The Eurozone PMIs Are Indicating A Recovery

Article by Investazor.com

Today, the Eurozone’s PMI indices were released. PMI means Purchasing Managers’ Index and is the best communicator of the economic climate for the concerned area. Even if it represents a survey of managers working in the manufacturing industry, it tends to represent the whole economy. Why? Because the manufacturing industry is an important segment of any economy which is able to indicate in advance if the economy is going in a good direction or it tends to slow. When calculating this index, five sub-indexes are considered: new orders, inventory levels, production, supplier deliveries and the employment environment. To simplify the understanding of this indicator, you just have to take as a mark the 50.0 level. Above it indicates that the industry is expanding and below it indicates a contraction of the industry.

Back to the news today, the Eurozone reflects a real improvement, reporting levels of the PMI indices that were last met in the middle of 2011. Even if French was the only one who missed the expectations (49.7), indicating a slight contraction, Germany, the European engine, beat expectations (52), as well as the index reflecting the manufacturing industry for the whole Eurozone (51.3).

The world’s economy seems to recover, slowly, as positive signals from the U.S., Europe and China are becomes increasingly evident. On the other hand, should be considered the fact that this recovery is due to be accomplished in the long term and meanwhile important obstacles may occur. Recent data improved the outlook for the biggest economies but put some pressure on the emerging markets as investors are shifting towards the largest economies.

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USD Index: Five Waves Up On The Line Chart Is Pointing For A Higher USD

EURUSD found some support an hour back or so, after disappointing US Unemployment claims. So I decided to check the intra-day structure on USD Index to see where the buck is positioned and headed next. Well, on the line chart I can see some very clear impulse to the upside, but its presented on a line chart. Its a clear five wave move with a textbook example of an extended wave three. If you are still learning Elliott Wave, then I suggest you to save and print this chart.
Current structure suggests that low is in place, because five-wave move is important evidence for a direction of a current trend. If that’s the case then we know that any pull-back to the downside should be only corrective retracement before USD breaks even higher.

USD Index 30min- Elliott Wave Analysis

Impulse extension-Elliott Wave Pattern
Most impulses contain what Elliott called an extension. An extension is an elongated impulse with exaggerated subdivisions. The vast majority of impulses contain an extension in one and only one of their three actionary subwaves.

The fact that extension typically occurs in only one actionary subwave provides a useful guide to the expected lengths of upcoming waves. For instance, if the first and third waves are about equal length, the fifth wave will likely be a protracted surge. Conversely, if wave three extends, like on our USD Index chart and on basic chart below, then the fifth should be simply constructed and resemble wave one. In the market, the most commonly extended wave is wave three.

Basic chart of extended third wave


Written by www.ew-forecast.com

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Central Bank News Link List – Aug 22, 2013: India cbank chief says FX reserves adequate to manage situation

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.

Gold & Silver Recover Fed Drop, S.African Mining “In Crisis”

London Gold Market Report
from Adrian Ash
BullionVault
Thurs, 22 August 08:45 EST

The PRICE of gold recovered overnight losses after the release of US Federal Reserve meeting notes in London trade Thursday morning, rising back to $1375 as major stock markets also rose with commodities.

 The Dollar continued to strengthen, helping the gold price rally faster for non-US investors.

 Reversing an earlier 1.5% drop, the gold price in Euros regained last Friday’s finish above €1030 per ounce – the highest weekly close in ten.

 Silver prices also rose back to last week’s finish above $23.25.

 “[The Fed] minutes were generally consistent with our view,” says Goldman Sachs economist Jan Hatzius, “that tapering of asset purchases is likely to occur at the September meeting,”

 But “The Fed has not settled on a September taper,” says the Financial Times. Instead, the July 31st minutes show it is now “flirting with recalibrating its forward guidance to mitigate tapering fears.”

 In the bullion market, “It was correct that the [gold price] came off,” says broker Marex Spectron, also commenting on the Fed minutes, “eventually making a low of almost $1355 before being rescued by a stronger than expected Chinese PMI number.”

 New data Thursday showed the manufacturing sector in China – the world’s #2 gold consumer market – expanding for the first time since April.

 “Gold is likely to stay choppy in the near term on thin liquidity,” says a precious metals note from bullion market maker HSBC.

