The wealthier are getting more and more wealthy

Millionaires are expected to control nearly half of the world's personal wealth by 2019, according to a new study, suggesting that the wealth gap will continue to widen.

The Global Wealth report from Boston Consulting Group (BCG) said the number of millionaires in the world grew to 17 million in 2014, up from 15 million in 2013. The world's millionaires now control 41 percent of the $164 trillion in global private wealth, up from 40 percent in 2013. The report said millionaires are expected to control 46 percent of the world's wealth in 2019.

The growing fortunes of the wealthy are owed largely to rising stock markets and asset prices around the world. According to BCG, 73 percent of the gains in global private wealth last year came from market performance on existing assets rather than newly created wealth or businesses.

"The wealthier are getting more and more wealthy," said Anna Zakrzewski, a BCG partner and managing director. "They have a much larger share of their wealth invested in equity markets and last year was a good year for market performance."

By far, the U.S. still has the largest number of millionaires. That segment of the population grew by 4.7 percent last year to 6.9 million. (BCG defines millionaires as households with $1 million in easily monetized wealth—cash, stock and securities, pension funds and other financial assets. Their wealth measurement doesn't include real estate, business ownership and collectible and consumer goods).

China ranked second in millionaire population but had the largest number of new millionaires in 2014. Its millionaire population grew to 3.6 million from 2.4 million in 2014, meaning the world's second largest economy added more than half of the world's 2 million new millionaires last year.

Ranking third was Japan, with 1.1 million millionaires, up 4.7 percent from 2013.

Switzerland had the highest concentration of millionaires, or millionaires per capita. Fully 13.5 percent of Switzerland's population are millionaires. Bahrain ranked second, with 12.3 percent, followed by Qatar with 11.6 percent.

The report also highlighted a growing divide between the rich and the super rich, as billionaires and those with hundreds of millions of dollars enjoy stronger wealth gains than mere millionaires.

The number of ultra-high-net-worth households—which is defined as $100 million and up—is expected to grow by 19 percent globally and 12 percent in North America by 2019. 

In contrast, the number of "lower high-net worth" households, or those with $1 million to $20 million, is expected to grow by only 6.9 percent.

Thank you for reading Money Executive.

US Fed’s rate hike pricing

No surprises from FOMC minutes with suggestion that a June rate hike is off the table. Current market pricing of US Fed interest rate hike is Jun 6%, Sep 40%, Oct 63%, Dec 94%.

The question now is whether the USD bid this week is a correction of the USD sell off past two months or a continuation of the broader USD rally past year.

The market will continue to be data dependent and news driven.  Tonight, we have ECB minutes, USD existing home sales, Philly Fed Manufacturing and ECB President Draghi speaking amongst other events. The Greece saga continues with a deal deadline at the end of the month.  

Trading Quote of the Day: “There is nothing wrong with changing a plan when the situation has changed.” –Seneca

Green lines are resistance, Red lines are support

EURUSD

Likely scenario: Short positions below 1.1165 with targets @ 1.106 & 1.1015 in extension.

Alternative scenario: Above 1.1165 look for further upside with 1.1215 & 1.128 as targets.

Comment: The pair stands below its resistance.

GBPUSD

Likely scenario: Long positions above 1.5445 with targets @ 1.563 & 1.567 in extension.

Alternative scenario: Below 1.5445 look for further downside with 1.539 & 1.535 as targets.

Comment: The RSI is well directed.

AUDUSD

Likely scenario: Short positions below 0.795 with targets @ 0.7855 & 0.783 in extension.

Alternative scenario: Above 0.795 look for further upside with 0.798 & 0.803 as targets.

Comment: As long as the resistance at 0.795 is not surpassed, the risk of the break below 0.7855 remains

NZDUSD

Likely scenario: Short positions below 0.7375 with targets @ 0.727 & 0.723 in extension.

Alternative scenario: Above 0.7375 look for further upside with 0.741 & 0.745 as targets.

Comment: As long as 0.7375 is resistance, likely decline to 0.727.

USDJPY

Likely scenario: Long positions above 120.7 with targets @ 121.5 & 122 in extension.

Alternative scenario: Below 120.7 look for further downside with 120.3 & 120.1 as targets.

Comment: The RSI lacks downward momentum.

USDCHF
Likely scenario: Long positions above 0.933 with targets @ 0.941 & 0.945 in extension.
Alternative scenario: Below 0.933 look for further downside with 0.927 & 0.9215 as targets.
Comment: The RSI is mixed and calls for caution.

USDCAD

Likely scenario: Short positions below 1.226 with targets @ 1.2155 & 1.211 in extension.

Alternative scenario: Above 1.226 look for further upside with 1.2305 & 1.2355 as targets.

Comment: As long as the resistance at 1.226 is not surpassed, the risk of the break below 1.2155 remains high.

GOLD

Likely scenario: Short positions below 1213.75 with targets @ 1200 & 1191 in extension.

