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The past week in central banking and monetary policy was relatively quiet, with just 5 central banks announcing interest rate decisions.  Those changing interest rate settings were: Romania -25bps to 5.75%, Bangladesh +50bps to 7.75%, and Cape Verde +150bps to 5.75%.  Those that held rates unchanged were Uganda at 23.00%, and Trinidad & Tobago at 3.00%.  Also making news was the signing into law of sanctions against Iran’s central bank by the US, Chinese leaders commenting on the direction of monetary policy in 2012, and the ECB appointing Belgian, Peter Praet, as Chief Economist; replacing the outgoing Jurgen Stark.

Following are some of the key quotes from the central bankers that announced decisions last week:

• Romania (cut 25bps to 5.75%): “The recovery of the Romanian economy has continued – underpinned by favourable dynamics of exports, as well as of industrial and farming output – whereas the growing uncertainties regarding global and European growth amid a worsened global risk appetite and heightened sovereign debt crisis in the euro zone are hindering the short-term outlook for the overall economic activity in Romania.”
• Uganda (held at 23.00%): “I acknowledge the fact that the long-term solution to controlling inflation rests on addressing the structural constraints and improving productivity, but controlling inflation in the short to medium term is extremely crucial in stimulating this long-term economic growth.”
• Trinidad & Tobago (held at 3.00%): “While there are signs that credit demand may be increasing, the basis for a sustained economic recovery is still to be established.”  The Bank also noted “The increase in the headline inflation rate was mainly attributable to higher food prices. Core inflation, which excludes the impact of food prices, has been relatively well contained for most of 2011, indicative of the overall sluggish demand conditions in the economy.”
• Cape Verde (increased 150bps to 5.75%): “The unfavorable balance of payments, the persistence of serious financial problems at the international level – in particular in the euro area – which could have impact on the evolution of the economy and domestic economic developments, require the making of monetary policy measures consistent with ensuring exchange rate stability and financial system.”

Looking at the central bank calendar, there’s a few key central bank meetings scheduled in the week ahead.  The market will be closely watching the decisions from the Bank of England and ECB; while neither are expected to change policy settings just yet, the statement from the ECB will merit close study.  Also due in the week ahead is China’s quarterly data dump, many are picking the PBOC will cut the RRR before Chinese Lunar New Year (23 Jan), and the data may (or may not) provide an additional excuse to move.  The Fed is also scheduled to release its Beige Book economic report on Wednesday.

The Banco de Cabo Verde (Bank of Cape Verde) increased its minimum cash availability ratio (DMC) by 200 basis points to 18.00% from 16.00%, and its base interest rate by 150 basis points to 5.75% from 4.25% previously. The Standard Lending Facility rate will be 8.75% and the Absorption Standing Facility Rate will be 3.25%. The Bank said [translated]: "The unfavorable balance of payments, the persistence of serious financial problems at the international level – in particular in the euro area – which could have impact on the evolution of the economy and domestic economic developments, require the making of monetary policy measures consistent with ensuring exchange rate stability and financial system."

London Gold Market Report
from Ben Traynor
BullionVault
Friday 6 January 2012, 09:00 EST

THE DOLLAR cost of buying gold hovered around $1620 an ounce Friday morning London time – becoming a bit more volatile following the release of US employment data but failing to establish a definite direction – while stocks and commodities edged higher.

Silver prices meantime eased around lunchtime, hitting $29.15 per ounce.

On currency markets the Dollar rallied – pushing the Euro down further – after the nonfarm payrolls release showed the US economy added 200,000 private sector non-agricultural jobs in December.

The US unemployment rate fell from 8.7% in November (revised up today from 8.6%) to 8.5%.

From its high above $1.30 on Tuesday, the Euro meantime has since fallen 2.5% against the Dollar.

By Friday lunchtime the price of buying gold in Euros – which touched a 4-week high of €40994 per kilo (€1275 per ounce) looked set for a weekly gain of over 5%.

The Dollar cost of buying gold meantime was headed for a weekly gain of around 3.6%.

“A close above the 200 day moving average at $1632 is needed to shift the market [for buying gold] to Neutral from Bearish,” reckons Russell Browne, technical analyst at bullion bank Scotia Mocatta.

“While gold is pushing towards its 200 day moving average at $1633, we are not convinced that it can sustain a break above this level yet,” adds Standard Bank commodities strategist Walter de Wet.

