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Commodity Traders Win Billions in Loans Amid Glencore Storm

Posted on 07 October 2015 by VRS  |  Email |Print

For all the fears that Glencore Plc could buckle under its weighty debt load, a wave of new bank loans this month shows the concerns aren’t spreading across the commodity-trading sector.
Banks are granting new credit lines to Glencore’s biggest trading rivals, including a record $8 billion of loan facilities on Tuesday to Vitol SA, the Swiss unit of the world’s biggest independent oil trader. Trafigura Pte Ltd. won improved terms on a $2.2 billion loan refinancing deal on Oct. 1 via a group of 28 banks. Swiss commodity traders Gunvor Group Ltd. and Mercuria Energy Group Ltd. are also marketing credit facilities totaling $2 billion………………………………………..Full Article: Source

Commodity Collapse Has More to Go as Goldman to Citi See Losses

Posted on 06 October 2015 by VRS  |  Email |Print

Even with commodities mired in the worst slump in a generation, Goldman Sachs Group Inc., Morgan Stanley and Citigroup Inc. are warning bulls that prices may stay lower for years.
Crude oil and copper are unlikely to rebound because of excess supplies, Goldman predicts, and Morgan Stanley forecasts that weaker currencies in producing countries will encourage robust output of raw materials sold for dollars, even during bear markets. Citigroup says the sluggish world economy makes it “hard to argue” that most prices have already bottomed………………………………………..Full Article: Source

Banks’ Troublesome Ties to Commodities Traders

Posted on 06 October 2015 by VRS  |  Email |Print

Fears around slumping commodities have whacked shares of Standard Chartered. But the U.K.-based and emerging-markets focused bank isn’t alone in lending to the world’s biggest metals, fuels and foods traders. Rivals such as HSBC and Royal Bank of Scotland have chunky loans to such firms as do big French banks, and MUFJ of Japan and Citigroup of the U.S., according to estimates from Bernstein analysts.
But what is critical is how big these exposures are compared with bank equity. Standard Chartered still stands out with loans to Trafigura that amount to 2.5% of the bank’s tangible net asset value, according to Bernstein, and loans to Glencore that amount to 1.3%………………………………………..Full Article: Source

Europe Banks’ Profit Outlook Dims on Commodities, Berenberg Says

Posted on 02 October 2015 by VRS  |  Email |Print

European banking profitability is set to worsen as falling commodity values weaken loan books and central bank actions from China to the U.S. cause economic uncertainty, according to analysts at Berenberg Bank.
“Developments in commodity markets matter for banks, given what they tell us about economic growth and the implications for asset quality,” Berenberg analysts Nick Anderson and James Chappell said in an note dated Sept. 29. “The financialization of commodities (their widespread use as collateral) underpins asset-quality concerns.”……………………………………….Full Article: Source

Credit and commodities run out of steam

Posted on 01 October 2015 by VRS  |  Email |Print

The world has been firing on two cylinders over recent years: commodities and credit. These did not quite deliver soaring growth, but were enough to keep things sputtering along. The tank, however, is running dry. Asia is especially exposed. While this need not portend imminent financial stress, growth is bound to disappoint for a while.
Consider the big picture. With the collapse of demand in the west following the global financial crisis, China has been holding up the roof. The mainland’s contribution to world growth occurred mainly through commodities. True, China imported everything from German cars and French handbags to Japanese excavators, but it was its appetite for raw materials that powered the world………………………………………..Full Article: Source

Credit, Commodities and Currencies Weigh on Stock Markets

Posted on 01 October 2015 by VRS  |  Email |Print

Call it a triple-C market—that is, one dominated by credit, commodities and currencies. A triple-C rating describes a speculative credit well down on the quality scale. In recent days, the market increasingly is looking askance at borrowers of lesser quality, especially those related to commodities.
That reduced esteem for lower-quality credits is hitting the equity market for the simple reason is that stocks never have been so dependent on borrowed money. Nor, for that matter, have commodities. The producers of metals, energy and agricultural goods went heavily into hock to expand production. Cheap credit funded the expansion of supplies not only of energy products but also metals that boomed in the so-called commodity super cycle………………………………………..Full Article: Source