Alternative scenario: Above 1213.75 look for further upside with 1224 & 1232 as targets.

Comment: As long as 1213.75 is resistance, likely decline to 1200.

OIL
Likely scenario: Short positions below 59.3 with targets @ 57.9 & 57.5 in extension.
Alternative scenario: Above 59.3 look for further upside with 60 & 60.8 as targets.
Comment: As long as 59.3 is resistance, likely decline to 57.9.

DAX
Likely scenario: Long positions above 11635 with targets @ 11900 & 12085 in extension.
Alternative scenario: Below 11635 look for further downside with 11415 & 11225 as targets.
Comment: The RSI is mixed.

We hope you will make wise investment decisions basing on the information given.

Here comes the Memorial Weekend

Drivers are likely to pay a few more cents per gallon for gasoline this Memorial Day weekend, which might be the highest prices of the year, experts say.

Tom Kloza, global analyst at Oil Price Information Service said he doesnt think we're going to see this huge crazy drop in gas prices. He thinks we saw one in 2012 in June, but he thinks the big drop comes after Labor Day.

Absent a major refining incident, hurricane or other disrupting factor, unleaded gasoline prices should peak for 2015 at about $2.75 per gallon in the next several days. 

Gasoline at the pump was averaging $2.72 a gallon  on Wednesday, 6 cents higher than last week and 33 cents more than a month ago, according to AAA. Kloza said he expects summer prices to hover around $2.50 nationally before dropping closer to $2-$2.25 in the fall.

"This weekend will be peak, and we'll see slight declines as we go through the summer," said Andrew Lipow, president of Lipow Oil Associates. "There's still a lot of crude oil out there that's going to temper any rises at all. But having said that, the demand for gasoline this summer is going to be very good, due to the lower prices."

Gasoline is expected to peak at about a dollar a gallon less nationally this year than last year, when the high was $3.71. Kloza said he thinks the futures market signaled the peak on May 6, when gasoline futures hit a high of $2.09 per gallon.

Memorial Day is viewed as the start of the summer driving season.

"It's a dress rehearsal for July and August. ...We're about six weeks away from the typical demand peak week which is in late July," said Kloza. "If you look at gasoline futures, there's a drop of about 30 cents that's perceived between now and December, but I think it will go down more than that."

One factor elevating the price this year is the outage at the Torrance, Calif. Exxon Mobil refinery, which produces about 10 percent of the gasoline for California, Lipow said. Californians were paying an average $3.80 per gallon of unleaded on Wednesday, according to AAA. 

"If you throw out California, the national average is about 10 cents lower," Kloza said. "I think we're going to see a substantial give back of some of the price strength in California because the wholesale prices have dropped as ... gasoline has arrived from Korea, Canada and the U.S. Gulf Coast."

Kloza said the Torrance refinery is not expected to reopen soon enough to affect summer driving, but it has caused price dislocations on the West Coast. For instance, gasoline was trading recently in the spot market at more than $120 a barrel, double crude prices. "In the rest of the country, gasoline trades for $10 to $15 over the price of crude. California really became untethered," Kloza said.

U.S. refineries were running at 92.4 percent of capacity last week, and gasoline production decreased slightly, according to the Energy Information Administration. Gasoline supplies declined by 2.8 million barrels, while distillates, including diesel fuel, fell by 500,000 barrels.

The EIA also pointed out that refining margins are at multiyear highs. For instance, the "crack spread," or difference between wholesale prices and crude oil, was the highest in New York Harbor since 2007, and in California it is dramatically higher.

"Refiners are doing splendidly," said Kloza. "The irony is that we had all the light shale crude in the U.S. The big worry among refiners was we're running this light sweet crude, and we're going to make too much gasoline." He said what's happened is that prices rose, and the refiners are making more profits.

Thank you for reading this blog. We look forward to seeing you soonest.

Becoming Financially Independent

One of the goals that we all have in common is that we all want to be financially independent. We all want to have enough money so that we never have to worry about money again. We want to build a financial fortress around ourselves. We want to make a high income, get out of debt, put money in the bank and have the ability to do the things we want without being worried about the costs. The only question is, “are we going to do it or not?”

The good news is that there are more people achieving financial independence faster today than ever before. There are currently almost four million millionaires, most of them self-made, first generation. Somewhere, somehow, someone becomes a self-made millionaire at the rate of one every four and a half minutes, 365 days a year. And for every person who becomes a self-made millionaire, there are many, many more who are achieving a net worth in the hundreds of thousands of dollars through different wealth creation strategies such as developing a millionaire mindset, developing habits of wealthy people among others..

By setting financial accumulation and financial independence as your career goals, and then by making a plan on the one hand to get better and better at what you do while on the other hand saving more and more of what you earn, you will become financially independent, if not a self-made millionaire in the years ahead.

Most great fortunes are built slowly. They are based on the principle of compound interest, what Albert Einstein called, “The greatest power in the universe.” In full 99% of cases where people become wealthy, it is over a long period of time, and it is based on slow, incremental growth as the result of compound interest.

