Month: April 2013

Scariest part of gold crash? No one knows why it happened

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The two-day crash in the price of gold is one of the most devastating asset sell-offs ever witnessed on Wall Street, right up there with the stock market crash of 1987. What makes it that much worse is no one is exactly sure why it happened. And until investors get some answers, the selling may continue, they say.

“Unless you have a catalyst, ‘cheap’ gets a lot cheaper during a crash in price expectations,” said Keith McCullough of Hedgeye Risk Management. “Old Wall calls it ‘catching a falling knife’ for a reason.”

Gold posted its biggest two-day dollar drop ever and its biggest percentage drop since 1980 when the carnage settled Monday. Prices rebounded slightly in early trading Tuesday. It’s now down 26 percent from its 2011 high.

“We are running out of superlatives to attach to the gold price move since last Friday,” Nomura analyst Tyler Broda wrote in a note to clients. “The rarity of a move like this is notable.”

Also Read- Gold May Head ‘Much Lower’: Broda

It seems like every trader on Wall Street has a theory for the move. Most commonly cited are fears of central bank selling (especially Cyprus), exchange-traded funds liquidation, global deflation setting in, a weak yen strengthening the dollar, and mysterious hedge funds blowing up from margin calls.

“The major holders of gold other than the US (i.e., the EU and England) need gold to support their economies and banks,” said Sean Egan of Egan-Jones research. “A little selling has a major impact on supply and feeds price declines and follow-on selling.” But the Cyprus theory has yet to be proven. Reportedly, there is an internal debate still raging inside Cyprus to sell gold to pay its growing bailout tab, but they have not sold any gold yet.

Many say there may not be a fundamental reason to pinpoint for the bullion crash. After all, the metal has no fundamentals like cash flows or dividends, so it is only worth what others are willing to pay for it. After a 13-year run, perhaps it was time for other assets like Treasurys and high-yielding stocks to gain favor among the safe-haven crowd.

“Commodities trade even more technically than other assets since it’s futures driven,” said Enis Taner, global macro editor for RiskReversal.com. The crash “was technical more than anything in my view.”

Taner points to the USD 1,530 to USD 1,550 area for gold, which was support for the metal for almost two years. Once it broke below that, the rush for the exits started.

And that’s where a new facet of this trade, which was not around in 1980, may have thrown fuel on the fire: ETFs. They give the average Joe access to the gold futures market and these less sophisticated investors may not have the same pain threshold or capital as institutional investors.

Also Read- Mark Fisher: Gold Bulls Should Love This

The SPDR Gold Trust, the most popular gold ETF, traded 150 million shares during the two-day slam, more than the total volume of the previous 16 days. This smacks of panic selling.

“The gold market metrics are in uncharted territory,” said David Greenberg of Greenberg Capital. “The GLD effects on gold in a panic sell-off have never been tested.”

History has shown that once gold enters a bear market (20 percent off high), it keeps going lower by another 14 percent on average, according to data going back to 1975 crunched by Bespoke Investment Group. That would put the metal well below USD 1,300.

“While no one of these explanations may be sufficient to explain a 20 percent move, collectively they all matter,” said Robert Savage, chief strategist at FX Concepts and previous director of FX macro sales at Goldman Sachs. “Gold is unlikely to bounce much—it’s a heavy metal after all—with the larger medium term risk of USD 1,100.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Who is natural buyer of gold right now?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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What’s next for gold? I never believed the gold bugs who argued that gold would inevitably hit $5,000 an ounce, but I also don’t necessarily believe the bears, who seem to believe gold could go right through the floor to, say, $500.

Right now, I see gold 25 percent off its highs…that is not good, but gold went through one of the great bull markets of all time…from $400 in 2005 to over $1,900 toward the end of 2011…so you are still above water if you bought gold before roughly February of 2011.

But still…the strategy of buying gold to protect against central bank printing of money has failed, as least for the moment.

Gold has underperformed the S&P 500 since the March 2009 bottom in the S&P, but particularly since the start of this year, with the S&P 500 up 9.8%, and gold down 22 percent.

