Month: May 2013

Teaching ………… learning

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Teaching ............ learning

I never teach …………

Trinidad & Tobago Central Bank News update

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Trinidad & Tobago holds rate, growth weak, inflation down – Central Bank News.

 The Central Bank of Trinidad and Tobago held its benchmark repo rate steady at 2.75 percent, saying its accommodative policy stance was appropriate in light of contained price pressures and economic growth that remains weaker than expected.
    The central bank, which cut rates by 25 basis points in 2012, said private sector credit growth remained subdued but the financial system was highly liquid and it “stands ready to employ additional measures in the coming months to contain excessive build-ups in financial system liquidity.”
    In response to the large build-up of liquidity – commercial banks’ daily excess reserves at the central bank averaged $6.5 billion during May 1-21, up from $5.3 billion in April – the central bank facilitated the issue of a $1 billion liquidity absorption bond. With the proceeds sterilized, excess reserves fell to $5.8 billion on May 21 from over $7 billion earlier in the month.
    In addition, the central bank sold foreign currency, removing $637 million from the system and rolled over a $1 billion fixed deposit held by commercial banks at the central bank.
    “Nevertheless, with liquidity still at elevated levels, there was no activity on the inter-bank market and banks did not access the central bank’s repo facility,” the bank said.
    Given the high levels of liquidity, treasury rates have remained depressed and banks lowered their lending rates early this year to encourage credit demand.
    Headline inflation rose by 1.5 percent in April from March, but on an annual basis, the inflation rate fell to 5.5 percent from 6.9 percent.
    For the first time since October 2011, food price inflation slowed to single digits, reaching 9.4 percent in April, down from 26.2 percent in April 2012 and 15.0 percent in April 2011.
    “The recent slowdown in headline inflation and the continued stability in core inflation suggest that general price pressures are contained, although food price pressures may increase in coming months with the advent of the rainy season,” the central bank said, adding that “economic growth is still not as strong as expected, underlined by the further contraction in business credit.
    On an annual basis private sector credit granted by the financial system grew by 2.0 percent in March, down marginally from 2.1 percent in February while business lending contracted for the fourth consecutive month, down by 2.4 percent year-on-year in March.
    Trinidad & Tobago’s Gross Domestic Product contracted by an annual 0.39 percent in the fourth quarter of 2012 and earlier this month the central bank said in its monetary policy report that it was still forecasting 2.5 percent growth this year, up from 0.2 percent in 2012, based on a rebound in natural gas production.

    www.CentralBankNews.info

The Future belongs to ….

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The Future belongs to ....

Believe in your dreams

Close Prices (24.05.2013)

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Athens Stock Exchange closing prices dated 24 May 2013

DSP Capital

  • ATHEX : 1.035,12 (-0,31%)
  • FTSE/ASE (Spot) : 350,65 (-0,36%)
  • FTSE / XA Large Cap (Future Delivery June 2013): 351,50 (-3,37%)
  • FTSE / XA Large Cap (Future Delivery July 2013): 350,25 (-2,91%)
  • FTSE / XA Large Cap (Future Delivery August 2013): 350,00 (-3,45%)

(from the Athens Stock Exchange and Athens Derivatives Exchange officials web sites)

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Bullish Borrowing Excess: NYSE Margin Hits Record High

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NYSE Margin hit new record high …..

The New York Stock Exchange is showing something that we would be more concerned about than optimistic. Margin debt at the NYSE grew for the ninth consecutive month and hit another record high in April, as investors have now borrowed on margin some $384.37 billion. This is only about 1.3% higher than the $379.52 billion in March, but it is almost 29% higher on a year-over-year basis, versus the $298.50 billion from April 2012.

 

The prior margin borrowing high was $381.37 billion, back in July 2007. This is an important reflection because that is months before the recession started and when certain aspects of the economy began giving warnings signs of worse things to come. What we would point out that may offer a break in worries here is that the July/July one-year comparison in margin borrowing at the peak in 2007 was a gain of almost 65%, and that is a much larger percentage gain than the year-over-year gain of almost 29% from the year-over-year comparison to the peak in 2013.

What is so different here is that the low rates (almost zero) seemingly should have started bringing back the record margin levels last year. It is concerning that it has happened at a time after the rally is so long in tooth. Investors are chasing returns with stocks already up well into the double-digits so far in 2013. We would also point out that the American Association of Individual Investors weekly bullish sentiment just surged massively in the past week, and that can be yet another reverse indicator ahead.

As a reminder, margin debt does not have to be reinvested in stocks just because it is borrowing against stocks. Borrowing on margin against big equity gains is often cheaper to borrow against positions than it is to get new loans, depending on the use and time to repay.

