Month: September 2013

By www.CentralBankNews.info
    Last week the central banks of Israel and Hungary cut their policy rates while 10 other banks maintained rates as the U.S. Federal Reserve’s surprise decision to delay tapering its asset purchases reverberated through global markets amid criticism of its communication skills and forward guidance.
    The Bank of Israel, which surprised financial markets by cutting its policy rate for the third time this year, cited the Fed’s decision as a sign of a possible slowdown in advanced economies while the National Bank of Hungary again trimmed its rate, taking advantage of a relief rally and rebound in emerging market currencies.
    Although the Central Bank of Nigeria saw reduced risks of currency instability from the Fed’s decision, both it and Taiwan’s central bank acknowledged that an eventual reduction in asset purchases remains a major risk for the global economy.
    In addition to Nigeria and Taiwan, the central banks of Armenia, Morocco, Georgia, the Czech Republic, Trinidad & Tobago, Colombia, Rwanda and Malawi maintained their policy rates last week.

    The Fed’s surprise decision to postpone tapering may have consequences for the future conduct of monetary policy.
    Although the Fed’s policy-making body, the Federal Open Market Committee (FOMC), never said September would herald the start of winding down asset purchases, there had been enough winks and nods in that direction from governors and Fed bank presidents to convince financial markets.
    The point of forward guidance as an additional communication tool is to help reduce investors’ uncertainty about the path of monetary policy, whether this guidance is open-ended, time-contingent or state-dependent, as in the case of the Fed.
    While no one is arguing the merits of the Fed’s decision to postpone tapering due to lackluster employment growth or the impact of a potential U.S. government shutdown, serious questions are being raised about forward guidance if investors’ expectations turn out to be so wrong, as brutally witnessed on Sept. 18.
    Ever since May, when Federal Reserve Chairman Ben Bernanke first raised the issue of tapering, global financial markets have been volatile as they adjust to a change in the flow of global capital, higher long-term interest rates, a depreciation of emerging market currencies and better economic prospects for advanced economies.
    The process of exiting from extraordinary accommodative monetary policy was always going to be tricky and forward guidance was intended to help central banks keep long-term interest rates low as the economy heals from the scars from the financial crises.
    But instead, long-term rates in most countries have shot up, threatening economic recovery and raising doubts over the efficacy of central bank’s communication via forward guidance, whether this was implemented by the Fed, the European Central Bank or the Bank of England.
    By adding more predictability and transparency to central banks’ policy, forward guidance was supposed to reduce market volatility, not confuse investors and make them even more nervous as they scratch their heads, wondering how they could have misread the Fed.
    So far, much of the criticism directed toward the Fed – even that by its own governors and presidents – has focused on its ability to communicate and not the basic concept of forward guidance.
    But the consequence of the Fed’s deliberate policy of vagueness and uncertainty about winding down quantitative easing may have serious consequences, as witnessed by Richard Fisher, president of the Dallas Fed, who said last week’s decision called into question the credibility of the Fed’s communications.
    Hopefully central banks and the Fed will learn from this error and look back at their notes from this year’s Jackson Hole conference where economists Arvind Krishnamurthy and Annette Vissing-Jorgensen called on the Fed to spell out the exact conditions for winding down quantitative easing to avoid a further damaging rise in long-term interest rates.
    “Since the prices of long maturity assets are much more sensitive to expectations about future policy than short maturity assets, controlling those expectations is of central importance in the transmission mechanism of QE. Therefore, how an exit is communicated to investors matter greatly,” the economists wrote in their paper, “The Ins and Outs of LSAPs.”
   
