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FinNews for the week ending August 10, 2012 Top Stories The German economy is facing fears of a recession as its exports and domestic demand slowly decline. China's slowing economy alongside poor industrial output has some believing Germany to be "on the verge of a technical recession." A weakened German economy could hamper its ability to provide euro rescue efforts. (1) Assuming no new evidence is presented, the Justice Department will no longer pursue allegations of deception by Goldman Sachs Group Inc. regarding its subprime mortgage market activities. The two-year investigation by the Department's Criminal Division delved into Goldman Sachs' misleading of bank clients and lawmakers and its massive bets against the mortgage market. (2) Chinese economic data was release on Friday, revealing new bank loans at a 10-month low and a 16 percent drop in European sales since last year. (3) Economic Releases & Statistics June's trade deficit fell to $42.9 billion, versus estimates for a $47.5 billion deficit. (4) This is a 10.7 percent drop from May's $48 billion and the lowest level since December 2010. Exports grew 0.9 percent to $185 billion in June, seeing the biggest gains in autos and consumer goods. Imports declined 1.5 percent to $227.9 billion, with all but automotives seeing losses. The trade deficit with the euro area shrank to $7 billion, while the deficit with China grew to $27.4 billion from $26 in May. (5) Unemployment claims fell 6,000 to 361,000 last week, versus estimates for a rise to 370,000. Analysts "do not expect claims will move materially lower from here without a significant boost to business and consumer confidence." (6) The unemployment rate grew a tenth of a percentage to 8.3 percent. Nonfarm payrolls grew 163,000 in July. (7) Stocks & Earnings The soccer club Manchester United held its initial public offering on Friday, hoping to grow its sponsorships and licensing deals. Despite being one of the most renowned sports teams, the team is heavily in debt and did not inspire much investor confidence. Bloomin' Brands, owner of Outback Steakhouse, held their IPO on Wednesday. As of Friday, their shares have grown 24 percent. (8) Monster Beverage Corp. divulged on Friday that it is in the early stages of an investigation into its advertising. Other energy drink companies may also have received subpoenas. (9) Global Currencies Over the last two years, five of the nation's largest banks have developed plans for preventing a collapse in the worst-case scenario. This is part of a 2010 program in which the Fed and Office of the Comptroller of the Currency prompted banks to develop "recovery plans" to reduce risk and failure in times of financial trouble. The program was kept from the public until now. (10) The Bank of Ireland's underlying operating profit declined by two-thirds during the first half of the year. (11) In response to weak economic reports and some worries of a global slowdown, the euro and Australian and Canadian dollars all fell against the dollar and yen. (12) Oil & Energies Natural gas storage rose 24 billion cubic feet to 3.241 trillion cubic feet, weaker than estimates for a 27 to 31 bcf rise. (13) Crude oil supplies fell 3.7 million barrels to 369.9 million barrels, overshooting forecasts for a 300,000 barrel drop. Gasoline fell by 1.8 million barrels to 206.1 million, less than estimates for a 2 million barrel fall. Distillates declined by 700,000 barrels to 123.5 million barrels, shy of forecasts for a 1 million barrel fall. (14) Due to fluctuating economic growth in the United States, Europe, and China, oil demand for 2013 is forecast to decline to 400,000 barrels per day. (15) Argentinean YPF opened a diesel fuel refinery on Thursday. The refinery's annual output is forecast at 1.75 billion liters and increase Argentine's output by 13 percent. (16) Grains & Field Crops The Crop Progress report revealed corn in good/excellent condition declined 1 percent last week to 23 percent of the crop. 26 percent is dented and 61 percent is doughing. Due to the Corn Belt's lingering drought, continued lower yields are expected. Soybeans in good/excellent condition remained at 29 percent, unchanged since last week. 39 percent of the crop is in poor/very poor condition. 71 percent of soybeans have set pods. Of the spring wheat yield, 63 percent is in good/excellent condition. 11 percent is in poor/very poor condition, unchanged from a week ago. 47 percent of the crop has been harvested. (17) In Friday's World Ag Supply and Demand, the government lowered its projected U.S. corn production 17 percent to 10.8 billion bushels, down from 13 billion. Corn growers are expected to average 123.4 bushels per acre. Soybean production declined is estimated at 2.69 billion bushels, with estimated yields averaging 36.1 bushels per acre. (18) Cooler, wetter weather in the Corn Belt Friday may provide relief for some of the soybean crop. (19) Despite the drought, Asian imports are surging for soybeans and soymeal. China, Japan, South Korea, and Thailand imported a combined 17.401 million metric tons from April to June, up 21 percent from last year. (20) South Africa exported 92,856 metric tons of white corn last week, the most exported in 2012. South African shipments of yellow and white corn have grown 18 percent to 2.44 million tons this year, and the country has exported 1.16 million tons of white corn to Mexico in the season ended April 27. (21) Despite cutting its 2012 global rice production forecast by 7.8 million tons to 724.5 million tons, the United Nations' Food and Agriculture Organisation believes the supply will still outstrip demand. Though India's output is estimated to suffer due to a 22 percent lower-than-average monsoon rainfall, others such as China, Thailand, and Indonesia are all forecast to see production gains. 