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Monthly Archives: January 2013

Tight Wads Help the Euro to Surge

 

“We mentioned earlier that the Euro has been on a jaw-dropping tear.

That continues today. Yesterday the euro was around 1.34. Today it’s at 1.355.

Why is it going nuts?

We chatted with analyst Lorcan Roche Kelly of Trend Macrolytics to get his take.

Well the big picture is that the ECB is the only central bank that’s acting relatively “tight” right now. The Fed will be on hold for awhile. Japan is doing new easing. The Bank of England is likely to do more under Mark Carney. You get the picture.

The specific story today that’s got people excited has to do with the ECB’s LTRO operations.

Remember at the beginning of 2012, the ECB held a bank-saving operation, where they gave banks cheap loans for up to 3 years in order to smooth the crisis.

Well things have really calmed down, and now banks are repaying their LTRO loans, in part to show that they’re strong and can stand on their own two feet.

About $137 billion of the LTRO loans is being paid back.

But today there was a 3-month LTRO operation, and the thinking was that maybe these banks who were paying back their 3 year loans early would roll into 3-month loans.

But that wasn’t the case.

As you can see here, just about $3.7 billion is being allotted in this operation….”

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The Difference Between $TSLA & $BA in Battery Design

 

“Tesla and SpaceX founder Elon Musk says the batteries that have burst into flame on Boeing’s new Dreamliners are “fundamentally unsafe.”

Musk’s electric car company, Tesla, specifically designed its batteries to prevent this problem.

In an email to the aviation publication Flightglobal, Musk said the following:

“Unfortunately, the pack architecture supplied to Boeing is inherently unsafe. Large cells without enough space between them to isolate against the cell-to-cell thermal domino effect means it is simply a matter of time before there are more incidents of this nature.”

Flightglobal’s Zach Rosenberg explains this in more detail:

Both Boeing and Tesla use batteries fueled by lithium cobalt oxide, which is among the most energy-dense and flammable chemistries of lithium-ion batteries on the market. While Boeing elected to use a battery with a grouping of eight large cells, Tesla’s batteries contain thousands of smaller cells that are independently separated to prevent fire in a single cell from harming the surrounding ones.

“Moreover, when thermal runaway occurs with a big cell, a proportionately larger amount of energy is released and it is very difficult to prevent that energy from then heating up the neighboring cells and causing a domino effect that results in the entire pack catching fire,” says Musk.

“They [Boeing]…”

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The Clam & Co. are Expected to Stay the Course

 

“WASHINGTON (Reuters) – The Federal Reserve is expected to keep monetary policy on a steady path when it concludes a two-day meeting on Wednesday, though behind the scenes intensive debate continues over when the controversial bond-buying program should be curtailed.

The policy statement issued by the U.S. central bank at the end of the meeting will likely be only slightly rephrased from its meeting in December to reflect minor changes in the economic outlook, notably reduced risks from financial turmoil in Europe

Otherwise, economists say the policy-setting Federal Open Market Committee will maintain asset buying at $85 billion a month and retain the commitment to hold interest rates near zero percent until the unemployment rate falls to 6.5 percent, provided inflation does not threaten to breach 2.5 percent.

The Fed has taken unprecedented steps to try to spark a stronger economic recovery and drive downunemployment. It has kept overnight interest rates near zero since late 2008 and has launched three rounds of bond purchases, known as quantitative easing, to drive other borrowing costs down.

Recent data has been consistent with a gradual improvement in the economy, although the government’s monthly labor market report, to be released on Friday, is expected to show the jobless rate remained stuck at 7.8 percent in January.

“The FOMC is expected to tweak the description of the state of the economy but announce no new policy measures,” Morgan Stanley economist David Greenlaw wrote in a note to clients.

The Fed statement is expected at around 2:15 p.m. (1915 GMT).

QE THRESHOLDS?…”

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$BA Tops Consensus, Vows to Fix Battery Problems

Source

“Boeing says its top priority this year is to fix the battery problems that grounded its 787.

The company made the pledge while reporting a fourth-quarter profit that topped Wall Street estimates, as rising profits from commercial jets offset a smaller profit from defense work.

Boeing earned $978 million in the latest quarter, or $1.28 per share. That was down 30 percent from $1.39 billion, or $1.84 per share, a year earlier, which included a big tax benefit.

The profit topped the $1.19 per share expected by analysts.

Revenue rose 14 percent to $22.3 billion.

Boeing Co. says earnings this year will be $5 to $5.20 per share, with revenue of $82 billion to $85 billion. The outlook assumes “no significant financial impact” from the 787 being out of service.”

