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C | Citigroup AT T end litigation over thanks | By Jonathan Stempel and Andrew Chung NEW YORK Reuters Citigroup Inc N C and AT T Inc N T have ended a court battle over whether the AT T thanks customer loyalty program infringed Citigroup s trademark in the phrase thankyou According to a Monday filing with a Manhattan federal court the companies have dropped claims against each other with prejudice meaning they cannot be brought again Citigroup sued AT T in June calling AT T thanks too similar to the thankyou that the New York based bank had used since 2004 on its own customer programs AT T countered that Citigroup has no monopoly over the word thanks and sought a court order to that effect The resolution may help preserve a relationship between Citigroup and AT T dating to 1998 that includes 1 7 million U S customers with co branded credit cards We have decided not to pursue this matter any further and look forward to continuing to work with AT T Citigroup spokeswoman Jennifer Bombardier said in a statement AT T spokesman Fletcher Cook said We consider the matter closed The case was dropped 11 days after U S District Judge Katherine Forrest in Manhattan rejected Citigroup s request for a preliminary injunction against AT T thanks She said Citigroup did not show that AT T thanks would necessarily confuse customers or cause it irreparable harm though AT T thanks and thankyou share some letters and pronunciation and both convey a message of gratitude
The case is Citigroup Inc v AT T Inc et al U S District Court Southern District of New York No 16 04333 |
C | Bank of Japan s rush into stocks raises fears of market distortions | By Hideyuki Sano and Tomo Uetake TOKYO Reuters The Bank of Japan s near doubling of its purchases of Tokyo shares is causing investors to worry the central bank will dominate financial markets which could lead to price distortions as it continues to grease the economy The BOJ s buying spree will make it harder for investors to sift good companies from bad and raises a host of other problems including misallocating capital making equities trading more speculative and reducing incentives for companies to meet shareholder needs analysts say More than three years of massive monetary stimulus has already resulted in the central bank cornering the Japanese government bond JGB market and distorting interest rates The increased BOJ purchasing provides a very favorable demand environment for listed equities said Michael Kretschmer chief investment officer at Pelargos Capital in the Hague Nevertheless in the long run we strongly doubt these type of monetary gimmicks aimed at price setting of risk assets can have a sustained positive impact on economic growth The BOJ doesn t dominate the stock market as it does JGBs but its revved up buying of index based shares has shifted attention to the central bank s behavior and away from how companies perform That s contributed to outsized gains for stocks such as Fast Retailing Co T 9983 Uniqlo s brand owner which features prominently in the Nikkei share average N225 Some liken the increased purchases by the BOJ the only central bank in the world that buys stocks at the moment to failed government efforts over more than two decades to prop up the market by pressing government related financial institutions to buy after the bursting of the late 1980s asset bubble The BOJ has sought to boost economic activity and dispel decades of deflation by flooding the system with cash through massive asset purchases These have been mostly JGBs but have included real estate investment trusts corporate bonds commercial paper and stocks in the form of exchange traded funds or ETFs The BOJ decided on July 29 to expand this stimulus by increasing its annual purchases of ETFs to 6 trillion yen 60 billion from 3 3 trillion yen With foreign investors largely staying away disappointed at the lack of progress in Japan s structural reforms the BOJ is almost sure to be the biggest buyer on the Tokyo Stock Exchange for the foreseeable future The market is driven completely by the BOJ s buying rather than views on each companies earnings said a fund manager at a Japanese asset management firm JGB IFICATION Some worry the stock market could start to resemble the bond market where the BOJ s purchases about 110 120 trillion yen annually have made traders fixate on its bond buying and pay scant attention to economic data The BOJ s tactics could weaken the market s function in the long run said Keita Matsumoto head of investor sales at Citigroup NYSE C Global Markets Japan I m worried that could lead to a JGB ification of stocks BOJ Governor Haruhiko Kuroda insists increased buying isn t intended to boost share prices and wouldn t warp the market The BOJ s buying although broad based benefits some shares over others Analysts estimate the central bank allocates about 60 percent of its buying in ETFs that track the Nikkei 30 percent to the broader Topix TOPX and the rest to the new JPX 400 JPXNK400 That reflects the size of available ETFs but disproportionately benefits the 225 companies in the Nikkei over the nearly 2 000 companies listed in the Topix The Nikkei and Topix should roughly track each other but the Nikkei has risen 0 7 percent while the Topix has fallen 0 3 percent since the BOJ s announcement Moreover the Nikkei is a simple average not weighted by market capitalization as the Topix is That means a handful of high priced shares that have outsized weightings in the Nikkei benefit the most Fast Retailing which accounts for more than 8 percent of the Nikkei has risen 12 4 percent since the BOJ s decision Softbank Group Corp T 9984 another heavyweight has jumped 21 0 percent even as the tech and investment firm s profit outlook has hardly changed
The rise in share prices may seem desirable but it causes harm as well said Shingo Ide chief equity strategist at NLI Research Institute Even if companies need to improve their management shareholders may not take them seriously if share prices are not falling |
C | Itau Unibanco ITUB Citigroup Deal Gets Approval From Cade | Brazil based Itau Unibanco Holding S A NYSE ITUB received Brazil s antitrust authority Cade s approval for the acquisition of U S bank Citigroup Inc s NYSE C consumer banking business in Brazil announced in October 2016 The deal was inked for around 220 million 710 million reais The sale constitutes around 2 8 billion in assets for Citigroup in Brazil and includes credit cards personal loans and deposit accounts and Citi Brazil s retail brokerage business as well Following the completion of this transaction Citigroup will continue operating corporate and investment bank commercial and private bank businesses in the country Terms of the ApprovalCade approved the deal on the agreement under which Itau Unibanco would be forbidden from purchasing other financial institutions for 30 months Notably Cade would enter into a deal with the Brazilian bank which would restrict any further mergers for Itau However Itau Unibanco s buying stake in brokerage XP Investimentos SA is not under the purview of restriction Notably the deal is already under Cade s review ConclusionBacked by the acquisition of assets from Citigroup Itau Unibanco reinstated its confidence in the Brazilian financial market and the value which it adds for its shareholders Itau Unibanco s shares have jumped nearly 22 1 on the NYSE in the past year
Both Citigroup and Itau Unibanco currently carry a Zacks Rank 3 Hold Stocks to ConsiderShinhan Financial Group Co Ltd NYSE SHG has been witnessing upward estimate revisions for the last 30 days Further the stock has surged nearly 27 2 over the past year on the NYSE It currently sports a Zacks Rank 1 Strong Buy You can see KB Financial Group Inc NYSE KB has been witnessing upward estimate revisions for the last 30 days Over the past year the company s share price has been up more than 50 on the NYSE It also flaunts a Zacks Rank 1 at present One Simple Trading IdeaSince 1988 the Zacks system has more than doubled the S P 500 with an average gain of 25 per year With compounding rebalancing and exclusive of fees it can turn thousands into millions of dollars This proven stock picking system is grounded on a single big idea that can be fortune shaping and life changing You can apply it to your portfolio starting today |
C | Time For Momentum ETFs As Tax Cut Odds Rise | The market is abuzz with talks that the Trump administration is silently proceeding with the tax cut plan Last week corporate CEOs abandoned him quitting his advisory councils and there was speculation respected aides and Cabinet members would leave him as per an article published on
This confusion raised chances of materialization of the proposed tax cut plan as Republicans apprehend losing the 2018 election read
As per the original tax overhaul plan Trump has suggested a 15 corporate tax rate compared with the present 35 The administration has proposed three tax brackets with rates of 35 25 and 10 down from the current seven brackets that Americans can claim on their tax returns and a repeal of the estate tax and alternative minimum tax read
Analysts now expect a modified tax cut plan to be enacted instead of a full fledged tax overhaul scheme According to a Citigroup NYSE C analyst as quoted at instead of a corporate tax rate in the range of 15 or 20 as proposed by the President and House Republicans the rate might be around 25 from 35 at present
The S P 500 company now has about a 27 tax rate on average which is slightly higher than the reduced possibility Still the move itself would be viewed as an achievement of republicans Treasury Secretary Steven Mnuchin recently said tax legislation is the Overall prospects of a reduction in the tax burden on American corporate houses would be well received by investors
How About Momentum Plays
If the prospect of tax cuts go up further equity investors can definitely cash in on the trend via momentum investing because stocks will likely then shoot up Momentum investing looks to reflect profits from buying stocks that are sizzling on the market
Below we highlight four momentum ETFs which may find a place on investors wish list
iShares MSCI USA Momentum Factor ETF
This ETF seeks to track the performance of large and mid cap U S stocks exhibiting relatively higher momentum characteristics IT and Financials hold the top two positions in the fund read
SPDR Russell 1000 Momentum NYSE ONEO Focus ETF This product targets large cap securities with a combination of core factors high value high quality and low size characteristics with a focus factor comprising high momentum characteristics
First Trust Dorsey Wright Focus 5 ETF V FV
The underlying index of the fund the Dorsey Wright Focus Five Index is designed to provide targeted exposure to the five First Trust sector and industry based ETFs that DWA believes offer the greatest potential to outperform the other ETFs in the selection universe First Trust Dow Jones Internet Index Fund 21 42 and First Trust NASDAQ 100 Technology Sector Index Fund 20 48 are the two top sectors of the fund
PowerShares DWA Tactical Sector Rotation Portfolio
The underlying index of the fund the Dorsey Wright Sector 4 Index is designed to gain exposure to the strongest relative strength sectors in the U S through the universe of nine PowerShares DWA sector Momentum ETFs
Want key ETF info delivered straight to your inbox Zacks free Fund Newsletter will brief you on top news and analysis as well as top performing ETFs each week |
JPM | Dollar Edges Up From 5 Week Low | The Dollar edged higher on expectations that the US Federal Reserve FED based on better economic data will start tapering monetary easing in September or later in the autumn Central bank meetings are due in the United States England and European Central Bank ECB later in the week No big changes are expected but a FED policy decision pointing towards a termination in bond buying will probably put upward pressure on the interest rates and strengthen the Dollar The Dollar gained both against the Euro 1 3254 and Japanese Yen which paid 98 06 Yen to a Dollar The DXY index where Dollar is weighed towards a basket of six major currencies was up 0 3 from a five week low Oil prices and precious metals Gold and Silver lost ground on a stronger Dollar The Swedish Krone lost one percent on the Minister of Finance s announcement of weaknesses in the generally perceived strong Scandinavian economy The US banking giant JP Morgan Chase which has lately been under regulators sharp scrutiny settled on USD 410 million on alleged power market manipulations in California and Midwestern states The settlement dictated that JPM accepted the facts presented by the Federal Energy Regulator without denying or admitting certain allegations Banks involvement in the commodity chain by trading metals and at the same time owing warehouses and pipeline plants have this week been under increasing fire from Congress The disputed practice was initiated in 2003 Global stock markets have lost some of their momentum starting a new trading week Both Dow Jones and S P ended in red following a sell off in telecoms and materials after disappointing quarterly results from Verizon and Mosaic |
JPM | Overfunded Pension Plan Assets Telling A Company s Whole Story | This report is one of a series on the adjustments we make to convert GAAP data to economic earnings This report focuses on an adjustment we make to convert the reported balance sheet assets into invested capital Reported assets don t tell the whole story of the capital invested in a business provide numerous loopholes that companies can exploit to hide balance sheet issues and obscure the true amount of capital invested in a business Converting GAAP data into economic earnings should be part of every investor s diligence process Performing detailed analysis of footnotes and the MD A is part of fulfilling fiduciary responsibilities We ve performed unrivalled due diligence on 5 500 10 Ks every year for the past decade The net funded status of a company s pension and post retirement plans is included on the balance sheet When a company has underfunded plans we do not make any adjustment The company is making a choice to fund other projects rather than use its money to fund its pension plan Effectively the company is borrowing from its own employees When a company s pension plans are overfunded on the other hand the excess assets are not being actively used to create revenue Overfunded pension assets are similar to excess cash and should not be included in the calculation of return on invested capital ROIC JP Morgan JPM has over 17 9 billion in assets funding its pension and postretirement benefit plans but only has 15 7 billion in obligations for those plans The remaining 2 2 billion recorded on their balance sheet is removed from our calculation of invested capital and ROIC For JPM which has over 2 3 trillion in assets that 2 2 billion has little effect on the overall investment outlook for the company In other cases however the removal of pension assets can significantly alter a company s ROIC Without careful research investors would never know that total assets could include a significant portion of non operating capital due to overfunded pensions Figure 1 shows the five companies with the largest overfunded pensions removed from invested capital in 2012 and the five companies with the larges adjustment as a percent of total assets Figure 1 Companies With the Largest Overfunded Pensions Removed From Invested CapitalSources New Constructs LLC and company filings Relatively few companies currently have overfunded pensions The majority chase short term results by allocating their assets elsewhere and allowing their pension plans to remain significantly underfunded In 2012 we found 50 companies with pension and postretirement benefit plans overfunded by a combined 5 5 billion Going back to 1996 we found 1 876 instances of overfunded pensions totaling 458 billion Since removing overfunded pension assets decreases invested capital The ROIC of companies with significantly overfunded pensions may get a boost when we remove those assets from Invested capital For instance Kaiser Aluminum Corp s KALU pension and postretirement benefit plans are overfunded by 359 million Without removing this amount from invested capital KALU would have had an ROIC of around 6 After adjusting the 359 million out of invested capital however KALU has an ROIC of 8 While that may not seem like a massive change it could easily be the difference between a company making negative or positive economic earnings Investors who ignore overfunded pensions are holding companies accountable for capital that is not actively involved in generating returns By removing overfunded pension assets one can get a truer picture of the value that management is creating for shareholders Diligence pays Sam McBride contributed to this report Disclosure David Trainer and Sam McBride receive no compensation to write about any specific stock sector or theme |
JPM | The Unbearable Lightness Of Being Long Silver | Buying silver or gold may seem easy enough for just about anyone these days but unless you can completely block out the culture around you the endeavor to make the monetary metals fit in with the rest of the hyper financialized world seems futile It also helps to remember that only a thin line exists between the U S government and the Fed and between the Fed and its member banks It is simple and yet very complicated for anyone looking at buying silver for the first time Also opening up silver s Pandora s Box reveals a lot of new terminology for a novice to be distracted by Things to Know About Silver When trading silver futures it is vitally important to keep track of the Commitment of Traders or COT Report issued weekly by the CFTC that illustrates the market s structure and the complexities of futures trading This report seems crucial for understanding the price discovery mechanism of silver as well the manipulation of its futures market Another supply factor to take into account is the current level of COMEX inventories Additional relevant concepts to become familiar with include The GOFO or Gold Forward Offered Rate which is the rates at which London Bullion Market Association contributing market makers will lend gold versus U S Dollars on a swap Lease Rates The annualized interest rate at which physical silver can be lent Normal Backwardation sometimes just called backwardation refers to the situation when the price of distant delivery futures contracts trade below the prices of nearer month contracts This phenomenon is subject to a never ending debate Paper versus Metal The strange situation has arisen when paper silver futures contracts have little to no fundamental bearing on realty and yet they also currently determine the price of physical silver metal Theoretically surging physical demand and long waits for physical delivery should increase futures prices Price Manipulation A silver market phenomenon that is currently the subject of a 5 year old CFTC investigation Basically anyone that does not acknowledge manipulation of the silver market at the most basic level probably has a hidden agenda The loudest voices deny it celebrate it and scorn those who strive to protest and educate others about it The Gold Factor Of course silver investors need to be aware of developments that affect silver s big brother gold since they can also impact demand for silver Plenty of Examples of Outright Insanity Time goes by slowly as the story of silver s market manipulation rarely changes although neither do the bullish fundamentals for silver What other market makes so much rational sense to investors but is then blatantly manipulated and the media flooded with fabricated and apparently rational arguments about the dismal manipulated result For instance silver had an access close last month at a price of 19 99 which was situated just under key psychological support at the 20 level This was combined with the Dow s Hail Mary which closed the index in the green and has to be one of the most egregious examples of the management of perception at work The last thing the powers that be probably want to see is red going into the weekend While this may just have been a coincidence it sure worked out nicely for them Silver futures markets have been subject to coordinated price attacks in London and elsewhere which are typically orchestrated by the large market players known as the Bullion Banks Basically uneconomic dumping in low volume often leads to an artificially suppressed paper silver price which is then used to set physical metal prices The seller of a silver futures contract does not need to deliver physical metal so they can just pay for their futures losses in intrinsically worthless paper money while they scoop up truly valuable physical metal cheaply This silver market manipulation mechanism was exposed by Ted Butler and then made famous by GATA whistle blower Andrew Maguire Current Market Perception All in all last week was not a bad time for silver especially considering it was an options expiration week JP Morgan Chase seems to be out for now but they will very likely pounce on the next rally Silver open interest has not indicated much of a liquidation taking place Anyway these sell offs are just part of the way the game of silver manipulation works The big players aim to shake out as many weak longs as possible while taking another blast at sentiment No one should put this sort of trickery past them Most people like to think of themselves as value investors and yet trends are too easy to wait too long for and miss Another test of 18 in silver would probably frighten away new longs or those dipping into the ETF s Best Guess Going Forward The object of the most recent manipulated sell off seems to have been to trick the hedgies into going short while bullion banks like JPM covering their own shorts and take delivery of as much physical as possible From the perspective of demand and perception silver is still showing surging retail demand and there is decent money out there eyeballing a 10 recent return in silver after a 60 decline Silver seems cheap While the technical picture is a totally fabricated affair that makes painting the tape a work of fine art various factors currently point to the scenario that silver will more than likely test its recent lows once again before resuming its long term up trend |
JPM | Feds Let London Whale Swim Free Go After London Minnow Instead | Can you imagine if instead of suspending Alex Rodriguez and others for the use of PEDs that Major League Baseball went after the clubhouse boy who may have been perhaps knowingly delivering them the stuff and presented that to the public as cleaning up the game Or if we were to steal a scene from the fabulous flick Goodfellas picture the Feds charging the young and impressionable Spider for his involvement albeit as a barboy in the family running rackets and presenting that to the public as one of the first cases to clean up the mob The authorities in either case would face a fair bit of ridicule As well they should Yet it is not a stretch to make these comparisons to the charges levied against former London based JP Morgan JPM junior trader Julien Grout whom I would characterize as the London Minnow for his involvement in the London Whale scandal On the heels of the SEC winning its case against Goldman Sachs vice president Fab Tourre and with these charges levied against Mr Grout the Feds are setting the bar mere inches off the ground in their attempt to clean up our financial industry All I can say is that the job of being a junior trader on Wall Street just got decidedly more risky How is it that the London Whale Bruno Iksil directly engaged in putting on the trades that led to the misrepresentations and potential fraud is allowed to to cut an immunity deal and swim free while an individual Mr Grout who simply takes orders now faces the potential of doing serious time The pursuit of justice here seems dramatically misplaced The FT touches upon this theme this morning The former JPMorgan Chase trader nicknamed the London whale escaped without criminal charges in exchange for his testimony against two former colleagues whom prosecutors allege concealed massive losses Bruno Iksil the Frenchman who earned his nickname for his large bets in credit derivatives signed a nonprosecution agreement with authorities to testify against Javier Martin Artajo his former supervisor and Julien Grout a lower level trader who entered the valuations for the trades on the bank s books Both men were charged on Wednesday in New York with conspiracy and misleading investors The decision to not charge Mr Iksil or force him to plead guilty to a crime is extraordinarily unusual one former Southern District of New York prosecutor said the deal stands out in two respects lawyers say Usually prosecutors build cases by gaining the co operation of low level employees and flip them to make a case against their supervisors Mr Iksil s co operation may help build a case against his supervisor but he is also co operating against his underling More unusual former alumni of the Southern District attorney s office say is the break with tradition in not forcing a guilty plea from a key player in the case I am all for pursuing the truth and justice here The Feds should connect the dots to Martin Artajo and elsewhere up the chain of command Let the chips then fall where they may To charge an individual like Mr Grout who is really little more than a caddy sends the message that the Feds are more interested in getting a scalp regardless of whose scalp it is than meaningfully pursuing truth and justice and cleaning up Wall Street Junior traders on Wall Street should navigate accordingly |
JPM | J P Morgan Chase Drops Watch This Level | J P Morgan Chase Co JPM has been coming under early selling pressure The leading financial stock is falling after a government investigation was launched into its Chinese hiring practices The company has also come under pressure recently after the London whale trading scandal lead to two arrests and caused the bank a 6 2 billion loss Recently the financial giant agreed to pay 410 million to settle charges with the Federal Energy Regulatory Commission for manipulating electricity prices Yesterday JPM stock was trading lower by 0 86 cents to 52 42 a share Day traders should watch for intra day support around the 51 49 level This is an area where the stock could see an intra day bounce The next major intra day support level would be at the 50 20 level |
JPM | Possible Intra Day Bottom And Breakout On JPMorgan | JPMorgan Chase JPM has put in a possible bottom The stock has taken a beating on the back of possible lawsuits and other negatives However note the rounded bottom on the chart picture below In addition notice that it has regained the 20 moving average This alerts traders to a possible bottom and a potential long What You Look For Start watching for bullish consolidation If you get that jump on board and ride it higher Plenty of upside potential intra day if this were to happen |
JPM | Goldman Sachs Got Us On Gold Why They Won t Get Us On Stocks | This is a story of how the big banks pulled gold prices from under our feet but why their plan for the stock market won t pan out When gold bullion prices went into semi crash mode in late spring of this year some stories written by financial analysts suggest big banks colluding together to bring gold bullion prices crashing down If you remember The Goldman Sachs Group Inc GS came out with a report saying gold bullion prices would go down and magically they did At about the same time Goldman Sachs gave a sell recommendation on gold bullion JPMorgan Chase Co JPM was selling gold bullion on the paper market The plunge in gold bullion prices started in April but JPMorgan was selling gold since the beginning of the year From January to April the big bank s house account had a net short position of 14 749 100 ounce COMEX gold contracts or about 1 47 million ounces of gold bullion Source Year to Date Delivery Notices CME Clearing August 19 2013 I ll be the first to admit it the gold bullion price takedown that started in April sure looks and smells fishy Once the sell off in gold bullion began no one cared about demand or supply the reason why gold bullion prices increase or decline The fundamentals were thrown out the window Irrationality and emotions took over and investors ran for the exit Gold bullion prices have started to climb back up They are above 1 300 an ounce and marching towards the next big level at 1 400 The gold play is over for the big banks they re onto something else the stock market The wave of optimism towards the stock market continues to gain momentum Big banks are telling us the stock market is going to go higher Some calling for higher stock prices say earnings are good some say valuations are good some say the economy is improving and others say investors will move out of the bond market and into the stock market Goldman Sachs says the S P 500 will increase eight percent in the next 12 months Its target for the S P 500 is 1 825 Its reason economic growth will pick up its pace Source Bloomberg August 13 2013 When I look at Goldman Sachs latest prediction I have two questions Will it and other big banks be right on the stock market like they were on gold And will the key stock indices continue to increase in their desired direction This time dear reader big banks won t be right They could be longing stocks and they could be saying stock prices will rise so their bets on the market get even more profitable but this time around they re simply too optimistic If the theorists are right and big banks did drive gold bullion prices lower we must remember that big banks were only able to drive the gold bullion market lower for a very short period of time as the metal s price is now bouncing back The stock market will also snap back to reality as optimism faces the facts What am I talking about Take a look at the chart below of margin debt the amount of money people borrow to buy stocks The margin debt on the New York Stock Exchange NYSE is at a record high it stood at 376 6 billion in June higher than what it was before the Tech Boom bust in 2000 and just about the same level it was at in 2007 just before stock prices started to come down Source New York Stock Exchange web site last accessed August 20 2013 The higher the margin debt goes the bigger the sell off in stocks will be because with so much leverage one negative move in the stock market will result in a domino effect as investors make good on their margin calls Earnings for public companies are dismal So far 72 of the companies on the S P 500 were able to beat their already lowered earnings expectations for the second quarter Great Don t be so quick to judge Only little more than half of them 53 were able to beat revenue estimates source FactSet August 16 2013 and companies have been engineering earnings growth through a record amount of stock buyback programs But earnings at the big banks they were stronger than ever Of the S P 500 companies that have already provided guidance for their third quarter corporate earnings 75 offered a negative outlook while only 17 have given a positive outlook Source Ibid As for the economy I don t think I have to go into detail here again My family of Profit Confidential readers knows the real scoop on the economy it s anemic at best While the majority of jobs created in the U S since the credit crisis have been in the low paying retail and service sectors millions of Americans still live in homes with negative equity And with mortgage rates rising the housing market is in trouble again Look at Wells Fargo Company WFC one of the big banks It announced yesterday it was laying off 2 000 people from its mortgage unit because higher interest rates are cutting demand Source Bloomberg August 21 2013 If I have to bet I would go against Goldman Sacks in its call that the stock market will be eight percent higher in the next 12 months I d take the opposite position I like ProShares Short S P500 NYSEArca SH an exchange traded fund that shorts the S P 500 I also like SPDR Gold Shares NYSEArca GLD a play on rising gold bullion prices ahead I for one am betting against the big banks all shows can only go on for so long What He Said In 2008 I believe investors will fare better invested in T Bills as opposed to the stock market I m bearish on the general stock market for three main reasons Borrowing money in 2008 will be more difficult for consumers Consumer spending in the U S is drying up which will push down corporate profits Michael Lombardi in Profit Confidential January 10 2008 The year 2008 ended up being one of the worst years for the stock market since the 1930s Disclaimer There is no magic formula to getting rich Success in investment vehicles with the best prospects for price appreciation can only be achieved through proper and rigorous research and analysis The opinions in this e newsletter are just that opinions of the authors Information contained herein while believed to be correct is not guaranteed as accurate Warning Investing often involves high risks and you can lose a lot of money Please do not invest with money you cannot afford to lose |
JPM | JPMorgan Trend Line Breaking What It Means | PMorgan Chase JPM has broken through a major trend line stretching all the way back into 2012 This tells of further weakness in the stock as well as the general market Just be aware as this market inches into the holiday weekend they could float the general market before further downside Please note the chart below to see the trend line break Near downside support would be the 200 moving average at 49 25 |
JPM | Second Largest US Stock Exchange In The Making | While the merger of NYSE Euronext Inc NYX and IntercontinentalExchange Inc ICE is in the advanced stages of culmination the latest merger pact between BATS Global Markets Inc and Direct Edge Holdings is the next potentially strong business combination in the US to have snatched the limelight Although the terms of the deal remain undisclosed the merger between BATS and Direct Edge is expected to close by the first half of 2014 once the regulatory approvals are attained Based in Kansas and formed in 2005 Better Alternative Trading System BATS is the third largest securities exchange in the US that operates through the BZX Exchange and the BYX Exchange accounting for about 12 of total equity volumes in the US Apart from equity trading BATS offers market data and listing services It is also the largest pan European equities trading hub with multilateral trading facility operating as BATS Chi X Europe On the other hand New Jersey based Direct Edge ranks just next to BATS and operates via two stock exchange platforms EDGA Exchange and EDGX Exchange Meanwhile both BATS and Direct Edge are held by consortiums of investment banks and high frequency trading companies such as JP Morgan Chase Co JPM and Goldman Sachs Group Inc GS Opportunities Galore The companies in the merger intend to expand the listing business and market data offerings in the US Furthermore BATS and Direct Edge seek to capitalize on the fresh opportunities in the underpenetrated markets of Canada and Japan We believe the effect of the potential merger on the global markets is likely to be significant as it would raise price competition in the equities markets of the US The merger is likely to benefit from the economies of scale as the parties aim to lower cost of expensive technology from the amalgamation of the four exchanges Further this merger is expected to gain competitive edge over other exchange giants such as NYSE and Nasdaq OMX Group Inc NDAQ through strong volumes generation Currently BATS holds a market share of about 10 in terms trading volumes while Direct Edge owns about 11 Accordingly the merged company is projected to be only second to NYSE which has 23 stake in the market beating Nasdaq holding 18 market share and CBOE Holdings Inc CBOE among others Challenges Ahead However the proposed merger has its share of challenges too the primary being controlling costs and handling technical glitches While a roar of merger and acquisition activities were witnessed in the past couple of years most of them never saw the light due to the regulatory and operational snags BATS is also facing diminishing volumes for over 4 years now and its bid for an initial public offering IPO also failed last year Nevertheless Hong Kong Exchanges Clearing Ltd bought the London Metal Exchange Ltd for 2 2 billion last year while Tokyo Stock Exchange merged with Osaka Securities Exchange to diversify into derivatives early this year It s a waiting game now to find out if the merged entity will be able to sustain the competition as the much awaited 10 2 billion merger between NYSE and IntercontinentalExchange may create additional competitive pressure in the market Thus we remain on the sidelines to analyze the future of this merger amid current market conditions |
