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Commodities Briefing - Category | Financial more

Why commodity-linked sukuks should be introduced?

Posted on 29 September 2016 by VRS  |  Email |Print

A sukuk is a sharia-based hybrid instrument that can have the features of both a conventional debt instrument and of equity. An example of equity is the stock of an enterprise. The stock’s value depends on the performance of the company and can be held in perpetuity; the stocks are neither paid (pre-fixed) dividends at set future times nor are they guaranteed capital appreciation.
The stock-holders share in the risk of the enterprise, and both the return and timing of the return on their investment depend on the performance of the enterprise. In contrast to a stock, a conventional bond is a debt instrument; it has a fixed duration, with the principal usually paid at maturity. Coupons of a prefixed amount are paid at set future times. …………………………………..Full Article: Source

Global banking watchdog warns over Chinese banks

Posted on 20 September 2016 by VRS  |  Email |Print

Risks of a Chinese banking crisis are mounting, according to a warning indicator from the banking industry’s global watchdog. A key gauge of stress in the banking sector is now more than three times above the danger level, the Bank for International Settlements (BIS) said in its latest quarterly review.
China’s credit-to-GDP gap hit 30.1 in the first quarter of 2016, it said. The BIS considers a credit-to-GDP gap of 10 to be a sign of potential danger. A year ago the BIS quarterly review put the figure for China at 25.4………………………………………..Full Article: Source

Commodities attract record $54bn of inflows

Posted on 16 September 2016 by VRS  |  Email |Print

Is the sun shining again on commodity investments? With inflows of $54bn during January and August, investment flows into the asset class are at an all-time high for the first eight months of any year, according to Barclays.
In its latest report on investment flows into commodities, the bank says investments into commodities are supported by three factors: Worries about global economic growth have fuelled money into gold, the desire of investors to benefit from volatility in individual commodities, and lastly, the revival of commodities as a diversification and inflation hedging tool……………………………………….Full Article: Source

Fed asks Congress to limit bank commodity activities

Posted on 09 September 2016 by VRS  |  Email |Print

Two U.S. financial regulators on Thursday made a significant push to impose new limits on banks’ commodity-market activities, which have been under scrutiny for years. The Federal Reserve asked Congress to repeal banks’ authority to make a range of investments in nonfinancial businesses, saying the businesses put the firms’ safety and soundness at risk.
Separately, the Office of the Comptroller of the Currency, which regulates federally chartered national banks, proposed to prevent national banks from dealing or investing in metals such as copper. That reversed a previous regulatory policy that had allowed copper trading………………………………………..Full Article: Source

Fed: Get Goldman, Morgan Stanley out of commodities business

Posted on 09 September 2016 by VRS  |  Email |Print

The Federal Reserve recommended Thursday that Congress act to get megabanks Goldman Sachs and Morgan Stanley out of the business of managing physical commodities and more generally to eliminate the practice of “merchant banking” in which banks invest or outright own nonfinancial firms.
In a report mandated by the 2010 Dodd-Frank financial reform law, the agency officially called on Congress to repeal the wrinkle in the law that allows just two banks, Goldman Sachs and Morgan Stanley, to store, transport and extract commodities, saying that those practices raise “safety and soundness concerns as well as competitive issues.”……………………………………….Full Article: Source

Banks’ Commodity Woes Deepen as Energy and Metals Earnings Hit

Posted on 06 September 2016 by VRS  |  Email |Print

It’s looking like another bad year for the biggest banks when it comes to commodities. Revenue from raw materials at Goldman Sachs Group Inc., JPMorgan Chase & Co. and 10 other top banks slid 25 percent in the first half to $2.2 billion from a year earlier, according to analytics firm Coalition Development Ltd.
That was the lowest first-half amount in at least half a decade amid a “lackluster” performance across energy and industrial metals, the company said in a report on Tuesday………………………………………..Full Article: Source