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Chrysler Posts a 68% Gain in Profits

 Source

“(Reuters) – Chrysler Group LLC reported a rise of 68 percent in fourth-quarter net income, to $378 million from $225 million a year ago, driven by higher vehicle sales in its home North American market.

For all of 2012, Chrysler said its net income was $1.67 billion, up from $183 million in 2011.

Chrysler, majority owned by Italy’s Fiat SpA , said its net income would rise to about $2.2 billion in 2013.

Chrysler’s 2012 net revenue was $65.78 billion, up from $54.98 billion in 2011.

The Auburn Hills, Michigan-based company said its 2013 revenue would be between $72 billion and $75 billion.”

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$TM To Recall 1 Million Vehicles for Airbag Issues

 

“TOKYO (Reuters) – Toyota Motor Corp will recall nearly 1.3 million cars globally for two separate defects, including 752,000 Corolla and Corolla Matrix vehicles in the United States to fix airbags that could be deployed inadvertently, the automaker said on Wednesday.

It is the third Toyota recall since October to involve more than a million cars, and it comes as the company tries to recover from a damaged reputation following a series of recalls between 2009 and 2011 that were related to unintended acceleration problems.

An IC chip in the airbag control unit can malfunction when it receives electrical interference from other parts in the car, causing the airbags to deploy when it is not necessary, Toyota spokesman Naoto Fuse said.

Toyota is also recalling certain Corolla and Corolla Matrix vehicles in Japan, Canada, and Mexico.

The problem has caused minor injuries such as abrasions in 18 cases that have been reported, he said. Two accidents have been reported by customers outside Japan, although Toyota has not been able to confirm them, he said.

Toyota will add an electrical signal filter to the airbag control module to the recalled vehicles — repairs expected to take an hour to hour-and-a-half, he said.

The spokesman declined to disclose the costs involved.

LIMITED FINANCIAL IMPACT…”

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Treasuries Fall for a Fifth Day Into Today’s Fed Meeting

“Treasuries traded at almost he highest level since April as global stocks gained before Federal Reserve policy makers end a two-day meeting today.

Benchmark notes were little changed as companies in the U.S. added more workers than forecast in January, according to a private report based on payrolls. Fed Chairman Ben S. Bernanke’s latest round of bond buying will reach $1.14 trillion before he ends the program in the first quarter of 2014, according to the median estimate in a Bloomberg News survey of economists. The Treasury auctions $29 billion of debt due in January 2020 today, the last of $99 billion of note sales this week.

“We expect the Fed will hold where we have been in terms of policy — the economy didn’t do as well as expected,” said Steven Ricchiuto, chief economist in New York at Mizuho Securities USA Inc., one of 21 primary dealers that deal directly with the Fed. “On ADP, we had a downward revision to the previous month. ADP is not telling us much about payrolls.”

The 10-year yield rose one basis point, or 0.01 percentage point, to 2.01 percent at 8:24 a.m.New York time after touching 2.03 percent, the highest since April 25, according to Bloomberg Bond Trader data.

Treasury yields may rise to 2.25 percent within three- to six months, von Mehren said….”

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Brazil Inflation Slows Less Than Expected on Higher Gas and Oil Prices

 

Brazil’s broadest measure of inflation slowed less than analysts expected as the government struggles to rein in consumer prices that will be pressured by new fuel price increases. Swap rates rose.

Wholesale, consumer and construction prices, as measured by the IGP-M price index, rose 0.34 percent this month, down from a 0.68 percent jump in December, the Getulio Vargas Foundation said on its website today. The gain compares with a median estimate of a 0.32 percent increase from 29 analysts surveyed by Bloomberg. The index, which is weighted 60 percent in wholesale prices, rose 7.91 percent in the past 12 months.

President Dilma Rousseff announced this month cuts to utility rates as part of plan to improve competitiveness and tame consumer price increases that have exceeded the government’s 4.5 percent target in the past 28 months. That opened the door for state-controlled oil companyPetroleo Brasileiro SA (PETR4) to say yesterday that it would raise gasoline and diesel prices by 6.6 percent and 5.4 percent, respectively.

The increase in fuel prices is less than Petrobras needs although “it will be very difficult for the government to accept new increases, especially when inflation is such a big problem,” Pedro Tuesta, chief economist at 4Cast Inc., said by telephone from Washington.

Swap rates on the contract maturing in January 2015, the most traded in Sao Paulo today, rose two basis points to 7.89 percent at 9:24 a.m. local time. The real was little changed at 1.9853 per U.S. dollar.

