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FinNews for the week ending June 1, 2012 Top Stories Despite aid from the European Commission via a euro zone rescue fund, nervous Spaniards sent a net 66.2 billion euros to foreign accounts in stronger economies last month. The Spanish government has announced plans to finance a 23.5 billion euro restructure of Bankia, which has suffered losses due to poor real estate investments and recession. (1) Friday, Spanish investors flocked to German debt, fearing their nation may require foreign assistance. (2) Facebook stock broke its four-day loss streak with a 5 percent gain Thursday, closing at $29.60. Due to its IPO calamity, the company's market value has dropped from $104 billion to roughly $63 billion in two weeks. (3) Due to Facebook's losses, a negative sentiment regarding going public has spread amongst potential companies. (4) Economic Releases & Statistics April's Pending Home Sales Index dropped 5.5 percent to 95.5, versus expectations for a 0.1 percent rise. April's level is the lowest since December. Despite faltering refinance demand, an increase in new home groundbreaking and general home sales is prompting the belief that price deflation could be almost over. (5) In a revised estimate, the 2012 first quarter GDP increased 1.9 percent, down from an earlier 2.2 percent estimate. Consumer spending rose 2.7 percent, versus an earlier 2.9 estimate. The GDP is forecast to rise 2.2 percent the annual rate in the second quarter. (6)The Institute for Supply Management Manufacturing Index fell to 53.5, versus forecasts for a 53.9 rating. (7) Construction spending in April rose 0.3 percent, bringing the seasonally adjusted annual rate to $820.7 billion. Residual construction increased 2.8. New home sales rose 3.3 percent to 343,000. Statistics show housing stabilization, but the sales rate is only half of that of a healthy market's level. (8) Consumer spending rose 0.3 in April, slightly higher than March's 0.2 gain, rising at an annual rate of 2.7 percent. Income rose 0.2 percent, the weakest rise since November. The national unemployment rate increased to 8.2 percent, its first increase in 11 months. However, only 69,000 jobs were created, the smallest in a year. (9) Stocks & Earnings In response to a weak GDP, the Standard & Poor's 500 Index dropped below 1,300, its worst monthly drop since September. (10) Following Mexican bribery scandal accusations Wal-Mart is promising to act with integrity. It was the same leaders' suspicious initial reactions, such as "ignoring calls for an independent investigation, hushing up the charges" which spurred investor indignation.(11) Global Currencies The European Central Bank released a statement deeming the euro "'unsustainable' if policymakers do not take action." (12) On Friday, the euro fell to a 23-month low against the dollar in response to Spanish monetary exports. (13) The Chinese central bank is looking to improve the yuan by deemphasizing the dollar's influence. This move was made in the wake of the Japanese yen's overnight rise. (14) Oil & Energies U.S. crude supplies rose 2.2 million barrels to 384.7 million, overshooting forecasts for a rise of 100,000 barrels. Gasoline fell 800,000 to 200.2 million barrels, versus estimates for supplies to remain unchanged. Distillate fuels fell 1.7 million barrels to 117.8 million, countering forecasts for a 150,000 barrel rise. (15) Natural gas supplies grew 71 billion cubic feet to 2.815 trillion cubic feet, slightly higher than estimates for a 67-71 rise. (16) Following Argentina's takeover of YPF, Spanish energy firm Repsol changed its name from Repsol-YPF SA to Repsol SA, to reflect that it no longer owns Argentina's YPF unit. (17) In India, a nationwide strike aimed at the government's corruption, high inflation, and rising petrol prices has many businesses and shops closed. (18) Grains & Field Crops Due to hot and dry weather along the corn belt, corn conditions fell 5 percent last week. However, Tuesday's USDA Crop Progress reported that 92 percent of the U.S. crop has already emerged, with 72 percent in good to excellent condition. 