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Switzerland opened a new round in the global currency war on 6 Sep 2011 as the Swiss National Bank's decision to cap the Swiss franc for the first time since 1978 marked a bid to protect trade hurt by record currency strength against the euro and dollar. The Swiss central bank said it is "prepared to buy foreign currency in unlimited quantities" to keep the euro above 1.20 francs. The franc plunged a record 8.1% against the euro on the SNB's unilateral move, putting it head-to-head with the $4 trillion-a-day forex market that drove the franc up more than 16% against 9 major peers in the past year.

The move may help stabilize markets by forcing investors to return to riskier assets, said Jim O'Neill, chairman of Goldman Sachs in London. The initiative may leave Norway and Sweden vulnerable to gains in their currencies as countries such as Brazil and Japan fight to limit appreciation amid a flight from the euro debt crisis and near-zero US interest rates. Led by China, all of Asia's 10 biggest economies last year sought to influence their own exchange rates to aid exporters as the dollar fell. HSBC recommended Norway's currency as an alternative after the SNB's action. The krone has strengthened 4.5% against its 9 major peers over the past year.

- This was one big announcement by the Swiss. At one stroke, EUR/CHF jumped from approximately $1.10 to $1.20 and stayed there. That's a gap up of around 10 cents, or in forex trading terms, 1000 pips. In the world of leveraged foreign currency trading, in large enough amounts, profits can be made trading in as little as 1-2 pips, while very good money can be made (or lost) in 10-20 pips. Hence 1000 pips is analogous to a Richter-scale 10.0 earthquake.

So the Swiss have gone nuclear on their own currency. While the exact timing of the announcement might have been a surprise, there had been hints along the way in recent weeks as the Swiss authorities had been openly discussing possible pegs to the euro and such. Investors may wish to take note that when the Japanese kicked off the current phase of the currency wars back in Sep 2010, gold prices had gone up nearly 60% from the $1200 region to over $1900 in the past year. This next round in the currency wars could eventually take prices of gold, commodities and other related assets into literally unchartered territory. Do not expect immediate jumps across asset classes though - we shall see how this plays out over time.

Inflation, Investing and Everything

lowem — Fri, 22 Jul 2011 10:04:28 -0700

Days like what we've been having recently remind me of why I started this blog in the first place. Looking back at the historical gold prices, in 2004 when I got seriously concerned and started blogging about inflation, gold prices were around the $400 level then.

And now, this week, gold prices have hit record highs above $1600 per troy ounce. That is a 4x increase from the $400 level. It equally reflects the rise in precious metals as it does the corresponding fall in the US dollar, the currency it is benchmarked against. It is a barometer that tells us that all is not right with our financial world. It tells us that, compared to a steady, unchanging store of value with a history of over 6,000 years, the so-called money we have in our wallets and in our bank accounts is decaying steadily. Plus, like most people I know, I don't think I have received a raise of 4 times my monthly salary in my day job in the past few years. If you have, good for you.

On the flip side of all this, with gold prices above $1600, silver prices above $40, and just as well oil prices again flirting with the $100 level, I am once again reminded of the central theme behind what I have been trying to communicate to you, the readers, of what has been coming down the road, and what is yet to come. Inflation. Inflation like nothing most of us have ever seen before.

Since 2004, I have been talking, and blogging, about the coming inflation, how what had seemed to be an unlikely but ultimately potent combination of the fiat money system, debt creation, resource depletion, peak oil, population growth, and climate change would combine to create an inflation monster that would bear down on us all. I tried to convey some measures of what we would need to do to combat inflation in our own manner. From investing in commodities ranging anywhere from gold and silver to oil and uranium, to food and water. From the base metals of iron and copper to the rare earth metals of lanthanum and neodymium and 15 other elements I'm not quite sure I know how to spell. On matters of asset allocation and how we should sub-divide our portfolios. On trying, or not trying to time the markets.

Yes, here we are. It would be prudent, now, I think, to prepare for the coming global hyperinflation. That is if the systems, and the structures that are currently in place continue to run as they have. And all indications point to the same conclusion. We still have not seen anything yet.

Inflation, Investing and Everything. Indeed.

Cisco said to be cutting as many as 10000 jobs in upcoming mass layoff

lowem — Tue, 12 Jul 2011 06:31:23 -0700

zerohedge.com -> bloomberg.com :

Cisco Systems, the largest networking-equipment company, may cut as many as 10,000 jobs, or about 14% of its workforce, according to two people familiar with the plans. The cuts include as many as 7,000 jobs that would be eliminated by the end of Aug 2011, said the people, who asked not to be identified because the plans aren't final. Cisco CEO John Chambers is slashing jobs and exiting less-profitable businesses as competitors such as Juniper Networks and HP take market share in Cisco's main businesses with lower-priced, simpler products.

Cisco said in May 2011 that it shuttered the Flip video-camera unit and cut 550 jobs. The company may eliminate more positions in the consumer-product unit, which makes Linksys home-networking equipment. Sales of Cisco's switches and routers, which made up more than half of revenue last year, will continue to slip, said Brian Marshall, an analyst at Gleacher & Co. Cisco stock had dropped 24% so far in 2011, while the S&P500 index had risen 4.9%.

- It would be quite a waste to see anything happen to the Linksys division, which used to be a standalone company in its own right until Cisco acquired them. So far all the home routers I have used have been Linksys products, from the wired BEF-SR41 to the Linux-based WRT54GL and now the Cisco Linksys E3000 wireless router, and they have all been reliable and served well over the years.

On the enterprise front, however, what I have heard from colleagues back at the office have not been as favorable in recent times, with some of them talking about the high cost and complexity especially of the newer Cisco switches and routers. In addition, as Cisco tried to integrate security features such as firewalls and intrusion detection systems into their products, I have actually been advised to specify other models from say Juniper instead, as their combo appliances are supposed to be actually cheaper and better. With the increasing level of maturity in this technology sector, the next frontier is inevitably pricing and this is where we might be looking directly at the impact of that.

Lloyds Banking to cut 15000 jobs, to focus on UK

lowem — Tue, 12 Jul 2011 05:21:21 -0700

Lloyds Banking Group, Britain's biggest mortgage lender, will cut 15,000 jobs and reduce costs by an additional 1.5 billion pounds ($2.4 billion) as it withdraws from overseas units and increases its UK focus. Most of the job losses will come in the UK as a result of cuts to management functions and centralizing some roles. The bank also plans to withdraw from more than 15 of its 30 overseas units. British banks, including Lloyds, HSBC and Barclays are reviewing their operations and trimming profitability targets as regulators enforce higher capital requirements to prevent a repeat of the 2008 financial crisis. Lloyds had already pledged 2 billion pounds of savings annually following its purchase of HBOS 3 years ago, which has so far resulted in about 27,000 job losses. Lloyds has a total of 104,000 employees with about 4,000 outside the UK. HSBC, Europe's biggest bank, had said it would cut 700 posts.

- It looks like what could be another wave of mass layoffs starting up again just as the world thought that the 2008 financial meltdown was over. With the economy supposedly in a recovery and the stock market seeming to have picked up right where it left off since 2009, the next thing is to look at the jobs front, and there things seemed to be easing for a short while before reversing course again.

But if you were to look at let's say the S&P500, you would note that the stock market has been in a consolidation pattern since the 1344 level back in Feb 2011. The SPX has been unable to make a convincing run for the 1400 level since then. Although it has not been an outright crash so far, we could suppose that the 6-month lag time also applies, which is why we might be looking at some consolidation on the jobs front in recent weeks.

Saudi Arabia has reached peak oil output, commodities to rise : Goldman Sachs

lowem — Sun, 10 Jul 2011 08:17:49 -0700

theoilage.com -> energyandcapital.com :

It's all speculation over the future of the commodities market. But Goldman Sachs is predicting a significant upturn. And they're particularly bullish when it comes to crude oil. According to Goldman Sachs, Brent crude oil prices could be as high as $120 at the end of 2011 and $140 at the end of 2012. The global economy, they believe, is on the rise, despite the Japanese earthquake and the high oil prices. A rise in demand will push up commodity prices. And Goldman Sachs believes this will be fueled by the fact that Saudi Arabia won't be able to meet oil demand.

Despite claims by analysts and even OPEC that Saudi Arabia will be able to increase output to meet growing market demand, Goldman believes that the Saudis have reached their peak oil output. This stems from 2008 when oil surpassed $100 a barrel. This was plenty of reason to boost market supply, but Saudi Arabia hit its peak at 9.5 million barrels a day. Now, despite claims that Saudi Arabia has the potential for a 12 million barrel-a-day capacity, Goldman estimates a supply shortage. US natural gas, gold futures and copper prices (due to China demand) could also see a significant increase. The solution? Go long on commodities - crude oil, copper, zinc, gold - or even soybeans.

- Over time, it is increasingly getting obvious that Saudi Arabia is going through the process of peak oil production and eventual decline. And as peak oil author Matt Simmons had said, "as Saudia Arabia goes, so goes the world". The first alarm bells started ringing as early as 2005 when it was first discovered that apparently the Saudi's could be having problems keeping up production of light sweet crude oil which is the more desired grade of oil. In the years after that, the peakoiler community watched as Saudi's answer to keeping up their oil production was done instead with heavy, sour crude oil. We knew that was it, back then, and waited for the time when even the heavy, sour stuff would start to peter out, and then it would actually be Global Peak Oil, for all intents and purposes.

As a number of peak oil watchers have stated, May 2005 was the date of peak oil for light sweet crude worldwide. Now all we are awaiting is confirmation of the peak date for all liquids - that would include both light and heavy crude, oil from tar sands, from NGL (natural gas liquids), deep-sea drilling, plus all the more exotic and smaller-scale forms like CTL (coal-to-liquid), GTL (gas-to-liquid) and so on. We are getting close but the actual date is hard to pin down as the only way to tell for sure is to look into the proverbial rear-view mirror. Best estimates, as far as we can tell, are currently at 2013 +/- 3 years. So yes, it could actually be in the past and indeed some are talking about the Global Peak Oil date, All Liquids, as being some time last year, back in 2010. And now with no less than Goldman Sachs coming out and saying it, and with the economy nowadays hardly able to gain any real traction, we're getting a sinking feeling that the "early peakers" could be right after all.

