story developing
Comments »Black Gold Continues to Find Weakness
“West Texas Intermediate traded near the lowest level in more than a week on forecasts that U.S. supplies climbed to the highest since at least 1931 amid production the IEA said is “transformative” for world markets.
Futures fell for a fourth day in New York on speculation that rising supplies will counter signs of an economic recovery. Crude inventories probably increased 450,000 barrels to 396 million in the week ended May 10, according to a Bloomberg News survey before Energy Department data tomorrow. Growth in North American production will be as significant for markets asChina’s economic boom, the International Energy Agency said.
“Supply-demand is skewed to the oversupply side,” said Michael Poulsen, an analyst at Global Risk Management in Middelfart, Denmark. “There is currently a lot of spare capacity and global crude overproduction. The multi-decade high in U.S. supply will keep weighing on WTI.”
WTI for June delivery was at $94.53 a barrel, down 64 cents, or 0.7 percent, in electronic trading on the New York Mercantile Exchange at 12:21 p.m. London time. The volume of all contracts traded was 5 percent above the 100-day average. Prices fell 87 cents to $95.17 yesterday, the lowest close since May 2.
Brent for June settlement on the London-based ICE Futures Europe exchange lost 74 cents and was at $102.08 a barrel. The European benchmark grade was at a premium of $7.40 to WTI futures. The spread was $7.65 yesterday, the narrowest based on closing prices since January 2011.
Cushing Supplies…”
Comments »The ECB Clashes With Germany Over Handling the Banking Crisis
“The European Central Bank set up a clash with Germany as Executive Board member Joerg Asmussen pushed back against the country’s incremental approach to building a banking union.
Asmussen called today for the European Union to create a central agency and a common backstop for handling failing banks by “the summer of next year.” This is in marked contrast to warnings from German Finance Minister Wolfgang Schaeuble that the bloc cannot venture into such territory without changing its current treaties, and should instead target a less ambitious, networked approach.
“We want a single European resolution regime together with a single resolution agency and a single resolution fund that is financed by a levy on the banking industry,” Asmussen told reporters in Brussels before a meeting of EU finance chiefs. This should happen in parallel with the ECB’s planned assumption of bank oversight powers next year, he said.
EU leaders began work on a banking union last year to break the cycle of contagion between nations and their banks that has plagued the euro area since the region’s financial crisis emerged in Greece in 2009. They started by giving the ECB oversight powers, and committed to accompany this with a single “mechanism” for bank failures.
Single Pool…”
Comments »Dr. Copper Gets Hit as China Slowdown is Feared
“Copper fell the most in almost two weeks in London amid signs growth is slowing in China, the world’s biggest consumer of the metal, as inventories swell.
China’s economy will expand 7.6 percent this year, JPMorgan Chase & Co. said today, cutting its estimate from 7.8 percent a day after a report showed industrial production in the nation expanded less than predicted by economists. Copper stockpiles monitored by the London Metal Exchange increased the most in four weeks, according to daily figures.
“The market is well supplied, and China is not growing as fast as everyone was hoping,” David Wilson, an analyst at Citigroup Inc. in London, said by phone.
Copper for delivery in three months slid 2.3 percent to $7,241 a metric ton by 11:32 a.m. on the LME. Prices dropped as much as 2.4 percent, the most since May 1. Copper for delivery in July fell 2.2 percent to $3.287 a pound on the Comex.
The metal also retreated as European Union statistics showed industrial production in the euro area dropped 1.7 percent on the year in March, the 17th decline in a row….”
Comments »A Rising Yen Boosts Exports and Emerging Markets
“Emerging-market stocks advanced for the first time in four days as a stronger yen boosted exporters, offsetting the biggest drop in Chinese shares in three weeks and a slide in Russian commodity producers.
LG Electronics Inc. (066570), which got 22 percent of its 2012 revenue from North America, rose the most in a month in Seoul. Hyundai Motor Co. (005380) added 2.7 percent as an appreciating yen eased concerns about a loss of competitiveness to Japanese rivals. Emaar Properties PJSC surged 3.1 percent, helping lift Dubai’s benchmark index to the highest since October 2009 as the real estate market outlook improved. OAO Severstal, a Russian steelmaker, fell for a third day as industrial metals declined on concern Chinese demand may weaken.
The MSCI Emerging Markets Index rose 0.1 percent to 1,043.23 as of 12:50 p.m. in London. The yen strengthened from the lowest level in more than four years against the dollar, benefiting companies that compete with Japanese exporters. JPMorgan Chase & Co. cut its growth outlook for the Chinese economy following data yesterday that showed industrial production missed estimates and fixed-asset investment unexpectedly slowed last month.
