Suez Canal revenue falls 7.2% in 2008-2009 fiscal year

July 31, 2009
The revenue of Egypt's Suez Canal in the 2008-2009 fiscal year which ended on June 30, decreased to 4.74 billion U.S. dollars, down 7.2 percent from a record high of the previous fiscal year, the canal's governing body said Sunday.

Chairman of the Ismailia-based Suez Canal Authority Ahmed Ali Fadel made the announcement at a press conference to mark the 53rdanniversary of the Suez Canal's nationalization.

"The total revenue of the 2008-2009 fiscal year fell to 4.74 billion dollars, down 7.2 percent compared with the previous year," Fadel said.

Meanwhile, the number of ships passing through the waterway fell to 19,354 in the 2008-2009 fiscal year, down from 21,080 in the 2007-2008 fiscal year. Some 811.4 million tons of goods passed the canal in the period, down 8.9 percent from 890 million tons the previous year.

According to the official, the traffic of the canal has been hit hard by the shrink of world trade since last autumn when the global financial crisis broke out. The pirate attacks in the Gulf of Aden, a key route to the canal, also scared away some cautious ship owners.

Its revenue dipped to 302 million U.S. dollars in February, registering a five-year low.

"We are now facing some hardships," Fadel said, referring to the Somali piracy activities, which, according to him, has become less rampant.

"The piracy issue has been magnified," Fadel stressed.

To alleviate the impact, the authority fixed the Suez Canal toll and kept it unchanged in 2009. The authority is also deepening the canal from 62 feet to 66 feet so that 64 percent of the world's oil tanks and 99 percent of the cargo ships could pass the waterway by the end of this year.

The Suez Canal, linking the Red Sea and the Mediterranean, is one of the world's busiest waterways for international trade and Egypt's major source of revenue along with tourism, remittances from expatriate workers and energy exports.

In the fiscal year of 2007-2008, the canal's revenue recorded about 5.1 billion U.S. dollars, up 22.5 percent on a year-on-year basis.

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Eurozone economic sentiment continues to recover in July

July 31, 2009
The Economic Sentiment Indicator (ESI) for the European Union (EU) and the euro area improved further in July, the fourth consecutive increase in both areas since the trough in March, the EU executive Commission said on Thursday.

However, in both areas, the level is still far below the long-term average. The ESI increased by 3.9 points in the EU to 75, and by 2.8 points in the euro area to 76 points.

Recovery of the industrial confidence indicator continued, backed by a further improvement in production expectations and normalisation in the level of stocks, the Commission said.

Manufacturers' order books finally showed some improvement after a slide that has lasted more than a year.

But both stocks of finished goods and production expectations remained below their long-term averages and, more importantly, industrial activity remained weak, as manifested by the all-time low level of capacity utilisation, it said.

The increase in the ESI resulted from a general improvement in sentiment in all sectors, except construction.

Services notably improved in the EU by 3.6 points and to a lesser extent in the euro area by 2.1 points.

Retail trade rose by 2.9 points in the EU and 3.5 in the euro area, while industry continued its improvement from the trough in March by 2.7 and 2.2 points, respectively.

Likewise, sentiment among consumers picked up again by 1.9 in the EU and 2.1 in the euro area.

Construction, in contrast, remained at June levels.

The majority of the EU member states registered an improvement. Among the largest member states, Britain saw a 5.0-point rise, followed by Spain with 3.9 points, Italy 3.5 and Germany 3.2. But the rise was a marginal 0.3 in France, 0.2 in the Netherlands and 0.1 in Poland.

The financial services confidence indicator - not included in the ESI - moved up by 2.0 points in both areas. While managers' assessment of the business situation and demand over the past three months improved markedly, expectations of demand for the next three months decreased substantially compared with the improvement registered last month.

In a separate report, the Commission said the Business Climate Indicator (BCI) continues to recover in July in both the EU and the euro zone, but noted the level was still very low, even when compared to the previous historical lows of 1993.

"This suggests that year-on-year industrial production growth will have been negative in June and will remain subdued in July," said the Commission.

The rise in the BCI reflected an overall easing. In particular, both order books and export order books finally showed some signs of improving.

Managers' production expectations and their perception of the production trend observed in recent months picked up for the fourth month in a row.

Their opinion of stocks of finished goods improved as well, even though the level of stocks was still considered excessive.

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Oil plunges 6% on unexpected inventory surge

July 30, 2009
Oil prices plunged nearly 6 percent on Wednesday after data showed crude inventories surged the most since April, reminding the fundamentals were still quite weak at the moment.

Light, sweet crude for September delivery plummeted 3.88 U.S. dollars, or 5.8 percent, to settle at 63.35 dollars a barrel on the New York Mercantile Exchange.

According to the U.S. Energy Department's Energy Information Administration (EIA), crude stockpiles rose by 5.1 million barrels for the week ended July 24, the biggest surge since April, driving the total stockpiles to 347.8 million barrels, 9.5 percent higher than the five-year average for the period.

Oil prices headed even lower after the Commerce Department reported that new durable goods orders fell 2.5 percent in June, the largest percentage drop since January, after rising 1.3 percent in May.

Meanwhile, U.S. stocks were heading for the biggest one-day loss in three weeks on Wednesday and the dollar advanced the most against a basket of major currencies in almost four weeks, further encouraging selling in the commodities markets.

London Brent for September delivery dropped 3.60 dollars to 66.28 dollars a barrel on the ICE Futures exchange.