If you think that this is a one-off, this is not the first concern and it may not be the last. Bloomberg outlined concern at the start of this month about the margin borrowing being off the chart in March and showed a comparable chart for comparison against the S&P 500 Index.

Apparently those borrowing on margin were not too concerned with a “Sell in May and go away” theme this year.

May 24, 2013 

Courtesy
Source: Frank Golhen, via Wikimedia Commons

 

24/7 Wall St.

NYSE-flagThe New York Stock Exchange is showing something that we would be more concerned about than optimistic. Margin debt at the NYSE grew for the ninth consecutive month and hit another record high in April, as investors have now borrowed on margin some $384.37 billion. This is only about 1.3% higher than the $379.52 billion in March, but it is almost 29% higher on a year-over-year basis, versus the $298.50 billion from April 2012.

The prior margin borrowing high was $381.37 billion, back in July 2007. This is an important reflection because that is months before the recession started and when certain aspects of the economy began giving warnings signs of worse things to come. What we would point out that may offer a break in worries here is that the July/July one-year comparison in margin borrowing at the peak in 2007 was a gain of almost 65%, and that…

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South Africa Central Bank News

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South Africa holds rate on inflation risk, cuts GDP forecast – Central Bank News.

South Africa’s central bank held its benchmark repurchase rate steady at 5.0 percent, as expected, but cut its growth forecast and appealed for price and wage restraint to avoid higher inflation.
    The South African Reserve Bank (SARB), which cut rates by 50 basis points in 2012, painted a bleak picture, saying domestic growth prospects were fragile, consumer confidence was low, the mining sector was plagued by continuing disruptions, the supply of electricity was constrained and the global economic environment was weak.
    “Given the current unsettled environment in the economy, the MPC assesses the risks to inflation to be on the upside, while many of the above factors contribute to a downside risk to growth,” the SARB said in a statement following a meeting of its monetary policy committee.

   South Africa’s rand currency has been falling in value, down by some 4.6 percent against the U.S. dollar since late March and some 10 percent this year, as the confidence of investors since mid-2012 has been undermined by fraught labor relations and high wage demands, especially in the mining sector, and worries over a growing balance of payments deficit due to lower commodity prices and mining exports.

    “The current level of the exchange rate, if sustained, poses a significant upside risk to the inflation outlook,” the SARB said in a statement.
    The impact of the weaker rand on inflation will depend on the extent and duration of the depreciation and while some of its decline reflects changes in fundamentals, the SARB warned the currency remains highly vulnerable to changes in sentiment and the current positive inflow of funds can quickly reverse.
    “Despite the current negative sentiment towards the rand, non-residents have remained net buyers of bonds and equites this year,” SARB said, buying 12.7 billion rand worth of stocks since January and 22.5 billion rands of bonds.
     A decline in the rand helps the international competitiveness of South Africa’s exporters, but the SARB said the competitive advantage of that needs to be realised through price and wage restraint, otherwise “the outcome is simply higher inflation with the risk of an exchange rate-inflation spiral.”
    The central bank cut its 2013 growth forecast to 2.4 percent from 2.7 percent and to 3.5 percent from 3.7 percent for 2014. In 2012 South Africa’s Gross Domestic Product grew by 2.5 percent.
    By 2015, SARB expects economic growth to accelerate to 3.8 percent, with the negative output gap starting to close that year after widening this year.
    In the fourth quarter of 2012, South Africa’s GDP expanded by 2.1 percent from the third quarter for annual growth of 2.5 percent, up from 2.3 percent.
    South Africa’s inflation rate was steady at 5.9 percent in April from March and February, but the SARB said food price inflation had risen by 6.3 percent in April, reversing a downward trend in place since November, and core inflation, which excludes food, rose to 5.2 percent from 5.1 percent.
     The central bank trimmed its headline inflation forecast by 0.1 percentage points to an average of 5.8 percent this year and 5.2 percent in 2014 and an average of 5.0 percent in 2015 due to changes in assumptions about international commodity prices, including oil, and lower global inflation.
     But inflation in the third quarter of this year is still expected to breach the SARB’s upper end of its target range, hitting 6.1 percent, up from a previous forecast of 6.3 percent.

     In 2012 inflation averaged 5.6 percent, in the upper end of the central bank’s 3-6 percent target.

 

     The forecast for core inflation, however, was raised to 5.3 percent from a previous 4.8 percent, due to higher medical insurance costs and higher administered prices and taxes.
    A number of sectors in South Africa are entering into wage rounds and the SARB said it was concerned about settlements well above inflation and productivity growth, along with the risk of strikes that would cut into growth and exports.
    “At a time of high and rising unemployment and slowing growth, the imperative of an economy-wide commitment to wage and salary restraint at all levels, including executive pay, cannot be over-emphasised,” the central bank said.