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Posts Tagged ‘inflation’

The U.S. Federal Reserve Building is pictured in Washington, March 18, 2008.

Credit: Reuters/Jason Reed/Files

NEW YORK | Thu Jan 26, 2012 6:19am IST

NEW YORK (Reuters) – Federal Reserve Chairman Ben Bernanke lent support on Wednesday to expectations at most leading Wall Street firms that the U.S. central bank will provide new stimulus for the economy in the first half of this year, a Reuters poll showed.

Economists at 12 of 18 primary dealers, the large financial institutions that do business directly with the Fed, said the central bank would do further quantitative easing. the poll was conducted after Bernanke’s news conference.

Bernanke told a news conference after the Fed’s two-day policy meeting that additional purchases of securities is an option if the recovery falters or inflation does not move toward the new target of 2 percent the central bank set.

Eight of the dealers forecast the Fed would undertake a new stimulus program in the first half of 2012, while the remainder of those looking for more stimulus said it would happen later in 2012.

“It is an old call, but we feel much better about it after today’s Federal Open Market Committee meeting,” said Aneta Markowska, economist at Societe Generale in new York. Societe Generale forecasts the Fed will announce a $600 billion program in March.

The Fed has already done two rounds of asset purchases — known as quantitative easing or QE1 and QE2 — under which it has bought $2.3 trillion of mortgage-backed securities and Treasury debt. Lingering economic weakness has fueled expectations of more such stimulus.

The median forecast from 10 dealers pointed to a program of $600 billion of purchases of Treasuries or mortgage-backed securities.

The Fed’s current $400 billion stimulus program, dubbed “Operation Twist,” extends the maturity of the central bank’s Treasury debt holdings in an effort to bring down longer-term rates like those on mortgages. Operation Twist is scheduled to last through June.

In its post-meeting statement on Wednesday, the Fed said it did not expect to raise rates from the current ultra-low level near zero until at least late 2014 in an effort to support a sluggish economic recovery.

Bernanke indicated that the securities purchases so far had had the desired effects.

“In Bernanke’s press conference he seemed to take whatever opportunity he could to emphasize that if the progress toward lower unemployment is too slow and if inflation remains benign, the Fed will be looking for more opportunities to be accommodative or to extend its balance sheet,” said Dana Saporta, economist with Credit Suisse in new York.

Credit Suisse expects the Fed to announce a securities purchase program of about $600 billion in the first half of 2012.

Most economists at primary dealers had already been calling for further Fed stimulus, with 12 of 17 dealers saying the central bank will undertake further quantitative easing in a poll conducted late last week.

The median of forecasts for the size of the program was also $600 billion in the earlier poll, and eight dealers also forecast such a program would be announced in the first half of this year.

There are 21 primary dealers, of which 18 answered the poll on Wednesday.

announce a How large

further round will the

of quantitative program be?

COMPANY easing? when?

BAML yes (Yes) Sept 2012 (Sept 2012) 800 (800)

BMO Capital Possibly (Yes) NA (Q2 2012) NA (400)

Bank of NS yes (Yes) Mid 2012 (Mid 2012) 500 (500)

Barclays No (No) No (No) No (No)

BNP yes (Yes) April (April 2012) 400 (400)

Cantor yes (Yes) April (June 2012) 750 (750)

Citigroup No (No) No (No) No (No)

CSuisse yes (Yes) H1 2012 (2012) 600 (600)

Daiwa No (No) No (No) No (No)

Deutsche No (No) No (No) No (No)

Goldman yes (Yes) Mid 2012 (H1 2012) NA (NA)

HSBC yes (Yes) June (June) NA (NA)

Jefferies yes (Yes) Q2 (Q2 2012) 750 (750)

JP Morgan No (No) No (No) No (No)

Mizuho yes (Yes) Q2 (March) NA (800)

M Stanley NA (NA) NA (NA) NA (NA)

Nomura yes (Yes) Q2 (Q2) 475 (475)

RBC Possibly NA (NA) 500 (500)

RBS yes (NA) Mid 2012 (NA) 600 (NA)

Soc Gen yes (Yes) March (March) 600 (600)

