U.S. considers no-fly zone after Syria crosses nerve gas red line...

The United States is considering a no-fly zone in Syria, potentially its first direct intervention into the two-year-old civil war, Western diplomats said on Friday, after the White House said Syria had crossed a "red line" by using nerve gas.

After months of deliberation, President Barack Obama's administration said on Thursday it would now arm rebels, having obtained proof the Syrian government used chemical weapons against fighters trying to overthrow President Bashar al-Assad. Two senior Western diplomats said Washington is looking into a no-fly zone close to Syria's southern border with Jordan.

"Washington is considering a no-fly zone to help Assad's opponents," one diplomat said. He said it would be limited "time-wise and area-wise, possibly near the Jordanian border".
Imposing a no-fly zone could require the United States to destroy Syria's sophisticated Russian-built air defenses, thrusting it into the war with the sort of action NATO used to help topple Muammar Gaddafi in Libya two years ago.

Washington says it has not ruled out a no fly zone but has played down the prospect and said a decision is not "imminent".

"We have not made any decision to pursue a military operation such as a no-fly zone," U.S. Deputy National Security Adviser Ben Rhodes said on Thursday.
"A no-fly zone … would carry with it great and open-ended costs for the United States and the international community. It's far more complex to undertake the type of effort, for instance, in Syria than it was in Libya."

Any such move would also come up against a potential veto from Assad's ally Russia in the U.N. Security Council. The Kremlin dismissed U.S. evidence of Assad's use of nerve gas.
"I will say frankly that what was presented to us by the Americans does not look convincing," President Vladimir Putin's senior foreign policy advisor Yuri Ushakov said.
France said a no-fly zone would be impossible without U.N. Security Council authorization, which made it unlikely for now.

Nevertheless, Washington has quietly taken steps that would make it easier, moving Patriot surface-to-air missiles, war planes and more than 4,000 troops into Jordan, officially as part of an annual exercise in the past week but making clear that the assets could stay on when the war games are over.

MOMENTUM TURNS

Syria's civil war grew out of protests that swept across the Arab world in 2011, becoming by far the deadliest of those uprisings and the most difficult to resolve, with powers across the Middle East squaring off on sectarian lines.

Western countries have spent the past two years demanding Assad leave power but declining to use force as they did in Libya, because of the far greater risk of fighting a much stronger country that straddles sectarian divides at the heart of the Middle East and is backed by Iran and Russia.
Just months ago, Western countries believed Assad's days were numbered. But momentum on the battlefield has turned in his favor, making the prospect of his swift removal and an end to the bloodshed appear remote without outside intervention.

Thousands of seasoned fighters from Lebanon's pro-Iranian Hezbollah militia joined the war on Assad's behalf in recent weeks and last week helped the Syrian government recapture Qusair, a strategic town. Assad's government says its troops are now preparing for a massive assault on Aleppo, Syria's biggest city, mainly in rebel hands since last year.

Activists reported an intensified assault on parts of Aleppo and its countryside near the Turkish border overnight, sparking some of the most violent clashes in months.
Hezbollah's leader Hassan Nasrallah said the guerrilla group would not be shaken in its support for Assad: "Wherever we need to be, we will be."

The arrival of Shi'ite Hezbollah in the war on behalf of Assad, a member of the Shi'ite offshoot Alawite sect, has exacerbated the war's dangerous sectarian overtones across the tumultuous region. Egypt's ruling Muslim Brotherhood backed a call by Sunni clerics for holy war.

OBAMA'S CALCULUS

The use of chemical weapons provides a straightforward reason for Washington to intervene. Deputy National Security Adviser Rhodes said Washington now believed 100-150 people had been killed by government poison gas attacks on rebels.
"The president ... has made it clear that the use of chemical weapons or transfer of chemical weapons to terrorist groups is a red line," he said. "He has said that the use of chemical weapons would change his calculus, and it has."Syria, which says rebels used chemical weapons not the government, said the U.S. statement was full of lies.

"The White House ... relied on fabricated information in order to hold the Syrian government responsible for using these weapons, despite a series of statements that confirmed that terrorist groups in Syria have chemical weapons," the foreign ministry said in a statement.
An implicit threat to join the conflict puts Washington on a diplomatic collision course with Moscow, which has used its U.N. Security Council veto three times to block resolutions that might be used to threaten force against Assad.

U.S. officials say Obama will try to persuade Putin to abandon support for Assad when the two leaders meet at a G8 summit in Northern Ireland next week.
Washington and Moscow have jointly called for a peace conference in Geneva, the first attempt in a year by the Cold War foes to find a diplomatic solution to the war, but the prospects for the talks now seem dubious.

