Saturday, July 31, 2010

The World Financial report, July 30 2010

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BNN : Commodities Overview

Oil continues to fall for a fourth consecutive week. BNN gets an overview of commodities from Andre Julian, CFO and senior market strategist at OpVest Wealth Management.

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Weekly Commitment Of Traders Summary: July 30

Commitment of Traders Report

Three Reasons Silver Is Likely to Shine


Although gold continues to grab most of the attention in the precious metal world, its less glamorous sister, silver, may be more appealing, and for good reason.

First off, silver has many more uses than gold. It's used for numerous industrial purposes and nearly 55% of total silver fabrication is used for industrial purposes. Silver is commonly used in the electronics space and can be found in plasma display panels and printed circuit boards, as well as in the lining of refrigerators, for food storage containers, and for water purification. Additionally, the metal can be used as an antimicrobial to fight bacteria and as an antiseptic to treat fungal infections. Silver's industrial uses even span to the solar energy industry. As economies around the world continue to expand, the industrial demand for silver will likely follow. See also, "The Misleading Nature of Beating Estimates in the Mining Sector."

Another force that's likely to support silver is that valuations appear to be strong. In a nutshell, silver is cheap and depressed on a historical basis, when compared to its sister metal, gold. Gold is trading much higher than its long-term ratio of 16 times the price of silver, indicating that there's plenty of room for silver prices to run. Additionally, silver is nearly 70% below its all-time high witnessed in 1980 and well below its near-term high of $21 per ounce seen in 2008. (more)

Bloomberg Businessweek - August, 02 2010

* The new abnormal american consumers
are cutting back. Except when they're not.

* Real Estate. A fixer-upper with seating for 80,000.

* Energy. BP's next move: more deepwater drilling.

* Finance. The sultan of credit default swaps.

(read more here)

Can Anyone Stop the Fed?

By Charlie Gasparino,| FOXBusiness

Congressional Republicans are now ramping up their criticism of the secrecy surrounding another government agency, the Federal Reserve, which under the new financial regulatory overhaul gains vast new powers to regulate Wall Street firms and banks, yet receives minimal oversight, FOX Business Network has learned.

The new initiative, spearheaded by Congressman Spencer Bachus, a ranking member of the House Banking Committee, comes after a FOX Business report detailed how the Securities and Exchange Commission, which polices the securities markets for wrongdoing, can now withhold more information from the public through new exemptions to the federal Freedom of Information Act created during the financial reform legislation that was recently signed into law by President Obama.

The SEC says it still must comply with most aspects of the FOIA. (more)

Marc Faber Questions if Dow Could Hit 1,000

By: Patrick Allen
CNBC Senior News Editor

In the August edition of the ‘The Gloom, Boom & Doom Report’ Marc Faber questions whether the Dow could hit 1,000 as predicted by Robert Prechter, based on his interpretation of Elliot Waves, Fibonacci numbers and socioeconomic trends.

Prechter, who has written 13 books on finance, believes that the stock market is historically overvalued in terms of dividends and earnings, because of a "great rise in positive social mood."

But the mood changed in 2000 and the "trend toward negative social mood will lead to an economic contraction," according to Prechter.

"Small bear markets lead to recessions, big bear markets lead to depressions. The current bear market will be the biggest in nearly 300 years, so the depression will be correspondingly deep," Prechter said. (more)

States go deeper into debt and you're on the hook

( -- The states are broke, and like many consumers, they're borrowing big time to get out of their fiscal binds.

The amount of debt that states are carrying spiked 10.3% last year to $460 billion, according to Moody's Investors Service. The debt is paid for through taxes and fees, making residents ultimately responsible.

The median personal share of this burden jumped to $936, from $865 in 2008. (To see how much the tab is in your state, click here.)

And it's likely that states will turn to the bond markets even more this year as federal stimulus money dwindles, experts said. After all, officials face an additional $12 billion shortfall for the current fiscal year and a $72 billion gap for fiscal 2012, which starts next July 1. (more)

The Economist - July 31st-August 6th 2010

The Economist is a global weekly magazine written for those who share an uncommon interest in being well and broadly informed. Each issue explores the close links between domestic and international issues, business, politics, finance, current affairs, science, technology and the arts.
In addition to regular weekly content, Special Reports are published approximately 20 times a year, spotlighting a specific country, industry, or hot-button topic. The Technology Quarterly, published 4 times a year, highlights and analyzes new technologies that will change the world we live in.
(read more here)

Stocks: Best monthly gain in a year

( -- Despite a mixed performance on Friday, stocks booked the best monthly gain in a year, with the Dow Jones industrial average and S&P 500 both rising nearly 7% in July.

Stocks were supported this month by strong quarterly financial results from major U.S. companies. About 75% of the roughly 300 companies in the S&P 500 that have reported earnings so far have beat analysts' estimates.

But the earnings optimism has been tempered by ongoing concerns about the economy, particularly worries that tepid job growth will eventually undermine corporate profits.

"Even though earnings and guidance have been better than expected, there's still skepticism in the market because jobs have been missing in action," said Alec Young, an equity strategist at Standard & Poor's. (more)

Sprott's John Embry "Gold Is On The Cusp Of A Parabolic Move Up"

Today, the FT provided some additional information on the BIS' "goldgate" as relates to its 346 tonnes of gold disclosed as swapped recently by the ubercentral bank. As the FT says, "Investors have bought physical gold in record amounts during the past two years and deposited it in commercial banks. European financial institutions are awash with bullion and some are trying to pledge gold as a guarantee." There was nothing necessarily new in the article, and as expected the swap was merely put in place to collateralize a dollar funding crunch ahead of the European insolvency, allegedly resolved by the guaranteeing of $1 trillion in the world biggest bail out fund by the IMF and the ECB. Nonetheless, at least now we can end speculating as to who benefited: it was not entire countries that had pledged their gold reserves to the ECB (contrary to the rumor that Portugal had given Bernanke a lien on its gold), but merely ten banks, of which HSBC, Société Générale and BNP Paribas were the biggest. While HSBC's presence is somewhat surprising, the latter two banks having found themselves in a massive currency crunch makes sense: as Zero Hedge had previously noted, this is confirmation that it was precisely the French banks that had found themselves on the wrong side of some major euro trades (one need only to recall BNP's call for subparity in the EURUSD from a month ago). Yet what is without doubt is that physical gold will play an increasingly prominent role as a hard collateral asset. In light of this, we present to you the thoughts of Sprott's John Embry on the precious metal, titled "Gold's on the cusp of parabolic move up" whose conclusion fits with the implications of the BIS action: "Central banks can no longer supply the amount needed to balance supply and demand while mine production continues to stagnate at best. It is imperative that investors ignore the volatility created by the anti-gold cartel and use every opportunity that is created by them to purchase more physical gold." Yes John is conflicted, and yes, he has said comparable things in the past... maybe, as more and more piece of the puzzle come into place, this time he will finally be right? (read the Investors Digest article)