Bair Says Regulators Lack Spine to Name Systemic Firms – Bloomberg 02-28-13

Salient to Investors:

Sheila Bair at Pew Charitable Trusts said US regulators lack the courage to designate non-bank financial companies systemically important and are not doing their job. Bair said regulators cannot even name as systemic  those companies in the crisis, like AIG and GE Capital, that were named as systemic – yet we can bail out taxpayer money to keep these guys afloat in a nanosecond.

Read the full article at http://www.bloomberg.com/news/2013-03-01/bair-says-regulators-lack-spine-to-name-systemic-firms.html

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BOJ Seen Spiking Punchbowl in April Under New Chief Kuroda – Bloomberg 02-28-13

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Adam Posen said given the jump in Japanese stocks and slide in the yen in anticipation of greater stimulus, any failure to move in April risks disappointing investors.

Masaaki Kanno at JPMorgan Chase said the party has just started, and predicts the BOJ’s open-ended bond purchases will be brought forward to May or June.

Hideo Kumano at Dai-Ichi Life Research Institute sees a high chance of further monetary easing on April 3-4. Tomo Kinoshita at Nomura sees a $108 billion increase in the BOJ’s asset purchase program – even if the BOJ takes no action, Kuroda will signal more easing at the next meeting on April 26.

Yasunari Ueno at Mizuho Securities said Kuroda and Iwata want to show that a tremendous change is happening, so sooner or later, a restructuring of the asset purchase program and the BOJ’s monthly bond-buying operations will be on the agenda.

Nobuyasu Atago at the Japan Center for Economic Research said Kuroda will have to maintain the balance between a new level of easing and the risk of being seen as financing government spending.

Read the full article at http://www.bloomberg.com/news/2013-02-28/boj-seen-spiking-punchbowl-in-april-under-new-governor-kuroda.html

 

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No Honeymoon for Japan’s New Central Banker – Bloomberg 02-28-13

Salient to Investors:

William Pesek writes:

  • Unconventional policies have worked out better in the US than in Japan. 
  • Abe’s revitalization plan rests on two tired ideas – massive public-works projects and more monetary stimulus. Absent are steps to improve Japan’s economy, including tax reform, deregulation, joining free-trade agreements, empowering women, supporting entrepreneurs and increasing productivity.

Jeff Kingston at Temple University said tackling deflation requires much more than setting a target and opening the spigots, i.e. Abenomics.

Read the full article at http://www.bloomberg.com/news/2013-02-28/no-honeymoon-for-japan-s-new-central-banker.html

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Emerging Stocks Rise Most in Two Months on China Property Rally – Bloomberg 02-28-13

Salient to Investors:

Jessada Sookdhis at CIMB-Principal Asset Mgmt said China is clearly recovering, especially in the property sector, while US data and Italian debt sales have bolstered sentiment in emerging markets.

The MSCI Emerging Markets Index is at 10.5 times projected 12-month earnings versus 13.8 for the MSCI World Index.

Martial Godet at BNP Paribas said the view is that QE can last longer than expected in the US, after some fears that it could be reduced later in 2013, and China is rebounding after significant underperformance.

Read the full article at http://www.bloomberg.com/news/2013-02-28/emerging-stocks-rise-most-in-four-weeks-on-china-property-rally.html

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A new 401(k) success formula: Low cost plus advice – Reuters 02-28-13

Salient to Investors:

Mark Miller writes:

  • A growing number of employers are adding unbiased third-party investment guidance options as they work to improve their retirement plans.
  • The best type of planner: independent advisers who have the fiduciary responsibility to put client interests first.
  • A Deloitte Center for Financial Services survey found that 58 percent of Americans don’t have a retirement plan, 39 percent don’t think their returns will be sufficient to provide a decent retirement income, 57 percent prefer handling their own retirement planning, and 38 percent say they don’t need professional advice.
  • Aon Hewitt, said one-third of all US plans offer a third-party investment advisory service either online or by phone, 25 percent offer in-person consultations, but only 15 percent of plan holders used a personalized advisory service in 2011.
  • BLS says just 49 percent of workers at companies with 100 or fewer workers have access to a retirement savings plan on the job.

Read the full article at http://www.reuters.com/article/2013/02/28/us-column-miller-idUSBRE91R1A320130228

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S&P 500 Falls as Senate Rejects Plan Replacing Sequester – Bloomberg 02-28-13

Salient to Investors:

E. William Stone at PNC Wealth Management doesn’t expect massive impact from the impending spending cuts, but says there is fear of the unknown and an anticipation of increased volatility.

William Murray at the IMF said sequestration means reevaluation of growth forecasts.

