By Courtney Schlisserman
Aug. 12 (Bloomberg) -- The U.S. trade deficit unexpectedly narrowed in June as the biggest jump in exports in more than four years overcame record imports of petroleum.
The gap shrank 4.1 percent to $56.8 billion from a revised $59.2 billion in May that was smaller than previously estimated, the Commerce Department said today in Washington.
The increase in demand from overseas signals manufacturers like Caterpillar Inc. may be better able to withstand a slump in U.S. sales and an increase in oil prices. Slowing demand for imported goods excluding petroleum means trade will keep helping the economy after making its biggest contribution to growth in 28 years last quarter.
``This is decidedly good news for the U.S. economy,'' said David Resler, chief U.S. economist at Nomura Securities International Inc. in New York, in an interview with Bloomberg Radio. ``It shows that the U.S. economy is still deriving considerable strength from foreign trade,'' with gross domestic product in the second quarter probably growing ``well north of 2 percent.''
Economists had forecast the gap would widen to $62 billion from an initially reported $59.8 billion in May, according to the median of 71 estimates in a Bloomberg News survey. Projections of the deficit ranged from $58 billion to $65.7 billion.
A weaker dollar has helped stoke American exports. The currency has slumped 24 percent versus the euro in the past five years. The dollar has recouped some losses in the past four weeks as the outlook for Europe's economy dimmed. It was little changed after today's figures, at $1.4941 at 8:40 a.m. in New York.
Biggest Since 2004
Exports increased 4 percent, the biggest percentage jump since February 2004, to $164.4 billion, led by record overseas sales of food, industrial supplies, capital goods and consumer goods.
Imports rose 1.8 percent to $221.2 billion after increasing 0.3 percent in May. The import figures reflected a record $44.5 billion in purchases of foreign petroleum as well as record purchases of industrial supplies from overseas and increased demand for foreign-made autos and parts.
A barrel of imported crude oil cost $117.13 in June, up from $106.28 the previous month.
Price Changes
After eliminating the influence of price changes, the trade deficit narrowed to $39.1 billion, the lowest since December 2001, from $43.5 billion in May. Those are the numbers used to calculate gross domestic product and may prompt economists and the government to increase their estimates of second-quarter growth.
Excluding the effect of prices, non-petroleum imports declined during June.
``You've got a weak economy so businesses aren't importing as much and consumers aren't buying as many goods,'' Jay Bryson, global economist at Wachovia Corp. in Charlotte, North Carolina, said before the report.
Commerce estimated on July 31 that the narrowest trade deficit in seven years added 2.42 percentage points to growth, the most since 1980, and prevented the U.S. economy from shrinking in the second quarter. Excluding the effect of trade, the economy would have contracted at a 0.5 percent pace, instead of expanding 1.9 percent.
The trade gap with China widened to $21.4 billion from $21 billion in the prior month.
Boost Exports
Some U.S. lawmakers accuse China of keeping its currency undervalued to boost exports.
U.S. Treasury Secretary Henry Paulson, writing this month on the Web site of Foreign Affairs magazine, said yuan strengthening still has ``much further to go.'' Of the advance since a fixed-exchange rate ended in July 2005, Paulson said 70 percent has come about after he initiated semiannual economic talks with China in 2006.
The deficit with the Organization of Petroleum Exporting Countries expanded by $200 million to a record $18.1 billion.
The U.S. trade deficits with Canada, Japan and the European Union widened. The gap with Mexico shrank as exports to that country reached a record.
U.S. manufacturers have received a boost from export orders as economies overseas grew and the dollar weakened.
Caterpillar, the world's largest maker of earthmoving equipment, said July 22 that second-quarter profit climbed 34 percent, helped by demand in China and the Middle East. Developing markets this year may grow more than six times as fast as in North America, where the U.S. may find it hard ``to avoid a recession,'' Chief Executive Officer Jim Owens said in a statement.
Dollar's Rebound
As economic growth in Japan, Germany and other major trading partners weakens and the dollar rebounds, the outlook for exports has softened. The trade-weighted dollar index yesterday rose to the highest level since February.
Harvard University economist Martin Feldstein, a member of the committee that charts the American business cycles, said yesterday the U.S. dollar is cushioning the slowing in the economy and the currency has further to fall.
``Market pressures over time are going to put downward pressure on the dollar,'' Feldstein, who retired in June as president of the National Bureau of Economic Research, said in a Bloomberg Radio interview. ``A more competitive dollar has been the driving force in keeping'' gross domestic product expanding.
The Institute for Supply Management's index of new export orders for manufacturers fell to 54 last month, the lowest level this year. Fifty is the dividing line between expansion and contraction.
To contact the reporter on this story: Courtney Schlisserman in Washington at cschlisserma@bloomberg.net
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Tuesday, August 12, 2008
BP Waits for BTC Link to Cool, Stops More Azeri Oil
By Eduard Gismatullin
Aug. 12 (Bloomberg) -- BP Plc is waiting for an oil pipeline in eastern Turkey to cool before it can assess the damage after an explosion last week and has shut oil and gas pipelines across Georgia on security concerns.
BP, partners and Botas International Ltd., a Turkish operating company, can't assess how long repairs will take before examining the BTC pipeline. BP shut down other oil and gas links through Georgia because of precautionary measures and is investigating reports of possible bombings and damage.
Damage assessments in Turkey ``will probably start over the next day or two,'' Murat Lecompte, external affairs director for pipeline operator BTC Co., said in a telephone interview. ``How long the assessment will take we don't know yet.''
The fire was put out yesterday on the pipe, which links Azerbaijan through Georgia with the Turkish port of Ceyhan. The fire broke out on Aug. 5 after a blast in the Erzincan province for which the Kurdistan Workers' Party, or PKK, has claimed responsibility. The 1,768-kilometer (1,100-mile) link contains 10 million barrels of oil at any one time and cost $3.9 billion.
Russian President Dmitry Medvedev today ordered a halt to Russia's offensive in Georgia after six days of fighting in the region of South Ossetia and Abkhazia.
Halted Pipelines
BP and partners stopped pumping crude into the Baku-Supsa pipeline from Azerbaijan to the Georgian Black Sea coast because of ``precautionary measures,'' in the Caucasus, BP spokesman Robert Wine said today.
The Baku-Supsa pipeline was restarted last week after 19 months of repairs. The companies had been filling the link with crude. No tankers have been loaded in the port of Supsa, according to Garsevan Jorbenadze, a Batumi-based ship agent at TeRo Co. Ltd., who arranges for vessels to dock and load.
BP and StatoilHydro ASA also halted natural gas exports from Azerbaijan through the South Caucasus pipeline because of security concern, Toby Odone, a BP spokesman, said today.
Oil is only being transported through the Baku-Novorossiysk link to the Russian Black Sea coast and in rail cars across Georgia to the Black Sea ports, Odone said.
Attack Report
Russian warplanes attacked a section of the BTC pipeline in Georgia today, according to Kakha Lomaia, head of Georgia's National Security Council. The damage on the link near the town of Rustavi is unknown, he said by telephone from Tbilisi.
Anatoly Nogovitsyn, deputy chief of the Russian General Staff, told reporters in Moscow that it hadn't been targeted.
``We can't verify'' the bombing of the BTC pipeline, Hugh McDowell, BP's general manager for Georgia, said by phone today. ``It's being investigated, but there are many different reports and we take each one seriously.''
Georgia shut its Poti port on the Black Sea coast, Jorbenadze said by phone today. Oil is arriving at the Batumi and Supsa terminals by rail from Azerbaijan. The port of Kulevi is operating with disruptions, he said.
``A recent escalation in military engagement between Russia and Georgia poses a threat to certain key oil and gas pipelines which transit Georgia,'' the International Energy Agency said today in a monthly report. ``Georgia's significance to global oil and gas markets is as a transit corridor.''
The Paris-based agency cut its forecast for Azerbaijan's oil production because of an explosion on the BTC pipeline.
The agency lowered its estimate for Azeri crude oil and natural gas liquid extraction by 255,000 barrels to 860,000 barrels a day in the third quarter, David Fyfe, the IEA's supply analyst, said in a telephone interview. The nation's 2008 output was cut by 55,000 barrels a day to 1.02 million barrels.
BP, StatoilHydro and other producers have cut crude production at the Azeri-Chirag-Gunashli and Shah Deniz fields in the Azeri part of the Caspian Sea.
To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net
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Aug. 12 (Bloomberg) -- BP Plc is waiting for an oil pipeline in eastern Turkey to cool before it can assess the damage after an explosion last week and has shut oil and gas pipelines across Georgia on security concerns.
BP, partners and Botas International Ltd., a Turkish operating company, can't assess how long repairs will take before examining the BTC pipeline. BP shut down other oil and gas links through Georgia because of precautionary measures and is investigating reports of possible bombings and damage.
Damage assessments in Turkey ``will probably start over the next day or two,'' Murat Lecompte, external affairs director for pipeline operator BTC Co., said in a telephone interview. ``How long the assessment will take we don't know yet.''
The fire was put out yesterday on the pipe, which links Azerbaijan through Georgia with the Turkish port of Ceyhan. The fire broke out on Aug. 5 after a blast in the Erzincan province for which the Kurdistan Workers' Party, or PKK, has claimed responsibility. The 1,768-kilometer (1,100-mile) link contains 10 million barrels of oil at any one time and cost $3.9 billion.
Russian President Dmitry Medvedev today ordered a halt to Russia's offensive in Georgia after six days of fighting in the region of South Ossetia and Abkhazia.
Halted Pipelines
BP and partners stopped pumping crude into the Baku-Supsa pipeline from Azerbaijan to the Georgian Black Sea coast because of ``precautionary measures,'' in the Caucasus, BP spokesman Robert Wine said today.
The Baku-Supsa pipeline was restarted last week after 19 months of repairs. The companies had been filling the link with crude. No tankers have been loaded in the port of Supsa, according to Garsevan Jorbenadze, a Batumi-based ship agent at TeRo Co. Ltd., who arranges for vessels to dock and load.
BP and StatoilHydro ASA also halted natural gas exports from Azerbaijan through the South Caucasus pipeline because of security concern, Toby Odone, a BP spokesman, said today.
Oil is only being transported through the Baku-Novorossiysk link to the Russian Black Sea coast and in rail cars across Georgia to the Black Sea ports, Odone said.
Attack Report
Russian warplanes attacked a section of the BTC pipeline in Georgia today, according to Kakha Lomaia, head of Georgia's National Security Council. The damage on the link near the town of Rustavi is unknown, he said by telephone from Tbilisi.
Anatoly Nogovitsyn, deputy chief of the Russian General Staff, told reporters in Moscow that it hadn't been targeted.
``We can't verify'' the bombing of the BTC pipeline, Hugh McDowell, BP's general manager for Georgia, said by phone today. ``It's being investigated, but there are many different reports and we take each one seriously.''
Georgia shut its Poti port on the Black Sea coast, Jorbenadze said by phone today. Oil is arriving at the Batumi and Supsa terminals by rail from Azerbaijan. The port of Kulevi is operating with disruptions, he said.
``A recent escalation in military engagement between Russia and Georgia poses a threat to certain key oil and gas pipelines which transit Georgia,'' the International Energy Agency said today in a monthly report. ``Georgia's significance to global oil and gas markets is as a transit corridor.''
The Paris-based agency cut its forecast for Azerbaijan's oil production because of an explosion on the BTC pipeline.
The agency lowered its estimate for Azeri crude oil and natural gas liquid extraction by 255,000 barrels to 860,000 barrels a day in the third quarter, David Fyfe, the IEA's supply analyst, said in a telephone interview. The nation's 2008 output was cut by 55,000 barrels a day to 1.02 million barrels.
BP, StatoilHydro and other producers have cut crude production at the Azeri-Chirag-Gunashli and Shah Deniz fields in the Azeri part of the Caspian Sea.
To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net
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BP, StatoilHydro Stop Gas Exports Through South Caucasus Pipe
By Eduard Gismatullin
Aug. 12 (Bloomberg) -- BP Plc and StatoilHydro ASA stopped natural gas exports from Azerbaijan through the South Caucasus pipeline because of security concern in Georgia.
The gas pumping through the link, which crosses Georgia on the way to Turkey, was stopped today, Toby Odone, a London- based spokesman, said by phone. BP also halted crude oil injection into the Baku-Supsa pipeline from Azerbaijan to the Georgian Black Sea coast because of security concern.
Russian President Dmitry Medvedev today ordered a halt to Russia's offensive in Georgia after six days of fighting in the region of South Ossetia and Abkhazia. The conflict raised concern among shippers and traders that crude transportation through Georgia may be disrupted.
The BP-led Baku-Tbilisi-Ceyhan line, which pumps crude from Azerbaijan through Georgia to the Turkish port of Ceyhan, has been shut since last week after an explosion.
Oil is only being transported through the Baku- Novorossiysk link to the Russian Black Sea coast and in rail cars across Georgia to the Black Sea ports, Odone said.
To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net
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Aug. 12 (Bloomberg) -- BP Plc and StatoilHydro ASA stopped natural gas exports from Azerbaijan through the South Caucasus pipeline because of security concern in Georgia.
The gas pumping through the link, which crosses Georgia on the way to Turkey, was stopped today, Toby Odone, a London- based spokesman, said by phone. BP also halted crude oil injection into the Baku-Supsa pipeline from Azerbaijan to the Georgian Black Sea coast because of security concern.
Russian President Dmitry Medvedev today ordered a halt to Russia's offensive in Georgia after six days of fighting in the region of South Ossetia and Abkhazia. The conflict raised concern among shippers and traders that crude transportation through Georgia may be disrupted.
The BP-led Baku-Tbilisi-Ceyhan line, which pumps crude from Azerbaijan through Georgia to the Turkish port of Ceyhan, has been shut since last week after an explosion.
Oil is only being transported through the Baku- Novorossiysk link to the Russian Black Sea coast and in rail cars across Georgia to the Black Sea ports, Odone said.
To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net
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Mitsubishi Buys LNG From World's First Floating Plant
By Dinakar Sethuraman
Aug. 12 (Bloomberg) -- Mitsubishi Corp., Japan's largest trading company, agreed to buy liquefied natural gas from the world's first floating plant that Flex LNG Ltd. is developing in Nigeria to meet rising demand for cleaner-burning fuels.
The Tokyo-based company will purchase as much as 1.5 million metric tons a year from the Progress LNG project for 15 years starting 2011, Philip Fjeld, chief executive officer of Flex LNG, a Norwegian developer of floating LNG terminals, said in an interview. Kawasaki Kisen Kaisha Ltd., Japan's third- biggest shipping line, is Flex's largest shareholder.
``Mitsubishi will buy the entire production from Progress LNG,'' Fjeld, 33, said by telephone from London. ``We are in talks with buyers for LNG from our other projects.''
Mitsubishi is counting on the commercially untested technology to gain access to supplies of LNG as demand from power plants in China, India and Japan sent prices surging to a record $20 per million British thermal units. LNG consumption is rising 10 percent a year and floating facilities may cost one- third of an onshore plant and take less than half the time to build, Citigroup Inc. said in April.
Shunsuke Nanami, Mitsubishi's spokesman in Tokyo, said the company has signed an agreement on the purchase and is in talks on details of the contract.
Floating Plants
Mitsubishi and Peak Petroleum Industries Nigeria Ltd. are also shareholders in the Progress venture, Fjeld said, without giving details on the stakes.
Flex LNG shares in Oslo have climbed 38 percent this year, compared with the 16 percent decline in the benchmark OBX Index. Mitsubishi shares have fallen 0.3 percent in Tokyo compared with a 13 percent drop in the benchmark Nikkei 225 Stock Average.
Royal Dutch Shell Plc and Inpex Holdings Inc. are also planning to build floating plants to process gas from areas off the coasts of Australia and Indonesia. Shell invited bids in June to build a 3.5 million-ton-a-year tanker, about twice the size of Flex's units.
Flex has placed orders for four floating carriers, each with a capacity of 1.7 million tons a year, from Samsung Heavy Industries Co. The first unit should be available by the third quarter of 2011 and the fourth by 2013, Fjeld said. Each carrier may cost as much as $1.2 billion, based on per unit costs for Flex's floaters.
Lower Costs
A floating LNG unit costs about $450 to $700 per ton of liquefaction capacity, excluding field items and financing costs, compared with $1,300 to $1,500 for onshore projects, Fjeld said. The floaters typically target gas fields with reserves of between 300 billion cubic feet and 1.5 trillion cubic feet.
Flex plans to locate a unit in Papua New Guinea and is in talks with coal seam-based LNG producers in Australia to use tankers to process the initial gas extracted from coal beds, Fjeld said.
``We are developing close to 20 projects,'' Fjeld said. ``The advantage with floating plants is that we can move these units to different projects.''
Kawasaki Kisen Kaisha owns 15 percent of Flex, Fjeld said. The company has raised almost $600 million from hedge funds and mutual funds to order the tankers.
To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net.
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Aug. 12 (Bloomberg) -- Mitsubishi Corp., Japan's largest trading company, agreed to buy liquefied natural gas from the world's first floating plant that Flex LNG Ltd. is developing in Nigeria to meet rising demand for cleaner-burning fuels.
The Tokyo-based company will purchase as much as 1.5 million metric tons a year from the Progress LNG project for 15 years starting 2011, Philip Fjeld, chief executive officer of Flex LNG, a Norwegian developer of floating LNG terminals, said in an interview. Kawasaki Kisen Kaisha Ltd., Japan's third- biggest shipping line, is Flex's largest shareholder.
``Mitsubishi will buy the entire production from Progress LNG,'' Fjeld, 33, said by telephone from London. ``We are in talks with buyers for LNG from our other projects.''
Mitsubishi is counting on the commercially untested technology to gain access to supplies of LNG as demand from power plants in China, India and Japan sent prices surging to a record $20 per million British thermal units. LNG consumption is rising 10 percent a year and floating facilities may cost one- third of an onshore plant and take less than half the time to build, Citigroup Inc. said in April.
Shunsuke Nanami, Mitsubishi's spokesman in Tokyo, said the company has signed an agreement on the purchase and is in talks on details of the contract.
Floating Plants
Mitsubishi and Peak Petroleum Industries Nigeria Ltd. are also shareholders in the Progress venture, Fjeld said, without giving details on the stakes.
Flex LNG shares in Oslo have climbed 38 percent this year, compared with the 16 percent decline in the benchmark OBX Index. Mitsubishi shares have fallen 0.3 percent in Tokyo compared with a 13 percent drop in the benchmark Nikkei 225 Stock Average.
Royal Dutch Shell Plc and Inpex Holdings Inc. are also planning to build floating plants to process gas from areas off the coasts of Australia and Indonesia. Shell invited bids in June to build a 3.5 million-ton-a-year tanker, about twice the size of Flex's units.
Flex has placed orders for four floating carriers, each with a capacity of 1.7 million tons a year, from Samsung Heavy Industries Co. The first unit should be available by the third quarter of 2011 and the fourth by 2013, Fjeld said. Each carrier may cost as much as $1.2 billion, based on per unit costs for Flex's floaters.
Lower Costs
A floating LNG unit costs about $450 to $700 per ton of liquefaction capacity, excluding field items and financing costs, compared with $1,300 to $1,500 for onshore projects, Fjeld said. The floaters typically target gas fields with reserves of between 300 billion cubic feet and 1.5 trillion cubic feet.
Flex plans to locate a unit in Papua New Guinea and is in talks with coal seam-based LNG producers in Australia to use tankers to process the initial gas extracted from coal beds, Fjeld said.
``We are developing close to 20 projects,'' Fjeld said. ``The advantage with floating plants is that we can move these units to different projects.''
Kawasaki Kisen Kaisha owns 15 percent of Flex, Fjeld said. The company has raised almost $600 million from hedge funds and mutual funds to order the tankers.
To contact the reporter on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net.
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Hunter, Touradji Hedge Funds Gain as Commodities Sink
By Saijel Kishan and Stewart Bailey
Aug. 12 (Bloomberg) -- Commodity hedge-fund traders Brian Hunter, Paul Touradji and Renee Haugerud made money in July as prices for energy, metals and agricultural products fell the most since 1980.
Peak Ridge Commodity Volatility Fund in Boston, advised by Hunter, the former Amaranth Advisors LLC energy trader, returned about 24 percent, leaving it up at least 230 percent this year, according to an investor. The main fund of New York-based Touradji Capital Management LP gained 6.5 percent, cutting its loss to 5 percent in 2008.
