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Business Today -

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(generated from captions) Regional markets may continue Regional markets may continue

to rise after a strong lead-in

from Wall Street. Yesterday

they were broadly higher.

For more on market action

I'm onned by Julia Lee from

Bell Direct. Good morning.

We've seen a rally on Wall

Street at start of the week? It

Street. Quite was a great session on Wall

Street. Quite a significant

one. One where a lot of the

short sellers and the bears in

the market really gave up and

the US market moved higher. We

saw the S & P 500 index move

onto positive ground, up by

0.4% for the year, which in

itself is a pretty amazing feat, seeing at one point in

2009 the index was down by 26%.

Once again it was a the

financial stocks which helped

the market high questioner. We the market high questioner. We

saw the S & P financials index

rise by 10% and the economic

news out of the US was positive

with pending home sales up by

327% in March as well as

construction spending higher by

037%. Both of these surprising

the market and adding to hopes

that perhaps the housing market

has bottomed. We sought Dow and

Nasdaq up by 276%. The S & P 500 gained a 500 gained a mossive 400 overnight. Shares in Europe

also gained? We saw London

close for a holiday but we saw

shares? Germany as well as

Paris gaining ground and

positive economic data from

around the globe really

helping. We saw the China purchasing index rise for the

first time in nine months. That

was good news for

commodity-based companies with

the No. 1 steel maker in the

also saw economic data world gaining more than 8%. We

also saw economic data coming

through in Europe. Consumer confidence coming in better

than expected, rising to 34.3

in April. So we saw the FTSE

closed for a holiday but the

German Dax rose by 2.8%.

Staying in Europe bsh - the EU expects an economic contraction

of around 4% there? We are

seeing the European Commission coming out with some coming out with some forecasts.

They're expecting a contraction

in the euro area of 4% in 2009

before being quite flat in 2010

with a contraction of 0.1%. We've also seen some forecasts

out of Germany and they're

expecting to see a 4.5%

contraction this year before a

rise of 0.5% next year. All up, the European Commission is

expecting unemployment in the

Eurozone to peak at 11.5%. So

some pretty dour forecasts

coming through there. Later

today we'll see Australia's

latest rates decision. What are

we expecting? The market is

really expecting rates to

remain on hold in Australia.

The Reserve Bank is expected to

try to work out whether

previous interest rate cuts and

stimulus has had an effect in

the economy. Also on May 12, the Australian Government

releases its budget which is

expected to hold some expected to hold some more

stimuli. This is despite all

the bad deteriorating economic

data coming through. If we do

see a surprise cut, expect the

market to react quite

dramatically with a sell-off in the Australian dollar as well

as a good session for

discretionary stocks but all up

the market is expecting no

change today. Before we go,

let's look at currencies. How

is the greenback performing

against the other majors? One

thing we've seen around the

world is that investors world is that investors are

adding risk to their portfolio.

That means riskier assets are

in play. The safer assets like the US dollar have been sold

off while the riskier assets

like the euro have gained

ground. So we have seen the US

currency weakening against the

majors. Commodity-based

currencies also doing well, so

the Australian dollar and the

Canadian dollar gaining ground

but it wasn't a good session

for the US currency. Thanks for

the update. Julia Lee from Bell

Direct there. Now a look at

what's happening with

currencies and commodities.

Much of the surge on regional markets was

underpinned by fresh data from

China showing manufacturing ex

anded for the first time in

nine months. The purchasing

managers index or PMI

registered a sharp rise in

April. The reading confirmed

official figures which show

sector is stabilising and an

economic recovery is under way

of the analysts say the

combination of government

stimulus packages and an

increase in orders has led to

the improvement. Meanwhile, a new survey has shown

manufacturing activity in India

also increased in April. The

first rise in five months. The

ABN AMRO PMI index climbed to

53.3. The positive

manufacturing data follows a

surge in orders in March. The

Australian Government's changes

to its Emissions Trading Scheme

have failed to win the support

of big business groups. It has

delayed the start of its

emissions trading program by 12 months and offered industry

more financial assistance. But

many big industry groups say

the changes only defer the pain

and warn that meeting carbon

reduction targets will be

difficult. Under the revised plan, the start date will be

pushed back a year to 1 July

2011. The upper end of the

carbon reduction target range

has been lifted from 15 to 25%.

Carbon prices will be fixed at

$10 per tonne for the first

year, then will revert to a

market-based pricing mechanism.

And additional assistance will

be granted to trade exposed

industries. We think we've got

the balance right. This is hard

policy. Difficult policy. But

one thing I know for certain is

that every business

organisation we've spoken to wants a certain investment

environment for the future.