Bad quarter for stocks; dire one for commodities

Posted on 01 October 2015 by VRS  |  Email |Print

The third quarter has been a bad one for global markets, with a rout in commodities putting the asset class among the hardest hit by China slowdown fears and U.S. interest rate uncertainty. Copper prices plunged to a six-year low earlier this week, while Brent crude oil prices were on course for a 23 percent fall during the period.
“We’ve pushed raw materials down so far, we must be getting to the point where they start to base out,” Marc Ostwald, a strategist at ADM Investor Services, told CNBC……………………………………….Full Article: Source

Glencore Crash: Sharing in the Commodities Giant’s Misery

Posted on 30 September 2015 by VRS  |  Email |Print

Asian commodities house Noble Group has been under siege since critics began assailing its accounting in February. Now, the woes of trading peer Glencore are adding to the sense of peril regarding Noble.
The 29% plunge Monday in miner-cum-trader Glencore’s London shares triggered a 10% drop in Noble’s Singapore-listed stock Tuesday. Noble’s 2020 bonds at one point Tuesday also fell by 20 cents on the dollar to around 60 cents, according to traders………………………………………..Full Article: Source

Commodities are Battered among the Asset Classes

Posted on 28 September 2015 by VRS  |  Email |Print

Commodities, one of the most important asset classes, have received a beating since 2014, largely due to global oversupply. This downtrend is seen in all the commodity sectors, including energy, industrial metals, precious metals, and agriculture. Commodity mutual funds have also followed this trend.
Commodities movement historically does not correlate with any other asset class like equities or bonds. They generally have a positive correlation with inflation. Hence, they are considered to be an attractive investment option from a diversification point of view. But investing in commodities involves higher risk compared to equities or bonds. So, exposure to commodities using mutual funds reduces the risk………………………………………..Full Article: Source

Oil price plunge forces Norway to cut rates to record low

Posted on 25 September 2015 by VRS  |  Email |Print

Norway’s central bank cut interest rates to a fresh record low as it battled to overcome a slump in oil prices that has hit the economy of western Europe’s biggest petroleum producer harder than during the financial crisis.
Norges Bank cut its overnight deposit rate, the amount that banks earn by parking their spare cash at the central bank, by 25 basis points to 0.75 per cent and warned that more cuts were possible………………………………………..Full Article: Source

Gold vs Debt: The Big Picture

Posted on 24 September 2015 by VRS  |  Email |Print

Gold prices peaked in January 1996 and then fell for 3.5 years into a multi-decade low. It was the age of stocks, debt, leverage, and good times; nobody needed or wanted gold. Since the gold price peak in 2011 the Federal Reserve has “generously” supplied the world with trillions of dollars of newly created digital and paper debt, all backed by nothing but faith and credit.
Bonds have rallied and the S&P is higher by 50% or so. The Japanese Central Bank has similarly produced trillions of yen, bought stocks and bonds, and extended their recession several more years………………………………………..Full Article: Source

Short bets on suffering commodities netting major returns in meltdown

Posted on 21 September 2015 by VRS  |  Email |Print

The biggest collapse in commodity prices in a generation is giving some investors the best returns of any asset class. Over the past 12 months, eight of the 10 best-performing U.S. exchange-traded funds were securities that benefited from declines in raw-material prices, with five more than doubling their money, according to data tracked by Bloomberg on more than 1,600 ETFs across asset classes, including equities, fixed income and mixed allocation.
With commodity prices languishing near a 16-year low because of excess supplies, money has been flowing out of funds linked to metals, crops and energy. But for the investors that took on more risk with leveraged short bets, the payoff has been big. The VelocityShares Daily 3x Inverse Crude ETN, by far the top gainer, surged 241 per cent over the 12 months through Wednesday as oil prices tumbled 50 per cent in New York………………………………………..Full Article: Source

China August commodities output weak as economic slowdown bites

Posted on 15 September 2015 by VRS  |  Email |Print

China’s output of key industrial commodities including coal and steel weakened in August, as government measures to cut smog ahead of World War Two commemorations further cut production already lowered by a slowing economy.
Growth in China’s investment and factory output missed forecasts in the month, pointing to a further cooling in the world’s second-largest economy that will likely prompt the government to roll out more support measures………………………………………..Full Article: Source

