Germany’s Economic Growth to Slow down in the Second Quarter, Says Bundesbank

Economic growth in Germany may slow down in the second quarter following the weather-backed growth in the first quarter, revealed the Bundesbank in its monthly report released on Monday. It also said that it expects the domestic demand to play a key role in supporting the economy in the foreseeable future.

Germany’s economy grew by 0.8 percent in the first three months of the year, the most in three years due to the unusually mild weather in the winter and higher domestic spending. The Bundesbank revealed that growth in spring will be slower due to the weather-linked boost in the first quarter, reported Reuters.

“GDP growth will nevertheless probably be relatively weak in the spring in seasonally and calendar-adjusted terms,” said Bundesbank.

It said that external shocks had increased recently due to the upheavals in Ukraine and economic risks in emerging economies, hence foreign demand will be subdued. This means the growth will be mostly backed by domestic demand.

In a separate report, Germany’s Economy Minister Sigmar Gabriel said he will initiate a policy seeking to curb exports of arms to non-EU or NATO members, in what is a radical shift from the previous government under which the exports rose.

Germany exported arms worth 1.2 billion euros ($1.6 billion) between January and April, a slight decline from the similar period last year. Exports to non-NATO or non-EU nations rose to 650 million euros, a growth of 130 million euros ($178 million). This involves 97 million worth of arms to Brunei, 29 million euros to Algeria and 31 million euros to Saudi Arabia.

Germany was ranked the third biggest arms exporter in the world from 2008 to 2012 by the Stockholm International Peace Research Institute after Russia and the United States.

 

 

Oil Traders Turn Their Focus From Ukraine To Libya

Oil Traders Turn Their Focus From Ukraine To Libya
Oil Traders Turn Their Focus From Ukraine To Libya
Crude oil is trading in the green to start off the week adding 14 cents to trade at 101.73 after declining late last week from above the 102 price level. Brent oil is also in the positive this morning at 109.99. Speculators continue to watch the turmoil in the Ukraine but the tension and stress seems to be subsiding from the market place. Energy trader’s focus is now turning towards Libya where fighting worsens and the country looks like it could destabilize. Brent extended its first weekly gain this month amid speculation escalating violence in Libya will further disrupt supplies from the holder of Africa’s biggest oil reserves.

Libya accused a retired army general in the eastern city of Benghazi of planning a coup while the nation’s General Assembly was said to be suspended following clashes in Tripoli. Government forces in Ukraine fought insurgents as separatists prepared for an election later this year after declaring independence.

Libya’s crude production “is already impaired and certainly not positive, which should be supportive of higher prices,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone today. “Adding the potential for escalation in Ukraine, it’s quite clear the risks that oil is on the upside this week.” As reported by Bloomberg.

Libya, a member of the Organization of Petroleum Exporting Countries, has struggled to restore security three years after the revolt that toppled former leader Muammar Qaddafi. Oil production declined to 215,000 barrels a day in April, about 13 percent of capacity, data compiled by Bloomberg show.

Looking across the globe to the US, where driving season is about to kick off gasoline prices climbed this morning to 2.9850. Crude prices moved modestly higher as the market found support from US gasoline demand hopes ahead of the looming summer-holiday driving season and the ongoing Ukraine crisis. Oil prices were finding support from the approaching US summer holiday season that kicks off with the long Memorial Day weekend May 24-26.

gasoline monday

“The driving season is right around the corner on Memorial Day and we expect increased demand for gasoline across the summer,” said Andy Lipow of Lipow Oil Associates.

Refineries were beginning to wind down their maintenance season in preparation for a ramp-up in activity in several days, he noted. Total US gasoline inventories fell by 800,000 barrels, or 0.4 percent, last week and were down 0.1 percent from a year ago, according to the Department of Energy.

gas mondayAlso in the US, natural gas edged down last week but is trading in the green this morning at 4.420 as faster-than-expected gains in natural-gas inventories are easing concern that a shortage is looming next winter, spurring speculators to cut bullish bets. Gas futures fell 9.2 percent in the period as stockpile gains topped analysts’ forecasts for a third week. Production from shale deposits in the U.S. Northeast and Midwest climbed to a record 16.1 billion cubic feet a day in the week ended May 9th. The Energy Information Administration said inventories rose 74 billion cubic feet in the week ended May 2. Analysts predicted an increase of 70 billion. Supplies climbed by 105 billion the following week, narrowing the deficit to the five-year average to the least since Feb. 28.

Asian Economies Still Strong as Malaysia’s Latest Data Shows

Malaysia’s gross domestic product rose its most in five straight quarters as exports rebounded, providing more room for the central bank to increase interest rates.

The country’s economy grew 6.2 percent in the first three months of the year from a year ago, up from 5.1 percent growth recorded in the last quarter of 2013. This exceeded the median estimate of a growth of 5.7 percent in a Bloomberg poll of 22 economists.

