US GDP; good for economy, bad for investors...

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U.S. economy is anticipating yet another hectic week, with the Federal Reserve stimulus coming to an end depending on the performance of the economy. Next week, the third reading for U.S. GDP will be released among other anticipated figures to put some light on when will the Fed cut bond purchases.

Third and final reading for third quarter GDP is estimated at 2.4%, and to remain unchanged from the prior reading, which will probably give investors a clearer signal over the health of the U.S. economy.


Any economic data reports, and in particular the GDP update this week will be leapt upon for signs that the US economy is improving ,the trigger for Ben Bernanke , chairman of the US Federal Reserve, to start scaling back the central bank`s easy money policy. 

Analysts believe the Federal Reserve might start to scale back the record $85 billion in monthly purchases in September and reducing at as much as $20 billion. Note that Bernanke said last week that the Fed will start reducing stimulus before the end of 2013, and its end will be somewhere around mid-2014.

As for the Income report for May, it is expected to show some improvement in income and spending levels, as Personal Income levels are expected to grow 0.2% in May, after it stalled the previous month, whereas personal spending is also estimated to rise 0.3%, compared to the prior drop by 0.2%, the sharpest amount in almost a year, mostly because of decreasing car sales and demand for energy.
Other data this week includes May’s durable goods, the housing sector, and the weekly update for jobless claims. 

Stock Markets (Heading)
U.S. stocks fell for the week, with the Standard & Poor’s 500 Index dropping more than 5 percent from a record high, as equity markets extended declines on Friday day after Federal Reserve Chairman Ben S. Bernanke said the central bank may phase out stimulus.

Stock Markets await another volatile week as traders will closely watch important data in the U.S. and overseas markets. Stock markets will also hurt by another surge in bond yields U.S. government bond yields also remain at elevated levels. The 10-year Treasury yield was at 2.5% Friday, the highest since August 2011.

Investors have been bailing out of bonds and sending yields higher over the past month amid speculation that the Fed will soon taper its monthly bond purchases, known as quantitative easing. Elsewhere, China will also keep investors on edge. The Chinese central bank could start becoming more aggressive in its efforts to inject liquidity into the banking system, experts say, after inter-bank lending rates have soared.

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News Source: www.reuters.com      

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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News Source: www.reuters.com

Weak U.S. Data Pushes Gold to Two Week High...

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August Gold reached a two-week high after weaker-than-expected U.S. economic news helped drive the U.S. Dollar lower. The metal was trading firmer before the release of the Preliminary U.S. GDP and Weekly Unemployment Claims due to the volatility in the Japanese markets, but it was the economic data which gave it its biggest boost.

The news that the U.S. economy expanded only at a 2.4 percent annual rate in the first quarter, missed pre-report estimates of 2.5 percent. Initial claims increased 10,000 to a seasonally adjusted 354,000 from 340,000 previously. Traders went into the report looking for 342,000.

The weak data drove investors out of the U.S. Dollar because it probably means the Fed will maintain the current pace of its asset-purchasing program. Since gold is priced in dollars, the break in the Greenback made gold more attractive to foreign investors.

Although the main trend is down, its looks as if gold has enough upside momentum to challenge a minor retracement zone at $1413.25 to $1431.01.

A combination of the weaker dollar and a Euro Zone report showing that confidence in the area’s economy improved more than anticipated in May helped drive up the EUR/USD. The poor U.S. economic reports helped weaken the dollar against the Euro because it likely means the Fed will refrain from tapering its aggressive asset-purchasing program.

Technically, the EUR/USD challenged a major retracement zone at 1.3019 to 1.3072 before selling off slightly. The main trend also turned up on the daily chart when the market crossed the swing top at 1.2997.

The GBP/USD turned its main trend to up to up on the daily chart this morning when the Forex pair took out a swing top at 1.5156. The current upside momentum suggests the market is poised to test a major retracement zone at 1.5307 to 1.5377.

Fundamentally, the Sterling found support earlier in the session following the release of a report that showed U.K. house prices rose at the fastest annual rate since November 2011. The mortgage lender Nationwide reported that house prices rose by 1.1% in May from a year earlier.
July Crude Oil weakened early in the session, but found support when it briefly pierced a major 50% level at $91.77. The actual low was $91.65. Profit-taking and bottom-picking helped turn crude oil to the upside, however, the main trend remains down.


Fundamentally, U.S. inventories rose unexpectedly last month. This likely means crude oil will remain range bound over the near-term. Along as the tops at $97.38 and $97.35 remain intact, look for the market to continue to find support in the $91.77 to $90.45 range.

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News Source: www.cnbc.com

A hedge fund for you and me? The best move is to take a pass...

