Saturday, October 22nd, 2011
Muammar Gaddafi’s golden gun
Gold Market Cheat Sheet (October 24, 2011)
For the week, spot gold closed at $1,642.38, down $38.35 per ounce, or 2.28 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, fell 6.88 percent lower. The U.S. Trade-Weighted Dollar Index slid 0.49 percent for the week.
- The performance of the gold funds was in line with benchmarks and peers for the week, despite a jittery market. A handful of companies made positive gains. Among them is Detour Gold, up 4.4 percent, which is being driven by hedge funds going long Detour Gold and shorting Osisko Mining, down 9.4 percent. Rubicon Minerals was also up 4.0 percent on takeover speculation for the week.
- Further to the original agreement of C$92 million as a cash-share takeover of Grayd Resources, the takeover offer was sweetened to C$183 million cash instead. Since the announcement of the takeover on September 19, Agnico-Eagle shares have plunged more than 30 percent; it can be understood why Grayd would ask for more cash than shares.
- The European sovereign debt crisis is still dominating sentiment. Ultimately the money-printing solution should be positive for gold and the companies that control large resource bases of high grade reserves. The Russian Central Bank noted they will continue acquiring “huge volumes of gold.”.
- Bullion continued the recent trend, and outperformed equities for the week by 2.28 percent. The ongoing trend of weakness in junior mining companies relative to the seniors continues. The Market Vectors Junior Gold Mine ETF finished down 7.67 percent for the week, while the Market Vectors Gold Miners ETF closed down 6.87 percent.
- The plunge in Agnico-Eagle’s share price this week is reflective of how nervous investors are in the current economic environment. The write off of Goldex, Agnico-Eagle’s lowest grade operating mine, is a classic case of the street assigning too much value to low quality assets. The write down to the balance sheet is about $170 million but the market trimmed the valuation by $2.7 billion. Low grade assets have a much lower probability of delivering a dollar of profit to the bottom line.
- Only two mining companies have yet to meet consensus and guidance on gold production on their earnings this quarter. With no exception to the trend, Newcrest Mining’s gold production for September fell 16 percent to 587,286 ounces, being heavily affected by heavy rain and maintenance shutdowns at its mine in Papua New Guinea. Political instability, royalty concerns, strikes and weather influences have all been affecting the industry as a whole for the third quarter.
- The EU Summit meeting will take place this weekend. There are some expectations that a bank recapitalization could be worked out and this would take a lot of uncertainty out of the market. China, which Europe’s largest, trading partner, could see some benefits out of this. With Chinese consumers being the destination of about 60 percent of all commercial gold sold today, some stability would be a welcome relief.
- India’s festival, Diwali, takes place next week. With the festival around the corner, a slight dip in gold prices has presented a great buying opportunity for the metal. Traders are speculating that gold jewelry buying and smaller denomination coins will surge during the Indian festival of lights, with sales already picking up significantly.
- In response to weak mining sector growth and criticism over the industry’s contribution to economic growth, Tanzania is said to raise gold royalties by year end as the country continues restructuring the sector, the Minerals and Energy Minister William Ngeleja said on Wednesday. Despite Tanzania’s annual gold exports tripling to $1.5 billion in the past five years as the price of gold has risen, the government revenues have remained stagnant around $100 million a year.
- With talk of higher taxes, it is no wonder that Tanzania’s mining sector growth slowed to 5.8 percent for the second quarter this year in contrast with the 20.5 percent growth of the second quarter last year. Down from 28.3 percent in the first quarter of 2010, the sector only expanded to an annual of 2.1 percent in the first quarter of this year. Ongoing uncertainty over government policies, a prolonged power crisis and limitations within infrastructure were all contributing factors to this decline.
- Negotiations surrounding mining export and foreign investments bans for Eritrea were scheduled to begin Tuesday among UN Security Council members. The new draft resolutions, which stated in part that “all states shall prohibit investment by their nationals, persons subject to their jurisdictions and firms incorporated in their territory or subject to their jurisdiction in the extractive industries and mining sectors in Eritrea,” also calls on all states to prohibit the import of gold and other raw materials from the country, Reuters reported. Eritrea has been under considerable scrutiny from the international community for its reported affiliation with Somalia and funding armed terrorist groups, linked to al-Qaeda.
