Föhrenbergkreis Finanzwirtschaft

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Posts Tagged ‘Commodity’

No Refuge for Investors as 2018 Rout Sends Stocks, Bonds, Oil Lower

Posted by hkarner - 27. November 2018

Date: 26-11-2018
Source: The Wall Street Journal

The failure of so many investment strategies is viewed by some as a warning of what could come following years of above-average returns

Stocks, bonds and commodities from copper to crude oil to burlap are staging a rare simultaneous retreat, putting global markets on track for one of their worst years on record and deepening a sense of unease on Wall Street.

Data show global stocks and bonds could both finish the year in the red for the first time in at least a quarter-century, according to BlackRock Inc. BLK -0.25%

Major stock benchmarks in the U.S., Europe, China and South Korea have all slid 10% or more from recent highs. Crude oil’s tumble has dragged it well into bear-market territory, emerging-market currencies have broadly fallen against the dollar, and bitcoin’s price—which had a meteoric rally last year—crashed below $5,000 last week for the first time since October 2017. Den Rest des Beitrags lesen »

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The strong performance of the global economy finally has an impact

Posted by hkarner - 12. Januar 2018

Date: 11-01-2018
Source: The Economist

THE strong performance of the world’s economy is finally filtering into commodity prices. Last year will probably turn out to have been the first year since 2010 in which growth accelerated in each of America, Europe, China and Japan. And Brent crude oil, copper and a Bloomberg composite index of spot prices for 22 raw materials are all at their highest levels since November 2014. But if global demand has been picking up for several quarters, why has it taken this long to become evident in commodity prices? And more importantly, how sustainable is the rally?

The delay in the price increases is the easiest part to explain. Years of strong production of oil, base metals and grains left the global economy with huge surpluses. Stockpiles of oil reached a record high in November 2015, according to the International Energy Agency. OPEC, the oil cartel, agreed to restrain production in order to drain the surpluses and eventually put prices under upward pressure. China also applied the same principle to certain sectors. In 2016 it cut the number of working days for coal miners from 330 to 276, and halved its steel output to 65m tonnes. These measures appeared to have little effect at first, but now that strong demand has eaten into those reserves, prices are rising. Den Rest des Beitrags lesen »

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Bitcoin Isn’t a Currency, It’s a Commodity—Price It That Way

Posted by hkarner - 5. Januar 2018

Date: 04-01-2018
Source: The Wall Street Journal

If bitcoin has more in common with gold than dollars, it could have a long way to fall

Is a bitcoin worth the $15,000 it commands today, or is it really worth about $3,000? The huge runup in value since September suggests the lower figure.

Cryptocurrency fans typically fall into two groups. One sees the currencies as ways to buy and sell things; the other views them as investments. For now, the investment crowd is winning out: Bitcoin remains a cumbersome way to purchase most goods, but its value has skyrocketed, nearly quadrupling since mid-September.

If bitcoin is an investment, it most closely resembles gold. Both are stores of value that provide some built-in protection against inflation because there is a finite supply and because extracting new deposits gets more expensive over time, barring big technology changes.

If bitcoin really is digital gold, however, investors should analyze it like a commodity—looking at supply constraints and the factors driving demand. That exercise produces worrying results.

Bitcoin and gold are both stores of value that provide some built-in protection against inflation.

The most important factor in gold prices over the long run is production costs, which act something like a natural price floor when demand dips. Of course, gold prices can also temporarily move much higher when demand is strong but tend to fall back toward the marginal cost of production once worries about inflation or the dollar subside and gold begins to lose its appeal as a hedge. Den Rest des Beitrags lesen »

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The Year in Review: Global Economy in 5 Charts

Posted by hkarner - 19. Dezember 2017

By Oya Celasun, Gian Maria Milesi-Ferretti, and Maurice Obstfeld, IMF Blog

December 18, 2017

On the economic front, 2017 is ending on a high note (photo: allstars/shutterstock)

It has been a tumultuous year marked by natural disasters, geopolitical tensions, and deep political divisions in many countries.

On the economic front, however, 2017 is ending on a high note, with GDP continuing to accelerate over much of the world in the broadest cyclical upswing since the start of the decade.

Here are five charts that help tell the economic story of the past year. Den Rest des Beitrags lesen »

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Commodities are not always bad for you

Posted by hkarner - 7. Oktober 2017

Date: 06-10-2017
Source: The Economist
Subject: A drag, not a curse

Raw materials need not undermine the countries that export them

THE LAMP POSTS in Kliptown, South Africa, do not all stand up straight. One lists awkwardly, laden with cables carrying stolen electricity to a squatters’ settlement nearby. Many families in this suburb of Soweto, a formerly black township in greater Johannesburg, are still crammed into makeshift housing. When it is hot outside, the temperature inside is “times two”, says one resident, who shares six rooms with 20 others. And when it turns cold, the chill inside is also “times two”.

On the other side of the railway tracks the government is investing heavily in Walter Sisulu Square, where in 1955 the African National Congress (ANC) and its allies adopted the Freedom Charter, a statement of principles for a post-apartheid nation. The charter’s commitments, written in stone on a monument in the square, include demolishing slums and building well-lit suburbs. They also include transferring ownership of the mineral wealth beneath the soil to the people. The contrast between what the charter says and what the slum itself reveals tells you how broken the system is, says one squatter. Den Rest des Beitrags lesen »

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Capacity cuts in China fuel a commodity rally and a debate

Posted by hkarner - 11. September 2017

Date: 08-09-2017
Source: The Economist

One of the biggest, and more controversial trends, in the global economy

STEEL ran in Zhang Cheng’s family for three generations. His grandfather mined iron ore. His father got a job in the big state-owned steel mill just outside Jinan, capital of Shandong province. His mother worked in the on-site hospital. And Mr Zhang went to the mill-run school, graduating to a job in its foundry, where, in the heat of the blast furnace, he rolled metal into thin bars for construction. But after nearly two decades in Jinan Steel, he worked his last day there this summer. In the name of “capacity reduction”—a government policy to rein in excess production of steel—the plant stopped operating in July, and Mr Zhang went on the dole.

Since they worked for a state-owned company, the local government has helped him and the 20,000 others who lost jobs find new ones. But it has been a struggle for Mr Zhang, a soft-spoken man. Openings in Jinan are mainly in the service industry—as a waiter in restaurants or an attendant at a station on the new underground. He worries that he does not have what it takes. “I’ve spent my life interacting with machines, not with people,” he says. Den Rest des Beitrags lesen »

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A Common Cause for Sustainable Growth and Stability in Central Africa Tweet

Posted by hkarner - 2. August 2017

August 1, 2017

 Six countries in Central Africa have a strategy to turn their economies around, with help from the IMF 

Six countries in central Africa have been hit hard by the collapse in commodity prices. Oil prices dropped, economic growth stalled, public debt rose, and foreign exchange reserves declined. A delayed response from policymakers, and a regional conflict have worsened the situation further for people in the region.

The countries of the Central African Economic and Monetary Community are Gabon, Cameroon, Chad, the Central African Republic , the Republic of Congo and Equatorial Guinea . They share a common currency—the CFA franc—that is pegged to the euro, and have a common central bank that holds the region’s pool of foreign exchange reserves.

In response to their current acute economic difficulties, the countries have devised a strategy to turn their economies around. Success depends on countries’ implementation of well-coordinated policies within and across their borders. Den Rest des Beitrags lesen »

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Everything the Market Thinks About Inflation Might Be Wrong

Posted by hkarner - 8. März 2017

Date: 07-03-2017
Source: The Wall Street Journal

How much money a central bank prints may be less important to inflation than commodity prices

No number is more important for investors right now than inflation. The belief that it will continue to rise underpins the recent rally in financial stocks and the slump in government bonds. It is key to commodities, currencies and more.

Yet investors are in a quandary: Theories used to forecast it just don’t seem to work.

“I don’t think we know what inflation is. It takes so many different forms,” said David Lafferty, chief strategist at Natixis Global Asset Management, which manages about $900 billion. Inflation is this year’s “wild card,” Mr. Lafferty said.

For decades, the assumption has been that central banks have the ultimate handle on inflation. When inflation goes up, they raise interest rates to quell it; when it goes down, they lower the rates.

Investors care a lot, because bond yields broadly track interest rates. They need to predict inflation levels as well as how central banks would react. Den Rest des Beitrags lesen »

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China’s Attempt to Export Its Way Out of Glut Threatens World Economy

Posted by hkarner - 13. August 2016

Date: 12-08-2016
Source: YaleGlobal: Börje Ljunggren

China came to the aid of the stricken global economy in 2008 with record stimulus funds. But that stimulus injection encouraged debt and overcapacity in key markets like steel and aluminum, explains Börje Ljunggren, author and former Swedish ambassador to China. The country’s total debt has more than doubled, now exceeding 250 percent of GDP. China accounts for half of global output in steel and is the world’s largest steel exporter. Overcapacity threatens industry, jobs and even China’s leadership. China’s central government has long realized that the current industrial model and trade imbalances with the West are unsustainable, but local officials are keen on creating jobs. To reduce overcapacity and control debt, China must sharply cut its labor force and also provide relief to trade partners in the West. –

China’s stimulus push during 2008 financial crisis protected jobs worldwide, but now threatens steel and aluminum industries

STOCKHOLM: At the height of the 2008 financial crisis, as the world peered into an abyss, China earned global gratitude by pumping a record amount of stimulus into its economy. Ironically, continued stimulus has left the Chinese economy with mounting debt and a production glut threatening world trade. Den Rest des Beitrags lesen »

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What Price Lithium, the Metal of the Future?

Posted by hkarner - 8. Juni 2016

Date: 07-06-2016
Source: Fortune

The mineral is a hot commodity.

Lithium is shaping up to be The Next Big Thing.

Prices are going stratospheric, junior miners are rushing to stake claims on future supply and investment websites are glowing red hot with speculation about the metal’s prospects.

The Global X lithium fund, one of the very few ways to get in on the action, has gained 25% over the past three months with assets under management leaping from $41 million to $68 million since the start of the year.

It’s a far cry from the 1990s, when the U.S. Department of Energy was selling surplus stocks and mines were closing as the nuclear arms race wound down, reducing demand for one of the materials used in hydrogen bombs.

But the fortunes of this most versatile of metals were transformed in 1991 when Sony commercialized the lithium-ion battery, now an integral part of just about every electronic device. Den Rest des Beitrags lesen »

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