Stocks & Equities
With the Taper off, Recession on? – (we are hardware store to the world after all)
Nonsensical diversions aside: this big picture view of the Canadian broad market TSX ( we are hardware store to the world after all) is not looking so perky, continuing to wobble around the 12,800 level now since the fall of 2011 (well actually since 2006 but why quibble). 11,000 remains the downside neckline test needed to finally resolve whether this secular bear will complete the massive head and shoulder’s pattern that has been looming over it for the past 2 years. Resolution has been a long time pending but market forces move at a pace all of their own. No one gets to command timing–certainly not central banks or governments. All we can do is time our own capital’s exposure to the price cycle. Such is the test of public markets: they are perfectly adept at driving the weak, impatient and unaware into assets just as price risks are the highest, while scaring them out once prices have collapsed once more. Heartbreak hill indeed.
Click HERE or on Chart for larger view
The price of oil hovered around $107 a barrel on Wednesday, a day after President Barack Obama said he asked U.S. lawmakers to postpone a vote authorizing the use of military force against Syria.
By early afternoon in Europe, benchmark oil for October delivery was down 14 cents to $107.25 a barrel in electronic trading on the New York Mercantile Exchange. On Tuesday, the contract fell $2.13, or 1.9 percent, to close at $107.39 a barrel on the Nymex.
Obama, in a televised speech to the nation late Tuesday, said he wanted to give Syria a chance to turn over its chemical weapons before he asks Congress for consent to intervene in the country’s civil war.
Oil prices have been at elevated levels for two weeks following Obama’s call for action against the government of Syrian President Bashar Assad in retaliation for what the White House says was a deadly chemical weapons attack against civilians last month.
Syria’s surprise announcement Tuesday that it would accept a Russian plan to turn over its chemical weapons stockpile raised the possibility of a resolution to the standoff between Obama and Assad and lowered tensions in oil markets.
“In view of the abating geopolitical risks, oil prices are likely to fall further, for the oil price level is still too high from a purely fundamental perspective,” analysts at Commerzbank in Frankfurt said in a report, listing ample global supplies and strong production by OPEC members as factors weighing on prices.
While prices edged off a recent two-year high as the likelihood of a Syrian strike diminished, some analysts predicted prices would remain high for the time being.
“Although recent political events have decreased the probability of an international military intervention in Syria, we still see the risks to oil prices as skewed to the upside over the next several months,” said analysts at Goldman Sachs in an email commentary.
Market fluctuations appeared to support this view, as the Nymex contract fell as low as $106.53 earlier Wednesday before traders began buying again, taking advantage of the dip and betting on the situation in Syria to keep supporting prices.
Syria is not a major oil producer, but oil traders say the possibility of a wider conflict could interrupt production and shipping routes in the Middle East and cause prices to rise.
A draw of 2.9 million barrels in U.S. crude stocks last week, as reported late Tuesday by the American Petroleum Institute, also sustained prices. Data from the Energy Department’s Energy Information Administration — the market benchmark — will be out later Wednesday.
Brent, the benchmark for international crudes, was up 53 cents to $111.78 a barrel on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
— Wholesale gasoline rose 0.26 cent to $2.7383 per gallon.
— Natural gas lost 1.7 cents to $3.567 per 1,000 cubic feet.
— Heating oil added 1.45 cents to $3.0813 per gallon.
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Pamela Sampson in Bangkok contributed to this report.
….read more at Euro Pacific Capital HERE
I often talk about how the gold trade is really two separate trades. There’s the Fear Trade that buys gold out of fear of war or poor government policies. This crowd sees the precious metal as a safe haven during times of crisis, such as when gold rose over the fear of a war in Syria, but eased when a much more limited military action became likely.
However, there were other factors beyond Syria driving gold. That’s the Love Trade. This group gives gold as gifts for loved ones during important holidays and festivals.
This is the time of the year that we are in the midst of right now. Historically, September has been gold’s best month of the year. Looking at more than four decades of monthly returns, the precious metal has seen its biggest increase this month, averaging 2.3 percent.
