By Greg Peel
The Dow closed unchanged, the S&P was flat at 1380 and the Nasdaq was flat.
It was a quiet and low volume Veterans' Day on stock and commodity markets, as expected, with banks and bond markets closed last night. Wall Street meandered with little incentive or conviction. Speculation has begun as to just what compromises the two parties may be able to reach with regard the fiscal cliff, but at this stage it is just speculation. Unfortunately, this will be the way of things for some weeks.
Meanwhile, eurozone officials are meeting in Brussels as we speak in the wake of the successful passage of the 2013 Greek budget through parliament. It would be the perfect opportunity for Greece to be granted its next bail-out tranche, but for the fact troika member the IMF has thrown a spanner in the works. The IMF is insisting Greek bondholders take a further hair cut on their positions to allow Greece to recover from its debt burden. The ECB and donor members are against this idea, suggesting another stalemate of the type we've come to know and love from Europe. There are no indications as to when or whether Greece will get its tranche.
At the very least, the Greek budget's passage took pressure of the euro for once, halting the greenback's post-election run. The US dollar index dropped slightly to 81.04.
Japan released its September quarter GDP yesterday and despite meeting with expectations, it was not a pretty sight. Japan's economy contracted 0.9% for the quarter and 3.5% year on year. Japanese exports of cars and computer chips were particularly weak. While the Australian market spends its life focused on Chinese data, note that the steel used to build Toyotas is made from imported Australian iron ore and coal.
There was an interesting report released last night with regard to the US energy industry. The International Energy Agency believes that the abundance of US shale gas/oil will mean the US will overtake Saudi Arabia and Russia as the world's biggest producer of oil by 2017, so rapid is the US industry expansion. The US could be a net exporter of natural gas by 2020, the IEA suggests, and energy sufficient by 2035. Since 2008, production of domestic US crude has increased by an average 720,000bbls per day, while imports of oil have fallen 1.5mbbls per day.
It's a tantalising thought ? not having the US running around the world fighting wars in the name of "democracy" when really they're all about oil. An interesting point, however, is that shale oil production is similar to CSG production in that it requires fracking, and just as is the case in Australia, there is now a groundswell of opposition building in the US against this process. And as US focus turns to its shale abundance, the local alternative energy industry is being left high and dry. Or maybe hot and windswept.
The news was never going to have any immediate impact on energy prices, particularly on Veteran's Day. Brent fell US33c to US$109.01/bbl and West Texas fell US35c to US$85.72/bbl.
Base metals responded to the small move in the dollar to retrace the moves of Friday night, with aluminium the stand-out this time on reduced inventories. Aluminium was up 3%. Spot iron ore was steady at US$122.10/t. Gold fell US$3.70 to US$1727.80/oz.
The Aussie is up 0.4% to US$1.0428 since Friday, most of which relates to yesterday's release of promising housing finance data. The RBA has noted an improving local housing market in recent dispatches.
The SPI Overnight also closed flat.
Incitec Pivot ((IPL)) will release its full-year result today.