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Jerome Powell, the new head of the U.S. Federal Reserve values continuity in policy, suggesting that the U.S. central bank will gradually raise interest rates in 2018. A raise is expected at the March 2018 Fed meeting. Powell said at his swearing in ceremony- "While the challenges we face are always evolving, the Fed's approach will remain the same. We are in the process of gradually normalizing both interest rate policy and our balance sheet with a view to extending the recovery."  Five interest rate increases since December 2015 have taken the short term benchmark rate to a range between 1.25% and 1.5%. During 2018 3-4 rate increases are expected.

Powell is seen as a consensus oriented leader with a focus on careful evaluation and rigorous study. Powell is pushing for a continuation of the Fed's policy to improve transparency, and responsiveness. 

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In a new first China's Chang'e-4 probe is about to touch down Jan 3rd on the dark side of the moon, and dispatch a rover in a vast crater to explore the moon. China is using this as the first step in setting up a planned lunar base by 2030. This happens as president Trump revives the U.S. space program after it languished under the Clinton, Bush and Obama administrations restricting to unmanned space exploration.

China National Space Administration is the best funded space agency in the world after U.S.'s NASA. Some experts say NASA has lost its focus falling victim to shifting political agendas. An earlier funded program to return astronauts to the moon by NASA was cancelled in 2010 during the Obama administration. This is now jolting the Trump administration into action to revive the programs whose goals are now harder to achieve for the moon program dates in 2023.

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Bill Ford answers some very pertinent and good questions with confidence and clarity in a meeting with Maria Bartiromo of CNBC and Business Week. His answers are direct and show his thinking today and throughout his difficult experience of the last few years struggling to establish his presence at Ford Motor and then struggling to get the right person to run the company. "It hurts us to see the employees of the company suffer," and this has made this experience at Ford have a personal impact as Ford traumatized over the layoffs of employees with many years of service. And he himself was not easily accepted in the prevailing culture of the time at Ford, and asked to drop his contacts with environmentalists when he joined the Board, which he says he told them he had no intention of doing. He knows his managers had foresight in borrowing a "ton of money" just before the credit crisis struck, and which will be a key to going through any further deterioration of the market in the next 2-3 years. Much clearer than any of the other manufacturers is Ford's new vision under, Bill Ford, Mullaly and Farley, with the finance guys in the background, of Ford as a car company and focused on smaller fuel efficient automobiles. And Bill Ford's vision and aspiration has a lot do with it, who he helped bring in and what he supported and pushed for in the old Ford culture helped Ford to grasp a vision of its future with clarity and purpose like a new beginning. Ford will continue to make trucks but it believes as Bill Ford does that the market will never go back to its old ways, that the absolute price of oil will have less to do with it than the psychology which will push for smaller more fuel efficient cars. And as he points out its European cars are" extremely well appointed and very, very succesful and extremely profitable"....

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Microsoft CEO completed 36 major acquisitions since taking over from Steve Ballmer in 2014. In this report Jay Greene of WSJ points out a significant change under Nadella. Under Gates and Ballmer the heads of companies acquired were not brought into company executives discussions. Nadella invited these heads to join the rest of the company's top managers to meetings to hear different views. Nadella says Microsoft would not have missed big trends had it listened more. Under Ballmer acquisitions such as Nokia were not properly handled. Even under Gates in the earlier period products in Search later developed by Google did not get the attention they deserved and heads of companies acquired did not get  to actively participate. The Not Invented Here Syndrome applied to Microsoft managers. The aggressive attitudes did not produce the best results. Like Apple's Cook who has a collaborative style, Nadella has set out to open up the company to different ideas and people. Nadella has shifted the company away from earlier products to cloud computing and mobile computing to produce better results. Under Nadella open source software programming receives the openness and respect it deserves, after the Ballmer years. The change in attitude is real and Nadella as a Microsoft veteran for 24 years has been able to steer the company in a new direction. ...

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Grand Rapids, Michigan, is an example of what can be achieved for U.S. midsized cities when public and private efforts combine to build friendly spaces for young people in downtown areas.

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Fiat plans to expand manufacturing in Italy by making the Panda small car in Italy instead of using a plant in Poland. This would expand production by Fiat in Italy from 650,000 to 900,000 cars, with an investment of 8 billion euros in 2 years. One of 5 unions gets 40% of the vote at the Fiat plant in southern Italy that will make the Panda. Fiat had asked for new working conditions at the plant in exchange for its investment and a new social pact with the unions.