Commodity prices in July fell 10 percent, the biggest monthly decline since March 1980, as measured by the Reuters/Jefferies CRB Index. The index has plunged 19 percent from its July 3 peak. Rising inventories and slumping demand sent contracts from oil to soybeans tumbling, raising the prospect of an end to the six-year commodity boom.
``They timed their trades well when everybody else missed the beginning of the correction,'' said Aoifinn Devitt, founder of Clontarf Capital, a London-based investment consulting firm. ``And this correction is increasingly looking like it's got legs.''
Commodities extended their declines this month, losing 8 percent, dragging down shares of companies in the mining, energy and agricultural industries. So far this year, the Standard & Poor's Index of 500 companies slid 11 percent. Ten-year Treasury notes returned 2.98 percent, according to Merrill Lynch & Co. indexes.
Risk of Collapse
Touradji, 36, the former Tiger Management LLC trader, told investors in March that a ``buying orgy'' in commodities was inflating prices and increasing the risk of a collapse. Touradji Capital, which oversees $3.5 billion, started in 2005 and has since returned an annualized 31.4 percent.
Peak Ridge Capital Group Inc., a Boston-based private equity firm, hired the 34-year-old Hunter last year to advise its commodity fund. Hunter last month failed in his attempt to get a court to prevent the Federal Energy Regulatory Commission from proceeding with enforcement action against him for manipulating natural gas prices. In 2006, his trades helped trigger $6.6 billion of losses for Amaranth, the most by a hedge fund.
Galtere International's Commodity-Based Global Macro Fund, run by Renee Haugerud out of New York, gained 0.98 percent in July, increasing its return this year to about 18 percent, according to two investors.
Saracen Gain
Haugerud started Galtere, which manages about $2.5 billion, in 1999. She began her career in 1981 trading commodities at Cargill Inc., the largest U.S. agriculture company, and later worked at NatWest Markets, a unit of U.K.-based National Westminster Bank.
Saracen Energy Partners LP, a Houston-based energy fund, gained about 3 percent in July, trimming its loss this year to about 29 percent, according to two investors. The fund, run by Neil Kelley, 49, had lost 22 percent in February alone.
Allison Duensing, a spokeswoman for Saracen, didn't respond to messages left on her phone. Officials for the other funds declined to comment.
About $70 billion is invested in commodity hedge funds, more than double the amount three years ago, according to estimates by Chicago-based Cole Partners Asset Management, which invests in such funds.
BlueGold, Ospraie
Traders that lost money last month included BlueGold Capital Management LLP, a $800 million fund co-founded in February by 31-year-old Pierre Andurand in London. The fund declined about 19 percent in July, paring its return this year to 109 percent, according to investors.
The flagship fund of New York-based Ospraie Management LLC, the $9 billion hedge-fund firm run by Dwight Anderson, 41, fell 13 percent, extending its loss this year to 15 percent, clients said.
Aisling Analytics' $2.3 billion Merchant Commodity Fund, run by former Cargill traders Michael Coleman, 47, and Doug King, 41, out of Singapore, dropped 11 percent in July, cutting its gain this year to 1.2 percent, investors said.
``Funds are riding through choppy waters at the moment,'' said Jeremy Charlesworth, founder of London-based Moonraker Fund Management Ltd., which invests in hedge funds. ``There isn't a bull market that doesn't have corrections along the way, and this is one of them.''
Moore, Armajaro
Christian Levett, 38, a former Moore Capital Management LLC commodity trader who started the $2.5 billion hedge fund Clive Capital LLP in London, lost 8 percent in July, cutting his return this year to 25 percent, investors said.
London-based Armajaro Asset Management LLP's $1.3 billion commodity fund run by former Marc Rich & Co. trader John Tilney, 53, lost 7 percent in July, trimming its return this year to about 12.5 percent, investors said.
Fortress Investment Group LLC's $1 billion Drawbridge Commodities Fund, run by William Callanan in London, lost about 3 percent in July, paring its return to 5.7 percent this year.
Surging demand for raw materials in China and other expanding economies spurred six straight years of gains, according to the UBS Bloomberg Constant Maturity Commodity Index of 26 prices. The index is up 11 percent this year.
``Commodities are akin to the Nasdaq back in the late 1990s,'' said Peter Rup, chief investment officer at New York- based Orion Capital Management LLC, which invests in hedge funds. ``It's in a bubble and the game is going to be over very quickly in the second half of the year as China's economy cools.''
Extreme Volatility
Natural gas plunged 37 percent since reaching $13.31 per million British thermal units on July 2, its highest since December 2005. Corn tumbled 35 percent since its June 27 record of $7.96 a bushel, while oil is down 23 percent from its July 11 peak of $147.27 a barrel. Gold has declined about 14 percent from its March 18 high and was at $806.74 as of 8:11 a.m. in London.
``Traders who've been around for years are used to volatility in these markets,'' said Christopher Peel, partner at London-based BlackSquare Capital LLP, which invests in hedge funds. ``Yet the volatility we've seen lately is pretty extreme. The fundamentals haven't changed enough to warrant this price action.''
Volatility jumped to 20 percent at the end of July from 13 percent at the start of the year, based on the UBS Bloomberg Constant Maturity Commodity Index, which measures price swings on a 30-day basis.
Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets, bet on falling as well as rising asset prices and participate substantially in profits from money invested.
To contact the reporter on this story: Saijel Kishan in New York at skishan@bloomberg.net; Stewart Bailey in New York at sbailey7@bloomberg.net.
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Aug. 12 (Bloomberg) -- Commodity hedge-fund traders Brian Hunter, Paul Touradji and Renee Haugerud made money in July as prices for energy, metals and agricultural products fell the most since 1980.
Peak Ridge Commodity Volatility Fund in Boston, advised by Hunter, the former Amaranth Advisors LLC energy trader, returned about 24 percent, leaving it up at least 230 percent this year, according to an investor. The main fund of New York-based Touradji Capital Management LP gained 6.5 percent, cutting its loss to 5 percent in 2008.
Commodity prices in July fell 10 percent, the biggest monthly decline since March 1980, as measured by the Reuters/Jefferies CRB Index. The index has plunged 19 percent from its July 3 peak. Rising inventories and slumping demand sent contracts from oil to soybeans tumbling, raising the prospect of an end to the six-year commodity boom.
``They timed their trades well when everybody else missed the beginning of the correction,'' said Aoifinn Devitt, founder of Clontarf Capital, a London-based investment consulting firm. ``And this correction is increasingly looking like it's got legs.''
Commodities extended their declines this month, losing 8 percent, dragging down shares of companies in the mining, energy and agricultural industries. So far this year, the Standard & Poor's Index of 500 companies slid 11 percent. Ten-year Treasury notes returned 2.98 percent, according to Merrill Lynch & Co. indexes.
Risk of Collapse
Touradji, 36, the former Tiger Management LLC trader, told investors in March that a ``buying orgy'' in commodities was inflating prices and increasing the risk of a collapse. Touradji Capital, which oversees $3.5 billion, started in 2005 and has since returned an annualized 31.4 percent.
Peak Ridge Capital Group Inc., a Boston-based private equity firm, hired the 34-year-old Hunter last year to advise its commodity fund. Hunter last month failed in his attempt to get a court to prevent the Federal Energy Regulatory Commission from proceeding with enforcement action against him for manipulating natural gas prices. In 2006, his trades helped trigger $6.6 billion of losses for Amaranth, the most by a hedge fund.
Galtere International's Commodity-Based Global Macro Fund, run by Renee Haugerud out of New York, gained 0.98 percent in July, increasing its return this year to about 18 percent, according to two investors.
Saracen Gain
Haugerud started Galtere, which manages about $2.5 billion, in 1999. She began her career in 1981 trading commodities at Cargill Inc., the largest U.S. agriculture company, and later worked at NatWest Markets, a unit of U.K.-based National Westminster Bank.
Saracen Energy Partners LP, a Houston-based energy fund, gained about 3 percent in July, trimming its loss this year to about 29 percent, according to two investors. The fund, run by Neil Kelley, 49, had lost 22 percent in February alone.
Allison Duensing, a spokeswoman for Saracen, didn't respond to messages left on her phone. Officials for the other funds declined to comment.
About $70 billion is invested in commodity hedge funds, more than double the amount three years ago, according to estimates by Chicago-based Cole Partners Asset Management, which invests in such funds.
BlueGold, Ospraie
Traders that lost money last month included BlueGold Capital Management LLP, a $800 million fund co-founded in February by 31-year-old Pierre Andurand in London. The fund declined about 19 percent in July, paring its return this year to 109 percent, according to investors.
The flagship fund of New York-based Ospraie Management LLC, the $9 billion hedge-fund firm run by Dwight Anderson, 41, fell 13 percent, extending its loss this year to 15 percent, clients said.
Aisling Analytics' $2.3 billion Merchant Commodity Fund, run by former Cargill traders Michael Coleman, 47, and Doug King, 41, out of Singapore, dropped 11 percent in July, cutting its gain this year to 1.2 percent, investors said.
``Funds are riding through choppy waters at the moment,'' said Jeremy Charlesworth, founder of London-based Moonraker Fund Management Ltd., which invests in hedge funds. ``There isn't a bull market that doesn't have corrections along the way, and this is one of them.''
Moore, Armajaro
Christian Levett, 38, a former Moore Capital Management LLC commodity trader who started the $2.5 billion hedge fund Clive Capital LLP in London, lost 8 percent in July, cutting his return this year to 25 percent, investors said.
London-based Armajaro Asset Management LLP's $1.3 billion commodity fund run by former Marc Rich & Co. trader John Tilney, 53, lost 7 percent in July, trimming its return this year to about 12.5 percent, investors said.
Fortress Investment Group LLC's $1 billion Drawbridge Commodities Fund, run by William Callanan in London, lost about 3 percent in July, paring its return to 5.7 percent this year.
Surging demand for raw materials in China and other expanding economies spurred six straight years of gains, according to the UBS Bloomberg Constant Maturity Commodity Index of 26 prices. The index is up 11 percent this year.
``Commodities are akin to the Nasdaq back in the late 1990s,'' said Peter Rup, chief investment officer at New York- based Orion Capital Management LLC, which invests in hedge funds. ``It's in a bubble and the game is going to be over very quickly in the second half of the year as China's economy cools.''
Extreme Volatility
Natural gas plunged 37 percent since reaching $13.31 per million British thermal units on July 2, its highest since December 2005. Corn tumbled 35 percent since its June 27 record of $7.96 a bushel, while oil is down 23 percent from its July 11 peak of $147.27 a barrel. Gold has declined about 14 percent from its March 18 high and was at $806.74 as of 8:11 a.m. in London.
``Traders who've been around for years are used to volatility in these markets,'' said Christopher Peel, partner at London-based BlackSquare Capital LLP, which invests in hedge funds. ``Yet the volatility we've seen lately is pretty extreme. The fundamentals haven't changed enough to warrant this price action.''
Volatility jumped to 20 percent at the end of July from 13 percent at the start of the year, based on the UBS Bloomberg Constant Maturity Commodity Index, which measures price swings on a 30-day basis.
Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets, bet on falling as well as rising asset prices and participate substantially in profits from money invested.
To contact the reporter on this story: Saijel Kishan in New York at skishan@bloomberg.net; Stewart Bailey in New York at sbailey7@bloomberg.net.
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Mol Net Quadruples as Forint Offsets Chemicals Loss
By Balazs Penz
Aug. 12 (Bloomberg) -- Mol Nyrt., Hungary's largest oil refiner, said second-quarter profit more than quadrupled as the stronger forint reduced the company's euro-denominated debt, offsetting a loss in the company's petrochemicals business.
Net income rose to 114.7 billion forint ($717.6 million), or 1,271 forint a share, from 26.9 billion forint, or 292 forint, a year earlier, the Budapest-based company said today in a statement. That beat the 109.1 billion-forint median estimate of eight analysts polled by Bloomberg.
The results were ``a low-quality beat, driven wholly by higher-than-expected foreign currency gains and a lower-than- forecast tax rate,'' Merrill Lynch analyst Hootan Yazhari wrote in a note to clients today. Rising profit on oil was ``wholly offset by a significant loss on their petrochemicals operation and weaker-than-expected contribution from the natural gas division.''
The Hungarian currency was the world's second-best performer against the euro in the second quarter. Its 11 percent gain cut the forint value of Mol's loans denominated in the European Union's common currency, helping the company increase earnings. The rising cost of crude resulted in a loss on chemicals and weaker performance at Mol's gas unit.
Shares Fall
Mol fell 0.3 percent to 17,950 forint in Budapest as of 9:35 a.m. local time, a one-month low. Mol shares have lost 27 percent this year, compared with a 20 percent decline in Hungary's benchmark BUX Index, valuing the company at 1.97 trillion forint as of yesterday's close in Budapest.
Sales increased 52 percent to 921 billion forint. Mol posted operating profit of 89.1 billion forint, down 3 percent, and a 37.5 billion-forint financial gain, compared with a 34.8 billion-forint loss on the same line a year ago.
The overall corporate tax rate was 11 percent, which compares with an estimate of 20 percent by analyst Tamas Pletser at ING Groep NV in Budapest.
Mol's exploration and production division boosted operating profit 30 percent to 30.6 billion forint on rising natural-gas and crude oil prices. The refining and marketing business had operating profit of 69 billion forint, 18 percent more than a year earlier.
Crude Outlook
The company expects the price of crude oil, which reached a record $147.27 a barrel on July 11, to remain ``high'' for the rest of the year, Chief Financial Officer Jozsef Molnar said in a phone interview today. Refining margins, or the profit from turning crude into fuels, will remain strong, including ``exceptionally high'' earnings for diesel, he said.
The petrochemicals unit posted a loss of 13.7 billion forint compared with a 12.2 billion-forint profit a year earlier, as margins in the industry collapsed because the increase in the price of crude oil boosted costs while the forint's gains cut export prices.
``Chemicals brought a definite disappointment,'' Kornel Sarkadi Szabo, an analyst at Cashline Securities in Budapest, wrote in a note to clients. ``Most likely, shipments occurred with the worst possible timing.''
The segment is past the ``bottom of the cycle,'' CFO Molnar said. The average margin was 278 euros ($414) in the second quarter and rose to 400 euros in July and 500 euros in August he said.
The petrochemicals business, along with the wholesale refined fuels, is the most affected by the forint's gains, Molnar said.
Mol's gas-transmission business posted an operating profit of 6.4 billion forint, compared with 6.8 billion forint in the second quarter of 2007.
Competitors' Earnings
Mol's profit compares with a 66 percent gain in net income at rival OMV AG, the Austrian refiner that earlier this month gave up a yearlong hostile bid valued at 2.8 trillion forint for the Hungarian company.
PKN Orlen SA, the Polish refiner that will publish second- quarter figures tomorrow, will probably say profit rose 20 percent, according to the median estimate of seven analysts surveyed by Bloomberg.
The end of the OMV bid now enables Mol to increase its stake in Croatian refiner INA Industrija Nafte d.d., which is ``the most important thing now,'' Molnar said today.
He reiterated that the company is ``studying options'' for OMV's 20.2 percent stake in Mol, declining to say whether the two sides have met to discuss it.
To contact the reporter on this story: Balazs Penz in Budapest at bpenz@bloomberg.net
Read more...
Aug. 12 (Bloomberg) -- Mol Nyrt., Hungary's largest oil refiner, said second-quarter profit more than quadrupled as the stronger forint reduced the company's euro-denominated debt, offsetting a loss in the company's petrochemicals business.
Net income rose to 114.7 billion forint ($717.6 million), or 1,271 forint a share, from 26.9 billion forint, or 292 forint, a year earlier, the Budapest-based company said today in a statement. That beat the 109.1 billion-forint median estimate of eight analysts polled by Bloomberg.
The results were ``a low-quality beat, driven wholly by higher-than-expected foreign currency gains and a lower-than- forecast tax rate,'' Merrill Lynch analyst Hootan Yazhari wrote in a note to clients today. Rising profit on oil was ``wholly offset by a significant loss on their petrochemicals operation and weaker-than-expected contribution from the natural gas division.''
The Hungarian currency was the world's second-best performer against the euro in the second quarter. Its 11 percent gain cut the forint value of Mol's loans denominated in the European Union's common currency, helping the company increase earnings. The rising cost of crude resulted in a loss on chemicals and weaker performance at Mol's gas unit.
Shares Fall
Mol fell 0.3 percent to 17,950 forint in Budapest as of 9:35 a.m. local time, a one-month low. Mol shares have lost 27 percent this year, compared with a 20 percent decline in Hungary's benchmark BUX Index, valuing the company at 1.97 trillion forint as of yesterday's close in Budapest.
Sales increased 52 percent to 921 billion forint. Mol posted operating profit of 89.1 billion forint, down 3 percent, and a 37.5 billion-forint financial gain, compared with a 34.8 billion-forint loss on the same line a year ago.
The overall corporate tax rate was 11 percent, which compares with an estimate of 20 percent by analyst Tamas Pletser at ING Groep NV in Budapest.
Mol's exploration and production division boosted operating profit 30 percent to 30.6 billion forint on rising natural-gas and crude oil prices. The refining and marketing business had operating profit of 69 billion forint, 18 percent more than a year earlier.
Crude Outlook
The company expects the price of crude oil, which reached a record $147.27 a barrel on July 11, to remain ``high'' for the rest of the year, Chief Financial Officer Jozsef Molnar said in a phone interview today. Refining margins, or the profit from turning crude into fuels, will remain strong, including ``exceptionally high'' earnings for diesel, he said.
The petrochemicals unit posted a loss of 13.7 billion forint compared with a 12.2 billion-forint profit a year earlier, as margins in the industry collapsed because the increase in the price of crude oil boosted costs while the forint's gains cut export prices.
``Chemicals brought a definite disappointment,'' Kornel Sarkadi Szabo, an analyst at Cashline Securities in Budapest, wrote in a note to clients. ``Most likely, shipments occurred with the worst possible timing.''
The segment is past the ``bottom of the cycle,'' CFO Molnar said. The average margin was 278 euros ($414) in the second quarter and rose to 400 euros in July and 500 euros in August he said.
The petrochemicals business, along with the wholesale refined fuels, is the most affected by the forint's gains, Molnar said.
Mol's gas-transmission business posted an operating profit of 6.4 billion forint, compared with 6.8 billion forint in the second quarter of 2007.
Competitors' Earnings
Mol's profit compares with a 66 percent gain in net income at rival OMV AG, the Austrian refiner that earlier this month gave up a yearlong hostile bid valued at 2.8 trillion forint for the Hungarian company.
PKN Orlen SA, the Polish refiner that will publish second- quarter figures tomorrow, will probably say profit rose 20 percent, according to the median estimate of seven analysts surveyed by Bloomberg.
The end of the OMV bid now enables Mol to increase its stake in Croatian refiner INA Industrija Nafte d.d., which is ``the most important thing now,'' Molnar said today.
He reiterated that the company is ``studying options'' for OMV's 20.2 percent stake in Mol, declining to say whether the two sides have met to discuss it.
To contact the reporter on this story: Balazs Penz in Budapest at bpenz@bloomberg.net
Read more...
Oil Is Steady as Russia Ends Action in Georgia, Dollar Drops
By Mark Shenk
Aug. 12 (Bloomberg) -- Crude oil was little changed as Russia called off military action in Georgia and the dollar dropped from a 5 1/2-month high against the euro, curbing the appeal of commodities as an inflation hedge.
Prices rebounded after Russian President Dmitry Medvedev announced the end to the five-day offensive in Georgia, a country that connects the oil-rich Caspian Sea region with world markets. BP Plc stopped pumping oil into a pipeline from Azerbaijan to the Black Sea coast because of concern over security.
``Medvedev's calling for an end of hostilities has taken away some of the appeal of the dollar as a safe heaven,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. ``This combined with BP shutting a pipeline has pushed prices higher.''
Crude oil for September delivery rose 13 cents to $114.58 a barrel at 9:33 a.m. on the New York Mercantile Exchange. Futures touched $112.48 today, the lowest since May 2. Prices are up 60 percent from a year ago.
``The oil market has been totally focused on the dollar recently,'' said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. ``The market had been ignoring a number of bullish news items but only rebounded when the dollar fell.''
The dollar declined 0.3 percent to $1.4949 per euro at 9:02 a.m. in New York, from $1.4909 yesterday. It touched $1.4816, the strongest since Feb. 26.
Brent crude oil for September settlement rose 23 cents to $112.90 a barrel on London's ICE Futures Europe exchange. Prices fell to $110.47 today, the lowest since May 2.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
Read more...
