<![CDATA[Hedgehogs.net: Ken Yeadon's connections' blogs]]> http://www.hedgehogs.net/pg/blog/keny/friends/?view=rss http://www.hedgehogs.net/pg/blog/asiablues/read/11593458/eia-inventory-report-and-oil-market-analysis-2-10-2016-video Wed, 10 Feb 2016 23:23:52 +0000 http://www.hedgehogs.net/pg/blog/asiablues/read/11593458/eia-inventory-report-and-oil-market-analysis-2-10-2016-video <![CDATA[EIA Inventory Report and Oil Market Analysis 2 10 2016 (Video)]]> By EconMatters

U.S. Oil Production is starting to roll over, fundamentals are changing in the oil market. Expect a rather large short squeeze in the oil market over the next couple of weeks.

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http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11593449/iceland-maintains-rate-but-still-sees-tighter-stance Wed, 10 Feb 2016 16:13:45 +0000 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11593449/iceland-maintains-rate-but-still-sees-tighter-stance <![CDATA[Iceland maintains rate but still sees tighter stance]]>     Iceland's central bank left its key interest rates steady, but said "a tighter monetary stance will probably be needed in the coming term, in view of growing domestic inflationary pressures," but how much and how quickly rates will be raised will depend on future developments.
    The Central Bank of Iceland (CBI), which raised its rate by 125 basis points in 2015,  said global price developments and a stronger exchange rate of the krona had provided scope to raise rates more slowly than previously considered as it lowered its forecast for inflation and raised the forecast for economic growth.
    In its latest monetary bulletin, the CBI forecast average consumer price inflation of 2.3 percent in 2016, sharply down from 3.3 percent seen in November, and 4.1 percent inflation for 2017, down from 4.0 percent, but an unchanged 3.4 percent inflation rate for 2018.
   Iceland's inflation rate rose to 2.1 percent in January from average 2015 inflation of 1.6 percent as the margin of spare capacity in Iceland's economy was estimated to have disappeared last year and is expected to widen even further.
   "Pay rises well in excess of the inflation target and productivity growth exacerbate inflationary pressure, which are offset by developments in global energy and commodity prices and the exchange rate of the krona," the central bank said.
    Unlike most other currencies worldwide, the Icelandic krona has been appreciating against the U.S. dollar since March 2015 and was trading at 126.8 to the dollar today, up 2.4 percent since the start of this year but only up 0.5 percent since the start of 2015.
    The CBI, which targets inflation of 2.5 percent, said the trend of deflation in global goods markets could come to a halt later this year, which would push up inflation though the extent and timing of changes to global prices was uncertain.
    Economic growth in Iceland last year was estimated at 4.1 percent, weaker than the central bank's forecast of 4.6 percent, but growth this year is forecast to rise slightly to 4.2 percent, sharply up from the November forecast of 3.2 percent, as private consumption is expected to rise, pulling up wages, employment and inflation.
    The CBI forecast a 5.3 percent rise in private consumption this year, up from 4.9 percent in 2015, before easing to growth of 4.2 percent in 2017 and 3.4 percent in 2018.
    The CBI left its key rate, the seven-day deposit rate, unchanged at 5.75 percent and the the seven-day lending rate at 6.25 percent.

   The Central Bank of Iceland issued the following statement:

 "The Monetary Policy Committee (MPC) of the Central Bank of Iceland has decided to keep the Bank’s interest rates unchanged. The Bank’s key interest rate – the rate on seven-day term deposits – will therefore remain 5.75%. 
Year-2015 GDP growth is estimated to have been weaker than was projected in the Bank’s November forecast, or 4.1% instead of 4.6%. The outlook is for broadly similar GDP growth this year, or 4.2%. This is 1 percentage point stronger growth than was forecast in November. The difference is due to the prospect of stronger private consumption growth than was projected then, as the outlook is for larger pay increases, more rapid growth in employment, and lower inflation. 
The margin of spare capacity is estimated to have disappeared last year, and the outlook is for a widening positive output gap. Pay rises well in excess of the inflation target and productivity growth exacerbate inflationary pressures, which are offset by developments in global energy and commodity prices and the exchange rate of the króna. Inflation has been lower than was forecast in November and appears set to remain so into 2017. 
Deflation in global goods markets could come to a halt, however, and eventually turn around in the coming term. According to international forecasts, this is expected to happen later in 2016. For this reason, among others, inflation is assumed to rise above 3% by end-2016 and reach 4% a year later. The extent and timing of these developments are uncertain, however.
Global price developments and a stronger króna have provided the scope to raise interest rates more slowly than was previously considered necessary. However, this does not change the fact that, according to the Bank’s forecast, a tighter monetary stance will probably be needed in the coming term, in view of growing domestic inflationary pressures. How much and how quickly the monetary stance must be tightened will depend on future developments."

