Fed bond-buying could be more aggressive than new timeline: Dudley...

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The Federal Reserve's asset purchases would be more aggressive than the timeline Chairman Ben Bernanke outlined last week if U.S. economic growth and the labor market turn out weaker than expected, the influential head of the New York Fed said on Thursday.

Pushing back hard against market concerns over the withdrawal of quantitative easing, William Dudley stressed in a speech that the newly adopted timeline for reducing the pace of bond buying depends not on calendar dates but on the economic outlook, which remains quite unclear.

Turning to the question of when the Fed will ultimately raise interest rates, Dudley, a close ally of Bernanke, went so far as to say that recent market expectations for an earlier rate rise are "quite out of sync" with the statements and expectations of the policy-making Federal Open Market Committee."Economic circumstances could diverge significantly from the FOMC's expectations," Dudley told reporters at a briefing at the New York Fed's headquarters in downtown New York.

"If labor market conditions and the economy's growth momentum were to be less favorable than in the FOMC's outlook — and this is what has happened in recent years — I would expect that the asset purchases would continue at a higher pace for longer," he said.

Following a Fed policy meeting last week, Bernanke surprised markets by saying the central bank expected to reduce the $85-billion monthly pace of bond buying later this year and to end the QE3 program altogether by mid-2014, if the economy improves as expected.Global markets have since fallen sharply, with yields on the 10-year U.S. Treasury spiking to near a two-year high.
Dudley, who has a permanent vote on monetary policy, repeated and backed the timeline Bernanke articulated last Wednesday.

But he appeared to want to bolster efforts by some of his Fed colleagues this week to calm investors' worries that less Fed accommodation will hurt the slow U.S. and global economic recovery.
The labor market, which the Fed is targeting with QE3, "still cannot be regarded as healthy," Dudley said, adding "there remains a great deal of slack in the economy."

He expects Gross Domestic Product growth of about 2.1 percent this year, about the same as it has been since the recession ended in 2009. But Dudley expects that to pick up next year.

LEANING AGAINST HIGHER RATES

Frustrated with fitful U.S. recovery from the Great Recession, the central bank has kept the federal funds rate near zero since late 2008 and has promised to keep it there at least until the unemployment rate falls to 6.5 percent from 7.6 percent now, as long as inflation stays below 2.5 percent.
Even under the timeline for reducing QE3, "a rise in short-term rates is very likely to be a long way off," Dudley said.

"Not only will it likely take considerable time to reach the FOMC's 6.5 percent unemployment rate threshold, but also the FOMC could wait considerably longer before raising short-term rates," he said.
According to futures contracts at the Chicago Board of Trade, traders had pushed forward expectations for the first interest-rate hike to late 2014 despite published forecasts that show most Fed policymakers don't expect to tighten until 2015.The Fed's two main stimulus efforts - QE3 and low rates - are tied in different ways to sustainable economic growth.

Dudley and others at the central bank have long complained that U.S. government spending cuts and higher taxes could undercut the U.S. recovery, which has stumbled in each of the last few years.
Economic growth was revised lower on Wednesday to a below-average 1.8 percent in the first quarter, another worrying sign for the world's largest economy.

"I continue to see the economy as being in a tug-of-war between fiscal drag and underlying fundamental improvement, with a great deal of uncertainty over which force will prevail in the near-term," Dudley said.

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News Source: www.reuters.com      

China May Limit Gold to 2% of Foreign Reserves,

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China is likely to limit its gold holdings to 2 percent of its total foreign exchange reserves, said Yi Gang, a deputy Chinese central bank governor.

The People’s Bank of China last made known changes to its gold reserves in 2009, announcing that it held 1,054 metric tons. The bank hasn’t made any revisions since then. That’s about 1.8 percent of its total reserves, according to data from the World Gold Council.

“If the Chinese government were to buy too much gold, gold prices would surge, a scenario that will hurt Chinese consumers,” Yi said today in a press briefing in Beijing. “We can only invest about 1-2 percent of the foreign exchange reserves into gold because the market is too small.”
The nation’s reserves, which have surged more than 700 percent since 2004, surpassed the value of all official bullion holdings in January 2004 and rose to $3.3 trillion at the end of 2012, data compiled by Bloomberg show.

