Au and Ag Get in the Smelter After Coming Out of the Vice

“Bernanke said yesterday the central bank, which buys $85 billion of Treasury and mortgage debt each month, may begin reducing purchases this year and end the program in 2014 should the economy continue to improve. The dollar rose to the highest in more than a week against six major currencies and the 10-year yield on Treasuries reached a 22-month high. Commodities dropped.

Bullion slid 22 percent this year, heading for the biggest annual drop since 1981, as some investors lose faith in it as a store of value and as speculation grew that the Fed will taper debt-buying that helped the metal cap a 12-year bull run last year. Investors sold 520.7 metric tons valued at $21.6 billion from gold-backed exchange-traded products this year. The price slump hurt billionaire hedge fund manager John Paulson and producer Newcrest Mining Ltd. (NCM)

“The markets are definitely not prepared to wait until the tapering actually begins,” said Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen. “The combination of Fed tapering, a spike in nominal yields and a stronger dollar has put gold under some considerable pressure.”

Gold Price

Gold for immediate delivery dropped as much as 4.8 percent to $1,286.20 an ounce, the lowest since Sept. 28, 2010, and traded at $1,300 by 11:57 a.m. in London. Bullion for August delivery sank as much as 6.5 percent to $1,285 on the Comex in New York and was last at $1,298.80. Futures trading volume was triple the average in the past 100 days for this time of day, according to data compiled by Bloomberg.

The metal may fall another $50 in the next few days and will probably drop to about $1,100 in a year, according to Ric Deverell, head of commodities research at Credit Suisse Group AG. Nouriel Roubini, professor of economics and international business at New York University, has forecast a decline toward $1,000 by 2015.

The Standard & Poor’s GSCI (SPGSCI) gauge of 24 commodities dropped 3.6 percent since the start of January, the MSCI All-Country World Index of equities rose 5.4 percent and the U.S. Dollar Index added 2.8 percent. A Bank of America Corp. index shows Treasuries lost 1.9 percent.

Money Printing…”

Full article

World Markets

Currencies

Commodities

USD Libor

Euribor

Yields for Japan, Italy, Spain, France,  and Germany …

“The man who predicted the crash of 2008 thinks energy and heavy manufacturing have the potential to fuel an economic boom not seen since the 1950s and 1960s. Photo courtesy of Jim R. Bounds/Bloomberg via Getty Images.

Paul Solman: In 2005, Charles Morris became convinced that a debt crash was inevitable. In 2006, he began his 10th book to make and explain his prediction. In 2007, he delivered the manuscript, and at the beginning of 2008, Public Affairs Books published “Two Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash,” which received almost no notice at all until The Economist magazine wrote about it in March. Six months after that, the deluge.

What’s remarkable is how well Morris’ analysis of the crash, written beforethe crash, holds up half a decade after it. So when I saw that he was calling his newest book “Comeback,” I felt obliged to take a look.

I’ll let him take it from here.

Charles Morris: It’s the best-kept secret in the economics media: The United States is on the brink of a period of solid, long-term growth rivaling that of the 1950s and 1960s. It is not a finance-driven, self-destructive boom, like the 2000s’ housing bubble. No, the new economy will be durably grounded in energy and heavy manufacturing, even though it will take several years to come to full fruition.

Evidence? Dow Chemical has commenced a $4 billion development in new plastics manufacturing in Texas, for example, that will start coming on stream in 2015 and be fully operational only in 2017, but it will be productive for a very long time. This will be a growth cycle with staying power.

Why haven’t you heard about the boom? Official economic forecasters, like the International Monetary Fund and the Congressional Budget Office, simply have not factored America’s emerging new economy into their forecasts. Instead, they still see us limping along at an average of 2 to 2.5 percent real (after inflation) growth to the farthest horizon — a hobbled, aging power, borne down by debts and deficits, shorn of its old bounce-back vigor, tottering along just fast enough to stave off out-and-out stagnation.