“Liquidity remains locked up as the European interbank market continues to malfunction…in the physical market, we continue to see steady buying of gold. But this demand is more likely to provide support for gold on dips below $1600 rather than push it substantially higher.”

Friday’s Asian trade saw demand for buying gold in physical form, according to one Shanghai trader.

“Liquidity is back in the market,” said the trader.

“With the Europe outlook still grim, investors would prefer to put their dollars in some safety assets, such as gold.”

In the US, however, the volume of gold to held to back shares in the world’s largest gold ETF, the SPDR Gold Trust (GLD), has not changed since before Christmas.

This contrasts with the world’s biggest silver ETF, the iShares Silver Trust (SLV), where steady outflows since the middle of last month has seen the volume of silver bullion held fall to its lowest level since September 2010.

“We expect silver demand to slow during [2012],” says the latest precious metals note from French bank Natixis, citing “reduced investment demand alongside the current weakness in global industrial demand.”

“There have been good data out of the US,” said Jeremy Friesen, Hon Kong-based commodity strategist at Societe Generale, speaking ahead of today’s nonfarm payrolls release.

“But ultimately the US can’t decouple from the European crisis…there are going to be enough reasons to be worried about global growth and the financial system in the next quarter or two, and gold should benefit from that.”

German factory orders fell 4.8% between October and November last year, Bundesbank figures published this morning show.

Retail sales for the 17-nation Eurozone as a whole meantime fell 2.5% in the year to November – compared to a 0.7% y-o-y drop to October – according to official European Union data, while the European Commission’s economic confidence indicator hit its lowest level in over two years last month.

“This data has recession written all over it,” says Martin van Vliet, Eurozone economist at Dutch bank ING.

A report in French newspaper Les Echos suggests the governments of France, Belgium and Luxembourg are considering fully nationalizing Dexia. The three governments pledged last October to guarantee for a decade €90 billion of the bank’s loans, nationalizing its Belgian division.

In Switzerland meantime Phillip Hildebrand, head of the Swiss National Bank – which last year pegged the Swiss Franc to the Euro – has refused to resign after it emerged that his wife bought US Dollars three weeks before the peg was announced.

Here in the UK – where the Pound this morning hit a 15-month high against the Euro – oil company Shell has announced it will close its final salary pension scheme, the last FTSE 100-listed company to do so.

The Sterling price of buying gold hit £1052 per ounce Friday lunchtime in London – 4.6% up on the start of the week.

Hungary’s leader Viktor Orban has expressed support for central bank governor Andras Simor as the government prepares to renew negotiations with the International Monetary Fund and the European Union over a possible bailout. The IMF and EU last month walked away from negotiations after Orban’s government refused to repeal new legislation seen as threatening the central bank’s independence.

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.

Jan. 6 (Bloomberg) — Arnaud Scarpaci, a fund manager at Agilis Gestion SA, discusses the outlook for the European banking industry and the prospect of more quantitative easing in the region. He speaks with Maryam Nemazee from Paris on Bloomberg Television’s “The Pulse.” (Source: Bloomberg)

Jan. 6 (Bloomberg) — Sean Darby, global head of equity strategy at Jefferies Group Inc., talks about the outlook for the euro zone and his investment strategy. He speaks from Hong Kong with Linzie Janis on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

How to Lower Your Energy Bills for Free

by David Fessler, Investment U Senior Analyst
Friday, January 06, 2011

It sounds like one of those suspect ads on television, doesn’t it? If someone told you an easy way to speed up your computer, for free, you’d more than likely take advantage of the offer.

But what if someone offered (at no upfront cost to you) to make your home more energy efficient? You’d probably take them up on that, too.

It turns out the energy efficiency industry does just that. The amazing part is that few homeowners and businesses are taking them up on it.

It’s called on-bill financing. Here’s how it works. You go get the work done to make your home more energy efficient. Your local utility pays for the work…

Sound good so far?

Customers repay the utility for the added insulation, more efficient lighting, new heating system, or other energy saving measures over extended terms on their monthly utility bills.

Your first inclination is to think: “Wait, that means higher utility bills.” But here’s the best part: In most cases, the cost savings more than offset the additional cost that shows up on the bill.