Jim Rogers : Global agriculture supply worsening, may lead to food shortages

lowem — Mon, 4 Jul 2011 01:50:48 -0700

This article belongs to the Global food crisis story arc.

The global agriculture supply situation has worsened and a failure to boost food production fast enough to meet demand may lead to shortages, said investor Jim Rogers. "We've got to do something or we're going to have no food at any price at times in the next few years," Rogers said in a Bloomberg TV interview. Monthly food prices tracked by the FAO have surged 9 times in the past 11 months, as global demand for corn and wheat outstripped production and drought and flooding ravaged harvests. The World Bank estimates higher food prices have pushed 44 million more people into poverty. In China, food-price inflation was at 11.7% in May 2011, the highest since the global food-price crisis in July 2008.

Global stockpiles of corn are forecast to drop to 47 days of use, the fewest since 1974. The proportion of the US corn harvest going to ethanol has almost quadrupled since 2002 and will reach 40% in the current marketing year, according to USDA. Ethanol output has increased more than six-fold since 2002, boosted by federal subsidies now being scrutinized by Congress. Corn is 92% higher than a year ago, remains the best performer in the GSCI Agriculture Index, and is currently at $6.685 a bushel in Chicago trading. Inventories of wheat, used in making pasta, noodles, bread and feed for hogs and poultry, will drop to a 3-year low of 184.26 million metric tons as output misses demand for a second year. Demand continues to outstrip global harvests because of rising ethanol production in the US and China's surging demand for meat. "Grain is a solid input into all those food sectors and so there's really no way to go to avoid grain-based inflation," said Kellogg CEO John Bryant.

- Food and energy are the two main categories that are the most sensitive to inflation, and here we are again looking at another possible 2008-style run. Food is particularly worrying what with the factors of climate change, biofuels and falling reserves converging with increasing populations and standards of living. Some say it will be different this time, with governments and central bankers fresh from the 2008 run watching most closely and acting much more quickly compared to the last round. But the primary trend will remain particularly so if the factors of demand and supply are weighted in its favour. The primary trend may be deflected for a short while yet, but the rebound will be that much the stronger.

Singapore electric cars testing starts with 9 electric vehicles

lowem — Tue, 28 Jun 2011 08:39:50 -0700

Singapore is testing out several electric vehicle (EV) prototypes and technologies. The Electric Vehicle Taskforce led by EMA and LTA announced the launch of the electric vehicle test-bed on Sat [25 Jun 2011]. The aim of the test-bed is to test different EV prototypes and charging technologies in Singapore's urbanised environment. The test-bed will be at 3 outdoor and 2 indoor charging stations and involve 5 Mitsubishi i-MiEVs and 4 Smart Daimler electric cars. From 9, the number of electric cars taking part in this test-bed is expected to grow to 95 before the trial ends in 2013. By then, there will also be 63 charging stations. The 5 stations will collect data on charging patterns as part of the test-bed. The data will also help determine the optimal ratio of charging stations to vehicles.

The charging stations will be installed near the homes or offices of test-bed participants and it will cost a flat rate of S$180 per month for unlimited charging of their electric vehicles. After a full charge of over 8 hours, the electric cars can run for about 90km to 160km. Companies interested in the test can apply for the TIDES-PLUS scheme which waives all vehicle taxes such as ARF, COE, road tax and excise duty for 6 years. The LTA said the cost of buying a Mitsubishi i-MiEV, for example, is about S$90,000 after waiving vehicle taxes under the scheme.

- Finally, the official testing of Singapore's first batch of fully electric cars seems to be taking off, after a roughly 1-year delay during which the rest of the world has been moving further ahead. The electric cars such as the Mitsubishi i-Miev are no longer prototypes as the article claims, but are now full-fledged production vehicles wth retail sales started since Apr 2010.

Yes, there are people keeping track of such things and I happen to be one of them. Back in 2009, the article that ran said that the test-bed was "expected to run for three years (2010-2012)". It is now 2011 and the trial is supposed to end in 2013. Looks like everything has shifted 1 year. In addition (or rather, subtraction), V2G (Vehicle-to-Grid) is no longer mentioned. The scale of the test also seems to have been reduced. At the end of 2009, it was reported that 50 Mitsubishi i-MiEV electric cars will make their way here from Sep 2010. The trial seems to have started with only 5 i-Miev's (down from 50) and another 4 Smart electric cars. In 2010, it was initially said that there would be 26 charging stations which can do 8-hour charges, with one of them being a "quick charge station [that] can do so in 45 minutes". We are down to 5 charging stations and no mention of a 45-minute quick charge station.

Like I've said before, yes, it is good that the Singapore government is looking at adopting electric vehicle technology. But now I have to say that we have got to move quite a bit faster if Singapore is to have any kind of leadership position in technology adoption or transition to the post-Peak Oil era. Not only do we need to move faster in adopting alternative transportation technologies, but also in adopting alternative energy technologies. But that, is a story for another day.

Book review : Shut Down by William Flynn

lowem — Sat, 25 Jun 2011 00:17:37 -0700

Shut Down by new author William Flynn is quite possibly the first actual "Peak Oil novel" written by a long-time member of the peakoiler community. For those unfamiliar with the concept of Peak Oil, as defined by geophysicist King Hubbert, it is the point at which maximum crude oil production is reached, after which the rate of oil production enters terminal decline. If that does not sound like too big of a problem, read the book and let Flynn take you on a whirlwind tour of what the peak oil community has been discussing and pondering about over the past years - about the inter-connectedness of everything in today's modern society, finance, politics, agriculture, logistics, and it all starts where we get most of our energy from - crude oil.

The book starts, innocently enough, with the main protaganist, Kelly Lee, turning up as usual at her workplace, a Starbucks coffee shop, on an ordinary Monday morning. What happens next is what the community calls a "fast crash", as events reminiscent of a souped-up version of the near-economic collapse of 2008 quickly unfold, only this time, unlike 2008, the economic collapse turns out to be a real and permanent one, with a major trigger event setting the stage as the author takes us on a Tom Clancy-style incursion by fighter jets which ends in a retaliation that takes out the most important of Saudi Arabia's oil facilities. This, combined with another massive bank implosion, devolves society quickly into chaos, as Kelly has to embark on a journey amidst the deteriorating sitation to first find her family, and next to seek safety and shelter together with her friends Joe and Bill.

It was a good read. Frankly, I have not touched an honest-to-goodness paperback book in the past couple of years due to work commitments and so on, but I found that I literally could not put this one down, finishing it in what must have been something like near-record time. It is that good. The author evidently knows his stuff - and this, from a fellow peakoiler who knows the scenarios and material depicted therein intimately. It was like, wow, this is what we had been talking about all these years, condensed into one book, summarized into a single, action-packed, terrifying narrative. For those who do not know what we mean by "fast crash", get the book, read it, and be prepared to be blown away. Get the book now.

Crude oil prices plunge as 28 countries release supply from strategic reserves

lowem — Thu, 23 Jun 2011 08:36:32 -0700

usatoday.com, beta.news.yahoo.com :

Crude oil prices tumbled Thursday [23 Jun 2011] on fresh news of US economic weakness and a pledge by 28 countries to release 60 million barrels of oil from strategic reserves. NYMEX crude oil prices for Aug 2011 delivery fell almost $5 a barrel to around $90.51 a barrel. Wary of a new surge in gas prices, the Obama administration decided to release 30 million barrels of oil from the country's emergency reserve as part of a broader international response to lost oil supplies caused by turmoil in the Middle East and North Africa, particularly Libya. Oil's most recent high was $113.93 a barrel in Apr 2011. Stocks fell sharply on news of a rise in initial unemployment claims with the Dow Jones industrials off 200. Oil companies from BP in Britain to Total in France and ExxonMobil in the US were all marked down heavily in the wake of the oil news, adding to the already depressed mood in stock markets.

- Apparently these people are trying to prevent another 2008-style meltdown by moving quickly to douse the fumes on simmering inflation before it becomes a roaring inferno and leads to another price run and subsequent crash. The other indicators included the raising of margin requirements in the futures markets just a few weeks back. But strategic petroleum reserves are only meant to be a short-term solution. This whole thing smacks of an attempt to manage the markets by government control. It might work for a while in the short term. Me, I would just like to thank the 28 countries for another buying opportunity to go long crude oil.

Singapore : SGX to try to boost volume by attracting high frequency trading

lowem — Thu, 12 May 2011 23:04:43 -0700

In a move to stay competitive, the Singapore Exchange (SGX) has unveiled several strategies to attract more traders and raise trading volumes. This follows its recent failed bid to merge with the Australian Stock Exchange [ASX]. One of these will be to woo high frequency traders. High frequency trading (HFT) is a type of computer-programmed trading which involves no human interaction. It currently accounts for 30% of the derivatives trading volume on the Singapore Exchange. And SGX said it hopes to raise that level higher but declined to provide any targets. HFT potentially could support growing liquidity, making it more accessible for new capital and for investors to participate in the market." Other initiatives to improve the bourse's competitiveness include reducing tick sizes, and increasing its product range to include metal futures. Come mid-August, SGX will launch Reach, which cost S$250 million and is the world's fastest trading engine.

- Barely just over one year after the 6 May 2010 Flash Crash where the Dow Jones index fell by 900 points due to high frequency trading, Singapore wants to have a go at the same kind of trading techniques that have been determined to be the main factors behind the falling-off-the-cliff behaviour of the US stock markets that day.

And that was even with large volume and highly liquid stock markets like the NYSE. So, is HFT even advisable for much smaller markets like the Singapore stock market? I don't think so. But I'd suppose they are going ahead anyway, now that they do not seem to have many new ideas or further initiatives since the failed ASX bid.

