Just when the shopping spree for the Fed had ended, there's talk that they could start spending up again. All in the name of saving the economy.
James Bullard, the president of the Federal Reserve Bank of St Louis has suggested that the Fed resume purchasing Treasury securities if the economy slows. This is interesting timing, as the US will release its GDP numbers Saturday morning our time, and many economists are expecting the number to be quite low.
And a low GDP number is one way of saying the economy is slowing down.
Basically Bullard is terrified of Japanese style deflation. Japan which has basically seen its economy contract rather than expand over the past twenty years has quickly become a 'how not to' guide to running - or ruining - an economy.
So in order to avoid what happened to Japan, he'd like the Fed to flood the financial system with more money. Yeah, that should fix the problems.
'A better policy response to a negative shock is to expand the quantitative easing program through the purchase of Treasury securities.' Said Mr Bullard.
Suddenly Australia is a one off in the booming Asian region, instead of being ahead of the pack.
After rate rises starting last October and continuing up to April, Australian rates look like they are on hold until the end of the year.
New Zealand lifted rates 0.25% yesterday to 3%, India on Tuesday, several other Asian central banks, such as Thailand, Malaysia, South Korea and Taiwan earlier this month or in June.
The Bank of Israel lifted its key rate 0.25% on Monday to 1.75%; Brazil boosted its rate 0.50% to 10.75% last week.
The US Federal Reserve meets early next month and already we know what we can expect from the meeting.
No change on rates and no change in the use of the phrase "extended period'' in the post meeting statement to refer to how long the Fed sees rates remaining at their current record lows.
Two senior Fed members, James Bullard, head of the St Louis fed, and his counterpart in Dallas, Richard Fisher, both warned that the US economy was slowing.
Mr Bullard was especially gloomy, warning of the possibility of deflation, Mr Fisher didn't go that far, but said the economy faced "a slow slog".
Despite signs in Europe and China (See separate story) that the worst fears for slump and slide are not going to be met, the US economy continues to slide, both sideways and downwards.
Peabody Energy, the world's biggest listed coal group, has shown us just how profitable the Australian coal industry is and how attractive an outlook there is in China for the industry.
Last week it reported a surge in second quarter earnings off the back of a 50% jump in profits from Australia and forecast more to come.
Peabody was the group that bid for Macarthur Coal, but tried to cut its offer price because of the rent tax brawl, then abandoned the bid.
They should have paid top dollar.
Macarthur told us this week that its on track for good profits and higher sales.
Home prices and superannuation, are contenders for top of the chat charts around dining tables, water coolers and bbq's.
Take home prices; slowing thanks to six interest rates rises since October, and despite continuing high levels of immigration and job creation.
The National Australia Bank said in its latest quarterly residential property survey that expectations for home price gains have flattened nationwide, with Melbourne seeing the most dramatic pullback.
That's because Melbourne home prices escalated by the most in any Australian market, up more than 20% in the year to March, according to the Australian Bureau of Statistics' Home Price Index.
;">A rebound seems to be underway in the Chinese sharemarket after the big fall this year.
That's because, as the AMP's chief economist, Dr Shane Oliver suggests, the economy could be having a soft landing and not the crunch that many investors had feared (as did governments offshore).
If that happens, its good news for Australia, exporters in resources and for the market.
China’s economy is normalising not collapsing.
Contrary to worries about a hard landing, our view is that China’s economy is behaving just as the Government has hoped and growth is simply normalising after last year’s surge.
After the massive policy stimulus of 2008/early 2009 China’s economy surged with growth reaching 11.9% over the year to the March quarter.
Fears of overheating came to the fore with surging property prices in some cities, rising inflation and unsustainable loan growth.
The market is down 23. The SFE Futures were down 17 this morning.
\Wall Street closed down 30 having been down 110 at worst and up 87 at best. Initial jobless claims fell less than expected and company results rather flopped.
The metal prices were up, Gold up $8 and the oil price up. The A$ at 90.07c is holding as the US$ hits a two months low against the Euro and falls 8.7% from the June high. Chinese officials declare inflation is under control. US 2nd Q GDP numbers tonight offer more fear than hope.
In other news…
Macquarie Group have had another profit warning. The second profits ‘caution’ in a month. They say results from Macquarie Capital, Macquarie Securities and the Fixed Income, Currencies and Commodities (FICC) divisions are expected to fall in 2011 unless market conditions improve. Price down 3.83% or 146c to 3692c.
Graincorp (GNC) and AWB have announced a $2bn mergerwhich is effectively a takeover of AWB by Graincorp at a small (10%) premium to the AWB price. For 5.75 AWB shares AWB shareholders get 1 GNC share. AWB have also announced a profits warning which perhaps explains the lack of a premium bid price. AWB is up 1.5c to 97c. GNC is down 10c to 592c.
This is a daily market report which is provided by our in-house Stockbroker Kinetic Securities.”Contact Daniel Chung at Kinetic securities on (02) 9295 9838 or
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Monitor to Acquire up to 90% Stake Iin Onshore Trinidad Oilfields & Local Drilling Company.
Highlights:
Monitor signs HOA to acquire up to a 90% interest in three production licences in producing onshore oilfields in Trinidad;
Following the Acquisition Monitor will be a fully-funded oil production company with a significant daily production profile and identified exploration upside; Independent experts Forrest A. Garb and Associates, Inc1 have assessed that the producing fields contain oil reserves of:
o Proved plus probable (2P) of 4.8 million barrels o Undeveloped Prospective Resources of 19.9 million barrels;
Current production at the Project is approximately 700 bopd and, Monitor has a planned work programme to lift production to more than 3500 bopd;
Acquisition comes with established drilling inventory (9 rigs), personnel and operations all in place on site.
Activities Report for the Quarter Ended June 30th 2010
Highlights
Production Focus has completed its second full year of production, generating a record 62,300 ounces at a total cash cost of A$792/oz in the year to June 30, 2010. This is a 52% increase on the previous year’s production of 41,400 ounces. Production during the June Quarter, which comprised just 52 milling days, totalled 164,919 tonnes @ 2.5g/t for 12,660 ounces. This excludes 33 days of toll milling and a six-day maintenance shutdown.
Reserves Focus’ reserves continue to grow, with open pit reserves now at 1,490,000 tonnes @ 1.8g/t and underground reserves growing to 954,000 tonnes @ 3.9g/t for a total combined position of 2,483,000 tonnes for 207,900 ounces in reserves and stocks.
Exploration and Resources Focus reached a key milestone in its development during the quarter, with its resource base climbing above two million ounces for the first time. Highlights of the resource growth include an increase of the underground resources at the Tindals Mining Centre to 2.04Mt @ 4.9g/t for 324,000oz following an 80% increase in the Cyanide resource to 117,800oz @ 5.5g/t.
In today's video we look at the technical aspects of Amazon and see what's causing it not to go up at this point in time.
Analyzing the market in-depth, we can see that Amazon has hurt itself technically. According to the chart, we can anticipate that it is going to take some time to repair or even overcome the current level resistance.
This new short video outlines the areas we feel must be challenged to change the present trend. We also look at some downside target zones that may be possible for this stock.
As always our videos are free to watch and there are no registration requirements.
We would love to hear your thoughts on Amazon.
Click here to watch today's free video compliments of INOTV and Asxnewbie..
