InvestMacro Forex News

By Profit Confidential

Troubles in the Chinese economy are mounting as the economic slowdown in the world’s second-biggest economy takes its toll—troubles that could wash ashore here in North America sooner than most expect.

The Flash China Manufacturing Purchasing Managers’ Index (PMI) registered at 47.7 for July—a new eleven-month low. (Source: Markit, July 24, 2013.) Any reading below 50 on the PMI represents contraction in the manufacturing sector.

The Chinese economy is heavily focused on manufacturing, so a contraction of this magnitude indicates a severe economic slowdown for the country.

And that’s not all…

Gross domestic product (GDP) for China’s economy is quickly slowing. After growing for years at 10% per annum, in the first quarter of this year, China’s economy grew at only 7.7%; in the second quarter, the rate slowed further to 7.5%. (Source: MarketWatch, July 23, 2013.) Growth of 7.5% per year for the Chinese economy is embarrassing when compared to its historical average.

So why would an economic slowdown in China’s economy be a problem for us here at home?

China’s economy is the third-biggest destination for U.S. exporters.

As the economic slowdown in the Chinese economy strengthens, demand for goods and services within the country will decline. American exporters will face more downward pressures on profits as they export less to China. And U.S. GDP will get hit as exports are considered one of the major factors in its calculation.

But the damage the economic slowdown in the Chinese economy could have on American and Canadian exporters is just one small piece of the puzzle. Corporate earnings of U.S.-based companies operating in the Chinese economy will also become an issue.

Giants like Wal-Mart Stores, Inc. (NYSE/WMT) and Caterpillar Inc. (NYSE/CAT) have a major presence in the Chinese economy. Wal-Mart operates 380 stores in China, employs 100,000–120,000 people in that country, and has been opening 50–60 stores a year in China.

Pfizer Inc. (NYSE/PFE) has a significant stake in the Chinese economy, with business operations in 250 cities and eight plants in three major cities. (Source: Pfizer China web site, last accessed July 24, 2013.)

As I have outlined in these pages before, the U.S. is not an isolated island. We are connected to events in the global economy. The economic slowdown in the Chinese economy will impact U.S. growth and the corporate earnings of companies on key stock indices.

Michael’s Personal Notes:

In the first quarter’s revised U.S. gross domestic product (GDP) numbers, we found consumer spending in the U.S. economy was slow, dragging U.S. economic growth lower. Going forward, I can’t help but to expect more of the same.

We are already getting warnings from major financial institutions that U.S. GDP growth in the second quarter will be dismal. The Goldman Sachs Group, Inc. (NYSE/GS) expects the U.S. economy to grow at only 0.8% in the second quarter. The Royal Bank of Scotland Group plc (NYSE/RBS) and Barclays PLC (NYSE/BCS) both expect U.S. GDP growth to come in at 0.5%. (Source: Wall Street Journal, July 15, 2013.)

It shouldn’t go unnoticed: consumer spending makes up about two-thirds of the GDP in the U.S. economy. If consumer spending declines, or remains stagnant, then it would be foolish to expect the U.S. economy to experience any growth.

Let’s look at retail and food services sales, a key indicator of consumer spending in the U.S. economy. Since the third quarter of 2009, the average rate of growth quarter-over-quarter in real retail and food services sales in the U.S. economy has been 0.9%. In the second quarter (April though June) of 2013, these sales only increased 0.81% from the previous quarter. (Source: Federal Reserve Bank of St. Louis web site, last accessed July 24, 2013.)

Unemployment—another indicator of pressure on consumer spending—remained a problem throughout the second quarter. While the mainstream media and politicians told us everything is great on the employment front, the reality was quiet the opposite.

In the U.S. economy, the underemployment rate, which provides a better look at the U.S. labor market situation, actually increased from 13.9% in April to 14.3% in June of 2013. (Source: Bureau of Labor Statistics, July 5, 2013.) It’s common sense that when people don’t have jobs, they pull back on their spending.

Aside from a slowdown in retail and food services sales and rising real unemployment, the U.S. housing market remains depressed, as real homes buyers stay away from the market. Right now, we have institutions fueling home purchases. First-time home buyers fuel the economy as they buy lawnmowers, appliances, and furniture to fill their homes. Recently, I’ve heard stories of big institutions buying homes in bulk (to rent out) and filling them with appliances they are buying directly from overseas in bulk.

All this happened during the second quarter of 2013, as the key stock market indices continued to rally.

