News That Matters
Seasonality is observable in a wide variety of variables. In business, sales, production, inventory, man hours and the best time to discount can be at least partially predicted by seasonal effects. Gold is no different. In different months price swings occur somewhat predictably year after year. What causes this, to what magnitude does it occur and most importantly  how can we profit? As we all know, two things affect the price of all things tangible and intangible  supply and demand.
Vince Cable has warned Britain’s banks that the economic recovery is “being imperilled” by a “yawning mismatch” between demands for finance from small business and the banks’ reluctance to lend,

Germany’s economic rebound, which has helped counter gloom created by Europe’s debt crisis, was set back in January by an unexpectedly sharp fall in industrial orders, especially from beyond the eurozone,

The US Treasury plans to sell AIG shares worth up to $6.9bn in the latest stage of a gradual selldown of the 77 per cent stake it still owns in the insurer after its $180bn bail-out in 2008. AIG shares have risen 27 per cent so far in 2012,

Private investors holding more than €100bn in Greek bonds have declared publicly they will participate in Greece’s huge debt restructuring, clearing a key hurdle that makes it likely that history’s largest sovereign default will proceed as planned,

Interest rates set by banks for savings and loans products are no longer dictated by the Bank of England’s base interest rates and will continue to rise regardless of Thursday’s decision by the bank’s rate-setting committee,


Asia is set to outspend Europe on defence this year for the first time in modern history as European Union nations cut military budgets and Chinese expenditure rises, a think-tank says. Highlighting the shift in military power across the world,

The FT reports that corporate pension shortfalls have increased by an additional £90bn since theBank of England resumed gilt purchases last October in an effort to drive down interest rates, according to an employers’ body. The National Association of Pension Funds said the impact of the Bank’s quantitative easing policy

General Electric expects revenue growth in its industrial business in regions such as Latin America to overtake that of its traditional growth engine of Asia, led by China and India, in 2012, the FT reports.

Deutsche Bank’s incoming co-chief executive, Anshu Jain, is making an early mark on Germany’s largest bank with a wide-ranging reshuffle that ushers several investment bankers into top management positions,

China intends to extend renminbi loans to other Brics nations, in another step towards the internationalisation of its currency. The China Development Bank will sign a memorandum of understanding in New Delhi with its Brazilian, Russian, Indian and South African counterparts on March 29, say people familiar with their talks. Under the agreement CDB, which lends mainly in dollars overseas, will make renminbi loans available, while the other Brics nations’ development banks will also extend loans denominated in their respective currencies.

Brazil’s central bank has slashed its benchmark interest rate as concern over lacklustre economic growth in 2011 was compounded by weaker than expected industrial production in January.  In a scheduled meeting late on Wednesday, the central bank’s monetary policy committee cut the benchmark Selic interest rate by 75 basis points to 9.75 per cent, the fifth cut in a row and more than the expected 50 basis points.

Mitt Romney’s campaign has called on his Republican rivals to heed “the basic principles of math” and drop out of the 2012 nomination race before they irreparably damage the party’s chances of beating Barack Obama in November. The former Massachusetts governor won six of the 10 states up for grabs on Super Tuesday, the biggest day of the Republican campaign so far, and is projected to have secured 415 of the 1,144 delegates needed to win the Republican nomination.

Volumes in the world’s multi-trillion dollar foreign exchange market have dropped to six-year lows as nervous investors have shied away from trading the euro and central banks have continued to maintain a tight grip on the value of their currencies. Daily trading on two of the main foreign exchange trading platforms, EBS and Thomson Reuters, has fallen significantly below average in the first two months of the year, traditionally a time when investors return to trading after a quiet fourth quarter.

Japan posted a record current account deficit in January, as energy imports surged because of nuclear plant shutdowns following last year’s earthquake and tsunami. The deficit the sum of trade and investment flows was Y437bn ($5.4bn), the Ministry of Finance said on Thursday. That is the biggest monthly deficit since comparable data began in 1985.
Asian stock markets were higher Thursday amid growing optimism that Greece’s debt swap would prove successful, while Japanese exporter stocks benefited from a weaker yen, which fell after Japan posted a record current account deficit. As Thursday’s deadline approached, investors were cautiously optimistic that improving participation in a key debt swap for Greece, needed to keep the debt-laden nation from defaulting, was an indication that the country’s debt restructuring efforts would prove successful. However, gains in most markets were limited as many investors stayed on the sidelines before an official announcement on Greece’s debt swap was made and ahead of Friday’s much-awaited U.S. jobs data.  Japan’s Nikkei Stock Average gained 0.9%, Australia’s S&P/ASX 200 added 0.5%, South Korea’s Kospi Composite rose 0.1% and New Zealand’s NZX-50 advanced 0.3%. Dow Jones Industrial Average futures were down 13 points in screen trade.

