Month: February 2013

By www.CentralBankNews.info     Botswana’s central bank held its Bank Rate steady at 9.5 percent, saying the medium-term outlook for inflation remains positive, despite unfavourable short-term developments, and the current policy stance is consistent with inflation hitting the bank’s 3-6 percent target.
    The Bank of Botswana, which has held rates steady since December 2010, said domestic economic output grew by 7.7 percent in the 12 months to September 2012, with non-mining Gross Domestic Product up by 11.6 percent while the mining sector contracted by 12.5 percent.
    The central bank expects non-mining GDP to remain below potential in the medium term and thus be non-inflationary, with modest growth in government expenditure and personal incomes. Botswana’s GDP rose 1.1 percent in the third quarter from the second for annual growth of 5.7 percent, down from 8.5 percent in the second quarter.
    Botswana’s inflation rate was steady at 7.4 percent in November and December and is expected to remain above the bank’s target range in the near term.
    But the “underlying trend remains downwards and, therefore, inflation is expected to converge to the medium-term objective range towards the end of 2013,” the bank said after a meeting of its policy committee on Feb. 12, adding:
    “Weak domestic demand and the forecast modest external inflationary pressures contribute to the positive inflation outlook in the medium term.”
 
    www.CentralBankNews.info

By Justice Litle

Joel Greenblatt has one of the best investment track records in
history. His hedge fund, Gotham Capital, is on record with average
50%-plus annual returns for more than a decade.

Those returns are even more impressive because Greenblatt didn’t earn
them by using fast-paced trading or leverage. Instead, he is a
dyed-in-the-wool value investor.

In his book You Can Be a Stock Market Genius,Greenblatt lays
out some of the strategies he used to generate these extraordinary
returns. One of those strategies is using LEAPS, which stands for
“long-term equity anticipation securities.”

Put simply, LEAPS are a special type of call option with a long-term
shelf life. (Puts are also available.) LEAPS are available on hundreds
of securities and can extend out as far as 30 years.

A big advantage of LEAPS is that they allow you to benefit from price
movements of a large amount of stock with a modest amount of capital.
Instead of buying $10,000 worth of shares, for example, it is possible
to buy just a few hundred dollars worth of LEAPS and still have similar
profit potential.

Better still, this smaller amount becomes the maximum amount of money you can lose if your investment goes against you.

So if investor “A” buys $10,000 worth of stock — tying up a large
portion of capital and exposing himself to downside risk on the entire
amount — investor “B” can use LEAPS to enjoy comparable upside
potential with a fraction of the capital and a fraction of the downside
risk.

Greenblatt describes how he used LEAPS to profit from a bullish
investment situation in the early 1990s. Wells Fargo, the mortgage
behemoth, was trading for $77 per share, having suffered through one of
the worst real estate recessions since the 1930s.

In fact, in 1992, things were so bad in the commercial real estate
market that investors were wondering whether Wells Fargo would survive
the downturn. Even if it could have rebounded modestly, Wells Fargo
stock was so depressed that the share price could have easily doubled
over the course of a year or two.

There was just one problem. What if some hidden risk lurked on the
balance sheet? What if the depressed share price was justified? How
could Greenblatt protect his downside, while still capturing a big
upside move?

Greenblatt decided to invest using LEAPS…

He later described the Wells Fargo LEAPS investment as “a great
chance for a double with a remote possibility of disaster.” LEAPS
allowed him to catch the upside if he were right. But even if he were wrong, the risk of the LEAPS position was limited to the cost of his purchased options.

As it happens, Greenblatt was right about Wells Fargo. And his LEAPS
investment was a home run. Wells Fargo shares more than doubled. But
Greenblatt’s LEAPS did even better. They returned in the neighborhood of
500%.

Not all LEAPS will deliver these kinds of returns. But they are an excellent way to lower your capital costs, reduce your risk and boost profit potential.

In Strategic Wealth Report, this is exactly what we strive
to do. I use the power of LEAPS to exploit compelling investment ideas
and major long-term trends.

If you would like to find out more about LEAPS, look for my special report on the subject (coming soon).

Carpe Divitiae,

Justice

http://www.insideinvestingdaily.com/

By Harjeet

The Indian Shipping segment, with 187 minor ports and 13 major ports spread across nine maritime states, is poised to mark exponential growth in the years to come. The Government of India is geared to attract foreign investors in India by embarking on public-private partnership (PPP) route for modernisation and expansion of the Indian ports.