In the first half of this year, key stock indices like the S&P 500 rose roughly 13%. Is this sustainable when the U.S. economy is struggling? I seriously doubt it.

Sure, markets can stay irrational for longer than most expect, but eventually, regression to the mean occurs. And when it does, it won’t be a pretty sight.

Article by profitconfidential.com

By Profit Confidential

In the first quarter’s revised U.S. gross domestic product (GDP) numbers, we found consumer spending in the U.S. economy was slow, dragging U.S. economic growth lower. Going forward, I can’t help but to expect more of the same.

We are already getting warnings from major financial institutions that U.S. GDP growth in the second quarter will be dismal. The Goldman Sachs Group, Inc. (NYSE/GS) expects the U.S. economy to grow at only 0.8% in the second quarter. The Royal Bank of Scotland Group plc (NYSE/RBS) and Barclays PLC (NYSE/BCS) both expect U.S. GDP growth to come in at 0.5%. (Source: Wall Street Journal, July 15, 2013.)

It shouldn’t go unnoticed: consumer spending makes up about two-thirds of the GDP in the U.S. economy. If consumer spending declines, or remains stagnant, then it would be foolish to expect the U.S. economy to experience any growth.

Let’s look at retail and food services sales, a key indicator of consumer spending in the U.S. economy. Since the third quarter of 2009, the average rate of growth quarter-over-quarter in real retail and food services sales in the U.S. economy has been 0.9%. In the second quarter (April though June) of 2013, these sales only increased 0.81% from the previous quarter. (Source: Federal Reserve Bank of St. Louis web site, last accessed July 24, 2013.)

Unemployment—another indicator of pressure on consumer spending—remained a problem throughout the second quarter. While the mainstream media and politicians told us everything is great on the employment front, the reality was quiet the opposite.

In the U.S. economy, the underemployment rate, which provides a better look at the U.S. labor market situation, actually increased from 13.9% in April to 14.3% in June of 2013. (Source: Bureau of Labor Statistics, July 5, 2013.) It’s common sense that when people don’t have jobs, they pull back on their spending.

Aside from a slowdown in retail and food services sales and rising real unemployment, the U.S. housing market remains depressed, as real homes buyers stay away from the market. Right now, we have institutions fueling home purchases. First-time home buyers fuel the economy as they buy lawnmowers, appliances, and furniture to fill their homes. Recently, I’ve heard stories of big institutions buying homes in bulk (to rent out) and filling them with appliances they are buying directly from overseas in bulk.

All this happened during the second quarter of 2013, as the key stock market indices continued to rally.

In the first half of this year, key stock indices like the S&P 500 rose roughly 13%. Is this sustainable when the U.S. economy is struggling? I seriously doubt it.

Sure, markets can stay irrational for longer than most expect, but eventually, regression to the mean occurs. And when it does, it won’t be a pretty sight.

Article by profitconfidential.com

By Profit Confidential

Today, a very good business reports its numbers. It’s an old economy play that we looked at back in February, and it’s the kind of company that, according to history, you can just tuck away and keep in your portfolio.

The company is Airgas, Inc. (ARG) out of Radnor, PA. It’s not the most exciting enterprise in the world; it’s unlikely you’ll find it featured on CNBC or other media outlets. But it’s exactly the kind of old economy, reliable business that’s very necessary to the economy.

Airgas is a seven-billion-dollar company that pays dividends (currently yielding 1.9%). It sells propane, oxygen, nitrogen, and a lot of other gases used for industrial and medical purposes.

It’s the kind of business that you never think of but is absolutely necessary for basic infrastructure to be created (welding) and for healthcare to be delivered (oxygen, carbon dioxide, helium).

On the stock market, Airgas has mostly been a powerhouse. The position has been trading range-bound for the last six months, but the company’s long-term track record is very solid.

This kind of business is absolutely worthy of consideration for retirement accounts or long-term savings plans. Yes, there will be quarters when a company like this doesn’t meet expectations, but it’s difficult to imagine the demand for welding and medical gases going down systemically.

Just take a look at the company’s long-term stock chart below:

Chart courtesy of www.StockCharts.com

Every business experiences tough times. You can see in the above stock chart that shares for Airgas turned downward in 1997 and took almost nine years to recover. But that’s why businesses like this are for long-term investors who like to collect dividends. The company’s normalized stock market trend is consistent.