Regardless, the whole thing that matters now is this: 1) where will gold bottom, and 2) who is the natural buyer right now?

I have no idea where the bottom is. Gold bears like MKM note that if gold had simply moved with the CPI basket since 1913, it would stand at $490 an ounce. Wow. That is more than 60 percent below it’s already low price. I doubt it will go anywhere near there.

Who is the natural buyer of gold now? Let’s run through the suspects:

1.Small buyers of physical gold and coins. Nah. Not big enough.

2.ETF buyers. Possible, but not as big as everyone thinks. The largest gold ETF, the GLD, only has 1,300 tons of gold. Compare that to the 8,000 tons the U.S. has.

3.The Chinese. They are the big buyers in commodities, and there’s no reason they would not be interested in buying on a dip. But they are investors, and they have been burned now, so it’s also possible they may wait for things to settle out.

4.Indians. Now it gets interesting. Indian women are the largest buyers of gold in the world; if they smell gold is a bargain they can make a difference.

5.Central banks. Also interesting. They have stepped in before. A couple years ago, the IMF sold about 400 tons of gold…about half that amount ended up in Central Banks of several emerging market countries, including India.

6.Investment funds. How about a big purchase from a sovereign wealth fund? A Templeton fund? Anybody who thinks gold is at a bottom? This is the most logical buyer…after all, it’s buy low, sell high.

So there you have several buyers. In order of preference: investment funds, Indian buyers, Chinese buyers, central banks.

One final thing puzzles me: all the way up for gold, many were bitterly complaining that the Fed was creating this move up because they were laying the groundwork for massive inflation. NOW some are bitterly complaining that the Fed has destroyed inflation and the gold market. Huh? Which is it?

Put differently: QE2 and QE3 was supposed to be a failure because it created a rise in commodity prices. NOW QE2 and QE3 are supposed to be failures because it DIDN’T create a rise in commodity prices. Which is it?

Maybe the Fed wasn’t so important for commodities after all?

—By CNBC’s Bob Pisani

Also Read: In few weeks gold will be at $1,260: Chartist

Kudlow: Falling gold is a good thing

The scary number for gold investors: $1200 

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

The scary number for gold investors: USD 1,200

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Many gold producers will struggle to stay afloat if the gold price slumps below USD 1,200 analysts have told CNBC, potentially putting the gold mining industry at severe risk beyond 2017, according to Goldman Sachs predictions.

The much talked about decline in gold continued on Monday, with spot prices falling USD 1,400, compounding fears the 12-year run in the precious metal has finally come to an end.

Gold miners were especially hard hit, with a sell-off in the sector in Australia, China and the UK.

But at what point does the demise of the gold price make gold miners uninvestable?

“As you get closer to the cash cost production for gold, which is around USD 1,200 an ounce, people get nervous,” Jonathan Barratt, founder of Barratt’s Bulletin told CNBC.

James Sutton, client portfolio manager of the JP Morgan Natural Resources fund, agreed, telling CNBC: “The level where we think the gold mining industry will struggle is USD 1,200.”

While he said gold may not reach those levels, the fund was taking precautions, trimming its gold holdings to lows not seen since the financial crisis.

“Gold is now just over 20 percent in both the European and U.K. portfolios, which is a meaningful step change from where we were last summer when we had 31 percent, and it is the lowest weighting we have had in gold since the financial crisis,” he said.

As mine production makes up just 10 percent of the gold industry, people could still gain exposure to gold through many different avenues, but many businesses extracting gold from the ground could fold, he added.

“It is around about the USD 1,200 we think the gold industry as a whole struggles, but there are many companies that can still survive and be profitable,” said Sutton “If there was a further deterioration in the gold market, then our portfolio would become even more concentrated in those stocks that we thought were going to be the last men standing.”

Goldman Sachs, which downgraded its gold price target and advised investors to short the precious metal last week, said its long term price forecast from 2017 onward is USD1,200 and so recommended producers lock in current gold prices for 2013 and beyond.

