Daily Digest

Daily Digest 12/26 - After Christmas Sales, Oil Prices Rise, IRS Delays Filing Season

Sunday, December 26, 2010, 12:00 PM
  • After Christmas Sales Could Lure Shoppers Back
  • Positive US Information Help Increase Stocks As Oil Prices Rise
  • China Raises Interest Rates Again to Cool Inflation
  • IRS Delays Start of Filing Season for Taxpayers With Itemized Deductions
  • Crude A Tad Down In Thin Trades Ahead Of Holiday
  • Financial Times taps Jobs as Person of the Year
  • Copper Approaches Record as Swiss Franc Weakens on Global Recovery Signs

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Economy

After Christmas Sales Could Lure Shoppers Back



Some of the country's biggest retailers are prepared for the onslaught of customers. Best Buy and Sears have both announced sales that will begin on Dec. 26, while many stores are lengthening their operating hours to accommodate as many customers as possible. Best Buy will have its annual Day After Christmas Sale, with stores across the country opening their doors on Dec. 26 at 7 a.m. The sale also offers free shipping at the BestBuy.com on Dec. 26 and 27 on a number of items.

Positive US Information Help Increase Stocks As Oil Prices Rise



US information on Thursday indicated an increase in spending for the fifth month in a row and increased demand for a number of US produced merchandise strengthening positive prospects for the fourth quarter. According to Bernard McAlinden of NCB Stockbrokers the positive economic information and quantitative easing made the run possible. The MSCI index, which went up by 9.6 percent, increased to a level just under the highest level in over two years.

China Raises Interest Rates Again to Cool Inflation



The People’s Bank of China said it would raise the one-year benchmark lending rate by 25 basis points to 5.81 percent, and the benchmark deposit rate by the same amount to 2.75 percent. The Chinese economy has been awash in liquidity due to government stimulus money and generous lending by state banks. Chinese officials are now concerned about an overheated economy and the inflationary pressures that come with that.

IRS Delays Start of Filing Season for Taxpayers With Itemized Deductions



“The majority of taxpayers will be able to fill out their tax returns and file them as they normally do,” IRS Commissioner Douglas Shulman said in a statement. “We will do everything we can to minimize the impact of recent tax law changes on other taxpayers. The IRS will work through the holidays and into the new year to get our systems reprogrammed and ensure taxpayers have a smooth tax season.” The delay also applies to filers preparing to take advantage of a deduction for college tuition and fees of up to $4,000, and a separate $250 deduction for teachers’ out-of- pocket classroom expenses.

Crude A Tad Down In Thin Trades Ahead Of Holiday



At 1125 GMT, ICE February Brent was down 29 cents at $93.96 a barrel. The ICE's gasoil contract for January delivery was $1.75 lower at $782.75 a metric ton. Trades for crude and products futures on ICE futures will close at noon. The New York Mercantile Exchange was closed Friday. Although oil prices hit the highest levels in more than two years, some members of the Organization of the Petroleum Exporting Countries seem unworried.

Financial Times taps Jobs as Person of the Year



Saying this year's unveiling of the iPad "capped the most remarkable comeback in modern business history," the FT noted Apple's Jobs-led bounce-back from its near demise in the '90s, as well as the visionary leader's perseverance through his recent struggles with cancer. In terms of Silicon Valley lore, the publication said, Jobs now shares the stage with no one. "Long-time nemesis Bill Gates may be richer and, at his peak, arguably exerted greater sway, thanks to his monopoly over the world's PC software," the FT said in a profile of Jobs earlier this week. "But the Microsoft co-founder has left the stage to devote his life and fortune to good works. It is Mr. Jobs who now holds the spotlight."

Copper Approaches Record as Swiss Franc Weakens on Global Recovery Signs



Copper gained 0.7 percent, extending this year’s rally to 27 percent. The franc depreciated 0.4 percent against the euro. The FTSE 100 Index added 0.2 percent, swinging to a gain from a loss in the final minutes of trading. The S&P/TSX added 0.1 percent at 1:10 p.m. in Toronto. The MSCI Emerging Markets Index fell less than 0.1 percent, the first drop in four days, as North Korea threatened to wage a “sacred war” if attacked. U.S. markets were closed for the Christmas holiday.






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10 Comments

idoctor's picture
idoctor
Status: Diamond Member (Offline)
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Re: Daily Digest 12/26 - After Christmas Sales, Oil Prices ...
China's Surprise Rate Hike May Roil Commodity Markets  http://www.cnbc.com/id/40810967

The surprise timing of the People's Bank of China (PBOC) increase in benchmark lending and deposit interest rates is likely to weigh on commodity markets when trading starts on Monday.

On Christmas Day, the PBOC raised rates by 25 basis points, the second rate rise in just over two months, part of a series of measures designed to combat inflation which hit a 28-month high of 5.1 percent in November.

 

Flag of the People's Republic of China
Eriko Koga | The Image Bank | Getty Images Flag of the People's Republic of China

 

The opportunity to cash in on prices at or near their highest in years before the year end could mean the correction this time may be greater than the losses following the last interest rate hike in October.

