Month: June 2012

Article by Investment U

Discover how Siemens' expert networking system, TechnoWeb, is creating value while Facebook (NYSE: FB) scrambles to make money.

I must confess, I feel like I’m personally responsible for Facebook (Nasdaq: FB) not being worth more. I’m about to mark the eighth year when people will wish me a happy birthday on Mark Zuckerberg’s social network, but I’ve never clicked an ad (in fact, I rarely notice them) and I think the iPhone app is unreliable.

Don’t get me wrong, social networking sites are a part of my life. But they’re not something I’d invest in – at least not yet.

I’m much more excited about a trend I discovered in my MBA coursework this past year. It’s called expert networking, and it’s creating value at the roots of some of the world’s biggest firms.

For instance, let’s take a look at German conglomerate Siemens (NYSE: SI). The company is an innovation hotbed. It has around 30,000 R&D workers and holds around 60,000 patents. And that base is only getting bigger and stronger with a network they recently implemented.

Keeping Knowledge In-House

TechnoWeb is a network platform that lets Siemens workers share questions and answers.

Imagine you’re an engineer in the U.S. working for Siemens. You hear from a salesperson that a potential customer needs a device that could win a multi-million dollar contract. If you can come up with a solution, you’ll land a big fish for your division and maybe get a promotion.

But unfortunately you’ve got a hole in your research that no one near you can fill.

Now you, an American engineer, can run your questions by hundreds of thousands of Siemen’s employees worldwide using the TechnoWeb.

After a multi-billion dollar bribery scandal broke in 2006, Siemens steered its pool of global talent away from networking based on corruption. It was time to harness the innovative power of Siemens employees.

It turns out that around 20,000 employees had been chatting about Siemens work topics on other social networks (such as Facebook). Not only is that not secure, it also doesn’t let Siemens get a bird’s eye view of what’s going on in-house.

The motto for this new internet-based knowledge networking was, “If only Siemens knew what Siemens knows…” The idea being that the most valuable knowledge is within the vast global network of Siemens employees – totaling more than 400,000.

Knowledge-Based Networking

Unlike Facebook, which puts individuals and their info at the center, and Wikipedia, which revolves around research topics, TechnoWeb links knowledge to people. That means that with each answered question, a new expert is acknowledged or reinforced, and great ideas are rising to the top.

In its first year 10,515 people used TechnoWeb, beating a target of 8,000. Not many people attended “how-to” webinars, which was actually a good sign… they knew how to use it right off the bat.

The nice thing is that TechnoWeb is a hybrid – open innovation and knowledge-sharing give way to executive command and control when implementation and strategy are needed. This encourages everyone in the organization to get involved in innovation, and solutions come from the people with the best knowledge.

Through this expert networking, people are working efficiently by working together.

As few as 3 in 10 TechnoWeb users have to be active for the model to work. The other 7 still reap the benefits, just as investors do when new products come to life. You don’t even have to be logged in. It’s a sort of dynamic yellow pages that gets big problems solved, quickly.

This “Social Network” is Already Being Monetized

Here’s just one story that points to TechnoWeb’s success…

A Siemens information technology worker in Munich posted an urgent request in TechnoWeb for info that would help a customer… Within five days, he received 15 responses from eight different business units in eight countries.

One response hit it right on the nose. The employee said he saved multiple working days and improved quality – all because of Siemen’s TechnoWeb.

So while Facebook struggles to find the value in its vast network and information database, Siemens is already monetizing on its own version of a social network. Investors should keep their eyes not only on Siemens but on other companies that look to take advantage of this new revelation.

Good Investing,

Sam Hopkins

Article by Investment U

By The Sizemore Letter

Lest I be labeled a doom monger, I want to be clear on a few things. I do not believe that the Eurozone will break up. Greece could—and probably will—be asked to leave sometime this summer, but most would agree that this would be addition by subtraction.

The other problem countries—most notably Spain—have shown the political resolve to do what is needed to stay in the Eurozone. And the sovereign debt crisis is, first and foremost, a political problem with political solutions.

So again, the Eurozone will survive.

But what if it doesn’t?

