Baltic Dry Index. 2547 -54
LIR Gold Target by 2019: $3,000
In eliminating the structural deficit by 2014-15, the UK Government is planning measures amounting to a fiscal squeeze of some 7.1 per cent of GDP, or in money times £113bn in spending cuts and tax increases by the end of the parliament. Just to put this in context, there was a bigger spending squeeze in the 1980s, but if you add in the tax increases on top, for the UK this amounts to easily the biggest fiscal retrenchment of the post war period.
Another day, and another drop in the Baltic Dry Index, a harbinger of a double dip global recession perhaps? A roughly 40% decline in less than a month. We open with news from China. From boom to bust perhaps? Stay long precious metals, “the next Lehman” is out there and now likely a lot closer if the BDI is signalling the double dip recession ahead. The worst is yet to come.
"Considerable uncertainty is attached to all economic estimates"
Alan Greenspan
June 23, 2010, 12:05 a.m. EDT
Steel makers fall as Beijing scraps exports rebate
HONG KONG (MarketWatch) -- Shares of steel makers skidded in Hong Kong and Shanghai on Wednesday after the Chinese Ministry of Finance said it will scrap a tax rebate previously available on exports of a range of commodities, including various forms of steel.
The move, which is reportedly part of Beijing's efforts to cut carbon emissions in some polluting industries, would further slash Chinese steel mills' already weak profits on exports, and would likely pressure steel prices and force the domestic industry to cut production, analysts say.
However, the move is expected to be positive for steel makers in some other countries, such as India, which currently import Chinese steel.
"Steel exports were making zero profit selling hot-rolled coils/cold-rolled coils abroad, and their profit mainly came from the rebate. Exporters now have to divert their sales to the domestic market, exerting downward pressure on domestic prices for HRC/CRC," Citigroup analysts Scarlett Chen and Thomas Wrigglesworth wrote in a note to clients released Wednesday.
------The Chinese ministry on Tuesday approved scrapping export tax rebates on about 406 products, starting July 15. In addition to steel makers, some non-ferrous metals, fertilizers, plastics, rubber and glass products were also excluded from the export tax rebate, according to a Xinhua news report.
The cancellation of export rebates will affect about 65% of Chinese steel exports, according to UOB Kay Hian analyst Helen Lau.
Lau said about 73% of Chinese steel exports are currently directed to other Asian countries, which import hot-rolled coils at about $610 per ton, versus Chinese companies' current export price of $600 per ton.
"Thus, exports to Asia could also become unprofitable if export tax rebates are scrapped," she said. "To internally absorb reduced exports, Chinese steel mills may have to cut production or flood the domestic market with lower-priced steel, thus dragging down steel prices, squeezing margins and slowing down volume growth."
http://www.marketwatch.com/story/china-steel-makers-hit-by-end-to-export-rebate-2010-06-23
June 22, 2010, 10:55 p.m. EDT
Toyota China plant halt drags on
HONG KONG (MarketWatch) -- Toyota Motor Corp. (TOKYO:JP:7203) suspended production at its Guangzhou assembly factory for a second day Wednesday as a labor strike at a key parts supplier continued, according to reports. Toyota was forced to halt output at Guangzhou Toyota Motor Co., its joint venture in China, amid shortages of fuel injectors and other vehicle components supplied by a local venture of Japan's Denso Co.
Workers at the parts maker, which also reportedly supplies Honda Motor Corp) walked off the job on Monday demanding higher wages. The last disruption to Toyota's supply chain comes just days after resolution of a separate strike at a different Toyota parts supplier in China.
http://www.marketwatch.com/story/toyota-china-plant-halt-drags-on-2010-06-22
In US news, when the federal real estate subsidy ran out so, as predicted, did the home buyers. Another sign of the arriving double dip?
"Sooner or later a crash is coming, and it may be terrific."
Roger Babson. Speech to National Business Conference, Sept. 5th, 1929.
JUNE 23, 2010
Outlook for Home Prices Grows Darker
Housing analysts have grown gloomier about the outlook for U.S. home prices as sales slump, a new survey shows.
The monthly report by MacroMarkets LLC, due for release Wednesday, found that 56% of the 106 economists and other analysts surveyed expect home prices to decline this year. That is up from 40% a month ago.
In a separate report Tuesday, the National Association of Realtors measured completed resales of homes in May at a seasonally adjusted annual pace of 5.66 million units, down 2.2% from April, though up 19% from a year earlier.
Federal tax credits of as much as $8,000 for home buyers spurred sales in recent months. To qualify for those credits, buyers had to sign purchase contracts by April 30. The Realtors' data for May reflect completions of sales, most of which were based on contracts signed in March or April.
Since April 30, new purchase contracts have plunged as buyers no longer have the incentive of a federal tax break, builders and real estate agents say. Lawrence Yun, chief economist for the Realtors, estimated that contracts signed in May were 10% to 15% below the weak level of a year earlier.
