Tag: finance

Just when you thought bizarro world couldn’t get any, er, bizarrer, here comes – who else – Dennis Gartman, who is now long gold…. in crude oil terms.

Further, we shall recommend owning gold in terms of crude oil, buying the former and selling the latter in equal dollar sums. Further, to eliminate the impact fo the Brent/WTI spread from this trade, we’ll do half of the oil trade in WTI and half in Brent.

Uhm, #Ref!

The New idea…

 

as the old faithful has been ‘killing it’

via Zero Hedge http://ift.tt/19phgq6 Tyler Durden

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

"Prosperity" based on serial asset bubbles and near-zero interest rates is neither real nor sustainable.

Longtime readers know I have been covering residential housing since mid-2005. In those 8+ years, housing has proceeded through a cycle of bubble-bust-echo-bubble: now the echo bubble is crumbling, for all the same reasons the 2006-7 bubble burst: a prosperity based on asset bubbles and low interest rates is a phantom prosperity that cannot last.

Correspondent Mark G. has written a three-part series on the current state of the residential and commercial real estate (CRE) markets. Part 1 addresses residential real estate.

The broad context of this analysis is straightforward: an economy based on ever-rising consumption falters when real household incomes stagnate or decline. Real income for the bottom 90% has been stagnant for forty years, and has declined since 1999.

The only way to keep consumption rising when incomes are stagnant is to boost the borrowing power (i.e. collateral and creditworthiness) of households by inflating asset bubbles that create temporary (i.e. phantom) collateral and by lowering interest rates so the stagnant income can support more debt.

This is why the Federal Reserve and the other agencies of the Central State have been reduced to blowing serial assets bubbles: there is no other way to keep a consumption-based economy from imploding.

But "prosperity" based on serial asset bubbles and near-zero interest rates is neither real nor sustainable: real prosperity is based on rising real incomes, not debt leveraged on phantom collateral.

Here is Part 1 of Mark's series on U.S. real estate.

 

PCE = Personal Consumption Expenditures. GDP = Gross Domestic Product. The ratio of these numbers times 100 produces the percentage figure.

PCE includes food, entertainment, residential housing, automobiles, clothes and iPads. The consumer broadly has two ways to obtain the money needed to support this spending. The first method is to earn it and the second method is to borrow it.

Since 1999 average real household income in the USA has declined by 10%. This real decline was only temporarily reversed during the peak bubble years. From 2000 to 2008 the full effects of this decline were masked by a vast expansion of household debts of all kinds, a collapse in mortgage and consumer lending standards and a concurrent decline in household net worth.

Exactly which 90% of the population is bearing the brunt of this collapse, and why it is occurring, is beyond the scope of this overview.

This trend culminated in the financial crisis of 2007 – 2009. This began in the subprime mortgage sector, spread to the entire residential real estate market and progressively engulfed commercial real estate, banking, the stock markets, commodity markets and finally all of international trade.

In response the Federal Reserve multiplied its balance sheet five times from $800 billion to $4 trillion dollars. And the US Government concurrently ran peak fiscal deficits up to $1.8 trillion. The US Government also extended many trillions more in direct guarantees of minimum prices of financial assets of all kinds.

US Residential Real Estate

The observed result of all this monetary and fiscal stimulus, combined with the lowest mortgage interest rates in the post World War II era, was to only slow the rate of decline of median US household income. In the combined residential US real estate market this set of policies had the following results:

Existing Home Sales

The rate of existing home sales has yet to recover to the levels of the mid-1990s. Since the most recent decline in sales rate is paralleling the upward spike in mortgage rates it is reasonable to believe they probably will not recover.

The average sales price of existing homes has recovered to approximately 2003 levels.

(Note: Whether increasing average home prices for a population still experiencing declining real average household incomes is an intelligent public policy goal is a second question. This question deserves far more critical discussion than it currently receives.)

New Home Sales: (This time it really is different)

Those interested in detailed numbers for single and multifamily housing construction can find them here:

New Privately Owned Housing Units Authorized by Building Permits in Permit-Issuing Places(Census Bureau)

New-Home Production Tops 1 Million in November (NAHB)

The National Association of Homebuilders (NAHB) announced in mid-December 2013 that new starts in single and multi-family housing had finally exceeded an annualized rate of 1 million units. In other words, the actual 2013 new construction number will be approximately 935k.

Prior to 2008 these sub 1 million total new build numbers were only seen in the six years of 1991,1981, 1980, 1975, 1966 and 1960. They have subsequently occurred six straight years in a row from 2008-2013. It will not be known for another year whether new builds will finally exceed 1 million in 2014.

Note that US population has been continuously increasing over the entire time period. Therefore the present era represents the lowest per capita rate of new construction on record for six decades.

Near Term Prospects

There are two primary reasons that residential real estate has not recovered more that it has. These are very straightforward:

1. Real US household incomes continue to decline.

2. Residential mortgage lending standards have been significantly tightened since 2007.

These charts represent averages and sums across most of a continent. Within this expanse some areas are already experiencing new record bubbles while many others continue to fall deeper into local depressions.

There are several other factors that have affected and will continue to affect the residential real estate recovery.

Factor One: Habitable Vacant Dwellings

AMERICA’S 14.2 MILLION VACANT HOMES: A NATIONAL CRISIS (RealtyTrac)
“As of the first quarter of 2013, there are just over 133 million housing units in America and 10.7 percent of them — more than 14. 2 million — are vacant all year round for some reason or another, according to the Census Bureau."
To this 14.2 million empty dwellings we can add several million additional vacation homes that are only occupied for a few months a year.

Factor Two: Cultural Shift To Multigenerational Households

At least one person is required to create a household and occupy a dwelling. A related question is, what is the average number of empty bedrooms per occupied dwelling in the US? It is at least 1.0 and very probably much higher.

During recent years there has been an increase in average household size and a corresponding drop in the total number of households. This is the result of adult children and grandchildren moving back in with the “folks” to weather the economic storm. Whenever this occurs, two households become one household and residential housing demand is sensibly reduced.

A related trend is adult children who are economically unable to ever leave their parents household. To the extent these shifts are permanent trends rather than temporary expedients this will permanently reduce the per capita demand for residential housing.

Based on results the decline in real household incomes has proven insensitive to a variety of economic theories and policies. Neither the Republican-Bush era tax rate cuts nor the Democratic-Obama Keynesian pump priming at fire hydrant pressures has succeeded in reversing this long term trend. Nor has anything appeared recently to suggest an abrupt reversal is at hand in this key trend of average household income.

In these circumstances the only other possibility for further residential real estate “recovery” would be for government regulators to foster another bubble by effectively relaxing residential mortgage lending standards again.

Three Possible Future Outcomes For U.S. Residential Real Estate

In order, these are: go up further, stay the same or resume declining.

1. Up. The Federal Reserve has already begun withdrawing from its bond buying program, albeit at a slow rate of ‘taper’. This has accordingly led to mortgage rate increases which were accompanied by a prompt decline in existing home sales. It is mathematically impossible for a population with declining real household incomes to propel residential real estate markets higher in the face of higher interest costs.

2. Steady State. At a minimum, this outcome requires that average household income cease declining and that mortgage rates not rise significantly. Neither of these outcomes is likely. The following review of commercial real estate will examine clearly visible economic trends that make further household income declines a certainty.

If we cannot go up and even staying the same becomes doubtful this leaves:

3. Down Again.

 

via Zero Hedge http://ift.tt/1j3uc8B Tyler Durden

Over the weekend, the entertaining @HistoryInPix twitter account posted this distrubing photo of the cemetery where all the radioactive vehicles that were used in the Chernobyl cleanup went to die.

