InvestMacro Forex News

By MoneyMorning.com.au

If I’d bought gold mining stocks a year and a half ago, I’d have lost my shirt. But that’s not stopping me from buying them now…

Things just seem to be so beat-up that the contrarian investor in me is coming out. The gold mining industry has had 15 years of pretty much getting everything wrong. And now it’s high time the industry started to get things right.

I won’t lie, it’s a risky move. But if this plays out, then gold miners could be set for a great few years. And more importantly, we could see some great returns.

Gold Mining’s 15 Year Journey

As the millennium kicked off, the gold mining industry did pretty well. But really, they didn’t do as well as they should. Gold pushed up from below the $300 level and topped out just under $2,000.

Just think about that. Back in the 90s, miners were, on average, paying something like $150 to $400 an ounce to get the stuff out of the ground. Productions costs vary wildly, but based on these sorts of figures, you’ll see that some of the industry was profitable, while other players were mining at a loss…hoping for an upturn in the gold price.

Say you were one of the lucky producers. Maybe your costs were $200 and the stuff was selling for $300 at the time. Based on an annual production of a million ounces, you were making shareholders $100 million.

Of course, as the gold price started to rise and hit something like $600, suddenly a producer like this should have been making serious money. Remember, if production remained flat (a million ounces) and costs were still $200, then suddenly the business was generating $400m. Note that the gold price doubled, yet profits quadrupled (or at least, they should have!). This is known as operational gearing.

Extend that example out towards $1,900…and you might see how operational gearing can get shareholders very excited.

The only problem was, the mining industry found a way of screwing things up…

For starters, the industry had grown paranoid and petrified. The guys that had previously been mining at a loss were scared stiff that the gold price would fall again. I mean, there’s only so long that you can run a business operating at a loss. Therefore, as soon as prices bounced off the bottom, they were selling forward production (what’s known as hedging) at prices of say $400. So when the price recovered to $600 — or more, the producers weren’t feeling the benefit.

The other problem with running a business at a loss is that you have to pare the whole operation down. Essentially, production fell as the businesses were scaled back to the bare bones. Again, shutting mines and reducing staff costs money. There were a lot of ‘extraordinary costs’ to factor in…and those costs were incurred even as the gold price recovered.

The industry has been lambasted for what, with hindsight, look like awful hedging strategies.

And yes, it’s true. They were! But the fact is, the industry was in a tight spot. They were survival strategies. The problem was, hedging ruined their profits when the price started to rise!

The Mining Industry’s Many Mistakes

Okay now let’s travel a little further down the track. As the gold price rose through the $1,000 level, the guys in the boardroom started to forget all about hedging. I mean, it hadn’t been popular with shareholders, anyway!

But now shareholders had something else to criticise…poor production figures. Remember, production had been pared right back. So now suddenly it needed to be brought back up to par. Only problem was, with everyone ramping up production at the same time, it came at a hell of a price.

Diggers, crushers, scrubbers, centrifuges and screeners — these are the bits of kit that the miners use. And they were all getting rather expensive.

Fuel costs are a significant part of mining costs. And the oil price was no longer back at 90s levels. And that’s why the days of $200 production costs are long gone. Recent figures suggest that the ‘all-in sustaining costs of production’ are $1,200 or more. An unlucky few have even reported costs of over $1,400.

Clearly, the mining industry has scored yet another own goal. Excited up by gold’s price action a couple of years back, the industry allowed costs to escalate out of control. As well as the cost of ‘picks and shovels’ and energy prices, the industry was also implementing new and expensive extraction methods to try to get hold of every last ounce of gold in the rock.

And remember, many had now done away with hedging production. So more recently, when the gold price tumbled, many producers faced exactly the same predicament as they did 10 or 15 years ago. A very sad state of affairs.

What Comes Next?

Once again, the industry is battening down the hatches.

And that’s a good thing. It means the costs of production are likely to fall this year. Some producers were hedging gold production as the price fell from its 2010/2011 peaks too. Again, with gold now trading around its five year low, that looks like a good move.

And perhaps…just perhaps…the gold price has now found a bottom. Having suffered a 40% retracement from its high a couple of years back, any improvement will be sure to jolly up the miners.

