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Commodities Briefing 16.May 2013

Posted on 16 May 2013 by VRS |  Email |Print

Commodities revenue at the 10 largest banks fell 54 percent in the first quarter from a year earlier, according to analytics company Coalition.
Commodities revenue of the top banks in the Coalition index dropped to $1.2 billion from $2.6 billion a year earlier, the London-based Coalition said in an e-mailed report today. Revenue fell 24 percent last year, it said in February…………………………………….Full Article: Source

Posted on 16 May 2013 by VRS |  Email |Print

Global investment banks suffered another bruising decline in commodity trading in the first three months of this year, new reports showed on Wednesday, with Morgan Stanley’s revenues collapsing to a quarter of what they were a year ago. Morgan Stanley Q1 commodity revenues fall 77 pct.
While industry heavyweights Goldman Sachs and JPMorgan reported slightly higher revenues year-on-year in detailed quarterly filings made with the SEC in the past week, the overall sector continues to be squeezed by increased regulation, tepid markets, and low levels of client activity…………………………………….Full Article: Source

Posted on 16 May 2013 by VRS |  Email |Print

It’s a dichotomy that has agitated equity market naysayers for many months. How can stocks be so bullish when growth-sensitive commodities are having such a rotten time?
In other words, why are central banks’ quantitative easing programmes helping the S&P 500 so much more than, say, copper? Julian Jessop, head of commodities research at Capital Economics, says there are three main reasons…………………………………….Full Article: Source

Posted on 16 May 2013 by VRS |  Email |Print

The spring swoon may not hit the stock market this year – nothing, it seems, can hit the stock market this year – but it’s visible in the real world. Three data points this morning, as well as Europe’s ongoing morass, show that all is not well outside Wall Street.
The news has hit the commodities complex, gold fell under the $1,400 mark, as investors extrapolated the lower demand for commodities implied by the reports. The dollar’s rise of late hasn’t helped matters (as commodities are priced in dollars). The stock market seems to have shaken it all off rather quickly — the Dow’s up 61 points as of this writing — which given the market’s mindset these days, isn’t terribly surprising…………………………………….Full Article: Source

Posted on 16 May 2013 by VRS |  Email |Print

Goldman Sachs Group Inc. said that returns from commodities have diverged from developed equity markets amid expectations for rising metal stockpiles and energy supplies, maintaining its neutral outlook on raw materials.
Commodity returns as gauged by the Standard & Poor’s GSCI Enhanced index will be 1.6 percent over 12 months, analysts led by Jeffrey Currie wrote in a report dated yesterday. That compares with an earlier estimate for a 2.5 percent return, according to an April 23 report. Goldman is most bearish on agriculture, forecasting a 13 percent loss over 12 months…………………………………….Full Article: Source

Posted on 16 May 2013 by VRS |  Email |Print

I’m not a big fan of the word “commodity.” At least, not in how economists would define the term. Sure, it is a perfectly good word with a perfectly reasonable meaning – a product or service that is in demand, but that is not qualitatively distinguishable in the marketplace.
But it also is a word with a built in excuse, because if something is a commodity, that means it is difficult, maybe even impossible, to differentiate it in the marketplace. Not true. Not by a long shot…………………………………….Full Article: Source

Posted on 16 May 2013 by VRS |  Email |Print

No one—aside maybe from survivalists who’d stocked up on MREs and assault rifles—was really looking forward to a peak-oil world. Read this 2007 GQ piece by Benjamin Kunkel—while we’re discussing topics from the mid-2000s—that imagines what a world without oil would really be like. Think uncomfortable and violent.
Oil is in nearly every modern product we use, and it’s still what gets us from point A to point B—especially if you need to get from A to B in a plane. If we were really to see the global oil supply peak and decline sharply, even as demand continued to go up, well, apocalyptic might not be too large a word…………………………………….Full Article: Source

Posted on 16 May 2013 by VRS |  Email |Print

The commodity axis has shifted, according to the latest International Energy Agency’s (IEA) semi-annual review of the oil market. North America’s shale oil boom is about to revolutionize the oil market, threatening OPEC’s grip on commodities.
The IEA expects US oil production to grow by 3.9 million barrels of oil per day from 2012 to 2018, significantly faster than the 1.75 million barrels per day of growth forecast for OPEC producers…………………………………….Full Article: Source

Posted on 16 May 2013 by VRS |  Email |Print

Shale oil has rapidly boosted oil production in the US, presaging a revolution in oil to mirror that in gas production. Developing countries have overtaken the industrialised world for the first time in their thirst for oil, according to the world’s leading energy authority.
This transformation in the demand for oil has come as production of the fuel has boomed in the US, “sending ripples through the global markets”, the International Energy Agency (IEA) said on Tuesday…………………………………….Full Article: Source

