Archives of “Chemistry” tag

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USD/JPY: Intra-day range In 2019 narrowest since 1976; Where next? – MUFG

  
Analysis, Forex
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Can the low volatility continue?

MUFG Research discusses USD/JPY outlook and targets the pair at 107, 106, 105, 104 in Q1, Q2, Q3, and Q4 respectively.

“The intra-day high-to-low trading range for USD/JPY in 2019 was 7.6% – that’s the narrowest trading range since 1976 according to Bloomberg data. Taking the last three years the trading range has been just 13.5% underlining the remarkable stability of USD/JPY. 3mth ATM implied volatility fell to 4.99% in December, a record low underlining the conditions conducive to carry. These conditions helped keep the yen weak but failed to trigger any notable sell-off of the yen,” MUFG notes.

“In our view that is a reflection of underlying positives for the yen that will contribute to yen strength this year, even if financial market conditions remain relatively benign…We see limited upside for USD/JPY from current levels. The factors above will act to limit yen weakness. We do not assume any major risk-off event this year but the assassination of Qassem Soleimani in Baghdad on 3rd January is a clear near-term upside risk for the yen that has emerged as 2020 commences,” MUFG adds.

Sources: China purchases 5 cargos of soybeans from the US

  
  Analysis
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About 300,000 tonnes

Sources are saying that China has purchase 5 cargoes of soybeans from the US. That is about 300,000 tonnes.  That is above an earlier report of two cargoes or 120,000 tonnes.
There are also unconfirmed reports that China is preparing for the December 15 tariffs to be enacted.

South Korea’s vice fin min says watching markets for impact of North Korea issues

  
Analysis, Politics
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Sounding a warning for volatility related to NK missile tests and other geopolitical issues

This comes after North Korea’s state media KCNA reported on Sunday that the country had conducted a “very important” test at its Sohae rocket-testing ground. NK have previously agreed to close the facility. But, no, they have not.
US President Trump had words on the NK tests over the weekend:
  • “Kim Jong Un is too smart and has far too much to lose, everything actually, if he acts in a hostile way. He signed a strong Denuclearization Agreement with me in Singapore,” 
  • “He does not want to void his special relationship with the President of the United States or interfere with the U.S. Presidential Election in November” 

Rare-earth metals fall to 7-month lows as China resumes Myanmar supply

  
  Analysis
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The prices of rare-earth metals have tumbled from their June highs after China, a key refiner, resumed the import of ores from Myanmar in September but supply concerns continue to plague the market.

In mid-November, neodymium, an ingredient of permanent magnets used in electric vehicle motors, was traded at around $54 per kilogram, while dysprosium, which is added to improve permanent magnets’ heat resistance, was traded at around $230 per kilogram. Both values were 20% lower than their recent highs in June, and at their lowest points since April.

China’s Yunnan Province, which borders Myanmar, suspended imports of all resources, including rare-earth ores, from its neighbor in November 2018. It was thought that this move was a crackdown on the smuggling of rare-earth metals into China from mines in neighboring Kachin State and other places in Myanmar, where many Chinese were working.

Rare-earth ores mined in Myanmar contain high concentrations of dysprosium, which is mined in only limited areas in China. Myanmar had become an attractive source for Chinese refiners as its rare metals are traded at relatively low prices due to cheap labor and loose environmental protection.

The suspension of imports from Myanmar has pushed up dysprosium prices since the start of the year, paving the way for soaring rare-earth metal prices in May and June over speculation that China could announce a ban on imports. Rare-earth metal prices are particularly susceptible to movements in China’s market, given its small size and the country’s dominance.

But the suspension was abruptly lifted in late September and even now, traders have few clues as to the reasons behind China’s move. “I have no idea what is going on,” said Yutaka Kawasaki, general manager of Samwood, a Japanese trading house that deals in rare earth. (more…)

Oil hit by double-whammy as Bolton turfed and EIA cuts demand forecast

  
  Analysis
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Oil drops $1 fast

Oil drops $1 fast
WTI crude oil fell to $57.30 from $58.50 in a quick move after Trump announced he was firing national security advisor John Bolton. It’s since bounced back 40 cents.
Bolton has long favored military solutions everywhere, but particularly in the Middle East. The news diminishes the chances of bombs falling on Iran.
Minutes after that news, the EIA lowered its forecasts for world oil demand this year and next. They saw a rise of an 890,000 barrel per day rise compared to 1 million barrels previously for this year. For 2020, they trimmed the forecast by 30,000 bpd to a rise of 1.4mbpd.
Offsetting that somewhat is a lower forecast for US production next year at 13.23 mbpd compared to 13.26 mbpd.

