Investment News

Although no agreements were made over disputed gas and oil rights in the East China Sea or the ongoing problems in Tibet, Japan and China have agreed to begin working together to strengthen economic ties.

China wants Japanese technology and investment in the Chinese economy, Japan wants more access to the world's biggest market for Japanese products. China is already Japan's biggest trading partner.

The two countries have also agreed to work together to overcome the disputes of the past and to continue working together in future summits to be held yearly.

This was the first visit by a Chinese leader since 1998. 

Landmark China-Japan deal agreed [BBC News]

After a terrible first quarter, the SENSEX on Tuesday made a sharp turn-around and closed up 2.13%.  The ralley was based on good quarterly corporate results and new government policies announced to slow inflation.  

The Reserve Bank kept short-term lending rates unchaged and raised the cash reserve ratio25 basis points to 8.25% in an attempt to start mopping up excess liquidity in the economy.

Stock market cheers policy announcements; awaits Fed stance [The Hindu]

According to Chakib Khelil, chief of OPEC, the high oil prices we've been experiencing are primarily due to the devaluation of the American dollar.  According to Mr. Khelil, each time the dollar falls 1 percent, oil rises $4 per barrel and vice versa and did not rule out $200 per barrel oil some time in the future.

Khelil suggested supply concerns are overblown and confirmed OPEC would not be increasing production, citing 5 year high record surplus stocks of gasoline in the United States.

Investors will be eagerly awaiting the Fed's decision this week on another possible interest rate cut (widely expected to be 25 basis points).  A further cut in interest rates will likely push oil prices higher.

Oil closed today just over $US 118 per barrel.

Falling dollar to push oil to $200 [PressTV]

Husky's first quarter results released on Monday showed net earnings surge to $887 million, or $1.04 per share.  An increase of 36% from a  year ago.

Husky credits the 'high oil commodity price environment'.

Husky Energy Reports 2008 Quarter Results [Huskyenergy.ca]

A senior Russian oil executive claims Russia would need to invest $1 trillion dollars over the next 20 years into new oil reserve exploration and development if Russia is expected to keep up to growing demand from Europe and China.

Russia is currently the world's number 2 exporter of oil and number 1 exporter of natural gas.  There is now serious worry that high royalty taxes and lack of tax incentives is seriously slowing oil companies from investing the necessary dollars into infrastructure.

Even though Russian production is still rising, there is growing concern demand could out pace production in the near future.

Financial markets reacted to the news by pushing the price of oil to a new record price of US$113.93 a barrel.

'Threat' to future of Russia oil [BBC.com]

WaMu, the largest U.S. savings and loan has obtained a $7 billion capital injection from TPG Inc, a private equity firm.

WaMu also plans to cut 3000 jobs and cut it's dividend.

Markets reacted to the news by punishing financial stocks and rewarding energy.

WaMu gets $7 billion infusion, cuts jobs, sees loss [Reuters.com]

According to Mysteel.net, a trade publication based in Shanghai, iron ore stockpiles have been steadily growing in Chinese ports.

Ships bringing in iron ore to China have in some cases been unable to get import licenses to offload their cargo.  The problem seems to be stemming from the tremendous price discrepancy between contract prices and local spot prices for the ore.

High grade ore from Australia has been contracted for about $50 per tonne for high grade ore.  Local Chinese suppliers are selling lower grade ore at the spot price of $200 per tonne. 

Rio Tinto has been selling ore on China's spot market in December to take advantage of the price discrepancy.  In response, China appears to be delaying the issuing of import licenses.

Clearly, iron ore demand is still strong, but the Economist is speculating that the ability of China to slow import licenses may point to slowing industrial demand.

Pile Up [Economist.com]

In response to increasing credit fears, both oil and gold hit all time highs session after session this week, with oil eventually touching $111 per barrel and gold crossing the $1000 per ounce barrier. 

As if on cue, Bear Stearns, smallest of the big 5, but the most exposed to sub prime securities was forced to accept a last second bailout. 

Most analysts seem to agree, the upward trend for oil and gold will likely continue for a number of months to come.  It's probably a good bet the financial pressure on banks and brokerage houses will continue for a number of months to come as well.

Stripped Bear [Economist.com]

Despite a US request to increase oil production, OPEC has concluded again, that high oil prices are not due to demand, but rather due to speculators driving the futures prices up.

The price of oil immediately rallied through $104 dollars US per barrel on the news.

No Production Boost From OPEC [Associated Press]

World Oil Outlook 2007 [OPEC.org]

Jim Flaherty, in the Conservative's 2008 Federal Budget, announced the Tax-Free Savings Accounts (TFSA).  Similar to US Roth IRA accounts, investors will be able to contribute up to $5000 of after tax income per year. 

This contribution room will carry forward if unused and will be indexed for inflation.   Unlike RSPs, money removed from TFSA accounts will increase contribution room.

If the budget is passed, Canadians over 18 years of age will be able to start contributing in 2009.

Budget 2008: Shelter for your capital gains  [Advisor.ca]