Aug. 12 (Bloomberg) -- Crude oil was little changed as Russia called off military action in Georgia and the dollar dropped from a 5 1/2-month high against the euro, curbing the appeal of commodities as an inflation hedge.
Prices rebounded after Russian President Dmitry Medvedev announced the end to the five-day offensive in Georgia, a country that connects the oil-rich Caspian Sea region with world markets. BP Plc stopped pumping oil into a pipeline from Azerbaijan to the Black Sea coast because of concern over security.
``Medvedev's calling for an end of hostilities has taken away some of the appeal of the dollar as a safe heaven,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. ``This combined with BP shutting a pipeline has pushed prices higher.''
Crude oil for September delivery rose 13 cents to $114.58 a barrel at 9:33 a.m. on the New York Mercantile Exchange. Futures touched $112.48 today, the lowest since May 2. Prices are up 60 percent from a year ago.
``The oil market has been totally focused on the dollar recently,'' said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. ``The market had been ignoring a number of bullish news items but only rebounded when the dollar fell.''
The dollar declined 0.3 percent to $1.4949 per euro at 9:02 a.m. in New York, from $1.4909 yesterday. It touched $1.4816, the strongest since Feb. 26.
Brent crude oil for September settlement rose 23 cents to $112.90 a barrel on London's ICE Futures Europe exchange. Prices fell to $110.47 today, the lowest since May 2.
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.
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OPEC May Consider Supply Cut as Oil Stockpiles Rise, Iran Says
By Ayesha Daya
Aug. 12 (Bloomberg) -- Oil prices are falling because of an oversupply of crude, and OPEC may consider cutting production at its September meeting to achieve a supply-demand balance while maintaining sufficient excess capacity, Iran's OPEC governor said.
``I think the market is oversupplied, especially with the additional barrels of oil coming from spare capacity,'' Mohammad Ali Khatibi said in a phone interview from Tehran today. ``If producers prefer a balanced market, then the additional barrels should be removed, but if they decide there should be more stock build-up, then they will maintain production.''
OPEC governors at the group's meeting in Vienna on Sept. 9 ``will review the market deeply and then advise'' the ministers on production, said Khatibi, adding it's too early to predict the outcome.
Oil prices have declined 23 percent in less than a month on signs that demand in the U.S., which absorbs a quarter of the world's oil, and other consuming countries may fall as the world economy slows. Crude for September delivery was at $113 a barrel at 10:05 a.m. London time, more than $30 lower than the record $147.27 on July 11.
Output Increase
Saudi Arabia, the world's largest oil producer and de facto leader of the Organization of Petroleum Exporting Countries, decided to unilaterally raise output by 500,000 barrels a day during June and July to curb the rise in oil prices as investors bought into commodities as a hedge against a weakening dollar and falling equity markets.
``Demand is not in good shape because of a recession in some industrialized countries, so the price is falling,'' Khatibi said. ``Normally, demand increases in the fourth quarter by around 1.5 million barrels a day which will absorb the extra barrels, but we will have to assess the economic situation in consuming countries.''
OPEC, which supplies more than 40 percent of the world's oil, will meet to review production targets in Vienna on Sept. 9 and then in Algeria on Dec. 17. The group has this year maintained an official output limit for 12 of its 13 members at 29.67 million barrels a day.
To contact the reporter on this story: Ayesha Daya in Dubai adaya1@bloomberg.net
Read more...
Aug. 12 (Bloomberg) -- Oil prices are falling because of an oversupply of crude, and OPEC may consider cutting production at its September meeting to achieve a supply-demand balance while maintaining sufficient excess capacity, Iran's OPEC governor said.
``I think the market is oversupplied, especially with the additional barrels of oil coming from spare capacity,'' Mohammad Ali Khatibi said in a phone interview from Tehran today. ``If producers prefer a balanced market, then the additional barrels should be removed, but if they decide there should be more stock build-up, then they will maintain production.''
OPEC governors at the group's meeting in Vienna on Sept. 9 ``will review the market deeply and then advise'' the ministers on production, said Khatibi, adding it's too early to predict the outcome.
Oil prices have declined 23 percent in less than a month on signs that demand in the U.S., which absorbs a quarter of the world's oil, and other consuming countries may fall as the world economy slows. Crude for September delivery was at $113 a barrel at 10:05 a.m. London time, more than $30 lower than the record $147.27 on July 11.
Output Increase
Saudi Arabia, the world's largest oil producer and de facto leader of the Organization of Petroleum Exporting Countries, decided to unilaterally raise output by 500,000 barrels a day during June and July to curb the rise in oil prices as investors bought into commodities as a hedge against a weakening dollar and falling equity markets.
``Demand is not in good shape because of a recession in some industrialized countries, so the price is falling,'' Khatibi said. ``Normally, demand increases in the fourth quarter by around 1.5 million barrels a day which will absorb the extra barrels, but we will have to assess the economic situation in consuming countries.''
OPEC, which supplies more than 40 percent of the world's oil, will meet to review production targets in Vienna on Sept. 9 and then in Algeria on Dec. 17. The group has this year maintained an official output limit for 12 of its 13 members at 29.67 million barrels a day.
To contact the reporter on this story: Ayesha Daya in Dubai adaya1@bloomberg.net
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Dresdner Hires Five for Currency Options, Hedge-Fund Sales Desk
By Kim-Mai Cutler
Aug. 12 (Bloomberg) -- Dresdner Kleinwort, the investment- banking arm of Allianz SE, hired five people for its foreign- exchange hedge-fund sales and options desks in London.
Farielle Boufaden will join as a director in foreign-exchange hedge-fund sales from BNP Paribas SA, according to a statement by Dresdner in London today. Greg Kaldor started in May as a managing director on the foreign-exchange hedge-fund sales desk after 22 years at Bank of America Corp., where he headed the institutional foreign-exchange sales desk.
Constantinos Constantinou will return to Dresdner as a director and senior foreign-exchange options trader, according to the statement. Gaelle Cohen started as a Group of 10 foreign- exchange options trader after working at Calyon, the investment- banking arm of Credit Agricole SA.
Brian Healy began in June as a senior foreign-exchange options trader. He was previously at Deutsche Bank AG, where he specialized in so-called exotic currencies.
To contact the reporter on this story: Kim-Mai Cutler in London at kcutler@bloomberg.net
Read more...
Aug. 12 (Bloomberg) -- Dresdner Kleinwort, the investment- banking arm of Allianz SE, hired five people for its foreign- exchange hedge-fund sales and options desks in London.
Farielle Boufaden will join as a director in foreign-exchange hedge-fund sales from BNP Paribas SA, according to a statement by Dresdner in London today. Greg Kaldor started in May as a managing director on the foreign-exchange hedge-fund sales desk after 22 years at Bank of America Corp., where he headed the institutional foreign-exchange sales desk.
Constantinos Constantinou will return to Dresdner as a director and senior foreign-exchange options trader, according to the statement. Gaelle Cohen started as a Group of 10 foreign- exchange options trader after working at Calyon, the investment- banking arm of Credit Agricole SA.
Brian Healy began in June as a senior foreign-exchange options trader. He was previously at Deutsche Bank AG, where he specialized in so-called exotic currencies.
To contact the reporter on this story: Kim-Mai Cutler in London at kcutler@bloomberg.net
Read more...
Dollar Declines From 5 1/2-Month High on Bets Gains Excessive
By Ye Xie
Aug. 12 (Bloomberg) -- The dollar dropped from a 5 1/2- month high versus the euro on speculation the currency's recent gains are too fast to be sustained.
``The dollar's rally was overextended,'' said Steve Butler, director of foreign-exchange trading at Scotia Capital Inc. in Toronto. ``It has been such a one-way street. The market was caught the wrong way.''
The dollar fell 0.2 percent to $1.4936 per euro at 9:02 a.m. in New York, from $1.4909 yesterday. It touched $1.4816, the strongest level since Feb. 26. The dollar decreased 0.2 percent to 109.87 yen, from 110.06 yesterday, when it touched the seven-month high of 110.40. The euro was unchanged at 164.10 yen after reaching 163.26 yen, the lowest since June 5.
The euro's 14-day relative strength index against the dollar fell to 22.40. A reading below 30 suggests a change in price direction is imminent.
To contact the reporter on the story: Ye Xie in New York at yxie6@bloomberg.net
Read more...
Aug. 12 (Bloomberg) -- The dollar dropped from a 5 1/2- month high versus the euro on speculation the currency's recent gains are too fast to be sustained.
``The dollar's rally was overextended,'' said Steve Butler, director of foreign-exchange trading at Scotia Capital Inc. in Toronto. ``It has been such a one-way street. The market was caught the wrong way.''
The dollar fell 0.2 percent to $1.4936 per euro at 9:02 a.m. in New York, from $1.4909 yesterday. It touched $1.4816, the strongest level since Feb. 26. The dollar decreased 0.2 percent to 109.87 yen, from 110.06 yesterday, when it touched the seven-month high of 110.40. The euro was unchanged at 164.10 yen after reaching 163.26 yen, the lowest since June 5.
The euro's 14-day relative strength index against the dollar fell to 22.40. A reading below 30 suggests a change in price direction is imminent.
To contact the reporter on the story: Ye Xie in New York at yxie6@bloomberg.net
Read more...
Russia Ends Offensive Against `Aggressor' Georgia
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Russia Ends Offensive Against `Aggressor' Georgia (Update4)
By Helena Bedwell and Henry Meyer
Enlarge Image/Details
Aug. 12 (Bloomberg) -- Russian President Dmitry Medvedev halted five days of military action in Georgia, Russia's first foreign offensive since the Cold War ended in 1991, defusing a dispute that threatened to draw in the West.
``The aggressor has been punished,'' Medvedev said today. Russia has secured the safety of its peacekeepers and citizens in the disputed regions of South Ossetia and Abkhazia, Medvedev said on state television.
Russia sent tanks, troops and warplanes into Georgia on Aug. 8 in what it said was a response to a Georgian offensive on South Ossetia, which won de facto independence from Georgia after a war in the early 1990s. Russian forces crossed into Georgia's heartland for the first time yesterday and took several towns and a military base, drawing criticism from President George W. Bush. More than 2,000 people were killed in the fighting, according to Russian estimates. The United Nations Refugee Agency said almost 100,000 people have fled the conflict.
The military thrust threatened to drag the U.S. into confrontation with its former Cold War foe. Bush backs Georgia's bid to join the North Atlantic Treaty Organization, which Russia views as a security threat. The West sees Georgia as a key ally in the region, in part because it has a pipeline that carries Caspian Sea crude oil to Western markets and bypasses Russia.
``Russia has come out looking like a victor,'' said Alexei Malashenko, an analyst from the Moscow Carnegie Center. ``If it had continued, the war wouldn't have been popular in Russia, not to speak of the negative reaction in the West.''
Fighter Jet Strikes
As Russian troops kept control of territory inside Georgia, Georgian Deputy Interior Minister Eka Zhguladze said two districts near the central city of Gori were under attack by Russian fighter jets as of 3 p.m. local time. While Russia has stopped offensive operations, sporadic strikes are continuing, Anatoly Nogovitsyn, the deputy head of Russia's General Staff, said earlier. Medvedev ordered Russian forces to destroy any ``pockets of resistance.''
The ruble surged the most in seven years, Russia's Micex Index climbed, and the cost of protecting the country's bonds fell after Medvedev halted the Georgian military operation.
The 30-stock Micex erased a decline of as much as 2 percent and oil extended its drop after Medvedev said military action in Georgia had achieved the country's goals.
Bush criticized Russia yesterday for pushing into central Georgia. ``I am deeply concerned by reports that Russian troops have moved beyond the zone of conflict,'' Bush said. ``It now appears that an effort may be under way to depose Georgia's duly elected government.''
Sarkozy in Moscow
Georgia welcomed Medvedev's decision, which came as French President Nicolas Sarkozy, whose country holds the rotating European Union presidency, arrived in Moscow to seek a cease- fire agreement.
``It's great, if that's what they said,'' Georgian Deputy Foreign Minister Grigol Vashadze said by phone in Tbilisi. ``I just hope that it's because they realize just how badly their name and reputation were damaged in the eyes of the world by doing what they've done.''
In an indication that Russia intends to impose tough terms on Georgia, Russian Foreign Minister Sergei Lavrov called for a de-militarized zone on the Georgian side of the border with Abkhazia and South Ossetia. Abkhazia also broke away from central Georgian control in the early 1990s. This followed the break-up of the Soviet Union in 1991 that brought an end to its political, economic and military opposition to the West.
Sarkozy told Medvedev at the start of their Kremlin talks that it was important to implement the cease-fire and that Russia now must withdraw its troops from Georgia to their positions prior to the conflict. Russia must be a ``force for peace,'' Sarkozy said.
Withdraw Forces
Russia says that Georgia must sign a legally binding non- aggression pact with South Ossetia, a self-proclaimed republic of 70,000 people, most with Russian passports. Georgia must also withdraw its forces from military bases it used to stage its attack on the disputed region, which is about half the size of Kosovo, Lavrov said. Georgian peacekeepers would not be allowed to return to South Ossetia.
The Russian minister also said that U.S.-backed Georgian President Mikheil Saakashvili should step down. Russia refuses to negotiate with Saakashvili because it has ``no trust'' in him and because he's a ``criminal,'' Lavrov said. ``It will be best if he left.''
Saakashvili, a 40-year-old U.S.-educated lawyer who came to power in 2003, forged an alliance with the U.S. and pursued a goal of joining NATO, ignoring Russian warnings. In April, NATO leaders promised Georgia and fellow former Soviet republic Ukraine eventual membership, while declining to offer them fast- track status.
Russia's Upper Hand
In a sign of Russia's upper hand, Russian forces are continuing reconnaissance activities in Georgia and disarming Georgian police in the town of Zugdidi, just across the border from Abkhazia, Nogovitsyn told reporters in Moscow.
The Russian military still controls the Georgian air base of Senaki, 40 kilometers (25 miles) from Abkhazia, he said.
Russian warplanes attacked a section of BP Plc's Baku- Tbilisi-Ceyhan pipeline in Georgia today, said Kakha Lomaia, head of Georgia's National Security Council. BP said it was unaware of any bomb damage and the Russian Defense Ministry denied the claim.
Medvedev has defended Russia's campaign as an obligatory response to what it terms the ``genocide'' waged by Georgia in South Ossetia. Most of the dead were civilians killed by Georgian military action, according to Russia. Saakashvili accused Russia of carrying out a ``well-planned'' invasion and pleaded for Western help throughout the conflict.
To contact the reporters on this story: Helena Bedwell in Tbilisi at hbedwell@bloomberg.net; Henry Meyer in Moscow at Hmeyer4@bloomberg.net.
Read more...
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Russia Ends Offensive Against `Aggressor' Georgia (Update4)
By Helena Bedwell and Henry Meyer
Enlarge Image/Details
Aug. 12 (Bloomberg) -- Russian President Dmitry Medvedev halted five days of military action in Georgia, Russia's first foreign offensive since the Cold War ended in 1991, defusing a dispute that threatened to draw in the West.
``The aggressor has been punished,'' Medvedev said today. Russia has secured the safety of its peacekeepers and citizens in the disputed regions of South Ossetia and Abkhazia, Medvedev said on state television.
Russia sent tanks, troops and warplanes into Georgia on Aug. 8 in what it said was a response to a Georgian offensive on South Ossetia, which won de facto independence from Georgia after a war in the early 1990s. Russian forces crossed into Georgia's heartland for the first time yesterday and took several towns and a military base, drawing criticism from President George W. Bush. More than 2,000 people were killed in the fighting, according to Russian estimates. The United Nations Refugee Agency said almost 100,000 people have fled the conflict.
The military thrust threatened to drag the U.S. into confrontation with its former Cold War foe. Bush backs Georgia's bid to join the North Atlantic Treaty Organization, which Russia views as a security threat. The West sees Georgia as a key ally in the region, in part because it has a pipeline that carries Caspian Sea crude oil to Western markets and bypasses Russia.
``Russia has come out looking like a victor,'' said Alexei Malashenko, an analyst from the Moscow Carnegie Center. ``If it had continued, the war wouldn't have been popular in Russia, not to speak of the negative reaction in the West.''
Fighter Jet Strikes
As Russian troops kept control of territory inside Georgia, Georgian Deputy Interior Minister Eka Zhguladze said two districts near the central city of Gori were under attack by Russian fighter jets as of 3 p.m. local time. While Russia has stopped offensive operations, sporadic strikes are continuing, Anatoly Nogovitsyn, the deputy head of Russia's General Staff, said earlier. Medvedev ordered Russian forces to destroy any ``pockets of resistance.''
The ruble surged the most in seven years, Russia's Micex Index climbed, and the cost of protecting the country's bonds fell after Medvedev halted the Georgian military operation.
The 30-stock Micex erased a decline of as much as 2 percent and oil extended its drop after Medvedev said military action in Georgia had achieved the country's goals.
Bush criticized Russia yesterday for pushing into central Georgia. ``I am deeply concerned by reports that Russian troops have moved beyond the zone of conflict,'' Bush said. ``It now appears that an effort may be under way to depose Georgia's duly elected government.''
Sarkozy in Moscow
Georgia welcomed Medvedev's decision, which came as French President Nicolas Sarkozy, whose country holds the rotating European Union presidency, arrived in Moscow to seek a cease- fire agreement.
``It's great, if that's what they said,'' Georgian Deputy Foreign Minister Grigol Vashadze said by phone in Tbilisi. ``I just hope that it's because they realize just how badly their name and reputation were damaged in the eyes of the world by doing what they've done.''
In an indication that Russia intends to impose tough terms on Georgia, Russian Foreign Minister Sergei Lavrov called for a de-militarized zone on the Georgian side of the border with Abkhazia and South Ossetia. Abkhazia also broke away from central Georgian control in the early 1990s. This followed the break-up of the Soviet Union in 1991 that brought an end to its political, economic and military opposition to the West.
Sarkozy told Medvedev at the start of their Kremlin talks that it was important to implement the cease-fire and that Russia now must withdraw its troops from Georgia to their positions prior to the conflict. Russia must be a ``force for peace,'' Sarkozy said.
Withdraw Forces
Russia says that Georgia must sign a legally binding non- aggression pact with South Ossetia, a self-proclaimed republic of 70,000 people, most with Russian passports. Georgia must also withdraw its forces from military bases it used to stage its attack on the disputed region, which is about half the size of Kosovo, Lavrov said. Georgian peacekeepers would not be allowed to return to South Ossetia.
The Russian minister also said that U.S.-backed Georgian President Mikheil Saakashvili should step down. Russia refuses to negotiate with Saakashvili because it has ``no trust'' in him and because he's a ``criminal,'' Lavrov said. ``It will be best if he left.''
Saakashvili, a 40-year-old U.S.-educated lawyer who came to power in 2003, forged an alliance with the U.S. and pursued a goal of joining NATO, ignoring Russian warnings. In April, NATO leaders promised Georgia and fellow former Soviet republic Ukraine eventual membership, while declining to offer them fast- track status.
Russia's Upper Hand
In a sign of Russia's upper hand, Russian forces are continuing reconnaissance activities in Georgia and disarming Georgian police in the town of Zugdidi, just across the border from Abkhazia, Nogovitsyn told reporters in Moscow.
The Russian military still controls the Georgian air base of Senaki, 40 kilometers (25 miles) from Abkhazia, he said.
Russian warplanes attacked a section of BP Plc's Baku- Tbilisi-Ceyhan pipeline in Georgia today, said Kakha Lomaia, head of Georgia's National Security Council. BP said it was unaware of any bomb damage and the Russian Defense Ministry denied the claim.
Medvedev has defended Russia's campaign as an obligatory response to what it terms the ``genocide'' waged by Georgia in South Ossetia. Most of the dead were civilians killed by Georgian military action, according to Russia. Saakashvili accused Russia of carrying out a ``well-planned'' invasion and pleaded for Western help throughout the conflict.
To contact the reporters on this story: Helena Bedwell in Tbilisi at hbedwell@bloomberg.net; Henry Meyer in Moscow at Hmeyer4@bloomberg.net.
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IEA Increases Its Global Oil Demand Forecast for 2009
By Grant Smith
Aug. 12 (Bloomberg) -- The International Energy Agency, an adviser to 27 nations, raised its forecast for global oil demand next year and said it expects Chinese oil consumption to rise after the Olympic Games.