Gold has fallen about 4.7 percent this year as the U.S. stocks extended a record rally amid speculation that the FederalReserve may rein in stimulus as the recovery gains traction, curbing demand for safe-haven assets.

China was expected to displace India as the biggest gold consumer last year, according to forecast in November from the producer-funded World Gold Council. Chinese investors sought to protect their wealth by buying gold, after government measures to curb real estate prices and as China’s stock market has fallen in the past decade even though nominal gross domestic product rose fourfold.

Foreign Reserves

About two-thirds of China’s foreign reserves are dollar- denominated and another quarter is in euros, according to Yao Wei, a Hong Kong-based economist at Societe Generale SA. China is now encouraging companies and residents to keep more foreign currency in a strategy known as “hiding foreign currencies among people,” meaning that the government’s foreign reserves may “gradually fall,” Yang said.

Gold capped a 12th annual advance in 2012 and rose to a record of $1,921.15 an ounce in 2011. Gold for immediate delivery were little changed today at $1,591.95 at 6:29 p.m. Beijing time.
“We will always keep gold in mind as an option in reserve assets and investments,” Yi said. “We are able to import 500-600 tons a year, or more, but we will also take into consideration a stable gold market.”

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For more information please visit our website:  www.cfb.ae

Here are some useful links that you can follow:

Here is a CFB blog that gives useful daily trade advice... http://century-financial-brokers-uae.blogspot.ae/

You can also follow CFB on facebook (useful advice on posts regularly)

Here is another blog that provides regular news and information and is very useful to stay updated
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News Source: www.reuters.com

Wall Street rally pauses on global headwinds

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Wall Street was little changed on Monday as Italy's credit downgrade and disappointing Chinese economic data gave investors a reason to pause after last week's rally that took the Dow to record highs.
Even with the slight decline, the S&P 500 index .SPX was only about 1 percent away from its all-time closing high. U.S. stocks have seen a strong gain in the first three months of the year and pullbacks have been short lived as investors look for an opportunity to buy.
"There's a lot of pent-up demand and people seem to be buying on weakness," said Alan Lancz, president of Alan B. Lancz & Associates Inc in Toledo, Ohio.
"I don't see this as anything negative from the standpoint of what the market's done throughout 2013 so far."

The S&P is up 8.7 percent since the beginning of the year, while the Dow has climbed nearly 10 percent. Markets have been cheered by signs of improvement in the U.S. economic recovery, including recent unexpected strength in the labor market.

But a number of potential roadblocks are not far from investors' minds, including worries about the euro zone debt crisis after Fitch downgraded Italy due to the country's political stalemate.
Data over the weekend from China pointed to an uneven recovery for the world's second-largest economy as inflation rose to a 10-month high in February and factory output and consumer spending were weaker than forecast.

The Dow Jones industrial average .DJI edged down 1.95 points, or 0.01 percent, at 14,395.12. The Standard & Poor's 500 Index .SPX slipped 1.89 points, or 0.12 percent, to 1,549.29. The Nasdaq Composite Index .IXIC was off 9.56 points, or 0.29 percent, to 3,234.81.

Dell Inc (DELL.O) has agreed to give Carl Icahn a closer look at its books less than a week after the activist investor joined a growing chorus of opposition to founder Michael Dell's plan to take the world's No. 3 personal computer maker private. Dell shares were up 1.1 percent at $14.31, above the take-private offer price of $13.65.

Genworth Financial Inc (GNW.N) shares jumped 6.4 percent to $10.46 following a report by Barron's that the mortgage insurer's stock could almost double in the next year, boosted by gains in mortgage and healthcare pricing.

Dick's Sporting Goods Inc (DKS.N) slumped 7.9 percent to $46.61 after the retailer reported lower-than-expected fourth-quarter results and gave a disappointing forecast.