“Over that horizon forecast, we expect US real rates to stabilize and see risks to US inflation as more symmetrical. And while higher inflation may be the catalyst for the next cycle in gold prices, this is likely to be several years away,” analysts led by Damien Courvalin said.

Gold Investors Battered

For investors in gold mining funds, 2013 has already been a very bad year.

Globally, gold mining and resource funds are down 10 percent on average in just the first quarter, before the latest falls,with the worst performing fund down 22 percent, according to investment research firm Morningstar.

In the UK, eight out of the ten worst performing funds in first quarter were gold and resources funds with an average loss of 12 percent, compared to the FTSE 100, which rose 9.29 percent over the same period, according to Morningstar.

—By CNBC’s Jenny Cosgrave: Follow her on Twitter @jenny_cosgrave

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Ford expects 40% of sales from China by end of decade

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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China, once a major weakness for Ford, is expected to generate 40 percent of the automakers annual sales by the end of the decade. The projection means China will likely pass the United States as Ford`s largest market by 2020.

“I am spending more and more time, and our team is spending more and more time, in China,” said Alan Mulally, Ford CEO. “We feel really good about our diversity and our position in china.”

As Ford gears up for the Shanghai Auto Show later this week Mulally believes it has found the formula for winning in China: tapping the booming markets of inner China while also rapidly expanding the number of models for sale.

“We are the fastest growing brand [in China]. We are doubling our production capacity. We are bringing in all the Ford vehicles now,” said Mulally.

Red hot in a hot market

In a country where auto sales grew by 17 percent in the first quarter of the year, Ford`s 54 percent jump stands out.

How did the American automaker grow sales three times faster than its competitors in China?

A big reason is the success of the Focus. The small car has been the best selling vehicle in Chin the last two years and shows no sign of slowing down.

“The styling is cutting edge compared to other products in the market and that makes a difference,” said James Chao, Director of IHS Automotive in Shanghai. “Ford is known as a higher technology brand. They pack the vehicles with their Sync technology and that does resonate with the consumer.”

(Read More: Ford Boosts Engine Production as Buyers Demand Fuel Efficiency )

Another reason the Focus is taking off in China is because the automaker has doubled the number of dealers it has in China. Many of the dealerships have been added in the growing inner part of China where many people and families are just starting to buy their first car or sports utility vehicle (SUV).

“There`s a strong desire in those inland cities to be an owner of a vehicle despite what we might see as very bad traffic and those type of issues. There is still a very basic desire to own an automobile,” said Chao.

Long road to catch General Motors and Volkswagon

As impressive as Ford`s growth has been China, the blue oval is barely a blip in the rear view mirror of Volkswagen and General Motors . VW and GM dominate the Chinese auto market, where each of them sells more than three times as many vehicles as Ford.

(Read More: Volkswagen Revs Up to Overtake General Motors )

VW and GM lead China in large part because they started investing heavily in the country in the mid-to-late 90`s when the communist government opened the door for foreign automakers. As a result, when the populated eastern part of China started buying millions and cars and SUV`s, VW and GM were front and center in cities like Beijing and Shanghai.

By comparison, Ford was late to the game. While the company made small investments in China, in the late 90`s and early 2000`s Ford was primarily focused on growing sales and profits in the U.S.-where the popularity of the Explorer SUV and F-Series pick-up helped Ford`s U.S. market share surge well above 20 percent. Those heady days ended with the Explorer tire controversy and the steady drop in U.S. sales and profits.

Mulally`s China strategy

In 2006, when Alan Mulally was brought in to turnaround Ford, he knew job one was shoring up a money-losing U.S. operation. Job number two was making Ford a true competitor in China.

“I remember one of the first conversations I had with Bill [Ford] was what`s Ford`s plan to support customers all around the world,” noted Mulally. “I knew that was going to be a very important part of our growth plan going forward. He said we had a small operation in China, but he believed, like I did, that it was going to be a tremendous growth opportunity.”

