Friday, November 30, 2007

Chinese Reserves looks at the slowing pace of Chinese reserves.
"However, the monthly increase represented the smallest rise since September 2006. Indeed, after rising at between $40bn and $50bn per month in the first seven months of this year, Chinese foreign exchange reserves rose by just $23bn in August and $24bn in September"

The Chinese continue to print yuan and exchange it for US dollars. It is a step forward that the Chinese are developing a diversified portfolio. However, it does not remove the impression that their saving is too high.

Sunday, November 11, 2007


Mercurial from the latin mercurious
Mercurial comes from Latin Mercurius, "Mercury," the Roman god of commerce and messenger of the gods.

A reminder of the flexibility or signalling quality.

Thursday, November 08, 2007

USD weakness


EADS announced Q3 "earnings" today, wherein they reported a loss of "only" €776 million, better than the expected €1.15 billion loss. But the insight on currency hedging is instructive; through the first 9 months of the year, EADS saw $11.8 billion worth of hedges mature: th4e average rate was 1.14 EUR/USD. In their stead, EADS has placed fresh hedges totally $15.1 billion, with an average rate of 1.37. That is a material change in competitiveness that is no doubt being mirrored elsewhere in Europe (or at least France); why else would Nicolas Sarkozy warn the US Congress that dollar weakness could lead to "economic war"?
Speaking of the US Congress, the Joint Economic Committee welcomes Ben Bernanke to the dance floor today for testimony on the US economic outlook. We can expect him to be peppered with queries on subprime, housinng, and the banking system, and perhaps also the level of the dollar. Yesterday's barrage of Fed speakers made it pretty clear that they are comfortable with where rates are as things currently stand, though we should probably expect BB to note that the Fed stands ready to act should conditions deteriorate markedly from here.

What's interesting is that several of yesterday's speakers also mentioned the level of the dollar, a topic that has been absent from their comments for the past several years. Could we perhaps be morphing towards a May 2006 scenario, wherein the Fed belatedly realizes that they are suffering from a credibility deficit and decides to "talk tough" to restore the balance, even in the face of crumbling risky asset prices?.

Wednesday, November 07, 2007

Investment responses to prices

FT's Lex talks about a change in strategy at BT in response to evidence that oil prices will be higher than they had forecast.

If deals and capital spending follow, it would represent a U-turn by BP. It is also understandable why oil majors use cautious long term forecasts. Nonetheless with spot oil prices now almost four times BP’s current planning assumption, it looks likely that Mr Hayward will turn the capex tap on.

Tuesday, November 06, 2007

Free Exchange on a story that has been circulating.

When Bundchen, 27, signed a contract in August to represent Pantene hair products for Cincinnati-based Procter & Gamble Co., she demanded payment in euros, according to Veja, Brazil's biggest weekly magazine. She'll also get euros for the deal she reached last October with Dolce & Gabbana SpA in Milan to promote the Italian designer's new fragrance, The One, Veja reported. Bundchen earned $33 million in the year through June, Forbes reported in July.

Friday, November 02, 2007


The FT on the problems with the spread between retail and crude oil that cost ExxonMobile in the latest quarter.

Declines within Exxon’s refining and marketing business were no surprise. The entire sector has taken a hit, with third quarter refining earnings generally down by half as compared with a year ago and margins down as much as 90 per cent from May highs. Exxon’s malaise was less severe than most, with refining profits down 30 percent. But the company’s shares slipped 2.7 per cent on concerns over its weak exploration and production volumes. Exxon’s upstream business is generally a strength, but the volatility of its profits there is bound to increase as price-sensitive gasoline becomes a bigger proportion of its production.

Macro Man supplies the picture and an analysis that suggests that the retail price of petrol will soon follow the crude price sharply higher.