Investors might not be interested in an old economy stock at its high, but it’s the kind of business that’s worth following in case of a quarterly miss and/or a major share price retrenchment.

Reporting today, Wall Street doesn’t expect much in the way of growth from this company. Revenues are forecast to grow 1.1% comparatively to $1.27 billion. The average earnings-per-share estimate is $1.15, compared to $1.13 in the same quarter last year.

Clearly, this isn’t a growth story. But I still follow a number of businesses like this, because they are real. They aren’t going away anytime soon and even as mature, old economy stories, many companies like this have actually produced very good long-term returns on the stock market. (See “Why These Old Economy Stocks Are Absolutely Crucial.”)

I like big brand-name companies that pay increasing dividends to shareholders. But I also like esoteric, non-media-hyped businesses that just grind it out every day.

As part of an overall portfolio, I think there’s definitely room for a position like Airgas—an industrial, basic-infrastructure type of company with a proven track record of wealth creation.

It isn’t fancy and it sure isn’t glitzy, but who cares? At the end of the day, it’s the return that counts.

Article by profitconfidential.com

By Profit Confidential

CEO Thorsten Heins of BlackBerry (NASDAQ/BBRY) may be smart to start thinking about looking for a new job. No, there’s no evidence he will be fired anytime soon. Hired in early 2012, Heins has been at the job just over a year. But while he may be the company’s biggest cheerleader, his enthusiasm has not spread to the stock market.

Having launched to rave reviews, the new “Z10” and “Q10” are excellent products—unfortunately, you need more to attract customers. Like I said back in March, the two new BlackBerry devices were really make-or-break for the company, and so far, it doesn’t look good. (Read “RIM Replacing Apple as the Stock Market’s Tech Darling?”)

Having looked at the Z10, I must say it’s a nicer-looking device than my current “iPhone 4.” The Q10, with its physical keyboard, reminds me of my old BlackBerry.

The problem I have—and that I suspect many potential buyers have—is that there’s just not enough to make me want to switch over to the new BlackBerry at this time. I’m pretty sure Heins now realizes this, especially with Apple Inc.’s (NASDAQ/AAPL) dominance of the U.S. market.

The chart below shows the downward move of BlackBerry (indicated by the red candlesticks) versus the upward move by Apple (shown by the green line).

Chart courtesy of www.StockCharts.com

BlackBerry is probably better off focusing on improving its devices and looking to the billions of users in the emerging markets like China, Asia, Latin America, and Eastern Europe.

These are the markets where the demand is for cheap yet still powerful phones. Apple, which has yet to produce a cheap version of its iPhone (there is speculation this may come), is well behind rivals Samsung Electronics Co. Ltd. and Nokia Corporation (NYSE/NOK) in the emerging markets. Nokia continues to be the king of the inexpensive phone. And until Apple comes out with a much cheaper version of the iPhone, I doubt it will gain any traction here. Users in these markets simply cannot afford expensive phones and plans.

Apple will need to somehow get into the emerging markets, as the company is stalling in its growth. The company will need to look outside of its dominant market in the United States to boost growth; until this happens, I doubt Apple can rally back to its record $705.00 high in September 2012.

The same goes for BlackBerry, but the situation is much worse. With minimal success in the U.S., unless it vaults over Apple, Heins will need a “Plan B” for BlackBerry’s survival, which should be to look at expanding into the emerging markets. Of course, even this won’t be easy, as the emerging markets are highly competitive.

So the battle continues. I don’t like BlackBerry, Apple is marginally better, but Samsung looks the most interesting; albeit, only time will tell. Movement into the emerging markets may just be what decides the fates of smartphone makers in today’s market.

Article by profitconfidential.com

London Gold Market Report
from Adrian Ash
BullionVault
Friday, 26 July 08:25 EST

The PRICE of gold bullion retreated from an overnight rise to $1340 per ounce in London on Friday morning, trading back down to $1322 – the low hit by the mid-April crash – as the US Dollar ticked higher.

Silver prices slipped back below $20 per ounce – a 33-month low when first breached in June.

Japanese stocks meantime fell hard as the Yen rose on the currency markets, and European equities slipped with commodities.

Government bond prices held steady, with 10-year US Treasury yields at 2.57%.

The US Federal Reserve next announces interest-rate and quantitative easing policy on Wednesday.

“I don’t really see how gold can go much higher,” says Matthew Turner, precious metals analyst at Australian bank Macquarie.

“After all the shenanigans of the last few weeks, we know that [QE] tapering at some point is clearly still the policy.”