Federal Reserve officials are considering a new type of bond-buying program designed to subdue worries about future inflation if they decide to take new steps to boost the economy in the months ahead. Under the new approach, the Fed would print new money to buy long-term mortgage or Treasury bonds but effectively tie up that money by borrowing it back for short periods at low rates. The aim of such an approach would be to relieve anxieties that money printing could fuel inflation later, a fear widely expressed by critics of the Fed’s previous efforts to aid the recovery.

A decision from the European Union’s highest court has called into question the tough downsizings imposed on many of the region’s banks as the price of approval for the giant government bailouts they received during the financial crisis. The ruling, issued last week by the European Union Court of Justice, said the EU misstepped and ultimately overreached in settlement talks with the Netherlands over the Dutch bank and insurance group ING Groep NV. The European Commission, the EU’s executive arm, has dictated the terms of bank restructurings using its near unilateral power to regulate aid that private-sector companies receive from national governments.

Fresh signs of economic weakness in Brazil are adding to a growing worry for the global economy: that the emerging markets that have boosted growth in recent years are slowing. That is a big concern amid the drag of the European debt crisis and a sluggish U.S. recovery. Brazil, China, Russia, India and South Africa are among the dynamic economies that helped the world bounce back from the 2008 financial crisis. This time around, they seem less likely to provide the same boost as they deal with problems such as strong currencies, inflation, deficits and real-estate bubbles.

So far there has been little sign of Beijing living up to its repeated promise of support for the single currency. The Chinese were at it again this week with the country’s Commerce Minister Chen Deming noting that “helping Europe is to help ourselves.” But there was something far more important that Chen said that suggests China could start buying the euro again this year.

Japan’s economy shrank less than initially estimated in the fourth quarter of 2011 on the back of stronger capital investment, but the result still marked the fourth contraction in five quarters amid the strong yen, flooding in Thailand and weak overseas demand. Also, Japan posted a record current account deficit in January amid flagging exports and soaring energy imports, in a further sign of fragility in the nation’s economic recovery.  Japan’s gross domestic product shrank by a price-adjusted 0.7% in annualized terms during the October-December period, according to revised data released by the Cabinet Office Thursday. That compares with an
Export-oriented small and family firms have been hit hardest in the post-financial crisis business, according to a 2011 survey of more than 1,000 companies conducted by Peking University’s National Development Research Institute and the e-commerce company Alibaba Group. Survey respondents at companies in China’s busiest manufacturing regions the Pearl River Delta, Yangtze River Delta and Bohai Rim described a variety of serious challenges.
Front-month Brent climbed 16 cents to $124.28 a barrel by 0506 GMT, after settling $2.14 higher at $124.12 in the previous session. U.S. crude was up 28 cents at $106.44 a barrel, after settling $1.46 higher at $106.16.

Spot gold was little changed at $1,686.04 an ounce by 0327 GMT, standing above the 200-day moving average of around $1,678. Gold gained 0.6 percent on Wednesday following a 2-percent slide in the previous session. U.S. gold inched up 0.2 percent to $1,687.10.

Beijing and the influential U.S. agriculture department may have overstated China’s corn crop by as much as 14 percent, pointing to higher imports from the world’s second-largest consumer of the grain that could squeeze already tightening global supplies. If China plugs the gap between projected and actual domestic supply with additional corn imports, it would drive up international prices already near four-month highs. Wheat markets could feel the impact too if Beijing snaps up the grain as a substitute to corn for animal feed.
Volvo Car Corp. (175)
showed a five-door hatchback this week in Geneva featuring the world’s first pedestrian airbag. The Swedish carmaker is counting on such innovations to burnish its safety image and help double sales. The V40, Volvo’s first model designed under owner Zhejiang Geely Holding Group Co (GEELZ). ofChina, has an airbag that ejects from the hood to protect pedestrians from injury. It also has a backswept headlight and panoramic glass roof to give it a sporty look.

