Charles Sizemore, CFA, talks with Jeff Reeves of InvestorPlace.com about auto stocks and whether GM ($GM), Ford ($F) and Daimler (DDAIF) have anything to offer in 2013.
Daimler is Charles Sizemore’s pick in InvestorPlace’s Best Stocks of 2013 contest.
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The post VIDEO: Are Automakers a Buy in 2013? appeared first on Sizemore Insights.
Is Spain a buy? In a word, “Sí.” But perhaps a better reply would be “Depende.”
After the recent volatility stemming from the Cyprus bailout, Spanish stocks are more attractive than at any other time in 2013. But you shouldn’t buy just anything trading in Madrid. A little selectiveness is warranted.
To start, if a company depends heavily on the local Spanish market, it’s probably best avoided. Last week, Spain’s central bank announced that the Spanish economy remains in siesta mode. By Bank of Spain estimates, the economy will contract by 1.5% , about on par with last year’s decline. The Spanish government had been budgeting a smaller decline, around 0.5%, so the news was not taken well by investors who already have enough to worry about in Europe’s periphery. Making it worse, unemployment was expected to creep up another percentage point to 27%. That’s over three times the (high) American unemployment rate. Ouch.
The good news is that most of the Spanish stocks that have the greatest exposure to the Spanish economy are not ones that you were likely to consider buying anyway. Most trade in the U.S. only as over-the-counter ADRs and don’t have much in the way of trading volume. The Spanish stocks you are most familiar with—such as telecom powerhouse Telefónica (NYSE:$TEF), megabanks Banco Santander (NYSE:$SAN) and Banco Bilbao Vizcaya Argentaria (NYSE:$BBVA) and retail fashion giant Inditex (OTC:IDEXY), parent company of the Zara chain—are companies with a truly global footprint that get the bulk of their earnings from outside Spain.
These four companies, along with Spanish oil major Repsol (OTC: REPYY), represent nearly 55% of the holdings of the iShares MSCI Spain Index ETF (NYSE:$EWP), the vehicle that most American investors would use to get exposure to the Spanish market.
Suffice it to say, the Spain ETF is not particularly well diversified. This is not necessarily a bad thing, if you are bullish on the largest holdings, as I am. But it is certainly something to keep in mind.
You really have to look to find Spanish companies for which the domestic market matters all that much. Electric utility Iberdrola (OTC:IBDRY), the sixth largest holding of EWP, is a case in point. This sleepy power company gets 70% of its profits from outside Spain. Construction and infrastructure company Ferrovial (OTC:FRRVY), the eighth largest, is even more international, getting a staggering 85% of its profits from outside Spain.
And Amadeus IT (OTC:AMADY), the seventh largest, is hardly a Spanish company at all. Amadeus provides software and IT solutions to the world’s travel industry and, other than its Madrid address, has little to mark it as distinctly Spanish.
So what are a few companies best avoided?
I would start with the local banks. The recent Cyprus bailout, in which large deposit holders effectively had their accounts seized to pay back international lenders, has investors worried that something similar could happen in Spain. This would not affect the large international banks like Santander and BBVA, both of which are healthy. But the banks that cater more to the domestic market—such as Bankia (OTC: BNKXF), Banco Popular Espanol (OTC:BPESY), CaixaBank (OTC:CAIXY) and Banco Espanol de Credito (OTC:BNSTY)—are stocks that I would steer clear of for now.
If investor risk appetites return to Spain, these are precisely the stocks that will rally the hardest. But for most investors, I would recommend sticking with the large multinationals that get most of their profits from outside Spain. Here I see the best risk/return tradeoff for the remainder of 2013.
Disclosures: Sizemore Capital is long SAN, BBVA, and TEF.
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The post Is Spain a Buy? Depende. appeared first on Sizemore Insights.
London Gold Market Report
from Adrian Ash
BullionVault
Thurs 4 Apr, 08:50 EST
The PRICE of GOLD extended its worst two-day drop vs. the Dollar since June last year
Thursday morning in London, falling as low as $1540.50 per ounce before rallying to $1551.
Commodities also stemmed their fall and major government bonds trimmed earlier gains.
European stock markets were mixed, but Japanese shares leapt 2.2% on the day after the
central bank in Tokyo vowed “to use every means available” to reverse the country’s two-
decade economic depression and price deflation.
