Month: August 2013

By www.CentralBankNews.info

By www.CentralBankNews.info     Indonesia’s central bank held its benchmark BI rate steady at 6.50 percent but will use a broad array of policy instruments “to curb inflation and maintain a more sustainable balance of payments, as well as overall financial system stability.”
    Bank Indonesia (BI), which raised its rate in June and July, also said the risks of an economic downturn remains high but a further decline in the rupiah exchange rate, which should improve exports, along with weaker domestic demand, should reduce the current account deficit.
    “Looking forward, Bank Indonesia expects the downward rupiah trend, which is still consistent with its fundamental conditions, to support efforts to expedite external rebalancing as well as to catalyze healthier economic growth,” BI said.
    The Indonesian rupiah has been depreciating from the beginning of the year with the decline accelerating since early May as major investors adjusted their portfolios in anticipation of a tapering of asset purchases by the U.S. Federal Reserves.
   In July the rupiah slid a further 1.95 percent on average compared with June and since the start of the year it is down over 7 percent, quoted at 10.39 to the U.S. dollar earlier today.
    The BI said it would undertake four different macroprudential and supervisory measures.
    First, it would continue to absorb excess liquidity that tends to rise after Ramadan by issuing deposit certificates and “improve LDR-Reserve Requirements provisions to strengthen lending and prudent fund raising as well as secondary reserve requirements for banks to bolster liquidity management.”
    Secondly, the BI would continue to stabilize the rupiah exchange rate “in line with its economic fundamentals to maintain a more sustainable balance of payments.”
    Thirdly, the BI will conduct supervisory actions to control a still relatively high growth of credit in several banks and specific sectors, including those with high import contents. Fourthly, the BI will increase the supply of foreign exchange.
    “BI strongly believes the policy mix will be sufficient to direct the 2014 inflation in line with its inflation target range of 4.5% +1%, as well as to buttress domestic economy adjustments toward a sound and balanced equilibrium,” the bank said.
    Indonesia’s inflation rate soared in July to 8.61 percent from 5.9 percent in June, due to a “skyrocketing inflation of volatile foods, while inflation of administered prices as a direct result of subsidized fuel price hikes is in harmony with Bank Indonesia projections.”
    However, core inflation remained under control due to second-round effects that were less intense than when fuel prices have been raised in the past and the central bank expects inflation pressures to ease after Ramadan, the start of a new academic year and slower economic growth.
    The central bank still expects headline inflation to return to its target range in 2014.
    Global growth is forecast to be lower than projected, at 3.1 percent compared with 3.2 percent, due to slower growth in emerging markets, especially China and India.
     Indonesia’s economy expanded by an annual 5.8 percent in the second quarter from 6.03 percent in the first quarter and BI said Indonesia’s exports remain insufficient to bolster economic growth as a result of persistently weak global economic demand.
    “Lukewarm exports, coupled with weaker purchasing power due to rising inflation, have slowed household consumption and non-construction investment,” the BI said.
    Economic growth this year is forecast in the lower limits of a range of 5.8-6.2 percent and between 6.4-6.8 percent in 2014.

    www.CentralBankNews.info

By HY Markets Forex Blog

Egypt crises worries investors as the West Texas Intermediate and Brent futures hit its highest level for the fifth day in a row. It reached its highest in over four month as the crises in oil-rich Egypt worsens. While crude prices extended its gains, investors are worried over the supplies that come through Egypt and the fall in the US Oil inventories.

The WTI Futures rose 0.24% to $107.11 a barrel on the New York NYMEX at the time of writing, while the Brent futures reached the $111 level, up 0.57% to $110.83 at the same time.

The on-going crisis across the oil-producing countries in the Middle Eastern region continues to spark worries amongst investors as the oil industries in Iraq, Libya and Egypt are at risk.

In the past recent weeks, the US Oil supplies have reduced to almost six times, as the inventories decreased to 360.5 million barrels in the week that ended August 9^th, according to reports from the Energy Information Administration (EIA).