As investors, we have to ask ourselves uncomfortable questions. We also have to accept the limitations of our knowledge. Sometimes, no matter how rational or well-research we are when forming an opinion, we are wrong. Good investors realize this and hedge their bets accordingly.

So what if I’m wrong? What if events spiral out of control and the euro as we know it ceases to be?

Today, I’m going to lay out a set of scenarios that investors could expect to see in the event that the Eurozone breaks up and its member states resurrect the old currencies:

1. All former Eurozone currencies would fall relative to a new German deutschmark—even the currencies of relatively healthy economies such as the Netherlands and Finland—with the currencies of the “PIIGS” countries falling significantly harder and faster. Currency collapse and hyperinflation would almost certainly follow, barring massive intervention by world central banks. And frankly, if relations between Eurozone member states were to sink low enough to make dissolution a possibility, I wouldn’t see coordinated intervention happening. Europe would become a collection of little Argentinas, minus the juicy steaks and tango.

Currencies of non-Euro European countries—such as the UK, Norway, and particularly Switzerland—would instantly soar to export-killing levels that would prompt their central banks to intervene. Major non-European currencies—particularly the U.S. dollar and Japanese yen—would also soar as potential havens from the storm. U.S. Treasuries and the dollar would soar to new all-time highs as investors had nowhere else to go.

2. Markets hate uncertainty, and in the post-dissolution chaos we would likely see stock market volatility on par with the 2008 meltdown—or worse.

We’ve all seen currency crises before; it was only a little over a decade ago that we had the emerging market currency and debt crisis that brought Long-Term Capital Management to an unceremonious death. When investors flee the capital markets, they do so in a hurry.

But remember that the European Union is collectively the largest economy in the world; if the likes of South Korea and Thailand could wreak havoc on world markets in 1998, imagine how much disruptive a euro dissolution would be. It would be the mother of all stock market crashes.

3. On a fundamental level, the story is more complicated. The economic dislocations would likely cause the worst recession since the Great Depression, which would devastate earnings and keep them depressed for years.

And good luck trying to value a European stock. The basic ratios that value investors use—price/earnings, price/sales, price/book value—would all be impossible to accurately calculate until the dust settled. This would be complicated further by the fact that most European blue chips have assets and sales across the European Union. I would pity the poor accountants tasked with assigning a fair market value—or even a historical value—to any of it.

I have no doubt in my mind that investors find incredible bargains, once some sort of equilibrium was reached. But for months—and maybe years—investors would be better off staying away from Europe in the event of a euro collapse.

4. U.S. stocks wouldn’t fare much better. As we saw in 2008, national boundaries mean very little during a panic. Correlations among normally diverse asset classes converge to 1.

Looking at the fundamentals, U.S. companies would be facing nightmares of their own. Let’s throw out a couple examples. Coca-Cola Enterprises ($CCE) gets nearly two thirds of its revenues from Europe, and Philip Morris International ($PM) roughly a third. Across the broader S&P 500, nearly 15% of revenues come from Europe.

5. In past currency crises, the countries affected eventually benefitted from having a lower currency through more competitive exports. This would not be the case in Europe, at least not for a long time.

Think about it. Who are they going to export to? Europe’s export partners depend on European demand for their own exports. The EU is China’s biggest trading partner. But what condition is China’s economy going to be in if European demand grinds to a halt?

And the United States? The U.S. economy is already fragile; expecting robust American demand to boost European exports is simply not realistic.

6. What about commodities? Think back to 2008 and what happened to most commodities then.  When the markets went into “risk off” mode, the raging commodities bull market went into a stark reverse.

When priced in the new European currencies, commodities might actually rise. That’s what happens in a hyperinflationary meltdown. But in terms of dollars and other non-European currencies, you would be looking at a major, multi-year bear market.

7. What about gold?

I could see gold going either way. I would prefer to hold gold rather than the new European currencies, of course, but I couldn’t say with any certainty if gold would be a better haven than the U.S. dollar. Consider that gold’s 2012 price declines have come even as the Eurozone roils in crisis, and you’ll get my point. Gold is a great crisis hedge…sometimes. At other times, it’s no hedge at all and falls in sync with everything else.