But even with what could be construed as a better outlook for the miners, many share prices continue to reflect despair.

It strikes me that the bad news is pretty much priced into the industry’s shares now.

It’s a contrarian move. But the gold miners could really be poised for much better things.

Bengt Saelensminde
Contributing Editor, Money Morning

Ed note: The above story was originally published in MoneyWeek.

Join Money Morning on Google+

By MoneyMorning.com.au

Source: Peter Byrne of The Energy Report  (2/6/14)

http://www.theenergyreport.com/pub/na/fight-chinas-smog-with-ethanol-says-chen-lin

In decades past, we have seen that any commodity China really wants goes through the roof. We saw it in copper. We saw it in oil. We saw it in liquefied natural gas. If China starts mandating a 5% blend of ethanol to gasoline, ethanol should trade on par with gasoline. So says Chen Lin, author of the widely read newsletter What is Chen Buying? What is Chen Selling? But there’s more to the story: because China produces no ethanol, U.S. ethanol producers could be looking at a massive new market, not to mention a spike in profit margins. In this interview with The Energy Report, Chen discloses his favorite ethanol picks, as well as some compelling fracking names.

The Energy Report: In your newsletter, What Is Chen Buying/Selling?, you make the argument that China is a potentially important market for ethanol. Why is that?

Chen Lin: On my visit to China last summer, I experienced the air pollution problem firsthand. The No. 1 concern of the Chinese people is the huge blanket of smog covering major parts of China. How would you like to breathe smog every day? The good news is that because ethanol contains oxygen, it can significantly reduce smog from car emissions. In the U.S., it is very common to blend 10% ethanol into gasoline to reduce pollution.

In the U.S., ethanol is priced much cheaper than gasoline. In the futures market, gasoline is trading at $2.80, while ethanol is at $1.80. These prices change every day, but right now, that is a spread of $1. The truth of the matter is that it is much cheaper to run cars on ethanol than gasoline.

But there is a shortage of ethanol in China, and only a few places sell blended gasoline. There is great potential for China to massively import ethanol from the U.S. in order to reduce pollution and cheapen motorists’ gasoline.

TER: Does China have the potential to produce its own ethanol?

CL: China is a food importer. China imports corn; it imports soy beans. Inside China, food costs are much higher than in the U.S. It is not at all economic to use corn in China to make ethanol.

TER: How can junior firms developing ethanol resources benefit from the increased use in ethanol in China and around the globe?

CL: Corn is the main cost for the junior ethanol producers. And the corn price is at a historical low, thanks to the huge harvest last year. We know that corn runs in multiyear cycles. Inventories build up. As a result of this large supply, ethanol producers’ margins are at historical highs. If China’s imports pick up, the ethanol price will go even higher. In conclusion, the margin for ethanol producers will be very high for at least a year or two. China is a big wild card. If China starts to import a large quantity of ethanol, we could see a multiyear bull market.

TER: Do you think the government would put any barriers on the import of ethanol, or would it encourage it?

CL: The main concern of the Chinese government and the Chinese people is pollution—not the gross domestic product. Smog sickness overrides almost anything. In November of last year, for the first time in many years, China started to import a significant amount of ethanol from the U.S. This could be the start of a trend of ever-increasing imports of U.S. ethanol.

TER: Are the engines of cars that are used on Chinese roads less efficient in terms of pollution than engines used in the U.S.?

CL: General Motors Co. (GM:NYSE) is one of the largest car producers in China, so the engines are quite similar to ours. We can fuel our engines with 10% ethanol. Brazil uses a 25% ethanol blend. China has basically no ethanol in its gasoline. The whole point of ethanol is to reduce pollution. I do not see any barriers ramping up the use of ethanol: I see a potentially dramatic increase in ethanol exports from the U.S. to China.

TER: If and when ethanol markets increase in China, how will that impact the refining industry for that product?

CL: Some gasoline refineries in the U.S. are also ethanol producers—such as Valero Energy Corp. (VLO:NYSE). Valero just reported huge earnings and a huge profit jump in its ethanol product line for Q4/13. Now may be the time for the larger ethanol producers to buy up the junior ethanol companies at low prices.

TER: Do you have any picks for us in the ethanol realm?