Gasoline stockpiles were also seen lower than forecasted in the report, falling by 1.2 million barrels. Distillate stockpiles rose by 2 million barrels, higher than the predicted 1 million rise.

Egypt Crises 

Investors are worried about the important Suez Canal oil chokepoint during the crackdown events in Egypt. Egypt manages the Suez Canal and the Suez- Mediterranean Pipeline which combines approximately 4.51 million barrels a day. Crude and refined products were shipped across the Red sea and the Mediterranean last year, according to EIA.

Almost 35% of the world’s oil output was accounted by the Middle East in the first quarter, according to data from the International Energy Agency.

More violence have been sparking in Egypt, as the bloody crackdown took place on Wednesday ,when protestors assembled at two different sitting organized against the military-supported Adly Monsour. According to reports over 500 people died.

Visit www.hymarkets.com  today and find out more on how you can how you can trade Energy products!  

The post Oil Rises On Egypt Crises appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

Article by Investazor.com

1) The factor that influences the most the long-term performance of gold is no longer the U.S.’ sentiment and behavior. Currently, the emerging markets are strongly influencing the precious metal as they covers almost 70% of the annual demand, while U.S. accounts for almost 10%. Covering the period April-June 2013, the demand for gold increased with 54% in China and 51% in India.

2) Central Banks remain committed to buying gold. Even if the demand in the second quarter (71 tones) didn’t exceed previous performances, Central Banks were net purchasers of gold for the tenth consecutive quarter.

3) Gold remains an element which has the quality of balancing the investors’ portfolios. The U.S.’s interest rate policy might not weight so much for the foreseeable future.

4) As recycling of gold represents 40% of total supply over the last five years, the first 6 months of 2013 showed a considerably drop in supply due to this cause. The decreasing in offer was also caused by the slowdown in the mining activity.

The post 4 Facts You Should Know About Gold appeared first on investazor.com.

By HY Markets Forex Blog

Eurozone recession ends, as the 17-nation’s longest-ever recession in the came to an end in the second quarter of the year, official reports confirmed on Wednesday.

Encouraged by the consumption and growth in Germany and France, Euro-zone as a whole broke out of recession in the second quarter, however the high number of unemployment amongst other problems in Europe still need recovery.

 Eurozone Recession’s Main movers & Shakers

According to Eurostat, the European Union’s statistics office, the improvement was aided by two of the largest economies in the 17-nation euro-zone which assisted pull the region as a whole, with a rise in the economic output by 0.3% in April till the month of June

The main movers were Germany and France, as Germany’s GDP grew 0.7% in the second quarter, compared to 0.1% in the first quarter and the French gross domestic product (GDP) edged up 0.5%, the National Institute of Statistics and Economics Studies (INSEE) reported. The current economic growth is the strongest for nearly two years.

Despite of the improving growth in the region, unemployment has risen to 12.1% and economists raise concerns on new debt crises may arise.

Among the improving countries in the eurozone is Portugal, which grew by a surprising 1.1%. Portugal was amongst one of the weakest economies with a two-year deep recession. Meanwhile in Spain, the economy reduced by 0.4%.

Cyprus economic tightening deepened, as the economy reduced by 5.6% at an annual rate, slightly better to the previous record of 6.8% in the first quarter.The Economy of Greece, which fell and declined though almost 20 reported quarters, is showing signs of a possible breakthrough.

Regardless of the encouraging news, most of the governments in Europe still have a long way to go, as they still have to face many more spending cuts, the high-record of unemployment and other debt crises to tackle.

To find out more on what products you can trade, visit www.hymarkets.com today!  

The post Eurozone Recession Ends appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By WallStreetDaily.com

Newsflash: The world’s most populous country might be on the brink of a reproduction boom.

According to the 21st Business Herald, citing sources close to the National Population and Family Planning Commission, “China may relax its one-child policy at end-2013 or early-2014 by allowing families to have two children if at least one parent is from a one-child family,” says BofA Merrill Lynch economist Ting Lu.