Every dollar that you save, properly invested and protected, has the ability to grow 5% – 10% each year. As your money grows, it compounds on itself, and grows even more. According to Stanley and Danko, it takes the average millionaire 22 years to accumulate a million dollars from the time he gets serious about his financial life. Most wealthy people get rich slowly, by gradually increasing their earning ability, saving more and more from their income, and investing it carefully and intelligently so that it grows and compounds over the years. You must do the same.

Thank you for reading and lets look forward to creating sustainable wealth.

WEALTH CREATION

Over the years I have heard people say that you cant create wealth over night. Well, to me I think it depends how you look at the issue. In the sort run you could create temporary wealth overnight, and it depends on how you use that wealth you have got. If well invested, you could create long lasting wealth, but it is also so easy to lose it all.

I have met many people fronting different theories about wealth creation, but I have come to conclude that wealth creation is a gradual process. It takes a lot of discipline, sacrifice and patience coupled with research. If you started small and watched your wealth grow from a $1 per day to 5$ per day and before you know it you are making hundreds of dollars per day.

With this you can now say that you have succeeded in the wealth creation process.

Making money through on-line surveys?

https://www.surveysavvy.com/?m=6613081

The spillover effect of Oil price crash bankrupting small oil companies

Sherri McDaniel is already feeling the sting of the drop in crude oil prices from more than $115 per barrel in June to less than $50 in early January. She is president of ATEK Access Technologies, a small Minneapolis firm that owns TankScan, a wireless monitoring system that keeps track of fluid levels in oil tanks. Oil companies that use the system are starting to postpone orders, as they take a cautious approach to spending.

"In the oil fields, they are starting to pull back pretty heavily," McDaniel said. "They are literally taking tanks and laying them down on their sides." As a result, she explained, "we have a number of big orders that are temporarily on hold."

ATEK Access Technologies is one of many small and midsize firms that are already feeling the effects of lower oil prices. The causes of the decline are complicated, but they are an outgrowth of the domestic shale oil boom and a decision by OPEC, the cartel of oil-producing countries, not to rein in its own oil production in response. The result has been a price war.

Some big oil firms are already cutting capital budgets and jobs in response to lower oil prices, but it is smaller players in the industry that are feeling the pain most acutely.

More than 20,000 small and midsize firms drive the "hydrocarbon revolution" in the U.S. that has helped the oil and gas industry thrive in recent years, and they produce more than 75 percent of the nation's oil and gas output, according to the Manhattan Institute for Policy Research's February 2014 Power & Growth Initiative Report. The Manhattan Institute is a conservative think tank in New York City.

A sustained decline in prices could lead to layoffs at these firms, say experts. "The energy industry has been one of the job-growth areas leading us out of the recession," said Chad Mabry, a Houston-based analyst in the energy and natural resources research department of boutique investment bank MLV & Co. in New York City. "In 2015, that changes in this price environment," he said. "We're probably going to see some job losses on a fairy significant scale if this keeps up."

Growth of jobs in the oil and gas industry greatly outpaced the private sector from 2007 to 2012, according to the U.S. Bureau of Labor Statistics. There was 40 percent growth in jobs in oil and gas, with 162,000 new jobs created, compared to 1 percent job growth in the private sector. By November 2014, 215,200 people worked in oil and gas extraction alone. And with job-related fields such as mining and quarrying factored in, employment in the industry hit 869,000, the BLS found.

Many of the new jobs are well-paying. Average hourly earnings in oil and gas extraction were $31.62 for non-supervisory workers in October and $40.79 for all workers.

McDaniel said ATEK Access Technologies has the staying power to withstand the drop in oil prices. Her firm owns three brands that have combined revenues of $50 million and collectively provide jobs for 200 employees. However, she believes many owners are in a weaker position to wait it out.

Companies on the brink

The small firms that are hurting range from exploration ventures to consultancies.

Last week a small central Texas oil producer, WBH Energy Partners, filed for Chapter 11 bankruptcy protection. The financial troubles reportedly began in September when Minnesota debt investor Castlelake declined to provide more funds under a credit facility. The 3-year-old company had more than $30 million in liabilities and more than $10 million in assets. It had about 2,600 net acres of oil and gas land in North Texas Barnett shale combo play, a region rich in shale that overlaps with oil formations. The filing demonstrates how small oil producers are feeling the squeeze on two fronts—falling oil prices and spooked investors.

Many industry experts say the struggles small players are facing are a harbinger of things to come, since there are many overextended producers who have not hedged their production well enough—a task that has gotten harder since big banks have exited the physical commodities business.

Under pressure from an activist investor who wanted liquidity, Trevor Spagrud, president and CEO of Hyperion Exploration, a publicly traded junior light oil and gas company in Calgary, Canada, was preparing in December for the sale of the roughly 4-year-old company to a Chinese firm, Tri-Win International Investment Group.