The GDP increased by 4.7 percent in 2013. The central bank forecasts that the economy may grow 4.5 percent to 5.5 percent this year, expanding from previous forecast of 5 percent to 5.5 percent.

The economy is benefiting immensely from improvement in international demand from key markets such as U.S., while domestic spending has increased due to capital spending and growth in wages.

The Bank Negara Malaysia hinted in May that it might tweak its monetary policy to curb threats to financial stability; leading traders to speculate that it may hike interest rates.

 “It’s a simple case of both domestic demand and external demand driving growth, unlike the last two years where it’s running on a single engine,” Suhaimi Ilias, a Kuala Lumpur-based chief economist at Maybank Investment Bank told Bloomberg just before the data was announced.

Net exports grew 14.9 percent in the first quarter from a year ago, while household spending surged 7.1 percent over the period. Services industry advanced 6.6 percent in the first quarter from a year earlier, compared to 6.4 percent growth in the last quarter of 2013. Construction sector rose 18.9 percent over the period, while manufacturing industry posted a growth of 6.8 percent.

 

Abenomics Pay as Japan’s Economy Accelerates Faster than Expected

Japan’s economy accelerated the most since 2011 in the first three months of the year as consumers rushed to take advantage of the sales tax hike while companies boosted their investments.

The gross domestic product in the first quarter expanded 5.9 percent from the previous quarter, reported the Cabinet Office. This exceeded the median estimate of a 4.2 percent growth in a Bloomberg poll of 32 economists.

Consumer spending grew 2.1 percent from the last quarter of 2013, the strongest since the first quarter of 1997, when it grew at 2.2 percent. Capital spending rose 4.9 percent, the highest growth rate since the first quarter of 2011, when it grew by 8.2 percent following the nuclear disaster and earthquake that rocked Japan.

The impressive data indicates the Bank of Japan may announce any monetary easing policies anytime soon. If the momentum is sustained, it could be a convincing factor for the government to increase the tax rate.

 “Maintaining capital spending growth will be a key factor in sustaining the recovery, “ Takuji Okubo, a Tokyo-based chief economist at Japan Macro Advisors, told Bloomberg. “The situation doesn’t warrant additional BOJ easing for now.”

Imports grew 6.3 percent from the preceding quarter, while exports increased 6 percent. The Japanese Economy Minister Akira Amari was pleased with the news, saying the surging demand just before the tax hike exceeded his expectations. Nonetheless, consumer sentiment in April after the sales tax hike plunged to nearly a 3-year low, indicating there are still hurdles ahead.

Beer deliveries last month plunged 21 percent from a year ago, the steepest decline since 2005, after earlier surging 17 percent in March. Consumer spending on goods such as computers and electronics increased in March, while auto sales grew in the seven months ending March before declining last month.

 

Gold Climbs On Ukraine On Going Tensions

Gold Climbs On Ukraine On Going Tensions
Gold Climbs On Ukraine On Going Tensions
Gold is trading at 1304.90 down just a buck as traders are once again focused on tension in the Ukraine. Earlier in the week the market seemed to get bored with the situation and gold fell below the 1280 mark but tensions climbed after several bloody days of violence. President Putin seems to use one hand to calm tensions and another to turn up the pressure. His end goal remains a bit unclear. Silver is marching right behind gold easing just 8 points but remaining strong at 19.767 along with Platinum which is trading at 1474.45. Gold traded near a one-week high as investors weighed the conflict in Ukraine against the outlook for the U.S. economy and further reductions in stimulus. Palladium dropped from the highest level since August 2011.

According to Bloomberg Gold has advanced 8.7 percent this year partly on tension between Ukraine and Russia. Russian Foreign Minister Sergei Lavrov said Ukraine is sliding into a civil war that may invalidate elections, as Ukrainian leaders and their international allies blamed Russia for the violence. Bullion has rebounded from last year’s 28 percent drop even as the Federal Reserve started to trim stimulus as the U.S. economy recovers. Janet Yellen has once again suggested that the economy continues to need help regardless of the strength of the recovery until all sectors are doing well and that the Fed intends to continue its support.

Gold(15 minutes)20140514160249

Platinum for immediate delivery fell 0.3 percent after advancing to $1,486 yesterday, the highest since March 7. Lonmin Plc will keep its platinum mines in South Africa open for a second day in an effort to break a 16-week strike even after many workers were prevented from reporting for duty yesterday.

Copper along with base metals and industrial metals are all trading in the red. Copper is at 3.151 down a few pips but remains near recent highs. Analysts believe the buying effect in the metal may remain elevated today while the gains could be minimal. This morning copper is seen trading slightly below the previous day’s close which could be due to weak Asian markets. Copper output in China, biggest consumer, was 584,000 mt in April, according to data from National Bureau of Statistics. Inventories of refined metal tracked by the LME have risen 6.6 percent in 2014, belying concern that a ban on raw ore exports by Indonesia would rapidly drain supplies. Ore stockpiles in China are sufficient for the biggest user of industrial metals to keep making nickel pig iron, a low-grade alternative to refined metal, through August, according to Beijing Antaike Information Development Co.