One can’t help but wonder: where is the comparable “cemetery” for the Fukushima disaster cleanup, and does the above photo have anything to do with the recently passed secrecy bill that was “designed by Kafka and inspired by Hitler“…

For those curious to see more of the Chernobyl cemetery, the following documentary should satisfy some of the pent up curiosity.

via Zero Hedge http://ift.tt/1j3u9cN Tyler Durden

Following some early strength in the Asia session, which saw Gold over $1255 (its highest in a month), the European session has seen pressure on the precious metals leak lower. That 'leak' was then helped on its way by the almost ubiquitous 8amET volume dumptaking gold and silver down markedly (though not catastrophically for now). The only other asset class showing any real action is GBPUSD (with GBP being sold aggressively) with Treasuries flat and stocks down modestly but stable for now.

 

 

and the only other asset class moving was GBPUSD…

Chart: Bloomberg

 

Of course, only a tin-foil-hat-wearing blogger would suggest manipulation… oh and the world's regulators as per Bloomberg:

The topic of gold market manipulation during the London AM fix is not new to Zero Hedge: in fact we have discussed both the historical basis and the raison d'etre of the London gold fix, as well as the curious arbitrage available to those who merely traded the AM-PM spread, for years. Which is why we are delighted that none other than Bloomberg has decided to break it down for everyone, as well as summarize all the ways in which just this one facet of gold trading is being manipulated.

Bloomberg begins:

 

 

Every business day in London, five banks meet to set the price of gold in a ritual that dates back to 1919. Now, dealers and economists say knowledge gleaned on those calls could give some traders an unfair advantage when buying and selling the precious metal. The London fix, the benchmark rate used by mining companies, jewelers and central banks to buy, sell and value the metal, is published twice daily after a telephone call involving Barclays Plc, Deutsche Bank AG, Bank of Nova Scotia, HSBC Holdings Plc and Societe Generale SA.

 

The fix dates back to September 1919, less than a year after the end of World War I, when representatives from five dealers met at Rothschild’s office on St. Swithin’s Lane in London’s financial district. It was suspended for 15 years, starting in 1939. While Rothschild pulled out in 2004 and the discussions now take place by telephone instead of in a wood-paneled room at the bank, the process remains much the same.

That much is known. What is certainly known is that any process that involves five banks sitting down (until recently literally) and exchanging information using arcane methods (such as a telephone), on a set schedule that involves a private information blackout phase, even if temporary, and that does not involve instant market feedback, can and will be gamed. "Traders involved in this price-determining process have knowledge which, even for a short time, is superior to other people’s knowledge,” said Thorsten Polleit, chief economist at Frankfurt-based precious-metals broker Degussa Goldhandel GmbH and a former economist at Barclays. “That is the great flaw of the London gold-fixing."

There are other flaws.

 

 

Participants on the London call can tell whether the price of gold is rising or falling within a minute or so, based on whether there are a large number of net buyers or sellers after the first round, according to gold traders, academics and investors interviewed by Bloomberg News. It’s this feature that could allow dealers and others in receipt of the information to bet on the direction of the market with a high degree of certainty minutes before the fix is made public, they said.

Yes, the broader momentum creation and ignition perspective is also known to most. At least most who never believed the boilerplate that unlike all other asset classes, gold is somehow immune from manipulation.

 

 

“Information trickles down from the five banks, through to their clients and finally to the broader market,” Andrew Caminschi, a lecturer at the University of Western Australia in Perth and co-author of a Sept. 2 paper on trading spikes around the London gold fix published online in the Journal of Futures Markets, said by phone. “In a world where trading advantage is measured in milliseconds, that has some value.”

Ah, hypothetical – smart. One mustn't ruffle feathers before, like in the case of Libor, it becomes fact that everyone was in on it.

 

 

There’s no evidence that gold dealers sought to manipulate the London fix or worked together to rig prices, as traders did with Libor. Even so, economists and academics say the way the benchmark is set is outdated, vulnerable to abuse and lacking any direct regulatory oversight. “This is one of the most concerning fixings I have seen,” said Rosa Abrantes-Metz, a professor at New York University’s Stern School of Business whose 2008 paper, “Libor Manipulation?” helped spark a global probe. “It’s controlled by a handful of firms with a direct financial interest in where it’s set, and there is virtually no oversight — and it’s based on information exchanged among them during undisclosed calls.”

Unless we are wrong, there was no evidence of Libor manipulative collusion before there was evidence either. And since the cabal of the London gold fix is far smaller than the member banks of Libor, it is exponentially easier to confine intent within an even smaller group of people. But all that is also known to most.

As is the fact that when asked for comments, 'spokesmen for Barclays, Deutsche Bank, HSBC and Societe Generale declined to comment about the London fix or the regulatory probes, as did Chris Hamilton, a spokesman for the FCA, and Steve Adamske at the CFTC. Joe Konecny, a spokesman for Bank of Nova Scotia, wrote in an e-mail that the Toronto-based company has “a deeply rooted compliance culture and a drive to continually look toward ways to improve our existing processes and practices."

Next, Bloomberg conveniently goes into the specifics of just how the gold price is manipulated first by the fixing banks, then by their "friends and neighbors" as news of the fixing process unfolds.

At the start of the call, the designated chairman — the job rotates annually among the five banks — gives a figure close to the current spot price in dollars for an ounce of gold. The firms then declare how many bars of the metal they wish to buy or sell at that price, based on orders from clients as well as their own account.

 

If there are more buyers than sellers, the starting price is raised and the process begins again. The talks continue until the buy and sell amounts are within 50 bars, or about 620 kilograms, of each other. The procedure is carried out twice a day, at 10:30 a.m. and 3 p.m. in London. Prices are set in dollars, pounds and euros. Similar gauges exist for silver, platinum and palladium.

 

The traders relay shifts in supply and demand to clients during the calls and take fresh orders to buy or sell as the price changes, according to the website of London Gold Market Fixing, which publishes the results of the fix.

.. only this time the manipulation is no longer confined to a purely theoretical plane and instead empirical evidence of the fixing leak is presented based on academic research:

Caminschi and Richard Heaney, a professor of accounting and finance at the University of Western Australia, analyzed two of the most widely traded gold derivatives: gold futures on Comex and State Street Corp.’s SPDR Gold Trust, the largest bullion-backed exchange-traded product, from 2007 through 2012.

 

At 3:01 p.m., after the start of the call, trading surged to 47.8 percent above the average for the 20-minute period preceding the start of the fix and remained 20 percent higher for the next six minutes, Caminschi and Heaney found. By comparison, trading was 8.7 percent higher than the average a minute after publication of the price. The results showed a similar pattern for the SPDR Gold Trust.

 

“Intuitively, we expect volumes to spike following the introduction of information to the market” when the final result is published, Caminschi and Heaney wrote in “Fixing a Leaky Fixing: Short-Term Market Reactions to the London P.M. Gold Price Fixing.” “What we observe in our analysis is a clustering of trades immediately following the fixing start.”

 

The researchers also assessed how accurate movements in gold derivatives were in predicting the final fix. Between 2:59 p.m. and 3 p.m., the direction of futures contracts matched the direction of the fix about half the time.

