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July 1, 2013

Key Market Trends, July 1, 2013



Federal Reserve officials intensified efforts to curb a growth-threatening rise in long-term interest rates, seeking to clarify comments by Chairman Ben S. Bernanke that triggered turmoil in global financial markets.

William C. Dudley, president of the Federal Reserve Bank of New York, said yesterday any decision to reduce the pace of asset purchases wouldn’t represent a withdrawal of stimulus, and that an increase in the Fed’s benchmark interest rate is “very likely to be a long way off.” He said bond purchases could be prolonged if economic performance fails to meet the Fed’s forecasts.


Along with exposing widespread international surveillance, Edward Snowden has revealed how exactly the US is financing its military ambitions, according to Max Keiser.

RT: Surely not even you can make any kind of link between the Snowden saga and the US economy?

Max Keiser: The American economy runs on the confidence, confidence that the world accepts the US dollar as world reserve currency, confidence that the US bond market will remain the standard. And what we are seeing is a sell-off in a bond market and a sell-off in the stock market, because confidence in the US and its ability to maintain a global empire through interest rates and the Central Bank policy is crumbling before the world’s very eyes.


The United States will lose access to a vital military logistics hub in Central Asia in 2014 following the Kyrgyz president's decision Wednesday to cancel a lease agreement for a military base.

President Almazbek Atambayev signed a law Wednesday that repudiates a 2009 lease agreement, with effect from July 2014, the president's website said in a statement.


Derivatives are not always “financial weapons of mass destruction,” as Warren Buffett famously called them.

But they are often weapons of mass deception.

For some derivatives, a desire for deception is the only reason they exist. That deception can allow those who own derivatives to evade taxes or accounting rules. It can allow activity that might otherwise be illegal, were it not called a derivative, or that would face regulation if it were labeled what it truly is.


Signal sends shockwaves through markets across Asia and Europe

The Federal Reserve's recent signal that it would withdraw stimulus efforts — otherwise known as quantitative easing round 3 — has rattled markets in Asia and Europe, and has drawn attention from leaders in emerging economies to forge a possible "safety net" to weather the uncertainty in global financial markets.


The federal agency that regulates credit unions announced Friday that it found the Ochsner Clinic Federal Credit Union to be insolvent without any chance of recovery. It liquidated the New Orleans-based credit union and transferred its members, deposits and loans to ASI Federal Credit Union of Harahan.

The National Credit Union Administration said the Ochsner credit union, which primarily served medical professionals, was owned and operated separately from Ochsner Health System, started in 1973 and had 3,099 members and about $9.25 million in assets.

HIGH RIVER, Alta. — The RCMP revealed Thursday that officers had seized a “substantial” number of firearms from homes in the evacuated town of High River, about 37 kilometres south Calgary.

“We just want to make sure that all of those things are in a spot that we control, simply because of what they are,” said Sgt. Brian Topham. “People have a significant amount of money invested in firearms … so we put them in a place that we control and that they’re safe.”


China is becoming increasingly powerful as a supplier of raw materials including iron ore, aluminum, nickel and coal as it boosts output from local mines and smelters, according to Standard Chartered Plc.

Gold and copper are among the raw materials that are least vulnerable to China’s growing capacity, the bank said in a report dated June 21. Other commodities cited as insulated from the trend were platinum and diamonds, while tin was reported to be somewhat resilient.


RALEIGH, N.C. — With changes to its unemployment law taking effect this weekend, North Carolina not only is cutting benefits for those who file new claims, it will become the first state disqualified from a federal compensation program for the long-term jobless.

State officials adopted the package of benefit cuts and increased taxes for businesses in February, a plan designed to accelerate repayment of a $2.5 billion federal debt. Like many states, North Carolina had racked up the debt by borrowing from Washington after its unemployment fund was drained by jobless benefits during the Great Recession.


UK's government has announced budget cuts affecting welfare claimants, teachers, nurses and policemen. But one show of generosity was an increase in funding for the intelligence services. RT contributor Afshin Rattansi gives his analysis on this.


LONDON (Commodity Online): China may be importing 2000 tons of gold by the time it is 2016 which would roughly be equal to 80% of the total global gold mine supply, said Standard Chartered in a report cited by Bloomberg News, noting that such a feat is not something 'inconceivable'.

