Month: September 2011

By Shanker Kukereja

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About the Author

FXCENTRAL is a leading Forex Traders established with the goal of providing a wide array of trading products to individual traders, Online FX Advantage, Forex Expert Advisor

By CountingPips.com

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators cut their positions of the euro against the US dollar for a second consecutive week and now stand at a bearish level for the European common currency. Non-commercial futures positions, those taken by hedge funds and large speculators, added to their long positions in favor of the Australian dollar and the Canadian dollar directly against the US dollar while decreasing their bets for the euro, Swiss franc, British pound sterling, Japanese yen, New Zealand dollar and the Mexican peso, according to data on August 30th.

This week’s notable changes included British pound sterling positions falling lower and close to back over to the short side while New Zealand dollar positions fell lower for the fourth consecutive week.

EuroFX: Currency speculators decreased their futures positions for the euro against the U.S. dollar for a second consecutive week to an overall net short position as of August 30th. Euro positions dipped to a total of -384 net short contracts from the previous week’s total of 2,539 net long contracts on August 23rd. Euro positions are at their lowest point since August 9th when net contracts reached a low of -8,273.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: British pound sterling positions fell after rebounding the previous week. Pound positions decreased to a total of 444 long positions following a total of 10,961 short positions as of August 23rd.

JPY:  The Japanese yen net contracts declined for a second consecutive week as of August 30th. Yen net long positions edged lower to a total of 41,185 net long contracts reported on August 30th following a total of 47,139 net long contracts reported on August 23rd.

CHF: Swiss franc long positions edged slightly lower after increasing for two consecutive weeks. Speculators decreased bets on Swiss currency futures to a total of 9,342 net long contracts as of August 30th following a total of 9,637 net long contracts as of August 23rd. Swiss franc speculative futures positions had dropped to their lowest level in over a year on August 9th at a total of 4,655 net long contracts.

CAD: The Canadian dollar positions increased for a second consecutive week as of August 30th. CAD net contracts rose to a total of 13,939 net long contracts as of August 30th following an increase to a total of 8,804 net long contracts on August 23rd.

AUD: The Australian dollar long positions rose for a third consecutive week as of August 30th following a sharp decline on August 9th. AUD futures positions advanced higher to a total net amount of 47,569 long contracts as of August 30th following a total of 43,574 net long contracts reported as of August 23rd. The August 9th drop to the 29,723 level marked the lowest level for Australian dollar speculative positions since November 2010.

NZD: New Zealand dollar futures positions fell for a fourth consecutive week to a total of 16,565 net long contracts on August 30th following a decline to 16,876 net long contracts registered on August 23rd. NZD contracts had increased for five straight weeks to their highest level in over a year at 24,126 net long positions as of August 2nd before declining for four consecutive weeks.

MXN: Mexican peso long contracts continued to edge lower and declined for a fifth straight week as of August 30th. Peso positions declined to a total of 20,880 net long speculative positions as of August 30th following a total of 21,835 contracts that were reported as of August 23rd. Peso positions are currently at their lowest level since September 14th of 2010 when net contracts equaled 14,957.

COT Data Summary as of August 30, 2011
Large Speculators Net Positions vs. the US Dollar

EUR -384
GBP +444
JPY +41185
CHF +9342
CAD +13939
AUD +47569
NZD +16565
MXN +20880

The past week in monetary policy saw just 4 central banks review interest rate settings: Belarus increased +500bps to 27.00%, Brazil dropped -50bps to 12.00%, Israel held at 3.25% and Ghana held at 12.50%.  Aside from interest rates, the People’s Bank of China was reported as planning to increase the scope of its Required Reserve Ratio, which by some estimates would amount to an effective 100 basis point increase.  Also on required reserves, the State Bank of Vietnam raised its foreign currency required reserve ratios by 100 basis points.

Following are some of the key quotes from the monetary policy statements and media releases from the banks that reviewed interest rates over the past week:

• Banco Central do Brasil (dropped rate -50bps to 12.00%): “Reevaluating the international scenario, the committee considers that there has been substantial deterioration, shown by, for example, generalized and large reductions in growth projections for the principal economic blocks.  The committee understands that this increases the chances that restrictions that are today seen in various mature economies will prolong themselves for a longer period than expected.” …”Therefore, the committee understands that the international scenario shows a bias toward disinflation on the relevant horizon.”
• National Bank of Belarus (increased rate +500bps to 27.00%): [Google Translated]: “Such an increase in refinancing due to the need to tighten monetary policy to stabilize the foreign exchange market and reduce the intensity of price increases. In addition, increasing the refinancing rate will increase the amount of compensation to depositors of costs associated with inflationary pressures, and will be an additional deterrent to the growth of money supply.”
• Bank of Israel (held rate at 3.25%): “The decision to leave the interest rate for September at 3.25 percent is consistent with the process of returning the inflation rate to within the target price-stability range of 1–3 percent a year within the next twelve months, and with supporting economic growth while maintaining financial stability.  The future direction of changes in the interest rate will be dependent on the inflation environment, economic growth in Israel and abroad, the monetary policy of the leading central banks, and developments in the exchange rates of the shekel.”
• Bank of Ghana (held rate at 12.50%):“Inflation expectations are well-anchored and have  stabilized along the single digit path, supported by favourable food prices. The rate has continued to decline and the 9 per cent target for the year is achievable.” However the Bank also noted: “Despite the improved macroeconomic fundamentals, upside risks to inflation are emerging in the form of the adjustment in utility tariffs, wage pressures and other oil-induced and external pressures that may result in the overheating of the economy.”

