Month: November 2013

By George Leong, B.Comm.

There you have it; the latest great news out of China, I think, will help drive sales of some U.S. companies going forward.

The news? There are going to be more babies born in China over the foreseeable future. In a surprise and strategic move, the Communist Party of China decided it was time to increase its baby population and look towards the future of the country.

Under the country’s new plan, the one child policy will be modified to allow two children per family in cases where one of the parents came from a one-child family.

As I said, this is huge; it could be a critical turning point in the direction and growth of the Chinese economy. (Read “Time to Look at Chinese Stocks Again?”) While the change in population control may seem archaic to us here in America, in China, this is a major change that could impact the country for decades going forward.

Make no mistake about it, China is ambitious and wants to expand its economy more and become the biggest economy in the world. This will inevitably happen; it could even take less than the previously estimated 20 years, given the new baby policy along with the opening of some state-operated industries to private investment and foreign companies.

And while the Chinese government wants to make sure there are sufficient babies born to replace the aging population, a key objective of the change is to inevitably drive up domestic consumption in the Chinese economy in the decades ahead.

The Chinese economy will see rising demand for food, homes, apparel, household goods, and services, just to list a few of the likely perks. What this all means is that the country will need to import more raw materials and goods from foreign markets—and that includes the U.S., meaning America could see a boost in its economy as a result of China’s reforms.

American multinational companies operating in China or selling in the country will likely see a rise in demand for goods. In the short-term, for example, family staples companies like The Procter & Gamble Company (NYSE/PG) and Colgate-Palmolive Company (NYSE/CL) will see a rise in their sales in China. And with the expected rise in the demand for food, companies like Caterpillar Inc. (NYSE/CAT) will likely see more demand for agricultural equipment.

In the United States, we could see a rise in demand for many raw materials and grains, such as wheat, corn, soybeans, and canola, to feed the new population growth in China. Companies like Archer-Daniels-Midland Company (NYSE/ADM) could likely see higher demand out of China as a result.

Whatever the case, the expected new population boom in China can only be a positive for American business—and investors.

This article China’s Expected Baby Boom a Boon for U.S. Business is originally publish at Profitconfidential

By Michael Lombardi, MBA

According to the World Gold Council (WGC), demand for gold bullion in the third quarter was 869 tonnes. (Source: World Gold Council, November 14, 2013.) And in the quarter, central banks purchased 93 of those tonnes.

Central banks have now been buyers of the precious metal for 11 consecutive quarters. Why have central banks been continuously buying more gold? My speculation is that they realize the fiat currency will eventually be problematic, with so much of it being created out of thin air these days.

Consumer demand for gold bullion is also robust. In China, in the third quarter, consumer demand for gold bullion accounted for 210 tonnes—18% higher than the same period a year ago. In India, consumers’ appetite for the precious metal declined 32% in the third quarter from the previous quarter, as the government and central bank worked together to curb consumer demand for gold bullion. But looking at the first nine months of 2013, gold bullion demand in India was 19% higher than the previous year.

In the third quarter, we saw higher demand for gold jewelry in countries like Vietnam, Thailand, and Indonesia. From the same period a year ago, precious metal jewelry demand in these three countries was up by 14%, 57%, and 19%, respectively. In Hong Kong, gold jewelry demand increased by 28%!

Need I say more?

Dear reader, the focus has shifted off gold bullion and onto the stock market these days, as stocks continue to break to new record highs.

With gold bullion prices off significantly from their peak, I stick to my belief that there is great value in the precious metal.

History tells us that gold bullion holds value in times of uncertainty. The mainstream doesn’t mention this, but aren’t currencies around the world in great danger, because so much paper money is being printed each passing month? Get a map, point a finger at a country, and big or small, chances are that the central bank of that country is involved in money printing. As this continues, the value of currencies around the world will diminish (and I’m not just talking about the U.S. dollar). As a result, the precious metal, which investors seem to dislike these days, will be in shortage.

The question, dear reader, is not if gold bullion prices will recover, but when? Don’t give up on gold as an investment.

This article Central Banks Net Buyers of Gold for Eleven Consecutive Months Now is originally publish at Profitconfidential

By Moe Zulfiqar for Daily Gains Letter

The Federal Reserve has been very accommodative. Its goals are very simple: it wants economic growth in the U.S. economy. As a result, the Federal Reserve is taking extraordinary measures, printing $85.0 billion a month and using it to buy U.S. bonds and mortgage-backed securities (MBS). The hope is that the money will go to the banks, which will lend it to consumers who then spend it, leading to economic growth.

