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Share buybacks increased by 46% in 2011. Has there ever been a more bullish indicator?

There are a number of signals that bode well for price appreciation with individual stocks: growing market share, rising sales, strong earnings growth and improving margins…

But you shouldn’t overlook another excellent indicator: share buybacks.

According to Standard & Poor’s, U.S. public companies spent at least $437 billion last year buying their own shares back. That was 46% more than in 2010.

Is this a good thing? Absolutely…

Regardless of whether you’re an individual or a corporation, sitting on cash isn’t terribly rewarding these days with the average money market fund paying five one-hundredths of 1%. And if the outlook is uncertain, a business owner doesn’t want to commit to building new facilities or taking on employees that aren’t needed. Nor is it necessarily in the best interest of shareholders to distribute this cash in the form of taxable dividends.

So buying back shares often makes good sense. Why? Because when you divide net income into a smaller number of shares outstanding, you get greater growth in earnings per share. And, ultimately, that’s what drives share prices higher.

Of course, stock buybacks boost earnings per share only if they’re larger than stock issuance. Historically, that hasn’t always been the case. (Much executive compensation today comes in the form of stock options that have a dilutive effect on existing shareholders.)

But in recent quarters, the supply of shares outstanding has been shrinking. And, according to analyst Howard Silverblatt at Standard & Poor’s, during the current earnings season, 97 of the S&P 500 enjoyed a boost to earnings per share of at least 4% from repurchases alone.

More Buybacks Ahead

Expect to see more of these buyback announcements in the weeks ahead. Why? Because U.S. corporations are sitting on more than $2 trillion in cash. That’s enough to buy all of ExxonMobil (NYSE: XOM), Microsoft (Nasdaq: MSFT) and IBM (NYSE: IBM).

There are some caveats, however. Some companies announce their intention to buy back shares and then don’t follow through. If business conditions change, interest rates rise, or cash flow decreases, a repurchase program may never get completed.

The other thing to watch is the exercise of stock options, as mentioned above. If a company is only buying back enough shares to offset the dilution that occurs when executives exercise stock options, you won’t see the buyback boost earnings per share.

But, generally speaking, share repurchase programs are a decided positive. And right now, with money cheap and corporate earnings strong, buybacks are occurring at record levels. Attractive companies in the midst of major share buybacks right now include L-3 Communications (NYSE: LLL) and ConocoPhillips (NYSE: COP).

Having Your Cake and Eating it, Too…

Of course, some analysts would rather see corporate executives buying shares with their own money rather than the company’s money. And I don’t disagree…

But sometimes you can have your cake and eat it too. In a recent study, stocks that were subject to repurchases but not insider buying beat other stocks by nearly nine percentage points over four years. But stocks that were the subject of both repurchases and insider buying beat others by a whopping 29 points over four years.

Which companies have enjoyed share buybacks and insider buying recently? Two of them are Boston Scientific (NYSE: BSX) and Bank of New York Mellon (NYSE: BK).

These are the kind of companies that should handily outperform the market in the months ahead.

Good Investing,

Alexander Green

Article by Investment U

London Gold Market Report
from Ben Traynor
BullionVault
Monday 12 March 2012, 09:00 EDT

THE DOLLAR gold price fell back through $1700 an ounce as US markets opened on Monday, continuing its slide begun when Asian markets opened several hours earlier.

The silver price dropped to $33.63 per ounce – a 2.0% fall on last week’s close – while stocks and commodities edged lower and US Treasury bond prices gained.

By Monday lunchtime in London, the gold price was 1.2% below where it closed on Friday.

“Gold’s latest behavior has been rather volatile over the past week,” says the latest commentary from Swiss precious metals refiner MKS, adding that gold last week was “battered by the economic news.”

The gold price “continues to look vulnerable on the charts,” MKS adds.

“Gold looks to have recovered from last week’s technical dip,” says a note out Monday from ANZ Ban, “but remains vulnerable to correction within a broadly positive longer term trend.”

On the gold futures and options market, the net long difference between bullish and bearish contracts held by so-called speculative gold traders dropped 22% in the week ended last Tuesday, the latest figures from the US Commodity Futures Trading Commission show.

“As expected, net speculative length was dealt a severe blow,” says Marc Ground, commodities strategist at Standard Bank.

“This was mostly the liquidation that occurred after market expectations of liquidity growth were undermined by Fed chairman Bernanke as he failed to mention further quantitative easing in his address to US lawmakers the previous week.”

The Federal Reserve Open Market Committee is due to announce its latest monetary policy decision tomorrow, with some in the market wondering whether there will be a third round of quantitative easing.