Tags: Agnico Eagle, Debt Crisis, Dollar Index, Gold, Gold Bullion, Gold Funds, Gold Market, gold stocks, Golden Gun, India, Infrastructure, Junior Gold, Market Vectors Gold Miners, Money Printing, Muammar Gaddafi, Nyse Arca, Printing Solution, Quality Assets, Rubicon Minerals, Russian Central Bank, Share Takeover, Sovereign Debt, Spot Gold, Takeover Speculation, Vectors Gold Miners
Posted in ETFs, Gold, India, Infrastructure, Markets | Comments Off
Tuesday, August 23rd, 2011
via The Trader, thetrader.se
The US justice department says Deutsche Bank knew in 2006 that a mortgage company it was preparing to buy lied to the US government about its mortgages, Reuters reports, yet went ahead with the purchase and should be held financially responsible. http://ftalphaville.ft.com/thecut/2011/08/23/659791/deutsche-knew-of-mortgage-company-problems/
Andy Coulson, the former editor of the News of the World who has been arrested on suspicion of involvement in phone hacking, received significant payments from News International after he took up his role under David Cameron as the Conservative party’s communications chief in 2007. http://ftalphaville.ft.com/thecut/2011/08/23/659806/coulson-received-now-payments-as-tory-aide/
Goldman Sachs chief executive Lloyd Blankfein has hired high-profile Washington lawyer Reid Weingarten, Reuters says, citing an unnamed government source, as the Justice Department continues to investigate the bank. Goldman Sachs shares fell almost 5 per cent on after the report reignited concerns that the bank’s legal headaches may return http://ftalphaville.ft.com/thecut/2011/08/23/659766/goldman-shares-fall-on-blankfein-lawyer-report/
The China Flash PMI index suggests the country’s manufacturing sector could shrink in August, for the second month in a row. Bloomberg reports the HSBC/Markit Economics purchasing managers’ index was 49.8 in August after a final reading of 49.3 for July. http://ftalphaville.ft.com/thecut/2011/08/23/659726/china-pmi-flash-suggests-second-negative-month/
A son of Muammar Gaddafi who rebels said they had captured appeared with cheering supporters in Tripoli, says Reuters, giving a boost to forces loyal to the veteran leader trying to fight off insurgents who say they control most of the capital. Saif al-Islam, http://ftalphaville.ft.com/thecut/2011/08/23/659721/rebels-battle-to-control-tripoli/
Gold has climbed back to all-time highs as a rally on Wall Street fizzles amid uncertainy about the price of oil, the direction of the Federal Reserve and the pace of economic growth, reports the FT’s global market overview http://ftalphaville.ft.com/thecut/2011/08/22/659631/risk-rally-fails-to-gain-traction/
Angela Merkel, German Chancellor, has repeated her country’s refusal to join other eurozone states in issuing joint “eurobonds” as protection from the debt crisis, the FT reports. “The markets want to force us into doing certain things http://ftalphaville.ft.com/thecut/2011/08/22/658981/germany-defies-call-for-eurobonds/
Libya could return to the global oil market within weeks after the rebels appeared to be on the brink of victory, but the full resumption of output is months, if not years, away. Libya produced about 1.6m barrels a day of oil before the start of the civil war, but the six-month conflict has reduced the flow to just 50,000 b/d, according to industry estimates. http://www.ft.com/intl/cms/s/0/3e3e2974-ccd7-11e0-88fe-00144feabdc0.html#axzz1VpA0w13T
Rich families around the world face a choice between surrendering privacy around their investments and significant legal risk as a consequence of new US rules designed to improve hedge fund transparency. Offices established to manage family wealth need only a tenuous connection to the US to be required to register as an investment adviser with the Securities and Exchange Commission. A family that fails to do so runs the risk of punitive damages if sued in US courts by estranged family members or disgruntled employees, lawyers warn. http://www.ft.com/intl/cms/s/0/f5f8ecde-cbf1-11e0-9176-00144feabdc0.html#axzz1VpA0w13T
The European Central Bank bought eurozone government bonds at a brisk pace last week, despite opposition from Germany’s Bundesbank, which on Monday broadened its criticism of steps taken to shore up Europe’s monetary union. The €14.3bn spent was less aggressive than the €22bn of purchases in the previous seven days but still the third-largest weekly amount since the programme was launched in May last year. http://www.ft.com/intl/cms/s/0/d1cd36b4-ccc6-11e0-b923-00144feabdc0.html#axzz1VpA0w13T
Asian shares were mostly higher, as investors bought beaten down stocks amid a tentative recovery in risk appetite. Tokyo stocks edged up as the high-flying yen appeared to stabilize, as Japanese authorities continued to hint at yen-selling intervention. “Despite the recovery (in risk appetite), the mood remains fragile due to lingering worries about the U.S. economy and the euro-zone debt saga,” said Mike Burrowes, a currency strategist at the Bank of New Zealand. Japan’s Nikkei Stock Average added 0.8%, Australia’s S&P/ASX 200 was 1.1% higher, South Korea’s Kospi Composite advanced 2.1% and New Zealand’s NZX-50 was flat. Dow Jones Industrial Average futures were 20 points higher in screen trade. http://online.wsj.com/article/SB10001424053111903461304576525204264056070.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews
Last fall, a group of leading anticorruption activists in India had reached a dead end. Their appeals to authorities to crack down on graft after a wave of high-profile scandals were going unheeded. They needed a figurehead to galvanize the masses and shame the government into action. One of the activists traveled to a rural outpost in western India to enlist Kisan “Anna” Hazare, a military veteran best known for turning a village that was stricken by drought and hooked on alcohol into a model of economic development. In Mr. Hazare, the movement tapped a leader whose austere lifestyle and history of nonviolent protests, including fasts, recalled the spirit and tactics of modern India’s most iconic founding father, Mohandas “Mahatma” Gandhi.http://online.wsj.com/article/SB10001424053111904279004576524251574234220.html?mod=WSJEUROPE_hpp_MIDDLETopNews
Swiss supermarkets are planning further price cuts to tackle the soaring Swiss franc which is driving food shoppers over the border into Germany and France. Retailers like the cooperatives Migros and Coop, as well as discounter Denner, have already cut prices of food, drinks and household and personal care items by up to 20%. Now they plan further reductions in the coming weeks which will extend to other products. http://online.wsj.com/article/SB10001424053111903327904576524740292236386.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews
Portugal is starting to feel the pain of the government’s deficit-cutting drive, raising the prospect of social unrest in a country that has endured three years of austerity with only sporadic and small protests. Compared with other euro-zone countries caught up in Europe’s debt crisis, Portugal has been a haven of calm. Greece has seen violent protests while in Spain, tens of thousands of people took to the streets in May and June demanding political change. http://online.wsj.com/article/SB10001424053111903461304576524392772951396.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews
The number of American households that fell behind on their mortgages increased slightly in the second quarter from the previous quarter, according to a survey released Monday, an unwelcome sign for the U.S. economy. After falling for most of the year, the figures offer the latest indication of how the slumping job market threatens to create new problems for housing. Mortgage delinquencies, while still down from their year-earlier levels, have now edged up in two consecutive quarters after hitting a plateau last year, according to the Mortgage Bankers Association.http://online.wsj.com/article/SB10001424053111903461304576524213444138314.html?mod=WSJASIA_hpp_LEFTTopWhatNews
Gold futures traded over $1,900 in Asia on Tuesday, continuing its record-breaking run, as investors stayed on an alert over sovereign debt troubles in the major developed economies. Gold for December delivery advanced $39.70, or 2.1%, to settle at $1,891.90 an ounce on the Comex division of the New York Mercantile Exchange Monday. Those gains took the metal to its sixth closing gain and fifth settlement record in six trading sessions. The metal traded as high as $1,899.40 an ounce on Monday, an intraday record for the metal. But that record didn’t hold for long, with gold futures at $1,901.80 an ounce in electronic trading on Tuesday, up $10.60. http://www.marketwatch.com/story/gold-futures-move-past-1900-an-ounce-2011-08-22
Brent crude rose toward $109 on Tuesday as fighting in Libya continued and in anticipation of a fall in U.S. crude stockpiles. Remnants of forces still loyal to Libyan leader Muammar Gaddafi fought rebels in Tripoli on Tuesday, extending a conflict that looked close to conclusion on Monday after rebels swept into Tripoli in tandem with an uprising within the city. Continued fighting surprised some in the market, after Brent fell on Monday on hopes for a quick resolution and a speedy restart in exports from the OPEC member. http://www.reuters.com/article/2011/08/23/us-markets-oil-idUSTRE77838320110823
Altogether, there are now almost 46 million people in the United States on food stamps, roughly 15 percent of the population. That’s an increase of 74 percent since 2007, just before the financial crisis and a deep recession led to mass job losses. At the same time, the cost doubled to reach $68 billion in 2010 — more than a third of the amount the U.S. government received in corporate income tax last year — which means the program has started to attract the attention of some Republican lawmakers looking for ways to cut the nation’s budget deficit. http://www.reuters.com/article/2011/08/22/us-usa-poverty-foodstamps-idUSTRE77L45Z20110822
Vice President Joe Biden said the special congressional committee charged with finding $1.5 trillion in budget savings has a chance at overcoming “very, very difficult” odds to reach an agreement by its deadline. The 12-member panel has “a shot of getting a deal that would be viewed by Wall Street, be viewed by everyone, be viewed by the international community as a significant alteration of a trajectory of long-term debt,” Biden told reporters traveling with him to Japan on the final leg of a three-nation Asia tour. http://www.bloomberg.com/news/2011-08-22/biden-says-getting-deal-done-on-deficit-reduction-will-be-very-difficult-.html
Japan’s two-year bonds yielded the least relative to overnight lending rates between banks in nine months on speculation the Bank of Japan will add to monetary easing to counter the yen’s advance against the dollar. The spread fell to 4.9 basis points yesterday, the least since Nov. 4. The two-year overnight-index swap rate, an indication of what traders expect the Bank of Japan’s key interest rate will average during the period, sank to 0.05 percent, the least since Oct. 5. The comparable U.S. rate slid to 0.07 percent on Aug. 11, a level not seen since Dec. 2001. http://www.bloomberg.com/news/2011-08-22/spread-dropping-to-nine-month-low-signals-more-easing-by-boj-japan-credit.html