The United Nations now estimates at least 93,000 people have been killed in Syria and millions driven from their homes.U.S. and European officials were meeting the commander of the rebels' Supreme Military Council and the Free Syrian Army (FSA), Salim Idriss, on Friday in Turkey. The group was expected to ask for advanced weapons, a no-fly zone and diplomatic help persuading Russia and Iran to stop backing Assad.

Western powers have been reluctant in the past to arm the rebels, worried about the rising strength of Sunni Islamist insurgents who have pledged loyalty to al Qaeda.
The White House said Washington would now provide "direct military support" to the opposition. A U.S. official, speaking on condition of anonymity, confirmed it would now include arms as opposed to "non-lethal" aid sent in the past.

Syrian rebels already receive light arms from Saudi Arabia and Qatar. They have asked for heavier weapons including anti-tank and anti-aircraft missiles.
Qassem Saadedine, a Supreme Military Council commander, called Obama's decision to send weapons "very brave" and he hoped weapons would start arriving in the coming weeks.
Islamist rebel fighters in Syria were more skeptical. "We consider America an enemy and see it as quite unlikely that it will actually give the mujahideen weapons," Abu Bilal, a Sunni insurgent in Homs, told Reuters via Skype.

An Islamist field commander in Hama said he would take the weapons if he could get them: "Everyone here right now is working on the principle that their enemy's enemy is their friend. America is against Bashar right now, at least publicly."UN Secretary-General Ban Ki-moon said increasing the flow of arms to either side "would not be helpful."

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Soft futures mostly higher - Coffee rebounds from recent losses...

U.S. soft futures were mostly higher during U.S. morning trade on Wednesday, with coffee prices moving higher for a second day amid speculation prices fell too far too quick.

On the ICE Futures U.S. Exchange, Arabica coffee for July delivery traded at USD1.3832 a pound, up 0.8% on the day.

The July contract rose by as much as 1.4% earlier in the session to hit a daily high of USD1.3907 a pound, the strongest level since April 8.

Coffee futures fell to a three-week low of USD1.3357 a pound on Monday, hovering close to a 34-month low of USD1.3207 a pound hit on March 20.

Coffee traders continued to monitor weather conditions in Brazil, as the country’s farmers began harvesting the coffee crop. Brazil is the world's largest producer and exporter of Arabica coffee.

Meanwhile, sugar futures for May delivery traded at USD0.1789 a pound, little changed on the day. The May contract was stuck in a tight trading range between USD0.1782 a pound, the daily low and a session high of USD0.1793 a pound.

Sugar futures advanced Tuesday after wet weather in Brazil caused some delays to the sugar-cane crush. Brazil is the largest producer of sugar cane in the world.

May sugar prices fell to a two-and-a-half-year low of USD0.1747 a pound on April 3, amid the view that global supplies are more than ample to meet world demand.

Elsewhere, cotton futures for May delivery traded at USD0.8374 a pound, up 0.5% on the day. The May contract rose by as much as 0.9% earlier in the day to hit a session high of USD0.8388 a pound.

Prices of the fiber slumped to a six-week low of USD0.8332 a pound on Tuesday after the U.S. Department of Agriculture said that nearly 8% of the U.S. cotton crop was planted as of last week, up from 5% in the preceding week.

The crop update eased recent jitters over a decline in U.S. and global supplies.

The agency said last week that global cotton inventories in the 2012-13 season was expected to rise to a record high of 82.45 million bales, compared to a month-earlier forecast of 81.74 million bales.

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Gold scores modest rebound from 2-year low; caution stays...

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Gold rose 1 percent on Tuesday after a drop to a 2-year low earlier in the session ignited physical buying, but investors frustrated by the metal's lackluster performance remained cautious amid fears of central bank sales and global growth.

Bullion posted its biggest ever daily drop in dollar terms in the previous session, catching many gold bulls and veteran investors by surprise. Gold has now fallen about 20 percent so far this year after an unbroken 12 years of gains.

The typically safe-haven asset has failed to capitalize on tensions in the Korean Peninsula even as Pyongyang made new threats of military action, and has been hit by uncertainty over the U.S. Federal Reserve's stimulus program.

"The scale of the down move is such that whenever we get any signs of stabilization or any official sign of interest to buy, it's going to cause something in the order of a 1.5 to 2 percent rebound. It's only to be expected," said Tim Riddell, head of ANZ Global Markets Research, Asia.

"Given the scale of the sell-off, I would say that the rebound is not that impressive. The fact the stock market is stable is helping, and it's not creating a further position liquidation mode."
Cash gold dropped to as low as $1,321.35 an ounce, but reversed losses to trade at $1,359.51 by 12:47 a.m. ET, up $6.76, with dealers noting buying interest from consumers in Asia. The metal is about $560 below a lifetime high around $1,920 an ounce hit in September 2011.