If that happens, all the recent mind-numbing analysis about China’s sputtering economy becomes moot.

Why? Well, because if the Chinese start (ahem) getting it on, we’re talking about an extra 9.5 million screaming mouths to feed each year, or about 170 million more Chinese by 2033. That’ll be enough to put the U.S. Baby Boom to shame. And then some.

It’ll also unlock a new wave of demand for everything from commodities, produce and energy to the latest consumer goods necessary to feed and entertain the swelling populace.

With that in mind, here’s a rundown on two companies that stand to benefit from feeding the Red Dragon’s current and future needs.

Milking It for All It’s Worth

Back in 2008, melamine-contaminated milk killed six infants and sickened hundreds of thousands of others in China.

Outside of being tragic, the scandal also created a tremendous void in the marketplace.

It left a country with 82 million children below the age of five in need of a new source of food, since the contaminated milk was linked to domestic producers.

Although Chinese milk producers did all they could to earn back the trust of consumers, it doesn’t appear to be working.

Case in point: From 2011 to 2012, China’s formula market grew by 25%. Yet, sales at China’s biggest dairy company fell 3.5%.

Enter French dairy company, Danone (BN.PA).

Buoyed by double-digit sales growth of baby nutrition products in (you guessed it) China, the company recently reported overall sales growth of 6% for the first half of 2013.

The strong growth is likely to continue, too. Not only will tariff reductions on baby formula (from 20% in 2012 to 5% in 2013) make the company’s products more affordable in China, but the company’s direct investments in China promise to pay dividends, to boot.

In May, Danone agreed to invest $417 million in two deals with China Mengniu Dairy Co., China’s biggest dairy producer.

The timing couldn’t be more perfect, either. Euromonitor estimates that demand for baby formula in China will double over the next four years to about $25 billion.

That’s without factoring in any change to the country’s one-child policy.

Add it all up, and the Paris-based company represents a decidedly safe way to play the current and future demand boom for baby formula in China. Even with shares up about 20% this year, there’s still plenty more room to run.

Double Duty for Gaming Stocks

The next China investment opportunity relates to the ever-increasing popularity of video games. Specifically, Activision Blizzard (ATVI), which I’ve been touting ever since I appeared on CNBC over a year ago.

The company is the hands-down leader in the videogame market. And these two figures for the company’s bestselling game, Call of Duty, prove it:

• 100 million: the number of people who have played Call of Duty, which exceeds the populations of the United Kingdom, Germany, or France.

• 2.85 million years: total playing time that gamers have logged online playing Call of Duty.

Here’s the thing – the wildly popular game hit the streets of China in beta form only a couple of months ago, thanks to an agreement with Chinese internet behemoth, Tencent Holdings (TCTZF).

Tencent sweetened the deal by making a $2.3-billion share purchase of Activision, in return for a 25% stake in the Call of Duty and World of Warcraft publisher.

I won’t bore you with the details, but it’s looking good for Activision. So much so, in fact, that its stock price soared more than 15% when the news broke.

Now, Activision doesn’t disclose its revenue in China. If Chinese children have the same passion for playing videogames as Americans, Activision has just found a second home. The partnership with Tencent only promises to accelerate its growth in the country.

Or, more simply, it’s game on for both stocks, despite their already impressive run-ups this year. (Tencent is up about 42% this year so far. Meanwhile, Activision’s shares are up about 60%.)

Bottom line: A single policy change by the Chinese government stands to be its best economic stimulus plan yet. Whether or not it comes to pass, Danone and Activision represent compelling buys. Don’t miss out.

Ahead of the tape,

Louis Basenese

The post China’s Two-Child Policy Will Set These Super-Hot Stocks Ablaze appeared first on  | Wall Street Daily.

Article By WallStreetDaily.com

Original Article: China’s Two-Child Policy Will Set These Super-Hot Stocks Ablaze

By MoneyMorning.com.au

There are two ways to look at yesterday’s Commonwealth Bank of Australia [ASX: CBA] profit results.