The Bank of Ghana held its key lending rate unchanged at 12.50%, pausing after two consecutive 50 basis point cuts.  Bank of Ghana Governor, Kwesi Amissah-Arthur, said: “Inflation expectations are well-anchored and have  stabilized along the single digit path, supported by favourable food prices. The rate has continued to decline and the 9 per cent target for the year is achievable.” However the Bank also noted: “Despite the improved macroeconomic fundamentals, upside risks to inflation are emerging in the form of the adjustment in utility tariffs, wage pressures and other oil-induced and external pressures that may result in the overheating of the economy.”

 Article by DividendOpportunities

Recently, I’ve talked a lot about buying “forever” stocks. These are the stocks I think that you can buy, hold, and basically forget about — all without losing much sleep at night.

When you buy this exclusive class of stocks and let them grow year over year, you increase your chance of earning big returns, and you decrease the odds of losing money.

It’s such a simple concept… and it works.

I’ve told you before about the Oppenheimer study that looked back as far as 1950 and found the S&P 500 has NEVER suffered a loss in a 20-year period.

But we all know that holding through thick and thin can be a challenge. After all, no one likes to see their holdings lose money, even if it’s temporary.

But when you look at the right kind of “forever” ideas, holding for the long term is not nearly as difficult — because they show a remarkable ability to hold up, even in bad markets.

Take the performance of the stocks I recently selected as my “10 Best Stocks to Hold Forever.” Since the beginning of the downturn that began on July 22nd through Tuesday’s close, the S&P 500 has dropped -13.4%.

But these 10 “forever” stocks are down just -6.5% during that same time period — less than half as much.

In fact, one of these 10 investments, MasterCard (NYSE: MA), soared 13% on August 3rd, following a great earnings announcement. That certainly helped investors cushion the blow the next day, when the Dow lost more than 500 points.

And if you look over a longer period of time, the difference is even more prominent. During the past year the average return on these “forever” stocks is 25.4%, while the S&P is only up 11.1%.

Now I’m not trying to brag about how these stocks missed the downturn while investors saw trillions in market cap evaporate. My job is to help investors make money, so I want to show you why these stocks did better.

If you know what to look for, then you’ll be able to spot additional “forever” stocks on your own.

Unfortunately, you can’t just buy any stock, hold it forever, and expect to come out ahead. The market is littered with Enrons, Worldcoms, even General Motors. Holding forever didn’t matter a lick with them.

So when I look at our “forever” investments, there are three major things that stand out to me. I look for companies that…

– Enjoy huge (and lasting) advantages over the competition
– Pay their investors each and every year by dishing out fat dividends
– Buy back massive amounts of their own stock

My research has shown that more often than not, these are the companies that can make you money in the long run. And once you find them, the strategy is simple — just buy shares and hold them for the long term.

It makes sense — strong companies that take care of their shareholders tend to do better over the long-run.

Take one of my “forever” stocks, Philip Morris (NYSE: PM), for example. Philip Morris is one of the most dominant companies I’ve ever researched. This company sells its products in 180 countries and owns 7 of the world’s top 15 global brands in its market.

But it’s also the most shareholder-friendly company I’ve ever seen. In the past three years it has raised its dividend 39.1%… and by the end of last year, the company had repurchased more than 330 million shares (about 16% of all shares outstanding). That’s one reason why earnings per share jumped 20% in 2010.

Buy it now and you’ll lock in a solid yield of nearly 4%, and I expect another dividend increase in the next quarter or two. Meanwhile, the company plans billions more in share repurchases this year, which should support the share price in just about any market.

But not only is there long-term upside potential. Philip Morris sells cigarettes, a product whose demand rarely fluctuates. That sort of business stability has meant stability in the share price as well, which lets investors sleep well at night.

Of course, with investing there is never a surefire thing, and in fact, some of my “10 Best Stocks to Hold Forever” are down since we first went public with the list in mid-July — but not nearly as much as the market.

That said, I think investing in companies with the traits I described above could be the key to profiting in the stock market. By choosing strong, shareholder-friendly companies, you’re investing in healthy businesses that won’t crumble at the first sign of financial panic.

And with the stock market whipsawing as it has been, knowing that your investments have a great track record of holding up nicely in a downturn is a valuable asset in and of itself.