Heather Ridout says the

Australian Industry Group's

wish list has largely been

granted. But warns that

achieving a 25% reduction in

emissions by 2020 will be difficult. Of itself, for

Australia to undertake that

kind of target would be unrealistic and arguably

totally reckless. But when you

put it in the context of the

conditions the government has

imposed, we're satisfied there

are sufficient conditions on

that 25% target to give protection to Australian

industry. And the Australian Chamber of Commerce and

Industry is concerned about the

rising price of energy once

market-based carbon pricing

commences in 2012. That's an

issue for business where

especially business that can't

necessarily pass on those

impacts of higher energy

prices, and that can refer to a

number of small and medium size

enterprises across Australia

where they may well tougher

higher energy costs but have

difficulty passing that on to

final consumers. While the main

business lobby groups are largely supportive of the

government's changes, there's

much greater concern from industry groups at the

forefront of emissions trading.

The Minerals Council says the

government should've phaseed in

the introduction of carbon

permits like most other

economies are planning to

do. There's a great deal of

uncertainty throughout the

industry, both at management

level and all the way down to

the rank and file worker. They

fear for their jobs. They can't

understand why it is that a government

government would impose a tax,

a cost to the bottom line of

our businesses that is not going to deliver the

environmental benefits that

we're all after. The en

Energy Supply Association says

the amendments do nothing to rectify critical flaws in the

original plan. There needs to

be ongoing investor confidence

in the sector to ensure future

energy supply and we need to

see that there nor increased

risk prepare --

premiums to the sector and we

also need to ensure there is

confidence in the long-term

carbon price signals will be.

And the Australian Bankers

Association says the changes

will add to complexity,

uncertainty and costs and

inhibit the ability of

businesses to manage their

carbon price exposure. The

range of business concerns

means that Kevin Rudd and Penny

Wong's efforts to win over

their political foes might just

be half the battle when it

comes to introducing laws on

emissions trading. To look a

little more closely at how the

mining and resources sector has

reacted to the news I'm joined

by our regular commodities

analyst Jonathan Barratt,

Managing Director at Commodity

Broking Services. Good morning.

Welcome to 'Business

Today'. Good morning. Firstly

, how worried were the big Australian resources companies

about the proposed trading

scheme to begin with? I think

they were very worried because

they didn't think they actually

had a good plan or the proposed

plan by the Rudd Government was

something that they really

couldn't work with. So if

anything, I think they were

concerned read -- leading into it and as it

stands they're relieved it's

been pushed forward. And

looking at the Australian

market, the mining sector was

boosted by the news of

Australia's decision to delay

the start of the carbon trading

scheme to mid 2011. What's your

reading of that? I think

already we're seeing more signs

that that part of the economy

is picking up. I think this

actually gave a bit more of a

leg-up. What we've actually

seen, I think is a lot of

industry experts actually

suggested that implementing the

proposed trading scheme at the

moment would actually act as

about a 2.5 million or

destimulus packages. When

you've deferred it and just

moved it away we can see there

is a bit more they can focus on

in terms of trying to get more

of a recovery under way. So

you say the market looks happy

about this. But practically

speaking what will it mean for

Australia's big miners? I think

really it sort of just defer

what is they're having to do,

but practically, I think it

means that they can actually

get down and focus on what they

have to do at the moment. That

is, returning profitability.

Remember, a lot of the miners

have gone through such a large

deleveraging process this was

the cloud on the horizon that always caused concern.

Practically it means they can

concentrate on working their

way through this recession and basically putting more product

out into the market and doing

it in a profitable way. But

you reckon it's always been a

cloud out there on the horizon

that's been hanging over the

sector. It hasn't gone away.

It's been deferred, so is that

something that they will be

distracted by? I think it will

still be there but you also

have to think it's not just

deferred for one year, it's

actually deferred for two

years. Because prices will be

fixed at $10 for the first

year. So effectively that's two

years of delay. I think at

moment yes it just in practical

terms means that they can focus

and I think this deferral

suggests that let's wait and

see, but more importantly,

let's see what Copenhagen has

to say at the end of to say at the end of the year

when they actually talk about

the global emission s and Mott

just the domestic side of

it. What do you think

Copenhagen will say? I think

they'll probably bring more of

an al lined trading system and

when one the whole globe can

focus on rather than trying to

do it separately or

domestically as we are in

Australia. Let's look

particularly at the coal

sector. How has coal been

trading this year? Coal like

particularly iron ore, remember

Australia is the largest

exporter of iron ore and coal,

I actually think our prices

have been down prabl close to

about 2007 levels. So prices

are already down, so I'd

actually see that price will

probably start to pick up

pretty much as a result of

this, and you will probably see

that there will be more profit,

I think, actually moving into

this sector as we start to

emerge from this recession.