Mitsubishi Sees Three Years Needed for Shift From Commodities

Posted on 29 August 2016 by VRS  |  Email |Print

Japan’s biggest-trading house has had its fill of commodities. After posting the first annual loss in its post-World War II history amid the collapse in commodity prices, Mitsubishi Corp. is shifting away from raw materials to make sure it never happens again. That process is going to take at least three years, according to Chief Financial Officer Kazuyuki Masu.
“We can’t post a second net loss,” Masu said in an interview in Tokyo. “We are balancing our portfolio so that if the price of resources fall again, we won’t be seeing red. To put it simply, we aren’t going to boost our current balance of resources assets” over the next three years………………………………………..Full Article: Source

Commodities on upswing in FY17 as funds return

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

How to Hedge Against Inflation With Commodities

Posted on 22 August 2016 by VRS  |  Email |Print

Investors in search of an inflation hedge may want to consider commodities. Commodities are an insurance policy, says Vic Sperandeo, president and CEO of EAM Partners, which developed the Trader Vic Index, a collection of futures contracts in commodities, currencies and U.S. interest rates.
A broad basket of commodities offers a hedge against inflation, and gold in particular is a hedge against both inflation and geopolitical chaos, Sperandeo says. “If you’re a typical retail investor, you must have commodities in your portfolio,” he says………………………………………..Full Article: Source

BHP makes record loss after commodity rout and Brazil disaster

Posted on 17 August 2016 by VRS  |  Email |Print

BHP Billiton, the world’s biggest miner, has reported a record loss of $6.4bn (£4.9bn) following a fatal dam disaster in Brazil, a slump in the price of commodities, and a bet on fracking in the US. Miners are struggling due to a sharp fall in commodity prices, sparked by concerns that a slowdown in the Chinese economy could leave a surplus of raw materials.
Andrew Mackenzie, chief executive of the London-listed company, said the last 12 months have been challenging and that commodity prices are likely to remain volatile, even if long-term demand remained robust………………………………………..Full Article: Source

Central banks are printing money as though the global economy is in freefall

Posted on 11 August 2016 by VRS  |  Email |Print

Central banks around the world are now spending $200 billion a month on emergency economic stimulus measures, pumping this money into their economies by buying bonds. The current pace of purchases is higher than ever before, even during the depths of the financial crisis in 2009.
And yet, despite the extraordinary support of so-called quantitative easing (QE), the global economy is not in great shape. What was supposed to bolster economies temporarily during times of crisis has become a routine tool for policymakers, who long ago cut interest rates to zero (or below) but haven’t seen the pick-up in activity they would have hoped………………………………………..Full Article: Source

Good and Services Tax (GST): All you need to know about the most important tax reform in India in 25 years

Posted on 04 August 2016 by VRS  |  Email |Print

The long-awaited Good and Services Tax (GST) Bill was deliberated in Rajya Sabha (Upper House of the Parliament) on Wednesday. This Bill is the 122nd Constitutional Amendment and will have to be passed by both the houses of the Parliament with a two-third majority. Its is being hailed as the most important tax reform in the country since 1991. The government argues that the passage of GST would add up to 2 per cent to the economic growth.
GST is based on the same principles as the Value Added Tax (VAT). It is a consumption-based tax, which means instead of being imposed at the point of manufacture, it will be imposed at the point of consumption. Moreover, it does not differentiate between goods and services………………………………………..Full Article: Source

Commodities-focused trusts top Q2 performers

Posted on 02 August 2016 by VRS  |  Email |Print

The best performing trusts in Q2 focused on commodities and natural resources, Vietnam and Latin America, according to QuotedData. Quoted Data does a quarterly report on investment companies listed in the United Kingdom, including performance figures on a price and NAV basis.
This quarter was different in that it was affected by the major macroeconomic event of the Brexit vote. Several sectors, mainly property and UK mid & small cap were affected by the referendum, and private equity was one of the sectors that was hit the most. The median discount within the private equity sector moved from -25.34% on the day of the vote to -32.21% one week later………………………………………..Full Article: Source