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US home price index shows increase

July 30, 2009

THE United States housing market may finally have turned around after three years, given the rise in the widely watched Case-Shiller home price index for May, the developers of the index has said.

The Case-Shiller home price index for May posted an increase of 0.5 percent on Tuesday, the first monthly rise since 2006, instead of a forecast 0.5 percent decline, though prices have tumbled more than 32 percent from their peak in the second quarter of 2006.

"This is much more important than an up day on the stock market. It may mean that we may have changed direction," Yale University economist Robert Shiller, one of the developers of the index, said.

After seasonal adjustment, prices showed a 0.2 percent decline, but this was still an improvement in the recent trend, economists said.

It is "a pretty significant indicator that we might be at or near a bottom," the other developer of the index, economist Karl Case, said.

Other recent signs of a housing market turnaround were seen in new home sales data for June which jumped 11 percent, the biggest monthly gain in eight years, the US Commerce Department said on Monday.

Existing home sales rose for the third straight month in June, the National Association of Realtors said last week, feeding optimism about the beleaguered housing sector.

Still, caution was warranted as long as the US unemployment rate and mortgage foreclosures keep rising, both Shiller and Case advised.

The upturn in the Case-Shiller index in May may be driven by seasonal factors, Shiller cautioned.

"I am worried that we'll have five or more years of a weak economy because we're seeing economic situations of fundamental uncertainty," Shiller said.

The lesson of the housing bubble is that preventative risk management must be a priority going forward, Shiller said. For example, changes to mortgage contract structure must be made to protect home-buyers in the event of a downturn.

But the US government bailouts of banks hit by losses on home mortgages in the past year may mean there will be less incentive for banks to engage in such risk management techniques, Shiller admitted. "The bailouts we've seen were extraordinary events that we want to prevent as much as possible in the future."

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Central bank: Mexican economy may shrink 7.5% this year

July 30,2009
Mexico's economy may shrink 7.5 percent this year, the country's central bank, Bank of Mexico, said in its quarterly inflation report Wednesday.

The new estimate comes a day after the National Statistics Agency (Inegi) reported that the economy may have slipped by over 11 percent in May, according to a preliminary indicator.

The report said Mexico's Gross Domestic Product（GDP）, which is measured quarterly, shrank 8 percent during the first quarter, adding that Mexico might only grow 2.5 percent next year.

"The world financial crisis has exposed Mexico's economic weaknesses," the report said. "The contraction of our economy has been very severe and larger than many other nations."

One of the Mexican economy's weaknesses is its heavy dependence on the U.S. economy. Investors lose confidence in the Mexican government's capability to handle financial affairs when oil prices fall and the government lack new equipment, best technologies and working practices, the report said.

"Even so, it is also important to recognize that Mexico has shown a substantial ability to resist the world financial crisis," the report said, noting that the government had avoided balance-of-payments crises seen in 1994 to 1995 and in 1981 when oil prices fell.

The report also estimated that Mexico might lose 735,000 officially registered jobs during 2009, and might regain only 200,000 in the following year. Only around half of Mexico's jobs are fully registered with the Mexican Social Security Agency.

The report did not alter inflation estimates for this year or next.

The central bank said inflation was no more than 4.5 percent in the second quarter and would be no more than 5.25 percent in the third quarter, while in the first quarter of 2010, it would be no more than 4.25 percent.

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Deutsche Bank ups bad-loan provisions

July 29, 2009
Deutsche Bank AG braced for an economic slump by raising loan loss provisions in the second quarter, overshadowing a nearly 70 percent rise in net profit driven mainly by its investment bank.

Shares in Deutsche, Germany's biggest bank, fell 7.9 percent to 47.93 euros by 0912 GMT yesterday - the largest decliner on the German blue-chip DAX index - as its cautious outlook showed that fallout from the global credit crisis in the real economy is a concern, even as investment banking profits recover.

Deutsche said its provisions for credit losses rose to 1 billion euros in the second quarter from 135 million euros a year earlier and were almost double the 526 million euros in provisions made in first quarter.

Equinet analyst Phillip Haessler said he was particularly worried about the bank's higher risk provisions.

"While the second-quarter results were strong, we expect the positive capital market environment will not be sustainable," he said.

BBVA, Spain's second-largest bank, also said yesterday it raised its bad loan provisions, prompting a 10 percent decline in first-half net profit, but net interest income increased sharply.

Deutsche Bank Chief Executive Josef Ackermann said the Frankfurt-based bank was well prepared for an uncertain environment, adding that he remained cautious on the outlook for the global economy, particularly employment and real estate markets.

For the banking sector as a whole, pressure on loan portfolios is likely to continue increasing substantially as private and corporate insolvencies mount and default rates rise, Deutsche Bank said.

The lender's second-quarter net profit rose to 1.09 billion euros ($1.56 billion) from 649 million euros a year earlier, and above the 985 million euro average estimate in a Reuters analyst poll.

But earnings were flattered by a low tax rate made possible by a raft of one-off charges. On a pretax level, profit more than doubled to 1.32 billion euros, but fell short of the 1.47 billion euro average analyst estimate.

"We call the second-quarter numbers a mixed bag. Deutsche Bank did not beat market expectations. Pretax earnings were slightly below and net income slightly above market expectations due to a low tax rate of 18 percent," said DZ Bank analyst Matthias Duerr.

Investment banking

The figures underline Deutsche's reliance on investment banking, which on its own accounted for more than 60 percent of total pretax profit in the second quarter.