Since then, Ford has pumped more than $2 Billion into China adding six plants and raising its capacity to 762,000 vehicles. China now generates 11 percent of Ford`s global sales

15 by `15

Ford China is now in the midst of its 15 X `15 campaign. An aggressive expansion that includes rolling out 15 new models by 2015. Chief Operating Officer Mark Fields is confident the campaign will pay off since it features the introduction of several SUV`s and crossover utility vehicle (CUV`s).

(Read More: Bye-Bye Minivans, Sales Slump While CUVs Surge )

“We are going to be in every segment of SUV`s in China,” said Fields. “When you look at the north and west in the interior of the country and you look at the infrastructure, maybe not as advanced as the coastal regions, we think our products will match up very well.”

(Read More: Ford Apologizes for Ads Showing Women in Bondage )

Few expect Ford sales to continue growing three times faster that the industry pace in China.

Still, with Ford expecting 40 percent of its global sales coming from China by 2020, it`s clear the Dearborn, Michigan automaker is primed for the day when China rivals, even passes the U.S., as Ford`s largest market in the world.

-By CNBC`s Phil LeBeau; Follow him on Twitter @LeBeauCarNews

Questions? Comments? BehindTheWheel@cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Europe’s austerity era could be coming to an end

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The tide is turning in Europe. Austerity, long seen as the most appropriate medicine for the continent`s debt-wracked economies, is fast losing favor, with increasing concessions being offered by Europe`s policymakers to countries over loan repayments and deficit reduction.

On Monday, Greece became the latest country to clinch a deal with the troika on a review of its austerity program.

(Read More: The Euro Zone Crisis Is Back-On Multiple Fronts )

“We have a deal,” Greek Finance Minister Yannis Stournaras told reporters in Athens, Reuters reported.

Meanwhile, Spain has requested more time from the EU to reduce its fiscal deficit in line with European rules.

A government source told Reuters last week that the country would now increase its 2013 deficit target to 6 percent of gross domestic product (GDP) and is negotiating with the European Commission for more time to cut its fiscal gap to 3 percent of GDP, currently targeted for 2014.

The request comes after European officials agreed last week to allow Ireland and Portugal seven more years to pay back their bailout loans.

(Read More: EU Offers Crisis-Hit Members Wiggle Room on Deficits )

Spain`s Finance Minister Luis de Guindos told CNBC over the weekend that fiscal consolidation and growth were not mutually exclusive, but that they had to be “compatible.”

“We have to try to make both elements compatible,” de Guindos said.

“This is something that has been started to be considered in all the European countries,” he added, denying that fiscal reduction and pro-growth policies were mutually exclusive.

“We have to reduce the fiscal deficit to put order in public finance that creates confidence in the country and simultaneously [ensure that] the fiscal reduction path is compatible with other measures in order to foster near-term growth,” he said.

Spain is expected to be asked to speed up its reform program in return for more time from the EU and the Spanish government will have to present its stability plan and reforms to the EU before the end of the month.

“The euro zone policymaking agenda of 2013 is not the one of 2011, or even of 2012 for that matter. Deficit sinners are being cut more fiscal slack; maturities of bail-out loans are being extended; and, most importantly, the crisis has spread to the core of the bloc, posing a challenge to the pro-austerity consensus,” Nick Spiro, head of Spiro Sovereign Strategy, said in a note.

“Euro zone policymakers have been steeling themselves for further setbacks. Their actions over the last several months show the extent to which the austerity-focused agenda has been undermined and is being watered down for fear of it collapsing entirely,” he added.

(Read More: Portugal Fires Warning Shot for Austerity in Europe )

“The euro zone remains stuck in a halfway house amid a standoff between a German-led group of states which refuse to share more risks and a French-led one wary of sharing more sovereignty,” he said.

German Austerity Pullback?

Peer Steinbrueck, a former German finance minister who heads the center-left Social Democratic party, kicked off his campaign for the German leadership by telling CNBC that, if elected, he would change the measure of austerity-policies imposed on Europe.