You can see it as confirmation that stocks are expensive and due for a fall.

Or you can see it as confirmation that stocks aren’t expensive because even a record $7.8 billion profit wasn’t enough to send CBA’s share price higher.

But to be honest, we’ve already made our position clear on where the Australian market is right now. It’s at a key level, and you should be prepared to act regardless of whether it goes up or down.

So today, we’ll take Money Morning in a different direction.

As we read through the CBA presentation yesterday, two things stood out. Neither of them had anything to do with the $7.8 billion profit…

One of the things we always look for in a bank’s profit results is the consumer arrears numbers. We’ll be honest, the CBA numbers are reasonably impressive.

That’s especially so when you compare them to the arrears rates for overseas banks during the financial meltdown. Some of the US arrears rates were in double figures.

Paying the Mortgage on Credit?

But then again, those banks went through an almighty financial crash…whereas Australian banks didn’t. So it’s only natural that Aussie consumer arrears rates would be low.

Even so, there’s something interesting about CBA’s arrears rates. Check out the chart below:

Source: Commonwealth Bank of Australia

The blue line is the 90+ days arrears rate for home loans. As you can see, this rate has steadily gone down over the past two years.

Folks would say the improvement in the housing market and lower interest rates have improved things. It’s hard to argue with that view.

But the thing that really stands out is the increase in 90+ days arrears for personal loans and credit cards. In fact the rate for personal loans arrears has increased by 50% in just seven months.

What can explain that?

Well, it’s always dangerous to draw a conclusion without knowing if there is a direct link (causal versus casual). But it makes us wonder. Are cash-strapped borrowers using personal loans and credit cards to pay for mortgage repayments?

It’s not a completely crazy thought. It could suggest borrowers have maxed out on their home loans. Otherwise you’d expect borrowers to use redraw facilities to take cash out of a lower interest rate home loan in order to pay off higher interest rate personal loans and credit cards.

But whatever the reason, it tells you all isn’t well beneath the surface. Aussie households are more heavily in debt than ever before. This hasn’t created a major problem so far, but with the last Aussie recession more than 20 years ago, the Australian economy is living on borrowed time.

When things blow up it will hit the Australian economy hard, and that would be bad news for the banking sector. But as we say, that wasn’t the only thing to catch our eye.

Of more interest to our work in Revolutionary Tech Investor was another feature of the bank’s results…

The Future of Money

In particular, we’re talking about the innovation in the payment and transfer systems.

It’s a theme we covered in depth in the latest issue of Revolutionary Tech Investor. The CBA made a big show of its instant and contactless payments system.

To cut a long story short, our view is that the end is near for coins and notes as a form of money.

The trend has moved away from notes and coins towards credit and debit cards for 30 years. The advent of chip technology on credit cards and ‘tap and go’ transactions is hastening that move.

But could credit cards be in for the chop too? This report from the International Business Times explains:

‘Paypal says the use of physical credit cards will soon die out by 2018, thanks to a rising number of Australians using their smartphones for purchasing almost virtually anything…‘

Think about it. If the only important thing on a credit card is now the computer chip, the rest of the credit card’s ‘real estate’ is pointless.

Not Everyone Understands the Coming Change

Why not just have a key fob containing a chip? Instead of tapping your credit card against the terminal, tap your key fob instead. There’s absolutely no reason why that can’t happen. We agree with Paypal, it will happen. And most likely within the next five years.

But who says it has to be a computer chip? As the folks at Paypal say, maybe smartphones or other electronic devices will be the main payment method.

How about going even further? What about biometrics? This is the idea that you will become the method to transfer money and pay for goods. You won’t have to tap a plastic card, key fob or smartphone…

Instead you’ll press your thumb onto a pad and your unique thumbprint will authorise the payment. Or perhaps facial or retina recognition will be the future way to pay for goods and services.