 “While the metal remains above $1348,” says fellow bullion dealer Scotia Mocatta, “we believe there is a high probability of gold making a move to $1416.”

 On the supply-side Thursday, shares in South Africa’s second largest producer, Gold Fields, dropped almost 10% after it posted a loss for the April to June quarter.

 Confirming the $300m purchase of Australian properties from world #1 Barrick, CEO Nick Holland also offered today to waive his 2013 bonus “in recognition of concerns” over how 9% of Gold Fields’ giant South Deep mine was given to black investors three years ago to meet the national government’s Black Economic Empowerment (BEE) targets.

 Holland’s bonus in 2012 was worth some $840,000.

 The National Union of Mineworkers, which represents nearly two-thirds of South Africa’s 140,000 gold miners, is currently demanding a basic wage of $800 per month – a rise of 60% from current levels according to Reuters.

 Yesterday the NUM quit talks with management and said it will ballot members about joining tens of thousands of construction and auto workers already striking over pay claims.

 “In other words,” says a note from Germany’s Commerzbank, “the fifth-largest gold producing country is soon likely to see supply outages.”

 “The [South African] gold industry is frankly in crisis at the moment,” says Holland.

 With global prices falling by a quarter in 2013, some 60% of the country’s gold output– down by more than one half from leading the world a decade ago – was operating at a loss last month according to Business Day.

 “When you talk about costs there are two elements,” says diversified mining giant BHP Billiton’s CFO Graham Kerr, speaking to Reuters.

 “One is how you tighten your belt and make the easy changes. The second is productivity – getting more out of your existing people, your equipment and your infrastructure.”

 BHP this week announced a $2.2 billion cut to operating expenses for the year, helping offset an $8.9bn drop in operating profits due to lower base metal and other mineral prices.

 In contrast to Western gold mining firms, who have been told by shareholders “we’d rather you not do M&A transactions” according to world #1 Barrick, Chinese mergers and acquisitions in gold have risen to new records this year, says Bloomberg.

 “Price declines are good for key Chinese producers to buy overseas assets,” the newswire quotes China #4 Zhaojin Mining’s head of overseas resources development Chen He.

 Back in the bullion market meantime, “Gold appears to be more stable these days,” says a note from Swiss refining and finance group MKS, “with a reversal in ETF outflows and still strong physical demand by China, India and Turkey.”

 Bullion holdings needed to back the world’s largest gold ETF – the SPDR Gold Trust – slipped 0.6% tonnes on Wednesday, edging back towards 54-month lows at 913 tonnes.

 “We expect ETF selling to pick up again,” said commodities analysts at Societe Generale in a report last week, “with the expectation of Fed tapering, rising real [interest] rates, and a stronger Dollar.”

Adrian Ash

BullionVault

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 or Singapore 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.

 

Elliott Wave Forecast: USDCHF Could Be Forming A Bullish Reversal

USDCHF hit a new low in this week, but now again reversing from it which could be start of some larger and important turning point. Notice that we are tracking a corrective decline from 0.9750 which is actually part of a much bigger contra-trend move on a daily chart where we are tracking triangle within larger uptrend. As such, we are ready on a bullish move on USDCHF, but would have to see further strength from here and through the upper falling channel line, as well as 0.9394 level to make sure that lows are in. The reading on the RSI is also interesting, where prices reversed from its own trend-line and suggests higher reading as we move forward.
USDCHF 4h Chart- Elliott Wave Analysis

USDCHF Daily Chart- Elliott Wave Analysis

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PMI Data For Germany Beats Estimates As Euro Drops

By HY Markets Forex Blog

The Eurozone currency was seen lower against the greenback on Thursday during Europe’s  morning trade , as the positive German manufacturing and services PMI data was released , which  surpassed analysts’ estimates in August.

The 17-nation currency cleared off some losses against the US dollar,  trading at a low 0.06% at $1.3346 against the greenback in response to the German flash manufacturing and services Purchasing Managers’ Index (PMI) which surpassed estimates. The euro was also seen 0.49% stronger then ¥131.10 against the Japanese Yen.

Germany’s Flash PMI Data

Germany’s flash manufacturing figure picked up to 52 in August, from previous record of 50.7 in the previous month and higher than the estimated 51.1 increase made by analysts, the preliminary data showed.

