InvestMacro Forex News

Source: Brian Sylvester of The Gold Report (7/10/13)

http://www.theaureport.com/pub/na/15431

These are scary times for precious metal investors. Resource equities are in the tank and, adding insult to injury, the gold price took a precipitous fall just days before summer, notoriously one of the slowest seasons for precious metals. Heiko Ihle, an analyst with Euro Pacific Capital in Connecticut, tells The Gold Report that something has to give. And soon. Ihle sets out a likely scenario and highlights some miners that are able to produce profitably at current metals prices.

The Gold Report: Heiko, in late June gold had its biggest weekly drop in two years. What’s your take on that?

Heiko Ihle: It was set off by far-reaching talk of a slowdown in quantitative easing. However, an awful lot of U.S. dollars are still floating around and the price of gold is pegged to the U.S. dollar. In the long run, companies can’t sell gold for less than it costs to take it out of the ground. At some point something has to give.

TGR: So, what’s going to give?

HI: Either the cost of mining or the price of gold. Quite frankly, the cost of mining has been reasonably sticky thus far.

TGR: Can miners profitably mine gold at $1,200/ounce ($1,200/oz) and silver sub-$20/oz?

HI: This is the first time in quite a while they’ve dipped this low, but there are miners that are able to produce profitably at these prices. One is Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE). The company’s mine-site cash costs were about $5/oz last year, and we forecast less than $6/oz this year. Even at $19/oz silver, Fortuna will be quite profitable.

TGR: Fortuna is planning in the third quarter to begin a 1,500 ton per day (1,500 tpd) mill expansion at its San Jose mine in Mexico.

HI: At current prices, Fortuna is more concerned about cutting costs than trying to increase production. That said, San Jose is a very profitable mine. It is a great location, fully permitted and operational. The site has a large amount of ore that can be mined over the next decade or two. I would continue to encourage the company to expand the mine.

TGR: What’s your price target on Fortuna?

HI: It’s $4. Given where the stock is trading, it’s actually pretty aggressive.

TGR: What are some of the companies under coverage doing to curb costs in this environment?

HI: There have been some cutbacks in every department. There have been layoffs. I’ve talked to a number of CEOs who are going to be doing more layoffs. Marketing budgets have been cut. A number of road shows have been flat-out canceled. There are cutbacks on exploration and general improvement budgets. Would Fortuna be expanding its mill if it started the whole process today? Probably not.

TGR: How does this trough compare to previous ones?

HI: There is general disinterest in nonproducing assets. Clients ask me almost every day: Why would I deal with a permitting process if I can get a producing asset for cheap? There’s also less interest in small-cap names because investors can buy Barrick Gold Corp. (ABX:TSX; ABX:NYSE) and Agnico-Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) at a discount. Overall, it’s been quite hard to get investors excited about some of the names that we follow just because of a lack of interest in the space all together.

TGR: Many of the companies you cover have operations in Latin America, particularly Mexico. Mexico was the world’s largest silver producing country in 2012, with about 162 million ounces (162 Moz), up 6% from 2011. Silver production was up 4% globally in 2012 to 787 Moz versus 757 Moz in 2011. Tell us about your favorite precious metal stories.

HI: Endeavour Silver Corp. (EDR:TSX; EXK:NYSE; EJD:FSE), run by Brad Cooke, has a reasonably low cost of production of about $8/oz this year. We forecast about $7/oz next year as the El Cubo plant should be fully on-line.

Endeavour Silver has a great business model. It buys underappreciated mines, puts some money into renovations and puts them into production at much lower cash costs with more efficient operations. The company tends to get a lot closer to reserve grade than the prior owners.

Today, for the first time since I’ve been looking at this company, Endeavour traded under $3/share. It’s a very good value play.

TGR: El Cubo was purchased from AuRico Gold Inc. (AUQ:TSX; AUQ:NYSE) and turned around. Are there other underperforming assets that Endeavour could work its magic on?

HI: Certainly in this environment, where everybody wants to sell and nobody wants to buy. However, I don’t think Brad is going to make any acquisition that’s going to be transformational for the company, given the overall capital market conditions. These are scary times for all these guys. The cost structure that they operate under has changed substantially in those 34 months.

TGR: Endeavour’s Guanaceví mine in Mexico has cash costs around $16.70/oz silver. With silver currently trading at around $19/oz, does that put that mine at risk of a short-term shut down?

HI: Not yet. The overall headquarter costs remain intact. The company will likely start mining the high-grade veins and leave everything else behind. It lowers production, which leads to overall lower cash costs.

TGR: What about some other Latin American plays that you have under coverage?

HI: I like Rio Alto Mining Ltd. (RIO:TSX.V; RIO:BVL). The company has the La Arena project in Peru. It’s a great company with good management. CEO Alex Black is a great manager.

