InvestMacro Forex News

Article by Investment U

Lately the market has been wilting like last week’s roses, drooping in one session after another. Is the bull finally headed out to pasture?

The market had a strong first quarter this year. The S&P 500 rallied 12% on the heels of an 11% gain in the fourth quarter of 2010. In fact, it has more than doubled from its bottom on March 9, 2009.

But lately the market has been wilting like last week’s roses, drooping in one session after another. Is the bull finally headed out to pasture?

Don’t count on it. While no one can forecast the short-term zigs and zags in the market, there are three good reasons to believe there’s still life in this bull:

1. History shows that pullbacks don’t generally follow a strong first quarter. The S&P 500 has soared 10% or more in the first quarter eight times since 1945. According to Standard & Poor’s, the market rose three-quarters of the time in the following quarter. And the one other time the market rose 10% or more in both the fourth and first quarters, stocks gained 5% the next quarter.
2. First quarter profits are likely to be another record. Don’t forget that corporate profits have hit all-time records in each of the last eight quarters. And – while the reporting season is just getting under way – this time isn’t likely to be any different. Yes, the gains will be more modest this time thanks in part to higher oil prices and tougher year-ago comparisons, but we’ll almost certainly see more all-time record profits for the first quarter and a few big surprises could send stocks higher again.
3. Investors are still afraid. That’s actually a good thing. As John Templeton declared, “Bull markets are born on pessimism, grow on skepticism, peak on optimism and die on euphoria.” You talk to anyone lately who’s euphoric about the economy and the stock market? Me neither. And people aren’t investing their money that way, either. According to The Investment Company Institute, investors yanked $1.2 billion out of stock funds in February after taking out $423 million in January. History shows a near perfect correlation between equity fund redemptions and stock market performance. It’s when investors starting throwing cash at the market that you need to worry. And we’re a long way from that.

When you look at the fundamentals, it’s surprising just how negative the average investor is. After all, we’re enjoying low interest rates, low inflation, expanding markets overseas (especially in the developing world) and all-time record corporate profits.

What’s keeping most investors at bay, of course, is volatility. And not just lately. Investors have been clobbered by two massive bear markets in 12 years. The 2000 to 2003 bear market took stocks down 49%. It was the worst market since the Great Depression – until the 2007-2009 bear market showed up. That ripped 57% from the leading market index.

Last year, the S&P 500 fell 3% or more six times, and on one gut-wrenching day in August, 6.7%. That made microscopic money market yields look attractive.

Of course, volatility is the price of admission in the stock market. If equity accounts rose as smoothly as bank accounts, everyone would be fully invested. But they’re not. Not even close.

Paradoxically, that’s another reason stocks actually look pretty good here.

Good Investing,

Alexander Green

Article by Investment U

Article by Investment U

If you’re the type of investor who likes to “set it and forget it,” DRIPs can be used as a great way to steadily grow your wealth.

You don’t always need a broker to get in on the world’s best and biggest companies.

In fact, you don’t always need to pay what the market does for a company’s shares, either.

Thanks to dividend-reinvestment plans (DRIPs), not only can you invest directly in companies like Exxon Mobil (NYSE: XOM), 3M (NYSE: MMM) and PepsiCo. (NYSE: PEP) without upfront fees, sometimes you can buy a company’s shares at a 3%, 5%, even 10% discount.

The Power of DRIPs

As the name suggests, DRIPs are only offered by companies that pay dividends. There are about 1,100 firms that offer these plans today.

If you’re the type of investor who likes to “set it and forget it,” DRIPs can be used as a great way to steadily grow your wealth.

For example, let’s say you’d like to get in on long-time dividend distributor Exxon Mobil’s DRIP.

To qualify, all you need to get started is to contact Exxon’s transfer agent Computershare and have a minimum investment ready of $250. This initial payment can be satisfied by buying $250 worth of Exxon’s shares all at once or by having $50 automatically taken out of your checking or saving account for five consecutive months.

After that, additional investment is up to you, as long as each contribution is at least $50 (with a maximum limit of $250,000 per year).

And as far as charges and fees go, Exxon does have a sale fee of $15 plus $0.12 a share.

But by investing in Exxon’s DRIP, you could save hundreds of dollars per year on the amount of fees you’d normally incur with your brokerage firm. Exxon charges nothing to set up a DRIP account and you can automatically reinvest your dividends and/or make additional purchases at no extra charge, as well. Plus, existing Exxon shareholders are even waived the initial $250 investment to start.

There are some other pretty cool advantages, too…

• Investing in Small Amounts: DRIPs allow you to purchase stock on a dollar basis as opposed to buying a certain number of shares. This enables investors to buy fractions of shares of a company. Some plans will even let you invest as little as $10 a month. And this could be in companies that otherwise cost $50, $80, or $100 per share.