“Asian exporters are doing well because there is a view the yen weakening is done in the short-term,” Michael Wang, an emerging-market strategist at Amiya Capital LLP in London, said by e-mail. Concerning China, “there are worries about data still being weak — bad for Russia and Brazil,” he said….”
Comments »Global Markets Hug the Flat Line, U.S. Futures Act in Kind
Yields for Italy, Spain, France, and Germany …
Comments »This Week Will Be Packed With Economic Data, Here is What to Look For
“Last week was unusually quiet for the economy, even as the stock market rallied to an all-time high.
This week’s schedule, however, is loaded with April and May economic data. By Friday, we should have a pretty good sense of whether or not the economy decelerated going into the second quarter.
For the most part, economists are expecting a month-over-month slowdown.
Top Stories…”
Comments »Jamie Dimon Says He Will Quit B4 He Gets Fired
“May 11 (Reuters) – JPMorgan Chase & Co Chairman and CEO Jamie Dimon said he may consider leaving the bank where he has held the top post since 2005, if shareholders vote to split his duties, the Wall Street Journal reported on Saturday.
Shareholders will vote later this month at an annual meeting in Tampa, Florida, on a non-binding proposal to separate the chairman and chief executive roles after a more than $6 billion trading loss last year raised questions about risk oversight.
At first, Dimon said he would not comment publicly on what he would do if the vote went against him, but when pressed he added that the worst-case scenario would be to leave the bank, the newspaper said, citing sources that attended a private meeting at the company’s New York headquarters.
Results of the vote will be announced on May 21, but it remains unclear what the board will do if the proposal passes….”
Comments »Sinkholes Mar CA Residents
“LAKEPORT, Calif. (AP) — Scott and Robin Spivey had a sinking feeling that something was wrong with their home when cracks began snaking across their walls in March.
The cracks soon turned into gaping fractures, and within two weeks their 600-square-foot garage broke from the house and the entire property — manicured lawn and all — dropped 10 feet below the street.
It wasn’t long before the houses on both sides collapsed as the ground gave way in the Spivey’s neighborhood in Lake County, about 100 miles north of San Francisco.
“We want to know what is going on here,” said Scott Spivey, a former city building inspector who lived in his four-bedroom, Tudor-style dream home for 11 years.
Eight homes are now abandoned and 10 more are under notice of imminent evacuation as a hilltop with sweeping vistas of Clear Lake and the Mount Konocti volcano swallows the subdivision built 30 years ago.
The situation has become so bad that mail delivery was ended to keep carriers out of danger.
“It’s a slow-motion disaster,” said Randall Fitzgerald, a writer who bought his home in the Lakeside Heights project a year ago.
Unlike sinkholes of Florida that can gobble homes in an instant, this collapse in hilly volcanic country can move many feet on one day and just a fraction of an inch the next.
Officials believe water that has bubbled to the surface is playing a role in the destruction. But nobody can explain why suddenly there is plentiful water atop the hill in a county with groundwater shortages.
“That’s the big question,” said Scott De Leon, county public works director. “We have a dormant volcano, and I’m certain a lot of things that happen here (in Lake County) are a result of that, but we don’t know about this.”
Other development on similar soil in the county is stable, county officials said….”
Comments »Gapping Up and Down This Morning
In Play and On the Wires
U.S. Retail Sales Rise More Than Expectations
“This story is developing. Please check back for further updates.
Economists in a Reuters survey expect a 0.3 percent decrease compared with a 0.4 percent decrease in March. Excluding automobiles, sales are expected to fall 0.1 percent versus a 0.4 percent drop in March.”
Comments »Europe Leaves G-7 Meeting With Willingness to Scale Back Austerity and Promote Growth
“European policy makers expressed a willingness to consider new ways to revive their ailing economy as they confronted fresh U.S. pressure to take action.
The bloc’s finance ministers and central bankers left weekend talks of the Group of Seven signaling that they’re poised to scale back austerity, are open to increased monetary aid and looking to unfreeze bank lending. European officials will meet in Brussels today to discuss the economy and review aid payments for crisis-struck nations from Greece to Spain.
Europe’s governments are in the midst of a policy rethink after three years of slimming budgets as they face up to a deepening recession in the euro area and a record unemployment rate that’s exceeded 12 percent. Still in doubt for economists is what kind of stimulus will actually be delivered and what effect it could have in the crisis-torn 17-member currency bloc.
“The new ‘fiscal realism’ is in evidence,” Mark Wall, co-chief European economist at Deutsche Bank AG in London, said in a report to clients. “Austerity may have reached its political limits and markets are happy to see some rebalancing. The key remains economic growth.”