The total capacity of the port sector is envisaged to be 2,301.63 million tonnes (MT), to meet the overall projected traffic of 1,758.26 MT by 2016-17, as per the 12th Five Year Plan (2012-17) document. “The traffic forecast by the end of the 12th Plan would be 943.06 MT and 815.20 MT for the major and non-major ports respectively, with corresponding port capacities of 1,241.83 MT and 1,059.80 MT respectively,” it added.

According to the Planning Commission, the capacity of Indian ports will have to nearly double to 2,302 MT over the next five years to be able to handle the fast growing cargo traffic.

The shipping industry of India has witnessed various deals and developments pertaining to foreign direct investment in India.

Indian Shipping Industry Goes Global

As the Government of India is determined to get Indian shipping industry at par with the global standards, it is in continuous discussions with foreign investors in India and across the world to achieve the growth targets.

The Ministry of Shipping expects that the bi-lateral co-operation would enable Indian organisations to acquire appropriate know-how, scientific knowledge and research and development (R&D) capabilities from the European country.

Moreover, India has recently shown interest to adopt new technology regarding decongestion of ports; information technology for the movement of container traffic and maritime training from Germany.

Investment Opportunities in Indian Shipping Industry

At the beginning of the financial year (2010-11), the Ministry of Shipping fixed a target of 21 projects under PPP for the major ports out of which two projects have been awarded so far at Tuticorin Port and Ennore Port.

The Government of India is focusing on port infrastructure development in the country and is promoting private participation and foreign direct investment in India. The Government has allowed 100 per cent foreign direct investments under the automatic route for:

• Leasing of existing assets of ports
• Construction/ creation and maintenance of assets such as-container terminals bulk/ break bulk/ multi-purpose and specialised cargo berths, warehousing, container freight stations, storage facilities and tank farms, cranage/ handling equipment, setting up of captive power plants, dry docking and ship repair facilities
• Leasing of equipment for port handling and leasing of floating crafts
• Captive facilities for port based industries

Investment Policy Updates

According to a Ministry of Shipping’s press communication a new programme – Perspective 2020 – will replace the existing NMDP plan. The Maritime Agenda 2010-2020 is a perspective plan of the Shipping Ministry for the present decade which has set the goals as follows:

• To create a port capacity of around 3,200 MT to handle the expected traffic of about 2,500 MT by 2020
• To bring ports at par with the best international ports in terms of performance and capacity
• To increase the tonnage under the Indian flag and Indian control and also the share of Indian ships in our EXIM trade
• To promote coastal shipping as it will help in decongesting our roads and is environment friendly

About the Author

Harjeet is an Indian – born mass-market novelist, who covers the world internet related topics. He writes columns and articles for various websites and internet journals in the domain of Investments and Investing in India.

London Gold Market Report
from Ben Traynor
BullionVault
Wednesday 13 February 2013, 07:00 EST

THE DOLLAR gold price  drifted back below $1650 an ounce Wednesday morning, 1.1% down on the week so far, although it jumped higher in Sterling following after a Bank of England report said policymakers are prepared to “look through” persistently high UK inflation.

“The $1625.77 level remains key for [gold’s] medium term trend,” says Axel Rudolph, senior technical analyst at Commerzbank.

“Failure here should provoke a sell-off to below $1600 level before the precious metal levels out and starts rising again.”

“Technically the metal appears susceptible to a move lower,” agrees a Deutsche Bank report, perhaps to the 1,600 an ounce level or even $1,550 an ounce… There is a distinct lack of obvious positive catalysts for gold at the moment, with the current environment seemingly bereft of macro[economic] concerns.”

Silver also drifted lower this morning, but held above $31 an ounce, while other commodities ticked higher.

“We believe silver is likely to move higher in 2013 based on four factors,” says a note from HSBC.

“Higher industrial demand, steady investor appetite for hard assets, strong coin and bar purchases, and a bottoming out of jewelry demand.”

European stock markets recovered this morning after easing in the first few hours of trading. The FTSE in London was the weakest performer of the major European markets this morning, dropping 0.2% before recovering some ground, after pharmaceutical firm Astra Zeneca, oil producers BP and Shell and payroll software provider Sage all went ex-dividend, meaning anyone who buys their shares today will not receive the next dividend payment.

