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By www.CentralBankNews.info

By WallStreetDaily.com

Stocks are officially cool again!

As I shared yesterday, everyday investors finally realized that we’re in a bull market. And they’ve begun rotating out of bonds into equities.

Ever the contrarian, though, I should be alarmed, right? Especially considering that the S&P 500 Index is higher today than it was at the height of the dot-com and credit bubbles. And everyday investors are notorious for being late to the profit party.

But I’m not alarmed one bit. Here’s why – along with three more dangerous myths about the current bull market.

Anything But “Great” Yet

Although the “Great Rotation” is definitely underway, it’s far from over.

You see, investors don’t rotate money out of bonds into stocks in one fell swoop. They wade back into stocks, instead of doing a cannonball. Or, more simply, they take their merry old time.

So even though a little more than $20 billion “rotated” out of bonds into stocks over the last two months, we’ve still got a long way to go.

Consider: Since the bull market began in March 2009, investors plowed $1.1 trillion into bond funds, but only $379 billion into stock funds, according to data from the Investment Company Institute.

There’s a whole lot of rotation left between those two numbers. (Just saying.) And as more retail money rotates into stocks, it’ll naturally push prices higher, which leads me right into the first myth about the current bull market…

~ Myth #1: The Idiocy of the Too-Many-New-Record-Highs Camp

Many pundits want you to believe that you’re a sucker if you buy stocks now.

Why? Because the stock market keeps hitting new record highs, and that simply can’t continue.

Fearmongers!

Or, as S&P Capital IQ’s Chief Equity Strategist, Sam Stovall, says, “I don’t know why they say that, other than to instill fear and thereby ensure that investors stay tuned. History, on the other hand, shows that new highs are typical in a maturing bull market.”

Indeed!

Consider: As of July 19, the S&P 500 Index hit 22 new all-time highs. But during the average “secular” bull market, Stovall found that the S&P 500 notches 127 new all-time highs.

Now, we can save the “secular” versus “cyclical” bull market debate for another day. Suffice it to say, we’ve got 105 new all-time highs to hit before we need to start worrying, based on Stovall’s research.

If you want a second opinion, consider Bespoke Investment Group’s…

They crunched the numbers on all-time closing highs for the Dow during bull markets and found that the current tally of 28 new highs “is nothing out of the ordinary.”

In fact, there have been 20 years with more than 28 record highs. The runaway record holder? That distinction belongs to 1995, when the Dow hit 70 new all-time highs. Again, we’re nowhere close to that.

~ Myth #2: Low Volume? No Problem!

If we don’t buy into the myth about too many new highs, the bears simply move on to spinning a tall tale about trading volumes.

You see, ever since this bull market began, bears warned that the rally has zero staying power. Why? Because trading volumes have been anemic, and that indicates a lack of conviction.

Sounds plausible. But the numbers don’t back up the theory.

As Bespoke found, if we only invested in stocks during days when trading volumes were above average, we’d be down 36.9% since March 9, 2009.

On the other hand, if we only invested on low volume days, we’d be sitting on profits of 295.6%, roughly double the actual return for the S&P 500 during this bull market.

So much for low volume days being a bad thing. By all means, Mr. Market, keep them coming!

~ Myth #3: Still Not a Snaggletooth

The last myth about the current bull market we need to address concerns its duration. Many contend that it’s too long in the tooth.

It’s not.

Since 1920, there have actually been five bull markets that lasted longer and rose higher in percentage terms.

With stock valuations still reasonable (the S&P 500 currently trades at 16 times earnings), there’s strong fundamental support for even higher prices.

Especially considering that companies keep growing earnings…

The latest data from FactSet Research reveals that profits are up 1.8% for S&P 500 companies midway through the earnings reporting season. You’ll recall, analysts only expected profit growth of 0.7% for the quarter. So they were way off the mark, which I told you to expect.

Bottom line: Stocks might be getting cool again. But investors are nowhere near euphoric. Nor are valuations overstretched. So stay invested and stick to the plan to keep putting new money to work in undervalued – but overlooked – fast-growing companies.