Ronald Peltier, chief executive officer of HomeServices of America Inc., which owns real estate brokers in 21 states, said new home-purchase contracts in May and June so far are down about 20% from a year earlier. The tax credit accelerated sales that otherwise would have occurred later in the year, Mr. Peltier said.
-----Last week, the Commerce Department reported that May construction starts on single-family homes fell 17% to an annual rate of 468,000, the lowest level in a year.
Builders have slowed construction because sales in May were "horrible" and June so far has been only slightly better, said John Burns, a housing-industry consultant in Irvine, Calif. He expects a gradual improvement over the rest of the year.
http://online.wsj.com/article/SB10001424052748704853404575322604214582736.html
In EU news, the UK gets an austerity budget that will leave every household in Britain worse off, according to The Daily Telegraph. In France, more austerity is planned for August.
JUNE 23, 2010
Budget 2010: George Osborne the enforcer issues toughest Budget for a century
Every household in Britain will be worse off after George Osborne unveiled £29 billion worth of annual tax rises and the biggest cuts in public spending for almost a century.
France's Lagarde Forecasts Austerity
PARIS—France might take new austerity measures this summer if the country's economy fails to meet growth targets, Finance Minister Christine Lagarde said Tuesday.
"Balancing our public finances is a priority," Ms. Lagarde said in an interview. "The road is arduous, but our political determination is complete."
The statement came against the background of weakening economic growth prospects in France, which could mean the French state gets less tax revenue than it was expecting. After gross domestic product for the second quarter is announced in August, France might have to cut its 2011 growth forecast, said Ms. Lagarde. The forecast currently stands at 2.5%, which she said was "audacious."
France's resolve to square its finances comes before a meeting of the Group of 20 leading and developing nations, where heads of government will debate the fundamental direction of their economies. Broadly, the U.S. wants governments world-wide to maintain consumer demand in order to not choke growth. But the Europeans have pledged to focus on rigorous budgets in order to avoid Greece-style crises over their sovereign debts.
Germany, Europe's biggest economy, has said it will shave €80 billion ($98.5 billion) off its deficit between 2011 and 2014. On Tuesday the U.K. announced spending cuts and tax increases that economists say could ultimately be the equivalent of as much as 8% of GDP over the next five years.
France has said it aims to slash its budget deficit, which swelled during last year's recession, to below 3% of GDP in 2013 from an expected level of about 8% this year.
Ms. Lagarde said on Tuesday that the 3% target was "immutable" and that she would conduct a review in mid-August, based on second-quarter GDP data, to see whether more spending cuts are needed.
The government has already announced €45 billion in spending cuts and €5 billion in tax increases.
We end for the day with BP. BP’s troubles in the Gulf of Mexico, leave BP’s international partnerships in doubt. Don’t worry says BP, we’re fine. I have my doubts that troubled BP can survive in anything like its present form. I have my doubts that with new regulations coming, that the whole oil sector is worth anywhere near current valuations. My guess is that despite what they say, BP’s partners are all looking around for other groups that might be necessary to replace BP.
It is hard to believe that a man is telling the truth when you know that you would lie if you were in his place.
H. L. Mencken.
Oil spill: BP reassures over Russian, North Sea assets
BP has sent its vice-president for the North Sea on a tour of oil rigs in the region to reassure workers their jobs are safe, following speculation the oil giant is preparing to withdraw from Britain.
By Rowena Mason Published: 9:01PM BST 22 Jun 2010
Its shares fell by 4pc on Tuesday, closing down at their lowest since 1996 at 334.28p, as Russia also sought guarantees that BP’s investments are financially secure following its US oil leak. The energy giant’s market value has now halved since the accident on April 20, amid fears that the first summer hurricane could hit the Gulf of Mexico next week.
The news came as a Louisiana judge reversed President Barack Obama’s six-month ban on US offshore drilling. The White House said it would challenge the ruling.
BP was on Tuesday also forced to pay attention to operations outside the US, after saying it wants to divest $10bn (£6.8bn) of assets a year to pay for the spill. It has so far only confirmed the disposal of its French retail business to Israel’s Delek Group for €180m (£150m).
Bernard Looney, the boss of BP’s offshore UK oil and gas production, told staff in an internal email that operations in the North Sea are under review after the Gulf of Mexico oil spill, suggesting some could be sold off. But he ruled out a total exit from the UK.
-----Tony Hayward, its chief executive, is now expected to fly to Russia for talks, after the country demanded clarity on how the leak will affect the TNK-BP joint venture.
