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FinNews for the week ending September 7, 2012 Top Stories In a Thursday meeting, the European Central Bank announced it will instate an unlimited short-term bond buying program for euro countries that request help. The plan aims to ease the financial pressure on Spain, Italy, and smaller economies while regaining control of euro region interest rates. (1) While promising, the plan requires interested countries to apply to the eurozone's bailout fund, requiring cuts on spending, deficits, and debt. (2) The move is opposed by Germany's Central Bank, which fears unlimited assistance could ruin the euro. (3) Digital Domain Media Group Inc.'s shares fell 45 percent following the company's announcement that it is considering bankruptcy protection following its default in paying interest on $35 million senior notes.(4) Economic Releases & Statistics July construction spending declined 0.9 percent to a seasonally adjusted $834.4 billion, weaker than expected. Residential construction spending declined 1.6 percent to a seasonally adjusted annual level of $264.6 billion. Home improvement projects fell 5.5 percent. Spending on single-family homes grew 1.5 percent, marking the fourth month of gains. (5) The Institute for Supply Management manufacturing index declined to 49.6, countering forecasts of a growth to 50.2 percent. This is the lowest reading since July 2009 and marks the third straight month of sub-50 percent readings, denoting more contraction than growth. (6) ISM non-manufacturing grew to 53.7 percent from July's 52.6, stronger than estimates for a rise to 53. (7) The U.S economy added 96,000 jobs in August, decreasing the unemployment rate from 8.3 percent to 8.1 percent. The labor force participation rate fell to 63.5 percent, the worst level since September 1981. The civilian labor force decreased by 368,000. (8) Stocks & Earnings Apple Inc. "is in talks to license music for a custom-radio service" along the same lines as Pandora, which has weakened the latter's stock. (9) Meanwhile, Apple's rose to a new high of $680 following its September iPhone 5 launch. Amazon saw gains following the introduction of its new Kindle. Google saw considerable gains following successful sales of its Nexus 7 tablet. (10) Facebook Inc. has acquired of Instagram in the completion of a deal valued at $715.3 million. (11) Smith & Wesson saw stronger than expected first-quarter profits, resulting in a share growth of 20 percent. Ulta saw second-quarter earnings grow 46 percent. Mattress Firm Holding Corp. saw its second-quarter earnings almost triple. (12) Caterpillar grew 4.2 percent following news that China aims to improve infrastructure spending. (13) Campbell Soup plans to launch 50 new products over the course of next year, many of which will come in pouches instead of cans. (14) Global Currencies The 10-month Treasury yield rose to 1.637 percent on expectations of ECB more bond buying. The 30-year bond grew to 2.772 percent. (15) The Bank of England opted to continue its low 0.5 percent interest rates and asset purchases program, decided against taking measures to provide stimulus to its economy. (16) Mexico's central bank decided to leave rates at 4.5 percent, but noted it may issue higher rates if inflation continues to rise. (17) The Bank of Canada held its rate at 1.0 percent, continuing a two-year freeze, though it warned that rates may soon rise. (18) Oil & Energies Natural gas supplies rose 28 billion cubic feet to 3.402 trillion cubic feet, weaker than forecasts for a 32 to 36 bcf rise. (19) Crude stockpiles declined 7.4 million barrels to 357.1 million barrels, greater than estimates for a 5 million barrel drop, partly due to imports being slowed by Isaac. Gasoline supplies fell 2.3 million barrels to 198.9 million barrels, less than forecasts for a 3.5 million barrel drop. Distillates grew 1 million barrels to 127.1 million, countering estimates for a 1.5 million barrel drop. Refineries ran at 86.1 percent, 5.1 percent less than last week and greater than forecasts for a drop to 89.2 percent. (20) With the European Central Bank announcing its support of the eurozone, weak economic data is driving down demand for energies. (21) Bangladesh oil demand is set to fall 22 percent, as the government shuts down several power plants to cut costs. (22) Grains & Field Crops Isaac brought a great deal of rain to the eastern Midwest, but too late to benefit soybean pod filling. The U.S. 2012 corn yield is forecast at 10.326 billion bushels, down from an earlier 10.779 billion. (23) This week's Crop Progress report showed corn in good/excellent condition stagnant at 22 percent. With 10 percent of the entire crop harvested, 86 percent is dented and 41 percent is mature. Soybeans in good/excellent condition remained at 30 percent, while those in poor/very poor fell 1 percent to 37 percent. 19 percent of the crop has dropped leaves. 