Month: March 2012

For the first time since 1946, the Harvard men’s basketball team will play in the NCAA Division I Men’s Basketball Championship. Harvard fought to win 26 games this season and clinched the conference’s automatic bid on Tuesday night after Princeton won over Penn.On this campus filled with future leaders of the world, we haven’t seen too many stars in sports, other than, of course, Jeremy Lin. Boston College men’s basketball coach Steve Donahue told the Harvard Crimson that he thinks the biggest hurdle is financial. Ivy League colleges lack in athletic scholarships, and it is way more difficult to find qualified athletes who can afford the Ivy League education at the same time than students who are academically qualified. Even with Harvard’s financial aid policy, many potential recruits have been unable to resist the temptation of a full scholarship at state universities.Congratulations Harvard, genuinely happy for you. I’m Julia Sun for the Financial News Network.

Zumiez (ZUMZ) announced that fourth-quarter profit increased by 22 percent to 60 cents per share, beating analyst estimates by one cent. Sales increased by 18 percent to $183.9 million, head of estimates of $183 million.

By TraderVox.com

The unemployment data from US came better than expected. The labor department announced that 227k jobs were added in the month of February as opposed to the expected jobs of 210k. In response to this, Euro fell massively against the US dollar soon after the non farm payroll. It has printed a low of day's low at 1.3105. It is battling against the 1.3100 levels.

The pair is down about 1.21% for the day. The support may be seen at 1.3080 and below at 1.3000 levels. The resistance may be seen at 1.3160 and above 1.3220.

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An obsession with safety will actually cause you to lose purchasing power.

Back in May of 2009, Bill Gross – Founder and Co-Chief Investment Officer of Pimco – forecast a “new normal” in the investment landscape characterized by slower growth in the developed economies, higher unemployment and orderly deleveraging. And many in the field took heed of these words.

Gross wrote in his investment outlook this past January that the new normal was evolving into a world of credit and zero-bound interest-rate risk.

Here’s what did happen:

• Most developed economies have not deleveraged over the last four years.
• Credit is still resilient because of Ben Bernanke’s belief in use of quantitative easing.

Gross went on to say that the Fed’s monetary policy may lead to the unraveling of financial markets if policy makers are unable to foster growth and inflation accelerates.

Until the future outlook becomes less murky, Pimco is advising investors to consider ways to hedge their bets, including U.S. Treasuries, long-term inflation-indexed U.S. debt, high-quality corporate debt, senior bank debt and municipal securities.

But Now There’s a “New World”

Now enter Larry Fink… No big deal, he’s just the Chief Executive Officer of the world’s largest asset management firm, worth about $3.5 trillion.

And he recently said savers need to become more aggressive investors as returns on bank accounts and Treasuries shrink and people grow older.

The traditional mix of putting 60% of assets in stocks and 40% in bonds is inadequate in a “new world” because of an aging population, a reduction in borrowing and risk-taking by individuals and governments, and the greater role of emerging economies.

“I’ve personally said many times I would be 100% in equities,” Fink, 59, said in a speech today to the Council on Foreign Relations in New York. “Most investors need a more-diversified portfolio, but virtually every investor has to find ways to achieve a better return than they’ll get in cash or government bonds for the foreseeable future.”

This is an attempt by BlackRock Inc. to assert their view of the pulse of current market and how investors should respond.

Embracing a Bold New World

More investors are coming off the sidelines and investing in the stock market, Abby Joseph Cohen told CNBC this Wednesday. And these were her reasons why:

• There have been better U.S. economic numbers, and it’s been an upward trend.
• There is a growing sense that there’s cash out there finally ready to hit the markets.
• There is the belief that many institutional investors are either coming back in or at least preparing themselves to come back into the U.S. equity market.

She said stocks are undervalued. Using one particular metric, she said stocks on the Standard & Poor’s 500 appear to have priced in a 7% decline in corporate profits for each of the next five years.