UBS NA (NA) NA (NA) NA (NA)

(Additional reporting by Pam Niimi; Editing by Andrew Hay)

<a href="http://in.reuters.com/article/2012/01/26/usa-fed-poll-idINDEE80P00L20120126?type=economicNewstag:news.google.com,2005:cluster=http://in.reuters.com/article/2012/01/26/usa-fed-poll-idINDEE80P00L20120126?type=economicNewsThu, 26 Jan 2012 00:53:37 GMT”>POLL: Bernanke keeps Wall St stimulus expectations intact

NEW YORK (Reuters) – Stocks were poised for a lower open on Friday after a massive earthquake hit Japan and accelerating inflation in China unnerved investors.

The biggest earthquake on record to struck Japan on Friday, triggering a roughly 30-foot tsunami that swept away everything in its path, including houses, ships and cars.

Chinese inflation topped expectations in February at 4.9 percent and looked set to climb further in coming months, adding to pressure for another dose of monetary tightening.

Japanese stock futures fell 2.4 percent after the earthquake, but market players said the slide may not be too deep because major cities and manufacturing facilities were not affected. (.T)

"Basically what has been happening here is earnings season is over in the U.S. and the focus goes from earnings to headlines," said Cort Gwon, chief strategist at HudsonView Capital Management in New York.

"you have huge global macro events happening and everybody is focused on these events. you have had almost this perfect storm over the past two days."

Oil prices fell in response to the earthquake, with Brent crude futures down 2.2 percent to near $113, and U.S. crude off 3.1 percent to nearly $100 as the earthquake shut down dozens of plants in the world's third-largest oil consumer.

S&P 500 futures lost 3.4 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 25 points, and Nasdaq 100 futures dropped 4.5 points.

Investors watched the Middle East and North Africa as police flooded the streets of the Saudi capital looking to deter a planned day of demonstrations and small protests were reported in the east.

The Commerce Department said total retail sales rose 1.0 percent, in line with expectations, the largest gain since October and the eighth straight monthly advance.

Insurer Aflac inc (AFL.N) fell 2.2 percent to $54.50 in premarket and Berkshire Hathaway inc (BRKb.N) lost 1.4 percent to $83.91.

Apple inc (AAPL.O) kicks off sales of its latest iPad model Friday and analysts expect the company to extend its lead in the burgeoning tablet computer market.

(Reporting by Chuck Mikolajczak; editing by Jeffrey Benkoe)

Wall Street set for lower open after Japan quake

Press Release Source: National Inflation Association on Tuesday November 16, 2010, 9:00 am EST

FORT LEE, N.J., Nov. 16, 2010 /PRNewswire/ — the National Inflation Association – http://inflation.us – today issued the following warning to all American citizens:

The National Commission on Fiscal Responsibility and Reform released last week their ‘CoChairs’ Proposal’ on how the U.S. can achieve $100.2 billion in domestic savings and $100.1 billion in defense savings in fiscal year 2015, for total discretionary spending savings of $200.3 billion. Combined with other steps designed to boost tax revenues, the commission’s plan, if implemented, is expected to reduce the projected 2015 U.S. budget deficit by $400 billion to $372 billion. NIA believes it is very unlikely that our representatives in Washington will have the political backbone and courage to implement any of the commission’s proposed spending cuts. the truth is, the U.S. is on a path towards exploding budget deficits in the years ahead, that could cause an outbreak of hyperinflation by the end of calendar year 2015.

Many people are asking us when exactly we expect our food price projections to be reached. we can pretty much guarantee you that all of our food price projections will be seen this decade. there is a very good chance of our projections being reached by the end of calendar year 2015 and a slight chance that they will be reached as soon as the 2012 elections. NIA’s food price projections are very conservative. They are based on the current purchasing power of the U.S. dollar and do not factor in the likelihood of an outbreak of hyperinflation.

NIA believes that if the U.S. stays on its current path, we are guaranteed to see hyperinflation this decade. the only way it will be possible to prevent hyperinflation is if the U.S. government dramatically cuts spending across the board immediately and if the Federal Reserve raises interest rates from near zero percent (where they have been for nearly two years) to a level that is higher than the real rate of price inflation. considering that the Federal Reserve still claims to fear deflation and just announced massive quantitative easing, we see very little chance of any major interest rate hikes taking place during the next six months.