“We want to see how this situation will affect the overall strategy of BP and how it may affect these joint ventures in Russia. We want to have some guarantees it will continue to work,” said Yuri Fedotov, the Russian ambassador to the UK. Meanwhile, Libya lent its support to BP, after Shokri Ghanem, of the National Oil Corporation, said he was “happy” with its partnership.
"Nothing contributes so much to the prosperity and happiness of a country as high profits."
David Ricardo, 19th century economist.
At the Comex silver depositories Tuesday, final figures were: Registered 52.08 Moz, Eligible 63.49 Moz, Total 115.57 Moz.
+++++
Crooks and Scoundrels Corner.
The bent, the seriously bent, and the totally doubled over.
Today we take a break from Ebenezer Squid and all the other squids slaving away doing God’s work putting Americans and Greeks into the poor house, we also take a break from BP and their blunder prone bull in a china shop, CEO Tony Hayward, this morning it’s the WSJ on Les Bleus, more hated in France than a BP drilling team showing up on a Caribbean beach. “You’ll never wear the blue again,” say the French to their England lookalike team. Few on the French team seemed familiar with their national anthem, adding to their endearment back home. Tumbrels and guillotines come to mind on their return to La Belle France.
"He said I offended his team," Mr. Parreira said. "I can't for the life of me think of what I said."
JUNE 23, 2010
Even the French Hate the French
Les Bleus Prompt a Rare Reaction After the World Cup: Universal Loathing
BLOEMFONTEIN, South Africa—You really have to hand it to the French. No team at the World Cup got the world's attention like they did.
As we bid them bon voyage from South Africa, let's count up all the lives they've touched. Ireland hates the French for cheating them out of a World Cup berth. The French people hate the French team for disgracing them on the world stage. The French team hates the French Football Federation for expelling one of its own.
And after Tuesday's 2-1 loss to South Africa—a game that guaranteed both teams would fail to advance to the next round—the South African coach made it clear he wasn't an especially big fan, either.
"It seems that the attitude towards them is justified," said Carlos Alberto Parreira, who was reacting to French coach Raymond Domenech's refusal to shake hands with him after the match.
Few teams at the World Cup have ever attracted such consistent and universal scorn. There were the Chicago "Black Sox" of baseball fame who conspired to fix the 1919 World Series, of course. Then there was that 2000 Spanish Paralympic basketball team that wasn't actually disabled.
But let's be honest, it's hard to top this French team's performance, which stands out in two major categories: gross incompetence and cartoonish dysfunction. Not only did France win the 1998 World Cup and make it to the 2006 final, it entered the tournament as the Group A favorite—only respond by scoring one goal, allowing four and finishing dead last among the four teams.
-----In doing so, the French saw one player, Nicolas Anelka, get sent home for allegedly insulting the coach at halftime of a loss to Mexico; the captain, Patrice Evra, get in a heated argument with a trainer; the entire team decide to lodge a protest by refusing to train; and the head of French soccer resigning.
-------In Ireland, the French implosion was met with a fine helping of Schadenfreude. The Irish still haven't gotten over how France qualified for the tournament at their expense, on Thierry Henry's handball goal in a European playoff against the Irish in November.
"The French team are jumped-up, overpaid prima donnas," said actor Gavin O'Connor. "It should be a privilege to play for your country and, in fairness to the Irish boys, they would have been proud to play for their country. We might have got hammered but we would have given 100%."
Matthew Kelly, an Irish student living in Paris, called the Fench team "infantile, overpaid and self-indulgent."
French Foreign Minister Bernard Kouchner called the team a "caricature" on French television and "a truly pathetic show."
----Ah, the coach. Mr. Domenech couldn't leave without one last controversy. After not shaking hands with his South African counterpart Tuesday, he refused to explain why during his news conference.
"Is there another question?" he repeatedly said, avoiding the issue.
Mr. Parreira said a French assistant told him that Mr. Domenech was upset because Mr. Parreira supposedly said that France didn't deserve to qualify for the World Cup, because of the Henry handball incident.
"He said I offended his team," Mr. Parreira said. "I can't for the life of me think of what I said."
Later today, England’s under performing ros bifs, take to the field against Slovenia, in a do or die effort to avoid the same fate as Le Bleus. Although it’s not entirely all their own fault they’re under performing. Someone thought it was a good idea to lock them up for nearly a month in Rustenburg, far from civilization, cigarettes, booze and WAGS. Little wonder that they look like nervous wrecks when they take to the field. With most of Britain taking the afternoon off to watch England’s must win effort in wintry South Africa, GB Plc faces a production slump this week, if England’s reds match the French bleus.
"There is no way of keeping profits up but by keeping wages down."
David Ricardo, 19th century economist.
The monthly Coppock Indicators finished May:
DJIA: +276 UP. NASDAQ: +499 UP. SP500: +304 UP. The great Bull market goes on with the all three continuing higher in positive numbers, but is now under serious pressure.
No comments:
Post a Comment