2012年2月29日星期三


Gold Got Crushed Today, And Everyone's Trying To Figure Out Why

The market was down a bit, but the selloff was nothing like the selloff in gold.
The big fat red bar at the end of this chart is what you want to draw your attention to.




So what happened?

Well it's gold, so one can only hazard a guess, but the selloff did happen right after Bernanke's testimony hit the wire, and the one thing people noted is that there weren't any hints of QE3. That being said, nobody really expected hints of QE3 so this isn't that compelling.

The other thing that happened today on the inflation front is that Q4 2011 GDP got revised up, and there was a healthy hike in the price component, which further undermines the case for QE3, although that was 8:30.

But whatever, the cocktail of improving fundamentals, and moderate language from Bernanke may have produced the start of some kind of snowball trade. As you can see, gold is still up big for 2012.


Bernanke’s No Mas Send Gold, Bonds, and Yen into Swan Dive


Bernanke’s No Mas Send Gold, Bonds, and Yen into Swan Dive

by macromon
Wow!  Take a look at gold, bonds, and the yen after Fed Chairman Ben Bernanke's testimony on Capitol Hill was interpreted as "no mas" on further quantitative easing though.  We we're a little too complacent with our covered gold positions and took some major pipe this morning and has us reaching for the you know what.
With LTRO2 done and LTRO3 not in sight, stocks are starting to wobble and we expect the long awaited pull back is now imminent.   If earnings growth were accelerating, one could argue that stocks could move higher without further liquidity injections.  They are not, and, in fact, at peak margins.  Furthermore,  stocks are up 20 percent since October.
Time for a nice healthy pullback, in our opinion.

S&P500 Sets Up for Correction



by macromon
This is not the chart pattern the bulls want to see at a major resistance level.  Today's high and low in the S&P exceeded yesterday's thus carving out a  bearish engulfing/or outside reversal day.  One point on a chart is just noise and does not make a trend so watch for follow through selling tomorrow for confirmation of a potential trend reversal.
Ouch in silver and gold today!  Monster reversals.  Hurt us big time.

THE FED BEIGE BOOK IS OUT: Everything Is Getting Better All Around The Country



beige tbi

The Fed Beige Book was just released.
The gist: The economy is improving in just about every district:

Reports from the twelve Federal Reserve Districts suggest that overall economic activity continued to increase at a modest to moderate pace in January and early February

Activity expanded at a moderate pace in the Cleveland, Chicago, Kansas City, Dallas, and San Francisco Districts. 

St. Louis noted a modest pace of growth and Minneapolis characterized the pace of growth as firm. 

Economic activity rose at a somewhat faster pace in the Philadelphia and Atlanta Districts, while the New York District noted a somewhat slower pace of expansion. 

The Boston and Richmond Districts, in turn, noted that economic activity expanded or improved in most sectors.
Full announcement below


Read more: http://www.businessinsider.com/the-fed-beige-book-is-out-2012-2#ixzz1noTPJq3u

STOCKS FALL AFTER BERNANKE SPEAKS: Here's What You Need To Know




fall, off, intense, dangerous, out of control, off course, let go,  professional bull riders, pbr, madison square garden, msg, january 2012, bi, dng

Daniel Goodman / Business Insider

Positive GDP revisions and an optimistic Beige Book couldn't overcome the general lack of enthusiasm after the European Central Bank's second and final LTRO this morning. But first, your scoreboard:

 
Dow: -0.4%, 12,951.6, -45.5

S&P 500: -0.5%, 1,365.7, -6.52

NASDAQ: -0.7%, 2,966.9, -19.2

And now, the top stories:
  • European markets closed down after 800 banks were allotted €529.5 billion ($707.3 billion) in cheap funding from the ECB. While that beat expectations of €470 billion, it did not appear to be a high enough number to reassure investors that renewed escalation of the sovereign debt and bank crises is not in the works. 


  • The Bureau of Economic Analysis revised estimates of 2011 fourth quarter GDP upwards, saying that the economy grew at an annualized pace of 3.0 percent during that period.


  • Chicago PMI smashed expectations, coming in at 64.0 versus expectations of a slight increase to 61.0. The only smudge on an otherwise jolly day for the economy was the NAPM-Milwaukee Purchasing Managers Index, which didn't increase as much as expected.