Plummeting Commodity Demand Slams Nigerian, Brazilian Debt

Posted on 14 September 2015 by VRS  |  Email |Print

Nigeria and Brazil may be in different continents, but they had something in common last week: There’s no hiding behind bad fiscal and monetary policies when commodity demand dries up. JPMorgan said it would boot Nigeria from its benchmark local-currency Government Bond Index-Emerging Markets, citing foreign-currency restrictions and a lack of liquidity.
But Nigeria defended policies that it argues curb speculative trading and volatility. Its oil-dependent economy is revenue starved, and new President Muhammadu Bhuari has been slow to appoint a new cabinet. The Global X MSCI Nigeria exchange-traded fund (ticker: NGE) has fallen 23% this year………………………………………..Full Article: Source

Local Funds Key to Shielding India From China Swings

Posted on 14 September 2015 by VRS  |  Email |Print

Foreign investors’ sway over Indian stocks is set to wane as local mutual funds take a bigger slice of the $1.4 trillion market, providing a buffer against price swings sparked by events like China’s yuan devaluation last month, according to Tata Asset Management Co.
Even as the worst emerging-markets rout in four years rubbed off on India’s benchmark S&P BSE Sensex, domestic stock funds took in a net 92 billion rupees ($1.4 billion) in August, 50 percent more than July, data from the Association of Mutual Funds in India showed last week. Global investors, on the other hand, sold the most shares since October 2008………………………………………..Full Article: Source

Major banks’ commodities revenue down 25 pct in first half-report

Posted on 09 September 2015 by VRS  |  Email |Print

Global commodities-related revenue at the top 10 investment banks tumbled by a quarter in the first half of the year, due to a retreat in business from the power and gas sectors after last year’s surge, a consultancy said on Tuesday. Revenue earned by leading banks from commodity trading, selling derivatives to investors and other activities in the sector fell to $2.6 billion from $3.5 billion in the same period of 2014, financial industry analytics firm Coalition said.
“Despite increased volatility in oil prices and better corporate activity, commodities revenues declined due to (the) absence of prior-year gains from the unusually cold winter,” Coalition said………………………………………..Full Article: Source

Smart Money May Be Early But It’s Betting On Commodities

Posted on 09 September 2015 by VRS  |  Email |Print

A few legendary influencers in investing are making huge bets right now on commodities, an area that continues to face some pretty strong headwinds. Stanley Druckenmiller made a $323-million bet on gold, now the largest position in his family office fund.
Meanwhile, George Soros recently moved $2 million into coal producers Peabody Energy and Arch Coal, and activist investor Carl Icahn took an 8.5-percent stake in copper miner Freeport-McMoRan, which we own. My friend Marc Faber, the widely-respected Swiss investor and editor of the influential “Gloom, Boom & Doom Report,” is now plugging for the mining sector and precious metals………………………………………..Full Article: Source

Commodity Finance Slump Threatens Global Trading, Report Says

Posted on 08 September 2015 by VRS  |  Email |Print

Small and mid-sized commodity traders are being squeezed as banks retreat from global trade finance or offer the “wrong type” of loans, according to law firm Clyde & Co. Trade finance is harder to access today than it was a decade ago, according to 77 per cent of companies and executives surveyed in the report to be published Monday by the London- based legal firm.
Bank-led trade finance has slumped by half from a peak of US$14 trillion before the global financial crisis in 2008 to about US$7 trillion, Clyde & Co said. That’s forcing traders and commodity producers to rely on a “complex patchwork” of financing to meet their needs………………………………………..Full Article: Source

U.S. CLOs Have Material Exposure to Commodities, Moody’s Says

Posted on 04 September 2015 by VRS  |  Email |Print

Collateralized loan obligations that were created after the financial crisis in the U.S. have material exposure to the commodities sector, which poses an increased risk to investors due to the plunge in crude prices.
That’s the finding of a report published yesterday by Moody’s Investors Service, which shows that as of June the top 20 individual CLOs with the largest exposures to companies in the commodities-related sector ranged from 14.4 percent to 21.3 percent of their holdings. A fund managed by GoldenTree Asset Management LP had the biggest exposure followed by two CLOs issued by Halcyon Asset Management LLC, the report shows………………………………………..Full Article: Source

