Archive for the ‘Commodities’ Category
UniCredit Bank Warns Plunge In Sterling And Gilts, Britain Is Next “To Be Pummeled By Investors”
Friday, March 12th, 2010
This article is a guest contribution from ZeroHedge.com.
Kornelius Purps, director of fixed income at Europe’s second-largest bank, UniCredit, has issued a stark warning to clients who wish to invest in the Britain: “I am becoming convinced that Great Britain is the next country that is going to be pummeled by investors.” Ambrose Evans-Pritchard reports reports that “Mr Purps said the UK had been cushioned at first by low debt levels but the pace of deterioration has been so extreme that the country can no longer count on market tolerance” and that “Britain’s AAA-rating is highly at risk. The budget deficit is huge at 13pc of GDP and investors are not happy. The outgoing government is inactive due to the election. There will have to be absolute cuts in public salaries or pay, but nobody is talking about that.” And everyone was wondering why the U in STUPID stand for UK (actually make that just CNBC, who never really bothered to even read the original definition). So can the whole sovereign default wave skip the PIIS and go straight to the U?
From the Telegraph:
“Sterling is going to fall further over coming months. I am not expecting a crash of the gilts market but we may see a further rise in spreads of 30 to 50 basis points.”
Yields on 10-year gilts have already crept up to 4.14pc, compared to 3.94pc for Italian bonds, 3.48pc for French bonds, and 3.19pc for German Bunds, though part of this reflects worries about higher inflation in Britain.
Ian Stannard, currency strategist at BNP Paribas, said markets are fretting over how the UK will cover its deficit following the pause in quantitative easing by the Bank of England. The Bank has absorbed £200bn of debt, more than total Treasury issuance over the last year.Advertisement, story continues below
“The UK may have difficulty in attracting extra investors to fill the gap. We think they will have to do more QE as recovery falters,” he said.
BNP Paribas expects sterling to drop to $1.31 against the dollar this year and reach parity against the euro despite troubles in Club Med. “We’re very bearish on the UK,” he said.
And the biggest insult to the island nation? The insinuation that Greece is actually better off that Britain.
UniCredit said Greece is better placed than the UK in coming months even if deficits look comparable. “The polls point to a minority government in the UK, while Greece’s government can count on a majority to push austerity measures through parliament. Secondly, the British tax system offers less leverage for a rise in revenue,” he said.
Paradoxically, Greek tax evasion creates scope for a surge in revenues from tougher enforcement. “It is not out of the question that we will see a positive surprise in Greece: is there any such hope for Britain?” said Mr Purps.
Well Mr. Purps, this means that there is still hope for America. As the still sentient part of the population has decided to show the corrupt administration and the criminals on Wall Street the middle finger and maxed out their withholding exemptions, all it will take is an order from the US politbureau that the Treasury can withhold 100% of every paycheck, and in addition, garnish wages in perpetuity, DCFed at Ben Bernanke’s favorite discount rate of -100%.
Tags: Aaa, Ambrose, Bank Of England, Basis Points, Bnp Paribas, Budget Deficit, Bunds, Cnbc, Currency Strategist, Debt Levels, Evans Pritchard, Fixed Income, Gap, Gilts, Issuance, Outgoing Government, Plunge, Public Salaries, Qe, Stannard
Posted in Commodities, Markets | No Comments »
Following up on Nordic American Tankers (NAT) one year later
Wednesday, March 10th, 2010
One year ago, yesterday, I shared the transcript of the CNBC interview with Herbjorn Hannson, CEO of Nordic American Tankers, an oil shipping company whose business fundamentals were profoundly good, particularly given the backdrop the market bottom, when things appeared most dire. This is but one company, and it captured my attention 12 months ago.
| Nordic American T - NAT | 30.43 |
On March 9, 2009, Nordic Shares closed around $23.43. Subsequently they closed at a high of 36.22, two months later on May 7, 2009. Currently, the shares are trading around 31.