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News Source: www.reuters.com

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Apple erases $17 billion from stock market

Apple Inc.’s near 4% drop wiped out $17 billion from the U.S. stock market on Monday, pushing two of the three benchmark indexes into negative territory.

Apple AAPL +0.15% shares fell $18.55, or 3.6%, to end at $501.75 after the Wall Street Journal and Japan’s Nikkei reported that the company had cut iPhone production plans because sales had come in below expectations.

The S&P 500 index SPX -0.09%  shed 1.37 point, or less than 0.1%, to 1,470.68, with telecommunications hardest hit and consumer staples faring best among its 10 industry groups.

“It would be positive without,” Apple, said Howard Silverblatt, senior index analyst at the S&P Indices, the stock’s impact on the index of 500 public companies.

The Dow Jones Industrial Average DJIA +0.14%  rose 18.89 points, or 0.1%, to 13,507.32, with Hewlett-Packard Co. HPQ +4.89%  leading the gains after J.P. Morgan upgraded the personal-computer maker to neutral from underweight. H-P also reclaimed the top PC-maker ranking from Lenovo Group Ltd.

International Business Machines Corp. IBM -0.14%  dropped 0.9% after J.P. Morgan downgraded it to neutral from overweight.

Shares of Dell Inc. DELL +12.96%  rallied 13% after Bloomberg News reported that the company was in buyout talks with private-equity firms.

Sprint Nextel Corp. S -3.89%  dropped 3.9% after the stock was downgraded by some brokerage firms. Read more about Monday’s biggest gaining and declining stocks.

The Nasdaq Composite COMP -0.26%  lost 8.13 points, or 0.3%, to 3,117.50.

Apple has a significant impact on the major stock indexes. It has a 3.8% weight in the S&P 500 and a 10% weight in the Nasdaq Composite, and is the largest stock on both. It’s not a member of the Dow average. Read more about the decline in Apple’s share price.

“In terms of the general negative sentiment, it’s a combination of Apple and a bit of poor industrial production number out of Europe. That was a pretty ugly wake-up call,” said Bill Stone, chief investment strategist at PNC Wealth Management. Industrial output for the 17-nation euro zone dropped 0.3% in November.

Decliners and advancers ran in a virtual dead heat on the New York Stock Exchange, where 590 million shares traded.

Composite volume approached 3 billion.

“As the week wears on, we’ll have a much more robust earnings calendar. Of those 27 S&P 500 companies reporting so far, they’ve lowered estimates significantly in the last three months,” said Art Hogan, market strategist at Lazard Capital Markets.

Companies reporting so far have managed to “squeeze out some sort of beat of lowered expectations,” said PNC’s Stone.

Of the first 27 companies in the S&P 500 to report fourth-quarter results, 67% exceeded earnings-per-share growth expectations, 15% were in line and 18% missed, according to Nick Raich, director of research at Key Private Bank. Of those companies, which represent 5% of the 500 that will eventually report, 11% raised their first-quarter 2013 guidance; 19% maintained and 70% lowered their outlooks.

“The new consensus expectation for fourth-quarter 2012 earnings growth is only 2%,” said Raich. “The guidance companies are providing after reporting results is still very weak.” 

In Washington, President Barack Obama talked about efforts to reduce the U.S. deficit at a Monday news conference in which he urged lawmakers not to use the debt ceiling as leverage in the political wrangling over government spending.

With a battle looming with Congress in the weeks ahead over hiking the $16.4 trillion debt ceiling, Republican lawmakers are mulling a government shutdown or default as a way to force cuts in government spending. Read a blog post on the U.S. Treasury thinking the unthinkable about the debt ceiling.

In separate statements, Senate Republican leader Mitch McConnell called the debt-ceiling debate the “perfect time” to confront government spending, and House Speaker John Boehner also indicated his intention to link spending cuts to hiking the debt ceiling.

The Treasury market did not signal distress over the danger of a government default, with yields on the benchmark 10-year note 10_YEAR +0.16%  off 1 basis point, or 0.01 percentage point, to 1.85%.