Yields on sovereign debt that soared during the crisis have eased with the European Central Bank’s pledge to do whatever it takes to defend the euro. The single currency was little changed at $1.2986 as of 9:03 a.m. today.
Record Low…”
Comments »The G-7 Will Tolerate a Falling Yen for the Moment
Group of Seven finance chiefs indicated they will tolerate a sliding yen for now as they intensified their focus on Japan’s recovery strategy.
Finance ministers and central bankers reaffirmed their February commitment to “not target exchange rates” at a meeting in Aylesbury, near London, U.K. Chancellor of the Exchequer George Osborne told reporters May 11.
The Bank of Japan “can and should ease again if the current measure does not seem to be working,” Takuji Okubo, chief economist at Japan Macro Advisors in Tokyo, said in an e-mailed response to questions.
While signaling acceptance of the yen’s decline through 100 per dollar for the first time since 2009, G-7 policy makers said they examined Japan’s strategy and that they will monitor its impact on currencies. The yen has fallen 15 percent against the dollar this year and 13 percent versus the euro as the Bank of Japan stepped up monetary stimulus.
“Everybody watches exchange rate developments,” German Finance Minister Wolfgang Schaeuble said after the meeting. “We had a very intense discussion about Japan with our Japanese colleagues.”
The yen weakened past 102 per dollar for the first time since October 2008 today. It dropped 0.2 percent to 101.87 a dollar as of 10:12 a.m. in Tokyo after losing 2.6 percent last week, the most in five weeks. It fell to 102.15 earlier.
Uneven Prospects…”
Comments »The Current Bull Offers .com Returns With Evaluations 28% Lower
“Returns from the U.S. equity bull market that started four years ago are matching those from the last half of the 1990s even as valuations are 28 percent lower.
The Standard & Poor’s 500 Index has gained 26.2 percent annually including dividends since March 2009, the same as during the last 50 months of the technology bubble, according to data compiled by Bloomberg. Shares in the index now trade at 18.6 times annual profit, below the average 25.7 multiple in the 1990s rally led by Internet companies.
For bulls, the valuations show stocks will keep rising after the S&P 500 advanced 164 percent as individuals scarred by the worst financial meltdown since the Great Depression return to equities. Bears say the price-earnings ratios mean investors lack confidence in the economy and corporate profit growth. They also note that the last time returns were this high, the bubble popped and more than $5 trillion was erased from the value of U.S. stocks, according to data from the World Bank.
“The size of this rally’s not what keeps me up at night,” Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees about $170 billion, said in a May 8 phone interview. “That was a tremendous rallythen, too, but I’m not getting all nervous based on the size of the rally this time, because we’re not there yet in terms of valuation.”
2013 Rally…”
Comments »Black Gold Falls as OPEC Inventory Hits Five Month Highs
West Texas Intermediate crude fell for a third day, the longest run of declines in four weeks, as OPEC boosted output to the highest level in five months.
WTI slid as much as 1.2 percent, and London-traded Brent dropped for a second day. The Organization of Petroleum Exporting Countries produced 30.46 million barrels a day last month, up from 30.18 million in March, the group’s secretariat said May 10. That’s the most since November. Morgan Stanley predicted that the spread between WTI and Brent will widen as U.S. supplies accumulate.
“Even if demand surprises, the market is still likely to remain comfortably supplied,” said Andrey Kryuchenkov, an analyst at VTB Capital in London, who predicts that WTI will struggle to surpass $96.80 a barrel this month.
WTI for June delivery fell as much as $1.18 to $94.86 a barrel in electronic trading on the New York Mercantile Exchange and was at $95.18 at 12:00 p.m. London time. The volume of all contracts traded was 1.2 percent below the 100-day average.
Brent for June settlement lost as much as $1.24, or 1.2 percent, to $102.67 on the ICE Futures Europe exchange. The European benchmark crude was at a premium of $7.59 to WTI, the narrowest since January 2011, compared with $7.87 on May 10.
Saudi Output…”
Comments »Au Continues to Show Weakness From a Higher Dollar
“Gold fell for a third day in New York as strength in the dollar may mean more declines in exchange-traded products holdings.
Holdings in gold-backed ETPs dropped 0.6 percent on May 10 as the dollar reached a five-week high against six major currencies, according to data compiled by Bloomberg. The U.S. Dollar Index climbed as much as 0.2 percent today as the Standard & Poor’s GSCI gauge of 24 commodities fell 0.6 percent.
“Commodities in general have been hurt by the dollar’s recent strength,” said Sun Yonggang, a macroeconomic strategist at Everbright Futures Co., a unit of one of China’s largest state-owned investment companies. “Investors are losing interest in gold.”