“[Austerity policies] won`t be replaced, [but] it is all about the dosage. At the moment, in countries like Greece, Portugal, we see a vicious cycle of excessive austerity, lower growth and higher unemployment. In some countries, you see youth unemployment of more than 50 percent, lower tax revenues, rating agencies come in and downgrade countries, and the vicious cycle starts again,” he told CNBC.

“It is very important that consolidation is enacted, but it needs to be a dosage that isn`t deadly, and it must be accompanied by economic impulses, measures against youth unemployment, tougher regulation of the banks, because in some countries, we are not dealing with a debt crisis but in Ireland, Cyprus or Spain, it is a banking crisis,” he added.

Growth Versus Austerity

The debate over growth versus austerity is set to take center stage as the financial leaders of the world`s 20 biggest economies (the G20) meet this week to discuss debt ceiling targets.

They will consider a proposal to cut their public debt over the longer term — to well below 90 percent of gross domestic product, Reuters reported over the weekend.

The EU, however, has a more ambitious debt ceiling of 60 percent of GDP for its 27 members, a target that currently looks ambitious considering the debt piles of most European economies.

-By CNBC`s Holly Ellyatt, follow her on Twitter @HollyEllyatt

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Gartman on gold: We’ve never seen anything like it

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Gold prices continued to plummet Monday on concern that Cyprus will have to sell excess reserves of the precious metal to raise about USD 522 million to help finance that country`s USD 13 billion international bailout, Dennis Gartman, editor of The Gartman Letter, told CNBC.

“There are a lot of people throwing up their hands. Throwing positions overboard. Panic is everywhere,” Gartman said in a “ Squawk Box ” interview on Monday. “I`ve never seen anything like this. I mean it.”

Gold prices broke below USD 1,400 Monday, their lowest level since March 2011. “Here we are under [USD 1,400],” Gartman observed. “Who would have thought it? Not I.”

“I think it would be unfair to force the Cypriots to sell [gold] and not to have others do exactly the same thing,” he argued. “I expect Spain and Portugal, Italy will also be rumored to do it, and that`s weighing on prices.”

(Read More: Here`s Why Gold Is Getting Crushed )

Gold mining shares around the world were battered, with shares of Australian-listed Kingsgate Consolidated, a gold producer and exploration company, and miner Beadell Resources plunging 15 percent, while Newcrest Mining, which operates gold and copper mines, tumbled more than 8 percent.

(Read More: Has China`s Economy Hit a `Dead End`? )

Gold producers in China and the UK also fell sharply. Shanghai-listed Zhongjin Gold fell 6.5 percent, while Zhaojin Mining tumbled more than 9 percent in Hong Kong. In the UK, Randgold Resources (London Stock Exchange: RRS-GB) fell 7.2 percent, while Lonmin (London Stock Exchange: LMI-GB) and Kazakmys (London Stock Exchange: KAZ-GB) were both down over 6 percent.

Analysts at Citigroup also sounded a bearish tone on Monday, pointing out in a note that the firm now had a “sell” rating on all UK silver and gold miners, except one.

“As you get closer to the cash cost production for gold, which is around USD 1,200 an ounce, people get nervous,” Jonathan Barratt, founder of Barratt`s Bulletin told CNBC.

But Barratt added that he believes this is a “significant overreaction” and offers a good entry point for investors. “For the amount of money that`s going into the system, you have to take a longer-term view that stimulus will support gold prices,” he said.

Gold miners have struggled to find favor with investors over the past year, due to their declining profitability in the face of rapidly escalating operational costs and poor performance of the precious metal.

(Read More: US, China Data Set Negative Tone for Oil Prices )

The precious metal has entered into bear market territory for the first time in 12 years. It is down about 25 percent from a peak hit in September 2011 at USD 1,920.

Reports last week that Cyprus was planning to sell some of its gold holdings have been the latest trigger for the sell-off in gold.

“Gold hasn`t done anything for anyone for a long time,” said Clay Carter, head of international equities at Perennial Investment Partners in Sydney. “If we were going to buy a gold producer it would have to be one that could really beat production.”