CL: I have been buying Pacific Ethanol Inc. (PEIX:NASDAQ). This company just came back from bankruptcy. It is trading at a very small fraction of what it was trading at a few years ago. It is based on the West Coast, which means that it benefits from West Coast ethanol prices being $0.40–0.60 higher than in the Midwest, thanks to the shortage of the railcars used to transport ethanol. Pacific Ethanol has a 160 million gallons ( 160Mgal)/year capacity right now. It may increase that capacity to 200 Mgal/year when it opens its fourth plant, which is likely to occur this year. Pacific Ethanol is the absolute cheapest ethanol company. And its stock is only $6–7 so it is trading 1x below its operating income.

Another company I own is Green Plains Renewable Energy Inc. (GPRE:NASDAQ). Similar to Valero, it has about a 1 Bgal/year ethanol production capacity. It is much bigger, which makes it an excellent takeover target for any refiner that wishes to get into the ethanol business.

TER: If Chinese demand increases, how will that affect these two companies?

CL: There is an abundance of ethanol in the U.S., and it’s very effective in reducing car pollution. In decades past, we have seen that any commodity China really wants goes through the roof. We saw it in copper. We saw it in oil. We saw it in liquefied natural gas. If China starts mandating a 5% blend of ethanol to gasoline, then ethanol could easily trade on par with gasoline.

India imported a large quantity of ethanol in November. What if many countries start to follow Brazil and blend 25% ethanol into the gasoline? That’s the future. If this trend is confirmed, ethanol will boom for years to come.

TER: Let’s talk about fracking in North America, which you view as a profit-laden industry. Do you have any picks in that space?

CL: Fracking can help the U.S. reach energy independence in a few years. However, fracking is a very capital-intensive business. Investors looking at juniors need to be very careful about picking the right company because they can be beset with dilutions and issued shares. It is tough to own the company and suddenly find your shares diluted.

One of the fracking stocks that I particularly like isTerrace Energy (CVE:TZR). It just finished a capital raise, so it is cashed up. It controls a huge acreage at Eagle Ford. Its partner is Royal Dutch Shell Plc (RDS.A:NYSE; RDS.B:NYSE). 2014 is a very important for year for Terrace, as it is clearly an attractive takeover target for Shell. For one thing, Terrace is experimenting with different fracking methods to make these wells profitable, something Shell didn’t do on its own. The initial data are very promising. If the trend continues, Terrace will be an easy takeover target for Shell.

TER: How is Terrace improving the fracking technology?

CL: The company is fracking one of the largest virgin lands in the Eagle Ford acreage with propane gas. So far, the results have been extremely encouraging.

TER: Does that mean that it pumps propane into the fracture instead of water and chemicals?

CL: Exactly. It pumps propane. It’s a new technology.

TER: Let’s not forget about more traditional oil and gas exploration and development ventures. I know that you cover a number of juniors, including Mart Resources Inc. (MMT:TSX.V), which has had some issues with its pipeline in Nigeria.

CL: Mart’s existing pipeline can only ship less than half its capacity, and it loses 30% of that, which is far too high a loss ratio. 2014 will be a very important year for Mart. It is planning to build a new—reduced flow loss—pipeline that can more than double its exportable capacity. When that happens, there will be a huge jump for Mart’s stock, a windfall cash flow, and potentially an increased dividend. It already pays a 17%/year dividend, so look for a double-digit dividend or even greater. We have been collecting the dividend now, while waiting for Mart to complete the new pipeline.

TER: Does Mart have partners?

CL: Yes, it has two Nigerian companies as its partners, which is good. You want local companies to be your face in Nigeria.

TER: Do you have any other oil and gas picks?

CL: When I examine my own successes and failures in stock picking during the past many years, it seems to me that making money in energy stocks is more and more difficult. A few years back, I was focusing on following cash flow when other energy investors were listening to the “big picture” talk from the management sector. That focus made me very successful, because I could find very solid stocks like Mart when it was $0.15. Now, everyone is starting to focus on cash flow. Investors learn quickly. But the point is that to make good money and hit home runs, investors need to look ahead of the crowds.