Rival Credit Suisse last week posted better-than-expected profit on the back of market share gains in investment banking and hefty wealth management inflows.

A rise in revenue from trading debt-related products and a reduction of loss-making toxic assets on its books helped Deutsche turn around profits at the investment banking arm from a 311 million euros loss in the second quarter 2008.

At the investment bank's core debt sales and trading arm, markdowns on toxic assets tied to subprime mortgages fell to 108 million euros during the second quarter, compared with the 2.1 billion euros in markdowns a year earlier.

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AIG keeps $2.4b from asset sale as taxpayers wait

July 29, 2009
American International Group Inc, the insurer dismantling itself to repay US loans, used $2.4 billion from asset sales to shore up a property-casualty unit instead of paying down its government credit line.

Proceeds from the two biggest business divestitures New York-based AIG announced so far were left with Chartis Inc, formerly known as AIU Holdings Inc, to improve the firm's capital. AIG was required to hold the funds by regulators and rating firms that monitor the insurer's ability to pay policyholder claims, said Mark Herr, a company spokesman.

The insurer's need to retain some sale proceeds may draw questions from lawmakers about whether AIG can repay loans within its government bailout, which ballooned to $182.5 billion. AIG's debt on a Federal Reserve credit line exceeded $40 billion most of this year, even after the company announced $6.7 billion in asset sales since being rescued in September.

"The taxpayer should not have been exposed to these risks," said Representative Brad Sherman, a California Democrat on the House Financial Services Committee. "We're going to lose something on the AIG bailout, let's hope it doesn't have too many digits."

Chief Executive Officer Edward Liddy has said AIG would repay its debts, which include the credit line and $40 billion from the Troubled Asset Relief Program, within five years if economic markets don't worsen. The company plans to hand over stakes in two non-US life insurance units in exchange for a $25 billion reduction of its Fed debt.

The $1.9 billion sale of auto insurer 21st Century to Zurich Financial Services AG and $500 million from the $1.1 billion public offering of shares in reinsurer Transatlantic Holdings Inc will go toward improving the "quality of capital" at Chartis, the insurer said in statements this month and in June.

"Many factors affect each asset sale and how the net proceeds are applied," Herr said. "Proceeds have been applied to maintain appropriate levels of capital in AIG's insurance subsidiaries, as is required by AIG's state regulators and ratings agencies, while some proceeds have been paid to the government."

The trustees managing the majority US stake in AIG declined to comment, said spokesman Peter Bakstansky, as did the New York Fed, said spokeswoman Deborah Kilroe.

Core operations

Liddy has said Chartis, which sells property-casualty coverage to corporations and high-net worth individuals in 160 countries and jurisdictions, will have the core remaining operations after AIG sheds a plane-leasing unit, consumer lender and asset manager.

The company gave the unit a separate brand, AIU Holdings, which was renamed Chartis on Monday, as management positions it for a public offering or sale of a minority stake. The subsidiary is "well capitalized" and had net written premiums of $36 billion last year, said Kristian Moor, president of Chartis, in an April statement.

"In effect, the Federal Reserve has decided to reinvest those proceeds" in Chartis, said William Poole, former president of the St Louis Fed. "How do we know whether the Fed will get a decent return when the funds go that way, rather than repaying the Fed right now?"

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Indian central bank keeps key interest rates unchanged

July 28, 2009
The Reserve Bank of India (RBI),India's central bank, Tuesday kept the key interest rates unchanged, apparently due to concern over inflation.

RBI Governor D. Subbarao said in a statement issued in Mumbai: "It is worth reiterating that the Reserve Bank will maintain an accommodative monetary stance until there are definite and robust signs of recovery."

The central bank has raised its inflation forecast for this fiscal to 5 percent, against 4 percent earlier.

In the policy unveiled by the central bank in April, both the repo and the reverse repo rates were cut by 25 points each, while statutory liquidity ratio and the cash reserve ratio were kept unchanged.

The repo rate, now standing at 4.75 percent, is the interest charged by the RBI on borrowings by the commercial banks of the country.

The reverse repo rate, standing at 3.25 percent, is the interest charged by commercial banks on borrowings by the central bank.

The central bank has also raised growth forecast for the country's economy to 6.5 percent from earlier projection of 5.7 percent.

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Oil prices settle higher again

July 28, 2009
OIL prices pushed higher again yesterday, as stock markets dipped with mixed signals on the economy.

Benchmark crude for September delivery rose 33 cents to settle at US$68.38 a barrel on the New York Mercantile Exchange.

Oil has rebounded by almost US$10 a barrel this month as stronger economic results from the U.S. and China boosted investor optimism along with better than expected second-quarter earnings results from many companies.

The Dow Jones industrial average has risen about 11 percent in the last 10 days, but was down slightly in yesterday afternoon trading.

The government said yesterday that new U.S. home sales jumped 11 percent in June, the largest amount in nearly nine years.

Sales have risen for three straight months, but the median sales price of US$206,200 was down 12 percent from US$234,300 a year earlier.

The report initially sent oil - and the stock markets - higher.

But even with growing signs of optimism, demand for oil has remained weak.

"Oil can't stand on its own," said Phil Flynn of Alaron Trading. "It's looking at what the other markets are doing."

Peter Beutel of Cameron Hanover said oil also has gotten support from refineries running at levels well below years past.

"That's the only fundamental factor for prices to be higher," he said.