  • James Murdoch stepped down from his post as Executive Chairman of News International—News Corp.'s British newspaper division—amid ongoing questions about his ties to the phone-hacking scandal that has threatened the company's credibility since the summer. In a statement, News Corp. Chairman and CEO Rupert Murdoch said his son would continue to perform a "variety of essential corporate leadership mandates, with particular focus on important pay-TV businesses and broader international operations."


  • Federal Reserve Chairman Ben Bernanke testified in front of Congress that the economy is continuing to improve slowly despite risks from the global economy. He added that oil prices could affect inflation in the short term, but are not a long term threat.


  • Gold and silver staged a massive selloff today beginning just as Bernanke took the floor. That continued well into the afternoon. Gold was down -5.4 percent and silver fell -7.9 percent.

  • The Federal Reserve Beige Book indicated that economic activity is improving in nearly every region in the country





歐央行再釋低利率貸款 第2輪金援料注資2兆



29/02/2012 

歐洲中央銀行(ECB)今天料將挹注5000億歐元(約2兆194億令吉)巨資,二度金援窘迫的歐元區金融體系。

 ECB預定今天格林威治時間1020左右宣布金額。

 ECB希望這會是他們對抗歐元區危機,最后一次釋出低利貸款。ECB將發行1.0%超低利率3年期債券,銀行愛囤多少就可以囤多少。

 去年年底他們也曾採用這種策略,來緩解威脅解體歐元集團的區域債券市場緊張情勢,這已經是第2次灑錢行動。

 ECB總裁德拉吉去年年底宣佈這項措施時,他的祖國意大利正處在危機震央。

 在名為“較長期再融通操作”(longer-term refinancing operations, LTROs)的措施啟動后,德拉吉曾表示已躲過“超大的信貸危機”。

 德拉吉呼籲銀行界將今天拿到的錢借貸給家庭和企業,以支持經濟成長。

 去年12月推出的第一輪較長期再融通操作中,約523家銀行共獲得約4892億歐元(約1兆9758億令吉),絕大部分用來償還到期債務。

 雖然部分分析師認為今天的第2輪,可能也是最終回合的較長期再融通操作中,銀行最多應該借貸1兆歐元(約4兆令吉),但多數人預測金額會較為保守、接近第1輪的金額。



交易所全新衍生產品結算系統啟用



大馬交易所首席執行員兼大馬衍生產品交易所主席拿督達祖丁表示,全球交易所正面臨強烈競爭,因此為了增強本身的競爭力,大馬交易所也須積極減低市場的交易障礙,並打造更有效的交易及結算環境。

“而嶄新的衍生產品結算系統,正是配合我們提昇衍生產品系統的策略,主要透過全球電子交易分銷平台及更加直接的功能處理系統。”

他解釋,新結算系統的好處在於其容量龐大,可承載高交易結算、高度自動化及擁有高端功能,如即時網絡電子要求及電子文件傳送等。

“對於投資者,則意味著效力可取得更大改善,提昇即時結算資訊及減少文件處理。”

同時,新的結算系統也可與較早前推出的芝加哥商品交易所(CME)交易平台,產生互補效益。




(星財)

寶敦(BOLTON) 第三季淨利漲3.7倍‧未入賬銷售逾5億



歸功於新產業銷售亮眼,以及高未入賬銷售提振,寶敦(BOLTON,1538,主板產業組)截至2011年12月31日止,第三季淨利從前期的230萬6千令吉,飆升373.37%至1千零91萬6千,促使首9個月淨利成長160.67%至2千712萬3千令吉。

第三季營業額為6千零20萬3千令吉,成長55.04%,提昇首9個月營業額增長43.44%至2億2千336萬6千令吉。

巴生河流域產業發展計劃持續,以及創紀錄的5億1千700萬未入賬銷售支撐,寶敦管理層對截至2012年3月31日止財政年取得良好表現感到樂觀。



(星財)


馬幣揚升‧外資流入‧綜指2月漲3.2%



  • (圖:法新社)
雖然今年馬股無法發揮“元月效應”而稍微敗退,但2月反倒是個“旺月”,馬幣揚升和外資流入,帶動股市大幅起伏和成交量熱爆,綜指全月共取得3.18%漲勢,馬幣奪得本月第二大漲幅,漲幅達1.6%,略遜泰銖的2.2%,因大馬的石油出口強穩,外界認為較不易受高油價衝擊。