China may report tomorrow the slowest inflation in 19 months and industrial-production growth near a two-year low, increasing odds the government will step up efforts to stimulate the economy. Consumer prices probably rose 3.4 percent in February from a year before, after a 4.5 percent increase in January, while output growth easedto 12.5 percent, Bloomberg News surveys of economists indicate. Commerce Minister Chen Deming yesterday signaled that export gains were less than analysts forecast.

China’s oldest bank is expanding in New York lending for trophy buildings as Europe’s debt crisis sweeps away the last wave of foreign financiers. Bank of China Ltd.increased its loans outstanding on U.S. properties fivefold to $2.6 billion since 2008, with most of that growth in New York, according to Trepp LLC, a mortgage data provider. The bank agreed last month to refinance the Mandarin Oriental hotel in Columbus Circle owned by Dubai’s Istithmar World PJSC. The Beijing-based state-backed bank is making inroads after European lenders including Anglo Irish Bank Corp., pulled out of the market, Commerzbank AG (CBK)’s real-estate lending unit stopped competing, and Societe Generale (GLE) SA pared assets.
The American consumer is levering-up again, as consumers borrowed more for everything from student loans to cars. Consumer credit jumped 8.6 percent, or $17.7 billion, in January to $2.54 trillion, the Federal Reserve reported. It was the fifth straight month that borrowing increased and the largest gain since 2004. The increase was much larger than the $10 billion analysts had expected, according to a Reuters poll. The consumer credit gains were driven almost exclusively by student loans from the federal government, raising doubts about whether the report signals economic growth.
Toyota has recalled 681,500 vehicles in the US dealing a blow its efforts to rebuild its image after a number of safety issues in recent years. It is recalling 70,500 Camry and 116,000 Venza cars to fix silicon grease leaks that may cause starting problems. Another 495,000 Tacoma vehicles need repairs to faulty steering wheels that may deactivate the driver’s air bag.

Indonesia will limit foreign ownership of its mines to 49%, which is likely to have an impact on overseas investment in the country. Foreign mining license holders will have to cut their stake down from 80% within 10 years, according to the Energy and Mineral Resources Ministry. The policy change was made on 21 February but not announced until Wednesday. Indonesia is keen to increase domestic investment in mining projects.
Less than half of Greece’s international creditors had agreed to a vital €206bn (£172bn) bond swap on Wednesday night, leaving Athens dangerously exposed to default. The Royal Bank of Scotland, Barclays and HSBC joined 30 European banks and institutions in declaring their acceptance of the deal – but the tally was still far short of the 95pc needed to avoid being officially declared in default. The International Institute of Finance (IIF), the body that has negotiated with the Greek government on behalf of bondholders, put out several announcements on Wednesday, counting the proportion of the vote as it inched up. The latest statement said bondholders “amounting in aggregate to €84bn, or 40.8pc of the €206bn total eligible debt” would support the deal.

So this is it. After three years of high drama, the European Union is staring at its first ever sovereign default. And ironically, unlike every other deadline so far, this one looks set to happen precisely on time. At 8pm GMT on Thursday, the authorities will know – or have a very good idea – how many of Greece’s international creditors have accepted its €206bn (£172bn) bond-swap offer. The results will probably take a few days to come out – Athens has to put its decisions through Brussels’ sluggish decision-making processes. But this time it isn’t up to the politicians so the possible outcomes are clearer:

Germans are famous for their mullet haircuts. So no wonder the nation’s Bild newspaper is bristling at the No1 variety being meted out by the Greek government. The tabloid, with 12m German readers, bought €10,000 (£8,350) of Greek debt in the secondary bond market back in December – at a knock-down €4,815. On Wednesday it declared it was saying “Nein” to the Greek debt swap, which is trying to force the holders of €206bn of bonds to accept a trimming of about 75pc. “A debt writedown without Greece’s exit from the eurozone does not address the question of how the Greek economy can ever pick up again,” said Bild, in a statement that may delight its readers but embarrass Angela Merkel.