    Through the first 39 weeks of this year, the global trend toward lower policy rates appears to be bottoming out as emerging markets raise rates to limit the inflationary follow-through from currency depreciation.
    Policy rates have been cut 88 times so far this year, or 23.3 percent of this year’s 377 policy decisions that by the 90 central banks followed by Central Bank News. This is down from 23.6 percent the previous week, 23.9 percent two weeks ago and 25.3 percent after the first half of 2013.
    Meanwhile, the percentage of rate rises is slowing creeping up.
Central banks have raised rates 21 times, or 5.6 percent of this year’s policy decisions, down from 5.8 percent the previous week but unchanged from 5.6 percent two weeks ago and up from 4.7 percent at then end of June.
    Emerging markets account for 43 percent of the 21 rate rises, with Brazil, Indonesia and India accounting for eight of those rate rises.

LAST WEEK’S (WEEK 39) MONETARY POLICY DECISIONS:

    This week (week 40) eight central banks are scheduled to hold policy meetings, including those from Angola, Romania, Mauritius, Australia, Poland, Iceland, the euro area and Japan.

   
     www.CentralBankNews.info

By Investment U

America is the strongest nation on Earth, but we depend on foreign energy suppliers. In fact, we import more oil than any other country. This is our crucial weakness as a superpower.

Now, that is changing big-time in ways that are good for America and bad for China. And this change offers you extraordinary investment opportunities.

Here are some information bombshells the U.S. Energy Information Administration recently dropped…

• In October, China will pass the U.S. to become the world’s biggest net oil importer.
• China will import 6.45 million barrels of oil a day. At the same time, the U.S. will import 6.23 million barrels of oil a day.
• On a yearly basis, China’s overseas purchases will surpass the U.S.’s next year. Net Chinese imports will be 6.57 million barrels per day (bpd) next year. That’s higher than the U.S.’s 5.71 million bpd.

This is happening even though China will use 11 million bpd of oil in October while the U.S. will use 18.6 million.

That’s because new technologies, including fracking and horizontal drilling, are shifting America’s crude oil production into overdrive. U.S. wells pumped out 7.5 million bpd in July.

Add in other liquids, including liquefied natural gas and biofuels, and total U.S. production will rise to 12.4 million bpd by October. China, meanwhile, will produce only 4.57 million bpd.

China’s largest oil fields are mature and production has peaked. Oil explorers in China are focusing on the western interior provinces and offshore fields.

Water injection has raised the oil output of China’s old fields. But fracking has met with mixed success so far. And that leads to the next chart…

You can see this is bad news for China… at least, if China hopes to be an energy-independent superpower.

To be sure, China could come up with new technology. But in the meantime, everybody in China wants to drive like a car-razy American.

• China’s auto sales rose 10.4% in July alone to 1.24 million units. For the most part, those aren’t replacement cars. They are thirsty new vehicles lining up at China’s gas pumps.
• China’s use of liquid fuels will grow to more than 11 million bpd in 2014 – up 13% from 2011.
• And by 2040, the EIA expects China will use 20 million bpd, compared with 19 million bpd for the U.S. That’s more than double what China used in 2010.

So where is China going to get the oil to fuel all those cars? Well, hang on to your hats for this next chart, showing non-OPEC oil production growth…

As you can see, the U.S. is the big cheese in production growth as well. No one else in the world comes close when you measure new production outside OPEC.

But how about production growth within OPEC? OPEC July output dropped 1.1 million bpd compared to last year. There’s no growth there.

So, when China looks for new sources of oil, it’s probably going to have to come to us.

According to forecasts, the world will use between 1 million and 1.2 million more barrels of oil next year than it did this year.

Longer-term is more of a guesstimate. But everyone agrees the world will use a lot more energy. For example, the EIA says world energy consumption will rise 56% in the next three decades.

The EIA singles out energy demand growth in China and India, as well as legions of thirsty new cars in other developing nations.

Heck, the average person in China consumes about one-ninth the oil an American does. What if everyone in China doubled their energy use?

To be sure, there are all kinds of energy. And there could be new technologies that help wean the Chinese and the rest of us from fossil fuels. But for now, petroleum-based gasoline is still the best way to keep your car on the road.