“That’s possible but it’s not likely,” she said, “but it gives you a sense of how nervous investors have been, and the sort of opportunities in equities if, in fact, the recession is over and profit growth continues.”

Losing Purchasing Power

Who’s right and who’s wrong? I don’t think there’s an entirely right answer. I think it all comes down to risk tolerance – what you’re comfortable with. But the equity market, at the moment, is the only way you’re going to make money.

I will tell you this: An obsession with safety will actually cause you to lose purchasing power.

Interest rates on savings accounts are below 0.3% and one year CDs are well below 1% on average. Rates have been pushed so low that even the 10-year Treasuries only yield 2%. In other words, if you buy a 10-year Treasury bond and hold it to maturity, you will only earn 2% per year.

Inflation was at 2.9% for this past February… Something to keep in mind.

Good Investing,

Jason Jenkins

Article by Investment U

Robert Arnott claims that the U.S. aging crisis is a threat to future stock market prices. But do the numbers add up?

There’s a new scaremonger in town. And his name is Robert D. Arnott, a portfolio manager, asset-manager executive and Chairman of Research Affiliates in Newport Beach, California.

Mr. Arnott has a simple thesis. Over the next 10 years, the ratio of retirees to active workers will balloon. Retirees, of course, must eventually sell their stocks to support themselves. But there will be fewer young investors around to buy them. Ergo, returns on stocks over the next 10 to 20 years will be anemic.

If this sounds simplistic, congratulations. You probably have a brain and at least a modicum of common sense. This type of “stock market analysis” is really no analysis at all. More to the point, it doesn’t work. Just ask failed economic futurist Harry Dent, whom I’ve written about before.

While it’s inevitable that there will be 10 new senior citizens for each new working-age citizen over the next decade, that in itself doesn’t portend paltry equity returns.

For starters, let’s look at what’s happening to the world population as a whole. There are currently seven billion human beings living on the planet. At the current growth rate, that total is likely to hit eight billion within a decade.

Now, if you believe that investors in China, India, Brazil and other countries will have no interest in buying companies like Procter & Gamble (NYSE: PG), ExxonMobil (NYSE: XOM), or Coca-Cola (NYSE: KO) in the future, no matter how inexpensively they’re priced, I guess you might put some credence in Mr. Arnott’s thesis.

But that’s highly unlikely. Citizens of capitalist countries are getting wealthier and better educated all the time. And the world is becoming more integrated. Would you really have a problem buying shares of Toyota (NYSE: TM), British Petroleum (NYSE: BP) or Nestle (OTC: NSRGY.PK) if they were bargains?

Of course not, regardless of the demographic trends in Japan, Britain, or Switzerland.

Mr. Arnott doesn’t just miss the big picture about the future, however. He also misinterprets the past. In a recent Wall Street Journal interview, for example, he talks about the collapse of Japan’s stock market over the last 23 years and blames it on the country’s aging population.

I have a better explanation. When the Nikkei 225, Japan’s leading stock market benchmark, climbed to nearly 40,000 in 1989, it was a bubble of epic proportions. Many stocks traded at more than 100 times earnings. And real estate was even more absurd. Just the 1.32 square miles that encompassed the Imperial Palace in Tokyo were valued at more than all the real estate in California combined.

Now that’s nuts. Crazier still were the Japanese banks that loaned money against these wildly inflated property values. This led to a protracted banking crisis that Japan’s political class refused to clean up.

To imagine that the two deflationary decades that followed this mania were the result of an aging population is like blaming this year’s warm winter on your aching big toe. Yet Arnott insists we should hunker down since “[Japan’s] demography is 10 years ahead of ours.”

Want to know what will really determine stock prices in the future? Earnings. I challenge you to look back through history and find even one publicly traded company that increased its profits quarter after quarter, year after year, and the stock didn’t tag along.

Perhaps our aging retirees will buy less in the future and contribute less to U.S. corporate profits. But there are billions of consumers around the world hungering for homes, computers, cars, phones, health insurance, credit cards, pharmaceuticals and golf clubs. They’re likely to be an engine of world economic growth – and rising U.S. corporate profits – for decades to come.

