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China – China's margin lending is rising faster than stock prices
Truck – Another strike is launched at California ports by truck drivers NatGas – The US Energy Dep't says the LNG exports will start next year and equal Qatar within a decade H5N2 – More outbreaks on Iowa poultry farms take the tally to over 15 milllion birds and counting |
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Daily Intelligence Briefing - April 28, 2015
Today’s Issue Cluster: China
- Stock market margin lending has tripled in the past year to a new record and accounts for 1/4 of non-state trading in Shenzhen
- Corporate defaults have reached real estate developers .. the IMF predicts a fat tail of defaults in real estate, mining, and construction
- Provincial governments are postponing bond auctions for want of demand by the banks ... S&P says half of the provinces merit junk status
- The PBOC prepares to launch an ECB-style bond swap of local government debt held by banks to boost liquidity across the board
- China's official growth 7% is nearly twice the pace as calculated by the US Conference Board, among others
- The Silk Road Project is creating an economic corridor through Pakistan ... Central Asia states are pivoting away from Russia
Best of the Rest
Truck – Another strike is launched at California ports by truck drivers
NatGas – The US Energy Dep't says the LNG exports will start next year and equal Qatar within a decade
H5N2 – More outbreaks on Iowa poultry farms take the tally to over 15 milllion birds and counting
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| MAJOR DATA POINTS | Top |
UK – Q1: Economy Slows Ahead of Election; +0.3% from +0.6% / WSJ / FT / AP
US – Feb: Case-Shiller Home Price Index Climbs Modestly; +4.2% from +4.4% / WSJ / R / cr
US – Apr: ConfBd consumer confidence slides; 95.2 from 101.4 / AP / B / R
| MARKETS | Top |
China – Debt Builds in Stock Rally
Margin lending has more than tripled in the past year to a record 1.7 trillion yuan ($274.6 billion)... state entities own more than half of the market.... Research by Macquarie Securities Group shows China’s margin-debt ratio at 8.2% of the free float. That easily exceeds the peak of 6% reached in the late 1990s in Taiwan, the second-highest level globally in recent years.... Trading funded by margin loans accounts for 25% of daily volume on the ChiNext, the market in Shenzhen where Chinese startups trade, according to estimates from UBS AG . WSJ
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China – ‘Foreign investors start to fear stock market bubble’
Shanghai-Hong Kong Stock Connect has also caused a certain degree of nervousness about the quality and transparency of the A-shares the policy is now giving foreign investors access to, as these A-shares may not necessarily have the same disclosure standards as H-shares...
a key limitation of the Shanghai-Hong Kong Stock Connect policy is the difference in settlement times between Hong Kong traders and traders in the Chinese mainland when buying and selling the same stocks. Settlement time in Hong Kong is T+2, meaning stocks exchange hands two days after a trade is placed, where as in the Chinese mainland it is T+0, meaning same day settlement. CD
a key limitation of the Shanghai-Hong Kong Stock Connect policy is the difference in settlement times between Hong Kong traders and traders in the Chinese mainland when buying and selling the same stocks. Settlement time in Hong Kong is T+2, meaning stocks exchange hands two days after a trade is placed, where as in the Chinese mainland it is T+0, meaning same day settlement. CD
China – Dumps Treasurys to fight capital flight
China lost its position as the largest holder of U.S. Treasury bonds for the first time in six and a half years in February.... To keep the yuan from plunging, the People's Bank of China, the central bank, started tapping its Treasurys to sell dollars and buy yuan. N
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| ECONOMICS | Top |
China – Just Learning the True Cost of Debt
The shift offshore was precipitated to a large degree by happenings within China. In July 2008, the China Banking Regulatory Commission had issued circular 214 banning the use of borrowed money to buy land in an effort to stem rising property prices. The year prior, the China Securities Regulatory Commission had begun turning down IPO and bond issue requests for the same reason. Having tapped equity investors, most developers followed up with a dollar bond sale....