In the French manufacturing sector, business activities showed no changes during the month of August. The French manufacturing PMI remained unchanged at 49.7 in August. As for the services sector, the PMI declined to 47.7 in the month, from previous record of 48.6 in July, highest index reading since August 2012.

The Eurozone’s flash manufacturing PMI figure is expected to be released later today and it’s also expected to show an improvement. Analysts predict the figures to have increased to 50.7 for August, slightly up from previous month’s record of 50.3.

The Markit will release the flash PMI figure in the services industry for Eurozone, which is expected to show an increase from previous record of 409.8 to 50.2.

The Federal Open Market Committee’s (FOMC) minutes for July 30-31 meeting noted on how the policymakers were planning to begin to taper the $85 million monthly bond-purchasing program later this year as long as the economy recovers.

The Federal Reserve (Fed) has kept the interest rates close to zero; while the minutes noted that the primary target of 6.5% unemployment rate would indicate the economy has recovered.

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Asian Stocks In Red Amid Fed‘s Decision

By HY Markets Forex Blog

Asian stocks were seen traded in red on Thursday as the minutes of the Federal Reserve Open Market Committee (FOMC) released showed that the policymakers’ are supporting tapering its stimulus program this year. However, investors are still uncertain as to when the cuts will begin to commence.

Asian Stocks – Fed to Taper This Year

With the world’s largest economy showing signs of improvement, the Central Bank policymakers are convinced on scaling back the its $85 million monthly asset-purchasing program.

On Wednesday , the widely awaited FOMC minutes from the July meeting did not show when exactly the scaling back of the stimulus program would begin , adding “moderate the pace of its securities purchases later this year, if economic conditions improved broadly as expected.”

The minutes also highlighted that the Fed committee members did not agree to the idea of reducing the 6.5% unemployment rate target the Fed policymakers set.

The minutes showed signs of immediate selling in both bonds and stocks on Wall Street.

The benchmark index Nikkei 225 dropped 0.40% to 13,365.17 points, after staying above the contraction level in the previous session. While the Tokyo’s broader Topix index edged 0.2% lower to 1,119.56 points, extending a series of losses since August 8.

In China, equities showed a fall as well as Hong Kong’s main index Hang Seng edging down 0.59% to 21,683.00 points. Natural gas producer and suppliers in China and Hong Kong declined as it had to clear off 2.9%.

The Chinese mainland Shanghai Composite was seen flat as it slightly edged up 0.04% to 2,073.78 points. Stocks in China have been ignored the preliminary HSBC showed that the manufacturing sector showed a strong recovery in August.

The South Korean Kospi had a massive drop of 0.98% to 1,849.10 points, while the Australian S&P/ASX 200 index wrote off 0.50% to 5,070.50 points.

 

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State of Emergency: 12 Stocks to Avoid in Egypt

By WallStreetDaily.com

Egypt is a mess… again.

“At times like these, it feels almost distasteful to write about the impact of the unrest on stocks,” says Barron’s Ben Levisohn.

While I agree, it would also be irresponsible to ignore the impact. After all, the potential for incurring losses in companies vulnerable to the situation is real. And there’s nothing more “distasteful” to an investor than losing money.

With that in mind, here’s a rundown on 12 stocks with enough exposure to the ongoing unrest in Egypt to warrant caution. That includes one company you should avoid at all costs.

No Defense Here

Two weeks after Egypt’s military ousted the elected Islamist government of Mohamed Mursi, the U.S. government put major military contracts with the country “under review,” according to a State Department document sent to Congress on July 16.

The potential for delays or outright cancellations spells trouble for a handful of defense contractors in the United States:

~ Dangerous Stock #1: Lockheed Martin (LMT) is under contract to provide 20 F-16 fighter jets and other military equipment to Egypt. Total value? About $1.66 billion. To date, only 57% of the contract has been paid.

~ Dangerous Stock #2: Boeing (BA) is set to deliver 10 Apaches this month, as well as 20 harpoon missiles and related equipment in future months under a separate contract. Total sales at risk here could top $30 million.

~ Dangerous Stock #3: General Dynamics (GD) is under a $338.2-million contract to provide M1A1 battle tanks. Less than half of the contract has been paid to date.

Ultimately, these contracts only represent a fraction of each company’s overall business. But depending on how long the unrest lasts, it could jeopardize future business opportunities in the region. And the uncertainty promises to weigh on shares.

