Indeud…
“A long-term chart of the S&P 500 would show a stock market that’s going up and sitting near all-time highs.
But this isn’t the case when you price the S&P 500 in gold.
Citi’s Tobias Levkovich includes this chart of stock priced in gold. Levkovich actually uses the chart to make the point that stocks are attractive relative to gold.
From his latest note to clients….”
Comments »“Political risk has entered our vocabulary,” writes Ian Bremmer pointing to the fiscal cliff, the eurozone crisis, and the turmoil in the Middle East.
Every year, Bremmer, the head of Eurasia Group, publishes a list of the top 10 risks the world faces. He also includes a couple of red herrings of which we should be mindful.
Believe it or not, Bremmer actually thinks that the world may be a little too worried about what’s going on in geopolitics.
“Looking to 2013, political risk in the developed world is now overstated,” he writes. “Despite the chaos in Congress–which we’ll surely see much more of in the coming year–concerns about the fiscal cliff in the United States have been overplayed. So too the fragmentation of the eurozone. And the impact of continued zero growth in Japan.”
But this doesn’t mean we should be dismissive of the risks.
What follows are Bremmer’s top 10 risks for 2013, key excerpts from his report, and a list of the red herrings.
“LONDON (Reuters) – Fragile economies and extreme weather have combined to crank up the global risk dial in the past year, creating an increasingly dangerous mix, according to the World Economic Forum.
Despite Europe’s avoidance of a euro break-up in 2012 and the United States stepping back from its fiscal cliff, business leaders and academics fear politicians are failing to address fundamental problems.
That is the conclusion of the group’s Global Risks 2013 report, which surveyed more than 1,000 experts and industry bosses and found they were slightly more pessimistic about the outlook for the decade ahead than a year ago.
“It reflects a loss of confidence in leadership from governments,” said Lee Howell, the WEF managing director responsible for the report.
Severe wealth gaps and unsustainable government finances were seen as the biggest economic threats facing the world, as they were last January. There was also a marked increase in focus on the dangers posed by severe weather.
The 80-page analysis of 50 risks for the next 10 years comes ahead of the World Economic Forum’s (WEF) annual meeting in the Swiss ski resort of Davos from January 23 to 27, where the rich and powerful will ponder the planet’s future.
Bringing together business leaders, politicians and central bankers, Davos has come to symbolize the modern globalised world dominated by successful multinational corporations….”
Comments »“WASHINGTON (AP) — Monsanto says its net income nearly tripled in the agricultural products company’s first quarter as sales of its biotech corn seeds expanded in Latin American countries.
The company, which is based in St. Louis, is also raising its profit guidance for the year, and shares are up 4 percent in premarket trading.
Monsanto said Tuesday that it earned $339 million, or 63 cents per share, in the three months ended November 30, from $126 million, or 23 cents per share, in last year’s quarter. Revenue climbed 21 percent to $2.9 billion.
Analysts polled by FactSet expected Monsanto to report earnings of 36 cents per share on revenue of $2.6 billion.
Monsanto has said it expects international sales to account for half of its growth in seeds for fiscal 2013.”
Comments »“Sears Holdings Corp. (SHLD) said Lou D’Ambrosio is stepping down as chief executive officer and Chairman Edward Lampert will take over the job as the billionaire hedge fund manager works to revive the retailer.
The sudden departure of D’Ambrosio, 48, was prompted by family health matters, the Hoffman Estates, Illinois-based company said yesterday in a statement. Lampert, 50, will take over at the end of the company’s fiscal year on Feb. 2.
Lampert becomes Sears’s fifth CEO since he merged the retailer and Kmart in March 2005 as the more than century-old department-store chain works to emerge from hard times. Sales have slid for five straight years and the company posted a $3.14 billion loss in its last fiscal year amid competition fromWal- Mart Stores Inc. (WMT) and Home Depot Inc. (HD)…”
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“WASHINGTON (Reuters) – Small business sentiment clawed back from a 2-1/2 year-low in December, but owners’ assessment of the labor market remained downbeat, a survey showed on Tuesday.
The National Federation of Independent Business said its optimism index edged up half a percentage point to 88 last month, the second lowest reading since March 2010. The index hit a 2-1/2 year-low of 87.5 in November.