Since 2011, offshore bond sales have increased consistently, peaking last year when developers sold $15.7 billion of debt, bringing the total outstanding amount to $41 billion. That’s 30 percent of all junk-rated debt in Asia... Clement Chong, a senior credit analyst at NN Investment Partners BV... said international investors should understand their rights as creditors in the event of default. “In almost all cases, onshore creditors will get their claims to assets first before offshore creditors, so the position of offshore creditors is deeply subordinated,” B
Since 2011, offshore bond sales have increased consistently, peaking last year when developers sold $15.7 billion of debt, bringing the total outstanding amount to $41 billion. That’s 30 percent of all junk-rated debt in Asia... Clement Chong, a senior credit analyst at NN Investment Partners BV... said international investors should understand their rights as creditors in the event of default. “In almost all cases, onshore creditors will get their claims to assets first before offshore creditors, so the position of offshore creditors is deeply subordinated,” B
China – True Growth Is a Mystery
When China released its tabulation of first-quarter growth earlier this month, the 7% figure—the worst in six years—stirred fears of a deepening slowdown...“Growth Likely Overstated,” said a Citibank report, concluding that actual quarterly growth could be below 6% year to year... Other research firms put their numbers far lower, with Capital Economics pegging the quarter at 4.9%, the Conference Board’s China Center at 4% and Lombard Street Research at 3.8%....
Then there are the many ways China’s GDP figures appear to clash with other data points considered more difficult to manipulate. Economists point to the discrepancy between headline GDP growth and industrial production, often seen as a proxy for growth, which grew by 5.6% year to year in March—its lowest level since late 2008. WSJ
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| POLITICS & FISCAL POLICY | Top |
China – China-Pakistan Pacts Worth Billions
During a his visit, the Chinese president and Pakistan's Prime Minister Nawaz Sharif unveiled energy and infrastructure projects worth $45 billion, as well as agreements deepening military cooperation between the two countries....
The central plank of Xi's trip was to establish an "economic corridor" linking Gwadar, a port in the south of Pakistan, with China's western Xinjiang region. The infrastructure revamps — which include helping upgrade Pakistan's dilapidated railroad network, and building dams, ports and power stations — are part of China's plan to create a "Silk Road" of land and sea ties to markets in the Middle East and the rest of Asia. NBC
the two sides signed 51 agreements. From the capital, Mr. Xi and Pakistani Prime Minister Nawaz Sharif also performed a remote grounding breaking, via video link to the sites, on five projects, including a $1.4 billion dam close to Islamabad that will deliver 720 megawatts of electricity, and adding 900 megawatts to a solar power park at Bahawalpur, in the center of the country, for $1.5 billion.... Pakistan’s acute electricity shortage leads to hours of daily scheduled power cuts to homes and businesses, holding back economic growth. WSJ
Beijing’s “One Belt, One Road” strategy includes plans to build roads, railways, ports, natural gas pipelines and other infrastructure stretching into south and Southeast Asia, the Middle East, and throough Central Asia to Europe to create demand for China’s industrial exports in the face of overcapacity at home... China Development Bank has provided funding for many of the country’s most ambitious financial diplomacy initiatives, including loans-for-oil to Russia, Brazil and Venezuela. Both CDB and Ex-Im Bank also provide trade credit to support Chinese exports. FT
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The central plank of Xi's trip was to establish an "economic corridor" linking Gwadar, a port in the south of Pakistan, with China's western Xinjiang region. The infrastructure revamps — which include helping upgrade Pakistan's dilapidated railroad network, and building dams, ports and power stations — are part of China's plan to create a "Silk Road" of land and sea ties to markets in the Middle East and the rest of Asia. NBC
the two sides signed 51 agreements. From the capital, Mr. Xi and Pakistani Prime Minister Nawaz Sharif also performed a remote grounding breaking, via video link to the sites, on five projects, including a $1.4 billion dam close to Islamabad that will deliver 720 megawatts of electricity, and adding 900 megawatts to a solar power park at Bahawalpur, in the center of the country, for $1.5 billion.... Pakistan’s acute electricity shortage leads to hours of daily scheduled power cuts to homes and businesses, holding back economic growth. WSJ
Beijing’s “One Belt, One Road” strategy includes plans to build roads, railways, ports, natural gas pipelines and other infrastructure stretching into south and Southeast Asia, the Middle East, and throough Central Asia to Europe to create demand for China’s industrial exports in the face of overcapacity at home... China Development Bank has provided funding for many of the country’s most ambitious financial diplomacy initiatives, including loans-for-oil to Russia, Brazil and Venezuela. Both CDB and Ex-Im Bank also provide trade credit to support Chinese exports. FT
