InvestMacro Forex News

By www.CentralBankNews.info     Serbia’s central bank cut its policy rate by a further 25 basis points to 11.0 percent as it expects inflationary pressures to continue to ease in coming months but it cautioned that its future policy stance would depend on government measures to cut deficits and reform public finance.
    The National Bank of Serbia (NBS), which cut its rate by 50 basis points last month due to a drop in inflationary pressure, said May inflation data should confirm its view of declining inflation, with the annual inflation rate returning to the central bank’s target range of 4.0 percent, plus/minus 1.5 percentage points, by October.
    In April, Serbia’s inflation rate rose slightly to 11.4 percent from 11.2 percent. Last month the central banks said it expected inflation to return to its target range in the fourth quarter of this year.
    Most economists had expected the central bank to keep its rate steady in light of a depreciation in the dinar since mid-May.
    The NBS, which intervened last week to slow the fall in the dinar, said its executive board “attributed current developments in the foreign exchange market to trends in international financial markets and great investor risk aversion.”
    Today the dinar traded around 114 to the euro, down 1.6 percent from the start of the year, but up from a spike to 118 late last month.

    The central bank said it expected the decline in inflation to be sustained by its recent policy measures, lower food prices in the new agricultural season and “additional fiscal consolidation measures that will eliminate uncertainty with regard to the future economic policy.”
    Economists have attributed to pressure on the dinar to a report from the International Monetary Fund that said the government deficit would exceed 8 percent of Gross Domestic Product, more than double the 3.6 percent target, unless policies change.
    The IMF also said following its mission to Serbia that the central bank had limited room to ease policy until inflation slows and recommended that the government cut spending by at least two percentage points of GDP.
    Last month the central bank cut its 2013 growth forecast to 2.0 percent from a previous 2.5 percent.
    In the first quarter, the economy expanded by an annual 1.9 percent, sharply up from a contraction of 2.0 percent in the fourth quarter.
    Beginning in June 2012, the Serbian central bank raised rates eight times in a row in response to rising inflation – it high a 2012 high of 12.9 percent in October – but then paused in March and April this year before cutting in May.

    www.CentralBankNews.info

By www.CentralBankNews.info     Uganda’s central bank cut its central bank rate (CBR) by 100 basis points to 11.0 percent to stimulate domestic demand while the outlook for inflation improves and the forecast is cut.
    It is the Bank of Uganda’s (BOU) first rate cut since December after cuts totaling 1,100 basis points in 2012.
    Uganda’s headline inflation rate in May rose slightly to an annual rate of 3.6 percent from 3.4 percent in April but core inflation eased to 5.6 percent from 5.8 percent, “an indication that inflationary pressures have remained muted,” the BoU said.
    The BoU now forecasts that core inflation will stabilise around the bank’s 5.0 percent medium-term inflation target over the next 12 months, with the balance of risks now neutral. In April the BOU forecast core inflation of 1-2 percentage points above the target over the next few months before easing toward the target later this year.
    The change in forecast is mainly due to weaker-than-expected household consumption, which is likely to dampen demand side pressures on consumer prices, and a higher-than-expected appreciation of the the exchange rate, which dampens prices of imported consumer goods.

    Economic growth in the current 2012/13 fiscal year, which ends June 30, is now forecast to be higher than in 2011/12, driven by a recovery in demand for exports and investments.
    The BOU said that in 2013/14 it was unlikely that net export demand would continue to provide the primary source of growth so domestic demand will have to contribute more and household consumption will have to rebound. Investment is also expected to rise, driven by both the public and private sectors.
    Last month the BOU projected Gross Domestic Product growth of 5.3 percent in 2012/13 and 6-7 percent in 2013/14.
    Private sector credit demand remains constrained by high bank lending rates and structural factors and the BOU said strong credit growth will be important in boosting demand, saying its rate cut should “also be a signal for commercial banks to reduce their lending rates further in order to boost demand for bank credit.”
    The BOU said it would maintain its band around the central bank rate at plus/minus 2 percentage points and the margin on the rediscount rate at 3 percentage points.
    In 2011 the BOU raised rates to a high of 23.0 percent in response to a rise in inflation to an all-time high of 30.5 percent in October 2011. Inflation then started to drop and hit a two-year low of 3.5 percent in February this year as the central bank slashed rates last year.

        www.CentralBankNews.info

By The Sizemore Letter

What now?