http://www.hedgehogs.net/pg/blog/asiablues/read/11593439/platinum-and-palladium-analysis-video Wed, 10 Feb 2016 00:13:51 +0000 http://www.hedgehogs.net/pg/blog/asiablues/read/11593439/platinum-and-palladium-analysis-video <![CDATA[Platinum and Palladium Analysis (Video)]]> By EconMatters

We look at Platinum and Palladium metals from the technical side in this video. These often neglected metals are pretty unique and special in their own right, and can offer some great trading setups.

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http://www.hedgehogs.net/pg/blog/asiablues/read/11593401/happy-chinese-new-year-2016 Mon, 08 Feb 2016 21:13:52 +0000 http://www.hedgehogs.net/pg/blog/asiablues/read/11593401/happy-chinese-new-year-2016 <![CDATA[Happy Chinese New Year 2016]]>

By EconMatters

Feb. 8 is the Chinese New Year day, the first day of the year of the Monkey. EconMatters celebrate the Chinese New Year with this video featuring performance by international martial arts movie star Donnie Yen.  Donnie Yen is the leading man in the upcoming sequel of Crouching Tiger, Hidden Dragon (U.S. release on Feb. 26, 2016), and also to appear in the next Star War.  

Happy Chinese New Year 2016!  

We appreciate your continuing support and readership....  

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The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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http://www.hedgehogs.net/pg/blog/asiablues/read/11593393/edge-vs-risk-management-video Mon, 08 Feb 2016 19:53:58 +0000 http://www.hedgehogs.net/pg/blog/asiablues/read/11593393/edge-vs-risk-management-video <![CDATA[Edge vs Risk Management (Video)]]> By EconMatters

Some traders think having good risk management in place is an edge, but there is a distinction to be made here. Today is a good day in financial markets to discuss this topic in depth.

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http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11592854/this-week-in-monetary-policy-iceland-armenia-philippines-sweden-serbia-chile-peru-uganda-and-zambia Sun, 07 Feb 2016 16:50:44 +0000 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11592854/this-week-in-monetary-policy-iceland-armenia-philippines-sweden-serbia-chile-peru-uganda-and-zambia <![CDATA[This week in monetary policy: Iceland, Armenia, Philippines, Sweden, Serbia, Chile, Peru, Uganda and Zambia]]>
    This week (February 8 through February 13) central banks from 9 countries or jurisdictions are scheduled to decide on monetary policy: Iceland, Armenia, Philippines, Sweden, Serbia, Chile, Peru, Uganda and Zambia.
    Following table includes the name of the country, the date of the next policy decision, the current policy rate, the result of the last policy decision, the change in the policy rate year to date, the rate one year ago, and the country’s MSCI classification.
    The table is updated when the latest decisions are announced and can always accessed by clicking on This Week.

FEB 8-FEB 13, 2016:
COUNTRY       DATE           RATE      LATEST        YTD     1 YR AGO    MSCI
ICELAND 10-Feb 6.50% 25 0 5.25%
ARMENIA 10-Feb 8.75% -100 0 10.50%
PHILIPPINES 11-Feb 4.00% 0 0 4.00%       EM
SWEDEN 11-Feb -0.35% 0 0 -0.10%       DM
SERBIA 11-Feb 4.50% 0 0 8.00%       FM
CHILE 11-Feb 3.50% 0 0 3.00%       EM
PERU 11-Feb 4.00% 25 25 3.25%       EM
UGANDA 12-Feb 17.00% 0 0 11.00%
ZAMBIA 12-Feb 15.50% 300 0 12.50%


http://www.hedgehogs.net/pg/blog/asiablues/read/11592851/inflation-is-the-monster-hiding-in-the-closet-for-the-bond-markets Sun, 07 Feb 2016 16:34:02 +0000 http://www.hedgehogs.net/pg/blog/asiablues/read/11592851/inflation-is-the-monster-hiding-in-the-closet-for-the-bond-markets <![CDATA[Inflation is the Monster hiding in the closet for the Bond Markets]]> By EconMatters

We are near the low in bond yields for the year, and with the global markets selling off but the employment numbers holding in there, we have a real conundrum for bond investors.