Inflationary Risks…”

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Spanish Recession Deepens More Than Expected

“Spain’s recession deepened more than economists forecast in the fourth quarter as the government’s struggle to rein in the euro region’s second-largest budget deficit weighed on domestic demand.

Gross domestic product fell 0.7 percent in the three months through December from the previous quarter, when it declined 0.3 percent, the Madrid-based National Statistics Institute said today. That’s more than the 0.6 percent contraction the Bank of Spain predicted on Jan. 23. GDP dropped 1.8 percent in the fourth quarter from a year earlier and 1.37 percent in the full year from 2011, INE said.

The European Commission this week signaled it may recommend easing Spain’s budget goals for the fourth time in a year as unemployment in the euro region’s fourth-largest economy rose to a record 26 percent at the end of Prime Minister Mariano Rajoy’s first year in power.

“Risks on this number are clearly on the downside,” Ruben Segura-Cayuela and Laurence Boone, London-based Bank of America Merrill Lynch economists, wrote in a note after INE released GDP data. “The recent behavior of indicators would suggest a stronger impact than anticipated of tax increases on domestic demand.”

Spreads Narrow

The yield on Spain’s 10-year benchmark rose one basis point to 5.17 percent at 10:42 a.m. in Madrid after a euro-era high of 7.75 percent in July. The spread with German borrowing costs has narrowed around 45 percent to 3.47 percentage points. Investors see bonds from so-called EU periphery countries offering even more gains than last year after European Central Bank President Mario Draghi pledged to do whatever is needed to save the 17- nation euro….”

 

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The Euro Hits $1.35 For the First Time Since 2011, Precious Metals Move Higher

The euro strengthened above $1.35 for the first time since 2011, metals gained and Treasuries fell as the Federal Reserve meets and European economic confidence rose more than estimated this month. European stocks declined from a 23-month high.

The euro appreciated 0.4 percent to $1.3543 at 7:25 a.m. in New York, while the yen declined against all but one of its 16 major peers. Nickel advanced 2.1 percent and zinc climbed 2.3 percent, leading commodities to a three-month high. The Treasury 10-year yield increased two basis points to 2.02 percent. The Stoxx Europe 600 Index slipped 0.3 percent, while Standard & Poor’s 500 Index futures swung between gains and losses. Amazon.com Inc. jumped 9.2 percent after reporting gains in sales and North American operating margins.

The Fed’s latest round of bond buying will reach $1.14 trillion before it ends the program in the first quarter of 2014, economists forecast in a Bloomberg survey. The U.S. will report fourth-quarter economic growth today before monthly payroll data on Feb. 1. An index of executive and consumer sentiment rose to 89.2, surpassing the 88.2 reading forecast in a Bloomberg survey, the European Commission said today.

“The world is shifting from fear to hunt for opportunity,” said Neil Jones, head of European head of hedge- fund sales at Mizuho Corporate Bank Ltd. in London. “Slowly but surely, economic data in the euro zone is going in the right direction and the numbers today were encouraging. The euro is leading the way today.”

Euro Gains

The euro advanced for a second day against the dollar, reaching $1.3563, the highest level since November 2011. It appreciated to as high as 86.07 British pence, the strongest since Dec. 7, 2011, before trading at 85.85. Against the yen, Europe’s shared currency rose 1 percent….”

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The Largest Global Mining & Steel Companies Have Written Down $50 Billion in Projects, More Expected

“The world’s biggest mining and steel companies have wiped about $50 billion off project valuations in the past year and the purge is poised to continue this earnings season as managers reassess expensive takeovers.

Anglo American Plc (AAL)Vale SA (VALE3) and Rio Tinto Group (RIO) led the writedowns as declining metal prices, rising project costs and slowing demand forced reviews. Glencore International Plc (GLEN) may write down some nickel and copper assets acquired through its takeover of Xstrata Plc (XTA), Liberum Capital Ltd. has said. BHP Billiton Ltd. (BHP) may trim aluminum operation valuations, according to Goldman Sachs Group Inc. and Sanford C. Bernstein Ltd.

Executives and shareholders are paying the price for a $1.1 trillion M&A binge over a decade. Failed deals in aluminum and coal caused $14 billion in writedowns at Rio and cost Chief Executive Officer Tom Albanese his job this month. Cost overruns contributed to Cynthia Carroll’s departure as CEO of Anglo American, which slashed $4 billion off the value of its Minas- Rio iron-ore project in Brazil yesterday. She leaves in April.

