Monday, May 30, 2011
Oil may gain this week on Asian demand: Survey
US crude futures last week rose as high as USD 101.90 a barrel, taking the weekly gain to 0.5%, after leaders of the Group of Eight said the global economy is strengthening, and as the dollar dropped to a one-week low against the euro.
US data will again be the main driver this week. Oil market focus will be pinned squarely on Wednesday's ISM manufacturing activity and May employment report on Friday. Economists expect both readings to show a slowdown, with higher input prices, supply chain disruption from Japan's tsunami disaster and slowing China demand putting the brakes in manufacturing activity.
Though China's demand remains a big open question - with many talking about the risk of a hard-landing there - many still expect overall Asian demand to remain robust, offsetting the torpor from the developed world.
"Even with the poor economic indicators coming out of the US, China, and the strengthening US dollar; oil was still hovering around USD 100," said Andre Julian, Chief Financial Officer at OpVest - Option Investments, Inc. "We still see Asian demand strengthening into the summer, and with Japan rebuilding demand should only increase."
Julian also offered a historical perspective, noting crude oil prices had risen in June in eight out of the 10 past years and in the two years that it didn`t, the drop was less than 10%. "Although we could see a sell-off into the USD 95 range, it is inevitable that this price point will be a key level of support and a buying opportunity," he added.
Tom Weber, Managing Director at PFGBest in Los Angeles, also referred to support at USD 95. If the market breaks below that level, prices may drop back to USD 88, he said.
"This doesn`t make me an oil bear, but we `gotta trade the chart`, Weber said. "Poor economic data, medium to heavy grade crude glut, and general trader disgust with lack of political will to fix debt problems has really cast a nasty dark cloud over most of the markets," he added.
The extended Memorial Day weekend may crimp volumes across the US markets, including oil but more importantly it marks the start of the summer driving season.
"I am not looking for any breakout, up or down," said Linda Rafield, Senior Oil Analyst at Platts. "The holiday-shortened week will keep liquidity low and the markets range bound. The real indicator is the crude options market on NYMEX-traders are betting on the market continuing to trade on either side of USD 100 and they are usually the lead indicator."
Rafield added: "I do think the downside is vulnerable-demand in the US looks dicey. But the second quarter is generally the lowest demand period of the year."
And as we head into US summer driving season, just how strong will it be especially when you consider the back-breaking price of gasoline at the pump? One indicator - US light-vehicle this Wednesday - should give us some clarity but initial forecasts don't look bright. US auto sales in May on an annualized rate are expected to total 12.2 million, down from the 13.1 million in April.
Labels: Oil-may-gain-this-week-on-Asian-demand:-Survey
Tuesday, May 24, 2011
From Russia with love - 200 new jobs
The contract will help GT, based at Whitehouse Business Park, achieve its ambitious growth programme and increase its workforce from 300 to 500 in the next three years.
The contract will see the firm producing up to 100,000 systems a year.
Group chairman Geoff Turnbull said: “This prestigious contract with Russia’s leading manufacturer will further cement GT Group’s rapid growth and its reputation as one of the principal suppliers of engine brakes and exhaust gas control systems for the heavy duty diesel engine markets.”
“It will also help the group achieve its plan to create an additional 200 jobs during the next three years. These will cover a range of disciplines focusing on research, design, manufacture and highly skilled engineers.”
The new engines will meet the latest Euro 4 and Euro 5 emissions standards and be produced at GAZ’s new world-class manufacturing facility, due to open in September on the outskirts of in Yaroslavl, in central Western Russia.
Geoff is confident GT Group’s substantial growth over the last year is set to continue.
“Our primary business objective is to meet the demands of vehicle manufacturers through the quality of our products and our extensive research and development capabilities,” he said.
“We continually strive to improve the efficiency and performance of our products to ensure they deliver the solutions required by the latest and future generation of engines.”
