Thursday 15 August 2013

Fed Bullard hinting small reductions in bond buying

"The Federal Reserve could hedge its bets by making small moves rather than large, aggressive ones when it starts pulling back on its $85 billion-a-month bond-buying program, said James Bullard, president of the Federal Reserve Bank of St. Louis.
"A larger move would be interpreted as a faster pace of reduction," he said Thursday. "A smaller move would be considered a more hedged bet, a slower rate of reduction in purchases."
He didn't elaborate on what amount would constitute a small pullback or a larger one"
Source: WSJ

Once again individual investors flocking into risky new "generation" investment products

According to an article published in the Wall Street Journal today, "individual investors are pouring tens of billions of dollars into a new generation of complex investment products, and regulators are raising concerns that not all buyers understand the costs and risks.
 The products often employ sophisticated strategies that aren't used by traditional stock and bond funds. They include betting against stocks, or shorting them, using derivatives or leverage to amplify bets, and buying unusual assets such as privately issued junk bonds.
A total of $59 billion poured into alternative mutual funds this year through July, according to Morningstar, making it by far the fastest-growing mutual fund category.
The figure reflects new investments into such funds minus withdrawals. The jump in those seven months was bigger than any previous full-year increase. The alternative mutual funds attracted $25.6 billion in additional assets in 2012".
Wall Street regulators are always "concerned" but when they apply regulations they are always too little and too late.
Source: The Wall Street Journal

Precious Metals Prices

Gold Price Futures     3 months        US$   1,368.46

Silver Price Futures    3 months        US$       23.02

China's CNOOC to build first floating LNG terminal in Tianjin

The CNOOC Gas and Power Group, a wholly-owned subsidiary of CNOOC, China's largest offshore oil and gas producer, said Thursday that its first floating liquified natural gas (LNG) project has gone through government approval.
The floating LNG terminal project, located in north China's Tianjin Municipality, will be the first of its kind to be built in the country, the company said.
It said in a statement that it will spend 3.3 billion yuan (534.7 million U.S. dollars) to build the floating LNG terminal, which will ensure fast supplies and shorten the construction period for its Tianjin LNG project by up to four years.
The floating LNG project will supply 3 billion cubic meters of gas each year, according to the company. However, the company did not say when construction on the floating facility will be completed.
Source: Xinhua

China strongly protested visit of Japanese cabinet members to Yakusuni Shrine

China has strongly protested against and condemned the visits of Japanese cabinet members to the controversial Yasukuni Shrine on Thursday.
Vice Foreign Minister Liu Zhenmin summoned Japanese ambassador to China Masato Kitera and lodged representations over the issue, Chinese Foreign Ministry spokesman Hong Lei said.
It is an open challenge to historical justice and human conscience that Japanese cabinet members visited the shrine which honors Class-A war criminals on the 68th anniversary of Japan's surrender in World War II, Hong said. He added that it severely hurts the feelings of people in victim countries in Asia, including China.
The Yasukuni Shrine issue reflects whether Japan can correctly understand its own militarism and history of aggression, as well as respect the feelings of people in victim countries in Asia, Hong said.
"The attitude of those in power in Japan toward historical issues, including the shrine issue, concerns the political foundation of China-Japan relations," Hong said.
In whatever forms and names the Japanese leaders visit the shrine, the nature is that they attempt to deny and glorify the militarism and history of aggression and challenge the results of World War II and the post-war international order. This will draw firm opposition and unanimous condemnation from China and other Asian countries, he said.
Hong reaffirmed that Japan can only face the future by looking in the mirror of history. He urged Japan to deliver their commitment to deeply reflect upon their history of aggression and make real efforts to gain trust from the international community.
"Otherwise, Japan's relations with its neighboring Asian countries will have no future," the spokesman said.
Repeated visits to the shrine by Japanese leaders and lawmakers have become a major obstacle for Japan to mend ties with its neighbors, especially China and South Korea, which suffered from Japan's invasion during World War II.

Government Bonds

Government Bonds

                                                                                Price        Yield
                                                                               Change        %

U.S. 5 Year0/321.526
U.S. 10 Year-1/322.776
U.S. 30 Year-2/323.812
Germany 2 Year0/320.247
Germany 10 Year0/321.888
Italy 2 Year0/321.874
Italy 10 Year0/324.247
Japan 2 Year0/320.114
Japan 10 Year-4/320.758
Spain 2 Year0/321.721
Spain 10 Year0/324.447
U.K. 2 Year0/320.428
U.K. 10 Year0/322.685

Source : WSJ

Japan's Government: Economy approaching end to deflation

Japan is approaching an end to deflation, the government said on Thursday, offering its most upbeat view on prices in nearly four years as a steady pick-up in the economy allows more companies to pass on rising costs to consumers.

The government also revised up its assessment on the job market to say it is "improving," as falls in the yen triggered by Prime Minister Shinzo Abe's reflationary policies boost manufacturers' profits and push down the jobless rate to levels before the collapse of Lehman Brothers.
"Recent price developments indicate that deflation is ending," the government said in a monthly economic report for August, offering a brighter view than last month when it said deflationary pressures were easing.
But it is too early to declare that Japan has made a sustained exit from deflation, according to an official who briefed journalists on the report, noting that doing so would require more lasting rises in consumer prices.
Japanese consumer prices rose in June for the first time in more than a year, although most of the increase was due to higher electricity bills rather than stronger demand that could drive a durable recovery.
The government has described the economy as in deflation since November 2009. Removing the word "deflation" from the report, or declaring that deflation is over, would herald a major success in its battle with price declines.

Source :  NewsOnJapan

Precious Metals Prices


Gold Price Futures        3 months       US$  1,324.66

Silver Price Futures       3 months       US$      21.79

Marc Faber thoughts on the price of gold

 “Maybe gold is signaling a deflationary collapse of all asset prices.
If this were indeed the case I suppose I would rather own gold than
government bonds, high yield bonds and equities. If this scenario were
to pass it would lead to even more money printing around the world,” 

Source:  Marketwatch

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