www.infystocks.co.uk: 19/10/2008

24 October 2008

Dollar surges vs. euro, tumbles vs. yen
Pound posts biggest drop versus the dollar since '71, euro sharply lower. Yen hits 13-year high.

* Consumer confidence at 5-year low
* Musical chairs at the mall
* U.S. ready to act to calm markets - Paulson
* Bush tax cuts center stage in Congress
* Slower growth, but no recession - forecast

NEW YORK (CNNMoney.com) -- Recession fears and expectations of sharp interest rate cuts by central banks in Europe sent the dollar soaring against the euro and the pound Friday, but the U.S. currency tumbled against the yen.

The euro fell 1.2% to $1.269 early in the session, but had dropped as much as 3% versus the dollar after the United Kingdom reported the first decline in economic production since 1992.

The British pound also tumbled, collapsing nearly 7% versus the dollar to $1.52, marking the biggest intraday decline since exchange rates became freely floated in 1971. But the pound had recovered by late morning in New York to trade down 1.1% at $1.7583.

Rate cuts on horizon? The British government reported that nation's gross domestic product, the broad measure of economic activity, fell 0.5% in the third quarter, and British treasury chief Alistair Darling vowed to do what was necessary to support the economy there.

Traders are expecting that the Bank of England and European Central Bank will have to make sharp interest rate cuts in the weeks and months ahead, much steeper than the cuts still available to policymakers with central banks in Japan and the United States.

The key benchmark interest rate of the Bank of Japan is 0.5%, and the U.S. Federal Reserve has already cut its fed funds rate to 1.5%. Meanwhile, the ECB's benchmark rate stands at 3.75%, while the Bank of England's rate is 4.5%.

Yen boost: The best performing major currency was the yen, which drove the dollar to a 13-year low of ¥91.10. By late morning in New York, the dollar was trading at ¥93.18.

The yen was driven higher by equity losses around the globe as investors lost confidence in the world economy. Investors often borrow yen to fund investments in higher-yielding currencies, such as the euro or the pound. When those currencies weaken, and investors reverse their positions, they are forced to buy back the yen, raising its value.

Investors also tend to buy into the yen as a defensive risk-aversion move.

Global stock markets were taking a beating Friday as spooked investors moved quickly to shift assets out of risky equities into perceived safe havens, like the dollar and yen.

"When the stocks are falling across the board and there is a big loss in risk appetite, the dollar rises. So does the the other low yielding currencies like the yen," said Ashraf Laidi, chief foreign exchange strategist for CMC Markets.

"There's nothing fundamental about any of this," said David Kelly, the chief market strategist for JPMorgan Funds. "What we're seeing is forced selling by some institutions. One of the ways of looking at what is going on is a mirror image of three to four months ago."

Laidi and Kelly both said those who bet against less expensive currencies like the dollar and the yen earlier this year, seeking higher returns in other currencies, are now forced to unwind those positions.

Oil Apocalypse vs. climate change: What is the right price?
Prof. Chems Eddine Chitour Ecole Polytechnique Algiers

"If you control the oil you control the country, if you control food, you control the population. "

Henry Kissinger

16% of the population share 75% of global consumption of oil. On average, four barrels of oil are consumed per inhabitant per year worldwide, but this figure rises to 20 by 12 by European American and only 1.5 in Chinese. It was consumed up to now between 850 and 950 billion barrels of conventional oil. It remains to produce (existing reserves and those still to discover) nearly 1000 billion barrels. The increase in world oil consumption would come for two-thirds of transport, especially road. Their share in final demand for petroleum products is expected to increase by 50% in 2000 to 60% in 2030. Oil remains difficult to substitute in transport dependent to 97% of petroleum products. The Middle East holds about 700 billion barrels of black gold in his basement, against 130 billion barrels for South America (with Mexico), 80 billion for Europe (North Sea and Russia) and 50 billion barrels for the United States (including Alaska). The rest of the world (including Africa) would hold 130 billion barrels of reserves.

The dollar has appreciated on average by 13% and the barrel has lost 55% the ratio is 1 to 4. we can not invoke the strengthening of the dollar. The crisis is here we are promised a recession, 'IEA does not change its forecasts for growth. The IMF mouth the horizon. On bare said that the United States consumed only 18 million barrels per day against 21 previously, we are told that speculators have left the oil and raw materials and are going to nest dan speculation on oil. Clearly this is the panic for pensioners potentates of OPEC. Especially in terms thinly veiled it is threatened if it reduces its production could jeopardize the restoration does the Western economic machine