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China – Central Asian nations warming to Beijing
Some Central Asian nations such as Kazakhstan and others are increasingly staying away from Russia and moving closer to China, though they retain membership in the Russia-led Eurasian Economic Union... Turkmenistan and Azerbaijan were forced to devalue their currencies, with the former slashing the value of its currency against the dollar by 19% in January and the latter by 34% in February. Market observers expect that Kazakhstan will have to devalue its currency again soon.... Their hope is to prop up their economies by establishing themselves as economic hubs in Beijing's Silk Road initiative N
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| MONETARY POLICY | Top |
PBOC – Readies Fresh Easing to Tackle Specter of Debt
China’s central bank is planning to launch its own version of innovative credit-easing programs adopted by its counterparts in developed countries... as Beijing’s flagship plan to restructure trillions of dollars of local-government debts is hitting snags. Under the plan, which could be put in place in the next couple of months, the People’s Bank of China will allow Chinese banks to swap local-government bailout bonds for loans as a way to bolster liquidity and boost lending... The strategy—dubbed Pledged Supplementary Lending—is similar to the long-term refinancing operations, or LTROs, used by the European Central Bank. WSJ
the bank’s plan to try to increase demand for cash-strapped local governments’ debt — by accepting it as collateral for loans to commercial lenders .... is better understood as a targeted measure to boost credit flows to local governments struggling to refinance Rmb1.9tn in debt due to mature this year.... at least two Chinese provinces were forced to postpone scheduled bond auctions due to insufficient demand from commercial banks. Allowing local bonds to be used as collateral would stoke demand for the paper. FT
Local governments are planning to sell more than 1.7 trillion yuan in municipal bonds this year, up from 400 billion yuan in 2014. B
The first wave of refinancing is under way, with an initial tranche of bonds worth 1 trillion yuan ($160 billion). The trouble is that the new bonds have longer duration and lower interest rates than the debt they replace, so banks are hardly keen to make the swap. Now the PBOC looks set to take up the burden itself. The PBOC would swap long-term loans for local government bonds now held by banks. WSJ
the bank’s plan to try to increase demand for cash-strapped local governments’ debt — by accepting it as collateral for loans to commercial lenders .... is better understood as a targeted measure to boost credit flows to local governments struggling to refinance Rmb1.9tn in debt due to mature this year.... at least two Chinese provinces were forced to postpone scheduled bond auctions due to insufficient demand from commercial banks. Allowing local bonds to be used as collateral would stoke demand for the paper. FT
Local governments are planning to sell more than 1.7 trillion yuan in municipal bonds this year, up from 400 billion yuan in 2014. B
The first wave of refinancing is under way, with an initial tranche of bonds worth 1 trillion yuan ($160 billion). The trouble is that the new bonds have longer duration and lower interest rates than the debt they replace, so banks are hardly keen to make the swap. Now the PBOC looks set to take up the burden itself. The PBOC would swap long-term loans for local government bonds now held by banks. WSJ
PBOC – China may join the unconventional monetary club
In the Fulcrum model for economic activity, the long run growth rate is estimated to have slowed gradually from 11.5 per cent in 2007 to 6.5 per cent now. ... the very weak industrial production data for March 2015, alongside declines in survey data, retail sales and investment, has resulted in a drop in estimated activity growth to only 5.2 per cent... the model’s probability distribution for GDP growth in the 2015 calendar year has shifted markedly downwards, with a much increased statistical risk of a sub 6 per cent outcome – one definition of a hard landing in the Chinese context. ft
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PBOC – China’s Currency Move Is Sign of Larger Struggle in Yuan
The market now wants to take the yuan lower, as seen in how it has periodically traded at the lower end of the PBOC’s trading band, forcing the central bank to sell dollars for yuan to defend the band. Along with a weaker euro, this partly explains the shrinkage in the PBOC’s currency reserves to $3.73 trillion from $4 trillion in June of last year... If capital flight accelerates and the yuan plunges, dollar debts will become hard to pay. The PBOC could draw on its giant reserves to avert a crisis WSJ
| FINANCE | Top |
China – Banks balk at local debt-swap plan
Several Chinese provincial governments have been forced to postpone bond auctions as banks balk at the low yields on offer... China’s finance ministry last month revealed a plan for provincial governments to refinance Rmb1tn in debt due to mature this year.... Demand from commercial banks is crucial to local governments’ ability to sell debt, since banks own 63 per cent of all bonds traded in China’s interbank market...
