Recently, CNN Money site has published figures showing towering wages of US President Barack Obama is about 4 times higher than Russian President Vladimir Putin.

EconomyVN - US President Barack Obama heads to earn the most money among leaders of major economies in the world. One year, Obama earns about $400,000.

Thus, Obama earns nearly 1.5 times more than German Minister Angela Merkel Prime Minister, while she only earns $ 242,000 /year.

Meanwhile, the income of Russian President Vladimir Putin is even less than Merkel's, only about $ 137,000 /year.

Notably, in the last position, Chinese President Xi Jinping has salary $ 20,600 announced in 2015. In 2014, Xi Jinping's salary was even lower, although he is the header of the 2nd largest economy in the world.

Tonny Le

Published in News

In July, the contraction in manufacturing activity in Great Britain appeared to be worse that initially expected, achieving its worst value since early 2013, as Monday’s industry data states.

Market research group Markit reported that in June its British manufacturing PMI sagged to a seasonally adjusted 48.2 the previous month from a reading of 52.1.

Since 2013, it was the worst level and it came below the preliminary report issued on July 22, which had shown the PMI tumble to 49.1 in July.

On the index, a reading higher 50 points out to industry expansion, while the reading below is a clear signal of contraction.

In the report, it was indicated that the domestic market was heavily impacted by uncertainty both before and after Britain’s vote to leave the EU.

Apart from that, the market research group stressed that weaker pound exchange rates contributed to fresh export order growth.

The weakening order book trend, as well as upswing in cost inflation indicated further near-term pain for British manufacturers.

China July factory activity suddenly slumps

In July, activity in Chinese manufacturing sector suddenly eased because orders cooled, while flooding disrupted business, an official poll revealed, thus contributing to fears that China’s economy will slow in the nearer months unless the government gets down to a huge spending spree.

While a similar private poll disclosed business picked up for the first time for 17 months, the actual growth was minor and the much larger official poll conducted on Monday suggested that China's overall industrial activity is still sluggish.

Both polls demonstrated persistently poor demand at home and also abroad. As a result, companies were forced to keep shedding jobs, even as Beijing vows to shut more industrial overcapacity, which could potentially lead to huge layoffs.

As for other Monday’s readings, they pointed to signs of apparent cooling in both the construction industry as well as real estate, that were major drivers behind better-than-expected economic growth during the second quarter.

Bazooka

Published in News
Monday, 01 August 2016 22:19

Aussie stands still, kiwi soars

On Monday, the Australian dollar stood still against its American counterpart, while the New Zealand dollar ascended after the release of China’s mixed manufacturing activity and Friday’s downbeat growth data kept weighing on the greenback.

The currency pair AUD/USD stood still at 0.7615, which is the highest value since July 15.

Data earlier demonstrated that in July China’s official manufacturing purchasing managers’ index ticked slumped to 49.9 from 50.0 last month, compared to hopes for an unchanged reading.

Meanwhile, the previous month, the Caixin manufacturing PMI headed north to 50.6 from June’s reading of 48.6, compared to hopes for a leapt to 48.7.

By the way, China appears to be Australia’s number major export partner and also New Zealand’s second biggest export partner.

As for NZD/USD, this currency pair soared 0.11%, being worth 0.7215, which is close to Friday’s two-week peak of 0.7233.

On Friday, the Commerce Department drew attention to the advance read on the second quarter, when American GDP disclosed a 1.2% annualized growth rate, which is below 2.6% expectations. 

Dollar pulls away

The evergreen buck pulled away from minimums it achieved following gloomy American growth figures late the previous week, while the Japanese yen pared some of the huge revenues generated after the BOJ disclosed a much smaller stimulus than it was actually expected.   

The dollar index, normally tracking the major American currency against a basket of key six counterparts, grew 0.1% being worth 95.578, thus rebounding from its Friday minimum of 95.384, its lowest value since July 5.

American GDP edged up at an annual 1.2% during April-June,and  Commerce Department figures unveiled on Friday, demonstrated a slight drift from the 2.6% surge forecast by financial experts surveyed by Reuters.

The greenback’s  advance was blocked in its tracks by the downbeat Q2 GDP figures.

The dollar index's next immediate technical target hit 94.75, as market speculation of an approaching interest rate lift keeps fading.

The FOMC statement earlier this week didn’t leave the impression that a September rate lift was quite probable and with mediocre growth numbers, the odds kept downgrading further.

