CNN Money
– U.S. oil is about to get squeezed even more. The Saudi-led cartel’s master plan to pump record amounts of oil in order to squeeze other producers out of the market appears to be working. «The strategy…appears to be having the intended effect of driving out costly, ‘inefficient’ production,» the International Energy Agency said Friday in its monthly oil market report.
Non-OPEC production will drop by nearly 500,000 barrels a day in 2016, the agency said. It singled out the U.S. shale oil industry as the biggest loser, forecasting that output will fall by 400,000 barrels a day next year. By contrast, demand for OPEC oil is expected to rise.
– China is dumping U.S. debt. China owned $1.3 trillion of U.S. Treasuries as of June, making it the biggest holder of U.S. debt.
But China’s foreign-exchange reserves plunged by a record $94 billion in August, according to the country’s central bank, leaving it with a war chest of $3.6 trillion. Analysts say it’s very safe to believe a big chunk of that decline occurred due to a reduction in U.S. Treasury holdings.
The selling and the potential that China will not be buying U.S. debt in the near future raises questions on its potential to increase America’s borrowing costs.
– Apple busted for not paying China taxes. China’s Ministry of Finance announced this week that Apple failed to account for 8.8 billion yuan ($1.4 billion) in sales in 2013, according to the government-run Xinhua News Agency. Apple also overstated its profit by 5.4 billion yuan ($820 million) that year.
As a result, Apple had to fork over 452 million yuan ($71 million) in unpaid taxes to the Chinese government, in addition to a 65 million yuan ($10 million) fine.
– Goldman Sachs: Oil could hit $20. Forget $40 a barrel oil. Prices could plummet to $20 as a massive supply glut persists until the end of next year. That’s the view of Goldman Sachs, which published an oil report Friday headlined «Lower for even longer.»
The bank’s commodities team slashed its forecast for average prices in 2016 to $45 per barrel from $57, but said the risks of a collapse to $20 were growing. Here’s why.
– OPEC will pump even more oil in 2016, led by increases in Saudi Arabia, Iraq and Iran.
– Producers outside OPEC, including U.S. shale oil companies, are proving more resilient to lower prices than expected.
– Growth in global demand for oil will slow next year. That’s largely due to China’s economic slowdown (…)
Bloomberg News
– Bank of Japan stimulus. More than a third of economists surveyed by Bloomberg see the Bank of Japan opting to expand its stimulus at its October meeting as the central bank struggles to raise inflation in the economy. One way the bank could add stimulus would be to increase the amount of ETFs it is authorized to purchase. The bank has already used much of its 3 trillion yen ($25 billion) allowance fighting recent volatility in the market, meaning that it must slow down purchases for the rest of the year.
– Copper recovery. Copper prices are in turnaround mode, with the industrial metal headed for its biggest weekly increase since May boosted by Glencore’s announced production cuts in Africa this week. Prices for the commodity have risen 5.4 percent this week.
– EU opposition ends merger. TeliaSonera AB and Telenor ASA scrapped the planned merger of their Danish telecoms businesses following opposition from EU Competition Commissioner Margrethe Vestager. As this is the first deal to land on Vestager’s desk since she was appointed as commissioner, the decision is being viewed as a setback for the entire European telecoms market where carriers are seeking tie-ups to reduce costs. Telecoms are among the biggest losers in the Stoxx Europe 600 Index this morning following the decision.
– Italian industrial output jumps. Industrial output in Italy rose the most in a year, jumping 1.1 percent in July, ahead of the median estimate of economists surveyed by Bloomberg which called for a 0.8 percent increase. With the Italian economy continuing to struggle for growth, it seems that Prime Minister Matteo Renzi is betting that housing could be key to any improvement. Bloomberg News calculations show that real estate is the component of GDP whose weighting has risen the most since 2007, with Renzi’s promise to abolish a controversial tax on first homes in 2016 set to boost that further.