NAT has no debt.
Here is the company’s dividend record:
NAT has made the following dividend payments to its shareholders:
Amount per share (USD)
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 2010 0.25 2009 0.87 0.88 0.50 0.10 2008 0.50 1.18 1.60 1.61 2007 1.00 1.24 1.17 0.40 2006 1.88 1.58 1.07 1.32 2005 1.62 1.15 0.84 0.60 2004 1.15 1.70 0.88 1.11 2003 0.63 1.27 0.78 0.37 2002 0.36 0.34 0.33 0.32 2001 1.41 1.19 0.72 0.55 2000 0.34 0.45 0.67 1.10 1999 0.32 0.35 0.35 0.36 1998 0.40 0.41 0.32 0.30 1997 0.30 The table illustrates the dividend declared by quarter in which the dividend was paid and is based on the earnings of the previous quarter.
Here is Hannson’s March 8, 2010 letter to shareholders.
Dear Shareholder,
As Chairman and CEO I strive to keep all our shareholders well informed about key aspects of the development of our Company. It is therefore now time for me to send you another letter.
Since my letter of September 29, 2009 to you, the Company has acquired two more suezmax vessels, of which one was delivered to us on November 17, 2009 and the other was delivered to us on March 2, 2010. We paid $51.5 million for each of these 2002 built suezmax tankers. Including the two newbuildings expected to be delivered to us later this year, the fleet of our Company consists of 18 suezmax vessels. The acquisitions are accretive and the dividend potential of the Company has increased.
Accretive growth is a key element in our strategy. Over time the fleet must grow faster than the share count in order to create value for shareholders. In January 2010 we priced a follow-on offering from which the proceeds to the Company were $137 million before cash offering costs. The Company currently has the resources to acquire 4 more vessels without tapping the equity market. An increase of the fleet from 18 to 22 vessels would represent a 22% increase of our fleet whereas the share count was increased by about 10% in connection with the follow-on offering. This is an example of accretion while recognizing that net debt is expected to be slightly higher after such prospective acquisitions.
Having a fleet consisting solely of suezmax vessels, we experience cost benefits and in today’s environment we also pursue possibilities of further reductions in our costs. The Company also has low general and administrative costs which together with our low debt contribute to a very low cash breakeven.
So far into the first quarter of 2010, at the time of this writing, we observe a spot suezmax tanker market which on average is well above the level of the fourth quarter of 2009. Based on the market so far in 2010 we therefore expect the dividend of the Company for the first quarter of 2010 to be substantially higher than the dividend for the fourth quarter of 2009, which was $0.25 per share.
Our primary objective is to maximize total return to our shareholders, including maximizing our quarterly cash dividend. Over time we have in the past produced a very competitive total return for our shareholders and we believe that we are in an excellent position to achieve such results also going forward.
With our proven model and strong balance sheet we aim to be in a position to reap the benefits in the markets as they develop, be they soft or strong from time to time.
I would like to finalize my letter to you by stressing a key dimension in our model: the alignment of interests between our shareholders and our management. If our shareholders do well, so do management and vice versa. We do not believe in special, supermajority shares, for our management. In our Company, all shares have one vote, plain and simple.
As you understand, I am optimistic about the future of our Company.
All the best!
Sincerely,
Herbjørn Hansson
Chairman & CEO
This is by no means a recommendation, I’m not promoting it, nor is not intended to be. What I believe is that this company and others like it are very attractive in a world where credit is difficult to come by.
Disclosure: No positions
Tags: 12 Months, 4th Quarter, 5 Million, Acquisitions, Backdrop, Business Fundamentals, Ceo, Cnbc, Cnbc Interview, Dividend Payments, Dividend Record, Earnings, Element, Fleet, Letter To Shareholders, Market Bottom, Newbuildings, Nordic American Tankers, September 29, Share Count, Shareholder, Shipping Company, Suezmax Vessels
Posted in Commodities, Markets, Oil and Gas | No Comments »
Hugh Hendry and Joseph Stiglitz Duke it Out Over Greece and the Euro
Wednesday, February 10th, 2010
This article is a guest contribution from The Business Insider.