There is no question that the financial crash has left deep economic scars. But the fundamentals will turn in America’s favor and when they do, annual GDP growth should kick back up to at least the 3.3 percent average real growth rate that has prevailed since 1950. That’s far from a startling forecast for a recovery, but even at that level, the budget problems that have so paralyzed official Washington will shrink rapidly in the rear-view mirror as tax receipts grow, making debts and deficits shrink. The seemingly crushing post WWII debt — 120 percent of GDP — quickly dropped from the radar screens with growth in the 3-4 percent range in the 1950s. So what are the positive portents?

The Energy Boom Is Already Here…”

Full article

Essentially, Bernanke tanked the markets when he said if the data comes in line with current the current pace of an economy that is expanding moderately, that the Fed would consider tapering later this year. If it continues to get better over the next several quarters then the fed could end QE mid next year.

Generally what ever happens on Fed speak day is the opposite of what happens over the next few. Although, this time may be different…

Market commentary 

Market update

Clam Speak

No taper comments by the fed, unemployment rate remains slightly elevated, downside risks have diminished, 2 members decent to current policy with Bullard saying the Fed is not paying enough attention to inflation risks…

Full report

“The whole world has been anxiously waiting for this moment.

The Federal Reserve will wrap up its 2-day Federal Open Market Committee (FOMC) meeting today.

At 2:00 PM ET, it will publish its FOMC statement as well as an update to its economic forecasts.

Then at 2:30 PM ET, Fed Chairman Ben Bernanke will hold a press conference, which will include a Q&A with economics reporters.

Expectations

Economists expect the Fed to announce no change in its benchmark interest rate target, which is currently at 0% to 0.25%.  Furthermore, they expect no change in its quantitative easing (QE) program, which consists of the Fed buying $85 billion worth of bonds each month to keep interest rates low.

However, there is little agreement on when the Fed will begin to scale back its easy monetary policy.

Recently, there has been tons of speculation…”

Full article

“….If there is one metric that has worked so well over time it is household assessments of the labour market — the consumer sector tends to get it right. Specifically, the University of Michigan survey component that measures consumer expectations on expected changes in unemployment rate. As the chart clearly illustrates, recessions start when this metric slips below 65 without fail…..”

Full article and chart

“All eyes are on the release of the Federal Reserve’s monetary policy statement from its latest FOMC meeting at 2 PM ET and Fed Chairman Ben Bernanke’s subsequent press conference and Q&A, which begins at 2:30.

Stocks are flat and trading sideways today, heading into the big event this afternoon.

However, the bond market is selling off…”

Full article

“The process for setting benchmark oil prices has never been particularly transparent, depending as it does on self-reporting by traders of offer and sale prices to energy pricing agencies like Platts, a division of McGraw Hill Financial Inc. (NYSE: MHFI). Platts, which depends on the truthfulness of traders, then

A report in today’s Wall Street Journal indicates that it ought to be fairly easy for the European Commission (EC) to substantiate charges of price fixing in the world’s oil markets. Last month the EC raided the offices of Royal Dutch Shell PLC (NYSE: RDS-A), BP PLC (NYSE: BP), Statoil ASA (NYSE: STO) and Platts to collect information on the charges. Italian oil major Eni SpA (NYSE: E) was also asked to provide information, but was not included in the raids.

One trader told the WSJ how the fiddling works. He offers to sell a small quantity of oil at a loss, driving down the price that he reports to the pricing agency. Once the lower benchmark price is published, he then buys larger quantities at the lower price.

Traders do not believe the practice is illegal…”

Full article

SOURCE
NYSE

NASDAQ

AMEX

Upgrades – ADBE, CX, GEVO, ING, KERX, NBIX, SONC, SPN, SKT, TEVA, UNFI, KO,

Downgrades – AEO, BBRY, CENX, CLF, KLAC, NVO, S, TTEK,

In Play ,

On the Wires 

“After a public disagreement that threatened to blow up into a larger battle, Chrysler said Tuesday that it agreed to recall 2.7 million Jeep vehicles that a government safety watchdog said could potentially erupt into fire if rear-ended.