Bank of Israel Has no Plans to Set Benchmark Level for Shekel

The Bank of Israel (BOI) has no immediate plans to fix the shekel’s exchange rate, despite pressure from manufacturers to do so.

Rafi Melnick, a key BOI policy maker, acknowledged that though Czech Republic had lowered the koruna by fixing a benchmark level last November and purchasing foreign currency, the conditions in Israel are different. The shekel is currently trading close to its highest level in three years.

 “They wanted to increase inflation,” Melnick was quoted by Bloomberg as saying. “They had other problems. If things fundamentally change we can do all kinds of things, but it’s not something that is being considered today.”

Israel’s manufacturers through their umbrella association-The Manufacturers Association of Israel- have been lobbying the central bank to intervene to bring the shekel down to 3.8 shekels per dollar. This would see it plummet 10 percent from the current level of 3.4580 per dollar on Wednesday. The industrial firms complain that the currency is ruining the economy.

The Israeli currency has advanced almost 15 percent versus the dollar since July 2012, affecting exports. The central bank has intervened a few times; it lowered borrowing costs and purchased $9 billion worth of foreign currency. Nonetheless, economic growth has declined from 4.6 percent in 2011 to last year’s 3.4 percent.

Exports have also declined to an annual growth rate of 1 percent over the last two years from an increase of 7.3 percent in 2011.

Melnick opted to dwell on the positive side of the appreciating currency, saying imports have become cheaper, including raw materials. He also said it is now cheaper to go on a holiday abroad.

 

China Industrial Output Holds Steady, Retail Sales Grow at Slower Pace

China’s value-added industrial output surged 8.7 percent in April from a year ago, down from March’s 8.8 percent growth, reported the National Bureau of Statistics.

This lagged the median estimate of a growth of 8.9 percent in a Dow Jones survey of 18 economists.  Industrial production grew 0.82 percent month-to-month between March and April, compared with February-March’s growth of 0.81 percent.

Investment in fixed-assets in China’s urban areas grew 17.3 percent in January to April compared to a year ago, reported Wall Street Journal.

Retail sales surged 11.9 percent to 1.97 trillion yuan (US$322.97 billion) last month from a year ago, down from the 12.2 percent growth posted in March. This also lagged the economists’ forecast of a growth of 12.2 percent in April. The retail sales grew 0.83 percent in April from a month earlier. This contrasts with a growth of 1.24 percent between February and March.

**relatedarticle**

Chinese retail sales rose 12 percent in the first four months of the year to 8.18 trillion yuan on a year-on-year basis. Sales in rural areas exceeded those in towns and cities. Rural area sales grew 13.2 percent in January to April, while those in urban centres rose 11.7 percent from a year ago, reported Xinhua News.

The Consumer Price Index, the benchmark measure of inflation, rose 1.8 percent from a year earlier in April. This was lower than March’s growth of 2.4 percent, said NBS in Friday. Economists believe that the low CPI may be the reason why retail sales stagnated in the first quarter.

 

 

 

 

 

 

Mexico Industrial Activity Declines in March, France’s Economy to Expand 0.2 Percent

Mexico’s industrial activity plunged 0.13 percent in March from a month earlier, reported the national statistics agency today. This lagged economists’ prediction of an increase of 0.30 percent.

The economists have already revised downwards their economic growth forecasts for 2014 after a sluggish start, and forecast economy to expand by 3.01 percent. Last year, the economy grew by 1.1 percent, its lowest in four years.

Manufacturing output, a segment of industrial activity, plunged 0.34 percent in March from February. Mexico exports 80 percent of its mostly manufactured items to the United States. Manufacturing sector confidence edged up slightly in April, though it was still weak, an indication that the economy is expanding slowly.

Industrial production grew 3.4 percent in March from a year ago, against forecasts of a growth of 3.65 percent. A good spot in the otherwise dim report is construction sector, which expanded by 0.05 percent after shrinking sharply in 2013. However, mining activity fell 0.48 percent over the period, reported Reuters.

In a separate report, the French central bank forecasts the economy to expand 0.2 percent in the second quarter of this year. The estimates come at a time when the Socialist government led by President Francois Hollande is looking for ways to slash deficit and control spiralling unemployment.

France’s unemployment rate currently stands at 10.2 percent. Hollande plans to jolt the economy back to life by removing 30 billion euros ($41.3 billion) in payroll taxes to firms in the next one year.

The Bank of France’s April monthly business climate survey showed that confidence in the industrial sector fell to 98, down from 99 a month earlier, down from the long-term average of 100. Idle capacity at factories fell slightly in April to 76.4 percent.