Federal Reserve Chairman Ben Bernanke spoke at 4 p.m. Eastern in Michigan, following comments delivered by Chicago Fed President Charles Evans that the central bank should continue to keep monetary policy accommodative as lawmakers cut U.S. spending.

“The market will be watching Bernanke to get a better take on when the Fed might start to take the punch bowl away,” said Stone of the Fed’s monetary policy.

Apple Cuts Orders for iPhone Parts

Apple Inc. AAPL -3.57% has cut its component orders for the iPhone 5 because of weaker-than-expected demand, people familiar with the situation said Monday, indicating sales of the latest smartphone haven't been as strong as anticipated.

Apple's orders for iPhone 5 screens for the first quarter, for example, have dropped to roughly half of what the company had planned to order, the people said.
The Cupertino, Calif., company also cut orders for components other than screens, one of the people said.

Customers stood outside a KDDI Corp. outlet prior to the launch of the Apple Inc. iPhone 5 in Tokyo in September.

Apple cut orders for iPhone 5 components on lower-than-expected demand. The WSJ's Juro Osawa talks about whether sales of Apple's latest smartphone are slowing. 

Apple has set the agenda for the smartphone market since it released its first iPhone in 2007.
But South Korea's Samsung, which sells Android-based models at various price points, has overtaken the U.S. company as the world's largest smartphone vendor by market share. Demand also is growing for inexpensive smartphones from Chinese makers such as Huawei Technologies Co.
While the popularity of iPhones and iPads has been boosting Apple's earnings and investors' expectations over the past few years, there have been concerns in recent quarters about how long the growth can continue. Apple's stock, which peaked at about $705.07 in September, was down 3.2% at $503.70 in midday trading Monday in New York.

Apple held 14.6% of world-wide smartphone shipments in the third quarter, down from a peak of 23% in the fourth quarter of 2011 and the first quarter of last year , according to IDC.
Samsung's market share, meanwhile, rose to 31.3% in the third quarter, compared with 8.8% in the third quarter of 2010. The Korean company said this month that it expects to report another record operating profit for the fourth quarter of last year, capping its best year ever amid strong sales of its Galaxy line of smartphones. The company expects an operating profit of between $8.1 billion and $8.5 billion for the quarter.

Analysts continue to cite multiple explanations for a potential trim to orders unrelated to demand, including the ebb of flow of Apple's supply chain and a strong holiday quarter.
Brian Blair, an analyst with Wedge Partners, says order cuts are typical after the holidays. He also noted that Apple uses multiple suppliers for individual parts making across the board cuts difficult to assess.

He estimates that Apple, which reports earnings for the December quarter on Jan. 23, sold 50 million iPhones during the quarter, ahead of average analyst estimates around 47 million.
Sanford Bernstein analyst Alberto Moe, said Apple may have made particularly large iPhone 5 orders to suppliers for the fourth quarter because of earlier concerns about manufacturing difficulties with some components such as screens.
Citigroup C -0.28% last month lowered its rating for Apple to "neutral" from "buy," citing concerns about cuts to iPhone orders. The brokerage noted that a sharp increase in iPhone 5 production during the fourth quarter may have left Apple with more inventory than expected. Still, it also said that "good not great" demand is likely a factor behind the order cuts.
"It is unlikely that Apple is cutting orders in a 'great' demand environment," Citigroup analysts said in the Dec. 16 report.
The iPhone 5, released in September, represents Apple's effort to maintain its strong position amid intensifying competition. The model comes with a longer, four-inch screen than the 3.5-inch screens in previous iPhone models.
Japan's Sharp Corp., 6753.TO +12.63% Japan Display Co. and South Korea's LG Display Co. 034220.SE -2.20% are the three suppliers of the screens, according to people with knowledge of the matter. When the iPhone 5 was introduced, there were concerns that suppliers might not be able to produce enough to keep up with demand.
Apple's cut in orders may affect first-quarter sales of component makers, some of which are largely dependent on the U.S. company. The fact that some iPhone components are highly customized makes it difficult for suppliers to find alternative buyers in a short time frame. Sharp, one of the screen suppliers, has been struggling with a cash crunch and losses from its television-set operations.
Japan's Nikkei reported Monday that Apple has slashed its orders for iPhone 5 components.