Hedge, to cope with commodity swings

Posted on 31 August 2015 by VRS  |  Email |Print

Oil, gas and non-ferrous metals are currently undergoing their biggest price correction since the recession of 2008. Economic volatility has shaken up the commodities market. China’s uncertain economic situation is likely to loom large over the metals sector in 2015.Recently, the Thompson Reuters Core Commodity index hit its lowest point since April 2003. Effectively, the market has erased all gains of the decade-long commodities “super-cycle”{+.}
Volatility has not spared the agricultural markets either, with corn showing volatility of over 24 per cent in 2014 and coffee volatility at the end of 2014 increasing to 50 per cent. This is a tectonic shift in the world of commodities — where relying on fundamentals of physical supply, demand and inventory positions alone cannot explain the extent of volatility………………………………………..Full Article: Source

Commodity Rout Erases $2 Trillion From Stock Values

Posted on 21 August 2015 by VRS  |  Email |Print

Prices have plunged after years of overinvestment led to a supply glut at the same time that economic growth is slowing in China. The value that commodity producers have lost in the past year almost equals India’s entire economy.
Slumping prices for raw materials have wiped out $2.05 trillion from the shares of mining and oil companies since the middle of last year, data compiled by Bloomberg show. That compares with India’s $2.07 trillion gross domestic product………………………………………..Full Article: Source

Oil bear market will end in panic liquidation: Gartman

Posted on 20 August 2015 by VRS  |  Email |Print

The bear market in U.S. crude will continue, eventually ending one day in “panic liquidation,” widely followed investor Dennis Gartman predicted Wednesday. “It will end when you’ve had an announcement of five or six bankruptcies. It will end when mergers and acquisitions step in and take over,” the founder and editor of The Gartman Letter said
U.S. crude (WTI) futures closed at their lowest in more than six years on Wednesday at $40.80 a barrel after U.S. data showed an unexpected rise in crude stockpiles. Oil has lost about a third of its value since June. U.S. oil production is at record levels and producer costs appear to be declining, with no output scaleback anticipated………………………………………..Full Article: Source

Commodity assets halve from peak

Posted on 20 August 2015 by VRS  |  Email |Print

Assets invested in commodity funds have halved from their peak four years ago, hitting $127bn (£80.9bn) in July, data from Lipper shows. The assets have been hit by both outflows and underperformance of funds, as commodity prices have plummeted.
Over the past three months to July commodity funds have seen $3.2bn in outflows, with the past month alone seeing $1.7bn in outflows, the worst for any asset group. However, over the longer term outflows have been starker, with $39.8bn leaving the funds in the past three years………………………………………..Full Article: Source

Saudi Arabia tumbles after China depresses commodities

Posted on 19 August 2015 by VRS  |  Email |Print

Saudi Arabia’s stock market fell sharply on Tuesday after U.S. oil prices dropped near six-year lows and equities in China tumbled. Chinese stock prices sank 6 percent as the yuan weakened against the dollar, raising fears that Beijing might further devalue its currency, which could decrease its consumption and imports of oil and other commodities.
The main Saudi stock index tumbled 3.6 percent by mid-afternoon to a seven-month low of 8,134 points with nearly all stocks deep in negative territory. The index plunged this week below technical support around 8,500 points, where it had bottomed in March and April; that triggered a double top formed by the March and April peaks and pointing down to December’s low of 7,226 points in coming months. ……………………………………….Full Article: Source

China’s gold reserves rise 19 tonnes in July

Posted on 17 August 2015 by VRS  |  Email |Print

China’s gold reserves rose by more than 19 tonnes in July, the official Xinhua news agency said yesterday, after the central bank last month gave the statistic for the first time in six years. Bullion holdings stood at 1,677.30 tonnes at the end of July, Xinhua said citing the People’s Bank of China (PBoC), a 1.16 per cent increase on June’s 1,658 tonnes.
The rise is worth nearly $700 million, according to yesterday’s price of $1,118.25 an ounce on the London Bullion Market. The PBoC issued gold reserve figures last month for the first time since April 2009, revealing a rise of 57pc over the past six years………………………………………..Full Article: Source

What a rout in commodities has done to long-term bond yields

Posted on 11 August 2015 by VRS  |  Email |Print

Demand for long-term Treasury bonds has been rising over the past four weeks, as an overarching flight-to-safety theme has emerged out of the global rout in commodities sparked in part by worries about a slowdown in China’s economy.
Treasury investors have been moving money from short-term to long-term Treasury bonds causing a phenomenon that is known as a “flattening yield curve.” “Most [Treasury investors] seem to be playing the curve flattening strategy ahead of the Fed’s September meeting,” Tom di Galoma, head of rates and credit trading at ED & F Man Capital Markets, said in a note………………………………………..Full Article: Source