馬股一度衝破1570

同時,美國股市突破1萬3千點,寫4年新高,帶動亞洲股市揚升,馬股今日也在基金經理進場扶持下,一度衝破1570點關口,攀升17.02點至1573.75點,惟終場漲幅收窄,只能以1569.65點作收,走高12.92點或0.83%,幾乎30大成份股均展現正面表現,進而擴大2月的整體漲幅。
馬股2月因外資持續流入而受追捧,加上歐美對全球的威脅力逐漸減弱,誘使投資者紛紛進場參與,將市場交投推向新高,2月上旬的每日成交量都突破20億股,而2月8日更錄得近44億股天量。
除了藍籌股,二三線股及憑單的交投行情也異常熱絡,其中最受矚目的莫過於耐因英達機構(NICORP,4464,主板貿服組)。該股在拿督曾文秀入股消息牽引下,暴漲數倍,交易所甚至勸告投資者謹慎看待此股。
目前馬股距離1600點重要心理關口並不遙遠,分析員認為,只要外圍沒有再傳來令人“意想不到”的消息,相信能穩步向前。
“就算是間中出現調整,預計仍會在1550點尋求強力扶持。”

2月中旬處盤整狀態

值得注意的是,雖然馬股2月上旬“衝勁”十足,不過自中旬起,飆升力度卻回落,成交量的熾熱程度逐漸消減,藍籌股開始進入盤整狀態,呈膠著走勢,或歸咎於出爐的業績沒有捎來太大的驚喜。
無論如何,大馬去年取得5.1%經濟成長,至少為股市提供支撐利好,前景仍受到唱好。
雖然希臘次輪紓困配套險些遇阻,但最終仍接獲高達1千300億歐元紓困金,化解當前違約危機。
分析員說,希臘雖暫無倒債隱憂,但歐元區債務問題卻依然存在,除了希臘,其他成員國的債務問題時而浮現,令市場擔心歐洲經濟衰退究竟會對全球經濟造成的衝擊程度有多大。
“同時,我們看到國際信評機構不斷下調歐元區成員國的評級,雖然市場早已反映此利空,但仍不可忽視其潛藏危機。”


金融漲4.28%冠全場
種植礦業領跌

馬股走勢亮眼,激勵各領域指數同樣看漲,2月大部份指數都處於上升格局,其中以金融指數的漲幅最大,達4.28%,歸功於銀行股的業績看俏。
雖然經濟走勢不穩定,但銀行業全年仍取得良好的成長,激勵近期銀行股紛紛彈升,扭轉1月的挫跌困境。
除了銀行業,消費指數及工商指數各成長3.29%及2.83%,延續其上升趨勢。
1月表現最出色的兩大領域―種植及礦業,2月卻雙雙淪為領跌領域,各下滑0.89%及1.04%,其中棕油產量逐漸走高抑制棕油價,而導致種植指數呈倒退局面。(星財)




整顿业务令人注目 再传阿南达售东亚卫星


大马富豪丹斯里阿南达继传将全面脱售超过20亿美元(约60亿令吉)的发电业务后,今又传出这位富豪有意脱售东亚卫星(Measat Global)的股权,逐步整顿本身的业务。

消息指出,阿南达脱售东亚卫星,预料可为他带来35亿美元(105亿令吉)。

阿南达近期逐步脱售资产的举动,让市场人士不期然地猜想其全盘商业重组计划。

市场甫在上周传出,阿南达已委任渣打银行为主理银行,在为其全球的电力业务寻找买家,而今又有脱售东亚卫星的消息。

新加坡《海峡时报》今日引述银行界消息指出,脱售东亚卫星的行动早已在2011年杪展开。

消息还透露,这一次脱售计划,可能涉及阿拉伯卫星公司Arabsat买入策略性股权,甚至是大多数的股权。

无论如何,Arabsat想要买入东亚卫星的控制性股权,似乎有点难度,因为大马政府限制外资不可持有本地公司超过40%的股权。

一名分析员告诉《南洋商报》,阿南达可能要重组旗下的业务,惟他全盘的计划依然令人摸不着头脑,大家也在静观这位富豪接下来的行动。
媒体报道也指出,阿南达为一个低调富豪,其私生活鲜为人知,所以没有人得知为何他近期一直在脱售资产。

身家180亿

根据“南洋富豪榜”的统计,丹斯里阿南达克里斯南的财富在大马排第3,以180亿3800万令吉的身家,夺得富豪榜的季军宝座。
无论如何,这名分析员认为,阿南达脱售东亚卫星也不是什么出奇的事,因为这原本就是一个高资本的业务,阿南达或许要藉此脱离这个行业。

先后私有化多公司 料专注媒体 油气业

另一名研究经理则认为,阿南达可能要重新专注在其他的领域,譬如:媒体和石油天然气行业等。
他表示,东亚卫星可能耗费太多资金了,所以阿南达有意将之脱售。
不过,根据他翻找东亚卫星的财务报告,该公司在2012财年上半年是赚钱的。

渐退出大马?

