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FinNews for the week ending July 20, 2012 Top Stories A euro zone rescue package for Spanish banks was approved by the German Parliament on Thursday. Germany will provide almost 30 percent of the new aid package to Spanish banks, which could reach up to $123 billion (100 billion euros.) The yield on Spain's sovereign bonds spiked to 7.185 percent early Friday. (1) During the second quarter, the U.S. venture-capital industry invested $7.04 billion among 898 deals, a 12 percent decline from a year ago. This decline suggests investor hesitation given the high valuations being demanded by some companies. (2) Economic Releases & Statistics U.S. May business inventories grew 0.3 percent, overshooting median forecasts for a 0.2 percent gain. (3) However, retail sales fell 0.5 percent in June, a third straight month of decline. (4) The nation's Consumer Price Index faced no change in June, signaling that "inflation may stay subdued." The core CPI grew 0.2 percent, marking a fourth straight month of growth. (5) Industrial production grew 0.7 percent in June, counting May's 0.7 decline. Overall industry production grew 0.4 percent. Capacity utilization grew to 78.9 percent, up 0.2 percent from May. (6) Housing starts grew 6.9 percent to a seasonally adjusted 760,000 units, the largest rate since October 2008. However, new permits fell 3.7 percent to 755,000. Single-family home groundbreaking rose 4.7 percent and multifamily homes grew 12.8 percent. (7) June's existing home sales fell 5.4 percent to a seasonally adjusted 4.37 million, shy of estimates for a 4.65 million annual rate. (8) U.S. unemployment claims grew 34,000 to 386,000 last week, greater than estimates for a rise to 365,000. (9) The national unemployment rate remained unchanged at 8.2 percent, despite unemployment rates rising in 27 states last month. (10) Stocks & Earnings Due to weakening revenue from its Windows operating system and its 2007 acquisition of aQuantive, Microsoft Corp. reported its first loss as a public company. The company faced a $492 million net loss. Google announced a net income of $2.8 billion, a growth of 11 percent. (11) In reaction Europe's financial crisis, Fender has decided against its initial public offering, originally planned for March. (12) In reaction to Europe's crisis, State Street Corp. completely exited their Greek portfolio. This cost the company $42 million, resulting in their booking a drop in earnings and revenue for the second quarter. (13) Global Currencies The European Central Bank announced that it will not accept Greek sovereign bonds as collateral until its review Greece's bailout program is complete. This move will likely force Greek banks to obtain Emergency Liquidity Assistance funds from the nation's central bank. (14) The Bank of China Ltd. has determined that the 2009-10 stimulus program introduced by the Chinese government to assist the nation's slowing economy will not effectively drive growth. Beijing aims to "re-orient its economy towards domestic-driven demand and increase the contribution made by services industries." (15) The Australian dollar continues to maintain a six-week high against the greenback, and is also doing well against the euro, trading at 84.98. (16) Anticipating policy adjustments in the U.S. and China, Asian currencies grew for the second week. (17) Oil & Energies The nation's natural gas storage rose 28 billion cubic feet to 3.163 trillion cubic feet, roughly in line with forecasts for a 28-32 bcf rise. (18) Crude supplies fell 809,000 barrels, less than estimates for a 1.4 million barrel drop. Gasoline supplies decreased 3.2 percent to 8.63 million barrels a day, countering estimates for a 700,000 barrel increase. Distillate fuel supplies rose 2.62 million barrels, more than doubling forecasts for a 1 million barrel rise. (19) On Thursday, Shell Singapore closed its No. 4 crude distillation unit for a scheduled month-long maintenance. The unit processes 110,000 barrels of crude oil per day. (20) Grains & Field Crops In the Crop Progress report, corn and soybean conditions continue to suffer from the Corn Belt's hot and dry weather. Corn in good/excellent condition has fallen 9 percent to 31 percent of the crop. 71 percent of corn was silking. Soybeans in good/excellent condition have decreased 6 percent to 34 percent, and 66 of U.S. soybeans have bloomed. (21) These poor conditions are forecast to last the rest of the summer, and will only worsen with the formation of an El Niño in the Pacific. (22) Due to difficulties in the U.S., Argentina's soybean harvest is fetching record prices. Additionally, the possibility of an El Niño has prompted Argentina to anticipate a record soybean harvest next season. Farmers aim to plant up to 20 million hectares of soybeans during 2012-13, which could yield 55 million metric tons. In turn, Argentina's corn harvest will potentially