…view 3 more charts & commentary HERE
KUALA LUMPUR (Sept 11, 2013): Marc Faber, known as “Doctor Doom” in the investment circle, plans to keep his shares in Malayan Banking Bhd and Public Bank Bhd because they let him “sleep well at night”.
“Unlike US banks, Malaysia’s are solid and they do not involve in derivatives or gamble,” he told a press conference after giving a presentation entitled “Investment Strategy – Where’s the Money?” here today.
“Malaysia may not be seen as an exciting market and the stock market is certainly not cheap, but this is a well-balanced economy and stable enough to let you sleep soundly at night,” he said.
He said that despite Fitch Ratings recent negative outlook on Malaysia, the country stood out relatively well compared to other emerging countries.
Marc Faber, the author of the Gloom, Doom & Boom Report, views China’s huge credit bubble, one that had been growing rapidly since 2008, as the next global financial crisis hot spot.
“The inflation in China is much higher than it seems. Credit growth in China will slow down. It is very much depends on whether they’re going into hard landing or soft landing, but this will inevitably lead to economic slowdown in emerging markets,” he said.
…..read more HERE
Marc Faber likes High dividend Stocks
“We are in a bull market that is in the tail-end instead of the beginning but that does not mean prices will collapse. I don’t think that stocks are the greatest bargain anymore, but it’s not that expensive either,” Faber told his audience during a luncheon talk organized by MIDF Amanah Investment Bank Bhd.in Kuala Lumpur Malaysia – in The Sun Daily
Diversification ~ I recommend the investors to take a balanced approach to Invest in Equity, Corporate Bond, Real-Estate and Gold
“I recommend the investors to take a balanced approach to invest in equity, corporate bond, real-estate and gold,”
“The inflation in China is much higher than it seems. Credit growth in China will slow down. It is very much depends on whether they’re going into hard landing or soft landing, but this will inevitably lead to economic slowdown in emerging markets,”- in the Sun Daily
….more commentaries below:
At the beginning of the year there was a growing chorus that U.S. housing was on the freeway to recovery. In March, I remember watching “Your Money” on CNN when hosts Christine Romans and Ali Velshi were pleading with Americans to buy homes before things really took off. Words like “hot” and “booming” were used liberally.
They were partly right. National home prices had risen about 15% from the recent bottom. However, prices were still off a significant 23% from the 2006 highs (prices had fallen 33% from peak to trough and have spent the last five years fluctuating in a range).
The miscalculation for those who thought U.S. housing was on a sustained recovery and back on a track towards its old highs was that it was a traditional recovery: the economy was doing a bit better, employment was slowly improving, and housing usually does well when this is the case. However, from our perspective, it was the financially-engineered and artificially low interest and mortgage rates that were pushing up prices.
The real reason is now more evident as mortgage rates have jumped since the Federal Reserve hinted that it would slow down the rate at which it pumps money and liquidity into the U.S. economy. Rates are up well over 1% since May.
One would think that a real recovery in housing would have a great deal of inertia. Instead, the 1% increase in rates has been enough halt the momentum. New mortgage activity highlights this. The number of new mortgages in the last three months has been hammered by about 30%. It has gotten so bad that yesterday the Bank of America announced that it had begun to lay off 2,100 mortgage-related staff. JP Morgan said that it now expects to lose money on home lending in the 2nd half of 2013 as new mortgage volumes will fall by 40% compared to the 1st half of the year.
Unless the Federal Reserve decides against “Tapering” the rate of money printing (which would be a bombshell announcement at this stage), U.S. housing is going to face headwinds. With prices only climbing to mid-2004 levels and still 23% below the peak, U.S. housing is falling well short of a full recovery. But, maybe it was never a real “recovery” at all if it was mostly due to Ben Bernanke, the Wizard of Oz, pulling levers behind curtains.
The opinions expressed in this report are the opinions of the author and readers should not assume they reflect the opinions or recommendations of Richardson GMP Limited or its affiliates. Assumptions, opinions and estimates constitute the author’s judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results.
Richardson GMP Limited, Member Canadian Investor Protection Fund.
Richardson is a trade-mark of James Richardson & Sons, Limited. GMP is a registered trade-mark of GMP Securities L.P. Both used under license by Richardson GMP Limited.
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