Joe Stiglitz and Hugh Hendry duked it out last night on BBC’s Newsnight.
Stiglitz says that betting on a default is absurd. Hendry is betting on exactly that happening in Greece.
From Hendry’s opening line you can tell this is going to be a good fight:
“Um hello? Can I tell you about the real world?”
Then the BBC anchor asks (at 7:28): “So you would see Greece tumble and the Euro currency tumble?”
Hendry: “Absolutely.”
He goes on to say that it’s recognizing the unsustainable debt and then Stiglitz cuts him off:
“That’s absurd.”
Watch the video after the jump. Here’s a bit more transcribed:
BBC anchor (around 5:00): “But isn’t the truth, Hugh Hendry, that if Greece defaults, that you, that hedge funds like you, make millions?”
“…Some hedge funds make millions. Yeah, the hedge funds who - hedge funds, speculators, and independent central banks are what stands between an economy and hyper-inflation.
“It’s very hard to create inflation when you have free markets. When you have the discourse and dissemination of information.
“Look what happens - you get into difficulty and these guys over here [pointing at Stiglitz and Spanish Ambassador to the UK, Carles Casajuana] say, “hey we don’t like it.”
“Suddenly the truth hurts! Suddenly we want to abandon the truth. Suddenly speculation becomes a pejorative term!”
Casajuana: “No no no, we don’t want to abandon the truth. We admit we have a problem…”
Video:
Tags: Anchor, Bbc, Business Insider, Carles, Central Banks, Discourse, Dissemination Of Information, Duke, Euro Currency, Free Markets, Good Fight, Hedge Funds, Hugh Hendry, inflation, Joe Stiglitz, Joseph Stiglitz, Newsnight, Spanish Ambassador, Speculation, Speculators
Posted in Commodities, Markets | No Comments »
Jim Rogers: Gold, Market Bubbles, Equities, and Dr. Doom
Tuesday, November 10th, 2009
This article is a guest contribution from Damien Hoffman, of Wall Street Cheat Sheet.
Jim Rogers is one of the most respected investors in the world. I had a chance to chat with him the other morning to get more details about some of his recent comments in the media …
Damien Hoffman: Jim, you were in the media a few times last week and I want to follow up on a few points you made. You said on Bloomberg that Nouriel Roubini did not do his homework regarding the asset bubbles about which he is now warning. Can you explain what homework he did not do?
Jim: All of it. How can you talk about a bubble when assets such as silver are 70% below their all-time high? Same for coffee, sugar, cotton, natural gas, and many more. I have a problem talking about a bubble when assets are this depressed from their all-time highs.
A bubble is when assets are screaming to new highs everyday, everyone is talking about them, and everyone owns them. Right now, virtually no one owns commodities. So for Mr. Roubini to talk about a bubble in commodities defies comprehension. It proves he does not understand markets.
I am flabbergasted at Mr. Roubini’s comment about bubbles because there is not a single market in the world making all-time highs except Gold, US Government Bonds, Cocoa, and the Sri Lankan stock market. That’s hardly reason to call for a bubble. So, I am most perplexed about this alleged bubble which is out there.
If an asset rises 100% in one year, that’s a great year, but not necessarily a bubble. Look at oil. It’s up huge off the bottom but nowhere near it’s old highs. Look at Citigroup. The stock is up 3 or so times off the bottom …
Damien: … and I doubt long term shareholders feel like they are in a bubble.
Jim: Exactly. And since Mr. Roubini thought oil would stay below $40 a barrel for all of 2009, I would love for him to tell me and the rest of the world exactly where are all the oil supplies because the International Energy Agency (IEA) — which has the best global data set on energy supplies — has no idea where is the oil. Mr. Roubini should tell us where this price suppressing oil supply is hidden. All the oil possessing countries in the world have declining reserves. All the oil companies have declining reserves. So Mr. Roubini must know something the rest of us don’t.