他接着指出,阿南达要脱售本地电力业务的举动,早已不是什么新鲜事;然而,令他感到意外的是,阿南达早前在私有化丹绒(Tanjong)时就表明,要向海外扩展,可如今为何将全球所有的发电业务都全数售出。
他从阿南达近期一连串的动作看来,阿南达可能要逐步脱售在大马的资产。
目前,阿南达大马资产有布米阿马达(Armada,5210,主板贸服股)、明讯(Maxis,6012,主板贸服股)、丹绒(已下去)及Astro(已下市)。
值得一提的是,丹绒的资产,经过早前脱售的博彩业务大马彩以及近期传出的发电业务脱售活动后,旗下资产也只剩下休闲业务,这些休闲业务包括电影院(TGV)和一些产业。

已委主理商售电力业务

媒体上周引述市场消息报道,大马富豪丹斯里阿南达将全面脱售发电业务,交易总值料超过20亿美元(约60亿令吉)。

据悉,渣打银行已被委任为脱售计划的主理商,以便把众多发电厂脱售,包括在大马、中东、南亚及埃及的全球发电业务,电力总产能接近4000兆瓦。

他同时也在孟加拉、埃及、大马、巴基斯坦、斯里兰卡及阿联酋,投资5座发电厂。

上述脱售计划预料能够吸引大马,以及本区域电力公司竞购,尤其是来自中东的投资者。

据了解,阿南达计划脱售的发电厂,都持有长期的购电合约,拥有盈利保障。

不过,购电合约将在几年后届满,届时必须以国家能源(Tenaga,5347,主板贸服股)商讨更新合约。













泰航母公司IPO筹资4.5亿



彭博社引援泰国交易所的资料指出,Asia Aviation总执行长塔萨庞(Tassapon Bijleveld)及其他5名主要股东,也将售出股权,以偿还瑞士信贷的资金。

不过,呈交给交易所的资料,并没有著名确实上市日期及股票定价。

塔萨庞指出,首次公开售股大约筹集1亿5000万美元(4亿5000万令吉),泰国亚航也计划在2016年以前,将机队规模扩大至48架飞机,以便和泰国航空竞争。

泰国亚航也考虑在2012年至2014年,投入5000万美元(约1.5亿令吉)扩充机队,单今年就会增5架飞机。

Asia Aviation计划透过首次公开售股,将泰国亚航的持股权,从51%增加至55%。

森那美(Sime) 次季净利涨26% 派中期股息10仙



在核心业务报捷下,森那美(Sime,4197,主板贸服股)截至2011年12月31日止次季净利,按年涨25.58%至11亿138万令吉,上财年同期则报8亿7705万8000令吉。
同时,现财年次季营业额也取得不俗表现,按年增13.97%至113亿8929万7000令吉,上财年同期为99亿9365万1000令吉。
鉴于业绩表现杰出,董事部宣布,建议派发每股10仙中期股息。

首半年净赚21.7亿



该集团次季每股盈利为18.32仙。
截至去年12月杪首半年内,森那美共净赚21亿7506万2000令吉,比上财年同期的15亿3180万令吉劲扬接近42%。
同时,现财年首半年营业额也按年上涨了20.27%,至224亿5290万7000令吉,上财年同期为186亿6887万令吉。
森那美总裁兼总执行长拿督莫哈末巴基沙烈说:“森那美旗下业务在现财年首半年取得双位数盈利增长,我们将继续专注于加强每个业务的盈利素质。”
他指出,尽管在过去6个月内,全球经济欠稳让商业环境更具挑战,但是该公司成功维持出色的表现。
为了推动投资组合的营运效率以及取得最大的成效,该公司早在现财年首半年推行执行蓝图,以确保每个业务皆可取得强劲的表现。
巴基沙烈说:“这是加强营运效率所换来的成果,所有业务均专注于追求内部增长,同时,也希望通过外来因素刺激增长。”

