Here's my summary of the key news overnight in 90 seconds at 9 am, including news stocks, commodites and the New Zealand dollar fell as fears grow that Europe's inability to deal with with its debt crisis will slow global growth.
The Dow closed down 0.2% after a late session rally wiped out most of earlier losses of almost 150 points. See more here at Bloomberg.
Few signs are emerging from a two day European summit of any solution to the Euro-zone debt crisis. The 10 year Spanish bond yield jumped to 7% overnight. See more here at Bloomberg.
Fears the European crisis will slow global growth hit commodity prices. Oil prices fell more than 2% with WTI down almost US$2 a barrel to US$78 a barrel. The gold price fell US$22.90/oz to July 2011 2007 levels of around US$1,555/oz.
Banking stocks slumped on both sides of the Atlantic as the implications of Barclays' extraordinary admission of guilt in the LIBOR rate fixing scandal dawned on investors and borrowers alike.
And JP Morgan shares fell sharply after the New York Times reported that losses from its 'Whale' trade in as stocks are likely to blow out from US$2 billion to US$9 billion.
US and European stocks retreated after Spain’s bond yields surged and Germany’s unemployment rate rose more than forecast as a two-day summit of the region’s leaders started in Brussels.
The market is putting fierce pressure on Spain, the world's twelvth largest - and Europe's fifth largest economy. The current EU meeting started poorly. It asked its impotent President to prepare a plan to deal with the crisis.
Meanwhile, economic confidence in the euro area slumped to the lowest in more than 2 ½ years in June and German unemployment increased more than economists forecast, adding to signs the European economy fell into recession. See more at Bloomberg.
Meanwhile, the LIBOR scandal impacts are widening.
Britain's biggest banks face the threat of a criminal investigation over the rate-rigging scandal that has already seen billions wiped off shares and Barclays fined US$450 million. Across the Atlantic, that huge US$2 billion hit that JPMorganChase took from its bad London derivatives trades is ballooning out dangerously. They have moved rapidly to unwind the positions, but in all that haste, internal models at the bank have recently projected losses of as much as US$9 billion may be incurred.
In line with weaker appetites for ris, the NZ$ fell to 78.7 USc from over 79.1 USc yesterday.
No chart with that title exists.
28 Comments
http://thearchdruidreport.blogspot.co.nz/
was the simple fact that in any environment with finite resources and a finite capacity to absorb pollution, the costs of growth would eventually rise faster than the benefits, and force the global economy to its knees.
The one exception is the financial sector, since increasing the amount of paper value produced by purely financial transactions involves no additional capital, resources, and labor—a derivative worth ten million dollars costs no more to produce, in terms of real inputs, than one worth ten thousand, or for that matter ten cents. Thus financial transactions increasingly become the only reliable source of profit in an otherwise faltering economy, and the explosive expansion of abstract paper wealth masks the contraction of real wealth.
Sandy Chen, banking analyst at Cenkos Securities, said that based on the methodology outlined in two legal cases in America Barclays alone could face billions of pounds of claims.
Indeed, at face value, the claims could wipe out both Barclays and Royal Bank of Scotland, dwarfing their respective market values of £20bn and £12bn.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9363260…
According to Mr Tan, however, manipulating the Libor rate was so ingrained in RBS’s culture that Paul White, RBS’s principal rate setter for Yen Libor (who has since been dismissed), and Mr Tan’s trading team in London were “specifically seated together” in the London office to “facilitate the sharing of information”.
With an estimated £290 trillion worth of contracts depending on Libor traded every six months on the world’s financial markets, even a tiny variation in the Libor rate can make huge differences to a bank’s profits and losses.
In 2009, for example, Citibank reported it would make $936 million extra if rates fell by 0.25 per cent over the next year and $1.935 billion if they fell 1 per cent instantaneously. Comparable losses would be chalked up if rates rose.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9363526…
Barclays' interest rate rigging? Nihil novi
Yesterday it was announced that Barclays Bank was fined for manipulating interbank lending rates. It is business as usual in the City, not even the tip of the iceberg. Don't pick up on Barclays: this shows what the modern banking system degenerated into. It has nothing to do with free market financial trading but crude and primitive manipulation and rigging. As previously published on this blog: this also shows what kind of "top talent" the current financial industry attracts.
From a broader perspective it is simply a part of the largest heist in history which continues. POSTED BY GREG PYTEL AT 11:39
Those Barclay guys must eat well , swan was traditionally a dish fit for the nobility ! .. Black ones are equally tasty as white ones , yes .
...... for a black swan event , try the breasts , they're very tender . Cut into medallions and marinade with some wine , black pepper , salt & cumin . Use a heavy pan to fry lightly on each side .
Delicious with a pear sauce .
..... wollah : Your Black Swan event will be a resounding success .