China’s households will meantime overtake India as the world’s No.1 buyer of goldin 2013, said Marcus Grubb, managing director for investment at market-development organization the World Gold Council, on Thursday.

Buying perhaps 1,000 tonnes of gold – around 1 ounce in every 4 sold worldwide in 2013 – China is growing its jewellery demand, Grubb says, but not as fast as it’s growing demand for investment gold bars and coin.

Analysts have been forecasting China to overtake India since late 2009.

Investment bank and bullion market-maker Societe Generale yesterday warned thatgold-price volatility looks certain if there’s a “hard landing” in China‘s economy.

“Gold purchases by central banks have noticeably slowed of late,” says a note from Germany’s Commerzbank, pointing to the 400 tonnes forecast for 2013 against last year’s 532 tonnes.

New data from the International Monetary Fund showed only light gold buying amongst central banks in June, with Turkey’s reserves falling for the first time in a year, down 0.8% to 441.5 tonnes.

“The flows in the central banks are pretty small now, the big shifts are gone,” Bloomberg quotes economist Justin Smirk at Westpac Banking in Sydney.

“Central bank buying might give us a little bit of a floor, but they’re just soaking up some of what the ETFs are selling. You’re not going to see central banks coming in to push the price up.”

The world’s largest exchange-traded gold trust fund, the SPDR (ticker: GLD) yesterday shed another 2 tonnes on Thursday, taking its bullion – held to back shares in the trust – down  to 927 tonnes, the lowest level since Feb. 2009.

Lower prices mean supplies of scrap gold from existing jewelry and investment owners may slump by three-quarters to 400 tonnes or below, according to 2013 forecasts earlier this week.

“The pawn-broking industry is facing a collapse in the price of gold,” reports NPR’s Planet Money, reducing margins on gold items pledged by borrowers.

On the mining supply side, meantime, world No.3 Goldcorp joined No.2 Newmont in announcing sharp write-downs on the value of its assets, thanks to the 20% drop in world gold prices so far in 2013.

Adding $2 billion and $1.8bn respectively to the gold mining majors’ recent $9bn in writedowns, Goldcorp and Newmont Mining have both dropped more than 40% already on the stock market since gold began falling from $1800 per ounce last fall

Adrian Ash

BullionVault

Gold price chart, no delay | Buy gold online

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver in Zurich, Switzerland for just 0.5% commission.

(c) BullionVault 2013

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

By www.CentralBankNews.info

By WallStreetDaily.com

We’re tackling all the following questions (and a little more) in this week’s edition of Friday Charts…

• What’s the single biggest risk to Apple’s (AAPL) plan to take over the world?
• Is there such a thing as a truly all-weather investment?
• Do consumers buy more domestics or imports? (I’m talking about cars – not beer – people. Come on!)
• And will the average American ever get their finances in order?

Please enjoy the answers!

Apple: Time to Bet “on the Come”?

1%. That’s all the sales growth Apple could muster up this quarter.

Talk about pathetic. For years, the company had delivered double-digit sales and profit growth like clockwork.

Don’t fret, though. Even with shares down about 40% from their all-time high in 2012, the new(ish) CEO wants us to hang tight on the promise of better growth ahead.

In his prepared statement, Cook said, “We are laser-focused and working hard on some amazing new products that we will introduce in the fall and across 2014.”

In other words, he wants investors to bet “on the come.” I wouldn’t.

As I’ve pointed out before, the law of large numbers isn’t working in Apple’s favor. Neither are the business fundamentals.

Average selling prices (ASP) for the iPad and iPhone, which account for more than 50% of sales, are falling, not rising. The iPad ASP fell to $436 from $449 last quarter, and the iPhone ASP dropped to a historic low of $581 from $613 last quarter.

You could wait for Cook to prove that he can innovate and deliver double-digit growth via new products.

Or, better yet, there’s a way for you to collect insane amounts of cash on Apple right now. I’m talking about pocketing $25,000 or more (enough to buy a new car) – in three seconds or less. Don’t believe me? Go here to find out how it’s done.

When in Doubt, Bank on Dividends

Financial headlines always try to scare us out of one investment or another. If you’re tired of trying to make sense of all the warnings, there is a solution.

And no, it’s not going 100% into cash. Even if cash reduces your anxiety levels, it’s a stupid investment. (Want proof? Go here.)

Instead, bank on dividend-paying stocks.

