Au Falls on Expectations of QE/ Stimulus Tapering

“Gold declined, following its first gain in eight sessions, as speculation the U.S. Federal Reserve may taper its bond-buying plan curbed demand for the metal as a protection of wealth.

Fed Chairman Ben S. Bernanke will discuss the economic outlook in congressional testimony and the central bank will publish minutes of its latest meeting tomorrow. Fed Bank of Chicago President Charles Evans said yesterday the economy has improved “quite a lot.” Gold futures rose 1.4 percent yesterday, the first gain since May 8, after Moody’s Investors Service said U.S. policy makers must address debt woes to avoid a credit-rating cut this year.

“Market participants should be watching the Fed Chairman Ben Bernanke’s speech and the Federal Open Market Committee minutes, which are expected to give rise to concerns of the continuation of the QE program,” analysts at Hyderabad, India-based Karvy Comtrade Ltd. wrote today in a report, referring to quantitative easing. “This would weigh down on gold prices.”

Gold for June delivery fell 0.5 percent to $1,376.70 an ounce by 7:47 a.m. on the Comex in New York. Prices slid to $1,336.30 yesterday, the lowest since April 18, before rebounding. Futures trading volume was 31 percent above the average in the past 100 days for this time of day, according to data compiled by Bloomberg. Gold for immediate delivery in London declined 1.1 percent to $1,378.80.

ETP Holdings…”

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“West Texas Intermediate crude declined from the highest closing price in seven weeks on speculation that supplies will remain sufficient in the U.S. even if stockpiles decreased as forecast last week.

Futures fell as much as 0.5 percent in New York after advancing for a fourth day yesterday. U.S. crude supplies fell by 800,000 barrels last week, according to a Bloomberg News survey before a report tomorrow from the Energy Information Administration. That would still leave inventories 3 percent higher than a year ago. The industry-funded American Petroleum Institute is scheduled to release its stockpile data today.

“There’s nothing here to fundamentally justify a sustained price push at the moment, while expectations of future supplies are rather comfortable,” said Andrey Kryuchenkov, an analyst at VTB Capital in London.

WTI for June delivery was at $96.21 a barrel, down 50 cents, in electronic trading on the New York Mercantile Exchange as of 12:15 p.m. London time. The contract expires today. The volume of all contracts traded was 7.3 percent below the 100-day average. The more active July future fell 52 cents to $96.42. Front-month prices increased 69 cents yesterday, or 0.7 percent, to $96.71, the highest close since April 2.

Brent for July settlement slid 71 cents to $104.09 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade was at a premium of $7.68 to WTI for the same month, down from $7.87 yesterday.

Fuel Supplies….”

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“U.K. inflation slowed more than economists forecast in April to a seven-month low and producer prices rose the least since 2009 as fuel costs fell.

Consumer prices rose 2.4 percent from a year earlier, down from 2.8 percent in March, theOffice for National Statistics said in London today. The median forecast of 35 economists in a Bloomberg News survey was 2.6 percent. Core inflation also cooled, while factory-gate prices increased at the slowest annual pace in 3 1/2 years. The pound weakened….”

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“China’s trade surplus is one-tenth the official $61 billion reported so far this year after accounting for fake transactions used to disguise hot-money inflows, Bank of America Corp. says.

The true surplus is about $6 billion, according to Lu Ting, Bank of America’s head of Greater China economics in Hong Kong. That would be the smallest for January-April since the nation posted a $10.8 billion deficit in 2004.

Lu’s calculations suggest the surplus shrank instead of tripling from a year earlier, a sign that global demand is restraining rather than boosting the world’s second-largest economy. Bank of America’s estimate underscores the size of possible discrepancies in the trade data, which has been disputed by analysts for four months, and broader skepticism about Chinese statistics from gross domestic product to jobs.

“Growth is weak in China now — the overstated export growth means the real growth is slightly weaker,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong. “We are expecting to see a fairly big drop in export growth in the coming months” as regulators crack down on so-called hot-money inflows, he said.

The government reported a trade surplus of $18.8 billion for the first four months of 2012.

Money Flows…”

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“The Reserve Bank of Australia cut its benchmark interest rate to a record low this month to boost businesses weakened by the currency’s sustained strength, even as households reacted to earlier reductions.

“Conditions in the business sector, as assessed in surveys, generally had remained below average, possibly in part because the exchange rate had remained high,” the RBA said inminutes of its May 7 meeting released today in Sydney. “Increasingly, the household sector had shown signs of responding to” lower rates….”