Spending more than $1.4 trillion in newly-created money over the next 2 years, the Bank of
Japan’s fresh quantitative easing will see it buy listed equities and real-estate trust funds as
well Japanese government bonds.
On the news the Yen fell nearly 3% versus the Dollar. That only unwound the last 36 hours
of falling gold prices, however, which rose back to ¥4750 per gram – a new three-decade
high when first hit at the start of this year.
“Stop loss orders were triggered [Wednesday] when the gold price fell through key support
levels,” says a note from German bank and bullion retailer Commerzbank.
“We believe the next wave will be another corrective wave [with] a target as low as $1308,”
says Russell Browne at bullion-bank Scotia Mocatta, pointing to Elliott Wave analysis.
“However, gold has to first break through big support level in $1522 to $1535 level, the lows
from 2011 and 2012.”
“We have to think that the gold sell likely has some roots in heavy fund liquidation,” says
comment from brokers INTL FCStone, adding “Our guess is that the lone holdout – John
Paulson – may finally be throwing in the towel and perhaps paring some of his massive
positions.”
The giant US-listed SPDR Gold Trust ETF shed a further 2.7 tonnes on Wednesday after
losing more than 8 tonnes Tuesday according to Reuters data.
Now holding 1206 tonnes of gold bullion to back its shares – more than 10% less than the all-
time peak of late-November last year – the trust was 5% owned by Paulson & Co. as part of
its flagship, gold-denominated hedge funds.
The quantity of bullion held for silver ETF trust funds was unchanged Wednesday according
to Bloomberg. But silver prices also extended their drop for the week to 5.6% on Thursday
morning with a new 8-month low versus the Dollar beneath $26.80 per ounce.
“Silver broke the four-year trend line now at $29.80 and corrected lower,” says a note from
bullion market-making bank Societe Generale, “and is nearing the multi-year lows at 26.40/
26.05.
“This zone is made up of the lows since 2011.”
SocGen earlier this week issued a report declaring “the end of the gold era” for the last
decade’s bull market, citing expectations of higher interest rates from the US Federal Reserve.
“Things still have a way to go before we can say we’ve fully recovered from the worst
financial crisis and recession since the 1930s,” John C.Williams of the San Fran Fed told an
audience in Los Angeles on Wednesday.
A day after Dennis Lockhart, president of the Atlanta Federal Reserve Bank, said the US
Fed’s $40 billion per month asset purchases “continue to be justified”, Williams said he
expects the unemployment rate “to edge down to a little below 7% by late 2014 and fall
below 6.5% in the middle of 2015.”
Six-point-five is the jobless level at which the Fed would consider tightening its ultra-
accommodative policies, according to its recent policy statements. Williams is not a voting
member of the Fed’s main committee until 2015.
Today both the Bank of England and the European Central Bank meantime kept their key
interest rates on hold yet again, offering overnight money to commercial banks at a record-
low 0.50% and 0.75% respectively.
The gold price in Euros today hit its lowest level in four weeks at €1200 per ounce – a record
high when first reached on the way up in August 2011.
UK savers and investors saw gold priced in Sterling make a new 2013 low at £1020 per
ounce.
Gold price chart, no delay | Buy gold online
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 and silver in Zurich, Switzerland for just
0.5% commission.
(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.
By www.CentralBankNews.info
The European Central Bank (ECB) kept its benchmark refinancing rate steady at 0.75 percent, as expected, and said it’s president, Mario Draghi, would comment on the governing council’s decision at a press conference later today.
The inflation rate in the 17-nation euro zone fell to 1.7 percent in March from February’s 1.8 percent, further under the ECB’s target of inflation that is below, but close to 2 percent.
Although most economists had expected the ECB to keep rates steady, a growing number are expecting the bank to signal that it may ease policy later this year if the economy remains weak.
The euro zone’s Gross Domestic Product contracted by 0.6 percent in the fourth quarter of 2012, the fifth quarterly contraction in a row, for an annual drop of 0.9 percent, wider than the 0.6 percent decline in the third quarter.
The jobless rate in the 17 nation area was unchanged at 12.0 percent in February with rates in Greece and Spain above 50 percent.
Last month the OECD said there was a strong case for the ECB to ease its policy given weak demand and inflation that is below its objective.
