The 300 Club

Morning View:

Economic News:

Europe – As the debt crisis rumbles on more reports are emerging that suggest most global investors are anticipating a considerable economic slump in the coming months.

·A poll conducted by Bloomberg shows that ¾ of those questioned this week said the Euro economy will fall into recession during the coming months.

·German lawmakers are expected to back a plan for the expansion of the euro rescue fund today.

US – The Federal Chairman yesterday stated that the US is facing a serious unemployment crisis.

·The US unemployment rate has been around the 10% mark for a number of years now.

·Crucially about 45% have been unemployed for more than six months.

·The US drastically needs Obama’s jobs program to for fill its goals.

·Is there some life in the auto industry – Ford has announced plans to add 7,000 jobs over the next two years as it forecasts the US will avoid recession.

·Finalised GDP data will be released later today.

·Initial jobless claims figures will be released at 13.30. Forecasts suggest that the figure will show a slight decline to 420,000.

China – A new poll conducted by Bloomberg shows that most global investors predict Chinese growth will slow to less than half the pace of the economy 3 years ago. The poll suggests that the economy will gain less than 5% annually by 2016.

·The pigs are back! – The Agriculture Ministry has stated that Chinese hog herds are bouncing back improving the outlook of pork supply and consequently a major food inflation driver could potentially be falling.

·On the back of the Bloomberg poll Chinese stocks fell sending the benchmark index to a 14 month low.

Japan – Retail sales slumped for the second month in a row in August as demand for appliances and autos fell.

·Sales dropped 1.7% from a month earlier and 2.6% yoy.

·The momentary pick up that characterised the months post the March earthquake now appears to be well and truly over.

·A fall in auto production could well have ramifications for US exports as the US is a major supplier of Japanese auto parts.

·Government officials have stated that they will expend by at least one month its monitoring of currency market positions as concerns remain a speculative trading will strengthen the yen.

·Sony has today announced that it expects a huge impact on earnings from a weaker euro as the fall eroded the value of sales in the company’s largest market.

UK – The BOE Chief Economist has expressed concerns about inflation and indicated that further asset purchases could well intensify the problem.

·His comments imply that the division within the BOE over further stimulus could well be larger than thought.

·That having been said, expectations continue to mount that as the economic slowdown becomes more persistent further purchases are ever more likely.

·Home prices in the UK were little changed in September and downside risks to the property market have increased according to the Nationwide Building Society.

Australia – Reports are emerging that the South Australia state is considering the privatisation of two assets to raise more than US$1bn. No more information was published.

·The Australian government said on Wednesday that plans for a profits-based tax on coal and iron ore miners due for approval in parliament this year and introduction on July 1 2012 will not be extended to include gold mining.

South Africa - The National Union of Mineworkers has called on South Africa’s Department of Mineral Resources to prevent DRDGold and its directors from continuing with any mining business in South Africa.

·Calls in response to proposal by Blyvoor, a subsidiary of DRDGold, to cut 500 jobs.

·Blyvoor is also considering other measures to avoid job losses

·DRDGold suspended financial assistance to Blyvoor in June, leading to a business rescue process.

Zimbabwe - Zimbabwe’s Prime Minister, Morgan Tsvangirai, has again stated that the proposed law to force the transfer of foreign-owned firms to local ownership is damaging investor confidence and is stalling economic recovery.

·Implementation of the law in the mining sector has encountered some legal challenges, Tsvangirai added.

Currency – The euro is up this morning against the dollar as expectations increase that Germany will pass the expansion to the Eurozone bailout fund.

US$1.3619/eur vs 1.3582/eur yesterday. Yen 76.56/$ vs 76.51/$. SAr 7.827/$ vs 7.847/$. $1.563/gbp vs 1.565/gbp

Commodity news:

Precious:

Gold US$1,625/oz vs US$1,643/oz yesterday – Gold is up after prices dipped below US$1,600 this morning as investors doubt the next tranche of aid next month would stave off default of Greece.

·Gold bars premiums over LME cash price in India climbed to US$2/oz, the highest level in more than a year.

·Hong Kong premiums have nearly doubled to US$2-3/oz led by a robust demand for bars in China.