Poor commodities: an asset without a central bank backer

Posted on 07 August 2015 by VRS  |  Email |Print

Commodity investors stung by the four-year bear market made one simple mistake: investing in an asset class not backed by a central bank. Whereas equities and bonds have benefited from very meaningful support, direct and indirect, from central bank asset-purchase programmes, commodities have not.
That may or may not be good policy; certainly you can argue that the current downdraft in commodities prices reflects a singular lack of inflation risk in the global economy. That might argue for more quantitative easing, but given that what we’ve had so far has neither generated much inflation or kindled demand for raw materials, it would be hard to be too sure that more central bank buying of financial assets would help commodities prices………………………………………..Full Article: Source

Oil’s $4.4 Trillion Hole: Deflation spreads through the global oil industry

Posted on 07 August 2015 by VRS  |  Email |Print

It rankles when you lose $20. But hey, at least it isn’t $4.4 trillion. That is roughly how much revenue the world’s oil producers will forego over the next three years, based on the current outlook for prices and demand, relative to what was expected just a year ago.
With Brent crude having tumbled back below $50 a barrel, the industry has entered a vicious, and spreading, bout of deflation. A year ago, futures indicated an average Brent crude-oil price in 2016 through 2018 of about $101 a barrel. Today, that is just under $60. Estimates of future demand have also been marked down slightly. The implied hit to oil producers’ revenue is about $4.4 trillion spread across those three years………………………………………..Full Article: Source

OPEC leader Saudi Arabia is having to borrow money

Posted on 07 August 2015 by VRS  |  Email |Print

The oil kingdom is facing a big hole in its budget, caused by the slump in oil prices and a sharp rise in military spending. That’s forcing the government to raid its reserves, and it may even borrow from foreign investors, analysts say.
Saudi Arabia has already burned through almost $62 billion of its foreign currency reserves this year, and borrowed $4 billion from local banks in July — its first bond issue since 2007. Its budget deficit is expected to reach 20% of GDP in 2015. That’s extraordinarily high for a country used to running surpluses. Capital Economics estimates that government revenues will fall by $82 billion in 2015, equivalent to 8% of GDP. The IMF is forecasting budget……………………………………….Full Article: Source

Global capex set to shrink as commodities crunch bites

Posted on 05 August 2015 by VRS  |  Email |Print

Conditions for Australia’s engineering and construction companies are set to worsen as the full effect of the post-commodities boom takes hold, with a survey showing business investment globally is likely to shrink for the next two years. Standard & Poor’s Ratings Services’ third annual global capital expenditure survey found non-financial corporate capital expenditure (capex) would fall 1 per cent this year and 4 per cent in 2016 before stabilising.
Energy and mining companies, which made up nearly 40 per cent of global capex in 2014, will drive the continued weakness in corporate spending worldwide as the price of their products remain under pressure. In 12 months, the price of iron ore has fallen 42 per cent to $US55.63 a tonne, while the benchmark brent oil price has dropped 53 per cent to $US49.88 a barrel………………………………………..Full Article: Source

Commodities dip derails Fed rate hike

Posted on 05 August 2015 by VRS  |  Email |Print

The Federal Reserve will have a harder time making the case for a September rate hike if commodity prices continue to slip, JPMorgan Asset Management’s David Lebovitz said Tuesday.
“As commodity prices continue to fall, it’s going to make it more and more difficult for the Fed to reach that 2 percent inflation target and have a reason for hiking rates,” Lebovitz said.”Still, Lebovitz said he expects the Fed will likely raise at least once this year………………………………………..Full Article: Source

Commodities Rout Erases Billions from Africa’s Biggest Fortunes

Posted on 04 August 2015 by VRS  |  Email |Print

The collapse in commodity prices and the rise of the African middle class has flipped the fortune trends of the continent’s richest people. Commodities tycoons Aliko Dangote and Patrice Motsepe have lost almost $4 billion in 2015, while Nigerian telecom billionaire Mike Adenuga and South African retail mogul Christo Wiese have added almost $2 billion, according to the Bloomberg Billionaires Index.
“The go-go years of African billionaires whose wealth has been built around oil is over,” said Martyn Davies, CEO of Johannesburg, South Africa-based investment research firm, Frontier Advisory. “We have placed far too much emphasis on a handful of people making significant capital through distorted-priced resources. True wealth creation is where billionaires are created from non-resource assets.”……………………………………….Full Article: Source

Will commodities crash trigger new financial crisis?