Ahead of the tape,

Louis Basenese

The post A Bull Market, Myth-Busting Extravaganza appeared first on  | Wall Street Daily.

Article By WallStreetDaily.com

Original Article: A Bull Market, Myth-Busting Extravaganza

By www.CentralBankNews.info     India’s central maintained its main policy rates, as expected, but cut its growth forecast and appealed to politicians to take immediate steps to slash the current account deficit and it was “ready to use all available instruments and measures at its command to respond proactively and swiftly to any key adverse development.”
    The Reserve Bank of India (RBI), which has taken a string of measures in recent months to curb the fall in the rupee, maintained its repo rate at 7.25 percent – it has been cut by 75 basis points this year in the face of declining growth – along with the reverse repo rate at 6.25 percent and the cash reserve ratio (CRR), which was cut by 25 basis points in January.
    The forecast for Gross Domestic Product growth in the current 2013/14 fiscal year, which began April 1, was cut to 5.5 percent from 5.7 percent due to “tepid” global growth and the main risk to the outlook stems from global financial markets and a sudden stop or reversal of capital flows.

   The International Monetary Fund (IMF) has forecasts Indian economic growth of 5.6 percent in 2013/14, up from 3.2 percent in 2012/13 but still well below the 6.3 percent rate in 2011/12.
    “India, with its large CAD (current account deficit) and dependence on external flows for financing it, will remain vulnerable to the confidence and sentiment in the global financial markets,” RBI said.

    India has a history of current account deficits and for the last three years the deficit has exceeded 2.5 percent of GDP – seen as a sustainable level by the central bank – hitting 4.8 percent of GDP in the 2012/13 fiscal year that ended March 31.
    The RBI said the deficit posed a “formidable structural risk factor” that has brought the external payments situation under increased stress and “eroded the economy’s resilience to shocks.”
    India’s currency, the rupee, has been declining over the last two years and is down 27 percent since its slide began in late July 2011 when it was trading at 44 to the U.S. dollar compared with 59.5 today.
    The rupee stabilized in late 2012 and at the beginning of this year, but the downdraft from the shift in investors’ view of global risks in May triggered a sharp bout of weakness that took it below the psychologically important level of 60 rupees to the dollar on July 8.
    From May 1 through July 8, the rupee lost close to 11 percent but since then it has bounced back following the RBI’s measures to tighten liquidity, which include raising short-term lending rates.
    The RBI said its measures, which would rolled back “in a calibrated manner as stability is restored to the foreign exchange market” had provided politicians with a window of opportunity and “emphasized that the time available now should be used with alacrity to institute structural measures to bring the CAD down to sustainable levels.”
      The RBI said it was currently “caught in a classic ‘impossible trinity’ trilemma whereby we are having to forfeit some monetary policy discrection to address external sector concerns.”
    The trilemma refers to an concept in international economics that says it is impossible to have a fixed exchange rate, free capital movement and an independent monetary policy at the same time.
    Under normal circumstances, the RBI would have been able to continue last year’s policy of easing to further stimulate growth as softening food inflation from this year’s robust monsoon would have given it room to act. But the downward pressure on the currency is limiting the bank’s options.
    India’s main inflation gauge of wholesale prices rose slightly to 4.86 percent in June from 4.7 percent and the bank said the stronger than expected monsoon had not yet softened food prices and some vegetable prices had been hit by weather-driven supply disruptions.
    “The sharp depreciation of the rupee since mid-May is expected to pass through in the months ahead to domestic fuel inflation as well as to non-food manufactured products inflation through its import content,” the RBI said, adding the timing of this and a revision to administered prices was a source of uncertainty for the inflation outlook.
    The RBI’s objective is to maintain WPI inflation at 5.0 percent by March 2014 while its medium-term objective is to keep the rate at 3.0 percent.
    The RBI’s policy stance today was largely expected following the release yesterday of its review of economic and monetary developments in the first quarter of the current 2013/14 fiscal year, in which it said that its priority is to restore stability in the currency market and the macro-financial risks warranted a cautious monetary policy stance.

    www.CentralBankNews.info

USDCHF remains in downtrend from 0.9751, the rise from 0.9264 is likely consolidation of the downtrend. Resistance is now located at the upper line of the price channel on 4-hour chart. As long as the channel resistance holds, the downtrend could be expected to resume, and one more fall to 0.9200 area is still possible after consolidation. On the upside, a clear break above the channel resistance will indicate that lengthier consolidation of the downtrend is underway, then the pair will find resistance around 0.9450.