Gold for June delivery dropped 0.6 percent to $1,428.10 an ounce by 6:11 a.m. on Comex in New York. Prices dropped 1.9 percent last week, the first decline in three weeks….”
Comments »$ELN Will Pay $1B For a Stake in an Irish Drugmaker, $THRX
“Elan Corp. (ELN) agreed to pay $1 billion for a share of the royalties on new drugs fromTheravance Inc. (THRX) as the Irish drugmaker tries to persuade shareholders to spurn a takeover offer by Royalty Pharma.
Elan will receive 21 percent of the royalties earned by Theravance from GlaxoSmithKline Plc (GSK) on the four respiratory medicines, and 20 percent of that income stream will be paid to Elan shareholders as a dividend, the Dublin-based company said in a statement today. The transaction is subject to shareholder approval, it said.
Elan is adopting an investment model pioneered by Pablo Legorreta, chief executive officer of Royalty Pharma, which has offered to buy Elan for about $5.7 billion. The company’s board last month unanimously rejected the takeover bid, advising shareholders not to take action. Elan plans to announce several more deals this year, Chief Executive Officer Kelly Martin said in a phone interview today.
“This is just one piece of the puzzle,” Martin said. “This deal allows us to invest our long-termcash flow into interesting clinical and commercial assets.”
Elan’s hunt for new assets stems from Biogen Idec Inc.’s Feb. 6 agreement to buy Elan’s stake in the Tysabri multiple sclerosis drug for $3.25 billion in cash plus future royalties. The sale transformed the Irish company into an investment vehicle, since it has no operations. Elan said at the time that it planned to use the cash for possible acquisitions and would return some of the proceeds to shareholders.
‘Risk Spectrum’….”
Comments »The Aussie Falls to 11 Month Lows as Business Confidence Slides
“Australia’s dollar declined toward an 11-month low after a private report showed business confidence slid amid bets that the Reserve Bank will cut interest rates further to curb the currency’s strength.
The so-called Aussie weakened against most of its 16 major peers after Barclays Plc cut its forecast for the currency, citing Australia’s falling yield advantage. New Zealand’s dollar held a five-day loss versus the U.S. greenback as the premium on the South Pacific nation’s 10-year note rate over Treasuries was near a four-year low.
“The Australian dollar has a little bit more room to decline,” said Takuya Kawabata, an analyst at Gaitame.com Research Institute Ltd. in Tokyo, a unit of Japan’s largest currency margin-trading company. “A recovery in the Aussie above $1 and a further advance would fan speculation the RBA will cut borrowing costs again.”
Australia’s dollar lost 0.4 percent to 99.86 U.S. cents as of 4:14 p.m. in Sydney after touching 99.61 on May 10, the weakest since June 14 and halting a record 10-month stretch of trading above parity. New Zealand’s currency was little changed at 83.03 U.S. cents.
The extra yield that investors receive to hold New Zealand’s benchmark 10-year note instead of similar-maturity Treasuries was at 1.44 percentage points after falling to 1.42 on May 3, the least since January 2009…..”
Comments »Japanese Stocks Hit a 4.5 Year High as the Yen Slides Above 102 to the Dollar
“Japanese stocks rose, with the Topix Index extending a 4 1/2-year high, as the yen weakened past 102 against the dollar after the Group of Seven signaled tolerance for the currency’s drop.Nissan (7201) Motor Co. and Panasonic (6752) Corp. jumped after posting earnings.
Brokerages rose the most among the 33 Topix industry groups, with Nomura Holdings Inc. surging 9.6 percent. Nissan added 4.5 percent after the automaker forecast net-income to grow 23 percent based on an assumption the yen will trade at 95 to the dollar. Panasonic gained 7.6 percent after the electronics maker topped estimates for operating profit. Sharp Corp. climbed 12 percent after the Nikkei newspaper reported the money-losing TV maker plans to pare its European operations.
The Topix advanced 1.8 percent to close at 1,232.20 in Tokyo, the highest close since Aug. 29, 2008. More than nine stocks gained for every seven that fell. The Nikkei 225 Stock Average (NKY) added 1.2 percent to 14,782.21, with volume 42 percent above the 30-day average.
“G-7 has given a nod to Japan’s measures to beat deflation,” said Kuninobu Takeuchi, Tokyo-based executive portfolio manager at DIAM Co, which oversees the equivalent of about $98 billion. “Exiting deflation means growth, enabling companies to expand. Companies tend to put forward conservative profit forecasts, say a 30-40 percent increase, while the market is pricing growth of 40-50 percent.”
The Topix and the Nikkei have been the top-performing major equity gauges since mid-November, advancing more than 70 percent amid unprecedented monetary easing from theBank of Japan and calls from Prime Minister Shinzo Abe to end deflation.