Hong Kong’s inflation surged to the fastest pace since 1995, encouraging workers to press for higher pay even as the economy teeters on the edge of recession. The consumer price index rose 7.9 percent from a year earlier after a 5.6 percent increase in June, the government reported on its website yesterday. Excluding distortions caused by a public housing subsidy, prices rose 5.8 percent.http://www.bloomberg.com/news/2011-08-22/hong-kong-s-worst-inflation-since-1995-may-boost-recession-risk.html
The aging of the U.S. baby boom generation may slow an already weak recovery as boomers sell stocks to pay for retirement, according to research released Monday from the San Francisco Federal Reserve Bank. Many baby boomers have already sold some assets in preparation for retirement, research adviser Zheng Liu and Mark Spiegel, vice president of economic research, said in the latest San Francisco Fed Economic Letter. http://www.cnbc.com/id/44230121
The Federal Reserve will take action if the economy weakens substantially and deflation reappears, a senior Fed official said in an interview with Japan’s Nikkei business daily published on Tuesday. St. Louis Fed President James Bullard said he would support action if that occurred. “If the economy weakens substantially, and especially if the inflation picture starts to deteriorate so that deflation becomes a risk again, then I think the committee would definitely take action,” Bullard told the Nikkei. http://www.cnbc.com/id/44235901
Unpopular Prime Minister Naoto Kan will likely resign on Aug. 30, his economics minister said on Tuesday, setting the stage for parliament to pick Japan’s sixth leader in five years as the country confronts a nuclear crisis and a raft of economic woes. The race to succeed Kan was blown wide open on Monday when former foreign minister Seiji Maehara, 49, decided to throw his hat in the ring, dimming the chances that the fiscally conservative finance minister, Yoshihiko Noda, could win. http://www.cnbc.com/id/44235663
American consumers have too much debt, not enough savings and are afraid they will lose their jobs—if they haven’t lost them already. It might be time for something that hasn’t been done since the 1930s to get Americans spending again: national debt forgiveness, Stephen Roach told CNBC Monday. A stronger dollar or higher interest rates would encourage consumption Roach said, but he prefers the more “direct approach” of coming up with “ways to forgive the excesses of mortgage, installment and revolving credit, as what was done in the 1930s, that will help consumers get through the pain of deleveraging sooner rather than later.” http://www.cnbc.com/id/44229642
Vice President Joe Biden said on Monday China’s leaders did not seek reassurances about the weak U.S. economy, and he called Xi Jinping — the man expected to take over as China’s next president — pragmatic and strong. Biden, who kicked off a trip to Asia last week with talks in Beijing, said the United States would continue to press China to let its yuan currency rise, but he made clear he did not expect that to happen quickly in the coming year. http://www.foxbusiness.com/markets/2011/08/23/biden-china-didnt-need-reassurance-on-us-economy/#ixzz1VpF4R4Rz
Australian state bond yields are trading at their highest levels since May 2009 relative to sovereign notes as investors shun all but the safest assets on concern Europe’s debt crisis will impair global economic growth. The extra return investors demand to hold states’ debt instead of federal securities held at 74 basis points for a second day yesterday, Bank of America Merrill Lynch indexes show.http://washpost.bloomberg.com/story?docId=1376-LQBDPL0D9L3501-0ON0VOPMQ3HUTFTVKHS51AT5GB
The first hurricane of the Atlantic season has gained strength as it passes north of the Dominican Republic. The Dominican Republic closed schools and evacuated coastal communities in preparation for Hurricane Irene. Irene brought high winds and torrential rain to Puerto Rico, cutting electricity to about 800,000 people. http://www.bbc.co.uk/news/world-latin-america-14625665
Prosecutors have asked a judge to drop a sexual assault case against former IMF director Dominique Strauss-Kahn. They told a New York judge they were “no longer convinced of the defendant’s guilt beyond a reasonable doubt”. The case – based on an accusation by hotel maid Nafissatou Diallo – crumbled in recent weeks over questions about her credibility and motives. http://www.bbc.co.uk/news/world-us-canada-14619921
Bank shares dived on Monday despite a widespread rally across Europe’s major stock markets as questions were raised about their ability to fund themselves. Shares in Royal Bank of Scotland slid below 20p for the first time since March 2009, making it the biggest faller in the FTSE 100 despite the blue-chip index closing up 1.1pc. Barclays and Lloyds Banking Group also saw their shares sink to levels not seen since early 2009, as bank shares made up four of the 10 largest fallers among FTSE 100 companies. http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8716822/Bank-shares-dive-on-funding-fears.html
The “Black Death” of the debt crisis across the euro zone will hurt China’s exports, although Beijing’s relatively small holdings of euro assets will limit damage to foreign exchange reserves, the nation’s top official newspaper said on Monday. The bleak diagnosis for the euro appeared in the overseas edition of the People’s Daily, the main newspaper of China’s ruling Communist Party, in a commentary by a former central bank official and an economist for the state-owned China Development Bank. http://www.telegraph.co.uk/finance/financialcrisis/8715203/Black-Death-of-eurozone-crisis-will-hit-exports-China.html