Although the commission’s proposal includes many large spending cuts including freezing federal salaries for three years (saving $15.1 billion), cutting the federal workforce by 10% (saving $13.2 billion), and eliminating 250,000 non-defense service and staff augmentee contractors (saving $18.4 billion); even if their proposal was implemented it would be too little too late. the commission’s proposal calls for its cuts to be gradually implemented beginning in early 2012 and it includes absolutely no meaningful cuts to social security. the only proposed major changes to social security are raising the retirement age to 68 in year 2050 and 69 in year 2075. there is absolutely no chance of the U.S. dollar surviving past the year 2020 unless much more drastic spending cuts than the commission has proposed are implemented within the next twelve months.

The commission says that if we fail to implement their proposed spending cuts, we will likely see interest payments on our national debt reach $1 trillion by 2020. the reality is, NIA believes interest payments on our national debt are likely to reach $1 trillion in 2015. it is currently projected that our interest payments in 2015 will be $586 billion. However, this number is based on a projected 4.1% interest rate on our 91-day treasury bills and 5.3% interest rate on our 10-year treasury bills.

The yield on 10-year U.S. treasuries has risen in recent weeks by 41 basis points to 2.94%, up from 2.53% on November 4th. NIA believes it is likely the 10-year yield will rise back above 4% in the first half of 2011. by 2015, we expect the 10-year yield to be substantially higher than 5.3%. During the 1970s, the last time we had an inflationary crisis like the one we are rapidly approaching, yields on the 10-year bond exploded. When each of the agricultural commodities in our food inflation report reached their real all time highs in the 1970s, the average 10-year bond yield at the time of their highs was 7.47%. With the Federal Reserve likely to be forced to raise the Fed Funds Rate to around this same level, based on our projected public debt in 2015 of $14 trillion, our interest payments will likely rise to $1.046 trillion or 29% of projected tax receipts, and this is a very conservative estimate.

The Federal Reserve’s monetary base currently stands at $1.9851 trillion and is projected to rise to $2.5851 trillion by mid-2011 due to the Fed’s upcoming $600 billion in quantitative easing. the U.S. M2 money supply rose over the past week by $22.4 billion to $8.7862 trillion. this represents a $1.1648 trillion annualized increase, which would equal 13.25% monetary inflation over the next year. the M2 multiplier, or M2 divided by the monetary base, currently stands at 4.426, compared to a long-term average of 10. Based on a projected monetary base of $2.5851 trillion and a long-term average M2 multiplier of 10, the M2 money supply has a chance of rising as much as 194% to $25.851 trillion over the next few years.

In the short-term, if the M2 multiplier remains at 4.426, it is likely the M2 money supply could rise to $11.4416 trillion next year, up 30.22% from its current level. With the UBS Bloomberg CMCI Food Index currently up 30.5% from its low in August, it appears as though the market has already factored the upcoming 30.22% increase in the M2 money supply into agricultural commodity prices. Even if food manufacturing companies and retailers agree to accept 2/3 of these rising costs in the form of lower profit margins, Americans will still see about a 10% rise in retail food prices come early 2011.

The upcoming food inflation crisis and eventual hyperinflation will come as a direct result of our representatives in Washington trying to prevent a much needed recession by propping up Real Estate prices through bailouts, stimulus plans, tax rebates, and other wasteful programs. the only thing that our elected representatives care about is remaining in power. They only see our current problems and not the problems that will arrive next as a result of their actions. their goal is to make the average American as dependent on them as possible through massive price inflation, so that the average American is forced to rely on entitlement programs just to survive.

It is important to spread the word about NIA to as many people as possible, as quickly as possible, if you want America to survive hyperinflation. Please tell everybody you know to become members of NIA for free immediately at: http://inflation.us

The National Inflation Association is an organization that is dedicated to preparing Americans for hyperinflation. the NIA offers free membership at http://www.inflation.us and provides its members with articles about the economy and inflation, news stories, important charts not shown by the mainstream media; YouTube videos featuring Jim Rogers, Marc Faber, Ron Paul, Peter Schiff, and others; and profiles of gold, silver, and agriculture companies that we believe could prosper in an inflationary environment.