Mind the gap between oil prices and commodity-sector bonds

Posted on 29 July 2016 by VRS  |  Email |Print

A recent divergence between commodity prices and spreads for bonds of companies in the commodity sector is flashing “mind-the-gap” warnings for the market. After a strong advance earlier in the year, oil prices recently plunged to a three-month low, pulling down the shares of energy companies and even weighing on the broader equity benchmarks.
But bonds of companies in energy, metals, mining and steel seem unaffected by oil’s decline — a trend that baffles analysts and suggests that bonds might actually be mispriced………………………………………..Full Article: Source

Hedge funds suffer $20.7bn net outflows in June

Posted on 27 July 2016 by VRS  |  Email |Print

Industry endures its longest sequence of quarterly withdrawals since 2009. Global hedge funds suffered net outflows of $20.7bn in June, as investors pulled more of their money out despite improved performance from most managers.
After inflows in April and May, the withdrawals took total aggregate net redemptions for the second quarter to $10.7bn, according to data from eVestment, marking the third consecutive quarter in which money has left the sector………………………………………..Full Article: Source

How to Add Some “Oomph” to Your Commodities Market Gains

Posted on 21 July 2016 by VRS  |  Email |Print

The big, bad commodity bear died in June. That’s when, after five years, commodities officially entered a bull market. Unofficially, though, the good news started months ago. Prices of oil, gold, zinc and many other “hard assets” have trended higher since early in the year.
Just look at this chart and you’ll see what I mean. Commodity prices move in cycles. This pattern is the result of a time lag between supply and demand. Supply needs time to react to changes in demand and vice versa………………………………………..Full Article: Source

OPEC’s Pain Is Only Getting Worse As Revenues Continue To Fall

Posted on 28 June 2016 by VRS  |  Email |Print

OPEC lost $349 billion in revenue last year because of low oil prices, cutting revenues almost in half from the year before. A report from the EIA in mid-June estimated 2015 revenues for OPEC countries at $404 billion, down 46 percent from the $753 billion the member countries earned in 2014. Revenues last year fell to their lowest level in eleven years.
Worse still for OPEC is the fact that revenues could fall even further this year, as low oil prices sank to new depths, particularly in the first quarter of 2016. The EIA projects OPEC revenues this year to drop to $341 billion. That will result in per capita oil export revenues in OPEC countries falling from $606 in 2015 to $503 this year………………………………………..Full Article: Source

OPEC oil revenues slump to 10-year low

Posted on 24 June 2016 by VRS  |  Email |Print

OPEC’s 13 member countries saw oil export revenues slump to their lowest level in a decade last year. Crude revenues fell nearly 46% to $518 billion in 2015, according to OPEC’s annual bulletin published Wednesday.
Collapsing world oil prices also meant that OPEC countries spent more importing goods than they raised from exports for the first time in 17 years. The cartel posted a combined current account deficit of just under $100 billion in 2015, compared with a surplus of $238 billion in 2014………………………………………..Full Article: Source

OPEC Registers First Collective Deficit Since 1998

Posted on 23 June 2016 by VRS  |  Email |Print

OPEC member countries last year registered their first collective budget deficit since 1998, the group said Wednesday, the result of an oil-price slump that dropped government petroleum-export revenue to a 10-year low.
In its annual statistical report, the Organization of the Petroleum Exporting Countries illustrated how an oil rout that has cut prices in half since 2014 has weighed on the economies of crude-dependent states. OPEC members ran a combined deficit of $99.6 billion in 2015, compared with a surplus of $238.1 billion in 2014………………………………………..Full Article: Source

