Month: August 2012

Article by Investment U

In focus this week: getting juiced takes on a whole new meaning, AT&T and Verizon’s war for mobile data, and the SITFA.

There’s a Bull Market… in Juice!

According to Barron’s, what do Bill Clinton, a million hedge fund managers and a lot of housewives have in common?

Juice! Spinach slurpees, kale cocktails, super fruit smoothies!

A Barron’s article said the liquid lunch is taking on a whole new feel in our well-heeled suburbs and trendy cities. Martinis are out, brackish-looking goo is in!

A 17-ounce bottle of cucumber, celery, parsley, kale, dandelion, Swiss chard, lemon and ginger juice will set you back $13.

It’s a $5-billion industry and growing like crazy!

Big players are jumping into it in a big way. Campbell Soup, Coke, Pepsi and Whole Foods are buying small juicers, and a Whole Foods spokesman said this segment is growing faster in traditional stores than in others.

Sales have grown 58% since 2004. Starbucks (Nasdaq: SBUX) is in on the game with Evolution Fresh that has an 11-foot wall with spigots that dispenses all kinds of juices.

A SBUX spokesman said they will do for juices what they did for coffee. Wow!

Matthew DiFrisco, an analyst who follows SBUX, said this could hit 1.3 billion in sales just at SBUX!

McDonald’s and Dunkin Donuts have been pushing a part of this segment with fruit smoothies, and some of the names to watch for: Juice Press, Organic Avenue and Earth Bar. In fact, Earth Bar is opening stores in Malaysia and Singapore.

Scott Van Winkle said in the Barron’s article that every player in the food business is either looking at juicing or moving on it.

Kale cocktail, no thanks!

AT&T and Verizon Fighting for Your Data Dollars

AT&T (NYSE: T), according to Barron’s, is the pick over Verizon (NYSE: VZ) as the dividend play in the data and wireless area. The demand for wireless may not be good for our wallets, it’s getting pricey out there, but it’s great for AT&T.

AT&T has $4 billion in stable cash flow, and it could expand even further as our demand for data usage and their customer loyalty grows.

With a 5% yield, and a lower price-to-earnings basis than VZ, it still has a comparable long-term growth estimate.

AT&T pays three times the 10-year Treasury yield with good upside potential, and, according to Dan Genter of the RNC Genter Dividend Income Fund, the dividend will continue to grow.

AT&T will be spending $9 billion in a stock buyback, that’s about a 5% of the float, Verizon isn’t, and analysts expect earnings to grow at 5% quarter over quarter.

The company’s subscriber base is also less fickle than it used to be. Most of their base is family and business with less churning than in the past.

Analysts see the industry coming down to two players, AT&T and Verizon, many of the small players have been bought up or forced out, and right now the edge is with AT&T.

Look for earnings to grow and increasing margins as demand for data increases, and everyone is looking for constantly increasing demand…

The stock is not likely to explode upward, but we do have a very nice defensive dividend play in AT&T.

Finally, the SITFA

This week the slap-in-the-face award goes to the folks at Squawk Box on CNBC.

In an economy where we have 15% real unemployment, a GDP that looks like it headed for the toilet, the EU crumbling, China slowing and almost no good news for the consumer in the energy and food sectors, CNBC ran a segment this past week about how cheap it is to own your own island.

I’m not kidding!

Yes, when folks are being put out of their homes, the over-50 crowd is being forced out of the job market, the market seems to have nowhere to go but down, the producers run a segment about how affordable your own island can be? Come on!

But wait, says CNBC. Islands have dropped in value anywhere from 20% to 80%. Oh, boy!

You can buy an entire chain of islands in Greece for less than 5 million euros. Why have one when you can have a chain?

Why have prices gotten so low? One island owner was quoted as saying that his kids have so many soccer matches they can’t find the time to use it.

Well, a little reality anyway.