This is the question on every income investor’s mind.  After a five-month start to the year in which income-focused investments went nearly parabolic, concerns that the Fed might—just might—start winding down its quantitative easing sent the share prices of REITs, MLPs, utilities, and other popular investments into a tailspin.

The JP Morgan Alerian MLP ETN ($AMJ) and the Vanguard REIT ETF ($VNQ)—both holdings in the Strategic Growth Allocation—dropped by 6% and 10%, respectively, from their May 21 highs through June 4, at time of writing.

Some of Sizemore Capital’s favorite income securities held in the Dividend Growth Portfolio—such as Realty Income ($O), National Retail Properties ($NNN), and Martin Midstream ($MMLP) were down by 20%, 17%, and 10%, respectively.

After dramatic reversals like these, it’s easy to panic.  But let’s put them in perspective.  Even after the May bloodletting, all of these securities are positive for the year, and after including dividends all are up by over 10%.  The price correction we saw was simply a shakeout.  The hot money had run the prices of these securities up, and when the hot money abandoned them they simply wiped away the speculative froth.

Interestingly, REITs and utilities took a harder hit than MLPs.  Though I have no hard evidence to support this, my theory as to why this happened was that MLPs tend to have greater ownership by individual income investors and tend to be less affected by the hot money’s changing moods.

So, back to the original question, what now?  In an environment of rising rates, does a dividend growth strategy still make sense?

It does, but only if you do it right.  Sizemore Capital has very little exposure to bonds and no exposure at all to slow-growth income investments such as utilities.  In this environment—and in any environment of non-zero inflation—future dividend growth is more important than the current payout.

This is why we are overweight in the sectors with what we consider the right mix of decent current income and excellent potential growth in income—sectors such as retail REITs, mid-stream MLPs, and “Big Tech” companies such as Microsoft ($MSFT), Intel ($INTC), and Cisco Systems ($CSCO).

And to be clear, I am by no means certain that the rise in interest rates will go much higher than it already has in the near term.  As the experience of Japan proved, market yields can stay low for much longer than anyone expects during a prolonged period of debt deflation and aging demographics.

But to the extent that rates do rise, you want to own assets that stand to benefit from an improving economy and that have room to raise their cash payouts at a rate that will keep pace with rising market yields.  On this count, midstream pipeline MLPs and most categories of REITs easily qualify.  Rising interest rates raise their borrowing costs and cut growth prospects at the margin.  And because these securities have become bond substitutes of late, falling bond prices (i.e. rising yields) mean falling stock prices.

But given that the 10-year Treasury still only yields 2.1%, a 4%+ dividend yield an a high-quality real estate and infrastructure portfolio still makes them vastly superior investments for income investors.  The dividend payout can be expected to grow over time with only modest risk of loss, whereas Treasuries are only “risk free” if you ignore inflation.

We may see more turbulence in dividend-focused investments as institutional investors rotate into more aggressive sectors.  I’m ok with that, and I intend to use any further weakness as a buying opportunity.

Disclosures: All securities mentioned are held in Sizemore Capital portfolios. 

Charles Sizemore is the manager of the Strategic Growth Allocation, the Dividend Growth Portfolio and two other models on Covestor.

SUBSCRIBE to Sizemore Insights via e-mail today.

By www.CentralBankNews.info

By WallStreetDaily.com

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Wall Street just saw its first two-day selloff in a month, but the weakness was nowhere near as intense as it was in Asia, where stocks in Japan tumbled 7% and Singapore suffered its biggest loss in a year.

Despite all the confusion about whether the Federal Reserve is or isn’t close to curtailing its stimulus program, U.S. investors once again showed the willingness to buy off the lows, with stocks finishing with only modest declines.

Wall Street is nothing short of resilient, says Jason Weisberg, Managing Director of Seaport Securities.

“This market has absorbed every negative headline that’s been thrown at it,” said Weisberg. “Whether its geopolitical, economic, corporate earnings, domestic politics, terrorism, the threat of a nuclear strike by North Korea, every negative headline that this market could possibly see has been thrown at it and it has shrugged every headline off that’s been negative time and time again.”