OPEC Says Its Oil Revenue Plunges $438 Billion to 10-Year Low

Posted on 23 June 2016 by VRS  |  Email |Print

OPEC said its oil revenue plunged by $438 billion to a 10-year low last year, as an increase in export volumes failed to compensate for the collapse in prices. The Organization of Petroleum Exporting Countries earned $518.2 billion in 2015 from the sale of crude and refined fuels, the lowest figure since 2005, the group’s Vienna-based secretariat said in its Annual Statistical Bulletin.
It boosted exports by 1.7 percent to 23.6 million barrels a day, maintaining its share of global markets, as Iraq increased output and Saudi Arabia pressed on with a policy to squeeze rivals………………………………………..Full Article: Source

World waits for global commodity bubble to deflate

Posted on 17 June 2016 by VRS  |  Email |Print

When the Federal Reserve raised rates in December, it thought the fallout would be minimal. It had telegraphed the increase for a year and it was, after all, just a quarter of a percentage point. Yet since then both the US and, even more so, the global economies have slowed. The reason isn’t because a quarter-point rate increase by itself represents a stringent tightening of monetary policy.
Rather, it brought to an end seven years of unprecedented monetary ease that had helped fuel a global commodity bubble. That bubble began deflating in 2014 and the effects are now being felt around the world and washing back on the US………………………………………..Full Article: Source

Opec revenue seen down for 3rd straight year

Posted on 17 June 2016 by VRS  |  Email |Print

The Organization of the Petroleum Exporting Countries (Opec’s) full-year 2016 oil export revenues will probably fall 15 per cent, down for the third straight year and possibly the lowest in more than a decade before rising in 2017, the US Energy Information Administration (EIA) said.
Members of Opec, including Iran, will likely earn about $341 billion in 2016, about 15 per cent below 2015 levels, based on projections of global oil prices and the group’s production levels, the US government’s EIA said in a report. The last time Opec’s export revenues fell for three years straight was 1983-86………………………………………..Full Article: Source

Commodities making a comeback as best performing asset class

Posted on 16 June 2016 by VRS  |  Email |Print

Commodities have performed strongly so far this year, returning 14.0%, outperforming Bonds at 6.6% and Equities at 0.5%. Nitesh Shah, Director – Commodities Strategist, ETF Securities, identifies an improved outlook for global growth, and signs of a commodity supply deficit, as key stimulants of the comeback.
“Sustained central bank interest in keeping interest rates low in an effort to stimulate the economy is providing further support for commodities. And investor sentiment has come off near decade lows as investor realise that commodity oversupply is ending in many areas.”……………………………………….Full Article: Source

Opec Oil Revenues Fell By $350bn Last Year, Says EIA

Posted on 16 June 2016 by VRS  |  Email |Print

Members of the Organization of the Petroleum Exporting Countries (Opec) saw their revenues from oil sales fall by $349bn last year, according to new analysis by the US Energy Information Administration (EIA).
The EIA estimates that the 13 countries of the oil cartel earned $404bn last year from oil exports, 46% less than the $753bn they earned the year before. It was the bloc’s lowest earnings since 2004. Lower export volumes played a role in the decline, but it was mainly due to the sharp fall in the price of oil which began in late 2014………………………………………..Full Article: Source

Charting the lowest interest rates in 5,000 years, worst commodity returns in 80 years

Posted on 15 June 2016 by VRS  |  Email |Print

Looking to dazzle friends and family at the next summer barbecue? Well, drop this little fact on them: global interest rates are at their lowest in 5,000 years. Not only that, you can tell the acquaintance who brags about his gold bars in the bank vault that returns on commodities are the worst since 1933. Sounds crazy you may say, but that’s just the kind of history Bank of America Merrill Lynch rolled out in the third edition of “Longest Pictures” note.
The assembly of more than 100 charts illustrates the long-term history of returns, volatility, valuation and ownership of financial assets. Pushing aside the mindblowers listed above, they also found corporate bond returns have never been higher going all the way back to 1915………………………………………..Full Article: Source

Commodities are the best performing asset class.