This is really, though, a

short-term reprieve. The

government has left the door

open for a tougher 2020

target? That's tough. We really

have to see what they come up

with. I actually feel that

trading program can be a bit more organised, and although

they have deferred it, who's to

say they're not going to defer

it for another year if they

can't actually get it passed? I

think that's the concern. We

all do have concerns about they

misses trading but to me the

important thing is sort of

having a good plan that

actually works and is industry

recognised. Looking at oil -

it had those big jurns but now

it's pared back those recent

gains. It's hovering around US

$53 a barrel. Why is that? I

think it's this optimism over

the general recovery. We've

seen some positive data out of

the India and China just

yesterday. When you look at it,

where it is actually trading on

the chart, it is at a level

that if it does break we can

see prices back up through the

US $60 barrel. So it is very

important. I think people,

there's this ground swell

developing that people are

saying that this recession is

going to be a bit shorter than

we first thought, and that as

oil is a primary input, we can

actually see it trade higher.

We'll have to leave it there.

Thank you. No problems.

Fiat's strategy to survive

the crisis in the car industry

by increasing its assets has

led to takeover talks for

Vauxhall in the UK. The Italian

car maker has agreed to buy 20%

of the ailing American car

giant Chrysler and the deals

would make it the world's

second largest car company. Germany's Foreign Minister at

an Opel factory today ahead of

a meeting with Fiat's bosses

which could decide the fate of

thousands of European car

workers. Opel and its UK sister

company Vauxhall are in urgent

need of a new investor and even Cabinet colleagues con shield

that some jobs would have to go

if GM Europe is to survive. Any

solution we find at the end of

the day will also be connected

with a certain consolidation

process and with consolidation

usually also job losses could

be connected. If control of

Vauxhall and Opel moves from GM

to Fiat, it would make the Italian car manufacturer the

second largest player in the

world, with sales of over ?72

billion a year. The 1600

workers at Vauxhall's plant

here in Luton will be anxiously

waiting to see who takes

control of their company.

They've already scaled back

production here and the fear is

any new owner may want to scale

it back even further. It'd lead

to a cut Pack in capacity and

we'd see that capacity affect if nowhere else Germany and

then at least one of our plants

namely the van plant in Luton.

GM's European operations have

lost over ?6 billion since

2002. The group which includes

Saab, Opel and Vauxhall

directly employs almost 56,000

people. Of that, 5,000 work

here in Britain. This latest

bid comes only days after

President Obama confirmed that

Fiat would take a major stake

in America's third largest car

maker Chrysler. Fiat has come a

long way from being a medium

size regional player, which

specialised in making small

cars. But whether Fiat can

afford this is another

question. It made a loss of

nearly ?400 million in the

first three months of this year

alone. Offshore tax loopholes

government's overhaul of the US are the latest target in the

economy's regulatory framework.

The proposals will cut some tax

deductions for firms which earn

profits in countries with low

tax rates. President Obama says

800 extra federal agents will

police the laws, which could

reap over $210 billion in tax

over the decade. Mr Obama says over the decade. Mr Obama says

he wants to make it easier for

American companies to create

jobs at home. For years we've

talked about ending tax breaks

for companies that ship jobs

overseas and giving tax breaks

to companies that create jobs

here in America. That's what

our budget will finally do. We

will stop letting American

companies that create jobs

overseas take deductions on

pay any their expenses when they do not

pay any American taxes on their

profits. The administration

plans to use the tax savings

for home-grown companies to

invest in research and

development to enhance

America's competitiveness. Mr

Obama now needs congressional

approval for the changes which

could come into effect in 2011.

The rebound on markets signs of manufacturing recovery manufacturing recovery in China

suggestions the worst of the and India have led to

global financial crisis has

passed. But in Europe and the

UK it could take until the

second half of next year before

an upturn occurs N China which

is the only major economy

that's still growing a massive

government stimulus package has

prompted a rise in the output of manufacturers which has

sucked in goods from Japan,

Singapore and South Korea and

reduced the declines in their

exports. Over in the US, orders

received by US factories are

according to widely followed still falling sharply but

and influential surveys,

consumers and manufacturers are

feeling a bit less down beat.

And since early March, US

shares have surged almost 30%

from their gloom induced lows.

Here in the UK, share prices

have risen a bit less, around have risen a bit less, around

20% from their recent lows. And

a survey of British

manufacturers showed they were

a bit less glum, too. I think

we're seeing increasing

evidence that the degree of

weakness in the UK is starting

to dissipate. It's good news.

The mood has been excessively

pessimistic with people

thinking things would get worse

and worse and these numbers

increasingly make it clear

that's not true. In Australia, that's not true. In Australia,

the lowest interest rates in a

generation still can't stop the

slide in house prices. They

fell more than expected during

the March quarter, and are

nearly 7% lower for the year.

