Today - Monday, March 10, 2014
1:20 PM| 1 Comment
- The 8.3% dive in the price of iron ore to $104.70 per ton is the 2nd largest one-day decline on record, and came following weekend data showing an 18.1% Y/Y slump in Chinese exports in February (a gain of 7.5% was expected). While miners like BHP and RIO remain optimistic about supply/demand dynamics (though dour on price prospects), Goldman - picking one analyst team - sees the market moving into surplus in H2 and prices falling below $100 per ton.
- The Shanghai Composite fell 2.9% overnight and Brazil's Bovespa is down 2% in the early-going. Australia (EWA) declined 0.9% and the aussie (FXA) is off 0.6% to $0.9017.
- The steelmaking ingredient is off 22% YTD and at its lowest price since October 2012.
- In the meantime, the rumors are flying, including speculation a mill in China's Shanxi province defaulted on Friday and shut five to six furnaces. There's also chatter about banks looking to call in 20% of loans to private steel companies.
- EWZ -2.1%, VALE -2.8%.
- Brazil ETFs: EWZ, BRF, BRXX, EWZS, BRAQ, BRAZ, BZQ, BRZU, BRAF, UBR, BRZS, DBBR, FBZ
- Base metal mining ETFs: XME, JUNR, PICK
9:06 AM| Comment!
- "We are clearly not very happy at the moment," says ECB board member Christian Noyer when asked about the strength of the euro (FXE). "It's clear that when the euro starts to strengthen it creates additional downward pressure on the economy and additional downward pressure on inflation. Both cases are not warranted at the moment."
- Noyer, however, doesn't signal any new policy ease, instead calling the "extreme degree" of stimulus appropriate for now. The ECB does, of course, stand ready to act as necessary.
- In the green earlier, the euro is now slightly lower on the session.
- Euro ETFs: FXE, EUO, ERO, DRR, EUFX, ULE, URR
- Japanese automakers continue to show strong sales gains in China.
- During February, Toyota (TM) saw a 43% jump in sales in the region, while sales at Honda (HMC) were up 28%. Nissan (NSANY) also showed solid improvement.
- The year-ago period saw more resentment in China against Japanese companies due to a brewing territorial battle.
- Toyota (TM) Chairman Takeshi Uchiyamada thinks the hybrids will account for 20% of the the global automobile market relatively soon.
- Hybrids currently account for 13%-14% of auto sales.
- Uchiyamada headed up the automaker's Project G21 group in the 1990s which created the landmark Prius model.
- Asian shares mostly fall following a greater-than-expected plunge in Chinese exports, although European stocks seem to have shrugged off such concerns and are higher, possibly boosted by decent U.S. jobs data on Friday.
- Japan -1%, Hong Kong -1.8%, to 22265, China -2.9%, India +0.3%.
- Euro Stoxx 50 +1%, London +0.3%, Paris +1%, Frankfurt +0.2%, Milan +1%, Madrid +1%.
- U.S. stock futures: Dow, S&P flat. Nasdaq +0.1%
4:40 AM| Comment!
- Japan has revised down its Q4 GDP growth calculation to 0.2% from an initial 0.3%, with the economy held back by weaker-than-estimated capex and consumer spending.
- Annualized GDP was +0.7% vs +1%. (PR)
- The current-account deficit increased to a record ¥1.59T ($15.4B) in January from ¥638.6B in December. (PR)
- "Capital spending remains weak and exports are not coming back to strengthen the recovery, and without support in these areas, Japan's economy is going to contract significantly in the second quarter," says economist Yoshimasa Maruyama. "The negative effect from the (upcoming) sales tax rise could be worse than the BOJ and government expect."
- The Nikkei is -0.9%, while the USJ-JPY is -0.1% to ¥103.12.
- ETFs: DXJ, EWJ, FXY, YCS, JGBS, JGBD, DFJ, JYN, NKY, DBJP, EZJ, EWV, YCL, SCJ, DXJS, JPNL, ITF, JSC, JGBL, JPP, JGBT, JPNS, HEWJ, JGBB, FJP
Sunday, March 9, 2014
- Mexico's Federal Telecommunications Institute (IFT) has ordered America Movil (AMX) and Grupo Televisa (TV) to share their infrastructure with rivals as part of an attempt to increase competition in the country's telecom and broadcasting markets respectively.