I’ll repeat again, I do not see the Eurozone splitting apart, aside from a possible Greek ejection. But if it were to happen, you would want to be prepared. You wouldn’t want to own anything from the European continent save maybe Swiss francs or British pounds.

Love it or hate it, the U.S. dollar would likely be your best option as a safe haven. Though canned goods and shotgun shells might not be such a bad idea either. I’m kidding (sort of).

Disclosures: Sizemore Capital is currently long PM—and quite a few European stocks as well.

SUBSCRIBE to Sizemore Insights today via e-mail.

By TraderVox.com

Tradervox.com (Dublin) – The south pacific currencies have gained after China decreased its interest rate to 3.25 from 3.5 percent which was sent in 2008. The Australian currency increased beyond parity against the US dollar in three weeks as demand for riskier assets was boosted by this change in monetary policy. However, its advance was limited after the Federal Reserve Chairman Ben S. Bernanke refrained from indicating whether the Fed would add stimulus during his testimony yesterday before US lawmakers. The New Zealand currency also increased against the yen the as Asian stock continued to advance for the fourth day.

According to Omer Esiner, the south pacific currencies have been short in the last couple of weeks and the current rally was expected. This has also been facilitated by the less bullish sentiments from the Fed Chairman Ben Bernanke. The People’s Bank of China reduced its benchmark for one-year deposit rate by 0.25 percent which will take effect tomorrow. The bank is also expected to cut the one-year lending rate by the same margin later in the year. The New Zealand dollar which has increased since the beginning of the week has been propelled by positive sentiments from euro area as well as the rising Asia Pacific Index of shares which has advanced by 1.3 percent. This has also boosted the demand for riskier assets hence strengthening commodity related currencies.

Other factors that buoyed the Australian dollar include the nation’s payrolls which increased unexpectedly by 38,900 in May according to a report released by statistics bureau. Australia’s Gross Domestic Product data also has been influential in the current surge of the Aussie.

The Australian dollar increased  by 0.8 percent against the US dollar to trade at $1.0003 before dropping by 0.3 percent to trade 98.94 US cent. The Aussie was up against the Japanese yen by 0.2 percent to exchange at 78.79 yen.  The New Zealand currency also increased against the dollar before dropping by 0.5 percent to trade at 76.72 US cents. It increased by 0.1 percent against the yen to trade at 61.09 yen.

Article provided by TraderVox.com
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News and analysis are produced throughout the day by our in-house staff.
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The US Defense Department consumes more energy than any other department or sector in the country, spending around $20 billion annually by some estimates; but ambitious plans to make it the nation’s green leader have been swept under the rug over budgetary concerns that smack of campaign politics.

It is an inauspicious development for US energy independence, and indeed a contradictory one. The Defense Department is reeling under higher fuel costs already, which have left it short some $3 billion. A stronger focus on alternative fuels will cost more in the immediate and near-term, but in the longer-term, it is a smarter strategy.

Last week, the Senate Armed Services Committee in a vote dampened the military’s green ambitions, refusing to allow a major shift to alternative fuels if they end up costing more than fossil fuels. They have also nixed the idea of the Pentagon building its own biofuels refinery or other biofuels facilities.

The Senate Armed Services Committee is largely divided right down the middle, as demonstrated by the 13-12 vote in favor of putting the brakes on green defense efforts.

Senator John McCain, the top Republican on the Committee, opposes what he sees as overly ambitious and expensive green initiatives (in the current political climate, that is). “In a tough budget climate for the Defense Department, we need every dollar to protect our troops on the battlefield with energy technologies that reduce fuel demand and save lives,” he told the Committee.

The White House objects to the vote as it would reduce the Pentagon’s capability to “procure alternative fuels and would further increase American reliance on fossil fuels, thereby contributing to geopolitical instability and endangering our interests abroad”.

This long-term vision was in part laid out in the Energy Independence and Security Act of 2007, but also in the Energy Policy Act of 2005, section 203, which lays out a plan for the US Army’s contribution of renewable energy to an installation’s total electricity consumption.