Article by Investment U

By Central Bank News
    The European Central Bank (ECB) is in the final stages of deciding which tools it may use to bring down the exceptionally high interest rates that some of the euro zone member states, such as Spain and Italy, are paying to sell their sovereign bonds.
     In a press conference following the bank’s decision to maintain its benchmark refinancing rate at 0.75 percent, ECB President Mario Draghi laid out his arguments to explain to fiscal hawks in Europe why the ECB was justified in new measures that would push down bond yields.
     Draghi said risk premia on bonds of some countries in the 17-nation euro zone “hinders the effective working of monetary policy”and the bank’s governing council had discussed the various policy options that are available to “address the severe malfunctioning in the price formation process in the bond markets of euro area countries.”
    The yield on Spanish 10-year bonds is currently below 7 percent but was starting to approach 8 percent recently. Italy is paying just below 6 percent compared with Germany’s 1.3 percent yield.
    Draghi called on euro zone policy makers to push ahead with reform and deficit-cutting efforts but  he acknowledged that this takes time and markets first react when those measures are clearly visible.
    Governments mush therefore be ready to use the euro zone’s bailout funds – either the permanent European Stability Mechanism or the current temporary version, the European Financial Stability Fund, – “when exceptional financial market circumstances and risks to financial stability exist,” he said.
     He also said that any “risk premia that are related to fears of the reversibility of the euro are unacceptable, and they need to be addressed in a fundamental manner. The euro is irreversible.”
    “The Governing Council, within its mandate to maintain price stability over the medium term and in observance of its independence in determining monetary policy, may undertake outright open market operations of a size adequate to reach its objective. In this context, the concerns of private investors about seniority will be addressed,” Draghi said, adding: 
    “Furthermore, the Governing Council may consider undertaking further non-standard monetary policy measures according to what is required to repair monetary policy transmission. Over the coming weeks, we will design the appropriate modalities for such policy measures.”
    The ECB cut its refinancing rate by 25 basis points on July 5 and Draghi said economic growth remains weak while inflation should fall further below the bank’s target of close to 2 percent in 2013.
    “A further intensification of financial market tensions has the potential to affect the balance of risks for both growth and inflation on the downside,” he said.
    The inflation rate in the euro zone was steady at 2.4 percent in June but the economy contracted 0.1 percent in the first quarter from the same 2011 quarter. The unemployment rate remained at a record high of 11.2 percent in June but the rate varies greatly across the euro area, from a high of 24.8 percent in Spain to a low of 4.5 percent in Austria.
    “The risks surrounding the economic outlook for the euro area continue to be on the downside. They relate, in particular, to the tensions in several euro area financial markets and their potential spillover to the euro area real economy. Downside risks also relate to possible renewed increases in energy prices over the medium term,” he said.

Article by AlgosysFx

The US housing market is seeing bottom.

Home-vacancy rate in the US fell to 3.4 percent as of mid-July from 3.6 percent a year earlier, as the total number of homes receiving mail increased by 970,000, according to Trulia Inc. The additional households include about 760,000 new homes and 210,000 formerly vacant homes.

In a sign that the housing market is recovering, the home-vacancy rate is falling in US cities such as Las Vegas and Phoenix that were hit hardest by the housing crisis. The Census Bureau reported last week that the US home-vacancy rate fell to the lowest level since 2006 in the second quarter, while new households formed at an annualized rate of about 800,000.

Household formation fell to a 100,000 pace in the fourth quarter of 2008, following the US financial crisis triggered by the bankruptcy of Lehman Brothers Holdings Inc. A normal rate is 1.2 million new households a year, which would spur demand for 1.6 million new residences, says Stephen East, a homebuilding analyst with International Strategy & Investment Group LLC.

The shrinking vacancy rate indicates that the so-called shadow inventory, which includes homes facing foreclosure or repossessed by banks that are not listed for sale, is smaller than the biggest estimates and less of a threat to a real estate recovery, Trulia Chief Economist Jed Kolko said.

The shadow inventory was 5.95 million homes last month, down from a high of 8.79 million in early 2010, Morgan Stanley said in a July 26 report.

“Inventories are actually dropping partly because homes are filling up –- not just because people or banks are unable or unwilling to put homes on the market,” Kolko said. “In fact, vacancies are better than inventories as a measure of whether there’s a housing shortage or housing glut.”

The vacancy rate fell to 1 percent in the San Jose area, which includes Silicon Valley, where technology companies have been hiring and homebuilders face limited land supply and regulatory challenges that slow development, Kolko said. Job growth also helped reduce vacancies in Denver; Seattle; Raleigh, North Carolina; and Nashville, Tennessee, he said.

In fact, last week, the upward revision to the demand for new US homes last May was the highest level in two years, in a sign that the housing market is recovering. Though home purchases increased to a lackluster 350,000 annual rate last June, the upwardly revised 382,000 figure for May was the most since April 2010.

Get more news and analysis at AlgosysFx Foerx Trading Solutions

By Central Bank News
    Here’s today’s Central Bank News link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don’t miss any important news.

By TraderVox.com

Tradervox.com (Dublin) – The Australian dollar advanced after improvements were reported in the Retail Sales and Trade Balance data released today. The data has boosted speculations that the Reserve Bank of Australian will hold its borrowing cost when it meets next week. On the other hand, the New Zealand dollar increased after data showed that whole-milk powder prices increased for the first time in one and a half months. However, South Pacific dollars’ gains were limited as speculation of inadequate measures by the European Central Bank rose in the market.

