls seeking comment. Or a new version of the bill could be filed in the General Assembly. If passed on its own, it would not include the “contingency clause” that Green struck down.

But Senate Pro Tem Rob Mayer (R-Dexter) told the Kansas City Star that a new bill was unlikely to succeed without broader tax credit reform.

“That was true during the special session and that’s true now,” he said.

Read more here: http://midwestdemocracy.com/articles/missouri-judge-rules-mosira-unconstitutional/#storylink=cpy

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