• “Worry-Free” Approach: By only investing a certain amount each month, you’ll buy less shares of a company when shares are expensive and you’ll buy more shares when prices are cheap. This investing strategy, also known as dollar cost averaging, can take the worry out of trying to time a company’s performance.

• Discounts: There are about 100 companies that allow investors to purchase stock at discounts of 3% to 5%, sometimes even as high as 10%.

Of course, there are some downsides too.

Risks and the Final Word

But there are only a couple of things you’ll need to consider…

• Limited Companies: Out of all the publicly traded companies out there, only 1,100 offer DRIPs. This might be a limiting factor to be able to invest in the companies you really want to.

• Taxes: When you receive dividends from a DRIP, those dividends are taxable as income by the Internal Revenue Service. Furthermore, you’re also responsible for keeping track of your records. This record keeping can become a lot to track over the long term.

At the end of the day, the advantages of DRIPs over the long term outweigh the disadvantages.

For long-term dividend investors, I think they’re really a no-brainer.

You’re reinvesting dividends and “dripping” money into your holdings every month, without paying what you normally would in brokerage fees.

And growing and saving your money for the long term is what we at Investment U are all about.

Good Investing,

Mike Kapsch

Article by Investment U

By TraderVox.com

Tradervox (Dublin) – Euro may see pressure amidst rising Eurozone worries:

EURO/USD:

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

London Gold Market Report
from Ben Traynor
BullionVault
Monday 16 April 2012, 08:00 EDT

WHOLESALE gold bullion prices traded just below $1650 an ounce for most of Monday morning’s London session – well within the past month’s range – as European stock markets edged higher while commodities fell.

The Euro meantime sank to a two-month low against the Dollar, as investors turned their attention to rising Spanish government borrowing costs.

On China’s Shanghai Gold Exchange, contracts equivalent to around 7.3 tonnes of gold bullion changed hands in Monday’s trading.

“Current levels are by no means excessively weak,” says a note from investment bank UBS, “but the fact that average daily turnover sits at just about half of the 18 tonne all-time high seen last year is in itself confirmation that there is less gold fever in China this year versus last.”

Authorities in Beijing meantime have widened the Yuan’s trading band against the Dollar from a 0.5% maximum daily move to 1%.

Silver bullion fells to $31.22 per ounce – close to four month lows – before recovering some ground in Monday morning’s London trading.

“The key downside risks for silver,” says a note from Morgan Stanley, “are that the weaker economic outlook in 2012 and 2013 will cut fabrication demand, but not enough to take prices back to levels that would deter anticipated strong mine production growth and a rising surplus.”

Sovereign debt stresses in the Eurozone are expected to dominate this week’s International Monetary Fund meeting, where European officials are expected to ask the IMF to expand its lending capacity to combat a fresh potential crisis, newswire Bloomberg reports.

At February’s G20 meeting, European leaders were told Europe needed to do more before non-European nations would consider a bigger IMF contribution. There has since been agreement to increase the size of the Eurozone’s ‘firewall’ to €800 billion, although only €500 billion will be available for fresh rescue programs.

“I think Europe has done its part,” European Central Bank board member Joerg Asmussen told the Wall Street Journal over the weekend.

“Now you would expect other IMF shareholders to come forward and make their contributions to increasing IMF resources.”

Benchmark yields on 10-Year Spanish government bonds rose above 6% Monday morning – a level breached last week for the first time since December.

“After three months that were calmer than expected, the Euro crisis is back,” says Holger Schmieding, London-based chief economist at Berenberg Bank.

“The speed of the recent surge in yields has elements of a renewed market panic.”

Spain is due to auction 2-Year and 10-Year bonds this Thursday.

The ECB “should step up purchases of [government] bonds” said Jaime Garcia-Legaz, a deputy minister in Spain’s Economics Ministry, speaking last week.

The ECB began buying distressed government debt on the secondary market in 2010 under its Securities Markets Programme. It reactivated the SMP last August when Spanish and Italian yields spiked.

Spanish 10-Year bond yields hit 6.7% last November – while Italian 10-Year yields breached 7%.
Here in the UK, economic growth will be only 0.4% this year – half the official projected rate used by the government – according to a report published Monday by the Ernst & Young ITEM Club, a forecasting arm of the accountancy firm.

The report cites “corporate cash piles” worth an estimated 50% of GDP as one reason the economy is expected to “stall” in 2012.

“Business investment has picked up nicely in the US but UK companies remain extremely risk averse,” says Peter Spencer, chief economic advisor to the ITEM Club.

“[This] is sapping strength from the economy…until these companies stop stashing the cash and start increasing levels of investment and dividends, the economy will remain on the critical list.”