With drilling each well costing $3 million to $4 million when it used horizontal multi-stage fracking techniques, Hyperion was under capitalized to deliver a "highly repeatable rate of return" in the immediate future, Spagrud said. Hyperion's team, about 16 people at its peak, had shrunk to eight as the company prepared for the sale.

"We could have tried to raise equity," he said. "When an activist investor gets involved, they quickly want full liquidity. We were somewhat hamstrung by that mandate. We have entered into a transaction to do that."

Spagrud, an engineer, is planning to start another venture in the industry once the deal is completed. "It's been frustrating for so long, you just want to move on," he said.

At ClearHedging, a 2.5-year-old firm that provides risk-management hedging advice to oil and gas producers, Chicago-based executive director Brad Carmody said that while current clients are still using its services, new business is "definitely quiet." With prices so low, he explained, "there's no interest in hedging at all."

He and partner A.J. McNally, based in the Greater New York City area, are now figuring out how to pivot in a new direction. "At the time we got into the business, the industry was booming. The price of oil was high," Carmody said. Now they're looking at "How do we apply our skill set outside of oil and gas?"

Small vendors—ranging from those who lease out oil rigs to teams that assist in drilling and completing wells—are particularly vulnerable. Many operators who might need their services have been doing their capital budgeting for 2015, said MLV's Mabry, adding, "We've seen a pretty traumatic response. There are hundreds of millions in capital that won't be spent."

Industry's downward slide

For small and mid-cap firms in the industry, MLV was projecting a 10 percent to 15 percent growth in capital spending before prices plunged. It is now expecting a 20 percent to 25 percent decline, he said.

"Everyone is on edge," Mabry said. "The companies we talked to said they haven't even gone back to their drilling contractors. Their vendors have come to them and said, `I know things are getting tight next year. We're willing to negotiate on rates and work with you in this environment.'"

Some firms that serve the oil and gas industry are finding the lower prices have an upside. TempoIQ, a 14-employee start-up in Chicago, is among them. It offers a cloud-based software system that helps clients interpret data that come from sensors. Oil companies—comprising about 15 percent to 20 percent of its customer base—have used its technology to track data such as pressure readings from sensors on oil pipelines, said Justin DeLay, co-founder and chief marketing officer.

DeLay believes sensors—and the technology to interpret the data they gather—will likely become more important as oil companies look for efficiencies in their operations to offset lower fuel prices. "There is a big push for preventative maintenance," he said. "They are looking for early warning signs something is about to break."

In the meantime, clients in other industries have more money to invest in technology now that their fuel costs have decreased, he said. "What we've been hearing is, `Hey, we've wanted to do a sensor project like this for a while but hadn't had the ability to do it because we haven't had enough money to do it,'" said DeLay.

So what is behind the rapid rise of ‘China’s Apple’ Xiaomi?

Xiaomi is likely to be the biggest smartphone maker you've never heard of.

The company – often dubbed "China's Apple" by analysts - has had a rapid rise in 2014, coming out of nowhere to knock Samsung off the smartphone top spot in China and propelling itself to number three smartphone vendor globally, according to IDC.

Investors are flocking to put money into Xiaomi, a company that was only founded in 2010. It raised more than $1 billion in the latest round of funding, according to the Wall Street Journal, giving the Chinese company a $45 billion valuation – bigger than Uber, Netflix and Twitter.

But how has Xiaomi risen so far so fast?

Razor-thin margins

Xiaomi's success has been driven by the Chinese market where it sells over 90 percent of its smartphones and is the number one player.

The company is known for its high-spec smartphones, which can take on its premium rivals such as Apple and Samsung, but sells at less than half the cost. This comes at a price for Xiaomi which has an approximately 3 percent margins on its phones, analysts said.

"Xiaomi has changed the game because it has such a strong image of affordability but with equally strong functionality for the phone," Can Huang, senior research analyst at Mintel, told CNBC by phone.

But Xiaomi is not worried about margins. Shipping their flagship Mi4 smartphones are a way to give users a platform to use the company's software.

"Sometimes we call Xiaomi the Chinese Apple and that gives you a hint about how it is perceived. They have a long term strategy on building an ecosystem and pathway through the hardware to get the software to closely interact with people's lives," Huang said.

Online-only selling

Xiaomi has run a forum since its inception where consumers and developers can post and chat. This allows Xiaomi to quickly act on feedback and has led to them releasing updates for their software every couple of weeks to keep their offering up-to-date.

In addition, the company also sells their phones in China and India, its second-biggest market, through online-only channels, keeping the cost base down and appealing to a tech-savvy audience.

Xiaomi also operates its own app store – like Google Play or Apple's App Store – keeping users in its ecosystem.

Earlier this year, Xiaomi announced it was entering 10 new markets including Brazil and Russia. But analysts said that as the Chinese smartphone maker looks to expand aggressively into new countries, the strategies that helped it succeed in its home market might not work elsewhere.

Rising costs

Xiaomi sold 26.1 million smartphones in the first half of 2014, soundly beating the 18.7 million full-year 2013 figure, and this was largely due to its online sales channel in China.

