WASHINGTON (Reuters) - New U.S. housing starts and permits surged in May from record lows, while wholesale prices were muted despite higher gasoline costs, indicating the economy was moving closer to the end of a deep recession.
The Commerce Department said on Tuesday housing starts jumped 17.2 percent, the biggest rise in three months, to an annual rate of 532,000 units. This was as ground-breaking activity for multifamily homes surged 61.7 percent after diving 49.4 percent in April.
Even more encouraging for the housing sector, which is at the center of the longest U.S. output decline since the Great Depression, single family starts rose 7.5 percent, the largest gain since January 2006.
Ground breaking activity for single family homes has now risen for three straight months, an indication that housing investment could be less of a drag on the economy in the quarters ahead, if the trend continues.
"There is hope that we are moving toward the end of the recession, but we will caution that once we get to that point any recovery is going to be very muted. It (economy) will not come from the recession with all guns blazing," said Paul Dales, an economist at Capital Economics in Toronto.
A separate report from the Labor Department showed prices paid at the farm and factory gate increased by 0.2 percent versus a 0.3 percent April rise. more...
Rabu, 17 Juni 2009
Bloomberg Crude Oil Little Changed as U.S. Equities Fall, Dollar Rebounds
June 16 (Bloomberg) -- Crude oil was little changed as U.S. equities dropped and the dollar rebounded, reducing the appeal of commodities as an alternative investment. Oil retreated from an advance of 3 percent, as the Standard & Poor’s 500 Index and Dow Jones Industrial Average fell and the dollar strengthened from its weakest level against the euro since May 21. U.S. industrial production figures signaled that the manufacturing slump remains broad-based.
“We started the day out with the idea that we’d have both a weaker dollar and a higher equity market, and now the equity market doesn’t look as robust as it did this morning,” said Tim Evans, an energy analyst with Citi Futures Perspective in New York.
Crude oil for July delivery fell 15 cents to settle at $70.47 a barrel at 2:42 p.m. on the New York Mercantile Exchange. Earlier, it rose as high as $72.77. Last week, oil touched a seven-month high of $73.23 a barrel. It has risen 58 percent this year.
Prices dropped in electronic trading after the American Petroleum Institute reported that U.S. crude-oil supplies lost 1.26 million barrels, or 0.4 percent, to 356.6 million barrels, a seventh consecutive weekly decline. Futures were down 25 cents, or 0.4 percent, to $70.37 a barrel at 4:32 p.m.
Earlier, oil increased for the first time in three days as the dollar dropped against most of its major counterparts after leaders of Brazil, Russia, India and China considered reducing their dependence on the currency. Gasoline rose above $2.11 a gallon for the first time since Oct. 7. more...
Bloomberg Crude Oil Poised to Break $79, Head to $93: Technical Analysis
June 16 (Bloomberg) -- Crude oil is poised to break $79 and rise to at least $93 a barrel by late August, according to technical analysis by fund manager Daniel Bruno, reaffirming a prediction he first made in December.
“Crude held above $70 a barrel support yesterday, which is a good sign,” said Bruno, the head of CEO Capital Management in New York and a chartered market technician. “If crude maintains $70, there could be a breakout above $79 by the end of June.”
Bruno on Dec. 23 called for crude to rebound from below $40 a barrel up to $93. He said yesterday in a telephone interview that crude was “five-sixths of the way there” on a percentage basis and saw no change to his original target price.
Oil is in a formation known as an ascending triangle, Bruno said, trading between a horizontal line of resistance at $78.96 a barrel and a rising support line. Resistance typically fails in such a pattern, allowing prices to move higher.
Even if the uptrend support is broken, the market is still bullish, Bruno said. “Crude has a lot of room to fall back” to a major support line near $60, “and still reach $93 and beyond.” Prices may stagnate between $57 and $72 for several weeks before rising support buoys the commodity by mid-July, he said.
“If the market trades sideways through the summer, the breakout over $79 will be stronger when it happens and crude will go higher quickly to $93 and $99,” Bruno said.
Crude oil for July delivery fell $1.42, or 2 percent, to settle at $70.62 a barrel yesterday on the New York Mercantile Exchange. Oil has risen 58 percent this year.
To contact the reporter on this story: Aaron Clark in New York at aclark27@bloomberg.net
“Crude held above $70 a barrel support yesterday, which is a good sign,” said Bruno, the head of CEO Capital Management in New York and a chartered market technician. “If crude maintains $70, there could be a breakout above $79 by the end of June.”
