Spain's jobless rate at end 2111 was 22.85%; Samsung reports record profits; Baltic Dry Index down 27 days in a row

International
Spain's jobless rate at end 2111 was 22.85%; Samsung reports record profits; Baltic Dry Index down 27 days in a row
By Finfacts Team
Jan 27, 2012 - 9:58 AM

Official figures from Spain today show that Spain's jobless rate rose to 22.85% at the end of 2011 -- the highest level in the industrialised world.

The number of unemployed rose above the 5m mark, jumping 295,300 to 5.27m in the last quarter of 2011, a National Statistics Institute report showed.

The CEO of the UK state controlled Royal Bank of Scotland has been awarded a bonus worth £963,000 - - about 60% of his entitlement, following political pressure to limit the pay-out.

Stephen Hester who earns a salary of £1.2m, will receive 3.6m shares in the bailed-out financial institution, the bank's board announced last night.

British Prime Minister David Cameron had made clear that he considered a seven-figure sum would be unacceptable.

South Korea's Samsung Electronics today reported a record operating profit of 5.3 trillion won ($4.72bn) in the fourth quarter, boosted by surging smartphone sales.

The company also announced a 25 trillion won investment in its chipmaking and panel-making business.

Recruitment group CPL today reported pre-tax profits of €4.5m for the six months to the end of December, a 17% rise on the same period a year earlier.

Revenue in the period rose by 28% to €142.7m and earnings per share were 20% higher at 10.9 cent. A 20% higher interim dividend of three cent is to be paid.

UK economy continuing to struggle: David McNamara, economist at Davy comments - - "Worse-than-expected retail data ended a week of dire releases for the UK as Wednesday's GDP figures all but confirmed that growth will slip back into negative territory in Q1. Reported retail sales, a survey of the retail and wholesale sectors in the UK, fell into negative territory for January with a contraction of -22, well below consensus estimates. The jump in the index to 9 in December now appears to have been an upward blip in an index trending negatively over the past six months. This likely fall-off in consumption means that a double-dip recession is all the more likely in the first half of 2012.

In the US, the Fed published the first of its long-term forecasts on Wednesday. The Federal Open Market Committee now expects to hold rates near zero through to late 2014. Another significant step taken by the Fed was to publish its specific inflation target for the first time. An explicit target of 2% annual inflation had long been advocated by chairman Bernanke and should in theory provide increased economic stability as investors can anticipate the Fed's response to a change in the long-term rate. Yesterday's US durable goods data yielded higher-than-expected gains, indicating an upturn in business investment into 2012, while today's Q4 GDP release should show that the economy grew in the region of 2.5-3%. Nevertheless, chairman Bernanke, cognisant of the fragile nature of the recovery and the headwinds from Europe, gave the strongest hint yet of a third round of quantitative easing in order to kick-start the economy in 2012.

Irish retail sales for December released today should reveal a positive swing in sales over the festive period. Consumers may have brought forward purchases into December, aware of the looming VAT increase in January, while the year-on-year growth may flatter to deceive after a comparatively mild Christmas period this year."

Economic View; Irish referendum on Fiscal Compact less likely than in December: Dermot O'Leary, chief economist at Goodbody comments - - "Ever since the Fiscal Compact was agreed at the December meeting of EU leaders, there has been scepticism about both its ability to solve the current problems of the euro-zone, but also some countries willingness to adopt it. The Irish Government has already given its support for the Compact, but the question of whether a referendum is to be required has been an open one.

Due to legal precedent, any further enshrined transfer of power to the EU must be ratified by a public vote in Ireland. The original wording of the Compact, stating that the fiscal rules must be contained in “constitutional or equivalent law”, meant that it was very likely that a referendum would be required. Draft versions of the text have since removed this wording and replaced it with the statement that the rules would “preferably” be written in the constitution.

The key proponents of the Compact – Germany and the ECB - are not best pleased with this change, as it gives some wriggle room around what are supposed to be binding rules. Nevertheless, reports this morning in the Irish Times suggest that Germany is now more willing to go along with the revised text. As a result, this makes it less likely that a referendum will indeed be required in Ireland, although we will not get a conclusive view on this issue until the final wording is agreed at the EU summit on Monday and then examined by the Irish Attorney General next week.

The other main issue ahead of Monday’s summit continues to be Greece, where a stand-off between Greece and its creditors is likely to mean that public authorities will have to make a larger contribution, either by way of haircuts on ECB holdings of Greek bonds or by additional funding by the Troika. It is unlikely that these issues will be ironed out by Monday, leaving the key focus of Monday’s meeting on the Fiscal Compact and efforts to tackle the deteriorating economic growth picture."

The LTRO Was An Important Step: Summers: Larry Summers, economist and Charles W. Eliot University Professor at Harvard University, told CNBC, "I think the LTRO will be remembered as an important step. It is providing very substantial liquidity in Europe that is lubricating both credit and economic activity, the sense that we are near the edge of a precipice has been walked back considerably:"

Japan's Nikkei 225 dipped 0.09%; China's markets are closed this week for the Lunar New Year holiday; South Korea's Kospi index rose 0.58%. Australia's S&P/ASX 200 added 0.402% and the Bombay Stock Exchange Sensex 30 index in Mumbai advanced 0.96%

In Europe, the Dow Jones Stoxx Europe 600 is down 0.17% in early trading Friday.

For live currency updates, check the right-hand column of the Finfacts home page.

The US dollar fell to $1.6038 per euro on Tuesday, July 15, 2008 - an-all time record.

On Thursday, July 15, 2010, the index fell for the 35th straight session, by 9 points, or 0.537%, to 1,700 points, Bloomberg report.

On Thursday this week, the BDI fell 31 points or 3.95% to 753 - - down 27 days in a row.

Freighter Oversupply Weighs on Shipowners and Banks - - Jan 26, 2012: The New York Times says vessels bought during the global commodity boom are only now being delivered, putting pressure on the European banks that financed the purchases.

The skyscrapers and immaculate beaches of Singapore's seaport look out on one of the world’s largest parking lots: mile after mile of empty cargo ships, as far as the eye can see.

Similar fleets bob at anchor, with empty cargo holds, off the coasts of southeast Malaysia and Hong Kong. And dozens of newly built ships float empty near the giant shipyards of South Korea and China, their owners from all over the world reluctant to accept delivery during one of the worst markets ever for the global shipping industry.

As recently as six weeks ago large freighters that can carry bulk commodities like iron ore or grain were fetching charter rates of $15,000 a day. Now, brokers and owners say, the going rate is $6,000 a day. If any customers can even be found.

Crude oil for February 2012 delivery is currently trading on the Chicago York Mercantile Exchange (CME/Nymex) at $99.91 up 21 cents from Thursday's close. In London, Brent for February delivery is trading on the International Commodities Exchange at $111.15. The North Sea benchmark accounts for two-thirds of the global market.

The margin between the US benchmark WTI (West Texas Intermediate) used on the New York Mercantile Exchange and Brent is over $11 - - The Globe and Mail says that for the past 10 months, Canadian producers - - whose prices are tied to WTI - - have been taking steep discounts for their oil compared with international crude prices that are benchmarked against North Sea Brent, which can be shipped more readily. In the past, WTI tended to trade at a small premium to Brent, because it is easier to refine.

That spread hit a peak of $28.08 (US) on Oct. 14, but has fallen dramatically since then. After plans for more pipeline capacity at Cushing, Oklahoma, the differential narrowed.

The spot price of an oz of gold is trading in New York at $1,719.90 down 60 cents from Thursday's close in New York.

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