Posted on 07 June 2016 by VRS  |  Email |Print

After years of disappointment, evidence that some investors are again seeking broad exposure. Here’s an unfamiliar phrase: commodities are the best performing asset class. Yes, it’s true. In the year 2016, total returns from the Bloomberg Commodity Index are over 11 per cent. Compare that to global bonds, at about 6 per cent, and global equities at just over 2 per cent.
The index has pushed higher thanks to components such as oil, gold, soyabeans and zinc. On Monday, the benchmark was up 21 per cent from its January low, entering a bull market. It is the strongest start to any year since the notorious commodities price spike of 2008………………………………………..Full Article: Source

How an Interest Rate Hike Could Affect Commodities

Posted on 06 June 2016 by VRS  |  Email |Print

Commodities tend to move lower when real interest rates rise, as supply increases and capital flows into higher yielding assets. For instance, commodity prices soared in the 1970s as real interest rates moved into negative territory. Commodity prices then fell in the 1980s when Paul Volcker raised interest rates to fight inflation and real interest rates reached all-time highs.
There is a very strong inverse relationship between real interest rates and commodity prices over time. In recent years, both nominal and real interest rates have been very low due to central bank monetary easing policies and low inflation expectations. These dynamics helped commodity prices move substantially higher following the 2008 economic crisis………………………………………..Full Article: Source

Rebound in distressed debt boosts investors

Posted on 06 June 2016 by VRS  |  Email |Print

Robust gains mainly reflects valuations for energy bonds rebounding with a higher oil price. Distressed debt investors have experienced their best returns since the financial crisis, providing a rare boost for specialist players after disappointing results in recent years.
In the wake of two straight years of 20 per cent plus losses, this highly volatile style of investing has rebounded strongly, with gains between March and May approaching 30 per cent, the best three-month stretch since the US emerged from recession in July 2009………………………………………..Full Article: Source

As U.S. Banks Exit Commodities, an Australian Rival Takes Over

Posted on 06 June 2016 by VRS  |  Email |Print

After the Federal Reserve pledged to crack down on banks engaged in the lucrative business of commodities trading, most big Wall Street firms got out. Macquarie Group Ltd. took the opposite approach. Australia’s largest investment bank has been buying and selling increasing amounts of oil, natural gas and fuel in the U.S., taking advantage of the opening as its competitors backed away.
It now is North America’s third-largest trader of physical gas, trailing only industry giants BP PLC and Royal Dutch Shell PLC, according to industry publications Platts and Natural Gas Intelligence………………………………………..Full Article: Source

Global commodity assets rise to $220 billion in April: Barclays

Posted on 02 June 2016 by VRS  |  Email |Print

The total value of commodity assets held by fund managers globally rose in April to $220 billion, up 14 percent from the month before to reach the highest level in a year, analysts at Barclays said in a note.
Precious metals accounted for 50 percent of total assets under management (AUM) at $110 billion, followed by energy at $58 billion, said the note published on Tuesday, which cited an analysis of data from financial information suppliers including Reuters as well as Barclays’ own research. ……………………………………….Full Article: Source

The banks where the commodities rout will hurt most

Posted on 31 May 2016 by VRS  |  Email |Print

When it comes to souring commodity-related loans putting pressure on banks, the credit ratings of lenders in Singapore, South Korea and Mongolia are the most at risk. That’s the verdict from Moody’s Investors Service, which highlighted the three countries as areas of particular concern, even though the ratings agency does not expect negative bank rating actions for most of Asia Pacific despite the prolonged commodities rout.
However “pressure on the quality of commodity-related loans could be a contributing factor behind possible negative bank rating actions in Singapore, Korea and Mongolia over the next 12-18 months, as reflected in our negative outlooks on many banks in these systems,” the ratings agency said………………………………………..Full Article: Source