种植业务半年赚18亿

森那美指出,种植业务在现财年首半年获得18亿令吉的营运盈利,按年微涨0.38%,归功于原棕油价格高企以及营运效率改善。
该集团种植业务的鲜果串(FFB)产量也上扬了5%,至540万吨,主要是我国的棕油产量提高所致。
森那美还披露,每公顷成熟地段的鲜果串收益提高了4%,而我国的鲜果串收益则增加11%,抵消了印尼因更改种植方式,而导致收益下跌8%所带来的冲击。
与上财年首半年相比,现财年首半年的原棕油产量按年增长了10%,榨油率也按年增加0.5%,至21.9%。

整体来说,大马的榨油率仅增加了0.2%,至21.3%;反之,印尼的榨油率增长显著,提高了1.1%,至22.9%。

另外,森那美的种植中游和下游业务表现较为逊色,在现财年首半年蒙亏3700万令吉
森那美说:“原料成本偏高、欧洲减少对成品的需求,加上需要面对来自印尼下游业者的竞争,都是导致蒙亏的关键因素。”





曾文秀出任纳音英达(NICORP) 总执行长





因频发动企业动作,而迅速成为业界“红人”的拿督曾文秀,在倒置收购纳音英达机构(NICORP,4464,主板贸服股)后,今日宣布坐上该公司总执行长的职位。

与此同时,纳音英达机构也委任Sagajuta私人有限公司的执行董事陈天来(译音)为该公司的董事。
曾文秀在去年因丰升工业(Harvest,9342,主板工业产品股)股价飙涨事件而成为风云人物。

继丰升工业之后,他在今年2月,将私有公司Sagajuta私人有限公司,注入纳音英达机构。

在入主纳音英达机构不到一个月的时间内,纳音英达机构今日向交易所报备,委任现年39岁的曾文秀,任职公司总执行长一职。

曾文秀是沙巴发展商,不仅是Sagajuta集团的大股东,也是丰升工业执行董事,持股权达13.85%。  

JIM ROGERS: Worry About 2013, Panic About 2014



Experts have been saying that 2013 is the year to worry about, not 2012. Jim Rogers agrees.  The commodities guru was on CNBC's The Kudlow Report last night saying again that 2012 will see money pumped into global markets because it is a year choc-a-bloc with elections.
Rogers said "This year's fine. Worry about 2013.  Be panicked about 2014.  This year, a lot of good news is coming out." Speaking of the U.S. economy specifically, he said the Federal Reserve's balance sheet is bloated referencing M2, a measure of money supply. He also added that President Obama is spending a huge amount of money ahead of the elections:
"Let's go back to the federal reserve. Larry, get out their balance sheet. You will see first of all, that unadjusted M-2 has been going through the roof, but more important, look at the balance sheet. All sort of things have suddenly appeared on the balance sheet in the last year. The tooth fairy didn't put that in the balance sheet. The federal reserve bought that stuff.
...I would tell you that Obama is going to win. I don't want him to win. It's not good for America. But Larry, it's hard to defeat a sitting president and he's spending a lot of money. Things will feel good this year just because he's throwing money into the market and into the economy."
Rogers said he is still staying away from stocks despite the rally, instead he is investing in real assets.
Watch the entire interview at CNBC:






GOLDMAN: That Good GDP Report Made Us Revise Down Our Q1 GDP Report



Iceberg

Goldman spills a drop of cold water on that good Q4 GDP report...

Despite the upward revision to Q4 GDP, the report was a small negative for our Q1 expectations. In particular, inventory growth was revised down by a smaller amount than we had anticipated, and stronger inventory growth in a certain quarter means a smaller inventory contribution in the subsequent quarter, all else equal. We therefore revised down our tracking estimate of Q1 GDP growth to 2.3% (annualized) from 2.4% previously.





Chicago PMI CRUSHES Expectations, Surges To 64.0




Chicago Bears
Flickr Creative Commons

UPDATE:
A key index measuring economic activity in the Chicago area surged higher in February, topping analyst expectations.
The Chicago Purchasing Managers Index gained to 64.0, from 60.2 the prior month, and marked the fourth consecutive month it remained above 60.
Economists polled by Bloomberg anticipated an 80 basis point jump to 61.0.
"The transportation industry seems to be improving consistently," one surveyed participant reported. "Orders continue to be strong and folks in my industry associations are hiring."
The employment sub index increased to its highest level since 1984, registering at 64.2.
The Institute For Supply Management - Chicago, will release its next report on March 30, 2012 at 9:45 a.m.
ORIGINAL:
Minutes away from a report on the Chicago Purchasing Mangers Index, which economists forecast will head higher in February.
Economists polled by Bloomberg expect the key index to gain 80 basis points month-on-month to end at 61.0, however estimates range from the 59 surveyed falls from a decline to 58.3 to an advance to 63.0 A reading over 50 indicates expansion.