2012 global trade is forecast to fall one million tons to 34.2 million in response to weaker imports from Asian countries. Global inventories are estimated to grow 200.000 tons to 164.5 million tons by the end of 2012/13. (22) Precious Metals As gold-buying continues to rise in China, the nation may surpass India as the world's top gold consumer. In an effort to purchase gold below spot prices, China has begun buying gold mines and storing produced gold before it reaches the international market. China's gold demand is estimated to rise as much as 30 percent to 900 and 1,000 metric tons, up from 769.8. Meanwhile, India's demand might fall to 700 to 800 metric tons, down from 933.4. (23) Production cuts made in the platinum-group metals sector to restore profitability are estimated to be limited, as there are currently enough low-cost projects to provide 1.1 million additional ounces of platinum over the next ten years. (24) Due to poor demand from China, spot iron-ore prices have fallen to their lowest level in two and a half years. (25) Other Commodities Brazil is looking to face favorable warm weather and a lack of rains for the next ten days, which will help bolster the country's coffee and sugarcane crops. (26) Brazil coffee growers have harvested 70 of their yearly crop. The country is facing a potential harvest of 56 million bags of coffee during the 2012-13 season. This would constitute a 13 percent output growth, helping to counter weaker output in both Vietnam and Colombia. (27) Capitalizing on unrest in the Middle East, Egypt is exporting its refined sugar to Libya, Sudan, and potentially Syria. (28) Dry weather in India may cut its sugar output; the country scheduled 96,000 metric tons of raw sugar from Brazil. (29) Brazilian cane mills this season are "heavily favoring sugar over ethanol production," pumping out 5.6 million tonnes of sugar. (30) A Ghana-based cocoa farming SMS service has logged 4,000 users. The service, CocoaLink, was developed by Hershey Company to connect cocoa producers and has allowed them to share ideas and knowledge, and is helping to spread better farming techniques and practices. (31) Next Week:
1. http://in.reuters.com/article/2012/08/10/germany-economy-idINL6E8J9GU420120810 3. http://www.reuters.com/article/2012/08/10/us-markets-global-idUSBRE86F00620120810 4. http://in.reuters.com/article/2012/08/09/usa-economy-idINDEE8780D020120809 6. http://www.marketwatch.com/story/weekly-jobless-claims-fall-unexpectedly-2012-08-09 7. http://in.reuters.com/article/2012/08/09/usa-economy-idINDEE8780D020120809 8. http://www.usatoday.com/money/markets/story/2012-08-09/manchester-united-stock/56928790/1 10. http://www.cnbc.com/id/48607899 11. http://in.reuters.com/article/2012/08/10/bankofireland-earnings-idINL6E8J9GMH20120810 12. http://www.cnbc.com/id/48602774 13. http://www.huffingtonpost.com/huff-wires/20120809/us-natural-gas-storage/ 14. http://www.huffingtonpost.com/huff-wires/20120809/us-natural-gas-storage/ 15. http://www.reuters.com/article/2012/08/10/us-iea-oil-idUSBRE87909P20120810 16. http://www.reuters.com/article/2012/08/10/argentina-ypf-diesel-idUSL2E8J9KE420120810 17. http://seekingalpha.com/article/788841-crop-progress-irreversible-corn-conditions 18. http://www.ajc.com/news/nation-world/usda-cuts-corn-outlook-1496069.html 19. http://in.reuters.com/article/2012/08/10/usa-drought-crops-idINL2E8JA2P720120810 20. http://www.bloomberg.com/news/2012-08-07/asian-buyers-soybean-imports-seen-surging-by-oil-world.html 21. http://www.businessweek.com/news/2012-08-07/s-dot-africa-exports-most-white-corn-last-week-for-2012 22. http://www.bernama.com.my/bernama/v6/newsindex.php?id=686519 23. http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=156756&sn=Detail&pid=102055 24. http://www.miningweekly.com/article/platinum-production-cuts-likely-to-be-limited-analyst-2012-08-10 25. http://www.miningweekly.com/article/iron-ore-spot-prices-hit-25yr-low-sentiment-bearish-2012-08-09 27. http://www.businessweek.com/news/2012-08-06/brazils-coffee-output-seen-making-up-for-vietnam-decline 28. http://www.reuters.com/article/2012/08/08/sugar-egypt-idUSL6E8J8B9W20120808 30. http://in.reuters.com/article/2012/08/09/sugar-brazil-ethanol-idINL2E8J8DFB20120809 31. http://www.telecompaper.com/news/ghanaian-cocoa-farming-sms-service-reaches-4000-users _______________________________________________________________________________________ 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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