The Armed Forces are very much on board for greening up. Both the Navy and the Air Force are interested in creating a stronger reliance on biofuels with the overall goal of reducing dependence on foreign oil.

Cutting the Pentagon’s investment potential in renewable energy is unaccountably short-sighted, and the cost-benefit analysis less than comprehensive.

The Pentagon’s renewable energy initiative, “Operational Energy Strategy”, was specifically intended to render its energy needs independent. After all, dependence on foreign oil ends up costing the Pentagon about $20 billion annually. Arguably, that dependence also leads to conflict and death, so the cost is enormous beyond the realm of paper currency. In addition, this dependence means that US forces are constantly guarding fuel convoys that come under attack from enemy forces.

It also pays to look at some of the Pentagon’s clean energy successes. For instance, the DoD has successfully developed hybrid tank batteries that allow them to go farther without fueling. Portable solar power has also been useful on the front lines in Afghanistan and reduces the frequency of fuel convoys that risk attack. (Keeping in mind that the US military goes through goes through more than 50 million gallons of fuel monthly.)

Marines use GREENS solar power, first used in Iraq in 2009, to provide continuous electricity in remote locations, and then in Afghanistan beginning in 2010.

“Better fuel economy for our aircraft means we can extend the range of our strike missions enabling us to base them farther away from combat areas. Being more efficient and more independent, more diverse in our sources of fuel improves our combat capability both strategically and tactically,” Tom Hicks, the Navy’s deputy assistant secretary for energy, said in 2011.

According to the Government Accountability Office (GAO), the DoD was the leader in 2010 of solar energy initiatives, accounting for more than 20 percent of all government solar initiatives. (It is also the lead polluter). Renewable energy sources could help the Pentagon “achieve its mission by, among other benefits, expanding and securing necessary energy supplies to reduce dependence on foreign oil.”

So why the short-sightedness in the vote to reduce the Pentagon’s clean energy ambitions? Undermining the Pentagon’s alternative energy plans can only be political, and specifically a Republican attempt to undermine the largely energy-focused campaign of President Barack Obama. After the elections, it should regain lost traction the next time it comes around for a vote.

Source: http://oilprice.com/Alternative-Energy/Renewable-Energy/Short-Term-Politics-Stifles-Pentagons-Green-Energy-Ambitions.html

By. Jen Alic of Oilprice.com

By TraderVox.com

Tradervox (Dublin) – After losing that battle to deflate the yen due to reluctance of government bondholders, the Bank of Japan may be forced to overhaul its asset purchases program in its coming meeting on June 14-15. The meeting will be held just two days before Greece goes into an election which might ultimately seal its fate in the euro region. The crisis in the euro area has already forced the BOJ to miss its target for purchases twice last month. After a surge in the demand for riskier assets in market, safe haven demand has returned as investors await important reports next week.

Statements from Bank of America Merrill Lynch indicate that the current disruptions to the BOJ program has compounded the pressure on the Bank of Japan Governor Masaaki Shirakawa to establish effective measures to support the economy expected to slow after a good show in the first quarter. Masayuki Kichikiwa who is the Chief Economist for the bank added that the BOJ might be forced to extend bond maturity in the coming month. The BOJ extended the maturity of its two-year bonds to three years as a measure to ease long-run borrowing costs.

The Bank of Japan failed to raise enough one- and two-year notes it needed in May 16 and later failed to attract enough offers for bond buying operation. This is a reflection of the dampening demand for riskier assets as investors speculate Euro zone crisis will worsen. Analysts have predicted a souring outlook for global economy which has forced policy makers around the world to establish measures to curb any emergent issue. Some of the countries that have taken such measures include China, which has lowered its interest rate for the first time since 2008, Brazil, and the US is said to be considering stimulus.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

London Gold Market Report
from Ben Traynor
BullionVault
Friday 8 June 2012, 08:30 EDT

WHOLESALE MARKET prices for gold bullion hit a low of $1561 an ounce during Friday’s Asian session – 4.8% down on this week’s high – while stocks and commodities also fell this morning and major government bond prices gained.