St. Louis Fed President James Bullard may have helped. Speaking in London, he said he doesn’t think the Fed is “that close” to withdrawing stimulus.

Hewlett-Packard (HPQ) was upgraded at Jefferies, and nearly a dozen Wall Street firms raised price targets on the stock one day after the tech company raised its outlook for the year. HPQ shares surged 17% to their best close in just over a year.

After the bell, a net loss at music streaming company Pandora (P) was in line with forecasts, and the revenue outlook for the current quarter is above forecasts. As for its customer base – user growth was 35% above year-ago levels.

On the economic calendar: new home sales. Purchases jumped 2.3% in April with the median price of a new home surging to a record high above $271,000.

Meanwhile, applications for jobless benefits reversed a prior gain. The data coincides with the week the Labor Department takes the survey used for the monthly jobs report.

Not all the data was upbeat, though. Manufacturing activity hit a preliminary seven-month low this month, according to financial data firm Markit.

In European action, stocks were down 2% across the board. Reasons cited: fear of a pullback in stimulus by the Federal Reserve, and weak manufacturing data out of China.

Article By WallStreetDaily.com

Original Article: U.S. Market Shrugs Off Setbacks

By www.CentralBankNews.info     The Bank of England (BOE) maintained its bank rate at 0.5 percent and its target for asset purchases at 375 billion pounds, as expected, in the final meeting of its retiring governor, Mervyn King.
    King, the last remaining member of the BOE’s policy-setting Monetary Policy Committee since the bank was granted operational independence in 1997, will be handing over the reins to Mark Carney of the Bank of Canada on July 1.
    King, along with two other members, has voted to expand the BOE’s asset purchase program by 25 billion pounds in the previous four meetings by the MPC but has failed to convince a majority of the nine-member committee.
    Minutes of today’s MPC meeting will be available on June 19.
    The BOE has held rates steady since March 2009 when it also started its asset purchase program, known as quantitative easing. The last time the BOE expanded its target for asset purchases was in July 2012 when it was raised by 50 billion pounds.
    Britain’s economy has recently shown signs of improvement with Gross Domestic Product rising by 0.3 percent in the first quarter from a quarterly contraction of 0.3 percent in the fourth – averting the third recession since the global financial crises – for annual growth of 0.6 percent, the strongest growth rate in five quarters.
    Last month King said a recovery of the U.K. economy was “in sight” and the BOE expects a gradual strengthening of economic growth.
    The bank is continuing with its Funding for Lending Scheme (FLS), together with the U.K. Treasury, and during first quarter 13 banks drew down 2.6 billion in funds to lend at favourable terms to households and businesses, raising the total amount of funds drawn to 16.5 billion, covering 80 percent of the stock of lending to the U.K. economy.
    Inflation in Britain, which has remained “stubbornly above” the BOE’s 2.0 percent target since December 2009, eased to 2.4 percent in April, breaking six consecutive months with inflation rates of 2.7 percent and above.
    The BOE expects inflation to remain above its target until the third quarter of 2015 due to higher regulated and administered prices and the impact of a depreciation of sterling.
    Today pound sterling was trading at 1.54 to the U.S. dollar, above a 2-1/2 year low of 1.4830 in mid-March, but down 5 percent from 1.62 at the start of the year.

    www.CentralBankNews.info

Source: Brian Sylvester of The Metals Report  (6/4/13)

Much has been said of the massive scope of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Lisa Reisman, managing editor of MetalMiner.com, sees opportunity in the controversial provisions governing conflict minerals. In this interview with The Metals Report, Reisman discusses how companies are dealing with the new requirements and names companies closest to production in the crucial tantalum, tungsten and tin space.

The Metals Report: Lisa, how will the Dodd-Frank Wall Street Reform and Consumer Protection Act affect industrial users of metals like tantalum, tin and tungsten?

Lara Reisman: The Securities and Exchange Commission (SEC) adopted a rule mandated by the Dodd-Frank Act that requires companies to publicly disclose if they use “conflict minerals” that originated in the Democratic Republic of Congo (DRC) or a neighboring region.

It’s a very broad-brush piece of legislation impacting about 6,000 manufacturers and tens of thousands of their suppliers.

