Dec 8th 2009
Three Catalysts That Will Drive Commodity Prices
Commodity prices will see most of 2010 a reasonably close repeat of 2009. Look at the chart below and figure how much more there is just to go.
By mid-November 2009 it was very clear that commodities were once again in a major bull market. A few commodities have been left out – coal, natural gas and many foodstuffs have experienced lackluster performance – but many of the others (such as the metals, in particular) have had an exceptional year. read more ...
Sept 26th 2009
The nervous, volatile mood on the interest rate markets continued this week. Very mixed economic indicators in the U.S. and Europe make it difficult for investors to form a clear opinion.
Disappointing figures from the U.S. housing market have given new impetus to growth pessimists.
Further rising sentiment in Germany, however, assist the camp of the optimists.
The central banks first buy time and have repeatedly stressed this week that they still have to hold low interest rates and provide high liquidity supply so as not to stifle the improvement in the bud.
But they are also aware of the danger that the current flood of liquidity at zero interest rates again is an incentive for the speculators on the capital markets.
Thus, the discussion of deflation versus inflation risk is managed more intensively. A trend is currently not clearly identify. The U.S. and Britain do nothing to support their increasingly weaker currencies.
Obviously, they see a weaker dollar and a weak pound as a simple way to solve their own growth problems.
The price will have to be paid so more by the Europeans, whose exports are accordingly in danger. Thus growth in Europe is increasingly difficult to reach.
Therefore these considerations, for the time being, hold the euro interest rates stable for long term. The major uncertainty for long interest rates will remain the fears of potential investors from uncontrollable high government debt and thus loss of confidence in the medium-term value of individual currencies. This nervousness will always lead to upward revisions in the bond market, such as during the past week.
July 25th 2009
Energy
In the face of the generally cheerful mood, existing U.S. dollar weakness and the continued strong upward movement in the stock markets also provided oil prices this week continued to grow.
Just yesterday WTI reached a 3-week high but exceeded this today already. From a fundamental view there are still little good reasons to justify this price.
Although, according to Oil Movements, OPEC exports may drop until the August 8th by a 1.7% fall, it is more likely to remain weak demand. The US Ministry of Energy records the sixth week in a row an increase in gasoline and distillate stocks.
WTI for deliveries in September, currently quoted at 67.83 USD per barrel on NYMEX. Brent Crude is currently listed with a strong add-up for deliveries in September at USD 69.99 per barrel on the ICE Futures Exchange in London.
Metals
Precious Metals
Also the gold price this week may further growth and floats on bravely, currently above the 950 USD mark.
In addition to the oil price developments and inflation expectations which seem to increase again, especially the currency markets are the driving factor here.
The negative correlation between USD and gold is now rose to 0.8 in the last month from 0.5 in the three previous months. A value of 1 would mean that the USD decline and gold price rise is around 1:1.
Gold in the spot market is currently quoted at 952.20 USD per ounce in New York. The London Gold Fix PM today quoted at 951.50 U.S. dollars per ounce respectively.
Base Metals
Also for industry metals, it was again another fabulous weeks along with rising stock markets and oil prices and mainly due to increasing recreational expectations.
So copper reached a 9-month high at 2.51 USD per pound, after the IFO-Institute had reported an increase of its business climate index and Xstrata filed an injury to his Collahuasi-Mine in Chile that their production may decline as result.
Copper in the spot market is currently quoted at 2.49 USD per pound.
July 1st 2009
COMMODITY NEWS
Pessimism characterized mainly the last week. Elements of a summer break with partly declining volumes added aggravated.
Stock markets mostly closed in loss this week. Thus, in the weekly comparison the DAX lost around 1.6%, Dow Jones lost over the week about 1.8% and the Nikkei closed with 0.6% in minus.
As expected the ECB this week, has made no change in the key interest rate. Despite a slight 0.1% decline in Germany’s unemployment to 8.1%, the European unemployment rate shows 9.5%.
Just as in the U.S. where on Thursday the weak labor market data puts the markets under pressure. The U.S. Labor Department reported a decline by a further 467,000 jobs in June. That is 100,000 more than the consensus had expected previously.
Although, according to U.S. Department of Commerce, the new orders for durable goods rose in May, but the figures disappointed the expectations.
Earlier, on Monday slightly deteriorating Chicago Fed National Activity Index helped for the negative mood, such as the slump in U.S. consumer confidence on Tuesday.
For Japan showed the on Wednesday published Tankan report a slight improvement in the sentiment in what the Japanese large scale industry is concerned, but in comparison to the expectations of the outcome was surprisingly negative.