Standard & Poor’s late last year estimated that half of all Chinese provinces would merit junk ratings, though it did not issue ratings for specific provinces. Yet local government bonds sold under a pilot project for municipal bonds, which was restricted to wealthier provinces, have been sold at relatively low rates. FT
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Standard & Poor’s late last year estimated that half of all Chinese provinces would merit junk ratings, though it did not issue ratings for specific provinces. Yet local government bonds sold under a pilot project for municipal bonds, which was restricted to wealthier provinces, have been sold at relatively low rates. FT
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| REAL ESTATE | Top |
China – Foreign investors unfazed by Kaisa's default
China's first default by a developer on offshore debt has not added to costs for fellow borrowers, with moves to relax policy countering any such concerns if two senior note issuances this week are any indication.... the mainland authorities relaxed refinancing channels to support the struggling real estate industry and rev up economic growth, developers could turn to the domestic market if pricing offshore became more expensive. SCMP
In February, Kaisa announced that it had $10.4 billion in debt, far more than it had previously disclosed.... It is the first major Chinese developer to default on its overseas bonds, raising concerns that other companies could follow.... The company began to unravel last fall after the Chinese authorities placed restrictions on the sale of many of its properties in the city of Shenzhen, where the company has its headquarters. The government did not offer an explanation for the decision, though some published reports said the company’s troubles were tied to an anticorruption campaign in Shenzhen. NYT
As the government’s anti-corruption probes widen, it’s raising concern that defaults will spread after overseas noteholders bought a record $21.3 billion of bonds issued by Chinese property companies. B
After Kaisa Group Holdings Ltd. defaulted on its dollar bonds earlier this week, the market got to wondering, who could be next?... Attention has rapidly shifted to Glorious Property Holdings Ltd., whose controlling shareholder is billionaire Zhang Zhirong. Moody’s Investors Service cut its senior unsecured rating to Ca, just one step from the lowest grade typically signaling default, on April 20 B
In February, Kaisa announced that it had $10.4 billion in debt, far more than it had previously disclosed.... It is the first major Chinese developer to default on its overseas bonds, raising concerns that other companies could follow.... The company began to unravel last fall after the Chinese authorities placed restrictions on the sale of many of its properties in the city of Shenzhen, where the company has its headquarters. The government did not offer an explanation for the decision, though some published reports said the company’s troubles were tied to an anticorruption campaign in Shenzhen. NYT
As the government’s anti-corruption probes widen, it’s raising concern that defaults will spread after overseas noteholders bought a record $21.3 billion of bonds issued by Chinese property companies. B
After Kaisa Group Holdings Ltd. defaulted on its dollar bonds earlier this week, the market got to wondering, who could be next?... Attention has rapidly shifted to Glorious Property Holdings Ltd., whose controlling shareholder is billionaire Zhang Zhirong. Moody’s Investors Service cut its senior unsecured rating to Ca, just one step from the lowest grade typically signaling default, on April 20 B
China – Takes Failure in Small Doses
Three prominent cases of default have surfaced in China recently.... The positive spin on these developments is that China is finally allowing companies that allocated capital poorly to pay the price. ....The more dangerous possibility is that these three cases, though unique in their details, represent the beginning of an unraveling...
A recently published International Monetary Fund working paper by Mali Chivakul and W. Raphael Lam found a “fat tail” effect among the two most indebted sectors of the economy, real estate and construction and mining and utilities. Debt wasn’t spread evenly in these sectors. Instead, debt was highly concentrated in a handful of highly leveraged firms. Among publicly listed real-estate and construction companies, more than two-thirds of the debt is carried by about 60 firms with dangerous leverage, defined as total liabilities worth more than three times common equity. WSJ
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A recently published International Monetary Fund working paper by Mali Chivakul and W. Raphael Lam found a “fat tail” effect among the two most indebted sectors of the economy, real estate and construction and mining and utilities. Debt wasn’t spread evenly in these sectors. Instead, debt was highly concentrated in a handful of highly leveraged firms. Among publicly listed real-estate and construction companies, more than two-thirds of the debt is carried by about 60 firms with dangerous leverage, defined as total liabilities worth more than three times common equity. WSJ
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China – Expanding Philippine developers employ different game plans
Ayala Land and SM Prime Holdings -- two fast-expanding Philippine real estate developers -- have different strategies for dealing with a slowing China. One says it is time to exit the Chinese real estate market; the other sees slowing growth as an opportunity to expand.