Oil & Gas Supply Disruptions Likely To Have Stronger Effect on Europe & Asia

Oil & Gas Supply Disruptions Likely To Have Stronger Effect on Europe & Asia
Oil & Gas Supply Disruptions Likely To Have Stronger Effect on Europe & Asia
Crude oil remains slightly over the $100 price trading on a positive note to start off the week, while Brent oil added 32 cents to trade at 107.60 plunging steadily last week as supply outpaced global demand. Tensions in the Ukraine seemed to ease after the separatist vote yesterday as violence seemed to ceases after protestors went to the polls. Data at the end of the week showed that China’s imports of major commodities rose strongly in April, although a rise in crude oil and copper imports was attributed to stockpiling as a rebound in manufacturing in the world’s second-biggest economy remained modest. Crude imports rose by than a fifth from a year ago to a record high, while copper climbed for a second consecutive month to a three-month high. Crude imports from China, the world’s top energy consumer, rose more than a fifth in April from a year earlier to a record high of 6.78 million barrels per day (bpd), helped by higher seasonal demand and indications of stockpiling.  As refineries cut production during the peak maintenance season, the strong crude imports suggest some of the oil went straight into storage, with two new strategic reserve sites in Tianjin and Hangdog estimated to add 39 million barrels of storage capacity.

Asia is more at risk from a disruption in oil supplies than either Europe or the United States. That is according to a new report from Chatham House, which found that China and India are poorly positioned to handle such a supply crisis. The paper looked at what would happen in the event of a major supply disruption, such as the loss of 10 million barrels per day through the Strait of Hormuz. More than 40% of Asia’s crude oil supplies transits through the narrow strait in the Persian Gulf.

Brent advanced for the first time in three days amid speculation that increased tension in Ukraine may disrupt oil supplies from Russia, the world’s biggest energy exporter. Futures climbed as much as 0.4 percent in London. Ukraine’s eastern regions voted yesterday in favor of secession in a referendum they organized as government troops and pro-Russian rebels clashed. The global oil market is sufficiently supplied and demand is “great,” according to Saudi Arabia’s Petroleum Minister Ali Al-Naimi.

oil monday

U.S. crude inventories dropped 1.8 million barrels to 397.6 million barrels for the week ended May 2, said the Energy Information Administration Wednesday. But even with the pullback of last week, stockpiles are still very high now. The current level of crude inventories is 2.1 million barrels higher from one year earlier.

The uncertainties of Ukraine put a big threat to the oil market. Russia is the second-largest producer of natural gas. More than 70 percent of Russian crude and gas exports to Europe pass through Ukraine. Traders said that a possible halt of Russian crude and natural gas supplies through Ukraine supported the crude prices.

Natural gas eased by 30 points this morning to trade at 4.505 as US natural gas is not subject to the possible disruptions in Europe as the US does not export much gas and does not have the facilities to ramp up for increased demand in the short term, so US natural gas is more dependent on US consumption based on residential demand for seasonal heating and air conditioning. With spring temperatures remaining moderate and summer well off into the future, gas is looking for a bottom.

Germany’s Exports and Imports All Decline in March

Germany’s March exports plunged the most in almost a year, while imports also fell due to economic slowdown in China and the impact of the Ukraine tensions.

The Federal Statistics Office reported that seasonally-adjusted overseas shipments declined 1.8 percent in March, marking the second month of straight decline, while imports fell 0.9 percent, shrinking the trade surplus to 14.8 billion euros. Economists polled by Reuters had expected imports to surge 1 percent and imports to grow 0.5 percent.

The seasonally-adjusted trade balance declined from 15.8 billion euros in February. The trade surplus in March fell short of a forecast of 16.6 billion euros.

“As already reflected in other industrial data, the month March saw a stronger real economic impact from the Ukrainian crisis and the Chinese slowdown as confidence indicators had suggested,” said ING economist Carsten Brzeski.”All in all, with ongoing geopolitical problems and the slowing emerging economies, it looks as if Germany’s famous export engine could still be sputtering for a while,” he added.

Germany saw its exports to Russia plunged 16 percent in January and February. Europe’s leading economy expects foreign trade, a key driver of its economic engine, to lag this year. Domestic demand is therefore expected to fuel much of this year’s economic growth.

However, Germany exported more to EU member states that don’t use euro like the UK, with exports to such areas surging 10.4 percent, while imports grew 10.8 percent. On an annualized basis, unadjusted figures show shipments to the euro zone rose 0.1 percent in March, while imports grew 2.3 percent.

The country’s current account in March rose to 19.5 billion euros, up from 13.8 billion euros a month earlier.

 

U.S. Jobless Claims Plunge Last Week as Labor Market Strengthens

The number of jobless Americans who applied for unemployment benefits plunged last week, as the U.S. labor market continues to strengthen.

Unemployment claims plunged 26,000 to 319,000 during the week ending May 3, down from 345,000 in the previous week, reported the Labor Department on Thursday. This overshot economists’ forecast of a decline to 325,000 in a Bloomberg survey.