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Heat is on: All eyes on big bank earnings

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Markets end the week with a peek at the state of the consumer and a pair of earnings reports from banking majors JPMorgan (NYSE: JPM) and Wells Fargo (NYSE: WFC).

Retail sales for March are expected at 8:30 a.m. ET and are expected to show a drop of 0.1 percent, while PPI , producer prices data is expected to show a decline of 0.4 percent, also at 8:30. “I think we`re going to get a little cool down in retail and we`ll get cool down in PPI too with gasoline prices falling,” said Jonathan Basile, economist with Credit Suisse. “Gasoline giveth in February and takes away in March.”

“While they hurt February, they`ll help March and we`ll wind up with potentially better momentum for consumer spending,” he said. Gasoline prices at the pump were $3.56 nationally for unleaded Thursday, down from $3.57 Wednesday, and $3.70 a month ago, according to AAA.

Consumer sentiment is also reported Friday at 9:55 a.m., and is expected to rise slightly to 79, from 78.6 in March. Business inventories are released at 10 a.m. Fed Chairman Ben Bernanke speaks at 12:30 p.m. in Washington on the topic of creating resilient communities. Boston Fed President Eric Rosengren will be interviewed by CNBC`s Steve Liesman at 10:45 a.m.

Stocks are sharply higher so far on the week, with the Dow (Dow Jones Global Indexes: .DJI) up 2.1 percent at 14,865 and the SandP 500 (INDEX: .SPX) up 2.6 percent at 1593. Both indices are at record levels and are just a shot from the big round mile markers of Dow 15,000 and SandP 1600. The market saw liftoff in relatively quiet trading Thursday, with the Dow up 62 and the SandP up five. But the Nasdaq (NASDAQ: .NDX-O) was up just slightly, held back by big declines in Microsoft (NASDAQ: MSFT) and other techs, after fresh data from IDC showed the worst ever, 14 percent quarterly decline in PC shipments in the first quarter.

“It`s kind of a rerun of yesterday,” said Art Cashin, director of floor operations at UBS. He said the big banks should be the important drivers for stocks Friday morning.

J.P. Morgan is expected to earn $1.40 per share on revenues of $25.7 billion, and Wells Fargo is expected to report earnings of $0.89 per share on revenue of $21.6 billion.

Cashin said the market keeps rising with no sense of frenzy, which would be evident in a short-covering rally or if anxious investors were rushing in for fear of missing the market`s gains.

“This kind of buying hints at buying that`s not motivated by performance,” said Cashin. “I think it`s that `I want to put my money where it`s safe.`” Cashin said that means it`s likely there are foreign buyers helping to drive U.S. stocks higher, and money may be leaving Europe because of Cyprus and Japan, because of the weakening currency.

Vassili Serebriakov, BNP currency strategist, said the markets are on alert, watching for fund flows from Japan. The weakening yen nearly touched a level of 100 to the dollar Thursday, as it continues to weaken on a new massive easing program by the Bank of Japan . Dollar/yen (Exchange: JPY=) was at 99.68 late in the New York day.

“We`re looking to see the footprints of Japanese investors in various markets,” he said.

Eurogroup ministers meet Friday in Dublin and are expected to discuss Portugal and Ireland and whether to give the two countries more time to pay their loans.

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Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

What to do in market where no news is bad news

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Investors who thought they might find some correction fodder off the latest Federal Reserve deliberations got just the opposite Wednesday from a market that seems unwilling to process bad news.

Minutes from the March Fed Open Markets Committee meeting showed some of the strongest dissent yet over the central bank’s money-creation machine. The central bank is using the fresh funds to buy USD 85 billion in Treasurys and mortgage-backed securities , despite concerns over future repercussions.

But while members contemplated a future exit, investors instead figured the poor batch of economic data released since the last meeting would change dissenters’ minds and keep the market rolling past its record highs.

Consequently, the 2013 rally just kept on churning, leaving questions over whether squeamish investors ought to head for the sidelines or finally join in the party.