MS | European stocks extend losses central bank hopes remain DAX down 0 59 | Investing com European stocks pushed lower on Wednesday as weak earnings reports continued to weigh although expectations that global central banks may implement further measures to stimulate growth seemed likely to limit losses During European afternoon trade the EURO STOXX 50 dropped 0 71 France s CAC 40 declined 0 71 while Germany s DAX 30 retreated 0 59 Markets eyed the ECB amid expectations the bank will soon take steps to help lower Spanish and Italian borrowing costs after bank head Mario Draghi indicated last week that the ECB may restart its bond buying program The ECB said action would be conditional on euro zone governments experiencing difficulty on bond markets activating the bloc s bailout funds to purchase government bonds and accepting strict conditions and supervision Meanwhile a Federal Reserve official on Tuesday kept alive hopes for central bank intervention by saying the Fed should launch an aggressive bond buying program to aid the economy until unemployment begins to fall Financial stocks remained mostly lower as shares in France s BNP Paribas dropped 0 92 while German lender Deutsche Bank plunged 1 40 and Dutch bank ING Group dove 1 79 Earlier in the day ING Group reporting second quarter net income of EUR1 17 billion missing analyst estimates of EUR1 26 billion Elsewhere Swisscom tumbled 1 05 after Switzerland s largest phone company said second quarter net income declined to CHF468 million from CHF485 million a year earlier In addition Morgan Stanley downgraded the shares to underweight from equal weight Also in earnings news Kloeckner Co Europe s largest independent steel trader retreated 0 87 after reporting its fourth consecutive quarterly loss and increasing job cuts as the euro zone s debt crisis weakened demand In London FTSE 100 declined 0 56 after the Bank of England s quarterly inflation report was less dovish than expected Standard Chartered surged 7 49 extending earlier gains despite reports the bank might be asked to pay as much as USD700 million to resolve money laundering allegations filed by New York s banking superintendent The U K lender is accused of scheming with the Iranian government to launder billions of dollars to potentially support terrorist activities Other financial stocks were mixed Shares in the Royal Bank of Scotland eased up 0 07 and HSBC Holdings dropped 0 38 while Barclays and Lloyds Banking declined 1 33 and 1 52 respectively Meanwhile mining giants Rio Tinto and BHP Billiton turned higher with shares advancing 2 78 and 0 31 while copper producer Xstrata rose 0 54 In the U S equity markets pointed to a lower open The Dow Jones Industrial Average futures pointed to a 0 22 fall S P 500 futures signaled a 0 24 decline while the Nasdaq 100 futures indicated a 0 07 loss Also Wednesday official data showed that German industrial production fell 0 9 in June more than forecasts for a decline 0 8 following an upwardly revised 1 7 gain in May Later in the day the U S was to release preliminary data on nonfarm productivity followed by a government report on crude oil inventories |
JPM | Verizon quarterly subscriber additions top estimates shares up | By Anjali Athavaley Reuters Verizon Communications Inc NYSE VZ reported quarterly revenue that topped expectations on Thursday as the No 1 U S wireless carrier attracted more subscribers with its unlimited data plan Shares jumped 3 6 percent to 46 01 in premarket trading In the quarter Verizon added 614 000 subscribers who pay a monthly bill including tablet customers compared to an increase of 615 000 in the year earlier period The additions were higher than the JPMorgan NYSE JPM estimate of 115 000 and consensus expectations of 70 000 JPMorgan analysts said in a research note on Thursday Verizon has been competing for customers with smaller rivals T Mobile US Inc and Sprint Corp in a saturated U S market for wireless service as most consumers already have cell phones In February Verizon reintroduced an unlimited data plan for the first time in more than five years Since then other carriers have launched aggressive promotions Sprint said in June that it was offering free unlimited data talk and text for a year to consumers who bring their own devices in a promotion aimed at Verizon subscribers The company added 358 000 phone only subscribers compared with 86 000 net additions a year ago Verizon s unlimited plan priced at 80 a month for a single line is more expensive than competing plans Chief Financial Officer Matthew Ellis said Thursday s post earnings conference call that even with the price premium we have it shows that customers value the high quality network experience that we deliver Churn or the rate of customer defections for subscribers paying a monthly bill was flat at 0 94 percent from the year earlier period and lower than analysts estimates of 1 1 percent according to JPMorgan Jonathan Chaplin an analyst at New Street Research called the subscriber numbers very strong but added that we remain cautious on Verizon equity given what we regard as unsustainable margins and returns in a competitive market Net income attributable to Verizon rose to 4 36 billion or 1 07 per share in the second quarter from 702 million or 17 cents per share a year earlier Excluding items earnings were 96 cents per share Total operating revenue edged up to 30 55 billion from 30 53 billion a year earlier Analysts expected adjusted earnings per share of 96 cents on revenue of 29 91 billion according to Thomson Reuters I B E S
The latest quarter included a gain from the sale of data centers and lower expenses Earnings in the year earlier period were also hurt by a strike in the wireline business |
JPM | Wells Fargo moves more auto staff to central hubs eyes rebranding memo | By Dan Freed Reuters Wells Fargo Co N WFC is making more structural and management changes to its auto lending unit according to an internal memo viewed by Reuters part of the bank s effort to control risk more effectively The latest overhaul will phase out 57 regional offices across the United States and eliminate the positions of those regional managers according to the memo Loan funding staff will shift from regional offices to two central locations in Chandler Arizona and Irving Texas while credit underwriting personnel and salespeople who call on dealerships will remain in local markets under a new management structure Wells auto business called Wells Fargo Dealer Services is also likely to get a name change to reflect that it works with retail customers as well as dealers according to a person familiar with the matter who was not authorized to speak publicly Spokeswoman Catherine Pulley confirmed the contents of the memo which was distributed on Wednesday This decision was made with careful consideration for our team members dealer relationships and consumer customers and will take several months to complete as we work to position Dealer Services for future growth in an evolving marketplace Pulley said in an emailed statement Pulley declined to comment on whether there will be a name change or to say how many employees might be affected by the reorganization Earlier this year Wells Fargo similarly consolidated its auto loan collections staff a move that could eliminate hundreds of jobs The bank is making structural changes to the business as it cuts back sharply on auto lending and centralizes risk management broadly after a sales scandal in which it created up to 2 1 million accounts without customers knowledge
Other auto lenders such as JPMorgan Chase Co N JPM and Ally Financial Inc N ALLY centralized their operations in similar ways years earlier |
JPM | JPMorgan plans cost cuts in Sapphire Reserve card unit WSJ | Reuters JPMorgan Chase Co N JPM is pushing for fresh cost cuts of about 200 million in the unit that oversees Sapphire Reserve credit card the Wall Street Journal reported on Friday Senior JPMorgan employees have reviewed models questioning whether the card would make money and when the Journal reported citing people familiar with the matter Gordon Smith head of JPMorgan s retail banking business this month ordered cost trims at the unit overseeing cards according to the Journal JPMorgan however denied specific budget cuts for its Reserve credit card unit We will neither confirm nor deny the number but there were no budget cuts specifically for reserve said Patricia Wexler managing director communications JPMorgan Chase As a part of any planning process we are always looking for ways to eliminate waste Sapphire Reserve card is popular among millennials who are willing to pay the 450 annual fee for a sign up bonus worth as much as 1 500 in travel plus 300 in annual spending credits and more freebies JPMorgan s latest quarterly results showed rising sales volumes and weakening credit trends in its credit card business consistent with other lenders |
JPM | Solid French Spanish Austrian data point to euro zone growth strength | By Leigh Thomas PARIS Reuters Solid second quarter growth numbers from France Spain and Austria on Friday suggest next week s figure for the broader euro zone could surprise on the upside with German and Spanish inflation data also pointing to robust activity The three countries were the first to venture growth estimates for the April June quarter before Eurostat releases a preliminary estimate for the euro zone on Tuesday Economists polled by Reuters are on average predicting that the economy of the 19 countries that use the euro will have grown by 0 5 percent from the previous three months France on Friday chalked up its third quarter in a row at that pace putting the euro zone s second biggest economy on course to surpass a government target of 1 6 percent for the year as a whole its best performance in at least six years Figures from the INSEE statistics institute showed the delivery of a massive luxury ocean liner last month boosted French exports offsetting a drawdown in company inventories and slower business investment Though largely welcomed by economists as a solid second quarter performance French growth pales compared to a recovery in Spain that has brought activity to levels last seen before the global financial crisis that started a decade ago The National Statistics Institute said Spanish growth reached 0 9 percent in the April through June period improving chances the economy will grow by at least 3 percent in 2017 as the government expects Austria meanwhile maintained a quarter on quarter growth rate of 0 8 percent in Q2 boosted by exports and investment according to the Wifo think tank that compiles data for the government Capital Economics Jack Allen said Friday s growth data suggested the wider euro zone economy would post an expansion of 0 6 percent in the second quarter Though Germany does not publish a Q2 growth estimate until mid August recent German surveys suggest the euro zone economy could expand by 0 7 0 8 percent although that pace is unlikely to be sustained over the rest the year Allen said But we remain optimistic about the outlook we think that euro zone GDP will expand by an above consensus 2 2 percent this year and 2 0 percent in 2018 Allen said in a research note The third quarter also appears to be getting off to a solid start despite concerns the euro s rise to a 2 1 2 year high against the U S dollar could hurt exports The European Commission s monthly economic sentiment indicator ESI rose slightly for a third consecutive month in July to a new 10 year high confounding expectations of a dip from June The fact that the overall ESI went up suggests that for now other forces are dominating any currency impact on growth JPMorgan NYSE JPM economist David Mackie said in a research note Other data published on Friday showed Spanish and German inflation slightly topping expectations at 1 7 percent and 1 5 percent respectively while French inflation was in line with estimates at 0 8 percent Though the German and Spanish figures were stronger than expected the fact the German rate was unchanged from last month meant that euro zone inflation due on Monday is likely to be stable at 1 3 percent Capital Economics Stephen Brown said
That is still some way below the European Central Bank s target of just below 2 percent suggesting the data is unlikely to hasten any changes to its massive stimulus program |
JPM | American Airlines revenue adjusted profit beats forecasts | By Alana Wise Reuters American Airlines Group Inc O AAL on Friday reported quarterly revenue and adjusted profit that beat analyst projections helped by strong passenger demand and improving average fares The No 1 U S airline by passenger traffic said total operating revenue grew to 11 11 billion in the second quarter through June 30 from 10 36 billion a year earlier The figure beat analysts expectations for 11 07 billion However operating expenses swelled increasing 11 1 percent to 9 6 billion on the back of higher fuel and labor costs For the third quarter American said it expects to see its total revenue per available seat mile inch up between 0 5 percent and 2 5 percent The airline s pretax margin is forecast to land between 10 percent and 12 percent for the late summer period American 3Q guidance falls notionally short of consensus but embraces buy side expectations for revenue per available seat mile JPMorgan NYSE JPM analyst Jamie Baker wrote in a research note Guidance should suffice American shares were down 1 9 percent at 49 05 in morning trading after earlier rising in premarket Shares across the broader U S stock market also slipped The Fort Worth Texas based carrier s net income fell to 803 million or 1 63 per share in the quarter from 950 million or 1 68 per share a year earlier On an adjusted basis American Airlines earned 1 92 per share topping analysts consensus forecast of 1 87 per share according to Thomson Reuters I B E S American surprised investors earlier this year by offering an unexpected mid contract pay increase to its pilots and flight attendants at an estimated expense of 230 million for 2017 With the pay hike which frustrated Wall Street and at the time sent American s stock spiraling downwards flight crew received on average 5 percent to 8 percent salary increases in hourly pay in an adjustment to match rival carriers American attributed a 12 5 percent increase in salary and benefits and a 15 4 percent jump in consolidated fuel expense for the rise in operating expenses Total second quarter cost per available seat mile rose 9 6 percent to 13 34 cents We look at this mid contract pay increase as a long term investment American Chief Executive Doug Parker said on the carrier s Friday earnings call We know it s the right idea Unit revenue which compares sales to flight capacity rose 5 7 percent |
C | U S crude bounces from 14 week low amid unexpected gas inventory draw | Investing com U S Crude futures bounced from 14 week lows on Wednesday as an unexpected draw in gasoline inventories last week helped temporarily ease some concerns related to the prolonged supply glut in global energy markets
On the New York Mercantile Exchange WTI crude for September delivery traded between 39 33 and 41 03 a barrel before closing at 40 80 up 1 29 or 3 26 on the session It came one day after WTI closed below 40 for the first time since mid April when crude futures took a hit following the collapse of a closely watched Doha Agreement among major producers including Saudi Arabia and Russia On the Intercontinental Exchange ICE brent crude for October delivery wavered between 41 58 and 43 28 a barrel before settling at 43 03 up 1 22 or 2 92 on the day
Since hitting 2016 yearly highs of 51 a barrel in early June U S crude futures have slumped by nearly 20 over the last several weeks
On Wednesday morning U S Energy Information Administration EIA said in its Weekly Petroleum Status Report that Gasoline Inventories declined by 3 3 million barrels for the week ending on July 29 considerably more than analysts expectations for a modest 0 2 million draw Of the declines stocks in the PADD 1 district covering the majority of the East Coast fell by 1 2 million barrels for the week The PADD 1 district which has been beset by rising stockpiles in recent weeks has still seen gasoline inventories soar by 11 5 million barrels over the last year
The drawdown could help assuage some fears of long term oversupply among gasoline inventories worldwide According to analysts from Citigroup Inc NYSE C gasoline inventories have soared to a near record high of 500 million barrels throughout the world as refineries churn out product at a rapid pace amid low crude prices Despite last week s draw total petroleum inventories have spiked by approximately 25 million over the last nine weeks according to Ion Energy Group analyst Kyle Cooper
Overall U S commercial crude inventories increased by 1 4 million barrels for the period in comparison with the week ending on July 22 At 522 5 million barrels U S crude oil inventories are at historically high levels for this time of year Analysts expected to see a decline of 1 4 million barrels one day after the American Petroleum Institute reported a draw of 1 3 million barrels At the Cushing Oil Hub in Oklahoma inventories fell by 1 12 million barrels on the week Cushing the main delivery point for NYMEX oil is the largest crude storage facility in the U S
The U S Dollar Index which measures the strength of the greenback versus a basket of six other major currencies rose by more than 0 40 to an intraday high 95 35 bouncing off five week lows On Tuesday the index slipped below 95 for the first time since June 24 Before Wednesday s rebound the Dollar had fallen sharply since hitting four month highs at 97 62 early last week
Dollar denominated commodities such as Crude become more expensive for foreign purchasers when the dollar appreciates |
C | Citigroup beats 800 million appeal by one time billionaire | By Jonathan Stempel NEW YORK Reuters A federal appeals court rejected a one time Florida billionaire s bid to revive his 800 million lawsuit accusing Citigroup Inc NYSE C of fraudulently hiding its exposure to subprime and other toxic mortgages inducing him to hold on to shares he otherwise would have sold The 2nd U S Circuit Court of Appeals in Manhattan on Friday said Citigroup and former officials including two chief executives Charles Prince and Vikram Pandit were not liable to trusts and corporate entities overseen by Arthur Williams and his wife We respectfully disagree with the court s opinion and are considering our appeal options Jacob Zamansky a lawyer for the Williamses said in a phone interview Citigroup spokeswoman Danielle Romero Apsilos said the bank was pleased with the decision Williams the founder of what became Primerica Financial Services has said he had planned in May 2007 to sell his 17 6 million Citigroup share stake but decided to sell just 1 million because the bank assured investors it was in good shape It was not until March 2009 upon realizing that Citigroup likely was never going to recover that he sold the rest of his stake at 3 09 per share costing him the financial benefit of his life s work court papers show He sued for the difference between that price and the 51 59 per share price prevailing in May 2007 But the appeals court called the damages too undeterminable and speculative saying Williams could only hypothesize what the stock price might have been at a given time had New York based Citigroup disclosed its exposure sooner Citigroup ultimately lost 27 68 billion in 2008 and underwent a series of federal bailouts that have since been repaid Pandit and the bank s current Chief Executive Michael Corbat have spent years shedding troubled assets Citigroup once the largest U S bank by assets now ranks fourth Friday s decision upheld an October 2013 ruling by U S District Judge Sidney Stein in Manhattan The decision was delayed because the appeals court asked the Supreme Court in Delaware where Citigroup is incorporated whether Williams should have sued on behalf of the bank and other shareholders in a so called derivative lawsuit
In May Chief Justice Leo Strine in Delaware said the claims were direct because they belong to the holders and are ones that only the holders can assert Citigroup s share price is down more than 91 percent from where it was in May 2007 after accounting for a reverse stock split in 2011 The case is AHW Investment Partnership et al v Citigroup Inc 2nd U S Circuit Court of Appeals No 13 4488 |
C | Crude retreats from 2 week highs ahead of API inventory report | Investing com Crude futures see sawed on a choppy volatile day of trading retreating from two week highs ahead of the American Petroleum Institute s weekly crude inventory report on Tuesday evening after the close of trading
On the New York Mercantile Exchange WTI crude for September delivery traded between 42 51 and 43 48 a barrel before closing at 42 66 down 0 36 or 0 84 on the session At session highs the front month contract for U S crude hit its highest level since July 25 the last time it traded above 44 a barrel On the Intercontinental Exchange ICE brent crude for October delivery wavered between 44 80 and 45 73 a barrel before settling at 44 87 down 0 52 or 1 15 on the day
Despite a relief rally from 3 month lows at the start of last week crude futures have still tumbled approximately 15 from 10 month highs in mid June when both the U S and international benchmarks of crude eclipsed 50 a barrel
Energy traders will receive a clearer picture of the supply demand balance on U S markets when the API releases its latest crude stockpile on Tuesday night following close of markets Separately Wednesday s government report could show that crude inventories nationwide fell by 1 0 million barrels for the week ending on August 5 Over the previous week U S crude stockpiles unexpectedly rose by 1 4 million barrels defying analysts expectation for a 1 4 million draw At 522 5 million barrels U S crude oil inventories are at historically high levels for this time of year
Analysts will keep a close eye on Gasoline inventories which are expected to decline by 1 2 million for the week During the last week of July gasoline stockpiles unexpectedly fell by 3 3 million barrels amid a considerable drawdown throughout the PADD 1 district covering the majority of the U S east coast In recent weeks worldwide gasoline inventories have swelled to around 500 million barrels according to analysts from Citigroup Inc NYSE C as refineries churn out product at a rapid pace due to historically low crude prices
Elsewhere Iran exported 1 72 million barrels per day in June to China India Japan and South Korea the Islamic Republic News Agency IRNA reported on Tuesday marking a 47 increase from its level in January Last month senior officials from Iran s state run National Iranian Oil Company told Bloomberg that the Gulf state expects to double exports from its pre sanction levels in an effort to regain market share as long as demand abroad remains high
In India the nation consumed 48 5 million tons of oil for the three period ending in June representing the swiftest pace of demand growth in more than a decade Currently OPEC provides 85 of all oil imports to India more than half of which is supplied by Saudi Arabia Iraq and Iran according to Clipper Data While a number of analysts expect global markets to rebalance at some point in 2017 the return of Iran to markets in February following the removal of longstanding economic sanctions has exacerbated concerns related to the worldwide supply glut
The U S Dollar Index which measures the strength of the greenback versus a basket of six other major currencies fell more than 0 20 to an intraday low of 96 02 The index is virtually flat over the last month
Dollar denominated commodities such as Crude become more expensive for foreign purchasers when the dollar appreciates |
C | NYMEX crude prices down in early Asia as API reports surprise build | Investing com Crude oil prices fell in early Asia on Wednesday as a surprise build shown in industry estimates of U S stockpiles weighed on sentiment
On the New York Mercantile Exchange WTI crude for September delivery was last quoted down 0 12 at 42 69 a barrel
The American Petroleum Institute reported a 2 1 million barrel rise in U S crude oil inventories last week according to sources Earlier arket analyst Genscape reported a build of more than 307 000 barrels at the Cushing Oklahoma delivery hub
Separately Wednesday s government report could show that crude inventories nationwide fell by 1 0 million barrels for the week ending on August 5 Over the previous week U S crude stockpiles unexpectedly rose by 1 4 million barrels defying analysts expectation for a 1 4 million draw At 522 5 million barrels U S crude oil inventories are at historically high levels for this time of year
Analysts will keep a close eye on gasoline inventories which are expected to decline by 1 2 million for the week During the last week of July gasoline stockpiles unexpectedly fell by 3 3 million barrels amid a considerable drawdown throughout the PADD 1 district covering the majority of the U S east coast In recent weeks worldwide gasoline inventories have swelled to around 500 million barrels according to analysts from Citigroup Inc NYSE NYSE C as refineries churn out product at a rapid pace due to historically low crude prices
Overnight crude futures see sawed on a choppy volatile day of trading retreating from two week highs
On the Intercontinental Exchange ICE Brent crude for October delivery wavered between 44 80 and 45 73 a barrel before settling at 44 87 down 0 52 or 1 15 on the day
Elsewhere Iran exported 1 72 million barrels per day in June to China India Japan and South Korea the Islamic Republic News Agency IRNA reported on Tuesday marking a 47 increase from its level in January Last month senior officials from Iran s state run National Iranian Oil Company told Bloomberg that the Gulf state expects to double exports from its pre sanction levels in an effort to regain market share as long as demand abroad remains high
In India the nation consumed 48 5 million tons of oil for the three period ending in June representing the swiftest pace of demand growth in more than a decade Currently OPEC provides 85 of all oil imports to India more than half of which is supplied by Saudi Arabia Iraq and Iran according to Clipper Data While a number of analysts expect global markets to rebalance at some point in 2017 the return of Iran to markets in February following the removal of longstanding economic sanctions has exacerbated concerns related to the worldwide supply glut |
C | Brent NYMEX down in Asia as API estimates show surprise build | Investing com Crude oil prices held weaker in Asia Wednesday as a surprise build shown in industry estimates of U S stockpiles weighed on sentiment
On the New York Mercantile Exchange WTI crude for September delivery was last quoted down 0 35 at 42 62 a barrel On the Intercontinental Exchange ICE Brent crude for October delivery eased 0 22 to 44 88 a barrel
The American Petroleum Institute reported a 2 1 million barrel rise in U S crude oil inventories last week according to sources Earlier arket analyst Genscape reported a build of more than 307 000 barrels at the Cushing Oklahoma delivery hub
Separately Wednesday s government report could show that crude inventories nationwide fell by 1 0 million barrels for the week ending on August 5 Over the previous week U S crude stockpiles unexpectedly rose by 1 4 million barrels defying analysts expectation for a 1 4 million draw At 522 5 million barrels U S crude oil inventories are at historically high levels for this time of year
Analysts will keep a close eye on gasoline inventories which are expected to decline by 1 2 million for the week During the last week of July gasoline stockpiles unexpectedly fell by 3 3 million barrels amid a considerable drawdown throughout the PADD 1 district covering the majority of the U S east coast In recent weeks worldwide gasoline inventories have swelled to around 500 million barrels according to analysts from Citigroup Inc NYSE NYSE C as refineries churn out product at a rapid pace due to historically low crude prices
Overnight crude futures see sawed on a choppy volatile day of trading retreating from two week highs
Elsewhere Iran exported 1 72 million barrels per day in June to China India Japan and South Korea the Islamic Republic News Agency IRNA reported on Tuesday marking a 47 increase from its level in January Last month senior officials from Iran s state run National Iranian Oil Company told Bloomberg that the Gulf state expects to double exports from its pre sanction levels in an effort to regain market share as long as demand abroad remains high
In India the nation consumed 48 5 million tons of oil for the three period ending in June representing the swiftest pace of demand growth in more than a decade Currently OPEC provides 85 of all oil imports to India more than half of which is supplied by Saudi Arabia Iraq and Iran according to Clipper Data While a number of analysts expect global markets to rebalance at some point in 2017 the return of Iran to markets in February following the removal of longstanding economic sanctions has exacerbated concerns related to the worldwide supply glut |
C | Citigroup fails to halt AT T use of thanks | By Jonathan Stempel NEW YORK Reuters A judge on Thursday rejected Citigroup Inc s N C bid for a preliminary injunction to stop AT T Inc N T from using the phrase AT T thanks on a customer loyalty program which the bank called too similar to its trademarked thankyou U S District Judge Katherine Forrest in Manhattan said Citigroup has not shown that customers would likely be confused or that it would suffer irreparable harm if AT T kept saying AT T thanks while the bank s lawsuit continued She also said AT T provided solid evidence that forcing it to start saying something other than AT T thanks would cause an expensive and significant disruption Citigroup had no immediate comment AT T said in a statement it was pleased with the decision and maintained that the law does not allow one company to own the word thanks The fourth largest U S bank by assets sued AT T on June 9 one week after the Dallas based phone company launched AT T thanks in a dispute that threatened to damage a co branding relationship dating to 1998 Citigroup said AT T went too far having known it would object after the New York based bank had since 2004 extensively used thankyou on its own customer loyalty and reward programs According to court papers Citigroup s thankyou programs have about 15 million members in the United States and 1 7 million customers there have AT T co branded credit cards But in her 30 page decision Forrest said the companies are targeting different markets finance and telecommunications and use different logos typefaces and colors in their marketing She said this counteracts the slogans obvious similarities at least when considered in the abstract AT T THANKS and THANK YOU share five central letters are partially pronounced similarly and both convey a message of gratitude Forrest also found no evidence of consumer confusion and said Citigroup s evidence of what it called many negative comments about the AT T thanks program show that consumers in fact could distinguish it from the bank s program The judge has not ruled on whether AT T actually infringed Citigroup s trademark
The case is Citigroup Inc v AT T Inc et al U S District Court Southern District of New York No 16 04333 |
C | Hedge fund manager used terminally ill patients for profit SEC | By Suzanne Barlyn Reuters A hedge fund manager paid terminally ill patients to use their names in a bond buying scheme that generated 9 5 million in profits a U S securities regulator said on Monday Donald Jay Lathen Jr who manages Eden Arc Capital Management LLC was charged with fraud after putting the patients names on joint brokerage accounts along with his own so he could buy bonds for his fund and profit by selling them back to issuers when the patients died according to a U S Securities and Exchange Commission complaint Lathen opened 60 such accounts since May 2011 but none listed his fund as the owner or Lathen as an agent The fund could not legally be a joint owner with survivorship rights because it is a corporate entity the SEC said We have no doubt that Mr Lathen s investment strategy is entirely legitimate and violates no law and we intend to vigorously defend him against the SEC s meritless charges said Lathen s New York based lawyer Harlan Protass in a statement Mr Lathen looks forward to clearing his name Lathen will be able to refute the SEC s allegations in an administrative proceeding According to the SEC s complaint the 48 year old hedge fund manager used contacts at nursing homes and hospices to help him identify patients who had less than six months to live He promised the patients 10 000 in exchange for becoming a joint account owner Lathen promoted an end of life financial assistance program to the terminally ill through EndCare a company he founded in 2009 to induce them to sign on to the joint accounts the SEC said Using those accounts Eden Arc bought medium and long term bonds as well as certificates of deposits that include so called death puts that allow a deceased person s beneficiaries to sell the bonds back to the issuers at full par value The strategy earned money because Eden Arc initially bought the bonds in secondary markets for less than par As patients died Lathen sent letters to issuers saying he was the joint owner the SEC said The conduct was reckless the SEC said because Lathen knew the statements were false The fund also ran afoul of SEC rules for the proper holding of funds known as custody because Lathen listed his own name on the brokerage accounts the SEC said Lathen launched Eden Arc Capital Partners LP in 2011 From May 2011 through September 2015 the fund claimed total returns of 74 7 percent It managed about 52 million at its peak but that declined to 31 million in January the SEC said Prior to Eden Lathen was an energy investment banker at Citigroup Inc NYSE C and Lehman Brothers Corrects paragraph 2 to Management instead of Manager |
C | Citigroup Upgrades OneSavings Bank | OneSavings Onesavings LON OSBO was upgraded by Citigroup NYSE C to a buy rating in a note issued to investors on Friday MarketBeat com reports
OSB has been the subject of several other research reports Credit Suisse SIX CSGN Group restated an outperform rating and set a GBX 450 5 88 price target on shares of OneSavings Bank PLC in a research report on Thursday July 6th Investec restated a buy rating and set a GBX 455 5 94 price target on shares of OneSavings Bank PLC in a research report on Wednesday June 14th Macquarie restated a neutral rating and set a GBX 388 5 07 price target on shares of OneSavings Bank PLC in a research report on Monday July 3rd Liberum Capital restated a buy rating and set a GBX 495 6 46 price target on shares of OneSavings Bank PLC in a research report on Thursday May 25th Finally Numis Securities Ltd restated a hold rating and set a GBX 394 5 14 price target on shares of OneSavings Bank PLC in a research report on Wednesday May 3rd One equities research analyst has rated the stock with a sell rating two have given a hold rating and eleven have issued a buy rating to the company s stock OneSavings Bank PLC presently has an average rating of Buy and an average target price of GBX 431 33 5 63
OneSavings opened at 392 20 on Friday MarketBeat com reports The stock s market capitalization is GBX 953 37 million OneSavings has a 12 month low of GBX 189 40 and a 12 month high of GBX 477 97 The firm s 50 day moving average is GBX 386 79 and its 200 day moving average is GBX 390 85
In related news insider Andrew Doman bought 1 938 shares of the firm s stock in a transaction that occurred on Tuesday June 13th The stock was purchased at an average price of GBX 394 5 14 per share for a total transaction of 7 635 72 9 970 91
OneSavings Bank PLC Company Profile
OneSavings is a United Kingdom based lending and retail savings company The Company operates through three segments Buy to Let SME Residential Mortgages and Personal Loans The Company provides Buy to Let mortgages secured on residential property held for investment purposes by experienced and professional landlords and commercial mortgages secured on commercial and semicommercial properties held for investment purposes or for owner occupation |
C | Citigroup Downgrades South32 | South32 Ltd AX S32 was downgraded by research analysts at Citigroup NYSE C to a neutral rating in a report issued on Friday MarketBeat com reports They currently have a GBX 170 2 22 price objective on the stock down from their previous price objective of GBX 180 2 35 Citigroup Inc s price target would suggest a potential downside of 0 58 from the company s previous close
Other equities research analysts have also issued reports about the stock HSBC Holdings LON HSBA plc raised their price objective on shares of South32 from GBX 185 2 42 to GBX 205 2 68 and gave the company a buy rating in a report on Wednesday April 19th Jefferies Group LLC raised their price objective on shares of South32 from GBX 215 2 81 to GBX 225 2 94 and gave the company a buy rating in a report on Tuesday April 18th Deutsche Bank AG DE DBKGn restated a hold rating and issued a GBX 150 1 96 price objective on shares of South32 in a report on Thursday May 4th BNP Paribas PA BNPP restated a neutral rating and issued a GBX 177 2 31 price objective on shares of South32 in a report on Tuesday March 28 Finally Macquarie restated an outperform rating and issued a GBX 220 2 87 price objective on shares of South32 in a report on Friday May 5th One investment analyst has rated the stock with a sell rating six have issued a hold rating and four have issued a buy rating to the company s stock The stock has a consensus rating of Hold and a consensus target price of GBX 170 18 2 22
South32 opened at 165 50 on Friday MarketBeat com reports The firm s 50 day moving average price is GBX 160 15 and its 200 day moving average price is GBX 163 20 South32 has a 12 month low of GBX 101 25 and a 12 month high of GBX 184 00 The stock s market cap is GBX 8 80 billion
South32 Company Profile |