Rio Alto is producing about 200,000 oz gold at slightly more than $700/oz this year. It is expanding its sulfide operation. The grades are decent. The company has been lucky because it kept hitting higher grade zones than it anticipated, which helped it beat production figures every quarter last year. Those times have, unfortunately, ended. The stock has dropped substantially over the past two months. Its shares are currently below $2. There’s speculation in the marketplace that one of its largest holders is selling, which is creating an overhang on the name, but I think it’s a valuable asset. Rio Alto has proven that it can perform.

TGR: What is the next catalyst for Rio Alto?

HI: When the sulfide goes on line, but that’s not until around 2016.

TGR: One more precious metals story in Latin America?

HI: Fortuna Silver. CEO Jorge Ganoza is a third-generation miner. The family knows exactly what it is doing. Peru remains a politically safe environment. Labor costs are pretty decent. The company has a fairly low cash cost, in fact the lowest cash costs of companies I follow. That’s in part because of the decent gold byproducts, but it’s also because its San Jose mine in Mexico is a very efficient operation with fairly low tonnage costs. The mine site in Peru is fairly remote, however. I’ve been there. It’s an eight-hour drive from the beautiful little town of Arequipa. It’s high-altitude mining, but the grades are good.

TGR: Gold and silver prices are down about 3% today, but you still have a number of companies with buy recommendations. You still see upside. What are some turnaround stories?

HI: The whole market could be a turnaround story. In markets like this everybody remembers that gold is down $160/oz over the past 30 days. Well, guess what? Gold could be up $160/oz in the next 30 days. There is demand, but it is on the sidelines because everybody is scared. Ultimately, I genuinely believe that gold is money. I believe that companies need to be able to make a profit in addition to their cost of mining because otherwise the overall supply is going to dwindle down. I believe once that happens, either production costs will decrease or the gold price will increase. It will happen. Something has to give. We can’t have every single company in the space losing money for eternity.

There is another company that I like, but it’s not in production yet. Romarco Minerals Inc. (R:TSX) doesn’t have a full permit, but I feel strongly that it will be able to get permitted. The mine is going to have about 91 million tons of ore at 1.6 grams per ton for a total of 4.8 Moz gold. You are essentially buying this thing for $50/oz at the current trading price of $0.39/share. I believe Romarco will get up and running, because its management knows a lot of large institutional shareholders who would be willing and able to front them some more cash. I believe the Haile project in South Carolina will be a mine in a couple of years.

TGR: How does that $50/oz compare to its peers?

HI: They range from $40/oz to almost $120/oz. It is definitely in the lower range, and it should be because it doesn’t have a permit. It is not as derisked as a producing mine.

TGR: How likely are those permits to come within the next year?

HI: If you asked me that question a year ago, I would have said about 75%. Today, I am going to give you the same answer. There is a very decent chance that the permits are going to come reasonably soon. The permitting process, especially in South Carolina where there are no real mines, is not easy. The company has to have constant discussions with the U.S. Army Corps of Engineers. Romarco claims to be making progress. I am inclined to believe that, but these things always take a lot longer than you would like.

TGR: Meanwhile, Romarco has increased its resource and it has brought in more experienced personnel. What institutional support does it have?

HI: Van Eck Global, BlackRock, Baker Steel Capital Managers, Oppenheimer & Co., Tocqueville Asset Management and so on, the usual suspects. Seventy percent of shares are institutionally owned. Those firms haven’t owned this and watched the stock sink in order to throw in the towel when it actually comes time to build a mine.

TGR: Can this management team get the permitting done?

HI: Yes, it should be able to do it.

TGR: How much lower can gold go?

HI: That question is a trap! Long term, gold cannot sell below the cost of production. One of the two things has to give. Either the cost of production has to go down, which is doubtful, or the price of the gold has to go up, which is the camp that I fall into.

TGR: We are into the summer months, which are some of the quietest months for precious metals equities in general. How should investors approach the summer months?

HI: For one thing, don’t panic. Next, look at the companies you own or want to buy and see what they have done lately. Have they delivered on what they said they would? I am not talking about the price of gold. I am talking about production, grades, recovery and cash costs. If they have delivered, the overall thesis remains intact and hold on—as hard as that might be to do.

TGR: Thank you very much.

Heiko Ihle joined Euro Pacific Capital in November 2011 as a senior research analyst covering companies in the mining and engineering & construction (E&C) industries. Prior to joining Euro Pacific, Ihle spent over six years with Gabelli & Company, more than five of which as a research analyst. While at Gabelli, he was awarded second place in the 2010 Financial Times/StarMine Top Analyst Awards for the engineering & construction space. A native of Germany, Ihle received his bachelor’s degree in finance and management from the University of Illinois at Chicago in 2004 and his Master of Business Administration from the University of Miami in 2006. He has been a CFA Charterholder since 2010 and is currently a member of the CFA Institute and the Stamford CFA Society.

