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Thu, 22nd June 2017

Anirudh Sethi Report

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Archives of “April 14, 2017” Day

LNG spot prices plunge in Asia on supply glut concerns

Spot prices of liquefied natural gas in Asian markets slid 40% from a high seen in January, foreshadowing a possible drop in Japanese electricity prices if weak demand and rising output abroad exacerbate a glut of the fuel.

Spot LNG is currently trading in the upper $5 range per million British thermal units, a steep fall from early January, when prices approached $10. “There are no longer factors supporting buying like problems in Australian production [seen at the end of 2016], or halts in South Korea’s nuclear plants, caused by an earthquake last fall,” said Tatsufumi Okoshi, senior economist at Nomura Securities.

 Furthermore, large LNG production facilities in the U.S. and Australia will come online this year. By around 2020, global LNG output is forecast to grow by roughly 100 million tons, equivalent to 40% of the fuel’s trading volume in 2015.

Slack demand for heating following the end of winter is also putting downward pressure on prices. “The supply-demand balance will remain loose until around May,” when Middle Eastern countries begin switching on their air conditioners, according to Mikiko Tate, senior analyst at Sumitomo Corp. Global Research.

Atlanta Fed first quarter GDP estimate drops even further

Atlanta Fed’s GDPNow falls to +0.5%

The Atlanta Fed’s tracking estimate for first quarter growth continues to point to a dismal start to the year.

Officials cut the tracker to +0.5% from +0.6% last wee

“The forecast for first-quarter real consumer spending growth fell from 0.6 percent to 0.3 percent after this morning’s retail sales report from the U.S. Census Bureau and the Consumer Price Index release from the U.S. Bureau of Labor Statistics,” the release said.

 

Big OPEC producers want $60 oil – report

WSJ says target price raised

  • Iraq oil minister: “Iraq wants prices to rise to $60. This our aim”
  • WSJ says Saudis and Kuwait also targeting $60

The WSJ is out with a story that’s bullish for oil. They say main producers had been seeking $55 per barrel but now want $60. They believe that level will boost their economies without attracting too much US shale drilling.

The higher price target suggests they will support an extension of quotas at meetings scheduled for the end of May.

The target is symbolic, the WSJ says, but “offers a window into how serious they are about using their supply power to affect the market.”

The big upcoming event is the Saudi Aramco IPO and that’s what is motivating the discipline from the Kingdom.

“They need this price [$60] for the IPO of Saudi Aramco,” a person familiar with Saudi oil policy told the WSJ.

Air China Airline to Cease Flights to North Korea From Apr. 17 Amid Tensions

Air China Boeing 737-800Air China was the only international airline company that was operating flights to North Korea, the CCTV broadcaster reported.

However the air traffic between the countries will continue as the North Korean state airline Air Koryo operates regular flights to the Chinese cities of Beijing and Shenyang and a charter flight to Shanghai.

In March, Air Koryo also launched the first regular flight between Pyongyang and the Chinese city of Dandong, located near the border with North Korea.

Since the beginning of 2016, North Korea carried out a number of missile launches and nuclear tests, prompting worldwide criticism, including from Beijing. As a result, the UN Security Council tightened the sanctions regime for North Korea in an attempt to force Pyongyang to stop ballistic missile launches and nuclear tests, including imposing a measure intended to effect the country’s trade, export of natural resources, arms trade and banking sectors.

US officials announced on Saturday that an aircraft carrier strike group was sent to the Korean peninsula amid rising tensions. Last year’s joint US-South Korean drills practiced taking out North Korea’s leadership, military facilities and intercepting incoming North Korean planes in the event of war on the Korean peninsula.

Macron, Le Pen Running Neck-And-Neck in 1st Round of French Elections

According to the Ipsos poll conducted for Le Monde newspaper, both far-left presidential hopeful Jean-Luc Melenchon and The Republicans’ party nominee Francois Fillon have improved their standings and now stand at 20 and 19 percent respectively. Melenchon’s projected share of the votes increased by 1.5 percent and Fillon’s by 1 percent

Putin Plans to Visit China in May to Attend ‘One Belt, One Road’ Forum

China’s “One Belt, One Road” strategy was launched in 2013 and is aimed at developing infrastructure and strengthening ties between the Eurasian countries, focusing on the land-based Silk Road Economic Belt (SREB) and the 21st-century Maritime Silk Road.

“I plan to participate in the work of the international ‘One Belt, One Road’ forum at the invitation of Chinese President [Xi Jinping] and therefore I plan to pay a working visit to Beijing,” Putin said at a meeting with Chinese First Vice Premier Zhang Gaoli.

In turn, Zhang said the Chinese leader attached great importance to Putin’s participation in the forum, while his reciprocal visit to Russia would take place in June.

He once again expressed condolences on China’s behalf over the terror attack in the St. Petersburg metro last week, which claimed lives of at 14 people.

Putin and Xi held a meeting in November 2016, on the sidelines of the Asia- Pacific Economic Cooperation (APEC) summit in Peru’s capital Lima, during which they discussed bilateral Russian-Chinese cooperation.

New North Korea Missile Launches Not Ruled Out Soon – Russian Ambassador

A man watches a TV news program showing photos published in North Korea's Rodong Sinmun newspaper of North Korea's Pukguksong-2 missile launch and North Korean leader Kim Jong Un at Seoul Railway Station in Seoul, South Korea, Monday, Feb. 13, 2017North Korea could either carry out new ballistic missile launches or conduct nuclear tests shortly in commemoration of its public holiday, Russian Ambassador to North Korea Alexander Matsegora told Sputnik.

“If you carefully read the North Korean press, then there is no need to even guess. They themselves openly say that ‘we will mark the upcoming glorious anniversary with significant events,’ in the plural at that,” Matsegora said.

North Korea celebrates the 105th anniversary of its founder Kim Il Sung’s birth on April 15, Saturday.

“We can well imagine what events these will be. Some believe that the choice is only in two possible events: either new tests or a missile launch,” Matsegora said.

The ambassador added that, the US aircraft carrier group dispatched toward North Korea is a provocation that did not contribute to de-escalation on the Korean Peninsula.

“Of course, annual US exercises this year are particularly provocative,” Matsegora said. “Taking into account the fact that the US is bringing up an airborne strike group here, this does not work toward calming the situation.”

The Russian envoy stressed that the US drills “are really working out a plan to seize Pyongyang, destroy the leadership of the country, approach the Russian and Chinese border, establish administrative control over the provinces of North Korea.”

Russophobia Tops Trumphoria – Moscow Stocks Plunge To 8-Month Lows

For eight straight week after President Trump was elected, global investors fell over themselves to buy Russian stocks, driving the MICEX index to record highs. However, the constant Russian headlines climaxing in the last two weeks of chaos has seen Russian stocks collapse – erasing all of the post-election gains and more.

 

However, as is clear from the chart above, while Russian stocks are languishing at 8 month lows; Russian credit risk remains near 3 year lows.

 “We see no reason that the market would return to the difficult-to-justify euphoria seen in the aftermath of Donald Trump’s victory,” Sberbank CIB analysts Cole Akeson and Andrey Kuznetsov said in an e-mailed note on Thursday.

 “Recent events in Syria evoke a higher level of caution than in weeks prior.”

Interestingly, the last two days have seen a notable divergence as while Tillerson and Russian Foreign Minister Sergei Lavrov were talking through their disagreements in negotiations in Moscow late on Wednesday, the Micex Index closed at its lowest level since before the U.S. election but Russia’s credit risk actually improved…

Overnight US Market : S&P down -0.68%. Nasdaq down -0.53%. Dow down -0.67%

S&P down -0.68%. Nasdaq down -0.53%. Dow down -0.67%

 The US stocks are ending the session at the lows.  
The indices were up marginally earlier in the day. Then a report that the US had dropped the “Mother of all Bombs” on a mountain range in eastern Afghanistan sent both bond yields and stocks lower.  President Trump called the bombing a “very, very successful mission”. Wall Street thought otherwise.
The major indices showed:
  • S&P down -0.68% to 2328.96. The high reached 2348.26
  • Nasdaq closed at the lows down -31 points to 5805. The high reached 5856 at the peak
  • Dow closed down 138.61 to 20453. The high peaked at 20612.27.

Yesterday, the S&P closed below its 50 day MA. That MA comes in at 2351.91 today.