Indian banks to hurt from weakness in metals, mining: Moody’s

Posted on 31 May 2016 by VRS  |  Email |Print

Global rating agency Moody’s expects banks in the Asia-Pacific region (excluding Japan) to feel the ripple effects of the problems in commodities-related sector. The asset quality and profitability of banks in Mongolia, Singapore, Korea, Indonesia and India are exposed to the more vulnerable parts of the energy/commodity sectors, such as oil services, offshore marine, shipping and shipbuilders, and metals & mining and steel, says the Moody’s report.
“For metals and mining, banks in Mongolia, India, Indonesia and China are more exposed,” says the report. Moody’s expects 2016 to be another challenging year for metals and mining firms, leading to higher problem loans and weak recoveries for existing problem and restructured loans. ……………………………………….Full Article: Source

Banks see worst Q1 in a decade in commodities

Posted on 25 May 2016 by VRS  |  Email |Print

Commodities revenue at the largest banks had the worst start to a year in more than a decade amid a pullback in financing of raw materials. Income at Goldman Sachs Group, Morgan Stanley and 10 other top banks slid by a combined 40 per cent year on year in the three months to March to US$1.1 billion (S$1.5 billion), according to analytics firm Coalition, which tracks commodities activities, including power and gas, oil, metals, coal and agriculture.
Revenue shrank as banks scaled back hedging and financing deals and their hedge-fund clients pulled out of commodities, said Mr Amrit Shahani, a research director at Coalition………………………………………..Full Article: Source

Defaults Have Already Spread Outside Commodities

Posted on 24 May 2016 by VRS  |  Email |Print

Bond investors appear to have placed their faith in commodities exceptionalism, with many positing that the recent pick-up in U.S. default rates will defy historical trends and remain confined to that industry.
New research from Deutsche Bank AG pours cold water on that idea, arguing that there are already signs of contagion in junk-rated debt outside of the commodities space. A look at previous peaks in default rates shows the potential for more pervasive corporate stress………………………………………..Full Article: Source

Gold miners net cash by 2018 as Goldmans ups price deck

Posted on 13 May 2016 by VRS  |  Email |Print

Analysts are throwing their weight behind a stronger gold market in the medium term with Goldman Sachs upgrading its dollar gold price deck by 10% to 15% for the next three years.JP Morgan was also positive on the medium term outlook for precious metals but diverging views on the platinum group metal (PGM) market could spell trouble in the short term for the normally robust gold stock, Sibanye Gold.
In a note published this morning, Goldman Sachs said the mines held in Rustenburg Platinum Mines, the entity Sibanye Gold is buying from Anglo American Platinum (Amplats), were not generating cash at current PGM prices………………………………………..Full Article: Source

The 15 Biggest Oil Bankruptcies (So Far)

Posted on 10 May 2016 by VRS  |  Email |Print

The pace of oil patch bankruptcies is picking up. According to a new count from Houston law firm Haynes & Boone, April saw 11 bankruptcy filings, the most of any month in the past two years. The headline failures that month were Ultra Petroleum, which buckled under $3.9 billion in debt, and Energy XXI, which carried debt of $2.9 billion.
All told, 69 oil and gas producers with $34.3 billion in cumulative secured and unsecured debt have gone under. Since share prices peaked in 2014, the oil bust has wiped out about $1 trillion in equity, with the Dow Jones U.S. Oil & Gas Index off 40%………………………………………..Full Article: Source

Asset class pushes higher on sustained demand from investors

Posted on 09 May 2016 by VRS  |  Email |Print

Commodities markets were awash in green at the end of the week despite another small gain for the US dollar, as data showed that investors were continuing to pile into the asset class. Gold was among the strongest performers, with the June 2016 COMEX contract up by 1.71% to $1,294.00/oz. by the closing bell.
Commodity funds had another week of inflows, the 17th so far this year, pushing year-to-date inflows to almost $6bn, analysts at Bank of America-Merrill Lynch said citing figures from EPFR Global………………………………………..Full Article: Source