C | Contura Energy Gambles On The President With Its IPO | Contura Energy Inc NYSE CTRA a Tennessee based coal mining company with operations that span across the US set the terms on Monday for an impressive IPO that could total at over 150 million The coal giant which formed after a restructuring of Alpha Natural Resources pegged initial shares at a range of 23 to 27
Contura hopes to sell upwards to 6 000 000 shares on the market though prominent underwriters will still be granted a 30 day option to buy an additional 900 000 shares If Contura s IPO follows through at its initially listed offers the company could come to achieve an impressive valuation of over 800 million
While some in the fossil fuel industry have been biting their nails over the recent expansion in green energy Contura Energy is betting heavily on a coal friendly market fostered under President Trump The president s 2016 election campaign heavily on reinvigorating Appalachian coal mining states such as West Virginia and Ohio a fact which Contura s prospectus prominently highlighted
The prospectus the president s domestic energy ambitions and indicated that they bode well for the company s future Contura doesn t deny that it faces increasing competition from green energy producers but cited a reduced regulatory burden likely to be enjoyed by the industry due to the president as one of the reasons it s optimistic
The company cited the president s suspension of the Clean Power Plan as one of the earliest indicators of the industry s potentially prosperous future
Contura s prospectus also highlighted the growing threat that fracking and other natural gas initiatives pose to its coal mining operations 37 of the company s revenue thus far into 2017 was driven by its steam coal operations which primarily dig coal for power that could be replaced by gas meaning that further development of natural gas fields cut stand to cut into its future profits
While it will face some serious competition Contura Energy will also have an impressive cadre of investors at its back as it dives into the fossil fuels market Citigroup NYSE C Credit Suisse SIX CSGN USB Investment Bank and Jefferies will act as the bookkeeping managers and a number of other securities firms will be peripherally as well
Most investors will probably come to dig the company s impressive sales record Contura booked over a billion and a half in sales in a 12 month period which ended March 31 2017 From July 2016 to December of the same year the company brought in roughly 689 million in revenue while only posting losses of about 10 9 million in the same period
Contura Energy s prospectus also noted the longevity of the mines in the company s possession saying it had a remaining mine life of approximately 30 years based on 2016 levels of production with over 1 0 billion tons of proven reserves and an additional 310 million tons of probable reserves
Regardless of support it receives from the White House Contura Energy s future may simply bank on the future of the global coal market which many investors may shun as being dead in the long term China the world s largest consumer of coal has recently instituted restrictions on domestic coal production as it competes with which could lead to more business for US producers in the short term but signals that the country is looking elsewhere for its power needs in the long run
Nonetheless President Trump s ardent commitment to coal miners to bring back their jobs and foster domestic US energy markets could lure in investors keen to capitalize on the political momentum currently enjoyed by the industry If it hopes to survive well into the future however Contura Energy will need to show that it won t rely on friendly politicians as life support vessels in an increasingly jeopardized market
Contura Energy s hefty levels of debt which exceed 400 million could also stand to muddy the company s future By nature of being a coal mining company it will also need to divert serious sums of cash towards ensuring its employee s health as it already faces nearly 14 million in black lung obligations Investors looking for a bold initiative to pin their hopes on could find what they re looking for in Contura Energy s earnest commitment to the American coal market should the company overcome these hurdles and continue to post impressive revenue figures With the president s vocal support of the industry it may yet give its competitors a run for their money |
JPM | Banks Far Outperforming The Street s Consensus | Two important banks just reported very solid numbers That s important because the financials are a very significant stock market sector that contributes tremendously to investor sentiment and the overall tone for trading action in the capital markets Wells Fargo Company WFC beat the Street with a 19 gain in quarterly earnings The company is the fourth largest U S bank by assets and controls almost 30 of the U S mortgage market The company s diluted earnings per share EPS grew for the 14th consecutive quarter Second quarter earnings were a record 5 5 billion or 0 98 per diluted share compared to 4 6 billion or 0 82 per diluted share in the second quarter of 2012 second quarter 2013 earnings are also up from 5 2 billion or 0 92 per diluted share in the first quarter First half earnings were a record 10 7 billion or 1 90 per share up from 8 9 billion or 1 57 per share in the first half of 2012 Compared to the second quarter of last year company management cited growth in loans deposits and net interest income and an improvement in credit quality Also reporting very good numbers was JPMorgan Chase Co JPM The company announced second quarter earnings of 6 5 billion way up from 5 0 billion in the comparable quarter last year EPS grew 32 to 1 60 up from 1 21 in the second quarter of 2012 Total net revenues were 25 2 billion up solidly from 22 2 billion comparatively The company s total assets under management grew 10 to 2 2 trillion while total loan balances rose to a record 86 0 billion The company also boosted its quarterly dividend payment to 0 38 a share up from the previous 0 30 a share JPMorgan handedly beat Wall Street consensus The company s CEO Jamie Dimon cited broad based signs that the U S economy is improving as the reason for its Wall Street consensus victory But quarterly comparables can be somewhat misleading when it comes to the financial sector In JPMorgan s case the company was forced to increase its loss estimate due to a bad trade in the second quarter of 2012 thereby reducing that quarter s earnings But the company s latest revenue growth was surprisingly solid Individuals may not be enthused about the big banks doing well but their financial strength is a very important part of confidence in the global capital markets Their revenue and earnings growth is a reflection of economic conditions both for Main Street and Wall Street Improvement in loan losses is also a positive development With strength in financials comes greater certainty for the stock market Good numbers from Wells Fargo and JPMorgan most certainly help to legitimize the stock market s recent run up As more earnings pour in I think it is increasingly likely that the broader market will consolidate on positive results The main market indices have come a long way already With the numbers company outlooks are critical Most corporations and Wall Street earnings estimates are weighted to the bottom half of the year and the market will be looking at company outlooks to reassure this expectation Disclaimer There is no magic formula to getting rich Success in investment vehicles with the best prospects for price appreciation can only be achieved through proper and rigorous research and analysis The opinions in this e newsletter are just that opinions of the authors Information contained herein while believed to be correct is not guaranteed as accurate Warning Investing often involves high risks and you can lose a lot of money Please do not invest with money you cannot afford to lose |
JPM | Commodities Trading For Banks Under Threat With Fed Reviewing Regulation | JPMorgan Chase Co JPM Morgan Stanley MS and Goldman Sachs Group Inc GS are among lenders whose commodity trading is in jeopardy as the Federal Reserve reconsiders letting banks ship oil and store metal The central bank ahead of a Senate subcommittee hearing on the issue tomorrow says it s reviewing a decade old ruling to let deposit taking banks trade physical commodities A reversal would be the Fed s biggest exclusion of banks from a market since Congress lifted the Depression era law against them joining with securities firms in 1999 Like any regulator the Fed doesn t like reversing a long line of decisions said Saule T Omarova a law professor with the University of North Carolina at Chapel Hill who s scheduled to testify at tomorrow s hearing If they get enough pressure from the outside they might be forced to do so The 10 largest Wall Street banks generated about 6 billion in revenue from commodities in 2012 including dealings in physical materials as well as related financial products according to a Feb 15 report from analytics company Coalition Goldman Sachs ranked No 1 followed by New York based JPMorgan Goldman Sachs held 7 7 billion of commodities at fair value as of March 31 and New York based Morgan Stanley had 6 7 billion according to regulatory filings None of the banks disclose how much revenue or profit comes from commodity trading or break out the contribution from physical assets |
JPM | JP Morgan s Gold And Silver Market Dominance | In the weekly review I referenced several news stories about JPMorgan A few hours after publishing that report another big news story made the scene a comprehensive in Sunday s New York Times concerning the big banks and base metal warehouse shenanigans In a nutshell the story alleged that giant financial firms like Goldman Sachs GS and JPMorgan JPM had amassed vast holding of metals warehouses and then engaged in schemes involving artificial metal movements for personal profit at the expense of the consumer and user communities This story was followed by news of senate committee hearings and CFTC interest in the warehousing issue and more commentary about the Federal Reserve having doubts about whether the big banks should be allowed to deal in This issue is potentially as important as it gets And it certainly begs the question I have asked repeatedly why in the world should big banks be dealing in physical or derivatives on commodities in the first place Volcker Rule would outlaw proprietary trading and thereby the Market Dominance by commercial banks Over the past few years much has been written and discussed about the that would outlaw proprietary trading by commercial banks The main purpose of the proposed rule was to end the risks to the financial system caused by reckless speculation by banks backed by insured deposits that were deemed too big to fail The idea of the Volcker Rule is to get the big banks out of proprietary trading and eliminate any need for taxpayer bailouts for big bets gone wrong While the big banks have held the Volcker Rule at bay and prevented its enactment to date it occurred to me that there is an even more compelling reason why these banks and especially JPMorgan should not be allowed to trade commodities for their own accounts Potential risk is one thing clear and present damage is another Quite apart from the potential risk that taxpayers may have to bail out a big bank on the wrong end of a speculative bet there is clear proof of a greater actual damage that is occurring today We are all suffering presently and mightily because of how JPMorgan and others conduct their proprietary trading in commodities These big banks are not interested in trading commodities like any other market participant instead their modus operandi is not just to trade in but to dominate markets This is my key point JPMorgan s intent and culture is to be the leader to be number one in any business activity in which it is involved Being number one and dominating a particular business space may be fine in activities like investment banking and issuing credit cards but the problem with this intent in commodity markets is that market dominance equals price control and manipulation There is no justification for there to be market dominance in any commodity market In fact this is the whole point in having commodity law and a commodity regulator namely to prevent dominance by any one entity I ve used the word concentration endlessly and that s just another word for dominance If you allow concentrated holdings and little real competition you invite price fixing This is the problem with the concentrated ownership of metal warehouses but it is even a bigger problem in our regulated futures markets where concentration and market dominance are verifiable The enactment of legitimate speculative position limits would eliminate and prevent concentration and market dominance as I ve advocated for decades and it should be no secret that those who hold concentrated and market dominant positions like JPMorgan have killed any prospect of legitimate position limits ever coming into existence If you held a dominant market position that enabled you to control prices and your own profits wouldn t you fight to keep that control JPMorgan s Market Dominance lead to Manipulation Concentrated short positions in COMEX Silver futures Let s face it if I m going to accuse JPMorgan of concentration and market dominance and therefore of manipulation I d better be specific and accurate In the past I ve pointed out JPMorgan s concentrated short position in COMEX silver futures which had reached over 40 of the total net open interest a few years back Back then CFTC Commissioner Bart Chilton verified my findings publicly but has since retreated from his past statements So let me update my COMEX silver concentration findings and include specific data on COMEX gold In the CFTC s Commitments of Traders COT and Bank Participation Reports of February 5 my analysis indicates that JPMorgan held a net short position of 35 000 contracts in COMEX silver futures Once 50 000 spread positions are removed from the total open interest of 151 512 contracts to arrive at true net open interest JPMorgan held 34 5 of the short side of COMEX silver on Feb 5 little real reduction from the 40 that Commissioner Chilton confirmed years before Please allow me to state the obvious JPMorgan held a manipulative share of the silver market on Feb 5 and that controlling and dominant market share was primarily responsible for the fall in silver prices from 32 on that date to a recent low of 18 and change For those keeping score JPMorgan s historic rigging of the silver price lower enabled the bank to reduce its share on the short side to less than 15 of total current COMEX net open interest Certainly if I am misstating anything I call on the CFTC or JPMorgan or anyone else to correct the record I ve been writing a lot about JPMorgan s COMEX gold position recently and I thought it might be instructive to talk about the bank s concentrated and dominant market share of that market On February 5 JPMorgan was net short around 50 000 COMEX gold contracts with the price of gold at 1670 After removing approximately 70 000 spread positions from total gold open interest of 423 982 contracts on that date there was a true net open interest on Feb 5 of 354 000 contracts Therefore JPMorgan short position of 50 000 contracts or more made up 14 of the entire short side of COMEX gold futures on a true net basis on Feb 5 A 14 share of a market may not sound like much after I just stated that JPMorgan had held a 34 5 share of the silver market on Feb 5 but silver is very special when it comes to being manipulated in both level of degree and longevity It would be a mistake to underemphasize the significance of a 14 net market share in any regulated futures market especially one as large as COMEX gold futures with a total notional value of more than 50 billion Let me return to the significance of such large percentages of concentration and market share dominance in a moment First let s look at JPMorgan s current long COMEX gold position Based upon the most recent COT report as of July 16 I estimate JPMorgan s net long position in COMEX gold futures to be 75 000 contracts After subtracting 77 000 spread positions from total open interest of 440 283 contracts true net open interest in COMEX gold futures is just over 363 000 contracts Therefore JPMorgan s 75 000 contract net long position represents more than 20 of the entire COMEX gold futures market on the long side First JPMorgan had a 14 market share on the short side and now they flipped that into a 20 share of the long side as a result of JPMorgan manipulating the price of gold nearly 500 lower These are extraordinary and dominant market shares and unprecedented price rigs to the downside To not see them as cause and effect is to miss the obvious To get a perspective of market shares of 34 5 14 and 20 you must measure them against some objective barometer I would suggest using the CFTC s own formula for position limits as the barometer The formula 10 of the first 25 000 of open interest plus 2 5 of the remaining open interest would call for a position limit in silver of around 5200 contracts in silver and not the 35 000 contracts held by JPM on Feb 5 or the 14 000 contracts that JPMorgan holds net short now in silver In gold the CFTC s formula would call for a position limit of 12 875 contracts and not the 75 000 that JPMorgan holds long now Expressed in percentage terms the CFTC s formula in gold would call for any one trader to hold not more than 2 9 of the COMEX gold futures market yet JPMorgan currently holds 20 on the long side If you can remember back three years ago I was bitterly disappointed when the CFTC devised their formula for position limits Many thousands of public comments were sent to the Commission at my urging asking that 1500 contracts or 1 of the entire COMEX market or of total world production be the proper formula in silver Fair Simple and Sound Not only was the base rate of the formula two and a half times greater than the proper 1 adding the much larger 10 provision on the first 25 000 contracts of open interest artificially raised the effective rate to 5 for smaller open interest markets like silver By the way this provision was provided by the CME Group and was readily accepted by the CFTC As it turned out I should have saved my disappointment for the eventuality that even the much larger 5 position limit in silver was too restrictive for the CME and JPMorgan In the end the enactment of position limits approved by the CFTC in conjunction with the Dodd Frank Act was disallowed after legal action sponsored by JPMorgan Now you know why we don t have position limits because it would limit JPMorgan s manipulative hold on the market But by being specific and clear I am hopeful that the current scrutiny being placed upon the big banks for their dealings in commodities might focus on the real issue market dominance This is the key issue and it has gone unstated until now According to the CFTC s own proposed formula no one trader should hold more than 3 in COMEX gold futures yet JPMorgan holds 20 currently Why is that allowed Years ago the CFTC was successful in alleging manipulation in the copper market by a trader from Sumitomo called Mr 5 for his share of the market What should we call JPMorgan Sir 20 or Your Highness 34 5 The important point is that my analysis is based upon publicly available data from the CFTC That data indicate that JPMorgan holds an unnaturally large and dominant share of the gold and silver markets based upon any objective measure Of course a 20 or larger market share is not unnatural from JPMorgan s perspective or culture and quite frankly that is the problem JPMorgan is only doing in the commodities market what it does in its other lines of business But what it does elsewhere is manipulation in the commodities market Some may question whether I should even raise the issue of JPMorgan holding such a large concentrated and dominant long position in COMEX gold for fear its forced disposal might pressure gold prices I understand those concerns but as an analyst it would be dishonest for me to remain silent in the face of such compelling evidence of wrongdoing by this crooked bank Besides the chances of any immediate action by the CFTC are remote Still it would be far better to remove JPMorgan as the dominant participant in the commodities market and eliminate their incentive for continued commodity manipulation Certainly I shouldn t have to be the one to urge the CFTC to do the job they swore to do particularly when the proof of market dominance and control is contained in their own publications Finally there continues to be an outburst of what I feel are misleading reports from within the precious metals Internet community Some of the reports from declining gold inventories on the COMEX to stories about lease rates and backwardation in gold to predictions of COMEX default or sudden changes in contract delivery terms have my head spinning Look I m bullish about the price prospects for gold and silver based upon the market structure and the fact that the silver cost of production is above current prices but that s no excuse for spreading false information The level of COMEX inventories has little to do with a contract default What would matter more would be short contract holders refusing to buy back or roll over positions in the spot delivery month A delivery default would kill the COMEX and it would be a self inflicted fatality The CME knows better than anyone what the consequences of a delivery default would be and they would take any measure necessary to prevent it especially now that JPMorgan is massively long COMEX gold The same goes for suggestions that the exchange would suddenly and unilaterally alter basic contract delivery requirements or institute a cash settlement The term futures contract means there are rigid contractual requirements which can t be suddenly abrogated without that being considered a legal default I suppose the CME could introduce new futures contracts voiding the physical delivery obligations of the current contracts but that would take years and no one would deal in such phony contracts anyway The one thing that gives COMEX metal contracts legitimacy is the ability to convert futures contracts into actual metal via delivery The chance of the CME initiating a contract default in gold or silver regardless of what warehouse inventories may be are about as good as me stepping ahead of the new royal baby in future UK succession plans for the throne And I have to add that I don t understand any of the current discussion of gold lease rates and I am very familiar with metals leasing for the simple reason that none of them make any sense Let me be the first to say it for a wide variety of reasons GOFO is goofy Instead as I indicated on Saturday one market participant JPMorgan determines what will happen price wise in gold and silver and other commodities This is a crooked bank that has no business controlling the gold and silver markets by its easy to document dominant market position It s encouraging that there is wide discussion on the unnatural control Market Dominance that big banks have on LME metal warehouses and that the Fed is reconsidering the wisdom of allowing banks to deal in physical commodities But the most obvious danger of all is allowing JPMorgan to hold dominant market shares in regulated futures markets |
JPM | On Gold And Seasonality Is Now A Good Time To Buy | A few years ago I attended a seminar where Jake Bernstein spoke about seasonality This really appealed to me because of the statistical nature of seasonality You had your odds and could bet accordingly From there I bought a few of Jake s books and did a little more reading on the subject I subscribed to his newsletter for a while and probed the internet for more information I found that there are a lot of websites that provide great information on seasonality What I discovered is that seasonality works Except when it doesn t The interesting thing about statistics is that they can be shaped morphed and eventually strained into making you think there is something there when there really isn t An older but good book on the subject is How to Lie with Statistics by Darrell Huff When I first read it back in the 90 s it was quite illuminating Since then I have come to understand that the responsible use of statistics is a powerful tool and that the misuse of them is also a powerful tool There is a temptation to read too much into market statistics just the same way that there is a temptation to read too much into technical indicators Statistics and indicators many based on statistics themselves really fall into the category of it is what it is Over reaching interpretations won t help you over the long run In a table shown below from seasonalodds com we see that over the last 20 years the S P has finished positive in the month of September 55 of the time That means that if you had taken a trade where you bought the S P on the first day of September and you sold it on the last day of September and you did this every year for the last 20 years you would have won 11 times and lost 9 times That s a positive edge At least that s how it appears on the face of it But also in that same chart we see that the average return for September over those 20 years is 0 13 This is because September on average is the worst month of the year to be long in the market you can Google it as there are dozens of articles pointing this out a recent one is So even though there may be a positive edge you must know what to do when that edge doesn t play out It s no good jumping in on a statistical edge and then not jumping out should the market go against your position If your wins are smaller than your losses having more wins won t help And therein lies one of the flaws in seasonality It gives you odds but it says nothing about trading style position sizing or risk management all of which are critical components when working in the markets That s the funny thing about statistics they doesn t always tell the whole story Shown below is a seasonal table for gold via the SPDR Gold Shares ETF GLD from seasonalodds com This is a fantastic looking chart and suggests that you should be in gold starting now and stay there through November But before you do take a look at the data set There are 8 9 years worth of data Is that sufficient Almost certainly not The reason is that the data set covers a period predominated by a historic bull run in gold There is no doubt that in the previous 8 years or so being long gold in July through November was the right move But buying gold just about any time since 2001 has been the right move Such is the nature of bull markets They are a great time to buy except for the time after the peak For the months of August and September there is a 75 chance that gold will finish higher at the end of those months than where it was at the beginning We won t know if this August and September become part of the 75 group or the 25 group If you are betting on 75 just make sure you know what to do should it turn out to be one of those times where gold s price lands in the 25 group I have to admit that I have been unfair in the previous seasonal chart of the GLD ETF It has only been around for 9 years of which the majority of time gold has been in a spectacular bull phase presently it is not according to my monthly and weekly charts I did this to point out that statistics are sometimes based on too little data We do have seasonality data on gold itself for the last 30 years As you can see in the chart below the last half of the year has been a good time to be long gold My usual charts are below and there is not much to say The SPX is in bull mode and Gold is not However as I stated last week I suspected that the Market Vectors Gold Miners ETF GDX and the Market Vectors Junior Gold Miners ETF GDXJ would both trigger the short stop meaning if you were short it was time to close that position That is exactly what happened I am now waiting to see if I get a long signal Certainly seasonality is in favor of this happening but seasonality only works with multiple samples over a long period of time At any given moment month or year seasonality can be wrong since no indicator or method is a perfect forecaster Finally in I suggested that there may be business reasons that explain some of the conspiratorial ideas surrounding gold and storage Specifically I said about JP Morgan JPM that They might be reducing inventory in preparation for new inventory from another customer they may be moving it to a partner holder or they might be getting out of the business of storage Several days later in a late Friday afternoon news release CNBC ran story The opening sentence says a lot is exiting physical commodities trading the bank said in a surprise statement on Friday The article also states that The firm will explore a sale spinoff or strategic partnership of the physical business So like any business that is getting out of carrying a specific item they are reducing inventories and looking at strategic alternatives The how and why of which we will not know until much later That information is proprietary to JPM business operations |
JPM | Futures Higher After Asia Turnaround | Futures Higher After Asia Turnaround U S equity futures rose slightly in early pre market trade as Asian shares reversed losses from Monday and rose overnight Market now look to earnings and the flood of economic data that begins today and continues through the rest of the week for direction Top News In other news around the markets J P Morgan Chase JPM was charged by regulators of manipulating the power market and costing citizens over 70 million in additional power costs Overnight the People s Bank of China injected funds into the short term lending market for the first time since February finally acting to ease credit conditions RBA Governor Glenn Stevens spoke overnight and hinted at more rate cuts to come at the August 6 meeting of the central bank S P 500 futures rose 0 7 points to 1 683 20 The EUR USD was higher at 1 3273 Spanish 10 year government bond yields were flat at 4 68 percent Italian 10 year government bond yields were flat at 4 46 percent Gold fell 0 41 percent to 1 324 10 per ounce Asian Markets Asian shares were higher overnight on some positive economic news and also on a reversal of Monday s losses The Japanese Nikkei 225 Index gained 1 53 percent and the Topix Index rose 1 78 percent In Hong Kong the Hang Seng Index rose 0 48 percent and the Shanghai Composite Index rose 0 7 percent in China Also the Korean Kospi rose 0 9 percent and Australian shares rose 0 02 percent European Markets European shares mixed but roughly unchanged in early trade on little news The Spanish Ibex Index fell 0 12 percent and the Italian FTSE MIB Index rose 0 1 percent Meanwhile the German DAX rose 0 08 percent while the French CAC 40 Index fell 0 03 percent and U K shares rose 0 14 percent Commodities Commodities were lower overnight as the dollar gained back some losses WTI Crude futures fell 0 68 percent to 103 84 per barrel and Brent Crude futures declined 0 2 percent to 107 24 per barrel Copper futures fell 0 84 percent to 308 15 per pound Gold was lower and silver futures declined 1 33 percent to 19 60 per ounce Currencies Currency markets were on the move as the Aussie dollar plunged on comments from Governor Stevens The EUR USD was higher at 1 3273 and the dollar rose against the yen to 98 03 Overall the Dollar Index rose 0 1 percent on strength against the pound the Canadian dollar and the yen Notably the AUD USD declined 1 5 percent to 0 9068 and the AUD JPY fell 1 41 percent to 88 9070 Earnings Reported Yesterday Key companies that reported earnings Monday include Herbalife HLF reported second quarter EPS of 1 41 vs 1 18 expected on revenue of 1 22 billion vs 1 16 billion expected Wynn Resorts WYNN reported second quarter EPS of 1 51 vs 1 57 expected on revenue of 1 33 billion vs 1 34 billion expected U S Steel X reported a second quarter loss of 0 54 per share vs an expected loss of 0 79 per share on revenue of 4 43 billion vs 4 61 billion expected Roper Industries ROP reported second quarter EPS of 1 16 vs 1 30 expected on revenue of 784 million vs 806 67 million expected Pre Market Movers Stocks moving in the pre market included Mosaic MOS shares fell 6 28 percent as the world s largest potash produced OAO Uralkali forecast global prices will fall 25 percent Potash POT shares fell 9 23 percent pre market on the same news Herbalife HLF shares rose 5 42 percent pre market after reporting better than expected earnings and raising full year guidance Alcoa AA rose 0 5 percent pre market after U S Steel X reported a narrower than expected loss and also on its newly announced 1 billion accelerated buyback program Earnings Notable companies expected to report earnings Tuesday include BP BP is expected to report second quarter EPS of 1 13 vs 1 16 a year ago on revenue of 62 35 billion vs 99 34 billion a year ago Pfizer PFE is expected to report second quarter EPS of 0 55 vs 0 62 a year ago on revenue of 13 03 billion vs 15 06 billion a year ago Aetna AET is expected to report second quarter EPS of 1 40 vs 1 31 a year ago on revenue of 11 9 billion vs 8 83 billion a year ago Merck MRK is expected to report second quarter EPS of 0 83 vs 1 05 a year ago on revenue of 11 22 billion vs 12 31 billion a year ago Dollar General DG is expected to report second quarter EPS of 0 74 vs 0 69 a year ago on revenue of 4 36 billion vs 3 95 billion a year ago Economics On the economics calendar Tuesday the weekly Redbook is due out followed by the S P Case Shiller Home Price Index and the CB Consumer Confidence Report The Treasury is also expected to auction 4 week bills Overnight the German retail sales and unemployment reports are due out BY Matthew Kanterman |
MS | Gold inches lower in cautious trade ahead of EU summit | Investing com Gold futures inched lower in rangebound trade during European morning hours on Thursday as most investors retreated to the sidelines ahead of the start of a two day European Union summit in Brussels later in the day On the Comex division of the New York Mercantile Exchange gold futures for August delivery traded at USD1 573 65 a troy ounce during early European trade shedding 0 3 The August contract traded in between a tight range of USD1 579 75 the daily high and a session low of USD1 572 95 a troy ounce Gold futures were likely to find short term support at USD1 546 35 a troy ounce the low from June 1 and resistance at USD1 605 25 the high from June 21 Investors remained cautious ahead of the start of a two day EU summit due to begin later Thursday amid worries the talks will not result in any effective steps to strengthen fiscal integration and allow the euro zone s rescue funds to buy government debt Hopes that European leaders would make headway on dealing with the debt crisis in the region faded after German Chancellor Angel Merkel reiterated her opposition to the idea of joint euro zone bonds on Wednesday Meanwhile the yield on Spanish 10 year bonds rose to 6 97 in early trade hovering just below the critical 7 threshold that prompted Greece Ireland and Portugal to seek international bailouts Elsewhere Italy saw six month borrowing costs climb to the highest level since December at a debt auction Wednesday as investor sentiment towards the country continued to deteriorate 10 year Italian bonds yields climbed to 6 23 up from 6 20 Wednesday Italy is offering up to EUR5 5 billion in five and 10 year debt in a closely watched bond auction later in the session Investors fear one or both countries may need a bailout similar to Greece by the fall Meanwhile Wall Street investment bank Morgan Stanley lowered its 2012 gold forecast by 8 to USD1 667 per ounce It also cut its 2013 forecast by 16 to USD1 816 per ounce Although gold s appeal as a safe haven is boosted during times of economic uncertainty the euro zone s debt crisis has done little to bolster appetite for the precious metal in recent months A weakening euro and stronger dollar have weighed on gold instead as the precious metal has been moving in tandem with riskier assets since hitting a record high of USD1 920 last September Gold has lost some of its safe haven appeal to the dollar U S Treasuries and German Bunds partly as a strengthening dollar makes the metal less attractive to buyers holding other currencies Elsewhere on the Comex silver for September delivery fell 0 2 to trade at USD26 94 a troy ounce while copper for September delivery was flat to trade at USD3 357 a pound |