Brent crude oil prices climb above $123 while Nymex crude above $110

lowem — Fri, 8 Apr 2011 07:18:56 -0700

World oil prices stayed above multi-year highs Fri 8 Apr 2011, supported by the continued tensions in the Arab world and the postponement of elections in Nigeria, Africa's biggest oil producer. NYMEX crude oil prices for May 2011 delivery rose 55 cents to $110.85 per barrel after touching the highest level in two-and-a-half years in US trade. Brent crude oil prices for May 2011 gained 38 cents to $123.05.

The market has been under pressure by tensions in the Middle East and North Africa region, where long-time rulers are under threat by uprisings similar to those that deposed the leaders of Tunisia and Egypt. Libyan leader Muammar al-Gaddafi is battling to remain in power, with rebels controlling large parts of the country. Gulf states have also piled pressure on Yemen's embattled President Ali Abdullah Saleh, saying they expect him to quit following more than two months of bloody protests. The IMF warned that crude demand is outpacing the growth of global supplies, a situation that would lead to sustained higher prices over the long term.

With the price action going on for the past couple of months, $100 is now acting like a floor for NYMEX oil prices. In the recent past there has been talk that prices above $100 would bring about another 2008-like economic catastrophe but this time round the conditions are slightly different. The arguments regarding "speculators" are strangely muted in the mainstream nowadays - what we hear is plentry of concern about geopolitics.

Heading above $107, NYMEX oil prices are definitely in "breakout" territory, and Brent oil prices above $120 are simply perpetuating the continuing spread between the two. Expectations are high for NYMEX to break above $120 but from there on, opinions vary. There are those who say that it will easily break the current standing record of $147.27 per barrel, while others are on record as saying that $120 is the barrier beyond which the world economy will go into another downturn again.

My take is that with the ongoing dollar weakness and geopolitical situation, amongst other factors, the price could well be driven by the momentum crowd, followed by a short pullback and stabilization, base-building for what could be yet another record-breaking run. Not very much of a specific prediction but that is the current "feel" of the situation as could be glimpsed from trawling through all the chatter going on out there. Of course as usual, we shall see.

NYMEX crude oil prices hit $103.41 on Libya violence

lowem — Thu, 24 Feb 2011 14:52:19 -0800

US crude oil futures rallied for a third session as escalating violence in Libya sparked supply worries. On NYMEX, crude oil prices for April 2011 delivery were at $100.64. It traded from $98.50 to $103.41. In London, ICE Brent was at $114.89 after trading from $111.83 to $119.79. Speculation that the Libyan unrest could spread to other big oil producers in the Middle East and North Africa again spurred buying, traders said. The violence in Libya has cut at least 400,000 barrels per day of that country's 1.6 million bpd output. The upheaval in Libya, which holds Africa's largest proven oil reserves, has ignited fears of an inflationary spike and hitting industrial commodities.

- I hadn't had the chance to say this to my friends and colleagues for a while now, but here we are : "Welcome back to $100 oil". Of course, in the grand scheme of things it may not really amount to that much, but triple-digit oil does seem to be a psychological stumbling block for many people, as in "I can't believe we're at $100 oil again". All this while the stock market seems to be doing its best to roll over and go down.

As expected some of the trading crowd has come in to fade the move and pull WTI crude oil prices back below $100 for the moment, but Brent crude oil prices remain strong and long, staying above $100. The spike up has been short and sharp so far with most pinning it on the events in Libya, and much of the concern has been about a contagion effect spreading to the ultimate king-pin of them all, Saudi Arabia, in which case it would be a short and sharp trip to $200 oil and beyond. But so far that hasn't happened yet. So in the meantime I would probably expect a consolidation and re-test of support levels around the $93 level before the next course of action.

Brent crude nears $99, Nymex crude oil prices hit $92 on Alaska pipeline shutdown

lowem — Thu, 13 Jan 2011 07:35:21 -0800

Oil prices rallied for a third straight day on Wednesday [12 Jan 2011], climbing in London to more than two-year highs, as the key Alaskan pipeline remained shut following a weekend leak. NYMEX crude oil prices, which gained nearly $4 since the beginning of the week, rose as high as $92.39 in trading during the day. In London, Brent North Sea crude oil futures for Feb 2011 delivery settled $98.12, peaking earlier at $98.85, the highest level since early October 2008. Prices pushed higher after the US Department of Energy reported American crude stockpiles sank by 2.2 million barrels last week. The decline was sharper than expected, suggesting stronger demand. The 1,300-kilometre Trans-Alaska Pipeline, which carries about 12% of US production, was shut down after a leak was discovered on Saturday.

- So we didn't get back to $100 oil on the first trading day of the new year like we did back in 2008. But we'll see if oil manages to hit the magic triple-digit level some time within the next 3 months, now that the commodities trade seems to be back in fashion since the past quarter or so.

Besides the Alaskan pipeline, a number of factors conspire to push oil towards upcoming news headlines proclaiming "$100 Oil is Back". The USD as usual being issued at high speed. Another front in the currency wars opening up at any time. The price targets, unofficial or not, of OPEC being stated as shifting from "being comfortable with $85" to "being comfortable with $100". Oil on the charts finally breaking out of consolidation, away from a massive triangle formation, and pushing through resistance levels around $87 to $90. The global economy supposedly on the mend, led by Asia and emerging markets. Real inflation going on, not just inflation expectations. And so on.

This should be another interesting year. Interesting as in the times we live in. This year we shall see if we might finally start getting used to $100 oil instead of proclaiming it as the end of the economy. Or perhaps, just perhaps, we might find out the hard way that, yes indeed, $100 oil continues to act as the natural limiting factor to economic expansion as we grind our way along the undulating plateau of peak oil.

Singapore in tough environmental balancing act

lowem — Sun, 19 Dec 2010 08:50:26 -0800

Singapore prides itself on being a clean and green city but a booming economy and a high-consumption lifestyle have made it one of the world's biggest carbon polluters per person. Singapore's green credentials are strong and it is establishing itself as a regional renewable energy hub. Yet, if all Asians emulated Singaporeans' modern and often luxurious lifestyles, greenhouse gas emissions would spike alarmingly. "If everyone in the world enjoyed the same level of consumption as the average Singaporean, we would need three planets to meet the demands placed on our resources," WWF spokesman Chris Chaplin said. Singapore was listed by Maplecroft as the world's 7th largest CO2 emitter relative to its population size. Ahead of it were only UAE, Australia, the US, Canada, Netherlands and Saudi Arabia.

Despite a punishing auto levy and road charges, the number of motor vehicles in Singapore reached 925,518 in 2009, up more than 27% in 5 years. Singapore authorities insist that the country has no choice but to rely on imported fossil fuel. With an area smaller than New York City, Singapore has no space for wind power, and is devoid of hydro and geothermal power sources. Nevertheless, the Singapore government is committed to the fight against climate change. Singapore is investing heavily in clean energy and is building an LNG terminal that will be ready by 2013. It is also pushing its people to do more recycling, doubling its rail network by 2020 and testing electric vehicles for commercial use. In addition, Norway's REC opened one of the world's biggest solar manufacturing facilities in Singapore in Nov 2010, costing nearly $2 billion, and Danish wind-turbine manufacturer Vestas already has a global R&D centre there.

- Whenever I go to places like Malacca, Malaysia for short breaks, I am reminded of how a society's choices have an impact on resource and energy usage. I was discussing just this with a colleague not too long ago. He had remarked that the buildings in Malaysia, ah, not to put too fine a point to it, generally are not quite as well maintained as those in Singapore. My take on that was it was their people's choice, and looking at it from a Peak Oil and/or environmental perspective, that may not be such a bad thing. After all, that means lower maintenance cost, and reduced demand for resources and energy. I doubt many of my colleagues and friends see it that way. Actually, I kind of doubt that even those in Malaysia see it that way.

Conversely, a look around the Singapore of end-2010 looks to me like one of those resource-intensive, high-energy usage scenarios of the future : shiny new buildings, brand new cars, newly paved roads, bright lights everywhere. Shopping malls completely decked out with seasonal decorations, supermakets full of food from all over the world. As for the supermarkets, their motto could well have been something along the lines of "it's always in season somewhere". Oranges from California. Apples from New Zealand. Mangoes from Pakistan. Peakoilers often talk about "3000-mile Caesar salads". How about 10,000-mile chickens from Brazil? Or a brand called "Air Pork" that is imported from Australia - no prizes for guessing how it gets here to Singapore. You really can't make this stuff up.

In recent times, it has been apparent to me that even though I am continuing to track my own country's attmpted progress in bringing in electric cars, putting up solar panels, inviting clean energy companies to setup shop here, the pace of economic growth and hence resource usage seems to have completely outstripped these efforts. It is always a fine balance between economic growth and ecological preservation, and we don't really seem to have found it - yet. But at least we should try to work towards it.

Singapore : Robert Bosch appointed to set up EV charging station infrastructure

lowem — Fri, 8 Oct 2010 23:05:31 -0700

26 charging stations will be set up for Singapore's Electric Vehicle (EV) test bed programme. The inter-agency Taskforce led by the Energy Market Authority and the Land Transport Authority has appointed Bosch to set up the infrastructure. For a start, the charging stations will cater to the first batch of Mitsubishi i-MiEV's being brought in for the test-bed. EV models by other car manufacturers are expected to become available in 2011.

All but one of the charging stations can fully charge an electric vehicle within eight hours. The remaining quick charge station can do so in 45 minutes. Bosch will work closely with each EV user in the test-bed programme to site the locations of these charging stations. The quick charging station will be sited at a location which the EV users can conveniently access. The charging infrastructure will be ramped up over time to match the take-up rate of EVs in Singapore.

- Good news for prospective Singapore electric car owners and users. This should be a much better idea in the long run and more sustainable than the handful of CNG refueling stations that have been put up around the island. Recent feedback from some taxi drivers I talked to has confirmed my opinions on CNG - according to them, CNG is not as cheap nowadays, the range is limited, and yes, the tank takes up valuable space. And of course CNG is still a fossil fuel.

EV adoption in Singapore should make an interesting study. Singaporeans are a pragmatic lot, so for any alternative solution to work, it has to be affordable and convenient, and there has to be little compromise in terms of power and range. I was talking to a colleague about EV's this week - he's not alone in this, but to him an acceptable electric vehicle range has to be at least the same as conventional cars, which would be say 400-600 km (250-370 miles). So until pure electric cars fall in price, we are of the opinion that plug-in hybrids would be much more acceptable over here in the meantime.