(Read More: Some Fed Members Fear Monetary Policy Effects )

“The market right now is in default mode, which is to go up,” said John Canally, investment strategist and economist at LPL Financial. “We`ve been in the opposite situation in 2008 and 2009 where all news was bad news. In this market, pretty much any news is good news.”

In many eyes, the stock market runup-which has seen the Standard and Poor`s 500 and Dow Jones Industrial Average gain more than 10 percent apiece and reach new all-time highs-is tired and in need of a pullback before climbing higher.

But actual calls for playing defense are getting scarcer as the bull market appears to know no barriers, whether it be poor economic news like Friday`s jobs report, the potentially contagious debt crisis in Europe, or any of the other threats that have pulled the market down in the past.

(Read More: Stocks Surge on Fed`s Promise to Battle Weak Economy )

“There definitely are reasons to play defense,” said Richard Ross, global technical strategist at Auerbach Grayson. “That being said, is there a reason to stand in front of a freight train? Not necessarily.”

Ross thinks investors should be “trimming rather than building positions” ahead of a seasonally difficult time for the market with a strong “Sell in May and go away” trade setting up. But he hedges that it`s “not a world-coming-to-an-end” call.

That advice, though seemingly contradictory, is heard a lot these days from strategists worried about a rally that seems overextended in a stock market that looks overbought when compared to longer-term averages.

Asked whether investors ought to just ride the market wave, Michael Cohn, chief investment strategist at Atlantis Asset Management, said, “For the time being, absolutely.”

“It`s going to get into a trajectory that`s unsustainable,” he said. “It`s already a little bit ahead of itself. You`ve got to assume that it`s going to get a lot ahead of itself.”

For his strategy, Cohn said he is “just accumulating puts,” meaning he is buying options that give him the ability to sell stocks that hit a certain level. He`s focusing on cheaply priced out-of-the-money puts that cost him little but will pay off during a market pullback.

CNBC Explains Put Options

“The end of the tunnel is starting to get near, as in eight months from now,” he said in reference to the end of the year, when the Fed has indicated it may start tapering its monthly asset purchases.

Frank Fantozzi, CEO of Planned Financial Services, said he has been moving money around from equities and Treasurys and putting it into popular high-yield- junk-corporate bonds as well as real estate. He expects a 5 percent market pullback that will give risk-averse investors opportunities to make more changes.

“People want to take some of the speed bumps out of their portfolios,” Fantozzi said. “They`ve got to make some tactical changes.”

(Read More: Looking for a Pullback Play? Try Going Global )

Even during such an aggressive run-up, it`s been the defensive stocks that have been much more popular.

On the SandP 500, the best-performing sectors have been health care (up 16.7 percent) and consumer staples (up 14.7 percent), while the cyclical areas of materials (3.1 percent higher) and information technology (up 2.8 percent) have lagged.

The trade, then, has been to be in the market to stay as close to the safety rail as possible.

Cohn advises investors to watch materials stocks, because the rally “will end when those stocks rally.”

In the meantime, the market faces not only declining economic indicators but also an earnings season in which negative pre-announcements have outnumbered positive by more than 4 to 1.

“The correction call has clearly become consensus, and that works against you at some point in time” said Art Hogan, managing partner at Lazard Capital Markets. “The soft patch in the economic data is such that the correction can happen here. It would be healthy, it`s just not on us yet.”

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Yen headed for another 10% drop: Daryl Guppy

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The dollar-yen, which is trading at multi-year highs has spent several weeks consolidating near the 95 level. The breakout above 95 has an upside target near 102. Speaking on CNBC`s “Asia Squawk Box” on December 21 as the dollar-yen moved above 84 we set the upside resistance target near 95.

In notes at the end of February we set the upside target near 102. The resistance behavior near 95 is significant because in the future this provides a floor for any market retreat. The rise of the yen is dragging the Nikkei index after it. Watching the dollar-yen gives early warning of Nikkei behavior.

This rapid rise from 79 to 95 had the short traders twitching their trigger fingers. They ended up shooting themselves in the foot. The rise was very rapid, but it was not unexpected from the technical chart perspective.