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DISCLOSURE:

1) Brian Sylvester conducted this interview for The Gold Report and provides services to The Gold 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 Gold Report: Fortuna Silver Mines Inc. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Heiko Ihle: I or my family own shares of the following companies mentioned in this interview: None. 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: Endeavour Silver Corp. 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) Euro Pacific Capital may sell to or buy from customers on a principal basis the named securities.

5) Euro Pacific Capital owns warrants in Endeavour Silver Corp.

6) Further disclosure information can be found on Euro Pacific Capital’s website at www.europac.net or by calling 1-800-727-7922.

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By CountingPips.com

An Added Advantage for Winning Traders

Trading in the forex market is inherently risky, the markets are often volatile and completely unpredictable. There are winners, there are losers. In the overall trading ecosystem, consistently profitable traders are in the minority. If a trader happens to be in this winning group, there has usually been a lot of time and effort invested into learning, developing, testing and honing their trading strategy and system. It has likely taken years of trial and error on demo trading accounts or small money accounts and long losing periods have likely been endured. Ultimately, traders have to overcome many obstacles through a lot of hard work, determination and intestinal fortitude to accumulate the experience and confidence to become a profitable trader.

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What are Trading Signals

Trading signals can be defined as the broadcasting, alerting or selling of a trader’s actual forex trades as they happen. These trade signals comprise the specific buy and sell price orders as well as the stop-loss and take-profit exit orders for each trade. When someone sells a forex signal, they are selling their future forex trades to be copied by others. The reason to buy or sell forex signals is easy; the buyer or subscriber of a trading signal looks to benefit from a successful trader’s performance while the signal provider usually sells or benefits in the sharing of their trades.

Due to the advancement of technology in the trading arena, it has become easier and easier to use forex signals either as a buyer or seller of signals through online tools, trading websites, social networks and even directly from trading platforms. When an online forex trader makes a trade, a record of that trade is then sent to a system or server that sends a message of that transaction electronically. Trading signals can be sent to the signal recipient by email, text message, twitter tweet or by many other similar posting systems.

In the past few years, trading signals have become more advanced and automated as trades can be executed directly in the signal buyer’s account in just about real-time. This automatic signal trading is also referred to as copy trading or mirror trading.

3 Benefits to Selling Signals

1. Earn Money Selling Forex Trades

The first advantage of selling signals is the direct monetary benefit the trader receives when subscribers purchase their forex signals. If a trader’s performance is consistent and profitable without being overly risky, they could very well find their signals in high demand. Buyers of signals are looking for consistent performance and will pay a reasonable amount of money for that skill if they think the payoff will exceed the cost.

The buyers of trading signals may be other traders or non-traders that are in the market to employ their extra risk capital in the forex markets. With trading signals, buyers can pick and choose signal providers and do it from their own trading accounts.

2. Don’t Give Up the Secret Sauce

Of course, winning traders have put a lot of time and effort into developing a winning trading strategies or systems. Understandably, a good number of successful traders do not want to give away their secrets. Purchasers of trading signals receive the orders from their signal providers and not the inner workings of their trading systems.

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Perhaps you have more ambition than being a solitary trader and would like to use your successful trading skills as a steppingstone to another venture. May be you have dreams of trading in a hedge fund, may be you would like to get a job at a top Forex brokerage or may be you would like to become more well known or write a book about trading. Maybe you even want to be a talking head on TV, whatever it is… All these endeavors could be helped by having a successful and provable track record to which you can point to.

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An Easy Way for Traders to Sell Signals

One fast and easy way to start selling forex signals or testing out a forex signal system is to sign up for the MQL5 Community Social Trading Signals. All that is needed is a free MQL5 community account and a trading account (free demo account or real money account) on either of the MetaTrader 4 or the MetaTrader 5 platforms.

There are two reasons why the MQL5 Community can be a good choice:

1. Simplicity of getting started

If you want to sell signals and you use the Metatrader platform already, the process is rather easy and straightforward. Sign Up for a free MQL5 account, provide your personal details and documentation and then verify your information. After your account is approved, you can choose your specific Metatrader trading account to use for a trading signal and how much you want to charge to follow your signals.

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See full description, directions and documentation here.

2. The huge inventory of traders on MetaTrader 4 and MetaTrader 5

The second reason the MQL5 community can be a good place to start is that there are literally thousands upon thousands of forex traders who use the MetaTrader 4 and the MetaTrader 5 platforms every day to conduct currency trades. If a trader is serious about earning some extra income from selling signals then having all of these traders as potential customers is a great way to start building a customer base.