 

From 3:01 p.m., the success rate jumped to 69.9 percent, and within five minutes it had climbed to 80 percent, Caminschi and Heaney wrote. On days when the gold price per ounce moved by more than $3, gold futures successfully predicted the outcome in more than nine out of 10 occasions. “Not only are the trades quite accurate in predicting the fixing direction, the more money that is made by way of a larger price change, the more accurate the trade becomes,” Caminschi and Heaney wrote. “This is highly suggestive of information leaking from the fixing to these public markets.”

Oh please, 9 out of 10 times is hardly indicative of any wrongdoing. After all, JPM lost money on, well, zero trading days in all of 2013, and nobody cares. So if a coin landing heads about 200 times in a row is considered normal by regulators, then surely the CTFC will find nothing wrong with a little gold manipulation here and there. Manipulation, which it itself previously said did not exist. But everyone already knew that too.

Cynicism aside, to claim that this clearly gamed process is not in fact gamed, not to say criminally manipulated (because it is never manipulation unless one is caught in the act by enforcers who are actually not in on the scheme) is the height of idiocy. Which is why we are certain that regulators will go precisely this route. That too is also largely known. Also known are the benefits for traders who abuse the London fix:

For derivatives traders, the benefits are clear: A dealer who bought 500 gold futures contracts at 3 p.m. and knew the fix was going higher could make $200,000 for his firm if the price moved by $4, the average move in the sample. While the value of 500 contracts totals about $60 million, traders may buy on margin, a process that involves borrowing and requires placing less capital for the bet. On a typical day, about 4,500 futures contracts are traded between 3 p.m. and 3:15 p.m., according to Caminschi and Heaney.

Finally what is certainly known is that the "London fixing" fix would be very simple in our day and age of ultramodern technology, and require a few minutes of actual implementation.

Abrantes-Metz, who helped Iosco formulate its guidelines, said the gold fix’s shortcomings may stretch beyond giving firms and clients access to privileged information. “There is a huge incentive for these banks to try and influence where the benchmark is set depending on their trading positions, and there is almost no scrutiny,” she said.

 

Abrantes-Metz said the gold fix should be replaced with a benchmark calculated by taking a snapshot of trading in a market where $19.6 trillion of the precious metal circulated last year, according to CPM Group, a New York-based research company. “There’s no reason why data cannot be collected from actual prices of spot gold based on floor or electronic trading,” she said. “There’s more than enough data.”

Which is precisely why nothing will change. Sadly, that is also widely known.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/f3zna2xQa_Y/story01.htm Tyler Durden

Following some early strength in the Asia session, which saw Gold over $1255 (its highest in a month), the European session has seen pressure on the precious metals leak lower. That 'leak' was then helped on its way by the almost ubiquitous 8amET volume dumptaking gold and silver down markedly (though not catastrophically for now). The only other asset class showing any real action is GBPUSD (with GBP being sold aggressively) with Treasuries flat and stocks down modestly but stable for now.

 

 

and the only other asset class moving was GBPUSD…

Chart: Bloomberg

 

Of course, only a tin-foil-hat-wearing blogger would suggest manipulation… oh and the world's regulators as per Bloomberg:

The topic of gold market manipulation during the London AM fix is not new to Zero Hedge: in fact we have discussed both the historical basis and the raison d'etre of the London gold fix, as well as the curious arbitrage available to those who merely traded the AM-PM spread, for years. Which is why we are delighted that none other than Bloomberg has decided to break it down for everyone, as well as summarize all the ways in which just this one facet of gold trading is being manipulated.

Bloomberg begins:

 

 

Every business day in London, five banks meet to set the price of gold in a ritual that dates back to 1919. Now, dealers and economists say knowledge gleaned on those calls could give some traders an unfair advantage when buying and selling the precious metal. The London fix, the benchmark rate used by mining companies, jewelers and central banks to buy, sell and value the metal, is published twice daily after a telephone call involving Barclays Plc, Deutsche Bank AG, Bank of Nova Scotia, HSBC Holdings Plc and Societe Generale SA.

 

The fix dates back to September 1919, less than a year after the end of World War I, when representatives from five dealers met at Rothschild’s office on St. Swithin’s Lane in London’s financial district. It was suspended for 15 years, starting in 1939. While Rothschild pulled out in 2004 and the discussions now take place by telephone instead of in a wood-paneled room at the bank, the process remains much the same.

That much is known. What is certainly known is that any process that involves five banks sitting down (until recently literally) and exchanging information using arcane methods (such as a telephone), on a set schedule that involves a private information blackout phase, even if temporary, and that does not involve instant market feedback, can and will be gamed. "Traders involved in this price-determining process have knowledge which, even for a short time, is superior to other people’s knowledge,” said Thorsten Polleit, chief economist at Frankfurt-based precious-metals broker Degussa Goldhandel GmbH and a former economist at Barclays. “That is the great flaw of the London gold-fixing."

There are other flaws.

 

 

Participants on the London call can tell whether the price of gold is rising or falling within a minute or so, based on whether there are a large number of net buyers or sellers after the first round, according to gold traders, academics and investors interviewed by Bloomberg News. It’s this feature that could allow dealers and others in receipt of the information to bet on the direction of the market with a high degree of certainty minutes before the fix is made public, they said.

Yes, the broader momentum creation and ignition perspective is also known to most. At least most who never believed the boilerplate that unlike all other asset classes, gold is somehow immune from manipulation.

 

 

“Information trickles down from the five banks, through to their clients and finally to the broader market,” Andrew Caminschi, a lecturer at the University of Western Australia in Perth and co-author of a Sept. 2 paper on trading spikes around the London gold fix published online in the Journal of Futures Markets, said by phone. “In a world where trading advantage is measured in milliseconds, that has some value.”

Ah, hypothetical – smart. One mustn't ruffle feathers before, like in the case of Libor, it becomes fact that everyone was in on it.

 

 

There’s no evidence that gold dealers sought to manipulate the London fix or worked together to rig prices, as traders did with Libor. Even so, economists and academics say the way the benchmark is set is outdated, vulnerable to abuse and lacking any direct regulatory oversight. “This is one of the most concerning fixings I have seen,” said Rosa Abrantes-Metz, a professor at New York University’s Stern School of Business whose 2008 paper, “Libor Manipulation?” helped spark a global probe. “It’s controlled by a handful of firms with a direct financial interest in where it’s set, and there is virtually no oversight — and it’s based on information exchanged among them during undisclosed calls.”

Unless we are wrong, there was no evidence of Libor manipulative collusion before there was evidence either. And since the cabal of the London gold fix is far smaller than the member banks of Libor, it is exponentially easier to confine intent within an even smaller group of people. But all that is also known to most.

As is the fact that when asked for comments, 'spokesmen for Barclays, Deutsche Bank, HSBC and Societe Generale declined to comment about the London fix or the regulatory probes, as did Chris Hamilton, a spokesman for the FCA, and Steve Adamske at the CFTC. Joe Konecny, a spokesman for Bank of Nova Scotia, wrote in an e-mail that the Toronto-based company has “a deeply rooted compliance culture and a drive to continually look toward ways to improve our existing processes and practices."

Next, Bloomberg conveniently goes into the specifics of just how the gold price is manipulated first by the fixing banks, then by their "friends and neighbors" as news of the fixing process unfolds.

At the start of the call, the designated chairman — the job rotates annua
lly among the five banks — gives a figure close to the current spot price in dollars for an ounce of gold. The firms then declare how many bars of the metal they wish to buy or sell at that price, based on orders from clients as well as their own account.

 

If there are more buyers than sellers, the starting price is raised and the process begins again. The talks continue until the buy and sell amounts are within 50 bars, or about 620 kilograms, of each other. The procedure is carried out twice a day, at 10:30 a.m. and 3 p.m. in London. Prices are set in dollars, pounds and euros. Similar gauges exist for silver, platinum and palladium.