Provided by ForexCycle.com

By MoneyMorning.com.au

‘Central banks have become the insider traders of the currency market, which is a paradigm shift that systematic traders cannot pick up as well as fundamental traders.‘ – Bloomberg News

If you had said 10 years ago that central banks were insider trading, you would have been laughed out of town.

Today everyone knows central banks trade in advance of upcoming policy decisions.

But it’s not just the central banks. The big investment banks play the same game too…

If you don’t believe us, take this story from Bloomberg back in May:

‘Goldman Sachs Group Inc. (GS), which generated about half its revenue from trading last quarter, posted losses from that business on two days in the first three months of 2013, compared with one day a year earlier.‘

If we assume there were 60 trading days in the first quarter, it means Goldman Sachs traders made profits 96.7% of the time.

In the world of trading that’s an unheard of strike rate. Most traders are happy to make profits on just half their trades.

Even if you factor in the large number of traders on Goldman Sachs’ trading desk, the law of averages would still dictate a win rate close to what an individual trader can achieve.

So there’s only one explanation – the big boys have a secret advantage compared to every other investor. But it’s not just insider knowledge. Until recently they’ve had another advantage…

Investing: Humans v Computers

Over the past few years, some folks have made a lot of noise about the influence of computer trading at the big banks and hedge funds. Another name for it is algorithmic or ‘algo’ trading.

Many worried that computers would take over the world. Some feared it would even be the end of investing as we know it.

But now it seems that computers aren’t quite so smart after all. In fact, according to Bloomberg:

‘Currency funds that use computer models for trading decisions made 0.7 percent this year through June, compared with 2.3 percent for those that don’t, the biggest margin since 2008.‘

The article says that computers haven’t yet figured out how to trade unpredictable markets. A good example was the US Federal Reserve’s about-face in May, when many thought it would start raising interest rates.

Human traders traded that move quickly as bond yields soared. It seems the computer (‘algo’) trading programs weren’t quick enough to catch the move.

(We guess we’ll find out soon enough on how many days Goldman Sachs traders and computers made profits during this rocky period.)

Saying that, the fallibility of computers and computer modelling shouldn’t surprise you. One of the big controversies during the 2008 financial meltdown was value at risk models (VaR).

Big traders used VaR to work out the potential loss for a portfolio. They use historical volatility and the expected behaviour of various asset classes in certain conditions – stress testing.

But none of this counted for toffee when financial markets collapsed. Events that the models said were a one-in-a-thousand-year’s possibility happened…and in a big way.

So, what does that tell you? For a start it tells you that even the smartest computer trading system needs a human to get involved when the computer misses something.

That’s why, as fond as we are of new technology and its ability to improve lives and drive down costs, we also know the human element is important.

‘Hands On’ Investing

In truth, as a fundamental analyst, we don’t leave anything to automation.

Because when dealing with revolutionary, breakthrough and leading-edge technology companies, the most important thing we look for is innovation.

And as far as we’re aware, there isn’t a single computer model that can identify a revolutionary change before it happens. There certainly isn’t one that can identify a company to benefit from the change.

So when it comes to finding revolutionary investments, we have no problem saying we’re old school. Call it a ‘hands on’ approach if you like.

But just as we prefer a ‘hands on’ approach with our investment research, we prefer to be ‘hands on’ when investing our own money too.

We like to know a human has complete control over our savings and investments. But not just any human. We like to have personal control over each of our investments.

That way, on any given day we can know exactly how much money is in our investment savings account. We know our shares balance. And we know the value of our precious metals.