TMR: I understand it gets really complicated on a number of levels. Certain metals mined in certain parts of the DRC are OK, but not in other parts of the DRC. Questions have arisen as to whether the SEC is the right agency to be implementing this sort of restriction and legislation.

LR: You’re correct: It is not banning these minerals from all of the DRC but from within certain regions. The problem with a rule like that is that its implementation is typically more of a kneejerk reaction.

We’ve already seen companies saying that they are not sourcing any materials at all from the DRC—period—even those that are coming from conflict-free sources within the DRC and neighboring regions. Many manufacturers are trying to make sure that they are completely disassociated with the entire area.

Hopefully, companies will begin implementing conflict-mineral compliance programs as an alternative. But there’s even some controversy about what kind of report needs to be submitted to the SEC.

Some legal challenges have been mounted over if the SEC even has the right to regulate this kind of thing because it’s really about human rights as opposed to shareholder value.

TMR: It seems as if this legislation has enough holes to drive a truck through.

LR: I’d agree. A lot of questions came up before the rule was even published formally. Steel mills that basically take scrap were wondering how they are ever going to find out whether a washing machine manufactured in 1955 has conflict minerals in it. That is impossible to figure out. Some of the issues have bordered on the absurd.

TMR: When is that compliance deadline?

LR: Publicly traded companies have to file the first report in May 2014. Despite the legal challenge to the law, most companies are preparing for the worst, even though it’s still possible for the whole regulation to be struck down.

TMR: Companies can submit a report saying they’re not sure where its supply came from— that they are pretty sure it’s conflict free, but not 100% certain—and they get a pass. Is there a chance that companies see this as an opportunity to stockpile to guard against supply shortages of these metals that are crucial to their businesses?

LR: No, because the clock started Jan. 1. Stockpiling would have had to have been completed by the end of last year in order for those materials to be allowed in a supply chain without knowledge of where they came from.

But is it happening? I think companies have stockpiled. Those companies are not the publicly traded original equipment manufacturers here in the U.S., but the suppliers in China and other places. They buy the conflict material, process it and shove it in the backyard and let it sit there. Then they mix it with their “good” material, and say, “Gee, I don’t know if it has conflict materials or not. It’s all mixed together.”

How can you expect the publicly traded U.S. company to respond to that? If you’re a tungsten buyer in the U.S. and your powder came from China, it probably does contain conflict minerals. You’re not going to know for sure, and you’re not going to be clear on that. Regardless, by next year, that little gimmick is going to have to be over.

TMR: MetalMiner.com and SpendMatters.com recently held a conference to make sense of where U.S. manufacturing stood on conflict-minerals compliance. What were some things you learned during those meetings?

LR: I learned that the more questions you ask, the fewer answers we seem to have. I say that jokingly, but the real issue is that nobody has tested this. Nobody has to file anything until May 2014.

A lot of basic questions still remain. For example, what counts as manufacturing?

“If you’re a tungsten buyer in the U.S. and your powder came from China, it probably contains conflict minerals.”

A friend, who’s the assistant chief legal counsel at a well-known media company, said to me, “Ping me the second that rule comes out and let me know what the findings are.” I looked at her, and I thought, “Are you crazy? Why do you care about it?” But the company has merchandising that it contract manufactures—little electronic devices, promotional items that have its brand and logo. It feels that it could be impacted by the rule. Companies that you never would have thought would be impacted are impacted.

This could also be a very large burden for smaller, privately held companies that supply publicly traded companies, which will be demanding they fill out extensive and comprehensive forms, tools and templates. They don’t have compliance managers on staff. It is a big burden for small and middle-market companies to comply with their customers’ requests, but they’re fearful of losing business if they don’t.

TMR: This legislation wouldn’t have happened unless somebody was making money. Who is making money here?

LR: That’s a great question. I would say the accounting firms are going to make money here. Software companies that have suites of products geared toward a company’s sourcing, procurement and supplier relationship management stand to gain.

Hopefully, the people in the DRC ultimately benefit from this. However, a lot of people have lost their livelihood as many artisanal mines were shut down due to a kneejerk drop in demand.

TMR: What percentage of American industrial manufacturers that are using conflict metals and minerals are ready to comply with the legislation governing their uses?