Posted on 16 May 2013 by VRS |  Email |Print

For decades the physical oil market has been the unregulated preserve of a few powerful companies. But in the wake of the Libor scandal, it is subject to intense scrutiny.
Energy companies including BP, Royal Dutch Shell and Statoil, the majors raided by the European Commission on Tuesday in a probe into possible price rigging, have long dominated the trade. A handful of large commodity trading houses, hedge funds and investment banks are the other big participants…………………………………….Full Article: Source

Posted on 16 May 2013 by VRS |  Email |Print

Billionaire investor George Soros joined Northern Trust Corp. and Blackrock Inc. in cutting holdings of exchange-traded products backed by gold before a bear market in prices last month, while John Paulson maintained a stake that lost about $165 million in the first quarter.
Soros Fund Management LLC lowered its investment in the SPDR Gold Trust, the biggest such fund, by 12 percent to 530,900 shares as of March 31, compared with three months earlier, a Securities and Exchange Commission filing showed……………………………………Full Article: Source

Posted on 16 May 2013 by VRS |  Email |Print

Copper prices fell to a two-year low earlier this month. The other London-traded base metals followed a similar pattern. In what we view as merely extremely oversold conditions, copper staged a mighty 10% rally. The other metals consolidated but continued to hover near their lows.
An indication, perhaps, that the recovery in copper prices was tied more to short covering than a resurgence in demand for industrial metals. Indeed, we find that the supply/demand situation for copper continues to head in a bearish direction…………………………………….Full Article: Source

Posted on 16 May 2013 by VRS |  Email |Print

Investors who want to begin investing in exchange traded funds have so many choices, it could be difficult to begin. There are many risks involved with using ETFs, just as there are plenty of rewards.
“To put things in perspective, there are probably six or seven times as many mutual funds as exchange-traded funds. So think of ETFs like tools in a toolbox. Some ETFs are basic tools that you might use every day. A large-cap index might be equivalent to a flat-head screwdriver that you use on a regular basis,” Michael Sapir of ProShares said……………………………………Full Article: Source

Posted on 16 May 2013 by VRS |  Email |Print

Even as stocks continue their mostly uninterrupted path to higher ground, fund managers are holding relatively big amounts of cash while worrying about China and a commodities crash.
The latest survey from Bank of America Merrill Lynch shows that the biggest fear is a hard landing for China’s slowing economy, and the effect it would have on the global commodity trade. Commodity allocations have fallen to a four-year low while cash allocations held steady at 4.3 percent, a surprise considering how much equities have rallied…………………………………….Full Article: Source

Posted on 16 May 2013 by VRS |  Email |Print

Agricultural commodities offer by far the worst prospects for returns in a raw materials sector which itself looks a poor rival – for now - to the potential offered by shares, Goldman Sachs said.
The investment bank, highlighting this year’s significant outperformance of shares over commodities after a decade close correlation, termed this divergence a “return to a more normal state of affairs”, in which assets were more prone to idiosyncratic price drivers…………………………………….Full Article: Source

Posted on 16 May 2013 by VRS |  Email |Print

The world’s leading finance ministers gave their tacit approval to the soaring US dollar and plunging Japanese yen at the weekend, but international divisions over economic strategy and European banking union remained unresolved.
After an informal gathering of the Group of Seven rich economies outside London, participants reaffirmed their commitment not to use economic policy to seek weaker currencies and did not conclude Japan was breaking that pact yet…………………………………….Full Article: Source

Posted on 16 May 2013 by VRS |  Email |Print

Unusual and rare objects always seem to be a favorite with collectors; the weirder, the better. The same applies to money. Some currencies don’t even look like our regular perception of what money should be, but served as legit cash at some point in history.
The following are the top 10 weirdest currencies the world has seen so far. Top 10: Wooden bills: Wooden bills may be rough on your wallet, but they were one of the best ways for Germany to rebuild its economy after World War I (1914-1918)…………………………………….Full Article: Source

Posted on 16 May 2013 by VRS |  Email |Print

Launched in 2005, the European Union’s emissions trading system represented a huge step forward in the fight to curb global warming. Under the scheme, some 5,000 companies generating half of the EU’s greenhouse gas emissions must surrender a carbon permit for each tonne of carbon dioxide (CO2) they emit.
Some factories receive permits for free, while most power firms buy them from companies with a surplus or from state-backed auctions held almost every day. The higher the price of the permits, the higher the cost of polluting…………………………………….Full Article: Source

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