GBPUSD failed to break above 1.5779 resistance, and pulled back from 1.5768 yesterday, suggesting that lengthier sideways movement in a range between 1.5423 and 1.5779 is underway. Deeper decline to 1.5500 area to reach next cycle bottom is expected. Key resistance remains at 1.5779, only break above this level could trigger another rise towards 1.6500.
How many European bankers does it take to change a light bulb? That’s a joke in search of an answer, but EWI’s European analyst Brian Whitmer explained five months ago that the “light bulb moment” was coming — that’s the time when most people would clearly recognize the severity of the European debt crisis. He offered this spot-on analysis back in July 2011, before the larger world came to know recently how bad things really are in the eurozone.
This chart shows how markets in Greece, Ireland and Portugal have behaved over the past five years, including the bailouts. Whitmer says that the turmoil in Greece is due mostly to both social mood and Greek markets having plummeted for more than a year and a half, while the larger EU stock markets have levitated. Once they turn down, he forecasts that what you saw in Greece will be replayed in the eurozone.
To help his subscribers see the light and get the full picture, he compared EU member nations under financial scrutiny to those that are usually viewed as being safe — and showed that they weren’t as safe as most people thought.
Specifically, Whitmer warned that the debt per person in Greece looked eerily similar to the debt per person in highly regarded countries, such as Germany and France — and even to non-eurozone countries, such as the United Kingdom.
In 2010, Britain proposed a five-year, 25% budget reduction that affects nearly every area of the government. While it sounds like a drastic measure, it has played out differently during the past year. According to member of European Parliament Daniel Hannan, statistics show that not only is government spending and borrowing significantly higher than this time last year, but taxes, too, are way up. Whitmer notes that the budget cuts rely heavily on the future and lack near-term bite.
Why has the worst of Europe’s violence taken place on the streets of Athens rather than London? Athenians did not suddenly grow more violent in 2011. What has changed since 2007 is their stock market. Whitmer’s words of advice: “…should your country’s stock market begin to look like Greece’s, watch out. Trouble will be on the way.”
*****
European Financial Forecast Editor Brian Whitmer has covered Europe’s debt crisis since March 2010 — and his forecasts kept subscribers ahead of the downward spiral every step of the way. Read more of his analysis in our free report, “The European Debt Crisis and Your Investments.”
 | Free Report The European Debt Crisis and Your Investments Continue reading more articles like this one by Brian Whitmer in our European Debt Crisis report. This free report offers commentary from February 2010 through November 2011 that will help you to better understand what could be in store in the coming months and years.Download your free report now. |
This article was syndicated by Elliott Wave International and was originally published under the headline The Light Bulb Moment for the Eurozone. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.
Dec. 8 (Bloomberg) — Avocet Mining Plc Chief Executive Officer Brett Richards discusses the outlook for gold prices. Avocet, which operates mines in West Africa, began trading on the London Stock Exchange’s main market today. Richards talks with Owen Thomas on Bloomberg Television’s “Countdown.”
It pays to be patient –
The majority of traders are aware that in order to be profitable they must be patient. However few trulyunderstand the concept of patience. Being a patient trader is one of the most difficult skills to learn, but once mastered can greatly affect a traders overall profitability. Like most other aspects of trading, patience requires discipline.
An impatient trader will often experience inconsistency, frustration and erratic trading. Impatience can be detrimental to all elements of trading, especially a traders trading plan including their entries, stops and targets,
How impatience affects trading –
Below we’ll take a closer look at some of the ways an impatient trader can see their trading negatively affected.
Entry – Impatience often leads to ‘jumping the gun’ and entering a trade too early or late. The following example will better explain the detrimental affect impatience has on entering a trade: A trader’s analysis suggests the market is going to rise, however before that rise they expect a pull back. In anticipation of that pull back, the trader places a buy order at a lower price than the current market price. Unexpectedly the market shoots up. The trader then panics and his impatience forces an error in judgment. He then enters the market at a much higher price than he wanted. Unsurprisingly that ‘shoot up’ was short lived and the market did indeed pull back to his original entry. It then continues to rise and reaches his target price. The trader is left frustrated as he exited the market with less than he should have. By being impatient and not sticking to his trading plan he ultimately did not trade to his full potential.