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“Australia’s dollar held its biggest gain in two months against the greenback before Federal Reserve Chairman Ben S. Bernanke speaks in Congress tomorrow.

The so-called Aussie has rebounded from its worst two-week loss in more than a year as traders bet Bernanke may counter speculation U.S. policy makers are closer to reducing bond purchases. The currency fell earlier before the Reserve Bank of Australia released minutes from this month’s meeting when it cut interest rates to a record. New Zealand’s kiwi dollar rose, building on its biggest advance in eight months.

“The way I see Bernanke playing this is that he’s just going to come out and defend his easy policies,” said Chris Weston, the chief market strategist at IG Markets in Melbourne. “People are looking to cover shorts on the Aussie dollar ahead of that, and that’s why we’re seeing the move up.” A short position is a bet that an asset will decrease in value. Weston said he expectsAustralia’s currency to strengthen toward 98.70 U.S. cents….”

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“The yen weakened against the dollar after Japan’s economy minister backed away from comments that drove the currency to its biggest gain in three weeks. The pound slumped and European stocks fell while grains and precious metals led commodities lower.

Japan’s currency dropped 0.5 percent to 102.78 per dollar at 7:26 a.m. in New York. The pound depreciated 0.7 percent to $1.5147, a six-week low, after U.K. inflation slowed more than economists forecast in April. The Stoxx Europe 600 Index declined 0.5 percent and Standard & Poor’s 500 Index futures lost 0.2 percent. Corn, wheat and gold lost more than 1 percent. The 10-year Treasury yield slid one basis point to 1.95 percent…”

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World Markets

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Commodities

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Yields for Italy, Spain, France,  and Germany …

“The Federal Reserve is artificially boosting the economy with its massive easing campaign, and it’s all going to end in tears, says legendary investor Jim Rogers, chairman of Rogers Holdings.

“Right now, we have a very artificial situation. You have the central bank in America printing staggering amounts of money,” he tells Newsmax TV in an exclusive interview.

“There’s this gigantic artificial flow of money floating into our economy, and this is going to end badly because it is artificial.”

So how long will the Fed’s quantitative easing ($85 billion of Treasury and mortgage-backed securities purchases a month) last?

Fed Chairman Ben Bernanke has said it’s going to continue till 2015, Rogers says. But some Fed officials have voiced hope that QE can be curtailed starting this year.

These folks “are not happy about this staggering amount of money printing because they know it’s going to have bad consequences,” says Rogers, author of the new book “Street Smarts: Adventures on the Road and in the Markets.”…”

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Upgrades – ABT, ACN, NTES, JCP, KORS, P, PCLN, TMUS, TMHC

Downgrades  – AMTD, BAC, BBBY, BLK, EAT, SCHW, KSU, LEAP, LOW, NSR, RHT, RT, SNDK,

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For all intensive purposes it seems that sliver and gold bulls are about to write themselves out of history. As you already know, gold and silver have been in bearish mode for quite some time. With stocks rising everyday it is time to turn in the towel.

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El-Erian on Gold

“(Reuters) – Generic drugmaker Actavis Inc, which has been the subject of takeover speculation, plans to buy specialty pharmaceutical company Warner Chilcott Plc for $5 billion in stock.

The companies said the deal had an enterprise value, including debt, of $8.5 billion.

The move comes as Actavis has spurned approaches from Canadian pharmaceutical companyValeant Pharmaceuticals International Inc and Mylan Inc. Analysts have said that if Actavis were to buy Warner Chilcott, it would kill the chances of its being taken over.

Warner Chilcott shareholders will receive 0.16 share of the combined company. The companies said that would equate to $20.08 per share, based on Actavis’ closing share price of $125.50 on Friday….”

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“Stronger-than-expected fiscal third-quarter growth helps Campbell Soup CPB -0.46% boost its EPS view and project other metrics being at the high end of prior forecasts.

Leading the way is a nearly 5% volume increase amid higher promotional spending helping US condensed, ready-to-serve and broth sales post double-digit sales gains.

That as the early part of 2013 was much-more conducive weather-wise to soup eating that a year earlier, which saw record late-winter/early-spring warmth in America.

But the company also saw roughly 5% volume growth in its global baking-and-snacks business and 4% gains in international simple meals and beverages….”