Earlier this year, Goldman Sachs Asset Management announced that it would launch a new mutual fund that — apparently — will bring the joy of hedge fund investing to the masses. For as little as $1,000, the Multi-Manager Alternatives Fund (GMAMX) allows mom-and-pop investors to put their life savings into some of Wall Street’s riskiest and most expensive products. This “fund of funds” will, according to its prospectus, let investors gain exposure to the trading strategies of hedge funds.

The obvious question is: “Why would investors want that?”

Despite all the media coverage, glitz and glam of hedge funds, they have not done well for their investors. They have high — some say excessively high — fees; their short- and long-term performance has been poor.

Before delving into the details, let’s define exactly what we are discussing: Hedge funds are private investment partnerships. The general partner is typically the fund manager (on occasion it includes his financial backers). The investors in the fund are the limited partners, normally institutions and accredited investors. This partnership structure typically has a max of 99 limited partners. Unlike mutual funds or brokerages, hedge funds are mostly unregulated.

The global hedge fund industry manages $2.13 trillion, or about 1.1 percent of all assets held by financial institutions, according to the Coalition of Private Investment Companies. Given what a relatively small asset class this is, hedge funds certainly receive an excess of media attention. Many hedge fund managers have become billionaires; perhaps this — plus their reputations as the smartest guys in the room — is why they have captured the investing public’s imagination.

Most hedge funds are “go anywhere” funds — they can own derivatives, mortgage-backed securities, credit-default swaps, structured products and illiquid assets. They also can use nearly unlimited leverage.

Gee, that sounds kinda hazardous. Why would anyone want to assume all of that risk? Originally, hedge funds earned their outsize compensation by, well, hedging their investments. This is a risk-mitigation strategy that can reduce the gains investors reap when markets are up but avoids much of the losses when markets are down.

That no longer seems to be the case with modern hedge funds. They have morphed into “absolute return” funds — more aggressive, greater leverage, more speculative, all in an attempt to generate returns that outperform their benchmarks. Not surprisingly, they have become riskier than the overall market.

Given these increased risks (and higher fees), how have hedge funds performed?
By most measures, not well. They have failed to keep up with major averages when markets were up — and they got mangled (like nearly everyone else) during the 2008-09 downturn. It turns out, most hedge funds are not very hedged.

The latest performance data (via the HFRX Global Hedge Fund Index) reveal that hedge funds haven’t fared well at all: They returned a mere 3.5 percent in 2012, while the S&P 500-stock index gained 16 percent. Over the past five years, and the hedge fund index lost 13.6 percent, while the indices added 8.6 percent. That’s as of the end of 2012; it has only gotten worse in 2013. Most hedge funds have fallen even further behind their benchmarks this year, gaining 5.4 percent vs. the market’s rally of 15.4 percent. As a source of comparison, the average mutual fund is up 14.8 percent.

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News Source: 

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News Source: www.washingtonpost.com

GOLD OUTLOOK : Gold To Watch The Dollar, Bernanke Influence on Market...

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U.S. dollar direction and comments from Federal Reserve Chairmen Ben Bernanke will influence the gold market next week.The U.S. dollar’s strength was a factor in gold-price weakness this week, as the dollar index rose to its highest level since August 2010. Whether the greenback continues to rise or pulls back will determine where gold goes next week, market participants said. The dollar’s trajectory itself will likely hinge on what Bernanke says about the U.S. economy in two appearances slated over the next week.

June gold futures fell Friday, settling at $1,364.70 an ounce on the Comex division of the New York Mercantile Exchange, down 5% on the week. July silver slipped Friday, settling at $22.352 an ounce, down 5.52% on the week.

In the wsj News Gold Survey, out of 36 participants, 28 responded this week. Of those 28 participants, nine see prices up, while 17 see prices down and two see prices moving sideways or are neutral. Market participants include bullion dealers, investment banks, futures traders, money managers and technical-chart analysts..

Participants in the survey are decidedly bearish. Several who see prices falling cited the short-term technical-chart based trend with the yellow metal possibly returning to the mid-April lows in the low $1,320s. Others, though, said sentiment in gold became too bearish and they see the market finding support not far from current lows.

The dollar saw some modest weakness on Thursday, but shook that off Friday. “The main reason for the gains in the U.S. dollar over the past week is the growing belief that the Federal Reserve will scale back their asset purchase program earlier than expected. (On Thursday) Federal Reserve Bank of San Francisco President John Williams said the central bank may reduce its $85 billion in monthly bond buying as early as this summer,” said Alan Bush, senior financial futures analyst at Archer Financial.
A key part of tapering off the Fed purchases is continued improvement in employment, Williams said at the time.