Read the full article at http://www.bloomberg.com/news/2013-02-28/u-s-stock-index-futures-little-changed-before-gdp-report.html

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Evans Says Fed Must Sustain Stimulus Amid Fragile Rebound – Bloomberg 02-28-13

Salient to Investors:

FRB of Chicago President Charles Evans said:

  • The Fed must avoid removing accommodation prematurely, as the Japanese did.
  • The US economy will grow 2.5 to 3 percent in 2013 and 3.5 percent to 4 percent in 2014, and unemployment will be at or slightly below 7 percent by year-end 2014 and 6.5 percent in mid-2015.
  • Risks to growth include government budget cuts and an unresolved debt crisis in Europe.
  • The economy will achieve escape velocity by 2014.
  • There are few signs of froth in financial markets that may destabilize the economy.

Read the full article at http://www.bloomberg.com/news/2013-03-01/evans-says-fed-must-sustain-stimulus-amid-fragile-rebound.html

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Gold Outlook Splits Traders Weighing Stimulus Gains: Commodities – Bloomberg 02-28-13

Salient to Investors:

Goldman Sachs said gold’s cycle has turned as the US economy gathers momentum, and cut its 3-month forecast to $1,615 from $1,825 and expects $1,550 in a year’s time. Hedge funds are the least bullish on gold since 2008.

Adrian Day at Adrian Day Asset Mgmt said confidence in a recovering US economy and a strong global stock market has reduced the perceived need for gold, but sees gold at buying levels because there is no expectation of serious tightening in any major economy anytime soon.

George Soros cut his stake in the SPDR Gold Trust by 55 percent in Q4 2012, but John Paulson maintained his holding.

Hedge fund net-long positions are down by 79 percent since October 2012. Credit Suisse said an unwind in the bull run has begun. Societe Generale said the gold rush is over.

The IMF predicts global expansion will climb to 3.5 percent in 2013 from 3.2 percent in 2012, despite a second year of contraction in the euro area.

BNP Paribas said gold will average a record $1,740 in Q4 as quantitative easing weighs on the dollar and raises the outlook for faster inflation. BNP cut its 2013 outlook by 6.7 percent to $1,670.

Mark O’Byrne at GoldCore said sentiment is the worst in recent years and therefore is due a bounce – gold is oversold on a host of benchmarks.

The World Gold Council said Indian and Chinese demand will rise at least 11 percent in 201, and central banks will be strong buyers in 2013.

The US Mint sold 80,500 ounces of gold coins in February versus 150,000 ounces in January, and 28 percent more than the monthly average in 2012. Central banks added 17 percent more to reserves in 2012 than in 2011.

Credit Suisse expects commodities will return 6 percent in the next 12 months.

Ole Hansen at Saxo Bank A/S said the real key is whether the stimulus will succeed in creating growth, which ultimately drives the physical demand for commodities.

Read the full article at http://www.bloomberg.com/news/2013-03-01/gold-outlook-splits-traders-weighing-stimulus-gains-commodities.html

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Central Banks Spewing Cash Need to Plan Exit Timing, Rohde Says – Bloomberg 02-28-13

Salient to Investors:

Danish central bank Governor Lars Rohde said world central bankers need to plan for monetary tightening to avoid feeding asset bubbles. Rohde said there is no short-term alternative to global easing, given the state of the real economy.

Jacob Graven at Sydbank A/S said it will be the same pattern as every time cycles shift, but the risk of getting it wrong this time is considerably bigger.

Sweden, Norway and Switzerland are tightening rules on mortgage lending as low rates inflate property prices and credit growth. , S&P said Swedish household debt rose to 173 percent of disposable income in 2012, Norway’s will exceed 200 percent in 2013, while Denmark owns the world record at 322 percent of disposable incomes.

Read the full article at http://www.bloomberg.com/news/2013-02-27/central-banks-spewing-cash-must-consider-exit-timing-rohde-says.html

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Asia Stocks Poise for Biggest Advance Since September – Bloomberg 02-27-13

Salient to Investors:

Tim Schroeders at Pengana Capital said US housing is pretty good and is providing a huge catalyst to consumers via the wealth effect, so the buy-on-dips strategy is in play and we’re definitely pricing in a lot more good news in equities.

The MSCI Asia Pacific Index is at 14.7 times estimated earnings versus 13.7 for the S&P 500 and 12.3 for the Stoxx Europe 600.

Glenn Morgan at Deutsche Bank said it is dawning on many people that they are not being aggressive enough with their exposure to equities, given the macro backdrop is looking better and companies are delivering – there’s a weight of cash on the sidelines.

50 percent of the 398 MSCI Asia Pacific Index companies so far reporting profits since January have exceeded expectations.

Read the full article at http://www.bloomberg.com/news/2013-02-28/asian-stock-head-for-fourth-monthly-advance-on-economy.html

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