It looks like China’s oil demand is shifting into overdrive. And Uncle Sam could end up with a lot of power in a rapidly shifting relationship.

How You Can Profit

Here’s one idea that could put money in your pockets. The SPDR S&P Oil & Gas Exploration & Production ETF (NYSE: XOP). The XOP gives investors exposure to plenty of smaller names in the energy space – companies that could do very well as America pumps more oil and natural gas.

There are a number of select companies that will profit significantly from America’s new oil boom. To find out more about them, read my new special report, “How to Profit From America’s Energy Boom and China’s Oil Thirst.”

Good investing,

Sean

Editor’s Note:  Housing starts are up, jobless claims are down – every month we seem to get better and better indications that the U.S. economy is improving. But we all know it isn’t the clowns in Washington or at The Fed that are restoring it. And now we have proof…

Our research has uncovered six companies that are leading a $1.2 trillion project to save America from itself. These companies are more than just great investment opportunities. If their plan works, it could end deficits, bring unemployment down to 4%, send the Dow to 20,000 or higher and even put $8,000 into the pockets of every American.

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Article By Investment U

Original Article: Net Oil Imports… This Should Scare the Hell out of China

By Investment U

Although home prices are rising at the fastest pace in seven years and sales of previously owned homes in April hit their highest level in more than three years, Heidi Moore isn’t buying it.

Who is Heidi Moore? That’s the perfect question to ask because the woman – who is the U.S. finance and economics editor at The Guardian – has completely misread the current conditions in the U.S. housing market.

In a recent column, she claimed that what looks like a housing recovery is, in fact, “a trap.”

Banks now own a big percentage of available homes for sale – through foreclosures – and she claims they are controlling the supply to artificially increase prices. Furthermore, she claims that buyers aren’t people looking for a home to live in but just cash investors who are fixing up homes to flip them for a profit.

Moore… or Less

Let’s start with her first claim that banks are manipulating the market to artificially increase prices.

If you’re going to make a claim like that, you ought to have a lot of evidence to back it up. She offers none. Foreclosure sales have declined for 17 straight months and the bankers I know say they are anxious to get their remaining ones off their balance sheets and converted into lendable cash.

RealtyTrac, a real estate website that tracks the industry, found that the number of foreclosures sold in the first quarter of the year declined 22%. Foreclosures are a much smaller part of overall home sales now. (Compared with April 2012, there were 24% fewer homes in some stage of foreclosure.)

Lower mortgage rates, a recovering economy, improving consumer confidence and rising home prices are the true factors leading this resurgent housing market.

And if banks – which threw lending standards out the window during the boom – would just loosen up their credit requirements a bit, things would heat up even more.

Flipping Out

How about her claim that a big part of the housing market is cash investors fixing up homes and flipping them? This is indeed happening. And let’s applaud it.

Former builders I know – who are cash-based home flippers themselves – tell me these foreclosed homes all have the same problems: dead lawns, green pools, soiled carpets and damaged walls and appliances.

These folks go in and replace the sod, clean the pool, paint the house, replace the carpet and put in new appliances. Then they flip it.

And to whom?

Not another investor but to a new homeowner who is delighted to have an opportunity to buy an attractive home at a good price.

In short, rising prices and near record-low mortgage rates are working their magic. The housing market is showing real strength again. So ignore Heidi Moore and her conspiracy theories and take advantage of changing conditions by picking up a few undervalued homebuilders.

A good starting point would be companies like Lennar (NYSE: LEN), D.R. Horton (NYSE: DHI), Toll Brothers (NYSE: TOL), KB Home (NYSE: KBH) or PulteGroup (NYSE: PHM). Or you might try an exchange-traded fund like the SPDR S&P Homebuilders ETF (NYSE: XHB).

All should do well… because the only sham I see is Heidi Moore’s shallow analysis.