On the currency markets, the Euro dropped back below $1.25 as the Dollar rallied, after Federal Reserve chairman Ben Bernanke yesterday “disappointed” traders by not making a firm commitment to a third round of quantitative easing, known as QE3.

Gold prices managed to recover some ground by Friday lunchtime in London, rising back above $1580 an ounce, but gold bullion was still down 2.5% on the week, having unwound most of last Friday’s jump.

Silver bullion meantime dipped below $28 an ounce in early London trading, before it too recovered some ground, adding about 50 cents ahead of the US session.

“Gold bulls were very disappointed by the Bernanke testimony yesterday,” says Lynette Tan, investment analyst at Phillip Futures in Singapore.

“Bernanke gave few clues on QE3,” adds the latest note from Swiss precious metals group MKS, “and attributed much of the recent job weakness to seasonal factors.”

“This morning, we are seeing some support for [precious metals] despite a persistently strong Dollar,” says Marc Ground, commodities strategist at Standard Bank.

“This support is most likely coming from the physical market as buyers find current price levels once again more attractive…however, we would not completely discount another leg down.”

At his testimony to the Joint Economic Committee on Thursday, Bernanke warned Congress that current US fiscal policy is “clearly unsustainable”. The Fed chairman added that the so-called fiscal cliff – the expiration of tax cuts and reduced government spending currently due to happen at the start of 2013 – poses “a significant threat to the recovery”.

A day earlier, European Central Bank president Mario Draghi also drew attention to fiscal policy issues, saying on Wednesday that “some of [Europe’s] problems have nothing to do with monetary policy…[which should not be used] to compensate for other institutions’ lack of action.”

Europe “poses significant risks to the US financial system”, Bernanke said yesterday.

“The Federal Reserve remains prepared to take action as needed to protect the US financial system and economy in the event that financial stresses escalate,” he added. Later in his testimony, Bernanke argued there is “no justification” for fears that QE poses a risk of high inflation.

“[Bernanke is] saying what he has said before,” reckons Fabian Eliasson, New York-based vice president of currency sales at Mizuho Corporate Bank.

“[He is] reassuring people that they will act if things deteriorate further.”

A day before Bernanke’s testimony, Fed vice chair Janet Yellen told an event in Boston she was “convinced that scope remains for [the Fed] to provide further policy accommodation either through its forward guidance or through additional balance-sheet actions”.

“Bernanke threw traders a curve ball,” complained one Chicago analyst following the Fed chairman’s testimony.

“After his vice chair made it seem like [QE] was a foregone conclusion, he really messed people up.”

Despite its rhetoric, the Fed is actually tightening policy, argues Grant’s Interest Rate Observer publisher Jim Grant. In an interview with CNBC this week, Grant pointed out that the Fed’s balance sheet has contracted over the last three months.

“The Fed is withdrawing stimulus even as more and more [Fed policymakers] are talking about QE3,” said Grant, who nevertheless says he expects there will be a third round of quantitative easing.

Here in Europe meantime, Spain is due to ask the European Union to inject funds into its banking sector, according to a Reuters report which cites EU and German officials.

“The government of Spain has realized the seriousness of their problem,” the newswire quotes a senior German official.

Spanish banks hold €184 billion in real estate loans described as “problematic” by the Economy Ministry, news agency Bloomberg reports.

Ratings agency Fitch downgraded Spain’s sovereign credit rating from A to BBB Thursday, putting it two notches above junk.

Fitch also warned Thursday that it will cut its rating for the US next year if it does sufficiently address its fiscal problems.

“The United States is the only [AAA-rated] country which does not have a credible fiscal consolidation plan,” said Fitch sovereign ratings analyst Ed Parker.

China, the world’s biggest buyer of gold bullion in the six months to March, is due to publish several pieces of key economic data this weekend, including the latest consumer price inflation, money supply and trade figures.

China’s central bank cut interest rates yesterday for the first time since early 2009, a move that surprised many analysts.