In other Nymex trading, gasoline for August delivery rose 1.88 cents to settle at US$1.9347 a gallon and heating oil gained 1.53 cents to settle at US$1.7966.

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Dollar falls on strong home sales data

The dollar fell against most major currencies on Monday as U.S. new home sales jumped in June.
The U.S. Commerce Department reported that new homes sales rose by 11 percent in June to a seasonally-adjusted annual rate of 384,000 units. It was the largest increase in eight years.

New home sales in June rose in the Northwest, Midwest and West, but declined in the South. The number of unsold new homes fell by the 26th consecutive month to 281,000. The inventory yardstick, the supply of new homes at current rates, fell from 10.2 months to 8.8 months.

A three-month moving average shows that new home sales appeared to have hit a bottom in January, and are starting to grow ever so slightly, said analysts of Global Insight.

It is unknown that how much of the increase in sales is coming from a government tax credit for new homeowners. Home sales and housing starts numbers may level off for a while when the tax credit expired on November 30.

Currency investors are watching closely at the China-U.S. Strategic and Economic Dialogue which opened in Washington on Monday. They are also looking for trading clues from the upcoming U.S. GDP data and auctions of Treasury debt.

The euro bought 1.4243 dollars in late New York trading compared with 1.4216 dollars it bought late Friday. The pound rose to 1.6498 dollars from 1.6432 dollars.

The dollar fell to 1.0804 Canadian dollars from 1.0839 Canadian dollars, and fell to 1.0698 Swiss francs from 1.0701 Swiss francs. It rose to 95.24 Japanese yen from 94.73 Japanese yen.

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Russian gold miner Polyus Gold posts $44.9 mln net profit in Q2 2009

July 27, 2009
Polyus Gold, Russia's largest gold mining company, said on Thursday its net profit calculated to Russian Accounting Standards increased almost 400%, quarter-on-quarter, in April-June 2009 to 1.4 billion rubles ($44.9 million).

Polyus Gold attributed its Q2 net profit growth to the receipt of 2008 dividends from closed joint stock company Polyus.

Headquartered in Moscow, Polyus Gold's operating mines and development and exploration projects are located in five major gold mining regions in Russia - the Krasnoyarsk Territory, the Irkutsk Region (both in East Siberia), the Far Eastern Magadan and Amur Regions and the Republic of Sakha (Yakutia) in northeast Russia.

Polyus Gold, which employs over 12,500 people, produced 38 metric tons (1.2 million ounces) of gold in 2008.

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Russia reports 24.6% gold output growth

July 27, 2009
Gold output in Russia grew 24.6%, year-on-year, in January-June 2009 to 77.3 metric tons (2.5 million troy ounces), the Union of Russian Gold Miners said on Monday.

Gold production decreased 23.5% in June 2009, year-on-year, due to lower alluvial gold output, the union said.

The production growth in the reporting period is largely attributable to production buildup in Russia's easternmost territory of Chukotka and the Amur Region in the Russian Far East, the union said.

Russia's largest gold miner is Polyus Gold, whose operating mines and development and exploration projects are located in five major gold mining regions of Russia - the Krasnoyarsk Territory and the Irkutsk Region in Siberia, the Far Eastern Magadan and Amur Regions, and the Republic of Sakha (Yakutia) in East Siberia.

Russia's gold production increased 13.3% in 2008, year-on-year, to 184.49 metric tons (5.9 million troy ounces).

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Gold price increases lower on profit-taking

July 25, 2009
Gold price, Silver price, profit-taking, COMEX, New York Mercantile Exchange
Gold futures on the COMEX Division of the New York Mercantile Exchange fell slightly on Friday as investors booked profits after the precious metal hit a six-week high in the previous session. Silver and platinum both gained.

Gold price for August delivery lost 1.70 U.S. dollars, or 0.2 percent, to finish at 953.10 dollars an ounce.

Analysts indicated that gold's failure to create another new high on Friday disappointed investors, who opted to take profits ahead of weekend to avoid uncertainty risk. On Thursday, gold touched as high as 957.50 dollars an ounce, the strongest level since June 11.

The modest gain in crude oil and softer tone in the dollar index gave the yellow metal some support and limited the loss.

September silver finished at 13.875 dollars per ounce, up 10.5 cents. October platinum rose 3.40 dollars to 1191.40 dollars an ounce.

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Oil soars on economic optimism

July 25, 2009
Oil price, economic situation
Oil prices ended above 68 U.S. dollars a barrel on Friday and gained for the second straight week as investors felt more confident about the global economy.

Light, sweet crude for September delivery rose 89 cents to settle at 68.05 dollars a barrel on the New York Mercantile Exchange, the highest close since July 1. The contract has gained more than 13 percent in the last two weeks, boosted by an upbeat sentiment in the market.

As many major U.S. companies reported better-than-expected quarterly results, more and more investors believed the recession had bottomed out and expected an economy recovery by the end of this year or early next year, which will trigger a rebound in energy demand.

Meanwhile the dollar kept falling against the euro in the last two weeks, encouraging demand for dollar-priced assets such as oil to hedge against inflation.

In London, Brent crude for September delivery rose 1.07 dollars to settle at 70.32 dollars a barrel on the ICE Futures exchange. 　

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Retail Sales Increase 2.9% in UK

July 24, 2009
UK, United Kingdom, retail, increase

RETAIL sales in the United Kingdom rose 2.9 percent in June compared to a year earlier and mortgage lending climbed by 8 percent in the month as summer weather smiled on a struggling economy, official reports said yesterday.