The IEA increased its forecast by 70,000 barrels to 87.8 million barrels a day, the Paris-based agency said today in its monthly report. Last week's pipeline explosion in Turkey may cut output from Azerbaijan by 30 percent this quarter and supplies are further threatened by military action in Georgia.
``We're still looking at a pretty buoyant picture in 2008, 2009 in China,'' David Fyfe, the IEA's supply analyst, said in a telephone interview. ``We are seeing a two-tiered market'' with emerging economies surging and developed markets flagging.
Chinese oil demand is expected to increase 5.7 percent next year as consumers in the world's fastest-growing major economy spend more on travel. ``Minor revisions'' to global growth forecasts, and expectations for rebuilding of depleted heating oil inventories in Germany also contributed to adjustments to world demand, the IEA said.
``Recent trends in Chinese crude runs suggest a possibility of stronger than expected demand, pre-Olympic stockpiling or both,'' the report said. Chinese demand ``will likely rebound'' with the lifting of measures to curb pollution during the Olympics, it said.
Unchanged
Oil traded in New York reached a record $147.27 a barrel on July 11. Oil for September delivery was at $113.60 a barrel as of 11:59 a.m. London time today on the New York Mercantile Exchange.
The agency projects demand growth for 2009 at 1.1 percent, from 1 percent last month, while the rate for this year remains unchanged at 0.9 percent.
The Chinese government had closed oil refineries and coal- fired power stations and reduced vehicle traffic before the Olympic Games to improve air quality. Fuel use will likely recover when these facilities are reopened after the event, the IEA said.
The country's demand trends for the second half of the year remain ``remarkably opaque,'' the report said. Once the games finish refiners may curb imports, or the government may raise fuel costs for consumers. Alternatively the return of one million cars removed from Beijing's roads during the tournament may bolster demand, the IEA said.
Supply Forecast
Oil has retreated 22 percent from a record after swelling fuel costs prompted motorists to drive less and airlines to scale back routes. Emerging economies from China and India to Indonesia are raising prices to rein in use of subsidized fuels.
The IEA also boosted its projections for supply from outside the Organization of Petroleum Exporting Countries by about 100,000 barrels a day this year, and next, on an improved outlook for North Sea and U.S. projects. Non-OPEC suppliers will provide 50.1 million barrels a day this year and 50.8 million in 2009.
The agency lowered its estimate for Azeri crude oil and natural gas liquid extraction by 255,000 barrels to 860,000 barrels a day in the third quarter. The nation's 2008 output was cut by 55,000 barrels a day to 1.02 million barrels.
OPEC, which supplies more than 40 percent of the world's oil, will need to provide about 31.6 million barrels a day this year to balance world supply and demand, the report showed. That's about 100,000 barrels a day less than it estimated last month. The IEA left its estimate for next year's so-called ``call on OPEC crude'' unchanged at 31.1 million barrels a day.
Saudi Arabia, the biggest producer in OPEC, has agreed twice this year to increase its own daily production in an attempt to curb the rise in oil prices. The group pumped 32.8 million barrels a day last month, 145,000 barrels a day more than in June, according to IEA estimates.
To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net
Read more...
Aug. 12 (Bloomberg) -- The International Energy Agency, an adviser to 27 nations, raised its forecast for global oil demand next year and said it expects Chinese oil consumption to rise after the Olympic Games.
The IEA increased its forecast by 70,000 barrels to 87.8 million barrels a day, the Paris-based agency said today in its monthly report. Last week's pipeline explosion in Turkey may cut output from Azerbaijan by 30 percent this quarter and supplies are further threatened by military action in Georgia.
``We're still looking at a pretty buoyant picture in 2008, 2009 in China,'' David Fyfe, the IEA's supply analyst, said in a telephone interview. ``We are seeing a two-tiered market'' with emerging economies surging and developed markets flagging.
Chinese oil demand is expected to increase 5.7 percent next year as consumers in the world's fastest-growing major economy spend more on travel. ``Minor revisions'' to global growth forecasts, and expectations for rebuilding of depleted heating oil inventories in Germany also contributed to adjustments to world demand, the IEA said.
``Recent trends in Chinese crude runs suggest a possibility of stronger than expected demand, pre-Olympic stockpiling or both,'' the report said. Chinese demand ``will likely rebound'' with the lifting of measures to curb pollution during the Olympics, it said.
Unchanged
Oil traded in New York reached a record $147.27 a barrel on July 11. Oil for September delivery was at $113.60 a barrel as of 11:59 a.m. London time today on the New York Mercantile Exchange.
The agency projects demand growth for 2009 at 1.1 percent, from 1 percent last month, while the rate for this year remains unchanged at 0.9 percent.
The Chinese government had closed oil refineries and coal- fired power stations and reduced vehicle traffic before the Olympic Games to improve air quality. Fuel use will likely recover when these facilities are reopened after the event, the IEA said.
The country's demand trends for the second half of the year remain ``remarkably opaque,'' the report said. Once the games finish refiners may curb imports, or the government may raise fuel costs for consumers. Alternatively the return of one million cars removed from Beijing's roads during the tournament may bolster demand, the IEA said.
Supply Forecast
Oil has retreated 22 percent from a record after swelling fuel costs prompted motorists to drive less and airlines to scale back routes. Emerging economies from China and India to Indonesia are raising prices to rein in use of subsidized fuels.
The IEA also boosted its projections for supply from outside the Organization of Petroleum Exporting Countries by about 100,000 barrels a day this year, and next, on an improved outlook for North Sea and U.S. projects. Non-OPEC suppliers will provide 50.1 million barrels a day this year and 50.8 million in 2009.
The agency lowered its estimate for Azeri crude oil and natural gas liquid extraction by 255,000 barrels to 860,000 barrels a day in the third quarter. The nation's 2008 output was cut by 55,000 barrels a day to 1.02 million barrels.
OPEC, which supplies more than 40 percent of the world's oil, will need to provide about 31.6 million barrels a day this year to balance world supply and demand, the report showed. That's about 100,000 barrels a day less than it estimated last month. The IEA left its estimate for next year's so-called ``call on OPEC crude'' unchanged at 31.1 million barrels a day.
Saudi Arabia, the biggest producer in OPEC, has agreed twice this year to increase its own daily production in an attempt to curb the rise in oil prices. The group pumped 32.8 million barrels a day last month, 145,000 barrels a day more than in June, according to IEA estimates.
To contact the reporters on this story: Grant Smith in London at gsmith52@bloomberg.net
Read more...
India's Gold Imports May Recover as Price Slump Lures Jewelers
By Thomas Kutty Abraham
Aug. 12 (Bloomberg) -- India, the world's biggest buyer of bullion, may increase imports of the precious metal as jewelers take advantage of the lowest prices in more than seven months to rebuild inventories before the festival season.
Gold today fell to the lowest since Dec. 21, tracking a global commodities sell-off, as gains in the dollar and lower crude oil prices eroded the metal's appeal as an inflation hedge. Bullion reached a record $1,032.7 an ounce on March 17.
``Demand has been so much in the last couple of days that banks and other importers have run out of supplies,'' said Suresh Hundia, president of the Bombay Bullion Association Ltd., which represents 230 trading companies. ``If the price keeps falling, there's no reason why people won't continue to buy.''
A recovery in Indian demand may help stem a drop in gold, which led other precious metals including platinum and silver into a bear market after falling 22 percent from its March high. Increased consumption may benefit retailers including Rajesh Exports Ltd., the nation's biggest jewelry producer, whose stock has plummeted 65 percent this year as record prices cooled sales.
Gold imports by the South Asian nation in the three months ended July likely fell by as much as 35 percent from a year ago after a 50 percent slump in the previous three months, said Ajay Mitra, managing director of the World Gold Council in India.
That trend may reverse as consumers advance their festival and marriage gold purchases to benefit from lower prices. Demand traditionally picks up in the second half of the year, spurred by the wedding season and Diwali, the Festival of Light.
Retail Buyers
``Buyers, who have been pushing back purchases for too long, will relish current prices,'' Mitra said. ``Retail buyers, with festivals around the corner, will lap up gold at these prices.''
India imported 722 tons of bullion in 2007, less than the 1,000 tons forecast by the Council at the beginning of the year.
Gold for immediate delivery declined as much as 2.6 percent to $802.34 an ounce and traded at $815.15 at 4:32 p.m. in Mumbai. Platinum lost as much as 3.7 percent and silver 4.5 percent. The dollar traded near a 5 1/2-month high against the euro today and close to a seven-month high against the yen.
Commodities, as measured by the Standard & Poor's GSCI index, have fallen 21 percent from a July 3 record, slipping into a bear market on signs a U.S. economic slump will extend into 2009. Gold has tumbled 22 percent from its record, while platinum and silver are down 36 percent and 33 percent from their peaks.
A bigger harvest, which leaves more money in the hands of India's 235 million farmers, may also boost demand for bullion, said Daman Prakash, director of MNC Bullion, which sells to jewelers in the southern states of Karnataka and Tamil Nadu.
``One cannot forget that agriculture is the backbone of the economy, so if there's good harvest we're going to see a rise in purchases,'' he said.
To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net;
Read more...
Aug. 12 (Bloomberg) -- India, the world's biggest buyer of bullion, may increase imports of the precious metal as jewelers take advantage of the lowest prices in more than seven months to rebuild inventories before the festival season.
Gold today fell to the lowest since Dec. 21, tracking a global commodities sell-off, as gains in the dollar and lower crude oil prices eroded the metal's appeal as an inflation hedge. Bullion reached a record $1,032.7 an ounce on March 17.
``Demand has been so much in the last couple of days that banks and other importers have run out of supplies,'' said Suresh Hundia, president of the Bombay Bullion Association Ltd., which represents 230 trading companies. ``If the price keeps falling, there's no reason why people won't continue to buy.''
A recovery in Indian demand may help stem a drop in gold, which led other precious metals including platinum and silver into a bear market after falling 22 percent from its March high. Increased consumption may benefit retailers including Rajesh Exports Ltd., the nation's biggest jewelry producer, whose stock has plummeted 65 percent this year as record prices cooled sales.
Gold imports by the South Asian nation in the three months ended July likely fell by as much as 35 percent from a year ago after a 50 percent slump in the previous three months, said Ajay Mitra, managing director of the World Gold Council in India.
That trend may reverse as consumers advance their festival and marriage gold purchases to benefit from lower prices. Demand traditionally picks up in the second half of the year, spurred by the wedding season and Diwali, the Festival of Light.
Retail Buyers
``Buyers, who have been pushing back purchases for too long, will relish current prices,'' Mitra said. ``Retail buyers, with festivals around the corner, will lap up gold at these prices.''
India imported 722 tons of bullion in 2007, less than the 1,000 tons forecast by the Council at the beginning of the year.
Gold for immediate delivery declined as much as 2.6 percent to $802.34 an ounce and traded at $815.15 at 4:32 p.m. in Mumbai. Platinum lost as much as 3.7 percent and silver 4.5 percent. The dollar traded near a 5 1/2-month high against the euro today and close to a seven-month high against the yen.
Commodities, as measured by the Standard & Poor's GSCI index, have fallen 21 percent from a July 3 record, slipping into a bear market on signs a U.S. economic slump will extend into 2009. Gold has tumbled 22 percent from its record, while platinum and silver are down 36 percent and 33 percent from their peaks.
A bigger harvest, which leaves more money in the hands of India's 235 million farmers, may also boost demand for bullion, said Daman Prakash, director of MNC Bullion, which sells to jewelers in the southern states of Karnataka and Tamil Nadu.
``One cannot forget that agriculture is the backbone of the economy, so if there's good harvest we're going to see a rise in purchases,'' he said.
To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net;
Read more...
Canadian Dollar Strengthens as Trade Surplus Rises in June
By Cordell Eddings
Aug. 12 (Bloomberg) -- Canada's dollar rose from the lowest in almost a year after a report showed the nation's trade surplus increased during June.
The Canadian dollar strengthened versus 13 of the 16 most- actively traded currencies and gained for the first time in nine days against its U.S. counterpart.
``We've had a string of disappointing reports, so markets may be taking some hope from the improvement in the trade balance,'' said Paul Ferley, assistant chief economist at Royal Bank of Canada in Toronto. ``There has been a modest weakening of the U.S. dollar, and that is providing some support for the Canadian dollar as well.''
The currency increased 0.4 percent to C$1.0647 per U.S. dollar at 8:59 a.m. in Toronto, from C$1.0692 yesterday. It was the biggest one-day gain since July 21. Earlier it touched C$1.0728, the weakest since Aug. 17, 2007. One Canadian dollar buys 93.93 U.S. cents.
The surplus widened to C$5.76 billion ($5.38 billion) from a revised C$5.22 billion during May, Statistics Canada said in Ottawa.
``There is a sense the U.S. dollar may have gotten ahead of itself, given its violent rally over the last couple of weeks,'' said Sal Guatieri, a senior economist at the Bank of Montreal in Toronto. ``We are seeing the U.S. dollar coming back some, which is giving the Canadian dollar a boost.
To contact the reporter on this story: Cordell Eddings in New York at ceddings@bloomberg.net
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Aug. 12 (Bloomberg) -- Canada's dollar rose from the lowest in almost a year after a report showed the nation's trade surplus increased during June.
The Canadian dollar strengthened versus 13 of the 16 most- actively traded currencies and gained for the first time in nine days against its U.S. counterpart.
``We've had a string of disappointing reports, so markets may be taking some hope from the improvement in the trade balance,'' said Paul Ferley, assistant chief economist at Royal Bank of Canada in Toronto. ``There has been a modest weakening of the U.S. dollar, and that is providing some support for the Canadian dollar as well.''
The currency increased 0.4 percent to C$1.0647 per U.S. dollar at 8:59 a.m. in Toronto, from C$1.0692 yesterday. It was the biggest one-day gain since July 21. Earlier it touched C$1.0728, the weakest since Aug. 17, 2007. One Canadian dollar buys 93.93 U.S. cents.
The surplus widened to C$5.76 billion ($5.38 billion) from a revised C$5.22 billion during May, Statistics Canada said in Ottawa.
``There is a sense the U.S. dollar may have gotten ahead of itself, given its violent rally over the last couple of weeks,'' said Sal Guatieri, a senior economist at the Bank of Montreal in Toronto. ``We are seeing the U.S. dollar coming back some, which is giving the Canadian dollar a boost.
To contact the reporter on this story: Cordell Eddings in New York at ceddings@bloomberg.net
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Copper Falls for Third Day as Dollar's Advance May Slow Demand
By Claudia Carpenter
Aug. 12 (Bloomberg) -- Copper fell for a third day in London on expectations the dollar's rebound will erode demand for the metal in Europe amid signs of slowing economic growth. Aluminum dropped to its lowest since February.
The German economy, Europe's biggest, may have contracted in the second quarter, economists said before a government report scheduled for Aug. 14. The dollar headed for its longest rally against the euro since October 2006. Investor demand for copper may also slow as lower oil prices spur selling of commodity indexes that include the metal.
``If you've got a stronger dollar, then copper becomes more expensive for non-dollar buyers,'' said William Adams, an analyst at London-based Basemetals.com. ``The weaker oil price is dragging metals lower as well because investors who were buying commodity baskets the past five years are selling everything now.''
Copper for delivery in three months fell $100, or 1.4 percent, to $7,230 a metric ton as of 1:34 p.m. in London and earlier dropped to $7,207, the lowest since Feb. 6. Crude oil futures in New York slid 79 cents to $113.66 a barrel.
Stockpiles of copper in warehouses monitored by the LME increased 75 tons to 151,700 tons, the highest since Feb. 14.
Mexico's copper output may rise 8.4 percent this year as new mines come online, said Sergio Almazan, director of Mexico's Mining Chamber of Commerce. Output may increase to 350,000 tons this year from 323,000 tons last year, he said yesterday.
Zinc fell $15 to $1,675 a ton. Inventories jumped 5,775 tons, or 3.6 percent, the biggest increase since June 19.
Stainless Steel
Nickel declined $275, or 1.5 percent, to $17,725. Posco, Asia's biggest maker of stainless steel, cut prices as much as 10 percent from Aug. 18, the first reduction this year, after the cost of nickel declined. Stainless steel makers are the biggest users of nickel.
``Some customers tend to hold back orders on expectations that falling nickel prices will lead to lower prices,'' said Posco spokeswoman Ko Min Jin.
Aluminum dropped $32, or 1.1 percent, to $2,801 a ton, the lowest since Feb. 15. Tin decreased $475 to $18,275 a ton and lead dropped $5 to $1,920 a ton.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net
Read more...
Aug. 12 (Bloomberg) -- Copper fell for a third day in London on expectations the dollar's rebound will erode demand for the metal in Europe amid signs of slowing economic growth. Aluminum dropped to its lowest since February.
The German economy, Europe's biggest, may have contracted in the second quarter, economists said before a government report scheduled for Aug. 14. The dollar headed for its longest rally against the euro since October 2006. Investor demand for copper may also slow as lower oil prices spur selling of commodity indexes that include the metal.
``If you've got a stronger dollar, then copper becomes more expensive for non-dollar buyers,'' said William Adams, an analyst at London-based Basemetals.com. ``The weaker oil price is dragging metals lower as well because investors who were buying commodity baskets the past five years are selling everything now.''
Copper for delivery in three months fell $100, or 1.4 percent, to $7,230 a metric ton as of 1:34 p.m. in London and earlier dropped to $7,207, the lowest since Feb. 6. Crude oil futures in New York slid 79 cents to $113.66 a barrel.
Stockpiles of copper in warehouses monitored by the LME increased 75 tons to 151,700 tons, the highest since Feb. 14.
Mexico's copper output may rise 8.4 percent this year as new mines come online, said Sergio Almazan, director of Mexico's Mining Chamber of Commerce. Output may increase to 350,000 tons this year from 323,000 tons last year, he said yesterday.
Zinc fell $15 to $1,675 a ton. Inventories jumped 5,775 tons, or 3.6 percent, the biggest increase since June 19.
Stainless Steel
Nickel declined $275, or 1.5 percent, to $17,725. Posco, Asia's biggest maker of stainless steel, cut prices as much as 10 percent from Aug. 18, the first reduction this year, after the cost of nickel declined. Stainless steel makers are the biggest users of nickel.
``Some customers tend to hold back orders on expectations that falling nickel prices will lead to lower prices,'' said Posco spokeswoman Ko Min Jin.
Aluminum dropped $32, or 1.1 percent, to $2,801 a ton, the lowest since Feb. 15. Tin decreased $475 to $18,275 a ton and lead dropped $5 to $1,920 a ton.
To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net or ccarpenter2@bloomberg.net
Read more...
Mid-Day Report: Dollar Consolidates, a Short Term Top in Place?
Market Overview | Written by ActionForex.com | Aug 12 08 13:09 GMT |
Dollar's intraday momentum against major currencies continues to diminish and it looks like a short term top is finally around the corner. In particular, Gold seems to be supported at 800 key psychological report and recovers on profit taking. Oil is set to test $115 minor support too. Though a break of intraday support/resistance levels in major pairs is still needed to confirm. Otherwise, consolidation could be brief and more upside might be seen in the greenback before a noticeable correction.
On the data front, dollar has little reaction to much narrower than expected trade deficit on -56.8b in Jun. Canadian trade surplus came in narrower than expected at 5.76b in Jun. Sterling received little support from inflation data today with headline CPI surging to record high of 4.4% yoy in Jul, far above expectation of 4.1%. Core CPI also climbed more than expected to 1.9% yoy. Markets will turn attention to tomorrow's BoE quarterly inflation report.
USD/CAD Mid-Day Outlook
Daily Pivots: (S1) 1.0628; (P) 1.0672; (R1) 1.0732; More.
USD/CAD retreats again after edging higher to 1.0727 earlier today. With 4 hours MACD dragged below signal line, an intraday top should be in place and some more sideway trading could now be seen. Nevertheless, consolidation should be relatively brief as long as 1.0538 minor support holds. Above 1.0727 will indicate recent rise has resumed for mentioned 1.0791/98 cluster resistance. Below 1.0538 will indicate that a short term top is in place and bring correction to 4 hours 55 EMA (now at 1.0469) or lower. But downside should be contained above 1.0273 support and bring rally resumption.
In the bigger picture, break of 1.0378 confirms that medium term rise from 0.9056 has resumed and is now set to test cluster resistance at 1.0791/98 (61.8% retracement of 1.1874 to 0.9056 at 1.0798, 61.8% projection of 0.9056 to 1.0378 from 0.9974 at 1.0791) first. Sustained break of 1.0791/98 will argue that rise from 0.9056 is probably more than just a correction in the long term down trend and will set the stage to test key long term resistance at 1.1874. On the downside, a break below 0.9974 support is needed to confirm that rise from 0.9056 has completed. Otherwise, further rally is still expected even in case of a deep pull back.
Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:01 GBP U.K. RICS house prices Jul -83.90% -90.00% -88.00%
23:01 GBP U.K. BRC retail sales Jul -0.90% N/A -0.40%
23:50 JPY Japan Domestic CGPI M/M Jul 2.00% 0.80% 0.80% 0.90%
23:50 JPY Japan Domestic CGPI Y/Y Jul 7.10% 5.70% 5.60% 5.70%
01:30 AUD Australia NAB business confidence Jul -9 N/A -9
04:30 JPY Japan Industrial prod'n M/M Jul -2.20% -2.00% -2.00%
04:30 JPY Japan Industrial prod'n Y/Y Jul 0.00% -0.20% -0.20%
04:30 JPY Japan Capacity utilisation Jul -1.70% N/A 2.20%
05:00 JPY Japan Consumer confidence Jul 31.4 N/A 32.9
08:30 GBP U.K. CPI M/M Jul 0.00% -0.20% 0.70%
08:30 GBP U.K. CPI Y/Y Jul 4.40% 4.20% 3.80%
08:30 GBP U.K. CPI core Y/Y Jul 1.90% 1.70% 1.60%
08:30 GBP U.K. RPI M/M Jul -0.10% -0.30% 0.80%
08:30 GBP U.K. RPI Y/Y Jul 5.00% 4.90% 4.60%
08:30 GBP U.K. RPI - X M/M Jul -0.20% -0.50% 0.80%
08:30 GBP U.K. RPI - X Y/Y Jul 5.30% 5.20% 4.80%
08:30 GBP U.K. DCLG house prices Y/Y Jun 0.60% 1.50% 3.70% 3%
12:30 CAD Canada Trade balance (cad) Jun 5.76B 5.80B 5.54B
12:30 CAD Canada Imports Jun 43.2B N/A 36.57B
12:30 CAD Canada Exports Jun 37.4B N/A 42.11B
12:30 USD U.S. Trade balance (usd) Jun -56.8B -61.0B -59.8B
18:00 USD U.S. Fed budget Jul -68.6B -36.45B
Read more...
Dollar's intraday momentum against major currencies continues to diminish and it looks like a short term top is finally around the corner. In particular, Gold seems to be supported at 800 key psychological report and recovers on profit taking. Oil is set to test $115 minor support too. Though a break of intraday support/resistance levels in major pairs is still needed to confirm. Otherwise, consolidation could be brief and more upside might be seen in the greenback before a noticeable correction.
On the data front, dollar has little reaction to much narrower than expected trade deficit on -56.8b in Jun. Canadian trade surplus came in narrower than expected at 5.76b in Jun. Sterling received little support from inflation data today with headline CPI surging to record high of 4.4% yoy in Jul, far above expectation of 4.1%. Core CPI also climbed more than expected to 1.9% yoy. Markets will turn attention to tomorrow's BoE quarterly inflation report.
USD/CAD Mid-Day Outlook
Daily Pivots: (S1) 1.0628; (P) 1.0672; (R1) 1.0732; More.
USD/CAD retreats again after edging higher to 1.0727 earlier today. With 4 hours MACD dragged below signal line, an intraday top should be in place and some more sideway trading could now be seen. Nevertheless, consolidation should be relatively brief as long as 1.0538 minor support holds. Above 1.0727 will indicate recent rise has resumed for mentioned 1.0791/98 cluster resistance. Below 1.0538 will indicate that a short term top is in place and bring correction to 4 hours 55 EMA (now at 1.0469) or lower. But downside should be contained above 1.0273 support and bring rally resumption.
In the bigger picture, break of 1.0378 confirms that medium term rise from 0.9056 has resumed and is now set to test cluster resistance at 1.0791/98 (61.8% retracement of 1.1874 to 0.9056 at 1.0798, 61.8% projection of 0.9056 to 1.0378 from 0.9974 at 1.0791) first. Sustained break of 1.0791/98 will argue that rise from 0.9056 is probably more than just a correction in the long term down trend and will set the stage to test key long term resistance at 1.1874. On the downside, a break below 0.9974 support is needed to confirm that rise from 0.9056 has completed. Otherwise, further rally is still expected even in case of a deep pull back.
Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:01 GBP U.K. RICS house prices Jul -83.90% -90.00% -88.00%
23:01 GBP U.K. BRC retail sales Jul -0.90% N/A -0.40%
23:50 JPY Japan Domestic CGPI M/M Jul 2.00% 0.80% 0.80% 0.90%
23:50 JPY Japan Domestic CGPI Y/Y Jul 7.10% 5.70% 5.60% 5.70%
01:30 AUD Australia NAB business confidence Jul -9 N/A -9
04:30 JPY Japan Industrial prod'n M/M Jul -2.20% -2.00% -2.00%
04:30 JPY Japan Industrial prod'n Y/Y Jul 0.00% -0.20% -0.20%
04:30 JPY Japan Capacity utilisation Jul -1.70% N/A 2.20%
05:00 JPY Japan Consumer confidence Jul 31.4 N/A 32.9
08:30 GBP U.K. CPI M/M Jul 0.00% -0.20% 0.70%
08:30 GBP U.K. CPI Y/Y Jul 4.40% 4.20% 3.80%
08:30 GBP U.K. CPI core Y/Y Jul 1.90% 1.70% 1.60%
08:30 GBP U.K. RPI M/M Jul -0.10% -0.30% 0.80%
08:30 GBP U.K. RPI Y/Y Jul 5.00% 4.90% 4.60%
08:30 GBP U.K. RPI - X M/M Jul -0.20% -0.50% 0.80%
08:30 GBP U.K. RPI - X Y/Y Jul 5.30% 5.20% 4.80%
08:30 GBP U.K. DCLG house prices Y/Y Jun 0.60% 1.50% 3.70% 3%
12:30 CAD Canada Trade balance (cad) Jun 5.76B 5.80B 5.54B
12:30 CAD Canada Imports Jun 43.2B N/A 36.57B
12:30 CAD Canada Exports Jun 37.4B N/A 42.11B
12:30 USD U.S. Trade balance (usd) Jun -56.8B -61.0B -59.8B
18:00 USD U.S. Fed budget Jul -68.6B -36.45B
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Dubai Stocks Enter Bear Market; Emaar, Dubai Islamic Decline
By Zainab Fattah
Aug. 12 (Bloomberg) -- Dubai stocks retreated, pushing the Dubai Financial Market General Index into a bear market, as investors speculated the emirate's real-estate boom may slow.
Emaar Properties PJSC, the largest real-estate developer in the Middle East and North Africa, fell to its lowest since April 2005. Dubai Islamic Bank, the biggest bank in the United Arab Emirates complying with Muslim Shariah law, declined for a seventh day.
Dubai's index has dropped for seven consecutive days, with losses accelerating after local media reported that regulators plan new laws aimed at curbing so-called ``property flipping'' and the central bank may tighten bank lending. The emirate joined Saudi Arabia and Oman as the third Gulf market tracked by Bloomberg to enter bear-market territory.
``Reports about new regulations to limit property speculation and tighten credit has scared off investors who fear the market may be in for a slowdown,'' Rami Sidani, head of Middle East and North Africa investments at Schroders Investment Management Ltd. in Dubai, said in a telephone interview. ``Low volume due to the absence of domestic money during the dormant summer period made the drop even worse.''
The Dubai Financial Market General Index lost 2 percent to 4,943.89 at the close, extending the drop since its 2008 high on Jan. 15 to more than 20 percent, the common definition of a bear market. About 173 million shares traded in Dubai's index, 32 percent less than the six-month daily average.
Real-Estate Boom
All of the 25 developing countries in the MSCI Emerging Markets Index except for Jordan and Morocco have experienced bear-market plunges since September as concern deepened that global economic growth will slow.
Dubai, the second-largest sheikhdom in the United Arab Emirates, became the first place in the Gulf to allow foreigners to own property in 2002, sparking a real-estate boom. Dubai's residential property prices in June jumped 41 percent from a year earlier, Al Mal Capital PSC said last month. Morgan Stanley on Aug. 5 said it expects Dubai real-estate prices to drop 10 percent between 2008 and 2010.
Dubai may approve regulations aimed at preventing property speculators from buying and selling real-estate before they are built, Al Arabiya television reported Aug. 9 on its Web site, citing the head of Dubai Real Estate Regulatory Authority, Marwan bin Ghalita. He was not available when contacted today on his mobile phone.
Bear Markets
The U.A.E.'s central bank is considering new regulations to tighten lending for personal loans and small business to rein in inflation, Gulf News reported Aug. 10, citing unidentified bankers. The central bank did not respond to a fax seeking comment on the article.
Emaar, the biggest member of Dubai's index, slid 3 percent to 9.6 dirhams. The stock has slumped 37 percent since Jan. 15. Dubai Islamic Bank lost 1.5 percent to 7.49 dirhams, extending the seven-day drop to 8.3 percent.
Saudi Arabia's Tadawul All Share Index has lost 30 percent from its 2008 high on Jan. 12. Oman's Muscat Securities Market 30 Index fell as much as 21 percent from its June peak.
The Abu Dhabi Securities Exchange General Index declined 1.8 percent. The Kuwait Stock Exchange Index decreased 0.8 percent, while the Bahrain All Share Index fell 0.6 percent.
Oman's Muscat Securities Market 30 Index rebounded, climbing 3.8 percent, after yesterday posting its biggest drop since Jan. 22. Qatar's Doha Securities Market Index added 0.1 percent. Saudi Arabia's Tadawul All Share Index gained 0.8 percent to 8,131.99 at 1:50 p.m. local time.
To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net.
Read more...
Aug. 12 (Bloomberg) -- Dubai stocks retreated, pushing the Dubai Financial Market General Index into a bear market, as investors speculated the emirate's real-estate boom may slow.
Emaar Properties PJSC, the largest real-estate developer in the Middle East and North Africa, fell to its lowest since April 2005. Dubai Islamic Bank, the biggest bank in the United Arab Emirates complying with Muslim Shariah law, declined for a seventh day.
Dubai's index has dropped for seven consecutive days, with losses accelerating after local media reported that regulators plan new laws aimed at curbing so-called ``property flipping'' and the central bank may tighten bank lending. The emirate joined Saudi Arabia and Oman as the third Gulf market tracked by Bloomberg to enter bear-market territory.
``Reports about new regulations to limit property speculation and tighten credit has scared off investors who fear the market may be in for a slowdown,'' Rami Sidani, head of Middle East and North Africa investments at Schroders Investment Management Ltd. in Dubai, said in a telephone interview. ``Low volume due to the absence of domestic money during the dormant summer period made the drop even worse.''
The Dubai Financial Market General Index lost 2 percent to 4,943.89 at the close, extending the drop since its 2008 high on Jan. 15 to more than 20 percent, the common definition of a bear market. About 173 million shares traded in Dubai's index, 32 percent less than the six-month daily average.
Real-Estate Boom
All of the 25 developing countries in the MSCI Emerging Markets Index except for Jordan and Morocco have experienced bear-market plunges since September as concern deepened that global economic growth will slow.
Dubai, the second-largest sheikhdom in the United Arab Emirates, became the first place in the Gulf to allow foreigners to own property in 2002, sparking a real-estate boom. Dubai's residential property prices in June jumped 41 percent from a year earlier, Al Mal Capital PSC said last month. Morgan Stanley on Aug. 5 said it expects Dubai real-estate prices to drop 10 percent between 2008 and 2010.
Dubai may approve regulations aimed at preventing property speculators from buying and selling real-estate before they are built, Al Arabiya television reported Aug. 9 on its Web site, citing the head of Dubai Real Estate Regulatory Authority, Marwan bin Ghalita. He was not available when contacted today on his mobile phone.
Bear Markets
The U.A.E.'s central bank is considering new regulations to tighten lending for personal loans and small business to rein in inflation, Gulf News reported Aug. 10, citing unidentified bankers. The central bank did not respond to a fax seeking comment on the article.
Emaar, the biggest member of Dubai's index, slid 3 percent to 9.6 dirhams. The stock has slumped 37 percent since Jan. 15. Dubai Islamic Bank lost 1.5 percent to 7.49 dirhams, extending the seven-day drop to 8.3 percent.
Saudi Arabia's Tadawul All Share Index has lost 30 percent from its 2008 high on Jan. 12. Oman's Muscat Securities Market 30 Index fell as much as 21 percent from its June peak.
The Abu Dhabi Securities Exchange General Index declined 1.8 percent. The Kuwait Stock Exchange Index decreased 0.8 percent, while the Bahrain All Share Index fell 0.6 percent.
Oman's Muscat Securities Market 30 Index rebounded, climbing 3.8 percent, after yesterday posting its biggest drop since Jan. 22. Qatar's Doha Securities Market Index added 0.1 percent. Saudi Arabia's Tadawul All Share Index gained 0.8 percent to 8,131.99 at 1:50 p.m. local time.
To contact the reporter on this story: Zainab Fattah in Dubai on zfattah@bloomberg.net.
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U.S. Trade Balance (June)
Daily Forex Fundamentals | Written by TheLFB-Forex.com | Aug 12 08 13:01 GMT |
Actual -56.8B, Expected -61.8B, Previous -59.8B
Release Explanation: A country's exports minus its imports; the largest component of a country's balance of payments. An increase or decrease in the Trade Balance will help determine the future economic outlook and growth numbers in a region. It can impact all aspects of an economy as it is the way that region balances its books. This is a standalone valuation of the reliance, or not, of imported Goods compared to what is being sent abroad. A currency will be greatly impacted by this report as the costs of buying Imports, or selling Exports, is reliant upon a currency's valuation to a degree. A country that Exports more than it Imports (China for example) will benefit from a weaker currency; its Exports are cheaper for foreigners to buy, and vice versa.
Trade Desk Thoughts: An increase was expected because oil prices had risen strongly in the month. The report will add to Q2 GDP, but the decrease in imports may also point to a weakening of demand towards the end of the quarter.
Forex Technical Reaction: After making a slight bounce to the upside, currency prices are virtually unchanged after the report. Of more importance for today will be the Russian/Georgian conflict. Russia has announced that it's halted military operations in Georgia now that it's taken over the area in dispute. BP is reporting that one of its three pipelines has been temporarily shut down due to damage.
Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com
TheLFB Risk Disclaimer can be found at http://www.thelfb-forex.com/content.aspx?id=174.
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Actual -56.8B, Expected -61.8B, Previous -59.8B
Release Explanation: A country's exports minus its imports; the largest component of a country's balance of payments. An increase or decrease in the Trade Balance will help determine the future economic outlook and growth numbers in a region. It can impact all aspects of an economy as it is the way that region balances its books. This is a standalone valuation of the reliance, or not, of imported Goods compared to what is being sent abroad. A currency will be greatly impacted by this report as the costs of buying Imports, or selling Exports, is reliant upon a currency's valuation to a degree. A country that Exports more than it Imports (China for example) will benefit from a weaker currency; its Exports are cheaper for foreigners to buy, and vice versa.
Trade Desk Thoughts: An increase was expected because oil prices had risen strongly in the month. The report will add to Q2 GDP, but the decrease in imports may also point to a weakening of demand towards the end of the quarter.
Forex Technical Reaction: After making a slight bounce to the upside, currency prices are virtually unchanged after the report. Of more importance for today will be the Russian/Georgian conflict. Russia has announced that it's halted military operations in Georgia now that it's taken over the area in dispute. BP is reporting that one of its three pipelines has been temporarily shut down due to damage.
Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com
TheLFB Risk Disclaimer can be found at http://www.thelfb-forex.com/content.aspx?id=174.
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European Stocks Decline, Led by BHP; U.S. Index Futures Retreat
By Adria Cimino
Aug. 12 (Bloomberg) -- European stocks fell for the first time in three days as declines by mining companies outweighed gains by tiremakers and airlines.
U.S. index futures retreated as JPMorgan Chase & Co. warned it will post a $1.5 billion writedown on mortgage assets. Asian shares also dropped, while Russian equities climbed after President Dmitry Medvedev ordered a halt to the military operation in Georgia.
BHP Billiton Ltd., the world's largest mining company, tumbled after gold, platinum and silver retreated deeper into a bear market. Michelin & Cie., the world's second-biggest tiremaker, Royal Ahold NV and Ryanair Holdings Plc rose. Singapore Telecommunications Ltd. sank on worse-than-estimated earnings.
Europe's Dow Jones Stoxx 600 Index lost 0.3 percent to 292.32 at 2:05 p.m. in London. Mining stocks, which led gains worldwide last year, are the worst performers in the past month, following declines in metals prices.
``For the moment, the best performance of basic resources shares is behind us,'' said Emmanuel Soupre, a fund manager at Neuflize OBC Asset Management in Paris, which oversees the equivalent of $33 billion. ``The idea of an economic slowdown is weighing on raw materials prices.''
Futures on the Standard & Poor's 500 Index fell 0.3 percent, while the MSCI Asia Pacific Index lost 0.8 percent. Russia's Micex Index added 2.3 percent.
More than $12 trillion has been erased from global equity markets this year as credit-related losses approach $500 billion and inflation accelerates, threatening economic and profit growth.
Inflation
Reports today provided the latest evidence that inflation is making it harder for policy makers to cut interest rates. Inflation last month held at the fastest pace in at least 12 years in France, while in the U.K. the rate climbed to more than double the central bank's 2 percent target.
House prices in Britain fell as the squeeze on credit brought the property market to a ``virtual standstill.'' U.K. homebuilders Persimmon Plc and Bellway Plc dropped after Dresdner Kleinwort said investors should abandon the stocks.
``We're waiting for more visibility on the evolution of the economy,'' said Clemence Bounaix, an analyst at Richelieu Finance in Paris, which oversees $6.2 billion. ``There are worries about inflation and consumer spending.''
Rising credit losses and higher inflation have prompted analysts to slash profit estimates this year. Earnings will slide 2.5 percent in 2008 for companies in the Stoxx 600, according to analysts' estimates compiled by Bloomberg. That's down from 11 percent growth forecast at the start of the year.
Second-quarter earnings at the 429 companies in the S&P 500 that have released results since July 8 are down 23 percent on average from a year earlier, according to data compiled by Bloomberg. Financial companies suffered the deepest declines, with profits down 91 percent.
Europe, Asia
Europe's Stoxx 600 has rebounded 10 percent from a three- year low on July 15 as oil retreated from a record and companies from Volkswagen AG and Nokia Oyj to Societe Generale SA and Royal Bank of Scotland Group Plc reported earnings that beat analysts' estimates. The gains have trimmed this year's retreat to 20 percent.
BHP dropped 2.8 percent to 1,446 pence as gold, platinum and silver slumped. Anglo American Plc, the world's fourth- biggest diversified mining company, retreated 2.2 percent to 2,619 pence.
Gold, platinum and silver plunged to their lowest in more than seven months on concern a spreading global economic slowdown will reduce demand for raw materials.
Mining Stocks
The Stoxx 600 Basic Resources Index lost 1.7 percent, the most among the 18 industry groups in the pan-European index. The industry has tumbled 11 percent this month as metals prices retreated.
Stocks pared declines as oil retreated after Russia's decision eased concern about regional supply disruptions. The dollar traded near a 5 1/2-month high against the euro also limited the appeal of commodities.
Crude for September delivery slipped as much as $1.97 a barrel, or 1.7 percent, to $112.48 on the New York Mercantile Exchange. Futures last traded up 49 cents. It touched a record $147.27 on July 11.
Michelin added 4.4 percent to 50.08 euros. Daimler AG, the world's largest truckmaker, climbed 3.6 percent to 44.33 euros. Ahold, the owner of the Stop & Shop grocery chain, increased 1.5 percent to 8.82 euros. Ryanair, Europe's biggest discount airline, gained 1.7 percent to 2.97 euros.
JPMorgan
JPMorgan lost 49 cents to $41.40. The bank will write down the value of mortgage-backed assets by at least $1.5 billion this quarter after credit-market turmoil and the U.S. housing slump deepened.
Trading conditions ``have substantially deteriorated'' since July and ``sharply widened'' spreads on mortgage-backed securities and loans caused losses, the second-biggest U.S. bank by market value said.
``From the beginning, we said it was a very significant crisis and would take time to work though the system,'' said Lucy MacDonald, London-based chief investment officer of global equities at RCM Ltd., which has $100 billion under management.
