stay positive

It has been a pretty poor week for the world, a positive being the Obama holiday statement that the US has rescued the Yazidi sect from the Sinjar Mountains. We suspect the actual truth about this event and many others these days is more a media fishing story, especially after the US got eyes on the ground (remember what the press told us Saddam had WMD). The downer is the UN comment that the Ebola outbreak has been vastly underestimated. So again we revert to The Times and attach a mid week article by Matt Ridley, “The World’s Gone to Hell, but Trust Me, it is Getting Much Better” (www.thetimes.co.uk), enjoy. Following on from the issue we raised yesterday re economic growth, a survey commissioned by 30 mayors of the largest US cities found that in 1975 the top 20% of US households have 43.6% of national income and the bottom 20% had 4.3%; by 2012 it was 51% and 3.2% respectively. On the work front, the average annual salary of jobs lost in 2008 / 09 was US$ 61,637 against the average annual salary of US$ 47,171 for new jobs created in Q2 2014. A difference of over 20%, remember 70% of US GDP is consumer spending.

The markets have absorbed the data and now sense that stimulus is the solution and leaders will move that way. So prices inched higher, a word of caution as the EU titters on the edge of a triple dip the ECB (strong German resistance) unlike the Fed, BoE and BoJ has yet to offer a cent in quantitative easing. This mood halted the decline in the metals, though oil and gold moved lower. The equities are up as investors sensing no imminent rise in interest rates hunt for returns. First, Glencore absorbed Xstrata, itself created as a result of a Billiton management bust up as the latter was merged with the floundering Big Australian, BHP in 2001. Now there is strong speculation that next week BHPBilliton will spin off the Billiton name and assets. The BHP rump wants to concentrate on iron ore, oil and copper. Back in 2001 it was an expensive iron ore venture that put it on its knees. The US$ 12 billion Billiton assets appear to include ni (Australia and Columbia); manganese (South Africa); al (South Africa); coal and the Queensland Cannington pb and silver mine (a BHP asset). The Billiton assets when merged in 2001 were values at US$ 11.6 billion. In Mongolia Rio Tinto has reached agreement with the government to construct a power generation plant to feed the Oyu Tolgoi cu project. That is good news but many hurdles remain. The weekly Shanghai Exchange stocks roller coaster seems to have turned down, for a second week decline of 4.1% or 4,093 tonnes to 96,853 tonnes. While the Chinese National Bureau of Statistics said in July cu output rose 16.53% to 633,519 tonnes yoy up 9.58%; al rose 7.17% to 1,976,974 tonnes yoy 7.47%; zn up 10.3% at 515,065 tonnes yoy up 2.71%; pb fell 9% to 349,610 tonnes yoy off 4%. Finally ni production jumped 32.3% to 31,530 tonnes yoy up 28.3%, where is the ore for this coming from, is it concentrate from Australia and elsewhere or nickel pig iron from the Philippines replacing banned Indonesian ore? Another afternoon with metal prices struggling to go anywhere.

The UK Q2 GDP remained unchanged at 0.8%, yoy revised to 3.2% (3.1%). Jul Canadian existing home sales rose 0.8% (0.8%). A flow of US data - Jul PPI rose 0.1% (0.4%) yoy 1.7% (1.9%) with ex food and energy 0.2% (0.2%) yoy 1.6% (1.8%). The Aug NY Empire State manufacturing index slumped to 14.7 (Jul 25.6). Then Jul manufacturing production up 1% (0.3%) auto output rose 10.1%; industrial production up 0.4% (0.4%) and capacity utilisation 79.2% (79.1%). Finally, the Aug preliminary Uni of Michigan consumer sentiment again disappointed 79.2 (Jul 81.8). The Taiwan government has raised its 2014 expect economic growth to 3.4% from 3%.