Posted on 31 July 2015 by VRS  |  Email |Print

The equity market has suffered sharp falls in the last two months, and investors are divided on whether the Hong Kong and A-share markets have stepped into the bear territory. Several commodities like gold, base metal and oil are certainly in the bear market territory. And the meltdown in commodity market may trigger a new financial crisis.
The market predicts that the chance for a “lift-off” within this year has increased to 50 percent from the previous one-third, according to recent remarks by Federal Reserve chief Janet Yellen. If that is the case, the Fed could open a “Pandora’s Box”, which could further strengthen the US dollar and trigger a further slide in the prices of commodities………………………………………..Full Article: Source

Banks see second quarter revenue dip from commodities

Posted on 23 July 2015 by VRS  |  Email |Print

Pinning down the financial performance of energy commodity trading at top financial institutions is complicated by the manner in which banks segment their operations and lump together certain revenue numbers. While differences exist from bank to bank, for the most part the big banks place commodity trading within their fixed-income unit of their investment bank division.
Low commodity prices, less volatility, and thus lower volumes traded, have all had an impact. A review of some of the numbers just released for the second quarter of 2015 at three top banks suggests that commodity trading in Q2 took a big hit. This follows a first quarter in which fixed-income numbers rose on what bank analysts said at the time was bullish volumes………………………………………..Full Article: Source

Commodity selloff: What it means for Fed rate hike

Posted on 22 July 2015 by VRS  |  Email |Print

A broad selloff in commodities and dollar strength point to disinflationary pressures on the horizon that weaken the argument for a near-term rise in U.S. interest rates, according to some analysts. This week has seen gold prices tumble to five-year lows and U.S. oil prices dip below $50 a barrel for the first time since April, with prices stabilizing a little on Tuesday.
“Given that weak commodity prices are likely to prompt a ripple out disinflationary effect it is hard to see how the Fed (U.S. Federal Reserve) would even consider hiking rates against such a weak backdrop, something markets don’t appear to be considering at the moment,” Michael Hewson, chief market analyst at CMC Markets UK, said in a note on Tuesday………………………………………..Full Article: Source

$1 trillion solar, wind finance to outstrip oil and gas industry

Posted on 21 July 2015 by VRS  |  Email |Print

Listed finance vehicles for large-scale wind and solar projects are likely to rapidly overtake the oil and gas industry in the US, but may bypass Australia altogether if the Abbott government continues to send the wrong signals to investors. Deutsche Bank last week released a report which said the renewable energy finance vehicles – known as “YieldCos” – were likely to rapidly outgrow their oil and gas industry equivalents, and become and order of magnitude bigger than their fossil fuel rivals.
YieldCos – listed vehicles that offer a high rate of return for investment in large-scale solar farms and wind farms, in much the same way as real estate investment trusts and the oil and gas industry’s mutual limited partnerships – currently account for less than one per cent of renewable energy financing………………………………………..Full Article: Source

Commodities firms facing tough times in fundraising amid oversupply and weak demand

Posted on 20 July 2015 by VRS  |  Email |Print

China still has great demand for energy and metals to feed its urbanising and industrialising economy, but it is facing challenges in raising funds for new mining projects, with the commodities and energy sectors lingering at the bottom of a down-cycle.
Its demand for products from the core industrial polluters - power, steel and cement - also comes as President Xi Jinping is making ambitious pledges to cut carbon emissions and as influential international investment funds have led a backlash against carbon-intensive mineral projects - particularly coal - divesting holdings and cutting billions of dollars from available funding that China needs. Amid oversupply in most commodities, depressed prices have translated into poor profits or losses for energy and metals producers across the whole supply chain, causing investors to shy away from their shares………………………………………..Full Article: Source

Earnings should grab attention, but watch commodities

Posted on 20 July 2015 by VRS  |  Email |Print

About a quarter of S&P 500 companies report earnings in the coming week, and that could be a positive catalyst for stocks as worries about Greece and China drift into the background. So far, just several dozen companies have reported, and the usual 70 percent-plus beat on the top-line, while just about half beat on revenue. Among the names reporting next week are Apple, IBM, American Express, General Motors, Boeing, Coca-Cola and Amazon.com.
“The reaction to earnings has been relatively good,” said Paul Hickey, co-founder of Bespoke. “Coming into this earnings reporting period, analysts’ sentiment was negative. We were getting more downward revisions than upward revisions, and typically when you see that coming into a reporting period, the market performance is much better than when you see analysts upping their estimates.”……………………………………….Full Article: Source

How Large Was US Gold Market Trade Deficit In Q1 2015?