In India, Xiaomi's devices are sold through ecommerce website Flipkart, despite a brief ban earlier this month. But the strategy of web-only sales might not translate across other markets, and trying to work out the right sales strategy could increase the company's cost base, analysts said.

Xiaomi sales: Too fast, too soon?

China's Xiaomi Technology rung in the New Year with a triple-digit percent revenue increase, but analysts advise investors not to pop champagne corks yet.

Xiaomi recorded $11.97 billion in 2014 pre-tax sales, an annual increase of 135 percent, CEO Lei Jun announced in a Weibo post over the weekend. The privately-owned firm also sold 61 million smartphones last year, a 227 percent jump from 2013. In comparison, sales ofSamsung's smartphones declined in the third quarter of 2014 while iPhone sales rose 26 percent on year, according to Gartner data.

"I don't think Xiaomi can repeat this astounding growth of 135 percent, it's a case of too big, too soon," said Cyrus Daruwala, managing director at IDC Financial Insights. "We're definitely in wait-and-see mode; investors are not looking to raise their profile on Xiaomi yet. The results are too dramatic and can only go downhill from here."

Vital components of the firm's business model remain missing, Daruwala added: "We are unclear as to their research and development (R&D) plans. What is their sourcing strategy in terms of commodities and raw materials? In manufacturing, will they embrace a high-end or low-end focus? We also need more clarity with regards to regional and global expansion plans."

Other analysts are also cautious, questioning the company's sustainability amid its massive hype in the tech world. With a market valuation of $45 billion, Xiaomi has been called tech's most valuable start-up and is currently the third-largest smartphone maker.

Lei's weekend blog post lacked profit figures, but a regulatory filing released in December indicated worrisome profitability levels. The tech firm logged an operating margin of 1.8 percent in 2013, far behind Samsung's 18.7 and Apple's 28.7 percent. Many experts attributed the poor performance to the firm's low-cost, large volume strategy in phone manufacturing.

Intensifying domestic competition also remains a key headwind for Xiaomi as Lenovo, Coolpad and Huawei all have plans to copycat its low-cost smartphone model, said Tom Kang, director at Counterpoint Research.

Content vs hardware

Worries over the firm's long-term growth are also in focus as it tries to present itself as an Internet firm rather than a handset maker: "Developing hardware is just a part of Xiaomi's businesses, and the driving forces behind those devices are its software and Internet content,'' said CEO Lei last month, according to media reports.

Xiaomi is heavily focused on content, said Ryan Huang, market strategist at IG. By acquiring content providers in its ecosystem like digital game maker Gameloft, e-book retailer Beijing Doukan as well as video sites Youku Tudou and iQiyi, it's providing value-added services to lock in users from leaving the brand, like Apple did with iTunes, Huang added.

However, confidential data leaked in November proves the company still has a long way to go before calling itself an Internet play. 94 percent of 2013 revenue came from handset sales, The Wall Street Journal reported in November.

Xiaomi's hopes for diversification aren't just limited to the Internet. Last month, it unveiled a new air purifier that can be controlled via mobile phone, Counterpoint Research's Kang pointed out, adding that its high customer loyalty will enable it to grow beyond consumer electronics.

"I do believe Xiaomi's overall revenue will continue to expand, it just may not come entirely from phones," he said.

Meanwhile, CIMB believes the firm is headed for another stellar performance in 2015, but strictly based on smartphone sales: "We believe that Xiaomi's growth momentum will persist into 2015, driven by the improvement in its supply chain and overseas expansion. Xiaomi now targets to ship 100 million smartphones in 2015, a jump of 67 percent on-year."

http://www.cnbc.com/id/102308335?trknav=homestack:topnews:9

Surveys on Africa

http://www.voicesafrica.com/index.php?option=com_comprofiler&task=registers&referrer=CIVA-FRANCIS%20NATANGA

World locked into 'alarming' global warming: World Bank

The world is locked into 1.5°C global warming, posing severe risks to lives and livelihoods around the world, according to a new climate report commissioned by the World Bank.

The report, which called on a large body of scientific evidence, found that global warming of close to 1.5°C above pre-industrial times – up from 0.8°C today – is already locked into Earth's atmospheric system by past and predicted greenhouse gas emissions.

Such an increase could have potentially catastrophic consequences for mankind, causing the global sea level to rise more than 30 centimeters by 2100, droughts to become more severe and placing almost 90 percent of coral reefs at risk of extinction.

The World Bank called on scientists at the Potsdam Institute for Climate Impact Research and Climate Analytics and asked them to look at the likely impacts of present day (0.8°C), 2°C and 4°C warming on agricultural production, water resources, cities and ecosystems across the world.

Their findings, collated in the Bank's third report on climate change published on Monday, specifically looked at the risks climate change poses to lives and livelihoods across Latin America and the Caribbean, Eastern Europe and Central Asia, and the Middle East and North Africa.