Stops – Stop losses are another element that can be impaired by impatience. A trader may find themselves in a trade which has been in drawdown for some time. Although they have a stop loss in place which was determined by their analysis (that so far has not been reached), the market has been showing little movement which is leading to the trader becoming increasingly impatient. The trader decides to cut his losses as he has no patience to wait and see how this trade turns out. Unsurprisingly after he’s closed his trade for a loss, the market starts to move in his anticipated direction, finally reaching his target. The trader’s impatience with the trade forced an error in judgment resulting in a loss when he really should have had a win.
Targets – Similar to entries and stops, targets are often negatively affected by impatience. It’s not uncommon for an impatient trader to close a trade early. A trader may find themselves in a trade which is moving in their direction; however they lose patience with the ‘slow’ market and decide to close their trade early. Again unsurprisingly the market continues in their direction and reaches their original target. The traders is left frustrated as despite leaving the market with a win, they did not stick to their original plan and left the market with less than they should have.
As we can see above, impatience can affect many aspects of trading. Impatience can play havoc on a traders emotions leading them to make elementary mistakes and leaving the market frustrated.
Possibly the most costly mistakes impatience can lead to is over trading. It’s not uncommon to see traders recklessly overtrading, often feeling as though they are missing out on the ‘action’ if they’re not involved in a trade. A patient trader has the knowhow and experience to sit and wait for the market to tell them when to enter a trade and not do what most impatient traders do which is ‘go looking for a trade’. Patient traders wait for high probability set ups which are inline with their trading plan before entering the market, as they know overtrading is detrimental to their success.
Impatience can be harmful to a trader’s long term success. Many new and impatient traders have the mind set of ‘get rich quick’. Their lack of patience and dreams of quick money usually result in the same outcome; loss. Successful traders fully understand the importance of patience; they’re not looking for ‘quick money’ and have the discipline to adhere to their trading plans.
Patience can’t be taught overnight, however with discipline and honest expectations a trader can greatly improve their patience and profitability. A tip many impatient traders may find beneficial is to have their trading plans written on paper in black and white next to their work stations. A trading plan on paper next to the traders screen is much more beneficial than being stuck in their head somewhere where it can easily be disregarded or lost. When asked, most successful traders will say that without patience they would not be successful. Its clear to see that when trading it pays to be patient!
MetLife: A Gem in a Rough Sector
by Jason Jenkins, Investment U Research
Thursday, December 8, 2011
The financial services sector appears to be very scary right now. You have a populist movement in Occupy Wall Street that has brought class warfare into the media forefront. We also have mass uncertainty in the European banking industry due to sovereign debt dysfunction.
But this doesn’t mean that everything in that sector needs to be avoided like the plague.
Just like I’ve tried to do in the housing market, I was looking for plays that make sense in a “traditional” market but in our new reality have been beaten down. And after doing a little research, here’s the case I want to make for MetLife (NYSE: MET).
MetLife Revises Numbers
We’ve seen our share of natural disasters and bad economic news across the globe in 2011, for which MetLife had to bare. Going forward, MetLife now expects premiums, fees and revenue to jump from 31 to 33 percent this year. In dollar terms, revenue will go from $46.3 to $46.8 billion in 2011. For 2012, the company sees that revenue rising about five percent to $47.3 to $48.6 billion.
The company, whose shares rose 3.7 percent in premarket trading when this announcement was made last week, also expects to go back to regulators next month with a revised plan to return capital to shareholders, after its last proposal was blocked. I’ll talk about that a little later.
Growth in International Markets
The company is one the largest insurers in the United States but expects to get its future growth from its international operations – especially from the BRICs.
MetLife has gone through an internal reorganization recently under the leadership of new President, CEO and Chairman-Elect Steven Kandarian. After the acquisition of Alico in 2010, MetLife has established three business units to capitalize on geographic differences: America, EMEA (Europe, Middle East and Africa), and Asia.
The insurer recently reorganized its business units to acknowledge this shift, and it has started spending more aggressively on international branding.
A Revised Plan for the Fed
Because MetLife is a bank holding company, the Federal Reserve has the power to block the company’s capital plans. The Fed did this back in late October.