Labels: From-Russia-with-ove-200-new-jobs
Tuesday, May 17, 2011
Southern Europe weighs on Vodafone results
The company noted “strong performance in key revenue growth areas,” with data increasing by 26.4 percent, emerging markets up 11.8 percent, fixed sales growing by 5.2 percent, and Europe Enterprise up 0.5 percent. The company also noted there had been a “successful drive to increase smartphone penetration in Europe,” which climbed to 18.7 percent from 11.6 percent year-on-year. Data now represents 12 percent of Group service revenue. It also said that 48 percent of its European smartphone customers now take some form of data plan – although this indicates there is still potential for growth, as more than half still do not.
Vodafone said its core European business exhibited “two different trends:” the more stable northern European economies of Germany, the UK and the Netherlands delivered service revenue growth of 2.7 percent, while the rest of Europe was down 2.9 percent, as a result of the ongoing macroeconomic issues. European data revenue growth continued to be strong, but was offset by continued voice price declines and cuts to mobile termination rates. It said that organic service revenue growth in emerging markets was 11.8 percent, driven by growth in India (16.2 percent), South Africa (5 percent) and Turkey (28.9 percent). The company’s share of profits at Verizon Wireless increased by 8.5 percent to £4.6 billion. It noted increased costs in this business, due to the launch of Apple’s iPhone.
Looking forward, Vodafone expects its adjusted operating profit for 2012 to be in the £11 billion–£11.8 billion range, compared with £11.82 billion in the period to March 2011, reflecting the loss of a £0.5 billion share of the profits from SFR. In addition to continued challenges in southern Europe, the company also noted that it expects further regulated cuts to termination rates to have a negative impact. Vittorio Colao (pictured), Group Chief Executive of Vodafone, said that “continuing network investment is an important differentiator for Vodafone, improving the customer experience and giving us leadership in smartphone penetration and in customer take-up of data plans. We enter the new financial year well positioned to deliver further value to our shareholders.”
Labels: Southern-Europe-weighs-on-Vodafone-results
Monday, May 09, 2011
Edinburgh traders count the cost of trams fiasco
“I LOST £500,000,” says Sam Withall.
“It was like being in a cage with the roads fenced off and my customers couldn’t get parked to get to me.”
Clothing designer Ms Withall of Sam Brown Clothing in the west end is just one person who rues the day the trams project ever came to Edinburgh.
She says the tram works forced her out of business altogether, until she set up a scaled-down business elsewhere.
Altogether, traders say the project has cost them hundreds of millions of pounds and now, ironically, many of the worst-hit shops may never see a single customer brought to their door by the service.
The pot of cash for the project has almost run dry, and the country’s First Minister has publicly doubted it will be completed.The latest forecast is that the line will end at Haymarket, well short of the original target, if more money cannot be found.
It will mean many firms which have suffered most will not see any direct benefit.
Problems started after Edinburgh City Council’s project leaders Tie began closing streets to prepare gas and water pipes and electricity cables, and lay tracks.
Tie and the council have now been locked in a legal dispute with contractors for two years, almost stopping progress.
A report due at the end of this month will suggest how to progress, but no timetable for resuming work has been finalised. There is an estimated £100 mil-lion funding gap and if they do go ahead, the trams are not expected before 2014.
Traders say the network of Georgian streets in the city’s west end were almost unnavigable at the height of the work. It is thought £100m was lost in that area alone.
Michael Apter, of Paper Tiger in Stafford Street and chairman of the West End Association, said: “It will certainly have cost Edinburgh’s businesses hundreds of millions of pounds.
“Many businesses that have folded are small and we may never know exactly how much it has cost the city – not least in reputation.”
Footfall for Shandwick Place, a key spot, dipped at some points in 2009 by 48% compared to 2008, equating to tens of thousands fewer potential customers. On-street parking dropped by 10%.
Mr Apter said: “It’s not just retail, it is hospitality and leisure that are also losing out if people are not coming into the city. If you put all of these factors together they all point towards a significant loss of business to the city.
“We need a full public inquiry into the trams.”
Ms Withall has now reopened in William Street. She said: “I could have survived either the trams or the economic downturn, but not both.”
Alan Rudland of Arkay Imaging, who helped set up the Leith Business Association so traders could collectively tackle tram chiefs, had to lay off staff.
He said: “There have been difficult financial times but looking carefully at it most people believed it was the tram works that have done the most damage.”