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Reorganizing a large and ineffective sales force at H-P is one of the biggest challenges facing new CEO Mark Hurd, who took the job in 2005. Under CEO Carly Fiorina the situation had deteriorated. The H-P sales force has become a large bureaucracy which takes much longer to get things done, with the added problems of duplication, redundant layers of management, delays getting approvals and so on. Corporate customers had difficulty reaching salespeople, and getting simple tasks done such as price quotes or getting a sample product took way too long for customers. Salespeople spent only 30% of their time in front of customers, with the bulk of their time spent navigating the large H-P bureaucracy to get things done. Out of 17000 salespeople only 10000 sell to customers, 7000 or 40% are in support or administrative positions. Four people from different groups can be found chasing the same customer, and different quotes from different salespeople cause duplication and confusion. H-P corporate salespeople did not specialize in any particular product area. And salespeople used 30 different types of software to track sales because of years of acquisitions, including the acquisition of Compaq. There are 11 layers of managers between the CEO and corporate customers. Hurd's solution was to organize the sales force so that it was responsible for specific products and specific countries, similiar to the situation he had seen at his previous company NCR. Responsibility and authority for decisionmaking were matched and clearly assigned. Each salesperson had a narrower focus and was to be limited to 3 accounts. H-P's 2000 corporate accounts would have just one salesperson to interface with. Sales would only use one type of software from Oracle Corporation. Changing an organization the size of H-P is a slow process. A year after these changes, the VP of Information Technology at Lear Corporation, says he still does not know who has been assigned as the salesperson for Lear. He has not seen much change in H-P sales. Hurd also reduced the number of employees by 10%, or about 14,500 people. After these layoffs the layers of management have been cut from eleven to eight between Hurd and the corporate customer, still too big a set of layers. ...

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A partnership is formed between Dr. Reddy's and Glaxo focussed on emerging markets, excluding India. The products will be manufactured by Dr Reddy's and licensed and supplied by Glaxo in countries in Africa, the Middle East , Asia-Pacific and Latin America. In certain markets they will be co-marketed by the two companies. The deal gives Glaxo exclusive use of over 100 branded pharmaceuticals in areas like cardiovascular, diabetes, oncology, gastroenterology and pain management. Under the terms of the agreement the revenue results will be reported by Glaxo and shared between the two companies. This is part of Andrew Witty's strategy to take the expansion in emerging markets -especially in association with India- to a new level. Witty recently took over as CEO of Glaxo and is one of the younger drug executives at 43. Last month Glaxo acquired a 16% stake in South Africa's Aspen Pharmacare's Holdings Ltd. in a deal that expanded an existing partnership. Glaxo agreed in June 2009 to a deal with Shenzen Neptunus Interlong Bio-Technique Co. to make influenza vaccines for China....

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The funny German ad for the Jazz is playful and funny. Its a redesigned Honda Fit minicar sold in Europe as the Jazz. Acura's TSX is essentially a European Honda Accord. Saturn is offering a version of the European Opel Astra compact. Ford is bringing the Fiesta here from Europe as the new Verve compact car and it unveiled a prototype of a New York City taxi built on a van Ford sells in Europe. VW is planning to bring more European cars here and build a factory in the US. And Mercedes is brining models here equiped with its new Blue Tec diesel engines. And Daimler is bringing its tiny Sart Fortwo car to the US with a website that has taken 30,000 orders already. The market is going global for cost reasons. And its a market looking more and more like the European market where the local carmakers and the foreign carmakers are all jostling for a share of the pie with a fractured market and each car maker having a small share of the market. Ford, GM and Chrysler compete with Toyota, Honda, Renault-Nissan, VW, BMW and Mercedes all with a small share of the overall market and all these companies now operating as global companies with operations all over the world and building models now for a worldwide market. Ford is clearly following this trend and Mullaly wants to see good European modelsbrought quickly into the US and costs for developing models shared across a worldwide market. Smaller size also works to bring European and Asian models adapted to the US because the US market is moving towards fuel efficient smaller cars. So there is a convergence from a number of angles, for it to make sense to build a good car and sell it in as many places as possible, and the old region based logic does not make sense any more....

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Diversification has helped BHP weather the decline in commodities prices better than Rio Tinto, Anglo-American and Vale. BHP is expected to report profits of $12.5 billion for the last fiscal year. BHP is also in the oil and gas business, in addition to iron, ore, copper, coal and aluminium. This has made it possible to take writedowns of $5.5 billion and still make stable profits. Andrew Mackenzie, the new CEO of BHP, is a Scotsman who is focussing on the productivity of capital and cost-cutting. BHP announced $1.9 billion in cost savings since July 2012. Mackenzie's goal is to reduce capital expenditures from $18 billion today to $15 billion or less in 2-3 years. Capital is tied up in incomplete projects taken up in the boom period of higher prices, and the process of reducing capital expenditures is gradual. Capital expenditures in the mining business increased dramatically from $20 billion to $120 billion from 2003 to 2012. For most of this period China's economy registered growth rates of over 10%....