Britain is poster child for financial crisis management. The UK has excelled in crisis management over the five years of the global downturn, but more dramatic intervention will be needed from central banks according to analysts. Deutsche Bank analysts said that despite the country’s vulnerability to the crisis because of its high debt level, “the UK authorities have done a good job to date” in limiting the effects, benefiting from control over its currency and its own central bank. As a result of independence the pound fell sharply, the Bank of England increased its balance sheet aggressively and consistently, giving investors a clear signal of intent, and the Government was early to respond with austerity.

Indonesia demands 51pc of foreign-owned mines. Indonesia has unveiled plans to enjoy a bigger take of the profits from its vast natural riches by limiting foreign ownership of its mines. Under new rules, foreign companies must sell down their stakes in mines in the country, so that by the tenth year of production the assets are at least 51pc owned by Indonesian entities. “The aim is the state has to get more,” said Jero Wacik, Indonesia’s energy and minerals minister. “For new investment it will be simple, but for existing investment there must be renegotiation.”  The move represents the latest instance of resource nationalism, the mining industry’s current bugbear.
Australia’s unemployment rate rose to 5.2 per cent in February as companies shed more than 15,000 jobs, increasing the chances of another interest rate cut. The jobless tally matched forecasts by economists, and rose from 5.1 per cent in January, the Australian Bureau of Statistics reported.  Jobs are being created in some sectors but perhaps not as much as the Reserve Bank was thinking, said Citi chief economist Paul Brennan.

Australia’s jobs market is still flat. Jobs are growing strongly in Western Australia, but collapsing in Victoria. That’s the real message coming out of the labour force figures released by the Bureau of Statistics today. On the seasonally adjusted measures that people are used to focusing on, job numbers zagged after last month’s zig. In the past few months, job numbers rose in November, fell in December, rose in January, and now fell in February: down by 15,000, to end up back where they started.

Australia’s largest banks are taking advantage of an easing in Europe’s sovereign debt crisis that helped drive yield premiums on the nation’s financial bonds to the lowest in more than three months. Westpac sold $2 billion of five-year notes on March 6, paying 20 basis points less than a similar-maturity offering by National Australia Bank last month, according to data compiled by Bloomberg. Australian banks have boosted unsecured debt sales to $US20.5 billion this year, up 23 per cent from the same period of 2011, the data show.
Global production of cars will increase by 3.0 per cent this year, about in line with growth in 2011, the International Organisation of Motor Vehicle Manufacturers forecast on Wednesday.  Last year, global vehicle production reached a record 80.1 million units, the organisation told a press conference at the Geneva Motor Show.  ‘After a dramatic fall in 2009 to 61.8 million units due to the crisis in 2008, world car production car has regained its growth rate,’ the president of the trade body, Mr Patrick Blain, said.
China’s central bank said Wednesday that it would provide 10 billion Yuan (1.58 billion U.S. dollars) in new loans to support the country’s spring farming. The People’s Bank of China (PBOC) said in a statement on its website that it would guide financial institutions in rural areas to make good use of the new loans and expand lending to the agricultural sector.
At a time when domestic airlines are reporting substantial losses, the Civil Aviation Ministry has proposed that the government allow 24 per cent Foreign Direct Investment (FDI) by foreign airlines in Indian carriers.  The Civil Aviation Ministry is preparing a note for the Union Cabinet and it is likely to come up for discussion in the Cabinet over the next few days, sources in the ministry said here on Thursday.  “The Civil Aviation Ministry has proposed 24 per cent investment by foreign airlines. The Cabinet is likely to take a call on the issue in a couple of weeks,’’ official sources said.

Seeking to give a big push to opening up of borders for trade and commerce between India and Pakistan, the Joint Working Groups (JWGs) on electricity, petroleum and banking are scheduled to meet this month to work on further enhancing the economic engagement and opening of bank branches between the two countries. In addition to this, the talks between the Home Secretaries of the two countries for liberalising the visa regime and reviewing the 1974 visa agreement between India and Pakistan are also likely to be held this month in order to pave the way for a new and more open visa policy, especially for businessmen from the across the border to enhance people-to-people exchange.

As is customary, ahead of the credit policy review on March 15 and the Union Budget for 2012-13 the day after, Reserve Bank of India Governor D. Subbarao on Wednesday met Finance Minister Pranab Mukherjee to discuss the overall macroeconomic environment at home and abroad, with special reference to the high inflation scenario in the wake of a spike in international oil prices, low growth and crunch in liquidity. The meeting, according to informed sources, was more significant than just a standard practice call-on by the RBI Governor prior to monetary policy review as the chances of inflation inching up again remains a possibility.