Pubic urged to be cautious ...

lowem — Fri, 8 Oct 2010 06:34:01 -0700

http://free.avg.com/us-en/download.prd-afh

- Yes, the "pubic" should try to be cautious ... I guess some people need to pay a little bit more attention to their proof-reading. This is almost as good as the "Unversity" headline on the front page of the Straits Times a few years back.

AVG Anti-Virus Free Edition 2011 direct download link

lowem — Sun, 3 Oct 2010 05:26:58 -0700

Even with let's say a 30Mbps cable-modem connection with international bandwidth of 18Mbps on tap, it's still a bit of a waste of bandwidth to have to download the AVG free anti-virus software 5 times for 5 machines at home (or however computers that *you* might have at your location), using the default web installer which pulls a complete 135MB copy of the software on every single install.

So here's the direct download link to the full offline installer of this excellent free anti-virus scanner utility :

Hope that helps.

COMEX gold prices hit new record high over $1300 per ounce on USD weakness

lowem — Sun, 26 Sep 2010 06:40:01 -0700

onefinancialmarkets.com, bbc.co.uk :

Gold prices have broken the $1,300 an ounce ceiling for the first time (24 Sep 2010), although only briefly. Trading platform investors saw London prices for Gold reach $1,300.07 before falling back below that threshold. The latest rise has been spurred by caution over the global economy, as well as weakness in the US dollar, which fell 1% against the euro. The gold price has increased five-fold in the last 10 years, up from a low of $258 in 2000.

One man who lost his bet on gold is former Prime Minister Gordon Brown, who sold 400 tonnes of the UK's gold reserve as chancellor between 1999 and 2002, just before prices began a ten-year price rise. The World Gold Council's last report on the gold market predicted that continuing strong demand from jewellery buyers in the two fast-developing markets of India and China would help to keep the price high. Particularly bullish analysts predict that continued uncertainty over the state of the economy will prompt gold to rise as high as $2,000 an ounce by the end of the year.

- Back in Apr 2010 I remarked that the gold chart had been looking like some kind of damped spring, apparently building up energy over a period of 5 months as the COMEX gold futures prices went back and forth as the trading markets tried to sort out the ongoing debate over inflation vs deflation. And then for a while it looked like deflation was poised to make a comeback when it seemed that we might get a repeat of 2008, with economic indicators looking like they were rolling over, a shrinking M3 money supply, and Death Crosses Everywhere.

But with recent talk of QE2 aka Quantitive Easing Round 2 making the rounds, and the Fed lately jabbering about not having "enough inflation", it is now becoming a bit clearer which way things might go. And of course there is Japan, lighting the fuse to spark off the Currency Wars, now apparently in full swing. Contrarian commenters have long written about a currency crisis being the next stage in the roadmap and we could be rounding that lap right about now. Hence gold's decisive take-off, blasting right through old records in the $1200's and now bumping up against $1300.

What's next is anyone's guess, with various people talking about $1400 or $1500 targets by the end of the year. $2000 seems a bit far out - but you never know. Gold prices have had quite a run the past 2 months. For those of you looking to get in, a good piece of advice would be *NOT* to chase prices. You'll have your chance, but you'll have to be patient. Give it a few months. If you *have* to DO something, at least do a bit of dollar cost averaging. So here's hoping to see you on the other side of, say, $1500 gold. Have fun in the meantime.

Malaysia : once-vaunted biofuel industry grinds to halt

lowem — Sat, 25 Sep 2010 01:31:15 -0700

Malaysia's once-vaunted biofuel industry has seen production grind to a halt since a Mar 2010 announcement that the government's mandatory switch to the green energy will be delayed to June 2011. Malaysia had ambitions to become a global leader in biodiesel and unveiled grand plans for the industry as the price of crude oil spiralled, peaking in mid-2008. However, the future of the alternative fuels is now in question given cheaper crude prices and the higher cost of Malaysia's palm oil.

Malaysian Palm Oil Board (MPOB) figures show that the production of biodiesel, a mixture of diesel with 5% processed palm oil, dropped 99% from 12,640 tonnes in March to just 137 tonnes in July. Malaysia has approved 56 licences for biodiesel output, which would create a production capacity of 6.8 million tonnes, but most plants have not been set up. The country is the world's second-largest exporter of palm oil after Indonesia, and the two countries account for 85% of global production.

- Biofuel has never quite been a spectacularly good idea on a number of fronts :

1. The food vs fuel problem. To put it very simply, this comes out as : do we grow food for cars or do we grow food for people? And as we've found out when we try to do both, food prices rise, and that's about the only spectacular thing we see about biofuels - the accompanying rise in food prices.

2. The EROEI (energy returned on energy invested) problem, which would roughly translate into a lack of monetary returns, meaning that all these biofuel ventures aren't quite viable without subsidies.

3. The lead time problem, which means that even if we were to burn ALL the animals AND all the plant growth on the Earth, we would only satisfy just a fraction of the world's total annual energy needs. Some studies have put that fraction as 1/400. Or to put it another way, every year we burn through an energy equivalent of 400 years of all plant and animal growth on the planet's surface (re: this entry from almost 5 years back : "So much for biodiesel"). As you can see, it's a bit hard to compete with hundreds of millions of years of geologic time that gave us these fossil fuels. It's kind of a big problem.

So, with governments withdrawing subsidies, and a bit of a drop in crude oil prices, we are seeing this thing about biofuels not being such a good idea get proven out. But I wouldn't count out biofuels totally yet. In fact, with the ongoing currency wars, which Japan kicked off the week before, once crude oil prices really get going once again, we might see yet another resurgence of this old idea of burning food to fuel our vehicles. We could easily see record food prices, food shortages, and a whole lot of hand-wringing over the whole issue. Again. Let's just hope that next time it's different.

Lockheed Martin lays off 600 senior executives

lowem — Mon, 20 Sep 2010 07:27:45 -0700

Lockheed Martin announced that more than 600 company executives have taken up early retirement offers as the defence contractor undergoes a massive cost-cutting restructuring. The layoffs, representing one quarter of Lockheed Martin's senior management, are part of the company's plan to cut back about 10,000 employees across the United States since the start of the year. The buyout offers are the latest in a series of initiatives aimed at "enhancing performance and lowering costs to keep pace with evolving customer realities and global security challenges." Lockheed Martin employs about 136,000 people worldwide and is engaged in development and manufacturing advanced weapon systems.

- Though this might sound more like a rounding error in the rarefied atmosphere that Lockheed Martin resides, where top-line revenue figures are well over the $40 billion range, this cost-cutting measure would probably be pretty significant in terms of the impact that it would have on the rest of the organization, and in terms of how it would be perceived by the rest of the world going forward. A quarter of senior management effectively being told, "thank you very much, here's the door" speaks volumes as to the kind of changes that are occurring in the US military-industrial complex.

Okay, now that some people have asked (again), besides the obvious macro-economic factors (or obvious to those who've been keeping track), here's some further information on how and why I decided to get out early, long before all this happened, which was all of two years back :

1. The company newsletter started to sound just a little bit too self-congratulatory (20,000th Hellfire missile delivered!). Not to take it too personally, but to me it sounded like they were celebrating it like it was a high-volume product, instead of saying they had a revolutionary new way of tracking and hunting down, say, tanks. Where exactly may I ask, is the edge in producing missiles in volume?

2. The halo around the Stealth Fighter mythos shining just a little bit less brightly, with the retirement of the original F-117 Nighthawk, and the F-22 Raptor ending up mired in problems, and ultimately being cancelled. That, and the end of the SR-71 Blackbird era with nothing viable in sight other than tin-foil hat brigade rumours of an Aurora super project that was supposed to be a black triangular UFO that could go Mach 5, stop, and turn on a dime. That would run on exotic fuel that doesn't exist. Yes, and that would take some photos as it went about being too invisible, too fast, and too maneuverable to catch. Nope, naturally I didn't quite buy that story.

3. The Democrats starting to win just a bit more in elections than they've been doing in the Republican years under the Bush family. It was mostly this last one, actually. The first was just a hunch, the second pointed at problems in the big aerospace division but did not detract at all from the information systems division I was in. But this last one, welllll ... that was political. That was different. That was it.

US defense industry girding for predicted slump

lowem — Sat, 11 Sep 2010 03:00:30 -0700

After years of predictions of a downturn that never materialized, US defense companies are now bracing in earnest for leaner times, lower profit margins and tougher negotiations about government contracts. Defense Secretary Robert Gates has launched a major efficiency drive to trim $100 billion out of the Pentagon's bloated overhead accounts from 2012 to 2016. The Pentagon expects growth of 1% after inflation in its 2012 budget, but much of that will be eaten up by rising personnel and health costs, leaving far less money for weapons programs than during years of double digit growth after the September 11, 2001 attacks. That has left industry executives with a growing sense of apprehension about the future, especially given the end of combat operations in Iraq and yawning deficits that have even some normally hawkish Republican lawmakers calling for cuts.

Recent news of delays in the U.S. Army's multibillion-dollar ground combat vehicle program and an even bigger US Navy warship program deeply unsettled industry executives. The Pentagon's efficiency and acquisition reforms are pressuring companies across the industry to make their organizations leaner and sell off unprofitable units. Many will also have to accept more risk and lower profits on the shrinking number of defense contracts that are up for grabs. Most companies have a solid backlog of orders from Bush administration years that would last for some time, although many companies are now trying to "mine the backlog". That means layoffs, tougher negotiations with suppliers and customers, and efforts to cut expenses across the board. Some companies like Lockheed Martin and Northrop Grumman have already taken more strategic steps to adjust their portfolios and sell off units that weren't a good fit in the current budget environment.

- It has been *quite* a while since my last post, but this is a little too big to pass up. Given the circumstances faced by the Singapore subsidiary of my former employer, some people have asked me how I could have seen this coming a couple of years ago. Naturally I couldn't really explain it in a sound-bite, but what I can say here is that it is not so much about having a crystal ball, rather, it is more like a matter of seeing the writing on the wall.