CONFIRMED: It Really Is Halftime In America



Want more proof that Obama's enjoying an economic boom of the same magnitude that Reagan had during his re-election?
That Chicago PMI report? The employment sub-index hit its highest level since 1984.
Here's a table of the readings from the report.
What your looking at is a survey of businesses, where they were asked if they were adding or subtracting jobs. In February, 37% of businesses said they were adding jobs. In January, it was only 19%.


And here's the chart:
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Gold Instantly Spikes Lower Thanks To Bernanke



Bernanke's speech is out, and there's not much new in it, but it seems like perhaps people were looking for more hints of QE. And Bernanke offered no such hints.
So the dollar is on fire against the Euro and other currencies.
And gold is instantly diving.
chart



North Korea Suspends Uranium Enrichment, Agrees To Return Of UN Inspectors




 north korea tank military
The United States announced Wednesday that North Korea has agreed to a moratorium on its nuclear activities and tests, marking a breakthrough in negotiations with the communist regime, according to the Associated Press.

 
North Korea, under the leadership of Kim Jong Un since his father's death at the end of last year, has agreed to stop all long-range missile launches, nuclear testing and uranium enrichment, according to Reuters.

The State Department said in a statement, "The DPRK has also agreed to the return of IAEA inspectors to verify and monitor the moratorium on uranium enrichment activities at Yongbyon and confirm the disablement of the 5-MW reactor and associated facilities."



North Korea's news agency confirmed the nuclear moratorium and said the decision was made "with a view to maintaining positive atmosphere," for potential high-level North Korea-US talks, according to MSNBC. In 2006, North Korea expelled inspectors and tested a nuclear bomb.

The US also agreed to provide 240,000 metric tons of food aid to the impoverished country, according to The New York Times. The Obama administration previously stated that food aid would be decided purely on humanitarian grounds, but as North Korea insisted that aid should be part of the deal, the US relented.
Little progress was thought to be made after talks were held in Beijing last week between the US and North Korea, but this moratorium marks progress in negotiations with North Korea. However, The Times noted that North Korea has agreed to and backed out of agreements before, with the North Korean news agency stating that the country would adhere to the agreement, “as long as talks proceed fruitfully.”

This article originally appeared at GlobalPost.




THE MARKET HAS ONLY BEEN RALLYING BECAUSE OF THE FED PUMPING LIQUIDITY...



The market is purely being driven by liquidity and pumping from the world's central banks*.
*Except for a few things, such as...
Initial jobless claims that keep grinding lower.
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Chicago-era hiring intentions at the highest level since 1984.
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And a rebound in housing starts.
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And rising car sales.
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Better and better readings from the Dallas Federal Reserve.
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And a nice uptick in the Richmond Fed Manufacturing Survey.
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And a collapse in anxiety about finding a job.
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And a long string of positive numbers in Citi's Economic Surprise Index
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Gold And Silver Are Getting Smashed Today



Ironically, right as Ron Paul was whaling on Bernanke about gold and silver, gold and silver... were getting destroyed.
Here's gold:
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And here's Silver:
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What €529.5 Billion Actually Means




800 banks applied to the European Central Bank for €529.5 billion ($712.5 billion) in cheap funding this morning in the second and final three-year long-term refinancing operation—the second chance for banks to get lots of central bank funding on the cheap.
While analysts had been guessing and second guessing the size of the take-up, the diversity of opinions ahead of the allotment (for instance, Morgan Stanley narrowed estimates down to a broad €250-600 billion) indicated that no one had any clue what banks were going to do.
A couple points to keep in mind in the fallout of the LTRO:
  • Only in this LTRO did the ECB relax collateral requirements for Irish, Spanish, French, Italian, Cypriot, Austrian and Portuguese banks. The national central banks of these countries will bear any losses from these higher risk assets.
  • Comments from members of the ECB have indicated that there won't be another LTRO—at least not anytime soon. While Bank President Mario Draghi has already proved far more activist than his predecessor Jean-Claude Trichet, he seems to recognize that market pressure has forced EU leaders to make difficult decisions, and that completely alleviating fears on banks and sovereign borrowing costs will likely lead to nothing.