Platinum and palladium, which have also been hammered by heavy selling, regained strength after Japanese shares pared losses due to renewed weakness in the yen. .T.U.S. gold futures for June delivery fell more than 2 percent to the weakest in more than two years before rebounding slightly, while the most active bullion contract on the Tokyo Commodity Exchange sank as much as 10 percent.
Monday's drop of around $125 per ounce in cash gold eclipsed the rout on January 22, 1980, a day after gold hit its then-record $850 on global panic over oil-led inflation due to Soviet intervention in Afghanistan and the Iranian revolution.

Reuters market analyst for commodities and energy technicals, Wang Tao, expects gold to fall further to $1,245 per ounce.Gold hit an 11-month high in October last year after the U.S. Federal Reserve announced its third round of aggressive economic stimulus, raising fears the central bank's money-printing to buy assets would stoke inflation.

But the gain was erased by a rally in equities, talks the Fed could soon end its bullion-friendly bond buying program, and concerns other indebted euro zone countries could follow Cyprus' plan to sell bullion reserves to raise cash.

Heavy outflows on global gold exchange-traded funds, which cut holdings to their lowest in more than a year, could also mark the end of a love affair between gold and investors.
"The fall in gold prices is reminiscent of some of the market capitulations seen during the global financial crisis when leveraged investors were required to sell assets to maintain balance sheets and preserve liquidity," said Ric Spooner chief market analyst at CMC Markets in Sydney.

"The extent of leverage is now much lower and this may see more orderly conditions return to the gold market sooner rather than later. Markets will also be sensitive to any further information on the situation in Boston and whether or not it has any geopolitical implications."
Physical dealers saw inquiries from jewelers following the latest sell-off, but there were no signs of buying related to tensions between the two Koreas or bombings in Boston, which killed three people.
It was the worst bombing on U.S. soil since security was tightened after the attacks of September 11, 2001. President Barack Obama promised to hunt down whoever was responsible.

Premiums for gold bars edged up to $1.70 to the spot London prices in Singapore on Tuesday from $1.20 on the previous day, but dealers had yet to see a surge in demand from jewelers and speculators.
"I think with a further reduction in gold prices, premiums may go up further. The demand is there, but the Thais are still on holiday and physical offtake in Hong Kong is not fantastic," said a dealer in Singapore.

In other markets, European stocks were seen extending losses while U.S. stock futures were up, pointing to a rebound at the Wall Street open after U.S. stocks dropped more than 2 percent.

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GOLD OUTLOOK: Views On Gold May Get Reassessed Next Week...

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 Gold’s fall under $1,500 an ounce for the first time since in nearly two years may mean a little soul-searching for investors in the metal, market participants said.
June gold futures fell Friday, settling at $1,501.40 an ounce on the Comex division of the New York Mercantile Exchange, and were down 4.7% on the week. On a June futures chart, this is the lowest level since April 2011. On a weekly continuation chart, this is the lowest level for a most-active contract since July 2011.

On the year, gold prices are down 11%. Gold prices reached in bear-market territory, since they are down 22% from the all-time high of $1,923.70 set in September 2011 to Friday’s settlement.
Most-active May silver fell on the day and the week, settling at $26.331, down 3.2% on the week.
In the Kitco News Gold Survey, out of 34 participants, 21 responded this week. Of those 21 participants, 10 see prices up, while 10 see prices down, and one sees prices moving sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts.

Gold prices fell to nearly two-year lows when it fell through last week’s low of $1,539.40, triggering resting sell orders. The market initially found support at $1,525 but its pause there was short-lived when selling pushed gold through $1,525 and triggered more resting sell orders, known as sell stops.
“The market uncovered a treasure-trove of sell stops under $1,525,” said Sean Lusk, precious-metals analyst at Ironbeam. “We just saw a cleansing of positions here.”

Lusk said negative sentiment in gold has been building over the past few months with the equities making record highs and investment banks reducing their price forecasts for gold. This week, Goldman Sachs caused a stir in the market when it called for investors to short, or sell, gold.
Additionally, Lusk said with more Federal Reserve governors talking about ending quantitative easing on the idea that the U.S. economy will improve later this year, gold found more pressure. Meeting minutes from the March Federal Open Market Committee from Wednesday showed more Fed governors are seeking to scale back the QE program. On Friday, Boston Fed President Eric Rosengren reiterated these ideas Friday on CNBC.

Gold fell even as equities dropped and was unable to capitalize on the weakness in stocks. Equities, which had put in record highs as recently as Thursday for the Dow Jones Industrial Average and the Standard & Poor’s 500, were pressured by the poor retail sales and profit taking.

U.S. retail sales in March fell 0.4% versus a decline of 0.1% expected. This was the largest drop since June. Economists said a cold snap in March may have trimmed sales, although they also said this might be a sign that higher taxes and sluggish job creation are hurting the U.S. economy.