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Excesses in condo building in Miami, a city of 400,000 people,where most of the condos were built for buyers buying for speculation hoping to flip these condos to the next buyer. Icon Brickell is one of these developments in Miami, with 1646 condos. Since 2003 83 towers with nearly 23,000 condo units were added to the downtown skyline. As of the end of 2008 45% of these condos were unsold. Only 30 of the 500 Icon Brickell condo units that were ready for closing in December actually closed, and many buyers including 144 represented by one lawyer are trying to get out of the contracts, according to Mr. Perez who is the developer for these towers. These condo units were listed for $400,000 to 800,000.

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The need for private investment to fund infrastructure growth in India.

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Paul Barrett of Business Week reviews McLean and Nocera's new book on the financial crisis; "All the Devil's Are Here." The title takes a line from The Tempest- "Hell is empty. All the devils are here." McLean and Nocera focus on securitization, the credit-ratings that were improperly given, and the chicanery of bankers, mortgage issuers and others behind the idea that every American should be able to have a home. Attention is also focussed on the loose monetary policy of the Greenspan era, with Greenspan airily dismissing all concerns, including concerns about the growing trade deficit with China. Barrett asks, what about the future? Barrett says the Bernanke easy monetary policy risks making the mistake a second time, and in all probability the devils will be coming back again in some other form.

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The crisis of late 2008 and early 2009 in the global economy saw huge stimulus programs, resposible economic management, and rapid recovery by the end of 2009 in developing countries. China put in place a large stimulus program, and in most developing countries, India, Vietnam, Brazil and other countries efforts were made to strengthen the safety net for the poor and to introduce stimulus for creating jobs. India and Indonesis saw the return of ruling party governments and in Brazil Lula da Silva had favorability ratings above 60%. So contrary to earlier fears in late 2008 their was both asense of political stability and asense of confidence in the developing countries. Capital is flowing into these countries and the IIF says that net private capital inflows to developing countries will double in 2010 to $672 billion. Russia which saw capital outflows of $50 billion in the first 9 months saw $20 billon of capital inflows in the fourth quarter of 2009. Half of the 140 million laborers working in Chinese cities returned home in early 2009, a fifth stayed there and another fifth counld not find work when they returned to the cities. But as the stimulus in China kicked in, and infrastructure development surged, (see link to the rail infrastructure spending) by the middle of 2009 jobless ness among rural migrant workers went down to less than 3%. This shows in the Pew Global Attitudes Project wth more than 40% of respondents in India, China and Indonesia saying that they were satisfied with their lives, in China this was 87%. In France, Japan and Britain the share is below 30%. In America 49% of those in the Pew pollingfelt that America should mind its own business internationally, 30 points higher than in 1964. When asked "Are you better off in free markets?" the respondents share fell in 2009 in Germany by 4 points, in Spain by 10 points. Shares rose in India and China, and stayed flat in Brazil and Turkey, so there is no backlash against free markets in developing countries....

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This NYT editorial on Jeb Bush economic advisor Ben Hubbard of Columbia University, says his response that "compensation didn't stagnate" about the wages and benefits of working class Americans and the middle class does not reflect the way these groups are falling behind. It says that the public cannot expect a new perspective from advisors who were in top positions in previous administrations when the middle class incomes and living standards began to face stagnation.

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NYT's Mokoto Rich provides this excellent report from Daegu, the fourth largest city in South Korea, where the current president's father attended teacher's college, and where she draws her base of support. Her father is the dictator president Park who ruled South Korea from 1961 to 1979, known for efforts to modernize South Korea and protect it from the Communist North.Most of the city's residents no longer support president Park Geun-hye because they say even though she herself is a good person, she had poor judgement in having a friend who they say swindled her. That friend Ms. Choo Soon-Sil won favors and contracts using the powers of the presidential office with the full knowledge of the president. This makes her incompetent for the presidential office say even conservative supporters who disagree with the opposition's protests. 

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This WSJ editorial points out a big concern in the third quarter 2012 economic growth figures- the figure showing non-housing related investment contracting by 1.3%. It says the U.S. borrowed $5 trillion and all it got in return was 1.7% economic growth- 1.7% being the growth in U.S. GDP for the first 9 months of 2012. It also points out that the growth came from consumer spending and the Federal Reserve's money printing. The consumer spending would be hard pressed to continue if incomes remain stagnant without the capital investment and hiring from the private sector. Government spending accounts for 0.7% of the GDP growth, and estimates for private sector growth in output is about 1.3%.