According to Gavin Stacey, who is the Chief Rate Strategist in Sydney at Barclays Plc, the data released today may help the Aussie to rise higher today. She also cast a shadow on the ability of the ECB to act according to the market’s expectation, hence indicating that this is a limiting factor on the Aussie advance. The National Bureau of Statistics said in a report today that the Australian Retail Sales increased by one percent in June after it recorded a revised 0.8 percent rise in May. Further, positive news came as Trade Surplus of A$9million was recorded in the same period against an market estimate of a decline of A$375 million.

The market expects the RBA to retain its current interest rates at 3.5 percent when official meets on August 7, while the ECB officials are expected to keep rates at 0.75 percent in their meeting today. Economists have warned that if the ECB does not live up to the promises made by ECB President Mario Draghi, there will be a big fall in risk appetite which will affect the south pacific currencies as well as other commodity related currencies.

The Australian dollar increased by 0.2 percent against the US dollar to trade at $1.0478 at the close of day in Sydney. The Aussie dropped 0.4 percent yesterday the biggest drop since July 23. It was up 0.2 percent against the yen to trade at 82.19 yen. The New Zealand dollar was up by 0.2 percent against the dollar to exchange at 80.88 US cents and rose by the same margin against the yen, trading at 63.44 yen.

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By Central Bank News
    The Bank of Uganda (BoU) cut its policy interest rate, the Central Bank Rate (CBR),  by 200 basis points to 17 percent as a sharp drop in inflation gives it room to stimulate the economy.
     The central bank said the “disinflationary momentum in the Ugandan economy strengthened in July,” with both headline and core annual inflation rates falling sharply and inflationary pressures have been easing since the beginning of the year.
    Uganda’s economy remains below its potential level due to subdued domestic demand and the deteriorating global economic outlook, the bank said.
    “To ensure that the real GDP growth of at least 5 percent can be achieved in 2012/13, it will be necessary to strengthen domestic demand, especially by stimulating a recovery of commercial bank lending to the private sector,” the BoU said in a statement.

    The central bank revised its inflation forecast down, with the inflation rate to be around 7 percent by the end of 2012 and then fall to around 5 percent in the first half of 2013.
    Headline inflation fell to 14.3 percent in July from 18 percent in previous months and monthly increases have been between 0.4 and 0.3 percent, which translates into annual rates of less than 5 percent, the BoU said.
    The bank also said it would maintain its band around the CBR at plus or minus 3 percentage points.
 
    www.CentralBankNews.info
 

By Chris Vermeulen, GoldAndOilGuy.com

While the exchange traded funds for gold (NYSEARCA: GLD TRADING –  GLD QUOTE) and copper (NYSEARCA: JJC) fell today due to investors expressing disappoint at the modest response of the Federal Reserve to declining economic growth, it was silver (NYSEARCA: SLV Trading, SLV Quote) that was off the most.

SPDR Gold Shares (GLD) fell in trading today by 0.89%.    IPath Dow Jones Copper (JJC) dropped 1.89%.  Plunging the deepest was iShares Silver Trust (SLV), off by 2.14%.

SLV Bullion Trust

Traders were hoping for more aggressive action by Federal Reserve Chairman Ben Bernanke.  But that will not come until after the November elections in the United States.  Remember that Quantitative Easing 2 did not begin until November 2010, though it was announced at the Jackson Hole economic policy summit in August of 2010.

Silver is in what would seem to be the “sweet spot” between gold and copper.  Almost all of gold is used for investment or decorative purposes.  Almost all of The Red Metal goes for industrial needs.   For silver, it comes almost down right in the middle between commercial and a commodity for investments or jewelry.  The charts below show the trading relationship for each of the exchange traded funds when paired against each other.

JJC Copper ETF Trading

Even though silver has a much higher industrial usage, the SLV moves along with the GLD.   As a result, it soared during Quantitative Easing 2.  Obviously, the charts reveal that most of the trading is from speculators as the JJC should move in an inverse relationship with the GLD.  That is due to gold being used almost entirely for non-industrial end uses while copper is used almost industrial for industrial uses.

Up slightly for the week as traders thought more dramatic economic stimulus efforts would result from the Federal Open Market Committee meeting  other than an extension until the end of the year for Operation Twist, the SLV is down for the last month, quarter, six months and 52 weeks of market action.  Year to date, the SLV is off by 1.48%.

For the last year, however, the SLV is down 33.35%.  Volume was up today, with the SLV below its 20-day, 50-day and 200-day moving averages.  In the most obvious trend, it is trading much lower under its 200-day day moving average at 11.67% down than underneath the 20-day moving average, beneath it by only 0.17%.  The only move worth noting in the technical indicators for silver were the long engulfing green bodies last week after Treasury Secretary Geithner’s  gloomy testimony on The Hill and more bad economic news from the US peaked buying as traders thought Quantitative Easing 3 was coming.