Good investing,
Alex

Article By Investment U

Original Article: The Housing Market…This Huge Trend Is No “Sham”

Article by Investazor.com

The shortest definition of the federal debt ceiling situation of the United States (currently estimated at over 16,700 billion) is that the country is spending more that is collecting and each year it finds itself in the same situation, of spending more and more than it is managing to take in by taxes. To find its way out of this situation, the government is issuing bonds which are purchased by investors around the world, mainly by China and Japan. Why should everybody care about the federal debt ceiling? Because it will eventually affect the citizens. Fields like the medicine, education or army will have to suffer payment delays or even restructuring in order to adjust the government’s budget to the society’s costs. Even if the debt ceiling will be increased, on the long term, the same consequences remain. If not, the whole world will be rocked by the imediatele consequences. In any case, expectations point towards an extension of the agony and passing the responsabilities to the next government.

Currently the Congress and President Barak Obama are debating over the debt ceiling as 17^th of October represents the next deadline. One of the House’s latest decisions was the 1 year postponement of the national healthcare law known as “Obamacare” which is considered by the Republicans as a cost that came at the wrong time. The American government being unable to pay its debts represents a scenario that nobody imagined before and no one has a clear solution for this problem.  The debt ceiling must absolutely be raised, in the opinion of U.S.’s President.

In an attempt to calm the situation, as the 1 of October announces the beginning of a new fiscal year, the House unanimously approved a bill to keep paying U.S. soldiers in case the government runs out of money. The Congress seems to react with a great delay and there isn’t a clear exist strategy put in place. The world is currently waiting for another round of votes in order to have a decision on the table and the responsibility is on the Congress’s back.

The post Federal Debt Ceiling – The Current Issue of the U.S. appeared first on investazor.com.

By Profit Confidential

I want to share with my readers a chart that I find very interesting. The chart below (courtesy of our research group) compares the number of Americans on food stamps since the so-called recovery began in the S&P 500.

As you can see for yourself, they are following the same trajectory! Our research shows that since late 2009, for every one-percent increase in food stamps usage in the U.S., the S&P 500 increased two percent!

Yes, food stamps usage has skyrocketed in this country. In October of 2009, there were 37.67 million Americans using some form of food stamps. In June of this year, that number reached 47.76 million people! (Source: United Stated Department of Agriculture web site, last accessed September 26, 2013.) This is an increase of more than 10 million Americans using food stamps in just four years.

During the same time, the S&P 500 has increased from around the 1,000 level to above 1,600—an increase of more than 55%.

This is very troublesome. And it’s a black-and-white example of how the rich (those buying stocks) are getting richer in this country, while the poor (those who can’t afford to buy stocks) are getting poorer.

An average American would think we should not be seeing the poor getting poorer when our government is spending rigorously and our central bank is printing $85.0 billion a month in new money—all in the name of economic growth. After all, doesn’t economic growth mean the standard of living improves for everyone?

The reality is simple: the Fed’s action of aggressively creating trillions of dollars in new paper money is helping the rich to a much larger degree than it is helping the average American Joe.

And in the next few weeks, we’ll hear that Congress has increased the government’s debt ceiling for the 79th time since 1960.

What’s next is the big question: how does the U.S. plan to deal with its national debt, with the mountain of debt growing trillions of dollars bigger and the “money in the system” growing by billions of dollars each month?

This month, the government of Poland confiscated half of the private pension funds in the country to pay for its national debt. (Source: Reuters, September 4, 2013.) Through this technique, the government will be taking bond holdings from the pensions, and leaving them with stocks. Why would a country do that? Well, to borrow even more.

The madness goes on.

Article by profitconfidential.com

By Profit Confidential

Earnings reports are starting to come in for this past quarter—and many are from unique, small- and mid-cap businesses. This is the time when investment opportunities can be plentiful.

Keeping tabs on the reporting is a great way to find new companies for potential investments. The earnings game is managed, but generally speaking, the numbers are the numbers and a great quarter can be a good catalyst for a stock.