Though fewer dismissals are laying the path for increase in wages and employment, most companies are still keenly monitoring consumer spending patterns, which contribute to 70 percent of the US economy, to pick up before they can embark on a hiring spree.

 “Claims are drifting lower on a longer-trend basis,” Jacob Oubina, a New York-based senior U.S. economist at RBC Capital Markets LLC told Bloomberg. “I think hiring will creep slightly higher.”

The 4-week moving average of jobless claims, which adjusts the data for volatility, rose to 324,750 up from 320,250 the previous week. The number of individuals who are still collecting unemployment benefits declined 76,000 to 2.69 million for the week ended April 26.

The report also indicated that the unemployment rate among persons who are entitled to benefits tumbled to 2 percent as of April 26, down from 2.1 percent a week earlier.

Companies absorbed 288,000 new workers in April, the most since January 2012, reported the Labour Department last week. Nonetheless, the labor participation rate, which measures the proportion of working- age individuals with a job, or those actively looking for work, plunged to 62.8 percent, the weakest in 36 years (since March 1978).

The data on unemployment claims fluctuated since early April due to spring recess and Easter holidays. However, the Labor Department told the press that most of the swings are now certainly over.

 

 

Chinese Trade Data Surprises To The Upside

Chinese Trade Data Surprises To The Upside
Chinese Trade Data Surprises To The Upside
Gold moved between small losses and gains this morning after taking a major tumble on Wednesday after Janet Yellen’s comments assured traders as sentiment shifted to risk on trading. Even though problems in the Ukraine continued Russian President Putin is now aggressively trying to turn the down the temperature as violence continues.  Speculators were buoyed by comments from Russian President Vladimir Putin. He urged separatists in Eastern Ukraine to delay a vote on independence and said, in a significant shift, that the Ukrainian election to be held on May 25 was a step in the right direction — but talks should be held with separatists first. Finally, Putin said that Russian troops had pulled back from the Ukrainian border.

Gold is trading at 1290.20, while silver gave up 54 points to trade at 19.288. Platinum gained a few dollars to trade at 1438.75 dealing with strikes and other problems outside of precious metal safety. Palladium gained $2.70 after a strong Chinese import export release. Palladium is trading at 799.70. Yesterday commodities were mixed again — metals finding themselves offered, with gold down $18.5 to $1290 on the Fed’s more upbeat comments on the economy and as Russian troops pulled back from Ukraine. Silver fell 1.5 per cent and copper was down 0.8 per cent.

gold may 8

Janet Yellen noted in comments to the Congressional Joint Economic Committee that “many recent indicators suggest that a rebound in spending and production is already under way”. However she was less enthusiastic about the housing market, noting that recent indicators showed a flattening out could prove to be permanent. At the same time Yellen assured everyone that rates would remain low for a very long time yet. She wisely dropped her previous comment that rates would rise in six months, noting when asked when rates would rise, “I’m afraid I can’t give you a timetable”. Gold fell 28 percent in 2013 to end a 12-year rally, on expectations the Fed would scale back asset purchases. Chair Janet Yellen yesterday told U.S. lawmakers in Washington that the world’s largest economy still needs stimulus even as data supported the outlook for faster expansion this year. The central bank has announced cuts to bond-buying at each of the past four meetings.

Gold has rallied 7.4 percent this year in part as tension in Ukraine spurred haven demand. Russian President Vladimir Putin called on separatists in Ukraine to postpone a vote for autonomy and said he’s pulled Russian troops from the country’s border after weeks of tension, as the U.S. said there’s no sign of a withdrawal.

Copper gained 5 points to trade at 3.041 after Chinese data this morning caught traders off guard with a surprise in exports and imports. Overseas shipments increased 0.9 percent from a year earlier, when figures were inflated by fraudulent invoicing, data from the Beijing-based customs administration showed today. That compared with the median estimate for a 3 percent drop in a Bloomberg News survey of analysts. Imports gained 0.8 percent, leaving a trade surplus of $18.46 billion.

metals may 8

 

Germany’s Factory Orders Slowed Down In March, says Statistics Office

Germany’s factory orders in March surprisingly declined, indicating that growth in the world’s fourth largest economy is still uneven.

The Federal Statistics Office said on Wednesday that factory orders, when adjusted for inflation and seasonal fluctuations, plunged 2.8 percent from February. The orders had rose 0.9 percent in February. March’s orders lagged the median estimate of an increase of 0.3 percent given by economists in a survey by Bloomberg News.

Domestic orders plunged 0.6 percent in March from a month earlier, while foreign orders fell 4.6 percent. Euro zone orders declined 9.4 percent, while those from outside the economic bloc tumbled 1.7 percent.

Germany’s economy faces various risks such as the Ukraine tensions, persistently low inflation and China’s economic slowdown. The European Commission revealed in its quarterly forecast that it expects a “dynamic, broad-based growth” of the German economy. However, Bundesbank expressed concerns that the economy will slow down considerably in the coming months.