Bad for Banking and Manufacturing

It’s not just companies selling products directly to Egypt that are at risk, either. Companies with sizeable operations in Egypt are in a bad spot, too. They’re subject to limited (or a total lack of) productivity. And the longer the fighting continues, the worse the impact could be for the following companies – and, in turn, their shareholders:

~ Dangerous Stock #4: HSBC (HBC) employs over 2,000 people at 75 branches in Egypt, which it’s been forced to close at the behest of Egyptian officials. The company’s total exposure in the country checks in at about $10 billion.

~ Dangerous Stock #5: Citigroup (C) also closed its branches in Egypt, impacting about 650 employees. The New York-based bank has a little more than $1.6 billion in assets at risk in Egypt.

~ Dangerous Stock #6: Swedish home appliances maker Electrolux AB (ELUXY) employs about 7,000 people in Egypt, equal to about 10% of its global workforce. Its recent production halt could lead to inventory issues.

~ Dangerous Stock #7: General Motors (GM) was the first privately owned automaker to open a factory in Egypt. It operates a plant in the suburbs of Cairo, which employs about 1,400 people. After halting production for several days, it’s now proceeding with caution. Like Electrolux, any subsequent production halts could lead to inventory problems.

A Loss of Luster

Gold might be staging a comeback. But I wouldn’t look to play a prolonged rally with this pick…

~ Dangerous Stock #8: Despite being headquartered in Australia, Centamin Plc’s (CEE.TO) gold mining explorations are based exclusively in Egypt. The company’s major asset is its interest in the Sukari Gold Mine, located in the Eastern Desert of Egypt. Last year, it yielded 262,828 ounces of gold at a cash cost of about $700 per ounce. However, if the unrest continues indefinitely, the company’s chief asset could turn into a major liability – as the ruling powers could revoke the company’s exploitation lease at Sukari.

No Oil or Profit Gusher Here

Egypt isn’t a major oil producer. Instead, its significance to the global energy markets stems from the Suez Canal, which is a vital waterway for the transportation of crude oil and liquefied natural gas.

Nevertheless, there are companies with enough production in Egypt and Libya that losses could lead to a meaningful decline in overall activity (and share prices).

If you’re wondering why in the world I’m bringing Libya into the equation, it’s simple: Many pundits fear that the chaos could spread to the country. And I agree.

Add it all up, and the following companies are all the more risky:

~ Dangerous Stock #9: Italy’s ENI SpA (E) counts on Egypt and Libya for 10% and 11.5% of daily oil production, respectively.

~ Dangerous Stock #10: Spain’s Repsol S.A. (REPYY) counts on Libya for 10% of its production and 11% of its net asset value (NAV).

~ Dangerous Stock #11: Germany’s OMV AG (OMVKY) counts on Libya for 11% of its current production and 22% of its NAV.

~ Dangerous Stock #12: Houston-based Apache (APA) counts on Egypt for 19% of production, 17% of its NAV and 24% of cash flow.

As I mentioned above, there’s one company that should be avoided at all costs right now. And as you can probably guess, it’s Apache.

The company possesses the most direct exposure to the unrest in Egypt. Accordingly, its shares hold the most downside potential.

I’m not the only one who thinks so, either.

Amir Arif, an analyst at Stifel Nicolaus, just downgraded the stock to a “Hold” from a “Buy.”

As we all know, Wall Street’s “Hold” is merely a euphemism for “Sell.” And that’s exactly what I’d do if I owned shares right now.

And if you don’t own them, don’t buy them. Even if shares are trading at a discount to book value.

As Arif appropriately points out about Apache, “The risk/reward profile has decreased, near-term catalysts have mostly played out, and while the name remains a value stock, we do not see any key drivers to move the name higher.”

Bottom line: Back in June, James Syme of JO Hambro Capital Management Group said, “Egypt has some interesting opportunities, but both the macroeconomic situation and the political/legislative situation are highly uncertain… It could have a place in a portfolio, but much further out on the risk-reward spectrum.”

Forget “further out,” James! In light of the recent developments, Egypt should be completely out of our portfolios for the foreseeable future. Especially Apache.

Ahead of the tape,

Louis Basenese

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Original Article: State of Emergency: 12 Stocks to Avoid in Egypt