*** Oil nears all-time highs
*** Airbus vs Boeing: the trade war heats up
*** Dumping modelling for real estate...the government must be bold...China's ever-increasing power...and more
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------------------- The thought of the looming hurricane season, combined with the kick-off of the driving season in the US sent oil prices over $55 a barrel this morning. Nymex crude traded 0.5% up at $55.33 per barrel, while Dated Brent gained just short of 1%, to trade at $53.17 a barrel.
Despite the oil price's steady gain to former highs, both FTSE heavyweights BP and Shell slid some 0.5% down before the weekend. BP closed at 561p while Shell fell to 488p.
The blue chip index gained 0.3% last week, to trade at 4,994 on Friday. The FTSE 250 shot up 1.5%, to trade at 7,204 a 35-point hike on the day. And across the pond, the Dow Jones fell 1% on Friday to trade at 10,460, while the Nasdaq shed 1.3% to close at 2,071. Why the weakness in the US indices?
US payroll data for May surprised investors, with just 78,000 non-farm jobs added in the month less than half the projected 185,000. The prompted another bout of speculation about the world's largest economy, and whether it could be slipping into a soft patch. Remember that in April non-farm jobs came in at a much higher 274,000.
Back in the city, PHS shares jumped some 5% on the prospect of a bidding war among private equity groups. PHS, the second largest washroom services outfit in the UK saw its share price close at 102p, up 5p on Friday. Up to now, the group has received five indicative offers, which could value it at £700m.
BAE Systems closed 2% higher before the weekend, as a top blue chip gainer. Yet it's not all good news for the group, which has a 20% holding in Airbus: Virgin Atlantic, furious at the delay in Airbus's new double- decker jumbos, has demanded some form of compensation from the aircraft maker. What's more, the trade war between Airbus and Boeing has taken a turn for the worse.
And shares in the speculative oil exploration group White Nile shot up on Friday after resuming trading. Shares closed 23p higher at 141p. The group's trading had been suspended by the LSE over fears that traders who had shorted the stock would be unable to cover their positions. The company listed at 10p a share and has seen its market cap rise from £15m to £246m.
------------------- So if Playboy's Playmate of the Month, a rather amiable Ms Jamie Westenhiser, notes that she wishes to exchange modelling for a career in real estate investing, just what are the implications? Could it be that the 'tidal wave' into property speculation in the US smacks of a bubble about it? asks MoneyWeek's Tim Price. And could it end with 'lots of arses being handed to their owners'; which would then impact on the fragile global financial ecosystem? Fore more, see:/article/817 The UK government has two foremost fiscal rules: that it should not borrow to cover current spending, and that net debt should not exceed 40% of spending. Yet the latter law now 'threatens to curtail investment that is needed', says Morgan Stanley economist David Miles in the Global Economic Forum, and should therefore either be scrapped, or amended so as to lift the net debt ceiling. This won't be easy Chancellor Gordon Brown would get much flack for any such change but now is the 'time to be bold'.
If China wanted to, it could teach America a lesson to remember. How? Well, considering that both China and Japan are the world's two biggest dollar holders and creditors, it would be easy for them to merely 'trigger the dumping' of their dollars, says Hans Sennholz in The Daily Reckoning. The result? The dollar would crash, inflicting terrible losses on all dollar holders, and would 'upset all bond and stock markets, and depress the world economy'. And according to Sennholz, there are a growing number of reasons for them to take this option seriously.