“There are risks that could slow down growth,” said Michael Holstein, a Frankfurt-based economist at DZ Bank told Bloomberg. “But the major positive factor from abroad is that the euro area is recovering, and the effect for the German industry is bigger than negative influence from China or Russia.”

Europe’s largest economy expanded 0.4 percent in the fourth quarter of 2013. The Federal Statistics Office is expected to announce the results for the first three months of this year on May 15.

Economists surveyed by Bloomberg predict that the European Central Bank will maintain its current target interest rate at 0.25 percent.

 

Twitter Tanks

twitter-logo-birdTwitter tanks… that should be the headlines of this morning’s financial newspapers. On Tuesday social media giant Twitter hit the skids giving up as much as 18% and closing down 11%. Tuesday marked the “unlock” date for insider shareholders. This is the date that these businesses and individual, most the original investors can sell their shares after the IPO. Although none have made any moves to sell these shares, it was enough to spook the markets on a quiet news day.  Many traders have been wondering how the “twitting” site can turn their huge membership into a profit center. Twitter had 4.5billion members at the time of the IPO and has added more to climb to 5 billion members, but have yet to be able to come up with a way to turn this into profits.

Twitter

Not that long ago, Twitter was the sweetheart of both Silicon Valley and Wall Street. Now, investors are writing eulogies for the service and claiming that it will be crushed by its rival Facebook. Are these the same people that filed lawsuits against Facebook when its IPO launched?  Last week, shares in the real-time social media company closed at their lowest level since listing. They’re still above the IPO price of $26—which is the actual price the company sold its stock at to big institutional investors—but they’ve fallen nearly 50% from their peak in December and around 40% so far this year. How fast speculators turn their back on companies sometimes amazes one.

Twitter CEO Dick Costolo and co-founders Jack Dorsey and Ev Williams last month took the unusual step of saying they had no intention of selling any of their shares. Chris Sacca, an early Twitter investor, told Bloomberg that he also plans to hold onto the 15 percent of the company’s shares that he manages through various arrangements.

Elsewhere in the markets on Tuesday, it was a quiet day. Wall Street saw further downside over the course of the trading session. The weakness reflected lingering concerns in the Ukraine crisis following continued clashes between Ukrainian armed forces and pro-Russian militants. The US declined sharply on Tuesday, a day after the Dow and S&P 500 closed near record highs, as AIG reported a decline in profit and Twitter fell as insiders got their first opportunity to sell since the company’s initial public offering. Asian equities declined on Wednesday as trading volumes returned to normal with Japan and South Korea resuming trade following a long weekend. European markets ended the day lower taking cues from the US.

Dow May 7

Asian shares fell this morning as the heightened possibility of Ukraine slipping into civil war dampened risk sentiment. Key benchmark indices in Japan, Hong Kong, China, Singapore, South Korea and Taiwan were down 0.44% to 2.3%.

For the rest of the week, analysts say the biggest market moves will be testimony from Federal Reserve Chairman Janet Yellen today and tomorrow, a meeting of the European Central Bank on Thursday, and ongoing tensions in Ukraine. The ECB is currently undecided and no one is sure what to expect from Mr. Draghi as the euro continues to gather strength trading at 1.3927 against the weak US dollar this morning. 

Germany’s Private Sector extends its Gains for the 12th Consecutive Month in April

Germany’s private sector activity surged for the 12th consecutive month in April on increased orders, indicating that the world’s fourth-largest economy started the second quarter on a strong note.

London-based financial data firm Markit Economics said its full composite Purchasing Managers’ Index, which measures expansion in services and manufacturing industries, was 56.1 in April. A reading above 50 indicates expansion. However, this was slightly lower than April’s preliminary reading of 56.3, thought it was higher than March’s 54.3.

A sub-index that tracks private sector activity surged to 54.7 last month, up from March’s 5-month low of 53.0. All service industries that were tracked by the survey reported broad-based expansion.

“April data signaled a continuation of the economic upturn in Germany’s service sector, with output growth accelerating since the previous month and above the average for the first quarter,” said Oliver Kolodseike, an economist at Markit.

Private sector firms have become positive on their future prospects due to the improving global economy and increasing number of new orders. Business confidence rose for the 17th consecutive month. The service firms hired new workers in order to cope with the increased workload, though the pace of employing was slower than in March.

“The rise in private sector employment should feed through to improved job security and provide a pillar of support to services demand from private consumption,” Kolodseike added.

Input prices advanced faster than output prices as the companies slashed their retail prices in order to stimulate demand. The service industry also expanded in France, Italy, Spain and Ireland, the first time to do so since May 2011.