Damien: On another note, Gold has been reaching new all-time highs, although not inflation adjusted. You said Gold may reach $2,000 an ounce over the next decade. Can you explain what variables will push Gold to $2,000?
Jim: First, I hope you will keep Mr. Roubini’s statement where he said Gold going to $2,000 an ounce by 2019 is “utter nonsense.” I think you’re going to get a chance to call him before 2019 to ask him what he thinks of Gold at $2,000 and why he thought it was “utter nonsense.”
Regarding variables, it’s very clear there is huge suspicion about paper money around the world. This suspicion is gathering steam. Governments are printing huge amounts of money. This has always led to higher prices. Maybe I am wrong and it’s different this time. But I doubt it.
Additionally, no new large gold mines have been opened in decades. Some of those mines are over 100-years old. They are all depleting. On the other hand, central banks have huge Gold reserves above ground — and they are less interested in selling than in the past.
If you adjust Gold for inflation and go back to it’s former all-time high in 1980, Gold should be over $2,000 an ounce right now if you want to say it’s reaching new inflation adjusted all-time highs. That does not mean Gold has to get back to a true all-time high. Nothing has to. However, I suspect that given all the money printing in the world, we will see much higher prices for hard assets.
Despite Gold’s potential, I think I will make more money in other commodities such as silver, cotton, or coffee — all of which are terribly depressed.
Damien: Speaking of other assets, as an outsider living abroad, what is your opinion on US Equities?
Jim: This is one of the few times in my life I have not had shorts anywhere in the world. I have also not had a lot of longs in the stock market because I’ve chosen longs in commodities and currencies. I have kept away from shorts because there is a gigantic amount of money being printed and it has to go somewhere. I thought some of it would end up in the stock market, and it has.
How much higher can the equity markets go? I don’t know. There are a lot of problems in the economy, but I don’t know when those problems will cause a downdraft in the stock market. All we’ve done is paper over the problem, so I expect we’ll have to deal with those issues in the future. Printing and spending money we don’t have simply prolongs the problems and makes them worse in the long run.
If the world economy improves, commodities will lead the way due to demand and shortages. If the world economy does not get better, commodities are still a great place to be because governments are printing so much money. And, if the world economy doesn’t get better, they will print even more money!
Damien: Jim, thank you for taking the time to share your outlook and opinions. I greatly appreciate it.
Jim: You are very welcome. Your site is very impressive. I look forward to staying in touch.
Tags: All Time Highs, Bloomberg, Bubbles, Cheat Sheet, Citigroup, Cocoa, Coffee Sugar, Commodities, Comprehension, Dr Doom, Ener, Gold, Gold Market, Government Bonds, Hoffman, Jim Rogers, New Highs, oil, Oil Supplies, Roubini, Single Market, Sri Lankan, Stock Market
Posted in Commodities, DXD, Emerging Markets, Gold, HFD, MYY, Markets | No Comments »
Prechter: Commodities, Stocks Topping - USD Set for Rally
Friday, November 6th, 2009
Robert Prechter tells Yahoo TechTicker that the USD is set for a rally, and Commodities and Stocks are topping.
Prechter also makes the seemingly counterintuitive argument that the dollar will rally because there’s so much debt, rather than being doomed because of it. If the economy turns sour again in 2010, as he predicts, Prechter says the dollar will benefit as more dollar-denominated IOUs get called by creditors seeking to shore up their own balance sheets, as was the case in 2008.
This goes hand in hand with Hugh Hendry’s (and others) call that because there is so much deleveraging yet to be accomplished, the dollar will be in high demand as big borrowers retire debt, and creditors end up long cash for the sake of balance sheets. A strengthening dollar will mean falling prices relative to the rise, and is therefore deflationary, by definition, as we have experienced in Canada with the strengthening loonie. If Prechter, Hendry and others are right, the CAD will pull back from its recent highs.