SLV ETF Trading

If traders long on silver are looking for help from Bernanke, it will not be coming until after the November election, though it could be announced when he speaks later this month at Jackson Hole.

By Chris Vermeulen, GoldAndOilGuy.com

London Gold Market Report
from Adrian Ash
BullionVault
Thurs 2 August, 07:10 EST

WHOLESALE PRICES for gold investment bars struggled just above $1600 per ounce in London on Thursday, after dipping below that level for the first time in a week as the US Federal Reserve left monetary policy unchanged yesterday.

“Immediate QE is off the table,” Reuters quotes Frank McGhee, chief precious metals trader at Chicago’s Integrated Brokerage Services.

“I will probably not be surprised to see them not do anything in September.”

The Bank of England today followed the US Fed in leaving UK policy unchanged in its midday announcement. The European Central Bank was also expected to make no change to its record-low rates of 0.75% per year.

Stock markets meantime ticked higher, while crude oil held onto a sharp rally but major-government bond prices also rose.

Silver prices ticked around $27.50 per ounce after hitting their own 1-week low versus the Dollar.

“Increased or decreased prospects of [central-bank] intervention seem to be the rationale for any move in precious metals at the moment,” says a London analyst in a note.

Ahead of Wednesday’s Fed decision, “Gold’s $50 gain since Mario Draghi’s pledge to ‘do whatever it takes’ last week suggested high expectations were priced in,” he adds.

Italy’s prime minister Mario Monti yesterday told reporters that a banking license for the European Stability Mechanism “will in due course occur” – meaning that the €500 billion ($615bn) bail-out fund could buy government debt using money borrowed from the European Central Bank.

But “a banking license for the ESM rescue fund is absolutely not our way,” said German spokesman Georg Streiter after a cabinet meeting in Berlin.

German Bundesbank chief Jens Weidmann – a member of the ECB meeting together with the 16 other national Eurozone central bank heads today – is also against such a move.

“If the ECB doesn’t do something today, there will be disappointment,” reckons Japanese conglomerate Mitsubishi’s precious metals analyst Matthew Turner, speaking to CNBC.

“But they will have to do something at some point. The situation…will force them,” says Turner, pointing to support for gold investment prices at the June and July lows around $1550 per ounce.

Back in Washington, and where the Federal Reserve’s June statement said “The Committee is prepared to take further action as appropriate,” this week’s press release said it will “will provide additional accommodation as needed.”

The Dollar rose fast on the “no change” decision against the European single currency, but gave back most of its gains by Thursday lunchtime in London to trade at  $1.228 per Euro.

“Gold prices have dropped in the aftermath of every [Fed] meeting this year with the exception of January,” said a note from bullion-bank and London market-maker HSBC’s precious metals team last night.

Just as on Wednesday this week, “The bulk of losses then were pared or reversed in late session trading the same day.”

Over in Asia, the Bank of Korea said today its gold investment increased by 16 tonnes in July, the third such rise in a year. That took gold holdings at the world’s 7th largest central bank to 70.4 tonnes, equal to 0.9% of its total reserves – up from 0.1% only five years ago.

Central banks globally hold an average 1.4% of their reserves in gold investment bars, according to data from market-development organization the World Gold Council.

Adrian Ash
BullionVault

Gold price chart, no delay   |   Buy gold online at live prices

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

By Central Bank News
   The National Bank of Romania has maintained its monetary policy rate at 5.25 percent, as expected.
    The Romanian central bank said in a brief statement that the bank would also “ensure adequate liquidity management in the banking system”
    It said the quarterly inflation report would be released on Aug. 6 and further details would be provided at a press conference.
    The Romanian central bank cut its main rate by 25 basis points in March as the economy started to contract. The GDP fell 0.1 percent in the first quarter from the previous quarter.
    www.CentralBankNews.info

By Central Bank News
    The European Central Bank (ECB) kept its key interest rate unchanged at 0.75 percent, surprising most economists who had expected the bank to cut the rate or provide further stimulus to the ailing euro zone.
    The ECB said in a  statement that its president, Mario Draghi, would provide further comments at a press conference. The bank also maintained its other key rates – the rate on marginal lending at 1.5 percent and a zero rate on its deposit facility – unchanged.
    Expectations about further stimulus were stoked last week following Draghi’s comments that the ECB would “do whatever it takes to preserve the euro,” within its mandate. 
   The ECB cut its refinancing rate by 25 basis points on July 5. 
    The inflation rate in the 17-nation euro zone was steady at 2.4 percent in June but the economy in contracted 0.1 percent in the first quarter from the same 2011 quarter, and  the unemployment rate remained at a record high of 11.2 percent in June. Unemployment varies greatly across the euro area, with a rate of 24.8 percent in Spain and 4.5 percent in Austria.

    www.CentralBankNews.info