fall to 4.2 million hectares, from 5, due to higher material and processing costs. Argentina has also revised its soybean harvest estimate at 40.1 million tons, down from 40.3 million last month. (23) Due to additional stocks, the Argentinean government approved an additional 450,000 tons of its 2010/11 wheat stock for export. (24) Precious Metals Anglo American Platinum Ltd., faced with a first-half profit decline of almost 78 percent, has named Chris Griffith as head of its platinum unit. Griffith must consider making changes to production while weighing their impact on jobs in the mining industry. (25) Japan has set a premium price for solar energy - three times that of conventional power - which will likely heavily drive up demand for silver. (26) Weak investor sentiment and uncertainty in overseas markets has weakened gold demand. (27) Chinese gold demand is rising, and the nation may overtake India this year as the metal's largest market. During the first quarter, China accounted for 30 percent of global jewelry demand. (28) Other Commodities Brazilian coffee growers have harvested 40 percent of the season's crop. The area's heavy rains have slightly degraded its quality, and caused early flowering for the 2012-13 crop. (29) On the other hand, the nation's sugar cane crop may benefit from the wet weather, as the extra time potentially improved the final crop. (30) Increased sugar shipments to China grew the sugar waiting at Brazil's ports by 9.5 percent. China is forecast to import 3.1 million tons of sugar during the 2011-12 season. (31) Nestlé has partnered with the Inter-American Development Bank in its project to rehabilitate Haitian coffee orchards and help coffee growers. The company has pledged $300,000 in support. (32) French chocolate maker Cemoi has announced plans to increase its Ivory Coast cocoa bean purchases to 150,000 metric tons a season, a 50 percent increase. (33) The National Association of Citrus Juice Exporters announced an initial investment of $1 million in "a strategic positioning project to promote orange juice consumption in the main worldwide markets." The company aims to counter the slow but steady consumption decline of OJ. 2012 U.S. exports of orange juice are forecast to fall 70,000 tons, due to traces of a Brazilian fungicide found in the juice earlier this year. (34) Next Week:
1. http://www.reuters.com/article/2012/07/19/us-eurozone-germany-spain-idUSBRE86I0ZT20120719 2. http://in.reuters.com/article/2012/07/20/venturecapital-investing-q-idINL2E8IKB1D20120720 4. http://in.reuters.com/article/2012/07/16/usa-economy-idINL2E8IGB8520120716 6. http://www.huffingtonpost.com/huff-wires/20120717/us-industrial-production/ 7. http://www.nytimes.com/2012/07/19/business/economy/us-housing-starts-near-a-four-year-high.html 10. http://www.mercurynews.com/breaking-news/ci_21119567/unemployment-rates-rose-27-us-states-june 11. http://www.bizjournals.com/boston/blog/mass_roundup/2012/07/tech-earnings-microsoft-google.html 12. http://www.npr.org/templates/story/story.php?storyId=157092382&sc=tw&cc=share 13. http://www.bizjournals.com/boston/news/2012/07/17/state-street-earnings-call.html 14. http://in.reuters.com/article/2012/07/20/ecb-greece-collateral-idINL6E8IKCRG20120720 15. http://in.reuters.com/article/2012/07/20/idINL4E8IK2IY20120720 16. http://www.dailytelegraph.com.au/business/a-up-on-weak-us-data/story-fn7ki99q-1226430590198 18. http://www.huffingtonpost.com/huff-wires/20120719/us-natural-gas-storage/ 20. http://www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_823884.html 21. http://seekingalpha.com/article/724891-crop-progress-corn-crop-in-critical-condition 23. http://www.agriculture.com/markets/analysis/soybeans/argentine-soybes-set-recd_10-ar25305 24. http://www.brecorder.com/agriculture-a-allied/183/1216767/ 29. http://www.bloomberg.com/news/2012-07-20/brazil-has-harvested-40-of-crop-coffee-council-says.html 32. http://defend.ht/money/articles/business/3223-nestle-joins-project-to-assist-haitian-coffee-growers 34. http://www.freshplaza.com/news_detail.asp?id=98622 _______________________________________________________________________________________ Disclaimer: Trading and investing involve a substantial degree of a risk of loss and are not suitable for everyone. Past performance is not indicative of future results. Fundamental factors, seasonal and weather trends, daily news, and other current events may have already been factored into the markets. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. The publisher, and/or its affiliates, staff or anyone associated with FinNews, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Information provided is compiled by sources believed to be reliable. Financial Media Corp, and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been canceled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of the publisher. |
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