Buyers of signals have the ability to enable trading signals right in their Metatrader platforms without any extra steps to be done. With such an easy way to subscribe to signals, it is almost guaranteed that there will be a good number of traders utilizing or browsing this market of signals.

In conclusion, selling Forex trading signals is another way for winning forex traders to benefit from their hard-earned trading skills. The benefits can even go beyond just the monetary rewards. If you are a profitable forex trader, you may want to think about whether selling your forex signals is right for you.

Article written by CountingPips.com

Risk Disclosure: Foreign Currency trading and trading on margin carries a high level of risk and can result in loss of part or all of your investment. Due to the level of risk and market volatility, Foreign Currency trading may not be suitable for all investors and you should not invest money you cannot afford to lose. Before deciding to invest in the foreign currency exchange market you should carefully consider your investment objectives, level of experience, and risk appetite. You should be aware of all the risks associated with foreign currency exchange trading, and seek advice from an independent financial advisor should you have any doubts. All information and opinions on this website are for general informational purposes only and do not constitute investment advice.

Blog Disclosure: CountingPips.com is an independent forex website and all opinions expressed on our blog postings are purely our opinions. This was a sponsored post and the company who sponsored it compensated via a cash payment, gift, or something else of value. We do accept forms of advertising, sponsorships and receive affiliate commission revenue. We do occasionally participate in paid reviews although our posts and opinions are not influenced by compensation and these posts are attributed as such. From time to time, we do recommend specific products or services for which we do receive compensation and in these cases, we do so on the belief that the product or service is worthy of an endorsement and will benefit our readers in their forex trading or in the furthering of their financial analysis. As always, we do our best to only recommend quality products and services but it is recommended to verify the accuracy of all products and services with their provider or manufacturer.

London Gold Market Report
from Adrian Ash
BullionVault
Thursday, 11 July 08:50 EST

WHOLESALE prices for gold retreated from an overnight surge to nearly $1300 per ounce in London trade Thursday morning, while world stock markets ticked higher with major government bonds and commodities.

Gold’s earlier 4.0% jump came after Federal Reserve chairman Ben Bernanke confirmed that the US central bank will maintain its “highly accommodative monetary policy for the foreseeable future [because it] is what’s needed.”

 Trading more than $100 above late June’s three-year low of $1181 per ounce Thursday morning, gold in large wholesale bullion bars recorded its best London Fix in two weeks.

 After falling sharply on previous talk of ending quantitative easing by mid-2014 and perhaps then raising rates from zero, “The strong reaction of the precious metal markets,” says Germany’s Commerzbank in a note today, “is [because] investors believe that the Fed’s actions and attitude do not differ significantly from those of the ECB or BoJ.”

 The European Central Bank last week suggested it may soon cut Eurozone interest rates from the current 0.5%.

 The Bank of Japan today kept its monetary policy unchanged, holding interest rates at 0.1% and continuing with more than $700 billion per year of new quantitative easing.

 “For the mid to longer term,” says David Govett at brokers Marex Spectron, “look to buy dips.

“Over the course of the next six months, gold will grind higher…On the whole, I favour the upside longer term.”

 Amidst gold bullion‘s record quarterly price drop this spring, “Recent recoveries consisted of upward moves of $150 and $80 respectively,” says another precious metals analyst, pointing to a top of $1320 for the current run “should it approximate what we saw in May.”

 “I suspect a test of $1300 will be on the cards,” says MKS Capital’s chief trader Alex Thorndike, because “order books are very light up to that point.

 “I have heard some chunky [mining] producer offers sit above this level, and there are good sell orders in the $1300-10 region.”

 UK investors wanting to buy gold bullion bars today saw the price reach a 3-week high above £857 per ounce.

 Silver prices meantime eased back 1.0% after hitting a 3-week high of $20.29 per ounce.

 The Euro currency also cut its earlier gains vs. the Dollar, as fresh political wrangling was blamed for a drop in Portuguese stock and bond prices.

 Meantime in India, the world’s No.1 gold consumer market, “We will not promote the sale of coins and gold bars till [the country’s current account deficit] issue is resolved,” the Times of India quotes Sanjeev Agarwal, CEO of major retail chain Gitanjali, today.

 Sixty-five per cent of India’s gold retailers have agreed to suspend sales of gold bars and coins for 6 months, the All India Gems & Jewellery Trade Federation said Wednesday, to help the government reduce imports and so cut India’s large gap between cash inflows and outgoings.

 Analysis by Barclays Capital says June saw the heaviest outflow on record of money from Indian bonds and equity holdings.