Tags: Advertisement, Balance Sheets, Borrowers, Cad, Canada, Commodities, Creditors, Dollar, Economy, Hugh Hendry, Ious, Loonie, Rally, Robert Prechter, Sake, Stocks, Yahoo
Posted in Commodities, Markets | 1 Comment »
David Rosenberg: Canada and Australia in the China Context
Tuesday, November 3rd, 2009
In today’s ‘Breakfast with Dave’ newsletter, David Rosenberg shares some interesting facts about key differences between Canada and Australia in the context of China’s growth, as well as an update on commodities and markets.
After yesterday’s wild ride in the U.S. equity market (and inability to hang on to the immediate post-ISM surge), investors are continuing to lock in profits today. Stock markets are down practically everywhere - by -1.6% in Asia (though Japan was closed for a holiday) and -2.0% currently in Europe. U.S. futures, at the time of this writing, are down sharply.
Commodities are off as well although gold has managed to hold onto most of its gain posted after the news came out that India’s central bank purchased 200 metric tons of the yellow metal from the IMF. The dollar has broken out this morning - to the upside - and the DXY index has actually firmed above its 50-day moving average. French officials came out today, by the way, and suggested that the recession in fact may not be over.
… the Reserve Bank of Australia hiked rates 25bps yet again, to 3.5% (this time it was expected by 18 of the 22 economists who follow Australia and the other four were thinking 50bps). The fact that the Aussie dollar has pared its gains after the rate hike is akin to the U.S. stock market doing likewise yesterday after the ISM came out. It is called the “sell the fact” syndrome, which is different than buy “green shoot hope” from March to September.
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While every country cut rates in tandem during the crisis, central banks will be marching to the tune of their own drum when it comes to tightening and so it would likely be a huge mistake to compare Australia to anyone else - especially given the massive fiscal stimulus there and the enormous link (especially compared to Canada) the country has to the accelerating growth being posted in China right now. Remember - only 3% of Canadian exports go to China; 75% head for the U.S.A. By way of comparison, 24% of Australian outbound shipments are destined for the hot Chinese economy while only 6% go to the U.S.A. In other words, relative to Canada, Australia enjoys 8x the Chinese exposure and has only 1/12th of the orientation to the much softer U.S. consumer market.
Tags: Aussie Dollar, Bank Of Australia, Canada, Canadian Exports, Central Banks, China, Commodities, David Rosenberg, Dxy Index, Emerging Markets, Fiscal Stimulus, French Officials, Gold, Imf, India, Interesting Facts, Ism, Metric Tons, Rate Hike, Recession, Reserve Bank Of Australia, S Central, Stock Markets, U S Stock Market, Wild Ride
Posted in Commodities, Gold, Markets | No Comments »
Jim Rogers on USD, China, and Commodities
Tuesday, November 3rd, 2009
Lindsay Whipp of the Financial Times sits down with Jim Rogers in Tokyo for a four-part interview covering the US dollar, China, commodities and crisis-related issues.
Part 1: Rogers sees brief dollar rally
He says he has increased his dollar holdings in anticipation of a rally in the US currency, but the dollar is still broadly set for a lasting decline.
Click here or on the image below to view the video clip.
Part 2: Rogers still a China bull
He says he’s not buying Chinese stocks, but sees the renminbi rising despite its effective peg to the dollar.
Click here to view the video clip.
Part 3: Rogers backs commodities for the long run.
He says he’s fully expecting another leg up in commodities, and that real assets represent the best hedge against future inflation.
Click here to view the video clip.
Part 4: Rogers on the “bigger picture”.
He says he fully expects more pain in the financial sector, with many of the problems at the heart of the crisis simply being “papered over”.
Click here to view the video clip.
Source: Lindsay Whipp, Financial Times (here, here, here and here), November 2, 2009.