“If there’s no QE3, then there will be disappointed selling again,” reckons Ronald Leung, director of Hong Kong-based Lee Cheong Gold Dealers.

Over in China, the world’s second-biggest gold consumer in 2011, exports in February fell 23.6% from the previous month – while year-on-year growth slowed to 18.4% – according to figures published Saturday. The fall in exports contributed to a trade deficit of $31.5 billion, “the largest monthly deficit since at least 2000” according to the Wall Street Journal.

“It is still very much necessary that the policymakers in Beijing provide sufficient support for funding for investments in the coming period,” reckons BNP Paribas economist Ken Peng.

During the last three months, the People’s Bank of China has twice cut the reserve requirement ratio for banks, which dictates how much money they have to hold as reserves as a proportion of total assets.

“Theoretically speaking, there is much room for RRR cuts,” PBOC governor Zhou Xiaochuan said Monday.

“But there are restraints, and we are paying particular attention to the possible impact on capital flows, especially in a time of economic globalization.”

Zhou said last week that the Yuan should be allowed to fluctuate in a wider range against other currencies, a move seen by some analysts as a way of encouraging Chinese firms to get used to managing exchange rate risk.

After Saturday’s export data however, the PBOC set the Yuan’s midpoint against the Dollar 0.33% lower on Monday. The move represented the second-biggest one day fall for the Yuan since China set up its foreign exchange market in 1994, with the biggest being the Yuan’s 0.36% fall in August 2010, newswire Reuters reports.

US lawmakers last year proposed a bill that would see tariffs imposed on Chinese imports into the US if China continued what some US politicians have called exchange rate manipulation.

In Japan meantime prime minister Yoshihiko Noda said today that the Yen remains “somewhat overvalued” despite falling around 8% against the Dollar since the start of February.

Japanese authorities intervened in the currency markets several times last year in an attempt to halt the appreciation of the Yen.

Japan’s finance minister Jun Azumi today added that the authorities “will take firm action against excessive and speculative moves” by currency traders.

Here in Europe, the International Swaps and Derivatives Association confirmed Friday evening that the use of collective action clauses by the Greek government to force some investors to go along with a bond swap constitutes a credit event. An auction has been scheduled for March 19 to determine the recovery value of outstanding Greek debt, and thus determine how much credit default swaps should pay out.

Eurozone finance ministers meantime are due to sign off Greece’s €130 billion second bailout when they meet today, enabling Greece to meet maturing bond payments next week. Finance ministers are also expected to discuss Spain, which last week said it will ignore its European Union deficit target for 2012.

Over in the US, the national average price for a gallon of gasoline rose above $3.80 on Monday, up from $3.77 last week and $3.51 a month back, according to motoring organization AAA.

The Organization of the Petroleum Exporting Countries (OPEC) said Friday that it is still exceeding its production target despite a fall in production from sanctions-hit Iran.

The value of all commodity assets under management rebounded in January to $366.8 billion – equivalent to over 2% of US GDP – according to a report by French investment bank Societe Generale.

The report adds that “aggressive monetary policy” should benefit gold and silver prices, news agency Bloomberg reports.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

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.

Source: ForexYard

Towards the close of trading last week wwe saw positive news come out of the U.S. with the announcement from American financial authorities regarding the third straight month of positive job growth. U.S. companies added another 200,000 new jobs to their payrolls as the economic recovery continues to gain steam. As of this morning the greenback was trading at $1.3087 against the euro.

Read more forex news on our forex blog.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

The most important events of this week are the meeting with the euro finance ministers today and the FED meeting Tuesday.

Senior Strategist Ib Fredslund Madsen explains why.

Legal information

Video courtesy of en.jyskebank.tv

By Elliott Wave International

As pundits chatter about an economic recovery, 80 miles east of San Francisco you’ll find a city (pop. 292,000) facing bankruptcy:

Stockton is on the verge of becoming the largest city in the United States to declare bankruptcy…

San Francisco Chronicle (3/4)

Bloomberg reports (2/25) that it costs the city $175,000 just to get a consulting firm’s fiscal evaluation. Management Partners issued a report which said:

…the city took on a large amount of debt in anticipation of ongoing growth that now exceeds the city’s ability to pay.

Compensation packages exceeded sustainable levels and the city assumed a significant liability for improved retiree health coverage without sufficient recurring revenues to cover growing costs…

Stockton also has one of the nation’s highest home foreclosure rates and has been called “Foreclosureville USA.”

And Moody’s just downgraded Stockton’s rating to Ba2, which is two levels below investment grade.

In the same Bloomberg article, the California State Treasurer said “The reputational stain can bleed onto other local issuers and the state, and that can hurt taxpayers in the bond market.”