Bazooka

Published in Forex

Japan considers issuing 50-year bonds

Japan is currently considering a possibility of issuing 50-year bonds. That’s going to be the first issue of such bonds and the longest maturity of Japanese government debt in the postwar epoch. The Japanese authorities are simply eager to take advantage of the ultralow rates resulting from the BOJ’s monetary easing, as sources already familiar with the matter state.    

The given move could contribute to observations that Tokyo’s growth-revival plan is getting quite similar to so-called helicopter money, especially considering if Japan’s major bank purchases the debt later as part of its campaign to stop deflation.

Well, if the Japanese government makes up its mind to go ahead with its 50-year bond plan, then an outline of it could be officially announced as part of an economic-stimulus package the administration of Prime Minister Shinzo Abe is expected to unveil in coming days. Apparently, the 50-year bonds could be released as soon as the current fiscal year, which ends March 2017.

Bonds

China’s Politburo wants to keep Yuan steady

China’s all mighty Communist Party Politburo has made up its mind to raise domestic demand by simply cutting taxes. The governing body has stressed that the given move is expected to keep the country’s national currency rate steady.

The Chinese government is on the verge of implementing policies to drastically relieve the burden of taxes as well as fees on companies in this Asian country, as Xinhua News Agency posted on Tuesday.

Apart from that, the Chinese government is going to boost its efforts aimed at fending off financial risks while maintaining the national currency exchange rate at rather a reasonable level. That’s what market participants can learn from the Xinhua report published following a Politburo gathering chaired by President Xi Jinping.

Downward pressure on economic growth is still huge and there’re some serious risks, which require high attention, as the Politburo states, without specifying anything.

Besides this, the Politburo vowed to stabilize market hopes with steady economic policies, thus reiterating recent official remarks.

 

Published in World economy

Borrowing costs, as well as access to funding appear to be the major obstacles to private investment in China. That’s what a senior official at the top economic planning agency told on Monday after private investment growth tumbled to a record minimum.   

A government spending spree along with housing boom helped the Chinese economy to surge 6.7% during the second quarter, though an abrupt sink in private investment is definitely pointing to a loss of momentum and it’s worrying policymakers.

Growth in investment by private companies, that accounts for approximately 60% of total investment in China, edged down to a fresh record minimum in the first half of 2016 as businesses retrench in the face of a gloomy economic outlook as well as poor exports.

Executives at China's private sector are currently adopting the so-called wait and see approach on investment, as the deputy chair of the National Development Reform Commission Zhang Yong states.

Published in News

On Friday, Li Keqiang, Chinese Premier called on world leaders to boost macroeconomic policy coordination, having met the heads of the World Bank, the International Monetary Fund as well as other senior global economic officials.   

Li Keqiang stressed that the sound fundamentals of the Chinese economy remained intact notwithstanding facing strong downward pressures. He added that the government's debt ratio appeared to be moderate, though he stressed that the government would boost regulation of the shadow banking sector and also keep an eye open on local government fiscal practices.

Apart from that, the premier addressed worries that China’s currently promoting its exports via aggressive policy support with the Yuan dropping against the dollar.

Considering the financial volatility as a result of Brexit, China is going to advance the market-based reform of the exchange rate.

The Chinese government are on the verge of maintaining a basically steady exchange rate at a balanced level and they won’t engage in a currency or trade war. 

Published in World economy
Thursday, 21 July 2016 11:59

EU accused China at WTO

European Union (EU) has followed the US to accuse China because it imposed tariffs and export quotas on essential raw materials.
 
EU supposed that China has violated the provisions of World Trade Organization (WTO) by limiting the exports of the needed raw materials. This has created advantages for the Chinese industry, as well as damaging to Europe companies and consumers.
 
"We can not sit idly looking companies and consumers suffered because of unfair activities", Cecilia Malmstroem - An EU leading trade official said in a statement.
 
In 2012 and 2014, EU also had a similar action to the China, about the rare earth and raw materials such as bauxite, zinc, and coke. At this time, they aim for graphite, cobalt, copper, lead, chromium, magnesia, talcum, tantalum, tin, antimony and indium.
 
"The two previous rulings of WTO on the restriction of exports of China have been very clear. That its actions are contrary to international trade rules. And because China does not solve, we must have legal actions," Malmstroem explained.
 
Last week, US also had similar dynamics. The US government said when approved to WTO accession in 2001, China agreed to remove the export tax, but so far unrealized.
 
Like the US, EU is implementing formal talks with China. This is the first step in the process of dispute resolution.
 