“This rate cut is a clear indication the government sees further weakness in the May economic data,” reckons Stephen Green, head of research, Greater China at Standard Chartered in Hong Kong.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

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Source: ForexYard

The euro hit a ten-day high against the US dollar during trading yesterday, following a positive Spanish bond auction which led to an increase in risk taking. By the end of European trading, the EUR/USD rose as high as 1.2609, an increase of close to 70 pips for the day. As markets get ready to close for the week, traders will want to pay attention to several indicators that could lead to volatility. The British PPI Input figure, set to be released at 8:30 GMT, could help the pound extend its recent bullish movement against the USD if it comes in above the forecasted -1.2%. Later in the day, the US Trade Balance figure could potentially lead to additional losses for the greenback if it comes in below expectations.

Economic News

USD – Dollar Takes Losses against Riskier Currencies

The US dollar extended its recent bearish trend against its higher-yielding currency rivals yesterday, as several global indicators generated risk taking in the marketplace. A significantly better than expected Australian Employment Change figure resulted in the AUD/USD moving up some 120 pips over the course of the day, eventually reaching just below the psychologically significant 1.000 level. Later in the day, the EUR/USD was able to hit a ten-day high after solid demand at a Spanish bond auction helped ease fears regarding the health of Spain’s banking sector.

Turning to today, dollar traders will want to pay attention to the US Trade Balance figure, set to be released at 12:30 GMT. Analysts are forecasting that the figure will come in around -49.3B, which if true, would represent a slight improvement over last month. Should the figure come in at or above expectations, the dollar could recoup some of its recent losses before markets close for the week. At the same time, analysts are warning that any gains could be temporary, as investors are still concerned with the possibility that the US economic recovery has stalled.

EUR – Euro Sees Mixed Trading Day

While the euro saw significant gains against its safe-haven rivals yesterday, including the USD and JPY, it dropped against other riskier currencies including the AUD. In addition to the 70 pip gain against the USD, the euro was able to advance close to 120 pips against the JPY. By the end of the European session, the EUR/JPY was trading around the 100.50 level. At the same time, better than expected Australian employment data resulted in the EUR/AUD falling more than 100 pips over the course of the day. The pair reached as low as 1.2592 before staging a slight upward correction to stabilize at 1.2629.

Turning to today, traders will want to pay attention to any announcements out of the euro-zone, particularly with regards to Spain and Greece. While the euro has seen a fairly significant recovery against the dollar and yen this week, analysts are warning that the economic and political problems that have plagued the euro-zone still have the potential to weigh down on the common-currency. Any negative indicators out of the region may cause the euro to quickly reverse its earlier gains.

Gold – Gold Reverses Gains amid Investor Risk Taking

An increase in investor risk taking yesterday, following positive news events out of Australia and the euro-zone, caused gold to reverse some of its earlier gains. Gold has recently been treated as a safe-haven asset due to economic turmoil in the US and euro-zone. The precious metal fell close to $30 an ounce during European trading, eventually hitting $1599.94.

Today, gold traders will want to pay attention to news out of the euro-zone. If riskier currencies like the euro and Australian dollar continue their current upward trend, gold may take additional losses to close out the week. At the same time, if any developments out of the euro-zone lead to risk aversion in the marketplace, gold could recoup some of yesterday’s losses.

Crude Oil – Crude Oil Moves Up Following Chinese Interest Rate Cut

Crude oil saw gains throughout European trading yesterday, after a surprise Chinese interest rate cut was taken as a sign that global demand could go up in the near future. The price of crude oil was up by over $2 a barrel, eventually reaching as high as $86.98 during mid-day trading before staging a mild downward correction. The commodity eventually stabilized around $85.85.

As we close out the week, oil traders will want to pay attention to the US Trade Balance figure at 12:30 GMT. With analysts predicting that the figure will show some improvement over last month, the news could result in modest dollar gains during afternoon trading. If true, investors may take the news as a sign that oil demand will go up in the US, which could help the price of crude move up further.

Technical News

EUR/USD

The weekly chart’s Slow Stochastic has formed a bullish cross, indicating that this pair may extend its recent upward movement. In addition, the Williams Percent Range on the same chart has crossed into oversold territory. Going long may be the wise choice for this pair.

GBP/USD

Long-term technical indicators are currently placing this pair in neutral territory, meaning that no defined trend can be determined at this time. Traders may want to take a wait-and-see approach, as a clearer picture may present itself in the near future.