And if you think this is pie-in-the-sky stuff, check out this from Bloomberg yesterday:

‘As the technology world buzzes with speculation that the next iPhone will have a fingerprint reader, makers of biometric security devices are bracing for a race among smartphone makers to adopt the technology.‘

But not everyone agrees with our fantastical view. The IB Times notes:

‘According to Visa, physical credit cards are considered legitimate currency and recognised globally. Visa Australia Country Manager Vipin Kaira said credit cards will continue to be around for many years and play a significant role in paying for products and services.‘

For Visa’s sake we hope they’re just talking their book in front of the public but developing new products behind the scenes.

Maybe Visa has the same vision for the future we have. The company probably realises if it innovates too much it risks destroying its own brand.

But the bottom line is this is a big picture technology view and it’s destined to happen whether the credit card companies and banks like it or not.

Cheers,
Kris+

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From the Port Phillip Publishing Library

Special Report: The Sixth Revolution

Daily Reckoning: When the Paper Gold Market Blows Up

Money Morning: Stocks Could Go Higher, but You Still Need an Exit Plan…

Pursuit of Happiness: The Next Big Leap for Transportation Technology

Australian Small-Cap Investigator:
How to Make Big Money from Small-Cap Stocks

By MoneyMorning.com.au

Australia already has an absurd cost of living. So it was no surprise to us when American research firm Concur calculated the world’s most expensive places for an international business traveller was an Australian city.

Brisbane topped the list, then Tokyo, then Sydney and Perth, with Melbourne in seventh. To be clear, Australia’s capital cities are the world’s most expensive places to do business.

Of course, part of the results were due to our high dollar, and that’s even taking into account the recent drop. Further falls should make things cheaper for foreigners, but even more expensive for us.

For now, unless you’re an exporter, you’re going to feel the cost of living crunch as the Australian dollar drops.

But all this is nothing compared to the crunch going on in the Australian shadow banking sector.

We’ve already documented Australia’s version of the sub-prime crisis. And you might have heard about China’s dangerous Wealth Management Products and how they’re supporting China’s property boom into new and unoccupied heights. Our college, Greg Canavan has been forecasting the demise of China’s property and finance sector for months.

Well here in Australia, the collapse of the very same sector has been underway for years. Instead of Wealth Management Products, the story focuses on Unlisted Unrated Debentures (UUDs). If you haven’t heard of them, or think they’re insignificant, just ask yourself whether you heard about American sub-prime mortgages or thought they were insignificant in 2006.

The collapse in Australia’s shadow banking sector is happening in slow motion, mostly delayed by Australia’s epic bureaucratic and legal shenanigans. But it’s happening nonetheless…

Unlisted Unrated Debenture providers Banksia, Gippsland Secured Investments, Australian Secured Investments Limited, Wickham Securities, FinCorp, Westpoint, the Cherry Fund, Cymbis Finance, and many more have all failed.

We Googled the names on ASICs list of debenture providers, and got more ‘in liquidation’ and ‘administrator appointed’ in the results than not. Angas Securities could be next, with S&P downgrading the firm’s credit rating and ASIC requesting it stops issuing new debentures.

UUDs were a favourite amongst retirees because they were often marketed as ‘bank like’ investments offering a slightly higher return than term deposits. But they don’t have a government guarantee, as people are learning the hard way.

Click to enlarge

All this reeks of the beginning of the American subprime mess. Peripheral finance companies going bankrupt because of dodgy mortgages while the banks sit pretty, claiming their bad loans are at perfectly normal levels.

But why did the UUD’s get left with all the dodgy mortgages? We reckon it’s because of the LAF scandal we wrote about last year. Bankers and mortgage brokers just inflate people’s incomes and assets on loan paperwork to make sure their loans are approved. A sub-prime loan becomes a prime loan on paper. The shadow banking industry buys the ‘prime’ loans and packages them into investments for you and me to lose money on when the mortgages turn out to be dodgy.

If you factored in all the defaults in the UUD loans, what would the state of the Australian housing and finance industry really be?