Sadly, the problems continue to persist in the U.S. economy, leaving economic growth still far from sight. The techniques used by the Federal Reserve aren’t working: the unemployment rate continues to be staggeringly high, troubling trends have formed, and the inflation continues to be low—threats of deflation loom.

Given all this, one would assume there might be something else that the Federal Reserve can do. Unfortunately, instead of using different measures to fight the problems in the U.S. economy, the Federal Reserve is planning to keep on doing what it has been doing for years now. I believe the techniques used by the Fed will continue on for some time.

Here’s my reasoning: in a testimony before the U.S. Senate Committee on Banking, Housing, and Urban Affairs, the newly nominated chairman of the Federal Reserve, Janet Yellen, said, “We have made good progress, but we have farther to go to regain the ground lost in the crisis and the recession. Unemployment is down from a peak of 10 percent, but at 7.3 percent in October, it is still too high, reflecting a labor market and economy performing far short of their potential. At the same time, inflation has been running below the Federal Reserve’s goal of 2 percent and is expected to continue to do so for some time.” The Federal Reserve realizes the problems still remain, but no other solution was provided. (Source: “FRB: Testimony—Yellen, Statement before the Committee on Banking, Housing, and Urban Affairs—November 14, 2013,” Board of Governors of the Federal Reserve System web site, November 14, 2013.)

If the Federal Reserve continues to print money in the form of quantitative easing, don’t be surprised to see more of the same—key stock indices will head higher and bond yields will continue to decline.

But what happens when the Federal Reserve starts to put the brakes on its asset purchases? We saw a minor episode of it in May; the bonds market witnessed a very noticeable sell-off. This time around, I wouldn’t be surprised if the sell-off is much bigger.

Dear reader, you have to keep in mind that the Federal Reserve became a massive buyer of bonds. Its balance sheet is huge, and closing in on $4.0 trillion. If it sells the bonds it has, the bond yields will go high, and if it keeps them, the current money printing will result in higher inflation ahead.

So, how does one actually profit from the actions of the Federal Reserve?

As long as the Federal Reserve continues to print money, investors may be able to profit from exchange-traded funds (ETFs) like the iShares 20+ Year Treasury Bond (NYSEArca/TLT). Essentially, this ETF buys long-term bonds, so as the Federal Reserve continues to buy bonds, their prices will continue to go higher, and investors will profit.

Once the Federal Reserve moves away from its money printing, ETFs like the ProShares UltraShort 20+ Year Treasury (NYSE/TBT), which shorts long-term bonds, will be able to provide investors with profit.

http://www.dailygainsletter.com/income/how-to-profit-from-feds-easy-money-mistake/2124/

Article By RoboForex.com

Analysis for November 20^th, 2013

EUR/USD

H4 chart of the EUR/USD currency pair shows ascending correction. Upper Window is support level. Three Line Break chart and Heiken Ashi candlesticks confirm ascending movement.

H1 chart of the EUR/USD currency pair shows resistance from upper Window and support from lower one. Three Methods pattern, Three Line Break chart, and Heiken Ashi candlesticks confirm that ascending tendency continues.

USD/JPY

H4 chart of the USD/JPY currency pair shows bullish tendency within ascending trend. Upper Window is support level. Three Line Break chart indicates that correction may continue; bullish Harami pattern and Heiken Ashi candlesticks confirm ascending movement.

H1 chart of the USD/JPY currency pair shows correction within ascending trend. Three Line Break chart indicates ascending movement; Heiken Ashi candlesticks confirm correction.

RoboForex Analytical Department

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Article By RoboForex.com

Article By RoboForex.com

Analysis for November 20^th, 2013

AUD/USD

Bulls took control and broke local maximum yesterday. The only thing that is slowing them down is weekly Super Trend. If they break it, price will continue growing up towards the 4/8 level.

At H1 chart, bulls are trying to keep price above the 5/8 level. If they succeed, pair will continue growing up. In this case, target will be at the 8/8 level.

EUR/JPY

Pair continues moving upwards quite fast. On Tuesday, bulls broke maximum and right now price is moving above the 5/8 level. Most likely, after slight correction, market will continue growing up towards the 8/8 level.

Levels at H4 and H1 charts are completely the same; bulls are supported by Super Trends, from which pair rebounded yesterday. In the future, we recommend you to pay attention how price will move at the 7/8 level: if it rebounds from this level, market may reverse.

SILVER

Silver is being corrected. Possibly, price may rebound from H4 Super Trend, which means that it may continue falling down. I’ve closed my sell order and placed a limit one instead.