 

The traders relay shifts in supply and demand to clients during the calls and take fresh orders to buy or sell as the price changes, according to the website of London Gold Market Fixing, which publishes the results of the fix.

.. only this time the manipulation is no longer confined to a purely theoretical plane and instead empirical evidence of the fixing leak is presented based on academic research:

Caminschi and Richard Heaney, a professor of accounting and finance at the University of Western Australia, analyzed two of the most widely traded gold derivatives: gold futures on Comex and State Street Corp.’s SPDR Gold Trust, the largest bullion-backed exchange-traded product, from 2007 through 2012.

 

At 3:01 p.m., after the start of the call, trading surged to 47.8 percent above the average for the 20-minute period preceding the start of the fix and remained 20 percent higher for the next six minutes, Caminschi and Heaney found. By comparison, trading was 8.7 percent higher than the average a minute after publication of the price. The results showed a similar pattern for the SPDR Gold Trust.

 

“Intuitively, we expect volumes to spike following the introduction of information to the market” when the final result is published, Caminschi and Heaney wrote in “Fixing a Leaky Fixing: Short-Term Market Reactions to the London P.M. Gold Price Fixing.” “What we observe in our analysis is a clustering of trades immediately following the fixing start.”

 

The researchers also assessed how accurate movements in gold derivatives were in predicting the final fix. Between 2:59 p.m. and 3 p.m., the direction of futures contracts matched the direction of the fix about half the time.

 

From 3:01 p.m., the success rate jumped to 69.9 percent, and within five minutes it had climbed to 80 percent, Caminschi and Heaney wrote. On days when the gold price per ounce moved by more than $3, gold futures successfully predicted the outcome in more than nine out of 10 occasions. “Not only are the trades quite accurate in predicting the fixing direction, the more money that is made by way of a larger price change, the more accurate the trade becomes,” Caminschi and Heaney wrote. “This is highly suggestive of information leaking from the fixing to these public markets.”

Oh please, 9 out of 10 times is hardly indicative of any wrongdoing. After all, JPM lost money on, well, zero trading days in all of 2013, and nobody cares. So if a coin landing heads about 200 times in a row is considered normal by regulators, then surely the CTFC will find nothing wrong with a little gold manipulation here and there. Manipulation, which it itself previously said did not exist. But everyone already knew that too.

Cynicism aside, to claim that this clearly gamed process is not in fact gamed, not to say criminally manipulated (because it is never manipulation unless one is caught in the act by enforcers who are actually not in on the scheme) is the height of idiocy. Which is why we are certain that regulators will go precisely this route. That too is also largely known. Also known are the benefits for traders who abuse the London fix:

For derivatives traders, the benefits are clear: A dealer who bought 500 gold futures contracts at 3 p.m. and knew the fix was going higher could make $200,000 for his firm if the price moved by $4, the average move in the sample. While the value of 500 contracts totals about $60 million, traders may buy on margin, a process that involves borrowing and requires placing less capital for the bet. On a typical day, about 4,500 futures contracts are traded between 3 p.m. and 3:15 p.m., according to Caminschi and Heaney.

Finally what is certainly known is that the "London fixing" fix would be very simple in our day and age of ultramodern technology, and require a few minutes of actual implementation.

Abrantes-Metz, who helped Iosco formulate its guidelines, said the gold fix’s shortcomings may stretch beyond giving firms and clients access to privileged information. “There is a huge incentive for these banks to try and influence where the benchmark is set depending on their trading positions, and there is almost no scrutiny,” she said.

 

Abrantes-Metz said the gold fix should be replaced with a benchmark calculated by taking a snapshot of trading in a market where $19.6 trillion of the precious metal circulated last year, according to CPM Group, a New York-based research company. “There’s no reason why data cannot be collected from actual prices of spot gold based on floor or electronic trading,” she said. “There’s more than enough data.”

Which is precisely why nothing will change. Sadly, that is also widely known.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/f3zna2xQa_Y/story01.htm Tyler Durden

After last week’s economic fireworks, this one will be far more quiet with earnings dominating investors’ attention: US financials reporting this week include JPM and Wells Fargo tomorrow, BofA on Wednesday, GS and Citi on Thursday, BoNY and MS on Friday. Industrial bellwethers Intel (Thurs) and General Electric (Fri) are also on this week’s earnings docket. On the macro front, this coming week we have two MPC meetings – both in LatAm. For Brazil consensus expects a 25bps hike in the policy rate. For Chile consensus forecasts monetary policy to remain on hold. Among the data releases, one should point out inflation numbers from the US (CPI and PPI), Eurozone, the UK and India. We also have three important US producer and consumer surveys – Empire Manufacturing, Philadelphia Fed (consensus +8.5), and U. of Michigan (consensus 83.5). Among external trade and capital flow stats, we would emphasize US TIC data, as well as current account balances from Japan and Turkey. Finally, the accumulation of FX reserves in China is interesting to track as it provides an indication of CNY appreciation pressure.

With seven Fed speakers scheduled for the week, including Bernanke, the markets could get a better sense of the Fed’s thinking after the weak labour market data last Friday.

Monday, 13 January

• US Fed speakers: Lockhart
• US Federal Budget Balance (Dec): consensus USD-44.0bn, previous USD-135.2bn
• Japan CA Balance (Nov): consensus JPY-368.9bn, previous JPY-127.9bn
• India CPI (Dec): consensus +10.1%yoy, previous +11.2%yoy
• Also interesting: Italy IP (Nov), Israel Trade Balance (Dec)

Tuesday, 14 January

• Fed speakers: Plosser, Fisher
• US Retail Sales (Dec): consensus +0.1%, previous +0.7%
• Euro Area IP (Nov): consensus +1.8%yoy, previous +0.2%yoy
• France Harmonized CPI (Dec): consensus +0.9%yoy, previous +0.8%yoy
• Italy Harmonized CPI (Dec, final): consensus +0.6%yoy, previous +0.6%yoy (flash)
• UK Core CPI (Dec): GS +1.9%yoy, consensus +1.8%yoy, previous +1.8%yoy
• Turkey CA Balance (Nov): consensus USD-4.3bn, previous USD-2.9bn
• Also interesting: US Business Inventories (Nov), China FX Inflows (Dec), Ukraine Trade Balance (Nov)

Wednesday, 15 January

• Fed speakers: Evans
• Brazil MPC: GS and consensus expect a 25bps hike in the policy rate to 10.25%yoy. Given the dovish central bank undertones contained in both the minutes of the Nov 27 Copom meeting and the subsequent Quarterly Inflation Report (QIR) we expect the Copom to moderate the magnitude of rate hikes (following five consecutive 50bp moves). However, given the pressure on the BRL, the December IPCA inflation surprise which frustrated the central bank public commitment to deliver inflation in 2013 below the 5.84% level of 2012, and the stickiness of headline, core, and inflation expectations, we assess a 35% probability of another +50bp hike on Jan 15.
  Brazil IGP-10 Inflation (Jan): GS +5.60%yoy: previous +5.39%yoy
• US Empire Manufacturing (Jan): consensus +4.0, previous +1.0
• US PPI (Dec): consensus +0.4%, previous -0.1%
• US Fed Beige Book
• Japan Machinery Orders (Nov): consensus +11.7%yoy, previous +17.8%yoy
• Spain Harmonized CPI (Dec, final): consensus +0.3%yoy, previous +0.3%yoy (flash)
• Also interesting: Japan Corporate Goods Prices (Dec)