 Whilst India “remains vulnerable” to more outflows of foreign money, “For those concerned that the central bank will be forced to sell [some of its] gold,” says the Sober Look blog, “at this stage there are a number of other alternatives.”

 India grew its reserves of gold bullion bars by nearly 60% in 2009, buying 200 tonnes from the International Monetary Fund at a price of $1045 per ounce.

 “Given the nation’s cultural attitude toward gold,” says Sober Look, “[selling reserves is] politically just not an option.”

 For the retailers’ gold bullion suspension, “If we don’t follow through,” says Vikas Chudasama, director general of the All India Gems & Jewellery Trade Federation, “there may be a situation when jewelers don’t have any gold to sell.

 “The government and the Reserve Bank of India have already restricted gold imports.”

 The Times of India notes that over the last 10 years, gold jewelry demand has remained constant, but investment demand has risen 150% since 2009.

 The ban will run beyond India’s peak gold-buying festival season of Diwali and Dhanteras.

 But “retailers will not be hit [so badly],” says The Times, “due to the low profit margins” on coins and bars – some 1-2% versus 8-12% on jewelry.

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     Indonesia’s central bank raised its benchmark BI rate by a higher-than-expected 50 basis points to 6.5 percent and the deposit rate by 50 points to 4.75 percent to “ensure that inflation will return to its target path after the fuel price hike,” but also lowered its forecast for 2013 economic growth.
    Bank Indonesia already raised its rate by 25 basis points in June in a pre-emptive move to control inflation expectations, bringing this year’s total rate rise to 75 basis points. The lending facility rate was held steady at 6.75 percent.
    In addition to the rate hikes, BI said it would provide adequate liquidity in the foreign exchange market to maintain a stable exchange rate, introduce loan to value regulations for property and strengthen its policy coordination with the government to “minimize inflationary pressure and to maintain rupiah exchange rate stability as well as stability to the financial system so the economic growth momentum is sustained and moves toward a more sound economy.”
    Indonesia’s government cut fuel subsidies on June 22 to reduce budget deficits and the BI had forecast this would trigger higher inflation. In June consumer prices rose by 5.9 percent, up from 5.47 percent in May, but the central bank said it expects the impact of higher fuel prices to last for around three months, peaking in July, then easing in August and returning to normal in September.

    “Bank Indonesia will remain vigilant and respond with measured policy to mitigate second round effects of fuel price hikes to inflation, including strengthening policy coordination with the government,” the BI said.
    By 2014, the central bank expects inflation to ease to its target range of 4.5 percent, plus/minus one percentage point.
    The BI cut its forecast for economic growth this year to between 5.7 and 6.2 percent, down from its previous forecast of 6.2-6.6 percent due to lower exports from weaker-than-expected global economic growth.
    Economic growth in the second and third quarters is seen at 5.9 percent, but then growth should rebound in the fourth quarter and accelerate to a range of 6.4 to 6.8 percent in 2014.
   “Household consumption and investment are forecast to be slightly contained as a result of deteriorating purchasing power triggered by unfavorable exports and the impact of the fuel price hike,” the BI said.

    www.CentralBankNews.info

By www.CentralBankNews.info     The Bank of Japan (BOJ) maintained its target for the monetary base and asset purchases but said “Japan’s economy is starting to recover moderately”and “is expected to recover moderately on the back of the resilience in domestic demand and the pick-up in overseas economies.”
    “The year-on-year rate of change in the CPI is likely to turn positive,” the BOJ added, though it slightly revised downwards its latest forecasts for growth and inflation.
    The BOJ, which embarked on a new aggressive phase of monetary easing on April 4, has become increasingly confident about the economy and it was the first time in over two years that Japan’s central bank had used the word “recover” to describe the country’s economy.
     In June it had said that the economy was “picking up” and in May it said the economy had “started picking up.”
    However, the BOJ also admitted there was a high degree of uncertainty over the economy stemming from the prospects from Europe’s debt problem, developments in emerging and commodity-exporting economies and the pace of U.S. economic recovery.
    But exports from Japan have stopped decreasing as overseas economies are gradually heading toward a pick-up, the BOJ said, adding business fixed investment appears to have stopped weakening, public investment is rising and housing investment has generally improved.

