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Weekly Market Review & Target Fills October Week 1

downloadThe major news for the week, is the movement in the global oil market following continuing chatter that there will be output cuts by major crude exporters. OPEC (Organization of the Petroleum Exporting Countries) had already agreed in principle to limit oil output to 32.5 million barrels a day. This would be from a high of 33.24 million barrels a day.

With crude prices in around $50 USD (United States Dollar) on the major exchanges in Europe and the United States another meeting is scheduled to take place in Istanbul, Turkey. OPEC and nations outside the oil cartel, will gather from October 8-13 to discuss how to implement the deal on output cuts agreed to in Algiers last week.

To further support crude oil prices, there is a discussion of possibly cutting production by an additional 1% on top of the 750,000 barrels a day already agreed to. It is important to remember, that there has not been any purposeful real reductions in output yet.

OPEC Headquarters in Vienna, Austria.

OPEC Headquarters in Vienna, Austria.

Levels of crude production for individual countries,will be worked out before upcoming meeting in Vienna, Austria, scheduled to take place in late November. If successful this will be the first time the cartel has been able to agree to output cuts since the financial crisis.

The basis of the agreement is to allow a partial exemption for OPEC members Iraq, Iran, Libya and Nigeria. OPEC is responsible for 40% of global output and 60% of the world trade in oil.

Another major event took place in precious metals this week. Gold had been slowly dropping in price, since reaching a high of $1,370.80 in August.

downloadA major set back took place this week. The price is now listed at $1256.90 from $1326.00 last week, a decrease of $69.10 USD (5.50%) from last week. It is a plunge of 9.06% from the recent high.

Gold prices in 2016, are still up +20% in 2016.

The price for silver decreased to $17.53 from $19.43 USD last week, a $1.90 drop for the week. This is a 10.84% decline for the period.

The drop in equities in world markets, that began last week on a global scale somewhat continued this week. There is still investor anxiety in response to the negative fortunes of Germany’s largest financial institution Deutsche Bank in Europe and

The bank has let the United States Department of Justice (DOJ) know it would accept a fine of $5.4 billion USD for its part in the selling of toxic mortgage backed securities. The DOJ had first wanted $14 billion USD.

International News Central bankers and financial officials from around the world will be gathering in Washington capital of the United States for the annual fall meetings of the World Bank and the IMF (International Monetary Fund). The three main topics of these talks will be the financial stability of European banks, the growing threat against free trade and a slowing global economy.

António Guterres

António Guterres

Former Portuguese Prime Minister Antonio Guterres is set to be the next United Nations General Secretary.

The 2015 Paris Climate Agreement is to go into force next month, since a sufficient number of countries have now signed up for the pact, after negotiations with more than 200 nations.

United States The United States employment figure for September came in at 157,000 for the month, when 175,000 had been expected. The official unemployment rate increased to 5% from 4.9% and labor participation inched up to 62.9%.

The mediocre jobs growth, makes the urgency of a interest rate increase by the Federal Reserve Bank in the United States less likely.

Heads of delegations at the 2015 United Nations Climate Change Conference in Paris.

Heads of delegations at the 2015 United Nations Climate Change Conference in Paris.

All three market exchanges in the United States (U.S.) saw losses reversing gains from earlier in the week. The Dow Jones Industrial Averages remains between the 18,200 and 18,300 level again. The Standard & Poor 500 & the NASDAQ composite both has similar results. Two weeks ago the latter reached a new all time at 5,342.88. It is now at 5,296.03.

Year to date, the major indexes have advanced the following. The Dow Jones Industrial Averages is up near 4.1%, the Standard & Poor 500 has climbed about 5.2% and the tech heavy NASDAQ has advanced near 5.2%.

The final estimate of GDP (Gross Domestic Product) for the 2nd quarter in the United States is 1.4% annual rate instead of the lower 1.3% level that was expected.

GDP projection for the 3rd quarter has been lowered by the Fed from 2.4% to 2.2%.

Europe The British pound sterling had a flash drop of near 9% overnight through heavy selling. No clear reason why it happened. The world reserve currency of the United Kingdom (U.K), fell to as low as $1.1491 against USD. It was at the lowest level since 1985. This morning there was a partial recovery.

French President Francois Hollande

French President Francois Hollande

Russia is considering restoring military bases in Cuba and Vietnam that were occupied by the Soviet Union during the Cold War. It would signal the return of Russia as a world military power.

Both leaders in France and Germany have said negotiations for the United Kingdom over Brexit, will not be easy. If the U.K. insists on restrictions in the movement of people, they will lose their access to the single market of the European Union.

Euro-zone business activity last month,dipped to its lowest level since January of 2015. The main reason is due to the slowdown in the economy of Germany.

Latin America In an unfortunate turn of events for President Temer, the top court in Brazil has approved a request by prosecutors to split up the investigation of numerous politicians, in the Petrobas bribery scandal.

President Temer with former President Rousseff

President Temer with former President Rousseff

The reason for this is that legislators for the Brazilian Democratic Movement Party will be implicated as well. This is the political party that the current president originates from since he took over from the impeached Dilma Rousseff.

Middle East Iraq would like Turkish troops that are stationed in northern part of the country to withdraw following the recapture of Mosul. Keeping them there following the liberation of the 2nd largest city in Iraq, is a threat to sovereignty and could well lead to a regional war.

Negotiations between Russia and the United States have broken down over the Syrian conflict.

President Duterte on the left, meets with Russian Prime Minister Dmitry Medvedev, September 8, 2016

President Duterte on the left, meets with Russian Prime Minister Dmitry Medvedev, September 8, 2016

Asia The Philippines is in the process of reassessing its relationship with the United States. President Duterte will be putting yearly military exercisers held with American forces on hold, while he attempts to build more positive contacts with both China and Russia.

The Chinese yuan is now at its lowest level vs. the American dollar in 2016. This was after lower than expected drops in Chinese foreign exchange reserves. They have dipped by $18.79 billion last month, to $3.17 trillion. It is the largest monthly drop since last May.

The Reserve Bank of India unexpectedly cut its benchmark interest rate by 0.25% to 6.25%. Central bank officials justified the move because of lower domestic inflation and the slowing global economy.

Business News Qatar Airways has ordered up to 100 Boeing Jets worth near $18.6 billion. It will keep American based Boeing, profitable and busy over the next year.verizon_2015_logo_-vector-svg

American based Verizon is now seeking a $1 billion discount to buy Yahoos core business. The previous deal that was negotiated for $4.83 billion USD, was before it became public knowledge that 500 million user accounts had been hacked in 2014. It was also before the company admitted it had allowed the U.S. government to scan all incoming e-mail.

download-45South Korean based Samsung has not suffered any major impact as of yet in corporate earnings. Operating profits for the 3rd quarter are expected to be $6.9 billion USD, an increase year to year of 5%. In addition, the company is earning record revenue of $45 billion USD for the same period.

American West Texas Intermediate (WTI) has increased from $48.15 USD last week to $49.76 USD today. This is an increase $1.61 or 3.34%. International Brent during the same period went from $49.25 last week to $51.87 USD today. This indicates an increase of $2.62 or 5.32%.

American priced crude oil is now up more than +30% in 2016.

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