India is unlikely to be a superpower, nor should it strive to be one. That is the conclusion of a report published this week by the London School of Economics. In ‘India: The next super power,’ a collection of essays, the authors weigh India’s changing role over the decades in a number of fields from economic, political, environmental and military. While its rise on many of these counts has been “impressive”, the authors conclude that factors such as the prevalence of the caste system, growing wealth inequalities and environmental costs, as well as “embedded corruption” and domestic conflicts prevent it “and will continue to stop it” from becoming a counterweight to China. Mr Ramachandra Guha, the Philippe Roman Chair in History and International Affairs at the LSE, argues that India has enough domestic problems to contend with.
Global power utilities are quietly firming up plans for the vast Indian market and have posted expats to hunt for opportunities, including M&A deals, in the sector where local companies are pleading for government support to battle rising costs, fuel scarcity and inefficient distribution networks. European power and gas giantsGDF Suezof France and E.ON of Germany, whose combined capacity matches India’s total installed capacity of 1,87,550 mw, are among half a dozen global firms scouring the Indian market for growth opportunities, company executives said. The two companies have also shown interest in the sale of BG’s 65% stake in Gujarat Gas Co.

Industrial output probably edged higher in January but remained subdued as an increase in production of consumer goods was offset by declines in the capital goods and mining sectors, a Reuters poll showed. A survey of 25 economists this week showed they expected Indian industrial production (IIP) to have grown by a median 2.1 per cent in January from a year earlier, compared with 1.8 per cent in the previous month. Forecasts in the poll ranged from a decline of 1.2 per cent to an increase of 4.6 per cent, with only one contributor expecting a contraction.
South Korea’s central bank on Thursday left the key interest rate unchanged for the ninth straight month in March, as rising oil prices threaten to build up inflationary pressures and fragile signs of economic revival at home and abroad continue to challenge policymakers. Bank of Korea (BOK) Gov. Kim Choong-soo and his five fellow policymakers froze the benchmark 7-day repo rate at 3.25 percent for this month, as widely expected. All 18 analysts polled by Yonhap Infomax, the financial news arm of Yonhap News Agency, forecast a rate freeze for March.
European Union oil sanctions on Iran will cause uncertainty in world oil markets and harm EU citizens, Iranian Oil Minister Rostam Ghasemi said. “The oil sanctions are not in the interest of the European countries and will cause tension in the global oil markets,” Ghasemi said, according to the Iranian oil ministry news service Shana.  “The global oil markets will be much impacted by these sanctions,” he added.  “This will harm the people of the countries that have imposed the sanctions. Of course, we did not want the European people to face problems but it was the European governments which chose the sanctions,” he said.

Arguing that any conflict in Iran would have disastrous consequences, India alleged that a series of recent media reports in the U.S. have distorted New Delhi’s foreign policy objectives and energy security needs. “Unfortunately, though, a series of recent media reports have presented a picture which not only distorts India’s foreign policy objectives and energy security needs, but also creates misunderstanding about its actions,” the Indian Embassy spokesman Virander Paul said in a press statement. It is one of the rare instances, when the Indian Embassy in Washington has issued an official statement in response to any news reports in the American media, which have questioned New Delhi’s decision to continue oil trade with Iran.

Indian exports to Iran under the rupee trade will receive incentives on par with those for export proceeds in freely convertible currency, the government said. “In respect of exports to Iran, export proceeds realized even in Indian rupee will be eligible to avail export benefits and incentives,” according to the statement.  Iran has opened a new rupee payment mechanism for Indian exporters, in order to skirt western sanctions. Under this, Iran allows India to make 45 per cent of its oil payments in rupees.  Most exporters are satisfied with the new rupee payment mechanism through which they will get paid in rupees under an arrangement between Iran’s Bank Persian and India’s UCO Bank.
Seasonality is observable in a wide variety of variables. In business, sales, production, inventory, man hours and the best time to discount can be at least partially predicted by seasonal effects. Gold is no different. In different months price swings occur somewhat predictably year after year. What causes this, to what magnitude does it occur and most importantly how can we profit? As we all know, two things affect the price of all things tangible and intangible supply and demand.



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