While the market expected China to raise rates, some investors had thought it was too late to move in 2010, and for that reason China's commodity markets may test their downside limits on Monday.

"This certainly doesn't spell the end of the commodities boom or the strong China story. It's a smart move that may have caught the market off guard," Mark Pervan, senior commodities analyst at ANZ said.

"This may give some impetus for some profit taking before the end of the year, and an opportunity to buy on dips." U.S. oil [CLG1  91.51    1.03  (+1.14%)   ] ended last week around a two-year high, above $91 per barrel while soybeans surged to a 27-month high, and copper flirted with record peaks.

Some analysts said after a lower open, markets could rebound and even hit new highs.

Because the rate hike was modest and overall the real deposit rates are still in the negative territory. Money supply was not tightened strictly enough, Gu Jianjun at Jinyuan Futures said.

Western markets, such as corn and soy futures on the Chicago Board of Trade, may be particularly choppy, as the kneejerk reaction to the rate move is accentuated by holiday-thinned volume.

When China last raised interest rates in mid-October, it sent the dollar higher, dragged gold down by more than 2 percent, oil fell 4 percent, copper lost almost 2.5 percent, and losses of 2.7 percent in wheat and 2 percent in corn.

But that, and other policy tightening choppy did little to slow commodities' march higher.

China is the world's top consumer of a host of commodity products, including copper, iron ore, coal, cotton and soy and is the second largest consumer of corn, gold and crude oil.

The Reuters-Jefferies CRB index, which tracks 19 commodities, fell almost 2 percent.

Assessing the effect on some markets will be complicated by the Christmas holidays which see British-based markets such as the London Metal Exchange and London-based agricultural contracts, including softs, on NYSE Liffe closed on Monday and Tuesday, while markets in China and the United States reopen on Monday.

"It is a little bit of a surprise, but the move should be welcomed by the market. The central bank has increased the interest rates before the end of 2010, which means the possibility of increasing interest rates in the beginning of 2011 will be smaller," said He Yifeng, analyst at Hongyuan Securities in Beijing. "I don't think the central bank will increase interest rates before March."

After the initial reaction, analysts said the move may prove to be positive, reaffirming November's message that China's leaders are acting to stem inflation and control prices if needed.

That along with China's plans to go to the world to stock up on commodities, especially grains, makes for a bullish outlook for 2011, analysts said.

"It will be bearish for agricultural prices, which have rebounded recently. But we believe the impact will be short-lived and not hit the bullish trend, especially of the soy market, which will be supported by the drought in the South America. Right now its also the peak consuming season in China," said Wang Ping, analyst with Dongwu Futures.

China has run down many of its agricultural stockpiles this year to stop strong demand driving up prices.

Many markets, especially corn, sugar and cotton surged to record highs.

Given limited farmland and rising consumption, analysts believe the government's goal of self-sufficiency in grains—rice, wheat and corn—may force China to import other farm products which compete for acreage, such as soy, cotton and sugar.

DavidC's picture
DavidC
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Re: Daily Digest 12/26 - After Christmas Sales, Oil Prices ...

"After Christmas Sales Could Lure Shoppers Back"

Interesting that the article states that the National Retail Federation predicts spending this holiday season will reach $451.5 billion, 3.3 percent up from last year.

Here in the UK, we've had a vast number of television adverts for post Christmas sales. Am I alone in getting a sense of desperation about all of this?

DavidC

britinbe's picture
britinbe
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Joined: Dec 28 2008
Posts: 381
Re: Daily Digest 12/26 - After Christmas Sales, Oil Prices ...
DavidC wrote:

"After Christmas Sales Could Lure Shoppers Back"

Interesting that the article states that the National Retail Federation predicts spending this holiday season will reach $451.5 billion, 3.3 percent up from last year.

Here in the UK, we've had a vast number of television adverts for post Christmas sales. Am I alone in getting a sense of desperation about all of this?

DavidC

I agree.  I do like the way the UK MSM is spinning the bad sales before Christmas as being due to the poor weather.  My dad for years used to moan about how things a few days after Christmas were always cheaper than before, I suspect many have now realised this fully and are delaying any purchases they really want until now, this being combined with the usual bargain hunters.  For many stores such as Debanhams to have an upt0 70% off, it makes me wonder.

Let's see how things are spun later in the year

taxed2death's picture
taxed2death
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Posts: 22
Re: Daily Digest 12/26 - After Christmas Sales, Oil Prices ...

You are not alone.