One interesting company that just reported another solid quarter of both revenue and earnings growth is Neogen Corporation (NEOG). This company operates in a very specific business area: food safety and animal safety products.

Based out of Lansing, Michigan, Neogen’s food safety division sells diagnostic test kits to detect foodborne bacteria, natural toxins, food allergens, drug residues, and plant diseases, along with sanitation. The company’s animal safety division is involved with animal genomics and sells all kinds of animal healthcare products, diagnostics, pharmaceuticals, veterinary instruments, wound care products, and disinfectants.

This is a good mid-cap business with a track record of increasing its revenues and earnings. The stock’s also been a very strong performer, not only because the company delivers on its promises, but because it’s the kind of enterprise that institutional investors just love to own. Neogen’s 10-year stock chart is featured below:

Chart courtesy of www.StockCharts.com

In its first fiscal quarter of 2014 (ended August 31, 2013), Neogen’s revenues grew a solid 18% to $58.6 million. The company recently digested an acquisition, but company management said it experienced significant growth in core product lines, as well as strong sales outside the U.S. market.

Earnings grew 17% during the quarter to $7.84 million, or $0.32 per share. Both revenues and earnings in Neogen’s first quarter of 2014 were records for the 31-year company. Of the past 91 quarters, 86 saw the company increase its revenues over the comparable quarter.

This isn’t the kind of business that jumps out at you as being an exciting double-digit grower, but Neogen has a lot of customers in agriculture, and that’s an industry that really spends on food and animal safety products.

Neogen has lots of cash in the bank and no debt. Naturally, a growing mid-cap enterprise like this has the attention of institutional investors, so the stock isn’t cheap, with a forward price-to-earnings ratio of 39. The company is delivering on expectations, though, and its latest quarter was very good, considering the lack of growth in the rest of the economy.

I find it very useful to consider esoteric businesses in an equity market portfolio. (See “How This Solid Old Economy Company Keeps Beating Tech Stocks.”) And while I tend to be a big believer in brand names, there are all kinds of non-headline companies that are actually very good businesses. Neogen is one of them, and it’s a company that more aggressive mid-cap investors should put on their watch list.

Article by profitconfidential.com

By Profit Confidential

Based on the record stock market highs in September and the lack of a follow-through, the stock market looks somewhat exhausted at this time. This is not to say that the upside potential for the remainder of the year is gone, but I do believe it is fairly limited, given the advance so far.

As we soon move into the fourth quarter, I expect the investment climate will get a whole lot more interesting, especially in the month of October.

At this juncture, I’m feeling cautious towards the stock market. Like many other traders and investors, I don’t like it when there are so many uncertainties waiting to be addressed.

In fact, the third-quarter earnings season makes me nervous. (Read “How Easy Money Is Hiding the Real Problems in Corporate America.”) Based on the gross domestic product (GDP) growth and the Federal Reserve’s recent announcement to continue buying bonds, you have to wonder how corporate America will not be impacted.

As I have said numerous times in the past, the four-year rally from the March 2009 lows was largely pushed higher by the Fed’s quantitative easing, not solely on economic or corporate results. The economy is clearly better off now than it was in 2008, but the country is also straddled with a massive national debt that needs to be resolved, which is why we could see a forced government shutdown in a few weeks if the two parties cannot agree on a resolution by the October 1 debt limit deadline. We have nearly $17.0 trillion in debt that needs to be dealt with.

The Fed also needs to get its act together and begin the tapering process; it needs to start weakening the stock market’s current dependency on the easy money. The problem is that the next Fed chairman will likely be Janet Yellen, a carbon copy of Ben Bernanke, so that’s good news for the stock market but not for the country’s debt situation.

And while tensions in the Middle East are concerning, I really hope they settle down so that the U.S. can at least save some money by not deploying its $1.0-million-a-pop missiles. There are 50 million people on food stamps in this country that could use that financial help.