  • Worries that the ECB's own balance sheet is at risk are probably unfounded. First, there's a huge distinction between the Eurosystem—the ECB and the National Central Banks—and the central bank itself, with the NCBs holding most of the nominal risk. Beyond that, the ECB doesn't feel losses like a commercial bank and is not subject to the same stipulations. From Citi's Willem Buiter:
    • The ECB is not subject to either regulatory capital requirements or national or international accounting rules (statutory or otherwise). That means that the ECB could choose to realize losses and potentially run with negative regulatory equity should the losses exceed its on-balance sheet loss absorption capacity. Or the ECB could choose to ‘evergreen’ its exposure indefinitely, for example, by recording assets at purchase prices even if these assets are non-performing or in default.
  • Nor will losses on holdings of securities necessarily mean that the ECB will be forced to print money. Again from Buiter:
    • The total non-inflationary loss absorption capacity (NILAC) of the ECB is very large – we provide estimates that put it at €3.4trn...We do not consider ECB default and hyperinflation in the euro area to be material risks.
  • The take-up was large, but there are still lots of risks. An extraordinarily high or low take-up would have been a surprise—think €1 trillion or €200 billion, respectively—but that's just not what happened. This suggests that banks are taking the opportunity to get cheap funding, but that they're still too wary about economic conditions in Europe to take on too many liabilities.
  • The biggest news from this LTRO is probably that the reaction from investors has been very blase. €529.5 is a great number, but it's hardly overwhelming. European markets have moved very little in response, and the EUR/USD has dropped slightly since the announcement.
Now that the LTRO is over, focus will probably return to political dealings in Europe. Taking the cake will be discussions about expanding the size of the European Stability Mechanism—the permanent European bailout fund set to go into effect this summer–from its current €500 billion. Per usual, Germany is vehemently denying that this is necessary, however this issue is likely to dominate the EU summit that starts tomorrow.



10 Things You Need To Know Before The Opening Bell




Maria Menounos
Astrid Stawiarz
Good morning. Here's what you need to know.
  • Asian markets moved mostly higher in overnight trading, with Hong Kong's Hang Seng gaining 0.5 percent. European shares are modestly up while U.S. futures point to a positive open.

  • The second European Central Bank three-year Long Term Refinancing Operation lent €529.5 billion, or $712.8 billion, to banks in an effort to alleviate capital concerns within the continent's financial system. Some 800 banks asked to borrow funds, up from the 500 that borrowed in the first operation. Last year the ECB lent out some €489 billion in its three-year LTRO.

  • Republican front-runner Mitt Romney claimed two primary victories last night, taking contests in Michigan and Arizona. The former governor of Massachusetts won 41.1 percent and 47.3 percent of the vote in Michigan and Arizona, respectively. Rick Santorum and Ron Paul took second and third in Michigan, while Newt Gingrich rounded out the top three in Arizona, edging out Paul. 


  • India's economy grew at the slowest pace in three years, posting an annualized 6.1 percent expansion in the final three months of 2011. Economists polled by Bloomberg had expected a 6.3 percent annualized rate.  

  • Unemployment in Germany remained steady at 6.8 percent in February. The Federal Labor Agency said 26,000 more people were jobless, pushing the total number of unemployed up to 3.11 million.

  • French consumer spending declined by 0.4 percent sequentially in January, data from the country's statistics office shows. Economists polled by Bloomberg had expected spending to advance by 0.2 percent. The government agency said most of the fall was attributable to lower auto sales.

  • U.S. economic announcements kick off at 8:30 a.m., when a second reading of fourth quarter GDP is scheduled for release. Economists forecast the economy expanded by an annualized rate of 2.8 percent during the final three months of 2011, the same rate as an earlier reading.


  • Chicago Purchasing Manager Index comes out at 9:45 a.m., followed by NAPM-Milwaukee at 10:00 a.m. Economists see the Chicago index advancing 80 basis points to 61.0 in February, while the NAPM-Milwaukee index moves slightly higher to 58.8, from 58.4. A reading above 50 indicates economic expansion. Closing out the day at 2:00 p.m. is the release of the Federal Reserve's Beige Book.

  • Earnings season continues with a number of retailers reporting. Analysts polled by Bloomberg are looking for earnings per share of $0.87 and $0.40 for Costco and Staples, respectively.