In other economic news, the producer price index was released and showed wholesale inflation was lower than expected, with the overall index down 0.6% in March versus 0.3% expected, as energy costs fell. The core PPI was up 0.2%. Over the last 12 months, the overall PPI index is up 1.1% in March versus 1.7% in Feb.

Lusk said the PPI data shows that inflation is not an issue, which also weighed on gold Friday.
Charles Nedoss, senior market strategist with Kingsview Financial, said the weakness in equities is getting overlooked as investors sell gold. He said aside from the selling cues from technical charts as prices broke through important support levels, there might be something more concerning to gold investors.

The news report this week that Cyprus might have sell some of their gold reserves to help fund their bailout jarred market participants, he said. The Cypriot central bank said that any decision about gold sales is up to them. Gold analysts said that even if the sales happened, the amount that would be sold – about 10 metric tons – would not have a big supply impact on prices. Yet, Nedoss said, that’s beside the point.

“The question is, what about other countries in the EU? Are they going to be required to put some skin in the game and sell their assets? What about Portugal? What about Italy? They have more gold,” he said.
Nedoss said there are some thoughts that even though the ultimate decision to sell the gold rests with the central bank and not the country, that doesn’t mean they can’t be coerced. It’s that uncertainty and the potential of what that might mean in the future that is likely weighing on gold, he said.

According to Reuters, eurozone finance ministers approved a 10 billion euro bailout for Cyprus on Friday. The Reuters story said in order for Cyprus to meet its financing needs over three years, the country will need to find 13 billion euros by itself, likely coming from the closure of its Laiki bank and the restructuring of the Bank of Cyprus.

Also in Europe, next week is parliamentary voting for the next Italian president. Brown Brothers Harriman said among those seeking to replace current Italian President Giorgio Napolitano is Prime Minister Amato, who implemented the tax on all savings in the early 1990s to enter the eurozone. Napolitano’s term ends May 15.

For price direction Lusk said it’s possible gold might try to probe the $1,400s area again after doing that initially on Friday. “Long term, I think gold has value, but right now, you just have to let the tide go and not step in front of it,” he said.

Nedoss said now that $1,500 broke, he said the next key support is $1,469.70, which is the 200-week moving average. He said he wants to watch how the market acts early next week. “With breaks like this, markets have a way of snapping back to (mess with) as many people as possible. It could rally $40, $50 and (hurt) all the new short” position-holders, he said.

Some analysts said watch whether physical buying picks up after this dip in gold. Chinese buyers have stepped up when prices have fallen and analysts said the Chinese response will be critical for any price support. Earlier this week Hong Kong Census data for February shown a strong month of gold re-exports into China, with 72 metric tons exported directly to China, just under the December record of 89 tons. This came as prices fell about $200 an ounce between those three months. “The pattern certainly displays an even greater demand for gold by China during price (falls),” said TDS.

 

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Gold Update: Paulson Loses More Than $300 Million as Gold Declines...

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Billionaire John Paulson lost more than $300 million of his personal wealth on his gold bet, as the precious metal fell to its lowest price in almost two years.
Paulson has roughly $9.5 billion invested across his hedgefunds, of which about 85 percent is invested in gold share classes. Gold dropped 4.1 percent today, shaving about $328 million from his net worth on this bet alone.

Gold tumbled and entered a bear market after falling more than 20 percent since August 2011, bringing more bad news for 57-year-old Paulson, who has struggled with poor returns for the past two years. He told investors last year that his $700 million Gold Fund would beat his other strategies over five years because the metal was the best hedge against inflation and currency debasement as countries pump money into their economies. The fund slumped 28 percent this year through March, a person familiar with the matter said this month.

“The recent decline in gold prices has not changed our long-term thesis,” John Reade, a partner and gold strategist at Paulson & Co., said in an e-mailed statement. “We started investing in gold at $900 in April 2009 and while it’s down from its peak to $1500, it’s up considerably from our cost.”
Paulson investors can choose between dollar-and gold- denominated versions for most of the firm’s funds. In addition losses from bullion’s decline, investors in Paulson & Co. funds, including the firm’s founder, lost about $62 million today on their gold-stock investments, based on holdings as of Dec. 31, 2012. New York-based Paulson & Co.’s biggest wagers in miners include a 7.35 percent stake in AngloGold Ashanti Ltd. (ANG)

‘Printing Money’

Goldman Sachs Group Inc. said this week that the turn in the gold-price cycle is accelerating after a 12-year rally as the recovery in the U.S. economy gains momentum. The bank reduced forecasts for the metal through 2014.