    “Reflecting these developments in demand both at home and abroad, industrial production has stopped decreasing and signs of picking up have become increasingly evident,” the BOJ said, adding inflation remains negative through “some indicators suggest a rise in inflation expectations.”
    But the BOJ also said that it would continue with its easy policy stance to help the economy overcome nearly 15 years of deflation.
    “The Bank will continue with quantitative and qualitative monetary easing, aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner,” the BOJ said, repeating its statement from recent months.
    The BOJ also confirmed its target for boosting the monetary base by an annual pace of 60-70 trillion yen.
    The BOJ will also purchase Japanese government bonds so their amount outstanding rises at an annual pace of about 50 trillion yen, buy exchange-traded funds and real estate investment trusts so the amounts outstanding rise by an annual pace of 1.0 trillion, and 30 billion yen, respectively, and continue to buy commercial paper and corporate bonds until the amounts outstanding reach 2.2 trillion and 3.2 trillion, respectively, by end-2013.
    In its latest forecast, a majority of BOJ policy board members see real Gross Domestic Product up by 2.8 percent in the current fiscal 2013 year, which began on May 1, slightly down from the April forecast of 2.9 percent. In fiscal 2014 growth is forecast at 1.3 percent, down from April’s 1.4 percent, and in 2015 growth is seen at 1.5 percent, down from 1.6 percent.
    In the first quarter of this year, Japan’s GDP rose by 1.0 percent from the fourth quarter for annual growth of 0.4 percent, steady from the fourth quarter growth rate.
    In May, Japan’s inflation rate remained negative at 0.3 percent but was up from April’s 0.7 percent drop and March’s 0.9 percent deflation rate.
   Consumer price inflation in the current fiscal year is forecast at 0.6 percent, slightly down from April’s forecast of 0.7 percent, while inflation is forecast to pick up to 1.3 percent in fiscal 2014 – excluding the effects of planned consumption tax hikes – down from April’s 1.4 percent. In fiscal 2015 inflation is seen hitting 1.9 percent, unchanged from April.

    www.CentralBankNews.info

By www.CentralBankNews.info     South Korea’s central bank held its base rate steady at 2.50 percent and expects inflation to gradually rise in the second half of the year from last year’s low base while the economy continues to grow weakly and will be below its potential output for a “considerable time going forward” due to the slow recovery of the global economy.
    The Bank of Korea (BOK), which cut rates by 25 basis points in May, said exports had generally been favorable while “indicators of domestic demand have alternated between improvement and worsening.”
    The global economy is expected to continue its “modest recovery going forward” but the BOK considers the downside risks to growth to comprise “the possibility of an earlier-than-expected tapering off of US quantitative easing and a slowdown in Chinese economic growth, and to the implementation of fiscal consolidation in major countries.”
    Just as in major international financial markets, Korea’s markets have been volatile in recent months with stock prices falling substantially due to outflows of foreigners’ investment funds and long-term market interest rates rising in concert with those of major economies.
    “After having depreciated greatly, the Korean won has appreciated to a considerable extent,” the BOK said.

    Following the Bank of Japan’s launch of a new more aggressive quantitative easing in early April, the won rose over 10 percent against the Japanese yen through late May, causing concern over the competitiveness of Korean exporters. But the won then reversed course until mid-June when it started rising again.
    Compared with the start of the year, the won has risen almost seven percent against the yen, quoted at 11.33 per yen earlier today.
    Korea’s headline inflation rate was steady at 1.0 percent in June from May, continuing a declining trend since mid-2011. The BOK targets inflation of 2.5-3.5 percent.
    It’s Gross Domestic Product grew by 0.8 percent in the first quarter of this year from the fourth quarter of 2012 for annual growth of 1.5 percent. The BOK has forecast growth of 2.6 percent this year, up from last year’s 2.0 percent.

     www.CentralBankNews.info

By WallStreetDaily.com

What drives stock prices? In this bull market, it’s the Fed, earnings and jobs.

Or, more specifically, it’s the size of the assets on the Fed’s balance sheet, Wall Street’s consensus estimate for earnings per share for the S&P 500 Index, and initial filings for unemployment benefits.

Amazingly, these three factors sport a 90% correlation with the weekly price swings in the S&P 500. And that’s been the case ever since the bull market began in March 2009, according to a recent analysis by Jeffrey Kleintop, Chief Market Strategist at LPL Financial.

But earnings represent the “most fundamental driver” of all, says Kleintop. And that’s music to my insecure ears, since I routinely tell you that stock prices ultimately follow earnings. Yet many of you still email me to say that you just don’t believe it. (What’s it going to take, people?!)

So why am I bringing any of this up? Because we’re at the onset of another earnings reporting season. And that means I have a brand-new opportunity to put my trusty earnings theory to the test.

Per tradition, aluminum giant, Alcoa (AA), kicked things off for us on Monday evening, beating expectations. But forget about Alcoa (go here to see why).

Instead, here’s the single most important data point we need to focus on to determine if stock prices will, indeed, head higher…

Introducing the Analyst “Error” Rate

When it comes to having an innate ability to make terrible predictions, Wall Street analysts stand right next to economists and weathermen.

According to the latest FactSet data, analysts collectively expect S&P 500 companies to report almost non-existent earnings growth of 0.7%.