The Philippines' second-largest real estate company by market value, Ayala, is now running down its inventory in the northern metropolis of Tianjin.... SM Prime is unfazed by events in China. The largest Philippine developer in terms of market value is pushing through with its maiden residential project in the city of Chengdu, Sichuan Province.... The company, which runs six shopping centers in China, plans to expand at a rate of one mall a year. It also plans to list a real estate investment trust in China going forward. N
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The Philippines' second-largest real estate company by market value, Ayala, is now running down its inventory in the northern metropolis of Tianjin.... SM Prime is unfazed by events in China. The largest Philippine developer in terms of market value is pushing through with its maiden residential project in the city of Chengdu, Sichuan Province.... The company, which runs six shopping centers in China, plans to expand at a rate of one mall a year. It also plans to list a real estate investment trust in China going forward. N
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China – First tier city house prices return to growth in March / b
| LABOR & EDUCATION | Top |
China – Economy Puts New Pressure on Its Lopsided Job Market
China’s services business, which includes industries like logistics, retail, information technology and sanitation, is booming, driving job creation across the entire economy. Around 300 million people now work in services in China, accounting for nearly 40 percent of the world’s largest work force. But workers are not easily making the switch. .... soaring university enrollment means new graduates often struggle to find the high-paying white-collar jobs they were expecting....
China’s premier, Li Keqiang, recently sought to play down the importance of the G.D.P. growth target, saying instead that he preferred to focus on whether the economy was expanding in a way that created new jobs. And so far, it appears to be doing that. China added 13.2 million new urban jobs last year, surpassing Mr. Li’s official target of 10 million such jobs. NYT
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China’s premier, Li Keqiang, recently sought to play down the importance of the G.D.P. growth target, saying instead that he preferred to focus on whether the economy was expanding in a way that created new jobs. And so far, it appears to be doing that. China added 13.2 million new urban jobs last year, surpassing Mr. Li’s official target of 10 million such jobs. NYT
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| TECH | Top |
Apple – iPhone boom as China switches on
China’s iPhone sales leapt 72 per cent compared with the same period a year ago, outstripping US sales of the handset — another first for Apple.... The bigger screens offered by the latest iPhones released in September have driven a fresh wave of upgrades, especially in Asia. Apple has also been working to expand its retail stores and distribution in China. FT / WSJ
Apple has long laid the groundwork to reap big sales in China, and revenue growth from the region has steadily gained momentum. The company in late 2013 struck an important deal to sell iPhones through China Mobile, the world’s largest phone carrier. Apple is also expanding its operations in the region, with 21 retail stores and plans to increase that number to 40 by mid-2016. NYT / R
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Apple has long laid the groundwork to reap big sales in China, and revenue growth from the region has steadily gained momentum. The company in late 2013 struck an important deal to sell iPhones through China Mobile, the world’s largest phone carrier. Apple is also expanding its operations in the region, with 21 retail stores and plans to increase that number to 40 by mid-2016. NYT / R
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Apple – Runs Up Against Its Own Success
Apple’s bar is raised after each launch. Its market value has risen by 37% on average in each of the seven periods between iPhone model launches. At $106 billion when the original went on sale in June 2007, Apple’s valuation had climbed to just over $600 billion when the iPhone 6 launched. Now worth $750 billion, Apple could crack the $1 trillion level between the iPhone 7 and iPhone 8, if that pace is maintained. Not only will the law of large numbers make that hard—the laws of economics will too. WSJ
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Apple – Premium power / r
| TRADE & TRANSPORTATION | Top |
Truck – Drivers at biggest US port complex strike over wages
Truck drivers who haul goods from docks at the nation's busiest seaport complex walked off the job Monday in a dispute over their earnings and employment status, but port officials said the impact on international commerce appeared to be minimal. The ports of Los Angeles and Long Beach are the primary West Coast gateway for hundreds of billions of dollars of annual trade... About 16,000 truckers work the two ports, and several hundred from four companies were taking part of the job action AP
Truck – ATA Index increased in March / cr
| ENERGY & ENVIRONMENT | Top |
NatGas – Diplomatic Thaw Piques Interest in Iran
Iran holds the world’s second-largest gas reserves, behind only Russia. It is the world’s third biggest gas producer, behind Russia and the U.S. But ... exports are still tiny—just 9 billion cubic meters a year. That ranks Iran 23rd in the world, behind Brunei... Iran plans to boost gas output by 40% within five years. Tehran’s oil ministry boasts spending plans for over $10 billion worth of export pipelines. Iran’s government has said in recent days it is currently testing a pipeline built to export gas to Iraq, with sales due to start in May. WSJ
NatGas – Brussels treads a fine line with Gazprom
Brussels has not shied away from heavyweights such as General Electric, Microsoft and, more recently Google. But it has found charges of “excessive pricing”, as they are known in economist parlance, among the most difficult, “and that is the reason we rarely, if ever, pursue them”, says one EU official. In the case of Gazprom, the commission has found that the Russian energy company charges different prices across the EU. Lithuania, for instance, at times pays a third more than Germany. But experts say prices can vary across countries for a number of reasons, including distribution costs, the size of the market and the presence of other suppliers.....