 

 

 

Tech Stocks Hold Traders Attentions Ranging From Facebook To Apple To Google

Tech Stocks Hold Traders Attentions Ranging From Facebook To Apple To Google
Tech Stocks Hold Traders Attentions Ranging From Facebook To Apple To Google

Monday was a fairly quiet day after the release of lackluster Chinese data in the wee hours of the morning, there was very little market data until the release of ISM services data in the North American session. London and Tokyo markets were closed yesterday for local holidays. After recovering from an early move to the downside, US stocks moved modestly higher over the course of the trading day on Monday. The initial weakness on Wall Street was partly due to news of continued clashes between Ukrainian armed forces and pro-Russian militants in the eastern part of the country. However, an upbeat report on service sector activity from the Institute for Supply Management showing that service sector activity expanded at a faster than expected rate in April contributed to the rebound in the US markets. The ISM said its non-manufacturing index rose to 55.2 in April from 53.1 in March, with a reading above 50 indicating growth in the service sector. Economists had been expecting the index to show a more modest increase to a reading of 54.2. Meanwhile, European stocks managed to trim steep early losses on Monday, but finished the choppy session in negative territory after weak Chinese data.

global markets may 6

This morning Asian markets are trading on a mixed note on the back of favorable economic data from the US in yesterday’s trade supporting an upside in the markets. While on the other hand, conflict between Ukraine and Russia has intensified after four Ukrainian troops were killed and 30 wounded by rebels in Slavyansk a city in eastern Ukraine which acted as a negative factor.

Monday saw a lot of events in the stock markets. A surprise announcement from the CEO of Target upset the stock prices. Target dropped more than 3% on news that CEO Gregg Steinhafel had stepped down. He was under fire for the handling of Target’s data breach last year. JPMorgan weighed on the Dow, falling more than 2%. The company said it expects fixed-income and equities trading revenue to slump 20% in the second quarter after declining 17% in the first quarter.

Target(15 minutes)20140506083849

This afternoon social media giant Facebook will give the markets an update A lot has happened with the company recently. In February, they bought WhatsApp — a hugely popular texting service — for $19 billion in cash and stock. WhatsApp had 450 million users at the time, and has now hit the half-billion mark. Just one month later, founder Mark Zuckerberg announced they were spending another $2 billion to buy Oculus Rift, a virtual reality headset maker.

Global traders continue to react to Friday’s nonfarm payroll data. U.S. employers added a robust 288,000 jobs in April, the most in two years, evidence that the economy is picking up after a brutal winter slowed growth. The Labor Department also said Friday that the unemployment rate sank to 6.3 percent, its lowest level in years.

In other market news, a jury has awarded Apple $119.4 million, far less than it demanded, in a patent battle with Samsung over alleged copying of smartphone features — and the jury made the victory even smaller by finding that Apple illegally used one of Samsung’s patents. Google has been sued for allegedly abusing its market power by forcing makers of handheld devices that use its Android operating system to also provide its applications.

Google’s requirements that manufacturers such as Samsung Electronics adopt less popular applications in order to use consumer favorites such as YouTube are “designed to maintain and extend its monopolies,” according to a complaint filed Thursday in federal court in San Jose, California.

Institute for Supply Management: U.S. Services Industry Expands Faster than Expected.

U.S. service industry expanded the most in eight months in April as the largest component of the economy will boost growth in the second quarter.

The Institute for Supply Management’s non-manufacturing index advanced to 55.2, up from March’s 53.1. This exceeded the median estimate of 54 in a Bloomberg survey of economists. A measure above 50 shows expansion.

The service industry accounts for 90 percent of the U.S. gross domestic product (GDP).

The expansion in the services industry, coupled with a strong showing by the manufacturing sector, indicates that economic growth is accelerating after the sluggish first quarter. The private sector hired more workers in April, the biggest hiring spree in two years, while the unemployment rate touched the levels last seen in 2008. This sets the pace for an improvement in consumer spending which will have positive ripple effect on the economy.

“Things are getting better,” Robert Stein, a Wheaton, Illinois-based deputy chief economist at First Trust Portfolios LP told Bloomberg, said before the report. “Among the top line numbers, we’re seeing a re-acceleration of the economy. Consumers are in excellent shape” and “spending is going to continue to grow this quarter.”

The ISM non-manufacturing research analyzes several industries such as retail, utilities, healthcare as well as factors in agriculture and construction. 14 service industries said they recorded growth last month, while 4 reported that business took a turn for the worse, according to the ISM report.

Another report released by financial data firm Markit Economics indicated that services industry grew marginally in April. Its full reading for April stood at 55, down from 55.3 a month earlier.

 

More Workers Hired in U.S. than Previously Estimated, More Opt Out Though

More workers were hired in the U.S. at the fastest pace in over two years last month, indicating the economy was starting to pick up after the brief winter lull. This clears the path for the Federal Reserve to phase out its monthly asset purchases in 2014.

Nonfarm payrolls increased 288,000 in April, reported the Labor Department on Friday. This was the biggest advance since January 2012, and exceeded the economists’ prediction of a 210,000 gain.