MS | European stocks push lower ahead of talks DAX plunges 1 70 | Investing com European stocks extended losses on Thursday as market sentiment weakened amid growing skepticism over the outcome of this week s European Union summit in Brussels while Italian and Spanish borrowing costs remained dangerously high During European afternoon trade the EURO STOXX 50 dropped 1 04 France s CAC 40 tumbled 1 02 while Germany s DAX 30 plummeted 1 70 Market sentiment was hit after a German government official indicated that the EU summit would not result in any detailed decisions and warned against high expectations among investors ahead of the conclusion of the summit on Friday Earlier in the week German Chancellor Angel Merkel reiterated her opposition to the idea of joint euro zone bonds Adding to the negative tone Italy saw long term borrowing costs rose to 6 19 their highest level since December following an auction of 10 year bonds Meanwhile the yield on Spanish 10 year bonds ticked up to 7 the level that prompted Greece Ireland and Portugal to seek international bailouts Financial stocks pushed broadly lower led by German Commerzbank down 7 08 and Deutsche Bank with shares plummeting 3 69 France s BNP Paribas and Societe Generale also extended losses tumbling 2 29 and 1 46 respectively while peripheral lenders turned higher as Italy s Unicredit surged 3 50 Intesa Sanpaolo climbed 0 70 and Spanish BBVA advanced 0 69 Meanwhile automakers erased earlier gains as shares in Daimler tumbled 1 46 and Volkswagen dropped 0 97 while French group Renault plunged 1 38 On the upside Paris based Veolia Environnement rallied 0 98 after agreeing to sell the water business to Rift Acquisitions Ltd an acquisition entity formed by Infracapital Partners and Morgan Stanley Infrastructure Partners Veolia called the sale the first significant step in an asset divestment program that it announced in December In London FTSE 100 plunged 1 23 weighed by losses in financial stocks and after official data confirmed that the U K s economy contracted by 0 3 in the first quarter Shares in Barclays dove 10 30 after U S and U K authorities announced on Wednesday that they had fined the bank more than USD450 million for attempting to manipulate the London interbank offered rate a benchmark interest rate The Royal Bank of Scotland saw shares plummet 7 66 and Lloyds Banking plunged 5 83 while HSBC Holdings tumbled 2 60 Mining stocks also remained broadly lower as shares in Rio Tinto fell 0 29 while copper producers Xstrata and Kazakhmys declined 0 85 and 0 22 respectively Elsewhere the U K s second largest department store chain Debenhams Plc saw shares decline 1 26 after it reduced its gross margin for the year by 0 3 from last year s level In the U S equity markets pointed to a lower open The Dow Jones Industrial Average futures pointed to a 0 33 fall S P 500 futures signaled a 0 26 decline while the Nasdaq 100 futures indicated a 0 23 loss Also Thursday official data showed that the number of unemployed people in Germany rose by a seasonally adjusted 7 000 in June above expectations for an increase of 5 000 but the unemployment rate held steady at 6 8 Later in the day the U S was to release government data on initial jobless claims followed by revised data on first quarter economic growth |
MS | Euro stocks close down on negative summit views DAX off 1 27 | Investing com European stocks closed lower again Thursday although off the lows as market sentiment weakened amid growing skepticism over the outcome of this week s European Union summit in Brussels while Italian and Spanish borrowing costs remained dangerously high At the close of European trade the EURO STOXX 50 dropped 0 37 France s CAC 40 tumbled 0 37 while Germany s DAX 30 plummeted 1 27 Equity sentiment was hit after a German government official indicated that the EU summit would not result in any detailed decisions and warned against high expectations among investors ahead of the conclusion of the summit on Friday Earlier in the week German Chancellor Angel Merkel reiterated her opposition to the idea of joint euro zone bonds Adding to the negative tone Italy saw long term borrowing costs rose to 6 19 their highest level since December following an auction of 10 year bonds Meanwhile the yield on Spanish 10 year bonds ticked up to 7 the level that prompted Greece Ireland and Portugal to seek international bailouts Financial stocks pushed broadly lower led by German Commerzbank down 7 08 and Deutsche Bank with shares plummeting 3 69 France s BNP Paribas and Societe Generale also extended losses tumbling 2 29 and 1 46 respectively while peripheral lenders turned higher as Italy s Unicredit surged 3 50 Intesa Sanpaolo climbed 0 70 and Spanish BBVA advanced 0 69 Meanwhile automakers erased earlier gains as shares in Daimler tumbled 1 46 and Volkswagen dropped 0 97 while French group Renault plunged 1 38 On the upside Paris based Veolia Environnement rallied 0 98 after agreeing to sell the water business to Rift Acquisitions Ltd an acquisition entity formed by Infracapital Partners and Morgan Stanley Infrastructure Partners Veolia called the sale the first significant step in an asset divestment program that it announced in December In London FTSE 100 plunged 1 23 weighed by losses in financial stocks and after official data confirmed that the U K s economy contracted by 0 3 in the first quarter Shares in Barclays dove 10 30 after U S and U K authorities announced on Wednesday that they had fined the bank more than USD450 million for attempting to manipulate the London interbank offered rate a benchmark interest rate The Royal Bank of Scotland saw shares plummet 7 66 and Lloyds Banking plunged 5 83 while HSBC Holdings tumbled 2 60 Mining stocks also remained broadly lower as shares in Rio Tinto fell 0 29 while copper producers Xstrata and Kazakhmys declined 0 85 and 0 22 respectively Elsewhere the U K s second largest department store chain Debenhams Plc saw shares decline 1 26 after it reduced its gross margin for the year by 0 3 from last year s level In the U S equity markets followed lower with the Dow off 1 09 fall the S P 500 down 1 06 while the Nasdaq 100 gave back 1 54 during midsession trade Also Thursday official data showed that the number of unemployed people in Germany rose by a seasonally adjusted 7 000 in June above expectations for an increase of 5 000 but the unemployment rate held steady at 6 8 Investors are awaiting U S consumer sentiment numbers the euro zone CPI and a talk by BOE s Gov King on Friday |
MS | Gold jumps higher on European summit optimism | Investing com Gold futures traded sharply higher Friday as worldwide commodity optimism gripped investors as a result of European Union summit progress on the debt crisis On the Comex division of the New York Mercantile Exchange Gold futures for August delivery traded at USD1581 45 a troy ounce surging 2 00 Gold was likely to find support at USD1548 45 and resistance at USD1588 95 Commodity sentiment found support after euro zone leaders agreed at a summit in Brussels that the region s rescue funds could be used to stabilise bond markets without forcing countries that comply with European Union budget rules to adopt extra austerity measures or economic reforms The leaders also agreed that the bloc s future permanent bailout fund the European Stability Mechanism ESM would be able to lend directly to recapitalize banks without increasing a country s budget deficit Spain s 10 year bond yield plunged 39 basis points to 6 56 while Italy s 10 year yield dropped 42 basis points to 5 78 on the news from the summit Adding to the bullish fervor central banks are buying bullion with Russia Ukraine Turkey and Kazakstan expanding reserves by a combined 25 tons in May according to the International Monetary Fund On a bearish note the Reserve Bank of India may cut gold coin sales by banks and Indian imports may drop to 20 tons from 25 tons this month down from 55 to 60 tons a year ago On Thursday Morgan Stanley slashed its 2012 gold price forecast by 8 1 to USD1677 per troy ounce The US Dollar Index which tracks the performance of the greenback versus a basket of six other major currencies fell 0 91 to trade at USD82 15 Elsewhere on the Comex Silver for September delivery jumped 3 30 to trade at USD27 158 a troy ounce while Copper for September delivery rose 2 69 to trade at USD3 421 a pound |
MS | U S futures mixed focus on central banks Dow Jones down 0 08 | Investing com U S stock futures pointed to a mixed open on Tuesday as a flurry of disappointing economic reports sparked fresh concerns over the outlook for global economic growth adding to expectations for further easing measures by central banks Ahead of the open the Dow Jones Industrial Average futures pointed to a 0 08 loss S P 500 futures signaled a 0 06 decline while the Nasdaq 100 futures indicated a 0 09 gain The Institute for Supply Management said its index of U S manufacturing activity dropped to 49 7 in June falling below the 50 level which separates contraction from expansion for the first time since July 2009 from 53 5 in May The weak data increased the chances that the U S central bank may implement a third round of quantitative easing to shore up economic growth which has been hit by the ongoing debt crisis in the euro zone In addition investors were looking ahead to the outcome of the European Central Bank s monetary policy meeting on Thursday amid growing expectations for a rate cut The tech sector was expected to remain in focus on Tuesday after Microsoft admitted its largest acquisition in the Internet sector was worthless and wiped out any profit for the last quarter sending shares down 1 87 in pre market trade The software giant said it is preparing to record a hefty USD6 2 billion write down in its fourth quarter mostly due to the disappointing performance of online advertising company aQuantive which it acquired five years ago Meanwhile Apple shares added 0 22 in early trading after a U S judge on Monday rejected a request by Samsung Electronics to lift a ban on U S sales of its Galaxy Tab 10 1 marking another setback for the South Korean firm in its tablet patent battle with the iPad maker Financial stocks were also likely to be active after Barclays Chief Executive Bob Diamond quit with immediate effect earlier Tuesday over an interest rate rigging scandal becoming the highest profile victim so far in a probe that spans a dozen major banks across the world The bank s Chairman Marcus Agius had announced his resignation on Monday Morgan Stanley was also likely to be in the spotlight after investors claimed that the U S bank successfully pushed Standard Poor s and Moody s Investors Service to give unwarranted investment grade ratings in 2006 to USD23 billion worth of notes backed by subprime mortgages according to a Bloomberg report The unsealing of the internal documents from Moody s and Standard Poor s came in one of the largest ratings lawsuits to emerge from the 2008 financial crisis Elsewhere Forest Laboratories was slated to move on Tuesday after investor Carl Icahn said he intends to look into disclosures that the company CEO Howard Solomon made before selling stock in the U S drug maker over the years Across the Atlantic European stock markets were moderately higher The EURO STOXX 50 rose 0 32 France s CAC 40 eased up 0 09 Germany s DAX climbed 0 51 while Britain s FTSE 100 added 0 20 During the Asian trading session Hong Kong s Hang Seng Index rallied 1 2 while Japan s Nikkei 225 Index advanced 0 7 Later in the day the U S was to release official data on factory orders |
JPM | Australia inflation surprisingly soft lengthens odds on rate hike | By Wayne Cole
SYDNEY Reuters Australian consumer prices were surprisingly soft last quarter and core inflation rate stayed below target for a sixth straight quarter a reminder of just why interest rates in the country are at record lows and set to remain there for months to come
The local dollar slipped a quarter of a cent as the consumer price index CPI rose 0 2 percent in the second quarter and 1 9 percent for the year well short of the 2 2 percent increase expected
Underlying inflation rose 0 5 percent in the second quarter from the first which matched market forecasts
The annual rate of 1 8 percent was again short of the Reserve Bank of Australia s long term target band of 2 percent to 3 percent where it has been since the start of 2016
Obviously the RBA is not going to be happy with these levels Core inflation has been too low for too long said Tom Kennedy an economist at JPMorgan NYSE JPM The RBA is not going to be thinking about rate hikes anytime soon
The protracted period of subdued inflation led the central bank to cut interest rates to a record low of 1 5 percent last year and it has been on hold ever since
Investors reacted to the inflation news by paring an already slim chance of a hike with interbank futures implying an 8 percent probability of a move by December
INFLATION HARD TO FIND
The main price increases last quarter were in health care taxes on tobacco and the cost of buying a house Offsetting that were falls in holiday travel petrol and fruit according to data from the Australian Bureau of Statistics
There are still plenty of headwinds to inflation
While higher utility charges should add to CPI this quarter they also act as a tax on consumer spending power at a time when wage growth is already at all time lows
Recent gains in the local dollar are also likely to suppress prices for many imported goods particularly tech products
The RBA itself doubts inflation will get above 2 percent for another year or more but is wary of cutting interest rates again for fear of stoking a debt driven bubble in the Sydney and Melbourne housing markets
Neither is it in any rush to hike Speaking just last week RBA Deputy Governor Guy Debelle argued there was no automatic reason for Australia to follow some of its peers in tightening
The global forces keeping rates low would continue to do so for the foreseeable future said Debelle quashing market talk of a hike before year end |
JPM | The best growth story in tech What Wall St is saying about Facebook | Facebook NASDAQ FB blew past Wall Street s expectations in its second quarter earnings
Wall Street has subsequently heaped commendation on the company Its stock one of the hot tech names that have driven the market s gains this year is set to open at an all time high on Thursday
In the second quarter Facebook s user base the largest in the world grew by 17 year over year with 66 of its 2 01 billion users visiting the social network every day Its revenues increased 45 from the same quarter a year ago to 9 32 billion while its earnings per share was 1 32 beating the forecast for 1 13
Here s a wrap of some of the analyst commentary
RBC Capital Markets BULLISH
Rating Outperform
Price target 195 185 previously
Comment FB might well be the best growth story in tech said Mark Mahaney
Yes we are incrementally more positive Core FB is growing extremely well with almost unprecedented ad revenue growth consistency More important we believe that FB s current low market shares approximately 15 of global online advertising and 5 of global total advertising will help it to maintain premium growth for a long time
Goldman BULLISH
Rating Buy
Price target 205 previously 180
Comment We maintain our attractive outlook on Facebook as the company continues to be well positioned in one of the best secular markets said the analysts led by Heather Bellini
We expect consensus estimates to increase on the back of this quarter s beat though management once again pointed to decelerating revenue growth in 2H17 as Facebook ad load reaches saturation However we continue to see opportunities for incremental ad load on Instagram increased engagement from Instagram stories and while early potential for new monetization levers through Messenger and WhatsApp
JPMorgan NYSE JPM BULLISH
Rating Overweight
Price target 210 previously 182
Comment FB continues to show a rare impressive combination of scale growth profitability said Doug Anmuth |
C | America Movil to reduce Telekom Austria stake | VIENNA Reuters America Movil will cut its stake in Telekom Austria by 7 8 percentage points to just over 50 percent it said on Thursday ahead of an end of year deadline to reduce its holding and increase the Austrian firm s free float The announcement came the same day that Citigroup NYSE C said it was launching an issue of bonds exchangeable into 7 8 percent of Telekom Austria s shares but America Movil s brief statement made no link to that issue America Movil became the majority owner of Telekom Austria through a billion dollar takeover offer in July 2014 that marked Mexican tycoon Carlos Slim s first successful venture into Europe When America Movil took control of Telekom Austria Slim agreed to increase the free float of the former state monopoly within two years Under the agreement America Movil has to increase Telekom Austria s free float by the end of the year to 20 percent from around 12 percent currently As a result America Movil is expected to reduce its 59 7 percent stake in Telekom Austria by September this year to fulfil its agreement with Austria s state holding company which owns 28 4 percent of Telekom Austria America Movil said in a statement that it had agreed to reduce its Telekom holding to 51 89 from 59 7 percent but the statement did not say how that would happen Shares in the Austrian company are currently below the price of 7 15 euros at which America Movil last acquired a stake in 2014 Telekom Austria shares closed at 5 11 euros on Thursday down 3 8 percent compared with a 1 1 percent fall in the European telecoms sector Citigroup s 374 2 million euro 415 million bond issue has an exchange price of 7 213 euros per share it said The initial exchange price represents a 40 percent premium over the volume weighted average price of the ordinary shares of the company between launch and pricing Citigroup said That premium is at the lower end of a range of 40 45 percent announced earlier on Thursday Telekom Austria had no immediate comment and America Movil was not immediately available for comment America Movil has said it wants to use Telekom Austria as a base for further expansion into central and eastern Europe where Telekom Austria already has operations in six countries It has since supported a 1 billion euro capital increase |
C | Citigroup says no significant negative impact from Brexit | Reuters Citigroup Inc N C said on Monday it did not experience any significant negative impact on its results or client activity as a result of Britain s vote to exit the European Union
Citi said in a regulatory filing that while market activity increased following the referendum in the UK the bank expects the operating environment to continue to be challenging
The bank s UK asset exposure was 108 4 billion as of June 30 according to the filing
Citi said only 30 percent of its corporate loans booked in the UK were to UK domiciled entities while the rest were mostly to European counterparties
The bank left its estimate for possible unreserved legal costs as of June unchanged at 3 billion |
C | Crude slips back below 40 ahead of weekly API inventory report | Investing com Crude futures fell considerably dropping to fresh 14 week lows as investors awaited further signs of potential volatility on global energy markets ahead of the American Petroleum Institute s weekly crude inventory report on Tuesday evening
On the New York Mercantile Exchange WTI crude for September delivery traded between 39 27 and 40 88 a barrel before closing at 39 49 down 0 57 or 1 39 on the session WTI remains squarely in bear market territory now down by approximately 23 from June highs when it traded at 51 67 a barrel At one point on Tuesday the front month contract for U S crude touched a key technical level when it slid below its 200 day moving average On the Intercontinental Exchange ICE brent crude for October delivery wavered between 41 52 and 43 16 a barrel before settling at 41 78 down 0 34 or 0 81 on the day
Crude prices fluctuated wildly on Tuesday in a volatile day of trading erasing gains from the morning session triggered by sharp declines in the dollar Hours later however oil futures fell back below the critical 40 level amid persistent concerns of oversupply worldwide A session earlier oil plunged nearly 4 to dip under 40 for the first time since a highly anticipated Doha agreement collapsed in mid April Investors continue to closely monitor activity on the options markets after short positions in WTI increased last week by nearly 39 000 for the week ending on July 26 data from the U S Commodity Futures Trading Commission CFTC shows The sharp rise in short bets on WTI options and futures marked the biggest weekly increase dating back to 2006 according to the CFTC
Investors could receive further indications on the supply demand balance on U S markets when the American Petroleum Institute releases its latest weekly crude stockpile report after the close of trading on Tuesday Separately Wednesday s government report could show that crude inventories nationwide fell by 1 9 million barrels for the week ending on July 29 A week earlier inventories unexpectedly rose by 1 7 million barrels halting a streak of nine consecutive weekly draws
Additionally gasoline inventories are expected to decline by 1 0 million barrels on the week while distillate fuel inventories could fall by 833 000 barrels analysts say Gasoline inventories have swelled to a near record high of 500 million barrels worldwide according to analysts from Citigroup Inc NYSE C as refineries churn out product at a rapid pace amid low crude prices
The U S Dollar Index which measures the strength of the greenback versus a basket of six other major currencies fell sharply on Tuesday to an intraday low of 94 94 slipping below 95 for the first time since June 24 The Dollar has been in freefall since hitting four month highs at 97 62 early last week
Dollar denominated commodities such as Crude become more expensive for foreign purchasers when the dollar appreciates |
C | NYMEX crude higher in Asia as API estimates show draw | Investing com Crude prices rebounded in Asia on Wednesday after U S industry estimates showed a drop in stockpiles
On the New York Mercantile Exchange WTI crude for September delivery rose 0 66 to 39 77 a barrel
The American Petroleum Institute said Tuesday that U S crude oil inventories fell by 1 3 million barrels in the latest week sources said
The drop comes ahead of Wednesday s government report that could show that crude inventories nationwide fell by 1 9 million barrels for the week ending on July 29 A week earlier inventories unexpectedly rose by 1 7 million barrels halting a streak of nine consecutive weekly draws
Additionally gasoline inventories are expected to decline by 1 0 million barrels on the week while distillate fuel inventories could fall by 833 000 barrels analysts say Gasoline inventories have swelled to a near record high of 500 million barrels worldwide according to analysts from Citigroup Inc NYSE NYSE C as refineries churn out product at a rapid pace amid low crude prices
Overnight crude futures fell considerably dropping to fresh 14 week lows as investors awaited further signs of potential volatility on global energy markets
On the Intercontinental Exchange ICE Brent crude for October delivery wavered between 41 52 and 43 16 a barrel before settling at 41 78 down 0 34 or 0 81 on the day
Crude prices fluctuated wildly on Tuesday in a volatile day of trading erasing gains from the morning session triggered by sharp declines in the dollar Hours later however oil futures fell back below the critical 40 level amid persistent concerns of oversupply worldwide A session earlier oil plunged nearly 4 to dip under 40 for the first time since a highly anticipated Doha agreement collapsed in mid April Investors continue to closely monitor activity on the options markets after short positions in WTI increased last week by nearly 39 000 for the week ending on July 26 data from the U S Commodity Futures Trading Commission CFTC shows The sharp rise in short bets on WTI options and futures marked the biggest weekly increase dating back to 2006 according to the CFTC |
JPM | Danske Daily July 12 2013 | In the US several FOMC members are scheduled to speak and they might add something to Bernanke s recent dovish comments James Bullard voting dove and Charles Plosser non voting hawk will be crossing swords in connection with a conference in Jackson Hole Bullard is one the FOMC members arguing more attention should be paid to current low inflation and for that reason tapering now would be premature Plosser will be a voting member next year and will in his presentation without doubt argue that Fed s QE programme should be terminated sooner rather than later San Francisco Fed president John Williams a non voting dove will also be speaking about his recently released research paper As the title of his paper suggests it appears he is in favour of starting tapering soon and possibly even terminating the QE programme relatively fast even though he is considered a dove In Europe the main focus is expected to be on euro area industrial production for May which is usually not a number that surprises a lot as many of the individual countries have already reported We expect a slight decline in May but it comes on the back of moderate increase in the three previous months so the overall picture remains stabilisation In the US the main focus will be preliminary University of Michigan consumer confidence for July where we expect an improvement slightly ahead of consensus Market focus will gradually move towards Q2 earnings reports with JP Morgan Chase and Wells Fargo reporting today To Read the Entire Report Please Click on the pdf File Below |
MS | Euro stocks surge on Draghi s promise DAX up 2 09 | Investing com European stock markets closed sharply higher Wednesday as ECB president Mario Draghi promised to lend support should the economy slip lower lifting hopes of stimulus supporting equities At the close of European trade the EURO STOXX 50 surged 2 42 France s CAC 40 jumped 2 42 while Germany s DAX 30 rallied 2 09 Market sentiment was lowered as Draghi stated that there were downside risks to the European economy stemming from the debt crisis in the region and its growing potential to spill over to the wider economy However Draghi promised the ECB stands ready to help support the economy should things deteriorate in the euro zone fuelling the equity rally The ECB president went on to say the central bank would extend its policy of lending to banks until mid January 2013 but didn t announce any new three year lending operations disappointing expectations for fresh easing measures to stabilize markets Earlier Wednesday the ECB left euro zone interest rates unchanged at 1 in a widely expected decision In addition Federal Reserve Chairman Ben Bernanke was due to testify on Thursday before a congressional committee about the strength of the U S economy The Wall Street Journal citing interviews and Fed speeches reported late Tuesday that the U S central bank is mulling new measures to stimulate growth in the world s largest economy Financial stocks extended earlier gains as shares in French lenders Societe Generale and BNP Paribas surged 2 97 and 3 36 respectively while Germany s Deutsche Bank and Commerzbank climbed 2 12 and 1 52 Commerzbank was one of the six German lenders downgraded on Tuesday evening by Moody s ratings agency which also cut the ratings of Austria s three largest banks saying they face risks if the euro zone crisis deepens Meanwhile telecom giant Nokia Finland saw shares surge 6 54 after U S Internet company Google lodged a complaint with European Union competition authorities against Nokia and its U S software peer Microsoft The complaint alleges collusion between Nokia and Microsoft in order to increase prices for smartphones and tablets In London FTSE 100 gained 1 40 boosted by strong gains in financial stocks while data showed that construction activity in the U K fell more than expected in May Shares in the Royal Bank of Scotland were up 7 88 after skyrocketing 932 52 when markets opened as a result of a share consolidation authorized at the bank s annual meeting last week According to Sir Philip Hampton chairman of the bank the consolidation will reduce the volatility of the bank s share price and help improve investor confidence Lloyds Banking saw shares climb 5 33 after agreeing to sell GBP809 million of Australian corporate real estate loans to a Morgan Stanley and Blackstone Group LP joint venture for about GBP388 million pounds in cash Meanwhile Barclays and HSBC Holdings rose 5 94 and 3 27 respectively Energy stocks also contributed to gains as Premier Oil Plc jumped 6 84 after the British explorer said it encountered oil in its 50 owned Carnaby 28 09 5A well in the North Sea Cairn Energy which owns 15 of the Carnaby well rose 4 78 Mining stocks extended earlier gains as Rio Tinto and Bhp Billiton added 3 57 and 3 44 respectively while copper producers Xstrata and Kazakhmys jumped 3 06 and 6 24 Elsewhere Diageo Plc the maker of Johnnie Walker J B and Buchanan s scotch whiskeys advanced 2 31 after saying it will invest in scotch whiskey production In the U S equity markets followed sharply higher with the Dow Jones Industrial Average up 1 90 S P 500 futures trading higher by 1 83 while the Nasdaq 100 soared 2 10 In addition Wednesday official data showed that German industrial production dropped 2 2 in April compared to expectations for a more modest 1 0 decline fuelling concerns over the impact of the ongoing sovereign debt crisis on the region s largest economy Investors are awaiting Ben Bernanke s testimony U S initial jobless claims as well as Great Britain s interest rate decision on Thursday |
MS | Grain futures consolidate after Tuesday s rally weather in focus | Investing com U S grain futures edged higher during European morning hours on Wednesday with corn and soybean prices consolidating just below multi week highs hit in the previous session Meanwhile wheat futures rose to a three week high amid concerns over a disruption to Russian supplies Agricultural commodities received an additional lift from a broadly weaker U S dollar The dollar index which tracks the performance of the greenback against a basket of six other major currencies was down 0 15 to trade at 81 50 A weaker dollar boosts the appeal of U S crops to overseas buyers and makes commodities more attractive as an alternative investment Markets were awaiting the conclusion of a Federal Reserve policy setting meeting later in the day amid growing speculation the central bank will move to stimulate growth in the world s largest economy A growing number of Fed watchers expect the central bank to extend its Operation Twist program in which it sells short term bonds to buy long term ones The current USD400 billion Twist program is set to expire at the end of June On the Chicago Mercantile Exchange corn futures for July delivery traded at USD6 1413 a bushel easing up 0 2 The July contract traded in a range of USD6 1463 a bushel the daily high and a session low of USD6 0938 a bushel Prices touched a high of USD6 1675 a bushel on Tuesday the highest since May 22 Front month corn futures have rallied nearly 5 so far this week as concerns over crop conditions in the U S corn belt boosted sentiment on the grain Weekly crop progress data from the U S Department of Agriculture showed that the recent adverse weather conditions across the U S Midwest and Great Plains region caused significant damage to corn crops in the area According to the USDA 63 of the U S corn crop was rated in good to excellent condition as of last week down from 66 the previous week and below the 70 recorded in the same week a year earlier Corn prices have been boosted in recent sessions by concerns that dry soil in the U S corn belt could strain the development of crops in the region just as it enters its key pollination phase in the next few weeks Wall Street investment firm Morgan Stanley said in a report Tuesday that corn prices could rally to as high as USD7 00 per bushel citing dry weather conditions which could elicit a negative production surprise The U S produced 38 of the world s corn last year making it the both world s largest corn producing nation and the largest exporter of the grain Elsewhere soybeans futures for July delivery traded at USD14 4313 a bushel gaining 0 65 It earlier rose by as much as 0 85 to trade at a session high of USD14 4688 a bushel Front month prices touched a high of USD14 5112 on Tuesday the highest since May 11 Soy prices advanced as the same hot dry weather that boosted corn was seen benefitting soy prices as well The USDA said the soybean crop was 56 good to excellent last week down from 60 the previous week Nearly 68 of the crop was good to excellent in the same week a year earlier Meanwhile wheat for July delivery traded at USD6 5088 a bushel easing up 0 2 It earlier rose by as much as 0 4 to trade at USD6 5250 a bushel the highest since May 31 Wheat futures tracked strong gains in corn Wheat and corn prices are linked because both can be used as animal feed Prices found further support after influential Russian industry group SovEcon cut its forecast for Russia s wheat harvest to 50 0 million tonnes down 3 0 million tonnes from a previous estimate citing damage from dry weather Wheat futures also continued to draw support from expectations of increased demand from China after the nation s official think tank revised down estimates on the country s winter crop to 111 7 million tonnes from a previous forecast of 114 million tonnes The downbeat crop outlook raised speculation that China will increase its imports of U S wheat to make up for the shortfall The Asian nation bought 110 000 metric tons of U S soft red winter wheat last week its largest single purchase of that class of wheat in more than eight years Corn is the biggest U S crop valued at USD66 7 billion in 2010 followed by soybeans at USD38 9 billion government figures show Wheat was fourth at USD13 billion behind hay |
MS | Grain futures Weekly outlook June 25 29 | Investing com U S grain futures ended Friday s session higher with wheat and soybean prices surging to multi week highs on the back of concerns over crop conditions across major grain growing regions around the world Corn prices settled higher supported by concerns over lower yield prospects in the U S Midwest Agricultural commodities received an additional lift from outside influences on Friday as market sentiment found mild support after the European Central Bank relaxed rules on collateral for central bank loans On the Chicago Mercantile Exchange wheat for July delivery settled at USD6 7425 a bushel by close of trade on Friday Earlier in the day prices rose to as high as USD6 8425 a bushel the highest since May 25 On the week the front month wheat contract jumped 8 97 Front month wheat prices rallied sharply amid speculation the U S Department of Agriculture will cut its forecast of 2012 13 world wheat production in its next monthly report in July following downgraded outlooks for crops in several key exporting countries Concerns over a disruption to supplies from the Black Sea region intensified this week after influential Russian industry group SovEcon cut its forecast for Russia s wheat harvest to 50 0 million tonnes down 3 0 million tonnes from a previous estimate citing damage from dry weather Meanwhile in Argentina the government forecast wheat sowings at 3 82 million hectares the lowest in decades Russia and Argentina are major wheat exporters and compete with the U S for business on the global market A downbeat crop outlook in those countries could boost demand for U S supplies which is the world s third largest wheat producer and biggest exporter Elsewhere on the Chicago Board of Trade corn futures for July delivery settled at USD5 9050 a bushel by close of trade on Friday Earlier in the day front month prices rose to a session high of USD5 9975 a bushel On the week the front month corn contract advanced 1 73 Corn prices have been well supported in recent sessions amid concerns dry soil in the U S corn belt could strain the development of crops in the region just as it enters its key pollination phase in the next few weeks U S based industry group Cropcast cut its forecast for the 2012 U S corn yield to 158 6 bushels per acre on Thursday from its previous estimate of 163 7 The next few weeks will be important for the grain as the crop could face bigger losses if more rain doesn t come during its pollination phase Wall Street investment firm Morgan Stanley said in a report earlier in the week that corn prices could rally to as high as USD7 00 per bushel citing dry weather conditions which could elicit a negative production surprise The U S produced 38 of the world s corn last year making it the both world s largest corn producing nation and the largest exporter of the grain Meanwhile soybeans for July delivery settled at USD14 4175 a bushel by close of trade Friday Earlier in the day front month prices rose to as high as USD14 6375 a bushel the highest since May 8 On the week the front month soy contract climbed 4 57 Soy prices rallied as the same hot dry weather that boosted corn was seen benefitting soy futures as well Soybeans are grown in many of the same regions across the U S as corn but the key growing phase for soybeans does not start until later in the summer Cropcast also cut its soybean yield forecast to 42 4 bushels per acre from its previous forecast of 44 1 and USDA s outlook of 43 9 Corn is the biggest U S crop valued at USD66 7 billion in 2010 followed by soybeans at USD38 9 billion government figures show Wheat was fourth at USD13 billion behind hay In the week ahead grains traders will focus on the USDA s weekly crop progress report on Monday as well as Thursday s weekly exports data Corn and soybean traders will also pay close attention to weather conditions in the U S Midwest and Great Plains region Dry weather is expected to keep stress on U S Midwest corn and soybean crops for at least the next few days but recently updated weather forecasts showed better chances for rain late next week Meanwhile wheat traders will focus on hot weather in the Black Sea region amid concerns over crop conditions in Russia and Ukraine |