USD/JPY

A bullish cross on the daily chart’s MACD/OsMA points to a possible upward correction in the near future. Furthermore, the Slow Stochastic on the weekly chart appears to be forming a bullish cross as well. Traders will want to keep an eye on this indicator. If the cross does form, it may be a good time to open long positions.

USD/CHF

The Slow Stochastic on the weekly chart has formed a bearish cross, indicating that this pair could see a downward correction in the coming days. Additionally, the Williams Percent Range on the same chart is hovering around the overbought zone. Opening short positions may be a wise choice for this pair.

The Wild Card

GBP/NZD

The daily chart’s Williams Percent Range has fallen into the oversold zone, indicating that this pair could see an upward correction before markets close for the week. This theory is supported by the Slow Stochastic on the same chart, which has formed a bullish cross. Going long may be the wise choice for forex traders.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By TraderVox.com

Tradervox (Dublin) – The 17-nation currency has lost against most of its peers after gaining for the better part of the week. This has come just before a report from Germany, the region’s biggest economy, is set to show that exports fell in April due to concerns of deteriorating economy as a result of prolonged European debt crisis. Investors are staying safe as they buy haven assets boosting demand for the yen and dollar. Euro is set to close the week on a low as risk appetite diminishes.

According to most economist, a report from Germany will show that the country’s exports decreased by 0.7 percent in April from March when they increased by 0.8 percent. Alex Sinton, who is a director for Institutional Foreign Exchange at Australia & New Zealand Banking Group Ltd, while talking about the report said that the situation in Europe is still shaky with a bunch of problems to deal with. He added that the recent euro rally will put more pressure on the currency as investors look for better reports and data from the region. The euro remains the worst performer in the last six months dropping by 3.7 percent while the dollar and the yen increased by 3.4 and 0.9 percent respectively over the same period.

Concerns about the euro area has dampened demand for riskier assets sending the Australian dollar down 0.4 percent against the US dollar to trade at 98.55 US cents and 0.8 percent lower against the yen to exchange at 78.16 yen. The 17-nation currency dropped 0.7 percent against the yen to trade at 99.33 yen per euro while it lost 0.3 percent against the dollar. It traded at $1.2518 during the mid-day trading in Tokyo.

Analysts and investors are now looking forward policy makers’ meeting in Japan and US on June 14-15 and 19-20 respectively. They will keep a close eye on any changes that might be proposed by the two nations.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

By MoneyMorning.com.au

‘The idea many investors have that China can make a seamless transition to a consumer-driven economy is ridiculous. There is no precedence for it. They don’t have a system, cultural, legal, economic or political, that would accommodate that kind of transition.’ – Michael Aronstein, Marketfield Asset Management

It’s good to see we’re not the only one who sees through China’s economic charade.

Michael Aronstein at Marketfield Asset Management thinks China’s days are numbered. He told Bloomberg:

‘It worries me, particularly in China, where the expectations about a developing middle class are, I think, way off the mark. The wealth China has developed has been mostly a function of either demand or capital coming from external sources.’

He’s dead right. And he’s backing it up by short-selling an exchange traded fund (ETF) that invests in Chinese stocks. Of course there’s a much better way to sell China, and it’s right here on the Aussie stock exchange…

Why China is an Anti-Consumer Economy

To hear most people talk about China’s economy, you’d think they’d created a magic formula to guide an economy to eternal success.

Some formula. The Chinese have simply spent and borrowed (yes, borrowed) to build huge infrastructure projects. When that stops, what happens next?

We had a chat about this with some old broker chums over an all-you-can eat buffet lunch (cauliflower soup, roast lamb and veg, and apple crumble with custard and ice cream) at the RACV Club in Melbourne last week.

We made this simple point. The notion that many in the West have is that China will allow its subjects (citizens would be a generous term) the freedom to become consumers.

We just don’t see it happening. A consumer-driven economy requires a free people and a mostly free market. At the very least it needs a competitive market.

It needs an economy where consumers can make choices about what they do, where they go, and what they buy.