Peak oil theorists were absolutely gutted this morning on the news that Oil prices fell more than 2% with WTI down almost US$2 a barrel to US$78 . " Thats not sposed to happen when oil is running out " one loon wept openly. " To think weve been saying it will be over $200 per bbl soon "
..... the problem is , clean burning natural gas is so cheap ...... particularly in the USA . Substitution of nat-gas for coal and oil applications has barely begun , yet .
The embarassing truth for the " peak oil " brigade is that we may give up on using the stuff long before it runs out .
...... and given that mainland USA is sitting atop 2 trillion barrels of shale oil , it ain't gonna run out for centuries ..... we may be only a fifth of the way up to the mythical " peak " .......
Did you know that the USA is the third biggest oil producer in the world . Over 7 million barrels a day they're pumping . More than half their consumption from their own supplies ......
..... NZ produces how much of it's own useage ? ....... aha ha ha de haaaaaaaaaa !
Brother is a geologist working in PA where fracking has been going full bore for awhile now. Finding more and more cases of contaminated ground water - often thought the fracking process/wells themselves are not doing the pollution damage - but rather the effect they are having on crude wells capped and abandoned many years ago having their casings fractured as a result of the new drilling process. He suggests that future generations will likely have to store a whole lot more surface water to replace the present groundwater supply as much of it (the groundwater) will be contaminated. So, yeah, there will be lots of NG to go around but potable water will become scarce.
There is a bill in Congress at the moment which would see government agencies no longer responsible for environmental monitoring and protection - instead the bill would have the work contracted out to the private sector. Says something about just how serious the problem is!
Consequences, gummy .. can't get away from it not even with the best industrial practice.
Ngas isnt a heavy transport fuel...
"truth" Im all for it GBH.....remember your words are recorded here and in google for ever....
Shale, I'd suggest to try reading up on EROEI as previously suggested, but I know you are not bright enough and being a vested interest party ie share ownership wont want to understand...
That of course just makes you front line canon fodder
Suggest you keep enough cash to fly back to NZ so you can claim WINZ....dont to that in the Philapines do they WINZ I mean?
regards
No, that was Goldman sacks. Economists, you understand.
Folk like me have long understood that at a certain 'price', economic activity crashes. It appears from the 2008 experience (anyone remember the Spanish truckers in mass protest?) that $148 US a barrel is too much, but that happen so fast that we must allow for overshoot.
I'd guess that in the mid $120's, US (2012), is 'break point. Bollard warned of "over $100".
Nobody said it's running out. Get your facts straight, or appear an idiot. We say 'peaked', which happens (volumetrically) around half-way through a resource, and (qualitatively) earlier.
If you'd -both - read the artivcle, you wouldn't have -both - written such drivel. Readers can judge for thenselves.
Great thing about posted such an idiotic comment that it remains for ever. You are obvious incapable of understanding........This see saw effect was expected by matt Simmons, ASPO etc.
"gutted", no....I sold my positions two years ago.....those about to be eviscerated are the ones still in the game like GBH...in the 30s the share market got to 10% from its height in 1929......Im just a watcher...
So for the record, if this is the next dip aka 2008 its expected that we could see $30US a barrel again this year....it will stay there as long as we are in a depression and once we start to recover it will climb to $80USD...then $100USD or there abouts and then it will collapse again to $30 odd as we go into the next recession/depression....and this up and down will continue....
The only unknown is, is this the down we have been expecting or not and the trend graph suggests yes it could be. If so how long will it stay down, mere months aka2008 or years....aka 1930s...
One final point $200 is never likely, the world's economy cant stand oil above $150USD....even $120 looks unlikely.......
regards
Wasn't there some talk recently of an internet " amnesty " , under which all records can be expunged from prior to a certain date ?
..... get rid of those embarassing pics of you groping the mother-in-law , which you put up on FacePlant , that sort of touch .
You'll have a chance to redeem yourself too , steven ...... to start blogging about reality , instead of your fantasy world of horror & woe ....
regards
OK then ....... it's a bet ! ....... hmm , world hasn't ended , steven still wrong ...
....... tum-te-tum tum tum ....... financial chaos engulfed us all ? ... No . .. steven still wrong ...
La de da , da daaaaa ..... oil run out ? ... nope ... steven still wrong ....
.... cha cha cha , hmmm .... plagues / riots / mass starvation from overpopulation ? ....... nah !
steven still wrong ............
Any landlord price gouging on his rentals will probably face a prolonged period of no income .......... the market place will sort out the correct rental levels , eventually .....but if some folks are happy to sign up to $ 1000 per week for a draughty leaky ice-box , that's entirely their decision .......
...... in the meanwhiles , doss the family down at the Redwood Hotel .... just $ 69 per night for a budget unit , $ 89 for the " superior " ........ cheaper than renting !
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