What is it really that threat. That industrialized governments have put on the table billion in 3000 to save banks bankrupt due to mismanagement of the financial system which absolved employers who are told to renounce their golden-parachute course not forgetting that their salaries even retired are counted in tens of thousands of dollars. The increase of oil is a dollar 85 million dollars per day over the year to $ 80 on average pension in 2008 was reported in OPEC countries with 30 million barrels per day equivalent $ 800 billion or just over 25% of what Western countries have paid at once to save their banks with taxpayers' money. We remember the outcry in July with a liter of gasoline at 1.5 euros in France blaming OPEC for paradoxically increases when the price plummeted began it was difficult to find the evolution of oil as it rose to second place

What is the fair price for oil? "Is it normal for a barrel of Coke costs more expensive than a barrel of oil? "Wondered outraged President Hugo Chavez known for his striking options? You should know that 1 liter of oil I can produce 10 kWh is the equivalent of 120 dinars in Algeria where the cost of electricity is cheap, result in significant mismanagement in use. In France, for example, energy costs six to eight times more expensive (per liter of gasoline worth 1, 6 euros in July or 7 times the price of gasoline in Algeria) In view of its real opportunities even $ 200 oil is cheap.

In fact oil prices despite what the specialists who can explain everything to us post-recall studies of the IEA predicted the 2005 price of oil would not exceed $ 30 in ... 2030 - In the early 80s oil was much more expensive now than it was, $ 1998, to nearly $ 70 a second correction But parity is necessary to bring the course to 2004 dollars. Thus, according to the website of the Ministry of Economy, Finance and Industry: the average smoothness dollars per year was: 1998: 5.89960 Francs for $ 1. 2004: $ 1.24333 for 1 €. Parity € / frs is fixed at 6.55957 francs / € according Boursorama We turn all these figures in $ 2004: $ 1 1998 = 5.89960/6.55987 = € 0899 €

In 1998, he had to 1/0.899 = 1.11 € for $ 1. Logically we get parity $ (1998) / $ (2004): 1 $ 1998 = 1243 = 1.11 * 1.38 $ 2004. There comes a oil prices in dollars of 2004, between 1978 and 1981 to more than 60 * 1.38 = 82.8 a barrel with a peak in 1980 to 69 * 1.38 = $ 95.22 a barrel! So for 3 years barrel was higher than $ 82! So who said that oil is expensive now? On a purchasing power of oil is too expensive, nobody will soon roll? This is wrong ... as oil, adjusted to purchasing power, ie the minimum wage in Europe, has already been much more expensive! Thus in 1980, it was nearly 15 hours of SMIC to "pay" a barrel of crude oil while in 2004, it was just under 4 hours! In short take the current $ 72 has not caught anything equal, the price of 1980 in constant dollars. If you want to match inflation other raw materials, for example, an ounce of gold worth $ 30 in 1978 in 2008 it had picks in 1000 dollars, the price

Everyone knows the petroleum fuels are heavily taxed. But what precisely the weight and nature of these taxes are distributed and how the cost of a liter of fuel? On a basis of a liter of fuel oil sold 1.02 € here is what that price compose on parity follows: $ 1.2 = € 1 (since the crude is quoted in dollars) and that for France. It is quite easy to simplify the cost of a liter of fuel as follows:
- 6 / 10 therefore profits tax for the state - 2 / 10 of turnover for oil companies - 2 / 10 fee therefore profits for the producing country. We see once again that the producing countries represent only 20% of the final price of oil. (1)

What I mean is that imponderables-irrational behavior, geopolitics are more important than "fundamentals" that allow limited oil prices. And he no doubt that much of the decision on production volume in a way that Pressed also in view of the tumble that nothing seems to stop e must consider several factors that appear minor, the possibility of a recession that demand will be depressed, on the other hand Saudi Arabia does not want to jeopardize relations with the new U.S. administration which, we are told is more favorable to the Kyoto Protocol on reducing greenhouse gases and hence a decrease in consumption of fossil fuels for development of renewable energy.

This leads in theory, to make access more expensive oil to make competitive that can not be less than $ 80 a barrel. This is even more plausible than for the U.S. price of oil high paradoxically arrange small American producers whose wells are not profitable with oil prices low. At the other end of the cursor a high price enables the development of oil in deep seas whose extraction costs using advanced technology and highly qualified personnel. Unfortunately, it also allows the development of oil shale of Alberta in Canada who make this country a big polluter

Back flash on oil prices up in 1960 oil prices were determined by the cartel of mostly American multinationals from Standard Oil, BP and Shell to a lesser extent the PSC become more tatrt elf, then Total Fina Elf and Total the current group of seven sisters "the sette sorelle" in the words of Enrico Mattei. The advent of OPEC has illusion that during the period 1960 -1980 Twenty years later, in July 2008 the situation is relived, Saudi Arabia and OPEC "decide" under American pressure to increase the volume of production. It was not immediately, but from July 11 the price of oil began its descent. The meeting of the OPEC came too late and with little ambition has nothing been done. Better she announced that the next meeting will take place in Oran on 17 December. Beginning on Oct. advance to the November 18 mid-October is the panic is scheduled for Friday October 24