Shares in London-listed miner African Barrick Gold meantime fell more than 9% to a six-month low this morning after the firm announced its lowest yearly production forecast since it listed in London in 2010. Earnings fell by 39% in 2012, the company said, as production fell and costs rose.

Until last month, Barrick Gold was in talks with China National Gold to sell its 74% stake in African Barrick, but the talks ended with no deal done.

Platinum meantime rose to $1723 per ounce this morning, its biggest premium over gold in 17 months, after the world’s third-largest producer Zimbabwe repossessed land held by the country’s biggest producer Zimplats.

In Washington last night, US president Barack Obama used his State of the Union address to highlight job creation, immigration and gun control as priorities for his second term.

“Most of us agree that a plan to reduce the deficit must be part of our agenda,” Obama said.

“But let’s be clear: deficit reduction alone is not an economic plan.”

“[Obama is promoting] a go-it-alone approach to pursue his liberal agenda,” Republican House of Representatives speaker John Boehner said following the address.

The Pound fell sharply against the Dollar and Euro this morning, following the publication of the Bank of England’s Quarterly Inflation Report, which says the Bank will “look through” above-target inflation “as long as domestic cost and price pressures remained consistent with inflation returning to the target in the medium term.”

“Attempting to bring inflation back to the target sooner by removing the current policy stimulus more quickly than currently anticipated by financial markets would risk derailing the recovery and undershooting the inflation target in the medium term,” the report says.

The Bank’s view on how likely inflation is to return to its 2% target is based on its own forecasts. Figures published yesterday show UK consumer price inflation remained at 2.7% last month, having been above target in every month since December 2009.

Gold in Sterling rose 0.9% to £1059 per ounce immediately following the publication of this morning’s report, just below its high for the week so far.

Criticism of Japan’s recent policy actions, which have been followed by sustained weakening of the Yen, was “not the key message” of yesterday’s G7 statement reaffirming a commitment to market determined exchange rates, according to Standard Bank currency strategist Steve Barrow.

“The key message is that international policymakers want China to have a market determined exchange rate, and it is particularly the message from the US which is, after all, the dominant player in any G7 or G20 forum,” says Barrow.

“G20 meetings start this weekend and we likely will see more forceful policy statements about individual currency devaluations going forward,” adds Ed Meir, analyst at brokerage INTL FCStone.

“However, the Japanese will likely water down any harsh language in the final communiqué by bringing up the disruptive actions the US has been taking with respect to its massive easing program and its inability to reach badly needed fiscal accords.”

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. Ben can be found on Google+

(c) BullionVault 2013

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.

Intent to keep the price movement at the middle of the trading week, the US dollar is anticipated to give in to the rally of its Australian counterpart. Traders are deemed to be willing to take in more of the riskier commodity dollar after earlier reports that Australian consumer sentiment surged to a 26-month high. Market participants are also likely to look into consumer spending data from the world’s largest economy today.

As the increased payroll taxes began to hit US consumers at the start of the year, it would be of importance how consumer spending held up in January, what with talks of sequestration from President Obama’s State of the Union speech. Median expectations place a decline to 0.1 percent figure on US retail sales for January. A similar decline to 0.1 percent in retail sales excluding autos in January is also forecast. Slower gains in the retail sales figures are seen to shift the focus away from the Greenback to the stronger Aussie today.

In fact, the Australian currency rose against most of its major peers after its gauge of consumer confidence reached more than a two-year high. The said increase likewise eases expectations that the central bank will cut interest rates sooner. Swaps traders reduced bets that the Reserve Bank of Australia will lower the overnight cash-rate target from 3 percent in March.

“The odds of a RBA rate cut in March have now slipped a little bit” after the release of the consumer-confidence survey, said Jonathan Cavenagh, a currency strategist in Singapore at Westpac Banking Corp. “The near-term risks are that it can head higher,” he said, referring to the Australian dollar.

Considering the adverse effect of these fundamental data on the Greenback, a buy position is advised for the AUDUSD today. It is still pertinent to look out for probable technical corrections on the currency pair’s movement.

For more news, analysis, technical charts and candlestick analysis, visit AlgosysFx Forex Trading Solutions.

Explore the rules, guidelines and Fibonacci multiples of impulse waves

By Elliott Wave International

Impulse waves are an integral part of the Wave Principle. Understanding their rules, guidelines and Fibonacci multiples will improve your application and your ability to identify high-confidence trade setups.