Standard Chartered Plc slipped 4.1 percent to 1,534 pence. Citigroup cut its recommendation on the stock to ``sell'' from ``hold,'' citing rising inflationary pressure in Asia.
``This will act as a cap on the group's rating with earnings potentially disappointing as asset growth slows next year,'' the analysts wrote.
SingTel
SingTel slumped 3.1 percent to S$3.47, set for its biggest decline since June 16. First-quarter profit fell 5.3 percent to S$878.1 million ($622 million) as a stronger currency eroded overseas earnings. Profit, the lowest in two years, missed the S$902 million median of analyst estimates in a Bloomberg survey.
China Mobile fell 3.9 percent to HK$95.10. Citigroup lowered its share-price estimate to HK$120 from HK$150, citing ``regulatory headwinds'' and increased competition.
U.K. homebuilders fell after Dresdner Kleinwort analyst Alistair Stewart said their results could be ``the grimmest for decades'' and investors should abandon the stocks after their recent rally.
Persimmon, the No. 1 by market value, sank 1.1 percent to 406 pence. Bellway, a U.K. homebuilder aimed at first-time buyers, tumbled 3.9 percent to 622.5 pence.
UBS AG rose 2 percent to 23.64 francs. Switzerland's biggest bank plans to separate its investment banking and wealth management units after a fourth straight quarterly loss caused by subprime-related writedowns. The European bank hardest hit by the collapse of the U.S. subprime market reported a second- quarter net loss of 358 million Swiss francs ($329 million), and and said it doesn't expect the ``adverse economic and financial trends'' to improve in the second half.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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Aug. 12 (Bloomberg) -- European stocks fell for the first time in three days as declines by mining companies outweighed gains by tiremakers and airlines.
U.S. index futures retreated as JPMorgan Chase & Co. warned it will post a $1.5 billion writedown on mortgage assets. Asian shares also dropped, while Russian equities climbed after President Dmitry Medvedev ordered a halt to the military operation in Georgia.
BHP Billiton Ltd., the world's largest mining company, tumbled after gold, platinum and silver retreated deeper into a bear market. Michelin & Cie., the world's second-biggest tiremaker, Royal Ahold NV and Ryanair Holdings Plc rose. Singapore Telecommunications Ltd. sank on worse-than-estimated earnings.
Europe's Dow Jones Stoxx 600 Index lost 0.3 percent to 292.32 at 2:05 p.m. in London. Mining stocks, which led gains worldwide last year, are the worst performers in the past month, following declines in metals prices.
``For the moment, the best performance of basic resources shares is behind us,'' said Emmanuel Soupre, a fund manager at Neuflize OBC Asset Management in Paris, which oversees the equivalent of $33 billion. ``The idea of an economic slowdown is weighing on raw materials prices.''
Futures on the Standard & Poor's 500 Index fell 0.3 percent, while the MSCI Asia Pacific Index lost 0.8 percent. Russia's Micex Index added 2.3 percent.
More than $12 trillion has been erased from global equity markets this year as credit-related losses approach $500 billion and inflation accelerates, threatening economic and profit growth.
Inflation
Reports today provided the latest evidence that inflation is making it harder for policy makers to cut interest rates. Inflation last month held at the fastest pace in at least 12 years in France, while in the U.K. the rate climbed to more than double the central bank's 2 percent target.
House prices in Britain fell as the squeeze on credit brought the property market to a ``virtual standstill.'' U.K. homebuilders Persimmon Plc and Bellway Plc dropped after Dresdner Kleinwort said investors should abandon the stocks.
``We're waiting for more visibility on the evolution of the economy,'' said Clemence Bounaix, an analyst at Richelieu Finance in Paris, which oversees $6.2 billion. ``There are worries about inflation and consumer spending.''
Rising credit losses and higher inflation have prompted analysts to slash profit estimates this year. Earnings will slide 2.5 percent in 2008 for companies in the Stoxx 600, according to analysts' estimates compiled by Bloomberg. That's down from 11 percent growth forecast at the start of the year.
Second-quarter earnings at the 429 companies in the S&P 500 that have released results since July 8 are down 23 percent on average from a year earlier, according to data compiled by Bloomberg. Financial companies suffered the deepest declines, with profits down 91 percent.
Europe, Asia
Europe's Stoxx 600 has rebounded 10 percent from a three- year low on July 15 as oil retreated from a record and companies from Volkswagen AG and Nokia Oyj to Societe Generale SA and Royal Bank of Scotland Group Plc reported earnings that beat analysts' estimates. The gains have trimmed this year's retreat to 20 percent.
BHP dropped 2.8 percent to 1,446 pence as gold, platinum and silver slumped. Anglo American Plc, the world's fourth- biggest diversified mining company, retreated 2.2 percent to 2,619 pence.
Gold, platinum and silver plunged to their lowest in more than seven months on concern a spreading global economic slowdown will reduce demand for raw materials.
Mining Stocks
The Stoxx 600 Basic Resources Index lost 1.7 percent, the most among the 18 industry groups in the pan-European index. The industry has tumbled 11 percent this month as metals prices retreated.
Stocks pared declines as oil retreated after Russia's decision eased concern about regional supply disruptions. The dollar traded near a 5 1/2-month high against the euro also limited the appeal of commodities.
Crude for September delivery slipped as much as $1.97 a barrel, or 1.7 percent, to $112.48 on the New York Mercantile Exchange. Futures last traded up 49 cents. It touched a record $147.27 on July 11.
Michelin added 4.4 percent to 50.08 euros. Daimler AG, the world's largest truckmaker, climbed 3.6 percent to 44.33 euros. Ahold, the owner of the Stop & Shop grocery chain, increased 1.5 percent to 8.82 euros. Ryanair, Europe's biggest discount airline, gained 1.7 percent to 2.97 euros.
JPMorgan
JPMorgan lost 49 cents to $41.40. The bank will write down the value of mortgage-backed assets by at least $1.5 billion this quarter after credit-market turmoil and the U.S. housing slump deepened.
Trading conditions ``have substantially deteriorated'' since July and ``sharply widened'' spreads on mortgage-backed securities and loans caused losses, the second-biggest U.S. bank by market value said.
``From the beginning, we said it was a very significant crisis and would take time to work though the system,'' said Lucy MacDonald, London-based chief investment officer of global equities at RCM Ltd., which has $100 billion under management.
Standard Chartered Plc slipped 4.1 percent to 1,534 pence. Citigroup cut its recommendation on the stock to ``sell'' from ``hold,'' citing rising inflationary pressure in Asia.
``This will act as a cap on the group's rating with earnings potentially disappointing as asset growth slows next year,'' the analysts wrote.
SingTel
SingTel slumped 3.1 percent to S$3.47, set for its biggest decline since June 16. First-quarter profit fell 5.3 percent to S$878.1 million ($622 million) as a stronger currency eroded overseas earnings. Profit, the lowest in two years, missed the S$902 million median of analyst estimates in a Bloomberg survey.
China Mobile fell 3.9 percent to HK$95.10. Citigroup lowered its share-price estimate to HK$120 from HK$150, citing ``regulatory headwinds'' and increased competition.
U.K. homebuilders fell after Dresdner Kleinwort analyst Alistair Stewart said their results could be ``the grimmest for decades'' and investors should abandon the stocks after their recent rally.
Persimmon, the No. 1 by market value, sank 1.1 percent to 406 pence. Bellway, a U.K. homebuilder aimed at first-time buyers, tumbled 3.9 percent to 622.5 pence.
UBS AG rose 2 percent to 23.64 francs. Switzerland's biggest bank plans to separate its investment banking and wealth management units after a fourth straight quarterly loss caused by subprime-related writedowns. The European bank hardest hit by the collapse of the U.S. subprime market reported a second- quarter net loss of 358 million Swiss francs ($329 million), and and said it doesn't expect the ``adverse economic and financial trends'' to improve in the second half.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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Michael Price Shorts Citigroup, Sees Few Banks to Buy
By Jeff Kearns
Aug. 12 (Bloomberg) -- Billionaire investor Michael Price is betting that Citigroup Inc. and Wachovia Corp. will keep tumbling and says he found few banks to invest in after total losses from subprime mortgages increased to almost half a trillion dollars.
``Citigroup's got more pain coming,'' said Price, who runs New York-based MFP Investors LLC and was chairman and chief executive officer of Franklin Mutual Advisers LLC in Short Hills, New Jersey.
Price, 57, is selling short both stocks even after Citigroup, the biggest U.S. bank by assets, tumbled 33 percent this year and Wachovia, the fourth-largest, lost 52 percent. In a short sale, investors borrow shares and sell them on the expectation they can be purchased at a lower price before paying back the loan.
Citigroup has reported $55.1 billion in writedowns and credit losses tied to the collapse of U.S. credit markets, while Wachovia had $22 billion in charges. Analysts project U.S. bank profits will fall 35 percent this quarter after $493 billion in losses from subprime lending sent them lower during the last four.
Price, a value investor who made his name buying shares of beaten-down lenders, shorted New York-based Citigroup when the shares traded in the ``mid-20s,'' he said. The stock hasn't closed above $25 for more than three months.
Citigroup reported its first loss from credit-card securitizations since at least 2005 last week, signaling that risks may be growing in a business that generated $3.5 billion of revenue in the past three years, analysts said. The stock slipped 10 cents to $19.72 in Germany at 12:27 p.m. Frankfurt time.
Covered Short
Price bought shares to replace his short position in Wachovia during a 110 percent advance in July and August, then shorted the stock again last week, he said. Wachovia rose 1.6 percent to $18.21 yesterday, extending its gain since falling to a 17-year low of $9.08 on July 15.
The Charlotte, North Carolina-based lender ousted Kennedy Thompson as chief executive officer on June 2 after cutting its dividend 41 percent and raising $8 billion. It hired Treasury Undersecretary Robert Steel as chief executive officer July 9, two weeks before reporting an $8.9 billion quarterly loss on a $6.1 billion charge tied to declining asset values.
``Their tangible book value is below $10 a share if they took the right markdowns'' of assets, Price said in an interview in New York. ``We like the guy who's running it -- it's not his fault. He's going to do the right things but the stock's not cheap enough.''
Book Value
Wachovia reported book value of $30.69 a share as of June 2008, according to data compiled by Bloomberg. The shares gained 15 cents to $18.36 today in Germany.
Price said bank shares may lead a decline in the Standard & Poor's 500 Index after the benchmark index for U.S. equities climbed 7.4 percent since July 15.
``This rally we've had, this huge rally, seems to me pretty premature,'' he said. ``Dividend cuts are inevitable. You're going to have to see them. How can they pay out dividends if they have to raise capital?''
Price said he plans to buy stakes in smaller banks that are replenishing their capital. He can't find many worth investing in, he said.
``In the next six months lots of banks are going to raise capital and we're going to probably put money into 5 or 10 of probably 50 or 100 we'll look at,'' Price said. ``We're going to be very selective.''
Price bought a stake in Sovereign Bancorp Inc. earlier this year. The second-largest U.S. savings and loan by assets ``is pretty well financed now with good management,'' he said.
``We're looking at the ones who need money,'' Price said. ``If there are small banks who need to raise money, our office doors are open.''
To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net.
Read more...
Aug. 12 (Bloomberg) -- Billionaire investor Michael Price is betting that Citigroup Inc. and Wachovia Corp. will keep tumbling and says he found few banks to invest in after total losses from subprime mortgages increased to almost half a trillion dollars.
``Citigroup's got more pain coming,'' said Price, who runs New York-based MFP Investors LLC and was chairman and chief executive officer of Franklin Mutual Advisers LLC in Short Hills, New Jersey.
Price, 57, is selling short both stocks even after Citigroup, the biggest U.S. bank by assets, tumbled 33 percent this year and Wachovia, the fourth-largest, lost 52 percent. In a short sale, investors borrow shares and sell them on the expectation they can be purchased at a lower price before paying back the loan.
Citigroup has reported $55.1 billion in writedowns and credit losses tied to the collapse of U.S. credit markets, while Wachovia had $22 billion in charges. Analysts project U.S. bank profits will fall 35 percent this quarter after $493 billion in losses from subprime lending sent them lower during the last four.
Price, a value investor who made his name buying shares of beaten-down lenders, shorted New York-based Citigroup when the shares traded in the ``mid-20s,'' he said. The stock hasn't closed above $25 for more than three months.
Citigroup reported its first loss from credit-card securitizations since at least 2005 last week, signaling that risks may be growing in a business that generated $3.5 billion of revenue in the past three years, analysts said. The stock slipped 10 cents to $19.72 in Germany at 12:27 p.m. Frankfurt time.
Covered Short
Price bought shares to replace his short position in Wachovia during a 110 percent advance in July and August, then shorted the stock again last week, he said. Wachovia rose 1.6 percent to $18.21 yesterday, extending its gain since falling to a 17-year low of $9.08 on July 15.
The Charlotte, North Carolina-based lender ousted Kennedy Thompson as chief executive officer on June 2 after cutting its dividend 41 percent and raising $8 billion. It hired Treasury Undersecretary Robert Steel as chief executive officer July 9, two weeks before reporting an $8.9 billion quarterly loss on a $6.1 billion charge tied to declining asset values.
``Their tangible book value is below $10 a share if they took the right markdowns'' of assets, Price said in an interview in New York. ``We like the guy who's running it -- it's not his fault. He's going to do the right things but the stock's not cheap enough.''
Book Value
Wachovia reported book value of $30.69 a share as of June 2008, according to data compiled by Bloomberg. The shares gained 15 cents to $18.36 today in Germany.
Price said bank shares may lead a decline in the Standard & Poor's 500 Index after the benchmark index for U.S. equities climbed 7.4 percent since July 15.
``This rally we've had, this huge rally, seems to me pretty premature,'' he said. ``Dividend cuts are inevitable. You're going to have to see them. How can they pay out dividends if they have to raise capital?''
Price said he plans to buy stakes in smaller banks that are replenishing their capital. He can't find many worth investing in, he said.
``In the next six months lots of banks are going to raise capital and we're going to probably put money into 5 or 10 of probably 50 or 100 we'll look at,'' Price said. ``We're going to be very selective.''
Price bought a stake in Sovereign Bancorp Inc. earlier this year. The second-largest U.S. savings and loan by assets ``is pretty well financed now with good management,'' he said.
``We're looking at the ones who need money,'' Price said. ``If there are small banks who need to raise money, our office doors are open.''
To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net.
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Katanga, Jazz Air, Sino-Forest, Timminco: Canada Stock Preview
By John Kipphoff
Aug. 12 (Bloomberg) -- The following companies may have unusual price changes in Canadian trading. Stock symbols are in parentheses, and share prices are from yesterday's close.
The Standard & Poor's/TSX Composite Index fell 1 percent to 13,203.19.
Fortis Inc. (FTS CN): The investor in electric distribution utilities was downgraded to ``hold'' from ``buy'' by Canaccord Adams analyst Robert Hastings in Vancouver. The shares fell 4.9 percent to C$25.45.
Great Canadian Gaming Corp. (GC CN): The owner of casinos in British Columbia had second-quarter net income of 5 cents a share, falling short of the 8-cent average analyst estimate, according to Bloomberg data. The shares fell 1.5 percent to C$9.
Katanga Mining Ltd. (KAT CN): The company restarting the Democratic Republic of Congo's largest underground copper mine said 2008 production will be 27,500 metric tons, less than the 33,500 tons previously forecast. The shares rose 0.4 percent to C$10.80.
Intermap Technologies Corp. (IMP CN): The digital mapping company reported a second-quarter loss of 13 cents a share, wider than analysts' estimate for a loss of 10 cents before items, according to Bloomberg data. Soleil Securities analyst Peter Friedland cut his rating to ``hold'' from ``buy.'' The shares rose 2.5 percent to C$4.51.
Jazz Air Income Fund (JAZ-U CN): The income trust that operates flights for Air Canada was cut to ``underperform'' from ``neutral'' at Merrill Lynch & Co. The shares rose 0.5 percent to C$5.55.
Sino-Forest Corp. (TRE CN): The owner of timberland in China had second-quarter profit of 24 cents a share before one-time items, exceeding the average of analyst estimates by 36 percent, according to Bloomberg data. The shares fell 3.9 percent t o C$15.
Timminco Ltd. (TIM CN): The maker of silicon for solar cells said its second-quarter net loss widened to C$7 million ($6.55 million) from C$1.5 million, due to C$9.8 million in costs related to the closure of a magnesium plant in Ontario.
Timminco shipped 221 metric tons of solar-grade silicon during the period, about 70 tons short of the average analyst estimate, Raymond James Financial Inc. analyst Andy Nasr in Toronto wrote in a note to clients. The shares declined 5.7 percent to C$19.97.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
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Aug. 12 (Bloomberg) -- The following companies may have unusual price changes in Canadian trading. Stock symbols are in parentheses, and share prices are from yesterday's close.
The Standard & Poor's/TSX Composite Index fell 1 percent to 13,203.19.
Fortis Inc. (FTS CN): The investor in electric distribution utilities was downgraded to ``hold'' from ``buy'' by Canaccord Adams analyst Robert Hastings in Vancouver. The shares fell 4.9 percent to C$25.45.
Great Canadian Gaming Corp. (GC CN): The owner of casinos in British Columbia had second-quarter net income of 5 cents a share, falling short of the 8-cent average analyst estimate, according to Bloomberg data. The shares fell 1.5 percent to C$9.
Katanga Mining Ltd. (KAT CN): The company restarting the Democratic Republic of Congo's largest underground copper mine said 2008 production will be 27,500 metric tons, less than the 33,500 tons previously forecast. The shares rose 0.4 percent to C$10.80.
Intermap Technologies Corp. (IMP CN): The digital mapping company reported a second-quarter loss of 13 cents a share, wider than analysts' estimate for a loss of 10 cents before items, according to Bloomberg data. Soleil Securities analyst Peter Friedland cut his rating to ``hold'' from ``buy.'' The shares rose 2.5 percent to C$4.51.
Jazz Air Income Fund (JAZ-U CN): The income trust that operates flights for Air Canada was cut to ``underperform'' from ``neutral'' at Merrill Lynch & Co. The shares rose 0.5 percent to C$5.55.
Sino-Forest Corp. (TRE CN): The owner of timberland in China had second-quarter profit of 24 cents a share before one-time items, exceeding the average of analyst estimates by 36 percent, according to Bloomberg data. The shares fell 3.9 percent t o C$15.
Timminco Ltd. (TIM CN): The maker of silicon for solar cells said its second-quarter net loss widened to C$7 million ($6.55 million) from C$1.5 million, due to C$9.8 million in costs related to the closure of a magnesium plant in Ontario.
Timminco shipped 221 metric tons of solar-grade silicon during the period, about 70 tons short of the average analyst estimate, Raymond James Financial Inc. analyst Andy Nasr in Toronto wrote in a note to clients. The shares declined 5.7 percent to C$19.97.
To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.
Read more...
Canadian Trade Balance (June)
Daily Forex Fundamentals | Written by TheLFB-Forex.com | Aug 12 08 13:00 GMT |
Actual 5.8B, Expected 5.7B, Previous 5.5B
Trade Desk Thoughts: Statistics Canada said that Canada's trade surplus expanded as energy exports to the United States increased, although prices increased 4.5% and volumes declined 1.4%. Overall, export prices have been on the rise for the past eight months, while volumes have been trending downward. Imports rose 2% but movements in volume have not shown a clear trend. The decline in export volumes point to continued weakening demand, and is a further indication that the BoC may reduce borrowing costs at its September 3 meeting.
Forex Technical Reaction: USD/CAD fell about 30 pips after the release, as the dollar seems to be weakening against most major currencies. After being down over $1 in electronic trading, oil is now up 1 cent.
Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com
TheLFB Risk Disclaimer can be found at http://www.thelfb-forex.com/content.aspx?id=174.
The Copying, Broadcast, Republication or Redistribution of TheLFB Content is Expressly Prohibited Without the Prior Written Consent of LFB Services, LLC.
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Actual 5.8B, Expected 5.7B, Previous 5.5B
Trade Desk Thoughts: Statistics Canada said that Canada's trade surplus expanded as energy exports to the United States increased, although prices increased 4.5% and volumes declined 1.4%. Overall, export prices have been on the rise for the past eight months, while volumes have been trending downward. Imports rose 2% but movements in volume have not shown a clear trend. The decline in export volumes point to continued weakening demand, and is a further indication that the BoC may reduce borrowing costs at its September 3 meeting.