Posted on 17 July 2015 by VRS  |  Email |Print

While the global financial system remained subdued in the first quarter of 2015, the U.S. Gold Market still suffered a large trade deficit. Matter-a-fact, the U.S. Gold Market deficit in 2015 may surpass its full-year shortfall in 2014 by a wide margin. Furthermore, with the heightened financial turmoil stemming from the Greek situation in Europe during the summer, I would imagine U.S. gold market deficits may be even higher in the second and third quarter.
Before we look at the data for the first quarter of 2015, let’s take a peak at the U.S. gold supply and demand situation for the full-year 2014: Last year, the U.S. imported a total of 308 metric tons (mt) of gold, had domestic mine supply of 212 mt and scrap of 90 mt (my estimates based on GFMS 2014 World Gold Survey). ……………………………………….Full Article: Source

Why Saudi Arabia Makes So Much Money on Oil

Posted on 14 July 2015 by VRS  |  Email |Print

Hint: it has to do with how many new wells the kingdom has to drill each year compared to other oil producers. A lot of reasons have been given as to why Saudi Arabia is allowing the oil price to not only fall but remain weak. Some suggest it’s because it’s seeking to harm emerging rivals like the U.S. and Russia.
Others have suggested that the move is because it wants to keep its regional rival Iran at bay. While both could be true, the reason Saudi Arabia isn’t worried about the oil price is because it doesn’t need a high oil price to justify the drilling costs needed to maintain or grow its production. This is due to the fact Saudi Arabia only needed to drill 399 new wells last year just to keep its daily production at 11.4 million barrels of oil………………………………………..Full Article: Source

Saudi Arabia borrows $4bn as oil price reality hits home

Posted on 13 July 2015 by VRS  |  Email |Print

Saudi Arabia needs an oil price of $105 a barrel to meet planned spending requirements, but the average price for the year is estimated at $58 a barrel, John Sfakianakis, director for the Gulf region at Ashmore, a fund manager said. “If the government continues business as usual and draws down like this it will deplete reserves faster than expected, by the end of 2018 or early 2019,” he added.
Saudi Arabia has borrowed $4bn from local markets in the past year, selling its first bonds for eight years as part of efforts to sustain high levels of public spending as oil prices slump. Fahad al-Mubarak, the governor of the Saudi Arabian Monetary Agency, said the government would use a combination of bonds and reserves to maintain spending and cover a deficit that would be larger than expected………………………………………..Full Article: Source

Bank for International Settlements warns of emerging market risks

Posted on 29 June 2015 by VRS  |  Email |Print

Economists and foreign investors may have overestimated the potential economic output of a quintet of Latin American countries by 2 percentage points, leading to the possibility of sharp financial outflows when reality sinks in. Separately, “massive borrowing” by emerging market companies has also left them vulnerable to funding reversals if and when investor sentiment towards EMs reverses.
These are among the warnings from the Bank for International Settlements, commonly known as the central bankers’ central bank, in its annual report, released on Sunday. Amid slowing economic growth across much of the emerging world, the BIS says that a “moderation” of growth from the very high rates seen in recent years is “probably unavoidable”………………………………………..Full Article: Source

OPEC’s Oil Revenues Have Dropped Below $1 Trillion - Here’s What That Looks Like

Posted on 25 June 2015 by VRS  |  Email |Print

OPEC nations’ oil revenues dropped last year below the psychological $1 trillion mark for the first time since 2010, in the clearest sign yet of the economic impact of lower prices for oil-rich nations.
The Organisation of the Petroleum Exporting Countries said on Wednesday in its annual statistical report that its 12-members earned $964.6 billion selling their petroleum, down 12.7 per cent from $1.1 trillion in 2013 and the lowest amount since 2010. Oil export revenues hit a nominal record of $1.2 trillion in 2012, according to OPEC data………………………………………..Full Article: Source