[Note: You can learn more about the rest of my “10 Best Stocks to Hold Forever” — including several names and ticker symbols — by viewing our latest research here.]

All the best,

Paul Tracy
StreetAuthority Co-founder, Chief Investment Strategist — Top 10 Stocks

Disclosure: StreetAuthority owns shares of PM as part of Top 10 Stocks $100,000 “real money” portfolio.  In accordance with company policies, StreetAuthority always provides readers with at least 48 hours advance notice before buying or selling any securities in any “real money” model portfolio.

Sept. 2 (Bloomberg) — Peter Hambro, chairman of Petropavlovsk Plc, discusses gold prices and China’s demand for iron ore. He speaks with Maryam Nemazee on Bloomberg Television’s “The Pulse.” (Source: Bloomberg)

London Gold Market Report
from Ben Traynor
BullionVault
Friday 2 September, 09:00 EDT

U.S. DOLLAR gold prices rose more than 2% following the start of trade in London on Friday, breaching $1878 per ounce following the publication of weak US jobs data

Nonfarm payroll data published at 8.30am New York time showed the US economy added no jobs in August – the worst result since September 2010 showed a slight decline.

Silver prices meantime smashed through $43 per ounce – a near 4% weekly gain as we head towards the weekend.

European stock markets slid throughout the morning – with the falls accelerating following the nonfarms announcement. The FTSE 100 dropped 0.7% in less than five minutes, while the German DAX dropped 1.1% over the same five minutes.

“Investors are coming to grips with the magnitude of how severely the US economy and global economy have and will slow,” said Adam Cole, global head of foreign exchange at RBC Capital Markets, speaking before the jobs data were announced.

“Most of the problems in the US have a root in the lack of sustainable employment growth.”
“People are weighing whether we’re facing a looming recession in 2012,” adds Nick Nelson, head
of European equity strategy at UBS.

“There’s enough background noise in Europe, the US and Asia to remind people of the many risks out there.”

The manufacturing sectors of several major economies contracted in August, while others grew at very low rate, according to official purchasing manager index data released Thursday.

Manufacturing PMI in Germany, for example, dropped to 50.9 – down from 52.0 the previous month (a figure below 50 indicates contraction).

“German PMI manufacturing has moved uncomfortably close to contraction…while Eurozone manufacturing has pushed deeper into negative growth,” notes Marc Ground, commodities strategist at Standard Bank.

“This should only serve to heighten concern over a possible Eurozone recession to the benefit of gold and silver.”

The European Central Bank should cut interest rates “as insurance to lower the risk of outright recession re-emerging,” reckons Julian Callow, chief European economist at Barclays Capital in London.

“The economic deterioration has become sufficiently rapid and alarming.”

“A weakening of global economic growth…should enable authorities to begin easing monetary conditions over the coming 3-6 months,” adds a note from French investment bank Natixis.

Selling official reserves of gold bullion, meantime, “is not a solution” to the sovereign debt crisis, news agency Reuters quotes Philip Klapwijk, executive chairman of leading precious metals consultancy GFMS.

“The extent of the problem and the holes that need to be filled are so large that the gold doesn’t really provide a solution.”

Last year’s Greek bailout, for example, was valued at €110 billion, while the most recent one agreed in July adds a further €109 billion to the rescue bill.

By contrast, WGC data suggest Greece officially holds just €4.7 billion of gold if valued at this morning’s AM London Fix price.

Even the US – holder of the world’s largest stock of official gold reserves – could not clear its debt by selling gold. US national debt is currently over $14.3 trillion – while its gold reserves are worth less than 4% of that at $484.8 billion.

Not only that, but “foreign exchange reserves are held and managed by central banks, not by governments,” points out Natalie Dempster, director of government affairs at the World Gold Council.

“[They] are set aside for specific purposes – defense of currency, payment of external debt obligations and payment of imports.”

In 2009, Bank of Italy governor Mario Draghi – who will take over from Jean-Claude Trichet in November as president of the European Central Bank – refused a request made from Italy’s government to sell off some of the country’s official gold reserves.

Over in Hong Kong meantime, the average daily traded volume of gold bullion last month was equivalent to 10 million ounces (311 tonnes) – double the daily volumes seen earlier in the year –according to the Chinese Gold & Silver Exchange Society, 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.

Sept. 2 (Bloomberg) — Mohamed El-Erian, chief executive officer at Pacific Investment Management Co., talks about the Aug. jobs report and the outlook for the U.S. economy. Payrolls were unchanged last month, the weakest reading since September 2010, after an 85,000 gain in July that was smaller than initially estimated, the Labor Department said today in Washington. El-Erian speaks with Betty Liu, Jon Erlichman and Dominic Chu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

Sept. 2 (Bloomberg) — Tom Elliott, a global strategist at JPMorgan Asset Management, talks about the outlook for the U.S. labor market. He speaks with Francine Lacqua on Bloomberg Television’s “On the Move.” (Source: Bloomberg)