Commodities boom “damaged” Australia

Posted on 05 May 2016 by VRS  |  Email |Print

Australia’s unprecedented commodities boom caused “considerable damage” to its economic relationship with East Asia, according to a senior economist.
Tom Taylor, the head of international economics at the National Australia Bank (NAB), says that the boom sent the Australian dollar so high, it helped hollow out other areas of the economy, which became uncompetitive as a result………………………………………..Full Article: Source

Record oil and gas companies in US file for bankruptcy

Posted on 05 May 2016 by VRS  |  Email |Print

The rout in crude prices is snowballing into one of the biggest avalanches in the history of corporate America, with 59 oil and gas companies now bankrupt after this week’s filings for creditor protection by Midstates Petroleum and Ultra Petroleum.
The number of US energy bankruptcies is closing in on the staggering 68 filings seen during the depths of the telecom bust of 2002 and 2003, according to Reuters data, the law firm Haynes & Boone and bankruptcydata.com. Charles Gibbs, a restructuring partner at Akin Gump in Texas, said the US oil industry is not even halfway through its wave of bankruptcies………………………………………..Full Article: Source

Falling Commodity Prices Leave India With Huge Subsidy Bill

Posted on 03 May 2016 by VRS  |  Email |Print

The nose-dive in global commodity prices has had an unexpected repercussion in India: a giant new subsidy bill as New Delhi spends billions to mop up wheat, rice, sugar and cotton at government-fixed prices.
India guarantees minimum prices for certain crucial crops to protect its large population of poor farmers. When prices plunge, it has to buy more. It usually sells the commodities it collects at a loss—some to India’s needy and some on global markets. Some of the stockpile just rots in government warehouses………………………………………..Full Article: Source

Chinese Commodity Speculators Drop Out After $261 Billion Binge

Posted on 29 April 2016 by VRS  |  Email |Print

The speculators that traded $261 billion in Chinese commodities in a single day last week are retreating as regulators prepare to step up control of the market.
The value of futures traded across China’s three biggest commodity exchanges has shrunk 42 percent since investors spent 1.7 trillion yuan last Thursday on everything from steel bars to eggs. The amount that changed hands was on a par with the entire U.S. equities market on the same day………………………………………..Full Article: Source

Commodity hedge funds outshine other hedge funds

Posted on 29 April 2016 by VRS  |  Email |Print

The commodities market has a very positive sentiment now and the commodity hedge funds are doing better than other hedge funds. Commodities hedge funds have given negative returns for the past three years.
But according to Peter Laurelli, vice-president, research, eVestment, the current year has started on a positve note for commodities as investors start reallocating for better gains. The commodities market has a very positive sentiment now and the commodity hedge funds are doing better than other hedge funds………………………………………..Full Article: Source

Citigroup’s commodity trading gross profit rises 50%

Posted on 25 April 2016 by VRS  |  Email |Print

Citigroup has reaped the benefits of investing in its commodities business as rivals pull back, cementing its position as one of the leading investment banks that generate hundreds of millions of dollars from trading raw materials.
Citi generated $850m in gross profit from commodities trading last year, up by about 50 per cent compared to 2014, according to three people familiar with the situation, on the back of volatile markets and the oil price rout………………………………………..Full Article: Source

Gold is the spectre haunting our monetary system

Posted on 18 April 2016 by VRS  |  Email |Print

For a century, elites have worked to eliminate monetary gold, both physically and ideologically. This began in 1914, with the UK’s entry into the First World War. The Bank of England wanted to suspend convertibility of bank notes into gold. Keynes counselled wisely that the bank should not do so. Gold was finite, but credit elastic.
By staying on gold, the UK could maintain its credit, and finance the war effort. This transpired. The House of Morgan organised massive credits for the UK, and none for Germany. This finance was crucial, and sustained the UK until the US abandoned neutrality and tipped the military balance against Germany………………………………………..Full Article: Source

Negative interest rates spark 2016 gold rush - but can German buyers push prices even higher?