Although they might lag the broader market during bull markets over short periods of time, they consistently do a portfolio good over the longer term.

Buy Domestic

Last week, I shared a shocking divergence in the real estate market. This week, I’m sharing one in the automotive market.

In the United States, new auto sales just hit the highest level in five years. In Europe, though, new auto sales dropped to their lowest levels in almost a decade.

The takeaway? Keep betting on domestic automakers, specifically Ford (F).

That’s it for this week. Before you go, though, let us know what you think of this weekly column – or any of our recent work at Wall Street Daily – by sending an email to [email protected] or leaving a comment on our website.

Ahead of the tape,

Louis Basenese

The post Friday Charts: Is it Time to Take a Gamble on Apple? appeared first on  | Wall Street Daily.

Article By WallStreetDaily.com

Original Article: Friday Charts: Is it Time to Take a Gamble on Apple?

By HY Markets Forex Blog

European Shares were seen opening in green on Friday, as new corporate reports from the European firms were released. Investors were supported from the higher close on Wall Street in the previous session. Shares in Europe were dropping in the previous session because of the weak earnings.

The pan-European Euro Stoxx 50 advanced 0.41% to 2,753 at market opening, while the German DAX rose 0.55% to 8,344.81. The French CAC 40 gained 0.61% to 3,980.20, while the UK FTSE 100 was up 0.39% to 6,613.50.

A batch of new reports of the European second quarter earnings are expected to be released later today, from companies such as Banco Popular, Aol and others.

Caixa Bank reported its net profits of 408 million euros during the first quarter of this year, as the bank income from investments gained a total income of 3,629 million euros.

The Automakers Renault reported its net profit for the first six months of 2013 dropped by 0.9% to 20,441 million euros , compared to the revenue 774 million euros  in the first half of 2012.

The Destatis reports showed that the German import prices for the month of June dropped 0.8% month-to-month while falling 2.2% annually.

Figures fell beyond analysts had predicted in the previous month. The French consumer confidence had a slight rise to 82 in the month July from the revised 79 reported in the previous month.

The post Europe shares open green ahead of earning reports appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By HY Markets Forex Blog

Most of the stocks in the Asian market was seen closing in red for the third day in row on Friday , while Japan’s consumer prices advanced beyond expectation for the first time since April last year . China has announced the new rules which are expected to reduce excess factory capacity.

However, the decline of the ongoing earning season, have raised concerns from investors as they worry the Japanese stocks will weigh down.

The Japanese yen advanced, adding pressure on the stock in Japan as the two usually reversely correlate.

The Japanese benchmark Nikkei 225 declined 2.97%, closing at 14,129.98.91, while the Tokyo’s broader Topix gauge dropped 2.9%, closing at 1,167.06.

The Hong Kong Hang Seng traded flat, with a minor rise of 0.10% to 21,926.41. The Chinese mainland Shanghai composite declined further by 0.26% to 2,015.72.

South Korean Kospi edged up 0.06% higher to 1,910.81 on Friday, while the Australian S&P/ASX 200 index advanced 0.13% to 5,042.00.

Japan’s Consumer Price index (CPI) for the month of June ,showed an upbeat result for the first time since April last year , with a rise in prices since mid-2011.

The core CPI rose by 0.4% in June, according to the Statistics Bureau in Tokyo. While the figures exceeded predictions of an increase of 0.3% for the month of June. However, current figures are still below the 2% target made by the Bank of Japan (BoJ).

“Japan is gradually shifting to inflation from deflation,” Japan’s Finance Minister Taro Aso said confidently following the readings that “CPI data shows the overall trend is improving little by little.”

While in China , investors continues to worry about the Chinese economy , as the Chinese Ministry of Industry and Information Technology ordered more than 1,400 companies in 19 industries to decrease their excess capacity by September this year .

On Thursday, the preliminary Purchasing Managers Index indicted that the Chinese factories are trapped with contraction due to the fall in the contraction territory in July.

The Chinese leadership announced on Wednesday, that the railway development project along with a reform is aimed to improve the business for small companies and reduce fees for exporters.

The post Most stocks in Asia opens red as China worries appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

USDCAD remains in downtrend from 1.0442, and the fall extends to as low as 1.0255. 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 continue, and next target would be at 1.0200 area. On the upside, a clear break above the channel resistance will indicate that the downtrend from 1.0442 is complete, then the pair will find resistance around 1.0360.

Provided by ForexCycle.com