The writing was on the wall for the US defence industry quite a while ago. The soaring US government deficits meant that they were depending on the kindness of strangers (the Chinese, the Japanese, and other governments) to fund their own wars. The scope of their twin giant ongoing adventures in Iraq and Afghanistan meant that expenses were grinding away at the capital base - or whatever was left of it, if any. Historically it has always been expensive to fight wars on two fronts - and it has only gotten more expensive in the modern era.

I used to tell people, when times are bad, when the economy did not look too good, to look for positions in sectors such as defence, government, healthcare, education, utilities, and so on. That will have to change. The defence industry, especially the US military-industrial complex that I was once part of, is no longer what it once was. The world is changing. And we will have to change with it.

Where we stand : leading economic indicators, S&P 500, crude oil prices and the economy

lowem — Tue, 22 Jun 2010 07:23:13 -0700

The economic recovery looks good, and the job market hasn't been anywhere as booming in a long time, albeit apparently limited to certain sectors of the economy. Crude oil prices have risen and have been gone over the $78-79 level in the past few trading sessions, and pump prices have gone up in recent weeks. Hopes are high that the European crisis has been resolved, with the EUR/USD bouncing off recent lows. But perhaps that is all it has been - just a bounce. Taking a closer look, this is where we stand in terms of some of the leading indicators for the economy :

1. Some of the published Leading Economic Indicators (LEI) are now rolling over and heading down. An example of which is the ECRI WLI (Weekly Leading Index), above, a composite index of a number of leading indicators, that has been falling since it hit a peak on 30 Apr 2010 of 134.7, and now it is down to 122.5, a fall of 9.06%. See here for more information and click here for the raw data. Although, besides a few voices in the contrarian community, the mainstream economists are not quite ready to call it a double-dip recession just yet.

2. Crude oil looks just days away from technical confirmation of a Death Cross (50/200-dma downside crossover). Stochastics are in overbought territory, and running into considerable resistance at the 80 level. In hindsight, the $87 level now looks like an ominously powerful triple-top formation. We might actually be able to start drawing a massive down channel through the $67 level, heading for $60, but that might be getting a little ahead of things. For the moment, the level to watch out for is the convergence of the 50- and 200-dma around $77.

3. The S&P 500, or SPX for short as some of us refer to it, is seemingly pulling off a nice double-bottom up from the 1040 level. This contrasts, however, with two other potential technical formations. One of which is of course the Death Cross downside crossover which could a couple of weeks to a month or so to confirm. The other is a potential down channel which could result in a slide below 1000. Of course it's not a hard and fast rule like having 2 bearish technical indicators outnumber 1 bullish indicator or something silly like that, we'll have to see how it plays out over time.

4. And finally there is the Baltic Dry Index, or BDI for short. This is a favourite indicator for some folks, who point out to the way the index is constructed, being based on a composite of actual shipping rates for various commodities and cannot be easily gamed. Based on this, the 11793 high reached around May 2008, or about 2 years ago, seems like a life-time ago. Compare this to the more recent 4209 local high in May 2010 and you can easily surmise that the world economy has not quite recovered to half of where it was 2 years back. A point which probably rings true for many people. And now, the worse thing is that the BDI seems to have started falling off a cliff since May 2010, violating both the 50-day and 200-day moving averages on the downside. A couple more months of this and we might see the dreaded downside crossover.

All the above could be considered as leading indicators for the economy at large, and add to these other items like M3 money supply contracting 10%, flat consumer spending, and a slowdown in growth of business expenditure (second order differentials), it does look like the economy is about ready to roll over. The short-lived enthusiasm for the long-awaited Chinese yuan float might also be another warning sign. The Second L, or second downleg could be at hand. On the other side of the argument are those who point at the market momentum indicators, or the concident economic indicators, or the job situation (which is a lagging indicator as explained earlier). Watch for an interesting second half of 2010 as we see events play out and watch for the technical formations above to either confirm themselves or be negated by other factors. For now, it might be a good idea to seek safety in cash and cash-equivalents instead of taking on risk in the markets. The more intrepid traders among us might consider opening, or holding on to short positions. The timeframe for a further evaluation of the macro situation will be around the end of Q3 to Q4 2010.

Nokia bicycle charger announced for Nokia phones with 2mm charging jack

lowem — Sat, 5 Jun 2010 02:38:10 -0700

news.yahoo.com :

The world's top mobile phone maker Nokia on Thu 3 Jun 2010 released details of 4 new cheap phone models and a battery charger powered by the energy generated from riding a bicycle. The charger, which can be fitted into any Nokia phone with a 2 mm charger jack, uses a dynamo to generate electricity from the movement of the wheels. The price of the charger kit, which also includes a holder for securing the phone to the bicycle, will vary according to market, but in countries like Kenya, where the product was introduced, it would be around 15 euros (US$18.43). To begin charging, a cyclist needs to travel around 6 km/h (4 mph). Charging times will vary depending on battery model - a 10 minute journey at 10 km/h produces around 28 minutes of talk time or 37 hours of standby time.

- This is a pretty good idea not only for developing countries, but also for places in developed countries like in Europe or say Portland, Oregon and elsewhere where cycling for work or leisure is becoming popular. The charging rate seems to be pretty decent as well. The only thing is, you'd need a compatible Nokia phone that uses their proprietary 2mm charger pin, a format which apparently they seem to be going back to, even for the upcoming Nokia N8 that is the current talk of the town for the Nokia crowd. But already, the forums are abuzz with talk of looking for a 2mm to micro-USB charger converter plug for the rest of the smartphone models out there.

Watch China

lowem — Tue, 1 Jun 2010 17:29:50 -0700

Earlier, I was saying "Watch the Euro". Well, now might be a good time to watch China.

A couple of possibly correlated events happened in the past few days in China. Days after intense media attention on those 10 Foxconn suicides + 3 unsuccessful attempts at the huge 420,000-employee factory in Shenzhen China which churns out, among other things, Apple iPhones, Sony Playstations, and various gadgets for many other companies including HP, Nintendo, Motorola and Dell, it has been announced that the workers there have been given a 20% pay raise on Friday. Around the same time, workers at a Honda factory are still on strike, coming into its second week, even after it was announced that Honda would be giving out a 24% pay raise - inflation expectations, anyone?

Next, we've got Bloomberg reporting that : "Chinese manufacturing expanded at a slower pace in May 2010, adding to signs that growth may moderate in the world's third-biggest economy. The Purchasing Managers' Index fell to 53.9 from 55.7 in April, seasonally adjusted. A government crackdown on property speculation is cooling the economy by damping sales and construction, while Europe's sovereign-debt crisis could exacerbate a slowdown by cutting export demand. Comparable indicators in manufacturing around the world in May are forecast to indicate global output growth has peaked. Australia manufacturing growth slowed in May and economists say reports due today in the U.S. will show manufacturing cooled while activity in Europe was unchanged. The Shanghai Composite Index fell 9.7% in May - the benchmark has declined more than 20% this year." - economic recovery, anyone?

Rising inflation leading to increasing pressure to raise wages, economic recovery threatening to go off the rails, and add to that the Chinese government taking a pin to the China property bubble - all this makes for a pretty potent combination. Plus, we have the confirmed completion of the China Death Cross technical pattern, and we could be looking at progressively lower lows ahead. Might, or might not be, an outright crash since the crossover isn't quite as sharp as the one back in 2008, so we might be looking at a protracted decline. For the Shanghai stock index, or SSEC, now that we have achieved the 500-point drop (which as I had mentioned to fellow investors earlier could go 500 points either way, and likely down), the next obvious support levels are around 2400, 2000 and 1800, with the 2000 level being another 500-point drop down from the 2500 area (see chart above).

So the takeaway is this - watch the leading economic indicators, watch oil prices - and watch China.

Job market / stock market outlook 2010

lowem — Tue, 1 Jun 2010 08:45:34 -0700

Like the chart says :

This is due to the observed effect that the job market lags the general stock market by around 6 months. The S&P 500 (aka SPX) is used as the benchmark stock index here since it is a broad-based index. Since the SPX has fallen quite a fair bit from its high of 1219.80 in Apr 2010, the clock is now ticking for prospective job-seekers. Now, 6 months is not quite a hard-and-fast rule, it's probably that, give or take a few weeks, and it has proven to be a pretty good rule of thumb historically.

As for the kind of defensive sector referred to, this could be among some of those that I have mentioned earlier, such as government, military, education, healthcare, utilities, consumer staples and so on. But with the sovereign debt crisis in full steam, and given that the contrarian roadmap points to a currency crisis ahead (and possibly worse stuff further afield), it could well be that this time might be different, and not necessarily for the better.

So, if you are thinking of moving to another company or organization, then move fast, move decisively, and move defensively. If not, then be prepared to stay put for some time, because the window of opportunity could well be closing in about 4-5 months' time : batten down the hatches, prepare for a deep dive. As always, I have to mention the possible negation of such a scenario - there are several alternatives : one could be a stunning stock market reversal above 1219 (if you'd believe that), another could be runaway inflation which would skew this indicator, and, lastly, well, this time might really be different.

NYMEX crude oil prices fall on Spain downgrade after hitting $75.72 intra-day

lowem — Sun, 30 May 2010 21:39:55 -0700

NYMEX crude oil futures ended lower on Fri 27 May 2010, posting the worst monthly decline since Dec 2008 at the height of the financial crisis, as a downgrade of Spain's credit rating sparked further euro zone worries and prompted oil traders to seek less risky assets. The day's retreat from a heady rally the day before accelerated past midday as Wall Street dropped sharply following news of the Fitch ratings agency's downgrade, stoking more worries that the euro-zone debt crisis would stifle global economic growth. NYMEX crude oil prices slid from $75.72 on disappointing consumer spending data and a report that business activity in the Midwest fell this month, overshadowing other reports that incomes rose and consumer confidence edged up.