Greece admits economy will shrink more than expected. Greece’s finance minister has said that the economy will shrink more than expected this year, putting further pressure on the country’s ambitious deficit-cutting effort. Evangelos Venizelos said the ministry forecasts annual output to shrink in 2011 between 4.5pc and 5.3pc of GDP. Venizelos had previously admitted that the recession might be over last year’s 4.5pc, a whole percentage point worse than initially estimated. The government has forecast a timid return to growth in 2012, but that now seems very unrealistic.http://www.telegraph.co.uk/finance/financialcrisis/8716828/Greece-admits-economy-will-shrink-more-than-expected.html
Britain has underperformed all the world’s leading economies over the past year except tsunami-hit Japan, figures from the Organisation for Economic Co-operation and Development (OECD) show. The revelation from the international think-tank will pose fresh questions for Chancellor George Osborne, who is already under pressure to bolster his economic strategy in the face of flagging growth. Politicians from his own Conservative Party as well as Labour are demanding more stimulus, predominantly through tax cuts, to help the recovery regain momentum. http://www.telegraph.co.uk/finance/economics/8716776/UK-growth-lagging-behind-worlds-leading-economies.html
Household budgets are deteriorating at a faster rate than during the height of the recession in early 2009, according to an analysis of consumers’ finances. Almost 40pc of households saw their finances deteriorate between July and August, compared to just under 6pc that reported an improvement as Britons were hit by rising prices and a squeeze on take-home pay. The latest Markit household finance index also found consumers suffered the fastest fall in their available cash since the monthly survey began in February 2009. http://www.telegraph.co.uk/finance/personalfinance/8714537/UK-household-finances-are-worse-than-during-height-of-recession.html
Bankers have warned that billions of pounds of lending to business could be put at risk if policymakers press ahead with “uncosted” plans to tighten banking regulations. As the industry awaits the final report of the Government’s Independent Commission on Banking with increasing trepidation, the British Bankers’ Association yesterday said it feared that tightening the rules on banks had become Britain’s top priority, ahead of even securing the economic recovery. http://www.independent.co.uk/news/business/news/banks-warn-tighter-icb-rules-will-curb-lending-2342299.html
The Reserve Bank Australia (RBA) has been torn between low economic growth and high inflation when deciding rates over the past year, a senior central bank official says. Australia’s annual headline inflation rate was 3.6 per cent in the June quarter and 3.2 per cent in the March quarter, well outside the RBA’s target range of two to three per cent. Meanwhile, the non-mining sectors of the economy have been suffering, causing the central bank to slash the economic growth forecast by one per cent to 3.25 per cent in its statement on monetary policy in August. http://www.smh.com.au/business/rates-bind-rba-juggles-growth-inflation-20110823-1j7ul.html#ixzz1VpIeuBfN
US prime money market funds are reducing their exposure to European banks, according to a report by the Fitch ratings agency, amid growing concern about their ability to find financing. The funds, which loan cash on a short-term basis to financial institutions, governments and companies, reduced their exposure to European banks in dollar terms at the end of July by nine per cent from the end of June.The reduction was 20.4 per cent from the end of May. http://www.smh.com.au/business/world-business/us-funds-cut-exposure-to-european-banks-20110823-1j7d7.html#ixzz1VpImmayY
Growth in leading world economies slowed for the fourth consecutive quarter, gaining just 0.2 per cent in the three months to June, an OECD indicator showed. In the April-June period, output of the 33 countries in the Organisation for Economic Cooperation and Development (OECD) grew 0.2 per cent after 0.3 per cent in the first quarter. “This is the fourth consecutive quarter of slower growth,” the OECD said, noting a widespread slowdown in developed economies. http://www.smh.com.au/business/world-business/economic-growth-slows-again-oecd-20110823-1j7cs.html#ixzz1VpIsM629
As worries about another U.S. recession mount, Canada’s economy is highly exposed to any downturn and is less equipped to fight a slump than it was three years ago. Heavy government and consumer debt, along with reduced flexibility for stimulus spending and monetary policy mean Canada today has less resilience to a crumbling U.S. economy compared with the global financial crisis of 2008.http://www.theglobeandmail.com/report-on-business/economy/canada-losing-its-wiggle-room-if-us-economy-goes-sour-again/article2137919/
In the past three years, the U.S. Federal Reserve Board has ridden to the market’s rescue – twice – with unconventional measures to stimulate growth. Economists and strategists aren’t convinced that a third time would be a charm. As investors contemplate the possibility of so-called “QE3” – a market-buoying third round of quantitative easing by the Fed – experts caution that the timing isn’t right. And, they say, another round of monetary stimulus may not improve the conditions that have been undermining the markets in the first place. http://www.theglobeandmail.com/report-on-business/economy/different-this-time-why-qe3-wont-sail/article2137945/