This is vital. It’s important to know where your money is and what you’re invested in at all times. That means avoiding opaque investments. And most of all, avoid investments where you don’t have complete control.

This is the key to avoiding any nasty surprises during the next financial meltdown (whenever it arrives). Whether the cause of the next meltdown is computer trading or human traders, it’s doesn’t matter.

What matters is that you take charge of your investments today.

Cheers,
Kris+

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From the Port Phillip Publishing Library

Special Report: The Sixth Revolution

Daily Reckoning: The Absurdity of Australian Property

Money Morning: This Stock Market Rally Hasn’t Run Out of Puff Yet…

Pursuit of Happiness: Save Now to Avoid the Government’s Retirement ‘Labour Camps’

Australian Small-Cap Investigator:
How to Make Big Money from Small-Cap Stocks

By MoneyMorning.com.au

How many times do you come up with an idea and think to yourself, ‘Wow, I should really do that.’

People in general have the capacity to come up with great ideas. We are all inherently creative to some extent. But there are a few key factors that separate great ideas from great technologies and from great businesses.

In this current global economic environment, a lot of businesses are struggling. There’s a lot of doom and gloom about. Yet it seems every other day there’s a story about successful technology companies making billions of dollars.

Recently the ‘Billion dollar Buy-out’ is the catch phrase running around tech hubs like Silicon Valley. But what takes a company from being worth nothing with a great technology to, to a billion dollar business?

Before we look at the answer first I should point out that, like with the English language there’s an exception to every rule. There are some companies that just have technology so good it sells itself.

A good example of that is Atlassian. Atlassian is an Australian private company that has no sales force, just a great software solution. They develop proprietary software that helps companies track information, analyse data, collaborate on documents and develop their own programs.

Not quite a billion dollar company yet, Atlassian has gone from start-up to about $200 million in just 10 years. Their clientele includes eBay, Facebook, Twitter and LinkedIn.

Also there are some great technology companies worth billions of dollars like photo-sharing website Instagram, and microblogging platform Tumblr. But…that doesn’t make them great businesses either. Mainly because they don’t actually make any money. These two are examples of a great idea that people love, but don’t pay for.

But there are a lot of great ideas in the world. A lot of inventions, a lot of smart people coming up with world changing ideas. Some get lucky (like Instagram and Tumblr), some fail and some take years of hard work.

For those ideas to become great companies, the pathway to that destination is relatively simple.

1. Have an idea,
2. Turn the idea into an invention,
3. Sell the invention to some people to see if it’s good,
4. Create a business to sell invention to more people,
5. Have plan for business, make it big,
6. Sell invention to many people,
7. Make invention better,
8. Make company bigger,
9. Repeat cycle and add to business model,
10. Sell for a billion dollars.

Sounds simple enough? Well unfortunately it’s not. Most people get to step one easy enough. But then most people will fail at step 2.

For the very few that make it to step 2. Most of them will fail at step 3. And for those that make it to step 4…they are likely to fail in the first year of business.

The Best of the Worst and the Best of the Best

But some do make it through the other side, and still can’t take great technology to a great business. Here’s a couple of examples of great technology, but not great businesses.

1. Segway.

   The launch of Segway had hype and fanfare like nothing before. It was the answer to the problems of personal transportation. It was a game changer…well that’s what the owners believed at least.

   The Segway is actually an amazing piece of technology. With inbuilt gyroscopes it’s a self-balancing battery powered transportation device.

   It’s got a swathe of computers and motors that work in tandem to make the machine work. But Segway never really took off as a business. Why?

   Well the technology is great and the sales pitch is outstanding. But the Segway didn’t actually solve a big problem. It was just something new and interesting. It ultimately failed to disrupt the transportation market it was aiming at, personal transport. People couldn’t afford it and didn’t find it particularly helped them in any way.

2. MiniDisc.

   Cassette tape ended the reign of the record player. The ability to have a compact portable audio device was ground breaking, but then CD’s came along and spoiled the party for cassette tapes.

   CD’s were the major format at the time, and dominated the music industry for many years. But in 1992 a new technology and format came out that was going to spell the end of CD’s forever. It was great technology, it was the MiniDisc.