Over in New York, the so-called speculative net long position of gold futures and options traders on the Comex – measured as the difference between bullish and bearish contracts – fell for the second week running in the week ended last Tuesday.

The spec net long dropped 3.9%, Commodity Futures Trading Commission data published late Friday show.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

By TraderVox.com

Tradervox (Dublin) – The Japanese currency has continued with its advance against major currencies after the Bank of Japan kept on hold the prospects of another easing. This is the second week the Yen has started high against the dollar and the euro. Further, debt crisis in Europe have further weakened the euro with concerns of spread filling the market. The euro has also decreased as most wagers placed their bets on the decline of the euro. Non-Farm Payrolls and increased Jobless claims led to the decrease of the dollar last week; positive reports from the US are expected to put a hold on the yen advance.

According to Eric Viloria, a Senior Currency Strategist at Gain Capital Group LLC in New York, the neutral stand the Bank of Japan has taken has given support for the yen as speculation of easing has ceased. He indicated that the main support for the low USD/JPY is the low US yield with 10-year bonds surging below 2 percent. The yen has increased by 4.5 percent over the last month making the best performer among the top 16 currencies. The dollar increased by 0.8 while the euro dropped by 0.6 in the same period.

The Bank of Japan decided to keep the interest rate unchanged as well as its asset-purchases program. This led to an upsurge of yen demand leading to its increase before the BOJ Governor intervened saying the policy makers were willing to make powerful easing to counter deflation of the currency. There is still expectation that the BOJ will do something to ease policy but the market is testing how far BOJ is willing to go with its utterances of asset purchases.

The yen advanced by 1 percent against the euro, to trade at 105.83 yen per euro. The EUR/JPY cross had gone as low as 105.45 on April 11 last week, which is the lowest it has been since February. The yen gained against the dollar by 0.9 percent to exchange at 80.93 yen per dollar, it was at 80.57 of April 11, which is the strongest it has been in six weeks.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

Once again Spains debt problems draws negative attention and puts a damper on the financial markets with spanish 10 year bond yields crossing 6 pct.

Will the ECB help Spain and buy goverment bonds? One of this weeks many questions.

ECB-chief Mario Draghi speaks Thuesday.

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Investor concerns regarding Spanish debt led to an increase in risk aversion on Friday, and caused the euro to tumble vs. its main currency rivals. Furthermore, news that the Chinese economy grew at a slower than expected rate last quarter resulted in safe-haven assets, including the US dollar and Japanese yen, turning bullish. Turning to this week, traders can expect market volatility as significant news from both the euro-zone and US is scheduled to be released. Today, US retails sales data may help the dollar extend its current upward momentum, should it come in at or above expectations.

Economic News

USD – Risk Aversion Leads to Dollar Gains

The US dollar turned bullish vs. most of its main currency rivals on Friday following poor euro-zone news which led to an increase in risk aversion. The EUR/USD fell well over 100 pips for the day and closed out the week at 1.3078. The GBP/USD also dropped around 120 pips to finish Friday’s session at 1.5845. Against the JPY, the dollar had a more mixed session. The USD/JPY fluctuated between 80.80 and 81.15 for much of the day. Eventually, the pair closed out the week at 80.88.

Today, investors will likely be focusing on a batch of US news, including the Core Retail Sales and Retail Sales figures. Both indicators are forecasted to show a slight drop over last month’s. That being said, should they come in at or above their expected levels, the dollar may be able to extend its current bullish momentum. Additionally, the TIC Long Term Purchases, scheduled to be released at 13:00 GMT, is forecasted to come in significantly below March’s figure. If true, the result may negatively impact the dollar.

Later in the week, traders will want to pay attention to the US Building Permits, Philly Fed Manufacturing Index and Unemployment Claims figures. All three are considered important signs of overall economic health, and are likely to generate significant volatility when they are released.

EUR – Euro May Extend Bearish Trend This Week

The euro-zone debt crisis once again dominated the news cycle on Friday, resulting in the common-currency tumbling across the board to close out the week. Worse than expected Spanish bond swaps were the main reason behind the euro’s bearish session. Against the Japanese yen, the euro fell over 120 pips before finishing out the day at 105.79. Similar losses were taken against the US dollar. The EUR/USD closed out Friday’s session at 1.3078, virtually erasing the gains it had made earlier in the week.

This week, the Spanish debt situation is likely to continue influencing the euro’s movement in the marketplace, with any further negative announcements likely to cause the currency to fall further. Additionally, traders will also want to note Tuesday’s German ZEW Economic Sentiment figure. As the biggest euro-zone economy, German indicators tend to have a significant impact on the euro. Analysts are forecasting the figure to come in at 20.2, slightly below last month’s result of 22.3. Should the news come in above expectations, the euro may be able to offset some of its recent losses.