Chrysler had been expected to file papers Tuesday refusing to comply with a National Highway Traffic Safety Administration’s voluntary recall request sent earlier this month. That request covered Jeep Grand Cherokees in model years 1993 to 2004 and Libertys in model years 2002 to 2007.

NHTSA had warned after investigations that a crash from behind on these vehicles could puncture the fuel tank, located in the rear of the models, spill fuel and potentially cause a fire. NHTSA said the defect may have been responsible for up to 51 deaths.

Chrysler had disagreed with NHTSA’s assessment.

“As a result of the agreement, Chrysler Group will conduct a voluntary campaign with respect to the vehicles in question that, in addition to a visual inspection of the vehicle will, if necessary, provide an upgrade to the rear structure of the vehicle to better manage crash forces in low-speed impacts,” Chrysler said in a statement…”

Full article

“TOKYO/NEW YORK (Reuters) – Japan’s SoftBank Corp cleared a major hurdle in its attempt to buy U.S. wireless provider Sprint Nextel Corp, as rival bidder Dish Network Corp declined to make a new offer after SoftBank sweetened its own bid last week.

SoftBank Chief Executive Masayoshi Son is now a step closer to sealing the largest overseas acquisition by a Japanese company in history, after winning support from a key shareholder by raising SoftBank’s offer to $21.6 billion from $20.1 billion last week.

Son, a rare risk-taker in a cautious Japanese corporate environment, has been determined to thwart a rival bid from Dish – led by Chairman Charlie Ergen, known for aggressive takeover attempts – in an effort to break into the U.S. market.

“We look forward to receiving the FCC (Federal Communications Commission) and shareholder approvals which will allow us to close in early July and begin the hard work of building the new Sprint into a meaningful 3rd competitor in the US market,” Softbank said in a statement.

SoftBank, one of Japan’s top mobile operators, has promised that Sprint would be able to save money on equipment such as smartphones by getting bulk-buy discounts from vendors. It can also lend its expertise in wireless technology, an area in which Son has said Dish’s Ergen has no experience.

“The advantage of SoftBank is really about the synergy between the two firms … in terms of distribution, branding and retailing,” said Hiroshi Yamashina, a senior telecommunications analyst at BNP Paribas in Tokyo.

Dish’s promise was additional wireless spectrum that it has bought in recent years as well as the opportunity to expand its video services to cellphone users.

Shares of SoftBank rose 4.2 percent in Tokyo, outpacing a 1.8 percent rise in the benchmark Nikkei average.

CLEARWIRE BATTLE…”

Full article

“Adobe Systems Inc. (ADBE) reported second quarter 2013 earnings of 24 cents per share, beating the Zacks Consensus Estimate of 21 cents. Adjusted earnings per share exclude one-time items but include stock-based compensation expense. Following the earnings release, share price rose 5.21% in after-hours trading.

Revenues

Adobe’s total revenue was $1.011 billion, up 0.3% sequentiallybut down 10.1% year over year. Reported revenues were within management’s guided range of $975.0 million to $1.025 billion. The sequential increase was attributable to increased adoption of Adobe’s Creative Cloud.

Products generated 64.0% of Adobe’s revenues but were down 26.0% year over year. Subscription comprised 25.0% of total revenue, up 59.6% year over year while Services & Support brought in the balance, increasing 18.3% year over year….”

Full article

“FedEx Corp., the world’s largest cargo airline, forecast full-year earnings below analysts’ estimates amid tepid economic growth and customers’ preference for less costly international shipping services.

Earnings per share for fiscal 2014 will rise as much as 13 percent to $7.04, Memphis, Tennessee-based FedEx said today in a statement. Analysts projected $7.28 a share, the average of estimates compiled by Bloomberg.