Thursday, 16 January

• Fed speakers: Williams, Bernanke
• US Philadelphia Fed Survey (Jan): consensus +8.5, previous +6.4
• US CPI (Dec): consensus +0.3%, previous flat
• US Initial Jobless Claims: consensus 325K, previous 330K
• US Total Net TIC Data (Nov): previous USD+194.9bn
• Euro Area CPI (Dec, final): consensus +0.8%yoy, previous +0.8%yoy (flash)
• Germany Harmonized CPI (Dec, final): consensus +1.2%yoy, previous +1.2%yoy (flash)
• Also interesting: US Homebuilders’ Survey (Jan), UK RICS Housing Market Survey (Dec), Canada International Securities Transactions (Nov)

Friday, 17 January

• Fed speakers: Lacker
• US U. of Michigan Consumer Sentiment (Jan, prov.): consensus 83.5, previous 82.5
• US IP (Dec): consensus +0.3%, previous +1.1%
• US Capacity Utilitzation (Dec): consensus 79.1%, previous 79.0%
• US Housing Starts (Dec): consensus -9.2%, previous +22.7%
• UK Retail Sales ex-Autos (Dec): consensus +3.2%, previous +2.3%
• Also interesting: Japan Consumer Confidence (Dec), Russia Trade Balance (Nov), Czech Republic CA Balance (Nov), Brazil GDP (Nov), Poland CA Balance (Nov)

Visually, from BofA:

Finally, key events and concerns for the coming week via SocGen:

LACKLUSTER HEADLINE US RETAIL SALES

Headline retail sales are set to clock in at a lacklustre 0.1% mom in December. Retail control, excluding movements in auto, building materials and gasoline outlays, is forecast to climb by a healthier 0.5%. A jump up in January consumer confidence, with the preliminary Michigan report forecast at 88, should ease any downside
fears on the US consumer, however. The January district Fed survey are expected to show some further improvement, consistent with the PMI manufacturing index remaining in the 56.4 to 57.3 range seen over Q4. Finally, we expect housing starts to take a breather in December with a pullback, but forecast a gain in building permits.

UK HOUSING DATA TO BE CLOSELY WATCHED BY FPC

The RICS housing survey will offer further evidence as to just how strong the housing sector is. As highlighted by Chief UK Economist Brian Hilliard in 2014 – tasks for the FPC and MPC, we expect the FPC to be left to deal with any excesses rather than the MPC in 2014. December CPI is set to clock in close to target at 2.2%, slightly up from 2.1% in November as utility price increases start to bite. We forecast December retail sales at -0.2% mom or +2.7% yoy in volume terms.

BCB TO HIKE SELIC RATE TO 10.25%

Inflation and inflation expectations will drive a final 25bp rate hike from the BCB in this cycle on Wednesday. Already at 10%, the Selic target is having a visible impact on the real economy. To the mind of our lead Brazil Economist, Dev Ashish, this just serves to illustrate that Brazil is facing a classic stagflation scenario where reforms are critical for both growth and inflation and where the size of real interest rate increases required to fully control inflation would simply stifle the real economy.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/50sbVsu0ooE/story01.htm Tyler Durden

It was inevitable that virtually at the same time as Goldman said the S&P is overvalued “by almost every metric” that the firm would go ahead and slam US equities in only its first tactically bearish call on US stocks in over a year.

Recall from Friday night:

S&P 500 valuation is lofty by almost any measure, both for the aggregate market (15.9x) as well as the median stock (16.8x). We believe S&P 500 trades close to fair value and the forward path will depend on profit growth rather than P/E expansion. However, many clients argue that the P/E multiple will continue to rise in 2014 with 17x or 18x often cited, with some investors arguing for 20x. We explore valuation using various approaches. We conclude that further P/E expansion will be difficult to achieve. Of course, it is possible. It is just not probable based on history.

 

The current valuation of the S&P 500 is lofty by almost any measure, both for the aggregate market as well as the median stock: (1) The P/E ratio; (2) the current P/E expansion cycle; (3) EV/Sales; (4) EV/EBITDA; (5) Free Cash Flow yield; (6) Price/Book as well as the ROE and P/B relationship; and compared with the levels of (6) inflation; (7) nominal 10-year Treasury yields; and (8) real interest rates. Furthermore, the cyclically-adjusted P/E ratio suggests the S&P 500 is currently 30% overvalued in terms of (9) Operating EPS and (10) about 45% overvalued using As Reported earnings.

Sure enough, here comes Goldman’s global portfolio strategy research team headed by Nielsen, Oppenheimer, Kostin, Garzarelli, and Himmelberg, and pulls another leg out of the Fed-driven rally.

We downgrade the US equity market to underweight relative to other equity markets over 3 months following strong performance. Our broader asset allocation is unchanged and so are almost all our forecasts. Since our last GOAL report, we have rolled our oil forecast forward in time to lower levels along our longstanding profile of declining prices. We have also lowered the near-term forecast for equities in Asia ex-Japan slightly. Near-term risks have declined as the US fiscal and monetary outlook has become clearer.

 

 

Our allocation is still unchanged. We remain overweight equities over both 3 and 12 months and balance this with an underweight in cash over 3 months and an underweight in commodities and government bonds over 12 months. The longer-term outlook for equities remains strong in our view. We expect good performance over the next few years as economic growth improves, driving strong earnings growth and a decline in risk premia. We expect earnings growth to take over from multiple expansion as a driver of returns, and the decline in risk premia to largely be offset by a rise in underlying government bond yields.

 

Over 3 months our conviction in equities is now much lower as the run-up in prices leaves less room for unexpected events. Still, we remain overweight, as near-term risks have also declined and as we are in the middle of the period in which we expect growth in the US and Europe to shift higher.

 

Regionally, we downgrade the US to underweight over 3 months bringing it in line with our 12-month underweight. After last year’s strong performance the US market’s high valuations and margins leaves it with less room for performance than other markets, in our view. Our US strategists have also noted the risk of a 10% drawdown in 2014 following a large and low volatility rally in 2013 that may create a more attractive entry point later this year.

Of course, how the above trade fits with Goldman’s top trade #1 for 2014 revealed in November, which was to go long the S&P funded by an AUD short, one can only wonder.

And now the muppets start to wonder: should we do what Goldman is telling us to do, and blow up as always, or do what Goldman’s trading desk is doing, which probably is buying risk from all those who are selling. Ah, questions.

via Zero Hedge http://ift.tt/1agWxDg Tyler Durden

It was inevitable that virtually at the same time as Goldman said the S&P is overvalued “by almost every metric” that the firm would go ahead and slam US equities in only its first tactically bearish call on US stocks in over a year.

Recall from Friday night:

S&P 500 valuation is lofty by almost any measure, both for the aggregate market (15.9x) as well as the median stock (16.8x). We believe S&P 500 trades close to fair value and the forward path will depend on profit growth rather than P/E expansion. However, many clients argue that the P/E multiple will continue to rise in 2014 with 17x or 18x often cited, with some investors arguing for 20x. We explore valuation using various approaches. We conclude that further P/E expansion will be difficult to achieve. Of course, it is possible. It is just not probable based on history.