“It lends significant legitimacy to the positive tone in the wide array of post-February economic reports, which have all been consistently pointing to a significant pick-up in economic growth momentum this quarter,” Millan Mulraine, deputy chief economist at TD Securities in New York, told Reuters.

However, unemployment rate slid to 6.3 percent, the lowest in 5 ½ years as more people dropped out of the labor market. Data in February and March was re-evaluated to indicate that 36,000 more people were hired than was announced earlier.

An estimated 806,000 individuals left the job market last month, adding 0.4 percent to the unemployment rate which touched its lowest level since September 2008.

The jobs report sent the U.S. dollar and stocks surging, though the Ukraine tensions weighed on the gains. U.S. Treasury prices surged. The labor force participation rate, which measures the percentage of working-age Americans who are either working or are jobless but actively looking for work fell to 62.8 percent in April, the lowest level in 36 years which was last recorded in December.

The Federal Reserve nonetheless ignored the weak performance in the first quarter and rolled out further tapering of the monthly bond-buying program. It also said that economic growth had accelerated in the second quarter.

 

 

Oil Continues To Trade Below $100

Oil Continues To Trade Below $#100
Oil Continues To Trade Below $#100

Crude oil continues to ease trading at 99.41 while Brent oil is down 7 cents at 107.71. Traders seem to be largely ignoring violence and tension in the Ukraine as President Putin does not seem to be holding the energy card over the heads of the West. Putin seems to be trying his best to quell the ongoing violence. Russian President Vladimir Putin urged Ukraine to withdraw forces from its easternmost regions as the International Monetary Fund warned that extra financing may be needed if control of the industrial heartland is lost.

In a telephone call yesterday with German Chancellor Angela Merkel, Putin also demanded an end to violence gripping cities in southeastern Ukraine, according to a Kremlin statement. The Ukrainian conflict will top the agenda when Merkel and U.S. President Barack Obama meet today in Washington, according to White House spokesman Jay Carney.

Oil prices declined Thursday on concerns over China’s economic slowdown and potential supply increase from Libya. The purchasing managers’ index (PMI) for the manufacturing sector rose to 50.4 last month, up from 50.3 in March, according to a statement jointly released by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing.

oil fri

Although China’s manufacturing growth continued to rise in April, the sub-index for export new orders dropped, fueling market worries over China’s economic slowdown in the first quarter.

Moreover, an oil port in Libyan, which has been closed for about 10 months due to protests, is said to have started loading oil again from Thursday.

On Wednesday the US Department of Energy’s weekly estimate of crude oil stocks gained 1.7 million barrels to a record 339.4 million barrels. U.S. crude stocks rose by 1.7 million barrels to just shy of 400 million last week, data showed on Wednesday, the highest since the U.S. Energy Information Administration started collecting data in 1982.  “The US market is certainly well-stocked, with April 25 crude oil inventories reaching a fresh 83-year high. Last week’s builds in US product inventories add some weight to the overall bearish shift.” Downward pressure on prices was also coming from the expected resumption of oil exports from a key terminal in Libya, the Zueitina port that has been shut down by protests for months. Libya’s eastern Zueitina oil port was expected to receive late on Thursday its first tanker of crude since reopening after nearly ten months due to protests, state-run National Oil Corp (NOC) said.

U.S. Manufacturing Plummets for the Second Month, Consumer Spending Surges

U.S. factory activity plunged for the second consecutive month in April, though the economy showed signs it is recovering from the extreme winter weather.

Financial research company Markit revealed that its U.S. Manufacturing Purchasing Managers Index fell from 55.5 in March to 55.4 last month.  Nonetheless, a measure above 50 shows that the sector expanded.

April’s reading was above 53.7 recorded in January, indicating that the toll of the extreme winter was starting to wane. The employment sub-index declined to 53.7 in April, down from 53.9 the previous month. However, output surged to 58.2 from March’s 57.5. New factory orders also increased from the previous month.

“The upturn in manufacturing output and new orders signaled by the survey suggest that the economy should rebound after the disappointing 0.1 percent annualized GDP growth rate seen in the first three months of the year,” Chris Williamson, the Chief Economist at Markit, told Reuters.

In a separate report, consumer spending in the U.S. in March advanced the most in 4 ½ years. The economy slowed down in the first three months of the year due to the harsh winter weather, though indicators point to a strong rebound in the second quarter.

Household expenditure expanded 0.9 percent last month, up from 0.9 percent in February, reported the Commerce Department on Thursday. This was the steepest growth rate since August 2009, and exceeded the median estimate of an increase of 0.6 percent in a Reuters survey.

“The weakness in growth we saw in the first quarter is not indicative of what is going on in the economy. The fundamentals continue to look pretty good, the economy has momentum,” said Gus Faucher, a senior economist at PNC Financial Services Group.

Consumer expenditure contributes over two-thirds of U.S. GDP. If inflation is smoothened out, the household spending rose 0.7 percent in March, up from February’s 0.4 percent growth.