The corresponding index shows an increase of - 58 in March to - 48 in June. The consensus had been expected previously an improvement on - 43 points.
Basically a negative sign means anyway still an overhang of the pessimists.
USD and JPY were in the middle of the week first slightly under pressure, but could at the end of the week, due to the deteriorating mood grow again. The medium term in the majors appears as being more of a range-trading (EUR / USD for example, from 1.38 to 1.43).
ENERGY
As much as crude prices had been supported ahead by moods, as because of the mood they now stand under pressure.
The weak economic data this week, especially the for many still surprisingly weak U.S. employment data, lessen the economic recovery hopes dramatically.
In addition, a slightly stronger U.S. Dollar at the end of the week, what exercised additional pressure on prices.
Meanwhile, the market seems to get to a point at which a re-strengthening of the high economic optimism not only expects stronger signs, respectively is no longer willing to evaluate only semi positive data, and won’t overlook negative signals.
NYMEX currently quotes WTI for August delivery at US$ 66.73 per barrel.
Brent Crude for August delivery currently quotes at US$ 66.65 per barrel on the ICE Futures Exchange London.
METALS / PRECIOUS METALS
The gold price continues this week, picturing a certain part of the EUR / USD development.
Thus the gold price on Wednesday reached briefly a high in US$ 945 dollars per ounce, as temporarily the EUR increased to US$ 1.42.
By weekend, the gold price reduced in correlation to the new US$ strength, but can hold very steady to 930 US$ per ounce on Friday.
Yet the gold price seems not to benefit by the growing risk aversion, even the weak U.S. economic data also seem to somewhat dampen the inflation fears, but at least it seems that the interest of consumers in the jewelry industry attract slightly. For example, Turkey imported 4.3 tons of gold in June.
In the spot market, Gold currently quoted at 929.40 US$/ounce. The London Gold Fix PM fixed today at 932.50 US$.
BASE METALS
The pessimistic mood (especially the weak U.S. labor market data), puts the industry metal prices increasingly under pressure.
Industry metal prices respond extremely sensitive to the mood in the markets, as long as no demonstrable fundamental factors finally suggest a rise in consumption.
In addition, an end of the Chinese purchases to increase reserves leaves a large gap on demand behind. A growing pessimism further drops hopes that U.S. consumption growth could fill this gap.
Copper as cyclical metal currently quoted at 2.23 dollars per pound in the spot market (where still the LME stocks fall, but rise in Shanghai).
May 3rd 2009
New Visa Rules in UAE
DUBAI/ABU DHABI — Foreign owners of property in the UAE will be able to stay in the country for six months with a renewable multiple entry visa under a decree issued by the Minister of Interior on Saturday.
The visa, tied to ownership of a completed property valued at Dh 1 million, had been expected after the government ordered a federal law on the issue when property companies promised residency visas with ownership. The resolution is effective immediately.
According to the amendment made to the residency law, the property owner and family can stay for six months from date of entry and then must return to his home country or a GCC state.
The property owner must also earn more than Dh10,000 a month and the property must also be ready to live in. The visa does not cover the owners of plots.
April 9th 2009
Investcorp plans $500m fund
Investcorp's managing director, Khalid Al Rumaihi, said that the firm may raise as much as $500m for a new fund to invest in US real-estate debt. 'Real estate debt, whether secondary or on an origination basis, is going to be very attractive,' Al Rumaihi said. The new mezzanine fund would follow the $1bn pool it announced in September to acquire whole loans, mezzanine loans and mortgage securities backed by commercial and residential real-estate assets in the US which according to al-Rumaihi is 'about 20% invested'.
April 9th 2009
Continuing Growth in Dubai
'Dubai Investment Park has grown to become the Middle East's premier industrial hub, with the Park's strategic location and world-class infrastructure attracting leading manufacturing and logistics companies from around the world. With investors continuing to flock to DIP, there has been a sharp rise in demand for electricity within the Park.'
A total of Thirteen 132/11 KV substations and one large-capacity substation of 400 KV will be constructed at the DI-Park. The power stations will be located strategically to ensure that they cater for all existing and future DIP plot connections.
'The new power stations will adequately meet the requirements of existing tenants and also address any future demand spurred by further expansion of the Park,' Al Mesmar added. 'Three of the 132/11KV substations have already been commissioned by DEWA, while two more are expected to be commissioned in July 2009.'