There are three rules that govern impulse waves:

1. wave two may never retrace more than 100% of wave one;
2. wave three may never be the shortest impulse wave of waves one, three and five. It does not have to be the longest, but it may never be the shortest; and
3. wave four may never end in the price territory of wave one.

Fibonacci multiples are the mathematical basis used to identify wave objectives. For example, we often tend to see a deep retracement in wave two. A .618 multiple of wave one and .382 multiple of wave three are the most common Fibonacci retracements for second and fourth waves. Fibonacci extensions for waves three and five include .618, 1.000, 1.618, 2.000 and 2.618.

For example in this 120-minute price chart of GE, we have an initial move to the downside. Notice the deep retracement in wave 2 – we go back to beyond the .618 retracement at 22.89.

From there, we see a wave three decline followed by a fourth wave bounce — a correction — back to the .382 retracement of wave three at 21.78.

The most common Fibonacci retracement for a fourth wave is a .382 multiple of wave three.

The most common Fibonacci retracement for a second wave is a .618 multiple of wave one.

You may notice another extension, or multiple, on this price chart coming in at 21.06. At that level, wave three equals a 2.618 multiple of wave one.

Within the structures of an impulse wave (or in corrections, for that matter), each wave of the pattern is going to have some type of Fibonacci multiple or ratio to prior waves within the structure.

One of the most relevant guidelines pertaining to impulse waves is that when an impulse wave completes, a correction occurs that pushes prices back into the span of travel of the previous fourth wave (most often ending near its terminus).

If we apply this to GE, you can see how it works:

When we finished the 5 wave decline, it set the stage for a countertrend move back up to the previous 4th wave extreme.

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By www.CentralBankNews.info     Sweden’s central bank held its benchmark repo rate steady at 1.0 percent, saying there were positive signs of stronger economic activity but the interest rate needs to remain at this low level over the coming year to support the economy and ensure that inflation rises to the bank’s target.
    The Riksbank, which cut rates by 75 basis points in 2012, said a low repo rate for the next year should help push up inflation toward 2 percent by mid-2014 but it also cautioned that “household debt as a percentage of their income is still high and the risk this entails for the economy in the long run still remain.”
     Sweden’s economy is still affected by the euro area’s crises and this will lead to weak growth in the first half of the year, but the unease on financial markets has declined and households and companies, both in Sweden and abroad, have become slightly more optimistic about the future, the bank said.
    “At the same time, developments in the emerging economies are strong and the recovery in, for instance, the United States is continuing. Altogether, this implies that Swedish GDP growth will gradually increase over the year, although there is a risk of setbacks,” the executive board said.

    The Riksbank’s latest forecast showed that the repo rate is first expected to rise to 1.2 percent in the first quarter of 2014, slightly down from the December forecast of 1.3 percent, and then rise to 2.0 percent in the first quarter of 2015, the same as the previous forecast. The repo rate is forecast to hit 2.7 percent by the first quarter of 2016.
     Consumer price inflation is forecast to decline to an average 0.4 percent in 2013 from 0.9 percent in 2012 and then hit 2.1 percent in 2014, below the December forecast of 2.3 percent.
    Sweden’s headline inflation rate was negative for the second month in a row in December, down 0.1 percent, the same as in November.
    The upside risks to the Riksbank’s repo rate forecast is that Asian and U.S. economic growth could be stronger than expected, while the repo rate path could be lower if unemployment were to rise more than expected and inflation was lower than expected.
    Sweden’s Gross Domestic Product expanded by 0.50 percent in the third quarter from the second, down from the second quarter’s expansion of 0.7 percent and the first quarter’s 0.8 percent. The annual rate in the third quarter was only 0.70 percent.
    Two of the Riskbank’s board members entered reservations against the decision to hold rates steady. Deputy Governor Karolina Ekholm wanted the rate to be cut to 0.75 percent and Deputy Governor Lars E.O. Svensson wanted the rate to be cut to 0.50 percent.

    www.CentralBankNews.info

By www.CentralBankNews.info

By www.CentralBankNews.info 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 MoneyMorning.com.au

The news out of Japan gets stranger by the minute.

According to the Japan Times last Saturday the economic and fiscal policy minister Akira Amari said the government ‘will step up economic recovery efforts so that the benchmark Nikkei index jumps an additional 17 percent to 13,000 points by the end of March.’

Have you ever heard of a politician giving explicit targets for the stock market?