In the report entitled "Turndown the heat – Confronting the new climate normal," scientists warned that even a seemingly slight rise in global warming could have dramatic effects on us all.

"A world even 1.5°C [warmer] will mean more severe droughts and global sea level rise, increasing the risk of damage from storm surges and crop loss and raising the cost of adaptation for millions of people," the report with multiple authors said. "These changes are already underway, with global temperatures 0.8 degrees Celsius above pre-industrial times, and the impact on food security, water supplies and livelihoods is just beginning."

As temperatures rise, heat extremes on a par with the heat waves in the U.S. in 2012 and Russia in 2010 will also become more common, scientists believed. "Everyone will feel the impact, particularly the poor, as weather extremes become more common and risks to food, water, and energy security increase."

Without concerted action to reduce emissions, the report warns that the planet is on pace for 2°C warming by mid-century and 4°C or more by the time today's teenagers are in their 80s.

A temperature rise of this magnitude would create "a frightening world of increased risks and global instability," the World Bank Group's President Jim Yong Kim said, calling the scientists' findings "alarming."

"Today's report confirms what scientists have been saying – past emissions have set an unavoidable course of warming over the next two decades, which will affect the world's poorest and most vulnerable people the most," Kim said. "Climate change impacts such as extreme heat events may now be unavoidable," he added.

The effects of climate change are already starting to impact on mankind, the president noted, with record-breaking temperatures occurring more frequently, rainfall increasing in intensity in some places, while drought-prone regions like the Mediterranean are getting dryer. A significant increase in tropical North Atlantic cyclone activity is affecting the Caribbean and Central America.

The new report comes on the heels of strong new warnings from the Intergovernmental Panel on Climate Change (IPCC) about the pace of climate change and the energy transformations necessary to stay within 2°C warming.

Earlier in November, China and the U.S. signed a landmark agreement to reduce greenhouse gas emissions by 2020 but there are fears those curbs don't go far enough to slow the onslaught of global warming. There are still many prominent and influential climate change skeptics to convince too.

Global governments are gathering in Lima, Peru at the start of December for the next round of climate negotiations. The World Bank said its latest report provides "direction and evidence of the risks and the need for ambitious goals to decarbonize economies now."

http://www.cnbc.com/id/102211556?trknav=homestack:topnews:4

Japan's yen is about to get pummeled—even more

The Bank of Japan just lit a fire under the already-hot dollar-yen trade.

A surprise move Friday to supercharge the central bank's quantitative easing program sent the yen tumbling as much as 2.5 percent to a six-year low of 111.89 against the dollar.

That's on top of an 11 percent fall in the last year, driven by easy policy in Japan implemented to fight deflation and a sluggish economy, setback even further by a planned increase in the nation's consumption tax.

"There is a risk that conversion of deflationary mindset, which has so far been progressing steadily, might be delayed," according to BOJ Gov. Haruhiko Kuroda at Friday's press conference.

Pros say the currency move is far from over.

The latest salvo in the currency war: The BOJ upped its expansion of the monetary base to $720 billion annually from $534 billion to $623 billion before, two days after the Federal Reserve ended its quantitative easing program.

In other words it added more fire power to its bazooka, at the exact moment the Fed is putting its away. For currency traders, who trade on monetary policy divergences and interest rate differentials, it's an opportunity of a lifetime.

"The scale of buying was already unprecedented and the faster pace now means that by the end of 2015 ... the total size of assets on the balance sheet of the BOJ could increase to about JPY 380 trillion," wrote Derek Halpenny, European head of global markets research at Bank of Tokyo Mitsubishi.

"The figure as it stands now is already over 50 percent of Japan's nominal GDP and this is now expected to move up to around 75 percent. That is extraordinary and unprecedented."

It's also a powerful signal that Kuroda is prepared to do "whatever it takes," as fellow central banker Mario Draghi famously promised in reference to the European debt crisis.

The market takeaway couldn't be clearer:

"The yen's status as the best funding currency has been further secured," Alan Ruskin, chief FX strategist at Deutsche Bank, wrote.

The dollar, on the other hand, is moving the opposite direction, and not just against the yen.

The dollar index, which includes the U.S. currency's value against the euro and other major trading partners, has run up to a four-year high.

Bullish dollar wagers in the futures market currently stand at $44 billion, a record high, according to weekly CFTC data. Traders are holding long positions on the dollar versus the euro, yen, Australian dollar, Swiss franc, Canadian dollar, Mexican peso, British pound and New Zealand dollar. 

It's all about the strength in the U.S. economy and the relatively faster track to tightening policy of the Fed, compared with other central banks around the globe. 

"While the BOJ had been conducting an accommodative monetary policy, the timing of this announcement was a surprise and is another big step in that same direction, joining the ECB and Sweden most recently, and is another contrast with the direction the Fed is taking, which will likely keep downward pressure on the yen," wrote Carl Forcheski, Societe Generale director, corporate FX sales America. 

So how high could dollar-yen run?