Kandarian has stated a new plan will be submitted to the Fed this January in hopes of a response by the end of March. They hope in the near future to sell its banking business and shed its holding company status.
What’s to Like About MetLife?
First of all, MetLife expects to have $6 billion to $7 billion in capital in 2012 for dividends and other actions. Analysts have said they expect MetLife to raise its dividend substantially and buy back at least $1 billion in stock.
We like dividends in this crazy market because you want to gain the best possible return for the lowest amount of risk. The buyback indicates that they feel the stock is undervalued. And if you look at MetLife’s tangible book value, it’s pretty undervalued compared to where it’s currently trading.
We can’t forget the 2010 acquisition of American Life Insurance Company (Alico) from AIG for $16.4 billion. This gave MetLife a market cap of $34 billion where Alico makes up almost half it’s the value. Alico operates in more than 50 countries and should contribute significantly to MetLife’s bottom line going forward.
Good Investing,
Jason Jenkins
Article by Investment U
Dec. 8 (Bloomberg) — Richard Meddings, finance director at Standard Chartered Plc, talks about contingency planning for a potential euro-zone breakup and the bank’s outlook in Asia. He speaks from London with Maryam Nemazee on Bloomberg Television’s “The Pulse.” (Source: Bloomberg)
Americans looking south of the Rio Grande tend to forget, if they ever knew, that Mexico is, according to the U.S. Energy Information Administration, now America’s second largest source of imports. Of the United States’ total crude oil imports averaging 9,033 thousand barrels per day (tbpd), Mexico is the second largest source of imports, at 1,319 tbpd, exceeded only by Canada with 2,666 tbpd.
But now, Mexico’s future seems even brighter. According to U.S. Energy Information Administration Executive Director Maria van der Hoeven, Mexico’s significant untapped natural gas reserves, if properly developed, could eventually provide Mexico with energy independence.
On 29 November in Washington, presenting the most recent EIA report on Mexico van der Hoeven stated, “Mexico is sitting on very large natural gas fields that could allow it to end gas imports and could give it energy independence.
Van der Hoeven’s assertions are backed by Mexican Energy Secretary Jordy Herrera, who said, “With the shale gas potential and reserves, and the gas associated with crude, we should become a country with sufficient energy resources, both fossil and renewable, to achieve independence, and we could eventually export, all we need to do is make decisions in favor of the Mexican people. Developing gas production is urgent, the country cannot be subjected to the political times.” Herrera is salivating over official estimates, that developing Mexico’s shale natural gas industry could attract $7-10 billion in annual investment. According to Herrera, government officials have been working with state-owned oil giant Petroleos Mexicanos, or Pemex, to determine the size of the country’s natural gas fields and have contacted Congress to discuss the development of the country’s indigenous natural gas reserves.
And therein lies the rub.
To unleash this natural gas, according to the EIA, Mexico will have to utilize the process of hydraulic fracturing, or ‘fracking,” a controversial process of injecting water and chemicals deep underground to break up shale natural gas formations that has encountered rising resistance in the U.S because of its potential to pollute underground aquifers.
So, does Mexico need to go down the environmentally contentious fracking road?
Unclear – but a little ray of sunshine for alternative fuels was provided on 1 December, when the Inter-American Development Bank (IDB) approved a $70 million loan to Mexico to boost funding for renewable energies in electricity generation to reduce greenhouse gas emissions.
The loan, whose funds were provided from the IDB Clean Technology Fund, will be matched by financing from Mexico’s loan Nacional Financiera (NAFIN) development bank, along with an additional $70 million provided by an existing IDB conditional line of credit approved two years ago, for a total of at least $210 million.
The Clean Technology Fund IDB loan will be used for the construction of at least 10 renewable energy facilities, in particular wind power plants and small hydroelectric plants, increasing Mexico’s installed energy capacity from renewable sources, generating an estimated savings of greenhouse gas emissions of up to two million tons of CO2 annually.
Bereft of its platitudes and PR buzz, the discussion comes down to simple facts.
Does Mexico want the quick peso by developing its shale natural gas reserves as soon as possible, or is it willing to take a longer term approach to renewable energy? Given the immense fiscal reserves of its giant northern neighbor and its mastery of fracking technology, the answer might seem to be fairly clear cut, and one cannot discount the inevitable influence of corruption in advancing agendas.