At H1 chart, we can see that bears’ first attempt to enter “oversold zone” failed. If, in the nearest future, market rebounds from the 1/8 level, bears will have a chance to start new descending movement towards the -2/8 one.

RoboForex Analytical Department

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Article By RoboForex.com

By CentralBankNews.info
    Chile’s central bank cut its policy rate by 25 basis points to 4.50 percent, its second rate cut in as many months, with the bank saying data for the third quarter confirmed its expectation that all components of demand were slowing down.
    The Central Bank of Chile, which has now cut its rate by 50 basis points this year, also said that inflation was “behaving moderately and market expectations foresee that it will gradually normalize toward 3% within the next 24 months.”
    Chile’s inflation rate fell further in October to 1.5 percent from 2.0 percent in September, below the bank’s target range of 2.0-4.0 percent inflation around the 3.0 percent midpoint.
    The central bank repeated that it would be flexible in its monetary policy with the aim of inflation at 3 percent.
    “Any future changes in the monetary policy rate will depend on the implications of domestic and external macroeconomic conditions on the inflationary outlook,” the bank said.
    Chile’s economy is growing moderately, the bank said after data showed that the country’s Gross Domestic Product expanded by 1.3 percent in the third quarter from the second for annual growth of 4.7 percent, up from 4.0 percent.

    The global economy is recovering gradually, the bank said, led by the United States while growth in emerging countries is more moderate.

    www.CentralBankNews.info

By HY Markets Forex Blog

The recent gains that the euro has made against the U.S. dollar indicate the important role that quantitative easing plays in the exchange rate for these two currencies. Individuals who want to make money by trading the currency pair might benefit from being aware of the key role that these bond purchases play in the value of the two.

Euro appreciates versus dollar
The EUR/USD pair rose during the week that ended on Nov. 18, with the common currency increasing to as much as $1.3505 during that period, according to CNBC. This was the highest value for the exchange rate since Nov. 7.

The greenback sank relative to the common currency during the week when Janet Yellen, who has been nominated to serve as the next head of the Federal Reserve, testified before Washington lawmakers, helping to boost hopes that QE will not be tapered for some time.

Yellen, who currently serves as the vice chair of the Fed, is generally viewed as being supportive of these bond purchases because she has frequently voted in favor of such transactions. The central bank has been buying $85 billion worth of debt-based securities every month since late 2012, and as a result of making these transactions, its balance sheet has surpassed $3 trillion. These bond purchases are generally thought of as pushing the value of the greenback lower.

Market experts bearish on dollar
Charles St-Arnaud, who works in New York as a foreign-exchange strategist at Nomura Holdings Inc., told Bloomberg that market participants should shun the dollar because of the high chances that Yellen will become the next Fed chief.

"The market is risk-on today, so there's no need to hold [the] U.S. dollar," St-Arnaud told the news source. "The appointment of Yellen as chairwoman of the Fed has created a lot of expectations that tapering will most likely be delayed, as she's a dovish person."

In addition to St-Arnaud, many experts have been bearish about the dollar, and individuals who want to make money by trading currencies might benefit from knowing about the various forecasts that such individuals have made.

"The USD might come under pressure as the doves get their say," Emma Lawson, senior currency strategist at the National Australia Bank, told CNBC. "The market had been thinking about a December taper – I think that's going to be pushed out through to March after they speak." 

It is also important for traders to know that many market participants became more hopeful that the Fed will wait longer to start tapering assets after the partial shutdown of the U.S. federal government. This event, which lasted for more than two weeks, was thought of by many as presenting significant headwinds to the nation's current economic recovery.

High hopes of continued stimulus
When providing testimony, Yellen stated that until she is convinced that the current economic expansion has obtained significant strength, she will continue to harness asset purchases, according to Bloomberg News.

These statements are similar to the ones that were previously made by Ben Bernanke, who currently serves as Fed chief. Bernanke shocked markets in June when he told members of the media after a meeting of the Federal Open Market Committee that QE could be tapered as early as 2013 and then stopped completely in the following year.

He took a more conservative tone when testifying before Congress later that summer, stating that for bond purchases to be reduced in volume, certain key indicators – including those related to the job market – would need to improve to certain levels.

The economy could soon see some improvement, at least if the statements recently made by Federal Reserve Bank of New York President William Dudley have any accuracy, the media outlet reported.

"While growth in 2013 has been disappointing, I believe a good case can be made that the pace of growth will pick up some in 2014 and then somewhat more in 2015," Dudley stated as part of remarks provided on Nov. 18. in Flushing, New York, according to the news source. "As growth picks up, I expect to see more substantial improvement in labor market conditions."