JPM | U S to drop criminal charges in London Whale case | By Jonathan Stempel NEW YORK Reuters U S prosecutors have decided to drop criminal charges against two former JPMorgan Chase Co N JPM derivatives traders implicated in the London Whale trading scandal that caused 6 2 billion of losses in 2012 In seeking the dismissal of charges against Javier Martin Artajo and Julien Grout the Department of Justice said it no longer believes that it can rely on the testimony of Bruno Iksil the trader dubbed the London Whale based on recent statements and writings he made that hurt the case Prosecutors also said efforts to extradite Martin Artajo and Grout respectively citizens of Spain and France to face the charges have been unsuccessful or deemed futile Acting U S Attorney Joon Kim in Manhattan asked a federal judge for permission to drop charges that included securities fraud wire fraud and falsifying records Martin Artajo and Grout were indicted in September 2013 After four long years of protracted litigation we are very pleased that the government has decided to do the right thing and dismiss the criminal case Grout s lawyer Edward Little said Lawyers for Martin Artajo did not immediately respond to requests for comment Friday s dismissal request marks a fresh setback in U S efforts to prosecute individuals for financial crimes It came two days after a federal appeals court voided convictions won by Kim s predecessor Preet Bharara of two former Rabobank NA traders for rigging the Libor interest rate benchmark Martin Artajo and Grout were accused of hiding hundreds of millions of dollars of losses within JPMorgan s chief investment office CIO in London by marking positions in a credit derivatives portfolio at inflated prices The losses were part of the 6 2 billion loss centered on Iksil who Martin Artajo supervised and Grout worked for Prosecutors said Martin Artajo and Grout acted in part to enhance their prospects for promotions and bonuses The scandal briefly hurt the reputation of JPMorgan Chief Executive Jamie Dimon who initially called it a tempest in a teapot JPMorgan ultimately paid more than 1 billion and admitted wrongdoing to settle related U S and British probes Iksil has chafed at the London Whale moniker and being portrayed as solely at fault for the losses In a February 2016 letter released to the media the French national said he had been instructed repeatedly by senior management in the CIO to execute the trading strategy that caused the losses Martin Artajo and Grout still face U S Securities and Exchange Commission civil charges over the scandal Iksil s lawyer and JPMorgan did not immediately respond to requests for comment
The cases are U S v Martin Artajo et al U S District Court Southern District of New York No 13 cr 00707 and SEC v Martin Artajo et al in the same court No 13 05677 |
JPM | Mexico s Pemex concludes 5 billion bond deal to aid finances | MEXICO CITY Reuters Mexico s Pemex reopened two long term bonds to raise some 5 billion on international markets using some of the proceeds to repurchase debt expiring over the next two years the state run oil company said on Sunday In a statement Pemex said it had registered demand worth close to 15 billion in placing the 5 billion via banks BBVA MC BBVA Bancomer HSBC JPMorgan Chase NYSE JPM and Santander MC SAN Most of the investors came from the United States and Europe it added The bonds reopened fall due in 10 and 30 years and will pay a return of 5 75 percent and 6 90 percent respectively at maturity added Pemex which has been battling with heavy debts and now faces increased competition from private firms Some of the financing secured was used to repurchase bonds maturing in the next two years worth 1 742 billion it said
This way the company has extended the average lifespan of its dollar denominated bond portfolio by 1 1 years significantly reducing its financing requirements Pemex said |
JPM | Confounding consensus ECB taper talk leaves peripheral bonds unscathed | By Dhara Ranasinghe LONDON Reuters After months of fretting about the impact on euro governments relative debt costs when the European Central Bank eventually runs down its bond buying program the expected quake never happened as the taper talk began A month after ECB chief Mario Draghi rattled markets by suggesting monetary stimulus was about to be scaled back the premium investors demand for holding Spanish bonds instead of top rated German peers is less than 100 basis points That s its lowest since March 2015 when the ECB began buying up bonds to boost inflation and economic growth The yield gap between Italian bonds viewed as particularly vulnerable to an unwinding or tapering of monetary stimulus and German is its narrowest since December This was not expected Banks estimated in February that euro zone yields would be 20 to 50 basis points higher without the ECB bond buying albeit below estimates from a year earlier of 75 to 100 bps higher This is something that has been bugging me for some time because you would expect with a tightening of peripheral bond spreads at the beginning of the program you would also see the reverse at the perceived end of the program said ABN AMRO AS ABNd senior bond strategist Kim Liu Bond market participants cite a number of reasons for the unanticipated move in bond spreads First the spread tightening has been driven by a sell off in German bonds Investors are positioning for ECB tapering to relieve a scarcity of German debt that the bond buying scheme created Germany the euro zone s biggest economy is the main source for the ECB s asset purchases A scarcity of eligible German debt for the scheme has pushed down yields But since Draghi s speech in Portugal last month 10 year Bund yields have doubled suggesting a reassessment of the policy outlook At the same time a rise in the euro pushed up by expectations of tighter monetary policy has encouraged investors to borrow money in low yielding assets and buy higher yielding ones such as southern European bonds The really telling thing after last week s ECB meeting was that while peripheral spreads tightened which you could say was because Draghi was seen as dovish the euro rallied dramatically said Iain Stealey co manager of JPMorgan NYSE JPM Asset Management s Global Bond Opportunities Fund Perhaps this reflects a push into European assets Alongside this a perception that any tapering will be prolonged to buffer the bloc for as long as possible has boosted risk appetite Relative political calm in the euro zone albeit with an Italian election due next year compared with Brexit upheaval in Britain and President Donald Trump s travails in the United States is also seen as positive for riskier euro zone debt Investor cash in the euro zone may be starting to flow back into riskier assets on the bloc s periphery playing a key part in the recent tightening of bond spreads a top ECB economist said on Monday But the sharp tightening in spreads also raises risks of an even sharper blowout once details of the ECB s plans for winding down quantitative easing emerge ECB policymakers see October as the most likely date to decide whether to start winding down its stimulus four sources with direct knowledge of the discussion told Reuters last week The reasons for expecting a sell off in peripheral bonds when the ECB does taper have not changed Peripheral economies are weaker than their higher rated peers their debt issuance is higher and the risk of political instability especially in Italy is greater If you look at the fundamentals the issuance picture the political risks in the periphery all these things are going to come into play when a big player like the ECB pulls out said Jan von Gerich chief strategist at Nordea Stealy at JPMorgan Asset Management said concerns about tapering and looming Italian elections are reasons he has a neutral position on peripheral bonds ECB bond buying has helped hold down borrowing costs across the bloc and been a buffer at times of heightened market volatility for instance after last year s UK Brexit referendum The true test of investor appetite for peripheral debt will come when the ECB lays out its tapering plans For me the situation doesn t feel right said ABN AMRO s Liu In the long run if the ECB exits the market spreads will go wider It s just that the move has been postponed |
C | Rate starved U S banks happily gobble mortgage business | By David Henry NEW YORK Reuters Just as mortgage bankers were preparing for the end of a historic boom driven by low interest rates borrowers have begun knocking at their doors again In earnings reports last week JPMorgan Chase Co N JPM Wells Fargo Co N WFC and Citigroup Inc N C said they originated 94 billion worth of new mortgages during the second quarter in their core mortgage operations an increase of 23 billion or 31 percent over the first quarter The reason for the sudden burst of business Mortgage rates have dropped to lows not seen since 2013 after the U S Federal Reserve dashed expectations for near term rate hikes That has led existing borrowers to try and lock in better rates New borrowers meanwhile have been enticed by low borrowing costs and low down payment offers With mortgage rates near historic lows and volumes still strong in the early days of the third quarter banks predict the trend will continue providing a bright spot in a low rate environment hammering their wider results JPMorgan has added more than 1 000 employees this year to handle the swell in mortgage business said Mike Weinbach its chief executive of mortgage banking He believes U S lenders will make about 1 8 trillion of mortgage loans this year 40 percent more than he had expected at the start of the year We thought the refinance market was going to shrink sharply Weinbach said in an interview We ve seen a market that has been much bigger than expected All this may be cold comfort to big U S lenders that desperately need rates to rise for broader profits to improve Though low rates bring in new mortgage business and deliver fees from refinancing banks are hard pressed to generate substantial income when rates fall too low Adding to the pressure on margins US banks cost of funding has also risen The difference between what banks pay for U S dollars and the Federal Reserve s expected policy interest rates on Friday hit its widest since August 2012 At some point there is little room left between what it costs banks to obtain funds and what they can earn from lending and investing Rates on short and long term debt known as the yield curve have come closer together leaving banks with razor thin margins almost regardless of the type of funding or loans they pursue The headwinds from a flatter yield curve and a lower for longer rate environment creates challenges for all financial institutions said John Shrewsberry chief financial officer of Wells Fargo which is the No 1 U S mortgage lender Wells JPMorgan and Citigroup each talked about low rates as the main hurdle to producing better results Their second quarter profits fell 3 5 percent 1 percent and 14 percent from a year earlier respectively The U S Federal Reserve set its interest rate target to nearly zero as the markets and economy were spiraling into crisis in 2008 The Fed kept rates there until December it raised its target by 0 25 percentage points causing optimism on Wall Street that rates would continue to rise gradually through 2016 Those hopes have since dimmed Concerns about market volatility and apparent weakness in the U S economy earlier this year combined with Britain s vote in June to exit the European Union have made it much less likely the Fed will raise rates further in the near term
While the rate situation is challenging there are a few silver linings in the clouds one of them being mortgages said KBW analyst Fred Cannon |
JPM | The Two Centers Of Unaccountable Power In America And Their Consequence | There are two great centers of unaccountable power in the American political economic system today places where decisions that significantly affect large numbers of Americans are made in secret and are unchecked either by effective democratic oversight or by market competition One goes by the name of the intelligence community and its epicenter is the National Security Agency within the Defense Department If we trusted that it reasonably balanced its snooping on Americans with our nation s security needs and that our elected representatives effectively oversaw that balance there would be little cause for concern We would not worry that the information so gathered might be misused to harass individuals thereby chilling free speech or democratic debate or that some future government might use it to intimidate critics and opponents We would feel confident in other words that despite the scale and secrecy of the operation our privacy civil liberties and democracy were nonetheless adequately protected But the NSA has so much power and oversight of it is so thin that we have every reason to be concerned The fact that its technological reach is vast its resources almost limitless and its operations are shrouded in secrecy make it difficult for a handful of elected representatives to effectively monitor even a tiny fraction of what it does And every new revelation of its clandestine requests for companies to hand over information about our personal lives and communications further undermines our trust To the contrary the NSA seems to be literally out of control The second center of unaccountable power goes by the name of Wall Street and is centered in the largest banks there If we trusted that market forces kept them in check and that they did not exercise inordinate influence over Congress and the executive branch we would have no basis for concern We wouldn t worry that the Street s financial power would be misused to fix markets profit from insider information or make irresponsible bets that imperiled the rest of us We could be confident that despite the size and scope of the giant banks our economy and everyone who depends on it were nonetheless adequately protected But those banks are now so large much larger than they were when they almost melted down five years ago have such a monopolistic grip on our financial system and exercise so much power over Washington that we have cause for concern The fact that not a single Wall Street executive has been held legally accountable for the excesses that almost brought the economy to its knees five years ago and continues to burden millions of Americans that even the Attorney General confesses the biggest banks are too big to jail that the big banks continue to make irresponsible bets such as those resulting in JP Morgan Chase s 6 billion London Whale loss and that the Street has effectively eviscerated much of the Dodd Frank legislation intended to rein in its excesses and avoid another meltdown and bailout all offer evidence that the Street is still dangerously out of control It is rare in these harshly partisan times for the political left and right to agree on much of anything But the reason I think both are worried about the encroachments of the NSA on the privacy and civil liberties of Americans as well as the depredations of too big to fail or jail Wall Street banks on our economy is fundamentally the same It is this toxic combination of inordinate power and lack of accountability that renders both of them dangerous threatening our basic values and institutions That neither Republicans nor Democrats have done much of anything to effectively rein in these two centers of unaccountable power suggests that if there is ever to be a viable third party in America it will may borne of the ill fated consequences |
MS | Asia stocks advance but euro zone fears cap gains Nikkei adds 0 1 | Investing com Asian stock markets edged higher on Monday after opinion polls in Greece showed conservative parties hold the lead in next month s national elections while growing fears over Spain s deteriorating financial situation capped gains During late Asian trade Hong Kong s Hang Seng Index rose 0 35 Australia s ASX 200 Index climbed 0 95 while Japan s Nikkei 225 Index added 0 1 Market sentiment firmed up after an opinion poll in Greece indicated that the country s pro bailout parties were leading the polls ahead of elections due to be held on June 17 Global equities have been rattled in recent weeks as fears over the possibility of a Greek exit from the euro zone dominated market sentiment However growing concerns over the fiscal health of Spain weighed after ratings agency Standard Poor s cut the ratings on five Spanish banks on Friday and said it believes the country is entering a double dip recession Adding to the gloomy environment the president of Catalonia Spain s wealthiest autonomous region said on Friday it had few options to refinance over EUR13 billion in debt due this year Furthermore a government source said on Sunday that Spain may recapitalize its fourth largest bank Bankia which last week asked for EUR19 billion in funding In Tokyo the Nikkei steadied after eight consecutive weeks of losses with index heavyweights Fanuc and Fast Retailing supporting the benchmark Fanuc shares rose 2 after Morgan Stanley raised its price target on the industrial robot maker and said a recent correction in the stock was overdone Meanwhile Fast Retailing shares climbed 2 15 On the downside Renesas Electronics shares plunged 10 6 after weekend reports that the firm planned to cut up to 14 000 jobs and raise nearly JPY100 billion in capital NEC Renesas s biggest shareholder tumbled 9 25 The Nikkei is down more than 16 since hitting a one year high on March 27 after rallying more than 19 in the first three months of the year as China s economic growth slowed and on renewed concern about Europe s debt crisis Elsewhere in Hong Kong shares in property developers and financial sector stocks were mostly higher supported by hopes for fresh monetary easing by China to prop up growth in the world s second largest economy Bank of China shares added 2 1 and Sino Land shares rose 1 5 but shares in Hang Lung Properties dropped 1 Meanwhile shares in Australia outperformed the region as investors returned to the market to pick up shares of battered resource sector stocks Gold miner Newcrest Mining rose 2 6 while BHP Billiton and Rio Tinto added 1 65 and 1 85 respectively Looking ahead the outlook for European stock markets was upbeat after weekend opinion polls in Greece indicated that pro bailout party New Democracy was leading the polls ahead of a general election next month The EURO STOXX 50 futures pointed to a gain of 1 France s CAC 40 futures rose 0 95 London s FTSE 100 futures advanced 0 75 while Germany s DAX futures pointed to a gain of 1 05 at the open Trade looked likely to remain quiet on Monday with some markets in Europe close for holidays while U S markets were to remain closed for the Memorial Day holiday |
MS | U S stocks fall on downbeat data Dow Jones down 0 31 | Investing com U S stocks opened lower on Thursday after the release of disappointing U S economic reports while concerns over the handling of Spain s worsening financial crisis continued to weigh on market sentiment During early U S trade the Dow Jones Industrial Average fell 0 31 the S P 500 index dropped 0 54 while the Nasdaq Composite index retreated 0 68 Data showed earlier that manufacturing activity in the Chicago area slowed significantly more than expected in May falling to the lowest level since September 2009 The report came after official data showed that first quarter gross domestic product was revised to 1 9 in line with expectations from an initial estimate of 2 2 In addition the Department of Labor said the number of people who filed for unemployment assistance in the U S last week rose to 383 000 defying expectations for a decline to 370 000 while a separate report showed that the U S private sector added 133 000 jobs in May missing expectations for an increase of 148 000 Sentiment was also vulnerable as ongoing worries over the situation in Spain where mounting borrowing costs and the lack of a convincing plan to recapitalize stricken lender Bankia fuelled fears that Madrid will be forced to seek an international bailout Morgan Stanley saw shares rise 0 31 after Chairman and Chief Executive James Gorman defended his bank s performance as lead underwriter on Facebook s IPO despite waves of criticism from investors and a potential legal review of the deal s marketing The investment bank also said it plans to buy 14 more of Smith Barney from Citigroup and will begin a 90 day process determine the fair market value of the additional stake Citigroup shares were up 0 54 after the news As for Facebook shares gained 0 71 but the stock still remained close to USD28 well below its IPO valuation price of USD38 Elsewhere Talbots skyrocketed 95 74 after private equity firm Sycamore Partners said it will acquire the women s clothing chain in a deal worth about USD193 million in cash Retailer giant Costco edged up only 0 02 after posting a 4 rise in comparable sales in May falling short of analysts forecasts as a strong dollar hurt the value of its sales overseas Rivals Target and TJX were up 0 36 and 0 94 respectively On the downside TiVo shares plunged 2 68 after reporting a bigger than expected quarterly loss and forecast another loss for the current quarter as the maker of digital television recorders fights costly legal battles to protect its patents Mining equipment maker Joy Global also tumbled 7 77 after saying it expects order rates to moderate and sales to remain unchanged over the next few quarters Across the Atlantic European stock markets were mixed The EURO STOXX 50 dropped 0 39 France s CAC 40 declined 0 64 Germany s DAX retreated 0 55 while Britain s FTSE 100 added 0 10 During the Asian trading session Hong Kong s Hang Seng Index fell 0 32 while Japan s Nikkei 225 Index tumbled 1 05 Later in the day Ireland was to vote on the European Union s fiscal treaty |
MS | Weak data sends U S shares skidding Dow down 0 35 | Investing com U S stocks closed lower Thursday after the release of disappointing U S economic reports while concerns over the handling of Spain s worsening financial crisis continued to weigh on market sentiment At the close of U S trade the Dow Jones Industrial Average fell 0 21 the S P 500 index dropped 0 23 while the Nasdaq Composite index retreated 0 35 Data showed earlier that manufacturing activity in the Chicago area slowed significantly more than expected in May falling to the lowest level since September 2009 The report came after official data showed that first quarter gross domestic product was revised to 1 9 in line with expectations from an initial estimate of 2 2 In addition the Department of Labor said the number of people who filed for unemployment assistance in the U S last week rose to 383 000 defying expectations for a decline to 370 000 while a separate report showed that the U S private sector added 133 000 jobs in May missing expectations for an increase of 148 000 Sentiment was also vulnerable as ongoing worries over the situation in Spain where mounting borrowing costs and the lack of a convincing plan to recapitalize stricken lender Bankia fuelled fears that Madrid will be forced to seek an international bailout Morgan Stanley saw shares rise 0 31 after Chairman and Chief Executive James Gorman defended his bank s performance as lead underwriter on Facebook s IPO despite waves of criticism from investors and a potential legal review of the deal s marketing The investment bank also said it plans to buy 14 more of Smith Barney from Citigroup and will begin a 90 day process determine the fair market value of the additional stake Citigroup shares were up 0 54 after the news As for Facebook shares gained 0 71 but the stock still remained close to USD28 well below its IPO valuation price of USD38 Elsewhere Talbots skyrocketed 95 74 after private equity firm Sycamore Partners said it will acquire the women s clothing chain in a deal worth about USD193 million in cash Retailer giant Costco edged up only 0 02 after posting a 4 rise in comparable sales in May falling short of analysts forecasts as a strong dollar hurt the value of its sales overseas Rivals Target and TJX were up 0 36 and 0 94 respectively On the downside TiVo shares plunged 2 68 after reporting a bigger than expected quarterly loss and forecast another loss for the current quarter as the maker of digital television recorders fights costly legal battles to protect its patents Mining equipment maker Joy Global also tumbled 7 77 after saying it expects order rates to moderate and sales to remain unchanged over the next few quarters During European afternoon trade the EURO STOXX 50 gave back 0 08 France s CAC 40 climbed 0 05 while Germany s DAX 30 dropped 0 26 Investors are anticipating the U S Non Farm Payrolls the ISM report and German manufacturing numbers on Friday |
MS | Gold pauses after Friday s rally global central banks in focus | Investing com Gold futures held steady during U S morning hours on Monday consolidating strong gains from the previous session as markets looked forward to several monetary policy meetings later this week before pushing prices higher On the Comex division of the New York Mercantile Exchange gold futures for August delivery traded at USD1 621 15 a troy ounce during U S morning trade dipping 0 06 The August contract traded in between a tight range of USD1 629 55 a troy ounce the daily high and a session low of USD1 616 05 Prices touched USD1 631 25 on Friday the highest since May 8 Gold futures were likely to find support at USD1 532 55 a troy ounce the low from May 30 and near term resistance at USD1 639 05 the high from May 8 Market sentiment found some support earlier amid speculation over coordinated liquidity boosting measures by global central banks Traders are closely watching several monetary policy meetings due this week including the European Central Bank on Wednesday and Bank of England on Thursday for clues on their responses to weakening global growth Federal Reserve Chairman Ben Bernanke on Thursday will testify before a congressional committee about the state of the U S economy Gold prices consolidated after scoring their largest one day gain in more than three years on Friday after the Department of Labor said that the U S economy added just 69 000 jobs in May the smallest increase in a year and far below expectations for a gain of 150 000 The unemployment rate unexpectedly ticked up to 8 2 from 8 1 the first increase in 11 months The weak data added to concerns that the economic recovery in the U S is losing momentum which could lead to a third round of quantitative easing from the U S central bank Gold investors will be closely watching U S data in the second quarter for clues as to the likelihood of a fresh round of monetary easing which could potentially hurt the dollar and support gold Vincent Reinhart Morgan Stanley s chief U S economist and a former Federal Reserve official said Friday that there is an 80 chance that a new quantitative easing program is announced at the June 19 20 Fed meeting Slower employment growth worsening strains in European markets and a gloomier assessment of US politicians ability to steer clear of the impending fiscal cliff makes it likely that the Fed will mark down its already tepid forecast he wrote in a note to clients Friday QE has been a key driver in gold s bull run as it keeps interest rates and borrowing costs low which makes gold more attractive compared with yield or dividend bearing assets such as bonds or stocks Gold gained as much as 15 earlier this year to hit USD1 790 an ounce after the Fed said in January it would keep interest rates near zero until at least late 2014 and indicated that it could introduce a fresh round of asset purchases However prices have lost almost 9 since late February amid growing concerns the European debt crisis has been escalating which has fueled demand for the yellow metal s hedge the greenback Elsewhere on the Comex silver for July delivery fell 0 65 to trade at USD28 32 a troy ounce while copper for July delivery was flat to trade at USD3 313 a pound |
MS | Profit takers hit gold after strong gains | Investing com Gold futures traded lower Monday selling off the strong gains from the previous session as markets looked forward to several monetary policy meetings later this week for firm direction On the Comex division of the New York Mercantile Exchange gold futures for August delivery traded at USD1 612 75 a troy ounce during U S afternoon trade falling 0 59 Gold futures were likely to find support at USD1 532 55 a troy ounce the low from May 30 and near term resistance at USD1 639 05 the high from May 8 Market sentiment found some support earlier amid speculation over coordinated liquidity boosting measures by global central banks Traders are closely watching several monetary policy meetings due this week including the European Central Bank on Wednesday and Bank of England on Thursday for clues on their responses to weakening global growth Federal Reserve Chairman Ben Bernanke on Thursday will testify before a congressional committee about the state of the U S economy Profit takers moved in after gold booked its largest one day gain in more than three years on Friday on the Department of Labor report that the U S economy added just 69 000 jobs in May the smallest increase in a year and far below expectations for a gain of 150 000 The unemployment rate unexpectedly ticked up to 8 2 from 8 1 the first increase in 11 months The weak data added to concerns that the economic recovery in the U S is losing momentum which could lead to a third round of quantitative easing from the U S central bank Gold investors will be closely watching U S data in the second quarter for clues as to the likelihood of a fresh round of monetary easing which could potentially hurt the dollar and support gold Vincent Reinhart Morgan Stanley s chief U S economist and a former Federal Reserve official said Friday that there is an 80 chance that a new quantitative easing program is announced at the June 19 20 Fed meeting Slower employment growth worsening strains in European markets and a gloomier assessment of US politicians ability to steer clear of the impending fiscal cliff makes it likely that the Fed will mark down its already tepid forecast he wrote in a note to clients Friday QE has been a key driver in gold s bull run as it keeps interest rates and borrowing costs low which makes gold more attractive compared with yield or dividend bearing assets such as bonds or stocks Gold gained as much as 15 earlier this year to hit USD1 790 an ounce after the Fed said in January it would keep interest rates near zero until at least late 2014 and indicated that it could introduce a fresh round of asset purchases However prices have lost almost 9 since late February amid growing concerns the European debt crisis has been escalating which has fueled demand for the yellow metal s hedge the greenback Elsewhere on the Comex silver for July delivery fell 1 65 to trade at USD28 04 a troy ounce while copper for July delivery was trading slightly lower at USD3 313 a pound off 0 002 |
MS | European stocks remain sharply higher focus on ECB DAX up 1 72 | Investing com European stock markets remained sharply higher on Wednesday as investors eyed the European Central Bank s policy meeting later in the day with hopes it will lead to further stimulus measures During European afternoon trade the EURO STOXX 50 surged 2 14 France s CAC 40 jumped 2 06 while Germany s DAX 30 rallied 1 72 Market sentiment found support amid speculation by market players that the ECB could announce liquidity injections in to Europe s troubled financial system Other analysts expect the central bank to renew its suspended government bond buying program to help ease pressure on Spain s rising borrowing costs In addition Federal Reserve Chairman Ben Bernanke was due to testify on Thursday before a congressional committee about the strength of the U S economy The Wall Street Journal citing interviews and Fed speeches reported late Tuesday that the U S central bank is mulling new measures to stimulate growth in the world s largest economy Financial stocks extended earlier gains as shares in French lenders Societe Generale and BNP Paribas surged 2 97 and 3 36 respectively while Germany s Deutsche Bank and Commerzbank climbed 2 12 and 1 52 Commerzbank was one of the six German lenders downgraded on Tuesday evening by Moody s ratings agency which also cut the ratings of Austria s three largest banks saying they face risks if the euro zone crisis deepens Meanwhile telecom giant Nokia Finland saw shares surge 6 54 after U S Internet company Google lodged a complaint with European Union competition authorities against Nokia and its U S software peer Microsoft The complaint alleges collusion between Nokia and Microsoft in order to increase prices for smartphones and tablets In London FTSE 100 gained 1 40 boosted by strong gains in financial stocks while data showed that construction activity in the U K fell more than expected in May Shares in the Royal Bank of Scotland were up 7 88 after skyrocketing 932 52 when markets opened as a result of a share consolidation authorized at the bank s annual meeting last week According to Sir Philip Hampton chairman of the bank the consolidation will reduce the volatility of the bank s share price and help improve investor confidence Lloyds Banking saw shares climb 5 33 after agreeing to sell GBP809 million of Australian corporate real estate loans to a Morgan Stanley and Blackstone Group LP joint venture for about GBP388 million pounds in cash Meanwhile Barclays and HSBC Holdings rose 5 94 and 3 27 respectively Energy stocks also contributed to gains as Premier Oil Plc jumped 6 84 after the British explorer said it encountered oil in its 50 owned Carnaby 28 09 5A well in the North Sea Cairn Energy which owns 15 of the Carnaby well rose 4 78 Mining stocks extended earlier gains as Rio Tinto and Bhp Billiton added 3 57 and 3 44 respectively while copper producers Xstrata and Kazakhmys jumped 3 06 and 6 24 Elsewhere Diageo Plc the maker of Johnnie Walker J B and Buchanan s scotch whiskeys advanced 2 31 after saying it will invest in scotch whiskey production In the U S equity markets pointed to a higher open The Dow Jones Industrial Average futures pointed to jump of 0 92 S P 500 futures signaled a 1 10 rally while the Nasdaq 100 futures indicated a 1 13 surge Also Wednesday official data showed that German industrial production dropped 2 2 in April compared to expectations for a more modest 1 0 decline fuelling concerns over the impact of the ongoing sovereign debt crisis on the region s largest economy Later in the day the ECB rate announcement was to be followed by a press conference with bank head Mario Draghi to discuss the monetary policy decision and the economic outlook for the region |
C | U S futures slip with bank earnings inflation and consumer data on tap | Investing com Wall Street futures pointed to a slightly lower open on Friday as investors took a breather after fresh record highs for the Dow and S P 500 as investors looked ahead to more bank earnings and a flood of data
The blue chip Dow futures gave up 17 points or 0 09 by 10 54AM GMT or 6 54AM ET the S P 500 futures edged down 4 points or 0 16 while the tech heavy Nasdaq 100 futures slipped 5 points or 0 10
After JP Morgan s better than expected earnings pushed bank stocks higher on Thursday attention will turn to the numbers from Wells Fargo NYSE WFC and Citigroup NYSE C before the opening bell
In other company news Bayer DE BAYGN upped its offer to acquire Monsanto NYSE MON to 64 billion in an attempt to entice the U S seed company to accept
On the economic front investors will focus on a score of reports out stateside with particular attention paid to June inflation figures retail sales for the same month and the preliminary read of consumer sentiment in July from the University of Michigan
Also set to be released are the July NY Empire State manufacturing index June industrial production and May business inventories
Markets will digest the data to try and glean clues for its effect on the Federal Reserve s Fed policy stance as various central bankers sent mixed signals
While Philadelphia Fed president Patrick Harker said Thursday that the FOMC could raise short term interest rates as much as twice this year three other Fed officials signaled that they were in no rush to raise rates
Markets had dismissed the possibility of policy tightening this year with odds at 100 that the Fed will keep rates on hold at the July 26 27 meeting and only a 37 chance of a hike in December
Meanwhile oil prices fell in early trade on Friday on concerns over the supply glut though positive growth figures out from China helped to pare losses
Investors continued to digest higher than expected U S stockpiles that were released throughout the week and reports of swelling supply levels among top OPEC producers such as Saudi Arabia and Iran
U S output would be in focus later in the session with the weekly Baker Hughes data According to oilfield services provider the number of rigs drilling for oil in the U S increased by 10 last week to 351 marking the fifth increase in six weeks
The renewed gain in U S drilling activity fueled speculation that domestic production could be on the verge of rebounding in the weeks ahead underlining worries over a supply glut
U S crude futures lost 0 44 to 45 48 by 10 56AM GMT or 6 56AM ET while Brent oil traded down 0 38 to 47 19
Elsewhere Asian shares traded mostly higher as the better than expected Chinese GDP caused a sigh of relief over the slowdown in the world s second largest economy
However European stocks traded lower on Friday halting the recent rally after a gunman at the wheel of a heavy truck plowed into a crowd celebrating France s Bastille Day in the southern city of Nice late on Thursday killing at least 84 people and injuring scores in what the nation s President Francois Hollande called a terrorist act |
C | U S stock index futures edge lower ahead of earnings reports | Investing com U S stock index futures edged lower Friday as investors await more earnings reports The Dow futures was down 0 07 at 07 00 ET while the S P 500 futures shed 0 06 The tech heavy Nasdaq 100 futures lost 0 08 Citigroup NYSE C and Wells Fargo NYSE WFC are due to report Q2 earnings later Friday U S June inflation and retail sales figures are also due out |