"As far as the USD/JPY is concerned, this definitely brings the 115 level onto the radar screen. We are also watching the psychologically important 1.2500 level in EUR/USD, which if or when breaks is likely to result in another big leg down in the single currency," wrote Forcheski.

After Friday's announcement, Jens Nordvig, a managing director and head of fixed income and currency strategy at Nomura, revised his trading target for dollar-yen in the near term from 112 to 115 by the fourth quarter of this year.

Another reason strategists say there's more scope for yen weakness against the dollar—positioning isn't extreme. In other words, while weekly futures data show expectations for the dollar to strengthen against the yen, it's not as overwhelmingly popular of a bet as it was in the past, partly because the Japanese authorities have been talking about negative consequences of the weaker yen.

"The BOJ did a remarkable job of not letting on their intentions ... successfully talking the yen stronger in the weeks before the meeting. ... The result is positioning was remarkably light," Ruskin wrote.

In fact, leading up to this meeting, bearish yen positions had been cut to $7.8 billion, after declining for four weeks straight.

"The changes in sentiment underscore the extent to which the subsequent BOJ policy announcement was unanticipated by market participants," Scotiabank strategist Camilla Sutton wrote in a report.

"To the extent there were long dollar-yen positions, many had barriers to cheapen up dollar-calls on a view that the move would be slow," Ruskin wrote. "That creates more scope for dollar-yen upside, on the hedging of barriers. It also fits with ideas from Tokyo that Japanese investors and corporates did not buy the recent dip significantly and are likely to chase the market now."

Beyond a weaker yen, the Bank of Japan's move could force other central banks to act in order to weaken their currencies, in this low-growth environment.

"No doubt this caught the attention of the ECB, who will not likely be happy with the euro's big move higher vs the yen today in the cross, as too strong a euro-yen cross has such a negative impact on German and eurozone exports," wrote Forcheski.

So what does all the currency action mean for stocks?

The stimulus jolt certainly propelled global stocks higher Friday on the announcement, with the S&P 500 and Dow Jones industrial average closing the week at record highs. In Japan overnight, it fuelled a 4.8 percent rally for Nikkei 225 to a seven-year high. 

Many are wondering, can Japan's central bank do the heavy lifting that the Fed has done in the past for global markets?

"In general we would answer no, but actions today have multi-week run. ... This all works with the risk melt-up story into year-end led by the S&P and now the Nikkei," according to Ruskin.

"The announcement by the Bank of Japan that it was adding to its purchase programs is a clear positive for the stock market that had been largely unexpected," said Tobias Levkovich, chief U.S. equity strategist at Citigroup.

"Additionally the decision by the Japanese pension fund to bump its holdings of foreign stocks to 25 percent of its monetary base establishes a new incremental buyer of shares and the U.S. should be a significant beneficiary. These new developments were not part of the Street's mindset a day ago and thus cannot be discounted as a flash in the pan since it provides some downside support to the broad market."

The ultimate question market watchers are contemplating: If Japan does manage to boost equity prices and weaken the yen successfully, as predicted, does that mean it will help Japan end its deflationary malaise and help boost its economy?

The jury is out on that.

Most economists, traders and strategists are far less certain about whether it will cure Japan's economic ills, than they are about how to trade the policy:

Don't fight the Bank of Japan!

Japan's economy contracts in third quarter

Japan's economy is in technical recession after gross domestic product (GDP) shrank in the third quarter, defying expectations for growth and paving the way for Prime Minister Shinzo Abe to delay a second sales tax hike.

The world's third-largest economy contracted an annualized 1.6 percent in the July-September quarter, data showed on Monday, compared with a Reuters forecast for a 2.1 percent gain. The economy contracted a revised 7.3 percent in the second quarter.

On a quarter-on-quarter basis, the economy shrank 0.4 percent in the third quarter, worse than the consensus for a 0.5 percent growth.

Private consumption, which accounts for about 60 percent of the economy, rose a smaller than expected 0.4 percent from the previous quarter, a sign that an increase in Japan's sales tax to 8 percent from 5 percent in April continued to take a toll.

Dollar-yen jumped to new seven-year highs on the news, hitting 117.04, levels not seen since October 2007. Japan's Nikkei 225 fell more than one percent in early trading.

"The first estimate of the GDP is usually very off the reality, especially we're lacking the import component from the corporate statistics to see the capex, and today's number in the capex was a big drag. So, we have to wait to see what the second estimate is but first impression of the result today is shockingly weak for the economy," Yoshito Sakakibara, executive director of investment research at JP Morgan.

The third-quarter GDP print has been highly anticipated after Abe said he will look would look at the data when deciding whether to press ahead with a second increase in the sales tax to 10 percent in October next year, as part of a plan to curb Japan's huge public debt, the worst among advanced nations.

April's hike sent the economy into a tailspin as consumers shut their wallets, and rendered the Bank of Japan's (BOJ) goal of 2 percent inflation by next year ever more remote.