Greece will receive the next tranche of EU/International Monetary Fund (IMF) aid package on time this September, Greek Deputy Prime Minister and Finance Minister Evangelos Venizelos said on Monday, rejecting scenarios of potential delays and obstacles due to the ongoing debate within the EU over the loan collateral. “Our financing needs next month will be covered. There are funds available. There are about 45 billion euros (57.69 billion U.S. dollars) still available from the first bailout pact,” stressed Venizelos during a press briefing at the Finance Ministry.http://www.cs.com.cn/english/ei/201108/t20110823_3023466.html
Sales at South Korea’s major discount outlets and department stores grew in July due to rising demand during the vacation season, a government report showed Tuesday. Total sales at the country’s three leading discount outlets, including E-Mart, Lotte Mart and Homeplus, rose by 4.9 percent in July from a year earlier, up from a 2.7 percent on-year expansion tallied for the previous month, the Ministry of Knowledge Economy said in a monthly report. http://news.xinhuanet.com/english2010/business/2011-08/23/c_131068237.htm
A ‘business-as-usual’ approach will not work if the Indian economy is to achieve its long-term 9 per cent annual growth target, which is “very ambitious” in the backdrop of global uncertainties, Prime Minister Manmohan Singh said on Monday. In his address at the Golden Jubilee celebrations of the Indian Institute of Management (IIM) here, Dr. Singh said while the Indian economy has inherent economic strength, “difficult things would be needed” to reach the growth target. http://www.thehindu.com/business/Economy/article2383753.ece
Dubai export markets by value are highly concentrated in India and Switzerland, comprising 40 per cent and 20 per cent, respectively, a government agency has said. According to Dubai Exports, an agency of the Department of Economic Development (DED), this has been due to the export of gold to these countries, whereas other direct exports go mainly to Gulf Cooperation Council (GCC) and the neighboring countries in small shares. http://www.thehindu.com/business/Industry/article2375688.ece
The Reserve Bank of India is likely to continue with its tight monetary policy stance to fight inflation and effect another hike in key interest rates in September, even though the global economic environment is on a downslide, believe experts. However, while the Reserve Bank of India is likely to go for another interest rate hike at its next mid-quarterly policy review on September 16, it will not be very aggressive, the experts said. http://www.thehindu.com/business/Economy/article2383096.ece
Six years can make a big difference in the energy world. Deals by Indian energy and utility companies abroad have soared and compare favourably against China and Russia. Data gathered for Business Lineby analytics firm Dealogic show that since 2006 Indian utility and energy companies have made $5,112 million worth of acquisitions outside BRIC nations, against $6,001 million by Russia and $ 7,436 million by China (Brazil’s figure is far lower at $704 million). http://www.thehindubusinessline.com/industry-and-economy/economy/article2384851.ece?homepage=true
South Korea’s external debt hit a fresh record high in the second quarter on foreigners’ buying spree of local bonds, but the growth of its short-term foreign debt eased due to tighter rules on currency derivatives, the central bank said Tuesday. South Korea’s external debt amounted to a record of US$398 billion as of the end of June, up $15.4 billion from three months earlier, according to the Bank of Korea (BOK). The second-quarter growth compared with a $22.6 billion on-quarter gain tallied in the first quarter. http://english.yonhapnews.co.kr/business/2011/08/23/37/0503000000AEN20110823004900320F.HTML
Russians have turned to real estate as a safe haven for investment over the last two months amid the high volatility of world financial markets caused by Standard and Poor’s downgrading the U.S. credit rating and the debt crisis in Europe, developers said. “We have noticed … a sales increase in August, it’s both direct sales of new homes and mortgage deals,” said Pavel Kocheryozhkin, deputy chief executive of YIT Moskovia, a subsidiary of Finnish developer YIT. http://www.themoscowtimes.com/business/article/real-estate-is-vibrant-despite-market-woes/442468.html#ixzz1VpLTVXrw
Sanctions on Iran have not had a major impact on trade and financial links between the country and Dubai, Saeed Al Awadi, CEO of Dubai Exports, told Gulf News. Al Awadi said Iran’s trading and financial ties continued with Dubai, even in the face of tighter sanctions by the western countries. “While many expected the measures to spell disaster for thousands of Iranian businesses that deal with Dubai —which has built its reputation on its role as the re-export hub for the Gulf — trade between the two countries has grown, according to the latest figures,” he said. http://tehrantimes.com/index.php/economy-and-business/1838-dubai-iran-trade-grows-in-goods-exempt-from-sanctions-
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Saturday, April 16th, 2011
Energy and Natural Resources Market Cheat Sheet (April 18, 2011)
- Copper inventories in warehouses monitored by the Shanghai Futures Exchange dropped 4.8 percent.