Contact: Gerard Adams, 1-888-99-NIA US (1888-996-4287), editor@inflation.us

Hyperinflation is Guaranteed if U.S. Stays on Current Path, says NIA

There is no period of time in world history where house prices haven't increased significantly during a period of hyper-inflation.

If hyper-inflation is coming as predicted by the experts (because of massive money printing by Obama and Bernanke), isn't real estate a pretty GOOD investment at this point?

You'll need the money for food.

not when home prices are expected to drop at least another 10%.

If Schiff/Celente/Jim Rogers-style hyperinflation is coming, then why not invest in real estate?

‘Everyone should be raising interest rates, they are too low worldwide,’ Rogers said in a phone interview with Bloomberg News. — PHOTO: BLOOMBERG NEWS

SINGAPORE – CHINA and other global economies should increase interest rates to contain a surge in inflation, said investor Jim Rogers, chairman of Rogers Holdings.

‘Everyone should be raising interest rates, they are too low worldwide,’ Rogers said in a phone interview with Bloomberg News.

‘If the world economy gets better, that’s good for commodities demand. if the world economy does not get better, stocks are going to lose a lot as governments will print more money.’

China’s central bank hasn’t increased rates since November 2007. In the US, the Federal Reserve this month left the overnight interbank lending rate target in a range of zero to 0.25 per cent, where it’s been since December 2008, while the European Central Bank has kept its key interest rate at a record low of 1 per cent.

Policy makers in Malaysia, South Korea, Taiwan and Thailand have increased the cost of borrowing at least once this year, while India has boosted rates four times in five months.

The global economy is at the risk of prolonging a recession after reports over the past two days showed US home sales plunged by a record and Japan’s export growth slowed for a fifth month in July, he said.

The Straits Times

Jim Rogers (former Quantum Fund manager)Predicts Bigger Financial Shocks Loom…do a google search on the name.

The worst of the global financial crisis is yet to come and a large U.S. bank will fail in the next few months as the world's biggest economy hits further troubles, former IMF chief economist Kenneth Rogoff

Wholesale inflation surged in July- fastest pace in 27 years http://www.msnbc.msn.com/id/26286459

indeed, the U.S. financial debacle is now so ingrained – and a so-called “Super Crash” so likely – that most Americans alive today won’t be around by the time the last of this credit-market mess is finally cleared away – if it ever is, Rogers said.

The end of this crisis “is a long way away,” Rogers said. “In fact, it may not be in our lifetimes.”

As a person who survived under the Carter Administration let me assure you that our national economy is in no uncertain terms as bad as the late 1970's or early 1980's. Even then, most people survived.

So, you can stop the Al Gore chicken little panic.

Geez, Democrats are shut wimps!

The average American probably feels as if the sky is falling because the average American does not financially prepare for lean times. Maybe, when the current slump is over, people will learn to not live beyond their means and manage money more wisely. Turning to the government ( which doesn't live within its means, either ) to bail out those that lack financial responsibility is not the answer. ask someone who has been wise with their finances over the years if they are suffering right now? The answer is no.

Does the average American know what is happening with the financial crisis we face?

In late 2009 the price of gold zoomed past $1,200 an ounce. This was a new record for the yellow metal as investors across the world sought protection from turmoil in financial markets and solace against worries about the inflation. for some investors, this was an expected outcome. Jim Rogers, a legendary fund manager, has made huge bets on gold in recent years based on his belief that the US dollar is overvalued and that the dollar and gold will show an inverse correlation to one another. In other words, he believe that as the dollar weakens, gold must inevitably rise.

Yet that inverse correlation may not be as predictive as mr Rogers and others investing in gold hope. for gold is often viewed as simply another currency. since gold is traded and priced in dollars, it must inevitably rise if the dollar weakens. Yet the same effect could be obtained by holding another currency such as the euro or Japanese yen.