Bruno on Dec. 23 called for crude to rebound from below $40 a barrel up to $93. He said yesterday in a telephone interview that crude was “five-sixths of the way there” on a percentage basis and saw no change to his original target price.
Oil is in a formation known as an ascending triangle, Bruno said, trading between a horizontal line of resistance at $78.96 a barrel and a rising support line. Resistance typically fails in such a pattern, allowing prices to move higher.
Even if the uptrend support is broken, the market is still bullish, Bruno said. “Crude has a lot of room to fall back” to a major support line near $60, “and still reach $93 and beyond.” Prices may stagnate between $57 and $72 for several weeks before rising support buoys the commodity by mid-July, he said.
“If the market trades sideways through the summer, the breakout over $79 will be stronger when it happens and crude will go higher quickly to $93 and $99,” Bruno said.
Crude oil for July delivery fell $1.42, or 2 percent, to settle at $70.62 a barrel yesterday on the New York Mercantile Exchange. Oil has risen 58 percent this year.
To contact the reporter on this story: Aaron Clark in New York at aclark27@bloomberg.net
Business Times Malaysia palm output to stay weak: MPOB
Palm oil output growth in Malaysia will stay weak for the next two years because an aggressive replanting scheme and hot weather will aggravate yield stress in oil palms, an industry regulator said today.
But the extent of output softening hinges on the severity of the brewing El Nino weather condition, which has previously brought droughts to the world’s No. 2 producer of the vegetable oil, Sabri Ahmad, chairman of the Malaysian Palm Oil Board (MPOB), said.
“El Nino is the wild card for now,” Sabri said in an interview in the Malaysian capital.
“The impact won’t be felt immediately but the trend of low production growth will persist into 2010 and 2011 since we have been good with our replanting this year and the yield stress has not tapered off.”
El Nino occurs when the eastern Pacific Ocean heats up, with warmer, moist air moving east, leaving drier weather in the western Pacific and Australia and putting crops at risk of failure.
The most devastating El Nino was in 1997, triggering droughts in Malaysia and Indonesia. Palm oil yields fell a year later by 20 per cent, to 3.2 tonnes per hectare as hot weather limited growth of the female flowers that produce palm fruits.
“There could be less oil because hot weather will also dry up fruits and the trees, but most of the big plantations have good water supply management plans and mini-reservoirs by now, so declines in yields won’t go below 20 per cent,” Sabri said.
During the last four El Nino episodes, palm oil prices rose but the impact on production was seen 12-18 months later. The 1997-98 El Nino saw palm prices spike 125 per cent within months, Reuters data showed.
Benchmark palm oil prices have rallied nearly 40 per cent so far this year on strength in commodity markets, tight supplies and still-resilient exports with the possible El Nino effect also giving support.
Even if the El Nino ends up being weak, palms are still producing less oil as biological yield stress that settled in after last year’s record harvests has yet to clear up, Sabri said.
“There is not going to be any double-digit growth for palm oil output this year. The peak will be in September but it’s not fantastic and that’s why we have revised our 2009 output to 17.5 million tonnes,” he said.
The government earlier pegged output at 17.7 million tonnes. Other analysts have also revised palm oil output this year, attributing the slowdown to a replanting scheme initiated last year when stocks were above 2 million tonnes.
As of June, applications to replant 150,000 hectares of oil palm had been received, accounting for three-quarters of the scheme started in October that aimed to remove 700,000 tonnes of palm oil when stocks swelled, MPOB data showed.
Although stocks rebounded in May to 1.37 million tonnes after 5 months of declines as output picked up, Sabri expects shipments to Asia and Europe to be strong for the second half as well, with year-end inventories set to hover at around 1.5 million tonnes.
“We are still in a tight supply situation and prices are bound to range between RM2,400 and RM2,500 for this year. We are still okay because global economy is starting to recover and people would still need to eat,” he said. -- Reuters
But the extent of output softening hinges on the severity of the brewing El Nino weather condition, which has previously brought droughts to the world’s No. 2 producer of the vegetable oil, Sabri Ahmad, chairman of the Malaysian Palm Oil Board (MPOB), said.
“El Nino is the wild card for now,” Sabri said in an interview in the Malaysian capital.
“The impact won’t be felt immediately but the trend of low production growth will persist into 2010 and 2011 since we have been good with our replanting this year and the yield stress has not tapered off.”
El Nino occurs when the eastern Pacific Ocean heats up, with warmer, moist air moving east, leaving drier weather in the western Pacific and Australia and putting crops at risk of failure.