This is a continuation of keynesian economists belief that governments can spend out of a depression.These same faulty theories are then applied to consumer spending.In a hypothetical situation,if consumers were hoarding cash,then getting the capital out from under the mattress and into the market makes sense.However,the reality is that the average american consumer has close to zero savings,also even if they did have savings,historically people use those savings as investments to help the market.The simple idea of saving,spending less on junk,and investing is so elementary that it's difficult to wrap your head around it when we are constantly bombarded with vague and complicated economists opinions.

on a lighter note:Merry Christmas, I hope everyone had to opportunity to spend some quality time with friends and family over the last couple days.

rjs's picture
rjs
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Re: Daily Digest 12/26 - After Christmas Sales, Oil Prices ...
US excess liquidity pushes oil to record high - RIYADH: As the year comes to a close, another round of crude price spiral seems just round the corner. Markets are already at their highest level in 25 months, despite the fact that the world is barely out of the Great Recession.  The jobless rate today is hovering at around 10 per cent twice the levels in 2007-08; the housing sector in the US continues to languish in the intensive care with existing home sales down 27.9 per cent year-on-year in November and a lacklustre global macroeconomic performance. And this leads us to the question-given ample supplies, considerable spare capacity how could crude be at this level,? Indeed, severe winter and snowstorms have hit parts of Europe buoying the expectations, at least temporarily, that fuel demand will increase. Chinese consumption continues to grow at least in the short term. Yet the biggest mover for energy markets appeared to be financial investors,” “The additional liquidity pumped into the markets by the Fed’s Treasury purchases should also reach commodity markets and is thus leading to increasing oil prices,” analysts at the Frankfurt-based Commerzbank AG said. “What is more, the higher price level reflects the weaker dollar, which is a direct consequence of the ultra-expansive US monetary policy.”
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Montana Native
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Damnthematrix's picture
Damnthematrix
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Re: Daily Digest 12/26 - After Christmas Sales, Oil Prices ...
DavidC wrote:

"After Christmas Sales Could Lure Shoppers Back"

Interesting that the article states that the National Retail Federation predicts spending this holiday season will reach $451.5 billion, 3.3 percent up from last year.

Here in the UK, we've had a vast number of television adverts for post Christmas sales. Am I alone in getting a sense of desperation about all of this?

DavidC

Same here in Australia.......  just yesterday, our regional paper had an article relaying that our Premier wanted Queenslanders to go out and spend on Boxing day to "save the retailers".  The comments on that online story were unanimous:  STUFF THE RETAILERS!  The cost of living here is going through the roof (water, electricity, food, fuel, government charges, all going up) and nobody seems to think they have any spare cash to spend at sales....  even though lame stream media is seemingly reporting that people are spending, which I don't believe.  The cynic in me says that they are just printing what fairyland asks them to print.  The Aussie economy is not looking good for 2011.

oldvanman's picture
oldvanman (not verified)
A tale of 2 grandsons, their Pa (me), and their Xmas money

A story from Australia...

Retailers are heading the way of the dinosaur, just don't know it yet.

My 2 grandsons aged 4 and 6 got lots of presents and a fair amount of cash (about $100) to spend at the after Xmas sales. The experience of each is very telling of retailers woes.

The 4 year old had watched the Doctor Who special on Boxing Day and decide he wanted a Tardis and a Sonic Screwdriver. The Doctor Who special was shown on National TV and was very popular. We checked online for him and he confirmed that was what he wanted spend his money on. When we went shopping today we could not find either item at any of the toy retailers. Several comments were made by staff that there had been a lot of inquiry for Doctor Who merchandise but that they had not stocked it for some time. His mother ordered the items online and not from any retailer represented in the local shopping centres.

The 6 year old wanted computer games so he checked online for what he wanted, the prices he should be paying, and had worked out how many games he would be able to buy. When we went to the post Xmas sales today, he was disappointed as he found what he wanted but realised that the specials were still a lot more expensive than what he had budgeted for. His mother also ordered the items online and not from any retailer represented in the local shopping centres.

I had a shopping list of a few items I wanted and so had chauffeured my family about so I could do some shopping as well. I don't frequent the malls so I was surprised at the quantity of junk that was stocked and the prices being asked for it. One item I was after was listed online for $14 plus $6 freight. The cheapest price I could find in a store for the same item was $59.95 and that was on special!

So we wasted a day driving around the city spending very little in the stores. The day was only redeemed when we went to the park and rode our scooters for an hour or two.

So two little boys ( and one large one) all learnt  lessons about buying what they want.

We are all becoming net savvy and shopping centres are not part of our future.

We are usually sweltering in heat wave conditions at this time of year however this month we have had rain nearly every day, so we are fighting lots of mosquitoes and mud.

I wish a peaceful and prosperous New Year to all. Keep up the good work.

Regards

Chris

 

dickey45's picture
dickey45
Status: Bronze Member (Offline)
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Posts: 77
Re: Daily Digest 12/26 - After Christmas Sales, Oil Prices ...

When we built our house I found that many parts had to be ordered online.  The stores are not stocking things like they used to and their prices were often many times higher.  Although we did save $900 on the $2600 water heater by having a local plumbing store order it for us.

sofistek's picture
sofistek
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Posts: 818
Re: A tale of 2 grandsons, their Pa (me), and their Xmas ...
oldvanman wrote:

We are all becoming net savvy and shopping centres are not part of our future.

I agree. Do you think that online stores, selling Doctor Who toys and video games are part of our future?

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