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Commodities Briefing 23.Aug 2016

Posted on 23 August 2016 by VRS |  Email |Print

What kind of investor are you? Are you the buy-high-sell-higher (trend continuation) type? Or are you a bargain hunter who likes beaten-down (trend reversal) opportunities? The former type of investor is now in heaven. With the stock market at new highs, there are many stocks on fire.
But if you’re looking for bargains, the pickings are pretty slim. Don’t worry. There are still many places to invest your money. I’m talking about hard assets, aka commodities. Hard assets go well beyond real estate and gold. They include all types of natural resources like oil, wheat, copper, timber, coffee, zinc, and pork bellies………………………………………..Full Article: Source

Posted on 23 August 2016 by VRS |  Email |Print

International commodities markets are on a boil since beginning of the current financial year and most commodities are up be that metals, crude oil or agri commodities. While so far US has refrained from raising rate after last December hike which has attracted global financial investors to commodities again, the decision will continue to be a biggest headwind for commodity rally to continue.
Bloomberg all commodity index is up 9.4 per cent from April while LME metal index (up 6.3 per cent) and Bloomberg agri index (4.6 per cent) has followed………………………………………..Full Article: Source

Posted on 23 August 2016 by VRS |  Email |Print

The two-year oil slump has mired Canada in one of the weakest stretches of growth in its history. So there’s some urgency to the search for alternative models. And Prime Minister Justin Trudeau has staked out his version: an economy built on an army of highly educated white-collar workers. Bloomberg’s Danielle Bochove reports on “Bloomberg Markets.”.………………………………………Full Article: Source

Posted on 23 August 2016 by VRS |  Email |Print

Traders have bid up oil futures on speculation that producers will take measures to prop up crude prices, but any such deal might do little to quickly bring supply and demand into balance, ClearView Energy Partners Managing Director Jacques Rousseau said. As a result, crude prices could continue swinging back and forth, he said.
A rally that lifted benchmarks about 16 percent and pushed Brent above $50 a barrel during the last seven sessions lost steam on Monday as market watchers including Morgan Stanley said the gains were overdone. The bank said it was “highly unlikely” OPEC members and Russia would be able to overcome the many headwinds to striking a deal………………………………………..Full Article: Source

Posted on 23 August 2016 by VRS |  Email |Print

Analysts warn that much of the impetus for the rebound of the past 2 weeks has faded. Oil retreated 3 per cent on Monday to back below $50 a barrel, as reports Iraq is increasing exports and signs hedge funds have rapidly switched positions raise doubts about the strength of the recent rally.
Brent crude, the international benchmark, has surged by almost 15 per cent in the 10 days since Saudi Arabia said it would participate in talks aimed at securing a production freeze with other leading producers………………………………………..Full Article: Source

Posted on 23 August 2016 by VRS |  Email |Print

Talk of a potential deal to freeze output helped push oil close to $50 a barrel and prompted money managers to cut bets on falling prices by the most ever. West Texas Intermediate, the U.S. benchmark, went from a bull to a bear market in less than three weeks.
Oil fell after the longest run of gains in four years as Iraq seeks to increase exports amid a global overhang of crude inventories and as Nigerian militants call an end to hostilities. UBS Head of UK Investment Office Geoffrey Yu discusses with Bloomberg’s Anna Edwards on “Countdown.”……………………………………….Full Article: Source

Posted on 23 August 2016 by VRS |  Email |Print

Oil has been in a bull market recently. Or was that a bear market? It can be tough to keep track when crude shifts as much as it does. West Texas Intermediate has gone from a bull market into a bear market, or vice versa, five times this year, according to WSJ Market Data Group.
That’s the most times since 1998, when it also crossed five times, according to the data, which is based on continuous front-month futures contracts. A gain or loss of 20% typically signals the start of a bull or bear market, respectively. After entering one, it takes a 20% move in the opposite direction to switch courses. A move of that size is big, so it typically doesn’t happen all that often — except in 2016………………………………………..Full Article: Source

Posted on 23 August 2016 by VRS |  Email |Print

Energy investors got all excited last week on hints of a freeze deal among major oil producers, but anyone hoping for coordinated action to boost the struggling oil market is bound for disappointment, according to Morgan Stanley.
In a note out on Monday, strategists led by head of energy commodity research Adam Longson warned that an output agreement between members of the Organization of the Petroleum Exporting Countries remains “highly unlikely” as the cartel members battle for market share………………………………………..Full Article: Source

Posted on 23 August 2016 by VRS |  Email |Print

The world’s gold industry will need the price of its metal to improve further in order to support investment in fresh resources, said Gold Fields CEO, Nick Holland. Making a return to the Melbourne Mining Club some four years after first addressing it, Holland said cost savings as well as currency and oil price weakness had served as tailwinds to the industry.
The average net cash flows of some of the industry’s biggest gold miners, including Barrick Gold, Newcrest Mining, AngloGold Ashanti and Gold Fields itself, had fallen to about $4bn in 2013………………………………………..Full Article: Source