So as you can see, America is not on a clear path and things could get a lot more interesting in the quarters ahead for the stock market.

With the Dow Jones Industrial Average down over two percent from its high, you can trade this market. But in my view, it’s best to wait for the stock market to be down by more than five percent before considering adding positions. So, if you tend to hold positions for longer than a few months, then I think there will be an opportunity coming on the horizon. Near-term, I’d approach this market with a lot of caution.

Article by profitconfidential.com

Trading binary options can be quite overwhelming to a novice, especially with all its complexities. For instance, there are several decisions that a trader has to make, some harder than others, especially when it comes to choosing a trading platform. There is a large number of trading platforms and software available to any binary options trader. Nonetheless MetaTrader 4 also known MT4, has emerged as one of the best trading platforms being used by hundreds of brokers nowadays as an excellent and innovative solution to the binary options trading problems. This can be attributed to the following list of benefits offered by this platform.

Expert advisors

This is one of the best features in the MT4 feature portfolio. As a matter of fact, traders can trade binary options on this platform and have the ability to enjoy the services of expert advisors. Basically, advisors can allow traders to automate their trades with a customized EA for the best results to suit their needs and expectations.

User experience

MT4 has an exceptionally user friendly interface and hence it enables both new and experienced traders to trade with ease and comfort, in spite of the current market complexity and volatility. In fact its seamless integration of a variety of languages has made it even easier for people to use expert advisors directly on MetaTrader 4 in their own language. This means that users around the globe can experience the benefits of this platform and all its data. It is also true to say that the simple and elegant interface of the platform leathers the powerful features offered by MT4 to both the expert and novice trader.

Advanced charting capabilities

MetaTrader 4 offers the best advanced charting capabilities in addition to its user-friendly trading features. Such charts enable binary options traders to simultaneously execute their trading options while analyzing the technical aspects of the market.

Low on resources

This trading platform is relatively low on resources, unlike several other platforms. This means that it keeps its disruptor effect to your computer as low as possible. Also, this enables MT4 to react faster, and thus this makes it possible for the traders to implement their trades and request instantaneously.

Security

It is quite obvious that when dealing with private and sensitive issues on any trading platform, traders would want to know that they are not susceptible to any form of online threats. Fortunately, MT4 is exceedingly a secure platform that encrypts the data between the traders and server to prevent attacks and hacks on their accounts.

To learn more about binary options in MetaTrader 4 please visit www.clmforex.com

Article by Investazor.com

What is Programmed in the Forex Calendar for Next Week

The week that has just passed did not bring any big surprises for the Forex Market. Monday the European Flashes PMI came above expectations for the services sector but disappointed for the manufacturing sector. Great Britain’s final GDP was in line with expectations. USA’s GDP was expected to rise 2.7%, but it only rose 2.5%. This bad news was equilibrated by a very good Unemployment Claims.

Last week was a lot of speeches from Mario Draghi and from the FOMC members. The ECB president reiterated the Central Bank’s position regarding the monetary policy. While a bigger number of FOMC members that spoke last week were expecting a tapering of the QE program in October, Evans said that he will not be surprised if Federal Reserve will continue not taking any action.

The calendar for next week will be full of important economic releases. On Monday Canada will publish its GDP. Tuesday Australia will have its Cash Rate and the monetary policy, from the Euro Area there will be published the Manufacturing PMIs for Italy and Spain and the unemployment rate. Wednesday (this time) the ECB will have its monetary policy and the press conference, and US will report the ADP. Thursday Great Britain will release its retail sales and US will publish its unemployment claims. On Friday BOJ will have its monetary policy and US will release the Non-Farm Employment Change.

All these data will be accompanied by the debt ceiling discussions. We are expecting a week with high volatility on the Forex market. We recommend traders to adjust their strategy for the new conditions and keep an eye on the market news.

The post What is Programmed in the Forex Calendar for Next Week appeared first on investazor.com.