The December survey does not capture the 11th hour deal reached in the U.S. Congress to prevent a raft of sharp cuts in government spending and higher taxes, or the fiscal cliff, that could have drained about $600 billion from the economy at the start of the year.
“Having some certainty about tax rates and some ‘tax extenders’ will provide some relief to owners, but doesn’t guarantee a more positive forecast for the economy,” the NFIB said in a statement.
“The January survey will sort this out – will higher taxes and spending cuts be viewed as a ‘positive’?”
Labor market gauges worsened last month, with only a net 1 percent of small business owners saying they planned to create new jobs. There was a slight drop in the share of owners reporting that job vacancies were hard to fill.
“More owners expect their real sales volumes to be lower in the first quarter than predict higher sales and more owners plan to reduce inventories than plan to add to them,” said the NFIB.
It said capital spending remained in ‘maintenance’ mode, while plans to make capital outlays remained at recession levels.
(Reporting By Lucia Mutikani; Editing by Neil Stempleman)”
Comments »“State and local governments are in their best financial shape since the recession, giving them leeway to cushion the U.S. economy from federal budget cuts with spending and hiring of their own.
After slashing their workforces by about half a million in the past five years, state and local authorities will add employees in 2013, said Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. Their payrolls in the fourth quarter will be 220,000 larger than in the same period for 2012, he projects….”
Comments »“U.S. stock futures were little changed, following the Standard & Poor’s 500 Index’s decline yesterday, before Alcoa Inc. (AA) publishes its quarterly results, kicking off the corporate-earnings season.
Alcoa gained 0.9 percent as analysts forecast the aluminum producer will report its strongest annual earnings growth in three years. Yum! Brands Inc. (YUM) tumbled 5 percent after saying fourth-quarter sales in China decreased more than it had projected. Plexus Corp. (PLXS) slid 4.3 percent in late trading yesterday after saying that it expects revenue and earnings in the fiscal first quarter to fall short of its previous estimate.
S&P 500 futures expiring in March declined less than 0.1 percent to 1,455.1 at 7:27 a.m. in New York. The equity benchmark retreated 0.3 percent yesterday, after rallying to a five-year high last week. Contracts on the Dow Jones Industrial Average added 4 points, less than 0.1 percent, to 13,311 today…”
Comments »“Treasuries are off to their worst start to a year since 2009 as money managers prepared to bid at three sales of notes and bonds totaling $66 billion this week, starting with a $32 billion three-year debt auction today.
U.S. government securities, little changed today, handed investors a 0.7 percent loss in 2013 as of yesterday, according to Bank of America Merrill Lynch indexes. It was the biggest decline for a first week since the Treasury was preparing to ramp up debt sales four years ago as it tried to snap a recession. Bonds slid after the Federal Reserve indicated it may stop its debt purchases in 2013 and as lawmakers averted the so- called fiscal cliff of spending cuts and tax increases….”
Comments »“Brazil swap rates rose as a measure of inflation accelerated, bolstering bets that policy makers will have to raise borrowing costs to tame price increases.
Swap rates on contracts due January 2015 rose four basis points, or 0.04 percentage point, to 7.74 percent, matching a one-week high reached on Jan. 4. The real gained 0.2 percent to 2.024 per U.S. dollar at 10:06 a.m. in Sao Paulo.
The Getulio Vargas Foundation’s IPC-S gauge, which monitors prices in Brazil’s seven biggest cities, rose 0.77 percent in the 30 days ending Jan. 7. The median estimate of 14 analysts surveyed by Bloomberg was for a 0.71 percent increase.
“Inflation numbers continue surprising on the upside and are one of the principal risks for 2013,” said Vladimir Caramaschi, the chief strategist at Credit Agricole Brasil SA (ACA), said in a phone interview from Sao Paulo.”
Comments »“The pound fell toward the weakest level in a month against the dollar after an industry report showed U.K. retail sales slowed in December, adding to signs Britain’s economy is lagging behind U.S. growth.
Sterling depreciated against all except two of its 16 major counterparts before a Bank of England meeting this week at which policy makers are forecast to keep interest rates at a record low as it struggles to stoke a recovery. The U.K. economy shrank 0.1 percent last year, while the U.S. expanded 2.2 percent, according to a Bloomberg News surveys. Gilts rose as the Debt Management Office sold 1.5 billion pounds ($2.41 billion) of bonds due in December 2030.