LR: A lot of companies have no idea whether or not they’re using conflict minerals. Most manufacturing supply chains are very long, in some cases easily 10 suppliers deep.

Take Apple assembling its iPhone—there are hundreds of components, parts, subassemblies and assemblies that make up that product.

Even Starbucks is probably impacted by this. You might scratch your head, but it has a new coffee machine that has an LCD display. It is not the contract manufacturer, but it designed the product so it is responsible for complying with the law. Does it know whether or not its LCD assembly has conflict minerals? I don’t think a lot of companies know whether or not they actually have conflict metals.

TMR: Do investors realize what this law could mean to some publicly traded companies?

LR: It’s a huge unknown at this point. Do companies that source ethically, use corporate social responsibility programs and have sustainability and green initiatives get rewarded by the stock price? I don’t know the answer to that.

TMR: Could the regulation spawn more offtake or end-user agreements with resource companies that have viable deposits of these commodities in desirable jurisdictions?

“Invest in mining companies that are closest to production. That’s still a very viable play.”

LR: Definitely. Companies are not looking to skirt the law. They want to try to comply with it. To do that, they are going to be forced to look at alternative sources to develop the supply chain. It’s a good opportunity for junior mining companies.

To some extent, the markets already work like that. Tantalum is a great example of a metal where companies basically buy forward. They’re not buying on the spot market. They’re buying on contracts. They’re looking to shore up and lock-in long-term supply contracts. We will see more, not less, of that.

The other question is: Will this legislation effectively choke off certain sources of supply, which could trigger shortages? There will be opportunity on that front for tin, tungsten and tantalum.

TMR: Can you tell us about the market right now for tantalum, tungsten and tin?

LR: The U.S. government put out a Strategic Minerals Report recently that identified those three metals as critical and potentially problematic from a supply standpoint.

Tantalum is not necessarily in short supply right now, but the price is well supported. It’s behaving differently than other metals, like steel, aluminum, copper and others that have fallen in price since the start of the year.

There are elements of the tantalum supply chains that are in short supply—a lot of domestic or non-DRC is available. In 2012, the U.S. imported $314 million ($314M) worth of tantalum. Of that, $108M came from China, $51.7M came from Kazakhstan and $43M came from Germany.

Tungsten looks a bit like tantalum except the majority of its concentration and processing is in China. From a conflict minerals standpoint, if your Chinese supplier tells you that the ore is conflict-free, can you believe it? Most manufacturers would probably say no.

The U.S. has only a small handful of producers, including Kennametal Inc. (KMT:NYSE), Allegheny Technologies Inc. (ATI:NYSE), a division within General Electric Co. (GE:NYSE) and privately held Buffalo Tungsten Inc., among a few others.

Tin has a lot of production in Malaysia and Indonesia, providing other supply options. Whether those are friendly sourcing locales where everybody wants to set up joint ventures is a different issue.

TMR: What are some examples of development-stage tantalum, tungsten and tin projects in conflict-free jurisdictions that manufacturers might be interested in starting relationships with?

LR: Commerce Resources Corp. (CCE:TSX.V; D7H:FSE; CMRZF:OTCQX) is an obvious one. It is extremely close to production this year or next. It is probably at the point where it is doing offtake agreements.

TMR: When is the earliest that its Blue River tantalum and niobium project in British Columbia, Canada, could be in production?

LR: Commerce is targeting 2014. It made the shift from being institutionally focused to being more end-user focused. It is trying to better understand who the big players are in the North American market and tying those relationships together. It is more visible to end users. It used to only be at rare earth metal conferences, but now I’m seeing it at places where end users of tantalum are.

There are other projects as well: one in Egypt that’s quite substantial, Critical Elements Corp. (CRE:TSX.V) in Canada and NOVENTa (NVTA:AIM). Many of these companies are far from actually becoming operational, but Commerce and some of these others should make it to market.

Meanwhile, Buffalo Tungsten is quietly making its way. It’s a family-owned company that’s at least 30 years old, but who has heard of it? However, it is trying to make a splash in the tungsten industry, investing heavily in new equipment, trying to get some processing capability and making substantial investments.

TMR: NOVENTa is an interesting company because it’s producing tantalum in Mozambique. Is that considered a conflict area?

