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Yuan Rises to 20-Year High on Record Fixing, Faster Inflation

15 Oct

China’s yuan strengthened to a 20-year high after the central bank set the currency’s reference rate at a record high and as consumer prices advanced the most in seven months.

The People’s Bank of China raised its daily fixing by 0.08 percent to 6.1406 per dollar, the strongest since a peg to the greenback was lifted in July 2005. Inflation (CNCPIYOY)quickened to 3.1 percent last month, the fastest pace since February, data showed today. The nation’s foreign-exchange reserves, the world’s largest, rose to a record $3.66 trillion as of Sept. 30 from $3.5 trillion at the end of June, according to central bank data released today.

“The global recovery remains patchy and China is looking to shift growth toward domestic consumption,” said Jonathan Cavenagh, a currency strategist in Singapore at Westpac Banking Corp. “If inflation continues to trend up, we are going to be in a stronger environment for the Chinese currency.”

The yuan gained 0.21 percent, the most since May 8, to close at 6.1079 per dollar in Shanghai, China Foreign Exchange Trade System prices show. It touched 6.1073 earlier, the strongest since the government unified the official and market exchange rates at the end of 1993. The yuan has risen 35 percent against the greenback since the end of its peg, when it traded around 8.2765, according to data compiled by Bloomberg.

There could be changes to the yuan’s trading band after China’s central committee meets in November, according to Sacha Tihanyi, a Hong Kong-based currency strategist at Scotiabank. The likely outcome is for the range to be widened to 1.5 percent or even 2 percent from the current 1 percent, he wrote in a note today.

New Loans

New local-currency loans were 787 billion yuan in September, compared with 623.2 billion yuan a year earlier, official data showed today. Exports (CNFREXPY) dropped 0.3 percent from a year earlier, trailing all 46 estimates in a Bloomberg survey, while imports rose a more-than-forecast 7.4 percent, according to trade data released over the weekend.

In Hong Kong’s offshore market, the yuan appreciated 0.09 percent to a record 6.1010 per dollar, according to data compiled by Bloomberg. Twelve-month non-deliverable forwards rose 0.19 percent to 6.1500, the strongest since Bloomberg began compiling the data in 1998. The contracts were at a 0.7 percent discount to the onshore rate. Hong Kong’s stock market is shut today for a public holiday.

One-month implied volatility in the onshore yuan, a measure of expected moves in the exchange rate used to price options, fell one basis point, or 0.01 percentage point, to 1.24 percent.

(Source : Bloomberg)

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China Steel Binge Spurs Record Hiring of Ore Carriers

15 Oct

Freight traders are hiring record numbers of iron-ore carriers in the spot market as Chinese steel production expands at the fastest pace in three years, spurring the biggest rally in shipping rates since 2009.

One-time charters to haul the commodity on Capesizes, the largest ore carriers, rose 51 percent to 124 in September from the previous month, according to data compiled by Morgan Stanley. More than 90 percent are bound for China, and the ore they carry would make enough steel to build about 150 Golden Gate Bridges. The surge means more demand for Nippon Yusen K.K. (9101) and Mitsui O.S.K. Lines Ltd., which are based in Tokyo and control the biggest fleets.

The jump in chartering reflects average monthly Chinese steel output that’s been about 10 percent higher in 2013, reducing the nation’s ore stockpiles to the lowest for this time of year since 2007. Imports of the raw material into China rose to a record last month. The demand is diminishing the fleet’s biggest capacity glut in three decades, spurring an almost sevenfold surge in rates since Jan. 2 that means ship owners are making money again for the first time in almost two years.

“Rates have moved quicker than even the most optimistic forecasters had hoped for only a few months back,” said Eirik Haavaldsen, an analyst at Oslo-based Pareto Securities AS, whose recommendations on the shares of shipping companies returned 18 percent in the past six months. “We have really seen a restocking commencing.”