The upbeat reports contrast with rising unemployment, which now stands at 7.6 percent and is expected to rise for some time.

Retail sales, which have remained fairly buoyant through the recession, were up 1.2 percent from May, when sales slid 0.9 percent from April, the Office for National Statistics said.

In the three months through June, retail sales climbed 1.3 percent compared to a year earlier, led by a 4.6 percent gain by department stores and other unspecialized retailers.

Sales of households goods fell 6.2 percent, continuing a protracted slump, the agency said.

"Admittedly, sales were lent a helping hand by the good weather," said Vicky Redwood, analyst at Capital Economics, who noted that clothing sales were up 4.7 percent from May.

"Nonetheless, the big picture is still that the high street has been holding up surprisingly well since the start of this year," she added.

The nation basked in above-average temperatures with less than normal rainfall in June. This month, cooler and wetter weather may put a damper on spending.

Inflation has mod

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Credit Suisse profit rises

July 24, 2009
Key Words: Credit Suisse, profit, rise
SWISS bank Credit Suisse Group yesterday reported a 29 percent increase in second-quarter net profit after a strong performance in its investment unit drove up core revenues.

The net profit of 1.57 billion Swiss francs (US$1.41 billion) compared with 1.22 billion francs in the same quarter last year and matched most analysts' expectations.

Credit Suisse noted that the results included one-time charges, legal costs and tax benefits, without which net profit in the second quarter would have been 2.5 billion francs.

Credit Suisse settled a dispute last month with Huntsman Corp over claims the bank scuttled a US$6.5 billion buyout of the US-based chemicals maker.

"Our reduced-risk business model is providing the basis for more sustainable, high-quality, lower volatility earnings," Chief Executive Brady W. Dougan said in a statement.

Investment banking made a profit of about 1.66 billion francs before tax.

Profit in private banking dropped 23 percent to 935 million. Wealth management saw a similar decline to 662 million francs before tax.

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Japan's trade surplus shrinks 99.7% in first half

July 23, 2009
Japan trade surplus
Japan's trade surplus shrank 99.7 pct in the first half of 2009 from a year ago to 8.32 billion yen (88.5 million U.S. dollars) due to the global financial crisis, the Finance Ministry said Thursday.
In June, the world's second largest economy posted a trade surplus of 508.00 billion yen, marking the first rise in 20 months from year-earlier levels, according to the ministry.
It was Japan's fifth straight monthly surplus. Exports fell 35.7 percent from a year earlier to 4,599.98 billion yen, while imports shrank 41.9 percent to 4,091.97 billion yen, the ministry said in a preliminary report.
Trade figures are measured on a customs-cleared basis before adjustments for seasonal factors. (1 U.S. dollar is equivalent to 94 yen)

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Oil dips on signs of growing supply glut

July 23, 2009
Oil price
OIL prices dipped yesterday after a government report showed U.S. fuel supplies are growing, with American consumers buying less gasoline even at a huge discounts to last year.
Benchmark crude for September delivery dropped 21 cents to settle at US$65.40 a barrel on the New York Mercantile Exchange after falling as low as US$63.76. In London, Brent prices added 34 cents to settle at US$67.21 a barrel on the ICE Futures exchange.
Energy prices got a boost this past week as Federal Reserve Chairman Ben Bernanke said the economy was improving and companies reported strong second-quarter earnings.
But yesterday, traders focused on a report by the Energy Information Administration's that showed bulging supplies of motor gasoline and distillate fuel.
The report said the U.S. has 215.4 million barrels of motor gasoline in storage, about 3 percent more than last year. And that was when US$4-a-gallon gasoline had more people leaving cars parked in the driveway. Distillates, which include heating oil, are rising to their highest level since the mid-1980s.
Both illustrate how much U.S. consumers have cut back on energy consumption this year.
Retail sales for gasoline are falling, even though a gallon (3.8 liters) costs 36 percent less than last year.
In other Nymex trading, gasoline futures for August delivery rose 2.63 cents to settle at US$1.8383 a gallon and heating oil rose 1.28 cents to settle at US$1.7112 per gallon. Natural gas for August delivery added 8.8 cents to settle at US$3.793 per 1,000 cubic feet.

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Obama hits out at big banks

July 22, 2009
Key Word: Wall Street bank, recession
President Barack Obama said on Monday that Wall Street banks had failed to show remorse for the "wild risks" that triggered a financial meltdown and helped to push the United States into recession.
Obama unveiled a sweeping regulatory overhaul in June aimed at improving government oversight of banks and markets to avert a repeat of the financial crisis.
"The problem that I've seen, at least, is you don't get a sense that folks on Wall Street feel any remorse for taking all these risks," Obama said in an interview with PBS television.
"You don't get a sense that there's been a change of culture and behavior as a consequence of what has happened. And that's why the financial regulatory reform proposals that we put forward are so important," he said.
Obama said the planned regulatory reforms would prevent Wall Street firms from taking the "wild risks" they had taken before the financial crisis. Shareholders should also have the right to weigh in on huge bonuses paid to executives, he said.
Wall Street paid more than $18 billion of bonuses in 2008, a year in which it needed trillions of dollars of taxpayer support.
Asked if he was concerned about the jump in profits reported by banks Goldman Sachs and JPMorgan Chase & Co, Obama said his administration had less leverage over them now that they had repaid government bailout money.
He said the measures put in his place by his government to stabilize the economy were working, despite unemployment projected to rise above 10 percent within months.
"I think we've put out the fire. The analogy I use sometimes is, we had this beautiful house. And there was a fire. We came in and we had to hose it down.
"The fire is now out, but what we've discovered is, we need some new tuckpointing, the roof's leaking, the boiler's out, oh, and by the way, we're way behind on our mortgage," he said.