What are the consequences? Since its July 11 record at 147.50 dollars, the price per barrel fell by almost 50%. At what level can it stabilize? The speculation and endless trips for investors at the response Crude make difficult. Recently, the investment bank Merrill Lynch has not ruled out a floor of $ 50, its level of early 2005. This threshold is unacceptable to all producing countries. Today, Iran and Venezuela defend a floor price of $ 100, while the president of OPEC, Chakib Khelil of Algeria, spoke recently of $ 80. "It seems that a lower production ceiling of one to three million barrels per day will be discussed at the meeting on 24 October in Vienna, said Mohammad Ali Khatibi, quoted by the Mehr agency. The cartel is now expected to produce 28.8 million barrels of oil per day. Beginning in October, the Iranian Minister of Petroleum, Gholam Hossein Nozar, felt that a barrel of crude to less than $ 100 was appropriate "to anyone, neither producers nor consumers." (2)

The views of David Miliband seems to summarize the current chaotic situation. Listen on: "While we are immersed in the throes of global economic slowdown, it is tempting to push into the background the transition to a low carbon economy. Yet this is, indeed, inseparable from our economic future. While high oil prices and gas fueling inflation, our dependence on sources of energy producing highly carbon is directed towards the collapse of our economies. It is also a threat to the safety of our environment and the geopolitical stability of the planet. We must use the EU to set a new course in the world of low-carbon ". (3)

"The growth of world population, which is 6.6 billion people so far and is expected to rise to 9 billion in 2050, as well as the rapid economic expansion in developing countries (all day, the Chinese fleet increases by 20 000 new vehicles), make this an upheaval structural evolution, not a temporary aberration. It is easy to be fatalistic, to conclude that greater uncertainty is inevitable. There is another alternative. By diversifying our energy supply, we can avoid a new global race for resources that we would force us to rely more and more countries that control them. By building a low carbon economy, we can not only limit emissions of greenhouse gases and reduce inflationary pressures, but also create green jobs and green growth ". (3)

"The main question is: how to accelerate the process? It seems to me that in this regard, the EU could play a catalytic role. . The priorities are threefold. First, we must use our influence within a framework of negotiations to adopt a global agreement on climate change beyond 2012. Then, the world needs a global carbon market to help developed countries to identify the most profitable sectors to reduce their emissions Finally, we can steer investment towards global green technologies. it is increasingly clear that we can no longer afford to depend heavily on energies emitting carbon. The current economic slowdown is no reason to delay the transition to a low carbon economy is one more reason to accelerate. (3)

Even appreciation for the President of OPEC Chakib Khelil who put on a recovery of the global economy in the coming months, particularly in Asian countries like China and India. "Hydrocarbons account for 75% of the energy consumed in the world. In the long term, demand will increase because the global economy will recover to return to annual growth rates of 5%, which will affect the price of a barrel, "said he. An opinion that seems to be shared by many economic experts predict that an exit from the global financial crisis by early 2009. In conclusion, a price of $ 100 should be a compromise that harms neither party and who does not use green energy unavoidable. The OPEC should withdraw at least 3 million barrels per day. The meeting of Oran in December will assess the relevance of these measures.

In all cases, for Algeria it would hinder the extraction of oil and gas (not to sell at those prices) but wait for the opportune moment. Again our best safe is our basement and not the U.S. Treasury bonds which we know now limits. Climate change is a reality that we must assume in practice and not in contemplation and fatalism. We must go to renewable energy and nuclear know our advantage negotiate mutually beneficial. In a study published on 11 January 2007 WETO H2-Europe, the latter no longer on the supply of Algeria from 2025. Clearly we will be importing energy. What about future generations?

20 October 2008

Previous Week Board Meetings this Week

Previous Week Board Meetings this Week
A rally that was seen in the first two days of the week fizzled out latter with the key benchmark indices tumbling to their lowest level in over two years on global recession worries. BSE Sensex crashed below psychological 10,000 marks on Friday, 17 October 2008. Aggressive cut in cash reserve ratio (CRR) by the Reserve Bank of India and pledges by policymakers around the world to pour cash into troubled banks had boosted markets at the beginning of the week. The BSE 30-share Sensex lost 552.50 points to 9975.35 The S&P CNX Nifty fell 205.60 points to 3074.35 in the week. Foreign institutional investors (FIIs) have sold shares worth Rs 46,661.20 crore in the calendar year 2008 so far (till 16 October 2008).

Concerns about a global recession may continue to have impact on the domestic bourses which have tumbled in a global equities rout in the past few days. Investors also await the mid-term monetary policy review by the Reserve Bank of India (RBI) due on 24 October 2008. Index heavy weight Reliance Industries (RIL) will declare its Q2 September 2008 results on 23 October 2008. Reliance Industries has 13.64% weight age in Sensex so it may guide the index movement in the next week.