According to the 2000 census, only 55 percent of Mexicans received drinking water of adequate quality. Given fracking potential to pollute aquifers, if might be time for Mexico city to forgo the quick peso and tell its remaining 45 percent to citizens to be a tad more patient while the government acquires more renewable energy grants.
Source: http://oilprice.com/Energy/
By. John C.K. Daly of Oilprice.com
Dec. 8 (Bloomberg) — Paddy Power, a spokesman at bookmaker Paddy Power Plc, discusses the odds of a euro-zone breakup. He talks from Dublin with Maryam Nemazee on Bloomberg Television’s “The Pulse.” (Source: Bloomberg)
China Attempts to Jump-Start Economic Growth
by Jason Jenkins, Investment U Research
Thursday, December 8, 2011
China is cutting the amount of money its banking institutions needs to hold on its books against loans in attempt to lend these extra funds and stimulate its economy.
The Chinese government has come to terms with an economy that has seemed to put on the brakes faster than economists had forecasted in October. This week, to the world’s surprise, the Chinese central bank reversed its yearlong move toward tighter monetary policy and took the needed action to encourage banks to resume lending.
The Central Bank cut the reserve requirement ratio for financial institutions by half a percentage point. It’s the first such cut since 2008 and a total change in direction after rates were raised five times this year. The cut will take effect December 5.
The earlier moves were designed to curb inflation. The inflationary signs are still there, but weak economic growth has replaced inflation as the government’s main concern.
Slowing Economy
The great Chinese economy is slowing down. Chinese real estate developers, small businesses and other borrowers have been complaining over the past month of dried up credit and a lack of demand.
The monetary policy moves earlier this year had been aimed at curbing inflation, which persists but appears to have been replaced by weakening economic growth as the top worry for policy makers.
In the real estate market, prices have declined as much as 28 percent for new apartments in some Chinese cities. Real estate brokers have laid off thousands of agents as transactions have shriveled while export orders have slumped.
And to top it all off, Chinese manufacturing numbers have hit a 32-month low, according to a preliminary report for November. The world was aware that the frenetic growth was slowing down.
PBC’s Reaction
The People’s Bank of China is considerably more secretive than the Federal Reserve or the central banks in Europe because they have always mistrusted outside government attempts to allow for faster appreciation of the Chinese currency.
Their Central Bank has been taking most of the reserves deposited with them and using it to buy dollars in international markets so as to slow the appreciation of the Chinese currency. Easing domestic monetary policy makes it difficult for China to continue limiting the appreciation of its currency against the dollar. We’ve all heard and seen the commotion this practice has caused in the news between the United States and Chinese governments regarding exports.
Recently, with a lack of international investors speculating in China’s currency, the central bank no longer needs to maintain its reserve requirements to continue currency intervention.
“Easing Constraints on Bank Lending”
Intended to increase liquidity, lowering the reserve requirement appeared to cause a boost Wednesday for U.S. pre-markets.
“The move will ease constraints on bank lending,” wrote Mark Williams, Chief Asia Economist for Capital Economics in London, in a report for investors. “The level of excess reserves had dropped very low.”
Williams said that lowering the reserve requirement by half a percentage point was equivalent to injecting 400 billion yuan, or $63 billion, into the banking industry.
The Chinese government is telling the world that we will do everything in our power to keep our growth going. Look at it as a monetary stimulus package to keep China doing what it has been over the past years.
Good Investing,
Jason Jenkins
Article by Investment U
By MoneyMorning.com.au
Today your editor and the rest of the Money Morning and Daily Reckoning crew are off to the race track for our Christmas bash.
We’ll have one eye on the races and one eye on the market… we’re sure at least one of our race track buddies owns a fancy iPhone or something, so we can check stock prices.
But before we scoot off, has gold just become money again in Australia?
Many will argue that gold already is money. And so it can’t become money if it’s already money.
The reason we ask is due to an article in yesterday’s Financial Standard:
“The Ashton Group has launched a Gold Share Class for the Ashton Select Fund and Ashton Performance Fund.