“U.S. growth is outperforming U.K. to such an extent that the last time we saw this kind of a differential was pretty much in the 1980s,” said Peter Kinsella, a senior foreign-exchange strategist at Commerzbank AG in London. “Definitely you’ll see lower levels in cable over the course of the year,” he said, referring to the pound-dollar exchange rate.
The pound dropped 0.1 percent to $1.6096 at 12:34 p.m. London time after falling to $1.6010 on Jan. 4, the lowest level since Dec. 7. The U.K. currency also declined 0.1 percent to 81.50 pence per euro.
Sterling has weakened 0.4 percent in the past six months, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro gained 2.7 percent and the dollar fell 4.5 percent…”
Comments »“Demand for palladium, last quarter’s best-performing precious metal, is exceeding supply for a second consecutive year as mine production stagnates while sales by automakers, the biggest buyers, reach record highs.
Consumption will beat production by 511,000 ounces in 2013, or about what the car industry uses every seven weeks, Barclays Plc estimates. Morgan Stanley expects deficits to persist until at least 2017 and predicts a record annual price average in 2014. Palladium will average at least $770 an ounce in the fourth quarter, or 14 percent more than now, according to the three most-accurate forecasters tracked by Bloomberg Rankings over the past two years….”
Comments »“Japanese pension funds, the world’s second-largest pool of retirement assets after the U.S., will more than double their gold holdings in the next two years as the new government pushes for a higher inflation target, according to an adviser to the funds.
Assets held by Japanese pension funds in gold-backed exchange-traded products may expand to 100 billion yen ($1.1 billion) by 2015 from less than 45 billion yen at present, said Itsuo Toshima, who represented the Tokyo office of World Gold Council for 23 years through 2011.
New Prime Minister Shinzo Abe’s pledge to spur inflation to 2 percent and end the yen’s appreciation means Japanese pension funds now have to hedge against rising prices and a currency decline after two decades of stagnation. They’re set to jump into gold after 12 straight years of gains with the precious metal now 14 percent below its all-time high reached 2011. Gold priced in yen reached a record a week ago.
“Bullion’s role as an inflation hedge, long ignored by Japanese fund operators, has come under the spotlight thanks to Abe’s economic policy,” Toshima, who now works as an adviser to pension-fund operators, said in an interview today in Tokyo. “Gold may be a standard asset-class in the portfolio of Japanese pension funds as Abe’s target is realized.”
Japanese pensions oversee $3.36 trillion….”
Comments »“European stocks rose as the region’s economic confidence topped forecasts and investors awaited the start of the fourth-quarter U.S. earnings season. Asian shares retreated and U.S. index futures were little changed.
Vodafone Group Plc (VOD) surged the most in five months as the Wall Street Journal reported that Verizon Communications Inc. said it’s feasible it will buy the U.K. company’s stake in their Verizon Wireless joint venture. TGS Nopec Geophysical ASA rallied 7 percent as the Norwegian offshore surveyor forecast revenue that exceeded estimates. Debenhams Plc (DEB) slid 6.4 percent after the retailer cut its profit-margin forecast….”
Comments »“Carlyle Group LP (CG) raised about $796 million from the sale of its remaining shares in China Pacific Insurance (Group) Co. (2601), cementing profits from its largest investment in China as the firm raises money for its biggest Asia buyout fund.
The Washington-based private-equity firm sold almost 204 million shares, a 2.2 percent stake, in the Shanghai- headquartered insurer at HK$30.30, the top end of the offering range of HK$30 to HK$30.30 apiece, according to a document obtained by Bloomberg News. China Pacific fellby the most in more than a month after rising 23 percent since Dec. 3 amid a surge in Chinese stocks…”
Comments »“Gold gained for the first time in four days in London as a weaker dollar and prices near a four- month low increased investor demand.
Bullion slumped to a four-month low on Jan. 4 after minutes from the Federal Reserve showed that policy makers may end $85 billion in monthly bond purchases some time this year, boosting the U.S. Dollar Index to a six-week high. The dollar gauge, a measure against six currencies, fell for a second day today.
“The metal has recovered from recent lows amid dip-buying and a retreat in the U.S. dollar,” analysts at Mumbai-based Kotak Commodity Services Ltd. said today in a report. “However, weighing on the gold price is uncertainty about the Fed’s asset purchase program after the latest Federal Open Market Committee minutes.”