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http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11592788/emerging-markets-may-be-facing-tighter-liquidity-bis Sun, 07 Feb 2016 02:08:22 +0000 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11592788/emerging-markets-may-be-facing-tighter-liquidity-bis <![CDATA[Emerging markets may be facing tighter liquidity - BIS]]>
    Emerging market economies may be facing tighter liquidity conditions as cross-border lending to emerging economies, especially China, shrank in the third quarter of 2015 and U.S. dollar borrowing by non-bank companies in those economies was flat for the first time since 2009, according to the Bank for International Settlements (BIS).
    BIS General Manager Jaime Caruana said global liquidity - a term that captures the ease of financing in global financial markets -  shows that the stock of U.S. dollar-denominated debt of non-bank borrowers outside the U.S. was unchanged at $9.8 trillion from June to September and dollar borrowing by non-banks in emerging economies also was steady at $3.3 trillion.
    An even clearer sign that global liquidity conditions for emerging markets may have peaked comes from a decline in cross-border lending to China, Brazil, India, Russia and South Africa. In the third quarter of last year lending shrank by $38 billion to $824 billion from the second quarter, Caruana said in a speech at the London School of Economics (LSE).
    The shift in global financing conditions comes as growth in emerging market economies is declining, the U.S. dollar is rising against emerging market currencies, and commodity prices, especially oil, has plunged, hitting commodity producers.
    While these three headwinds may appear unconnected at first sight, Caruana said they are deeply connected and share common factors.
    "Rather than being exogenous "shocks," they are manifestations of a major realignment of economic and financial forces associated with the long-anticipated shift of global monetary forces," he said.
    Although total global debt has continued to rise since the global financial crises, the growth in emerging markets has been dramatic as compared to that of advanced economies, Caruana said.
    Since 2009 the average level of private credit in emerging economies as a proportion of Gross Domestic Product has jumped to 125 percent from around 75 percent and the debt of non-financial emerging market firms as a proportion of GDP has grown so fast that it exceeds that of advanced economies.
    Companies that produce commodities as well as non-tradable goods were attracted to a relatively weak U.S. dollar and low interest rates since 2009 and as a rule of thumb, 1 percent depreciation of the dollar has been associated with a 0.6 percentage point increase in the quarterly growth of dollar-denominated cross-border lending outside the U.S. 
    The increased leverage facing companies in emerging markets would be less of a concern if the debt had been used to finance productive investments that eventually boost profits.
    "However, the profitability of EME non-financial companies has fallen," Caruana said, noting that traditionally they had been more profitable than their peers in advanced economies but their profitability has been falling in recent years and is now below that of advanced economies.
    Although many firms in emerging markets have dollar cash flows to help service debt and much of the debt has maturities of over 10 years, Caruana said the challenges of deleveraging and a depreciation of the local currency should not be underestimated.
    "The feedback loop has started to impact the broader economy in EMEs now that the dollar has started to appreciated, " he said.
    And while many emerging markets economies now have large foreign exchange reserves in contrast to the crises in the 1980s and 1990s, Caruana said this may not necessarily prevent slower growth as there is no real mechanism for transferring foreign exchange reserves to private firms with dollar debts, which end up curtailing their operations as they reduce leverage.
    The impact of the fall in commodity prices has not only hit oil producers in emerging economies but also U.S. shale producers, with both types of firms borrowing heavily from both banks and markets against oil reserves and projected revenue.
    The value of outstanding bonds from oil and gas companies rocketed to $1.4 trillion in 2014 from $455 billion in 2006 and syndicated loans amounted to $1.6 trillion in 2014, up from $600 billion in 2006.
    A large part of the borrowing was from state-owned oil companies in emerging markets whose firms paid large dividends to their governments, helping finance spending.
    "As with any leveraged sector, the combination of falling oil prices and higher leverage can lead to financial strains for oil-related firms," Caruana said.