“Although it is the world’s largest producer of gold, 40 percent of its production uses imported gold in concentrates,” Standard Chartered noted.


NAIROBI — One of the goals of U.S. President Barack Obama’s upcoming tour of Africa is to promote U.S. business interests across a continent now dominated by China. The competition between the economic giants is playing out in Tanzania, the last stop on Obama’s tour.

While in Tanzania’s economic hub, Dar es Salaam, the president is due to meet Monday with American and African business leaders to find ways to get U.S. companies a foothold in African markets.


The stock exchange is going to start trading gold and silver by the end of this year, and platinum and palladium in 2014. Trading physical metals is expected to boost liquidity in the market and attract more participants.

Russia has so far only been trading futures on gold and silver, not dealing with real metals.


BRUSSELS--Including the European Stability Mechanism bailout fund in the plans for rescuing banks creates "solidity and solidarity" for the bloc, France's finance minister Pierre Moscovici said in the early hours of Thursday morning, after EU finance ministers reconvened following inconclusive talks in Luxembourg last week.

"Some countries didn't think on Friday the ESM should be included, we thought it should, be, it is--and it makes the whole thing coherent," he told reporters after the meeting. "It didn't seem coherent to me to put in place on the one side a direct mechanism for recapitalization through the ESM, and on the other side, to exclude the ESM from the flexibility."


The new guidelines have the aim of ensuring that taxpayers are no longer the first in line to take on the burden of banking failures following a European sovereign debt crisis driven by multi-trillion government bailouts and guarantees for the financial sector since 2008.

Jeroen Dijsselbloem, the chairman of the Eurogroup of finance ministers, hailed the agreement as a major step towards a “banking union” and away from state funded aid to recapitalise or bailout troubled banks across Europe.


The 2008 shock was certainly violent, but the reactions of the system, countries and central banks with their bailouts on an unprecedented scale, managed to hide the worst consequences: downgrading of the West in general and the United States in particular, a forced cleanup of the economy, a heavy fall from an artificial standard of living, mass unemployment, the beginning of social unrest… have been able to be partly neglected in favour of recovery hopes kept alive by irresponsible policies diverting liquidity to the banking systems and stock exchanges. Sadly, whilst the world drugged itself, global issues weren’t addressed… five lost years: the building is even less strong than before the crisis; the US “solution” orchestrated by the Fed, that everyone else left it to manage to take the time to dress their own wounds, has been to put out with gasoline the fire which they themselves lit. It’s not surprising then that it is still the US, pillar of the world before, refusing to fall in line, with their faithful Japanese and British floats, which is once again igniting the world situation. And this time, we shouldn’t rely on bankrupt countries to save the situation: they are on their knees following the first shock in 2008. Therefore, it’s actually a second world crisis which is looming, once again caused by the United States. Ultimately this five-year period will have been nothing other than taking a step back to enter into an even bigger crisis, which we have called “the crisis squared”.


Russia has evacuated the last of its personnel from Syria, including from its Mediterranean naval base in Tartus, in a move that appears to underline Moscow's mounting concerns about the escalating crisis.

Russian media reported on Wednesday that they had confirmed the evacuation with officials in the country's military and foreign ministry. But there was no official confirmation of a claim from rebel Free Syrian Army sources that a Russian plane had been shot down and its pilot captured in the western Aleppo area.


THE GOLD REPORT - The gold price may have taken a tumble, but Ian Gordon, chairman and founder of the Longwave Group in British Columbia, is watching for a recovery. As bullishness in gold reaches some of its lowest levels, Gordon, in this interview with The Gold Report says he believes that is indicative of a turn.

The Gold Report: On April 15, the gold price plunged about 9%—the biggest one-day loss ever for the yellow metal. Many gold investors got "murdered" that day. Has your personal investigation revealed any suspects?


Bond yields have surged over the past several weeks as the U.S. Treasury market has priced in a tapering of the pace of Federal Reserve bond purchases later this year based on expectations for an improving economy – and maybe even a full halt to quantitative easing in a year’s time, as Fed Chairman Ben Bernanke outlined during last week’s FOMC press conference.

That prompts notedly bearish Société Générale strategist Albert Edwards to pose the question in his latest market commentary: “Is the Ice Age over?”

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Item Reviewed: Key Market Trends, July 1, 2013 Rating: 5 Reviewed By: Econ Matters