So now the Japanese government is doing two things. First, it’s leaning heavily on the Bank of Japan to print money aggressively, in order to incite inflation and lower their currency. Second, they’re now setting a precise target for the Japanese stock market…

Japan Trashing the Yen

The fact is the rise in the Japanese stock market so far is a function of the falling Yen anyway. So what he’s really saying is that he wants to trash the Yen further.

The beauty parade of potential governors for the Bank of Japan is picking up pace and contenders know that they had better be in favour of more money printing or they don’t stand a chance.

Haruhiko Kuroda, who has thrown his hat into the ring for the job, has said that additional monetary easing can be justified this year. What a surprise.

The Yen continues to spiral down and the Nikkei continues to spike higher on the expectation of a surge in exports due to the weaker currency.

But let’s think about this for a second. Japanese conglomerates have been losing market share for years and I’m not sure the loss of market share is purely due to the strong currency. Therefore will a weaker currency translate into a surge in sales? I don’t think so.

Sony Corp is down from over $110 to $14 over the past 12 years. You can’t blame a fall like that on the currency alone. So I don’t think a further fall in the currency will stop the rot.

Why don’t we just stop the charade and get the central banks and governments to tell us what price they’d like the price of everything to be so we can all stop guessing.

Having watched markets for twenty years I can honestly say that I’ve never seen them so heavily manipulated. And the future holds more of the same.

I can’t imagine that we’ll see politicians announcing that they have been wrong all along and they would like to apologise for sticking their noses in where they didn’t belong.

The more they stuff things up, the more they’ll say that they need to do more to correct the mistakes (although of course they’ll blame those mistakes on forces outside of their control). They’ll keep doing that until the whole edifice tumbles down on their and our heads.

Japan’s economy is definitely the poster child in this respect so I have little doubt that the cracks will appear there first.

If they do convince everyone that inflation is coming to Japan after about 20 years of deflation do you think their long term bonds will stay below 2%?

Almost 25% of government revenue goes to paying interest on their debt with interest rates at multi-generational lows. What will happen to that figure if bond yields rise to 3% or 4%? It will be game over for Japan, that’s what.

Japan is trashing their currency to incite inflation and if they succeed they just might bring about their own downfall.

Demand for Money Down, Supply Up

Not to be outdone, the US Fed is playing catch up.

I watched a great presentation this week that focused on the relationship between the velocity of money and the current Quantitative Easing by the US Fed. You can find the presentation here if you’re interested.

The basic premise of the presentation is that the velocity of money (which is the average frequency with which a unit of money is spent on new goods and services produced domestically in a specific period of time) has plummeted since the dot com crash in 2000. Accordingly, that is putting pressure on the Fed to print more money to keep the system stable.

Click to enlarge

The money printing by the Fed isn’t translating into a surge in activity because the banks aren’t lending, due to their damaged balance sheets. And consumers and businesses aren’t borrowing, because they already have too much debt and there aren’t many opportunities to pursue.

So at the moment the Fed is basically pushing on a string by printing more money.

But the risk is if the velocity of money turns around and starts heading higher, then the inflationary response could be vicious.

In the past when the velocity of money picked up the Fed would start raising rates to counteract the inflationary consequences of a rising money supply and a rising velocity of money.

But now that the Federal government has such a huge debt burden it will be far harder for the Fed to raise rates and thus increase the interest payments owed by the government as a percentage of their revenue.

The Endgame Approaches

This is a dangerous set of circumstances. When inflation takes hold the Fed will drag its feet and we could go from very little inflation to immense inflation very quickly. In that situation the bond market would collapse anyway and force the Fed’s hand.

This may be a story for 2015 or beyond, and we’ll probably see a deflation in asset prices prior to the final act, but there is no doubt the ducks are all in a row for this outcome.

So Japan may be the first to implode, since they started their journey into the Keynesian sinkhole before everyone else, but the US Fed is determined not to be far behind.

So it’s quite clear that both the Bank of Japan and the US Fed are going to keep their foot on the gas for the foreseeable future. This could mean that the Aussie equity market will rally faster and further than most (including me) thought possible.

Our equity market is highly correlated to the Japanese Yen due to the effect of the carry trade, so if we continue to see a collapse in the Yen equities may continue to fly.

Murray Dawes
Editor, Slipstream Trader
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From the Port Phillip Publishing Library

Special Report: How to Hunt Down 2013′s Biggest Stock Market Winners

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