If they’re right, the stock market is all but certain to suffer a setback. If they’re wrong – and earnings growth for the S&P 500 checks in higher – giddy up! This bull market is going to blast higher.

So what’s my prediction? Analysts are going to be spectacularly wrong. (And based on their past performance, the odds are in my favor. Just saying.)

Simply put, analysts are too darn pessimistic. They’re giving in to recent warnings about how the slowdown in China and other emerging markets could affect U.S. corporate profitability.

A fellow contrarian, Richard Bernstein, has my back. He recently told Morningstar’s Kevin McDevitt that “a lot of people don’t realize some of the best growth stories in the world right now are in the United States.”

Amen, brother! And those “people” include analysts.

For what it’s worth, Bernstein also adheres to the “stocks follow earnings” philosophy, saying that we’ve been in a primarily “earnings-driven market” ever since 2000. Maybe his faith in the doctrine will encourage a few of the holdouts among us to convert.

If not, the tale of the tape this quarter should do the trick. By that I mean, if stock prices march higher thanks to stronger earnings growth, nonbelievers won’t have a choice but to accept the theory as true.

Bottom line: Analysts should have stuck to their March 31 prediction, which called for earnings growth of 4.2% for the quarter. As it stands now, the bigger their error, the higher we can expect the stock market to rally. Bet on it!

Ahead of the tape,

Louis Basenese

The post The Three Most Critical Drivers of Stock Prices appeared first on  | Wall Street Daily.

Article By WallStreetDaily.com

Original Article: The Three Most Critical Drivers of Stock Prices

By HY Markets Forex Blog

According to the minutes released  from the last Federal Reserve’s meeting  , the Fed are not showing any signs of ending the bond-buying program  as they need more signs of a stronger economy and an improved job market before proceeding with the cut back in the monthly $85 billion stimulus program .

However, the minutes released also showed the policy makers are still discussing and contemplating whether to end the bond-buying program by the end of 2013.

The minutes stated “many members indicated that further improvement in the outlook for the labor market would be required before it would be appropriate to slow the pace of asset purchases.”

Federal Reserve Chairman Ben S. Bernanke continued by highlighting the labor market is weaker than expected as the current unemployment rate is at 7.6%. The Fed Chief also highlighted the US dollar dropped 0.7% against the euro.

The Fed’s purchase of its monthly  $85 billion in mortgage bonds and Treasuries , have kept the interest rate low,  persuading people to purchase more properties to boost the economic growth .

Stocks rose as minutes from the Federal Reserve meeting were released, as the Standard & Poor’s 500 Index advanced 0.8 % to 1,661.40.

“It may well be sometime after we hit 6.5 percent before rates reach any significant level, so again, the overall message is accommodation. There is some prospective, gradual and possible change in the mix of instruments, but that shouldn’t be confused with the overall thrust of policy which is highly accommodative,” Bernanke stated in the minutes.

The post Fed hints no instant end to QE stimulus appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By HY Markets Forex Blog

Europe shares  fell  on Wednesday  as  the Standard & Poor’s lowered Italy’s rating  to BBB’ , because of the predicted weakening of the economic prospects .

The EuroStoxx 50 dropped 0.27% to 2,657.00, while the French CAC 40 lost 0.16% to 3,844.60. The UK FTSE 100 gained 0.10% to 6,519.30, while in Germany the DAX index fell 0.19% to 8,042.50.

With predictions of the Italian economy heading towards another quarter of high unemployment and contraction, the Prime Minister Enrico Letta suspended a property tax payment.

“The rating action reflects our view of a further worsening of Italy’s economic prospects coming on top of a decade of real growth averaging minus 0.04 percent,” S&P said. “The low growth stems in large part from rigidities in Italy’s labor and product markets.”

Italy’s Gross Domestic Product (GDP) is predicted to edge down from its previous estimated fall of 1.4% to 1.9%, according to S&P.

Meanwhile, the International Monetary Fund (IMF) lowered its prediction for the global growth from 3.3% to 3.1, and changed its outlook for Europe prediction of 0.4% to 0.6%, according to reports released.

In Germany, the Consumer prices rose by 0.1% in June, with continuous rising every month since May when it rose 0.4%. Annually the prices increased by 1.8%, according to reports released by the Federal Statistical Office.

In France, the industrial production fell by 0.4% month-to-month since May, compared to previous month’s growth of 2.2%, according to the National Institute for Statistics and Economic Studies.

With Italy still struggling with the economy, Italy’s industrial production rose by 0.1% in May, according to data from the National Institute for Statistics.

Italy is expected to auction the treasury bills with a target of 9.5 billion euros.

The post Europe Shares falls; Italy’s credit rating lowers appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By MoneyMorning.com.au

Yet again the markets are zooming around on the back of comments from our fearless leader Ben Bernanke.