China likely to get central bank nod for yuan gold fix soon

Posted on 25 June 2015 by VRS  |  Email |Print

China is expected to receive approval from its central bank for a yuan-denominated gold fix “anytime now”, with more details about the scheme potentially set to emerge at a major industry conference this week, sources told Reuters.
The world’s top gold producer and one of the biggest consumers wants to be a price-setter for bullion and is asserting itself at a time when the global dollar-denominated benchmark, the century-old London fix, is under scrutiny for alleged price-manipulation. If the yuan fix takes off, China could compel buyers in the mainland and foreign suppliers to pay the local price, making the London fix less relevant in the world’s biggest bullion market………………………………………..Full Article: Source

Investors may bond with gold, but not part with yellow metal

Posted on 23 June 2015 by VRS  |  Email |Print

Investors would opt for the gold bonds to be offered by the government, but are not likely to part with their jewellery under its monetisation scheme. The government’s efforts at curbing the insatiable demand for gold would only succeed in halting the purchase of the yellow metal for investment purposes to an extent, say experts.
“The gold monetisation scheme (GMS) will not take off as people have an emotional attachment with gold. They aim to get back the same piece of jewellery even when they pledge gold for raising money,” says Suresh Sadagopan, founder, Ladder7 Financial Advisories………………………………………..Full Article: Source

China’s removal of molybdenum export tax boosts moly metal, scrap trade

Posted on 23 June 2015 by VRS  |  Email |Print

China’s May 1 removal of export taxes on molybdenum products has boosted its exports of moly metal and scrap and left moly oxide and ferromoly markets largely unaffected, sources said Monday. The lifting of the 5% export tax on 99.9% moly metal had an immediate impact, with supply in China tightening as demand for exports surged, mainly from Europe.
June cargoes supplied by around 20 Chinese producers had sold out by end May and July cargoes were already fully booked this week, with the earliest supply currently seen available for August, a South Korean trader said………………………………………..Full Article: Source

Banks Balk at China Commodities Deals

Posted on 18 June 2015 by VRS  |  Email |Print

Once bitten, twice shy. Banks are wary of commodities deals in China a year after officials started investigating alleged fraud that led to a $193 million writedown for Standard Chartered Plc and $147 million at Standard Bank Group Ltd.
Traders in the world’s biggest consumer of metals are finding it harder to get credit from lenders after the probe at the eastern ports of Qingdao and Penglai, according to Guotai & Junan Futures Co. and Everbright Futures Co., Chinese commodity brokers whose clients include trading companies and financial institutions………………………………………..Full Article: Source

OPEC Export Revenue Below $1 Trillion Lowest Since 2010

Posted on 18 June 2015 by VRS  |  Email |Print

According to the report, released on Tuesday, the value of the 12-member organization’s combined petroleum exports dropped from $1.1 trillion in 2013 to $993.3 billion in 2014, the year when oil prices plummeted to less half their prior value.
OPEC upheld its production quota of 30 million barrels per day at its meeting in Vienna on June 5. The group surpassed its self-imposed limits for the past 11 months, according to analysis conducted by Bloomberg………………………………………..Full Article: Source

Citi faces headwinds in commodity trade finance, presses on with expansion

Posted on 16 June 2015 by VRS  |  Email |Print

Citigroup Inc and rivals in the commodity trade finance sector are facing headwinds of weak oil prices, sanctions on Russia and stiff competition, which have pressured fees. The U.S. bank, which launched its business in the sector three years ago, has shifted attention from China, where fees are weak, to Africa and Latin America, said Kris van Broekhoven, global head of commodity trade finance.
“It’s still a tough environment,” he told Reuters. “China is not an easy market. It’s very competitive and pricing is low. We want growth, but not at any cost.”……………………………………….Full Article: Source

Saudi Arabia’s efforts toward diversification cushion oil price drop

Posted on 15 June 2015 by VRS  |  Email |Print

Although Saudi Arabia has substantial financial reserves to withstand low oil prices over the next few years, recent government spending has intensified the need for longer term fiscal, environmental and resource sustainability in the Kingdom, according to a new report commissioned by ICAEW titled “Economic Insight: Middle East Q2 2015” produced by Cebr, ICAEW’s partner and economic forecaster.
Lower oil prices will have a greater impact on Saudi Arabia’s economic growth over the medium rather than the short term. As a result of the government’s decision to allocate additional funding to social activities like education, the breakeven crude oil price has surged from just under $75 in 2009 to $90 in 2015………………………………………..Full Article: Source

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