Forex Technical Reaction: USD/CAD fell about 30 pips after the release, as the dollar seems to be weakening against most major currencies. After being down over $1 in electronic trading, oil is now up 1 cent.
Written by TheLFB Trade Team, © 2007-2008 LFB Services, LLC. All rights reserved. http://www.TheLFB-Forex.com
TheLFB Risk Disclaimer can be found at http://www.thelfb-forex.com/content.aspx?id=174.
The Copying, Broadcast, Republication or Redistribution of TheLFB Content is Expressly Prohibited Without the Prior Written Consent of LFB Services, LLC.
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London Session Recap
Daily Forex Fundamentals | Written by Forex.com | Aug 12 08 12:03 GMT |
The buck traded sideways in the London session, as economic data across the pond came in broadly in line with expectations and did not offer a compelling reason to take currencies one way or the other. French consumer prices were in line at -0.2% in July, leaving the annual rate unchanged at 3.6%. Meanwhile, UK consumer prices came in flat in July and the annual rate did come in above expected at 4.4% from 3.8%. Weaker home price data offset this, as the DCLG showed home prices in the UK rose just 0.6% annually in June from a 3.0% run-rate the prior month.
The dreary economic data provided little decisive price action. EURUSD opened London trading near 1.4880 and was sitting near 1.4890 at the close. GBPUSD saw a similar reaction, opening around 1.9050 and closing near the 1.9025 level. USDJPY meanwhile closed right about where it opened in London, right around the 100.20 mark. USDCAD traded in a very tight 30 pip range as oil prices dropped off a modest $0.50 in the session. The pair opened and closed near the 1.0705 area.
Trade data out of the US and Canada kick of the NY session this morning. The market expects a widening in the US trade deficit to $62.0B in June from $59.8B the prior month. A better than expected trade balance should provide a boost to the buck. Canada's trade balance is expected to print C$5.8B in June after a C$5.5B result the previous month. The market is also likely to be focused on oil in NY trading, as the improvement in the Russia/Georgia conflict provides oil traders another excuse to sell the commodity.
Upcoming Economic Data Releases (NY Session) Prior Estimate
* 8/12/2008 12:30 GMT CA Int'l Merchandise Trade JUN C$5.5 C$5.8
* 8/12/2008 12:30 GMT US Trade Balance JUN -$59.8B -$61.5B
* 8/12/2008 14:00 GMT US IBD/TIPP Economic Optimism AUG 37.4 - -
* 8/12/2008 14:00 GMT SZ SNB Announces Results of Dollar Repo Auction
* 8/12/2008 18:00 GMT US Monthly Budget Statement JUL -$36.4B -$82.7B
* 8/12/2008 21:00 GMT US ABC Consumer Confidence AUG 10 -49 - -
Forex.com
http://www.forex.com
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
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The buck traded sideways in the London session, as economic data across the pond came in broadly in line with expectations and did not offer a compelling reason to take currencies one way or the other. French consumer prices were in line at -0.2% in July, leaving the annual rate unchanged at 3.6%. Meanwhile, UK consumer prices came in flat in July and the annual rate did come in above expected at 4.4% from 3.8%. Weaker home price data offset this, as the DCLG showed home prices in the UK rose just 0.6% annually in June from a 3.0% run-rate the prior month.
The dreary economic data provided little decisive price action. EURUSD opened London trading near 1.4880 and was sitting near 1.4890 at the close. GBPUSD saw a similar reaction, opening around 1.9050 and closing near the 1.9025 level. USDJPY meanwhile closed right about where it opened in London, right around the 100.20 mark. USDCAD traded in a very tight 30 pip range as oil prices dropped off a modest $0.50 in the session. The pair opened and closed near the 1.0705 area.
Trade data out of the US and Canada kick of the NY session this morning. The market expects a widening in the US trade deficit to $62.0B in June from $59.8B the prior month. A better than expected trade balance should provide a boost to the buck. Canada's trade balance is expected to print C$5.8B in June after a C$5.5B result the previous month. The market is also likely to be focused on oil in NY trading, as the improvement in the Russia/Georgia conflict provides oil traders another excuse to sell the commodity.
Upcoming Economic Data Releases (NY Session) Prior Estimate
* 8/12/2008 12:30 GMT CA Int'l Merchandise Trade JUN C$5.5 C$5.8
* 8/12/2008 12:30 GMT US Trade Balance JUN -$59.8B -$61.5B
* 8/12/2008 14:00 GMT US IBD/TIPP Economic Optimism AUG 37.4 - -
* 8/12/2008 14:00 GMT SZ SNB Announces Results of Dollar Repo Auction
* 8/12/2008 18:00 GMT US Monthly Budget Statement JUL -$36.4B -$82.7B
* 8/12/2008 21:00 GMT US ABC Consumer Confidence AUG 10 -49 - -
Forex.com
http://www.forex.com
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
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FX Thoughts for the Day
Daily Forex Technicals | Written by Kshitij Consultancy Services | Aug 12 08 12:06 GMT |
USD-CHF @ 1.0891/95.... Support at 1.0850 holds
R: 1.0900 / 1.0925 / 1.0960 / 1.1000-25
S: 1.0850 / 1.0800 / 1.0750-35
As per our expectation, a dip to 1.0850 was seen in the day. The Support was strong and as a result a rise towards 1.0920 has been seen since then. Further ahead in the day, a rise towards 1.0950 could be possible as long as this Support at 1.0850 holds.
To see the chart of the pair click on:
http://www.kshitij.com/graphgallery/chfcandle.shtml
http://www.kshitij.com/graphgallery/chfma.shtml
The overall bias is bullish with an overall target of 1.1030, the 38.2% Retracement of the fall from 1.3288 (Nov-05) to 0.9637 (Mar-08).
GBP-USD @ 1.8995/99... Seems soft for further fall
R: 1.9100 / 1.9180 / 1.9275
S: 1.8940 / 1.8910 / 1.8875
The pair has not seen a big move in the day despite the Core CPI figure being released at 1.9%. Most analysts are of a similar view that even the rising inflation would not help the pair to strengthen from here. The higher inflation combined with almost negligible growth is a serious concern for the economy. The UK economy is facing a tough situation, and this could lead to a recession in the near future.
Over today-tomorrow it could fall further towards 1.88.
AUD-USD @ 0.8744/48.... Heading towards 0.8650
R: 0.8800 / 0.8852 / 0.8880-8900
S: 0.8700 / 0.8670 / 0.8640
The pair continues to be bearish in the longer term. However, it has dropped to the Support at 0.8700 during the day and could result in a small bounce towards 0.8950, if not higher.
The charts suggest that the pair has been oversold and could result in a bounce from the current levels. Market had earlier “Sold the rumour”, when it believed that the RBA will cut rates when New Zealand central bank did so. However, the view that the market could now “Buy the fact” has been ruled out completely after the fall seen in the day. This could lead to over weekly target of 0.8650 being achieved mid week itself.
To see the charts of the pair click on:
http://www.kshitij.com/graphgallery/audcandle.shtml
http://www.kshitij.com/graphgallery/audma.shtml
Happy Trading!
Kshitij Consultancy Service
http://www.fxthoughts.com
Legal disclaimer and risk disclosure
These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsibly for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.
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USD-CHF @ 1.0891/95.... Support at 1.0850 holds
R: 1.0900 / 1.0925 / 1.0960 / 1.1000-25
S: 1.0850 / 1.0800 / 1.0750-35
As per our expectation, a dip to 1.0850 was seen in the day. The Support was strong and as a result a rise towards 1.0920 has been seen since then. Further ahead in the day, a rise towards 1.0950 could be possible as long as this Support at 1.0850 holds.
To see the chart of the pair click on:
http://www.kshitij.com/graphgallery/chfcandle.shtml
http://www.kshitij.com/graphgallery/chfma.shtml
The overall bias is bullish with an overall target of 1.1030, the 38.2% Retracement of the fall from 1.3288 (Nov-05) to 0.9637 (Mar-08).
GBP-USD @ 1.8995/99... Seems soft for further fall
R: 1.9100 / 1.9180 / 1.9275
S: 1.8940 / 1.8910 / 1.8875
The pair has not seen a big move in the day despite the Core CPI figure being released at 1.9%. Most analysts are of a similar view that even the rising inflation would not help the pair to strengthen from here. The higher inflation combined with almost negligible growth is a serious concern for the economy. The UK economy is facing a tough situation, and this could lead to a recession in the near future.
Over today-tomorrow it could fall further towards 1.88.
AUD-USD @ 0.8744/48.... Heading towards 0.8650
R: 0.8800 / 0.8852 / 0.8880-8900
S: 0.8700 / 0.8670 / 0.8640
The pair continues to be bearish in the longer term. However, it has dropped to the Support at 0.8700 during the day and could result in a small bounce towards 0.8950, if not higher.
The charts suggest that the pair has been oversold and could result in a bounce from the current levels. Market had earlier “Sold the rumour”, when it believed that the RBA will cut rates when New Zealand central bank did so. However, the view that the market could now “Buy the fact” has been ruled out completely after the fall seen in the day. This could lead to over weekly target of 0.8650 being achieved mid week itself.
To see the charts of the pair click on:
http://www.kshitij.com/graphgallery/audcandle.shtml
http://www.kshitij.com/graphgallery/audma.shtml
Happy Trading!
Kshitij Consultancy Service
http://www.fxthoughts.com
Legal disclaimer and risk disclosure
These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsibly for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.
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Ann Taylor, Continental Air, McDonald's: U.S. Equity Preview
By Katherine Greene
Aug. 12 (Bloomberg) -- The following companies may have unusual price changes in U.S. markets. Stock symbols are in parentheses after company names, and prices are as of 7:46 a.m. in New York, unless stated otherwise.
Ann Taylor Stores Corp. (ANN US) fell 5.8 percent to $24.50. Citigroup cut its rating of the clothing retailer that targets women ages 25 to 55 and said the company could report lower-than- expected second-quarter profit.
Continental Airlines Inc. (CAL US) gained 4.8 percent to $18.60. JPMorgan Chase & Co. raised its rating on the fourth- largest U.S. carrier to ``overweight'' from ``underweight.'' Analysts said the drop in fuel prices would help airline companies realize profits in 2009.
Delta Airlines Inc. (DAL US), which is merging with Northwest Airlines to create the world's largest carrier, rose 5.4 percent to $9.84. JPMorgan raised the shares to ``overweight'' from ``neutral.''
Gilead Sciences Inc. (GILD US): Viread, the oldest of its AIDS medicines, gained U.S. approval as a treatment for chronic hepatitis B. The Food and Drug Administration cleared the use of Viread by adults as a once-a-day tablet for liver disease. The shares gained 1 percent to $57 in extended trading yesterday.
LDK Solar Co. (LDK US) jumped 22 percent to $40.99. The Chinese maker of silicon wafers said net income climbed to $149.5 million, or $1.29 a share, from $28.7 million, or 29 cents, a year earlier. Analysts had an average estimate for earnings of 43 cents, according to Bloomberg data.
McDonald's Corp. (MCD US) slid 1.2 percent to $65.15. UBS AG cut its rating of the world's largest restaurant company, citing slowing fast food trends in the U.S. and a forecast for increased U.S. job losses.
Ventas Inc. (VTR US): The real-estate investment trust that owns senior housing and medical buildings agreed to sell 4.4 million common shares though underwriter Merrill Lynch & Co. Ventas will use proceeds to repay debt. The company also said it had funds from operations of 71 cents a share before certain costs in the second quarter, matching the median estimate of 10 analysts surveyed by Bloomberg. The shares fell 2.6 percent to $46.75 in extended trading yesterday.
Zoltek Cos. (ZOLT US): The maker of carbon fibers for products such as windmill blades said third-quarter earnings declined 54 percent to $2.3 million, or 7 cents a share. Before certain costs, Zoltek earned 12 cents a share, below the 31-cent median estimate in a survey of five analysts by Bloomberg. The shares dropped 8.4 percent to $16.75 in extended trading yesterday.
To contact the reporter on this story: Katherine Greene in New York at kgreene8@bloomberg.net.
Read more...
Aug. 12 (Bloomberg) -- The following companies may have unusual price changes in U.S. markets. Stock symbols are in parentheses after company names, and prices are as of 7:46 a.m. in New York, unless stated otherwise.
Ann Taylor Stores Corp. (ANN US) fell 5.8 percent to $24.50. Citigroup cut its rating of the clothing retailer that targets women ages 25 to 55 and said the company could report lower-than- expected second-quarter profit.
Continental Airlines Inc. (CAL US) gained 4.8 percent to $18.60. JPMorgan Chase & Co. raised its rating on the fourth- largest U.S. carrier to ``overweight'' from ``underweight.'' Analysts said the drop in fuel prices would help airline companies realize profits in 2009.
Delta Airlines Inc. (DAL US), which is merging with Northwest Airlines to create the world's largest carrier, rose 5.4 percent to $9.84. JPMorgan raised the shares to ``overweight'' from ``neutral.''
Gilead Sciences Inc. (GILD US): Viread, the oldest of its AIDS medicines, gained U.S. approval as a treatment for chronic hepatitis B. The Food and Drug Administration cleared the use of Viread by adults as a once-a-day tablet for liver disease. The shares gained 1 percent to $57 in extended trading yesterday.
LDK Solar Co. (LDK US) jumped 22 percent to $40.99. The Chinese maker of silicon wafers said net income climbed to $149.5 million, or $1.29 a share, from $28.7 million, or 29 cents, a year earlier. Analysts had an average estimate for earnings of 43 cents, according to Bloomberg data.
McDonald's Corp. (MCD US) slid 1.2 percent to $65.15. UBS AG cut its rating of the world's largest restaurant company, citing slowing fast food trends in the U.S. and a forecast for increased U.S. job losses.
Ventas Inc. (VTR US): The real-estate investment trust that owns senior housing and medical buildings agreed to sell 4.4 million common shares though underwriter Merrill Lynch & Co. Ventas will use proceeds to repay debt. The company also said it had funds from operations of 71 cents a share before certain costs in the second quarter, matching the median estimate of 10 analysts surveyed by Bloomberg. The shares fell 2.6 percent to $46.75 in extended trading yesterday.
Zoltek Cos. (ZOLT US): The maker of carbon fibers for products such as windmill blades said third-quarter earnings declined 54 percent to $2.3 million, or 7 cents a share. Before certain costs, Zoltek earned 12 cents a share, below the 31-cent median estimate in a survey of five analysts by Bloomberg. The shares dropped 8.4 percent to $16.75 in extended trading yesterday.
To contact the reporter on this story: Katherine Greene in New York at kgreene8@bloomberg.net.
Read more...
Asia-Pacific Market Recap: Fixed Income, Equities Mixed
Market Updates | Written by CEP News | Aug 12 08 06:19 GMT |
(CEP News) - Asia-Pacific fixed income markets are mixed and equities closed mixed with yields on Australian 10-year bonds down 4.7 bps to 5.87% and Japanese 10-year government bonds flat at 1.47%.
Sydney's S&P ASX 200 closed up 27.50 points to 5053.6.
The Japanese Nikkei closed down 127.31 points to 13303.6 and the Hang Seng up 377.54 points to 22236.88.
Yields on three-year Australian bonds were down 5.5 bps to 6.76 and the Australian 90-day March 09 contract was up 3.0 ticks to 93.23.
The Euroyen March 09 contract was up 3.5 ticks to 99.21.
The Australian dollar was down 0.83 cents to 0.8757 against the USD and down 0.74 cents to 0.9376 against the Canadian dollar.
Against the yen, the U.S. dollar was up 0.12 points to 110.18 and the Canadian dollar was down 0.03 points to 102.91.
The euro was down 0.70 cents to 1.4837 USD.
All data taken at 2:16 a.m. EDT.
Generated by CEP Newswires
CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca
The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.
A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.
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(CEP News) - Asia-Pacific fixed income markets are mixed and equities closed mixed with yields on Australian 10-year bonds down 4.7 bps to 5.87% and Japanese 10-year government bonds flat at 1.47%.
Sydney's S&P ASX 200 closed up 27.50 points to 5053.6.
The Japanese Nikkei closed down 127.31 points to 13303.6 and the Hang Seng up 377.54 points to 22236.88.
Yields on three-year Australian bonds were down 5.5 bps to 6.76 and the Australian 90-day March 09 contract was up 3.0 ticks to 93.23.
The Euroyen March 09 contract was up 3.5 ticks to 99.21.
The Australian dollar was down 0.83 cents to 0.8757 against the USD and down 0.74 cents to 0.9376 against the Canadian dollar.
Against the yen, the U.S. dollar was up 0.12 points to 110.18 and the Canadian dollar was down 0.03 points to 102.91.
The euro was down 0.70 cents to 1.4837 USD.
All data taken at 2:16 a.m. EDT.
Generated by CEP Newswires
CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca
The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.
A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.
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U.S. Stock-Index Futures Fall; Goldman, JPMorgan Shares Retreat
By Adam Haigh and Lynn Thomasson
Aug. 12 (Bloomberg) -- U.S. stock futures fell after analysts said slumping equity markets will hurt earnings at Goldman Sachs Group Inc. and JPMorgan Chase & Co. warned it will post a $1.5 billion writedown on mortgage assets.
Goldman tumbled after Deutsche Bank AG and Oppenheimer & Co. reduced earnings estimates for the biggest U.S. securities firm. JPMorgan declined after the bank said trading conditions ``have substantially deteriorated'' since July. AMR Corp., parent of American Airlines, and General Motors Corp., the largest U.S. automaker, advanced as oil retreated below $113 a barrel.
Futures on the Standard & Poor's 500 Index expiring in September slipped 0.9, or less than 0.1 percent, to 1,304.2 at 8:13 a.m. in New York. Dow Jones Industrial Average futures decreased 10 to 11,759. Nasdaq-100 Index futures added 4.75 to 1,947.75.
The S&P 500 has slumped 17 percent from its 2007 high as credit losses approaching $500 billion, accelerating inflation and record fuel prices curb profit growth.
Second-quarter earnings at the 429 companies in the S&P 500 that have released results since July 8 are down 23 percent on average from a year earlier, according to data compiled by Bloomberg. Financial companies suffered the deepest declines, with profits down 91 percent.
Goldman, JPMorgan
Goldman fell $3.99 to $174.01. Deutsche Bank cut its recommendation on the shares to ``hold'' from ``buy.'' The brokerage also reduced its price estimate on the stock 8.1 percent to $192, saying earnings are likely to be weaker than consensus estimates. Oppenheimer's Meredith Whitney lowered her profit estimates for Goldman for 2008 and 2009
JPMorgan lost 49 cents to $41.40 after saying it expects the global economy ``to continue to be weak, for capital markets to remain under stress and for a continued decline in U.S. housing prices,'' according to a regulatory filing yesterday.
``Sharply widened'' spreads on mortgage-backed securities and loans have caused losses, the bank said.
Citigroup retreated 25 cents to $19.57. The biggest U.S. bank by assets has dropped 33 percent this year.
Billionaire investor Michael Price is betting on further declines at Citigroup, which he said has ``more pain coming.'' Price runs New York-based MFP Investors LLC and was chairman and chief executive officer of Franklin Mutual Advisers LLC in Short Hills, New Jersey.
AMR Corp., the owner of American Airlines, the world's largest carrier, climbed 29 cents to $12.47 after JPMorgan upgraded the shares to ``overweight'' from ``underweight,'' saying profits are likely to resume in 2009 due to the recent drop in oil prices.
Delta Air Lines Inc. gained 36 cents to $9.70. Goldman Sachs lost $2.06 to $175.84.
GM climbed 10 cents to $10.86.
For related news:
To contact the reporters on this story: Adam Haigh in London at ahaigh1@bloomberg.net; Lynn Thomasson in New York at lthomasson@bloomberg.net.
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Aug. 12 (Bloomberg) -- U.S. stock futures fell after analysts said slumping equity markets will hurt earnings at Goldman Sachs Group Inc. and JPMorgan Chase & Co. warned it will post a $1.5 billion writedown on mortgage assets.
Goldman tumbled after Deutsche Bank AG and Oppenheimer & Co. reduced earnings estimates for the biggest U.S. securities firm. JPMorgan declined after the bank said trading conditions ``have substantially deteriorated'' since July. AMR Corp., parent of American Airlines, and General Motors Corp., the largest U.S. automaker, advanced as oil retreated below $113 a barrel.