C | Citigroup shares jump after Q2 earnings beat | Investing com Citigroup NYSE C the fourth largest U S bank reported stronger than expected second quarter earnings but revenue missed consensus ahead of Thursday s opening bell sending its shares higher in pre market trade
Citigroup said adjusted earnings per share came in at 1 24 in the three months ended June 30 down from 1 51 a share a year earlier and above expectations for adjusted earnings of 1 10 a share
The bank s revenue totaled 17 55 billion in the April to June quarter a decrease from the 19 06 billion reported in the same period in 2015 and below estimates for revenue of 18 07 billion
Traders will now turn their attention to the bank s conference call due to start at 11 30AM ET
Following the release of the report shares in Citigroup rose 1 00 or 2 25 in pre market trade to trade at 45 45 The bank closed Wednesday s session with gains of 2 6 on the back of JP Morgan s own earnings beat
Meanwhile U S equity markets remained flat after the release The blue chip Dow futures inched up 8 points or 0 04 by 12 09GMT or 8 09AM ET the S P 500 futures edged forward 1 point or 0 03 while the tech heavy Nasdaq 100 futures slipped less than a point or 0 01 |
C | Citigroup Q2 EPS 1 24 vs forecast 1 1 | Investing com Citigroup NYSE C Friday reported Q2 diluted EPS of 1 24
That beat estimates for the quarter of diluted EPS of 1 1 EPS in Q2 2015 was 1 51
Revenues for the quarter fell to 17 5 bn from 19 5 bn a year earlier
CEO Michael Corbat said the results were achieved despite a challenging and volatile environment
Citi s shares were up 0 67 in pre market trade at 44 75 at 08 15 ET |
C | Wells Fargo management prodded on expenses after profit decline | By Dan Freed and Nikhil Subba Reuters Top Wells Fargo Co N WFC executives were grilled by analysts on Friday about whether they re doing enough to control expenses after the bank reported a drop in second quarter profit Like its big bank peers Wells Fargo has been challenged by a prolonged period of historically low interest rates which only fell further in the second quarter Even as the San Francisco based lender extended more loans its profits fell 3 5 percent because it has started setting aside more money for possible losses in the future Revenue growth was not enough to offset those increased provisions as well as higher costs elsewhere The expense line was boosted by standard operating costs like compliance and personnel as well as investments in things like biometric scanners and technology to approve loans more quickly Wells Fargo s shares fell 3 percent in afternoon trading following the results At least five analysts asked Chief Executive John Stumpf and Chief Financial Officer John Shrewsberry about those operating expenses during a conference call on Friday and whether they can come down any further Though Wells Fargo is at the high end of a cost efficiency range that management has set out the two executives argued that costs are necessary for either day to day business or long term investments that will pay off A lower for longer interest rate scenario puts pressure on everything that we do Stumpf responded to one analyst who acknowledged he might be beating a dead horse by asking again about costs We are not going to do something that is short term bright long term dull just because of pressure on the revenue side or the earnings side Stumpf continued We will continue to work really hard on taking out costs that don t add value Wells the third largest U S bank by assets reported net income applicable to common shareholders of 5 2 billion in the second quarter down from 5 4 billion a year earlier Revenue rose 4 percent to 22 2 billion Earnings per share slipped to 1 01 from 1 03 matching the average analyst forecast according to Thomson Reuters I B E S Wells Fargo s second quarter results compare to better than expected profit declines of 1 percent at JPMorgan Chase Co N JPM and 14 percent at Citigroup Inc N C All three banks described healthy loan growth in their core businesses and largely blamed low rates for the profit declines When rates get too low the gap between what it costs a bank to obtain funding and what it can earn from investing or lending tends to narrow Wells net interest margin which measures interest income as a portion of assets declined on both an annual and quarterly basis Banks have tried to keep a handle on expenses to offset the impact of low rates Wells Fargo management has said the bank will keep expenses as a portion of revenue known as an efficiency ratio in a range of 55 to 59 percent this year In the second quarter its efficiency ratio was 58 1 percent The industry is also lending more to boost income a sign of strength for the U S economy Wells reported loan growth across commercial loans auto loans credit cards and residential mortgages Stumpf noted that consumer spending on big ticket items was especially robust during the quarter Wells Fargo s 950 8 billion worth of average loans during the quarter was 9 percent above the year ago and 3 percent higher than the prior period It was the 16th consecutive quarter of loan growth for the San Francisco based bank But with that growth has come the need to boost reserves against loan losses that are possible in the future Wells provisions for loan losses of 1 1 billion more than tripled from the year ago quarter and were 49 percent higher than the first quarter The bank said its overall credit quality was solid with the exception of its oil and gas portfolio which has come under pressure due to the decline in energy prices Wells Fargo is the biggest U S mortgage lender but faced some particular challenges in that business Its mortgage banking revenue fell 17 percent even amid a wave of new business The decline came from its mortgage servicing portfolio where hedges on the direction of interest rates were less effective and where the bank also faced higher costs Up to Thursday s close Wells Fargo s stock had dropped about 10 percent since the start of the year but it remained the most highly valued U S bank Although Wells results were generally in line with expectations Oppenheimer analyst Chris Kotowski said they were an indication of how difficult revenue growth is to come by |
C | Asian shares mixed in cautious trade Tokyo shut for holiday | Investing com Asian shares eased on Monday with markets in Tokyo closed and investors cautious after a failed military takeover in Turkey at the weekend raised political risk for the region
The Shanghai Composite eased 0 55 despite a gain in house prices data for June in China of 7 3 year on year with the previous month up 6 9 Hong Kong s Hang Seng Index was last up 0 09 The S P ASX 200 rose 0 52
The yuan fell against the dollar after the People s Bank of China weakened the fixing for the first time in four days at 6 6961 compared with 6 6805 on Friday
Last week U S stocks were mixed on Friday remaining in near record territory as a bevy of robust economic data in June offset subdued earnings from Wells Fargo NYSE NYSE WFC and Citigroup Inc NYSE NYSE C while travel stocks weighed in response to the Nice truck attack
Shares in Wells Fargo and Citigroup two of the most prominent banks on Wall Street closed lower in Friday s session after revenues moved lower in the second quarter
The Dow Jones Industrial Average gained 10 14 or 0 05 to 18 516 55 closing at all time record highs for the fourth consecutive session The Dow reached session highs of 18 557 43 late on Friday afternoon also hitting a record high for the fourth straight day While the S P 500 Composite index also set a fresh all time intra session high at 2 164 75 the S P pared gains to close at 2 161 74 down 2 01 or 0 09 Had the S P 500 closed higher on Friday the index would have posted all time closing highs in five straight sessions over a single week a feat last achieved in March 1998
On the S P 500 six of 10 sectors closed in the green as stocks in the Utilities and Basic Materials industries led Stocks in the Consumer Services sector lagged falling more than 0 50 on the session despite the release of strong retail sales data on Friday The NASDAQ Composite index also fell slightly on Friday losing 4 49 or 0 09 to close at 5 029 59 |
C | USD Weakens After Weak Inflation Data Market Update | Currencies
EUR USD the inflation data out of the US was not good as also the retails sales number disappointed sending the USD lower The likelihood that the FED will feel comfortable of raising the interest rate once more this year and start working on reducing the balance sheet of 3 5 trillion is much lower now There was already concern that inflation was not picking up even though there is full employment Up until now most FED officials argued that the low inflation was transitory but with the disappointing inflation data there is even more doubt that this is indeed the case Today will also see inflation data out of the Eurozone Technically we are seeing that we remain trading a crucial area on the weekly chart
USD JPY extended its drop after the weak US data and therefore completed the first weekly drop in a month on Thursday it is the turn of the BOJ again to set the interest rate and its policy statement While no expectation is expected in either it is expected that the BOJ will change its outlook slightly
GBP USD the GBP had another very strong day on Friday breaking through the temporary resistance around the 1 295 level and basing itself above the 1 30 level to reach the highest level since September This all thanks to the weakness of the USD and the possibility that the BOE will raise the interest rate Today will see the first real Brexit negotiations taking place which could cause some pressure on the GBP
USD CAD reached the lowest level in over 2 years as the USD continued to weaken as the CAD strengthened further due to the rise in oil price
AUD USD rose to the highest level in well over a year after the weak inflation data out of the US Data out of China was also better than expected this morning but it didn t have a major impact on the AUD this time around at least not yet Tonight we will get the meeting minutes of the last RBA meeting
NZD USD moved up again on Friday as the USD weakened but is down this morning as the RBNZ Deputy Governor argued that a weaker NZD would economic growth Tonight we will get to see the inflation data where a slowdown is expected
USD ZAR also here the USD lost ground but here it was also due to some strengthening of the ZAR after the Chamber of Mined suspended a contentious charter
Indices
Dollar Index after the weak data out of the US which casts serious doubt on the way forward for the FED the Dollar Index dropped to a new 10 month low There are now serious doubts if the FED can move forward with its intended goals of reducing its massive balance sheet and continue to increase the interest rate We are now nearing the next support level around the 94 57 level
S P 500 rose to a new record high as the first major earnings came in better than expected lifting the expectation further for the rest of earning season The fact that the FED is unlikely to be able to move full speed ahead with monetary tightening due to the weaker than expected data on Friday was also helpful for equities
Commodities
Gold as we could expect the disappointing inflation data out of the US helped gold break through the resistance as well as the downwards trend line leaving the danger of dropping below the 1200 level behind it for now Oil oil continued to move higher and is targeting the 47 level again The main reason is not that OPEC is shifting gear although we will wait to see what the extraordinary meeting of today is about but rather the increase in demand This was reinforced this morning after data out of China showed their economy continues to grow and therefore demand for oil is expected to remain high The number of active rigs in the US meanwhile increased again indicating that production in the US will continue to rise However we definitely start to see a change in direction of inventories in the US which has been dropping steadily over the last few weeks Another drop this week could help oil near the 50 level again depending obviously as well on comments out of OPEC
Wheat after reaching a 2 year high at the start of the month because of the lack of forecasted rain it has dropped sharply last week as weather forecast have turned more positive with rainfall expected and the WASDE report which although it projected lower production expects the overall stock to be higher than previously thought
Stocks
Citigroup NYSE C reported a better than expected revenue which came in at 17 9 billion However it was not able to benefit and closed lower mainly due to trading revenue dropping and a less positive outlook
JP Morgan reported a record profits in several sectors with overall revenue beating the forecast and totaled 25 5 billion and a profit of 7 03 billion Also here the stock was unable to benefit due to diminished expectations for the coming quarters
Teva dropped as there is some uncertainty regarding the CEO position that was offered to AstraZeneca CEO Pascal Soriot with reports saying he has turned the offer down |
JPM | James Turk Gold And Bitcoin Are Currencies Of The Future | Europe says James Turk founder and chairman of GoldMoney is in the midst of two crises one in the banking sector the other related to economic activity and capital is needed to solve both As to the allegedly strong dollar Turk in this interview with The Gold Report suggests comparing it to the price of gold rather than other fiat currencies for a better picture And the world s newest currency Bitcoin has a lot in common with one of the oldest gold The Gold Report James from your perspective in Europe is the region in as bad a financial crisis as it appears in the headlines here in the U S James Turk Yes it really is However Europe is a big place and you have to look at the individual countries one by one to understand the situation Generally speaking the Mediterranean countries are in the worst shape Germany has been in the best shape although recent economic data indicate it may be falling into a recession again France is not quite as bad as the Mediterranean countries but in economic activity it is worse off than Germany and the rest of Northern Europe TGR What role does the euro play in all this and where might the next crisis take place JT Most of the problems we have seen in Europe are not really euro crises they are banking crises That was clearly the case in Cyprus The hot spot now is Slovenia a small Alpine country that is part of the European Union and the Eurozone Its banks are overleveraged and under scrutiny because of the number of bad loans they carry The banks in Luxembourg and Malta are also very highly leveraged relative to the size of those countries gross domestic product GDP This concern follows on what happened in Iceland Dubai and Cyprus where the perception was that the banks were potentially vulnerable to hot money withdrawals due to the banks high percentage multiple to the country s GDP In other words if depositor money were to flee those banks might experience liquidity squeezes too big for the government to manage That is what happened when the European Central Bank ECB pulled the plug on Cypriot banks after Russian depositors pulled out large sums Economic activity is the second part of the problem Italy is probably the most vulnerable at the moment and that is saying quite a bit given how bad off Spain is But Italy has more political uncertainty TGR Italy has a new coalition government Could that calm things down JT It could calm things down for a while but there is so much difference of opinion as to what is needed to solve Italy s problem the various groups are too polarized I do not see this coalition government lasting very long TGR What will it take to cure this banking crisis JT Capital The banks are overleveraged and have too many bad assets on their balance sheet Capital has been wiped out even accounting for reserves set aside by the banks That was clearly the case in Cyprus and is the case in most other countries The banks look solvent because the ECB is keeping them afloat with liquidity If the ECB removes that liquidity as it did with Cyprus it will soon become apparent which banks are truly insolvent Bank crises occur overnight for that reason When the liquidity is gone the bank closes up because it is not solvent It lacks quality liquid assets that can be sold into the market to raise cash to meet depositor withdrawals Capital cannot be created out of thin air which is something that politicians have yet to learn They think that by borrowing more money from the market they can save the banking system But they are just adding fuel to the fire because most European countries are already overleveraged TGR Looking to the east Japan just announced its own quantitative easing QE Will it win the currency race to the bottom JT We seem to have a horse race going on that no one should want to win Which is going to the fiat currency graveyard the quickest the yen the dollar the euro or the pound Right now Japan is leading the race with its debasement of the Japanese yen through QE and government spending programs This is astounding because when you look at economic activity around the world Japanese GDP growth is better than most and it has one of the lowest unemployment rates in the industrialized world Japan was in pretty good shape until its new prime minister took over and laid out his policy to debase the yen TGR Why has the dollar remained so strong despite QE here JT Is the dollar really strong When you look at the dollar against gold which is what it should be measured against the dollar has lost 16 per annum on average for 12 years in a row At any moment the dollar might look OK compared to the euro or vice versa but you have to measure the dollar against something meaningful I do that by looking at the dollar relative to the gold price I expect this multi year weakness in the dollar to continue because just as in Europe Japan and in the U K the U S government and the Federal Reserve are following destructive monetary policies that are eroding the dollar s purchasing power TGR Will that lead to hyperinflation and is there a tipping point for that to happen JT I think it will lead to hyperinflation There have been signs for quite a number of years You have to keep a couple of things in mind One is that the inflation numbers released by the U S government and most governments around the world have been massaged and doctored to make inflation look lower than it really is I rely on the inflation statistics that of ShadowStats com puts together Right now inflation in the U S is running about 9 5 For example commodity prices and the cost of things like property taxes and insurance premiums have been running much higher than what the U S government reports inflation to be Second hyperinflation always comes from one cause excessive government spending forcing it to borrow When a government borrows it can only borrow what the market is willing to lend or what the market has the capacity to lend If the government is borrowing more than the market is saving it is by definition debasing the currency When no one is willing to lend to the government it tells the central bank to buy its debt and turn it into currency The central bank then puts this newly printed money into the government s checking account which the government then spends We are headed for hyperinflation not necessarily the paper currency hyperinflation that occurred in Germany s Weimar Republic or in Zimbabwe but a deposit currency hyperinflation like Argentina 12 years ago There is not a lot of paper currency being printed but there is a lot of money in bank accounts this is currency that people spend with checks wire transfers and plastic cards TGR Recently you talked on the about Bitcoin Does it matter if digital currency has no value beyond accounting Are there parallels between gold and Bitcoin JT Bitcoin is not only a digital currency it is a crypto currency a technological innovation we have not seen before The parallels to gold are quite interesting I did a study recently for the showing that the aboveground stock of gold grows by about 1 8 per annum year after year after year That number is approximately equal to world population growth and new wealth creation so gold s purchasing power has been consistent over long periods of time Gold mining does exactly what Milton Friedman recommends in his K rule it grows the gold money supply by the same amount year after year after year Bitcoin is designed in essentially the same way but instead of mining the earth you are mining mathematical formulas to arrive at a very consistent growth of Bitcoin until 2040 when approximately 21 million Bitcoins will be in circulation Bitcoin and gold each have advantages and disadvantages The piece of gold you hold in your hand has 5 000 years of history Bitcoin has maybe four years of history On the other hand because you can hold gold in your hand and store it in vaults it can be confiscated by governments Bitcoin because it is a crypto currency based on mathematical formulas stored in computers all around the world cannot be confiscated Bitcoin has value to people who understand that confiscation is a real risk In the last century Lenin Mussolini Hitler and Roosevelt all confiscated gold to increase the power of the state Once the state controls the money we use it can control economic activity which explains what we are seeing today around the world Crypto currencies are here to stay and should be looked at closely by everybody particularly those who understand sound money and appreciate the value and usefulness of gold TGR Is Bitcoin an investment vehicle JT No because neither gold nor Bitcoin generates cash flow Both are sterile assets Investments generate cash flow You put your money at risk in the hope of getting cash flow from your investment Gold is money When the price of gold goes up you are simply taking wealth that is already created and in the hands of people who own fiat currency and transferring that wealth to people who own gold The same concept applies to Bitcoin Bitcoin is money not an investment Its exchange rate can go up or down just like the price of gold In that sense Bitcoin could be called a store of value just like gold The difference is that gold has a 5 000 year history Bitcoin is much younger We will have to see how Bitcoin plays out as a store of value in the years ahead but regardless Bitcoin is a useful currency because it makes possible low cost global payments It is a technological advancement that leaves bank payment systems in the dust TGR Will governments see Bitcoin as a threat because it is an alternative currency not under their control JT They may see it as a threat but there is nothing they can do about it unless they seize every personal computer in the world People are studying it becoming familiar with it Some day there may be a Bitcoin2 or a Bitcoin3 that is even better than the original That is the beauty of technology Technology enables society to move forward and improve everyone s standard of life Crypto currencies may be the technological innovation that gets us out of our current monetary malaise arising from state control of money and enables us to return to vibrant economic activity that results when we use sound money TGR Based on your Fear Index and the Gold Money Index would you explain the difference between value and price JT Price is the measurement we use when we enter into an exchange with someone else in the marketplace Value is what something is truly worth In other words I might have a house worth 500 000 but I sell it at 400 000 The purchaser is buying it at a price below its true value On the other hand I might sell that house at 600 000 in which case the purchaser is buying the house above its true value To correctly analyze gold we must look at its value We can measure gold s value by comparing it to national currencies I use the Fear Index to compare gold to the dollar and the Gold Money Index to compare gold s role in international trade and finance against all of the foreign exchange reserves held by the world s central banks Gold is undervalued by both of those measures Even though its price has been rising for 12 consecutive years against the U S dollar it remains undervalued because the dollar itself is being debased at almost as rapid a rate as the gold price is rising The other thing about gold is that its value is not only expressed numerically Gold is money that is outside the banking system Because it is tangible it has no counterparty risk It is not money that depends on a bank or a government promise Given what happened in Cyprus and the fragility of many banks around the world I think everybody should have some gold to protect themselves from the eventuality of a much larger banking crisis than what we have seen so far TGR In light of all the volatility of gold and silver recently how are you adjusting your portfolio What roles do cash physical gold mining stocks and exchange traded funds ETFs play JT When you buy gold you have to first identify your objective Do you want to profit from movements in the gold price or do you want a safe haven as protection from monetary and banking turmoil You want the right tool for the right job which depends on your objective If investors want a safe haven physical gold with no counterparty risk is the way to go you want to hold gold bars and coins If investors want to trade to profit from fluctuations in the gold price then you can look at what I call paper gold instruments These would be futures options and ETFs In this case you do not own gold you own exposure to the gold price and that exposure comes with counterparty risk I recommend focusing on gold as a safe haven own physical gold and leave paper gold to the professional traders and the speculators Gold is part of the cash the liquidity part of your portfolio Mining shares go into the investment part of portfolios Investors need to look at mining shares using the same process they do when buying any equity What is the quality of management What does the balance sheet look like What do the assets look like What is the political risk where the company operates And so forth If you are prepared to shoulder those investment risks you might then decide to have some mining shares in your portfolio as well Generally speaking I have never seen mining share prices this undervalued in relation to the cash flow they are generating and as a result many mining companies have increased their dividends If I am correct that the gold price will go much higher I think mining company shares will rise much higher as well TGR Is the TSX Venture Exchange a bargain basement right now JT Everything is pretty much on sale The question is when the mining shares go up which ones will go up first There are a couple of characteristics that may give us a clue Good dividend payers with secure cash flow will probably rise first I would stay away from any mining shares that have any hedge positions because those hedge positions will cut into profit as we have seen in the past I also would look to the mining shares with management teams that have proven themselves There were a number of disasters over the past few years caused by companies focusing on growth rather than cash flow They overpaid for investments and diluted their shareholders Many of those executives have left and their successors have I hope learned the lessons of those departures You always have to look at management first and have complete confidence in management before investing in any company TGR Some people have predicted that hundreds of junior miners will be gone by year end Do you agree or are you more optimistic JT It is possible that a lot of them will go by the wayside and disappear simply because capital is very hard to come by today A lot of these little companies are the explorers looking for a resource but even those that have a resource cannot always find the capital they need to develop it A lot of the smaller companies are at bargain basement prices but they come with a lot of risk The less risky play would be companies that have a dividend record a good management team and a strong solid cash flow that will likely continue into the future TGR Based on the five standard deviation decline that occurred in mid April what would the technical analysts predict for the price of gold this summer and the rest of 2013 JT The present drop in prices is very similar to what occurred in 2008 although it is not as severe a percentage decline And remember within one year of the low of 2008 gold made a new record high above 1 000 ounce 1 000 oz and silver more than doubled within 12 months I think history will repeat Within the next 12 months a new record high in gold above 2 000 oz is possible and I think silver will double TGR Any last advice for investors looking to preserve or increase their wealth JT When you are preserving wealth you want a safe haven Physical gold has been the best safe haven over the past 12 years and I expect that to continue You just need to make sure you store it with a professional storage firm where you have the assurances of integrity that your gold is safe If you want to grow your wealth you have to focus on investments not the money in your portfolio Here you might want to look at the mining companies because there are some very good opportunities because of today s low prices I guess it comes down to a question of age If you are older you want to be more conservative and take less risk If you are younger you might want to take more risk For me the rule of thumb is that you should have gold bullion equal to your age A 65 year old pursuing a less risky portfolio strategy should have 65 of his or her assets in gold bullion and the rest in various investments A 25 year old can have 25 of his or her assets in gold bullion and invest the remaining 75 which means the portfolio has less liquidity and more risk Whether you are the 65 year old investing 35 or the 25 year old investing 75 look at the gold mining shares because they are extremely undervalued right now I do not think the gold mining industry is going to disappear for the same reason that gold with its 5 000 year record is not going to disappear TGR Great advice Thank you so much for your time is the founder and chairman of GoldMoney which launched in 2001 GoldMoney is an which its customers can store in Canada UK Switzerland Hong Kong and Singapore After positions with The Chase Manhattan Bank now JP Morgan Chase and Abu Dhabi Investment Authority Turk began the Freemarket Gold Money Report in 1987 which published until 2009 when he began occasional blogging at DISCLOSURE 1 JT Long conducted this interview for The Gold Report and provides services to The Gold Report as an employee 2 Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment 3 James Turk I was not paid by Streetwise Reports for participating in this interview Comments and opinions expressed are my own comments and opinions I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview 4 Interviews are edited for clarity Streetwise Reports does not make editorial comments or change experts statements without their consent 5 The interview does not constitute investment advice Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility By opening this page each reader accepts and agrees to Streetwise Reports terms of use and full legal disclaimer 6 From time to time Streetwise Reports LLC and its directors officers employees or members of their families as well as persons interviewed for articles and interviews on the site may have a long or short position in securities mentioned and may make purchases and or sales of those securities in the open market or otherwise |
JPM | Ego Alert Jamie Dimon Makes His Biggest Mistake | Jamie Dimon let his ego get the best of him and it caused a major error in judgement Often times ego is the downfall of some of the greatest men in history Word surfaced today that Jamie Dimon would keep his head directors role along with the CEO title at JPMorgan Chase Co JPM The vote was tight but ultimately he succeeded Word has it that Jamie Dimon threatened to quit if the head director role was taken away from him What Was The Critical Error He should have let the company name another director as head Why He would enshrined himself as one of the greatest leaders of all time through the financial crisis and beyond If he let the director s position go any negatives the company experienced in the future would be blamed partially on him not being in that leadership role If the company continues to have success it would still be looked at as his company as the CEO Ultimately he would have insulated himself slightly by allowing another person to take his place as director By staying in the position everything that happens will be under an even closer microscope with his head on the chopping block This was a simple ego move by Jamie Dimon with no real thought It will be an error in judgement he will likely regret in the years to come |
MS | Crude oil futures sink 2 in risk off trade | Investing com Crude oil futures came under heavy selling pressure on Monday hitting the lowest level in two weeks as ongoing concerns over the sovereign debt crisis in the euro zone and global growth worries continued to weigh on investor confidence On the New York Mercantile Exchange light sweet crude futures for delivery in June traded at USD101 98 a barrel during U S morning trade tumbling 1 8 It earlier fell by as much as 2 to trade at USD101 97 a barrel the lowest since April 11 Earlier Monday data showed that the euro zone s manufacturing output slumped to its lowest level since June 2009 this month while its services sector fell to a five month low The decline was driven by poor performances in Germany and France with manufacturing activity in Germany slowing to the lowest level in almost three years The weak data fuelled fears economic growth in the region will be hit by planned government austerity measures The 17 countries using the euro accounted for about 12 of world demand last year Manufacturing numbers are used as indicators for fuel demand growth Sentiment also weakened amid fresh concerns over political uncertainty in the euro zone as investors mulled the implications of the collapse of the Dutch government following failed budget negotiations and outcome of the first round of the French presidential election Adding to the gloomy market environment the Bank of Spain said earlier that the country s economy shrank by 0 4 in the first three months of 2012 That follows a 0 3 contraction in the fourth quarter of 2011 and zero growth in the third quarter of last year There have been renewed concerns of further debt contagion in the euro zone in recent weeks amid fears Spain will be the next in the euro zone to require a bailout The news prompted investors to shun riskier assets such as stocks and industrial commodities and flock to traditional safe haven assets like the U S dollar The dollar index which tracks the performance of the greenback versus a basket of six other major currencies was up 0 47 to trade at 79 65 Oil prices were mildly lower during the Asian trading session following a report showing that Chinese manufacturing activity remained in contraction territory for the sixth consecutive month in April fuelling concerns over a slowdown in the world s second largest economy A deeper slowdown in China the world s second biggest economy would impair a global expansion that is already faltering because of the implementation of harsh austerity measures in Europe China is the world s second largest oil consumer after the U S and has been the engine of strengthening demand Market analysts noted that oil prices may be poised for a downward correction Wall Street investment bank Morgan Stanley said in a report earlier that Supply outages and geopolitical concerns have supported crude but barring a supply shock upside is limited from here A potential loss of Iranian oil supplies has helped underpin strong gains in oil prices during late last year and the first quarter of this year but revived talks between Iran and major powers over Tehran s nuclear ambitions along with rising Saudi Arabian and Libyan output and signs of slower U S economic and employment growth helped pull oil prices back from first quarter peaks Elsewhere on the ICE Futures Exchange Brent oil futures for June delivery fell 1 15 to trade at 117 44 a barrel with the spread between the Brent and crude contracts standing at USD15 46 |