The BOJ last month shocked markets by expanding its already massive stimulus in an effort to re-energize a fragile recovery and stoke inflation.

"This is absolutely not a situation in which we should be debating an increase in the consumption tax," said Etsuro Honda, a college professor and economic adviser to Abe, told Reuters on Monday. "Debate needs to focus on how to support the Japanese economy."

JPMorgan's Sakakibara does not see a deep recession for Japan, but he notes that the rebound remains vulnerable.

"I think the industrial activity is showing signs of recovery and we have very bad weather and natural disasters during summer - that probably had significant impact on the activity. so I guess the recession we seem to have now is likely to be shallow. That said, the momentum of the recovery is still fragile," he said.

Political gamble

Markets are also grappling with the prospect of snap elections, which several media outlets say could happen as soon as next month.

Abe's Liberal Democratic Party (LDP) looks virtually certain to keep its majority in the lower house, since the opposition is divided and weak, but it could well lose seats.

Postponing the sales tax hike could buy Abe goodwill with voters, although some analysts have cautioned risks to his reform mandate.

"A decision not to go ahead with the 2015 tax hike would probably be seen as a watering down of a key element of Abenomics and could weaken momentum for further reform," analysts from Capital Economics said in a recent report.

"While markets now seem to regard the tax hike as a negative, questions would soon be raised about the future for monetary policy if the government's commitment to fiscal consolidation was seen to have been abandoned," they added.

INTERNATIONAL ENERGY AGENCY: LOW OIL PRICES TO BITE INTO 2015 US SHALE GROWTH

Falling oil prices may cut investment in U.S. shale oil by 10 percent next year, the International Energy Agency (IEA) said on Wednesday, slowing growth in a sector that has turned the U.S. into a major global producer.

"A well-supplied oil market in the short-term should not disguise the challenges that lie ahead, as the world is set to rely more heavily on a relatively small number of producing countries," Fatih Birol, the IEA's chief economist, stated in the agency's 2014 "World Energy Outlook" published on Wednesday. 

Benchmark oil prices have dropped by about 30 percent over the past four months on the back of a mounting oil glut from the Middle East and North America, which is putting pressure on oil-producing nations and oil companies.

On Wednesday, Brent crude slipped near $81 a barrel, close to a four-year low.

"If prices remain at these lows, this may result in a decline in U.S. upstream capital expenditures by 10 percent in 2015, which will have implication for future production growth," Birol told Reuters at the launch of the report.

U.S. oil production has risen by 1 million barrels per day (bpd) per year over the past year as strong oil prices led to a boom in shale oil production through fracking, a technique that uses high pressure to capture gas and oil trapped in deep rock.

Production is set to grow by an additional 963,000 bpd in 2015, according to the U.S. Energy Information Administration.

Analysts told CNBC the current decline in oil prices could start to deter investment in U.S. shale oil production immediately.

Gareth Lewis-Davies, senior oil strategist at BNP Paribas, told CNBC on Wednesday that the growth in non-OPEC supply would "stall at these low prices."

"We think current production will not be affected because the operating costs are covered but a more difficult question is the extent to which investment will be cancelled or delayed as a consequence of low oil prices," he told CNBC's "Worldwide Exchange."

"At the current levels, we still see a fair amount of [U.S.] shale oil production on a full cycle -- but not all of that which is currently planned. So on that basis, the growth in non-OPEC supply will start to stall at these prices, if these low prices are sustained," he said.

Last month, the IEA's executive director Maria van der Hoeven told Reuters that "some 98 percent of crude oil and [natural gas] condensates from the United States have a break even price of below $80 and 82 percent had a break even price of $60 or lower," meaning that the U.S. shale oil producers could well cope with current lower oil prices.

The chief executive of Sweden-based petroleum company Lundin Petroleum, told CNBC that he wasn't reassured.

"When I look [at the U.S. shale industry] I see the fact that it hasn't delivered any free cash flow and it continues to eat capital. I look at the availability of capital over the last two years and I must admit, I think 'Can this continue?'," Ashley Heppenstall said, speaking to CNBC at UBS' European conference in London on Wednesday.

"We hear lots of talk of break-even prices for U.S. shale [and] at what price it's going to start to have an impact -- and I think on the margin it will already start to have an impact -- the question is how quickly and how much we will see U.S. production growth slowing."

Despite those concerns, the IEA's chief executive believed oil prices could well rise as weak prices stimulated demand.

"Given the negative impact of $80 on investments, and given the $80 positive impact on demand and oil demand growth there will be upward pressure on oil prices within a couple of years if not earlier," Birol told Reuters.

The IEA forecast global oil demand to rise from 90 million bpd in 2013 to 104 million bpd in 2040, when the energy supply mix divides into four almost-equal parts between oil, gas, coal and low-carbon sources.

Strife in the Middle East, mostly in Iraq, poses a threat to future supplies - hampering investments necessary to sustain production growth there, Birol said.

http://www.cnbc.com/id/102175914