    Click to read Caruana's speech "Credit, commodities and currencies."


http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11592783/romania-maintains-rate-inflation-in-target-band-2017 Sun, 07 Feb 2016 02:07:15 +0000 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11592783/romania-maintains-rate-inflation-in-target-band-2017 <![CDATA[Romania maintains rate, inflation in target band 2017]]>     Romania's central bank left its monetary policy rate steady at 1.75 percent as the latest quarterly inflation forecast sees inflation re-entering the variation band around the target at the start of 2017 and remaining there after slipping deeper into negative territory from January through May this year due to the cut in Value Added Taxes in June 2015.
    The National Bank of Romania (NBR), which cut its rate by 350 basis points and the reserve requirement on foreign exchange liabilities in January, added that inflation is expected to remain within the target variation band of 1.5 to 3.5 percent from 2017 due to a fading of the impact of the VAT rate cuts, an easing of the fiscal policy stance and the rise in wage costs.
    Romania has cut its VAT rate in two steps, initially in June 2015 and then to 20 percent from 24 percent as of Jan. 1, 2016, and the February inflation report will be published on Feb. 9.
    In December Romania's headline inflation rate was minus 0.9 percent, higher than minus 1.1 percent in November and the highest since consumer prices started falling in June. The gradual rise in inflation in recent months was attributed to the base effects from fuel price movements, a faster pick-up in tobacco prices and the relative weakening of the leu currency.
    In its November inflation report, the central bank forecast that headline inflation would hit minus 0.7 percent at the end of 2015 and then turn positive by the end of this year at 1.1 percent before returning to the variation band.
    Excluding the impact of the reduced VAT rate, the NBR said annual inflation would have neared 2 percent at the end of 2015, within its variation band around the midpoint target of 2.5 percent. In November the central bank had forecast headline inflation of 2.1 percent end-2015 and 2.7 percent end-2016.

    The National Bank of Romania issued the following statement:

"In its meeting of 5 February 2016, the Board of the National Bank of Romania decided the following:

  • to keep unchanged the monetary policy rate at 1.75 percent per annum;
  • to pursue adequate liquidity management in the banking system; and
  • to maintain the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of credit institutions.
The NBR Board examined and approved the February 2016 Inflation Report, which will be presented to the public in a press conference scheduled for 9 February 2016.
Inflation remained in negative territory at the end of 2015, in line with the projection. Behind this stood mainly the broadening of the scope of the reduced VAT rate to all food items, non-alcoholic beverages and food service activities starting June 2015. 
The annual inflation rate touched -0.9 percent in December 2015, compared with -1.1 percent in November and the record low of -1.87 percent seen last August. The rise was attributed to the base effects stemming from fuel price movements, faster pick-up in tobacco product prices, as well as the influences of the swifter narrowing of negative output gap and the relative weakening of the local currency. 
In the absence of the measure on broadening the scope of the reduced VAT rate, the annual inflation rate would have neared 2 percent at year-end, standing inside the ±1 percentage point variation band of the 2.5 percent target. 
GDP growth gathered momentum in 2015 Q3. The fastest annual rates of increase saw the tertiary and construction sectors (more than 5.5 percent), in contrast to the still modest dynamics in the industrial sector and sharp decline in the agricultural sector. A differential between pay rises and labour productivity gains is manifest in the industrial sector. 
As for demand, the largest contribution to GDP advance made further final consumption, to which added, this time around, a favourable performance of net exports. In this context, the current account deficit remained below 1 percent of GDP over the first three quarters of 2015, with the wider trade gap being largely offset by an upward path in the services surplus. 
Interbank rates on the money market and bank rates continued to decrease to new historical lows. Against this background, the annual dynamics of credit to the private sector advanced further into positive territory, due to leu-denominated loans alone. Loans in domestic currency accounted for 50.7 percent of the loan stock at end-2015, compared with a 35.6 percent low in May 2012, benefitting the functioning of the monetary policy transmission mechanism and helping mitigate the risks to financial stability. 
The NBR Board has examined and approved the February 2016 Inflation Report. The new quarterly forecast reconfirms the outlook for inflation to go deeper into negative territory January through May 2016, as a result of the cut in the standard VAT rate and in other indirect taxes. At the same time, the forecast points to the annual inflation rate re-entering the variation band of the target at the beginning of 2017 and remaining there afterwards. This is attributable to the fading out of the transitory disinflationary impact of the standard VAT rate cut, to the easing of the fiscal policy stance and to the rise in unit wage costs. The successive indirect tax cuts in the period from 2015 to 2017 cause the volatility of inflation rate over the projection interval. 
The risks to the current projection stem primarily from the domestic environment. They are triggered by the uncertainty about the fiscal and income policies, as well as about the implementation of structural reforms, in the context of the elections scheduled to take place this year and in the absence of agreements with international financial institutions. 
On the external front, particularly relevant is the heightened uncertainty surrounding global economic growth, stemming from the performance of the Chinese economy and of other major emerging economies, with implications on euro area recovery. Adding to this is the uncertainty about developments in international oil prices and the recent spike in global financial market volatility, associated with the increasingly diverging monetary policy stances of the world’s major central banks. 
Under the circumstances, the Board of the National Bank of Romania has decided to keep unchanged the monetary policy rate at 1.75 percent per annum, to further pursue adequate liquidity management in the banking system, and to maintain the existing levels of minimum reserve requirement ratios on both leu- and foreign currency-denominated liabilities of credit institutions. 
The NBR Board decisions aim to ensure price stability over the medium term in a manner conducive to achieving sustainable economic growth and preserving macroeconomic stability. 
The NBR Board considers that a balanced economic policy mix and the progress in structural reform implementation are pivotal to preserving macrostability, ensuring lasting economic growth, carrying on convergence with the European Union, as well as enhancing the resilience of the Romanian economy to potential shocks or adverse conditions worldwide. 
The NBR is closely monitoring both domestic and external economic developments for an adequate use and dosage of all its available tools to fulfil the overriding objective regarding medium-term price stability and preserve financial stability. 
The new Inflation Report will be presented to the public in a press conference on 9 February 2016. In line with the calendar, the next NBR Board meeting dedicated to monetary policy issues is scheduled for 31 March 2016."