Given Williams’ comment, market watchers said they are going to look closely at other Fed speakers next week to see if they also echo Williams’ statement. Of critical importance will be two speeches by Bernanke, who will speak first on Saturday about the long-term economic prospects and then in front of Congress on Wednesday, where he will also address the economy.

“Any indication that (a) tapering remains far off and (b) growth is still below where the Fed would like would hurt” the U.S. dollar, said BNP Paribas, which has been skeptical of the dollar gains.
Yet there are many others who see the dollar in a long-term uptrend and that is bearish for commodities in general since they are dollar-denominated. They said any losses in the dollar are slim and noted Friday’s move was higher again.  

“We still think the other side of that equation (relative weakness in the rest of the world) remains in play. In May, we've seen rate cuts and dovish surprises from the ECB (European Central Bank), RBA (Reserve Bank of Australia), and the central banks of Israel, Poland, Korea, India, and Turkey. The economic outlook for the rest of the world is getting worse and the U.S., while disappointing a bit recently, remains on track for a modest recovery,” said Brown Brothers Harriman.

Bob Haberkorn, senior commodities broker, RJO Futures, said the short-term trend in gold is down, although longer term he still likes gold. He said because of the dollar strength, “the path of least resistance in gold is down. I wouldn’t be surprised to see it test the April lows” of $1,321.50 basis June Comex contract.

The comments from Bernanke will be the most important event for the week, especially if he talks about the current bond-buying program, known as quantitative easing, Haberkorn said. His comments will impact not only gold, but also other financial markets such as U.S. Treasury bonds and equity markets.

As many market watchers said in recent weeks, the record highs in equities have siphoned demand away from gold and other commodities. The rise in stocks has come without a significant correction, and that’s something that worries Haberkorn and others, who said the longer equities rise without a breaking, the greater the fall will be.

BEARISH SENTIMENT OVERDONE

Not everyone is so negative on gold. In fact, some say because sentiment in gold is so beat up, that it might be time to step back in, at least for a short time. Gold has closed lower for seven consecutive sessions. Open interest on the Comex rose about 4,300 contract since May 10 through Thursday, meaning that new short positions likely were established with the price decline.

Ken Morrison, founder and editor of online newsletter, Morrison on the Markets, said since 2009, gold prices have never closed down seven days in a row. He said it’s possible that gold might see some further weakness initially next week, but he sees the market regaining strength by the end of next week.

After being bearish on gold, this is “the first time we've been bullish gold for quite some time, of the opinion the large-volume decline has about run its course,” Morrison added.

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News Source: www.wsj.com

Gold futures jump with physical demand on the rise...

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Gold futures rose more than 1% on Wednesday as bargain hunters waded into the beaten-down market, lifting physical demand for the metal on the back of fresh data pointing to difficulties for the U.S. economy.

 Gold for June delivery GCM3 +0.89%  climbed $15.10, or 1.1%, to $1,423.90 an ounce on the Comex division of the New York Mercantile Exchange. Prices were poised to recover the loss of $12.40, or 0.9%, they saw a day earlier.

The fall on Tuesday was gold’s first in four sessions, with prices for the precious metal hurt after disappointing data on manufacturing data in China,a rally in equities and a stronger U.S. dollar.

Orders for U.S. durable goods fell by a seasonally adjusted 5.7% in March, more than the 3.2% decline expected by economists polled by Market Watch.

If the economic data releases covering April are similar to the month prior, then the Federal Reserve isn’t likely to give any signs of an early withdrawal of quantitative easing, said Chintan Karnani, independent bullion analyst based in New Delhi. QE has been a supportive factor for gold, as it can lead to inflation and gold is often seen as a hedge against inflation.

Bargain buys

Traders and investors are stepping in to buy the recent big dip in prices, said Jim Wyckoff, senior analyst at wsj.com in a daily market note. “Demand for physical gold world-wide remains strong after last week’s price plunge.” Read about why investors should be bullish on gold price as long as chaos reigns.

Gold prices are on track for a roughly 11% drop this month, and analysts have been pointing to declines in the metal’s holdings among exchange-traded funds and lower gold-price forecasts as factors behind the recent selloff.          

Goldman Sachs on Tuesday closed its recommendation for clients to “short” gold, telling them to exit out of those bets on lower gold prices. The investment bank on April 10 cut its short- and long-term gold forecasts as prices approached bear-market territory.“Strong demand for physical gold world-wide, and especially from Asia, continues to underpin the gold market,” said Wyckoff.

The U.S. Mint this week stopped sales of its smallest-denomination gold bullion coins as demand reduced government inventories.