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Oil prices climb ahead

July 22, 2009
Key Word: Oil Price, DoE report
Oil prices moved higher Tuesday, with the market anticipating the US government's weekly oil report will show a decline in the crude stockpile as the recession-mired economy shows signs of recovery.

New York's main futures contract, light sweet crude for delivery in August, rose 74 cents to close at $64.72 a barrel. The August contract expired at the close.

In London, Brent North Sea crude for September delivery gained 43 cents to settle at $66.87 a barrel.

Prices climbed in "anticipation of the Department of Energy (DoE) stats coming out tomorrow," said Andy Lipow, of Lipow Oil Associates.

The DoE report shows the weekly change in crude and oil products inventories in the United States, the world's biggest energy consumer.

Oil products inventories have increased sharply in recent weeks, but an anonymous reseacher forecast that refinery problems would curb the buildup in the latest report.

The figures will be "more bullish than the market had anticipated due to a number of refinery problems around the country, in the Gulf Coast and the West Coast," anonymous reseacher said.

The oil market was supported once again by gains in European stock markets. The boost, however, faltered after Wall Street stocks lost momentum.

Over the past five sessions, the benchmark New York futures contract has surged more than five dollars on the back of stock rallies.

Traders also digested key testimony Tuesday from US Federal Reserve chairman Ben Bernanke.

The US Federal Reserve is likely to maintain its easy money policy for some time despite signs of improvement in the economy and financial markets, Bernanke told lawmakers.

Bernanke, delivering his semiannual economic report to Congress, cited "notable improvements" in financial markets and a somewhat brighter economic outlook but considerable risks led by high unemployment.

"In light of the substantial economic slack and limited inflation pressures, monetary policy remains focused on fostering economic recovery," Bernanke told the House of Representatives Financial Services Committee.

The market kept an eye on Iran, where disputed election results have threatened the stability of the oil-producing nation.

The Islamic republic produces about 3.8 million barrels of crude per day and is the third-biggest global oil exporter after Russia and OPEC kingpin Saudi Arabia.

Iranian hardliners on Tuesday denounced a call by reformists for a referendum to resolve the deepening political crisis in the Islamic republic, branding it a Western plot to cause more "havoc."

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APEC economies vow not to raise new trade barriers till 2010

July 22, 2009
Key Word: APEC, trade barrier
Trade ministers from the Asia-Pacific Economic Cooperation (APEC) economies agreed here on Wednesday to extend till the end of 2010 the commitment to refrain from raising new barriers to trade and investment in the region.
APEC leaders undertook in November 2008 to refrain till end 2009 from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing WTO inconsistent measures in all areas, including those that stimulate exports.
"We agreed to extend the above commitment for another year, that is until 2010, and stand ready to extend this further, if necessary," trade ministers attending the Ministers Responsible for Trade Meeting of APEC 2009 said in a statement after the meeting.
They added that they will "promptly notify the WTO of any measures that fall short of these commitments."
The trade ministers said in the statement that the global economy appears to be bottoming out, but the outlook remains uncertain and significant risks remain, adding that sustaining trade and investment flows remains critical to the future prosperity.
The statement said that APEC economies agreed to design policy responses to the crisis, including fiscal policy and action in support of the financial sector, in a manner that minimizes distortion to trade and investment.
The trade ministers said that they will regularly review their commitment to free trade and open markets, and keep their markets open and continue to reduce barriers to trade and investment, using the crisis as an opportunity for reform.
The two-day Ministers Responsible for Trade Meeting, which kicked off here on Tuesday, is the first APEC Ministerial Meeting of APEC 2009 chaired by Singapore. Trade ministers from 21 APEC economies are here to discuss policy responses to the economic crisis as well as preparing for recovery in the longer-term.

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OPEC Says Members to Continue Oil Production Cut

July 20, 2009
Keyword: OPEC,oil product
Chairman of the Organization of the Petroleum Exporting Countries (OPEC) Botelho de Vasconcelos said that OPEC member countries will continue to comply with the OPEC's decision on oil production cut.

Botelho de Vasconcelos, who is also Angola's minister of Oil Industry, guaranteed that all the OPEC member countries are complying with the oil production cut decision made in May in Austria.

In his capacity as OPEC chairman, he told reporters that the OPEC members whose oil production are being cut by 20 to 22 percent have achieved a desired goal of maintaining acceptable oil prices in the world market.

However, he admitted, some elements of the oil market are not yet fully controlled, hence the continuation of oil production cut.

From this perspective, he said, studies and projections are being conducted with some prudence as there is already speculative situation in the market.

"It is in this framework that oil raised to 72 dollars, fell to 58 dollars and currently it seems to be fixed at 72 dollars, which shows that there exist some fluctuation that does not satisfy exporters, being fundamental to find out a level of equilibrium on the price so that the various economies can develop themselves without constrains," he said.