Futures on the Standard & Poor's 500 Index expiring in September slipped 0.9, or less than 0.1 percent, to 1,304.2 at 8:13 a.m. in New York. Dow Jones Industrial Average futures decreased 10 to 11,759. Nasdaq-100 Index futures added 4.75 to 1,947.75.
The S&P 500 has slumped 17 percent from its 2007 high as credit losses approaching $500 billion, accelerating inflation and record fuel prices curb profit growth.
Second-quarter earnings at the 429 companies in the S&P 500 that have released results since July 8 are down 23 percent on average from a year earlier, according to data compiled by Bloomberg. Financial companies suffered the deepest declines, with profits down 91 percent.
Goldman, JPMorgan
Goldman fell $3.99 to $174.01. Deutsche Bank cut its recommendation on the shares to ``hold'' from ``buy.'' The brokerage also reduced its price estimate on the stock 8.1 percent to $192, saying earnings are likely to be weaker than consensus estimates. Oppenheimer's Meredith Whitney lowered her profit estimates for Goldman for 2008 and 2009
JPMorgan lost 49 cents to $41.40 after saying it expects the global economy ``to continue to be weak, for capital markets to remain under stress and for a continued decline in U.S. housing prices,'' according to a regulatory filing yesterday.
``Sharply widened'' spreads on mortgage-backed securities and loans have caused losses, the bank said.
Citigroup retreated 25 cents to $19.57. The biggest U.S. bank by assets has dropped 33 percent this year.
Billionaire investor Michael Price is betting on further declines at Citigroup, which he said has ``more pain coming.'' Price runs New York-based MFP Investors LLC and was chairman and chief executive officer of Franklin Mutual Advisers LLC in Short Hills, New Jersey.
AMR Corp., the owner of American Airlines, the world's largest carrier, climbed 29 cents to $12.47 after JPMorgan upgraded the shares to ``overweight'' from ``underweight,'' saying profits are likely to resume in 2009 due to the recent drop in oil prices.
Delta Air Lines Inc. gained 36 cents to $9.70. Goldman Sachs lost $2.06 to $175.84.
GM climbed 10 cents to $10.86.
For related news:
To contact the reporters on this story: Adam Haigh in London at ahaigh1@bloomberg.net; Lynn Thomasson in New York at lthomasson@bloomberg.net.
Read more...
Michael Price Shorts Citigroup, Sees Few Banks to Buy
By Jeff Kearns
Aug. 12 (Bloomberg) -- Billionaire investor Michael Price is betting that Citigroup Inc. and Wachovia Corp. will keep tumbling and says he found few banks to invest in after total losses from subprime mortgages increased to almost half a trillion dollars.
``Citigroup's got more pain coming,'' said Price, who runs New York-based MFP Investors LLC and was chairman and chief executive officer of Franklin Mutual Advisers LLC in Short Hills, New Jersey.
Price, 57, is selling short both stocks even after Citigroup, the biggest U.S. bank by assets, tumbled 33 percent this year and Wachovia, the fourth-largest, lost 52 percent. In a short sale, investors borrow shares and sell them on the expectation they can be purchased at a lower price before paying back the loan.
Citigroup has reported $55.1 billion in writedowns and credit losses tied to the collapse of U.S. credit markets, while Wachovia had $22 billion in charges. Analysts project U.S. bank profits will fall 35 percent this quarter after $493 billion in losses from subprime lending sent them lower during the last four.
Price, a value investor who made his name buying shares of beaten-down lenders, shorted New York-based Citigroup when the shares traded in the ``mid-20s,'' he said. The stock hasn't closed above $25 for more than three months.
Citigroup reported its first loss from credit-card securitizations since at least 2005 last week, signaling that risks may be growing in a business that generated $3.5 billion of revenue in the past three years, analysts said. The stock slipped 10 cents to $19.72 in Germany at 12:27 p.m. Frankfurt time.
Covered Short
Price bought shares to replace his short position in Wachovia during a 110 percent advance in July and August, then shorted the stock again last week, he said. Wachovia rose 1.6 percent to $18.21 yesterday, extending its gain since falling to a 17-year low of $9.08 on July 15.
The Charlotte, North Carolina-based lender ousted Kennedy Thompson as chief executive officer on June 2 after cutting its dividend 41 percent and raising $8 billion. It hired Treasury Undersecretary Robert Steel as chief executive officer July 9, two weeks before reporting an $8.9 billion quarterly loss on a $6.1 billion charge tied to declining asset values.
``Their tangible book value is below $10 a share if they took the right markdowns'' of assets, Price said in an interview in New York. ``We like the guy who's running it -- it's not his fault. He's going to do the right things but the stock's not cheap enough.''
Book Value
Wachovia reported book value of $30.69 a share as of June 2008, according to data compiled by Bloomberg. The shares gained 15 cents to $18.36 today in Germany.
Price said bank shares may lead a decline in the Standard & Poor's 500 Index after the benchmark index for U.S. equities climbed 7.4 percent since July 15.
``This rally we've had, this huge rally, seems to me pretty premature,'' he said. ``Dividend cuts are inevitable. You're going to have to see them. How can they pay out dividends if they have to raise capital?''
Price said he plans to buy stakes in smaller banks that are replenishing their capital. He can't find many worth investing in, he said.
``In the next six months lots of banks are going to raise capital and we're going to probably put money into 5 or 10 of probably 50 or 100 we'll look at,'' Price said. ``We're going to be very selective.''
Price bought a stake in Sovereign Bancorp Inc. earlier this year. The second-largest U.S. savings and loan by assets ``is pretty well financed now with good management,'' he said.
``We're looking at the ones who need money,'' Price said. ``If there are small banks who need to raise money, our office doors are open.''
To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net.
Read more...
Aug. 12 (Bloomberg) -- Billionaire investor Michael Price is betting that Citigroup Inc. and Wachovia Corp. will keep tumbling and says he found few banks to invest in after total losses from subprime mortgages increased to almost half a trillion dollars.
``Citigroup's got more pain coming,'' said Price, who runs New York-based MFP Investors LLC and was chairman and chief executive officer of Franklin Mutual Advisers LLC in Short Hills, New Jersey.
Price, 57, is selling short both stocks even after Citigroup, the biggest U.S. bank by assets, tumbled 33 percent this year and Wachovia, the fourth-largest, lost 52 percent. In a short sale, investors borrow shares and sell them on the expectation they can be purchased at a lower price before paying back the loan.
Citigroup has reported $55.1 billion in writedowns and credit losses tied to the collapse of U.S. credit markets, while Wachovia had $22 billion in charges. Analysts project U.S. bank profits will fall 35 percent this quarter after $493 billion in losses from subprime lending sent them lower during the last four.
Price, a value investor who made his name buying shares of beaten-down lenders, shorted New York-based Citigroup when the shares traded in the ``mid-20s,'' he said. The stock hasn't closed above $25 for more than three months.
Citigroup reported its first loss from credit-card securitizations since at least 2005 last week, signaling that risks may be growing in a business that generated $3.5 billion of revenue in the past three years, analysts said. The stock slipped 10 cents to $19.72 in Germany at 12:27 p.m. Frankfurt time.
Covered Short
Price bought shares to replace his short position in Wachovia during a 110 percent advance in July and August, then shorted the stock again last week, he said. Wachovia rose 1.6 percent to $18.21 yesterday, extending its gain since falling to a 17-year low of $9.08 on July 15.
The Charlotte, North Carolina-based lender ousted Kennedy Thompson as chief executive officer on June 2 after cutting its dividend 41 percent and raising $8 billion. It hired Treasury Undersecretary Robert Steel as chief executive officer July 9, two weeks before reporting an $8.9 billion quarterly loss on a $6.1 billion charge tied to declining asset values.
``Their tangible book value is below $10 a share if they took the right markdowns'' of assets, Price said in an interview in New York. ``We like the guy who's running it -- it's not his fault. He's going to do the right things but the stock's not cheap enough.''
Book Value
Wachovia reported book value of $30.69 a share as of June 2008, according to data compiled by Bloomberg. The shares gained 15 cents to $18.36 today in Germany.
Price said bank shares may lead a decline in the Standard & Poor's 500 Index after the benchmark index for U.S. equities climbed 7.4 percent since July 15.
``This rally we've had, this huge rally, seems to me pretty premature,'' he said. ``Dividend cuts are inevitable. You're going to have to see them. How can they pay out dividends if they have to raise capital?''
Price said he plans to buy stakes in smaller banks that are replenishing their capital. He can't find many worth investing in, he said.
``In the next six months lots of banks are going to raise capital and we're going to probably put money into 5 or 10 of probably 50 or 100 we'll look at,'' Price said. ``We're going to be very selective.''
Price bought a stake in Sovereign Bancorp Inc. earlier this year. The second-largest U.S. savings and loan by assets ``is pretty well financed now with good management,'' he said.
``We're looking at the ones who need money,'' Price said. ``If there are small banks who need to raise money, our office doors are open.''
To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net.
Read more...
MOVES-UBS, Dresdner, Nomura, Mirabaud
Aug 12 (Reuters) - The following financial services industry appointments were announced on Tuesday. To inform us of other job changes, please e-mail moves@thomsonreuters.com.
UBS
UBS AG's finance chief Marco Suter will step down to be replaced by John Cryan, the troubled Swiss bank said, as it revamped its management to combat the impact of the credit crisis.
DRESDNER KLEINWORT
The investment bank of Dresdner Bank AG named Farielle Boufaden, previously with BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz), as a director in FX hedge fund sales.
NOMURA
The financial services group named Bernd Broker, previously with Bear Stearns, as head of emerging markets foreign exchange and global foreign exchange derivatives. Broker will be based in London.
MIRABAUD SECURITIES LTD
The brokerage arm of Mirabaud Group appointed Keith Watson, previously with Dresdner Kleinwort Wasserstein, as mining research team analyst. (Compiled by Anand Basu in Bangalore)
Read more...
UBS
UBS AG's finance chief Marco Suter will step down to be replaced by John Cryan, the troubled Swiss bank said, as it revamped its management to combat the impact of the credit crisis.
DRESDNER KLEINWORT
The investment bank of Dresdner Bank AG named Farielle Boufaden, previously with BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz), as a director in FX hedge fund sales.
NOMURA
The financial services group named Bernd Broker, previously with Bear Stearns, as head of emerging markets foreign exchange and global foreign exchange derivatives. Broker will be based in London.
MIRABAUD SECURITIES LTD
The brokerage arm of Mirabaud Group appointed Keith Watson, previously with Dresdner Kleinwort Wasserstein, as mining research team analyst. (Compiled by Anand Basu in Bangalore)
Read more...
Australia's Golden West in Chinese iron ore deal
SYDNEY, Aug 12 (Reuters) - Australian iron ore firm Golden West Resources has agreed a 15-year deal to sell ore to China's Hunan Valin Steel Tube & Wire Co 000932.SZ, sealing it with an equity tie-up that mirrors other Chinese resource deals.
The deal, announced by Golden West on Tuesday, follows several similar alliances where Chinese steel-makers have bought stakes in Australian iron ore miners, anxious to secure supplies of an essential raw material that is in short supply.
Golden West is still in the exploration phase, one of several smaller firms in a new iron ore precinct in west Australia. Like its fellow prospectors, it needs fresh equity and forward sales to help fund mining development.
"Getting the Chinese involved now is an indication that there's a strong resource and a viable resource," Golden West spokesman Paul Downie said.
Under the deal, Golden West would supply up to 4.5 million tonnes of iron ore a year to Hunan Valin Steel Tube & Wire, which is one-third owned by Arcelor Mittal , the world's largest steel-maker, over 15 years from the start of production.
Golden West has not given a timeframe for production start-up, partly because the port it intends to use for exports has not even been built yet. The proposed Oakajee port is expected to be completed by about 2013, according to local media.
The company said Valin would also buy 14.4 million new Golden West shares at A$1.85 each, raising A$26.6 million ($23.4 million) for Golden West, conditional on approvals from China and Australia's Foreign Investment Review Board.
Golden West closed up 0.6 percent on Tuesday at A$1.69.
Australian miners, ranging from global heavyweights BHP Billiton and Rio Tinto to small explorers, are in the sights of state-backed Chinese firms as Beijing looks for stable supplies to fuel its booming economy.
China's Sinosteel has won a $1.3 billion bid battle for iron ore prospector Midwest Corp , which is exploring in the same precinct as Golden West. Sinosteel has also previously shown interest in another explorer, Murchison Metals Ltd .
Earlier this year, China's state-owned Aluminium Corp of China (Chinalco) and its U.S. partner, Alcoa Inc , bought a 12 percent stake in Rio Tinto, which is defending a hostile bid approach from BHP Billiton. Rio Tinto and BHP Billiton are two of the world's largest producers of iron ore.
Last month, Golden West estimated inferred resources of 119 million tonnes, at 58.9 percent iron, at its Wiluna West deposit, saying this was the second-largest resource of its type in Western Australia state's emerging Mid-West iron ore province. (Reporting by Mark Bendeich; Editing by Lincoln Feast) ($1=1.139 Australian Dollar)
Read more...
The deal, announced by Golden West on Tuesday, follows several similar alliances where Chinese steel-makers have bought stakes in Australian iron ore miners, anxious to secure supplies of an essential raw material that is in short supply.
Golden West is still in the exploration phase, one of several smaller firms in a new iron ore precinct in west Australia. Like its fellow prospectors, it needs fresh equity and forward sales to help fund mining development.
"Getting the Chinese involved now is an indication that there's a strong resource and a viable resource," Golden West spokesman Paul Downie said.
Under the deal, Golden West would supply up to 4.5 million tonnes of iron ore a year to Hunan Valin Steel Tube & Wire, which is one-third owned by Arcelor Mittal , the world's largest steel-maker, over 15 years from the start of production.
Golden West has not given a timeframe for production start-up, partly because the port it intends to use for exports has not even been built yet. The proposed Oakajee port is expected to be completed by about 2013, according to local media.
The company said Valin would also buy 14.4 million new Golden West shares at A$1.85 each, raising A$26.6 million ($23.4 million) for Golden West, conditional on approvals from China and Australia's Foreign Investment Review Board.
Golden West closed up 0.6 percent on Tuesday at A$1.69.
Australian miners, ranging from global heavyweights BHP Billiton and Rio Tinto to small explorers, are in the sights of state-backed Chinese firms as Beijing looks for stable supplies to fuel its booming economy.
China's Sinosteel has won a $1.3 billion bid battle for iron ore prospector Midwest Corp , which is exploring in the same precinct as Golden West. Sinosteel has also previously shown interest in another explorer, Murchison Metals Ltd .
Earlier this year, China's state-owned Aluminium Corp of China (Chinalco) and its U.S. partner, Alcoa Inc , bought a 12 percent stake in Rio Tinto, which is defending a hostile bid approach from BHP Billiton. Rio Tinto and BHP Billiton are two of the world's largest producers of iron ore.
Last month, Golden West estimated inferred resources of 119 million tonnes, at 58.9 percent iron, at its Wiluna West deposit, saying this was the second-largest resource of its type in Western Australia state's emerging Mid-West iron ore province. (Reporting by Mark Bendeich; Editing by Lincoln Feast) ($1=1.139 Australian Dollar)
Read more...
Crucell Q2 net loss narrows, margin disappoints
(Rewrites, adds analyst comments, updates shares)
By Harro ten Wolde
AMSTERDAM, Aug 12 (Reuters) - Dutch biotechnology firm Crucell's net loss halved in the second quarter, beating expectations, thanks to its key childhood vaccine product Quinvaxem, though gross margins disappointed.
Crucell's shares, which initially rose to a three-month high on Tuesday, sharply reversed gains as investors focused on weakening gross profit margins, which dropped to 36 percent from 39 percent a year earlier and 40 percent in the first quarter.
The net loss was 7.9 million euros ($12 million) compared with an average forecast for a 12 million euros loss in a Reuters survey of four analysts, with estimates ranging from 6 million to 16 million euros.
"Top-line and net profit growth looked good at first sight but underlying, the results seemed disappointing," Petercam analyst Jan van den Bossche said.
He also noted the slow start to Crucell's cost savings programme, with expected net savings of 3 million euros in the second half of this year.
Crucell shares reversed early gains and were down 2.5 percent at 11.76 euros at 0943 GMT, underperforming a 0.7 percent dip in the Amsterdam Midcap index .
The company said it expected gross margins in the second half to be positively influenced by its flu product Inflexal V.
Lehman Brothers analyst Peter Welford said in a client note he expected margins to expand during the second half, improving over the year to 40 percent with volume growth.
QUINVAXEM STRONG
Crucell reported strong growth of its paediatric vaccines, driven by Quinvaxem, a vaccine cocktail for the childhood diseases diphtheria, tetanus, whooping cough, hepatitis B and an antibiotic against bacterial meningitis.
The market for Quinvaxem, acquired in 2006 through the acquisition of Berna Biotech, is expected to be 150 million doses in 2009, Crucell's Chief Executive Ronald Brus said.
He declined to say whether Crucell, which has posted losses in all quarters since listing in Amsterdam in October 2000, would be able to report a quarterly profit this year.
He said the company would be able to say more when reporting third quarter results in November.
Second quarter revenue rose 51 percent to 59.6 million euros, beating the average analyst expectation of 50 million.
Crucell kept its 2008 forecast for 20 percent revenue growth excluding currency effects, with higher margins and positive cash flow.
New competition has emerged for Quinvaxem as two Indian companies, Panacea Biotec and Shantha Biotechnics, have received prequalification from the World Health Organization (WHO) to supply child vaccines to United Nations agencies.
Brus said this was little cause for concern.
"We expect the product can grow significantly in the coming years and we think we are well positioned to become a main player on this market, based on our experience of producing Quinvaxem on a large scale," Brus said.
The company reaffirmed its 15 percent cost savings target by end-2009, excluding research and development costs, resulting in 30 million euros in savings. (Reporting by Harro ten Wolde; editing by Elaine Hardcastle)
Read more...
By Harro ten Wolde
AMSTERDAM, Aug 12 (Reuters) - Dutch biotechnology firm Crucell's net loss halved in the second quarter, beating expectations, thanks to its key childhood vaccine product Quinvaxem, though gross margins disappointed.
Crucell's shares, which initially rose to a three-month high on Tuesday, sharply reversed gains as investors focused on weakening gross profit margins, which dropped to 36 percent from 39 percent a year earlier and 40 percent in the first quarter.
The net loss was 7.9 million euros ($12 million) compared with an average forecast for a 12 million euros loss in a Reuters survey of four analysts, with estimates ranging from 6 million to 16 million euros.
"Top-line and net profit growth looked good at first sight but underlying, the results seemed disappointing," Petercam analyst Jan van den Bossche said.
He also noted the slow start to Crucell's cost savings programme, with expected net savings of 3 million euros in the second half of this year.
Crucell shares reversed early gains and were down 2.5 percent at 11.76 euros at 0943 GMT, underperforming a 0.7 percent dip in the Amsterdam Midcap index .
The company said it expected gross margins in the second half to be positively influenced by its flu product Inflexal V.
Lehman Brothers analyst Peter Welford said in a client note he expected margins to expand during the second half, improving over the year to 40 percent with volume growth.
QUINVAXEM STRONG
Crucell reported strong growth of its paediatric vaccines, driven by Quinvaxem, a vaccine cocktail for the childhood diseases diphtheria, tetanus, whooping cough, hepatitis B and an antibiotic against bacterial meningitis.
The market for Quinvaxem, acquired in 2006 through the acquisition of Berna Biotech, is expected to be 150 million doses in 2009, Crucell's Chief Executive Ronald Brus said.
He declined to say whether Crucell, which has posted losses in all quarters since listing in Amsterdam in October 2000, would be able to report a quarterly profit this year.
He said the company would be able to say more when reporting third quarter results in November.
Second quarter revenue rose 51 percent to 59.6 million euros, beating the average analyst expectation of 50 million.
Crucell kept its 2008 forecast for 20 percent revenue growth excluding currency effects, with higher margins and positive cash flow.
New competition has emerged for Quinvaxem as two Indian companies, Panacea Biotec and Shantha Biotechnics, have received prequalification from the World Health Organization (WHO) to supply child vaccines to United Nations agencies.
Brus said this was little cause for concern.
"We expect the product can grow significantly in the coming years and we think we are well positioned to become a main player on this market, based on our experience of producing Quinvaxem on a large scale," Brus said.
The company reaffirmed its 15 percent cost savings target by end-2009, excluding research and development costs, resulting in 30 million euros in savings. (Reporting by Harro ten Wolde; editing by Elaine Hardcastle)
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