 

The current valuation of the S&P 500 is lofty by almost any measure, both for the aggregate market as well as the median stock: (1) The P/E ratio; (2) the current P/E expansion cycle; (3) EV/Sales; (4) EV/EBITDA; (5) Free Cash Flow yield; (6) Price/Book as well as the ROE and P/B relationship; and compared with the levels of (6) inflation; (7) nominal 10-year Treasury yields; and (8) real interest rates. Furthermore, the cyclically-adjusted P/E ratio suggests the S&P 500 is currently 30% overvalued in terms of (9) Operating EPS and (10) about 45% overvalued using As Reported earnings.

Sure enough, here comes Goldman’s global portfolio strategy research team headed by Nielsen, Oppenheimer, Kostin, Garzarelli, and Himmelberg, and pulls another leg out of the Fed-driven rally.

We downgrade the US equity market to underweight relative to other equity markets over 3 months following strong performance. Our broader asset allocation is unchanged and so are almost all our forecasts. Since our last GOAL report, we have rolled our oil forecast forward in time to lower levels along our longstanding profile of declining prices. We have also lowered the near-term forecast for equities in Asia ex-Japan slightly. Near-term risks have declined as the US fiscal and monetary outlook has become clearer.

 

 

Our allocation is still unchanged. We remain overweight equities over both 3 and 12 months and balance this with an underweight in cash over 3 months and an underweight in commodities and government bonds over 12 months. The longer-term outlook for equities remains strong in our view. We expect good performance over the next few years as economic growth improves, driving strong earnings growth and a decline in risk premia. We expect earnings growth to take over from multiple expansion as a driver of returns, and the decline in risk premia to largely be offset by a rise in underlying government bond yields.

 

Over 3 months our conviction in equities is now much lower as the run-up in prices leaves less room for unexpected events. Still, we remain overweight, as near-term risks have also declined and as we are in the middle of the period in which we expect growth in the US and Europe to shift higher.

 

Regionally, we downgrade the US to underweight over 3 months bringing it in line with our 12-month underweight. After last year’s strong performance the US market’s high valuations and margins leaves it with less room for performance than other markets, in our view. Our US strategists have also noted the risk of a 10% drawdown in 2014 following a large and low volatility rally in 2013 that may create a more attractive entry point later this year.

Of course, how the above trade fits with Goldman’s top trade #1 for 2014 revealed in November, which was to go long the S&P funded by an AUD short, one can only wonder.

And now the muppets start to wonder: should we do what Goldman is telling us to do, and blow up as always, or do what Goldman’s trading desk is doing, which probably is buying risk from all those who are selling. Ah, questions.

via Zero Hedge http://ift.tt/1agWxDg Tyler Durden

• Full onslaught 1: New Jersey Gov. Chris Christie’s Aides Pressed Hard for Endorsements (WSJ)
• Full onslaught 2: Feds investigating Christie’s use of Sandy relief funds (CNN)
• Iran nuclear deal to take effect on January 20 (Reuters), Iran to get first $550 million of blocked $4.2 billion on February 1 (Reuters)
• Sen. McCaskill didn’t want to be in same elevator with Hillary Clinton (Hill)
• The banks win again: Basel Regulators Ease Leverage-Ratio Rule for Banks (BBG)
• Ireland’s Rebound Is European Blarney (NYT)
• Democrats prove barrier for Obama in quest for trade deals (FT)
• Federal Reserve Said to Probe Banks Over Forex Fixing (BBG)
• UK Treasury gives debt pledge on Scotland (FT)
• KFC’s Crisis in China Tests Ingenuity of Man Who Built Brand (WSJ)
• Hedge fund Elliott’s latest activitist target: WM Morrisson (FT)
• Amec Agrees to Acquire Foster Wheeler for $3.2 Billion (BBG)
• Ermotti Says UBS Not Considering Investment-Bank Spinoff (BBG)
• German choice for ECB heralds shift as rate clout slips (BBG)

 

Overnight Media Digest

WSJ

* Volkswagen AG plans to invest $7 billion in North America over the next five years, in a bid to accelerate its growth in the region and catch up to key competitors like General Motors Co, Ford Motor Co and Toyota Motor Corp.

* Accenture Plc’s unit, Accenture Federal Services, won a one-year contract to continue technical improvements to the HealthCare.gov site after the government chose not to renew its contract with CGI Group Inc.

* General Motors Co Chief Financial Officer Dan Ammann said the auto maker is “the closest it has ever been” to reinstating a dividend. GM last paid a dividend on its common stock in May 2008.

* Units of DuPont Co, Syngenta AG and Dow Chemical Co sued on Friday to overturn a new law in Hawaii that would restrict the planting and spraying of genetically modified crops.

* The Fifth U.S. Circuit Court of Appeals upheld the existing framework for reviewing claims and disbursing funds, narrowing BP’s options for avoiding what it says are millions of dollars in payments to individuals and business not harmed by the 2010 oil spill in the Gulf of Mexico.

* Toyota Motor Corp expects to boost U.S. sales by 100,000 vehicles this year to 2.3 million vehicles, about 4 to 5 percent ahead of last year, the head of the Japanese auto maker’s North American operations said.

* The Denver Art Museum was set to announce on Monday the largest donation in its history – a gift of 22 paintings worth more than $100 million that will nearly triple the size of its Impressionist collection.

 

FT

Following ferocious industry lobbying, global banking regulators agreed on Sunday to ease new rules aimed at reining in banks’ reliance on debt, providing relief to big investment banks who have been anxious about raising billions in extra capital.

U.S. agribusiness giant Cargill Inc acquired a $200 million stake in Ukraine’s largest agribusiness holding, UkrLandFarming, in a deal that would, according to sources, see both groups join forces to export grains to China and other growing markets in the future.

Google Inc is in the top ranks of technology companies building stockpiles of legally-protected innovations with nearly 2,000 patents awarded in the United States last year, almost double the number of all previous years combined.

Global automobile makers are trying to stay ahead of a swiftly shifting market and fierce competition from the technology industry with more investment in research and development than ever before.

According to a Financial Times poll of 15 steel analysts, world production of steel will rise by 3.6 percent in 2014 with a rebound in Europe and the rest of the world offsetting a slowdown in Chinese growth.

 

NYT

* The Basel Committee for Banking Supervision agreed on Sunday to ease a new rule, meant to rein in risky balance sheets, starting 2018, in an effort to avoid tightening financing for the world’s economy. The regulators signaled there is still no agreement on the final level of the new leverage ratio, which measures how much capital a bank must hold against its loans and other assets.

* Comcast Corp unit NBCUniversal News Group announced a partnership with Now This News, a startup that creates short-form news segments tailored for distribution over social media sites like Vine, Instagram and Snapchat. It was not revealed how much money NBC invested, but the transaction would give it a roughly 10 percent stake, as well as an entry into a new news format.

* Gerchen Keller Capital, an upstart investment firm that bets on lawsuits, was expected to announce on Monday that it has amassed about $260 million for its second fund. Litigation finance, as the business is known, often involves bankrolling plaintiffs in exchange for a slice of the lawsuit’s potential winnings.

* An increasing number of pawn businesses catering to the wealthy offer fast liquidity in exchange for high-end luxury items. With almost 250 years of experience in the exclusive world of high-end pawn, Suttons & Robertsons has come to the United States to fill what it believes is a growing need among wealthy Americans who have spent beyond their means and need a quick – and quiet – infusion of cash in exchange for a few cherished baubles they are willing, at least temporarily, to live without.

* The annual North American International Auto Show has taken on added importance for Detroit, which filed for bankruptcy six months ago, as the city desperately needs a successful show to improve its battered image.

* Indonesia, one of the world’s biggest producers of minerals including gold, nickel, copper, tin and thermal coal, implemented a new law on Sunday banning the export of unprocessed ore.

