Happy 12/21/12! Something big was supposed to happen today but I can’t remember for the life of me what it was. As for our dearly beloved commodities this week, oil has remained under the influence of the fiscal cliff – the skullduggery of it all leaves crude ultimately range-bound and run ragged. As for natural gas, it has shimmied higher on cooler weather outlooks, back to swing around the monkey bar of mid three-dollardom. But enough from me, it’s time for treats: » read more
Posts Tagged ‘India’
Twas the eighth day before Christmas, when all through the (commodity) house, not a market was stirring, not a bull, bear, or mouse……….crude oil has had the most dullest of weeks (barring weekly inventory shenanigans, see burnt burrito below), kicking about the high $80s as half-decent economic data and apathetic cheerleading from equities have been unable to motivate it. As for natural gas, it has got walloped as immediately colder weather is overshadowed by moderating forecasts into Yuletide. Meanwhile, supply continues to increase, leaving natty on a slippery slope lower, swinging on the monkey bar that is the $4 level once more. Anyhow, utensils at the ready for an infographic-tastic set of burrito bites: » read more
This, like many of my posts, is an elaboration on a simple theme, explained through the medium of something easy to relate to. So for this juncture, emerging markets are…. where the wild things are (specifically Brazil, India and China). Furthermore, The US is the self-crowned king of all the wild things (for now), based on its position as the world’s largest country by GDP, and the largest and most voracious consumer of the world’s goods and services. The wild things are labeled as such for good reason; their economies are running wild.
‘And now’, cried Max, ‘let the wild rumpus start!’
The first station on our whistle-stop tour is India. They released their first quarter GDP data on Monday, which showed its economy expanding by 8.6%, at its fastest pace in two years, driven by manufacturing and farming. India, similar to China, holds such great promise due to its size, and the sheer extensiveness of its poverty (which implies tremendous potential for income and asset growth). The current population is estimated at 1.18 billion, and should surpass China (currently 1.33 billion) by 2025, as the country encourages population growth much more than China does with its one-child policy.
And when he came to the place where the wild things are
they roared their terrible roars and gnashed their terrible teeth and rolled their terrible eyes and showed their terrible claws
Next stop, China. I already researched China in a recent post, but have been filling my boots on this stuff recently - including a great piece explaining how China’s manufacturing power is not driven by innovation, but by global demand. A most telling representation of China’s insatiable appetite for growth is illustrated through their demand for coal in the past four years, which has grown by double digits (in percentage terms) for the vast majority of months, even growing at as high a rate as 57.5% in January of this year. This resonates even further when one realizes that approximately 70% of China’s energy consumption comes from coal (approximately 3.5 billion tons per annum):
Our last stop is Brazil, which, although is showing a strong recovery after last year’s slowdown, is exhibiting the symptoms of the most common disease to fast-growing emerging markets - inflation. The resource-rich country is, however, being proactive in combating this risk; the Central Bank of Brazil hiked interest rates by 0.75% in March to 9.5% – the first rate rise in two years, and are likely to raise again should inflationary concerns continue (and they should).
So I draw this story to a close. We should be grateful to know where the wild things are, and should hope that their wild rumpus continues apace. After all, dealing with an overheating economy seems a much more preferable rumpus than that of facing potential deflationary pressures (your majesty). And if you can’t be grateful, BE STILL!