Don’t let anyone scare you otherwise.

Good Investing,

Alexander Green

Article by Investment U

IRS announced today a 6-month grace period aiming to help unemployed and underemployed taxpayers. Under this rule, workers who have been unemployed for at least 30 consecutive days during 2011 or through April 17, 2012 may have their payment deadline moved to Oct 15 without penalty. The same rule applies to self-employed individuals who experienced a drop in business income of at least 25% due to the economy. The income limitations are $200k for taxpayers filing jointly or $100k for taxpayers filing single or as the head of household.The IRS also raised the maximum installment term to 72 months, up from 60 months. Taxpayers entering these new installment agreements are will need to set up a monthly debit plan in order to get the process going. For more news and updates, keep it right here at the Financial News Network. I’m Julia Sun.

London Gold Market Report
from Ben Traynor
BullionVault
Friday 9 March 2012, 09:10 EST

SPOT MARKET gold prices fell by over $20 an ounce within one hour Friday lunchtime in London, while stock markets rallied along with the Dollar immediately following the release of monthly US jobs data.

Dollar gold prices fell over 1% to below $1680 per ounce, while silver prices fell to $33.25 per ounce, while other commodities were relatively flat on the day.

Government bond prices meantime fell along with the Euro Friday morning, after news on Thursday night that Greece’s bond swap should go ahead successfully.

The US Bureau of Labor Statistics nonfarm payrolls report revealed Friday that the American economy added 227,000 non-agricultural private sector jobs last month, compared to the analysts’ consensus expectation of around 210,000.

The US unemployment rate remained static at 8.3%.

Heading into the weekend, Dollar gold prices were down 1.9% on the week by Friday lunchtime, while silver was down 4.5%.

“It’s difficult to see what would make gold push higher,” said Citigroup metals research analyst David Wilson Friday, speaking ahead of the nonfarms release.

“[It] seems odd because you would want to be buying gold if Europe is still a big risk and the US isn’t but that is not how it’s been trading.”

Greece secured the biggest sovereign debt restructuring in history last night, after more than 95% of its private sector creditors agreed to a bond swap deal that will see them lose 70-75% on their Greek debt holdings.

Private creditors who did not agree are expected to be compelled to comply with the deal after Athens confirmed it plans to activate retroactively inserted collective action clauses (CACs).

The International Swaps and Derivatives Association’s  Determinations Committee was meeting Friday lunchtime to decide whether the bond swap, with its CACs, constitutes a credit event, and therefore whether credit default swaps bought as a hedge against Greek bond default should pay out.

“It almost now certainly going to trigger CDS,” said Nick Stamenkovic, Edinburgh-based bond strategist at RIA Capital Markets, speaking before the ISDA meeting.

“If this doesn’t trigger it, nothing will.”

The bond swap should ensure Greece receives its €130 billion second bailout and avoid default when it has to pay maturing bonds on March 20.

Elsewhere in Europe, Spanish unions on Friday voted for a general strike to be held March 29, after negotiations with government on labor reform failed to find a compromise. Spain’s government was negotiating to make it easier to fire workers and harder to link salary increases to inflation.

Germany’s largest bank Deutsche Bank borrowed up to €10 billion from the European Central Bank at last week’s three year longer term refinancing operation (LTRO), Reuters reported Friday. The bank reportedly used the funds for its operations in Spain and Italy.

“It is essential for banks to strengthen their resilience further,” said ECB president Mario Draghi Thursday, speaking to reporters after the ECB’s Governing Council had announced its decision to hold Eurozone interest rates at a record low of 1%.

“The soundness of banks’ balance sheets will be a key factor in facilitating an appropriate provision of credit to the economy.”

At the press conference, Draghi “adopted a significantly less dovish tone [on inflation]” says Holger Schmieding, chief economist at Berenberg bank in London.