And that is why I have been buying Pan Orient Energy Corp. (POE:TSX.V). The beauty of Pan Orient is that the stock is completely ignored by the market. 2014 will be the most important year in the company’s history. Its operating field in Thailand is producing a little over 1 thousand barrels per day. Management left Canada to relocate to Thailand in order to reduce costs. The back story is that during the financial crisis of 2008-2009, Pan Orient accumulated a few important properties spread out in Canada, Thailand and Indonesia. This year is the year for exploring all three of these properties. The company has high-impact wells in each country. If any of the plays has success, the stock will go double digit, instead of trading at $1-something today. There has been a very strong insider purchase of the company in the past few months. Plus, its existing cash and cash flow more than justifies its current stock price. All this upside is being ignored by the market, which is a situation I really like.

TER: What is the political situation like for foreign companies that relocate to Thailand, like Pan Orient?

CL: The Pan Orient stock has weakened a little bit because of political unrest in Thailand. But Thailand is importing oil and even the protestors still need gasoline to drive their cars! During the bloody military coup that happened a few years ago, there was absolutely no interruption of the oil production in Thailand. Looking beyond the recent unrest in Thailand, I see a great buying opportunity. For one thing, Pan Orient’s management is willing to do whatever it takes to get the job done. I applaud these managers for relocating to Thailand to focus on the production and exploration in-country. And when I talked to the CEO recently, he jokingly said the protests made commuting less crowded.

TER: In your portfolio, what kind of ratios do you use to allocate investments between ethanol stocks, oil and gas, and other energy stocks?

CL: I own a very large basket of oil and gas stocks, with a much heavier weighting than my ethanol picks. However, the ethanol story is just getting started. If there is a jump in ethanol exports to China and/or India during in the next months, or China starts to mandate 5% ethanol blended into gasoline, there will be an explosion of new opportunities for the ethanol juniors. Then I can confidently declare that the long-term bull market for ethanol is arriving. China has a bigger automobile market than the U.S. A 5% ethanol blend will take almost half the ethanol the U.S. produces. That will provide a tremendous gain for ethanol producers.

TER: Many thanks for your time, Chen.

CL: Until next time, Peter.

Chen Lin writes the popular stock newsletter What Is Chen Buying? What Is Chen Selling?, published and distributed by Taylor Hard Money Advisors Inc. While a doctoral candidate in aeronautical engineering at Princeton, Chen found his investment strategies were so profitable that he put his Ph.D. on the back burner. He employs a value-oriented approach and often demonstrates excellent market timing due to his exceptional technical analysis.

Want to read more Energy Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Interviews page.

DISCLOSURE:
1) Peter Byrne conducted this interview for The Energy Report and provides services to The Energy Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Energy Report: None. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.
3) Chen Lin: I or my family own shares of the following companies mentioned in this interview: Pacific Ethanol Inc. and call options, Green Plains Renewable Energy Inc. and call options, Mart Resources Inc., Pan Orient Energy Corp. and Terrace Energy. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. 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.

Streetwise – The Energy Report is Copyright © 2014 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

Participating companies provide the logos used in The Energy Report. These logos are trademarks and are the property of the individual companies.

101 Second St., Suite 110
Petaluma, CA 94952

Tel.: (707) 981-8204
Fax: (707) 981-8998
Email: [email protected]

AUDUSD: Trades Above The 0.8887 Level, Extends Recovery

AUDUSD: With the pair holding above the 0.8887 level, its Jan 22’2014 high there is risk of further upside in the days ahead. A turn above this level if seen will aim at the 0.9000 level, its big psycho level. Where a break will aim at the 0.9050 level and then the 0.9100 level. Its daily RSI is bullish and pointing higher supporting this view. Conversely, on failure of its current recovery to maintain above the 08887 level, a decline could occur towards the 0.8729 level where a breach will target the 0.8700 level. A turn below here will aim at the 0.8659 level, its Jan 2014 low followed by the 0.8600 level and subsequently the 0.8550 level. All in all, the pair remains biased to the upside on further corrective recovery.

Article by www.fxtechstrategy.com

Get Your Free Investment Report By Elliott Wave International

The major stock indexes started 2014 with losses of 5-7%. Many analysts say this is just a reaction to emerging markets’ weakness and that the U.S. economy is getting stronger.

