Today is Super Tuesday. Excited. This is all going to be very interesting, because a number of the states that are voting today have very strong evangelical tendencies. And I am endlessly entertained by their choice between the lesser of two evils: Mitt Romney the Mormon Latter Day Saint, or Rick Santorum the Roman Catholic. I may be wrong, but I think that most of the Bible Belt barely consider Catholics to be Christian – never mind the Mormons.
“What we need in this country is a revival”
It’s the extreme right wing tagline. I’m betting on the Pope. Link: Super Tuesday.
- After all that jazz last week about China’s economy improving, Chinese stocks have had their biggest fall in a month on fears of an economic slowdown. Although I’m always a bit sceptical of the chain of causality identified by journalists. For example: they could just as easily claim that the Chinese stocks fall as investors return to Europe on the back of renewed confidence in the Eurozone thanks to the success of the Greek Debt Swap – no doubt, that will be next week’s headline. But that said, Chinese Premier Wen Jiabao cut the economic growth target from 8% to 7.5%, stating that China needs a more sustainable model. The markets await the announcement of Chinese inflation data on March 9. Link: China’s stocks decline.
- Oil has been trading at a two-day high on fears that Iran will disrupt supply. No doubt, that fear will be priced into oil futures for a while yet. Link: Oil trades near two day high. At the same time, the HSBC chief economist has released a report stating that Oil is the new Greece as sources of investor anxiety go. The world’s fragile economic recovery (ie. that of Europe and the US) could easily be derailed by oil shocks similar to those of the 1970s. And the issue isn’t just Iran sanctions: with Israel announcing that it’s poised and ready to defend itself, there is the threat of the two countries having a stand-off in the Middle East. Naturally, the most devastating part of that would be oil supply disruption. And politics aside, there is also the risk that quantitative easing in the US and Europe will drive investors in search of stores of value. The Austrian Economists will tell everyone to buy gold. But oil (in its futures contract form) is a brilliant store of short-term value. Link: Oil is the new Greece.
- Evangelos Venizelos, the Greek Finance Minister, says that he is willing to force debt-holders should the debt-swap not gather the expected voluntary support. Well, obviously – otherwise, the CAC (Collective Action Clauses) legislation wouldn’t have been pushed through. But most seem optimistic that enough debt-holders will agree to the swap. Link: Venizelos says Greece prepared to force matters.
- Bloomberg is reporting a scandalous secret loan agreement between Greece and Goldman Sachs, which allowed Greece to show an improvement in its public finances via a derivative swap arrangement. The terms of the agreement are not yet clear, but the size of the loan to be repaid increased from 2.8 billion euros in 2001 to 5.1 billion euros in 2005. Nothing like complex finance arrangements where Goldman makes a profit and earns a management fee. Investment Banks rule. Link: Goldman Secret Greece loan shows two sinners.
- Australia has left their Reserve Bank interest rate unchanged at 4.25% (again). Even though inflation is expected to weaken in the next two quarters, RBA Governor Glenn Stevens expects it to stay within the range (2% – 3%) of the RBA inflation-targeting regime. Link: RBA holds rate steady.
- And the Africa Business News in brief. Link: ABN Briefs. The highlights:
- Impala Platinum announced that the Rustenberg mine has restarted as planned. Almost 15,000 of the 17,000 fired workers have been rehired.
- Nigeria is due to award new gasoline import allocations this month. This will ease gasoline supplies – as the country has been reliant on direct exchanges of gasoline for crude since the government halted import allocations in January.
- Malawi president Bingu wa Mutharika accused Western donors of funding opposition movements and told them to “go to hell”.
- Indian conglomerate Tata has formed a Joint-Venture with South African miner Exxaro to focus on renewable energy projects in Southern Africa.
- The ANC is considering constitutional reform that would include a change in the powers and mandate of the SARB.
That’s all for now.
Have a super Tuesday.
Gareth Crosland March 6, 2012 at 10:24
Does the story on Nigeria suggest that with all its crude oil, Nigeria still exchanges crude for petrol and diesel? Why don't they have their own refinery? Seems crazy to me….Reply
Jayson Coomer March 6, 2012 at 11:23
I've read that Nigeria has "insufficient refinery capacity" for its fuel needs. So about 85% of their fuel needs are imported. Nigeria gets its fuel allocations from two places:
1. swap arrangements that exchange crude for refined fuel products; and
2. the Petroleum Products Pricing Regulatory Agency (PPPRA) awards allocations to importers.
The trouble with the second is that the Nigerian government has traditionally subsidised the import of fuel (hence the allocations). But this puts a strain of government finances, and the 30% (I think it's that amount) subsidy has become a drag on Nigeria's economic growth. So the Nigerian parliament has begun negotiating the removal of the subsidies – and suspended allocations of imports while that debate was ongoing. After fierce protests from the public after it tried to remove the subsidy completely, the government reinstated a partial subsidy.
And then the government discovered some discrepancies (about $4 billion worth) between the subsidies granted and the amount of fuel entering the country. Surprised? So now they're investigating that as well.
It's all very complicated. Obviously.Reply