- The IFT will also regulate Telefonica's prices, and it will force Televisa to publish its advertising prices and stop pressuring advertisers to purchase space on its billboards, cable TV and magazines.
- In addition, IFT has called for bidders for two national broadcast-television networks.
- The upside for America Movil is that once it has complied with the IFT's demands, the regulator may allow the company to start offering TV services.
- Chinese exports dropped 18.1% on year in February vs growth of 10.6% in January and consensus of +6.8%.
- However, the trend may have been distorted by the Lunar New Year holiday and fake invoicing that boosted the data a year earlier, while the severe winter weather in the U.S. may also have had an effect.
- Imports +10.1% vs +10% and +8%.
- China swung to a trade deficit of $22.98B last month from a surplus of $31.86B in January and vs forecasts of $14.50B.
- "We will probably have to wait for next month's data to get a true picture of the export situation, but we shouldn't worry too much," says UBS economist Wang Tao.
- As expected, inflation eased to a 13-month low of 2% on year in February from 2.5% in January. The figure is below the government's 2014 target of 3.5%.
- On month, CPI +0.5% vs +1% previously and consensus of +0.8%.
- PPI declined for the 24th consecutive month, sinking 2% vs -1.6% and -1.9%. "The risk of deflation is rising in the near term," say ANZ economists Liu Li-Gang and Zhou Hao.
- The factors that could be dragging on producer prices include weak consumer demand and the excess capacity of some raw material-industries such cement as glass and steel.
- ETFs: FXI, PGJ, GXC, FXP, YINN, CYB, HAO, KWEB, CNY, ASHR, CHIQ, DSUM, TAO, CHIX, YANG, CQQQ, MCHI, PEK, QQQC, XPP, YAO, CHXX, FXCH, CHII, CHXF, YXI, ECNS, CHIM, CHIE, KFYP, FCA, TCHI, CHLC, CHNA, KBA
Friday, March 7, 2014
11:10 AM| Comment!
- A disruption of natural gas supplies to Europe by an escalation of Russia’s military action in Ukraine may boost LNG demand and prices in Asia and South America, analysts say.
- Russia, which provides Europe with a quarter of its natural gas mainly though Ukraine, has cut supplies twice since 2006; while the current crisis hasn’t interrupted exports, LNG prices will “move through the roof” if flows transiting Ukraine are stopped, Societe Generale says.
- Any potential supply curbs could cause traders to stop selling LNG cargoes out of storage and instead hold them for domestic use, triggering competition for the fuel in South America and Asia.
- ETFs: UNG, DGAZ, UGAZ, BOIL, GAZ, KOLD, UNL, NAGS, DCNG
- More brinksmanship in the Ukraine crisis: Gazprom (OGZPY) says Ukraine has missed today's deadline in paying for February gas deliveries and is threatening to cut off the country's gas supply.
- Russian Pres. Putin and Gazprom already have said Russia will scrap price discounts for Ukraine as of April because Ukraine failed to pay for gas on time.
- Gazprom says Russian gas transit via Ukraine to Europe remains stable.
- A check of asset markets following what's currently being interpreted as a strong nonfarm payroll report (175K jobs added vs. 154K expected; UE rate up to 6.7%): Flat ahead of the number, stock index futures are up by 0.5%; gold is down 1.1%, silver down 3.2%, copper off 2.9%; the dollar is up a bit, but mostly against the loonie after a weak jobs number in Canada.
- DIA +0.5%, GLD -1%, SLV -2.9%, JJC -3%, UUP +0.15%
- Previously: Treasury yields fly higher after payroll report.
- Related ETFs: GLD, SLV, DIA, AGQ, IAU, PHYS, UUP, SIVR, USLV, ZSL, SGOL, UDN, UGL, DGP, DOG, GLL, DXD, JJC, DZZ, UDOW, UGLD, SDOW, DSLV, DDM, DGL, DBS, GLDI, DGZ, DBV, AGOL, DGLD, SLVO, FORX, TBAR, UDNT, UUPT, USV, UBG, CPER, GLDE, GYEN, CUPM, GEUR, USDU, GGBP