“The risk of undue inflationary pressure associated with monetary easing is small, as the transmission mechanism is impaired, especially in the periphery countries where banks face high funding costs,” the OECD said in its interim economic report.
By www.CentralBankNews.info
The Bank of England (BOE) maintained the official Bank Rate at 0.5 percent and its target for asset purchases at 375 billion pounds, as widely expected.
In the BOE’s March and February meetings, Governor Mervyn King and two other members of the nine-member Monetary Policy Committee were defeated in their attempts to expand the bank’s asset purchase program, first launched in March 2009, by 25 billion pounds.
It was the first meeting by the BOE’s policy-making committee since the UK Chancellor last month expanded the bank’s remit, giving it more flexibility and leeway to use “monetary activism”- to borrow George Osborne’s phrase – and deploy new unconventional policy instruments to stimulate growth as long as inflation is trending toward the bank’s 2 percent target.
The BOE acknowledged in February that inflation had remained “stubbornly above” its target and was likely to rise further and remain above the target for the next two years due to higher regulated and administered prices and the decline in sterling’s exchange rate.
In February the UK inflation rate rose to 2.8 in February from 2.7 percent in the preceding four months. The last time it was below 2 percent was in December 2009.
This morning sterling was trading around 1.51 to the U.S. dollar, above its a 2-1/2 year low of $1.4830 in mid-March, but down some 8 percent since January.
The UK’s Gross Domestic Product contracted by 0.3 percent in the fourth quarter from the third for an annual growth rate of 0.2 percent, down from 0.4 percent, flirting with the risk of a third recession since the global financial crises.
The BOE has held its bank rate steady since March 2009.
In addition to giving the BOE more flexibility to act when inflation is above its 2 percent target, which Osborne confirmed, the BOE was given freedom to start using forward guide to give markets a better idea of its future rate path.
Osborne also said the BOE could link this policy guidance to specific thresholds, for example unemployment as now used by the Federal Reserve. The BOE will give an assessment of the use of such thresholds in August, the month after Mark Carney, currently governor of the Bank of Canada, takes over from King.
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 www.CentralBankNews.info Japan’s central bank launched a radical overhaul of its monetary policy framework in an ambitious effort to banish deflation over the next two years through massive purchases of government bonds and a doubling the country’s monetary base.
At the first board meeting under its new governor, Haruhiko Kuroda, the Bank of Japan (BOJ) replaced it’s current asset purchase program with “quantitative and qualitative monetary easing,” under which it will no longer target the overnight call rate, which has been at effectively zero since December 2008, but the monetary base, or the amount of money in the economy.
The BOJ was also considerably more optimistic about Japan’s economy, saying it had now “stopped weakening and has shown some signs of picking up.” Last month, the BOJ only observed that the economy had stopped weakening, and has now added the sentence that it sees signs of a pickup.
It also said that Japan’s economy should return to a moderate growth path on the back of firm domestic demand and stronger growth overseas.
Although Japan continues to battle with falling consumer priced, the BOJ said “some indicators suggest a rise in inflation expectations,” the first sign that consumers and investors may be reacting to Prime Minister Shinzo Abe’s efforts to get the economy going and rid the country of deflation.
Japan has been caught in a cycle of declining prices for almost two decades and in February the inflation rate was a negative 0.7 percent, the ninth month in a row of deflation.
Under pressure from the newly-elected Abe, the BOJ in January adopted an inflation target of 2 percent, hoping that this would change consumers and businesses’ expectations and boost prices.
At that point the BOJ only said it expected to achieve this target at the “earliest possible time” and has now added that this target should be reached in the next two years.
The BOJ said it expects its new quantitative and qualitative easing program to keep interest rates low and “also to drastically change the expectations of markets and economic entities,” and “contribute to a further pick-up in inflation expectations that appear to have risen, and lead Japan’s economy to overcome deflation that has lasted for nearly 15 years.”
Under the new program, the BOJ aims to boost the monetary base by 60-70 trillion yen annually to a total of 200 trillion yen by the end this year and 270 trillion end-2014 from 138 trillion at the end of 2012 through money market operations. This compares with the U.S. monetary base of $2.84 trillion, or some 268 trillion yen, at the end of February.
In order to push down interest rates across all maturities, the BOJ will buy government bonds at an annual pace of about 50 trillion yen, or about 7 trillion a month. The BOJ will no longer focus its purchases on shorter maturities but include 40-year bonds so the average remaining maturity of its new bond purchases will extend to about seven years from less than three years.