·The State Bank of Vietnam has allowed local banks to reopen foreign gold trading accounts in a move to decrease the difference between domestic and international prices. Accounts were closed abroad on Jul 31 2010.

·SPDR gold trust holdings remained at 1,242t (39.929moz) value US$65.578bn.

Platinum US$1,540/oz vs US$1,551/oz yesterday

Palladium US$624/oz vs US$648/oz yesterday

Silver US$30.82/oz vs US$30.98/oz yesterday

·American Eagle Silver coin sales reached 3.725Moz so far in Sep according to the US Mint data. Sales may head for the best month since 6.4Moz in Jan.

Rhodium US$1,635/oz vs US$1,665/oz yesterday

Base metals:

Copper US$ 7,103/t vs US$7,386/t yesterday – Copper is down this morning ahead of a German vote on the expansion of the EFSF to €440bn from €250bn and expectations of a slowing growth in China.

·The US pending home sales report that is due later today may be down for the 2nd month in a row in Aug and may put further pressure on copper prices.

·Copper miners at Freeport’s Sociedad Minera Cerro Verde SAA unit will strike today, the third strike this month, over wage demands. The strike has been ruled legal by the Labor Ministry, preventing the company from hiring outside contractors.

·Freeport’s Indonesian unit is currently negotiating an extension to a labour contract, which expires on 30 September. On 27 September the company said that it may change its wage offer to help end a strike at their Grasberg copper mine in Indonesia that began on 15 September.

Aluminium US$ 2,219/t vs US$2,236/t yesterday

Nickel US$ 18,401/t vs US$18,550/t yesterday

Zinc US$ 1,891/t vs US$1,923/t yesterday

Lead US$ 1,988/t vs US$1,995/t yesterday

Tin US$ 20,800/t vs US$21,300/t yesterday

Energy:

Oil US$104.0/bbl vs US$106.3/bbl yesterday – Brent crude is down on increasing US stockpiles amid growing concerns of slowdown in demand.

·U.S. crude dropped as much as 1.9 percent to $79.69bbl from $80.77.

·East Africa sparking interest for oil and gas exploration tapping into unexplored areas.

Natural Gas US$3.792/mmbtu vs US$3.800/mmbtu yesterday

·A Bridgend-based company called Coastal Oil and Gas Ltd has applied for a right to explore for conventional and shale gas at an industrial estate in Llandow but concerns over fracking method to be used has been met with local hostility.

·GAIL- India’s state owned and largest gas transportation company has acquired its first shale gas asset in the US for $95m.

Uranium – US$52.5/lb vs $54.00 last week

Other:

Rare Earths - Rare earth prices may fall in the next twelve months due to reduced demand as consumers seek to reduce consumption and switch to alternative technologies.

·As of 27 September prices for eight of the most widely used rare-earth oxides have fallen 13% from a record high in July.

·Toyota and General Motors Co. both intend to reduce usage of rare earths in their vehicles in favour of more economic alternatives.

·The chief scientist and manager of material sustainability for GE Global Research, Steve Duclos, stated an intention to reduce rare earth usage across the business. GE has previously announced the development of wind turbine generators with reduced rare earth content.

Steel – Japan’s steel production is forecasted to gain 0.3% in the next quarter on carmakers’ demand recovery according to the trade ministry.

LME board will meet tomorrow to discuss a potential sale. There are currently more than 10 “expressions of interest” according to LME CEO Martin Abbott. The number is likely to grow as investors are expected to file their “credible bid”” by Q1 2012. Shareholders may vote as soon as April with 75% required to vote in favour of a bid to make it happen.

Coal - The government of Mozambique has suspended the issuing of coal mining licences in the western province of Tete.

·Conglomerate Wesfarmers plans to sell its Premier Coal business in Western Australia to Chinese coal miner Yanzhou Coal Mining for AUS$296.8 million.

·Workers of Coal India and Singareni Collieries in India would strike 1 day on Oct 10 on pay rise demands after the previous National coal Wage Agreement expired on Jun 30. Furthermore, the coal miners’ officers are planning mass hunger strikes during Oct and Nov followed by mass stoppage on Nov 15. No mining operations are permitted without an officer on site.

·India’s Coal Ministry forecast coal demand for 2011/12 to equal 696Mt versus an aggregate supply of 554Mt.