After Alex Salmond said he believed the trams would “come to nothing” amid new funding fears, Gordon Burgess, former Leith Business Association chairman, said firms there never wanted the trams but there was a “carry on regardless” attitude from project managers.
The owner of the Bed Shop said: “I have seen recessions before, but I lost 50% of my business and I know it was down to the trams. ”
Alan Myerthall, whose family have owned the Pipe Shop in Leith Walk for 50 years, said: “It has already cost us our business. The trams not coming to Leith is the best thing that could happen.”
Originally costed at £375m and due to run from Leith to Edinburgh Airport, the trams will now cost £545m and more if the line is to make it beyond Haymarket.
Any hopes of the Scottish Government giving more cash to the project appear to have been dashed by the SNP election triumph.
A spokesman for Tie said: “There have been many different and localised support measures put in place in recognition of the disruption that businesses and retailers have suffered during construction … with hindsight, our communication at that time could have been much better.”
He added: “All parties concerned in the mediation process are intent on finding a resolution which will provide absolute clarity on when the project can be delivered.”
Labels: Edinburgh-traders-count-the-cost-of-trams-fiasco
Saturday, May 07, 2011
Reserve leaves rates on hold
The decision was widely anticipated by interest rate watchers, with 21 out of the 22 financial institution economists surveyed by Bloomberg expecting no change in the cash rate target.
Many of these analysts are expecting the bank to remain on hold until the second half of the year, with August a widely-tipped month for the next move.
That is despite last week's official Bureau of Statistics inflation data showing a sharp 1.6 per cent rise in consumer prices during the March quarter - the highest quarterly jump in five years.
Many analysts have interpreted that as proof that high inflation early this year is mainly attributable to temporary cuts to fresh food supply caused by the Queensland floods and Cyclone Yasi.
Reserve Bank governor Glenn Stevens appears to agree, while sounding a note of caution about rising utility prices.
"Recent data on inflation show the effects of production losses due to the floods and Cyclone Yasi. The affected prices should fall back later in the year, though substantial rises in utilities prices are still occurring," he noted in his statement outlining the reasons for today's rates decision.
"The bank expects that, as the temporary price shocks dissipate over the coming quarters, CPI inflation will be close to target over the year ahead."
Mr Stevens did, however, warn that the fall in consumer prices which followed the financial crisis has probably finished, and inflation is now likely to be on the rise in the months ahead.
"Looking through these short-term movements, however, the recent information suggests that the marked decline in underlying inflation from the peak in 2008 has now run its course," he added.
"While the rising exchange rate will be helping to hold down prices for some consumer products over the coming few quarters, over the longer term inflation can be expected to increase somewhat if economic conditions evolve broadly as expected."
The bank's board also considered the recent fall in house prices, and weakness in household borrowing as an offset against a fledgling recovery in commercial lending, and the boom in the commodities sector.
It also noted that rises in employment had eased in recent months, and that jobs growth was likely to be at a slower pace over the rest of the year.
Mr Stevens says that means the board will "continue to assess carefully the evolving outlook for growth and inflation" over the months ahead.
Macquarie's senior economist Brian Redican says it is a very balanced statement by Glenn Stevens.
"I think the statement does shift a notch maybe in the direction of tightening [monetary policy by lifting rates], but there's certainly no sign of panic or any indication that the Reserve Bank is about to embark on a very aggressive tightening period, as some people had been suggesting," Brian Redican told ABC News.
Mr Redican says the continuing strength of the Australian dollar, the current level of interest rates, and the prospect of deep cuts in next week's federal budget are all factors negatively affecting large sectors of the economy and putting downward pressure on inflation.
He says that makes it likely the Reserve Bank will wait until August, after the next official inflation figures are released in late July, before lifting interest rates again.
The decision to stay on hold, if followed by the major banks, will leave their standard variable mortgage rates in a range between a low of 7.67 per cent at National Australia Bank and a high of 7.86 per cent at Westpac.
The Australian dollar has hovered in a fairly narrow range just above 109 US cents before and since the data was released.
Labels: Reserve-leaves-rates-on-hold