Others believe this may be the start of a negotiation. “Maybe the European Commission is pushing Gazprom to make a proposal on price and then decide,” says Mr Mariniello. “It is far easier to say if a price is unfair than to determine what is fair.” FT
Others believe this may be the start of a negotiation. “Maybe the European Commission is pushing Gazprom to make a proposal on price and then decide,” says Mr Mariniello. “It is far easier to say if a price is unfair than to determine what is fair.” FT
NatGas – ‘US to launch export blitz, eyes global energy dominance’
The United States is poised to flood world markets with once-unthinkable quantities of liquefied natural gas as soon as this year.... Ernest Moniz, the US Energy Secretary... said four LNG export terminals are under construction and the first wave of shipments may begin before the end of this year or in early 2016 at the latest....
"We're just fifteen years into a 150-year process," said Steve Mueller, head of Southwestern Energy, the fourth biggest producer of gas in the US .... Mr Mueller said it had taken his company 17 days to drill a 2,600 ft well as recently as 2007. It has just drilled a 5,400 ft well in six days. .... US drillers can produce a third more natural gas today with 280 rigs than they did in 2009 with 1,200 rigs. ...
Gas sells at for $7 in Europe, and over $10 in North-East Asia, four times more expensive. This cost-gap has been a key driver behind America's so-called "manufacturing renaissance", stoking an investment boom in chemicals, plastics, and glass, and saving the country's steel mills from slow death. DT
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"We're just fifteen years into a 150-year process," said Steve Mueller, head of Southwestern Energy, the fourth biggest producer of gas in the US .... Mr Mueller said it had taken his company 17 days to drill a 2,600 ft well as recently as 2007. It has just drilled a 5,400 ft well in six days. .... US drillers can produce a third more natural gas today with 280 rigs than they did in 2009 with 1,200 rigs. ...
Gas sells at for $7 in Europe, and over $10 in North-East Asia, four times more expensive. This cost-gap has been a key driver behind America's so-called "manufacturing renaissance", stoking an investment boom in chemicals, plastics, and glass, and saving the country's steel mills from slow death. DT
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| HEALTH | Top |
H5N2 – New cases probable in Iowa, millions of birds affected
Initial tests have found five probable new cases of the rapidly spreading avian influenza on commercial poultry sites in Iowa, affecting more than 6 million birds... Additional tests are pending to confirm the highly pathogenic H5N2, agency officials said. Positive results would push the outbreak's national tally to more than 15.1 million affected birds from commercial flocks in 13 states. In the avian influenza outbreak of 1983 to 1984 in the northeast, which was the largest in U.S. history, about 17 million birds were culled....
Two bird flu strains have been discovered in the United States this year. The H5N2 strain is in Arkansas, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, Oregon, South Dakota, Washington and Wisconsin. It has also been identified on farms in Ontario, Canada. The H5N8 strain has been identified in California and also in Idaho....
The number of birds affected by the outbreak so far represents a fraction of the U.S. commercial flock. Chicken dominates U.S. poultry production. Poultry processors slaughtered nearly 8.7 billion chickens in 2014 and about 237 million turkeys, according Agriculture Department data. R
The virus typically dies in the warmth of spring and summer, and the Midwest is approaching the season where temperatures in the 70s and more ultraviolet rays should halt the virus. AP
Two bird flu strains have been discovered in the United States this year. The H5N2 strain is in Arkansas, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, Oregon, South Dakota, Washington and Wisconsin. It has also been identified on farms in Ontario, Canada. The H5N8 strain has been identified in California and also in Idaho....