MS | Gold tumbles 1 5 to hit 2012 low Greece technical selling weighs | Investing com Gold futures added to heavy losses during U S morning trade on Monday falling to the lowest level since the start of the year as investors continued to seek the relative safety of the U S dollar amid growing concerns over a potential Greek exit from the euro zone On the Comex division of the New York Mercantile Exchange gold futures for June delivery traded at USD1 560 95 a troy ounce during early U S morning trade tumbling 1 45 It earlier fell by as much as 1 75 to trade at USD1 556 55 a troy ounce the lowest since December 30 2011 Gold futures were likely to find support at USD1 523 95 a troy ounce the low from December 29 and resistance at USD1 639 05 the high from May 8 Gold s losses accelerated after prices broke below a key technical support level close to USD1 567 an ounce triggering fresh sell orders amid bearish chart signals Technical traders expect the next level of support for gold to be at USD1 550 and then USD1 544 after breaking below USD1 600 last week Some market participants noted that heavy losses in stocks and other commodities markets accelerated gold s sell off as traders were forced to sell their gold holdings to raise cash to cover losses elsewhere Money managers in gold futures and options cut their net long positions by 20 to the lowest level since December 2008 as investors aggressively unwound their bullish bets in the precious metal after a sharp price pullback last month In October 2008 gold prices tumbled 18 as turmoil in global financial markets led to losses in global equity and commodity markets The precious metal rallied 23 in the next two months Investors continued to monitor political developments in Greece as the debt laden country struggles to form a coalition government following last weekend s elections fanning fears over a potential Greek default and eventual exit from the euro zone Meanwhile concerns over the health of Spain s banking system persisted pushing the yield on Spanish 10 year bonds to 6 27 the highest level since December after the country sold EUR2 90 billion of 12 month and 18 month bonds in an auction which saw short term borrowing costs rise Although gold s appeal as a safe haven is boosted during times of economic uncertainty the euro zone s debt crisis has done little to bolster appetite for the precious metal A weakening euro and stronger dollar have weighed on gold instead The euro fell to a four month low against the U S dollar in early trade Monday while the dollar index which tracks the performance of the greenback versus a basket of six other major currencies was up 0 45 to trade at 80 79 the highest since March 15 Despite the recent run of losses Wall Street investment bank Morgan Stanley said in a report earlier that it remains bullish on the precious metal citing negative U S real interest rates as well as central bank buying Morgan Stanley also expects the European Central Bank to introduce fresh measures to shore up bank balance sheets Elsewhere on the Comex silver for July delivery tumbled 1 3 to trade at USD28 53 a troy ounce just above the lowest since January 3 while copper for July delivery plunged 2 1 to trade at USD3 572 a pound the lowest since January 12 |
MS | Gold plunges on U S dollar strength Greece fears | Investing com Gold futures added to losses Monday hitting the lowest level since January as investors continued to seek the relative safety of the U S dollar amid growing concerns over a potential Greek exit from the euro zone On the Comex division of the New York Mercantile Exchange gold futures for June delivery traded at USD1 561 85 a troy ounce during U S morning trade tumbling 1 42 It earlier fell by as much as 1 75 to trade at USD1 556 55 a troy ounce the lowest since December 30 2011 Gold futures were likely to find support at USD1 523 95 a troy ounce the low from December 29 and resistance at USD1 639 05 the high from May 8 The precious metal losses accelerated after prices broke below a key technical support level close to USD1 567 an ounce triggering fresh sell orders amid bearish chart signals Technical traders expect the next level of support for gold to be at USD1 550 and then USD1 544 after breaking below USD1 600 last week Some market participants noted that heavy losses in stocks and other commodities markets accelerated gold s sell off as traders were forced to sell their gold holdings to raise cash to cover losses elsewhere Money managers in gold futures and options slashed net long positions by 20 to the lowest level since December 2008 as investors aggressively dumped their bullish bets in the precious metal after a sharp price pullback last month In October 2008 gold prices tumbled 18 as turmoil in global financial markets led to losses in global equity and commodity markets The precious metal rallied 23 in the next two months Investors continued to monitor political developments in Greece as the debt laden country struggles to form a coalition government following last weekend s elections fanning fears over a potential Greek default and eventual exit from the euro zone Meanwhile concerns over the health of Spain s banking system persisted pushing the yield on Spanish 10 year bonds to 6 27 the highest level since December after the country sold EUR2 90 billion of 12 month and 18 month bonds in an auction which saw short term borrowing costs rise Although gold s appeal as a safe haven is boosted during times of economic uncertainty the euro zone s debt crisis has done little to bolster appetite for the precious metal A weakening euro and stronger dollar have weighed on gold instead The euro fell to a four month low against the U S dollar in early trade Monday while the dollar index which tracks the performance of the greenback versus a basket of six other major currencies was up 0 45 to trade at 80 79 the highest since March 15 Despite the recent run of losses Wall Street investment bank Morgan Stanley said in a report earlier that it remains bullish on the precious metal citing negative U S real interest rates as well as central bank buying Morgan Stanley also expects the European Central Bank to introduce fresh measures to shore up bank balance sheets Elsewhere on the Comex silver for July delivery tumbled 1 86 to trade at USD28 35 a troy ounce just above the lowest since January 3 while copper for July delivery plunged 2 81 to trade at USD3 572 a pound the lowest since January 12 |
C | Citibank to close Venezuela government accounts Maduro | CARACAS Reuters Venezuela s President Nicolas Maduro said on Monday that Citibank NA UL C planned to shut his government s foreign currency accounts within a month denouncing the move by one of its main foreign financial intermediaries as part of a blockade With no warning Citibank says that in 30 days it will close the Central Bank and the Bank of Venezuela s accounts Maduro said in a speech adding that the government used the U S bank for transactions in the United States and globally Do you think they re going to stop us with a financial blockade No gentlemen Noone stops Venezuela Citibank a unit of Citigroup Inc N C could not immediately be reached for comment about the purported measure against Venezuela s monetary authority and the Bank of Venezuela which is the biggest state retail bank With the OPEC nation s economy immersed in crisis various foreign companies have been pulling out or reducing operations nL1N19Y00B Critics say the socialist economics of Maduro and his predecessor Hugo Chavez have been a disaster for Venezuela while the government blames its political foes and local businessmen for waging an economic war against it
Due to strict currency controls in place since 2003 the government relies on Citibank for foreign currency transactions |
C | Citibank to close certain Venezuela accounts | Reuters Citigroup Inc N C said its unit will stop correspondent banking and servicing of certain accounts in Venezuela Venezuela President Nicolas Maduro said on Monday that Citibank planned to shut his government s foreign currency accounts within a month denouncing the move by one of its main foreign financial intermediaries as part of a blockade Citibank said the decision was taken after a periodic risk management review
Due to strict currency controls in place since 2003 the Venezuelan government relies on Citibank for foreign currency transactions |
C | Citigroup to pay 7 million over inaccurate reporting of trading data to SEC | By Sarah N Lynch WASHINGTON Reuters Citigroup N C agreed on Tuesday to pay 7 million and admit to wrongdoing after the U S Securities and Exchange Commission accused its brokerage arm of providing incomplete trading data to regulators for 15 years The Securities and Exchange Commission said a computer coding error led Citigroup Global Markets to make mistakes every time the SEC made a blue sheet request or a request to provide details on things including the timing pricing and volume of trades
A Citigroup representative was not immediately available for comment |
C | No balance oil markets still oversupplied now growth is stuttering | By Henning Gloystein SINGAPORE LONDON Reuters Oil industry hopes that markets are about return to balance ending a global glut that pulled down prices by over 70 percent between 2014 and early 2016 might be abruptly dashed Despite recent disruptions and output cuts there is mounting evidence that plentiful supplies and brimming inventories will delay a much quoted rebalancing of oil markets The market needs to stop worrying about this balance and concentrate on the now said Matt Stanley a fuel broker at Freight Investor Services in Dubai We rallied on the back of supply outages wildfires and seemingly increased demand Well Shell LON RDSa have lifted force majeure at Nigeria s Bonny the wildfires are out and Canada is close to full production and U S gasoline demand is at 15 month lows he added Not just are supplies improving now demand may be waning With the United States and Europe stagnating Asia has been the main pillar of oil demand growth But that too is now stuttering with tanker flows into the region down for four straight months Thomson Reuters Eikon data shows One indicator of a continuing glut is the shape of the forward crude oil futures curve 0 LCO which has been in contango for much of this year meaning that oil for sale at a later date is more expensive than that for immediate delivery This makes it attractive for traders to store oil for sale later and is seen as a key sign of oversupply In fact so much oil is now stored that the world is running out of space forcing traders to charter supertankers in which to keep unsold fuel There is so much oil in storage that it could take well into 2018 for the glut to clear There are still excess stocks on the market hundreds of millions of barrels of surplus oil It will take a long time to reduce this inventory overhang Saudi Energy Minister Khalid al Falih told a German newspaper While headline figures such as Chinese car sales and gross domestic growth GDP remain strong both have slumped most of this year China s new passenger vehicle sales while still huge at over 2 million per month have fallen by a quarter since reaching their December peak Counting on a continuing boom China s oil refiners are producing so much fuel that even its huge domestic market can t cope resulting in a surge of Chinese fuel exports into an already glutted Asian market Furthermore China s program to build up strategic petroleum reserves SPR a strong source of crude demand over the past years may slow sharply or even halt soon as its available storage facilities are full or close to capacity As a result U S bank JPMorgan NYSE JPM expects a 15 percent month on month decline in China s crude imports in September The impact on oil consumption of Britain s vote to leave the European Union is likely to delay the supply demand rebalancing further probably by six months INDIA NOT THE NEW CHINA The U S Energy Department cut its forecast for oil demand growth in 2016 and increased its demand growth forecast for 2017 according to a monthly outlook issued on Tuesday U S oil demand is expected to grow 160 000 barrels per day in 2016 compared with previous expectations for 220 000 bpd according to the department Demand will grow 120 000 bpd in 2017 compared with 60 000 bpd previously It doesn t look as though we ll put much of a dent in global oil inventories until the second half of 2017 said Tim Evans energy futures specialist at Citigroup NYSE C in New York The market is making considerable progress relative to the surplus of the past two years but it s going to take more time to bring inventories back down to more normal levels he added Many in the oil industry hope India will pick up the baton from China and act as the global driver for oil demand growth Yet such hopes are premature as India remains for the time being too poor to get anywhere near China s fuel consumption While its demand may now be growing faster than China s its outright consumption remains far lower as seen in vehicle sales India sells some 16 million motor bikes per year similar to China Yet in China some 2 million new passenger vehicles hit the road every single month 25 million in 2015 up from around one million just five years ago In India by contrast car sales have stagnated between 200 000 and 300 000 per month for years and never recovered from their historic peak of just over 300 000 reached in 2011 Meanwhile Asia s two most developed major economies Japan and South Korea are grappling with a steady and likely terminal decline in oil demand Some pin their hopes on Southeast Asia where large emerging markets such as the Philippines Vietnam Thailand and Indonesia have huge potential But like India the region still lags China in terms of development for it to act as a substitute In short the sort of fuel demand growth seen in Asia over the past decade may be a thing of the past While few expect the region s demand to fall outright many say the oil industry needs to adjust to a future of lower Asian growth just like the coal and steel industry has had to
Again the automobile sector provides a clue Car sales in Asia including in China are falling amid economic downturn Tae nyen Kim executive managing director of Korea Automobile Association told Reuters |
C | Citigroup targets high growth firms to boost Asia corporate banking business | By Sumeet Chatterjee HONG KONG Reuters Citigroup Inc NYSE C looks to sharpen its focus on winning a bigger share of business from emerging market champions in Asia including rapidly growing Internet firms as part of its plans to boost corporate banking revenue The U S bank which counts Asia as its fastest growing region employs more than 600 people in its corporate banking business in the region and would make select hirings to bolster its presence Gerald Keefe newly appointed head of Asia Pacific corporate banking said These companies have achieved scale quickly and now increasingly are growing in developed markets Keefe said referring to what the bank calls emerging market champions in countries such as China and India Citigroup announced the appointment of Keefe as Asia Pacific corporate banking head in April a new role that brings together bankers working for clients from financial institutions public sector entities corporates and local units of global firms One of the priorities in the new role is to deliver stable top line growth for corporate banking in Asia in an efficient and responsible manner Keefe who was previously the bank s corporate banking head in Japan told Reuters Citigroup s enhanced focus on the corporate banking business in Asia comes against the backdrop of a drop in revenues from trading and deal advisory and underwriting in the first quarter that weighed on its earnings Citigroup Chief Executive Officer Mike Corbat indicated last month that the bank s second quarter net income will be roughly 25 percent lower than the same period a year earlier The bank is due to report on Friday Under the corporate banking business in Asia its offerings include cash management foreign exchange trade finance loans and capital markets and structured products solutions The unit will work closely with investment banking and markets teams In a sign of its increasing focus on high growth firms in the region Citigroup was one of the lead arrangers in three separate loan deals of Chinese Internet giants Alibaba NYSE BABA Group Baidu and Tencent Holdings which raised a combined 10 4 billion earlier this year according to Thomson Reuters LPC data We have leading corporate champions in China as our clients they are now in many ways global businesses Keefe said We are uniquely positioned to help them expand globally with our network in over 100 countries
In Asia the bank is also looking to grow its supply chain financing business in which target clients range from car component makers to telecoms equipment producers as these firms look to expand their geographical footprints Keefe said |
C | JPMorgan buoys itself with loan growth in swamp of low rates | By David Henry and Sweta Singh Reuters JPMorgan Chase Co N JPM is lending more and keeping a lid on expenses to combat the scourge of low interest rates allowing management to stick to financial goals for the year JPMorgan the largest U S bank by assets beat subdued expectations in reporting a 1 percent slide in second quarter earnings on Thursday in the face of historically low rates volatile markets and questions about its future in one of Europe s biggest economies Chief Financial Officer Marianne Lake struck a resilient tone when discussing results saying JPMorgan would be at the higher end of management s forecast for 2016 loan growth and was also on track to reach a cost cutting target During the second quarter JPMorgan s average book of core loans those related to ongoing businesses it plans to maintain grew 16 percent with particular expansion in mortgages and commercial real estate Even as deposits grew the portion it lent out also rose to 66 percent compared with 61 percent a year ago and 64 percent in the prior quarter We had broad based demand for loans pretty much across categories Lake said on a conference call with journalists I would say that speaks well for the U S economy Growing the loan book is especially important as JPMorgan like other banks faces extreme challenges in earning money on idle deposits because of very low rates The difference or spread between 10 year and two year U S Treasuries an indicator of how much profit banks can make from loans dropped to 75 basis points on Friday its lowest level since late 2007 The Fed last raised rates in December by 0 25 percentage points after keeping them near zero for almost a decade At the start of the year further rate hikes were widely expected but now Wall Street is uncertain whether the Fed will raise rates at all this year Declining rates put pressure on the amount of money banks can earn relative to their cost of funding known as net interest income JPMorgan s net interest income fell during the second quarter relative to the previous one Another symptom of the bank s struggle with low rates was its return on tangible common equity a key measure of profitability It fell to 13 percent from 14 percent a year earlier Management has said it should be about 15 percent but to get there the bank needs higher rates However Lake said low rates have sparked robust demand for new loans which will help boost net interest income and keep net interest margins stable through the end of the year He expects the bank to come in at the higher end of its forecast loan growth for 2016 a range of 10 to 15 percent Executives were also quick to defend the pace of loan growth They described conditions in certain markets as frothy but manageable and said they were being careful and JPMorgan s portfolio of loans was solid When an analyst described the bank s commercial real estate loan book as growing like a weed during a conference call Lake responded Growing like a sunflower not like a weed TOUGH ENVIRONMENT Overall JPMorgan s second quarter net income slipped to 6 2 billion in the second quarter ended June 30 from 6 3 billion a year earlier Net revenue rose 3 percent to 25 2 billion Earnings per share of 1 55 handsomely beat the average analyst estimate of 1 43 per share according to Thomson Reuters I B E S Analysts had reduced their forecasts for big banks in recent weeks For a graphic on bank earnings and stock prices click here Even as business grew last quarter JPMorgan managed to keep down costs apart from technology Overall operating expenses fell 6 percent compared with the year earlier period JPMorgan continues to execute really well in a tough environment said Evercore ISI analyst Glenn Schorr noting that the bank beat his expectations not only in loan growth but also in fixed income trading investment banking and expenses JPMorgan shares rose 2 2 percent to 64 53 at midday and helped push the S P 500 and the Dow to fresh highs However financial firms are underperforming the wider jump in U S stocks The sector in the S P SPSY is down 1 23 percent year to date the only loser in a wider index up 5 88 percent in the same period JPMorgan is the first U S bank to announce results for the quarter as well as the first to report since Britain voted on June 23 to leave the European Union Wells Fargo Co N WFC and Citigroup Inc N C the third and fourth biggest U S banks report results on Friday The vote to leave the EU known as Brexit helped push JPMorgan s fixed income trading revenue up 35 percent last quarter as investors scrambled to react to the vote So far in the third quarter trading volumes have been fine but a normal seasonal decline is expected Lake said In addition to its impact on interest rates and markets Brexit also raised questions about whether banks will shift some of their London operations to other cities
After the vote JPMorgan said it was considering changes that could result in moving some of its 16 000 UK based employees On Thursday Lake said dialogues about staff moves are only in their infancy |
C | BoC Acts As The Fed s Dancing Mate Will Others join The Party | At the start of the year the Federal Reserve was the only major central bank engaging in as well as communicating that it remains on a path of policy normalization At that point in time the Fed had already hiked rates twice since last reducing them back in 2008 while it has delivered two additional rate increases so far during the year The Bank of Canada s decision to raise rates for the first time in roughly seven years could be a sign that a hiking trend is to follow amid signs for an improved outlook for the global economy
After the decision by the BoC to raise its target for the overnight rate by 25 bps to reach 0 75 on July 12 the Canadian dollar rose versus its US counterpart to touch its highest in nearly thirteen months Specifically dollar loonie fell to as low as 1 2680 a fall reflects a strengthening loonie The greenback later recovered part of its losses but still finished the day lower by a sizable 1 3
It is noteworthy that the Canadian dollar experienced significant gains in the weeks before the BoC decision The rise in that period was in part attributed to the imminent rate increase by the Canadian central bank In other words the rate hike was already almost completely priced in by the markets before it officially materialized It is thus interesting to examine what caused the loonie s surge on the day of the announcement year to date the loonie advanced 5 5 relative to the greenback
In its accompanying statement the Bank interpreted weak inflation data to be non persistent expressing that inflation is on track to reach its 2 target as the Bank s Governor Stephen Poloz maintained an overall hawkish tone in his message Moreover the Bank expressed content for the country s economic recovery while Poloz acknowledged the lag between monetary policy actions and future inflation i e that it takes time for monetary policy decisions to have their intended effect on inflation Therefore it is clear that the loonie s jump higher was spurred by market participants expecting further hiking soon The BoC is next scheduled to make a monetary policy decision announcement on September 6
When asked about the credit fueled boom prior to the 2007 09 financial meltdown Chuck Prince the then Citigroup NYSE C chairman and chief executive famously said that as long as the music is playing you ve got to get up and dance The BoC has just joined the dance in the party that was started by the Federal Reserve This begs the question Will other central banks soon join the party According to financial market analysts there is some reasoning for central bankers to follow through on the actions of their peers especially if their currencies are moving in a direction that is detrimental for their respective economies
It is also of interest that similar to Poloz the European Central Bank head Mario Draghi recently played down not so strong inflation figures attributing them to global factors Back then those comments by Draghi led to the euro rallying relative to other majors Soon after Bank of England officials including Governor Mark Carney followed suit with hawkish comments
A Wall Street Journal report hitting the markets yesterday stated that the ECB is likely to signal in its September meeting that its asset purchase program will be gradually scaled down starting next year In the case of the BoE recent not so upbeat economic data combined with political uncertainty predominantly due to Brexit might not allow its decision makers to enter a phase of normalization as soon as they would have otherwise wished As of now the Bank of Japan seems to be standing as the odd one out Its Governor Haruhiko Kuroda delivered a broadly dovish message after the Bank s last meeting on June 16 saying that there s some distance to achieving the Bank s 2 inflation target The BoJ maintaining its ultra loose monetary policy at a time when others are either hiking rates or signaling readiness to normalize policy is expected to add downside pressure on the Japanese currency over the short to medium term
For history s sake Chuck Prince s stance backfired leaving Citigroup with a sizable exposure to the subprime mortgage market as the most damaging recession since the Great Depression of the late 1920s early 1930s unfolded It remains to be seen whether the world s central banks will face a similar faith for the time being though such a scenario seems unlikely |
JPM | Closer Look At JPMorgan Head And Shoulders Pattern | In today s post I wanted to take a closer look at the Head and Shoulders pattern that s forming in JP Morgan JPM It s important to note the pattern has not triggered yet You can see in the chart below the obvious pattern but there are a couple of things I want to add that stand out to me First let s talk about the expected move if JPM were to close below its neckline which sits at about 46 30 The standard measured move is calculated by measuring the distance from the head to the neckline and then projecting that same distance from where the neckline break would be This is show on the chart as a light blue line and would put JPM at around 42 I see two problems with this potential move First the slope of the neckline is actually down which would imply the measured move may not be fully achieved When it comes to Head and Shoulders patterns upsloping necklines allow the stock to fall further In JPM s case the neckline is already sucking price lower The next problem with the potential move is that the previous resistance point of about 43 30 will likely become a significant support area These two factors work together suggesting to bears that if this pattern were to trigger next week profits should be taken on the way down and that they shouldn t hold out for a target of 42 It s possible it reaches 42 but anything past 43 should be considered a bonus So we talked about the target let s talk about the entry As I mentioned the Head and Shoulders pattern hasn t triggered yet Pattern folks will look for a close below the neckline and possibly a retrace to get short However our MTS Option Trading service started a short position in JPM today based off our Momentum Sniper trading method The trade was sent out via text message this morning for some May put options Our Momentum Sniper method tells us that we had a daily Squeeze fire short yesterday when the dots turned from red to green on the Squeeze indicator below the chart The other factor here is the plunge below zero in the Squeeze indicator in early April as the neckline was being formed indicating the deteriorating condition of the stock We will be looking to add to our JPM short position next week if any relief rally were to take place back to the 48 49 area |
JPM | Jamie Dimon Slaps The Public And Smiles | For lack of a better word greed is good Jamie Dimon has done some shady things as the head of JPMorgan Chase Co JPM While JPMorgan has been fined left and right with investigations galore apparently it matters little Remember if you can make 5 billion and get fined 1 billion it is still a great trade in the realm of publicly traded companies No ethics needed in this arena Dimon is getting the last laugh for now as JPMorgan has just crossed through the 52 week high of 51 00 The stock is trading at 51 09 0 86 1 71 Three cheers for slapping the public with a very large stick There is talk about removing him as the board of directors chair at JPMorgan Chase The stock hitting new 52 week highs has just locked in his tenure Cheers Disclosure I am neither long nor short JPM I have no intention of buying shorting the stock in the next 72 hours |
MS | U S stocks knocked lower on Fed minutes Dow down 0 49 | Investing com U S stocks were knocked lower Tuesday as Fed minutes revealed that the central bank does not see the need for additional monetary stimulus At the close of U S trade the Dow Jones Industrial Average gave back 0 49 the S P 500 dropped 0 42 while the Nasdaq Composite slipped 0 20 Stocks were slammed lower as the Federal Reserve s meeting minutes revealed that the central bank does not see the need for additional monetary easing despite global slowdown concerns Igniting the risk off flight the Commerce Department reported U S factory orders climbed 1 3 in February erasing the previous months downwardly revised 1 1 decline but missed expectations for a 1 5 increase Stock investors are proceeding with caution prior to the Federal Reserve minutes that may signal a third round of monetary easing to support growth Meanwhile concerns over the economic outlook for the euro zone were increased after official data confirmed that the regions economy contracted by 0 3 in the final three months of 2011 unchanged from a preliminary estimate Annualized gross domestic product contracted by 0 7 in the fourth quarter In addition Monday s data showed that manufacturing activity in the euro zone remained in contraction territory for the eighth successive month in March while a separate report showed that the bloc s unemployment rate ticked up to a record high of 10 8 in February Meanwhile in Spain the number of people registering for jobless benefits increased by 38 769 marking the 8th straight monthly increase in the unemployment level In addition the yield on Spanish 10 year bonds advanced 10 basis points to 5 45 while the nation s debt will reach 79 8 of the GDP this year up from 68 5 last year Banks led the decline with JP Morgan Chase giving back 2 4 and Morgan Stanley falling 2 6 on the Fed minutes General Motors plunged 5 3 after reporting sales gains that missed analysts estimates Apple advanced 1 5 after a Piper Jaffray analyst reported he expects the shares to rise to USD1000 00 per share by 2014 At the close European trade the EURO STOXX 50 fell 1 69 France s CAC 40 dropped 1 62 while Germany s DAX traded lower by 1 05 Meanwhile in the U K the FTSE 100 gave back 0 62 Traders are awaiting U S ISM and industry data on employment as well as German factory orders and the ECB interest rate announcement on Wednesday |
MS | Gold silver futures edge higher after previous session s sell off | Investing com Gold futures rose for the first time in three sessions on Thursday as the previous day s steep drop to a three month low created bargain buying opportunities for investors reluctant to bet that prices would fall further On the Comex division of the New York Mercantile Exchange gold futures for June delivery traded at USD1 626 05 a troy ounce during early European trade gaining 0 74 It earlier rose by as much as 0 85 to trade at a session high USD1 628 05 a troy ounce Gold futures fell to USD1 613 55 on Wednesday its lowest level since January 10 and below its 50 day moving average Gold futures were likely to find support at USD1 606 05 a troy ounce the low from January 9 and resistance at USD1 685 25 the high from April 2 Trading is expected to be thin ahead of the Easter holiday Markets in the U S and Europe will remain closed on Friday in observance of Good Friday Most markets in Europe will be shut next Monday as well Gold futures plunged more than 4 in the two sessions leading up to Thursday including a 3 drop on Wednesday as traders readjusted positions after minutes from the March meeting of the Federal Reserve s Open Market Committee released Tuesday indicated that the central bank was unlikely to introduce more stimulus measures to help boost the U S economy in the near term This was the second time in a month that gold has sold off in response to signals from the Fed that more easing is not guaranteed Gold prices dropped almost 5 in the three sessions following March s Fed meeting after the central bank gave an upbeat assessment of the U S economy which reduced expectations for a third round of monetary easing in the U S Wall Street investment bank Morgan Stanley downgraded its forecast of further quantitative easing by the Federal Reserve to one out of three chance from two out of three Expectations of monetary stimulus tend to benefit gold as the metal is seen as a safe store of value and inflation hedge Attention now shifts to Friday s U S non farm payrolls data which could shed further light on the strength of the U S economy and the need for further monetary easing in the U S Resurfacing concerns over the euro zone s debt crisis also added to the gloomy trade environment after Spain s Treasury on Wednesday auctioned EUR2 59 billon of government bonds short of the maximum targeted amount of EUR3 5 billion in the country s first debt auction since last week s austerity budget There have been renewed concerns of further debt contagion in the euro zone in recent weeks amid fears over the fiscal health of the region s fourth largest economy On Tuesday Spain s government announced that the country s public debt will rise to a record 79 8 of gross domestic product this year Elsewhere on the Comex silver for May delivery jumped 1 5 to trade at USD31 51 a troy ounce while copper for May delivery added 0 35 to trade at USD3 804 a pound |
MS | Bottom fishing lifts gold on session | Investing com Gold futures bounced from their lowest level since mid January Thursday as bottom fishing supported prices ahead of Friday s non farm payroll data On the Comex division of the New York Mercantile Exchange gold futures for June delivery traded at USD1 631 05 a troy ounce during early U S trade climbing 1 05 It earlier rose by as much as 1 25 to trade at a session high USD1 634 55 a troy ounce Gold futures fell to USD1 613 55 on Wednesday the lowest since January 10 and below its 50 day moving average Gold futures were likely to find support at USD1 606 05 a troy ounce the low from January 9 and resistance at USD1 685 25 the high from April 2 Trading volumes were expected to remain thin ahead of the Easter holiday Markets in the U S and Europe will remain closed on Friday in observance of Good Friday while most markets in Europe will remain closed next Monday as well The U S Department of Labor reported earlier that the number of individuals filing for initial jobless benefits fell by 6 000 to 357 000 last week the lowest level since April 2008 Meanwhile rising Spanish borrowing costs which continued their uptrend following Wednesday s poorly received government bond auction added to the risk off environment The yield on the country s 10 year bond climbed to 5 84 earlier the highest level since mid December Gold futures plunged more than 4 in the two sessions leading up to Thursday including a 3 drop on Wednesday as traders readjusted positions after minutes from the March meeting of the Federal Reserve s Open Market Committee released Tuesday indicated that the central bank was unlikely to introduce more stimulus measures to help boost the U S economy in the near term This was the second time in a month that gold has sold off in response to signals from the Fed that more easing is not guaranteed Gold prices dropped almost 5 in the three sessions following March s Fed meeting after the central bank gave an upbeat assessment of the U S economy which reduced expectations for a third round of monetary easing in the U S Wall Street investment bank Morgan Stanley downgraded its forecast of further quantitative easing by the Federal Reserve to one out of three chance from two out of three Expectations of monetary stimulus tend to benefit gold as the metal is seen as a safe store of value and inflation hedge Elsewhere on the Comex silver for May delivery jumped 2 08 to trade at USD31 69 a troy ounce while copper for May delivery added 0 17 to trade at USD3 79 a pound |