Gold for immediate delivery added 0.2 percent to $1,651 an ounce by 9:35 a.m. in London. It reached $1,625.85 on Jan. 4, the lowest since Aug. 21. Gold for February delivery was 0.3 percent higher at $1,651.10 on the Comex in New York.
Holdings in gold-backed exchange-traded products were at 2,622.3 metric tons yesterday, about 0.4 percent below the record set Dec. 20, data compiled by Bloomberg show. Prices gained for a 12th consecutive year in 2012 as central banks from the U.S. to China pledged more steps to spur economic growth…”
Comments »“The Australian dollar fell for the first time in three days after the nation reported the biggest trade deficit in more than four years.
New Zealand’s dollar weakened after Asian equities slid by the most in two weeks, reducing demand for higher-yielding assets. Both nations’ dollars also weakened against the yen on speculation recent losses for Japan’s currency were excessive.
“The big trade deficit reported in Australia and lower equity markets are driving a risk-off sentiment,” said Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia (CBA), the nation’s largest lender. “That’s pushing the Australian dollar lower.”
Australia’s currency fell 0.2 percent to $1.0478 as of 4:46 p.m. in Sydney and declined 0.6 percent to 91.70 yen. New Zealand’s dollar weakened 0.2 percent to 83.57 U.S. cents and 0.5 percent to 73.13 yen.
Australia’s imports outpaced exports by A$2.64 billion ($2.77 billion) in November, the biggesttrade shortfall since March 2008, from a revised A$2.44 billion deficit the prior month, data compiled by the statistics bureau showed today.
Traders see about a 60 percent chance the Reserve Bank of Australia will lower the benchmarkinterest rate from 3 percent this quarter, according to Bloomberg data on overnight index swaps. This compares with a less than 20 percent probability that New Zealand’s central bank will reduce borrowing costs from 2.5 percent….”
Comments »“Syndicated lending in Asia fell to the least in two years in 2012 as companies use their bank relationships to strike cheaper bilateral or club deals in the private market.
Lending volumes in the Asia-Pacific region outside of Japan slumped 17.6 percent to $376.4 billion last year from $456.8 billion in 2011, according to data compiled by Bloomberg. Average interest margins for dollar-denominated loans increased 15 basis points to 273.6 basis points, versus a rise of 40 to 351.8 in the U.S., where the decrease in syndicated debt was a smaller 14.8 percent.
At the same time as the economy slows, reducing companies’ willingness to make new investments and expand, higher-rated borrowers in Asia are finding that reverting to loans which aren’t marketed to a wider group of banks in syndication is a more competitive source of funding. The rise of Japanese and Chinese bank participation in some parts of the syndicated market meanwhile is reducing costs, with other lenders forced to match lower rates or bow out of transactions.
“High-grade borrowers are turning maturing facilities into bilateral loans because they can leverage their relationships to get better pricing and more favorable terms,” Priscilla Lee, the head of northeast Asia loan syndications at Bank of Tokyo- Mitsubishi UFJ Ltd., said in a Dec. 14 interview. “Many don’t care to go to the syndicated market….”
Comments »“Japan plans to use its foreign- exchange reserves to buy bonds issued by the European Stability Mechanism and euro-area sovereigns, as the nation seeks to weaken its currency, Finance Minister Taro Aso said.
“The financial stability of Europe will help the stability of foreign-exchange rates, including the yen,” Aso told reporters today at a briefing in Tokyo. “From this perspective, Japan plans to buy ESM bonds,” he said. The purchase amount is undecided, Aso said.
The move may help Prime Minister Shinzo Abe temper criticism of Japan’s currency policies from trading partners such as the U.S. The yen has fallen around 8 percent against the dollar since mid-November on Abe’s pledge to reverse more than a decade of deflation as his Liberal Democratic Party won an election victory last month.
“The Europeans would be happy to see Japan buy ESM bonds, so Japan can avoid criticism from abroad and at the same time achieve its objective,” said Masaaki Kanno, chief economist at JPMorgan Securities Japan Co. and a former central bank official.
The yen erased gains after Aso’s comments, reaching 87.81 per dollar, before appreciating again to 87.51 as of 7:14 a.m. New York time. The Japanese currency appreciated 0.3 percent to 114.86 per euro….”
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