Such a change in the business climate could have significant implications for bond purchases, and therefore the dollar. Individuals who want to make money by trading currency pairs such as the EUR/USD might benefit from carefully watching the latest economic reports.

The Fed official stated that the dollar could be pushed lower as a result of the lackluster growth that the economy has suffered, MarketWatch reported. Alan Ruskin, global head of G10 foreign-exchange strategy at Deutsche Bank, weighed in on how the most recent data could affect the greenback.

He stated in a recent note to clients that the latest reports are "still not providing much support for a significantly stronger [U.S. dollar] story," according to the news source. 

The post Recent gains of euro versus dollar illustrate importance of Fed’s QE appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

USDCAD remains in uptrend from 1.0182 (Sep 19 low), the price action from 1.0496 could be treated as consolidation of the uptrend. Key support is located at the lower line of the price channel on 4-hour chart, as long as the channel support holds, the uptrend could be expected to resume, and one more rise towards 1.0700 is still possible. On the downside, a clear break below the channel support will indicate that the uptrend from 1.0182 had completed at 1.0525 already, then the following downward movement could bring price to 1.3000 zone.

Provided by ForexCycle.com

By MoneyMorning.com.au

One of the things we like most about technology and innovation is that the path it takes is almost entirely unpredictable.

It’s far less predictable than investing where it’s possible to make pretty good educated guesses or forecasts about the future.

But within that realm of unpredictability is a problem for businesses.

A business has to predict the future and get it right. And unlike an investor who may have just a few thousand dollars at risk, if a business makes the wrong move it could put the entire future of the company at risk…

The fact is even the brightest businessmen and women can make wrong or muddle-headed decisions.

That happens in business all the time. It might be backing a dud product line or approving a completely inappropriate advertising campaign (boy, have we seen plenty of those).

Those things are usually just small fry and repairable. But what if the biggest mistake wasn’t by one business, but an entire industry? A mistake that involved failing to predict its own demise?

It may sound crazy, but that very thing could be on the verge of happening to the global pharmaceutical industry. They just can’t see it coming.

Blind to Their Own Demise

The thought about the end of big pharma struck us as we read an article in the Financial Times yesterday afternoon. The first paragraph set our brain whirring:

‘Global spending on prescription medicines will accelerate next year to exceed $1tn for the first time, fuelled by the launch of more innovative drugs and rising health expenditure in emerging markets led by China.‘

The article points out that the big drug companies have had a tough time in recent years.

After going through a ‘purple patch’ where it seemed as though they created a new blockbuster drug every year (Lipitor, Avastin, Viagra), the last few years have seen leaner times.

And as these blockbuster drugs came off patent, revenues dropped as generic alternatives appeared.

But now, despite the recent disappointing run it seems the drug companies have regained confidence. We wish them luck. That’s because at the current rate of progress, the whole healthcare industry could be about to change.

This is the Future of Medicine

We avidly follow the subject of new trends in medicine in our premium investment advisory, Revolutionary Tech Investor. It was the theme of the latest issue, in which we looked further into regenerative and personalised medicine.

These terms may be new to you. If so, in simple terms regenerative medicine means using specialised treatments to help repair and even rebuild certain body functions or even body parts.

And when we say rebuild, we mean that. The latest advancements in stem cell therapy mean that the medical profession can stimulate the body to regrow degenerated tissue. One of the biggest potential leaps forward is the treatment of osteoarthritis, which affects tens of millions of people worldwide.

In the near future it could be possible for physicians to inject stem cells into an affected area and for the stem cells to ‘instruct’ degenerated cartilage to repair itself. It may sound far-fetched and even impossible, but the technology is real.

Related to regenerative medicine is personalised medicine. The clue to this is in the name. As we wrote in the latest issue of Revolutionary Tech Investor, since the discovery of penicillin and other mass-produced drugs, medical treatment has become mostly generalised.

In other words, the prescribed drugs you get at the pharmacy are the same drugs everyone else gets. There’s limited personalisation of the treatment. The pharmacist slaps a label with your name on it on the side of the box or bottle and that’s it. That’s about as personal as it gets.

Turning Off Disease with ‘Nature’s Off Switch’

But the wheel turns. As we see it, the days of generalised medicine and big blockbuster drugs are almost over. The big drug companies may dream of a $1 trillion market. And they may get it.

But they should enjoy it while they can.

The future of medicine is in bespoke DNA-derived treatments. Scientists will develop treatments and preventative measures at the individual level. Scientists will analyse your DNA, which will reveal any diseases or ailments you could contract.