MS | Gold moves higher pre U S non farm payrolls | Investing com Gold futures traded slightly higher in light U S trade Friday as investors await the critical non farm payroll data and prepare for the long holiday weekend On the Comex division of the New York Mercantile Exchange gold futures for June delivery traded at USD1 632 15 a troy ounce during early U S trade easing higher 0 05 It is trading in a tight range from a low of USD1631 55 and a high of 1632 45 during the slow holiday session Gold futures were likely to find support at USD1 606 05 a troy ounce the low from January 9 and resistance at USD1 685 25 the high from April 2 Trading volumes were expected to stay thin during the Easter holiday Markets in the U S and Europe will remain closed on Friday in observance of Good Friday while most markets in Europe will remain closed next Monday as well Anticipation is high for the release of U S non farm payrolls at 8 30 am New York time before many traders take off for the long Easter holiday weekend Analyst s are expecting U S non farm payrolls to increase by 205 000 based on the ADP report Wednesday The jobless rate is forecasted to have held a three year low of 8 3 in a separate report released today Sentiment on the metal was hit by concerns over the debt crisis in the euro zone after a poorly received auction of Spanish government debt earlier saw the country s borrowing costs rise Spain s Treasury auctioned EUR2 59 billon of government bonds short of the maximum targeted amount of EUR3 5 billion in the country s first debt auction since last week s austerity budget Following the auction the yield on Spanish 10 year bonds climbed to 5 7 up from 5 5 before the sale On Tuesday Spain s government announced that the country s public debt will rise to a record 79 8 of gross domestic product this year These results prompted Spanish Prime Minister Rajoy to state that the economy is in extreme difficulty thus raising the spectre of a possible bailout Earlier in the week Wall Street investment bank Morgan Stanley downgraded its forecast of further quantitative easing by the Federal Reserve to one out of three chance from two out of three Expectations of monetary stimulus tend to benefit gold as the metal is seen as a safe store of value and inflation hedge However analysts at HSBC said in a report earlier that some of Thursday s gains can be attributed to the view that the Fed s policy remains accommodative enough to support gold prices even in the absence of further easing Policy is already ultra accommodative by conventional monetary standards and therefore gold friendly This may be overlooked or underestimated in the current sell off we believe the bank said in a report Elsewhere on the Comex silver for May delivery advanced 0 25 to trade at USD31 72 a troy ounce while copper for May delivery added 0 25 to trade at USD3 80 a pound |
MS | U S futures rise Spain worries persist Dow Jones up 0 58 | Investing com U S stock futures were higher on Thursday ahead of U S economic data but gains were seen as limited as concerns over Spain s ongoing debt troubles persisted despite initial relief following an auction of Spanish government bonds Ahead of the open the Dow Jones Industrial Average futures pointed to a rise of 0 58 S P 500 futures signaled a 0 61 increase while the Nasdaq 100 futures indicated 0 88 gain Spain raised slightly more than the full targeted amount of EUR2 5 billion while the yield on the country s 10 year bonds remained below the 6 level However the results failed to ease concerns over the outlook for Spain as Prime Minister Mariano Rajoy s government attempts to reduce one of the largest deficits in the euro zone amid fears that the economy is entering a recession Energy stocks were expected to be active after U S oil major ExxonMobil and Russia s Rosneft ROSN M unveiled an offshore exploration partnership on Wednesday that could invest over USD500 billion in developing Russia s vast energy reserves in the Arctic and Black Sea Exxon shares edged down 0 07 in after hour trading Elsewhere EBay saw shares surge 8 03 in pre market trade after saying quarterly sales and profit grew more than expected and after raising its 2012 forecasts citing growth in the e commerce company s Marketplaces and PayPal businesses Marriott International was also slated to move higher after it reported a higher quarterly profit late on Wednesday as corporate business strengthened and the hotelier raised its forecast for a key revenue metric In health care companies Illumina Inc was likely to be active after Roche Holding abandoned a USD6 7 billion bid for the U S company because investors were concerned over the viability of the firm s gene mapping technology Other stocks in focus included Morgan Stanley Microsoft Freeport McMoRan Copper Gold Verizon and DuPont all announcing results later in the day Across the Atlantic European stock markets were higher The EURO STOXX 50 rose 0 44 France s CAC 40 advanced 0 65 Germany s DAX added 0 58 while Britain s FTSE 100 climbed 0 72 During the Asian trading session Hong Kong s Hang Seng Index eased up 0 3 while Japan s Nikkei 225 Index slumped 0 8 Later in the day the U S was to release official data on unemployment claims followed by industry data on existing home sales and a report on manufacturing activity in the Philadelphia area |
JPM | Weak U S inflation retail sales data dim rate hike prospects | By Lucia Mutikani WASHINGTON Reuters U S consumer prices were unchanged in June and retail sales fell for a second straight month pointing to tame inflation and soft domestic demand that diminished prospects of a third interest rate increase from the Federal Reserve this year Still the economy likely regained speed in the second quarter after a sluggish performance at the start of the year Other data on Friday showed industrial production picked up in June driven by a surge in oil and gas drilling Today s reports imply that the Fed will go very slowly normalizing rates but it also means that businesses will have to really hustle to find ways to keep earnings growing strongly said Joel Naroff chief economist at Naroff Economic Advisors in Holland Pennsylvania The Labor Department said the unchanged reading in its Consumer Price Index came as the cost of gasoline and mobile phone services declined further The CPI dropped 0 1 percent in May and the lack of a rebound in June could trouble Fed officials who have largely viewed the recent moderation in price pressures as transitory Policymakers are confronted with benign inflation and a tight labor market as they weigh a third rate hike and announcing plans to start reducing the central bank s 4 2 trillion portfolio of Treasury bonds and mortgage backed securities In the 12 months through June the CPI increased 1 6 percent the smallest gain since October 2016 after rising 1 9 percent in May The year on year CPI has been retreating since February when it hit 2 7 percent which was the biggest increase in five years The so called core CPI which strips out food and energy costs edged up 0 1 percent in June rising by the same margin for three straight months The core CPI increased 1 7 percent year on year after a similar gain in May The Fed has a 2 percent inflation target and tracks a measure which is currently at 1 4 percent Financial markets were pricing in a 47 percent chance of a 25 basis point rate hike in December down from 55 percent before the data according to CME Group s FedWatch program As a result the dollar fell briefly touching a 10 month low against a basket of currencies Prices for U S government bonds rose and stocks on Wall Street edged higher Fed Chair Janet Yellen told lawmakers on Wednesday that the recent cool off in inflation was partly the result of a few unusual reductions in certain categories of prices that would eventually drop out of the calculation We expect a little more cautious language from Fed officials on the inflation outlook going forward said Michael Hanson chief economist at TD Securities in New York BROAD WEAKNESS In June gasoline prices fell 2 8 percent decreasing for a second straight month Food prices were unchanged after rising for five consecutive months The cost of cellular phone services fell 0 8 percent extending their decline amid price competition among service providers There were also decreases in airline fares and prices for apparel household furnishings new motor vehicles and used cars and trucks But rental costs rose with owners equivalent rent of primary residence increasing 0 3 percent after advancing 0 2 percent in May Americans also paid more for hospital visits and prescription medication as well as motor vehicle insurance Low prices are hurting retailers A second report from the Commerce Department showed retail sales fell 0 2 percent last month weighed down by declines in receipts at service stations clothing stores and supermarkets Sales at restaurants and bars as well as at sporting goods and hobby stores fell May s retail sales were revised to show a 0 1 percent dip instead of the previously reported 0 3 percent drop Retail sales rose 2 8 percent year on year in June Excluding automobiles gasoline building materials and food services retail sales slipped 0 1 percent last month after being unchanged in May These so called core retail sales correspond most closely with the consumer spending component of gross domestic product Despite two straight months of decreasing retail sales consumer spending likely gained steam in the second quarter after a helping to restrict economic growth to a 1 4 percent annualized rate in the first quarter However that could negatively impact third quarter GDP The weak trajectory of consumer spending at the end of second quarter adds some challenges to the third quarter consumption outlook which reinforces our view that growth will step down modestly in the current quarter said Michael Feroli an economist at JPMorgan NYSE JPM in New York That was supported by a third report showing a measure of consumer sentiment fell to a reading of 93 1 in early July from 95 1 in June It has declined from a high of 98 5 in January The Atlanta Federal Reserve lowered its second quarter growth estimate by two tenths of a percentage point to a 2 4 percent rate following the inflation and retail sales data Still growth in the second quarter likely got a lift from the industrial sector of the economy In a fourth report on Friday the Fed said industrial production increased 0 4 percent in June amid robust gains in oil and gas drilling after nudging up 0 1 percent in May
Industrial production increased at a 4 7 percent rate in the second quarter |
C | U S capital spending set to rise in 2016 Citi | Reuters Capital spending by U S non financial companies excluding energy firms is expected to accelerate in 2016 despite uncertainties surrounding Fed policy and Britain s vote to leave the European Union Citigroup NYSE C said
Citigroup s June review of more than 700 non financial companies showed capital spending is likely to increase by 5 3 percent this year up from the 4 2 percent pickup projected in February Only the energy sector is expected to lower spending this year
Overall this year would mark the eighth straight year of growth in capital spending
Despite fears of a reduction in capital spending given Fed policy uncertainty concerns about global economic growth and even recent Brexit driven worry data collected from companies suggests a better environment Tobias Levkovich Citi s U S equity strategist wrote in a note to clients
Citigroup s study which was conducted in June after the Brexit vote involved reviewing corporate guidance issued by non financial U S companies
According to the review capital spending in the energy sector is expected to drop 30 percent in 2016 with exploration and production companies capex set to plunge 51 percent
Capital expenditure at technology companies is expected to increase 18 percent with software companies expected to spend 27 percent more this year
Hardware and equipment companies are expected to spend 15 percent more as they invest in cyber security cloud and virtual and augmented reality
U S consumer discretionary companies capex is expected to increase 16 17 percent this year helped by a 30 percent boost from media companies |
C | Citigroup merges EMEA Asia consumer banking businesses internal memo | HONG KONG Reuters Citigroup N C is merging its consumer banking unit in Europe Middle East and Africa EMEA with Asia the largest region for profit for the business outside North America according to an internal memo seen by Reuters on Thursday The move which will see consumer banking revenues from five countries Bahrain Poland Russia the United Arab Emirates and the United Kingdom getting consolidated with Asia will not have any impact on headcounts in EMEA or in Asia said a person with direct knowledge of the matter James Griffiths a spokesman for Citigroup in Hong Kong confirmed the contents of the memo As part of ongoing efforts to become a leaner simpler organization Citi s EMEA consumer cluster will now be managed by its Asia consumer franchise he said The integration is designed to enable us to operate more efficiently and effectively he said
With this change Asia which contributed a fifth of Citigroup s global consumer banking profit last year will manage the group s business in 17 countries The bank has consumer banking business in 19 countries globally |
C | Citigroup to merge EMEA Asia consumer banking units | Investing com Citigroup NYSE C is merging its EMEA and Asian consumer banking units The merger plans were included in an internal memo seen by Reuters James Griffiths a spokesman for Citigroup in Hong Kong confirmed the memo He said the merger is part of ongoing efforts to become a leaner simpler organization The move won t impact headcounts in EMEA or in Asia Reuters reported |
C | Ex ICAP brokers escape U S Libor charges after U K acquittals | By Nate Raymond NEW YORK Reuters The U S Justice Department is dropping charges against three former ICAP LON IAP brokers charged in connection with a global investigation into the manipulation of Libor after they were acquitted earlier this year in a related U K trial In a filing in Manhattan federal court made public on Wednesday the U S Justice Department said it was dropping charges against Darrell Read Daniel Wilkinson and Colin Goodman given the U K trial in which they were acquitted in January A Justice Department spokesman declined to comment beyond what the filing said Lawyers for the ex ICAP brokers did not immediately respond to requests for comment The trio were among 16 people the Justice Department had charged in connection with U S and European investigations into whether banks attempted to manipulate the rate to benefit their own trading positions Investigations have resulted in roughly 9 billion in sanctions worldwide against financial institutions London based brokerage firm ICAP in 2013 agreed to pay 87 million to resolve U S and British probes Read Wilkinson and Goodman were charged in the United States in 2013 with conspiracy to commit wire fraud and two counts of wire fraud The trio were also charged in the United Kingdom where in London s second trial to arise from the Libor scandal they and three other brokers were cleared of conspiring with convicted trader Tom Hayes to manipulate Libor The acquittals marked a major blow to the U K Serious Fraud Office which had in its first trial in 2015 secured the conviction of Hayes a former UBS AG UBSAG UL and Citigroup Inc N C trader serving an 11 year prison term
The case is U S v Read et al U S District Court Southern District of New York No 13 mj 02224 |
JPM | Isolating A Stock Market Correction What To Look For | Stocks are trading lower today The SPDR S P 500 ETF Trust SPY is trading at 155 95 0 87 0 55 Over the last ten days the markets have not had two up days in a row nor two down days in a row This up and down action has kept the markets mostly floating sideways with small pops to make new closing highs on the S P 500 How To Recognize When A Drop In The Market Is Coming The key here is super simple Look for two consequetive down days in a row The only catch is the second day down must close below the lows of the first day If this happens further downside is likely in the coming weeks Price action today is very bearish with the financial stocks leading JPMorgan Chase Co JPM is taking a beating trading at 47 03 0 95 1 98 |
JPM | April Showers And The 10 Best Real Estate Bargains In The U S | If you re new to the Wall Street Daily Nation you re in for a treat Every Friday I go from being the boring professor who drones on with longwinded lectures to the nutty professor who blows things up Well not exactly But instead of boring you to death with words I try to enlighten you with a few carefully selected graphics Longtime readers tell us it s their favorite column of the week So let s get to it Expecting April Showers The S P 500 Index soared 10 6 in the first quarter After such a rip roaring start to the year we absolutely positively must be overdue for a pullback Right Not so much At least not according to 100 years worth of stock market data April actually ranks as the best month for stocks As Bespoke Investment Group writes Over the last 100 years the Dow has averaged a gain of 1 29 in April with positive returns 57 of the time Over the last 50 years the Dow has averaged a gain of 2 21 in April with positive returns 64 of the time Finally over the last 20 years the Dow has averaged an April gain of 2 71 with positive gains 70 of the time So don t whip out the umbrellas just yet Get Your Cheap Real Estate Here In I kindly pointed out to one reader that he has his real estate stats all mixed up We re nowhere near another bubble in prices That s not to say real estate everywhere is a Buy Even the village idiot knows real estate is local meaning that conditions can vary greatly between various states and cities So where can the best bargains be found Survey says Dallas Based on the median home price to median income ratio the home of Mark Cuban s Mavericks tops ZipRealty s ZIPR list of the 10 most affordable housing markets No surprise the epicenter of wealth nowadays New York City Washington D C boasts the least affordable real estate In our nation s capital the median home price to median income ratio checks in at a staggering 16 78 Don t Bank on a Recession Part 2 I calmed your fears about another recession in the United States This week I m confronting any fears you might have about a worldwide slowdown Guess what They re completely unfounded too Case in point The latest global Purchasing Managers Index PMI which measures the health of the manufacturing sector inched up to 51 2 from 50 9 in February In you re not an economist fear not David Hensley over at JP Morgan JPM was kind enough to put the reading into laymen s terms He says the current levels are consistent with moderate stable growth in global production In other words the global economy is growing not contracting Whether or not the growth is the result of a massive coordinated unprecedented and ultimately doomed policy of non stop money printing on the part of the world s central banks remains a debate for another day |
MS | European stocks gain as banks autos rebound DAX up 0 3 | Investing com European stock markets were mildly higher after the open on Wednesday as the previous day s steep declines created bargain buying opportunities for investors though worries about a hard landing in China remained During European morning trade the EURO STOXX 50 rose 0 25 France s CAC 40 gained 0 5 while Germany s DAX 30 added 0 3 Global equities came under heavy selling pressure on Tuesday with losses fuelled by concerns over a deeper than expected slowdown in Chinese economic growth after mining giant BHP Billiton said that Chinese demand for iron ore was flattening out The comments followed the recent downward revision in China s growth target and a larger than expected trade deficit A deeper slowdown in China the world s second biggest economy would impair a global expansion that is already faltering because of the implementation of harsh austerity measures in Europe But equities rebounded on Wednesday with shares in automakers recouping some of the previous day s losses after Citigroup lifted the sector to overweight from neutral In France Renault and Peugeot shares jumped 2 1 and 1 4 respectively while Daimler rose 1 1 in Frankfurt and BMW added 0 85 Lenders performed strongly as markets blew a sigh of relief after the March 20 deadline for Greece to avoid a default passed German banks Deutsche Bank and Commerzbank rose 1 3 and 1 7 respectively while French lenders BNP Paribas and Societe Generale gained 1 1 and 0 8 But Italian lenders underperformed as investors were looking ahead to a vote of confidence in Italy later in the day which would allow Prime Minister Mario Monti s government to press ahead with legislation to reform the country s labor market Unicredit shares dipped 0 25 and Intesa Sanpaolo declined 0 2 German retailers were weaker with athletic apparel retailer Adidas dropping 1 8 after Morgan Stanley downgraded the stock and METRO shares tumbling 4 after HSBC cut the stock to underweight from neutral Elsewhere London s commodity heavy FTSE 100 eased up 0 25 ahead of the U K s annual budget statement later in the day Banks were mixed with Barclays gaining 0 4 but Lloyds Banking Group sown 0 8 Miners also put in a mixed performance amid concerns over a slowdown in demand from China which is the top consumer for many commodities Mining giant BHP Billiton slumped 0 6 while Rio Tinto added 0 35 On the upside J Sainsbury shares jumped 3 1 after Britain s third biggest supermarket group beat forecasts for fourth quarter sales growth as it won market share from rivals Vodafone Group climbed 1 4 after Goldman Sachs added the mobile service firm to its conviction buy list In the U S equity markets pointed to a mildly higher open The Dow Jones Industrial Average futures pointed to a gain of 0 25 S P 500 futures added 0 3 while the Nasdaq 100 futures indicated an increase of 0 25 Later in the day the U S was to release industry data on existing home sales |
MS | European stocks turn lower as global growth worries linger | Investing com European stock markets erased gains on Wednesday turning lower as lingering concerns over the outlook for global growth dampened appetite for riskier assets During European afternoon trade the EURO STOXX 50 shed 0 3 France s CAC 40 dipped 0 15 while Germany s DAX 30 edged down 0 2 European equities were higher after the open as markets blew a sigh of relief after the March 20 deadline for Greece to avoid a default passed However worries about Europe s debt crisis remain amid renewed concerns over the fiscal health of Spain and Portugal and lingering worries over downbeat growth prospects in the region Concerns over a deeper than expected slowdown in Chinese economic growth which fuelled sharp losses on Tuesday also continued to weigh A deeper slowdown in China the world s second biggest economy would impair a global expansion that is already faltering because of the implementation of harsh austerity measures in Europe Italian lenders came under heavy selling pressure as investors looked ahead to a vote of confidence in Italy later in the day which would allow Prime Minister Mario Monti s government to press ahead with legislation to reform the country s labor market Italy s biggest labor union CGIL was likely to call an eight hour strike against the labor reform proposals according to a union official Unicredit shares dropped 2 4 and Intesa Sanpaolo declined 1 5 Spanish lenders also contributed to losses with Banco Santander down 1 35 and BBVA slumping 1 65 Italian insurance giant Assicurazioni Generali saw shares tumble 3 45 after reporting weaker than expected 2011 net profit on the back of significant writedowns on its Greek bond holdings German retailers were weaker with athletic apparel retailer Adidas dropping 1 85 after Morgan Stanley downgraded the stock and METRO shares tumbling 3 85 after HSBC cut the stock to underweight from neutral On the upside France s biggest computer services company CapGemini saw shares climb 2 5 in Paris boosted by stronger than expected earnings at its U S counterpart Oracle Elsewhere London s commodity heavy FTSE 100 swung between modest gains and losses as investors digested the release of the U K s annual budget statement earlier in the day Also Wednesday the minutes of the Bank of England s meeting revealed that two policymakers voted for additional easing but the bank left the size of its asset purchase program unchanged at GBP325 billion Financial sector stocks declined with Royal Bank of Scotland shares down 2 2 and Lloyds Banking Group dipping 0 5 On the upside J Sainsbury shares jumped 3 5 after Britain s third biggest supermarket group beat forecasts for fourth quarter sales growth as it won market share from rivals Vodafone Group climbed 1 2 after Goldman Sachs added the mobile service firm to its conviction buy list Meanwhile shares in Essar Energy rose sharply for a third day after Merrill Lynch forecast on Monday that shares in the power group would more than double Essar shares were up 2 4 taking its three day gain to almost 20 In the U S equity markets pointed to a mildly higher open The Dow Jones Industrial Average futures pointed to a gain of 0 15 S P 500 futures added 0 1 while the Nasdaq 100 futures indicated an increase of 0 05 Later in the day the U S was to release industry data on existing home sales |
MS | Euro stocks mixed on housing numbers Bernanke\ s words DAX up 0 23 | Investing com European stocks traded mixed Wednesday as disappointing U S housing numbers restrained hopes of a global economic rebound and Ben Bernanke had cautious words for the euro zone Near the close of European trade the EURO STOXX 50 traded down 0 35 France s CAC 40 fell 0 10 while Germany s DAX climbed 0 23 Meanwhile in the U K the FTSE 100 eased higher by 0 01 The lackluster trading was triggered when the National Association of Realtors in the U S reported that existing home sales gave back 0 9 to a seasonally adjusted 4 59 million units in February compared to expectations for a decline to 4 61 million units The figure is 8 8 higher than the 4 22 million unit level in February 2011 Existing home sales in January was revised down by nearly 1 5 to 4 63 million units from a previously reported 4 57 million Lawrence Yun NAR chief economist stated underlying factors are much better compared to one year ago The market is trending up unevenly with record high consumer buying power and sustained job gains giving buyers the confidence they need to get into the market His words added dollar bullish sentiment to the negative numbers In Greece former Deputy Finance Minister Filippos Sachinidis was sworn in as the country s new finance minister On Tuesday Greece repaid EUR14 5 billion in maturing debt just one day after receiving the first tranche of aid under the terms of its second bailout Germany and Portugal sold bonds at an auction today helping to ease slowdown fears Meanwhile worries persist that Japan will move to boost stimulus having far reaching economic consequences In other news U S Fed Chief Ben Bernanke stated that Europe must further strengthen its banks and that its financial and economic situation remains difficult despite lessening of stresses However investment banking kingpin Goldman Sachs went on record stating it believes stocks will continue a steady upward trajectory over the next few years as any economic slowdown news has already been priced in Adidas the world s second largest sporting goods maker fell 2 3 after Morgan Stanley downgraded the shares Banco Popolare climbed 3 3 after stating it can meet target capital without market transactions Metro AG gave back 3 as the retailer had its recommendation cut at HSBC In U S midsession trade stocks are mixed with the Dow down 0 18 the S P 500 flat and the Nasdaq Composite climbing 0 25 Investors are awaiting euro zones industrial production manufacturing and service numbers as well as Mario Draghi s talk on Thursday |
MS | Gold pares gains to trade unchanged Fed stimulus hopes support | Investing com Gold futures pared earlier gains to trade largely unchanged during U S morning trade on Tuesday consolidating sharp gains from the previous session after dovish remarks from Federal Reserve Chairman Ben Bernanke fuelled speculation over a third round of monetary easing On the Comex division of the New York Mercantile Exchange gold futures for June delivery traded at USD1 689 55 a troy ounce during U S morning trade easing up 0 06 It earlier rose by as much as 0 62 to trade at USD1 699 55 a troy ounce the highest since March 13 Gold futures were likely to find support at USD1 657 65 a troy ounce Monday s low and short term resistance at USD1 706 15 the high from March 13 Gold prices surged 1 6 on Monday its biggest one day gain since late January after Fed chief Bernanke said that continued accommodative policies are needed to bring about big gains in the U S jobs market which he described as far from normal despite a recent improvement Markets interpreted the comments as an indication the central bank will maintain its ultra loose monetary policy and reinforced the view that further easing from the central bank may be possible The Fed has embarked on two previous rounds of bond buying most recently in late 2010 known as quantitative easing QE has been a key driver in gold s bull run over the past year as it keeps interest rates and borrowing costs low which makes gold more attractive compared with yield or dividend bearing assets such as bonds or stocks Prices have been under pressure in recent weeks dropping nearly 6 since late February as investors unwound long positions after the Fed gave an upbeat assessment of the U S economy earlier in the month which reduced expectations for a third round of U S monetary easing Despite the recent slump knowledgeable market analysts expect prices to climb higher in the near term AngloGold Ashanti Chief Executive Mark Cutifani said earlier the price of gold could exceed USD2 000 a troy ounce later in 2012 as demand remains robust in fast growing economies like India and China Meanwhile Wall Street investment bank Morgan Stanley expects gold prices to average USD1 825 per ounce in 2012 approximately 7 5 higher than the current price It s bullish case is built on negative real interest rates and the prospect of further unconventional monetary policy in the U S and Europe Australian lender Macquarie also weighed in with an upbeat forecast saying the recent pullback represents a major buying opportunity and that prices were likely to hit USD2 250 per ounce in 2012 The bank added that that recent weakness in the metal is not surprising giving the tendency for the gold market to eke out seasonal lows in March Elsewhere on the Comex silver for May delivery dipped 0 3 to trade at USD32 65 a troy ounce while copper for May delivery fell 0 7 to trade at USD3 861 a pound |
MS | Gold futures lower on profit taking | Investing com Gold futures traded lower during the U S afternoon session as profit takers took advantage of the sharp gains from Monday triggered by dovish remarks from Federal Reserve Chairman Ben Bernanke On the Comex division of the New York Mercantile Exchange gold futures for June delivery traded at USD1 686 85 a troy ounce during U S afternoon trade down 0 07 It earlier rose by as much as 0 62 to trade at USD1 699 55 a troy ounce the highest since March 13 Gold futures were likely to find support at USD1 657 65 a troy ounce Monday s low and short term resistance at USD1 706 15 the high from March 13 Gold prices surged 1 6 on Monday the largest one day gain since late January after Fed chief Bernanke said that continued accommodative policies are needed to bring about big gains in the U S jobs market which he described as far from normal despite a recent improvement Markets interpreted the comments as an indication the central bank will maintain its ultra loose monetary policy and reinforced the view that further easing from the central bank may be possible Quantitative easing has been a key driver in gold s bull run over the past year as it keeps interest rates and borrowing costs low which makes gold more attractive compared with yield or dividend bearing assets such as bonds or stocks Prices have been under pressure in recent weeks dropping nearly 6 since late February as investors dumped long positions after the Fed gave an upbeat assessment of the U S economy earlier in the month which reduced expectations for a third round of U S monetary easing Despite the recent slump knowledgeable market analysts expect prices to climb higher in the near term AngloGold Ashanti Chief Executive Mark Cutifani said earlier the price of gold could exceed USD2 000 a troy ounce later in 2012 as demand remains robust in fast growing economies like India and China Meanwhile Wall Street investment bank Morgan Stanley expects gold prices to average USD1 825 per ounce in 2012 approximately 7 5 higher than the current price The bullish case is built on negative real interest rates and the prospect of further unconventional monetary policy in the U S and Europe Australian lender Macquarie also weighed in with an upbeat forecast saying the recent pullback represents a major buying opportunity and that prices were likely to hit USD2 250 per ounce in 2012 The bank added that that recent weakness in the metal is not surprising giving the tendency for the gold market to eke out seasonal lows in March Elsewhere on the Comex silver for May delivery fell 0 16 to trade at USD32 70 a troy ounce while copper for May delivery gave back 0 24 to trade at USD3 89 a pound |
MS | European stocks turn lower amid debt concerns DAX down 0 21 | Investing com European stock markets turned lower on Tuesday as a flurry of weak economic data from the euro zone sparked new concerns over a potential recession in the single currency bloc During European afternoon trade the EURO STOXX 50 slumped 0 63 France s CAC 40 dropped 0 53 while Germany s DAX 30 retreated 0 21 Stocks were hit after official data confirmed that the euro zone s economy contracted by 0 3 in the final three months of 2011 unchanged from a preliminary estimate Annualized gross domestic product contracted by 0 7 in the fourth quarter A separate report showed that producer price inflation in the euro zone rose more than expected in February climbing 0 6 slightly higher than expectations for a 0 5 gain Data on Monday showed that manufacturing activity in the euro zone remained in contraction territory for the eighth successive month in March while a separate report showed that the bloc s unemployment rate ticked up to a record high of 10 8 in February Financial stocks remained broadly lower led by Italian lender Intesa Sanpaolo down 3 90 closely followed by Unicredit whose shares plunged 3 30 Meanwhile France s BNP Paribas and Societe Generale tumbled 1 71 and 1 50 while German lenders Deutsche Bank and Commerzbank saw shares plummet 1 09 and 2 30 respectively French caterer Sodexo contributed to losses plunging 2 35 after Morgan Stanley lowered its recommendation for the company s shares to underweight the equivalent of sell from equal weight On the upside UCB SA gained 3 16 after the Belgian drug maker said that the U S Food and Drug Administration approved its Neupro medicine for the treatment of advanced stage idiopathic Parkinson s disease In London FTSE 100 fell 0 24 weighed by sharp losses in the financial sector while data showed that activity in the U K construction sector expanded at the fastest rate in 21 months in March fuelling hopes that the country s economy may avoid a recession The Royal Bank of Scotland was among the session s top losers with shares sinking 2 92 while Barclays tumbled 1 89 Lloyds banking declined 1 52 and HSBC Holdings added 0 15 Meanwhile shares in U K oil explorer Cairn surged 4 98 The company agreed earlier to buy Agora a private Norwegian company with non operated exploration appraisal and development assets in the U K and Norwegian North Sea in a cash and stock deal In the U S equity markets pointed to a lower open The Dow Jones Industrial Average futures pointed to a fall of 0 18 S P 500 futures signaled a 0 16 decline while the Nasdaq 100 futures indicated a 0 01 loss Later in the day the U S was to produce official data on factory orders while the Federal Reserve was to release the minutes of its most recent policy meeting |
MS | Euro stocks lower on Spanish bonds U S factory orders DAX down 1 05 | Investing com European shares traded lower Tuesday as Spanish bond yields climbed and U S factory orders bounced less than expected resulting in a risk adverse flight At the close European trade the EURO STOXX 50 fell 1 69 France s CAC 40 dropped 1 62 while Germany s DAX traded lower by 1 05 Meanwhile in the U K the FTSE 100 gave back 0 62 Igniting the risk off flight the Commerce Department reported U S factory orders climbed 1 3 in February erasing the previous months downwardly revised 1 1 decline but missed expectations for a 1 5 increase Stock investors are proceeding with caution prior to the Federal Reserve minutes that may signal a third round of monetary easing to support growth Meanwhile concerns over the economic outlook for the euro zone were increased after official data confirmed that the regions economy contracted by 0 3 in the final three months of 2011 unchanged from a preliminary estimate Annualized gross domestic product contracted by 0 7 in the fourth quarter In addition Monday s data showed that manufacturing activity in the euro zone remained in contraction territory for the eighth successive month in March while a separate report showed that the bloc s unemployment rate ticked up to a record high of 10 8 in February Meanwhile in Spain the number of people registering for jobless benefits increased by 38 769 marking the 8th straight monthly increase in the unemployment level In addition the yield on Spanish 10 year bonds advanced 10 basis points to 5 45 while the nation s debt will reach 79 8 of the GDP this year up from 68 5 last year Banks led the decline with Populare di Milano falling 6 6 and Banco Santander giving back 4 on the negative economic outlook Catering company Sodexo fell 2 3 when its shares were slashed to underweight by Morgan Stanley Novo Nordisk climbed 2 4 on analysts stating sales of its drug Victoza will soar in the first quarter U S stocks are trading lower with the Dow off 0 41 the S P 500 down 0 43 and the Nasdaq slipping 0 14 Traders are awaiting U S ISM and industry data on employment as well as German factory orders and the ECB interest rate announcement on Wednesday |
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