Year to date, demand for the one-tenth ounce coins are up more than 118% compared with the same time a year ago, the U.S. Mint said in a memo to authorized purchasers, according to The Wall Street Journal.

Other reports this week have said there are shortages of gold bars and coins in some countries, with gold retailers jacking up their charged premiums over the spot price of gold, Wyckoff said.      

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News Source: www.wsj.com

                      

Gold Is Undervalued in Fiat Money Terms...

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The question on everyone's mind is whether or not the gold bull market is over? Such an utterance seems glib in the face of 8,000 years of history that suggests otherwise. Of course, there is a time and moment to own gold. That time is still now. So you will not be surprised to hear us say, no it's not over; it's just getting interesting.

Another question that is on everyone's minds -- or if it isn't, should be -- is, was the gold market sell-off a product of continued and escalating manipulation?

I will explore the answers to both these questions, and by understanding reality we can begin to understand whether gold can reassert itself in its justifiable role as an antidote to the current fiat currency system.

Is Gold Currently Undervalued?
First off to state publicly, gold is still undervalued in 'fiat money' terms, that's the easy question to answer.People have said to me gold has gone up a lot, and so now it's too high. I always reply that gold has a price and a value. These two constructs are not interchangeable. Price is a level at which you make an exchange, and value is whether it is worth it. Right now gold remains undervalued when examined in the context of other assets, primarily against paper money.

To illustrate this point we can now see how gold is as undervalued, incredibly, as it was in 2000, just before this gold market began to rise in nominal terms.

One phrase that sums up my thinking – price has changed, but nothing has changed.
To develop this statement a little further, I want to quote a friend, Detlev Schlichter, on the recent brutal bloodletting in the gold market. Detlev wrote a really eloquent book Paper Money Collapse, about the inevitable failure of paper money economies. He states:

"After 40 years of relentless paper money expansion and in particular 25 years of Fed-led global bubble finance, the dislocations in the global financial system are so massive that nobody in power dares to turn off the monetary spigot and allow market forces to do their work, that is to price credit and to price risk according to the available pool of real savings and the potential for real income generation rather than according to the wishes of our master monetary planners."
This fact remains, so nothing has changed.

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www.wsj.com

A Make or Break Week Ahead for the Stock Market...

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  It's make-or-break time for the first-quarter earnings season, and it comes just as the stock market is showing signs of strain.About 170 S&P 500 and 10 Dow companies report earnings in the week ahead, and they include everything from tech icon Apple to industrial names like Caterpillar and energy companies like giant Exxon. As of Friday, a fifth of the S&P 500 had reported, and two-thirds had better-than-expected earnings. But an unusually high amount—57 percent—missed their top-line revenue estimates, according to Thomson Reuters.

That's a cause for concern, since stocks traded in one of the most volatile seesaw patterns of the year in the past week, as worries about global growth increased amid a dramatic sell-off in commodities. The Dow finished its worst week this year 2.1 percent lower at 14,547, and the S&P 500 was down 2.1 percent at 1,555. The Nasdaq was down 2.7 percent for the week, even with Friday's big gain of 1.3 percent on the back of a tech rally.


The week ahead also has a light but important economic calendar, including home sales data Monday and Tuesday, durable goods Wednesday, and the first look at first-quarter GDP Friday. Even though it is a reading of past activity, first-quarter GDP is important since, at estimated 3 percent growth, the rate is about double what is expected for the current quarter. Traders have also been fixated on events surrounding the Boston Marathon bombers, though it was not seen as a market factor.

"I think this rally is a little weary," said Art Cashin, director of floor operations at UBS. "The 'buy the dips' have been in and they bought most of the dips. The question is will they continue, or is the market getting ready for the spring swoon everyone is talking about."


Cashin said the Dow broke an important trend line at 14,500 Friday as IBM had its worst day in eight years, but it rose back above that level by the end of the day. The S&P struggled at its 50-day moving average Thursday, but it too got about a dozen points above it by Friday afternoon. Commodities markets were calmer by the end of the week, but gold lost 7 percent in the past week, sliver lost 12.8 percent, copper lost 6 percent and oil lost 3.6 percent.


"By any sort of measure, we're kind of overdue for some sort of a pullback, and maybe we're finally going to get it," said Bill Stone, chief investment strategist at PNC Wealth Management. Year to date, the S&P is up 9 percent and has not had a significant pullback. He noted that the economic data has been disappointing.


