Here's my summary of the key issues that affect New Zealand overnight with news of even weaker oil prices and tough consequences.
But first, US jobless claims fell last week, although not by quite as much as was expected. Fewer Americans signed up for unemployment benefits last week as employers retained staff to meet domestic demand for goods and services ahead of the holiday season.
Today's ECB meeting was something of a damp squib. No real decisions for action were taken although Mario Draghi did say that "technical preparations have been stepped up" for further measures if needed to revive the eurozone economy and that they will reassess stimulus plans in early 2015. They are finding taking action hard, although they did cut growth forecasts for the region. Oddly the euro strengthened on the non-decision.
In Russia, a defiant President Putin has warned Russians of hard times ahead and urged self-reliance in his annual state-of-the nation address to parliament. Russia is being hit hard by falling oil prices and by Western sanctions imposed in response to its interventions in neighbouring Ukraine.
Back in New York, UST 10yr bond yields were basically unchanged in trade earlier today, down marginally at 2.27%.
The oil price is trading slightly lower today. The US oil price is now US$66/barrel and the Brent price fell back a little to US$69/barrel. Oil market analysts are debating if oil will fall to US$50. But in North Dakota, prices are already there. If that price spreads, Russia and Venuezela especially will take even more pain. (Russia has effectively imposed capital controls today.) On the 'plus' side of the price fall, China and other countries may use the opportunity to roll back or end subsidies and supports.
In contrast to the oil markets, equity markets are higher erasing yesterday's unusual drop. Wall Street was driven by good domestic confidence data and those lower jobless claims.
Gold is unchanged from this time yesterday at US$1,207/oz.
The kiwi dollar has risen overnight against the US dollar. We start today at 78 USc, 92.9 AUc its highest in almost five months, and the TWI is at 78.4.
If you want to catch up with all the changes from yesterday we have an update here.
The easiest place to stay up with today's event risk is by following our Economic Calendar here »
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9 Comments
When will Putin make his move?
If you back him into a corner, he may come out fighting with nothing left to lose.
Look at a world map & Russia's proximity to the Middle East & Western Europe neighbours.
Notice his references to Hitler in his State of Nation speech last night. Forebodings.
Interesting podcast discussion between Chris Martenson and Dmitry Orlov:
www.peakprosperity.com/podcast/89249/dmitry-orlov-russias-patience-wear…
Having lived before immigration to the US in the USSR, Dmitry Orlov has an invaluable perspective on both the US and Russian Perspectives, as well as the Ukraine. With western propaganda flying thick and heavy, it's more important than ever to cut through the chaff and learn what we can about the most important geopolitical realignment (and renewes tensions) in recent memory.
And in the reknown "Deutsche Wirtschaftsnachrichten" (in German) report with several fotos what happend recently in the Ukraine,
http://deutsche-wirtschafts-nachrichten.de/2014/12/02/ukraine-us-invest…
Same facts in different story in English www.zerohedge.com/news/2014-12-04/how-ukrainian-government-giving-away-…
If you want to know the true cost of oil, scan through these countries listed and see what others pay. And see the true state of each nation. It may open your eyes a little.
http://www.bloomberg.com/slideshow/2014-12-02/highest-and-cheapest-gaso…
Even in America, taxes and costs are accountable as to why?.
http://www.bloomberg.com/news/2014-12-04/why-oklahoma-city-gets-2-gasol…
Proved reserves in the US up again coupled with record production increases. Interesting times.
""Proved reserves, or resources that can be recovered under existing economic and operating conditions, grew after U.S. oil output surged to the highest level in 31 years. Companies used horizontal drilling and hydraulic fracturing to extract oil from underground shale rock layers that sat untouched a decade ago.
“We know there is oil,” Fadel Gheit, an analyst at Oppenheimer & Co., said in a telephone interview from New York. “We know it will exceed even the most optimistic forecasts. That’s the huge leap forward. You’re talking about potentially a 50 percent increase in proved reserves in the next three years.”
The government’s annual estimates of proved reserves are based on survey responses from 480 domestic operators of oil and gas wells, according to the EIA.""
and yet more comments questioning the true figures the EIA puts out,
http://peakoil.com/geology/world-proved-oil-reserves-fact-or-fiction
Really the weight of evidence is going against the EIA.
regards
"investors" face huge losses?
"Bond investors who helped finance America’s shale boom are facing potential losses of $11.6 billion as oil prices plummet by the most since the credit crisis"
"If oil prices stay at $65 per barrel for three years, 40 percent of all energy junk bonds could be looking at default, according to a recent JP Morgan estimate. While that is a long-term and uncertain scenario, the pain is being felt today. The FT reported that a third of energy debt issued in the junk-bond market is currently in “distressed” territory."
another sub-prime?
http://www.bloomberg.com/news/2014-12-02/junk-bonds-funding-shale-boom-…
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