Tags: Advertisement, Anticipation, Buying Stocks, China, China Crisis, Chinese Stocks, Commodities, Decline, Emerging Markets, Financial Sector, Financial Times, Heart, Image, inflation, Jim Rogers, November 2, Peg, Rally, Real Assets, Renminbi, Tokyo, Us Currency, Video Clip, Whipp
Posted in Commodities, Markets | No Comments »
Stock markets ripe for a correction, but…
Wednesday, August 19th, 2009
I am on the road today tending to a few business matters - in an environment in which South Africa has just seen its third consecutive quarter of negative GDP growth - and the mood is not entirely upbeat.
Back to the yin and yang of equities: I have tried arguing over the past week or two that global stock markets were grossly overbought and out of kilter with economic reality, and therefore ripe for correction - a process I believe has now commenced (also for commodities, and the reverse for safe-haven assets such as government bonds, the US dollar and the Japanese yen). I have also mentioned that we may see at least some degree of reversion to the 200-day moving averages in a number of instances.
It is perhaps premature to say whether we will be dealing with a normal short-term correction or a more significant move threatening the primary trend. However, when considering longer-term data, it would seem that any correction may still be part of an overall bottoming-out process. The chart below shows monthly intervals for the S&P 500 Index since 1998 and conveys an important message when considering the three momentum-type oscillators at the bottom (RSI, MACD and ROC). These are reversing course for the first time since the primary sell signals of 2007 and now either indicate buy signals (or are getting close to them in the case of MACD).
Source: StockCharts.com
I need to be off to my appointments, but thought I would just share this thought with you while we remain cautious and await Mr Market to offer us stocks - especially in high-growth markets such as China, India and resource-based economies - at more realistic levels.
Tags: Business Matters, Chart Below Shows, Commodities, Consecutive Quarter, Dollar And The Japanese Yen, Economic Reality, Emerging Markets, GDP, GDP Growth, Global Stock Markets, Government Bonds, Growth Markets, India, Intervals, Kilter, Macd, Moving Averages, Oscillators, Realistic Levels, Reversion, Safe Haven, Yin And Yang
Posted in Commodities, Markets | No Comments »
Roubini’s Canada Outlook: Supported by Easier Credit and Commodities Recovery
Tuesday, August 18th, 2009
Nouriel Roubini’s RGE Monitor recently published “Are There Bright Spots Amid the Global Recession?,” which provides a comprehensive global economies roundup, and says that Canada’s economy will lag that of the US, though it is supported by easier credit conditions, stronger banks, and the commodities recovery.
Canada
Despite relatively sound finances that helped it outperform the rest of the G7 in 2008 and early 2009, Canada’s exposure to the U.S. for trade and investment suggests its recovery may lag that of the U.S. (a trend that Q2 2009 data seems to support). However, a more consolidated financial sector with lower leverage, lower default rates, as well as a revival of domestic demand, should support recovery in 2010, albeit one characterized by below- potential growth. Canadian households and corporations still have more access to credit than their U.S. counterparts, a factor that helped buffer Canada from a more severe property market correction. Yet the nascent revival in consumption may be weaker than the Bank of Canada expects. The rebound in commodity prices is mixed news. Higher commodity prices and greater demand for metals, if not yet for oil and cheap natural gas, should contribute to an expansion of mining and energy output–but too strong a surge could boost the Canadian dollar, exacerbating Canada’s manufacturing weakness as it boosts labor costs.
Source: RGE Monitor, August 5, 2009
Tags: Bank Of Canada, Banks Canada, Canada, Canadian Dollar, Canadian Households, Commodities, Commodity Prices, Counterparts, Default Rates, Energy Output, Financial Sector, G7, Global Economies, Global Recession, Leverage, Natural Gas, oil, Rebound, Recovery Canada, Revival, Roubini, Roundup
Posted in Commodities, Markets | No Comments »
Commodities: A Favourite Theme
Thursday, June 11th, 2009
The Reuters/Jeffries CRB Index - an index that was first constructed in 1957 and comprises 19 major commodities - has been rising non-stop for the past four weeks and for nine weeks out of the past 14. This surge represents a gain of 30.2% from its low on March 2. But one needs to put this in perspective: the Index fell by 57.7% from its high in early July 2008, and therefore still needs to rise by a further 81.5% to match the previous peak.