Deutsche Bank AG cut its 2013 gold outlook this week by 12 percent, citing a strengthening dollar and a lack of haven buying, and Societe Generale SA said in an April 2 report that gold is in a “bubble.”
Paulson’s Reade said gold will continue to appreciate in the long run because governments are pumping money into the economy at a rate not seen before.

“Federal governments have been printing money at an unprecedented rate,” said Reade. “We expect the strengthening of the economy and stock market to cause money supply to rise more than real growth and eventually lead to inflation. It is this expectation of paper currency debasement which makes gold an attractive long-term investment for us.”

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News Source: www.bloomberg.com

Gold Now Testing Key Support Levels At $1555

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 The sorry state of affairs for gold bugs continued once again yesterday, with the June gold futures contract ending the electronic session with a wide spread down candle, having fallen over $25 per ounce in the session and closing at $1558.80 per ounce. Not only was it yet another negative day for gold, the daily chart has also delivered some worrying signals which do not bode well for the gold price in the short term.

The first of these is the isolated pivot high which has now been posted on the daily chart at $1590 per ounce, and this in itself will add further downward pressure to gold. Second, the volume associated with yesterday’s wide spread down candle was well above average, sending a clear signal of selling pressure, and once again, if we are to see any reversal in the short to medium term, we will need to see evidence of stopping volume, coupled with the required price action.

We saw an example of this last week with the hammer candle and high volume, a clear signal that the volume here was predominantly buying, which duly pushed the commodity higher and back to test the $1600 per ounce level. However, as I wrote at the time, one swallow does not make a summer, and for any sustained recovery, this needs to be matched with a sustained period of buying, which is certainly not the case at present.

The key technical level, which has been on the daily chart for some time, is the yellow dotted line of potential support in the $1555 per ounce area. This was tested again yesterday, and is being tested once more this morning.

If this is breached in trading today, or indeed in the next few days, with a clear hold below, then expect to see gold prices sell off sharply and test the $1500 per ounce level in due course.

These are not happy times for gold bugs, but rest assured they will return, with North Korea being one possible catalyst in the short term. Longer term, with countries increasingly desperate to drive some much needed inflation into their economic systems, gold will once again become the ultimate hedge, as the economic cycle begins it’s inevitable journey once more.

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George Soros Tells Germany It Should Leave Euro Zone...

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 As the backlash against austerity and bailouts increases in the euro zone, billionaire investor George Soros is the latest person to criticize Germany's role, telling the country on Tuesday that austerity "does not work" and that it should even consider leaving the euro itself.

"The financial problem is that Germany is imposing the wrong policies on the euro zone. Austerity doesn't work. You can't shrink the debt burden by shrinking the budget deficit," Soros, the founder and chairman of Soros Fund Management,said during a speech in Germany's financial center of Frankfurt on Tuesday.

Soros, who is known as "the man who broke the Bank of England" for betting against the pound in the early 1990s, told Europe's paymaster and largest economy that it had made mistakes on Cyprus' 10 billion euro ($13.07 billion) bailout, which forced some savers to share in the cost.

"In the bailout of Cyprus, Germany went too far, what happened in Cyprus undermined the business model of the European banks which relies heavily on deposits," he said.


 In a lecture entitled "How to save the European Union from the euro crisis," Soros said that he was attributing "a large share of the responsibility [for the crisis] to Germany."

"I want to make it clear in advance that I am not blaming Germany. Whoever was in charge would have made similar mistakes…I realize that I risk antagonizing you by putting the responsibility on Germany. But only Germany can put things right," he added.

He said that Germany should either drop its opposition to "Eurobonds" – the mutualization of European debt – or should leave the euro.

"My first preference is eurobonds; my second is Germany leaving the euro…It is up to Germany to decide whether it is willing to authorize eurobonds or not. But it has no right to prevent the heavily indebted countries from escaping their misery by banding together and issuing Eurobonds," he said.
"In other words, if Germany is opposed to eurobonds it should consider leaving the euro and letting others introduce them," he said, adding that another dimension to the crisis was Germany's unwillingness to take responsibility for its policies.

"Germany did not seek the dominant position into which it has been thrust and it is unwilling to accept the obligations and liabilities that go with it. Germany understandably doesn't want to be the "deep pocket" for the euro. So it extends just enough support to avoid default but nothing more," he added.
Soros' comments come against a backdrop of anti-austerity feelings in Europe as Portugal's constitutional court rejected reform measures and Slovenia becomes the latest country to resist pressure to request a bailout.

(Read More: Portugal Fires Warning Shot for Austerity in Europe)
His comments also follow criticism of austerity from the U.S. Treasury Secretary Jack Lew. During his visit to Europe this week, Lew called on his European counterparts to strike a balance between growth and austerity and to boost demand.