- China has exported 42,600 metric tons of refined copper during the first two months of 2011, eight times the amount in the last year.
- Mexico (up 13 percent year over year) and Argentina (up 20 percent year over year) became the largest contributors to mine supply according to Gold Fields Mineral Services (GFMS), GFMS estimates a rise of 2.5 percent to a record 22.9kt, driven by growth from the primary and Lead/Zinc sector.
- Seasonally adjusted US auto sales for the month of March remained above 13 million vehicles per year; the sales figures crossed the 13 million vehicle level the second time since the cash for clunkers program that ended on Nov 1, 2009.
- The National Bureau of Statistics reported this week that China’s crude steel rose 9 percent to 59.42mt in March from a year ago and 9.4 percent higher than February’s 54.3mt. This boosted China’s production to the second-highest level on record amid higher demand from builders.
- China’s Gross Domestic Product (GDP) increased 9.7 percent in the first quarter, which was higher than expected and despite inflation rising to the highest level in almost three years.
- Manufacturing growth, which makes up about 80 percent of India’s industrial production index, was at 3.5 percent for the month, down from 16.1 percent a year ago.
- A drop of 16 percent to 8.37 million tons for the first quarter iron ore shipments was reported by Fortescue’s due to heavy rains in Australia, the company said it will raise output to 12 million tons in second quarter.
- China Iron and Steel Association reported a decline in China’s daily crude steel output in the last ten days of March to 1.922 million tonnes per day.
- After the African Union said Muammar Gaddafi had accepted a roadmap to end the civil war in Libya, as a result Brent crude fell below $126. Furthermore, Brent crude fell sharply to below $122 and U.S. crude dropped by $2 a barrel this week on concern high fuel prices will destroy demand.
- China’s preliminary March trade data shows a 29 percent month over month increase in copper imports. This could provide more support to this metal, which ended the week at a one month high.
- Gasoline is crowding out retail sales at rapid pace, its share of total retail sales exploded higher in March to 10.72 percent from an upwardly revised 10.49 percent in February.
- A Transocean owned rig has drilled the deepest-ever water depth well off the coast of India, drilling in 10,194 feet of water, more than the previous record of 10,011 feet.
- Diego Hernandez, CEO of state mining giant Codelco, said this week that the global salmon farming industry could need up to 50,000 tonnes of copper a year to build rearing cages thanks to the metal’s anti-bacterial qualities.
- One of the world’s main suppliers of grain, Argentina, may revive a controversial tax system on grain export. A similar plan to raise taxes on soy exports in 2008 sparked nationwide farmer protests that rattled global commodity markets and hit the popularity of President Cristina Fernandez, who plans to bid for re-election in October.
- The Association of American Railroad reported this week that Major Class 1 cross-continental railroads hauled almost 200,000 multi-modal shipping containers, which was easily a record for this time of the year, conforming business survey data suggesting the U.S. economy has entered a mini boom as cheap money revs up the recovery.
- Although copper prices have almost quadrupled after a two-year rally, largely driven by the belief that China has an insatiable appetite for this metal. Evidence recently surfaced of previously unreported copper stockpiles, which shows signs of about 15 percent of the country’s annual consumption of Copper hasn’t been yet put to use. Chinese buyers are facing a dual problem of higher copper prices and the government’s aggressive move to tighten credit.
- Eskom, a South African power supplier, has said power supply is likely to remain tight for the next five years; a potential risk for the Platinum Group Metals (PGMs) production.
- Plans to halt the approval of new aluminium plants in China to tackle serious overcapacity in the industry. The decision would put a hold on investment worth $ 11 billion.
- Mohammad Ali Khatibi, governor of OPEC, was quoted last week as saying that the global oil market is oversupplied; despite prices that have been pushed up by upheaval in the Middle East.
- Global 2010-11 cocoa surplus estimates last week have expanded to 184,000 tonnes and prices look set to fall further from the 32-year high hit last month. Cocoa exports from Cameroon, the world’s fifth largest grower, hit 186,305 tonnes by the end of March from the start of the season in August, up 21 percent year over year.