   You could quickly search through discs, and even record and edit on the portable device itself. It was better tech than all other audio formats.

   But the problem with MiniDisc was hot on its heels was still better technology. Technology that would change the way we listen to music, and change the whole music industry forever. MP3′s and MP3 players.

Each of these examples highlights a different problem that stops great technology from being a great business.

Segway had tunnel vision and weren’t prepared to accept that as great as their technology was it didn’t really solve a problem for lots of people. And although they are still a business, they certainly aren’t a great technology business.

MiniDisc weren’t open and aware to other technologies in the market place. They failed to appreciate the market in which they were trying to build a business. Within a few years a superior technology simply overtook it.

But for point of comparison, let’s look at some great business, and see what made them stand out in a competitive world of technology.

1. Apple.

   You simply can’t go past Apple when it comes to turning great technology into a great business.

   When Steve Jobs and Steve Wozniak put together the first Apple computer they didn’t know the impact it would have on the world. But what they did have was a great vision to put a Personal Computer in the homes of millions of people.

   The benefit they had here was that they started a whole new industry. The Personal Computer didn’t exist at that stage. So the two Steve’s had the advantage of being early movers.

   That’s not to say there weren’t competitors. IBM and Dell became competition, as did Microsoft when it came to operating systems and software. But what Apple did was make their products beautiful and easy to use. And what they were able to do was design, market and sell their products like no one else.

2. Nokia.

   Although not at the pinnacle it once was, Nokia is an example of taking great technology and turning it into a great business.

   Mobile phones were all the rage from the late 80′s into he 90′s and of course the smartphone revolution today. But Nokia dominated the mobile phone market through the 2000′s. How?

   What Nokia did was make a product accessible to the masses using available technology. Mobile phones were expensive devices that only the affluent and rich could afford.

   Nokia changed all that by putting to market an affordable mobile phone for everyone. This led them to having the top 6 bestselling mobile phone models of all time.

   They sold almost one billion units worldwide between those top 6 models alone. Nokia phones are still the number one used phone in developing nations across Africa.

There a couple of key factors that made these two companies tech giants of the world.

Apple had the combination of a great technical guy in Wozniak, but a great salesman in Jobs. Without the creative and marketing genius of Jobs, Apple would simply be a company for computer hobbyists.

If Wozniak had gone it alone he wouldn’t have had a great company. If Jobs had done it himself the company wouldn’t have had great technology.

Likewise Nokia didn’t necessarily have the marketing genius and personality of a Jobs-like leader. But they identified an unmet need in a market that affected millions of people.

They created a big solution to a big problem. And that was to put affordable mobile phones in the hands of everyone. They also had the advantage of being the first company to mass market cheap mobile phones.

The Great Business Checklist

When we look at these basic examples of great technologies, it’s fair to say not one technology is necessarily better than another. They all meet an unmet need, and they all were new technologies of their time.

But what companies like Nokia and Apple were able to do was have the leadership and management in place to make great technologies into great businesses. They also met an unmet need that impacted millions of people around the world and were also able to make their technologies simple and accessible to everyone.

And that’s the key difference between great technology, and great technology companies. It’s really got nothing to do with the technology at all.

It’s about the people that lead the technology and the team that’s involved to take it from good to great. It’s about making it accessible and relevant to lots of people, not just one small segment.

These companies also had the foresight to see when something wasn’t working. For them failure was par for the course, just a part of the process. And both Apple and Nokia had their fair share of failures. But they saw the problems, and fixed them the next time around.

So here’s the checklist that makes a great business from a great technology.

With the steps outlined and the checklist above, there’s potential to turn great technology into a great business. It’s hard, takes years and there’s a very good chance it won’t work.

But the right tech, the right people, the right plan and the drive to make it happen, gives a fighting chance of making a truly great technology business.