For a hint, you could look at New Zealand. Seven years into its own debentures debacle, $3 billion is missing from 200,000 deposit holder’s accounts. The taxpayer was on the hook for another $1 billion.

Here in Australia, debentures make up a whopping 7% of total deposits and debt securities. In other words, a crisis in the debenture markets, if it’s recognised as such, could cause real problems for the banking sector, not just the shadow banking sector.

Unfortunately for investors in the Aussie UUD market, there hasn’t been a government bailout…for now. Of course, the real question is whether this virus comes out of the shadows and into the real banking sector.

Nick Hubble+
Editor, The Money for Life Letter

Join The Daily Reckoning on Google+

From the Archives…

Should You Still Buy Stocks Here? Yes, but…
09-08-2013 – Kris Sayce

The Secret to China’s $7 Billion Milk Market
08-08-2013 – Nick Hubble

RBA (Retirees Below Average)
07-08-2013 – Vern Gowdie

Have Australian Stocks Broken Free from China?
06-08-2013 – Kris Sayce

When Should You Sell Your ‘Loser’ Stocks?
05-08-2013 – Kris Sayce

Article by Investazor.com

Everybody is speaking about the tapering of the Quantitative Easing program, but nobody has any concrete and reliable piece of information. If we are to consider the macroeconomic indicators that describe the U.S.’s economy, it is difficult to take any position. The data is mixed. On one hand, the labour market seems to be giving real signs of improvement, on the other hand, we cannot trust only one set of data. An information that can be trusted is the FOMC Member Bullard’s speech. It looks like between the FOMC members, the only measure which was discussed so far, about the tapering of the QE3, is the starting of discussions about possible plans for reducing the pace of asset purchases. Another thing that we know for sure, is that no final decision will be taken unless the end of the year will meet the same positive results that were met at the end of the first half of 2013. In the best case scenario, the September’s meeting might bring a set of pans, which will be implemented next year, according to the economic conditions.

The main findings of the Bullard’s speech are the following:

– Any decision concerning the Quantitative Easing program is separated from any decision concerning the policy rate;

– There are discussions on whether or not a wider range of labour market indicators need to be taken into consideration, decreasing the importance given to the present key indicators ( the unemployment rate and payroll employment growth);

– FOMC will have to decide if, in taking any tapering decision, it is important to consider the weak evolution of the GDP (starting with the beginning of 2013) or is better having sight of the future evolution, which is expected to be improved, and to trust this presumption?

– The size of the Fed’s balance sheet might pose questions about the most appropriate moment of tapering;

– The inflation is low. In such an environment, the FOMC might remove the policy accommodation;

The post Which is the position of St. Louis Fed’s Bullard? appeared first on investazor.com.

Article by Investazor.com

Did you miss a commodity analysis? We have watched the price of cotton for some time now to give us a bullish signal.

Chart: Cotton, Weekly

In March 2011 the price of cotton reached a historical high, at 227.00, after a low production and high worldwide demand. As usually the history repeated itself. Producers saw the potential in planting cotton and they started to plant record at record levels, resulting in a production that overwhelmed the demand.

In June 2012 the price got to a low of 66.10, dropping more than 70% from the all-time highs. But from 1^st of January 2012 the price of cotton started to draw a Head and Shoulders Inverted, a pattern which could be actually build in an accumulation area. The base of the area is situated around 92.00.

At this point the demand for cotton seems to have increase. A big part of the worldwide production is held by China, so the prices might get to higher levels in the near future. If this week, or next 2 weeks will close above 92.00 we will have a confirmed a reversal price pattern. In this situation the target for the Inverted Head and Shoulders sits at 122.76, meaning a 34.00% rally from the current levels.

If anyone would like to profit from a possible rally of the price of cotton there are some possibilities. Investing in futures on the CME or on CFDs would be one of the solutions, while the second would be buying a LEAP call option with 95 – 100 strike.

The post Price of Cotton is signaling a Reversal appeared first on investazor.com.