Don’t panic, in other words. But is this truly the case?

Robert Prechter, president of Elliott Wave International, has released a new free report that will help you see if the sell-off is a correction — or the start of something bigger.

Prechter says that “charts tell the truth,” and this report includes 15 charts of the S&P 500, NASDAQ, gold, and mutual funds — along with his analysis.

These are not your typical price charts. They combine history and price patterns to tell the big-picture story clearly, and from Prechter’s distinctly refreshing point of view.

With this information, his Elliott Wave Theorist subscribers are now prepared for 2014. And you can be, too, because you can get the full 10-page issue, FREE.

This free Theorist issue is extremely important as it provides you with an outlook for 2014 that you shouldn’t miss.

Download your free 10-page report now.

About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world’s largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.

By CentralBankNews.info
    Ghana’s central bank raised its policy rate by 200 basis points to 18.0 percent, more than expected by most analysts, because “the risks to inflation and exchange rate stability are highly elevated.”
    The Bank of Ghana, which has seen inflation accelerate despite a 100 basis point rate rise in May last year, said a reversal in capital flows following the start of tapering of asset purchases by the U.S. Federal Reserve had led to pressure on the cedi currency, lowering the real yield on cedi assets relative to foreign assets.
    This has heightened inflation expectations, a situation that was also seen in the first half of 2012 when rate hikes by the central bank helped to restore stability, the bank said following an emergency meeting of its monetary policy committee. In 2012 the central bank raised its rate by 250 basis points.
    “The uncertainties in the outlook and weakened domestic fundamentals underscore the need for continued tight fiscal and monetary policies and measures that would reduce the country’s vulnerability to shocks, re-anchor inflation expectations and sustain macroeconomic stability,” the bank said.
    In addition to its rate rise, the central bank has issued new foreign exchange regulations,  such as restrictions on foreign currency-denominated loans, to promote the use of the cedi as the sole legal tender along with a code of conduct in the foreign exchange market.
    The central bank appealed to the government to strictly stick to its targets for fiscal consolidation and said in the medium to long term, the tax base has to be broadened, the export base has to be diversified and broadened, imports of consumption goods has to be reduced in favor of local substitutes and effort to block foreign exchange leakages have to be intensified.
     Ghana’s inflation rate has been rising for the last year, hitting a 2013-high of 13.5 percent in December, above the central bank’s target of 9 percent, plus/minus 2 percentage points. In November the bank said upside risks to inflation from higher petroleum and electricity prices had crystalized but it expected inflation to track back toward its target by end-2014, helped by fiscal tightening.
    But inflation expectations have risen and fiscal consolidation in 2013 was slower than expected due to lower-than-expected revenues, with the budget deficit estimated at 10.2 percent of Gross Domestic Product against a target of 9.0 percent.
    The fiscal imbalance and external pressures led to a current account deficit of 12.3 percent of GDP in 2013, up from 12.1 percent in 2012 while gross international reserves ended at US$ 5.6 billion, the equivalent of 3.1 months of imports, compared with $5.3 billion end-2012. Cocoa and gold export recipes fell by $1.3 billion in 2013 from 2012.
    The result is that Ghana’s cedi has been under pressure, down 14.6 percent against the U.S. dollar in 2013. This depreciation has picked up pace in the last month, with the cedi down a further 7.8 percent during the month of January. Today the cedi was trading at 2.4 to the U.S. dollar.
    Ghana’s GDP expanded by only 0.3 percent in the third quarter from the same 2012 quarter.

    http://ift.tt/1iP0FNb

By Investment U

Last week I wrote an article stating that the best time to buy on a dip is when the Relative Strength Indicator (RSI) generates a buy signal. So far, the S&P 500 still needs to decline a bit more before an RSI buy signal is even possible.

I wouldn’t be a buyer of anything until the S&P 500 does generate that buy signal. But the big question is: When the general stock market does see the “buy signal” you’ve been waiting for, what stocks should you buy?

The answer ties back into the technical approach that I use to find the best stocks and sectors to invest in. That approach is called “Relative Strength Investing.”

There are ultra-sophisticated ways to use relative strength, but today I’ll go over a “quick and dirty” method that my second-grader can follow. But don’t let the simplicity fool you. It’s still a very effective approach.