The BOJ will also boost its annual purchases of Exchange Traded Funds (ETFs) and real estate investment trusts, so-called J-REITs, by an annual 1.0 trillion and 30 billion yen, respectively.
“The Bank will continue with the quantitative and qualitative monetary easing, aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining the target in a stable manner,” the BOJ said, adding it would adjust its policy in light of upside and downside risks.
The BOJ is one of the pioneers in using its balance sheet to stimulate economic activity and its current asset purchase program, which was launched in 2010 and aimed at purchases of 101 trillion yen by 2014, would be absorbed into the new program.
The BOJ’s decision to scrap its target for the overnight interest target shows how far central banking has come since the 2008 financial crises. At that point, many major central banks cut rates to effectively zero and were forced to use their balance sheets to boost demand.
The BOJ initially cut its overnight rate to 0.1 percent in 2008 and then trimmed it to the current level of 0-0.1 percent in 2010.
Kuroda, who has only been governor for two weeks, also temporarily suspended the BOJ’s previous banknote principle, saying the new bond purchases are for the “purpose of conducting monetary policy and not for the purpose of financing fiscal deficits,” addressing the fear that the BOJ may be loosing some of its independence and will now just be used to finance government deficits.
Under the banknote principle from March 2001, the BOJ had to limit its bond purchases so the total outstanding amount of long-term government bonds was below the stock of banknotes.
Japan’s Gross Domestic Product stagnated in the fourth quarter from the third, following contractions in both the third and second quarters, for annual growth of only 0.5 percent, marginally above the third quarter’s 0.4 percent growth rate.
I popped up to the Sunshine Coast for the break over Easter, staying in Mooloolaba.
I fell in love with the place I have to say. The locals are a laid back and friendly bunch.
I loved strolling across to the beach of a morning for a quick swim before grabbing a great coffee at the ‘good bean’, then whipping up some bacon and eggs on the BBQ’s by the ocean. The surf club has some great seafood as well.
As always when you find a place you’d love to move to you start flicking through the local papers having a squiz at properties. There was article after article calling the bottom in the real estate market. Apparently things are on the mend on the Sunshine Coast after five difficult years…
A quick search on Domain.com brought up 877 properties for sale in the surrounding area. Nearly 1,000 properties for sale in a fairly small area seems like quite a lot to my mind but perhaps that’s normal for the area.
The prices are certainly not what I would call cheap, with two bedroom apartments listed for about $400,000–$1,000,000 depending on their position. The seven-figure ones were prime positions overlooking the beach, but even so the housing prices remind me of Sydney rather than an hour and a half out of Brisbane.
The shocking data on housing sales released yesterday has definitely placed a large question mark over the view that property has bottomed. If very low interest rates aren’t inspiring people to start buying property it won’t take much bad news to see prices sliding again.
Australian new home sales slid 5.3 per cent in February, driven by sharp falls in Victoria and South Australia. Sales in the detached new homes market are now tracking at the lowest level in the sixteen year history of the series and it was apparently the worst February on record. Hmm. Not good.
Victoria is looking the sickest of the lot with a drop of 13.7 per cent in detached new home sales!
Wow.
It looks like all of that endless optimism isn’t transferring into sales.
Our stock market actually reacted to the bad news on housing, which is a real turn up for the books. Usually bad news is shaken off like rain off a duck’s back, but for once there was some selling, despite the new record highs in the US market.
The only thing holding us up at the moment is the continued buying in the Financials, Health Care, IT and Consumer Staples sectors (i.e. defensives). Resources and small-caps are coming under some intense selling pressure.
You can see quite clearly from the above chart that there is a huge divergence opening up between the Financials and the Metals and Mining Index. The ASX 200 (blue line) is being dragged higher by the strength in the Financials but the big picture is much muddier beneath the surface.
You can see that the small-cap stocks are also finding it difficult to keep their head above water. There are plenty of small-caps that are going to the wall with the increased difficulty in raising capital to complete their projects.
So while the mainstream media is fixated on the record prices in the US markets it is quite clear that the reality is not so sanguine.