Posted on 30 March 2016 by VRS  |  Email |Print

Almost a quarter of world GDP lies in economies whose central banks now have negative interest rates of some form. This experimental policy – used variously to weaken strengthening currencies and attempt to stimulate growth – has its fans, but investors have not been among them.
“There’s a sense that central banks are running out of ways that they can stimulate the economy,” says Chris Beauchamp of IG. As Deloitte economist Ian Stewart, among others, has pointed out, while in theory negative rates should encourage banks to lend and consumers to spend, in practice, they could just prompt individuals and companies to hold physical cash instead………………………………………..Full Article: Source

The commodities slump won’t undermine Australia’s banks

Posted on 29 March 2016 by VRS  |  Email |Print

Australians hate a tall poppy, which means the country’s richly valued banks are liable to get cut down at the first hint of bad news. So when Australia & New Zealand Banking Group admitted last week that it would have to take higher bad-debt charges due to the slump in commodity prices the shares fell as much as 6 per cent, the biggest drop in more than seven months.
Overvalued banks, rising defaults, troubled mining companies: What’s not to dislike about that picture? Sadly for the dwindling band still shorting the country’s big four banks, there’s little evidence such problems will pose more than a temporary speed-bump to their earnings. ……………………………………….Full Article: Source

Bondholders suffer $150bn oil price hit

Posted on 22 March 2016 by VRS  |  Email |Print

Investors have suffered losses of at least $150bn in the value of oil and gas company bonds, as the slump in crude prices since the summer of 2014 has fuelled fears of a wave of defaults in the US and emerging markets.
The 300 largest global oil and gas companies have also seen $2.3tn sliced from their stock market value over the same period, a 39 per cent slide since oil began its decline, an analysis by the Financial Times has found………………………………………..Full Article: Source

Shale Patch Pain Sees Speculators Boost Bets on Oil Price Rise

Posted on 14 March 2016 by VRS  |  Email |Print

Hedge funds are the most bullish on oil in almost a year as the U.S. shale boom unravels and demand for gasoline strengthens. Signs that producers won’t be able to sustain a supply glut are intensifying, with the International Energy Agency calling a bottom for the price rout.
U.S. output is near a 15-month low as companies from Anadarko Petroleum Corp. to Chesapeake Energy Corp. cut jobs and park rigs to conserve cash, while several missed debt payments. Meantime, U.S. gasoline consumption rose to the highest on record for this time of the year………………………………………..Full Article: Source

Miners seek fresh financing options, backed by resurgent gold

Posted on 09 March 2016 by VRS  |  Email |Print

This year’s double-digit gold rally is opening opportunities for smaller miners to sell future output or tap markets for finance, aimed at paying back debt and strengthening balance sheets. Miners have been hit hard by plummeting commodities prices, forcing them to cut jobs, capital expenditure and dividends.
However, bullion has risen nearly 20 percent so far in 2016 to a 13-month high around $1,280 an ounce on concern about financial and economic turmoil and a weaker dollar as markets adjust to the prospect of deferred U.S. interest rate rises………………………………………..Full Article: Source

While market debates commodities bottom, inflation warnings rise

Posted on 08 March 2016 by VRS  |  Email |Print

Some traders have been ringing the bell for the bottom of the commodities collapse, just as markets are sniffing out the earliest signs of inflation. That’s important since a turn in commodities prices could mean a pickup in inflation, which is already starting to materialize, and that could get the Fed moving faster on interest rate hikes.
Fed funds futures on Monday began to price in a full rate increase for December, for the first time since late January. Futures had been pointing to the first rate hike in March 2017. “Services inflation has remained steady for a while. All you needed was commodities prices to stop going down and that changed the inflation calculation here,” said Peter Boockvar, chief market analyst at The Lindsey Group………………………………………..Full Article: Source

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