“[Draghi dropped] anything that could hint at any additional non-standard measure or a further rate cut to come.”

“Further rate cuts seem to be off the table,” agrees Carsten Brzeski, Brussels-based senior economist at ING Group.

“[However], the new anti-inflation rhetoric is probably rather lip service to soothe the Bundesbank than a serious intention to hike rates anytime soon.”

Over in China, the world’s biggest gold consumer in the last quarter of 2011, consumer price inflation fell to 3.2% last month – down from 4.5% in January – according to official figures published.

“A lower headline inflation number means that the central bank can continue to be very accommodative, which means printing more money,” reckons Jeremy Friesen, Hong Kong-based commodity strategist at Societe Generale.

“The more money it prints versus the gold out there, the more it should raise the value of gold versus that money.”

“I believe inflation will again pick up in the second half, because of the monetary easing the Chinese government will adopt now,” adds Shen Jianguang, chief economist for Greater China at Mizuho Securities Asia, who also cited recent wage rises in China.

China’s central bank last month cut its reserve requirement ratio, which dictates how much money banks have to hold as a proportion of their assets.

“I don’t think there’s any room for cutting interest rates for China this year,” Shen says.

“Last cycle they hiked RRR twelve times, but they only hiked interest rates five times.”

Elsewhere in China, industrial production growth slowed to an annual rate of 11.4% last month – down from 12.8% in January – while annual retail sales growth dropped from 18.1% to 14.7% over the same period, official data show.

Earlier this week, data from Hong Kong’s government revealed that Chinese gold imports from Hong Kong dropped by 15% between December and January.

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.com (Dublin) – The Greek Government has managed to secure the 75 percent participation required to get the 130 euro-bailout. After closing the bond swap deal yesterday with optimism, it has now been confirmed that the bondholders’ participation exceeded the minimum requirement of 75 percent by registering an 83.5 percent overall participation. According to the Greece finance minister, 85.8 percent of private investors who hold bonds under the Greek law voluntarily agreed to accept the deal while 69 percent of those holding Greek bonds under foreign law took the deal. This tallied to an 83.5 percent overall participation that gives the Greek government to legally force wayward creditors to accept the deal.

By accepting this deal, bondholders have agreed to incur losses totaling to 75 percent of their investments. The deal involved writing down 53.3 percent of the value of the bonds and swapping their Greek debt for lower interest rate securities that will be offered by the Greek government.  The Greek government has finally managed to escape bankruptcy and the threat to of its membership to the Euro region seems to have waned for now. The 130 billion Euros of its debt refinancing is expected to be available by March 20^th when the government is expected to make repayment.

The euro-zone is scheduled to hold a phone conference to deliberate on the participation. The Greek finance minister indicated that the recalcitrant creditors have been given up to March 23 to comply with the deal.

Despite the strong participation by creditors and Greece securing the bailout money, there are some analysts who are very skeptical about the state of the Euro zone and Greece. Some have blatantly expressed this skepticism by claiming that Greece and Euro are finished since the second bailout does not accomplish anything worthy of note. They are citing the fact that the country has not had any growth for the last five years and its economy is on a negative spiraling trend, and expecting to register growth in the next two years after 130 billion euro bailout is “outright insane.”

Investors are now keen on the effects of the participation and economic analysts are waiting to see how Greece handles this situation.

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 TraderVox.com
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News and analysis are produced throughout the day by our in-house staff.
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business, finance, investing, stock, trading, news, analysis, market, suntech, stp

By TraderVox.com

Tradervox.com (Dublin) – The single currency yesterday peaked out at 1.3290 on the back of successful Greek swap deal. On the last day of the week, it remained mostly in the red and printed a low of 1.3211 during the European session. It is currently trading around 1.3218, down about 0.42% for the day. The support may be seen at 1.3200 and below at 1.3160 levels. The resistance may be seen at 1.3260 and above at 1.3310 levels. It is an important day for the markets as non farm payroll data will be released later in the day.

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 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