European markets are down, U.S. Dollar down at support and WTI oil remains in an uptrend. U.S. Markets are fractionally down as investors have moved to the sidelines before the start of a two-day Federal Reserve meeting, but trending back up as we expect the markets to open down.
Here is the current market situation from CNN Money
European markets are sharply lower today with shares in France off the most. The CAC 40 is down 1.65% while Germany's DAX is off 1.19% and London's FTSE 100 is lower by 1.03%.
Gold Rises, Silver Surges on Short-Covering and Physical Demand â€" Greece, Ukraine, Russia Risks
- Gold rises over 2% while silver surges 4.4%
- Speculators caught off guard as prices rose forcing them to cover their short positions
- Concerns re defaults by Greece and Ukraine
- Geopolitical risk of conflict in Middle East and with Russia remain
- Price rises were accompanied by strong physical demand
Precious metals had their best day since January yesterday as the price of gold and silver rose substantially.
Gold rose over 2% and is now back above the important $1,200 per ounce psychological mark while silver surged 4.4% and is now comfortably above $16 per ounce.
Gold in U.S. Dollars - 1 Week
Many factors seemed to have come together to generate the rise in prices but the primary cause seemed to be buying in the futures market which led to short covering which quickly propelled gold from $1,180 an ounce to over $1,205 an ounce in a short period of time.
Silver prices surged from around $15.80 an ounce to $16.45 an ounce or 4.1% prior to selling which capped prices below the $16.50 level.
Overnight we got the latest proof that there is nothing worse for an economy than to be run by a bunch of central planning academics who get "advice" from Paul Krugman. The reason: Japan's retail sales which crashed by 9.7% Y/Y, the biggest annual drop in history. To be sure, the biggest reason for the annual drop was the base effect with the surge in demand last March ahead of the April 2014 consumption tax hike.
... but the drop was bigger than what consensus had expected, as expectations were for a -7.3% drop.
And confirming that things are getting worse on a sequential basis as well, was the 1.9% drop in sales in March compared to a 0.7% increase in February. In fact, as the chart below show, on an indexed basis, the March retail sales print was one of the worst since last year's tax hike.
And while lower gasoline prices courtesy of sliding crude (if not any more) translate directly into a decline in sales value, because retail sales are calculated on a nominal basis, in March gasoline prices stabilized, with the result that fuel sales were down only 0.8% mom in March, versus -2.6% in February and -10.9% in January.
In fact, as Goldman breaks it down, the retail sales weakness was due to lack of purchasing across the board as Japan's shellshocked population no longer wishes to be part of the great Abenomics experiment:
Auto sales decreased 6.0% mom (February: -2.1%), pushing down overall retail sales by 0.8 pp.
DEARBORN, Mich. (Reuters) - Ford Motor Co on Tuesday reported a profit that was less than analysts expected, selling fewer vehicles in North America as it worked to increase production of the redesigned F-150 pickup truck and losing money in South America.
Last week, the first province to participate in China's local government debt swap program delayed a $10.5 billion bond sale. As a reminder, local governments in China are laboring under some 18 trillion yuan in high interest loans. That figure amounts to around 40% of GDP and has doubled since 2007. The rates are unfavorable because the debt was raised via banks and shadow banks through off-balance sheet vehicles which allowed the country's local governments to skirt official restrictions on borrowing. Here's a look at the situation:
In order to help alleviate the problem, China is allowing local governments to swap a portion of that debt (the pilot program is set at 1 trillion yuan) for new, government guaranteed bonds that carry lower rates. The initial debt swap should save local governments some 50 billion yuan in interest payments per year. While that sounds like a good idea, it only works if there are buyers for the new bonds and that is where Jiangsu province ran into problems last Thursday. Here's Bloomberg:
China's Jiangsu province postponed a local government bond sale scheduled for Thursday, raising concern that there isn't adequate demand for municipal debt with issuance set to quadruple this yearâ€¦
MUNICH (Reuters) - Deutsche Bank's co-chief executive Juergen Fitschen went on trial on Tuesday, accused of giving misleading evidence in connection with the collapse in 2002 of the Kirch media empire in a case that could prove a major distraction at a time when the bank is undergoing a strategic overhaul.
ATHENS (Reuters) - Greek Prime Minister Alexis Tsipras said on Tuesday he was confident of an outline deal with international creditors within two weeks, after shaking up his negotiating team and sidelining his finance minister who has infuriated euro zone partners.
The 20th century could be categorized as THE century when communications took off and we started living in each other's pockets. Lives had been ruined by war, trouble and strife. Wealth had been redistributed beyond belief. There were no longer just a few that were making the profits, but there were growing classes of people that wanted recognition.
They might not have got it until the second half of the 20th century, but the way things unraveled in the first half meant that people were not prepared to sit ba ...
With US Q1 GDP set to be a huge disappointment to initial estimates of 3% growth set at the beginning of the year, and since plunging to 1% or lower when it is reported later this week because, well, it inexplicably snowed in the winter for the second year in a row, earlier today we learned that US harsh weather cross the Atlantic and landed in the UK where ONS reported that the economy grew at a tepid pace of just 0.3% in the first quarter, well below consensus estimates of 0.5%, and at the lowest pace since Q4 2012 when GDP posted a 0.3% drop.
A key reason for the slowdown: the plunge in oil prices, which lead to a drop in North Sea production, which in turn dragged down the UK's industrial sector.
The economic slowdown comes at a sensitive time for the UK, less than two weeks ahead of the national election. The WSJ's take:
The economy is a key battleground in the U.K. general election, which takes place on May 7. Polls signal a close fight between the Conservative Partyâ€"currently in a coalition government with the Liberal Democratsâ€"and the main opposition Labour Party.
Prime Minister David Cameron and his Treasury chief George Osborne are trying to use the economic recovery as a way to win over voters after Britain finished 2014 as the fastest-growing nation among Group of Seven industrialized countries.
The U.K. economy is about 4% above its pre-downturn peak in 2008 ...
Following yesterday's early MNI rumor that a Chinese QE is being "considered" and which sent the Shanghai Composite surging 3% and led to an initial boost in US stock futures, overnight the PBOC scrambled to once again deny such speculation.
A few hours ago, PBoC chief economist Jun Ma said in an interview that media report on China's QE is ungrounded. Paraphrased by UBS, Ma said that the central bank has enough tools to manage liquidity and base money supply with current tools at hand, and there was no need for the central bank to purchase local government bonds to supply base money. Ma noted that the central bank law specifically prohibits central bank to provide direct financing to the government. Forgive us if after the ECB roundly flouted a comparable law, we are somewhat skeptical that mere laws can stop central banks. Ma also said that at the moment the PBoC has not considered allowing LGFV loans to be used as collateral for central bank onlending.
Of course, going full "cold Turkey" on Chinese stimulus would be too much for the market to handle, so in a piece by the WSJ also released overnight, the author said the PBOC would pivot from outright QE to mere LTRO, which is also not new and was reported over a week ago here in "China Floats QE Trial Balloon, PBoC May Launch LTROs."
In any event, for now at least, Asian stocks are not happy despite Apple's latest blockbuster results, and neither is Europe, with the Stoxx 600 down 1%, and even the E-mini is hugging 2100 unable to levitate on any imminent central bank intervention, even though the UK's 0.3% Q1 GDP coming in well below the 0.5% consensus, and the lowest growth rate since Q4 2012 suggests ...
Econintersect wants your comments,
data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.
Econintersect Live Market
Print this page or create a PDF file of this page
The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.
Take a look at what is going on inside of Econintersect.com