Posted on 23 August 2016 by VRS |  Email |Print

In our paper from March 23, 2016 we concluded that JPM [J. P. Morgan] in cooperation with the BIS [Bank of International Settlements] controls the dollar gold price by using their very dominant position in gold derivatives in the US Banking System.
JPM held during 1999 – 2014 an average of 3.262 paper metric tons gold (derivatives) available for interventions on the development of the dollar gold price with the BIS as counterparty. Furthermore we concluded that the paper volume sets the dollar gold price and that there is almost no influence on the dollar gold price from the physical supply and demand. Overall the conclusion is that there is no free market for gold………………………………………..Full Article: Source

Posted on 23 August 2016 by VRS |  Email |Print

Gold fell to a two-week low on Monday following upbeat comments on the U.S. economy from a senior Federal Reserve official. Spot gold traded at around $1,333.40 per ounce at the start of the trading week, after Fed Vice Chairman Stanley Fischer told a conference in Aspen, Colorado, Sunday that an interest rate hike was still under consideration for this year and that economic growth would accelerate.
“I think that as U.S. data has surprised to the upside recently … the Fed prepares for a hike … it is understandable that gold comes under pressure, especially in these quiet summer months when liquidity is not great,” Joni Teves, UBS strategist, told CNBC on Monday………………………………………..Full Article: Source

Posted on 23 August 2016 by VRS |  Email |Print

Assets invested in exchange-traded funds and exchange-traded products listed globally continued their upward march in July, reaching a new record high of $3.343 trillion, according to data from London-based ETF consultancy ETFGI.
Various new regional record highs were also reached, including in the US at $2.367tn, Europe at $539.2bn, Japan at $191.8bn and Canada at $81.2bn. The milestones were reached through a combination of strong net inflows as well as bullish markets during the month………………………………………..Full Article: Source

Posted on 23 August 2016 by VRS |  Email |Print

Exchange traded funds, at their onset, provided new and valuable ingress for investors. Daily liquidity is an additive feature for investors, and the financial instruments made access to passive market exposures attainable at low expense. Some of the larger, and broader-based ETFs still provide that utility.
However, the more than 500 net new ETFs created over the last five years have altered the industry’s value proposition, replacing inexpensive access with thematic or sovereign speculation, often with leverage………………………………………..Full Article: Source

Posted on 23 August 2016 by VRS |  Email |Print

Asian exchange hopes to establish Singapore as ideal location for trading and settlement of shipping contracts. SGX has moved closer to clinching an acquisition of the Baltic Exchange, after agreeing terms with the UK bourse and winning backing from shareholders representing a majority of share capital.
The Singapore exchange and the Baltic said on Monday they had agreed a cash bid of £160.41 per share and a final dividend of £19.30 per share, revised up from £18.80 offered two weeks ago………………………………………..Full Article: Source

Posted on 23 August 2016 by VRS |  Email |Print

Just over a year ago a 3 per cent devaluation of the Chinese yuan against the dollar triggered panic in global markets amid fears about a faltering Chinese economy and an escalating currency war. A similar episode occurred early this year.
Yet since April the yuan has fallen by about 3 per cent with barely a murmur, begging the question whether panic has been replaced by complacency. Some things have certainly changed………………………………………..Full Article: Source

Posted on 23 August 2016 by VRS |  Email |Print

Traders have long been at the heart of the currency market, world’s biggest and whose capital is London. Their buying and selling of large amounts of currencies has helped to maintain a deep pool of liquidity, but a series of changes in financial regulations and banks’ business models means they are a dwindling breed.
Decades of largely uninterrupted growth in the currency business has stalled since it topped $5 trillion a day in 2013………………………………………..Full Article: Source

Posted on 23 August 2016 by VRS |  Email |Print

There are at least three good reasons why China is likely to succeed in starting the world’s biggest carbon-trading market when its efforts to limit pollution kick in next year.
The government wants to put a cost on emissions of toxic smog to control pollution in industrial cities, starting with Beijing. The market may trade as much as 408 billion yuan (US$61 billion) of certificates a year, a step toward making the economy more transparent to outsiders. And it’s good public relations, showing China is serious about climate change………………………………………..Full Article: Source

Posted on 23 August 2016 by VRS |  Email |Print

The “proper industrial strategy” being advocated by Theresa May faces some immediate tests. The first is climate change: carbon reduction destroys jobs and a “proper industrial strategy” will have to choose jobs over carbon reduction.
The second is the exchange rate, which has been ignored for decades, even though an over-valued currency can wipe out all the efforts of our companies to reduce prices by improving their productivity. In her Birmingham speech Mrs May said she wanted an energy policy that “emphasises the reliability of supply and lower costs for users”, and she voiced her commitment to greater prosperity in which everyone shares………………………………………..Full Article: Source

Posted on 23 August 2016 by VRS |  Email |Print

The future over the next three to five years, as seen through the lens of PIMCO’s Secular Outlook, is stable but not secure. “[W]hile we do not see a global economy heading toward recession, we also do not see readily available means to stimulate aggregate demand and drive accelerated growth,” the piece reads.
Citing the most immediate and prevalent dynamic – diminishing returns from central banks’ monetary policy and probable inadequacy of fiscal policy to fill the gaps – the outlook predicts volatility that will leave investors vulnerable to both negative and positive shocks………………………………………..Full Article: Source

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