So rather than being a sitting duck for a deadly disease, it could be possible in the near future to delay or even prevent the disease from occurring.

If scientists can isolate a disease at the genetic level and then ‘turn off’ the gene using what we like to call ‘nature’s off switch’, it would revolutionise the treatment of illnesses. This could mean doctors treating you for a disease before you even get it.

We can’t say for sure, but we’re pretty certain that big pharma won’t welcome that kind of biotechnology. Instead of getting hooked on long-term medication, the future of medicine is in one-off DNA-driven treatments.

It may be too soon to trumpet the end of big pharma right now. But as a long-term investment proposition, big pharma stocks don’t make sense. The world of healthcare is about to take a major turn and big pharma will be left behind.

Cheers,
Kris+

PS. We explore the concept of regenerative and personalised medicine in more detail in Revolutionary Tech Investor. Our recent stock picks include a specialist 3D printing company that plans to do amazing things in the field of regenerative medicine, and a tiny Aussie biotech that has just received approval in the US to use its stem cell treatment on an unconventional type of patient…

Special Report: The ‘Wonder Weld’ That Could Triple Your Money

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By MoneyMorning.com.au

By MoneyMorning.com.au

For nearly four decades, curious investors have made their way to the Big Easy for a taste of New Orleans and several helpings of advice and perspective at the New Orleans Investment Conference.

In preparation for my presentations in New Orleans as well as for the Metals & Minerals Investment Conference in San Francisco and the Mines and Money in London in a few weeks, I’ve been pulling together this kind of research that we can all put to use now.

One contrarian idea these days is investing in resources. This is an unloved and underowned area of the market, but there is a case to be made for owning commodities.

Consider the low expectations that analysts have on earnings growth for cyclical industries. BCA Research looked at times when the Institute for Supply Management (ISM) new orders index were more than 60, and calculated the average earnings growth in the following 12 months. The chart shows the gap between past earnings performance and what analysts are anticipating in the next 12 months.

According to BCA, sectors including energy and materials stand out ‘as having overly bearish expectations compared with their historical performance patterns.‘

Click to enlarge

These analysts are bearish even though the world is experiencing an earth-shaking resurgence in manufacturing. In October, the JP Morgan Global Manufacturing Purchasing Managers’ Index (PMI) grew to an incredible 29-month high, rising to 52.1 in October. A number above 50 indicates expansion in manufacturing, and if manufacturing is expanding, so should the economy.

Click to enlarge

If you look at the PMIs of individual countries, including the data coming out of the U.S., Europe, Japan, China, Brazil, and Australia, more than 90 percent are above 50.

Historically, when an overwhelming majority of countries see this level of manufacturing expansion, world-wide growth remains elevated for an extended period of time. Since January 2005, there were two previous times when PMIs remained high: From 2005 until the Great Recession in 2008, and from January 2010 through the middle of 2012.

Click to enlarge

What’s exciting about this revival in global manufacturing is the relationship between growing strength in PMIs and higher returns from certain commodities, including copper, crude oil, as well as energy and materials stocks.

Based on 23 observations from January 1998 to December 2012, there is a high mathematical probability that physical commodities and commodity stocks rise in the three months after the current PMI number rises above its 3-month moving average.

Click to enlarge

In addition, the Organization for Economic Co-operation and Development (OECD) Composite Leading Indicator has been heading in a positive direction. This leading indicator provides early signals of turning points in business cycles, including economic activity. Historically, metals performance has closely followed this leading indicator, so as developed markets improved, the S&P GSCI Industrial Metals Index increased.

Click to enlarge

Gold is certainly a contrarian buy these days, but the big story that is affecting the supply of gold is how the physical metal continues to migrate east. According to Paolo Lostritto of National Bank, year-to-date net physical imports by China equate to approximately 50 percent of global mine supply.

This is in addition to the reports from GFMS suggesting that China is the world’s largest gold producer with an estimated 400-plus tonnes annually, or roughly 14 percent of global mine supply.

As Portfolio Manager Ralph Aldis likes to say, the gold going into China won’t be coming back to the market. This journey is a one-way trip for gold.

Click to enlarge

However, Chinese demand for gold is only one ingredient in the very significant Love Trade. With the increasing gold import restrictions in India, the country’s leading position as the world’s biggest buyer of gold is in jeopardy.

For a firsthand perspective on what is really taking place with the demand for gold and to get a flavour for what’s going on, I’ll be traveling to India later this month. Stay tuned.

Frank Holmes
Contributing Editor, Money Morning

Publisher’s Note: This is an edited version of an article that originally appeared here.

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By MoneyMorning.com.au