- The sharp rise in crude oil prices in the past few sessions has been breathtakingly steep, but I'm not really buying it. Figuratively and literally. I've got about a couple of reasons for that, one fundamental and one technical. Fundamentally, while the US economy appears to be in the process of recovery, there are a couple of leading economic indicators that appear to have been rolling over in the past few weeks. Consumer spending had been flat in Apr 2010, while business activity has been growing less than expected.

On the technical front, you will see two opposing forces at work in the chart above. If we are looking at short-term trending (if you could call it that), then yes it appears that there has been a sharp upside reversal in the last few trading sessions, with oil prices hitting a local minimum in the $67 region, and they even seem to be on track to break above the 200-dma level. Which ought to be bullish. However, on a longer-term basis, there is a looming Death Cross in the process of formation, which is a 50/200-dma downside crossover. Now, as they all say, a technical formation isn't a technical formation until it is actually completed, but I wouldn't really want to bet against 50/200-dma crossovers if I could help it. Which is bearish, and further, that's on a longer-term basis.

Meanwhile, Business Week reports that : crude oil futures are "very weak" and are poised for a drop to $58, according to a technical analysis by Newedge Group. "The picture remains very heavy" for oil, and the trend is still down, said Veronique Lashinski, a senior research analyst for Newedge USA LLC in Chicago. After settling below $70, the next support level on a weekly basis is at $65.05 a barrel, and below that $58.32, according to Lashinski. - those support levels are roughly near what I've mentioned earlier. But of course, if it breaks the local high above $87, then the picture changes somewhat and we're back on track to $100 oil. Well, you never know.

NYMEX crude oil prices plunge to $70 on US supply glut, euro contagion fears

lowem — Sat, 15 May 2010 19:59:32 -0700

NYMEX crude oil prices tumbled to 3-month lows on Fri [14 May 2010] at the end of a volatile week in which the market was hit by eurozone economic concerns and a strong dollar. NYMEX light sweet crude for Jun 2010 delivery closed at $71.61 per barrel. The price had tumbled to $70.83, the lowest level since Feb 2010, before recouping some of its losses. Prices fell when American crude stockpiles rose by 1.9 million barrels, more than double the amount forecast by analysts. Crude oil prices had already collapsed by more than 10% last week as the market was rocked by euro contagion fears about the Greek debt crisis, a stronger dollar and sliding global stock markets.

The oil market had begun the week on a bright note, soaring on Monday after a $1-trillion EU-IMF eurozone rescue plan eased market concerns over the eurozone financial crisis. However, prices have since fallen as market enthusiasm waned for the massive bailout plan, while concern grew about higher Chinese inflation that could slow global economic growth. Oil also took a major hit from a stronger USD. The EUR/USD forex rate tumbled under 1.24 on Friday, plagued by concerns about debt and deficits in the eurozone. The IEA cut its projection for global oil demand this year in the face of public finance pressures in Europe that could drown recovery "in an ocean of public debt."

- What a difference a few weeks make. When earlier, oil prices were hitting local maximums of over $87, the prognosis was for economic recovery and there was talk about crude oil options going into the $90's and $100's, but then oil failed to reach those levels when the euro crisis hit. The euro contagion fear has been driving, among other things, the huge Dow 1000-point fall, a flight of safety into bonds and treasury instruments, and it has taken oil down $13 in 2-3 days and now oil prices are down in a waterfall-like drop of over $16 in a matter of a week or so.

A huge fall, but now I am looking at the next possible support levels being $70, $65 and $60 respectively. In comments I made to fellow investors earlier this week, I noted the following : meanwhile oil is down and gold is up. When I issued the "sell everything call", it was way early but I did manage to sell off [much of my risk holdings]. So far, -1 for buying back oil though nobody could have predicted the Dow 1000 meltdown and $13 oil fall, +1 for buying back gold on an an up trend and breaking new records. By breaking below $80, oil is now on track to hit the $70 support level and if that fails $65 and $60 are next supports. Remember though that tar sands operations, a critical energy source now that light sweet crude has peaked worldwide since May 2005, start turning unprofitable below $80 and start outright shutting down below $60 so we could have some support there.

In the big scheme of things, the contrarian community has already worked out a road map on the transition from a sovereign debt crisis to a currency crisis, which we are now witnessing. The next few stages could be even uglier and it's not just me saying that. If the world continues to go in the same direction, we are headed for bankruptcies, defaults, interest rate surges, and possibly worse. $60-70 oil could look like pretty decent prices then.

NYMEX crude oil prices surge above $86 to 17-month high on economic recovery

lowem — Mon, 5 Apr 2010 22:11:57 -0700

Crude oil prices surged to the highest level in 17 months as growth in American jobs and service industries signaled that the economy is recovering from the worst recession since the 1930s. NYMEX crude oil prices for May 2010 delivery increased $1.75 to settle at $86.62, the highest closing price since 8 Oct 2008. The contract has risen for 5 consecutive sessions, the longest stretch in 6 weeks. Crude oil has climbed 65% in the past year. Meanwhile, the S&P 500 rose to 1187.44, an 18-month high.

Oil prices traded within a range of $68-$84 in the 6 months till Mar 2010, rising as investor confidence boosted equity markets. "It's 2008 redux," said Tim Evans, an energy analyst at Citi Futures Perspective in New York. "The fundamentals don't matter until they matter very much." Prices surged to a record $147.27 in Jul 2008 and fell to $32.40 in Dec 2008 as the recession worsened and demand waned. US crude oil stockpiles posted 9 weekly increases with inventories at 354.2 million barrels, the highest level since June 2009. Prices have established a floor of $75 and Venezuela seeks a price band between $80 and $100 a barrel, Venezuela's Oil Minister Rafael Ramirez said. OPEC slashed output in Jan 2009 to prevent a supply glut, and left production quotas unchanged when ministers met on 17 Mar 2010.

- We've had a clear breakout in NYMEX crude futures since it burst through the $84 level recently, blowing past the $83.95 level that might have served as resistance if it had turned back then. Now we are on-trend to try for $90, the next potential resistance level which had served as past support for a brief period back in Sep 2008.

So far everyone is yelling "global economic recovery" and even NBER, the semi-official agency that calls the beginnings and endings of recessionary periods, has joined the chorus chiming in and announcing the end of the Great Recession. Far be it for me to argue with the trend, though the few still in the contrarian community are aware that the economic fundamentals are as rotten as they have ever been - or actually worsening and threatening to hit a Debt Wall in the future with interest rates rising off the lowest possible values of zero or nearly zero.

All this will take some time to play out however, since interest rate trends take years, even decades to develop. In the meantime, I am long - and going longer - on crude oil positions, including ETF's, ETN's and futures derivatives, and will ride the trend as far as it might go.

Gold price as a damped spring

lowem — Mon, 5 Apr 2010 06:57:48 -0700

It looks like gold prices have been behaving like a dampened spring in the past 4 months :

The trading range is between 1100-1150 give or take $15 or so. So what does this mean for prices going forward? From a technical point of view, this could fit a symmetric triangle. Which means that bull/bear factors have been fighting it out and will come to a conclusion when there is a clear breakout from the triangle, *in either direction*. For the medium term of 2-3 months, since there is no clear direction under both technical analysis and trend following rules, the best thing to do right now is to let the pattern play out and see if a new trend establishes itself. The 50-dma is also flattening out, though the longer-term 200-dma is still in an up-trend.

We are certainly living in interesting times with regards to the gold price. Watch for a possible Death Cross if a downside breakout occurs. Conversely, look out for another record-breaking run above 1200 to possibly 1300 area if an upside breakout occurs.

Recommendation for the moment : neutral on all gold trading vehicles including ETF's, ETN's, futures and spot.

Mozilla Firefox 3.6 : Gmail, Google Docs connection reset problem

lowem — Sun, 4 Apr 2010 23:17:10 -0700

Just filed a support issue over at Mozilla for this problem I encountered over the past few days.

Ran into this problem in Firefox 3.6, both 3.6.2 and 3.6.3, and across multiple machines - when trying to access Gmail, Google Docs via HTTS/SSL a "connection was reset" error is encountered. Network/connectivity issues can likely be ruled out since these services work under Internet Explorer and Google Chrome on the same machines.

A few further notes regarding this issue :

- HTTPS works on other sites but not on Google sites
- I've cleared cache, cookies, etc. to no avail
- ditto with deleting profiles.ini to create a new default profile
- status bar flashes "waiting for www.google.com" ~10 times
- both Firefox 3.6.2 and 3.6.3 are affected
- going back to Firefox 3.5.9 works, as do IE & Chrome

From observing the status bar and chatter elsewhere, it could be some kind of redirect issue. I've got one laptop on Firefox 3.6.3 and another on Firefox 3.6.2 and both have had the same problem. The odd thing was, they were both working up until the middle of last week. Oh, and I'm having this problem back at the office where both machines are behind what is probably your typical corporate firewall - though I can't really point to that as the cause since both IE and Google Chrome work perfectly fine with Google's sites. No problems at home with 3.6.x though. It's a rather odd mix I should say.

In the meantime, pending a resolution of this issue, I'm switching back to Firefox 3.5, and now will have to restore my usual set of bookmarks, settings, extensions and all. The latest 3.5.9 iteration fixes the same critical security issues as 3.6.2, whilst 3.6.3 only fixes a 3.6-specific problem so security-wise it should be covered as best as can be for now.

Watch the Euro

lowem — Mon, 22 Mar 2010 08:32:55 -0700

I am currently looking to see if EUR/USD breaks below the 1.34-1.35 intermediate support level. If it does, all bets are off : SELL ALL risk asssets / GO SHORT, or both.

The Euro belongs to the class of assets which are termed "risk assets" - a category which includes currency-wise, EUR, AUD, CAD in the forex trading markets, and also the commodities complex as well as the general stock market. The last time that the Euro did its 50/200-dma downside crossover thing, we had the Aug-Sep 2008 economic/financial meltdown (see chart above). Not sure if this time will be the same or different as Aug 2008, or if it is just all a scare on the way back to recovery, but whatever it's going to be, one of the key things now is to watch the Euro.