If the two parties can not reach agreement within 60 days, EU may propose WTO set up a council, to decide whether China accordances with the provisions of the organization.
 
The European Commission (EC) today will also review trade relations with China. Due to the terms to the WTO, China should be regarded as a normal market economy, instead of that the government plays a central role.

Thong Le

Published in News
Sunday, 17 July 2016 15:32

Oil price lower in third quarter

According to Barclays Bank, the large production of crude oil in storage will likely bring big trouble for the world oil market in the coming time.

Crude oil prices had fallen to the lowest level in two months on July 7th after the energy information agency (EIA) said the storage of crude oil fell less than expected. An energy market observer supposes that this is a potential hazard.

In an interview with CNBC, chief analyst of Barclays Michael Cohen said the supply and demand of crude oil in 6 quarters are unbalanced. According to him, Barclays predicted that oil prices will fall within 6-8 months because reserves of oil may continue rising amid the recession.

In the summer months, the increased travel demand typically leads to rising oil demand and oil prices also will increase during this period. But once summer ends, oil inventory could continue to rise.

Excess crude oi

Looking at the chart above, between the expected supply and a source of reality, we can see an incredible difference. Data in this chart has been compiled from 38 countries belonging to the Organization for Economic Co-operation and Development (OECD).

In financial crisis in 2008, the crude oil reserves reached 138 million barrels. Today, this number has increased more than 2 times to 383 million barrels. Mr. Cohen said this figure was from only the countries of OECD organization.

By several reasons, analysts believe that the recovery of the oil price in recent times will stop and the price of oil will decline from now until the end of the year. Oil price had earlier caught the bottom in mid-February and then again near 100% to $50 a barrel.

Oil price in one year
Oil price in one year

Bank of America-Merrill Lynch is the only person who predicts oil price could surpass level $50 per barrel by the end of this year. Capital Economics predicts oil price will end up below $50 a barrel in the year 2016. Oil price is currently traded around $47 per barrel.

Another point made Barclays hardly be optimistic on global growth, which is the problem of excess production in China.

With all of these, Mr. Cohen said that oil price will continue to decline in the third quarter of 2016 and then recovery in the fourth quarter and increase sharply in 2017.

According to Cohen, the problem of supply-demand at present are not yet paying attention and the American shale oil producers will maintain output instead of the cut production like before. But once the market realizes this fact, we will need to decrease the production of shale oil, help promote rising oil prices.

Minh Hoang

Published in Commodities

In the Thursday session, oil prices recovered strongly as the dollar discount and less pessimistic psychology of investors on the market, according to the Wall Street Journal reported.

On New York market, the price of light sweet crude oil August delivery rose 93 cents to or 2.1% to 45.68 dollars per barrel.

On London market, the price of Brent oil rose 1.11 USD or 2.4% to the level of 47.37 per barrel. In previous session, oil prices declined sharply down, the lowest level in two months.

Since the British electorates voted to leave the European Union (EU) in late June 2016, oil price fluctuations follow the happenings of US dollar. Brexit makes investors worried about the global economic outlook, so the impact of supply and demand factors for oil is less than before.

Investors on the energy market and the stock market always try to assess whether investors are "fleeing" to the safe property.

In the yesterday session, USD index decreased 0.3%. Thus, prices of commodities increase. S&P GSCI tracking the movements of 24 types of goods increased 0.7%.

The psychology of investors on the energy market in the recent weeks is not optimistic by residual energy supply continues to increase, according to the Chairman of Ritterbusch & Associates Foundation, Mr. Jim Ritterbusch.

At the same time, there are also signs that demand for energy consumption rises more slowly, G7 reserves increased. Data from China showed the oil reserve in June 2016 of the country dropped down to the lowest level in five months.

However, still more positive factors support oil prices, according to experts in the Royal Bank of Canada (RBC).They forecast the global economy will grow 3.2% from now to 2018, energy consumption will remain high, predict that energy consumption of Canada increased 1.4 million barrels of oil per day from the level of 1.1 million barrels of oil per day as calculated previously.

RBC raise oil price forecasts on the US market up $45 per barrel this year from $41/barrel as calculated previously. Brent oil prices, also predicts this year's average is $47 per barrel, up more than $4 per barrel compared with previously updated research reports.

RBC said that world oil markets will establishe equilibrium in the second half of the year 2016 when the interrupt source elements as forest fires in Canada and riots in Nigeria are resolved. Oil demand will increase over time, excess reserves will be addressed.

Xuân Nguyễn

Published in Commodities

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