I posted an article a week ago entitled “Secular bull in commodities remains intact” and concluded as follows:
“… commodities still seem to be in a supercycle that was only temporarily interrupted by the global economic malaise. As inflation money finds its way into commodities, it is still not too late to purchase these, but only on price corrections that are bound to occur from time to time.”
David Rosenberg, chief economist and strategist of Gluskin Sheff & Associates, concurred, saying: “… what we experienced last year was a severe cyclical correction in what is still a secular bull market - you can connect the dots on the chart and see that the CRB looks a lot like what the S&P 500 looked like in the months following the sharp 1987 collapse. It seemed like the end of the world in October of that year, and yet in retrospect it was just the fifth year in what proved to be an 18-year secular bull phase.”
Bringing technical analysis to the equation, Adam Hewison of INO.com has prepared another of his popular analyses, specifically on the CRB Index. Click here or on the image below to access the short presentation.
Tags: Bull Phase, Cape Town, Chief Economist, Collapse, Commodities, Crb Index, David Rosenberg, Dots, Economic Malaise, Gluskin Sheff, inflation, Jeffries, Nine Weeks, Retrospect, Reuters, Secular Bull Market, Strategist, Supercycle, Target, Time David
Posted in Commodities, Markets | No Comments »
Bespoke: Most Overbought ETFs
Monday, June 8th, 2009
“With stocks rallying around the world, the many ETFs that track various equity markets have moved significantly above their 50-day moving averages. Below we highlight the most overbought ETFs in relation to their 50-day moving averages. As shown, the Russian stock market ETF (RSX) is the most overbought, trading 36.17% above its 50-day. India (INP) ranks second at 35.72%, followed by the steel ETF (SLX), emerging market Europe (GUR), metals and mining (XME), and Singapore (EWS). The majority of the ETFs on this list track countries. The rest are generally concentrated in the commodities area.”
Source: Bespoke, June 2, 2009
Tags: Commodities, Emerging Market, Emerging Markets, ETF, ETFs, Europe, Ews, Gur, India, Inp, Metals, Metals Mining, Moving Averages, Rsx, Russian Stock Market, Singapore, Slx, Stocks, Xme
Posted in Commodities, Emerging Markets, Markets | No Comments »
Baltic Dry Index - more than a snap-back rally
Friday, June 5th, 2009
The Baltic Dry Index - a measure of freight rates for iron ore and bulk commodities - rose non-stop for 23 sessions until Wednesday, before declining somewhat yesterday. This surge represents a gain of 517% from its low on December 5. But one needs to put this in perspective: the Index fell by 94% from its high in May 2008, and therefore still needs to rise by a further 188% to match the previous peak.
More importantly, this rise seems to be more than a snap-back rally and points to better economic tidings. This becomes apparent when considering the close relationship between China’s Purchasing Managers Index (PMI) for New Export Orders and the Baltic Dry Index, showing both indices turning sharply higher.
Source: Plexus Asset Management (based on data from I-Net Bridge)
Also, the improvement in China’s PMI (with the composite Index back in expansionary territory above 50) and the Baltic Dry Index is consistent with the improvement in the Metals Index. (See my recent post “Secular bull in commodities remains intact“.)
Source: Plexus Asset Management (based on data from I-Net Bridge)
Tags: Asset Management, Baltic Dry Index, Bridge, Cape Town, Commodities, Composite Index, Export Orders, Freight Rates, Higher Source, Iron Ore, Metals Index, Perspective, Pmi, Postcards, Purchasing Managers Index, Relationship, Sessions, Snap, Target, Tidings
Posted in Commodities, Markets | No Comments »