Yet in recent months investors have been enamored with municipal bonds. Our December Financial Forecast said:

No matter how thick the storm clouds over state and city finances become, the belief in a bullet-proof municipal bond market just seems to grow. As the [chart below] shows, the ratio of AAA municipal bond yields to comparably-dated U.S. Treasury yields rose…in August.

…investors still believe munis are safe, but we’ll stick with our bearish forecast…the evidence continues to mount that a change for the worse is underway. Deflation will only accentuate the impact of waning revenue streams, underfunded pension liabilities and bloated labor costs.

Financial Forecast, Dec. 2011

Other municipalities facing recent bankruptcy include:

• Jefferson County, Alabama (home of Birmingham)
• Central Falls, Rhode Island
• Boise County, Idaho

Jefferson County, Alabama is the biggest U.S. municipality to face bankruptcy; Stockton is the biggest city.

In fact, as of December there were eleven municipal bankruptcies in 2011. Many other cities face extreme financial woes.

Economic recovery?

Look under the hood so you can see what kind of condition our economic engine is really in. Prepare for what’s ahead.

EWI’s NEW free report, The Economic Rot Beneath, reveals important economic numbers that you are not currently reading in the mainstream headlines � but you should be. For instance, did you know stocks priced in real money (gold) are down 87%? Or that U.S. manufacturing jobs are half of what they were in 1979? Or that housing starts per capita are back to 1922 levels? Learn what’s really going on in the U.S. economy. Download your free report now.

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

Source: ForexYard

A better than expected US Non-Farm Payrolls figure boosted the USD against its main currency rivals to close out last week’s trading session. In yet another sign that the economic recovery is moving forward, the US added 227K jobs in February. The news led to significant dollar gains against the euro, Japanese yen and Swiss franc. This week, traders will want to focus on a batch of data out of the US, including retail sales figures on Tuesday and a speech from Fed Chairman Bernanke on Wednesday. Positive data could lead to additional dollar gains.

Economic News

USD – Non-Farm Report Leads to Major USD Gains

Positive US employment data gave the USD a boost to close out last week’s trading session. The Non-Farm Payrolls figure came in at 227K, above the forecasted level of 209K. As a result, the USD/JPY shot up close to 90 pips to close out the week at 82.45. Against the euro, the combination of the positive US data and ongoing concerns regarding euro-zone debt caused the common-currency to slide on Friday. The EUR/USD dropped some 150 pips to close out the week at 1.3120.

Taking a look at the next several days, dollar traders will want to focus on Tuesday’s US Retail Sales and Core Retail Sales figures, as well as a speech from the Fed Chairman on Wednesday. Later in the week, the weekly Unemployment Claims and CPI figures may generate some market volatility. Positive data may help the dollar extend its gains against the yen.

Turning to today, a lack of significant US news means that any announcements out of the euro-zone may dictate risk appetite in the marketplace. Despite a successful bond swap last Thursday, investors are still worried about Greece’s long term prospects for economic stability. In addition, concerns regarding the Spanish and Portuguese economies have the potential to weigh down on the euro in the near future. Unless positive euro-zone news is announced, the EUR/USD may continue to slide.

EUR – Greece Continues to Weigh Down on Euro

A successful Greek bond swap last Thursday did little to help the euro against its main currency rivals during Friday’s trading session. Greece needed to complete the bond swap in order to qualify for a badly needed bailout package. While the news means that Greece will likely receive its bailout and avoid a potentially disastrous default later this month, it appears that the countries problems are far from over. High unemployment combined with the likely affects of tough austerity measures means that Greece’s prospects for economic growth are bleak. As a result, the EUR/USD tumbled some 150 pips on Friday, while the EUR/AUD dropped close to 90 to close out the week at 1.2403.

Turning to this week, the euro may see some relief when the German ZEW Economic Sentiment figure is released on Tuesday. As the euro-zone’s biggest economy, German data tends to have a significant impact on the common-currency. A positive reading may encourage investor risk taking and help the euro recover some of its recent losses. That being said, traders will also want to pay attention to any announcements regarding the current state of the Greek economy. Negative news could cause the euro to extend its losses.

JPY – US Employment Data Sends Yen to 11-Month Low vs. USD

The yen closed out last week by dropping to an 11-month low against the USD, following the release of a better than expected US Non-Farm Payrolls figure. The USD/JPY was last trading at 82.45, its highest level since April of 2011. Against most of its other main currency rivals, the yen was relatively unchanged on Friday. Negative Japanese economic data has caused investors to question the yen’s safe-haven status as of late, and has kept the currency low against the euro, British pound and Swiss franc.