Freight Swaps

Daily rates for Capesizes, each hauling about 160,000 metric tons, jumped to a 34-month high of $42,211 on Sept. 25, according to the Baltic Exchange, which publishes shipping costs for more than 50 marine routes. They were at $31,545 yesterday. Freight swaps, traded by brokers and used to bet on future rates, anticipate a fourth-quarter average of $28,500, the most since 2011. The 1,000-foot carriers need about $14,500 to break even, says RS Platou Markets AS, an investment bank in Oslo.

Shares of Nippon Yusen, with 68 Capesizes in its fleet, rose 62 percent to 326 yen this year and will reach 333.07 yen in 12 months, according to the average of 14 analyst forecasts compiled by Bloomberg. Those of Mitsui O.S.K., which owns 64 of the ships, gained 74 percent to 443 yen and will be at 438.31 yen in a year, the average of 13 estimates shows. The fleet-size data were compiled by Clarkson Plc, the biggest shipbroker.

China may be producing more steel than it needs, according to Morgan Stanley analyst Fotis Giannakoulis in New York. The surge in charters comes as growth in the nation’s $8.36 trillion economy slows. China buys about two-thirds of all seaborne iron ore, the second-biggest commodity cargo after crude oil.

Monetary Fund

The International Monetary Fund cut its 2014 growth forecast for the country on Oct. 8, predicting a pace of 7.3 percent, from a July estimate of 7.7 percent. That would be the slowest expansion since 1990. The World Bank lowered its prediction a day earlier to 7.7 percent from 8 percent.

Owners also are contending with a fleet whose capacity more than doubled since June 2008, when Capesize rates rose to a record $233,988 a day and triggered an unprecedented number of orders for new vessels, according to data from London-based Clarkson. Trade in iron ore climbed 40 percent over the same period, the broker’s data show.

The rally in rates is curbing the biggest ship-demolition program in at least three decades. Owners who previously intended to scrap vessels are now trading them again, Global Marketing Systems Inc., the biggest buyer of obsolete carriers, said Oct. 3. Older Capesizes sailing to China from Brazil, the most important trade route for iron ore, can earn $1.4 million from a single voyage, according to Arctic Securities ASA in Oslo. A 15 year-old ship costs about $17 million.

Fewer Demolitions

Even with fewer demolitions, the largest fleet expansion in history is now easing. Ship yards have orders for new Capesizes equal to 16 percent of current capacity, down from as much as 100 percent five years ago, according to data from IHS Maritime, a Coulsdon, England-based research company. The fleet will expand 5 percent this year, the smallest gain in a decade, according to Clarkson.

The rally in Capesize rates contrasts with declines spanning most other shipping markets. The ClarkSea Index measuring rates across the maritime industry averaged $9,472 a day this year, heading for the lowest annual level on record. The surplus of capacity for oil tankers delivering 2 million-barrel cargoes is the biggest since about 1985, according to Fearnley Consultants A/S, a research company in Oslo.

Nippon Yusen, which also owns crude carriers, container ships and car transporters, will report a 76 percent gain in net income to 33.17 billion yen ($337.8 million) in its fiscal year ending March 31, according to the mean of 16 analyst estimates.

Narrow Losses

Mitsui O.S.K. (9104) will make a profit of 45.63 billion yen, compared with a loss of 178.8 billion yen in the prior year, the average of 16 predictions shows. Seven out of 12 companies in the Bloomberg Dry Ships Index will narrow losses or report a profit in 2013, according to forecasts compiled by Bloomberg.

Trade in seaborne iron ore will expand 6 percent to 1.17 billion tons this year, with China taking 66 percent of the total, Clarkson says. Shipments of dry-bulk commodities that also include coal and grains will rise 5 percent to 4.3 billion tons, according to the shipbroker.

Spot iron-ore fixtures provide the best indicator of changing demand because they exclude cargoes moved under long-term contracts, according to Erik Nikolai Stavseth, an analyst at Oslo-based investment bank Arctic Securities. The ships booked in September will mostly unload this month and next.

Services Industry

China’s steel mills now account for 50 percent of global output. Manufacturing (CPMINDX) in the country is expanding at the fastest pace in 17 months, while growth in the services industry is the strongest since March, government figures show.