Sam Volkering+
Technology Analyst, Revolutionary Tech Investor

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From the Archives…

Is This the Spark to Send Australian Property Crashing?
26-07-2013 – Kris Sayce

Why it’s Deflation…Not Inflation, that’s Heading Our Way
25-07-2013 – Vern Gowdie

Why You Must Avoid This Big Investing Mistake…
24-07-2013 – Kris Sayce

The Dark Side of Technology: Part 2
23-07-2013 – Sam Volkering

The Dark Side of Technology: Part 1
22-07-2013 – Sam Volkering

By WallStreetDaily.com

Try to wrap your brain around these numbers…

Cyber criminals launched 1.5 billion web attacks in 2012, infiltrating 6.5 million unique domains. Malicious codes corrupted servers in the internet zones of 202 countries, just 20 of which accounted for 96.1% of all of those detected by IT security vendor, Kaspersky Labs.

The United States earned the dubious distinction of holding the No. 1 spot. We’ve been a victim of 413,622,459 attacks.

Think we have a big problem on our hands? The scary thing is, sometimes I’m not so sure whose side our government is on.

On one hand, the Department of Homeland Security acknowledges that public and private sectors need to share information intimately to advance the fight against cyber security. After all, private companies own the majority of critical infrastructure in the United States.

On the other hand, since March, the DHS has cancelled two training and networking conferences that teach utility companies how to defend against cyber attacks. The reason? Budget cuts.

And not to rub salt in any cyber victims’ wounds, but the Cyber Intelligence Sharing and Protection Act (CISPA) is barely limping along. As of April 18, the Senate refused to vote on it and is in the process of drafting its own version of the legislature.

Besides, CISPA – a law that would allow for information sharing by opening the gates of internet traffic between the U.S. government and some private sectors to beef up security – is hardly an adequate, long-term fix.

I seriously doubt it would have prevented what the Pentagon called “the largest leak of classified documents in its history.” (If you recall, WikiLeaks posted 400,000 pages on the Iraq War two years ago, and 4.8 million people had access to Top Secret information.)

As big a concern as national security is, it doesn’t even scrape the surface. For criminals, there’s really no limit to the havoc they can wreak on countries, businesses and individuals.

In fact, this headline just popped up on my computer screen: “Leak Exposed Securities and Exchange Commission Workers’ Data.” Apparently information on SEC employees kept appearing on federal agency computers after a former worker downloaded names, birthdays, and Social Security numbers and transferred them to another network.

On the heels of that news – and the recent Nasdaq community website hacking – the International Organization of Securities Commissions (IOSCO) released a report saying that “half the world’s financial exchanges suffered cyber attacks in the past year.”

Like I said, nothing is sacred.

A recent report by the Ponemon Institute, 2012 Cost of Cyber Crime Study: United States, paints an even uglier picture:

• The average annualized cost of cyber crime for 56 organizations is $8.9 million per year, with a range of $1.4 million to $46 million. In 2011, the average annualized cost was $8.4 million.
• Companies in the study experienced 102 successful attacks per week and 1.8 successful attacks per company each week. This represents an increase of 42% from last year’s successful attack experience.
• The most costly cyber crimes are those caused by denial of service, malicious insiders and web-based attacks. Mitigation of such attacks requires enabling technologies such as security information and event management (SIEM), intrusion prevention systems, application security testing and enterprise governance, risk management and compliance solutions.

And as the costs of these attacks continue to mount, companies that provide theses “enabling technologies” will continue to thrive.

Our Chief Investment Strategist, Louis Basenese, recommended just such a company to WSD Insiders – KEYWAVE Holdings (KEYW). They’re already up by double digits with the position. But that’s not the only cyber security opportunity he’s recommended in the portfolio. Go here to upgrade your subscription now.

Ahead of the tape,

Karen Canella

The post Cyber Crime: Whose Side is the Gov’t on, Anyway? appeared first on  | Wall Street Daily.

Article By WallStreetDaily.com

Original Article: Cyber Crime: Whose Side is the Gov’t on, Anyway?