Lew met French and German finance ministers on Tuesday and his pro-growth message may have struck a chord in France, which is grappling with slow growth and high unemployment. Germany, however, has the biggest trade surplus in the euro zone and is the driving force behind austerity measures.

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North Korea warns foreigners to leave South Korea...

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North Korea intensified threats of an imminent conflict against the United States and the South on Tuesday, warning foreigners to evacuate South Korea to avoid being dragged into a "merciless, sacred, retaliatory war".

The North's latest antagonistic message belied an atmosphere free of anxiety in the South Korean capital, where the city center was bustling with traffic and offices operated normally.

Pyongyang has shown no sign of preparing its 1.2 million-strong army for war, indicating the threat could be partly intended to bolster Kim Jong-un, 30, the third in his family to lead the reclusive country.

None of the embassies in Seoul appeared to have issued any directives to their nationals after the warning and airlines reported no changes in their schedules. Schools catering to foreign pupils worked without interruption.

The warning, read out on North Korea's state television in a bulletin that interrupted normal programming, was the latest threat in weeks of high tension following U.N. sanctions slapped on Pyongyang for its latest nuclear arms test.

It followed the North's suspension of activity at the Kaesong joint industrial just inside North Korea, all but closing down the last remnant of cooperation between the neighbors. North Korean workers failed to turn up on Tuesday.

North Korea had said South Korea was trying to turn the Kaesong complex into a "hotbed of war".
The warning to foreigners, reported by the KCNA news agency said once war broke out "it will be an all-out war, a merciless, sacred, retaliatory war to be waged by (North Korea).
"It does not want to see foreigners in South Korea fall victim to the war," the agency quoted the Korea Asia-Pacific Peace Committee as saying.

"The committee informs all foreign institutions and enterprises and foreigners, including tourists...that they are requested to take measures for shelter and evacuation in advance for their safety."
Last week, North Korean authorities advised embassies in Pyongyang to consider pulling out in case of war, though none appeared to have taken any such action.

SPECULATION OVER MISSILE LAUNCH, NUCLEAR TEST

Speculation has grown that the North would launch some sort of provocative action this week -- perhaps a missile launch or a fresh nuclear weapons test.
A government source in Seoul said a North Korean medium-range missile, reported to have been shunted to the east coast, had been tracked and was believed to be ready for launch.
"Technically, they can launch it as early as tomorrow," the source said.

But a U.S. embassy official in Seoul said a directive issued last week saying there was no imminent threat to Americans in South Korea remained valid. "Our workers are in all our offices today," he said. "We have not evacuated anyone."

A Philippine foreign ministry spokesman quoted diplomats at its Seoul embassy as saying the situation "remains normal and calm".

Stocks, which had fallen 4 percent over the past four days, edged higher on Tuesday despite the warning to foreigners. The won currency moved little, dipping slightly after the North Korean statement.

Employers at the Kaesong complex faced uncertainty as the 53,000-strong North Korean workforce stayed away. A spokesman for textile company Taekwang Industrial and at least two other firms said production had stopped.

About 475 South Korean workers and factory managers remain in Kaesong, which generates $2 billion in trade for the impoverished North. The Seoul government said 77 would return on Tuesday.
North Korean workers at the park have appeared increasingly agitated in recent days, refusing to talk to their colleagues.

Many Southerners connected with the park bedded down at budget hotels in a nearby South Korean town in the hope that an order would come from the North to re-open.
"I have been feeling anxious now and then. Now it's really preposterous facing this," said Shing Dong-chul, 55, a South Korean worker who transports wire made in Kaesong.

"North Korean workers didn't talk a lot, but they appeared to have complaints about Kaesong being closed. They worried whether they would be working or not."Addressing a cabinet meeting, South Korean President Park Geun-hye described the suspension of Kaesong as "very disappointing" and said investors would now shun the North.

Few experts had expected Pyongyang to jeopardize Kaesong, which employs more than 50,000 North Koreans making household goods for 123 South Korean firms.

LAST VESTIGE

The zone is practically the last vestige of the "Sunshine Policy" of rapprochement between the two Koreas and a powerful symbol that the divided country could one day reunify.
South Korean companies are estimated to have invested around $500 million in the park since 2004.
World leaders have expressed alarm at the crisis and the prospect of a conflict involving a country claiming to be developing nuclear weapons.

China, the North's sole diplomatic and financial ally, issued a new call for calm and restraint, though Beijing's leaders have shown increasing impatience with Pyongyang.

"We ask all the relevant sides to bear in mind regional peace and stability and earnestly protect the legal rights and safety of citizens," Chinese Foreign Ministry spokesman Hong Lei told a briefing.
A Russian foreign ministry spokesman, in a statement on the ministry's website, said Moscow was in solidarity with all G8 industrialized countries "as regards the rejection of Pyongyang's current provocative and bellicose line of conduct".