The most devastating El Nino was in 1997, triggering droughts in Malaysia and Indonesia. Palm oil yields fell a year later by 20 per cent, to 3.2 tonnes per hectare as hot weather limited growth of the female flowers that produce palm fruits.
“There could be less oil because hot weather will also dry up fruits and the trees, but most of the big plantations have good water supply management plans and mini-reservoirs by now, so declines in yields won’t go below 20 per cent,” Sabri said.
During the last four El Nino episodes, palm oil prices rose but the impact on production was seen 12-18 months later. The 1997-98 El Nino saw palm prices spike 125 per cent within months, Reuters data showed.
Benchmark palm oil prices have rallied nearly 40 per cent so far this year on strength in commodity markets, tight supplies and still-resilient exports with the possible El Nino effect also giving support.
Even if the El Nino ends up being weak, palms are still producing less oil as biological yield stress that settled in after last year’s record harvests has yet to clear up, Sabri said.
“There is not going to be any double-digit growth for palm oil output this year. The peak will be in September but it’s not fantastic and that’s why we have revised our 2009 output to 17.5 million tonnes,” he said.
The government earlier pegged output at 17.7 million tonnes. Other analysts have also revised palm oil output this year, attributing the slowdown to a replanting scheme initiated last year when stocks were above 2 million tonnes.
As of June, applications to replant 150,000 hectares of oil palm had been received, accounting for three-quarters of the scheme started in October that aimed to remove 700,000 tonnes of palm oil when stocks swelled, MPOB data showed.
Although stocks rebounded in May to 1.37 million tonnes after 5 months of declines as output picked up, Sabri expects shipments to Asia and Europe to be strong for the second half as well, with year-end inventories set to hover at around 1.5 million tonnes.
“We are still in a tight supply situation and prices are bound to range between RM2,400 and RM2,500 for this year. We are still okay because global economy is starting to recover and people would still need to eat,” he said. -- Reuters
Goldman Sachs - Great expectations on India reforms
The formation of a new government has generated enormous interest and expectations on structural reforms and its likely impact. We have written extensively on the kinds of
reforms that India needs to pursue to meet its potential. We now take a look at some of the major reforms that are on the table, assess the likelihood of their implementation, and the potential impact on the economy and particular sectors.
We think that in general, structural reforms will be of a piecemeal nature and happen gradually, without being “big-bang” or radical in nature. We expect the following reforms to have a greater likelihood of getting implemented: establishing a pension regulator; insurance reforms to allow capital raising and increasing the FDI stake to 49% from 26%; a big push in disinvestment to finance the fiscal deficit in the short term; removal of regulatory hurdles for investment in roads and ports; the implementation of the Goods & Services Tax; opening up mining to greater exploration; higher education reforms and; reforms to boost to some extent, governance and efficiency of the bureaucracy. The reforms which we think have a lower probability of happening are: further opening up of the banking sector to foreign banks; changes to labor laws;outright privatization; FDI in retail; any major subsidy or expenditure reduction.
In terms of potential impact, we see a big increase in infrastructure investment—especially in roads and ports. We also think that the insurance sector, metals and mining,education, and logistics will benefit from lesser regulation. The low likelihood of allowing more entry to foreign banks will shield the domestic banking sector from greater competition.
reforms that India needs to pursue to meet its potential. We now take a look at some of the major reforms that are on the table, assess the likelihood of their implementation, and the potential impact on the economy and particular sectors.
We think that in general, structural reforms will be of a piecemeal nature and happen gradually, without being “big-bang” or radical in nature. We expect the following reforms to have a greater likelihood of getting implemented: establishing a pension regulator; insurance reforms to allow capital raising and increasing the FDI stake to 49% from 26%; a big push in disinvestment to finance the fiscal deficit in the short term; removal of regulatory hurdles for investment in roads and ports; the implementation of the Goods & Services Tax; opening up mining to greater exploration; higher education reforms and; reforms to boost to some extent, governance and efficiency of the bureaucracy. The reforms which we think have a lower probability of happening are: further opening up of the banking sector to foreign banks; changes to labor laws;outright privatization; FDI in retail; any major subsidy or expenditure reduction.
In terms of potential impact, we see a big increase in infrastructure investment—especially in roads and ports. We also think that the insurance sector, metals and mining,education, and logistics will benefit from lesser regulation. The low likelihood of allowing more entry to foreign banks will shield the domestic banking sector from greater competition.
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