Japan's economy grew 2.6% in Q2 less than forecast

Japan's economy logged a third quarter of growth in the three months ending June, but the increase was much smaller than expected.

The economy grew 2.6 percent on an annualized basis in the April to June quarter, lower than 3.6 percent growth forecast according to Reuters and follows the 4.1 percent growth in the first quarter, government data showed on Monday.Quarter on quarter growth came in at 0.6 percent, versus expectations of 0.9 percent and compared to the 1 percent figure logged in the first quarter.
The figures are seen as an important indicator in determining whether the government moves forward with plans to raise the consumption tax in April 2014, say economists. The decision is expected to be made on September 9 following the release of revised second quarter gross domestic product data.

Source NewsOnJapan

Precious Metals Prices

Gold Price Futures   3months       US$   1,329.73

Silver Price Futures  3months       US$       21.02

China to spur technological innovation

China will speed up development of the energy-saving sector and make it a pillar of the national economy by 2015, top policymakers said on Sunday.

The State Council vowed in a statement to spur technological innovation, expand demand for energy-saving products and boost the environmental-protection service industry.

According to the State Council, the value of the energy-saving industry's output will reach 4.5 trillion yuan ($728 billion) by 2015, an average annual growth of 15 percent.

Wang Xiaokun, an energy analyst at Sublime China Information, a Chinese commodities consulting firm, said the policy gives clear direction to the industry and brings opportunities to investors, including private companies.

The government will play a leading role and allow non-State capital to invest in energy-saving projects.

"The government encourages low-carbon and energy-saving development, which means business opportunities to the suppliers for such industries," said Wang. "For instance, the equipment manufacturers for power plants and grid will benefit from the policy."

Source: Xinhua

Futures contracts and leverage. Part I

One of the hard lessons for thousands of individual investors are the  losses in net worth that the volatitility of the futures contracts can bring to investors in commodities, not only in this market
but also in the spot market because there is only a difference between both prices, depending on market conditions contango or backwardation,and of course in the price of the shares of the companies that produce commodities

  For example one futures contract for gold controls 100 troy oz of gold. Being more specific when
you buy a futures contract you are entering into an agreement to buy gold in the future(usually 3months) longer deliveries have less liquidity. Right now in the Comex the margin is 25%, that
means that you buy 100 troy oz whose market value is US$ 132,990 with US$ 33,247.50. If the price of gold falls, you will have to increase your deposit,or you will be automatically liquidated if you
don't answer to a margin call.
  Now the futures market is called a paper market, for one simple reason,many market participants
don´t take the delivery of their futures contracts, they liquidate them before their expiration or they renew them for a later delivery

   So it is absolutely true that this market can bring high volatility in prices,and for long periods of time
the quantities involved in the futures contracts surpass the quantities that can be delivered in the
physical market of a commodity.
  If you add to this the low interest rates, the quantity of money in the banking system stemmed by
QE,and the leverage that the futures contracts bring. The picture is very clear.
   The trauma of the stock market crash of 2007-8 should have brought more market regulations,one of the big  reasons of this long recession is the still present deleveraging of american households.
  For me this means increased supervision and regulations of ALL kinds of leverage
  Of course I'am not saying that the only reason e.g for the correction of the gold price and its volatility is because of the futures market, but it brings a distinguishing feature that can be easily manipulated,by big investment banks,big speculators and hedge funds. Or not?
   

UN President view solid growth in China's economy

 President of the United Nations General Assembly Vuk Jeremic said Friday that the Chinese economy is one of the strongest performers worldwide and offers optimism to the world economy.

Jeremic, president of the 67th session of the UN General Assembly, made the comments in a joint interview with Chinese media in Beijing.

He said one of the most significant reference points to the world economy is China's economic situation. If China is going in the right direction, the rest of the world will be going in a good direction economically. If China is having difficulties, everybody is going to have difficulties.

In the first half of the year, China's economic growth slowed to 7.6 percent.

"The growth, which some people question that whether this is good enough or strong enough... I don't really think that there are too many countries in the world that can have 7.6-percent growth, a very stable one," he said.

"I understand that of the 7.6-percent growth rate, 7.5 percent can be attributed to domestic demand, so we are talking about really 'solid' growth, perhaps not 10 percent like China used to have," he added.

Jeremic praised China for showing the strength and resilience in the face of international challenges.
Source: Xinhua

Why so many market crashes and bubbles since the 70's ?

We are always shocked by what we have read or heard about the Depression of 1920-21 and  the
Wall Street Crash of 1929 and the the market crash and depression of 1937-38.We have heard or/and read about unwise monetary restrictive policies and ultra protectionist trade responses by Goverments
which exacerbated these crisis, and that now, are past experiences with hard lessons learned.

But other market crashes and bubbles have happened long past these previous experiences, and they have become ever more often. I will mention them by calendar ocurrence, The 1971 Brazilian Market
Crash, the 1973-74  stock market crash, the silver Thursday 1980, 1982 the Souk Al-Manakh stock market crash,the Japanese asset price bubble 1986-1991, Black Monday 1987, Rio de Janeiro Stock Exchange Collapse 1989,Friday 13th mini-crash 1989,Black Wednesday 1992,The Dot-com bubble
(1995-2000), The Asian Fiancial Crisis 1997, The October 27,1997 mini-crash,the 1998 Russian
Financial Crisis, Economic Effects of September 11th attacks 2001, 2002 market crash,Chinese stock
Bubble,U.S real state bubble 2003-2008,US stock market crash 2007-2008 Great Recession,Flash crash 2010.


 I will write  on stock market crashes that have their origin in loose monetary policies,low and even negative real interest rates,in economies with low inflation in terms of CPI, which create
mis-allocation of resources and bubbles in asset clasess

   The mandate of Central Banks is only to have price stability and full employment?