The nation imported 74.58 million tons of the ore last month, 15 percent more than a year earlier, customs data show. Its steel output averaged 65.1 million tons a month this year, 10 percent more than in 2012, according to data from the Brussels-based World Steel Association. Stockpiles of iron ore at China’s ports now come to 70 million tons, 24 percent less than this time last year.

“China needs a much bigger restock in iron ore than last year,” said Aneek Haq, a metals analyst at Exane BNP Paribas in London. “The recent increase in fixtures is a confirmation of this.”

(Source : Bloomberg)

Marc Faber Warns “There Is No Safe Haven”

15 Oct

There is no safe haven, Marc Faber tells Bloomberg TV’s Tom Keene, “The best you can hope for is that you have a diversified portfolio of different assets and that they don’t all collapse at the same time.” Bank deposits are no longer safe; money and treasury bills are not 100% safe; and equities in the US are relatively expensive by any valuation metric. However, at around $1250, gold is a buy, Faber adds on the basis of the ongoing monetization of debt globally. The debt ceiling debacle will lead to the Fed stepping up to directly fund the government (something it already implicitly does but mainstream media prefer not to consider). Faber clarifies the idiocy of the discussions, “both parties want to spend, it’s just on different things,” with “the idiocies of government” having grown way too large, wasting money everywhere… the Democrats are “buying votes” and the Republicans funding the military complex. The debt-ceiling is merely a symptom of the problem, Faber concludes, that “government has grown disproportionately large and that retards economic growth.”

Faber on gold:

“We have a strong rally form the lows at 1180 to over 1400 and now we are backing off. I think between around 1200 and 1250 it is getting into buying range. The sentiment about gold is very negative, but if you look at everything considered – the monetization of debt, the debt ceiling, which sooner or later will be increased because both Republicans and Democrats are big spenders and the government’s debt has expanded from $1 trillion in 1980 to $5 trillion in 1999, now we are at $16 trillion. Both Democrats and Republicans have been big, big spenders because a lot of money flows through the government.”

On how he sees the debt ceiling debate playing out:

“If they don’t agree by the 17th, I think what can happen is that the Fed will actually finance the Treasury independently so the interest payments are being met. If the interest payments are not being met, I think it will cause quite a bit disruption to the financial market. I am not that concerned about that. I think this larger issue is like the euro issue a year ago where people were very negative and it was debated and so forth. In the end it is a political decision. I think both parties want to spend. It’s just on different items that they want to spend money.”

On whether what’s going on across equities, bonds currencies and commodities, along with the events in US, can be compared to other idiocies by governments in previous decades:

“Yes, idiocies by governments. That is exactly the word. It’s basically a dysfunctional government that we have that is far too large that is essentially wasting money left, right and center. The Republicans are wasting money on the military complex and the Democrats are basically buying votes with transfer payments, with entitlement programs, it goes on. It is a huge waste. The problem is that I don’t see a solution. I think the current debate about the debt ceiling and the budget is more a symptom of a problem than a problem itself. The problem is really that the government, not just in the US but other countries as well, has grown disproportionally large and that retards economic growth.”

On whether there’s a safe haven left:

“There is no safe haven. Bank deposits are not safe, which used to be safe. Money in treasury bills is not 100% safe because there is inflation in the system and you hardly get any interest. Bonds are not very safe anymore because eventually interest rates will go up. Equities in the US are relatively expensive by any valuation metrics you might use. I don’t see anything particularly safe. The best you can hope for is that you have a diversified portfolio of different assets and that they don’t all collapse at the same time.”

Families hoard cash 5 years after crisis

10 Oct

They speak different languages, live in countries rich and poor, face horrible job markets and healthy ones. When it comes to money, though, they act as one: They’re holding tight to their cash, driven more by a fear of losing what they have than a desire to add to it.

Five years after U.S. investment bank Lehman Brothers collapsed, triggering a global financial crisis and shattering confidence worldwide, families in countries as varied as the United States, Japan, the United Kingdom and Germany remain hunkered down, too spooked and distrustful to take chances with their money.

An Associated Press analysis of households in the 10 biggest economies shows that families continue to spend cautiously and have pulled hundreds of billions of dollars out of stocks, cut borrowing for the first time in decades and poured money into savings and bonds that offer puny interest payments, often too low to keep up with inflation.