“Companies are now starting to come clean with many of the mistakes they’ve made over the last few years,” Evy Hambro, manager of BlackRock Inc.’s $12 billion World Mining Fund, said in an interview with Bloomberg Television. “It wouldn’t surprise me to see more writedowns.”

Anglo American fell 20 percent in London trading last year, while Glencore slipped 10 percent. BHP gained 13 percent and Rio Tinto 12 percent. Earnings from Melbourne-based BHP are due Feb. 20, while Glencore’s 2012 financials are expected March 5.

Deal Missteps…”

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Nintendo Boosts Guidance on a Weakening Yen

Nintendo (7974) Co., the world’s largest maker of video-game machines, said it expects a full-year operating loss as it cut estimates for sales of its Wii U consoles and 3DS handheld players.

The loss may be 20 billion yen ($220 million) for the year ending March 31, compared with a previous estimate of a 20 billion-yen profit, the Kyoto, Japan-based company said in a statement today. Nintendo cut its full-year forecast for Wii U sales to 4 million units from 5.5 million and its outlook for 3DS players to 15 million units from 17.5 million….”

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Australian Markets Put Together the Longest Rally in 9 Years as the Reserve Bank of Australia Cuts Cash Rates

“Australian stocks posted the longest streak of daily gains in more than nine years as three cuts in interest rates boosted lenders’ profit margins and signs of recovery in China’s economybuoyed BHP Billiton Ltd.

The benchmark S&P/ASX 200 (AS51) Index rose for a 10th day, the longest run since October 2003. Lenders from Westpac Banking Corp. (WBC) to National Australia Bank Ltd. (NAB)accounted for the largest proportion of the increase as home sales climbed and business confidence grew. BHP, the world’s largest mining company, paced gains among mining companies as China’s manufacturing, economic growth and industrial production exceeded estimates. The measure climbed 0.2 percent to 4,896.70 today.

Investors are moving into equities as the Reserve Bank of Australia undertakes the most aggressive interest-rate cuts among advanced economies, sapping the allure of bonds as yields decline. The S&P/ASX 200’s forecast dividend yield of 4.5 is the highest among the world’s 10 largest equity markets, according to data compiled by Bloomberg.

“Lower interest rates contributed to strong gains in the banking sector and the improved China outlook supported demand for Australian resources,” Keith Poore, the Wellington-based head of investment strategy at AMP Capital, which has about $126 billion in assets under management, said in a phone interview yesterday. “We didn’t think there was going to be a hard landing in China and that seems to have been the case. This year will be more about how fast the recovery is in China.”

Interest Margins

RBA governor Glenn Stevens has cut the central bank’s target cash rate four times, or 1.75 percentage points, since November 2011. Australia’s four biggest banks, controlling more than three of every four contracts in the nation’s A$1.1 trillion ($1.2 trillion) mortgage market, have withheld about a quarter of the cuts, according to Bloomberg data….”

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Property and Financials Lead China Stocks to New Highs

“Chinese stocks rose, led by property companies and brokerages, as the Shanghai Composite Index extended its bull-market rally.

Gemdale Corp. (600383) led a gauge of property developers to a 21- month high as Fitch Ratings said Chinese homebuilding volumes will rise this year. China Merchants Securities Co. led brokerages higher after Taiwan’s securities regulator said the island will double the limit on mainland Chinese institutions’ securities investments. China Resources Sanjiu Medical & Pharmaceutical Co. (000999) paced declines among health-care shares as technical indicators signaled the stocks are overbought.

The Shanghai Composite rose 1 percent to 2,382.48, its highest close since May 30. The index has climbed 22 percent since Dec. 3, signaling a bull market to some investors. The CSI 300 Index (SHSZ300) climbed 0.5 percent to 2,688.71, taking its surge since Dec. 3 to 28 percent. Hong Kong’s Hang Seng China Enterprises Index (HSCEI) gained 0.9 percent.

“The rally will remain strong as the local economy has shown evidence that it’s growing steadily,” Zhang Haidong, an analyst at Tebon Securities Co., said by phone from Shanghai. “We have risen a lot so there is a requirement for a correction. But this year, we are bound to gain.”

The Shanghai gauge is valued at 13.1 times reported profit, the highest level since March 13, after it exited its longest- ever bear market yesterday. A 756-day stretch without a 20 percent gain from Nov. 8, 2010 through Dec. 3 is the longest on record, according to data compiled by Bloomberg and Birinyi Associates Inc. The gauge fell 38 percent during the period.