Adding to the property woes is

the employment outlook, with

new numbers pointing to further

increase pressure on the lob Josses and that will

Reserve Bank to cut interest

rates again when it meets

today. The property market

hasn't been given the last hasn't been given the last

rites yet, with plenty of bargain hunters still out and

about. The property is ...

sold. Someone always seems to

outbid me. The competition is

so fierce. You wouldn't know it

from these numbers:

The worse than expected

numbers don't tell the full

story according to Chris

Joy. They're excluding 20 to 30

% of the market. Like first

home buyers, lining up to grab home buyers, lining up to grab

an apartment or new home. It's

also claimed the falls are

exaggerated by tumbling prices

for upmarket real estate,

although not everyone dismisses

the findings. This is a

reminder that the first six

months of this year into the

middle of the year will be very

tough in our economy. Here's

another reminder:

It will all come into the

mix when the Reserve Bank board

meets tomorrow to consider

interest rates. There's a

strong view the board will want

to see the Federal Budget

before making its next

move. We're expecting rates to

either be unchanged or a small

cut of 25 basis points. And

home borrowers may not even see

all of that. There was good and

bad news for the 35,000 shareholders attending the

annual Berkshire Hathaway meeting. Warren Buffet's investment company didn't have

a stellar year thanks to its

exposure to the US banks but Mr Buffett managed to be

optimistic about the future. It

isn't Pearl Harbor any more.

But he cautions the economy

remains in peril and a time

line for recovery remains

line for recovery remains

vague. Our economy back in

September was like finding a

friend of yours in quicksand up

to his chest an he's going

down. And we threw a rope out

to him. He ties it around

himself. You hook it to a car

and you yank him out. Now, you

probably will dislocate a

couple of shoulders. You can't

do it without some pain

involved. But the important

thing was to get out of the

quicksand. And we did that.

This tell it like it is

candour is why 35,000

shareholders gathered in Omaha

Nebraska for the Berkshire

Hathaway annual meeting on

Saturday. Buffett answered any

and all questions. I want to

hear, really, what he says and what's gonna happen to his

companies, what's actually

they're doing to help their

companies do better. I want

to know when he thinks the real

estate market will recover.

Buffett sounded off on these

issues and others while giving the current administration

credit for its efforts to

revive the economy. We're doing

the right thing. And I tip my

hat to the administration. To

be sure, like most publicly

traded companies, Buffett's

Berkshire Hathaway has taken a Berkshire Hathaway has taken a

hit. Its shares have fallen

31% from a year ago but still

the world turns to Warren

Buffet for his wisdom, which he

delivers with his typical

mid-western wit. We were all in

a party. It was kinda of like

Cinderella at the ball. It was

a lot of fun. I got the real

thing here. What else have we

got? I like this the best. He

may be called the oracle of

Omaha but even Buffett admits

he can't predict the future. He

says the greatest risk beyond

the horizon replanes the one we cannot see. --

remains. The impending demise

of the Pontiac brand is seen as

one of the most telling

indicators of the crash in the

American car industry.

Enthusiasts are lamenting the

end of Pontiac, which ruled the

road back when horsepower was

the thing to brag about. This

is a picture of pain. is a picture of pain. Abandoned

California runway, overcrowdd

with foreign luxury cars

because there are no buyers.

Mercedes, BMW, Lexus will all

live to fight another day.

That's not the case for the

brand that may be dearest to

this nation's baby boomers. The

great one is Pontiac GTO for

1967. If I was trying to be the

alpha maeft parking lot I

would've picked a 68 GTO. Smart

choice because this model now

sells for $90,000. Does it

still turn heads? Every day.

Wait till you hear it!

It was not just the sound of

the engine. America's original

muscle car dominated the radio

airwaves with 'Little GTO'.

SONG: # Little GTO you really

lookin' fine # And GTOs have

been starring in TV shows and

hit movies ever since.

Pontiac had the audacity to

simply steal the name of the most famous sports car of the

fame, the Ferrari GTO. Many

Italians were outraged but the Italians were outraged but the American public loved T the GTO

was designed by the renegade

engineer John Delorean, creator

of the outrageous gull-wing

sports car immortalise ed in

'Back to the Future'. But GM just announced the entire

Pontiac line has no future.

It's being shut down next

year. My God, they can't get

rid of an icon brand that's been around since

been around since 1926! Yes

they can. Pontiac which boasted

"we build excitement" is at the

end of the road. Now let's look

at what's making headlines. The

'Standard' reports on why the

slide in local retail sales

continued in Hong Kong in March

as a gloomy jobs outlook kept

shoppers at bear. Barack Obama

squares up to big business over squares up to big business over

tax voidance. And the 'Wall

Street Journal' also looks at

Obama's plans to target these

matters. If you'd like to look

back any of our interviews,

please visit our web site. We

look forward to your feedback.

I'm fit Fittler. Thanks for

joining me. Enjoy your day.

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