The net effect is that most customers see no net increase in the cost of their monthly utility bills. They end up with a building that uses less energy and haven’t had to shell out a dime.

If this sounds too good to be true, it isn’t. It’s a great deal for the customer, who gets a more energy-efficient house. The utility gets to postpone the building of new power plants, since its energy generation requirements go down.

I’ve often touted energy efficiency as the fastest, cheapest way not only to lower our dependence on foreign oil but to reduce our overall energy bill in the United States.

So Why Aren’t Customers Lining Up?

The American Council for Energy-Efficient Economy (ACEEE) recently published a report on these programs. There are a total of 31 different programs spread across 20 states. Some are so new they’re still in the pilot phase. In its report, the ACEEE profiled 19 on-bill finance programs. You can read the report here.

You would think that with all those programs out there, and with a populous eager to reduce one of the biggest chunks of their monthly budget – energy consumption – they would be lined up in droves.

But less than one percent of the customers eligible to participate in the programs are doing so. According to Casey Bell, lead author of the ACEEE report, it may simply be a lack of knowledge that the programs even exist: “The growth of these programs depends on a number of factors. We are seeing a trend where they are emerging in more states.”

According to ACEEE behavioral scientists, when it comes to energy, people are slow on the uptake concerning new ideas. Even after reading an information booklet from their utility, watching a TV commercial and seeing an advertisement somewhere, they’re still reluctant or slow to respond.

So what does convince them? Talking with a neighbor who did it, a pitch to a social group like a church or other community gathering, or a simple knock on the door by a utility company representative.

Does My Utility Offer Such a Program?

Good question. The report lists the ones that do, and it points out that many others are considering legislation to introduce them. The movement could eventually snowball, once utilities see the payback.

Money is certainly going to be an issue. Some utilities may be reluctant to shell out huge sums of cash, especially if they have a surplus of generation capacity. Third-party capital will likely be attracted to these types of programs, since investors perceive utilities as generally low-risk investments.

Says Bell: “There is a lot of opportunity to learn from experience, and tapping into private sector sources of funding is likely critical for scalability.”

The bottom line: The money equation has to be right, or it won’t get done. On-bill financing is one instance where it seems like a no-brainer.

Give your utility a call and see what they have to offer. You’ve got nothing to lose, except money off your utility bill.

Good investing,

David Fessler

Article by Investment U

Identify This “Tell” and Beat the Stock Market Casino

by David Fessler, Investment U Senior Analyst
Friday, January 06, 2011: Issue #1681

A lot of my friends are comparing the stock markets to a giant casino these days. They tell me “it’s a rigged game.”

They basically have no hope in beating Wall Street and the high-frequency computer traders.

I completely understand how they feel. The markets have been a treacherous place for the average investor. It’s been nothing but a whipsaw ever since last July when Eurozone fears took hold.

But as my colleague Alexander Green has stated countless times, “Investors should tune out all the end-of-the-world hysteria and think rationally.” And one of Alex’s favorite ways to beat the market is to identify “tells.”

The Art of Reading a “Tell”

Those who have played poker understand what a “tell” is. It’s some sort of unconscious behavior that a poker player exhibits which tips other players to the strength of his/her hand.

If you ever watch a professional poker tournament on television you’ll notice many players wearing large sunglasses and hats. (I tried this in a tournament last fall. I lost anyway.) They do this in an attempt to hide any unconscious signals they may be transmitting to the other players.

Well there’s also a type of “tell” that can help investors identify stocks that are about to make significant gains. And that’s by tracking corporate insider stock purchases.

Companies are required to disclose insider purchases by the Securities and Exchange Committee (SEC). As Peter Lynch famously said, “Insiders might sell their shares for any number of reasons, but they buy them for only one: They think the stock price is undervalued and will eventually go up.”

The Proof is in the Pudding

In Hasan Nejat Seyhun’s book Investment Intelligence from Insider Trading, published in 2000, he found that insider trading information is in fact more valuable than several other valuation measures, and can be used to improve investment returns.

However, by the time insider buying at a company becomes public knowledge, shares are often much higher than when the insiders bought them.

With the market’s recent multi-hundred-point moves in both directions, it’s created a few bargains in the shares of insider stocks. Here are a few sitting within a few percentage points of where insiders bought them.