And the difficulty with holding gold as an investment is that the price of the metal has a strong influence on jewellery demand, which accounts for some two-thirds of gold demand. last year some $61 billion was spent on gold jewellery, according to the World Gold Council. In contrast investment accounted for just $32 billion of demand for gold. for investors who are holding gold as a hedge against inflation, the worry is that a rising price is unsustainable if it halts gold jewellery buying and leads to an oversupply of the metal. for now gold has served investors well, but at current high prices they should think carefully before investing in gold or buying gold ETFs.

Jon Rose is the pen name of a financial journalist who has covered business and financial markets for 15 years and has an interest in personalfinance. You can read other articles he has written about buying gold ETFs and investing.

CoolArticles.org Real Estate Cool Articles

This entry was posted on Tuesday, July 6th, 2010 at 3:36 pm and is filed under investing in gold. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Investing in Gold ETFs May Not Make a Portfolio More Robust

GOLD PRICE NEWS The gold price fell $16.20 to $1,216.26 Thursday as the spot price of gold finished lower for the third consecutive session. The SPDR Gold Trust (GLD), which acts as a proxy for the gold price, closed down by $1.59, or 1.3%, at $118.98 per share. in spite of todays weakness, the gold price remains modestly higher for the month, by $2.12, but turned negative by $2.09 on the week.

Gold stocks did not follow the gold price lower, with shares of most gold miners rising alongside the broader market. Notable advancers in the gold stocks sector included Agnico-Eagle Mines (AEM), Freeport McMoRan Copper & Gold (FCX), and Gammon Gold (GRS). Shares of AEM, FCX, and GRS posted gains of 1.9%, 5.9%, and 3.4%, respectively.

Weakness in the gold price came as the euro rallied against the U.S. dollar for the third straight day, rising 1.0% to 1.2116 as U.S. equity markets closed. The euro climbed after European Central Bank (ECB) President Jean-Claude Trichet said the European Unions central bank will continue its bond purchase program, a component of the $1 trillion rescue plan announced last month at the height of the Greek debt crisis. Trichet made the remarks during his monthly post-ECB meeting news conference, but declined to provide details on the scope or duration of the purchase program.

The rescue announcement in mid-May fueled concerns of inflation among investors and sent the euro to a four-year low against the dollar. ECB officials have subsequently made great efforts to note that the bond purchases are sterilized i.e., they are offset by other asset sales and result in no increase in liquidity. however, investors have remained skeptical of such assurances, and have fled the euro for the safety of assets tied to the price of gold.

Commenting on the European sovereign debt crisis at a conference in Vienna, Austria, legendary investor George Soros sounded quite skeptical of the measures taken by European policymakers. Soros, who is perhaps best known for founding the Quantum Fund with Jim Rogers in the 1970s, stated that The collapse of the financial system as we know it is real, and the crisis is far from over. indeed, we have just entered Act II of the drama.

The billionaire investor went on to say that the present global economic environment is eerily reminiscent of the 1930s, with governments recently coming under pressure to reduce their budget deficits during a period when the economic recovery remains fragile. when the financial markets started losing confidence in the credibility of sovereign debt, Greece and the euro have taken center stage, but the effects are liable to be felt worldwide, Soros stated.

Given Soros stellar track record, investors will pay close attention to his comments. If the dire scenario he describes unfolds, the euro is likely to come under additional pressure in the months ahead. Despite the recent three-day rebound, the euro remains near a four-year low against the U.S. dollar, with many investors and traders eyeing the 1.15 or 1.10 as the next likely target. Such a development would most likely be a substantial positive catalyst for the gold price, which has benefited from economic uncertainty and the policy responses to the deflationary aspects of the sovereign debt crisis.

Gold Price Dips, but “Crisis far from over”

In Peter Lynch’s book “learn to earn” he talks about a bond paying 8% interest on 10K investment. (8K Intrest). then he says inflation is 4%. He calculates that you lose almost 1,300 of the interest (I think) to inflation. therefore he says that your orginal 10K investment is worth 6,648 after 10 yrs of 4% inflation. How is it that the investment ends up at 6,648 after 10 yrs of inflation?

Need explination of this thing..?