The dollar-yen breakout above 79 in October 2012 was part of a long term fan reversal pattern. This pattern started with the peak price of 110 in August 2008. We have spent five years with the yen well below parity, but this is not the usual condition for the yen. A return to parity or above is the long term position of the yen from 1996 to 2008.

Resistance near 95 is well established. It acted as a support level in March and August 2009. It acted as a resistance level in April 2010. This has been a major feature of the market post-Global Financial Crisis. Now that this has been broken this suggests it will become a strong support level in 2013. When it was acting as a resistance level it meant the dollar-yen took several weeks of consolidation near this resistance prior to developing a breakout.

The current breakout has two upside targets. The first target is near 101. This was a major support level in December 1999 and again in November 2004. However, it offered no support in April 2008. This suggests that it will offer limited resistance for a breakout above 95.

The most powerful support-resistance level is near 102. This acted as support in June 1997, January 1999 and again in September 2005. It acted as a resistance level in January 2004 and June 2008. It was the peak high used for the start of the long term fan trend reversal pattern in August 2008.

Parity is a strong probability, but it`s only part of the story. When we step back and look at a monthly chart we see two features. First, as noted, is that the yen has spent a long time historically above parity. Second is that any breakout above 102 has an upside target near 111. It`s a long stretch to set this as a target, but any sustained breakout above 102 has 111 as the next target. This acted as resistance in 1994, 2000 and 2004. It acted as support in 1997, 1998 and 2006.

Daryl Guppy is a trader and author of Trend Trading, The 36 Strategies of the Chinese for Financial Traders –www.guppytraders.com. He is a regular guest on CNBC Asia Squawk Box. He is a speaker at trading conferences in China, Asia, Australia and Europe.

If you would like Daryl to chart a specific stock, commodity or currency, please write to us at ChartingAsia@cnbc.com. We welcome all questions, comments and requests.

NBC assumes no responsibility for any losses, damages or liability whatsoever suffered or incurred by any person, resulting from or attributable to the use of the information published on this site. User is using this information at his/her sole risk.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Stock crash likely if rally continues: Marc Faber

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

In the near-term, the US stock market is overbought and adding that any more near-term gains portend big trouble for the market, “The Gloom, Boom and Doom Report” publisher Marc Faber told CNBC on Monday.

“If we continue to move up, the probability of a crash becomes higher,” Faber predicted in a “ Squawk Box ” interview, saying it could happen “sometime in the second half of this year.”

By his calculations, Faber said the bull market began four years ago with important stocks recently “breaking down,” such as Oracle and FedEx “Can we go up just on a few stocks like Johnson and Johnson, Procter and Gamble, Wal-Mart, and so forth?” he asked and answered: “Possibly.”

“We could on the SandP make a new high,” he acknowledged, “but with very few stocks making new highs.”

“It`s not a very good time to buy stocks,” Faber warned, arguing that stocks are not at the beginning of a bull market as many analysts have predicted on “Squawk Box” over the past few weeks.

Meanwhile, Faber said he`s worried about the possibility of another financial crisis, which he thinks, could be worse than the one that crushed world markets in 2008. “The next crisis could lead to a deflationary bust. And a bust in governments. In other words, we may have a total collapse in confidence in the system.”

He`s also concerned about the growing international tensions caused by the threats coming out of North Korea. “Don`t think the North Koreans are acting alone,” he said. China is in cahoots with the North, he said, despite Beijing`s tough talk against Pyongyang over the weekend.

China`s foreign minister said it would not allow “trouble making” on its doorstep, while Chinese President Xi Jinping appeared to rebuke North Korea during a speech, in which he said no country should be allowed to cause chaos “for selfish gain.”

Faber noted, “In general, [North Korea] is a country that can hardly produce bicycles. They have practically no industries. How can they have nuclear technology? How can they supply weapons to Iran?” He claimed that “China is using the North Koreans” to do their dirty work.

–By CNBC`s Matthew J. Belvedere ; Follow him on Twitter @Matt_SquawkCNBC . Reuters also contributed to this report.

Copyright 2011 cnbc.com

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow