Sunday, 23 September, 2012

Merkel, Hollande

hold anniversary talks

with euro on agenda

LUDWIGSBURG

AFP

The leaders of France and Germanymeet Saturday to mark a seminal 1962speech by Charles de Gaulle, with theeuro crisis and a proposed EADS-BAEmerger also on the agenda. GermanChancellor Angela Merkel’s spokesmansaid the meeting in the southwesterncity of Ludwigsburg, where De Gaulleaddressed German youth in a keygesture of post-war reconciliation, wasto be largely ceremonial. But a few hottopics will nevertheless figure on themenu. “The issue of EADS and BAE willcertainly be addressed at the workinglunch with President (Francois)Hollande,” the spokesman, SteffenSeibert, told reporters Friday, referringto the mooted tie-up. “There will ofcourse be no decisions this Saturday andyou should not go into the pressconference expecting any.” The sameapplied to the issue of tighter checks onthe European banking sector, a focus ofeurozone crisis-fighting at the moment,Seibert said. Governments have beencautious since the announcement lastweek that the British defence group BAEand European aerospace behemothEADS are negotiating a merger.

NEW YORK

AGENCIES

Brent crude topped $111 a barrel butposted a 4.5 percent drop on the week dueto a three-day rout that sent it plungingfrom $116 to $108. Oil dropped from Mon-day to Wednesday on rising U.S. invento-ries and Saudi efforts to tame prices.

The decline followed weeks of concernabout the impact of higher oil and fuelcosts on the struggling U.S. economy,which had prompted expectations theWhite House could tap emergency reservesto cool off prices. Oil scraped lows not seensince early August on Thursday, beforeturning positive in a move that could be asign the market is establishing a new rangeas traders digest a third round of U.S.

quantitative easing, unrest in the MiddleEast and North Africa, and delays in NorthSea oil shipments. “I’m not really surewe’ve seen a turnaround yet. Oftentimeswhen the market sees a lot of liquidationpressure it rebounds when that dissipates,”said Gene McGillian, analyst at TraditionEnergy in Stamford, Connecticut.

“Going forward, I think the market hasestablished a bit of a new trading rangefrom $90 to $100 (a barrel for U.S. crude)and it’s trying to find a value here and set-tle down.” Oil found some support fromoptimism over a move by Spain toward re-form measures in anticipation of a bailoutpackage. Equities markets rose. .N

November Brent futures settled up$1.39 at $111.42 a barrel, before trading upto $111.70 in post-settlement activity.

Brent hit a low of around $107 on Thurs-day, its weakest since August 3.

On Friday, it edged back above its 50-day moving average around $111.18, atechnical indicator watched by traders.

Brent outpaced U.S. futures, sendingthe premium of the international bench-mark - which is more sensitive to North Seadisruptions - to U.S. oil up 90 cents to near$18.50 a barrel. U.S. futures ended down6.2 percent for the week. On Friday, No-vember U.S. crude climbed 47 cents to set-tle at $92.89 a barrel, off highs of $93.84.The October contract for U.S. crude expiredon Thursday at $91.87 a barrel, havingtested the 100-day moving average of$90.73. Trading was light, with U.S. crudevolumes on the New York Mercantile Ex-change nearly 30 percent below the 30-day

moving average and Brent trade more than20 percent below that average. Commentsfrom a Gulf source that OPEC kingpinSaudi Arabia wanted lower oil prices andwas willing to supply more oil to the mar-ket set a bearish tone for much of the week.

The comments helped deflate expecta-tions that a third round of stimulus an-nounced by the U.S. Federal Reserve lastweek would send investors into oil and otherriskier asset classes. High prices and the eco-nomic downturn have helped drive downU.S. fuel demand in recent years, and a re-port released on Friday by industry groupthe American Petroleum Institute showedU.S. oil consumption hit the lowest level in15 years for any August. Hedge funds andother large investors have, however, been in-creasing bets on rising prices since June.

NORTH SEA, LIBYA: Ongoing exportdelays of North Sea Forties oil, the mostimportant of the four grades that form theBrent crude basket, stirred concerns aboutavailabilities.

Two more cargoes of North Sea Fortiescrude loading in October were delayed dueto maintenance at the 200,000-barrels-per-day Buzzard field, the largest con-nected to the Forties pipeline. The fieldwas shut on September 5 for 28 days ofwork, but traders now say that mainte-nance could be extended by three to fivedays. In addition, the market was watchingunrest in OPEC member Libya, Africa’sthird-biggest producer, that could furtherdelay already-slow efforts to return expa-triate oil workers to the country after lastyear’s revolution.

ISLAMABAD

ONLINE

IN order to move beyond thecrisis in the eurozone and re-store confidence in the globalrecovery, policymakers shouldimplement agreed decisions

that will help anchor medium-term ex-pectations about economic policy.

It was stated by the InternationalMonetary Fund (IMF), Managing Direc-tor, Christine Lagarde in an interview.

“It’s a question of really trying to getbeyond the crisis in the eurozone, as-serting a medium-term plan for coun-tries like the United States and Japan,and making sure that some of the issuesthat actually created the crisis five yearsago are really dealt with, not just halfdealt with. And I’m particularly thinkingabout the financial sector,” she said,speaking ahead of a speech at the Peter-

son in Washington D.C. on September24 that will preview the agenda for theupcoming annual meetings of the IMFand the World Bank.

In early October, about 10,000 poli-cymakers, business leaders, academics,civil society representatives, and journal-ists will gather in Tokyo to discuss theoutlook for the world economy, and howto address issues ranging from the euro-zone crisis, to high unemployment, risingfood prices, and better regulation of thefinancial sector. The Meetings will beheld at a time of continued uncertainty forthe world economy, and after further ac-tion in September by the European Cen-tral Bank, the U.S. Federal Reserve, andthe Bank of Japan to restore confidenceand stimulate growth and job creation.

Lagarde discussed the challengesfacing not just Europe but also theUnited States, emerging markets, andlow-income countries. She also provided

an updateon the IMF’sefforts to im-plement an im-p o r t a n tgovernance reformthat will give moresay to fast-growingemerging markets inAsia and elsewhere.

The meetings will kickoff with the IMF’s regularupdate of its World EconomicOutlook on October 9, followedby more than 300 other events,including press briefings, semi-nars, and bilateral countrymeetings.

Late cutWTO cuts 2012global trade growthforecast to 2.5%

SINGAPORE

AGENCIES

World trade will grow by a mere 2.5percent this year, dragged down byEurope to less than half of theprevious 20-year average, the WorldTrade Organization (WTO) said onFriday. The WTO cut its estimate froma 2012 growth forecast of 3.7 percentit made in April and also lowered itsforecast for 2013 to 4.5 percentgrowth from 5.6 percent. “I see therisk more on the downside than theupside,” WTO Director General PascalLamy said at a news conference inSingapore. “What could be surprisingis that you have a volume of trade thatis lower than world (economic)growth.” The WTO figures are basedon world economic growth of 2.1percent in 2012 and 2.4 percent 2013,which it said was a consensus estimateof economic forecasts. “The mainreason for the growth slowdown is ofcourse Europe,” said Lamy, who willstep down next year as head of the157-member group that has so farfailed to agree on major reforms ofglobal trade rules. “We also know U.S.growth is lower than expected, (and)Japan is not in great shape.” The WTOnow expects 1.5 percent growth inexports from developed economiesthis year, instead of the previousforecast of 2 percent.Those from developing countries areseen posting 3.5 percent growth, downfrom 5.6 percent previously.It sees developed nations more thandoubling their export growth to 3.3percent next year and developingcountries exporting 5.7 percent more.

SAN FRANCISCO/LONDON

AGENCIES

Apple Inc fans queued around cityblocks worldwide on Friday to get theirhands on the new iPhone 5, pointing toa strong holiday season for the con-sumer device maker despite grum-blings about the mapping app inthe new smartphone.

The iPhone 5 —

thinner, lighter and with a 4-inchscreen —went on sale in stores acrossthe United States, Europe, Asia andAustralia, with mobile carriers report-ing record demand that looked likelyto stretch Apple’s supply capacity.“The line for the iPhone 5 was 70 per-

cent greater than the line forthe iPhone 4S despite

Apple taking two(times) asmany onlinepre-orders,”said PiperJaffray ana-

lyst Gene Mun-ster. He expects

Apple to sell 8 millionof the new smart-

phones overthe week-end.

T h elong lines of

excited buyersprompted opti-

mism on Wall Street.Deutsche Bank raised its

target on Apple stock to $850from $775, saying “demand indica-

tors are tracking very strongly.”The iPhone is Apple’s highest-

margin product and accounts for halfof the company’s annual revenue.Apple shares were up 0.5 percent to$702 in afternoon trading in NewYork. JPMorgan estimates the phonecould provide a $3.2 billion boost tothe U.S. economy in the fourth quarter- a boost almost equal to the wholeeconomy of Fiji. Apple’s rival andcomponent supplier, Samsung Elec-tronics Co, tried to spoil the party, say-ing it plans to add the iPhone 5 to itsexisting patent lawsuits against Apple.

Like any other day at the office…

Oil rises for second day as supply concerns mountOil rose for a second straight session in light activity as supply concerns and economic optimism fuelled a rebound from a 7 percent slide earlier in the week

Apple iPhone 5 fever ragesdespite grumbling over maps

Consul General of the republic of Turkey, Murat M Onart, hosted a reception to meet the Ambassador M Babur Hizlan,

and Mrs Hizlan, Turkish Airlines Country Manager Mr Huseyin Cepni, with officials of Turkish Airline & Consulate.

IMF viesto solve

globalcrisis

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Sunday, 23 September, 2012

Business

NEW YORK

AGENCIES

Volume was thin ahead of the weekend,exacerbating volatility, and traders saidthe euro may struggle to extend gainsamid uncertainty over the timing of apotential bailout.

Sources with knowledge of the mat-ter told Reuters Spain is consideringfreezing pensions and speeding up arise in the retirement age as it attemptsto meet conditions of an internationalaid package. German Finance MinisterWolfgang Schaeuble dented expecta-tions by saying on Friday that Spain didnot need a sovereign bailout on top ofthe package already agreed for itsbanks because it was on the right pathto regain the confidence of markets.

“Reports of a Spanish deal as soonas next week helped to boost sentimentand the euro. The market remains pru-dently bullish buying on dips,” said Se-bastien Galy, currency strategist atSociete Generale in New York.

The euro rose 0.1 percent to$1.2987, having hit a session high of$1.3047 on Reuters data, not far froma four-and-a-half-month peak of$1.3169 set on Monday.

The dollar .DXY slipped 0.1 percentto 79.3331 against a basket of curren-cies, within sight of a six-and-a-half-month low of 78.601 hit last week inthe wake of aggressive monetary easingby the Federal Reserve.

Carl Hammer, chief currencystrategist at SEB in Stockholm, said theeuro may rise to $1.31 or slightly higherover the coming month but would peakat not more than $1.34-$1.35 becauseSpain applying for funding would be“the last piece of euro-positive news.”

Spain, the new epicenter of theeuro zone debt crisis after Greece,Ireland and Portugal,has been hesitat-ing to apply for ex-ternal aid, creatinguncertainty in the mar-kets. Its borrowing costsfell on Thursday at a debtauction but the relief may beshort-lived.

The European Central

Bank pledged this month to buyshorter-term bonds of troubled eurozone members but only after they firstapply for assistance.

“The risk is that if they don’t (seeka bailout) investors will panic out oftheir newly bought Spanish bonds,” So-ciete Generale’s Galy said.

Even if Spain does request assis-tance, analysts say it may not be a pos-itive sign for the euro as the toughspending cuts that come with the aidwould put further pressure on an econ-omy already in recession.

There are also concerns surround-ing Greece, with negotiators still shortof a deal that would unlock the next in-stallment of the country’s 31.5-billion-euro bailout package. The dollar fell 0.2percent to 78.10 yen, well below a one-month high of 79.21 hit on Wednesdayafter the Bank of Japan boosted itsasset-buying program to support thecountry’s economic recovery.

Sterling rose to its highest in nearly13 months against the dollar, helped byUK public borrowing data that was notas bad as expected. It was last at$1.6246, up 0.2 percent.

The high-yielding Australian dollarclimbed 0.2 percent to $1.0448.

The euro’s losses earlier in the ses-sion came after reports that the SwissNational Bank sold the currency

against the Australian dollaras part of its long-termdiversification drive torecycle its inventory of

euros into higher-yielding Australian

dollars, said BorisSchlossberg, manag-

ing director of FX Strat-egy at BK Asset

Management.

NEW YORK

AGENCIES

APPLE Inc (AAPL.O), theworld’s most valuable pub-lic company in terms ofmarket capitalization,jumped to an all-time high

of $705.07 as customers lined up to buythe iPhone 5. Apple’s stock ended up 0.2percent at $700.10.

News from Spain helped lift stocks afterthe debt-laden country said it was consider-ing freezing pensions and speeding up aplanned rise in the retirement age as itraced to cut spending and meet conditionsof an expected international sovereign aidpackage. The moves, taken with the Euro-pean Central Bank’s efforts to spur growthin the euro zone and the Fed’s recent an-nouncement of a third round of quantitativeeasing, continued to underpin gains.

“The market is predominantly lookingforward to the Federal Reserve and the QEinfinity that the Fed promised, and theglobally coordinated easing cycle,” saidSteve Wood, chief market strategist at Rus-sell Investments in New York. This week,though, the market’s action has beenmuted, with the S&P 500 barely moving0.6 percent in either direction daily.

The Dow Jones industrial average .DJIslipped 17.46 points, or 0.13 percent, toclose at 13,579.47. The Standard & Poor’s500 Index .SPX dipped just 0.11 of a point,or 0.01 percent, to finish at 1,460.15. TheNasdaq Composite Index .IXIC rose 4.00points, or 0.13 percent, to close at3,179.96. Earlier, the S&P 500 hit an intra-day high of 1,467.07, while the Nasdaqreached a session high of 3,196.93.

A quick and sharp sell-off in spot goldshortly after midday, driven by a rumorthat the CME may raise margin require-ments on commodities, weighed on fi-nancial services stocks, according toJoseph Greco, managing director ofMeridian Equity Partners in New York.

Many banks and other companies inthe financial sector have high exposure togold and other commodities, so any in-crease in margin requirements would affect

them, Greco said. Spot gold later recoveredto trade up 0.6 percent at $1,777.19 anounce by 1:11 p.m. EDT on Friday, after hit-ting a session high of $1,787.20 - close to its2012 high of $1,790.30. But financialshares were still lower by late afternoon onFriday. The S&P financial index .GSPFended down 0.3 percent.

The transportation sector limited themarket’s advance on Friday, when the DowJones Transportation Average .DJT fell 1percent. Earlier this week, two large ship-ping companies - FedEx Corp. (FDX.N) andNorfolk Southern Corp. (NSC.N) - warnedabout the impact of the weakening worldeconomy on their results. At the close,FedEx shares slid 0.9 percent to $84.39 andNorfolk Southern shares lost 1.7 percent to$65. On Wednesday, a few brokerage firmscut their price targets on FedEx stock. OnFriday, four brokers lowered their price tar-gets on Norfolk Southern’s stock.

The benchmark Standard & Poor’s500 Index .SPX has gained 5.9 percentsince the start of August, mostly on expec-tations for new economic stimulus meas-ures from the world’s central banks. OnSeptember 13, the Federal Reserve an-nounced a third round of stimulus orquantitative easing, known as Q3, in-tended to bolster the economy and reduce

U.S. unemployment. The market wasmore active than usual because of“quadruple witching,” the quarterly settle-ment and expiration of four different typesof September equity futures and optionscontracts. Expiration can lead to greatervolume and volatility as players adjust orexercise their derivative positions.

“There was a little bit of a sell-off to-wards the close, but nothing crazy,” said JJKinahan, chief derivatives strategist at TDAmeritrade. “There is not much volatilitybecause the market has been trading in apretty tight range most of the day, and itlooks like most of the players have alreadyrolled their positions over the last twoweeks.” Looking ahead to quarterly earn-ings, one bright spot came from the fash-ion front. Shares of Michael Kors HoldingsLtd (KORS.N) shot up 9.3 percent to closeat $57.35. The fashion and accessory de-signer’s company said it will probably earnmore than it expected in the second quar-ter as it banks on strong global sales.

Housing shares climbed, led by KBHome (KBH.N), up 16.4 percent at$15.26, after the fifth-largest U.S. home-builder reported a surprising quarterlyprofit and said its revenue backlog hit afour-year high. The PHLX housing sectorindex .HGX surged 1.74 percent.

THE US continues striving hard tosqueeze Iran into submission,some of the biggest oil purchasers

are being showed the Washington stick,the EU embargo is now nearly threemonths old, you’d expect Iran’s fiscalreservoir to scream out with barrenness.

However, the reality is – if the numbersbeing posted be Iranian export, and thevoice generated by the hierarchy inTehran are anything to go by – the effectof the US sanctions on Tehran is a grandtotal of nada.

The Iranian hierarchy is adamantthat the Western sanctions are doingzilch in terms of creating problems forthe Iranian oil industry, since the oil issupplied to markets all over the globe,

and the traditional buyers are resistingthe Western pressure. If anything thesanctions are making the world realizethat they simply can’t do with taking amassive chunk of global oil produce outof the market, since there is no appositesubstitute for Iranian oil. And the crudeprices that have been soaring of late vin-dicate the position and importance ofTehran as the principal supplier in theglobal crude market.

It is being observed that Tehran ishaving no problem in selling its oil andthat the crude export is on the rise, whichis paving way for a currency influx. Theprimary reason why Iran has managed to,and continues to, dodge the sanctionsbullet is because it has found numerousways to insure its crude oil tankers to theAsian countries which has meant that thenation has forestalled any legal maneu-vers that could potentially throw a deci-sive spanner into the oil works. A lack ofinsurance – apart from the oh so daunt-ing Washington stick of course - was seenas possibly the only thing that could dis-courage leading companies from oil tradewith Iran, and now that that base hasbeen covered, Tehran looks all healthyand upbeat to play ball.

The US Energy Information Admin-istration (EIA) had recently reported afall in oil production from Tehran thisyear, which has been categorically re-

buffed by Rostam Qasemi, the Iranianoil minister. Tehran produced around3.5 million barrels per day (bpd) lastyear if them OPEC figures are to be be-lieved and the minister is adamant thatsimilar numbers would be posted thistime round as well – a claim that isbeing vindicated by the recent exporthike and the juxtaposition of numbersfrom the same time last year.

Washington is continuing to put pres-sure on the Iran’s main oil customers,China, India, Japan and South Korea to“seek other suppliers”. But no heed isbeing paid, or damn being given, so tospeak with regards to these sanctions -probably since “other suppliers” of simi-lar mould and volume don’t exactly exist,now do they?

A baffling double standard, worth

highlighting here is the bias in the osten-sibly global sanctions that would even putthe customary American prejudice toshame. Both South Korea and Japan –strategic American chums - have been ex-empted from the

US sanctions, since they would havetrouble filling in the oil void, more sothan the rest of the countries apparently.

So while the US makes a mockery ofits foreign policy, Iran sits pretty flaunt-ing promising export numbers, the oilprice is set to soar stampeding over the$150 per barrel mark this winter. The de-mand for energy sources would rise as thetemperature falls and with no plausiblesubstitute present to make up thegalleons even the $150 mark would be amiracle, if the price per barrel stays thereor thereabouts.

Sanctions do nada to Iranian oilIran continues to post promising oil exportnumbers amid Western sanctions

KUNWAR KHULDUNE SHAHID

CRUDE AWAKENING

Wall Street ends flatdespite Spain hope,S&P off for week

Stocks closed flat even though investors

welcomed Spain’s efforts to seek a bailout and

cheered Apple’s newest iPhone that went on

sale today, driving its shares to a record high

Euro gains

vs dollar on

spain optimismThe euro climbed against

the US dollar, reversingearlier losses, helped by

speculation Spain maysoon request financial

aid to help ease thecountry’s debt crisis

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