'As the industrial nerve centre of the UAE, Dubai Investments Park holds great strategic importance to the overall industrial growth of the country, and we are thankful to all the government departments that are supporting DIP to meet its infrastructure requirements.' Al Mesmar said.
Dubai Investments Park hosts more than 1,200 companies, and current demand for land at DIP is estimated to be almost double the volume of land already leased as investors continue to make a beeline for the Park to set up manufacturing and warehousing facilities.
March 19th 2009
Lawyers in the UAE are the highes paid in the WORLD!
Dubai the city of superlatives, not only in landscaping and architechture but also in Businesses. Recently I met a med. Dr. from Germany on a flight from Europe to Dubai where he told me that he moved 2 years ago from London to Dubai after tripling his and his wifes (med Dr. too) net income which he had already doubled before against their earlier German net income.
But here's another story: Lawyers in the UAE are the highest paid - not just in the region - but across the world.
As per the figures provided to Emirates Business by Acritas, the legal sector researcher based in UK, the average hourly rates for lawyers in Dubai are the highest.
In the UAE, it’s $610/hour (AED 2,240) and within the country Dubai lawyers charge more ($663/hour) when compared to Abu Dhabi ($551/hour).
June 14th 2008
Comment
Interest rates rise
On the interest rate markets in Europe and the USA came, in weekly course, further significant increases in yields Renditen. This was particularly the remarks of the European Central Bank (ECB). These were understood, already in July, from the market with the first announcement of an increasing key interest rate. Accordingly many market participants have re-positioned themselves. They expect now even a series of interest rate rises until the end of the year. Starting point of these ideas are the world's high inflation figures, which force the central banks to preventive action. Particularly strong turned this week the sentiment in the U.S. Within a week the interests of government bonds for two year durations, increased by 69 basis points to 3.07% now. This is the largest increase within a week since 1982. In the U.S., a further decrease of the key interest rate became cut from the market, so the expectation. A rate hike to combat inflation, is now well as the central bank’s next step. The central bank’s course is clear: Defence is a priority of inflation – therefore a weaker growth will be taken. Against this background, the interest rate increases in long term maturities are still moderate. The investors rely on the controlled approach of the central banks and see again a decline in inflation rates at the latest in 2009. If this expectation tilt in the next couple of months, the risk premium for long durations still continue to grow.
March 7th 2008
Despite the progressive deterioration of the US economy and the declining growth expectations for the EURO-Zone, the European Central Bank (ECB) remain in its key interest of 4.00%. ECB President Jean-Claude Trichet, argues this decision on Thursday with the high inflation rate and the rise in inflationary expectations and thus subdued the hope of an interest rate cut in the next few months. As at the same time the US-economic data confirm a recession, most market participants expect that the US Federal Reserve (Fed), latest on 18 March, lower the key interest rates at least by 0.5%. This step has been anticipated long time already, by the interest rates at the American bond market. Thus, the interest rates for two-year government bonds is now below 1.60% and the ten-year Treasury note was around 3.60%. These movements also dropped the interest rates in the euro zone to a slightly fall. The clear ECB statements of the estimated inflation also mean, that there is no real scope to bottom in the EURO-Zone’s long-term interest rates, as long as the growth in line with expectations. For the USA, today's weak figures clearly confirmed to the job market: The recession has been since the beginning of the year. This is a picture that have been anticipated of the bond market since many weeks. Therefore, in the coming months the speculation begins, when the American economy will turn around.
We therefore assume that the US capital market interest rates, being near their lowest levels, more likely threaten corrections towards the top.
Feb. 15th 2008
The deterioration of the American economy is increasingly clear, and lead to a slight decline of capital market rates in the last few days. Also the figures for weak economic growth in Q4 2007 and the higher unemployment rate, have disappointed the hopes for a shallow recession in the US. Therefore the intimations of US Federal Reserve Chairman Ben Bernanke towards further interest rate cuts have supported the bond market. Which led to yet a further dollar weakening. The EURO rating with 1.52 US $ has reached a new high. And this of course creates increasing difficulties for the European Exports Economy.
Actually the decisive factor for the strong EURO is the high interest rate difference vs. the US $.
While in the next six months, a key interest rate of 2.00% can be expected in the US, the European Central Bank (ECB) will remain in its 4.00% level of key interest rate, regarding the high inflation and still relatively good economic conditions. Because the strong EURO has a decreasing effect on inflation and economic growth, in the euro zone an interest rate cut, first around 0.25%, may be expected until summer. In my view, the long-term capital market interest rates are more fluctuate in the coming weeks. But especially the inflation development, determines the investors acts on the bond market.