Tags: Bureau Of Statistics, China, Crude Oil, Crude Steel, Eight Times, Fortescue, Gold, Gold Fields, Heavy Rains, India, Industrial Production Index, Iron And Steel, Iron Ore, Metric Tons, Million Vehicles, Mineral Services, Month Of March, Muammar Gaddafi, National Bureau Of Statistics, oil, Refined Copper, S Industrial, Shanghai Futures Exchange, Steel Association, Steel Output
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Monday, February 28th, 2011
The ‘Crude’ Reality of Unrest
by David Andrews, CFA-Director, Investment Management and Research, Richardson GMP
Investor sentiment turned decidedly more cautious this week with major North American indexes retreating amid the growing pro-democracy movement in the Arab world. Following the mostly peaceful demonstrations in Tunisia and Egypt, the pro-democracy rallies in Libya turned ugly as protesters were met with a stiff and inhumane response from pro-Gaddafi supporters. Mercenaries and Militia were reportedly firing on unarmed crowds amidst the incoherent ramblings of embattled leader, Muammar Gaddafi. Gaddafi went so far to suggest the protesters were being drugged and under the influence of Al Qaeda. The unstable situation saw the price of Brent crude oil surge to 2-1/2 year highs near $120 a barrel.
As a result, Canadian commuters felt the sting at the gasoline pumps this week as prices seemed to increase a few cents a litre each night. Stock market investors also felt the pinch with the TSX slipping below the recently attained 14,000 level. Three consecutive down sessions on the holiday shortened week (Canadian and U.S. exchanges were closed Monday) were followed by a Friday reprieve as Saudi Arabia announced it would increase its crude oil production in an attempt to offset any global supply disruption from Libya. The influential Materials and Financial stocks surged and helped boost the index by 1.25% on the day and back above 14,000. For the week, the TSX lost a little more than half of one percent. The major U.S. indexes fell about 2 percent on the week as investors bet higher oil costs may unseat the early stages of the economic recovery.
Speaking of the economy, there were a few positive signs of things getting better with U.S. consumer confidence at 3 year highs in February despite higher food and fuel costs. U.S. weekly employment data also showed fewer Americans filed for jobless claims suggesting the employment situation is continuing the slow process of healing. If employment and confidence are a silver lining, housing continues to be the dark cloud. January new home sales were again below already depressed expectations. In Canada, retail sales in December fell but most of that was due to the auto sector. Ex autos, retail sales were up 0.6% which was expected.
IS Gold Set To Rally?
Despite the fact that Gold is trading near its record high, some suggest that Bullion will outperform Oil as surging inflation will underscore the metal’s role as an investment hedge. The chart to the left shows the price of both Gold and Oil since 2008. The chart below is the ratio of Gold to Oil, or how many barrels an ounce of gold will buy. At its peak in late 2008, an ounce of gold bought you about 28 barrels of crude oil. Currently, oneounce buys about 15 barrels. Notwithstanding OPEC’s spare production capacity, energy markets have priced in a considerable risk premium. If tensions ease and or production comes on stream, oil prices could drop rather quickly. Gold has fallen 1.6% this year following a 30% rally in 2010. Crude is up about 5% this year following last year’s 15% rise.
The Trading Week Ahead
Canadian stock market investors are expecting the rest of the Big Banks will be able to follow the solid start to bank earnings season set by CIBC and National Bank. Following a softer second half of 2010, the banks are poised to benefit from better market conditions for their retail and wholesale lending businesses. Investors looking for dividend increases will have to wait on National and Commerce but they may not have to wait on the others. Bank of Montreal reports Tuesday and is followed by TD and Royal on Thursday. (Scotia reports March 8th).
U.S. reporting season has concluded with another upbeat quarter and substantial positive earnings surprises. The biggest positive surprises were in the Materials sector where elevated commodity prices boosted the bottom line. Consumer goods, specifically Automobiles, provided the biggest earnings disappointment in the fourth quarter on the S&P500.
The economic calendar will likely continue with the theme of improving consumer and business confidence but scant signs of improvement in the U.S. housing market. Pending homes sales in January are expected to once again come in lower. The February employment report is released on Friday. For the past three months we have overlooked disappointing results and explained them away by bad weather. We did not have weather issues of significance this month so the non farm payrolls on Friday could be significant.
Commodities prices, specifically oil & gold, will be influenced by the evolving and volatile demonstrations in the Middle East and North Africa. Risk premiums for both oil and gold remain rather elevated helping to push the loonie higher. Watch for no move in policy by the Bank of Canada on Tuesday, but the wording of the statement will be scrutinized for signs of their next move likely around mid 2011.
Copyright (c) Richardson GMP
Tags: Brent Crude Oil, Canadian Market, CIBC, Commodities, Consumer Confidence, Crude Oil Production, Democracy Movement, Employment Data, Employment Situation, energy, financial stocks, Food And Fuel, Gasoline Pumps, Global Supply, Gold, Incoherent Ramblings, Investor Sentiment, Jobless Claims, Muammar Gaddafi, oil, Oil Costs, Peaceful Demonstrations, Positive Signs, Silver, Stock Market Investors, Supply Disruption, Unstable Situation
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