“It doesn’t take very much to destroy confidence, but it takes an awful lot to build it back,” says Ian Bright, senior economist at ING, a global bank based in Amsterdam. “The attitude toward risk is permanently reset.”

A flight to safety on such a global scale is unprecedented since the end of World War II.

The implications are huge: Shunning debt and spending less can be good for one family’s finances. When hundreds of millions do it together, it can starve the global economy.

Some of the retrenchment is not surprising: High unemployment in many countries means fewer people with paychecks to spend. But even people with good jobs and little fear of losing them remain cautious.

“Lehman changed everything,” says Arne Holzhausen, a senior economist at global insurer Allianz, based in Munich. “It’s safety, safety, safety.”

The AP analyzed data showing what consumers did with their money in the five years before the Great Recession began in December 2007 and in the five years that followed, through the end of 2012. The focus was on the world’s 10 biggest economies – the U.S., China, Japan, Germany, France, the U.K., Brazil, Russia, Italy and India – which have half the world’s population and 65 percent of global gross domestic product.

Key findings:

– RETREAT FROM STOCKS: A desire for safety drove people to dump stocks, even as prices rocketed from crisis lows in early 2009. Investors in the top 10 countries pulled $1.1 trillion from stock mutual funds in the five years after the crisis, or 10 percent of their holdings at the start of that period, according to Lipper Inc., which tracks funds.

They put more even money into bond mutual funds – $1.3 trillion – even as interest payments on bonds plunged to record lows.

– SHUNNING DEBT: In the five years before the crisis, household debt in the 10 countries jumped 34 percent, according to Credit Suisse. Then the financial crisis hit, and people slammed the brakes on borrowing. Debt per adult in the 10 countries fell 1 percent in the 4 1/2 years after 2007. Economists say debt hasn’t fallen in sync like that since the end of World War II.

People chose to shed debt even as lenders slashed rates on loans to record lows. In normal times, that would have triggered an avalanche of borrowing.

– HOARDING CASH: Looking for safety for their money, households in the six biggest developed economies added $3.3 trillion, or 15 percent, to their cash holdings in the five years after the crisis, slightly more than they did in the five years before, according to the Organization for Economic Cooperation and Development.

The growth of cash is remarkable because millions more were unemployed, wages grew slowly and people diverted billions to pay down their debts.

– SPENDING SLUMP: To cut debt and save more, people have reined in their spending. Adjusting for inflation, global consumer spending rose 1.6 percent a year during the five years after the crisis, according to PricewaterhouseCoopers, an accounting and consulting firm. That was about half the growth rate before the crisis and only slightly more than the annual growth in population during those years.

Consumer spending is critically important because it accounts for more than 60 percent of GDP.

– DEVELOPING WORLD NOT HELPING ENOUGH: When the financial crisis hit, the major developed countries looked to the developing world to take over in powering global growth. The four big developing countries – Brazil, Russia, India and China – recovered quickly from the crisis. But the potential of the BRIC countries, as they are known, was overrated. Although they have 80 percent of the people, they accounted for only 22 percent of consumer spending in the 10 biggest countries last year, according to Haver Analytics, a research firm. This year, their economies are stumbling.

Consumers around the world will eventually shake their fears, of course, and loosen the hold on their money. But few economists expect them to snap back to their old ways.

One reason is that the boom years that preceded the financial crisis were fueled by families taking on enormous debt, experts now realize, not by healthy wage gains. No one expects a repeat of those excesses.

More importantly, economists cite psychological “scarring,” a fear of losing money that grips people during a period of collapsing jobs, incomes and wealth, then doesn’t let go, even when better times return. Think of Americans who suffered through the Great Depression and stayed frugal for decades.

Although not on a level with the Depression, some economists think the psychological blow of the financial crisis was severe enough that households won’t increase their borrowing and spending to what would be considered normal levels for another five years or longer.