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Morgan Stanley raises 2009 growth forecast

July 21,2009
Keyword: Morgan Stanley, forecast
US Investment bank Morgan Stanley has raised its 2009 GDP growth rate forecast for China to 9 percent from 7 percent earlier. It has also upped its forecast for 2010 to 10 percent from the 8 percent previously, according to a recent report by Morgan Stanley economist Qing Wang.

"This automatically raises our implied earnings view and index multiples for the Hang Seng China Enterprises Index (HSCEI)," Jerry Lou, China strategist of Morgan Stanley, said at a media briefing yesterday.

HSCEI, which tracks the H shares of mainland companies listed in Hong Kong, may rise by 40 percent by the end of the year, while the indices measuring the domestic A share market are likely to rise by higher margins, Lou said.

As the economic recovery is not yet full-fledged, Lou believes the government would not officially opt for a tight monetary policy - despite a series of micro-tightening efforts - before the second half of 2010. "We assume there would be two rate increases in the second half of 2010," he said.

Chinese stocks jumped 2.42 percent to a fresh 13-month closing high yesterday while turnover surged to its highest in nearly 26 months, with metal and coal shares ending higher after data reinforced investor faith in a strong third-quarter outlook for the economy.

The Shanghai Composite Index ended at 3266.92 points, posting its biggest one-day percentage gain in seven weeks. The gauge has surged 79 percent this year as banks tripled new loans to 7.37 trillion yuan in the first half from a year earlier and the government implemented a stimulus package.

"The best way to profit from this bullish economic outlook, in our view, is through the consumer and industrial sectors," Lou said, adding that the growth laggards, such as consumption and industrials will have to catch up during the economic boom.

The strategy is to avoid sectors sensitive to monetary and fiscal policy, such as banks, property and materials, because they are too close to the "policy exit". These sectors, according to Lou, were also the early beneficiaries of the stimulus-driven economic recovery.

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Oil above US$63

Oil above US$63
July 19,2009
OIL MARKET
 OIL prices surged through the week, rising above US$63 a barrel yesterday as China reported faster economic growth and political turmoil in Iran raised concerns about future oil supplies.

Benchmark crude for August delivery jumped US$1.54 to settle at US$63.56 a barrel on the New York Mercantile Exchange. In London, Brent prices climbed US$2.63 to settle at US$65.38 a barrel on the ICE Futures exchange.

Earlier in the week, crude futures were tugged higher by a rally on Wall Street, and prices continued to rise as China reported that its economy grew faster in the second quarter.

Political unrest in Iran, combined with reports of union troubles with Iraq's Southern Oil Co., also sparked concerns about whether oil production would suffer later this year.

Iran sits on 136.2 billion barrels of oil, ranking behind Saudia Arabia and Canada in proven reserves, according to the Energy Information Administration. Ongoing political turmoil there could disrupt supplies in the future and possibly force crude prices higher.

Oil prices also were buoyed by a US government report that new home construction rose in June to the highest level in seven months. And Bank of America Corp. and Citigroup Inc. reported big second-quarter profits.

Still, with the country swimming in surplus oil and consumer demand hovering around 10-year lows, analysts struggled to find a fundamental reason for an extended rally in oil.

Investors, those who have no commercial use for the oil contracts they're buying, aren't basing their decisions on the economy's present condition. They're simply buying oil right now on the expectation that the economy will eventually heal.

In other Nymex trading, gasoline for August delivery added 5.64 cents to settle at US$1.7699 a gallon and heating oil climbed 4.16 cents to settle at US$1.641 a gallon. Natural gas for August delivery ticked higher by a fraction of a penny to settle at US$3.669 per 1,000 cubic feet.

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SWEDBANK suffering from credit problems

July 20,2009
BANK, CREDIT
SWEDBANK AB, one of Sweden's four main banks, issued a 2Q net loss of 2 billion kronor (about US$300 million) on July 17 for it is suffering from exposure to the troubled economies of the Baltic countries and Ukraine.

The Stockholm-based company also said it expects to reduce staff numbers by 3,600, or 16 percent, by the second quarter of 2010 compared to the end of 2008. By June 30 this year, the bank had a total of around 21,000 staff, down from 21,850 at the end of last year.

Most of the cutbacks will be made in the Baltic region and in the bank's international operations, it said. In Sweden, the reductions will mainly be achieved through retirement.

Swedbank's net loss in the second quarter compared with a profit of 3.6 million kronor in the same three months last year. Aside from growing credit problems, especially in Ukraine, Latvia and Lithuania, where customers began to struggle to repay interest, the bank said it was also hit by low money market rates, lower lending volumes as well as extended funding maturities.

However, credit quality in both Sweden and Estonia was better than expected, it said.

Impairment losses on loans reached 6.7 billion kronor in the quarter, with 4 billion related to its Baltic Banking unit and 2 billion to Ukrainian Banking.

The size of the impairment losses pushed the bank's shares down 2.3 percent to 47.30 kronor on the Stockholm stock exchange.

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US STOCK STRONG WEEK

July 18, 2009
KeyWords: US STOCK, Dow Jones,BOND

STOCKS ended little changed yesterday but held onto an enormous rally for the week. Investors are looking to another flood of corporate earnings reports next week to provide more signs that the US economy is healing.

The Dow Jones industrials and the Standard & Poor's 500 index posted their best weekly performance since the week ending March 13, when the market's spring rally began. All the major stock indexes rose about 7 percent for the week.next week's large batch of reports includes dow components caterpillar inc., dupont and merck & co.

