Monday, May 19, 2014

growth concerns

As geopolitical and global growth concerns ramp up, investors have been shifting assets in directions that hurt the dollar. Those global worries have trumped solid US data, leading investors to buy US Treasurys and unload their long-dollar positions, particularly with the yen,The dollar remains near three-month lows against the Japanese currency, down 0.4% at Y101.17. The euro sits 0.2% higher against the greenback, at $1.3725. Ten-year Treasurys up 4/32 to yield 2.504%.

African investors

African investors also continued to boost their presence on the continent, representing 18% of total investment in new -or "greenfield"- projects in 2012, up from 7% in 2007. Unlike their foreign counterparts, who directed most of their attention to the mining sector, investors from the continent preferred financial services, construction and communication projects.
A combination of foreign direct investment, portfolio investment in stock and debt, growing remittances from workers sending money home and improved tax revenues has meant that the continent's overall dependence on foreign aid will continue to shrink as a proportion of its external financing, the report showed. Foreign aid as a proportion of total foreign capital inflows to Africa was set to decline to about 26% in 2014 from 30% the year before, the report said. But foreign aid will continue to increase this year to reach about $55 billion and the poorest African nations rely on it to survive.

Friday, May 16, 2014

The ECB

“The ECB has now officially joined the increasing list of central banks directly or indirectly targeting their exchange rate since the global financial crisis,” wrote Bank of America Merrill Lynch strategists led by Athanasios Vamvakidis after the meeting.
“The ECB’s references against euro strengthening”rather than calling directly for a weaker currency”to address deflation risks do not cross the line of G20 commitments against beggar-thy-neighbor policies in our view, but certainly are not fully consistent with market-driven exchange rates,” they added. In other words, the ECB isn’t breaking any international taboos of directly intervening in the currency market, but indirectly, it’s talking the euro down.
Talk is one thing, action is another. Strategists say for the euro to continue weakening, Draghi must pull the trigger. The question is what will he do?

Thursday, May 15, 2014

Empire State Manufacturing Survey

The May 2014 Empire State Manufacturing Survey indicates that business conditions improved significantly for New York manufacturers. The headline general business conditions index jumped eighteen points to 19.0, its highest level in nearly four years. The new orders and shipments indexes also posted sharp gains, rising to 10.4 and 17.4, respectively. The unfilled orders index rose to a level close to zero. Price indexes were slightly lower, suggesting a small degree of slowing in price increases, with the prices paid index falling three points to 19.8 and the prices received index falling four points to 6.6. Employment expanded significantly; although the average workweek index held steady at 2.2, the index for number of employees rose thirteen points to 20.9. Indexes for the six-month outlook were highly optimistic, with the future general business conditions index rising to 44.0, its highest level in more than two years.

Wednesday, May 14, 2014

U.S. producer prices posted

U.S. producer prices posted their largest increase in 1-1/2 years in April as the cost of food and trade services surged, hinting at some inflation pressures at the factory gate.
The Labor Department said on Wednesday its seasonally adjusted producer price index for final demand rose 0.6 percent, the biggest gain since September 2012. Producer prices increased 0.5 percent in March.
Economists polled by Reuters had forecast prices received by the nation’s farms, factories and refineries rising 0.2 percent. In the 12 months through April, producer prices advanced 2.1 percent, the biggest gain since March 2012, after rising 1.4 percent in March.
Producer prices have been volatile in recent months, driven by swings in the trade services category. The PPI series was revamped at the start of the year to include services and construction.
Its short history and volatility makes it a bit difficult to discern a trend. While price pressures are creeping up at the factory gate, the overall inflation backdrop remains benign given the slack left over from the recession.
Last month, food prices surged 2.7 percent, the biggest rise since February 2011. That followed a 1.1 percent increase in March and marked the fourth consecutive month of gains in food prices.
A drought in California is putting upward pressure on food prices, leaving Americans confronting higher prices at the supermarket.

RSI Trend Line Charts

 RSI indicator to use it as an indicator to help identify whether trend would continue or if the supply and demand zones were strong enough to hold. While discussing the indicator in detail most traders decided to apply it to the broad markets to see if it had any use as a market trend predictor. This is the modified indicator did prove its worth. As with any technical indicator, the RSI should be used as a confirming indicator, not a decision making tool.  Price and supply and demand should be the only thing you use for your decisions to enter or exit the markets. The RSI offered both positive and negative divergence signals to warn of trend changes before the 2008 credit bubble burst and the 2009 bottom.  The trend changes were confirmed with the RSI moving below 40 bearish  or above 60 bullish .
RSI Trend

Tuesday, May 13, 2014

Money Markets Stock Market News

Money markets rates have moved around in recent weeks as the amount of excess funds held by banks lowered. But much of that appeared to have been the result of typical month end volatility brought on by holidays. They've since stabilized somewhat. One step the ECB could take would be to suspend their weekly funding drains, or sterilizations, that absorb the roughly EUR 170 billion in government bonds on its books from a previous bond purchase program. German and French central bankers have signaled their support. But the effects on short term rates might be limited because banks may simply borrow less from the ECB's regular lending facilities. Economic growth A key question is whether the current period of super low inflation is upending tepid recovery that started last spring. So far it hasn't. In fact, the recovery seems to be gathering steam. Purchasing managers reports and other data point to an acceleration in GDP growth during the first quarter, led by Germany. Retail sales in the bloc grew each month of the first quarter for the best quarterly rise since 2006, according to ING Bank.
That runs counter to one of the telltale signs of excessively low inflation or outright deflation: that consumers delay spending in hopes that prices will fall. Instead, low inflation seems to be giving households a much-needed income and confidence boost. Regulators have attempted to tighten bank rules by forcing them to raise additional capital and by adopting a raft of other rules contained in the Dodd-Frank financial reform law. However, there is growing concern that such rules are forcing financial activity into the "shadow banking" sector, outside the purview of regulators which is partly what led to the crisis in the first place.
Financial News