“Ashton’s Gold Share Class enables investors to elect gold as a ‘currency’ in which to denominate their investment.”
A gimmick? Possibly.
The beginning of gold winning acceptance as a genuine consumer currency? Not yet…
Or is it…?
We’re not saying that within the year consumers will pay for goods by the weight of gold or silver. But one day that will happen…
After all, for thousands of years – until the early 20th century – consumers had used gold and silver to buy goods.
But something is happening.
Although buying silver hasn’t yet reached the mainstream, it’s certainly hanging out around the fringe. Take this chart printed in a recent issue of Diggers & Drillers, by my old pal, Dr. Alex Cowie:
In the last two years, investor demand for silver has soared. From an average of 5% of silver demand for the previous eight years, investors now account for nearly 30% of demand.
And the total amount of silver held by private investors has taken off too. From fewer than a million ounces in 2000, to 2.2 million ounces in 2010:
This tells you slowly but surely, investors are losing faith in paper money. As the Silver Institute notes in a recent report:
“In the United States, silver bars and coins have grown in popularity for many of the reasons outlined above, including for their safe haven appeal, as well as a means to gain proxy exposure to gold. In addition, small investors have specifically chosen small bars and coins because of their mistrust of the financial and banking system, choosing instead to take physical delivery.”
But while private investors are buying silver bars and coins, as we’ve written before, the change from paper to hard assets won’t happen overnight… it’s taken 11 years for private ownership in silver to increase 144%… and that’s from a fairly low starting point.
Yet that tells you something else… there’s still much further to go.
Put this way, 2.2 billion ounces in private hands is less than one-third of an ounce for each person on the planet (or about $10 per person).
That’s compared to over $707 trillion-worth of derivatives on issue by banks… or about $101,081 per person on the planet… and the mainstream tries to tell us the silver and gold prices are in a bubble!
The bottom line is, the global banking system is stretched to the limit. They’re doing all they can to prevent its ultimate collapse. Even to the extent of lending gold reserves in order to get hold of cash.
As the Financial Times reports:
“‘People are lending out gold to raise dollars,’ said one senior metals banker.
“Edel Tully, a precious metals analyst at UBS, said banks were ‘looking to offload metal either for balance sheet reasons or funding – or both’.
“Large bullion-dealing banks take gold on deposit from a range of customers such as investors, central banks and other commercial banks.”
In short, the public is buying gold and silver as a safe asset while banks are selling it because they prefer paper (or electronic) dollars.
And they say the retail investor is slow to catch on. Not in this case.
The bank selling and lending is precisely why you shouldn’t store your gold within the banking system (Diggers & Drillers editor, Dr. Alex Cowie warned his subscribers about this in a recent issue of his monthly investment newsletter).
We wonder how many investors think they’ve got gold safely stored in the bank without realising the bank has loaned it out to someone else.
The long and the short of it is this: the idea of pricing a fund in terms of gold rather than cash is a nice idea… if a little gimmicky.
But when you add the increasing number of private investors in the silver and gold market… the fact the banks are lending out other people’s gold because they’re short of cash… and the huge punts banks are taking on the derivatives market… well, it tells you the financial meltdown of 2008 is far from solved.
To us that makes what we’re about to say a no-brainer…
Gold and silver prices are heading higher. There’s no doubt in our mind about that. The key is how to best profit from it.
One way is to buy gold. Another is to buy silver. And the third way is to buy gold and silver stocks that will give you a leveraged return from rising gold and silver prices.
Cheers.
Kris
PS. My old pal, Diggers & Drillers editor Dr. Alex Cowie has just released a special report and presentation. He outlines his best ideas for helping investors make the most from rising gold and silver prices. If you’d like to find out which silver stock could make you $4,935 for every $1,500 invested, click here…
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From the Archives…
How to Profit from the Inevitable Return to Sound Money
2011-12-02 – Kris Sayce
Two Reasons the Market Should Have Fallen…
2011-12-01 – Shae Smith
Ditch Your Investor Pride to Avoid an Investing Fall
2011-11-30 – Kris Sayce
How to Play a Volatile Market for Profit
2011-11-29 – Kris Sayce
No Thanks to Central Banks
2011-11-28 – Kris Sayce
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