He was once probably the richest man. They were bringing in $1B a year in profits in 1978.

  
  Education
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Embedded image permalink

During its heyday, Pablo Escobar’s drug cartel spent $2,500 per month on rubber bands for bricks of cash. Mental Floss has a interesting profile of the drug lord.

The profits were astronomical at every step. In 1978 each kilo probably cost Escobar $2,000 but sold to Lehder and Jung for $22,000, clearing Escobar $20,000 per kilo. In the next stage they transported an average of 400 kilos to south Florida (incurring some additional expenses in hush money for local airport authorities) where mid-level dealers paid a wholesale price of $60,000 per kilo; thus in 1978 each 400-kilo load earned Escobar $8 million and Lehder, Ochoa, and Jung $5 million each in profits. Of course the mid-level dealers did just fine: after cutting the drug with baking soda each shipment retailed on the street for $210 million, almost ten times what they paid for it.

Soon Lehder was hiring American pilots to fly a steady stream of cocaine into the U.S., paying them $400,000 per trip. At one trip per week, in 1978 this translated into wholesale revenues of $1.3 billion and profits of $1 billion.

November core sector output at five-month high of 6.7%.Another Useless Data For Traders

  
Analysis, Education
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The annual infrastructure output growth accelerated to a five-month high of 6.7%in November, driven by higher production of cement and refinery products, government data showed on Wednesday.

The output expanded 6.3% year-on-year in October. It was 3.2% in the same month last year.

On annual basis, the coal production increased by 14.5% during the month.
The cement output accelerated to 11.3% as against -1% in October.
The April-November core industries’ growth increased to 4.6% from 4.1% a year earlier.

The infrastructure sector, which comprises coal, crude oil, oil refining, natural gas, steel, cement, electricity and fertilisers, accounts for 37.9 percent of India’s industrial output.

Six Myths of Russian Vodka Put to the Test

  
Education, Life
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Russian vodka has garnered a legendary status around the world, developing its own mythology and attracting countless urban legends. Here are six of the most popular myths related to the drink.

 Myth 1: Russian vodka was invented by Dmitry Mendeleev, creator of the periodic table

Wrong. Dmitry Mendeleev is often credited with standardizing vodka’s 40% strength, based on his PHD paper “A Discourse on the Combination of Alcohol and Water.” However, Ethanol, on which vodka is based, was originally synthesized by Arabian scholars in the 11th century. They, however, only used it for medicinal purposes due to their religious beliefs. The original vodka, known back than as ‘aqua vitae’ (“water of life”) was brought to Russia in the 14th century, and presented to the Muscovite Prince Dmitry Donskoy in 1386 by an envoy from Genoa.

Myth 2: Vodka is the least harmful of all alcoholic spirits

Wrong. Drinks based on rectified alcohol (such as ethanol) are much more addictive and toxic than distilled alcoholic beverages such as whisky.

Myth 3: Vodka is purified with milk

Wrong. While a popular sales pitch, it is completely off the mark. Ethanol is already pure to begin with and needs no further purification, and methanol can only be purified by using coal.

Myth 4: Vodka can be used as a cold cure (more…)

Thermodynamics and the Market

  
  Education
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Does Prigogine’s principle have any predictive market implications?

Well if you move from thermodynamics to information theory entropy, and consider the information content of market prices, then there are two clear analogies:

1. There should be local, transient edges (Prigogine, market prices self-organizing to minimize the rate of information loss).

2. Those edges are decaying (Second Principle, “Changing cycles”).

Chemistry and Markets

  
  Education
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Since the topic of chemistry/market analogies has come up, I’m reminded of something I noticed while studying economics. Anyone else notice some resemblance between stoichiometry and the Cobb-Douglas production function?

Stoichiometry and the reaction rate equation: r = k(T) * A^n * B^m

And the Cobb-Douglas production function: Y=AL^{\beta}K^\alpha

What kind of “chemical” reactions can we find in the markets?

Something like this?

Trader-Cash_p + Stock <-> Trader-Stock + Cash_p

An important difference with this “reaction” is that _p, which is price, fluctuates; whereas chemical reactions always have the same stoichiometry. So, are there any useful analogies?

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