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Friday, 10 August 2012

FT Alphaville » Who’s “buying” this rally?

Assigning specific causes to stock market swings is always a mug’s game, and doubly so in summer when volumes have cratered — especially this year.

Intuitively we know this. Yet after this month’s rally, it’s still hard not to wonder just why the S&P remains up more than 11 per cent this year, and roughly 25 per cent over the past twelve months, given that the macro data has been mostly disappointed in the last few months and that the earnings picture has worsened (same with earnings guidance).

There are exceptions, of course, with the most recent payrolls number and housing market indicators starting to improve.

But we still couldn’t help thinking about it after we saw these charts from Credit Suisse Trading a few days ago:

Opec output down as crude gains - The National

Opec oil output fell last month, one in which the price of crude rose steadily on geopolitical concerns and steady demand.

The 12 members of the organisation pumped a total average of 31.1 million barrels per day (bpd) last month, a decrease of 157,000 bpd.

Iran, saddled with hefty sanctions, led the decline but Saudi Arabia, Libya and Angola also reduced output.The cutback was partially offset by Iraq, which passed the 3 million bpd mark for the first time in many years.

DP World waits to hear on Indian port reforms - The National

Reported planned policy reform to allow foreign ships to transport cargo between ports within India to and from DP World's Vallarpadam terminal in Kerala would provide a huge boost to the facility the Dubai company has invested in and operates.

The terminal has struggled since it opened in February last year under current shipping law with the port developed on an understanding foreign ships would be able to transport container cargo between ports in India, industry sources said.

"The investment is not working because the terminal was built on the premise that it would be a transshipment terminal," said a source, who declined to be named.

Iraq is sweet on Turkey despite the frosty politics - The National

In the sweltering heat of a Baghdad summer's day, Hyder Zahid heads to his local supermarket in the Iraqi capital's Mansour district.

The banker buys himself a tub of ice cream made by Ulker, a popular Turkish brand. The bottom layer consists of kunefe, a Middle East dessert with a cheese base covered by a semolina crust doused in sugar syrup, followed by a second layer of ice cream topped with pistachios.

Not a dessert for the calorie conscious.

Oil stocks to rise |

Oil demand will rise more slowly than expected next year as economic growth falters, pushing up stockpiles of fuel worldwide and offering some relief to consumers facing high prices.
The West’s energy watchdog, the International Energy Agency (IEA), said on Friday it had cut its estimates of oil use worldwide for several years, trimming its 2013 demand forecast by 400,000 barrels per day (bpd) in the light of a “worrying slowdown” in global economic activity.
“Lower economic growth is feeding through to slower oil demand all round,” said David Fyfe, head of the IEA’s markets division. “Global inventories have risen, and the oil market looks comfortably supplied.”

Global oil demand to decline |

Faltering economic growth will undercut global oil demand this year and next, the International Energy Agency said on Friday, citing slowdowns in China and the United States in particular.
“Sluggish economic growth could restrict annual oil demand growth to 0.9 million barrels per day in 2012 and 0.8 mbpd in 2013, with demand averaging 89.6 mbpd and 90.5 mbpd,” down from last month’s estimates of 89.9 mbpd and 90.9 mbpd, respectively, the IEA said in its latest Oil Market Report.
The IEA highlighted slower demand in the United States and China, which together account for a third of the global market, while technical changes in its calculations also cut its 2012 forecast by 0.25 mbpd.

Islamic trade finance lost in transaction |

Omar Ibn Al Khattab, ruler of a nascent Islamic empire in the seventh century, once convened a meeting in Madinah to admonish his subjects “for avoiding trading and leaving the markets in the hands of the foreign traders”.
The story underscores the importance given by Islam to real economic activity, said Mohammad Qasim, head of the Sharia department at Dubai Islamic Bank-Pakistan. “One of the main sources of earning pure wealth is true Sharia-compliant trade.”

Oil groups eye reserves in north Iraq -

The rise in Iraq’s oil production comes in spite of increasing rows over the development of fields in the semi-autonomous Kurdistan region of northern Iraq.
Over the past month, Chevron of the US, Total of France and Gazprom of Russia have followed the lead taken by ExxonMobil in 2011 and bought interests there, bypassing attempts by Baghdad to exert full control over all of Iraq’s oil resources.
Chevron was banned from applying for any further licences in the country’s southern provinces – the historic hub of production in the country – after angering Baghdad by purchasing oil rights from Reliance of India in territory controlled by the Kurdistan Regional Government.

Sovereign wealth funds hunt for bonds on Chinese mainland - Yahoo! News Maktoob

Sovereign wealth funds are increasingly interested in buying China's domestic bonds to get a bigger foot in the world's second largest economy, benefit from good yields and diversify their exposure to more currencies.
Despite concerns over China's slowing growth, the giant industry, which manages countries' windfall revenues for future generations, is taking advantage of the gradual opening up to foreign investors of its mainland bond market worth over $3 trillion.
Norway's sovereign wealth fund said on Friday it had increased its exposure to Chinese government bonds, had already reached the ceiling of its quota for onshore Chinese assets and was seeking to increase it.

Dubai questions Standard Chartered - The National

Regulators in the UAE are asking questions about Standard Chartered's operations in the Dubai International Financial Centre (DIFC).

The move follows allegations the UK bank concealed as much as US$250 billion (Dh918.26bn) in transactions with Iran that violated US sanctions.

The Dubai Financial Services Authority, which regulates firms operating in the DIFC, the emirate's financial free zone, said it was looking into allegations against Standard Chartered made in the week by US officials. The bank has not been accused of any wrongdoing by the DFSA. "We are currently making our own inquiries as the regulator of the branch of Standard Chartered bank in the DIFC," a spokeswoman for the DFSA said.

Risk spills over in Middle East | Global Investing

There’s little or nothing to put your money into in Iran or Syria, and countries like Egypt and Tunisia are struggling to win investors back after their Arab Spring uprisings last year. But geopolitical risk is also seeping into other countries in the Middle East.

Lebanon is looking a tricky bet, as the country has seen clashes between supporters and opponents of the uprising against Syrian President Bashar al-Assad and the border region has been used by rebels to smuggle arms into Syria and take refuge from Syrian troops.