95 percent of the spring wheat crop has been harvested. (24) Mexico raised its 2012 corn forecast to 23 million tonnes, up from 21.8 million tonnes. Its sugar production is forecast at 5.3 million tonnes for the 2012/13 period. (25 Brazil corn output for the 2011-12 year grew to 72.7 million metric tons, just shy of forecasts for 72.8 million tons. Soybean output there fell to 66.4 million tons, in line with estimates. (26) Precious Metals Most South African unions have come to an agreement with Lonmin PLC to end violence and begin wage talks. (27) In response to weak supplies due to the Lonmin strike and other disruptions at South African mines, platinum demand has grown to a pace not seen since 2010. Strikes this year have slowed output by 380,000 ounces, roughly 6 percent of global output. (28) Chinese gold demand fell for the first time in 5 years during the second quarter. (29) Following the European Central Bank's announcement to buy government bonds, gold saw its highest price in 5 months. (30) India may hike a gold import duty to help curb buying. (27) Other Commodities The International Coffee Organization grew its world coffee forecast for the 2011-12 season by 1.37 million bags to 132.7 million. (31) Brazil's 2012/13 coffee crop is estimated at 50.5 million 60 kg bags. (32) With their coffee harvest 75 percent complete, Brazilian farmers are stockpiling much of their crop in anticipation of price increases. (33) Nestle SA announced plans to improve direct coffee purchases by from Vietnamese farmers over the next 5 years. While Nestle Vietnam Ltd.'s purchases this year range from 12,000 to 14,000 tons, the company aims to eventually increase these to 60,000 metric tons in order to improve quality. Vietnam's 2011-12 harvest came in at a record 1.55 million tons. This season may see a 7.9 percent gain to 21 million bags. (34) Ivory Coast is working to settle disputes between rival factions in order to bolster its economy. Aiming to gain emerging market status by 2020, "the government is projecting double-digit growth by 2014." (35) Ghanaian Members of Parliament will deliberate multiple loans aimed at improving the nation's infrastructure, including a $200 million facility connected with the production of cocoa. (36) As Ghana's oil sector grows, earnings could weaken Ghanaian cocoa exports. (37) Thanks to a dry period, Brazilian sugar-cane crushing may have improved as much as 14 percent in August's second half. 46.3 million metric tons were harvested during that period. (38) India will export 176,000 tonnes of sugar to Iran, 146,000 tonnes of which have already left the country. (39) The festive season may push up demand for sugar and other essential commodities. (40) Next Week:
2. http://www.npr.org/templates/story/story.php?storyId=160725410 6. http://www.marketwatch.com/story/ism-factory-index-contracts-for-third-month-2012-09-04 8. http://www.cnbc.com/id/48938568 9. http://blogs.wsj.com/marketbeat/2012/09/07/stocks-to-watch-pandora-smith-wesson-and-more/ 10. http://news.cnet.com/8301-1023_3-57508310-93/apple-amazon-google-riding-high-on-wall-street/ 11. http://statesmansentinel.com/2012/09/07/facebook-nasdaqfb-finished-its-acquisition-of-instagram/ 12. http://www.marketwatch.com/story/hot-stocks-to-watch-2012-09-07 15. http://online.wsj.com/article/BT-CO-20120907-706724.html 17. http://in.reuters.com/article/2012/09/07/mexico-economy-idINL2E8K75PU20120907 18. http://in.reuters.com/article/2012/09/05/canada-economy-rates-idINL2E8K43W120120905 19. http://www.boston.com/cars/news/articles/2012/09/06/us_natural_gas_supplies_grew_last_week/ 20. http://www.huffingtonpost.com/huff-wires/20120906/us-crude-inventories/ 22. http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/7048074 23. http://www.farminguk.com/news/Isaac-brings-weekend-rains-Brazil-exports-record-corn_24155.html 24. http://seekingalpha.com/article/846251-crop-progress-conditions-unchanged-as-harvest-begins 25. http://www.reuters.com/article/2012/09/05/mexico-corn-forecast-idUSL2E8K537O20120905 27. http://www.nasdaq.com/article/precious-metals-highlights-top-stories-of-the-day-20120906-01029 28. http://www.mineweb.com/mineweb/view/mineweb/en/page35?oid=158266&sn=Detail&pid=102055 30. http://online.wsj.com/article/BT-CO-20120906-710043.html 31. http://www.agrimoney.com/news/ico-lifts-hopes-for-end-to-colombias-coffee-slump--4948.html 32. http://www.reuters.com/article/2012/09/06/coffee-brazil-crop-idUSL2E8K63ZY20120906 35. http://in.reuters.com/article/2012/09/05/worldbank-ivorycoast-kim-idINL6E8K5IJN20120905 36. http://www.ghanabusinessnews.com/ghana-mps-to-scrutinize-200m-loan-deal-for-cocoa-sector/ 37. http://online.wsj.com/article/SB10000872396390443686004577633080263468336.html?mod=googlenews_wsj 39. http://in.reuters.com/article/2012/09/06/india-sugar-idINL4E8K62D220120906 40. http://www.myiris.com/newsCentre/storyShow.php?fileR=20120907172748718&dir=2012/09/07 _______________________________________________________________________________________ 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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