Daily Digest 2/4 - Whitney to Testify on Muni Call, Weather a Factor in Slow Job Growth, Oil Near $91 in NY
- Meredith Whitney Called To Testify Before House On Her Muni Call
- Oil Prices: Too Early For A Choke Point
- Growth Of World Hydrocarbon Prices Can No Longer Help Russia
- Reagan for President...of China!
- U.S. Jobless Rate Falls to 9% in January; Payrolls Rise 36,000
- Weather a Factor in Slow U.S. Job Growth
- Oil Near $91 in New York After Falling on U.S. Economy, Supplies
According to Charlie Gasparino, the intifada between Meredith Whitney and the rest of the world just got uglier. According to the former CNBCer, the one-time Citi scourge has been called in to testify before the House TARP committee and explain her less than favorable position on munis. From Dow Jones: Meredith Whitney has been called to appear as a witness at an upcoming hearing by the U.S. House TARP oversight subcommittee, Fox Business Network's Charles Gasparino reported Thursday.
Tightening efforts in China have had virtually no impact on energy demand, as crude oil imports remain in a strong uptrend as the country transitions to a ‘car economy’. Furthermore, physical demand for oil has started to draw down energy inventories in the OECD countries despite an increase in OPEC production and non-OPEC supply.
At the same time, investments - the guarantee of successful and stable development - continue to decline, despite all of the world market conditions that are favourable to Russia. While in 2006, at 67 dollars per barrel, the influx of capital comprised over 40bn dollars, and in 2007, when a barrel cost an average of 75 dollars, 81bn dollars came into the economy, in 2010 - at oil prices of 85 dollars per barrel, we are seeing an outflow, which the Central Bank and Rosstat [State Statistical Service] appraise at approximately 38bn dollars. This year, oil prices have already reached the mark of 100 dollars per barrel, but predictions for influx of capital and growth of the country's GDP remain sooner in the minus zone.
By promoting domestic growth, a strong currency is welcome, as it dampens inflationary pressures. Commodity prices in local currency go down as the currency strengthens. Given that China is a major importer of commodities, a strong Chinese renminbi will help tame inflationary pressures. China has been reluctant to allow its currency to rise, mostly because of the feared negative impact on exporters. We are not as pessimistic, as our analysis shows that Chinese companies have pricing power: China has long given up competing on price, as the goods and services exported from China are at the higher end of the value chain. Think about it from a U.S. corporation’s point of view: to remain competitive, more outsourcing needs to take place at a time when just about everything is outsourced already. As a result, ever more complex processes are being outsourced. China is best positioned in the world to accommodate complex outsourcing projects.
Payrolls in construction and transportation, industries most affected by bad weather, dropped in January, while factory employment rose the most since August 1998. Federal Reserve Chairman Ben S. Bernanke is among policy makers still concerned the pickup in growth is failing to revive the labor market quickly, one reason why the Fed said it will continue a plan to add another $600 billion into the economy.
For the unemployed, the slow addition of jobs is increasingly frustrating. “If you want to get there and you’re sitting in an airplane, the fact that the airplane is moving 20 miles faster down the runway doesn’t matter to you,” said Cliff Waldman, economist at the Manufacturers Alliance/MAPI, a trade group. “You want it to take off.” The Labor Department’s monthly snapshot of the job market also included its annual “benchmark revisions,” which suggested that job growth during 2010 was actually lower than originally reported.
"U.S. Fed Chairman Bernanke noted that 'it will be several years before the unemployment rate will return to a more normal level,' generating cautious sentiment," Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd., said in a note today. "A firmer U.S. dollar and bearish oil sentiment, after the recent build in Cushing stocks to record levels, weighed on prices."
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