LR: No, it’s not. That’s a really interesting opportunity. We are going to see alternative sources come from other countries within Africa. NOVENTa is completely viable.

TMR: And it is already in production.

LR: Exactly. If you were to go sniffing around NOVENTa’s website, I’m sure you’d find that it has gone through quite a rigorous conflict-free smelter program. I’d be shocked if it hadn’t.

TMR: About 80% of tungsten comes from China. Are there any smaller companies with tungsten deposits that are on your radar?

LR: There are several. However, no tungsten is mined in the U.S. Some of the smaller producers are EMC Metals Corp. (EMC:TSX), Buffalo Tungsten and Elmet Technologies Inc. The larger players are Global Tungsten & Powders Corp. , General Electric, Kennametal, and Allegheny Technologies. For Allegheny, tungsten is a much smaller operation. The U.S. does not mine it. It’s the actual powder form. To be sure, we have a hole further up in the chain.

TMR: And tin?

LR: There is little to no tin production in the U.S. There are processors, but we don’t mine tin in the U.S. There’s Cookson Electronics Assembly Materials. The big 800-pound gorilla, Malaysia Smelting Corp. Berhad (MSGCF:OTC), is in Malaysia.

Tin is used in electronics, but also in steel production. Some forms of copper and bronze require tin as well. There is plenty of tin in the world. All you need to do is look at the London Metal Exchange price to see that that’s true.

TMR: Is demand for tin weak?

LR: It’s pretty weak right now. It’s still a concern, though, because the U.S. doesn’t have any tin mining. We are dependent on others, and conflict minerals compliance complicates the situation. It just adds another layer of pressure to that. I don’t think tin is as worrisome as tantalum or tungsten.

TMR: What’s your advice for investors who may want to gain some exposure to small- and mid-cap companies that are developing tantalum, tungsten or tin assets or are already in production?

LR: Invest in those mining companies that are closest to production. That’s still a very viable play. I am definitely bullish on the “T” metals—tantalum, tungsten and tin. Unfortunately, a lot of the tungsten players are privately held companies. There is no exchange-traded fund (ETF) or stockpile-type fund that people can invest in.

TMR: Do you think that that could ever happen—a tungsten or tantalum ETF—or are these just too small?

LR: They’re too small, and the industry is too concentrated. You’d have to get the big industry players to agree to do it to make it viable. There’s an opportunity to stockpile. Whether or not you can create a fund around it, I’m not so sure. It’s possible with tin because the price per unit of measure is expensive, relatively speaking. Tin has the most opportunity.

TMR: Thanks for your time today.

LR: Certainly.

Lisa Reisman is a third-generation metals enthusiast who began trading semi-finished aluminum metals in 1994, after earning her master’s degree in public administration at New York University. Reisman eventually went on to the supply-chain management practices of Arthur Andersen Business Consulting, where she earned the nickname “Shredder.” She then went on to Deloitte Consulting. She has worked with a range of industrial manufacturing firms, including Caterpillar, Motorola, Johnson Controls, Sanford Office Products, Hamilton Beach, Proctor-Silex and others. Reisman has primarily helped firms remove costs from their global supply chains. In 2004, the CEO of a Tier-1 automotive company challenged her to save his company money, so Reisman formed Aptium Global with partner Stuart Burns. The rest is history.

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

DISCLOSURE:
1) Brian Sylvester conducted this interview for The Metals Report and provides services to The Metals 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 Metals Report: Commerce Resources Corp. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.
3) Lisa Reisman: I or my family own shares of the following companies mentioned in this interview: None. I personally or my family am paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent.
5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.
6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.

London Gold Market Report
from Adrian Ash
BullionVault
Thurs 6 June, 08:25 EST

The WHOLESALE price of gold flipped yet again either side of $1400 on Thursday in what dealers called “choppy” trade ahead of tomorrow’s much-anticipated US jobs data for May.

Asian stock markets followed Wall Street’s overnight loss to finish lower, but European equities rallied as major government bonds held flat.

Commodities slipped even as the Dollar fell to new 4-week lows after the Bank of England and the European Central Bank both left monetary policy unchanged at their June meetings.

Silver ticked higher to $22.65 per ounce.