Meanwhile, crude oil prices are in a trading range between 80-83, and gold prices are also in a range between 1100-1130. There are multiple factors pushing and pulling in these markets, including the usual supply/demand, geopolitical and various economic factors, but the EUR/USD does figure prominently enough.

China crude oil imports exceed 50% of total consumption, hits energy security alert level

lowem — Tue, 9 Mar 2010 05:21:02 -0800

peakoil.com -> chinadaily.com.cn :

China's oil imports will continue to see solid growth this year, with more than half of the country's total oil consumption coming from abroad, industry insiders said. It is inevitable for the country - the world's second largest oil consumer - to see a robust increase of imports, as domestic production cannot keep up with rising demand. China's oil dependency reached alarming levels last year with imports accounting for 52% of total consumption, China Business News reported. Importing more than 50% is a globally recognized level for an energy security alert.

China's oil imports in 2010 are expected to grow 5% from a year earlier, and the proportion of imported oil consumed may further rise to 54% this year. China imported 204 million tons of oil last year [1495 million barrels, or 4.1 mbpd], while total production was 190 million tons [1393 million barrels, or 3.8 mbpd]. The Middle East, Africa and the Asia-Pacific are the three main regions that supply oil for China. According to a report by the Chinese Academy of Social Sciences (CASS), 64.5% of China's oil consumption is likely to be met by imports in 2020. China's crude oil production may see a decline after 2020.

- The big question to be asked now is whether the proverbial rise of the Chinese consumer will survive a looming double dip recession in the rest of the developed world. Will China's internal demand pick up enough to keep China's GDP growth rates at 8-9% when the Western consumers crash and burn (again)? Maybe, maybe not. It depends on whether the Asian consumers have picked up enough momentum for the current trends like the China car sales jump, etc. to continue in a self-sustaining cycle.

GM to wind down Hummer as Sichuan Tengzhong sale accord fails

lowem — Mon, 8 Mar 2010 02:17:14 -0800

General Motors said it will close Hummer, the maker of military-inspired sport-utility vehicles, after Sichuan Tengzhong Heavy Industrial Machinery Co. couldn't win Chinese approval to buy the unit. Winding down the brand will take several months, a spokesman said. "The Hummer brand was very much a product of its time," said Aaron Bragman, an analyst at IHS Global Insight. "In today's much more environmentally conscious world, it's a brand that just doesn't fit in."

Tengzhong was "unable to obtain clearance of the transaction from the Chinese regulators within the proposed deal time frame," according to a statement from the company. The deal would have been worth $150 million. A Tengzhong purchase of Hummer would have bucked China's government policy of promoting fuel-sipping small cars of less than 1.6L. US sales for GM's Hummer unit fell 67% in 2009 as the economy faltered, GM slid into a 40-day government-backed bankruptcy and Hummer's fate was unresolved.

- No love lost for the SUV's of the world, as you might guess from my Jun 2005 blog entry aptly titled "Die SUVs Die!!". They sure took their time to go about it, as it is with any large ongoing trend, and this Hummer shutdown announcement is surely not only the latest but one of the largest nails in the coffin (if you'd excuse the metaphor-mangling).

Greece could sell islands to cut debt : German MPs

lowem — Thu, 4 Mar 2010 06:43:16 -0800

Greece should consider selling some of its islands as one option to reduce debt, two members of the German parliament, Josef Schlarmann and Frank Schaeffler said. "Those in insolvency have to sell everything they have to pay their creditors," Schlarmann told Bild newspaper. "Greece owns buildings, companies and uninhabited islands, which could all be used for debt redemption." "The chancellor cannot promise Greece any help," Schaeffler told Bild in a story under the headline: "Sell your islands, you bankrupt Greeks! And sell the Acropolis too!"

Greek Deputy Foreign Minister Dimitris Droutsas was asked about the idea in an interview with ARD TV. "I've also heard the suggestion we should sell the Acropolis," Droutsas said. "Suggestions like this are not appropriate at this time." Greece has launched an austerity programme designed to secure European help to tackle its crippling debt burden.

- Some kind of bad blood going on between the Greeks and the Germans. Just some days back, the Greeks had been blaming the "Nazi Germans" for their problems and now the Germans are telling the Greeks to sell off their islands to pay off their debt. I wonder how a monetary, economic and political union like the EU is supposed to hold together under such differences in opinion.

Singapore Airshow 2010 photos and video gallery

lowem — Sat, 6 Feb 2010 15:09:55 -0800

The Singapore Air Show is here again. Went to the Singapore Airshow 2010 twice this year, as has been the case for the past couple of rounds - once during the trade day on Wednesday where there are fewer people, and once with the family during the public day on Saturday when the crowds arrive in full force.

Here are some photos - the whole set of photos has been uploaded into my Google Picasaweb photo gallery (trade day) (public day) :

Besides the usual F-35 Lightning II mockup from Lockheed Martin (still waiting for the real one to arrive here), the Apache AH-64D Longbow attack helicopter, the F-15's and the F-16's, a new addition this year was the F-111 fighter-bomber, said to be making its last appearance ever :

Here's a video of an F-16 Falcon in the flying display :

The rest of the videos will be uploaded to my Youtube channel.

Singapore to consider nuclear power to improve energy security

lowem — Mon, 1 Feb 2010 20:40:21 -0800

Singapore should consider using nuclear power and depend less on foreign workers in its efforts to transform the economy in the next decade, a government-appointed panel said. The recommendations have been accepted by the government and will be addressed in the budget to be unveiled on 22 Feb 2010. Singapore is seeking ways to ensure its economy expands in a more sustained manner after three recessions in the past decade, with its most recent slump the deepest since independence in 1965. The panel announced 7 proposals to restructure the economy. They include making the city state a hub for global companies seeking to expand in Asia, improving energy security and being more flexible in land usage. The committee urged the government to study using nuclear energy as a future source of power and the import of coal and electricity. It also recommended the creation of a "waterfront city" on existing port facilities run by PSA International in the south of the island when the lease expires in 2027. The panel recommends that the government develop an "underground master plan" to create more space as there may be limits to how much land it can reclaim.

The Economic Strategies Committee (ESC) on Monday [1 Feb 2010] gave extensive recommendations to ensure energy sustainability and the full optimisation of Singapore's land space, given the island-state's limited resources. Among the plans is a new waterfront city at Tanjong Pagar, currently a port area comprising Keppel and Pulau Brani. Besides land constraints, Singapore also faces energy resource constraints. The committee suggested that Singapore study the feasibility of using nuclear energy in the long term, an idea which Prime Minister Lee Hsien Loong in 2008 said he "hasn't ruled out". The ESC said the option could help meet base load electricity demand as well as Singapore's energy security in the long run. In the medium term, the committee suggested Singapore should explore coal and electricity imports to diversify its energy sources. Importing energy will also free up valuable land in the country.

- This is the clearest confirmation yet by the Singapore government on its plans for nuclear power, which I have been advocating since at least 2006 (see my feedback to the government during the National Climate Change Strategy consultation). Until this pronouncement, all prior communications had been vague, along the lines of "we are not ruling it out". Of course the "coffeeshop talk" folks would murmur that once the Singapore government even so much hints at any new initiative even in vague terms, it has already been decided upon and WILL be implemented rapidly and efficiently, without so much as a peep from the rest of the people. Perhaps. But I shall leave the political pontifications to those so inclined.

Myself, I am glad that the Singapore government has decided to take a bold move towards embracing nuclear energy. As I have been saying all along, and now as the government panel itself has also said, what we need is baseload power, and with current technology we have about two choices - nuclear and coal. What *is* a little unfortunate, though, from my point of view, is that the government seems to be choosing *both* nuclear *and* coal. Now I'm sure that as a Kyoto signatory, Singapore probably wouldn't be going out building conventional dirty coal power plants willy-nilly. Or at least, we environmental activists surely hope not. The hope is that they will at least try to adopt some form of clean coal system. And while I have some reservations (some rather big reservations) about clean coal, if it is at all technologically feasible, you can trust the Singapore government to try to pull it off. Well. Like they say : you win some, you lose some.

A mixed congratulations then to Singapore. +10 points for embracing nuclear power, -5 points for considering coal at the same time. To be fair, I have tracking both initiatives coming on the horizon, plus the one about the LNG terminal, so all this is hardly much of a surprise. So keep posted, as we shall track how the execution goes on these plans.

ST - Ingram Micro Vietnam Retreat 2010 Day 3

lowem — Mon, 25 Jan 2010 20:31:29 -0800

Day 3 was "Going Back Day". We started off with a wrap-up of the conference with Koh See Kiat giving a short overview of the ST Electronics Infosoft corporate structure, after which we took a group photo. Thanks to automatic face recognition technology from Google Picasaweb, you can click on the link below and check out the names. But thanks to my being not very good with names, many of the names are not yet properly tagged - any help from the audience would be appreciated :)

After the conference it was time to check out and the first group to get ready for the return flight home. Here I am at the lobby of the Duxton Hotel Saigon, bags all packed and ready.

Back to Tan Son Nhat International Airport, looking out of the terminal windows at SQ173, a Singapore Airlines Boeing 777-200. That's our ride back to Singapore from Ho Chi Minh City.

James Wong, a colleague from ST Infosoft, from the Land Information Systems department. We've got representatives from all 3 departments in the classic triumvirate of "Air, Land and Sea" on this trip.

And that's it. It was a good trip. We had a good time, and got to meet up with our partners and vendors from the various companies including Ingram Micro, IBM and Symantec, and we also got the opportunity to get to know better our colleagues from the other departments within ST Electronics Infosoft.

ST - Ingram Micro Vietnam Retreat 2010 Day 2

lowem — Sun, 24 Jan 2010 21:16:32 -0800

Day 2 was the conference proper, but before that my room-mate Chan Yue and I went about taking some photos out on the street in the block surrounding the hotel.

As could be expected, at present Vietnam is still very much motorcycle/scooter country. Like some of my peakoiler friends might say, just wait till they really start buying cars. The country is still very much in development, with contrasting styles of new ultra-modern buildings rising up right alongside the existing buildings, such as this example here :

The conference itself - there's myself and Chan Yue, with the IBM folks giving the initial round of presentations.