Insider Buying Bargain #1

NYSE Euronext (NYSE: NYX) provides trading technologies around the globe. Its service offerings include equities, options, futures, ETFs, swaps, bonds, clearing operations, market data and carbon trading.

It operates on the NYSE, AMEX and NYSE Arca here in the United States. In Europe, it operates on the NYSE Liffe derivatives market in Lisbon, Amsterdam, Brussels, Paris and London.

Its CEO, Duncan L. Niederauer, and one of its Directors, Duncan M. McFarland, collectively purchased 35,000 shares this past August at prices ranging from $25.50 to $27.38 per share. The stock closed December 30 at $26.10 and currently sports a healthy dividend yield of 4.6%.

Insider Buying Bargain #2

Archer Daniels Midland Company (NYSE: ADM) processes corn, wheat, oilseeds, cocoa and numerous other agricultural commodities. It manufactures corn sweeteners, vegetable oils, flour, biodiesel, protein meal, and other ingredients for animal feed and edible foods.

The company has a vast network of grain elevators and transportation networks to store, clean and transport the commodities it deals in.

Executive VP and COO Juan R. Luciano, along with two other company officers, purchased a total of 9,650 shares back in August of last year, priced between $27.42 and $28.23. Shares of Archer closed on December 30 at $28.60. The company currently yields 2.45%.

Insider Buying Bargain #3

Landline telephone systems are generally very reliable here in the United States and other developed nations. But sometimes Mother Nature has other ideas, and wreaks havoc by bring down trees and wires along with them.

That’s when equipment from Telular Corporation (Nasdaq: WRLS) comes in handy. Telular designs and manufactures equipment that interfaces things like fax machines and other data and services normally sent over land lines.

Remotely located equipment without landline access is also able to be interfaced using Telular’s products and services. Supply chain management, vehicle tracking, security monitoring, and other commercial and industrial applications all make use of Telular equipment.

Business is booming. As evidence, the company raised its guidance and increased its dividend. Robert Deering, company CAO and Controller, must think so, too. He increased his ownership this past December, purchasing 3,175 shares at $7.54.

The company’s shares closed on December 30 at $7.50 a share. Telular currently yields 5.87%, a rather healthy dividend. But this company appears to be going places, so there’s an excellent chance it will continue to generate the cash to pay it.

Insider Buying Bargain #4

Cloud computing is all the rage these days, and there are a lot of big players in the business. Today’s Investment U Plus pick isn’t one of them…

This little company provides eCommerce technology, training, eServices and a host of web-based technologies.

These include search engine optimization (SEO) and search engine management services to entrepreneurs and small, medium and large enterprises.

Its customers are located in the United States and international markets in Canada, the United Kingdom, New Zealand, Australia and Singapore.

This company’s CEO must know something the rest of us don’t. Over the last six weeks, he’s quietly purchased 80,000 shares of his company’s stock. (To find out which company I’m talking about, find out how to upgrade your subscription to Investment U Plus here.)

Should You Buy Them, Too?

I can’t give you personalized investment advice. Ultimately you should weigh the merits (and the business) of each of the companies mentioned, and consult with your investment advisor.

But insider buying is usually a sign that the company executives believe their operation is undervalued. By nature, they’re contrarian investors. Remembering the words of my friend Rick Rule: “You’re either a contrarian, or a victim.”

Good investing,

David Fessler

Article by Investment U

Jan. 6 (Bloomberg) — Hans-Guenter Redeker, head of global currency strategy at Morgan Stanley, talks about the outlook for the dollar and euro in 2012. He speaks with Linzie Janis and Mark Barton on Bloomberg Television’s “Countdown.”

GBP/AUD Daily outlook – 06 January

The sterling weakened against the Aussie on Thursday resulting in the daily candle closing as a bearish pin bar. The market initially pushed higher, however was met with strong resistance at 1.5200 which was unable to be broken. Late trading saw a fall back lower.

The daily pin bar was the 3^rd bar in a bearish Hikkake pattern suggesting further losses could be seen in the coming days.

The strength of the 1.5200 area can be seen in the chart below

We’ll be looking to short this market down to initially 1.50 and depending on price action possibly lower. The market formed an almost perfect double bottom at this level in September & October which suggests we may see a struggle to push through. To make the trade worth while with a good R:R we’ll look to sell on limit at a 50% retracement of Thursdays bar with a stop just above the highs of the day.

Article by vantage-fx.com

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