“On any downside below $1400 per ounce,” said Standard Bank analysts in a note, “we still feel that physical demand should once again return and thereby limit moves lower.

“Since April this support from the physical market has prevented gold from pushing significantly below $1360 per ounce.”

Officials in India – the world’s No.1 – today urged banks to deter consumer demand for gold after raising import duty to 8% on Wednesday.

In China – the world’s second-largest gold buying nation – “The ongoing Shanghai arbitrage is the main attraction for demand,” says a trader in Sydney, quoted by Reuters.

Prices of Shanghai gold futures held some $20 about international benchmarks on Thursday. China’s markets will be closed for the first three days of next week for the Dragon Boat Festival.

In the United States – world No.3 for gold jewelry and investment purchases – demand for American Eagle gold coins remains “unprecedented” according to US Mint acting director Richard Peterson.

“We are buying all the coin blanks [which suppliers] can make.”

Anti-government protests meanwhile continued in Turkey, the fourth-largest market for gold in 2012.

“While [India’s] duty hike may make bullion more expensive,” writes HSBC analyst James Steel, “it is important to note that gold prices in local currency terms are currently lower than at any time in the last year”

Prices to buy gold in Indian Rupees “are still at attractive levels,” says Steel.

A day after imposing new blocks on legal gold imports, the Indian government yesterday hiked bullion import duty from 6% to 8% by value – an 8-fold increase from the start of 2012, when New Delhi began blaming gold jewelry and investment purchases for India’s large balance of trade deficit.

“This shows that the Indian government is very serious about reducing gold imports,” says one bullion dealer.

While the immediate impact will be higher prices for Indian households, “The nature of demand at the retail level is such that restricting supply will not be effective in the long run,” says India’s managing director at market-development organization the World Gold Council, P.R.Somasundaram.

“[It’s] likely to lead to…demand being met increasingly through unauthorised channels, which will not be positive for either the economy or for society.”

Also known as the “parallel market”, smuggling may account for 20% or more of India’s total imports in 2013, according to one estimate quoted by the Economic Times.

Called “wasteful expenditure” by one senior official this morning, household gold demand should be further deterred by advising customers against buying gold coins, finance minister P.Chidambaram told the same banking conference in Mumbai.

The new import duty should be positive for the Indian Rupee, albeit short term, agree analysts at Societe Generale, Bank of America-Merrill Lynch and Kotak Mahindra Bank.

Thursday morning however the Rupee fell, down to 57 per US Dollar for the first time in 12 months and very near its all-time record low.

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.

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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 Profit Confidential

Change in the railroad business is not something you expect, but it is happening with Bakken oil.

The Association of American Railroads (AAR) is the industry group for North American railroad stocks, and while all trade groups are to be taken with a grain of salt, you can garner insight on the U.S. economy by reading the AAR’s data.

Even if you aren’t interested in railroad stocks, business conditions for railroads are still very relevant. They remain the backbone of North America and the industrial economy.

According to the AAR, U.S. Class I railroad stocks originated a record 97,135 carloads of crude oil in the first quarter of 2013. This represents a gain of 20% from 81,122 carloads in the fourth quarter of 2012 and a substantial increase of 166% from 36,544 carloads originated in the first quarter of 2012.

While the shipment of oil—Bakken oil, in particular—is the source of renewed growth for railroad stocks, the numbers also reveal a flatness that coincides with the rest of the U.S. economy.

The AAR reported that in the first 21 weeks of 2013, U.S. railroad stocks reported volume of 5.8 million total carloads, down 1.8% from the comparable period in 2012. Total U.S. traffic for the first 21 weeks of 2013 was 10.8 million carloads and intermodal units, up 0.8% comparatively.

For the same period, Canadian railroads reported volume of 1.6 million carloads, up 2.3% comparatively, and 1.1 million intermodal units, up 4.7%.

Volume on Mexican railroads came in at 315,377 carloads, up nine percent, with 192,060 intermodal units, down 0.3% from last year.

Railroad stocks have been on a tear lately and are only now taking a little bit of a break. Most railroad companies are right close to their stock market highs.

The AAR, as a trade group, is promoting rail transportation for oil, including Bakken oil, and is citing a number of statistics suggesting that transporting Bakken oil by rail is safer and offers greater reliability over pipelines.