The North is also angry at weeks of joint U.S.-South Korean military exercises off the coast of the peninsula, with B-2 stealth bombers dispatched from their U.S. bases.But the United States announced the postponement last weekend of a long-planned missile launch, a move officials said was aimed at easing tensions on the peninsula.

U.S. Secretary of State John Kerry visits Seoul this week and the North holds celebrations, and possibly military demonstrations, next Monday to mark the birth date of its founder, Kim Il-Sung - the current leader's grandfather.

In Washington, U.S. Deputy Defense Secretary Ashton Carter urged China to use its influence with the North and said Moscow wanted similar action from Beijing.But Chinese criticism of North Korea is unlikely to mean tough new action against Pyongyang because China would see any collapse of its troublesome neighbor as a disaster.

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News Source: www.marketwatch.com

Stocks Earnings are 1st big stock test since market high...

U.S. stocks, which reached all-time highs at the end of March, will face the first real test of their resiliency in the coming weeks as investors parse a flood of first-quarter earnings reports due to hit the market.

Since the benchmark Standard & Poor’s 500 Index reached a new closing high of 1,569.19 on the last trading day of the first quarter, the index SPX -0.01% has met resistance at that level, not straying past 1,573.66, a few points below the all-time intraday high of 1,576.09. On Friday, weak jobs data drove the index down to close at 1,553.28, marking its worst week of the year.

As a drumbeat of lowered analyst estimates and increasingly negative outlooks fills the air, investors who are planning on going long in the market should look past the initial negative hype and concentrate on what the company is making and how they are making it, said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. Upon further inspection of the earnings, initial pullbacks because of negative numbers can be exploited as buying opportunities.

After all, the fourth quarter saw all-time highs in capital expenditure spending, and 2012 saw all-time highs in corporate cash, dividends, and cash flow, Silverblatt said, who expects those metrics to grow going forward, or at worst be flat.

He said it was noteworthy that most of these strong corporate metrics came during a time when the average investor and consumer was being assaulted daily not only with the uncertainty of the November elections, but also with budget showdowns and the specter of the so-called fiscal cliff.

“The consumer is still spending mostly because they’re tired of hearing how the world is coming to an end,” Silverblatt said. Barring another big flare-up in fighting in Washington, D.C., or on the Korean peninsula for that matter, consumer spending should continue and provide wide support for earnings, he said.

On Friday, the Federal Reserve said February consumer credit jumped the most in six months, rising $18.1 billion, with credit card debt increasing by less than 1% to $532 million.

How that played out in the rest of the first quarter will become more evident toward the end of April and into May when consumer staples and consumer discretionary company earnings start coming out in full force.    

McDonalds Corp. MCD -0.36% , Coca-Cola Co. KO +0.77% , and PepsiCo Inc. PEP +0.66% report the week beginning April 15. While classified as a tech company, the consumer is the life blood of Apple Inc. AAPL +0.19% , which reports during the week beginning April 22, along with other consumer bellwethers like Procter & Gamble Co. PG +0.41% and Amazon.com Inc. AMZN +0.34% . After that, major retailers including Wal-Mart Stores Inc. WMT +0.77% , Target Corp. TGT +0.23% , and Home Depot Inc. HD +0.84% come out in mid-to-late May.

The current bottom-up, operating earnings per share estimate for the S&P 500 is $25.45, according to Silverblatt. That’s two cents above the all-time high of $25.43 set in the second quarter last year, and a 5% increase from the year-ago quarter, so even if it falls a few cents short, it’s the second-highest earnings on record, he said.  

While it may be one of the most negatively forecast earnings seasons in a while, some analysts say the consensus is still too high. Consensus earnings estimates have already fallen 6.5% over the first quarter alone, according to Silverblatt’s data.

Alcoa may be traditional first, but banks are bigger

Even though Alcoa Inc. AA +0.06% is scheduled to report results after the bell Monday and kick off the unofficial start of earnings season, the biggest earnings of the week by far will be in the banking sector with both J.P. Morgan Chase & Co. JPM +0.09% and Wells Fargo & Co. WFC -1.24% reporting on Friday.

Expect fundamentals, such as loan growth and margins to remain challenges for the sector, said Paul Miller at FBR in a recent note. The analyst said that business loan growth slowed dramatically in the first quarter. Also, mortgage originations may fall short of expectations because of seasonal weakness, something to think about with Wells Fargo, the largest U.S. originator or mortgages.

On the other hand, Miller expects capital markets to do well with strong equity and debt underwriting to boost results. Expect that to be a big factor in the results of J.P. Morgan, which has fought with Goldman Sachs Group Inc. GS -1.16% recently for dominance in the capital markets sector.

