Author: shijiulvv

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U.S. jobless claims sink for second straight week after a steep increase in early December

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Gold little changed as U.S. tariff deadline approaches

Crude oil declined as driven by a potential oil-for-good deal between Iran and Russia. Meanwhile, it’s reported that Iran’s exports exceeded the sanction limits for 5 consecutive months. The Brent crude contract plummeted to a 5-month low of 103.95 before ending the day at 104.79, down -0.79%. The front-month contract for WTI crude oil initially plunged to as low as 98.86 before ending the day largely flat at 99.62.

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Oil Pressured as Russia and Iran to Sign Oil -for-Good Deal

Financial markets were weighed down in US session yesterday as well as Asian session today by the US budget deal and speculations that the Fed would announce tapering to begin in the meeting next week. Wall Street declined with the DJIA and the S&P 500 indices losing -0.33% and -0.32% respectively.

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Investors Cautious over US’ Budget Deal, Fed’s Tapering

PGMs rose for the third consecutive day. Indeed, a number of drivers suggest that platinum and palladium should perform better than gold and silver. Operations of South African mines, production in Russia and rising demand in the auto sector appeared to be positive catalysts.

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PGMs Near-Term Outlook Remains Subdued Despite Catalysts

Crude oil prices jumped ahead of the US session amid concerns that the US is moving closer to military action against Syria. The front-month contract for WTI crude oil, while staying with the recent trading range, rebounded to as high as 1069.5, while the Brent crude contract soared to 111.92, the highest level in more than 5 months. As speculations of a strike to the MENA country loom, Iran warned against possible attack from the West.

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Crude Prices Soared as Syrian Tensions Heightened

Financial markets moved cautiously ahead of the FOMC meeting and release of a number important US data on Wednesday. Wall Street changed little with the DJIA and the S&P 500 indices closed largely flat. In the commodity sector, the front-month contract for WTI crude oil plunged to a 3-week low of 102.67 before ending the day at 103.08, down -1.41%, while Brent crude contract slipped -0.50% during the day. The selloff was driven by concerns over US’ economic recovery.

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WTI Crude Plunged to 3-Week Low amid Concerns Over US Recovery

Financial markets weakened across the board. In the US, concerns over Fed’s tapering as investors awaited the FOMC meeting sent stocks lower. Wall Street declined with the DJIA and the S&P 500 indices losing -0.24% and -0.37% respectively. In Asian session today, Japan’s Nikkei recovered after the sharp selloff yesterday amid strength in Japanese yen.

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Sentiment Dampened Across the Board

Euro currency gloom continues to haunt member states as falling output across the euro zone now confirms that the 17 nation economy is in its longest recession since records began in 1995 with the euro zone shrinking 0.2 percent in Q1 of 2013.

Euro Depression

“The misery continues,” said Carsten Brzeski, a senior economist at ING in Brussels. “Almost all core countries bar Germany are in recession and so far nothing has helped in stopping this downward spiral,”

For many parts of Europe, a real depression is already here, and its cost is mounting. Meanwhile, the calls on the Spanish and Greek governments to downsize their spending programs continue. Unemployment in Spain is at 27 percent. Young people are fleeing Portugal and Ireland.

Meanwhile in Greece, one in four say they have difficulty paying for food. Yesterday the Greek Hellenic Statistical Authority reported that Greek industrial orders were down 12.7 percent in March, year on year, while industrial sales were off 11.5 percent. Unemployment keeps climbing with the youth jobless rate is an astounding 64 percent and Greece’s GDP keeps falling. Since the start of the crisis, the Greek economy has contracted by about 25 percent.

Despite the Depression era conditions, however, Europe has no crash plan to get people back to work. Under the German engineered strategy to escape the euro crisis, struggling southern European members must continue to cut public spending, lower wages and grind down prices until they’re competitive again. At current rates, it could take a decade or more to complete the process, according to studies by Goldman Sachs.

All the pain being endured raises the question: Is there a breaking point at which Europeans simply say, “Enough”?

The Week Ahead

European policy makers are once again talking down the risk of a euro zone breakup, and the single currency may continue to consolidate ahead of the EU meeting on May 22 as the group continues to push for greater fiscal integration.

For the euro, the question is whether economic conditions continued to deteriorate in the March, boosting the odds of additional stimulus from the ECB. The latest euro zone PMI numbers will be released this week along with the German IFO report. Economists are looking for a small recovery in manufacturing and service sector activity and if they are right, the euro could extend its gains.

A few hours after the PMI numbers are released on Thursday ECB President Draghi will speak about the future of Europe in the global economy. If the data shows a deeper contraction in Europe and Draghi reminds investors that the central bank is watching economic data carefully to see if additional action is necessary.

Head for the Exit?

The risk of extreme nationalism arising from the current policies and the utter devastation being wrought across half a continent to save the euro currency is not a price worth paying to secure economic benefits.

Member states should be leading Europe away from the precipice towards which its bureaucrats appear determined to push it. Clearly this isn’t happening at present, so it gets closer for member euro states to leave. Not, as some would suggest, to a Norwegian or Swiss style semi detached model, but complete detachment from the euro currency and maybe even the EU itself.

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Euro gloom continues as member states hold onto their tainted currency

Wall Street changed little on profit taking despite encouraging retail sales data in the US. Strength in US dollar sent commodities lower. Chinese economic data was mixed with IP rising faster while retail sales and FAI inline with expectations. Crude oil prices slipped with the front-month contract for WTI crude oil losing -0.91% and the Brent crude contract down -1.05%.

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Commodities Pressured by Strong US Dollar