According to the group, total railroad oil spills are less than one percent of total pipeline spills. The group estimates that pipelines spill three-times more oil than railroads.

Weaker shipments of coal, due to the increasing use of natural gas for power plants, has not dented the enthusiasm that institutional investors have to invest in railroad stocks so far. (See “Keeping It Rolling—U.S. Energy Boom Good News for Railroad Stocks.”)

Bill Gates likes railroad stocks. His private investment firm, Cascade Investment, LLC, is now the single largest shareholder in Canadian National Railway Company (NYSE/CNI; TSX/CNR), now owning about 10% of the company. With the addition of the Bill & Melinda Gates Foundation Trust, Gates owns 12% of Canadian National (CN).

Railroad stocks have proven over time to be excellent stock market investments, but they have experienced long periods of nonperformance.

Railroad stocks are very sensitive to general economic conditions and changing preferences among investors. If technology stocks are roaring, who wants to own real railroad stocks?

In my view, there definitely is room in a long-term equity market portfolio for one railroad company.

The railroad sector is an old economy industry that continues to pay.

Article by profitconfidential.com

By Profit Confidential

The battle is on in the online streaming of videos and other shows, according to my stock analysis.

Yet the main combatants include not only incumbent Netflix, Inc. (NASDAQ/NFLX) but also upstart Amazon.com, Inc. (NASDAQ/AMZN), which in two short years is likely causing some stir at Netflix’s corporate headquarters due to its own video streaming service.

If I was Netflix CEO Reed Hastings, I would be more than worried about the aggressive push of Amazon.com into the video streaming market, based on my stock analysis.

No longer is Amazon.com merely a seller of books and related items, as the company is looking at expanding its business line. My stock analysis suggests this strategy makes a lot of sense, considering that Amazon.com has a significant membership base to draw business from. This is the very real reason why Facebook, Inc. (NASDAQ/FB) needs to monetize its more than one billion users and make money, as my stock analysis indicates. (Read “Facebook Does an About-Face: Set to Move Higher?”)

There is speculation that Amazon.com may have paid as much as $200 million to Viacom Inc. (NASDAQ/VIA) for the rights to show hundreds of shows on its “Amazon Prime Instant Video” streaming service, including those from Nickelodeon, MTV Comedy Central, and others. The move comes after a similar licensing deal between Viacom and Netflix expired. For Amazon.com, it appears to be a great move and hits hard at Netflix. (Source: “Amazon and Viacom reach multiyear licensing deal,” Associated Press, Yahoo! Finance web site, June 4, 2013.)

My stock analysis suggests that Amazon.com has clout, and Netflix better be watching.

With a market cap of $122 billion, Amazon.com is much bigger than Netflix, whose market cap pales in comparison at just less than $13.0 billion.

Sometimes, when a bigger company wants something, it will get it, one way or another, based on my stock analysis.

And while Amazon.com may be behind now, according to my stock analysis, the fact the company has access to its huge membership base is a major advantage over Netflix. According to Morningstar analyst R.J. Hottovy, the Amazon Prime service may have over 10 million members. (Source: Thomas, O., “Amazon Has An Estimated 10 Million Members For Its Surprisingly Profitable Prime Club,” Business Insider, March 11, 2013.) Netflix currently has over 36 million users in 40 countries (source: Netflix, Inc., web site, last accessed June 5, 2013), so it’s ahead of Amazon.com for now.

The comparative cost of the two services is close. Netflix charges $8.00 a month, versus $79.00 year-long subscription fee for Amazon.com. But for Amazon.com members, there’s the extra benefits, including unlimited free two-day shipping on goods and free access to the “Kindle Owners’ Lending Library” that has over 300,000 e-books that can be borrowed.

But what it will come down to is not only the movie offering, but the special programming that can be viewed only on one or the other’s service, according to my stock analysis.

The chart below shows the recent outperformance of Netflix (shown in the red candlesticks) over Amazon.com (indicated by the solid green line), based on my technical analysis.

Chart courtesy of www.StockCharts.com

It will be a fierce battle online, but given the size of Amazon.com and its membership base, I would probably give the edge to Amazon.com in the long run, based on my stock analysis.

Article by profitconfidential.com