The number of birds affected by the outbreak so far represents a fraction of the U.S. commercial flock. Chicken dominates U.S. poultry production. Poultry processors slaughtered nearly 8.7 billion chickens in 2014 and about 237 million turkeys, according Agriculture Department data. R
The virus typically dies in the warmth of spring and summer, and the Midwest is approaching the season where temperatures in the 70s and more ultraviolet rays should halt the virus. AP
H5N2 – An explanation of wild birds’ role in outbreak
Disease experts believe a portion of it came from European and Asian strains of bird flu that readily cause illness and death in birds and mixed with a North American strain that was less likely to cause severe illness as birds from different regions crossed migratory paths.... Bird flu has been found in more than 100 species of wild birds, but most are low pathogenic viruses — present, but don't sicken or kill it. The virus can be left behind in wild birds' feces, on feathers and on the bodies of dead birds. ... In some cases, the virus may enter on clothing or shoes of workers... wind could be carrying the virus in on dirt particles or feathers through barn ventilation openings. AP
H5N2 – Increased human protections offered as outbreak spreads
How severe such human infections could be is not known. But even if some people become ill, government researchers and public health experts said, it is highly unlikely the illness could be passed between humans – in part due to the genetic make-up of this particular flu strain... the CDC is also working through legal issues related to releasing the government’s stockpile of Roche's antiviral drug Tamiflu to be used for this outbreak R
H5N2 – Escalating Outbreak Takes Toll on US Poultry Farms
Turkey farms have accounted for the bulk of commercial flocks afflicted with the flu. That may be because the upper Midwest—where the virus has been most prevalent—is home to more turkey farms than chicken farms... turkeys are more susceptible than chickens are to this strain of avian influenza...
About 40 countries since December have imposed bans on poultry products from a specific county, state or the entire U.S. Shipments of chicken-broiler meat fell 17% in February versus the same month a year ago, partly due to trade restrictions implemented by China and South Korea WSJ
Minnesota Gov. Mark Dayton declared a peacetime state of emergency ... to fight a deadly form of bird flu that has already killed millions of birds in the country's top turkey-producing state. AP
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About 40 countries since December have imposed bans on poultry products from a specific county, state or the entire U.S. Shipments of chicken-broiler meat fell 17% in February versus the same month a year ago, partly due to trade restrictions implemented by China and South Korea WSJ
Minnesota Gov. Mark Dayton declared a peacetime state of emergency ... to fight a deadly form of bird flu that has already killed millions of birds in the country's top turkey-producing state. AP
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Antibiotics – Tyson Joins the Flock
Tyson Foods Inc. plans to largely eliminate antibiotics used in human health from its chicken production... by the end of September 2017... The company may still use some antibiotics used in human medicine to treat birds that become sick, and its suppliers will continue to administer antibiotics used solely to prevent and treat animal maladies.... Tyson’s plan, announced Tuesday, is among the biggest in a string of actions by meat producers, restaurant chains and retailers to address fears that widespread antibiotics use ... Tyson also is exploring similar moves in swine, cattle and turkey. WSJ
Federal regulators have been increasingly vocal in raising concerns over the use of antibiotics in animal husbandry as more and more bacteria and pathogens have shown resistance to such drugs. In 2013, the Centers for Disease Control and Prevention estimated that at least two million Americans fall sick each year because of antibiotic-resistant infections and at least 23,000 die as a result. NYT
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Federal regulators have been increasingly vocal in raising concerns over the use of antibiotics in animal husbandry as more and more bacteria and pathogens have shown resistance to such drugs. In 2013, the Centers for Disease Control and Prevention estimated that at least two million Americans fall sick each year because of antibiotic-resistant infections and at least 23,000 die as a result. NYT
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| ENDNOTES | Top |
The Guardian as contrarian indicator
The editor of The Guardian launched his valedictory campaign to demand divestment from fossil fuels with a wrap-around promotion and the paper’s full moral force..... Investors, he explained, should sell their shares in oil, coal and others digging up nasty carbon-based fuels, because they weren’t really worth as much as everyone thought... It turned out he was a perfect contrarian indicator. He picked a six-year bottom in the US benchmark oil price ft
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Warren Hatch, PhD, CFA
Portfolio Management and Global Investment Strategy
McAlinden Research Partners
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