FedEx is seen as an economic bellwether because of the variety of goods it ships worldwide. The company is parking older planes sooner than planned and cutting capacity to Asia to help trim $1.7 billion in costs as customers opt for cheaper deliveries. About 3,600 workers will leave the company under a voluntary buyout program, FedEx said today….”

Full report

“Alcatel-Lucent SA (ALU) Chief Executive Officer Michel Combes plans to sell at least 1 billion euros ($1.3 billion) of assets and reduce costs by another 1 billion euros to stem losses and focus on businesses including ultra-high speed Internet.

Shares jumped as much as 5.6 percent after Combes said that the time the plan is fully executed in 2015, the company will have positive free cash flow and be more tightly focused on its most remunerative areas after cutting out legacy operations.

“It’s a strategic turning point for the company,” he said during a conference call. “For the first time, it’s making strong industrial choices.”

Combes, who took over almost three months ago after predecessor Ben Verwaayen’s asset sales and firings failed to achieve a turnaround, wants to execute his plan by 2015 to keep the French network equipment vendor’s cash from further dwindling after seven consecutive years of decrease. Alcatel then will look to cut its debt by 2 billion euros by selling shares on the stock market or through further asset sales, the Paris-based group said in a statement.

Alcatel-Lucent shares were up 5.2 percent at 1.49 euros at 9:04 a.m. in Paris, more than double what they were worth when they hit a 23-year low in October.

Narrowing Business…”

Full article

“The Australian dollar remained lower following a three-day loss against the greenback before theFederal Reserve concludes a policy meeting today.

The Aussie fell to the lowest in almost a week ahead of a news conference by Fed ChairmanBen S. Bernanke that could provide clues on when policy makers will begin scaling back quantitative easing that tends to debase the U.S. currency. New Zealand’s kiwi dollar advanced after data showing a narrowing in the nation’s current-account deficit and the first gain in whole-milk powder prices in two months.

“I think the message is very much nervous, choppy price action going into Bernanke,” saidRobert Rennie, a Sydney-based chief currency strategist at Westpac Banking Corp. (WBC)“Aussie hasn’t traded well. I do think though, that we’re showing some signs of building a base in this 94, 94.50 U.S.-cent region.”

The Australian dollar was little changed at 94.84 U.S. cents as of 4:42 p.m. in Sydney from yesterday, when it dropped 0.6 percent. It earlier touched 94.35, the lowest since June 13. The kiwi rose 0.2 percent to 80.03 U.S. cents, following a 1.6 percent slide over the previous three sessions….”

Full article

“West Texas Intermediate crude rose to a nine-month high after an industry report showed U.S. inventories dropped last week.

Futures rose as much as 0.6 percent. Crude stockpiles fell by 4.3 million barrels in the week ended June 14, the American Petroleum Institute said. An Energy Information Administration report today may show supplies shrank by 500,000 barrels, according to a Bloomberg News survey. Russian President Vladimir Putin agreed to sign a statement at the Group of Eight summit calling for a “transitional government” in Syria. The U.S. Federal Reserve will release a statement and economic forecasts when its meeting ends today.

“The API offered a little more support,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in an e-mail today. “Geopolitical concerns are also supportive. The long-running conflict in Syria has little fundamental market impact, but it is fears for a spillover to neighboring oil producers that will see jittery Brent trading this summer.”

WTI for July delivery, which expires tomorrow, rose as much as 57 cents to $99.01 a barrel, the highest intraday price since Sept. 17. Futures were at $98.63 in electronic trading on theNew York Mercantile Exchange as of 12:56 p.m. London time. The volume of all futures traded was 40 percent above the 100-day average. Prices climbed 67 cents to $98.44 yesterday. The more-active August contract gained 7 cents to $98.74.

Brent for August settlement increased 36 cents to $106.38 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $7.54 to WTI. It was $7.35 yesterday, the narrowest based on closing prices since January 2011.

Gasoline Supplies…”

Full article