First, the release of the minutes from the last FOMC meeting managed to confuse just about everyone with their opaqueness. Some people think this, others think that, so all up we might do this or that at some point in the future.

As a result, the stock market gyrated up and down and closed scratching its head.

But then Ben got on the pulpit and started to wax lyrical about the difference between tapering Quantitative Easing and raising interest rates. Bernanke said that even if unemployment did fall to his target of 6.5% it wouldn’t definitely mean that he would start raising rates from that point.

The stock market was closed at this stage, so the futures markets took off like a rocket on the back of these dovish comments from the king. But I have to ask. Why? What has changed? 

Selling Pressure is Brewing for the Stock Market

The answer is nothing.

Basically Bernanke wanted everyone to know that it was going to be a long time until he raises interest rates.

The minutes from the FOMC are hinting loud and clear that tapering is on the table and it’s coming soon.

If they do start to taper then bond yields are going to continue rising. They have already spiked by over 1% in the last few months. That’s a huge move in the yield curve and it’s not going to stop because Bernanke has promised not to raise interest rates for the foreseeable future. 

Did anyone think he could possibly start raising rates soon?

The other interesting thing to note is that the stock market has been rallying for months on the back of falling interest rates. The dividend yield on stocks was looking tempting when 10 year US Treasury bonds were yielding only 1.6%.

With bonds now yielding about 2.6%, a 2% dividend yield on stocks isn’t looking so great. If tapering does get started and yields continue to rise then the stock market should come under selling pressure.

But for now everyone is cheering his words. Not actions, not fundamentals – but words.

What a world we live in.

So how far can this market rally go, and when should we start to look for opportunities to get short for the next leg down?

ASX 200 Daily Chart

Click to enlarge

I’m going to give you a detailed technical view of the ASX 200 and where I see it going from here.

I realise how confusing it can be reading a technical analysis view of a chart because there are so many moving parts and squiggly lines rushing all over the place. I will be as clear as possible in my analysis.

I am using the terms L1, L2 and H1, H2 to describe the lower (L1,L2) and upper (H1,H2) bounds of the ranges that I make all of my calculations from.

The POC1 and POC2 terms relate to the Point of Control of each distribution in the chart, which is the midpoint between L1-H1 and L2-H2.

On the 16th of May (the day after the high was reached), I wrote to you and said:

‘Our stock market has traded in a pretty tight range for years. The gravity of the point of control at 4,700 is very strong and I would expect to see us revisiting that level at some point.

‘The first thing I need to see is a close under the 15th March high of 5,163. From there we should see a retest of 5,025-5,040. If the market can’t hold above that level then we’ll be re-entering the major long term range and we could expect to see a pretty quick trip to 4,700.’

The sell-off in late May and early June was certainly quick and we saw the retest of 4700 as expected.

From there we went into a sideways distribution (L2-H2), which has been shaking both the bulls and the bears out of their positions.

The interesting thing to note is that prices found support in an area which was 0.618 (Fibonacci level) outside of the upper range.

The Trap for Share Traders

The way to think about that is that prices are still under the gravitational influence of the POC1 even though prices have broken below L1. 

Most share traders would think that prices have ‘broken out’ of that upper range when prices fell below L1. 

The fact is that even though prices may be below the extremity of the range they can easily reverse course and re-enter the range. That’s why I call them ‘distributions’ and not ‘ranges’. A range sounds concrete, whereas a distribution is more fluid.

Distributions form because traders place ‘stop losses’ outside the extremity of the range, so the thing that will stuff up the most people is a ‘widening distribution’ that shakes everyone out of their position before the market is ready to have its real move.

Before the real move occurs though, you will often see a return to what I call the Point of Control. It acts as support or resistance, and then prices will shoot higher or lower out of the distribution and start trending again.

The rally from the lows at 4632 could possibly be a move such as this. The POC1 sits at approximately 5025, so we may see the ASX 200 rally all the way to that level. That is the upper bound of my ‘sell zone’ in the chart.

The lower bound of my sell zone is the bottom of the L1-H1 range at 4883. We have already busted above that level in the last few days. 

So I am currently on red alert looking for potential selling opportunities.

The line at 5100 which is the ‘possible extent of rally’ in the chart, is the 76.4% retracement of the whole sell off from 5250. 

Not many people look at the 76.4% retracement zone, but it is well worth keeping an eye on because the market will often reverse in that zone.

So I’ll let the market cheer Bernanke’s empty words, but I’ve got my eyes on some concrete levels where I believe we will find resistance.  On the first signs of a reversal I will be jumping on board some short positions to ride the next leg down.

Murray Dawes+
Editor, Slipstream Trader

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