* A fire at a Citibank branch in Morningside Heights in Manhattan burned for more than 30 hours on Saturday and Sunday, drawing over 200 firefighters before it was extinguished. The fate of customers’ valuables stored in safe deposit boxes at the branch was not known.

 

Canada

THE GLOBE AND MAIL

* Thousands of Nova Scotia Power Inc customers were in the dark Sunday after high winds and heavy rain battered the region. More than 20,000 customers were without power Sunday morning – mostly in the Halifax area – although that number had dropped to around 1,100 by early afternoon, the utility said. Spokeswoman Neera Ritcey said crews were replacing a utility pole that caught fire.

* Singer-songwriter Neil Young spoke out strongly against the federal government’s role in the industrial development of Northern Alberta oil sands.

Reports in the business section:

* Industry Minister James Moore said on Friday that the auction of the 2500 megahertz frequency would take place on April 14, 2015, stressing the licenses would come with strict rules to support competition and potentially lower prices for consumers, especially those in rural areas.

NATIONAL POST

* Photos of Toronto Mayor Rob Ford posing with other bargoers at Muzik nightclub drew dozens of comments on Instagram and Twitter. Ford publicly vowed to stop drinking alcohol late last year as the crack video scandal engulfing his office hit a fever pitch – and none of the photos of the mayor posted online suggested he had broken the vow.

FINANCIAL POST

* Target Corp revealed growing pains at its Canadian operations will drag down fourth-quarter results by more than it initially anticipated.

 

China

CHINA SECURITIES JOURNAL

– China will reduce land availability for construction in the Eastern region and cities with a population of over 5 million will not be allowed more building projects, said the Ministry of Land and Resources in an annual meeting last Friday.

CHINA DAILY

– Countries involved in the South China Sea conflict should demonstrate wisdom in resolving issues and be on guard against U.S. interference, said a commentary in the paper. Washington’s recent accusations that China’s fishing regulations in the area were provocative are unreasonable, it added.

PEOPLE’S DAILY

– Everyone is a beneficiary of China’s reforms, said a commentary in the paper that acts as the Party’s mouthpiece.

 

Britain

The Telegraph

THE NORTH SEES FASTEST GROWTH IN ANY REGION

Companies in the North of England are now growing at the fastest pace seen in any UK region one of the country’s leading business figures has said in a sign that the economic recovery is broadening.

UK TO GUARANTEE INDEPENDENT SCOTLAND’S DEBT

The Treasury will on Monday pledge to guarantee all of Britain’s debt even if Scotland votes to leave the UK, in an attempt to prevent creditors from pushing up the cost of government borrowing.

The Guardian

U.S. BANK RESULTS SET TO REIGNITE CONTROVERSY OVER CITY BONUSES

Controversy over City pay is likely to be re-ignited this week when the major U.S. banks – including JPMorgan Chase & Co and Goldman Sachs – release their results for 2013.

MORRISONS MAY SELL 10 PCT OF PROPERTIES TO APPEASE SHAREHOLDERS

British grocer WM Morrison is reported to be considering selling off up to 10 percent of its properties to appease shareholders after bad tidings over Christmas trading. While the supermarket chain has traditionally made store ownership a key plank of its business, owning about 90 percent of its stores, shareholder pressure has pushed the company to consider selling off and leasing back some of its 9 billion pound property portfolio.

The Times

AMAZON, GOOGLE, FACEBOOK AND APPLE ‘MUST NOT BE SO AGGRESSIVE OVER UK TAX’

One of Britain’s biggest shareholders in Amazon, Google Inc, Facebook and Apple Inc has warned them not to be so aggressive in avoiding UK corporation tax in the wake of parliamentary and public anger last year. James Anderson, manager of the £2.6 billion Scottish Mortgage Investment Trust, said the American companies were taking risks by so aggressively seeking to minimise their tax bills.

‘CATCH-UP’ PAY DEMANDS SPELL TROUBLE, WARNS BOSS OF ACAS

Business must brace itself for a wave of “catch-up” pay demands in the private sector after five years of pay freezes or below-inflation raises. The warning has come from the outgoing head of Acas, the industrial dispute mediation agency, who has also cautioned that private sector pay claims could fuel unrest over wages in the public sector.

The Independent

JAGUAR LAND ROVER NOTCHES UP RECORD-BREAKING GLOBAL SALES

Britain’s largest car manufacturer Jaguar Land Rover has reported record breaking global sales for 2013, the company has said. Together the iconic British brands sold 425,006 vehicles in 2013 – up 19 percent on 2012 – setting new sales records in 38 international markets.

 

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
December Treasury Budget at 14:00–Current consensus is $44.0B

ANALYST RESEARCH

Upgrades

Autodesk (ADSK) upgraded to Overweight from Equal Weight at Morgan Stanley
Banco Bilbao (BBVA) upgraded to Overweight from Equal Weight at Barclays
Carnival (CCL) upgraded to Neutral from Reduce at SunTrust
Diana Shipping (DSX) upgraded to Buy from Hold at Deutsche Bank
Estee Lauder (EL) upgraded to Buy from Hold at Deutsche Bank
F5 Networks (FFIV) upgraded to Outperform from Market Perform at William Blair
Fortinet (FTNT) upgraded to Overweight from Equal Weight at Morgan Stanley
Garmin (GRMN) upgraded to Outperform from Perform at Oppenheimer
HomeAway (AWAY) upgraded to Overweight from Equal Weight at Barclays
Jacobs Engineering (JEC) upgraded to Buy from Neutral at UBS
LPL Financial (LPLA) upgraded to Overweight from Neutral at JPMorgan
Life Time Fitness (LTM) upgraded to Buy from Hold at KeyBanc
MGM Resorts (MGM) upgraded to Buy from Neutral at BofA/Merrill
Macy’s (M) upgraded to Outperform from Neutral at Macquarie
Marriott (MAR) upgraded to Overweight from Neutral at JPMorgan
Multimedia Games (MGAM) upgraded to Buy from Neutral at Janney Capital
Nimble Storage (NMBL) upgraded to Outperform from Sector Perform at Pacific Crest
Pinnacle West (PNW) upgraded to Neutral from Sell at Goldman
Qihoo 360 (QIHU) upgraded to Buy from Hold at Stifel
Red Hat (RHT) upgraded to Overweight from Equal Weight at Morgan Stanley
Strategic Hotels (BEE) upgraded to Buy from Underperform at BofA/Merrill
Towers Watson (TW) upgraded to Outperform from Neutral at Credit Suisse
Ventas (VTR) upgraded to Top Pick from Outperform at RBC Capital
Visa (V) upgraded to Buy from Neutral at Citigroup

Downgrades

BlackBerry (BBRY) downgraded to Underperform from Perform at Oppenheimer
Corcept Therapeutics (CORT) downgraded to Hold from Buy at Stifel
Cree (CREE) downgraded to Hold from Buy at Stifel
Crown Holdings (CCK) downgraded to Neutral from Outperform at Macquarie
El Paso Electric (EE) downgraded to Sell from Neutral at Goldman
InterContinental Hotels (IHG) downgraded to Underperform from Hold at Jefferies
Marriott (MAR) downgraded to Underperform from Hold at Jefferies
Marsh & McLennan (MMC) downgraded to Neutral from Outperform at Credit Suisse
Peregrine (PSMI) downgraded to Hold from Buy at Deutsche Bank
Plexus (PLXS) downgraded to Underperform from Market Perform at Raymond James
Ply Gem (PGEM) downgraded to Neutral from Overweight at JPMorgan
Principal Financial (PFG) downgraded to Neutral from Outperform at Macquarie
Sanmina (SANM) downgraded to Underperform from Market Perform at Raymond James
Shutterfly (SFLY) downgraded to Equal Weight from Overweight at Barclays
Symantec (SYMC) downgraded to Underweight from Equal Weight at Morgan Stanley
TiVo (TIVO) downgraded to Neutral from Buy at Goldman