Article by Investazor.com

Starting with April this year the QQE program (quantitative and qualitative monetary easing) has been launched. Through this program, the Government is increasing annually the monetary basis by 60-70 trillion yen. The quantitative aspect is determined by the great amount of JGBs bought monthly while the qualitative aspect is represented by increasing average remaining maturity of the Bank’s JGB purchases to about 7 years. Positive effects have been observed in terms of stocks (whose prices rose), a flat long-term interest rates, a more favorable consumer’s sentiment and increased expectations for inflation.

The pace of growth is expected to evolve as: 2.8% for fiscal 2013, 1.3% for fiscal 2014, and 1.5% for fiscal 2015. The only disturbing factors are the two scheduled consumption tax hikes (this scenario is valid if the global economic situation remains stable otherwise, the strongest obstacle remains the anxious global economic evolution). An increase in the sales tax in considered to be mandatory in order to sustain the  ”repair” rhythm of the country’s finances.

In the meantime, Japanese officials are visiting China on the 29^th and 30^th of July in an attempt to build a mutually beneficial relationship and to solve the territorial disputes.

The post Japan May Face a Small Obstacle appeared first on investazor.com.

By www.CentralBankNews.info     Angola’s central bank held its main policy rate steady at 10.0 percent, citing a decline in inflation, rising credit to the economy, lower market interest rates and a stable exchange rate.
    The National Bank of Angola (BNA), which last cut its rate by 25 basis points in January, said the monthly inflation rate in June was 0.63 percent, down from May’s 0.87 percent, for an annual rate of 9.19 percent compared with 9.25 percent.
    Credit extended to the economy rose by 1.20 percent in June, reaching an outstanding stock of 2.752 billion kwanza, with an average interest rate on credit extended 181 days to 1 year of 12.17 percent for individuals and 14.41 percent for corporates, “maintaining the downward trend in interest rates.”
    The average reference exchange rate for the kwanza was 96.326 to the U.S. dollar at the end of June, compared with 96.045 at the end of April, “maintaining stability in the foreign exchange market.”
    During June the BNA sold $1.6525 billion worth of foreign exchange to the market for a total of $9.6345 billion in the first six month.
    While the BNA held its main rates steady, it added that its rediscount operations would be indexed to the interest rate of the marginal lending liquidity.

    www.CentralBankNews.info
   
   

By www.CentralBankNews.info     Israel’s central bank held its policy rate steady at 1.25 percent, saying economic activity has continued at its recent pace, making it less concerned over a further slowdown but inflation expectations are below the midpoint of the bank’s target range.
    The Bank of Israel (BOI), which cut rates twice in May to weaken the strong shekel, noted the currency’s effective exchange rate had strengthened by 0.9 percent this month against a background of continued expansionary monetary policies in major economies.
    The cost of homes, one of the BOI’s concerns in recent months, eased by 0.1 percent in April-May and previous months’ data have been revised down but “it is too early to determine if this represents a change in trend,” the bank said.
     Israel’s inflation rate rose to 2.0 percent in June from 0.9 percent, the highest rate in 10 months, mainly due to a rise in VAT, along with higher prices for clothing, footwear, fuel and electricity.
    Inflation expectations for the next 12 months by private forecasters eased to 1.7 percent after the latest inflation data while forecasts for the BOI’s policy rate one year from now remained stable at 1.1-1.2 percent on average. The BOI targets inflation of 1-3 percent.
    Economic activity in the second quarter is expected to be similar to the first quarter, though manufacturing exports continue to stand still, the BOI said.

    “Indicators which became available in the past month point to continued growth of economic activity at the relatively moderate pace of the past two years, which eased concerns of an additional slowdown in growth,” the bank said.  
    The third estimate of first quarter Gross Domestic Product growth was revised upwards to 2.9 percent, another factor that eased some of the BOI’s concerns. In the fourth quarter, GDP rose by an annual 2.6 percent.
     In March the BOI said economic activity was continuing to improve but it was still too early to tell if the economy had turned the corner.
    “The Bank of Israel will continue to monitor developments in the Israeli and global economies and financial markets, particularly in light of the continuing uncertainty in the global economy,” it said, adding it would use the tools available to achieve its objectives and also keep a “close watch on developments in the asset markets, including the housing market.”

    www.CentralBankNews.info