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Tuesday, November 25, 2014

$60 oil after OPEC meeting is not possible: BRG's Grossman

It's not possible for oil to fall to $60 a barrel after OPEC meets this week to discuss output policy, Jeff Grossman, president of BRG Brokerage, told CNBC on Monday.
While the chance of a big price cut is small, he said, the cartel will likely announce that it has discussed reducing production in order to stem the tide of lower prices and put a bottom on the market.
"Even with some serious tempering of weather, the market could possibly go to maybe $72 in the next four to six weeks," Grossman told"Power Lunch." "The most optimistic bear would have to be in agreement with that."
The price of benchmark oil has slid 30 percent from highs in June. Brent crude traded near $80 on Monday, down from $115 at its peak. U.S. crude was above $76 compared with its high of about $107.
OPEC will have to keep a stiff upper lip at its meeting on Thursday and show it is united and that no one is panicking, Grossman said. Members such as Venezuela and Iran have called for the organization to draw down production, but it remains uncertain whether Saudi Arabia, the group's largest producer, will agree to a cut.

Competitve Advantage - A key to acquire convincing Influential Power

PM recently demonstrated himself, for how close he shall and he is to the general public. His critical customers - the Malaysian qualified voters - whom they are eligible to vote and to decide his future in the next coming General Election. He attended the "Gotcha" program at the FM Radio recently. He attempted to close within the younger generation. He pointed to the specific target group.

He is very determined in influencing the voters. He created the One Nation, One Aim, One Target, One Malaysia style of management. He referred his success of modeling his nation through various transformation program. He deferred the "Corridor" system that was demonstrated by his predecessor.

Although most people know that the transformation program is part of his massive marketing program towards creating good image and desired support, the problems remain unchanged. The country has experienced an undesired situation - the globalization and not well to do within the operating climate. Malaysia has lost its competitive advantage. And, it has lost his convincing bargaining power among the nation.

Malaysia used to be the OEM manufacturing power house in 1980s. It was then replaced by China and India later. In determining the moderate modification and maintaining the cost hence productivity, most has chosen to employ cheap foreign labor. As a result, millions of immigrant began to flood in Malaysia


shale oil , US , Russia Vs OPEC - the game plan that US makes the impossible possible

The Organization of Petroleum-Exporting Countries (OPEC) is facing a "shale-tinged" reality and needs a "wake-up call," energy analysts have warned.
Analysts in Citi's commodities research team warn that the shale gas and oil revolution in the U.S. has been ignored for too long by OPEC, the powerful group of 12 global oil producers, and it must agree to cut production when it meets on Thursday or else oil prices "will resume their slide."
"The reality of the shale revolution in the U.S., long scoffed at from within OPEC as high-cost folly, is now hitting the producer group where it hurts, while oil demand growth has underperformed significantly," a group of Citi energy analysts said in a report published late on Monday.
"After years of inaction, the shale revolution [has issued] the producer group with a wake-up call, against a weak demand backdrop," Citi analysts Seth Kleinman, Eric Lee, Christopher Main, Edward Morse and Anthony Yuen, said in their "Energy Weekly" report.
The analysts' comments come ahead of OPEC's meeting in Vienna on Thursday (November 27), a meeting at which the group could decide whether to reduce oil production in the face of a steep decline in the oil price since the summer.
The price of Brent crude for January delivery has fallen around 30 percent from a high of $115 per barrel (pb) in June to currently trade around $80pb amid a global over-supply. On Tuesday, Brent crude futures were trading at $79.43.
Iran, Venezuela and Ecuador have put pressure on fellow OPEC members to reduce oil output to stem falling prices but, so far, OPEC's biggest producer and exporter Saudi Arabia has shown no signs of being ready to cut.
On the contrary, Saudi Arabia has signaled that it is comfortable with lower prices, seen by many as a sign the country was ready to fight the U.S. -- and its shale oil producers -- for market share.
Saudi intentions?
The U.S. energy market has received a massive boost as a result of its domestic shale oil and gas industry, bringing with it a supply not only of cheaper gas but oil onto the market.
Pump jacks are seen at dawn in an oil field over the Monterey Shale formation in California.
DAvid McNew | Getty Images News | Getty Images
Pump jacks are seen at dawn in an oil field over the Monterey Shale formation in California.
This has led to greater competition for the likes of traditional producers like Saudi Arabia. Indeed, the entrance of the U.S. into the global oil market added a new twist to OPEC's decision making, one investment strategist told CNBC on Tuesday.
"If you think about this from [a historic point of view] it used to be Saudis keeping OPEC in line and then being under-cut by non-OPEC [producers] which as Russia and the other guys got bigger and bigger became more important, "Sean Corrigan, Chief Investment Strategist at Diapason Commodities Management told CNBC Europe's "Squawk Box" on Tuesday.
"But now we've got the Americans as the other third big producer we have this three-way tie. We now have all these underlying geo-political currents of who's trying to do what to whom."
"If we don't get cuts obviously the danger is that the oil market lurches down very quickly…but they're [Saudi Arabia] not going to be the ones to switch everything off and let everyone else cheat the quotas," he added.
Citi's analysts expected there to be "some sort of a cut" decided upon at Thursday's meeting, "or at least a renewed commitment to observe the overall group's 30 million barrels a day (b/d) production ceiling in place since late-2011."
But they said Citi "remains very sceptical" that the members will be able to overcome disagreements and forge a convincing cut on the order of magnitude required to remove the oversupply currently hanging over the market. They also expected increase in that overhang in 2015. "Absent a convincing cut, Citi expects oil prices to resume their slide," they warned.
In the face of competition from the U.S., the global oil market needs clarification on Saudi Arabia's position and intentions, according to oil analysts at UBS, William A. Featherston and Jon Rigby.
"If OPEC does not cut its quota, we expect another slide in oil prices as markets interpret it as Saudi's desire to either defend market share or punish non-OPEC producers (Russia, U.S. shale)," they said in a note on Tuesday. "Although the current over-supply is clear, the OPEC meeting outcome is not."
- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt

Monday, November 24, 2014

Why rich Malaysians are very rich and the poor, very poor

Why rich Malaysians are very rich and the poor, very poor

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OUTSPOKEN: The Umno-led BN government continues to paint Malaysia as a thriving socio-economic nation despite the statistical reality that points to a "not all-is-dandy" outlook.
How can the economic and financial outlook be all dandy when the global economy is faltering and struggling?
Furthermore, Malaysia's economic and fiscal policies have only widened the gap of the rich and poor since Merdeka in 1957.
Officially, the country’s federal debt is at RM568.9 billion or 52.8 per cent of gross domestic product (GDP) as of June. 
However, economists believe the figures and statistics had not included other hidden debts.
Former International Trade and Industry Deputy Minister Datuk Mukhriz Mahathir had “accidentally” revealed in 2012 that the federal debt stood at RM800 billion or more than 70 per cent of GDP, way above the 55 per cent federal debt ceiling.
Anas Alam Faizli, who blogs at Blindspot, has recently taken pains to compile damning statistics that should awaken those blinded by BN's propaganda that all is well for Malaysians.
Anas' two questions, backed by statistics:
•    How does it feel to be in a high income nation that Minister in the Prime Minister's Department Datuk Seri Idris Jala is talking about? In 2008, two states in Malaysia surpassed the World Bank Threshold to become “High Income” states – Kuala Lumpur and Sarawak. High Income nation through GNI/capita? In numbers and papers only or a holistic high income nation that prospers?
•    Malaysia’s Gini Index did not move at all in 20 years.
Malaysia is the third most unequal nation in Asia! We have the third biggest gap between the rich and poor. We are worse off than the Philippines, Thailand and even Indonesia. Our rich are very rich and our poor, very poor! Income inequality is bad and has to be addressed. Are we talking and thinking about this enough? Do you understand this as an issue or not? Please discuss. For 40 years, the gap between rich and poor did not change much! What happened?
In short, this has exposed how Malaysians have fallen prey to a skewered economic policies that will only result in misery when a global financial and economic crisis makes a comeback.
The question is, when will the bubble economies start bursting globally?
To quote Anas: “That's high income nation but low income population. To paraphrase, Rich Malaysia, poor Malaysians and why is that so?”
Malaysians already know the answer because they can clearly see who the rich and super rich are and who the poor and very poor are.
The rich and super rich are those with the right political connections and the poor and very poor are those who have to work day and night to put food on the table for their family and loved ones.
The recent case of the six major banks fined a record total US$4.3 billion (RM14 billion) for foreign exchange rate-rigging tells all.
When banks, such as HSBC, Royal Bank of Scotland, Swiss bank UBS and US banks JP Morgan Chase, Citibank and Bank of America had to resort to cheating, common sense tells that all is not well in the global economy.
It's certainly difficult for banks to continue to meet profit targets without resorting to exploitation when the majority of the people are getting poorer.
Even commercial banks in Malaysia have tightened their regulations in approving loans, especially for housing.
The recent depressing news on the economic and financial uncertainties in the US, Germany and China must be taken seriously. The economies of the big three are sneezing and the rest of the world are expected to also catch the cold from them.
Reuters reported from Washington on Nov 13 that policymakers scrambling to keep the world economy from settling into the "new mediocre" of sluggish growth can no longer rely on global trade to do the heavy lifting.
International trade helped the global economy tide over rough spots over two decades before the financial crisis, when it grew nearly twice as fast as economic output, but this engine is running out of fuel.
That is bad news for officials taking part in discussions at the International Monetary Fund and World Bank meetings this week, focused on preventing what International Monetary Fund chief Christine Lagarde warns could be a long spell of sub-par performance for the global economy.
The impetus from China and Russia opening their doors and the emergence of global supply chains, linking factories in emerging markets with rich consumers in the developed world, has largely run its course, economists say.
"It's that particular engine which seems to have exhausted its propulsive energy for now," World Bank trade specialist Aaditya Mattoo said.
The McKinsey Global Institute calculates trade and cross-border financial flows contribute up to a quarter of global growth, leaving policymakers with a gaping hole to fill if trade shifts into a lower gear.
As the IMF cut its global growth outlook, it also forecast annual trade growth to average just 4.2 per cent in the 10 years starting in 2016, compared to 6.7 per cent in the decade leading up to the 2008-2009 financial crisis.
One reason for that downgrade is obvious enough; it is hard to replicate the effect of an economy of China's size tearing down trade barriers.
Malaysians must be reminded again to be prepared for the hard times and misery of a national and world financial and economic crisis.
Ng Kee Seng believes that God helps those who help themselves. In a healthy democracy, every Malaysian has a role in politics and nation-building.
- See more at: http://www.theantdaily.com/Main/Why-rich-Malaysians-are-very-rich-and-the-poor-very-poor#sthash.j31QrYRn.dpuf