Initiations

Booz Allen (BAH) initiated with a Neutral at Citigroup
ChemoCentryx (CCXI) initiated with a Neutral at Goldman
Cliffs Natural (CLF) initiated with a Hold at Brean Capital
Continental Resources (CLR) initiated with an Outperform at BMO Capital
EMC (EMC) initiated with an Overweight at Atlantic Equities
F.N.B. Corp. (FNB) initiated with a Buy at Jefferies
HP (HPQ) initiated with an Overweight at Atlantic Equities
Hilton Worldwide (HLT) initiated with an Equal Weight at Evercore
IBM (IBM) initiated with a Neutral at Atlantic Equities
NCR (NCR) resumed with an Overweight, added to Focus List at JPMorgan
National Penn (NPBC) initiated with a Hold at Jefferies
NetApp (NTAP) initiated with a Neutral at Atlantic Equities
Qlik Technologies (QLIK) initiated with a Neutral at Atlantic Equities
ServiceNow (NOW) initiated with an Outperform at RBC Capital
Shutterfly (SFLY) initiated with an Outperform at RBC Capital
Silicom (SILC) initiated with a Buy at Needham
Splunk (SPLK) initiated with an Overweight at Atlantic Equities
Stericycle (SRCL) initiated with an Outperform at Credit Suisse
Tableau Software (DATA) initiated with a Neutral at Atlantic Equities
Teradata (TDC) initiated with an Overweight at Atlantic Equities

HOT STOCKS

Goldcorp (GG) offered to acquire Osisko for C$5.95 per share in cash and shares
Yahoo (YHOO) said malware-infected ads issue larger than previously reported
Dunkin’ (DNKN) reported strong FY13 growth, plans to open 685-800 new stores in FY14
Telstra (TLSYY) to sell majority stake in Sensis for A$454M
Judge estimated EnPro’s (NPO) GST mesothelioma liability at $125M
DOJ probing export and import procedures at Honeywell (HON), Reuters reports
Orbital’s (ORB) Cygnus spacecraft successfully berthed with International Space Station
Covidien (COV) announced acquisition, JV agreement to meet ‘value segment’ markets
JinkoSolar (JKS) to separate Solar PV project business

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Platinum Group (PLG)

NEWSPAPERS/WEBSITES

• Volkswagen (VLKAY) to invest $7B in North America over five years, WSJ reports
• Microsoft (MSFT) News Twitter account hacked by SEA, Business Insider reports
• Cyber attacks said to spread to other well known retailers, Reuters reports
• Rogers Communications (RCI) plans Netflix-like service, Globe and Mail reports
• Fed investigating banks over forex fixing, Bloomberg reports
• Alcatel-Lucent (ALU) in talks to sell enterprise business, Bloomberg reports
• UBS (UBS) CEO: No spinoff of investment bank, Reuters reports
• New Ford (F) aluminum F-150 pickup marks new era, WSJ reports
• Yum struggles in China a year after KFC crisis began, WSJ reports
• Discovery (DISCA), Scripps Networks abandon merger talks, WSJ reports
• Eminence backing Men’s Wearhouse (MW) bid for Jos. A. Bank (JOSB), WSJ reports
• GM (GM) CFO says company close to reintroducing dividend, Reuters says

BARRON’S

Worst might be over for Target (TGT) investors
Cisco (CSCO) shares could return 20%
Macy’s (M), Dick’s (DKS), Home Depot (HD), Lowe’s (LOW) could benefit from cold
Magna (MGA) could deliver returns of almost 30%
Titan International (TWI) could rebound in 2014
Drop presents entry point for Ford (F), Schlumberger (SLB), Armstrong World (AWI)
ZTE Corp. (ZTCOY), others think Apple (AAPL), Samsung (SSNLF)are vulnerable

SYNDICATE

Quantum (QTWW) files to sell 1.35M shares of common stock for holders
Talmer Bancorp (TLMR) files registration statement for proposed IPO
Teekay Offshore Partners (TOO) files to sell 1.75M common units for holders
UQM Technologies (UQM) files to sell $30M of common stock, warrants
UR-Energy (URG) files to sell 12.91M common shares for holders

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/wPxMyGhLYCI/story01.htm Tyler Durden

Today’s AM fix was USD 1,246.00, EUR 911.89 and GBP 757.86 per ounce.
Friday’s AM fix was USD 1,232.25, EUR 906.53 and GBP 750.78 per ounce.

Gold climbed $18.70 or 1.52% Friday, closing at $1,247.10/oz. Silver rose $0.56 or 2.86% closing at $20.13/oz. Platinum climbed 14.85, or 1.1%, to $1,428.10/oz and palladium rose $5.99 or 0.8%, to $739.10/oz. Gold was up 0.87% and silver was down 0.15% for the week.

Today’s gold prices continued last week’s rally, strengthened by a disappointing U.S. jobs number which creates doubts about the strength of the U.S. economic recovery.

Gold in U.S. Dollars, 1 Year – (Bloomberg)

The Perth Mint‘s Bron Suchecki has written an interested blog post regarding the real risk of gold coin shortages and rationing happening again:

The extraordinary demand for precious metals coins following the 2008 global financial crisis caught the minting industry by surprise, resulting in never before seen coin rationing and shortages.

It seems not much has changed, with recent reports that the UK Royal Mint ran out of 2014 Sovereign gold coins due to “exceptional demand”, as well as the continuation for over one year of an allocation program first put into place early 2013 by the US Mint on its ever popular silver Eagle bullion coins.

While these recent events have been limited to specific coins, with availability of other leading bullion coins like the Perth Mint’s gold Kangaroo not affected, it does seem to indicate that worldwide minting production capacity is still unable to meet demand surges.

However, it is little appreciated that the bottleneck in the global coin minting process is blank (planchet) manufacture. This is a far more complex process than simple stamping of a coin, particularly around purity and accurate weight control.

If you dig deep, you will find that many of the coin supply problems come from underestimation of demand and the resulting exhausting of blank inventories. Often, blank suppliers are mints themselves and can face conflicts where they earn more by prioritising blanks for internal use rather than supply externally. Running higher blank inventories is often not an option, due to the cost of funding the high dollar value of the inventory.

 
How high coin premiums can go when coin demand overwhelms production capacity – (Sharelynx)

Notwithstanding the capacity expansion by blank suppliers over the past five years, in my opinion there is no way the industry can meet the demand that would occur were precious metals to see even a small bit of interest from the mass market. While cast bars are a lot easier to make and refiners are much more casting production capacity, I am not even sure if it could meet sustained mass market demand.

For now 2008 style shortages and rationing don’t seem to be on the horizon but the fact that the UK and US Mint are having supply issues on a few of their product with metal prices at these low levels is an indicator that as prices rise and (re)attract investor interest, shortages and rationing may become a reality of coin buying life again.

The interesting and informative blog post can be read here.

This is another reason why is you are considering buying coins or bars in volume for delivery or bullion storage in Zurich or Singapore, it is best not to wait.

“Don’t wait to buy gold and silver. Buy gold and silver and wait.”
 
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/0NDwNF9ViFo/story01.htm GoldCore