A consumer economy is where you decide whether to use that five dollar note to buy a magazine, a bag of lollies or a coffee. Then you have to choose which magazine, which bag of lollies, or which coffee.

We’re sorry to say it, but most Chinese don’t have that choice. And the Chinese economy has no experience of a competitive market where consumers make choices. When you’re building a skyscraper you want steel, copper and glass. Those are commodities. To a large degree it doesn’t matter which steel, which copper or which glass you buy.

One of Pavlov’s dogs could run the Chinese economy. More steel? Press a button, more steel arrives. More copper? Press a button, more copper arrives. And so on.

How does that work in a consumer economy? It doesn’t. They can’t bulk order one product or service and allot it to the entire population. And if they do, it’s not what most of the people want…because it’s decided by a central planner rather than by the consumer.

Not a Cross-Section of Chinese Living Standards

Perfect examples in the West are public healthcare, schooling and housing. Forcibly paid for by taxpayers who don’t need it, don’t want it, or would prefer something else…something they could choose.

But, we hear you ask, ‘Ah, but what about the pictures you see of the rich folks in Shanghai wearing Rolex’s and driving Ferrari’s. Isn’t that proof consumer culture exists and can be successful?’

Again, we mentioned this over lunch last week. The Rolex’s and Ferrari’s are what you can see. What about what you can’t see?

Using the rich in Shanghai as a sample of consumerism in China is like taking a snapshot of consumers in Toorak, Vaucluse and Beverly Hills and assuming that’s a fair picture of all consumers in Melbourne, Sydney and the Los Angeles area.

The rich in Shanghai are consumers because their mates in China’s ruling elite let them be consumers. But don’t expect the Chinese government to give the same personal and consumer freedom to the masses.

Because the rulers know that once they lose control over what the people can buy and sell, they’ll lose power. And power is the biggest weapon the Chinese rulers have.

In China There Can Be No Freedom Without the Loss of State Power

In the May issue of Australian Small-Cap Investigator we wrote that until the Industrial Revolution, ‘There was no progress or improvement in the standard of living because no-one knew the concept of wanting to do better for themselves.’

Kings ruled kingdoms, Lords ruled their estates, and the serfs and servants obeyed their masters. They knew no better. They certainly never dreamt of becoming a King or Lord.

But once the Industrial Revolution arrived, people gained some freedom. And they got a taste for it and the chance to better themselves.

The point is it didn’t happen overnight. It took time. It needed a situation where individuals could exercise some choices. And it needed an environment where capitalists could lure labourers away from hand-to-mouth living, towards earning a wage.

At the time of the Industrial Revolution this was new to everyone. They couldn’t have known the impact it would have, and how it would result in more freedom for the lower classes and less power for the ruling classes.

But that’s not how it is in China. If they’ve done their homework, the ruling powers will know what will happen if they allow individuals to become free and make their own choices. It will mean loss of power and control.

Freedom and State power are the two extremes. You can’t have both in equal measures. You can’t have absolute power and absolute freedom. It’s one or the other or something in between. So something has to give.

And that is the last thing China’s rulers want. Consumerism in the Chinese economy won’t happen. Not without a fight.

Sell Aussie Miners – Sell China

That’s why we’re a fan of the ‘sell big Aussie miners trade’.

Companies such as BHP Billiton [ASX: BHP], Rio Tinto [ASX: RIO] and Fortescue Mining [ASX: BHP] are almost 100% pure plays on the Chinese economy.

Shares in these companies did amazingly well between 2003 and 2007. Why? Because they had what the Chinese needed – millions of tonnes of bulk materials: iron ore, copper, and coal.

You need a lot of that stuff when you’re building skyscrapers, freeways, houses and sports stadiums. But…you don’t need quite so much iron ore, copper, and coal when you’re making consumers goods.

Such as handbags, lollies, toothpaste and shoes.

The big Aussie miners have already taken a tumble this year. BHP is down 26%, Rio is down 30%, and Fortescue is down 27%.

Our bet is all three have much further to fall.

And quite frankly, we doubt if there’s a better trade in the world to sell China’s economy than the opportunity Aussie investors have to short sell these three stocks.

Cheers,

Kris.
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