But unless a significant number of companies beat bottom-line results, it doesn’t appear that earnings growth is in the cards this season. The high frequency of negative outlooks has John Butters, senior earnings analyst at FactSet, expecting a 0.6% decline in earnings for the first quarter.

In the run-up to earnings season, 86 out of the 110 companies on the S&P 500 that have offered an outlook have issued one that falls below the Wall Street consensus. That 78% negative outlook from companies giving forecasts is well above the five-year average of 61%, Butters said in a recent note.

Other S&P 500 components scheduled to report in the coming week all happen on Wednesday and include Bed Bath & Beyond Inc. BBBY +1.14% , CarMax Inc. KMX +2.37% , Constellation Brands Inc. STZ +1.63% , Family Dollar Stores Inc. FDO -0.77% , and Fastenal Co.

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News Source: www.marketwatch.com

Gold Pops Higher after Weak U.S. Employment Report..

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Gold prices are moderately higher in active early-morning U.S. dealings Friday. The yellow metal was immediately boosted in the aftermath of a surprisingly weak U.S. employment report, which suggests the Federal Reserve will keep its foot on the easy-money accelerator for some time to come.

 Short covering and bargain hunting are featured in both gold and silver markets Friday morning, following strong selling pressure seen earlier this week. Gold had been trading near steady levels just prior to the jobs report’s release. June Comex gold rates last traded up $11.50 at $1,563.90 an ounce. Spot gold was last quoted up $9.60 at $1,563.75.  May Comex silver last traded up $0.163 at $26.92 an ounce.

The U.S. Labor Department reported non-farm payrolls rose just 88,000 in March, which was well below trade expectations. Other components of the jobs report were also alarmingly weak. The consensus forecast for the report called for the key non-farm payrolls figure to have risen by around 200,000 in March.

This week’s decline in gold price today has also prompted some better demand for physical gold that may continue into next week, especially from India and China, reports said.
In overnight news, the Japanese yen hit a 3.5-year low against the U.S. dollar following Thursday’s conclusion of the Bank of Japan meeting, which saw the central bank implement more aggressive monetary stimulus measures. The Euro currency was supported Friday by a better-than-expected report on German manufacturing orders, which rose 2.3% in February. However, Euro zone retail sales dropped in February by 0.3%.

North Korea and its bellicose rhetoric toward the U.S. and South Korea this week continues to attract the attention of the market place. North Korea has publicly threatened to attack the U.S. with nuclear missiles and is also threatening South Korea. The U.S. is taking North Korea’s threats seriously and has dispatched military assets to the region surrounding North Korea. The market place is digesting this news fairly well this week. However, that could change very quickly if the North Korea situation turns from just rhetoric to military conflict.

The U.S. dollar index is trading lower Friday morning on the weak jobs data and on some profit taking. The U.S. dollar bulls still have the overall technical advantage. Meantime, Nymex crude oil futures prices are lower Friday morning. The crude oil bulls have faded badly this week and the bears have near-term momentum. These two key “outside markets” will continue to have a significant daily influence on gold and silver prices.

Other U.S. economic data due for release Friday includes the international trade report, and consumer installment credit.

The London A.M. gold fix is $1,552.75 versus the previous P.M. fixing of $1,546.50.
Technically, June gold futures are seeing short covering and a corrective bounce after
prices hit a 10-month low on Thursday. Serious near-term technical damage has been inflicted this week. The gold bears still have the overall near-term technical advantage. Prices are in a six-month-old downtrend on the daily bar chart. Importantly, the “line in the sand” for the gold market, on a longer-term technical basis, is major psychological support at $1,500.00. Multiple daily closes below $1,500.00 would produce serious longer-term chart damage to then also call into question the 12-year-old uptrend in gold prices.

 The gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,580.00. Bears' next near-term downside breakout price objective is closing prices below major technical support at $1,500.00. First resistance is seen at the overnight high of $1,576.00 and then at $1,580.00. First support is seen at the overnight low of $1,549.00 and then at this week’s low of $1,539.40.  

May silver futures prices hit a nine-month low Thursday. Silver bears have the solid overall near-term technical advantage as serious near-term technical damage has been inflicted this week. Prices are in a four-month-old downtrend on the daily bar chart.

Bulls’ next upside price breakout objective is closing prices above solid technical resistance at $28.00 an ounce. The next downside price breakout objective for the bears is closing prices below major technical support at $26.00. First resistance is seen at the overnight high of $27.20 and then at Wednesday’s high of $27.315. Next support is seen at this week’s low of $26.575 and then at $26.50.

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Asad Rasheed
Direct:04-3841906
Email:asad@cfb.ae
Email:info@cfb.ae

For more information please visit our website century financial brokers.

 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/

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Here is another blog that provides regular news and information and is very useful for Forex Signals. 

News Source: www.wsj.com