96 percent of wheat has emerged, with 79 percent in good to excellent condition. (19) The Department of Agriculture improved its 2012 agricultural export forecast to $134.5 billion, a $3.5 billion increase from February. (20) Due to similar good weather, Brazil's 2011-12 corn harvest is forecast to surpass 67 million tons, 2.6 billion bushels, a 13.5 increase over last year's numbers. (21) Due to recent flooding in key areas of its farm belt, Argentina cut its soybean harvest forecast by 1.1 million metric tons to 39.9 million. Argentina's corn forecast was also fell 500,000 tons to 19.3 million. (22) In response to Argentinean lawmakers passing a land tax hike, farmers throughout the region are halting grain sales for nine days in protest.(23) Precious Metals Prompted by slower economic growth and falling prices, Chinese gold demand is slowing. This stagnating demand may offset projections that China will displace India as gold's largest consumer. (24) India's 2012 gold demand is forecast to fall 4 percent in volume, but rise 4 percent in value. (25) India's current poor demand has arisen from the rupee's volatility and the current strike to protest petrol price rises. (26) Global silver demand is forecast to rise 3 to 5 percent to roughly 900 million ounces during 2012. (27) Other Commodities In response to a crop area increase and recovering output levels, Colombia aims to produce a record 18 million coffee bags by 2020. The nation believes newer markets such as China and Russia will be key to successfully exporting a larger yield. (28) Many European coffee roasters are hesitating to import Brazil's coffee crop, anticipating rising selling pressure which will lead to even greater price drops. (29) Both the Ivory Coast and Ghana are due to receive considerable rainfall over the next week, potentially assisting in the cocoa pod development cycle. (30) Claiming penalization of local cooperatives, a group of Ivory Coast cocoa farmers are calling for an end to cocoa exporter tax breaks. (31) Some cocoa processors are stockpiling their supplies in response to the possibility of an export delay later this year. (32) In anticipation of fasting for Ramadan, Muslim nations have purchased roughly 618,452 tons of sugar from Brazil. A total of 1.61 million metric tons was loaded onto docked vessels Thursday. (33)  1. http://www.reuters.com/article/2012/05/31/us-spain-economy-idUSBRE84U08N20120531 2. http://www.reuters.com/article/2012/06/01/markets-bonds-euro-idUSL5E8H1HDC20120601 3. http://news.cnet.com/8301-1023_3-57445139-93/facebooks-share-price-gets-a-5-percent-boost/ 5. http://www.reuters.com/article/2012/05/30/us-usa-economy-housing-idUSBRE84T0WC20120530 6. http://www.nasdaq.com/article/us-1q-gdp-revised-down-to-19-growth-rate-20120531-00612 9. http://seattletimes.nwsource.com/html/businesstechnology/2018328446_apusconsumerspending.html 11. http://www.businessweek.com/articles/2012-06-01/wal-mart-fawlty-towers-in-fayetteville?r=read 12. http://money.cnn.com/2012/05/31/investing/ecb-draghi/ 13. http://www.reuters.com/article/2012/06/01/markets-forex-idUSL5E8H17X320120601 14. http://online.wsj.com/article/SB10001424052702303552104577439562041892518.html 16. http://www.sacbee.com/2012/05/31/4528451/us-natural-gas-supplies-grew-last.html 17. http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2012/05/31/international/i070845D13.DTL 19. http://seekingalpha.com/article/624521-crop-progress-corn-conditions-worsen-by-5 20. http://www.agriculture.com/markets/analysis/corn/us-expt-fecast-raised_9-ar24467 22. http://www.marketwatch.com/story/argentina-exchange-cuts-soybean-view-on-floods-2012-05-24 23. http://uk.reuters.com/article/2012/06/01/argentina-farming-tax-idUKL1E8GVKGG20120601 26. http://in.reuters.com/article/2012/05/31/markets-india-precious-idINDEE84U0BV20120531 28. http://www.reuters.com/article/2012/05/28/us-latam-summit-colombia-coffee-idUSBRE84R0KM20120528 29. http://www.reuters.com/article/2012/06/01/markets-europe-coffee-physical-report-idUSEUCOF120120601 30. http://www.bloomberg.com/news/2012-05-29/ghana-ivory-coast-cocoa-growing-areas-to-get-rainfall.html 32. http://www.reuters.com/article/2012/05/29/cocoa-crunch-idUSL5E8GOD2I20120529 34. http://twocircles.net/2012jun01/india_give_major_boost_africas_cotton_output.html _______________________________________________________________________________________ Disclaimer: Trading and investing involve a substantial degree of a risk of loss and are not suitable for everyone. 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