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FinNews for the week ending September 14, 2012 Top Stories Thursday saw the Federal Reserve conclude its highly anticipated policy meeting at which bank members agreed to another round of economic stimulus. The central bank will spend $40 billion per month buying bonds and mortgage backed securities. They also pledged to maintain record-low interest short term interest rates through the middle of 2015. (1) Furor over an American-made video mocking the Prophet Mohammed has sparked violence in the Middle East and attacks on US embassies, as well as several protests. (2) Economic Releases & Statistics Consumer credit was lower in July, the first time in almost a year, dipping by more than $3 billion versus forecasts for a $9.1 billion advance. (3) The US trade deficit was almost unchanged for July with exports dropping by 1.0% and imports falling by 0.8%. (4) The Producer Price Index (PPI) was up 1.7% in August on rising energy prices, core prices rose 0.2%. Forecasts called for overall PPI to increase by 1.0% and core prices to climb 0.1%. (5) The Consumer Price Index rose 0.6% in August, slightly above forecasts for a 0.5% increase. Retail sales were up 0.9% - the largest move higher since February - in line with analyst expectations. (6) Stocks & Earnings Staples Inc. (SPLS) moved higher on news that private firms may be looking to buy the office-supplies chain. Shares climbed 3.6 percent to $11.96, the "biggest gain since June...." (7) Apple stocks (APPL) headed to a record high this week following the announcement of the iPhone 5 and the Fed stimulus plan. (8) Global Currencies Spanish bank borrowing has hit a, "412 billion euros ($531.77 billion) from the European Central Bank in August," accounting for more than a third of the emergency euro zone borrowing. (9) Despite ongoing weakness in the euro zone, the latest round of quantitative easing from the Federal Reserve has pared the US dollar value against the euro currency. The euro is at a four-month high against the greenback. (10) Economic slowdown in Japan is still under threat from the rising Yen, prompting the Japanese finance minister to suggest that intervention may be forthcoming. (11) The drop in the dollar index precipitated another rise in the Yen, threatening exports. (12) Oil & Energies Crude oil supplies were up 2 million barrels in the week ending Sept. 7. Forecasts from analysts were for a 3.3 million barrel decline. Gasoline stockpiles were down 1.2 million barrels versus forecasts for a 2.3 million barrel draw. Distillates were up 1.5 million barrels versus forecasts for a 1.5 million barrel drop. Gasoline demand was 0.1 percent below year-ago levels. (13) The Organization of Petroleum Exporting Countries reported production increases of about 260,000 barrels per day last month. According to the group, global supply is abundant while demand remains, "skewed to the downside." (14) Prices for crude oil broke through $100 per barrel following protests in the Middle East and the Fed announcement of stimulus. (15) Natural gas supplies in storage increased by 27 billion cubic feet according to this week's EIA data. This data was in line with forecasts for between 25 and 29 billion cubic feet. (16) Grains & Field Crops The "withered" US corn crop is currently being harvested, too late to receive benefits from recent rains, but drought conditions in key areas may be easing. According to recent drought monitor reports, "Nebraska deemed to be in extreme or exceptional drought — the two most severe categories — held steady during the seven-day period ending Tuesday, at 97.4 percent. Kansas remained unchanged, at 88.34 percent, and Illinois showed little change, coming in at 6.67 percent." (17) Grain prices had eased ahead of this week's USDA World Ag Supply and Demand Report. Corn fell to a six-week low. (18) Following the report, corn prices dropped 1 percent on optimistic USDA data. Corn ending stocks are forecast at 733 million bushels, higher than the average estimates for 592 million bushels. Crop and yield estimates for soybeans were cut, leading to a rise in soy futures prices. (19) Overall impressions suggest that the drought conditions may not have impacted crop totals as severely as anticipated. Forecasted corn use has declined as prices have increased. (20) Precious Metals The proposed quantitative easing from the Federal Reserve helped send gold prices higher to end the week. December gold futures prices topped $1,760 following the FOMC meeting announcement. (21) In India, the announcement spurred another round of gold buying from jewelers. An increase in purchases has been noted as the festive season approaches. Spot prices in India hit a record high. (22) Platinum prices remained high as mining strikes in South Africa continue. (23) Other Commodities The current USDA estimates for beef production are 3.2% higher than the January forecasts, and steer and heifer weights are, on average, 2% above year-ago levels. (24) Coffee growers in Brazil are still looking to sell more than half of this season's crop. Output in the top coffee grower was 50.5 million bags this season according to government estimates. (25) Coffee deliveries from the third-largest robusta producer, Indonesia, were up as harvest wraps up in the lowlands. Wet weather may delay the robusta harvest in Vietnam. (26) Rains in Brazil prompted gains in sugar prices as speculators bet on delays in harvesting and shipping. (27) Kingsman SA, a researcher and broker, suggests that sugar is likely to "pile up" in the coming season amid "lack of demand" and "global surplus." (28) India is forecast to produce a sugar surplus in the 2012/13 season, the third year in a row production will exceed domestic consumption. (29) Cotton prices rose following surprising purchase data which revealed buying from China. Weekly exports were the, "biggest in three months." (30) Dry conditions in the US have let the USDA to pare estimates for cotton production, dropping the total by 3.1 percent versus last month's estimates. The current harvest may yield just over 17 million bales versus Bloomberg analyst estimates for 17.46 million bales. (31) India's production is forecast to be down 11 percent from last year. (31) Next Week:
1. http://www.cbsnews.com/8301-505123_162-57512296/fed-to-spend-$40b-a-month-on-bond-purchases/ 5. http://www.nasdaq.com/article/us-producer-prices-jump-17-core-ppi-up-02-20120913-00477 7. http://www.bloomberg.com/news/2012-09-14/staples-rises-on-report-private-equity-mulling-buyout.html 8. http://www.mercurynews.com/breaking-news/ci_21535666/apple-stock-hits-record-high-after-iphone-5 9. http://in.reuters.com/article/2012/09/14/spain-banks-ecb-borrowing-idINL5E8KE3UF20120914 10. http://in.reuters.com/article/2012/09/13/markets-forex-idINL1E8KD9JC20120913 11. http://online.wsj.com/article/SB10000872396390444709004577650632272233176.html 12. http://in.reuters.com/article/2012/09/13/markets-forex-idINL3E8KD98A20120913 13. www.cbsnews.com/8301-505245_162-57511510/us-crude-inventories-increase-to-359.1m-barrels/ 14. http://www.reuters.com/article/2012/09/11/us-opec-oil-idUSBRE88A0HD20120911 16. http://articles.marketwatch.com/2012-09-13/markets/33802290_1_natural-gas-natural-gas-futures-bcf 18. http://in.reuters.com/article/2012/09/10/markets-grains-idINL5E8KAGTP20120910 19. http://www.reuters.com/article/2012/09/12/markets-grains-idUSL1E8KC99L20120912 20. http://www.chicagotribune.com/business/sns-rt-us-usa-cropsbre88b1if-20120912,0,490944.story 21. http://www.forbes.com/sites/kitconews/2012/09/13/gold-prices-jump-on-more-quantitative-easing/ 23. http://www.reuters.com/article/2012/09/14/us-safrica-mines-idUSBRE88D07I20120914 28. http://www.businessweek.com/news/2012-09-11/sugar-to-pile-up-as-demand-stays-weak-kingsman-says 29. http://in.reuters.com/article/2012/09/11/india-sugar-surplus-idINL3E8KB2TG20120911 30. http://www.reuters.com/article/2012/09/13/markets-cotton-idUSL1E8KDLW020120913 _______________________________________________________________________________________ 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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