"Once you had a market that moved up like this one has, expectations are really your enemy. We're not meeting expectations … then you throw in earnings season. Earnings, I would argue, are coming in better than expected. Underneath the surface is something that's not quite so healthy," he said. "They're struggling on the top line, the revenue side. That's indicative of a global economy growing below trend." The commodities sell-off is also signaling a global weakening, and it accelerated when China released disappointing GDP data Monday.

Gina Martin Adams, institutional equity strategist at Wells Fargo Securities, has also been expecting a pullback. "I still think we're in some sort of process of trading a top. It's hard for me to say," she said. "There has been enough disturbance to suggest the trend is now in question, which is the first time you can say that this year. Certainly the factors have been lining up."
"Every April we have this. It's scary how the market is trending exactly as it has for the last four years running," she said. "There is this confluence of factors. The fundamental case—everyone was excited about the economy improving, but that story broke down. The earnings are not improving. The commodities complex looks just like last year."


Even though economists expect a weaker economy, they do not expect it to be as soft as last year, and stock strategists also expect the market to rebound later in the year, after any sell-off.

Adams said seasonally, April can actually be a good month for stocks so they may hold on, but in the next few weeks, there could be a downdraft as there was in the past three years. "May is when you get a little worried … we've got a sideways trend in place," she said, adding it's also possible there could be a sideways correction. That means stocks would grind in within a range, instead of selling off.

This makes the earnings season particularly key, as traders look for clues about the extent of the soft spot and its impact on corporate profits.

"The next two weeks are really important. That's when the bulk of the market cap reports. They will be extremely important. There's a limited amount of economic data to consume. The huge reports come at the beginning of the month," when April employment data is released, Adams said.

She added that is especially watching industrials and technology. "Those are the areas where the market is expecting the greatest weakness. If there are areas where there could be a surprise and guide higher, those could be the areas. They should be the areas where the turnaround story could occur, should it show up. I'd like to see that, but it's not in my forecast."


Industrial companies GE and Honeywell both reported earnings that slightly beat expectations Friday. GE, however, reduced its forward guidance while Honeywell slightly raised it. In tech, the message has been mixed. IBM fell 8 percent Friday after its weak earnings report, but shares of Google and Microsoft both gained even though revenues missed slightly.

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news source: www.bbc.com

G20 agrees not to set hard targets on debt reduction

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Finance leaders of the G20 economies said on Friday they agreed they did not need to set hard targets for reducing national debt levels, and said they would be watching for negative effects from massive monetary stimulus efforts, such asJapan.

Russian Finance Minister Anton Siluanov said at a news conference that finance officials from the Group of 20 nations believed overall debt reduction was more important than specific figures.
"We agreed that these would be soft parameters, these would be some kind of strategic objectives and goals which might be amended or adjusted, depending on the specific situations in the national economies," he said.

In a communiqué released after a two-day meeting, the G20 said it would be "mindful" of possible side effects of extended periods of monetary stimulus. Central banks have flooded their economies with cheap funds to try to boost borrowing and spending but that has raised concerns about excessive capital flight, particularly to developing nations.
Siluanov said the G20 agreed that greater monitoring of the side effects of Japan's $1.4 trillion program announced earlier this year was needed.

The G20 discussions were dominated by talk of the struggling euro zone, Siluanov said, where harsh austerity measures have failed to lift the region out of its economic slumber. The nature of the discussion was of some concern to officials in other nations.

"It was supposed to be a G20 meeting, but for a moment I thought it was a G7 meeting. All that we heard was how sick Europe is and how badly affected many countries of the world are," said India's finance minister, P. Chidambaram, who spoke at the Peterson Institute in Washington.
"They have a very accommodative monetary policy. They are doing whatever it takes to rescue economies that seem to be tumbling one after another."

SOFT DEBT TARGETS
There has been some disagreement over the need for specific targets for reducing debt. The United States and Japan have opposed committing to a targeted debt-to-GDP level. Russia - this year's G20 chair - had hoped to secure an agreement on targets by the time G20 leaders meet in St. Petersburg in September.

The world's biggest economies are rethinking the austerity drive that dominated the last few years. The austerity argument has been undercut by weakness in economies that undertook severe measures to cut deficits, including Britain, which is headed into its third recession in the last five years.
Fitch cut its credit rating on Britain on Friday to double-A-plus, citing expectations that general government debt will rise to 101 percent of GDP by 2015-2016 due to weak economic growth.
Siluanov also said a greater amount of coordination was needed with the International Monetary Fund on global liquidity, with recommendations expected by next July.

G20 ministers called on the Financial Stability Board to oversee work on reforms for short-term interest rate benchmarks such as Libor in the aftermath of a global rate-rigging scandal. FSB was asked to report back in July on its progress.

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News Source: www.cnbc.com

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

News Source: www.cnbc.com