http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11592778/mexico-holds-rate-but-risks-rising-watching-peso Sun, 07 Feb 2016 02:06:08 +0000 http://www.hedgehogs.net/pg/blog/CentralBankNews/read/11592778/mexico-holds-rate-but-risks-rising-watching-peso <![CDATA[Mexico holds rate but risks rising, watching peso]]>     Mexico's central bank left its benchmark target for the overnight interest rate steady at 3.25 percent as inflation is expected to converge to the bank's target but warned that the economic situation had changed in an unfavorable manner and risks had risen so it was closely monitoring inflationary expectations, especially the exchange rate and how it affects consumer prices.
    The Bank of Mexico, which in December raised its rate by 25 basis points in the wake of the U.S. Federal Reserve's hike, added that it was especially watching the relative position between the U.S. and Mexico in order to take flexible measures when conditions warrant.
    The central bank noted that the the balance of risks to global growth and inflation had worsened since December as the global economy was continuing to weaken and one could not rule out that emerging economies with greater vulnerabilities could "face a messy financial adjustment process."
    This also meant that Mexico's peso had depreciated against the U.S. dollar after the Federal Reserve maintained its rate in January and looking ahead it cannot be "ruled out that international financial volatility will remain high or even increase," the central bank said.
    The peso was trading at 18.28 to the U.S. dollar today, down from 17.2 at the start of this year with the central bank on Tuesday saying that it had twice sold $200 million at two auctions after the peso fell more than 1 percent from its fix in the previous session and then fell another 1.5 percent.
    Mexico's economy was still showing sustained growth in the fourth quarter of last year, helped by higher wages, but the bank said manufacturing exports were stagnant and it growth in output in the fourth quarter was moderately lower than in the third quarter.
    Mexico's Gross Domestic Product expanded by an annual 2.5 percent in the fourth quarter, slightly below 2.6 percent in the third quarter.
    Mexico's inflation rate eased in December to a 2015-low of 2.13 percent, down from November's 2.21 percent but data for the first half of January show a rise to 2.48 percent due to the comparison of the cut in the cost of telephone services in January 2015.
    The central bank expects that both headline and core inflation will end this year close to 3.0 percent and then stabilize around that level in 2017.
    The central bank targets 3.0 percent inflation, plus/minus 1 percentage point.