You simply note which stocks are not getting clobbered in the current market correction. When a stock or sector outperforms the general market, that means the stock or sector is showing positive relative strength. This reveals the areas of the market that aren’t only “rising with the tide,” but have strength of their own, without the help of broader market trends.

Let’s look at Netflix (Nasdaq: NFLX), for example. It was the best-performing stock in the S&P 500 last year, up a whopping 298%.

It’s tough for investors to buy a stock that has already jumped 50%, 100%, 200% or more, which is why it’s tough for the average investor to stomach using relative strength strategies to invest. It means you’re buying stocks that have already gone up a lot.

On January 23, when the S&P 500 declined 0.87% (orange line), Netflix jumped 16.51% (blue line). Over the next couple of trading days, Netflix declined only 1.5% while the S&P 500 declined 2.6%.

From that point, the stock gained another 6.3% while the S&P 500 lost another 1.8%. Throughout this process, Netflix is breaking all-time highs!

The point is, this is a classic example of the kind of stock that will make my shopping list the next time I’m a buyer.

Index fund traders dominate the stock market. That means fund managers, who don’t care about individual stocks, do the vast majority of the trading activity that occurs each day. If they need to “sell the S&P 500,” they are putting in sell orders to sell every stock in the index, including Netflix.

Despite the selling pressure from all the index fund traders out there, Netflix’s stock still has enough demand to send it up 22% (while the S&P declined by 5%).

Considering that stocks breaking all-time highs continue to charge higher, and considering the fact that this stock is able to charge higher even as it swims against the market current, what do you think it will do when the bulls return to the general market?

This article is not meant to be a Netflix buy recommendation. But this illustrates the types of stocks you should be watching today and consider buying when the bulls return to the market.

Good investing,

Chris

Article By Investment U

Original Article: Technical Tuesday: Buy High, Sell Higher

By CentralBankNews.info
    The European Central Bank (ECB), which earlier today maintained its benchmark refinancing rate at a record low of 0.25 percent, said the 18-nation euro area was “experiencing a prolonged period of low inflation”and reiterated that it expects to keep interest rates “at present or lower levels for an extended period of time.”
    In his prepared statement to a press conference, ECB President Mario Draghi repeated his guidance from last month that the accommodative monetary stance would be maintained “for as long as necessary” and the bank was ready to consider all available instruments and “to take further decisive action if required” to ensure that a rise in money market rates do don’t impact the bank’s easy policy.
    Most economists had expected the ECB to maintain its rates today but news of another drop in euro area inflation to 0.7 percent in January had led some economists to forecast a rate cut, either to the refi rate or the deposit rate, or even a form of quantitative easing through bond purchases.
    Draghi acknowledged that January’s inflation rate was lower than generally expected but this was due to energy prices. Based on current prices, he expects inflation to remain around the current level in coming months and price pressures will remain subdued.

    But Draghi said the ECB still expects a gradual rise in inflation toward the target of “below, but close to 2% percent,”but a new forecast in early March would throw further light of the outlook.
    In its current forecast, the ECB expects average inflation of 1.1 percent in 2014 and 1.3 percent in 2015.
   Draghi also said the latest information confirms the bank’s forecast of a moderate economic recovery, with output expected to recover slowly on the back of an improvement in domestic demand as real income is supporters by lower energy price inflation and a gradual improvement in exports.
    But the risks surrounding the economic outlook continue to be on the downside, Draghi said, referring to the potential for recent developments surrounding emerging market economies to have a negative impact on the euro areas economic conditions.
    Other downside risks include weaker than expected domestic demand and export growth along with slow of insufficient implementation of structural reforms.
    The ECB forecasts economic growth of 1.1 percent this year and 1.5 percent in 2015 after an estimated contraction of 0.4 percent in 2013 and a 0.6 percent contraction in 2012.
    The latest official data shows that Gross Domestic Product in the euro area expanded by 0.1 percent in the third quarter from the second quarter for an annual contraction of 0.3 percent, the seventh consecutive quarterly contraction on an annual basis.
 
    http://ift.tt/1iP0FNb

Crude oil is moving sideways for the last few days which now can be a triangle in progress placed in wave (iv). Triangle is a five wave pattern, so be aware of a break to the upside in the next few days as price already made pullback down to 96.70 yesterday that can be wave e), final leg in the pattern.