Turning to this week, yen traders will want to focus on Tuesday’s Bank of Japan (BOJ) Monetary Policy Statement. While the BOJ is not expected to adjust Japanese interest rates, the statement could give investors a better idea of the current state of the Japanese economy. A positive statement could help the yen against its higher yielding currency rivals, like the euro and AUD. In addition, traders will also want to note the results of a batch of US data set to be released throughout the week. Any positive US news could cause the yen to extend its recent losses vs. the greenback.

Crude Oil – Crude Oil Hits $108 Following US Non-Farms Data

Crude oil hit its highest level in a week on Friday, following the release of a positive US employment figure. Positive US data typically leads to an increase in demand among American consumers, and can result in higher oil prices. Crude reached as high as $108.17 a barrel on Friday, before staging a slight downward reversal to close out the week at $107.40.

Turning to this week, a batch of US data is forecasted to generate some volatility in the price of oil. Positive indicators out of the US could convince investors that demand will continue to go up, which may lead to another spike in prices. Additionally, traders will want to monitor the ongoing conflict between Iran and the West. Any escalation in the conflict may cause the price of oil to rise.

Technical News

EUR/USD

The Relative Strength Index on the daily chart has dropped into oversold territory, indicating that upward movement could occur in the near future. That being said, most other long-term indicators place the pair in neutral territory. Taking a wait and see approach for the pair may be a wise choice.

GBP/USD

While the Williams Percent Range on the daily chart has entered the oversold zone, which means that upward movement could occur, most other technical indicators are inconclusive at this time. Traders will want to keep an eye on indicators like the Slow Stochastic and Bollinger Bands on the daily and weekly charts, as a more defined trend may present itself in the near future.

USD/JPY

Following the spike the pair saw to close out last week’s session, technical indicators now show that downward movement could occur in the coming days. The Slow Stochastic on the daily chart has formed a bearish cross, while the Relative Strength Index on the weekly chart has entered overbought territory. Going short may be the wise choice for this pair.

USD/CHF

The Bollinger Bands on the weekly chart have begun to narrow, indicating that a price shift could occur in the coming days. The Relative Strength Index on the daily chart, which has crossed into overbought territory, shows that this shift could be downward. Traders may want to go short in their positions.

The Wild Card

EUR/CAD

A bullish cross on the 8-hour chart’s Slow Stochastic indicates that upward movement could occur in the near future. This theory is supported by the daily chart’s Relative Strength Index, which has dropped into oversold territory. Forex traders may want to go long in their positions.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

AUD/JPY Weekly outlook – 12 March – 16 March

The Aussie closed last week slightly lower against the Yen, with the price once again, being unable to break, hold and close above 88.00. The Yen’s weakness was again seen with the pair quickly reversing losses experienced early in the week. For the second week in a row, the weekly chart’s candle closed as a bullish pin bar suggesting a continuation of the recent bullish momentum.

With the price unable to close above 88, trading the pair may prove to be a difficult task. Two bullish pin bars on the weekly charts suggests a bullish bias for the pair leaving the door open for brave traders to long the market on Mondays open.

As the market has been unable to close above 88, our outlook for the moment is to sit on our hands and wait for further confirmation before entering any long trades. We’ll be monitoring the 4hr and daily time frames for any possible bullish signals should the market pull back before resuming upwards. A possible trade idea may be to wait for a 50% retracement of last weeks pin and take a long, with a stop just below the low of the pin targeting 88.00.

Article by vantage-fx.com

The Bank For International Settlements [BIS] recently released the March issue of the International Journal of Central Banking [IJCB].  The March issue features articles on exchange rate stabilization and the so-called ‘Dutch disease’, DSGE Models, the use of Reserve Requirements for price and financial stability, The Fed as an informed forex trader, central banking in an open economy, the dynamics of food price pass-through and inflation, the impact of growth in the BRIC economies on inflation in the G-7, and the effect of import prices on inflation.

The below infographic details the history of the personal check (also known as cheque), an instrument which has been a pivotal component of historical and modern banking, and the payment system.  While checks have become marginalized and even phased out in some countries, in preference of electronic payment systems, checks and related financial instruments (e.g. letters of credit, bills of exchange, bearer bonds, etc) remain an important tool in financial transactions and arrangements.  Central banks often have oversight of the payment system, particularly where the central bank has banking system regulatory responsibilities, and may play a role in regulating the form and function of checks, and the clearing and processing of check based payments.

Infographic source: http://www.bradfordexchangechecks.com/bec/historyofchecks.jsp

www.CentralBankNews.info