This was followed by a "Mini Amazing Race" team-building exercise, which also served as a good way to explore the city.

A couple of games the team played :

A couple more landmarks - the Notre Dame Cathedral and Independence Palace. In the nearby park and surrounding areas, workers were getting ready putting the finishing touches for the upcoming Vietnamese New Year 2010 celebrations.

Over at Ban Thay Market, we bought some souvenirs, and met members of other teams.

And just before dinner, Chan Yue and I went for some Vietnamese "pho", which is some kind of noodle-like strips in nice flavored soup - I tried the chicken pho.

Dinner itself was a river cruise on a restaurant-boat going up and down the Saigon River, an historic and important part of Ho Chi Minh City, serving as water supply, Saigon Port and tourist attraction all in one.

During the cruise, Vincent Lee of IBM Singapore entertained us with his keyboard renditions. And this one here is an interesting stone-based xylophone instrument thing :

ST - Ingram Micro Vietnam Retreat 2010 Day 1

lowem — Sun, 24 Jan 2010 18:12:24 -0800

Day 1 of the trip was pretty much free and easy. For business continuity reasons, we were divided into 2 groups - I was with the morning group.

One of the very first impressions you get upon arrival at a country would be immigration, and it went through pretty smoothly. The officer who attended to me entered my particulars really quickly - he must have been clocking 80 wpm or better, banging away at the keyboard.

On the way to the hotel from the international airport, just snapped some street scenes.

Interesting architectural features include the pagodas dotting the cityscape.

The Opera House is one of the distinguished landmarks in Ho Chi Minh City.

After arriving at the Duxton Hotel Saigon, I just did my setup and proceeded to start blogging as described here. Next item was just to wait till the second group arrived in the evening, then it was time for something apparently rather unique to Vietnam, a "water puppet show" complete with dinner. Here are a couple of short video clips on that :

By the way, I've uploaded all the videos into my Youtube channel here, and all the photos into my Picasaweb photo album here.

ST - Ingram Micro Vietnam Retreat 2010

lowem — Thu, 21 Jan 2010 23:08:52 -0800

Just reached the Duxton Hotel Saigon, Ho Chi Minh City, Vietnam, where a group of about 30 folks from ST Electronics, Ingram Micro, IBM and Symantec are having a sponsored weekend conference/retreat. Here are some initial photos from today. Here I was at the departure gate at Changi Airport T2 :

Inside the airplane cabin of the twin-engine Boeing 777-200 :

Arrived at the Tan Son Nhat International Airport :

The Opera House :

My hotel room :

Wasted no time setting up the equipment, up and blogging within 5-10 minutes of arrival :

The rest of the initial set of photos has been uploaded to my Picasaweb album here.

Japan Airlines (JAL) files for bankruptcy in $10 billion turnaround plan

lowem — Tue, 19 Jan 2010 05:08:19 -0800

Japan Airlines (JAL) filed for the country's fourth-largest bankruptcy under a 900 billion yen ($10 billion) turnaround plan after four government bailouts failed to revive Asia's most indebted carrier. Asia's largest airline will shed staff, cut unprofitable routes and retire older planes as it restructures. The airline, worth more than $6 billion as recently as March 2009, will be delisted following the bankruptcy, wiping out shareholders. JAL, which flew at least 45 million passengers last year, will continue operations. Kazuo Inamori, the 77-year-old Kyocera founder, has been named to oversee JAL's restructuring as CEO. Delta Air Lines and American Airlines have made rival offers to invest in JAL or a restructured company to access routes in China and Japan.

JAL, Asia's first major flag carrier to seek bankruptcy, filled less than 65% of seats on domestic routes in each of the last 6 fiscal years. The airline suffered a 16th straight drop in overall passenger numbers in Nov 2009 as the global recession sapped travel. Worldwide international air travel likely fell 4.1% last year, causing industrywide losses of $11 billion, according to the International Air Transport Association.

- You could have pointed your finger at various factors like lack of management judgment, prolonged government support, rising oil prices, the global economy, or the unfolding trend of Peak Oil, Peak Airlines. There are plenty of reasons to choose from. But well, that was it. Now to see how they fare after the turnaround plan.

Toyota to double global production of hybrid vehicles by 2012

lowem — Tue, 19 Jan 2010 02:20:00 -0800

Toyota plans to double its global production of hybrid vehicles in about two years, positioning such fuel-sipping cars as a core profit earner. The automaker recently notified parts suppliers that it intends to roll out about 800,000 hybrids domestically in 2010, with the figure to be raised to around 900,000 in 2011 and 1.1 million in 2012, the Nikkei reported. Toyota's 2009 hybrid vehicle output was estimated to be around 500,000.

Toyota also plans to sell an additional 10 new hybrid models from minivans, subcompacts to luxury cars within a few years, on top of its current lineups such as the 2010 Toyota Prius, Sai and Lexus HS250h. The world's biggest automaker now makes about 90% of its hybrid vehicles at home in Japan. In 2011, hybrids will likely account for about 30% of all vehicles that Toyota manufactures in Japan, up from the projected figure of about 20% for 2009, the Nikkei said. The petrol-electric Toyota Prius hybrid car was the best-selling car in Japan in 2009, becoming the first hybrid to top the annual rankings, with sales almost tripled from the previous year.

- In spite of the global recession, it looks like Toyota is on a roll with its hybrid line-up. And these plans are not new. The Asians including the Japanese and Chinese are reputed for long-term thinking. Back in 2005, Toyota announced plans to go to an all-hybrid vehicle model line-up. And this paragraph quotes from a 2006 entry : "Toyota Motor said that it would double the number of hybrid models it offers to 14 by the early years of the next decade as part of its effort to meet higher demand for fuel-efficient vehicles". I'll be looking out for Toyota to continue to execute on its plans to bring the next generation of lithium-ion powered hybrid, plug-in and EV technology to the rest of its line-up.

NYMEX crude oil prices drop below $79 as Euro falls against USD on Greece concerns

lowem — Fri, 15 Jan 2010 06:05:42 -0800

The Euro declined the most in almost a month against the US dollar on concern Greece's struggles to reduce its budget deficit will damage confidence in the region. The EUR/USD forex exchange rate fell as much as 0.8%, the biggest decline since 17 Dec 2009. Oil prices fell for a fifth day, the longest losing streak in five weeks, leading declines in commodities prices. ECB President Jean-Claude Trichet's warning that no member nation can expect "special treatment" fueled concern Greece's debt won't be eligible as collateral at the central bank. Rating downgrades sparked a rout in Greece's bonds in Dec 2009 as the budget deficit headed for 12.7% of GDP, more than 4 times the European Union limit.

Feb 2010 NYMEX crude futures fell to $78.95. The S&P GSCI Index of commodities fell for a fifth day, the longest losing streak in a month. Corn declined 0.9% to $3.7775 a bushel in Chicago trading. Wheat and soybeans also declined. Copper fell 0.5 percent to $7,455.50 a metric ton on the London Metal Exchange, leading a drop in industrial metals.

- It looks like we could be headed for a slight pause in the commodities rally powered by crude oil and gold prices coming into the beginning of 2010, or at least a consolidation situation in the commodities markets before the next directional movement can be discerned. The threat of a China slowdown with the central bank starting to make noises about tightening credit and reining in the runaway property boom does not help the bullish case very much either. Hence I am now looking once again at support levels with that for crude oil prices being around the $75 level and for gold prices it is around the $1100 level, with the advice being to watch for either support holding or breaking down below these levels.

Japan Airlines (JAL) to cut 15600 jobs under turnaround plan

lowem — Fri, 15 Jan 2010 03:44:02 -0800

Troubled Japan Airlines (JAL) is expected to cut 15,600 jobs, or about 30% cent of its group workforce, in 3 years under a rehabilitation plan. The layoffs, coupled with cuts in benefits and wages, will be carried out together with the sale of JAL's subsidiaries including JAL Hotels Co., Kyodo News reported. The carrier's workforce will be trimmed to about 36,000 by the business year to March 2013. The state-backed Enterprise Turnaround Initiative Corp. (ETIC) plans to decide on its bailout package for JAL as early as January 19, the same time the airline is expected to file for bankruptcy protection. The ETIC estimated JAL's consolidated operating loss to expand to about 265 billion yen for the current business year to March 2010, compared with a year-earlier loss of 51 billion yen, due to a drop in passenger numbers.

- Like the GM bankruptcy case, the long decline of Japan Airlines has been noted by outside observers for a long time (see earlier posts dated Feb 2006 and Aug 2006). Traditional airlines have been finding it rather difficult in challenging business conditions in recent years, with increasingly volatile oil prices and a global recession. The rising competition from budget airlines didn't help either. Airlines like JAL and their like will need to revamp and re-invent themselves in order to stay relevant in the economic environment ahread.

Japan Airlines set to file for bankruptcy on 19 Jan 2010

lowem — Sun, 10 Jan 2010 06:23:39 -0800

Japan Airlines (JAL) is set to file for bankruptcy on 19 Jan 2010, the first step in a court-led rehabilitation process for the debt-ridden Japanese carrier. The decision came as its creditor banks dropped their earlier proposal for an out-of-court reorganisation of the troubled airline. The state-backed Enterprise Turnaround Initiative Corp will provide 300 billion yen (US$3.2 billion) investment so that it can continue operation.

The government body will also ask JAL's creditors to waive a further 350 billion yen in loans to the airline, while speeding up its restructuring, including massive trimming of its international routes. The carrier is seeking its fourth government bailout since 2001. The airline, which lost about US$1.5 billion in the 6 months to Sep 2009, has said it plans thousands of job cuts and a drastic reduction in routes.

- The airline industry is an obvious case of hyper-sensitivity to oil prices, and with crude oil futures rising and breaking through the $80 resistance level, the peakoiler community has been rumbling about airlines hurting again. In any case, if (/when) oil prices rise further, JAL's case may not be the last we hear about airline bankruptcies either.

Commodities prices post biggest annual gain in four decades on China demand

lowem — Sat, 2 Jan 2010 18:24:02 -0800