OIL 4h Elliott Wave Analysis

OIL One Hour

Crude oil is trapped in contracting range in this week but because of five legs it may be a time to be aware of a coming break. This break should be to the upside because of a triangle placed in the middle of a larger uptrend. Break above wave d) will open door for push above $99, ideally towards $100 per barrel.

OIL 1h Elliott Wave Analysis

Written by www.ew-forecast.com

14 days trial just for €1 >> http://www.ew-forecast.com/register

Financial parallels between the 1920s and today

By Elliott Wave International

When the financial media mentions the late 1920s, they usually mean the 1929 stock market top. But today’s investors can also learn from what happened in 1928. That was the year that the bond market topped, while commodities peaked even sooner.

You can see this for yourself in a chart published in the September 2013 issue of Robert Prechter’s Elliott Wave Theorist.

In the deflationary collapse of 1929-32, commodities fell from lower peaks, not higher peaks; stocks fell from all-time highs down to the bottom; and bond prices fell from an all-time high a year earlier.

The Elliott Wave Theorist, July-August, 2013

These markets could see a similar outcome in the near future: Commodities peaked in 2008, while Treasury bonds topped in 2012. The high in the Dow Industrials remains December 31, 2013.

Of course, history doesn’t always repeat itself. Whether December 31 proves to be a long-term high in the Dow remains to be seen. The stock market rally since March 2009 has been doggedly persistent. Prices have surged several times just as the indicators suggested the uptrend was over.

Bad Start for Stocks in 2014: Buying opportunity or more pain to come? You can benefit greatly from looking at charts that take a historical look at what’s going on in the financial markets. Robert Prechter has just released an issue of his Elliott Wave Theorist publication that includes 15 charts of the S&P 500, NASDAQ, gold, and mutual funds — along with his analysis. With this information, his Elliott Wave Theorist subscribers are now prepared for 2014. And you can be, too, because you can get the full 10-page issue, FREE. Download your free 10-page report now >>

By CentralBankNews.info
    The Czech Republic’s central bank maintained its benchmark two-week repo rate at 0.05 percent and confirmed its commitment to intervene on foreign exchange markets to ensure the koruna currency remains below 27 to the euro.
    The Czech National Bank (CNB) started intervening in foreign exchange markets in November after many months of deliberations, 12 months after it cut its repo rate to the current level. Last month it also confirmed its commitment to intervention which cost it 7 billion euros in November.
    The decision to intervene in FX markets until at least early 2015 was in response to the threat of deflation in addition to the wish to make Czech exporters more internationally competitive.
    There are now signs that the threat of deflation is receding but the CNB still trimmed its forecast for headline inflation in the first quarter of 2015 to 2.8 percent from 3.0 percent in its November forecast.
    Inflation in the second quarter of 2015 is forecast to remain at 2.8 percent. In the three months from January through March, headline inflation is forecast at an unchanged 0.4 percent and the forecast for the bank’s preferred inflation measure is for 0.2 percent in January though March.

   Inflation in the Czech Republic December rose to 1.4 percent, up from November’s 1.1 percent and the recent low of 0.9 percent in October, though still below the CNB’s 2.0 percent midpoint inflation target, plus/minus one percentage points.
    In its latest forecast, the central bank raised its estimate for the economy’s contraction in 2013 to 1.3 percent from November’s forecast of a 0.9 percent contraction.
    But for 2014 the CNB now forecasts growth in Gross Domestic Product of 2.2 percent, up from a previous 2.1 percent, and 2.8 percent growth in 2015, up from a previous 2.5 percent.
    In the third quarter of 2013, the Czech GDP grew by 0.2 percent in the third quarter from the second quarter, but on an annual basis GDP contracted by 1.2 percent, slightly better than the second quarter’s 1.7 percent contraction.
    Since the CNB started intervening, the koruna has remained below 27 to the euro, trading at 27.56 to the euro today compared with 25.84 just before the decision to intervene.

    http://ift.tt/1iP0FNb