AUD – Chinese Data Weighs Down on AUD

A worse than expected quarterly GDP figure out of China caused the Australian dollar to slide during Friday’s trading session. Chinese fundamental news tends to have a significant impact on the AUD, as Australian exporters rely heavily on demand from China. The AUD/JPY fell close to 100 pips on Friday, before closing out the week at 83.88. Against the US dollar, the aussie fell 78 pips for the day to close at 1.0371.

Turning to this week, aussie traders will want to pay attention to news out of the euro-zone, as it will likely determine the level of risk taking in the marketplace. The AUD is considered a growth-linked currency, and tends to increase in value when positive international news is released. In addition, the Reserve Bank of Australia’s Monetary Policy Meeting Minutes, scheduled for Tuesday at 1:30 GMT, are likely to generate market volatility. Positive news may help the aussie recover some of its recent losses.

Crude Oil – Crude Oil Finishes Week on Bearish Note

Crude oil fell on Friday, following the release of a worse than expected Chinese GDP figure. The figure showed that growth in the Chinese economy fell to its lowest level since 2009, and resulted in fears that global demand for oil would drop as a result. For the day, crude oil was down just over $1 a barrel to close out the week at $102.81.

This week, euro-zone news is likely to determine oil movement in the marketplace. Recent concerns over Spanish debt have weighed down on growth related commodities, like crude oil. Should these concerns persist, oil could extend its recent bearish trend. Furthermore, talks between Iran and the West this past weekend have helped ease concerns that a military conflict will occur in the near future. As a result, supply side fears have eased which could result in the price of crude oil dropping further.

Technical News

EUR/USD

The daily chart’s Williams Percent Range has entered the oversold zone, indicating that an upward correction may occur in the near future. That being said, most other technical indicators show this pair range trading. Taking a wait and see approach may be the wise choice until a clearer picture presents itself.

GBP/USD

Technical indicators on the weekly chart show this pair range-trading, meaning that no defined long term trend can be determined at this time. The Williams Percent Range on the daily chart points to possible bullish movement in the near future. Traders may want to go long in their positions for time being, but beware of any sudden downward corrections.

USD/JPY

A bearish cross appears to be forming on the weekly chart’s MACD/OsMA, meaning that downward movement could occur in the coming days. Opening short positions may be a wise long term strategy, but traders will want to watch out for any minor upward corrections.

USD/CHF

A narrowing of the Bollinger Bands on the weekly chart indicates that this pair could see a price shift in the coming days. Traders will also want to note that a bearish cross appears to be forming on the same chart’s MACD/OsMA. Should the cross form, it may be a sign of an impending downward correction.

The Wild Card

EUR/JPY

The daily chart’s Williams Percent Range has entered the oversold zone in a sign of an impending upward correction. Additionally, the Relative Strength Index (RSI) on the same chart is right on the border of oversold territory. Forex traders will want to keep an eye on the RSI. If it drops below 30, it will be another sign of future bullish movement.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By TraderVox.com

Tradervox (Dublin) – The Standard and Poor’s have disagreed with Fitch and Moody’s on the UK economic outlook. The S&P have confirmed UK AAA economic outlook despite the other two warning that the country might be at risk of losing this status. According to a statement from S&P the coalition led by the UK Prime Minister David Cameron have succeeded in ensuring that determined focus is put on curbing the current budget deficit. The statement gave accolade to the political institution in the country for being able to act quickly to economic challenges.

The decision by the S&P has been prompted by the current expectation that the UK government will undertake the bulk of its fiscal consolidation operation. There is also expectation that economic growth will remain in line with the current projections. This decision is in contrast to that of Moody’s and Fitch. The Chancellor of the Exchequer has used negative reports from Moody’s and Fitch to insist that the government should continue with its efforts in deficit cutting. After the report was released, Osborne said in a statement that the S&P ratings are an indication that UK has continued to weather the international debt crisis in Europe.

The sterling pound has increased on these comments rising to 18-month high against the euro. The pound was rose against 11 of the 16 major currencies as before a UK Homes sales report. The sterling pound advanced by 0.4 percent against the euro to trade at 82.18 pence per euro; it had earlier rose to 82.10 pence, which is the strongest it has been since September 9, 2010. It has been one of the best performers in the past month advancing by 0.7 percent.

However, the S&P indicated that the austerity plan adopted by the government will drag on economic growth in spite of the country’s ability to absorb economic shocks improving. In their decision, Moody’s and Fitch had indicated the inability to absorb economic shock as the reason they were giving warnings to UK.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

By Central Bank News
Here's today's Central Bank News link list, click through if you missed the previous central bank news link list.  Remember, if you want to submit links for inclusion in the daily link list, just email them through to us or post them in the comments section below.