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“SAN FRANCISCO (AP) — Yahoo is buying online blogging forum Tumblr for $1.1 billion as CEO Marissa Mayer tries to rejuvenate an Internet icon that had fallen behind the times.

The deal announced Monday represents Mayer’s boldest move yet since she left Google 10 months ago to lead Yahoo’s latest comeback attempt. It marks Yahoo’s most expensive acquisition since the Sunnyvale, Calif., company bought online search engine Overture a decade ago for $1.3 billion in cash and stock.

Yahoo is paying all cash for Tumblr, dipping into some of its remaining stash from a $7.6 billion windfall reaped last year from selling about half of its stake in Chinese Internet company Alibaba Holdings Group. Taking over Tumblr will devour about one-fifth of the $5.4 billion in cash that Yahoo had in its accounts at the end of March.

Yahoo also says that “per the agreement and our promise not to screw it up, Tumblr will be independently operated as a separate business” with David Karp staying on as CEO.

Tumblr, a service started six years by Karp, a high school dropout, now figures to play a pivotal role in Mayer’s attempt to reshape Yahoo. To take on the challenge, Mayer ended a highly successful 13-year career at Google, which she helped surpass Yahoo as the Internet’s most influential company. Since coming to Yahoo, Mayer has concentrated on improving employee morale, redesigning services and bringing in more engineering talent through a series of small acquisitions that have collectively cost less than $50 million….”

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“General Electric Co. (GE)’s finance unit plans to return $6.5 billion in dividends to the parent company in 2013 as Chief Executive Officer Jeffrey Immelt pursues his plan to shrink the size of the business.

The payments from GE Capital will consist of $2 billion in earnings dividends and a $4.5 billion special dividend, GE said today in a statement. GE Capital paid a first-quarter earnings dividend of $447 million on April 19, it said.

“This announcement is consistent with our goal to reduce the overall size of GE Capital and for it to return significant cash to GE,” Immelt said in the statement.

Transportation and other manufacturing businesses such as health care and energy have been a focus of Immelt’s growth strategy….”

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“As JPMorgan Chase & Co. (JPM)’s Jamie Dimon prepares for a vote tomorrow on whether he should keep his chairman and chief executive officer titles, he may take comfort knowing most of his biggest shareholders are led by men with the same dual role.

Seven of JPMorgan’s 10 largest owners — including top five BlackRock Inc. (BLK), Vanguard Group Inc., State Street Corp. (STT), Wellington Management Co. and FMR LLC — are run by CEOs who are also chairmen. The top 10 hold a combined 29.5 percent of New York-based JPMorgan’s stock, data compiled by Bloomberg show.

“People just like him are going to vote on this,” said Erik Gordon, a business and law professor at the University of Michigan in Ann Arbor. “If you’ve told your own board that the best structure for the sake of the company is to combine the roles, then how do you turn around and say, ‘But that’s not true for JPMorgan?’”

Of JPMorgan’s top 10 shareholders, only Baltimore-based T. Rowe Price, the seventh-biggest with a 2.15 percent stake, has commented publicly on Dimon’s role. Brian Rogers — T. Rowe Price’s chairman and chief investment officer, and not the CEO – – said in a May 16 statement that “I fully support the combined chairman and CEO role at JPMorgan under the superb leadership of Jamie Dimon.”

No Formula….”

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“West Texas Intermediate crude snapped a three-day gain. Syrian government forces started an offensive against rebels, renewing concern that conflict may destabilize the Middle East.

Futures declined in New York after rising for a third day on May 17. Government forces retook most of the strategic city of Al-Qusair in central Syria, state-run SANA news agency said. Iraq resumed crude exports via Turkey after a bomb attack targeted an oil pipeline on May 17. Hedge funds and other money managers raised bullish bets on Brent to their highest level in six weeks, according to data from ICE Futures Europe.

“Syria is a microcosm of the unrest across the Middle East and could spread to other countries,” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London.

WTI for June delivery dropped as much as 69 cents, or 0.7 percent, to $95.33 a barrel in electronic trading on the New York Mercantile Exchange, and was at $95.50 at 12:42 p.m. London time. The more-active July future slid 53 cents to $95.47. Front-month prices increased 86 cents to $96.02 on May 17, the highest close since May 10.

Brent for July settlement dropped 53 cents to $104.13 a barrel on the London-based ICE exchange. The front-month European benchmark was at a premium of $8.37 to WTI, up from $8.35 on May 17.

‘Civilian Massacre’…”

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