Murray Dawes
Editor, Slipstream Trader
From the Port Phillip Publishing Library
Special Report: Australia’s Energy Stock BLOWOUT
Daily Reckoning: The Australian Government’s Deficit Numbskullery
Money Morning: Good News in China’s Economy? Put This Date in Your Diary…
Pursuit of Happiness: Why a PlayStation and Mining Technology Have More In Common Than You Think
You need to know the truth about banks.
Why? Because they rob you.
Why? Because they can.
It’s the Willie Sutton bank robber quote in reverse. Willie was asked, ‘Why do you rob banks?’
He famously answered, while in handcuffs, ‘Because that’s where the money is.’
But, banks can’t keep robbing the public if they keep shooting themselves in their feet. That’s where central banks come in.
They are the real kingpins keeping their robber minions in pinstripes — instead of prison stripes.
Estimates now are that US banks — the too big to fail ones — will end up paying more than $100 billion in fines, settlement costs, to buy back bad mortgages, to right some of the past wrongs related to the mortgage crisis they caused.
It could end up being more. But they’re all still in business. They’re able to digest these ‘costs of doing business’, and get bigger. And the banks are making enough profits to want to ‘reward shareholders’ by raising their dividend payouts and buying back their stock.
Then there’s the LIBOR mess. Banks colluded to manipulate the London Interbank Offered Rate. LIBOR is referred to by the British Bankers’ Association (an outfit populated by bankers as a kind of trade group that oversees LIBOR dissemination), as ‘the world’s most important number’.
There have been some settlements already. Three giant European banks — Royal Bank of Scotland, UBS, and Barclays — have ponied up almost $3 billion to settle matters regarding their involvement.
How much will the big American banks have to pay to settle their end of the scheming manipulation?
Nobody knows. But estimates I’ve seen range from $7.8 billion (I have no idea how the analyst came up with that figure… Thin air?) to more than $125 billion.
The point is that no one knows how much it will cost banks because it’s impossible to calculate how so many people, businesses, municipal governments, and anybody who paid interest based on LIBOR, was adversely affected.
The banks will pay whatever they have to in order to get these matters settled. They’ll all still be in business and able to digest these ‘costs of doing business’. They’ll get bigger, and make enough profits to want to ‘reward shareholders’ by raising their dividend payouts and buying back their stock.
But the hits keep coming folks.
Now the banks are being investigated for collusion, price fixing, restraint of trade, and just flat out being the criminal enterprises that they are. And for all their hard work in keeping credit default swap (CDS) trading off exchanges — where prices would be transparent and honest.
Then again, who cares about that little corner of the market for that little product? It’s only estimated to be in the tens of trillions of dollars. They are weapons of financial mass destruction in the shaky hands of speculating shysters.
Okay, that’s a hyperbole. There is a place for CDS, it’s just not where it is now — which is everywhere.
How much will it cost banks? $1 billion? $10 billion? $100 million billion?
Who cares?
The banks will pay whatever they have to. They’ll all still be in business. They’re able to digest these ‘costs of doing business’. They’ll get bigger, and make enough profits to want to ‘reward shareholders’ by raising their dividend payouts and buying back their stock.
Banks have become protected criminal enterprises.
They couldn’t do what they do without two things…
Make that one thing, because the one thing really encompasses the two things. I was going to say with they operate under the auspices of their cronies in government — and the Federal Reserve or central banks everywhere. But forget the government stooges. They are beholden to the Federal Reserve and central, which they long ago sold their souls to.
Without central banks to bail out the banks they would fail. And they should. But they can’t because they are too big to fail — and too big to jail.
Now that’s a business model!
Oh, and why are governments around the world (case in point: the United States) able to run mega-deficits?
That would be because they’re in bed with their cuddly central banker colluders, so they can print money to buy their never-ending, always-spewing bills, notes, and bonds that finance political pandering to the voters to stay in power.
They couldn’t do it without central banks.
Shah Gilani
Contributing Editor, Money Morning
From the Archives…
Why Dividend Stocks May Not Stay This Cheap for Long
29-03-2013 – Kris Sayce
Respect the Market Trend, but Don’t Expect it to Last
28-03-2013 – Murray Dawes
Silver ‘$100 Within Two Years’
27-03-2013 – Dr. Alex Cowie
11 Billion Reasons to Expect a 200% Move in Gold Stocks Within Months
26-03-2013 – Dr. Alex Cowie
You Want Proof the Stock Market’s Heading Up? Try This…
25-03-2013 – Kris Sayce
