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Analyst Upgrades/Downgrades

$GS Calls for the Shorting of Gold

“Goldman has advised clients to straight up short gold, with an end-of-the-year price target of $1450/oz.

Izabella Kaminska at FT Alphaville has the full summary of the call, which actually is a follow-on to a generally bearish call that the company has had all year.

This is an interesting observation

While there are risks for modest near-term upside to gold prices should US growth continue to slow down, we see risks to current prices as skewed to the downside…”

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Fitch Warns of Downgrading the U.K.’s Triple A Rating

“Britain looked poised to lose its AAA rating from a second ratings agency after Fitch Ratings warned on Friday it was likely to downgrade the country in the coming weeks, citing high government debt levels and weak growth.

A month since Britain was downgraded by Moody’s, Fitch put the country on review and said a downgrade was a heightened possibility. A decision is due by the end of April, Fitch said in a statement.

Sterling fell sharply, dropping half a cent against the dollar.

The review announcement comes hard on the heels of the government’s annual budget this week, which halved Britain’s growth forecast for this year and raised borrowing projections.

The move by Fitch was not unexpected but will be another setback for finance minister George Osborne. He has staked his reputation on repairing Britain’s public finances and had promised to protect its triple-A rating.

Britain’s finance ministry, which is three years into an austerity plan, said Fitch’s announcement showed “there are no easy answers to problems built up over many years”.

“But we are, slowly but surely, fixing our country’s economic problems,” a Treasury spokesman said, citing a reduction by one third of the budget deficit and the creation of 1.25 million jobs since the government took office in 2010.


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Wilbur Ross Advises Against a Position in Long Term Debt

“Investors would do well to steer clear of long-term bonds while the Federal Reserve continues to execute its quantitative easing, says private-equity titan Wilbur Ross.

His thinking is that yields can’t stay near historic lows forever.

“Where I’d be very wary is bonds,” Ross tells CNBC. “If the 10-year Treasury reverts back just to its average yield from 2000-2010, you know how much the price will go down?” The answer: 23 percent. “That’s a huge risk,” says Ross, chairman and CEO of WL Ross and Co.

The 10-year Treasury yield stood at 1.92 percent late Friday afternoon.

“We’ve been advising friends it’s not worth getting a few extra basis points to take that kind of downside risk for a year or two while [Federal Reserve Chairman Ben] Bernanke keeps this quantitative easing going,” Ross says.

“We’re recommending people not be in long-term debt of any kind. Instead, we’re urging our companies to borrow as much long-term fixed money as they can.”

Ross isn’t the only noteworthy investor to have a dismal view of U.S. Treasury bonds.

Warren Buffett, the third-richest person in the world, agrees that long-term U.S. government bonds aren’t the place to be. “The dumbest investment you know, in my view, is a long-term government bond,” he told CNBC earlier this month….”

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S&P Warns That Italy, Spain, France, and Portugal Face Social Unrest, Giving Rise to Being Unable to Proceed With Austerity

“BERLIN (Reuters) – Standard and Poor’s sees a high risk that Spain, Italy, Portugal and France will not be able to carry through necessary reforms as the unemployed become less willing to put up with austerity, S&P’s Germany head Torsten Hinrichs told a newspaper.

“The high unemployment in Spain, Italy and France is socially explosive,” Hinrichs was quoted as saying in Monday’s Neue Osnabrücker Zeitung.

“There has to be a social consensus for saving measures. High unemployment … does not help.”

Hinrichs said the people of Spain and Portugal had already proven they were willing to bear withausterity measures, but “this cannot continue forever”.

In Italy, there was the further danger that “a new government may not be strong enough for the still necessary reforms to strengthen growth,” he said….”

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China Stocks Fall 12% From Their Highs as Downgrade by $JPM is Cited Over Slow Growth and Higher Inflation

“China’s stocks fell, dragging the Hang Seng China Enterprises Index (HSCEI) down 12 percent from this year’s high, as slowing growth and faster inflation spurred JPMorgan Chase & Co. to downgrade the nation’s shares.

The Hang Seng China index slumped 2.1 percent to close at a three-month low of 10,794.70. The Shanghai Composite Index (SHCOMP) declined 1.7 percent to 2,240.02 and the CSI 300 Index lost 1.5 percent to 2,502.49. JPMorgan cut China to underweight and recommended bearish derivatives tied to the country’s four biggest banks, Adrian Mowat, its chief Asia and emerging-market strategist, wrote in a report today…..

“Investors are concerned about the possibility of slowing growth and monetary tightening,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “The departure of Guo is perceived as negative for the market as he’s reform-minded and pushed forward innovative measures for the brokerage sector and the stock market.”

The measure of 40 Chinese stocks traded in Hong Kongentered a so-called correction after falling more than 10 percent since Feb. 1. The gauge has lost 5.6 percent this year, compared with a 5.8 percent advance by the MSCI All-Country World Index, and trades at 8 times earnings for the next 12 months, less than its five-year average of 10.3, according to data compiled by Bloomberg.

‘Nasty Combination’…”

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Moody’s Upgrades Chances of Local Government Default in China, Country Admits 20% of Loans are High Risk

“Moody’s Investor Services said China’s local-government financing vehicles face greater risk of default, as regulators warn 20 percent of their loans are risky.

A rally in LGFV bonds may reverse, particularly should delinquencies emerge, Christine Kuo, a Moody’s analyst, wrote in an e-mailed response to questions on March 8. The average yield may rise to 7 percent by June from 6 percent now, according to Shenyin & Wanguo Securities Co., the first brokerage incorporated in China and ranked the nation’s most influential research provider by New Fortune magazine in 2010.

“I see increased risk of LGFV defaults because the financial profiles of many remain weak and heavy refinancing is needed,” Hong Kong-based Kuo said. “Regulators have asked banks to control their LGFV exposures. Some of the projects could default unless other sources of funds are found.”

People’s Bank of China Governor Zhou Xiaochuan said in a March 13 press briefing that about one-fifth of loans to the financing arms of local governments are risky. Net debt issuance by these entities surged 179 percent in 2012 to 1.132 trillion yuan ($182 billion), accounting for 50 percent of corporate bond sales, according to Bank of America Corp. data.

The China Banking Regulatory Commission warned lenders to exercise caution and limit their holdings of bonds sold by local governments’ financing arms, the 21st Century Business Herald said on March 13. Banks aren’t allowed to increase outstanding loans to LGFVs above the level as of Dec. 31, 2011, the report said. Phone calls made by Bloomberg News to the regulator’s press office went unanswered.

Loan Curbs…”

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