"We had a big run-up earlier in the week and I think people would just as soon go into the weekend without any major disruptions in their exposures," said Jeff Buetow, managing partner at Innealta Portfolio Advisors. "I think people want the market to go up."

Solid results from Goldman. and Intel Corp. spurred buying early in the week. But not all the results yesterday were strong, holding the market in place.

Yesterday, BOA. and Citigroup Inc. became the latest banks to report big profits but also weakness in their loan portfolios. General Electric Co. beat earnings forecasts, but its revenue came up short.

"The important thing is these earnings results, while not all entirely positive, are beginning to show some signs of stabilization," said Tom Kersting, an analyst at Edward Jones.

The Dow Jones industrials rose 32.12, or 0.4 percent, to 8,743.94. The broader Standard & Poor's 500 index slipped 0.36, or less than 0.1 percent, to 940.38, while the Nasdaq composite index rose 1.58, or 0.1 percent, to 1,886.61.

The number of stocks that fell narrowly outpaced those that rose on the New York Stock Exchange, where trading volume came to 1.3 billion shares compared with 1.2 billion traded Thursday.

Financial stocks mostly fell, weighing on the broader market. Investors have been encouraged by strong profits from large banks, but there are still signs that the recession's grip hasn't eased as much as hoped, such as higher loan defaults.

BofA, which has struggled more than some of its peers from loan losses, beat Wall Street estimates just as Goldman Sachs and JPMorgan Chase & Co. did earlier in the week. However its profit fell from a year earlier as losses from delinquent loans continued to climb. BofA fell 28 cents, or 2.1 percent, to US$12.89.

Citigroup, another troubled bank, surprised Wall Street with a US$3 billion profit instead of the big loss analysts had expected, but results were boosted by the sale of a majority stake in its Smith Barney brokerage. Its shares fell a penny to US$3.02.

One exception was CIT Group Inc., whose shares jumped 29 cents to 70 cents, on speculation that the troubled lender might be able to avoid bankruptcy. Its shares had tumbled 75 percent on Thursday after negotiations with federal regulators about a possible rescue fell through.

GE's shares dropped 6 percent after the conglomerate said its earnings fell 49 percent on losses at its financial unit and weakness in industrial businesses. The profits topped forecasts, but revenue came in US$3 billion below estimates. The stock lost 75 cents to US$11.65.

The reports followed mixed results from Google Inc. and IBM Corp. late Thursday.

Homebuilders' shares climbed after an upbeat reading on the housing market. Construction of new homes and apartments jumped 3.6 percent in June to the highest level in seven months, beating economists' estimates. Building permits climbed 8.7 percent, also beating forecasts.

Shares of Hovnanian Enterprises Inc. rose 8 cents, or 3.3 percent, to US$2.53, while DR Horton Inc. rose 26 cents, or 2.7 percent, to US$9.90.

The market's moves were jagged this week, with modest gains coming after big surges. Influential banking analyst Meredith Whitney got the market off to a roaring start on Monday after raising her view on Goldman, stoking hopes that financial companies would show more signs of healing.

But the market's response to Goldman's actual report the following day was somewhat subdued amid mixed economic data. Strong earnings and an upbeat forecast from Intel pulled more investors into the market on Wednesday, and hope for more good earnings from the technology sector stirred buying again on Thursday.

This week's upward move has temporarily halted a decline that began in mid-June as investors worried the 40 percent jump in stocks this spring was overdone. Analysts said it was a healthy sign that the market was taking a breather yesterday.

Sparks,senior equities analyst at Schaeffer's Investment Research, said it's early to say if this week will be representative of the rest of earnings season. Next week's large batch of reports includes Dow components Caterpillar Inc., DuPont and Merck & Co.

Bond prices fell. The yield on the 10-year Treasury note rose to 3.66 percent.

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JPMorgan profit jumps 36 percent

July 19, 2009

investment, bank

JPMORGAN said investment banking and trading achieve a 36 percent jump in quarterly profit.

Though the second-largest U.S. bank is widely considered the nation's major lenders, it added US$2 billion to credit reserves in the quarter and set aside more than twice as much as a year earlier for bad loans. It said credit quality in consumer mortgages was deteriorating faster than it expected.

CEO Jamie Dimon said the bank had great confident that its capital, reserve levels and earnings power were solid despite a "difficult economic environment".

Second-quarter net income rose to US$2.72 billion, the bank reported Thursday. Net revenue jumped 41 percent to US$27.71 billion.

Profit per share fell to 28 cents from 53 cents as the number of shares outstanding increased.

Analysts on average expected profit of 4 cents per share on revenue of US$25.91 billion, according to Reuters Estimates.

The results followed better-than-expected earnings posted Tuesday by Goldman Sachs Group Inc., Bank of America Corp. and Citigroup Inc., JPMorgan's main rivals, may fare less well when they report results, expected Friday.

"It looks like good, strong numbers and it looks pretty broad-based," said Michael Hecht, an analyst at JMP Securities. "We are in an increasing world of haves and have-nots, and we know where JPMorgan and Goldman fall."

JPMorgan last month repaid US$25 billion taken from the TARP. It has said it will let the Treasury Department auction the attached stock warrants, rather than pay an inflated price to buy them back.

Second-quarter results included per-share charges of 27 cents relating to the TARP repayment and 10 cents to bolster a federal deposit insurance program.

JPMorgan shares rose 18 cents to US$36.44 in premarket trading. Through Wednesday, the shares were up 15 percent this year, compared with a 14.4 percent drop in the KBW Bank Index.

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