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Gold and Silver Miners Show Strength as Futures Decline

On Tuesday, gold (NYSEARCA:GLD) futures for February delivery, the most active contract, dropped $25.30 to settle at $1,695.80 per ounce, while silver (NYSEARCA:SLV) fell 95 cents to close at $32.78.

Both precious metals declined as political rhetoric over the fiscal continues to dominate headlines. In an interview on Bloomberg Television, President Barack Obama said, “We have the potential of getting a deal done.”

 However, he also added, “We’re going to have to see the rates on the top 2 percent go up, and we’re not going to be able to get a deal without it.” The statement shows that both sides of the aisle still have some work to do before reaching an agreement.

Some analysts believe that a failure to prevent the fiscal cliff will send gold prices lower, as everything in the market will selloff in the short-term. However, long-term bullish trends like ultra-low interest rates still remain in place for precious metals. Australia’s central bank cut interest rates by 0.25 percent to 3.0 percent on Tuesday, matching the lowest level on record since 2009.

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) fell about 1.0 percent, while the iShares Silver Trust (NYSEARCA:SLV) declined 2.0 percent. Gold miners (NYSEARCA:GDX) performed better, with Barrick Gold (NYSE:ABX) and Goldcorp (NYSE:GG) both jumping more than 1.0 percent. First Majestic Silver (NYSE:AG) and Silver Wheaton (NYSE:SLW) also climbed higher.

CENTURY FINANCIAL BROKERS Forex

Dear Investor,

CFB realizes that you have many choices and opportunities in the international financial markets when it comes to seeking, evaluating and selecting a personal and professional broker. Founded in Dubai in1989, CFB is the region’s largest independent brokerage firm in the financial industry. Regardless of how you want to invest and trade the financial markets – CFB can provide you with the tools, resources and services you desire. 

Century Financial Brokers LLC (CFB) is licensed and regulated by the Central Bank of United Arab Emirates and Emirates Securities and Commodities Authority (ESCA). We are also the principal broker & clearing member of Dubai Gold and Commodities Exchange (DGCX).

Margin Trading

Facilitating margin trading in Currencies, Commodities and Metals and more, with a leverage facility of 100% of face value. In the financial markets, you can trade (Buy or Sell) any currency, commodity or metals simply by investing 1% or 2% of the product value.

Products offered by CFB

• Currencies: Euro, British Pound, Swiss Franc, Japanese Yen & over 25 crosses
• Metals:        Gold, Silver, Aluminum, Nickel, Copper, etc.
• Energies:     Crude Oil, Heat Oil, Natural Gas, Gasoline, etc.
• Commodities: Sugar, Wheat, Corn, Coffee, Grains, etc.
• Indices:       Dow Jones, NASDAQ, S&P, FTSE, CRB, etc.
• CFD Stocks: American, European & Asian stocks.

Benefits & Services facilitated by CFB

• 24 hours trading 5 days a week with continuous access from any part of the world.
• An enormous liquid market making it easy to trade most markets.
• Volatile markets offering huge profit opportunities.
• Wide range of trading markets and financial instruments.
• Leverage trading with low capital.
• Recognized instruments for controlling risk exposure.
• The ability to profit from rising or falling markets.
• Leveraged trading with low margin requirements.
• Proper training for trading in FX Markets.

• CFB provides state-of-the-art online trading software, providing electronic order entry in the most liquid and dynamic market movers world-wide
• Through one window, traders access FX, futures, stocks, CFDs, metals, energies etc.
• As a client you will have access to real-time prices, two-way quotes, charts, news, market commentaries & analysis of all major currencies, metals, commodities, futures, energies etc. and  receive statements of your account on regular basis

We request you for a few minutes from your valuable time to give you a brief idea of how our company can help explore the investment opportunities in the global financial markets which can give you amazing returns on your investments. For more details, please visit our website www.cfb.ae

Thank you.

CONTACT

Asad Khan  (CFB)
(0508774861)
asad@cfb.ae