Higher Volumes…”

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The Nikkei Closes Above 11k Since April of 2010

“Japanese shares gained, with the Nikkei 225 Stock Average closing at its highest since April 2010, as positive earnings reports boosted the market.

Yahoo Japan Corp. (4689) surged 17 percent after the Internet company boosted its operating profit forecast and said it would buy back shares. Central Japan Railway Co. gained 6.6 percent after reporting a 49 percent gain in net income. Softbank Corp. (9984) advanced 3.6 percent after the Nikkei newspaper said the mobile carrier may post a record operating profit, boosted by sales of Apple Inc.’s iPhone. KDDI Corp. rose 3.1 percent after Credit Suisse AG named the phone-network operator as one of its top picks in Japan.

The Nikkei 225 gained 2.3 percent to 11,113.95 at the close in Tokyo, its highest level since April 30, 2010. The broader Topix Index (TPX) climbed 1.5 percent to 934.67, headed for a five- month advance, the longest such streak since August 2009. All of the gauge’s 33 industry groups rose.

“Investors are starting to price in expectations of increasing earnings going forward for the next few years,” said Soichiro Monji, chief strategist at Tokyo-based Daiwa SB Investments Ltd., which manages the equivalent of about 6 trillion yen ($66 billion). “The yen is positive, but there’s also an increasingly better outlook for an economic recovery in places like China as well as in Japan. There are a lot of positive reasons why earnings should improve.”

Topix Rally

The Topix surged 29 percent from Nov. 14….”

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Crazy Taste

 

“The mainstream media and the federal government will soon have the blood of the world on it’s hands.

Radiation from the Fukushima Nuclear Plant disaster in Japan is now actively in the ecosystem all along the North American west coast… even the sea weed is now radiated.  The Vancouver Sun reported one year ago that the seaweed tested from waters off the coast of British Columbia were 4 times the amount considered safe.  No further test results were released after the initial report.

The governments of the United States and Canada are not conducting tests for radioactivity – at least not to the knowledge of the public.  Secretary of State Hillary Clinton has agreed to continue purchasing seafood from Japan, despite the fact that the food is not being tested for radioactive contamination.  Last November, independent testing in Japan showed 65 per cent of the catches tested positive for cesium (a radioactive material).  Instead of refusing to purchase the poisoned fish, food safety agencies in both the United States and Canada have simply raised the “acceptable level of radiation.”  We can’t go offending the Japanese after promising to buy their tainted goods, now can we?

After the North American governments refused to fund testing, oceanographer Ken Buesseler, a senior scientist at the non-profit Woods Hole Oceanographic Institution in Woods Hole, Mass, along with Nicholas Fisher, a marine sciences professor at the State University of New York at Stony Brook, and other concerned scientists, managed to secure private funding for a Pacific research voyage.  The results?

Cesium levels in the Pacific had initially gone up an astonishing 45 million times above pre-accident levels. The levels then declined rapidly for a while, but after that, they unexpectedly leveled off.

In July, cesium levels stopped declining and remained stuck at 10,000 times above pre-accident levels.

This means the ocean isn’t diluting the radiation as expected. If it had been, cesium levels would have kept falling.

The finding suggests that radiation is still being released into the ocean long after the accident in March, 2011.

Less than two weeks after the tsunami and subsequent nuclear disaster, Michael Kane, an investigative journalist, reported, “In the wake of the continuing nuclear tragedy in Japan, the United States government is still moving quickly to increase the amounts of radiation the population can “safely” absorb by raising the safe zone for exposure to levels designed to protect the government and nuclear industry more than human life.”

The radiation has absolutely reached the shores of North America.  Water samples from across the continent have tested positive for unsafe levels of radioactivity.  The levels exceeded federal drinking water thresholds, known as maximum contaminant levels, or MCL, by as much as 181 times.”This means that the complete ecosystem of the Pacific Ocean is now poisoned with radiation and we aren’t being warned….”

 

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Yet More Sandy Hook Mystery

“At the words “they arrived to carnage,” the CNN Anderson Cooper report cuts to helicopter footage of seven police officers charging across a parking lot and toward a school. It is breaking news coverage of the Sandy Hook shooting just hours earlier.

The three-minute report posted on the day of the shootings at the official CNN website is entitled “Tragedy Strikes at Elementary School.” But the school the police are seen ‘arriving’ to is almost certainly not Sandy Hook.

It is St. Rose of Lima School, a private school a few miles away, also in Newtown. Sandy Hook Elementary School is the site where 20 school children were killed on December 14, 2012, and 6 adults. Two adults were wounded, Natalie Hammond and another whom police have not named.

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