To better understand why people remain so cautious five years after the crisis, AP interviewed consumers around the world. A look at what they’re thinking – and doing – with their money:

Rick Stonecipher of Muncie, Ind., doesn’t like stocks anymore, for the same reason that millions of investors have turned against them – the stock market crash that began in October 2008 and didn’t end until the following March.

“My brokers said they were really safe, but they weren’t,” says Stonecipher, 59, a substitute school teacher.

Americans sold the most in the five years after the crisis – $521 billion, or 9 percent of their mutual fund holdings, according to Lipper. But investors in other countries sold a larger share of their holdings: Germans dumped 13 percent; Italians and French, more than 16 percent each.

The French are “not very oriented to risk,” says Cyril Blesson, an economist at Pair Conseil, an investment consultancy in Paris. “Now, it’s even worse.”

It’s gotten worse in China, Russia and the U.K., too.

Fu Lili, 31, a psychologist in Fu Xin, a city in northeastern China, says she made 20,000 yuan ($3,267) buying and selling stocks before the crisis, more than 10 times her monthly salary then. But she won’t touch them now, because she’s too scared.

In Moscow, Yuri Shcherbanin, 32, a manager for an oil company, says the crash proved stocks were dangerous and he should content himself with money in the bank.

In London, Pavlina Samson, 39, owner of a jewelry and clothes shop, says stocks are too “risky.” What’s also driving her away may be something that runs deeper: “People feel like they’re being ripped off everywhere,” she says.

Holzhausen, the Allianz economist, says the crisis taught people not to trust others with their money. “People want to get as much distance as possible from the financial system,” he says.

The crisis also taught them about the dangers of debt.

After the crisis hit, Jerry and Madeleine Bosco of Tujunga, Calif., found themselves facing $30,000 in credit card bills with no easy way to pay the debt off. So they sold stocks, threw most of their cards in the trash, and stopped eating out and taking vacations.

Today, most of the debt is gone, but the lusher life of the boom years is a distant memory. “We had credit cards and we didn’t worry about a thing,” says Madeleine, 55.

In the U.S., debt per adult soared 54 percent in the five years before the crisis. Then it plunged, down 12 percent in 4 1/2 years, although most of that resulted from people defaulting on loans. In the U.K., debt per adult fell a modest 2 percent, but it had jumped 59 percent before the crisis.

Even Japanese and Germans, who weren’t big borrowers in the years before the crisis, cut debt – 4 percent and 1 percent, respectively.

“We don’t want to take out a loan,” says Maria Schoenberg, 45, of Frankfurt, Germany, explaining why she and her husband, a rheumatologist, decided to rent after a recent move instead of borrowing to buy. “We’re terrified of doing that.”

Such attitudes are rife when it has rarely been cheaper to borrow around the world.

“A whole new generation of adults has come of age in a time of diminished expectations,” says Mark Vitner, a senior economist at Wells Fargo, the fourth-largest U.S. bank. “They’re not likely to take on debt like those before them.”

Or spend as much.

After adjusting for inflation, Americans increased their spending in the five years after the crisis at one-quarter the rate before the crisis, according to PricewaterhouseCoopers. French spending barely budged. In the U.K., spending dropped. The British spent 3 percent less last year than they did five years earlier, in 2007.

High unemployment has played a role. But economists say the financial crisis, and the government debt crisis that started in Europe a year later, has spooked even people who can afford to splurge to cut back.

Arnaud Reze, 36, owns a home in Nantes, France, has piled up money in savings accounts and stocks, and has a government job that guarantees 75 percent of his pay in retirement. But he fears the pension guarantee won’t be kept. So he’s stopped buying coffee at cafes and cut back on lunches with colleagues and saved in numerous other ways. “Little stupid things that I would buy left and right … I don’t buy anymore,” he says.

Even the rich are spending cautiously.

Five years ago, Mike Cockrell, chief financial officer at Sanderson Farms, a large U.S. poultry producer in Laurel, Miss., had just paid off a mortgage and was looking forward to the extra spending money. Then Lehman collapsed, and he decided to save it instead.

“I watched the news of the stock market going down 100, 200 points a day, and I was glad I had cash,” he says, recalling the steep drops in the Dow Jones industrial average then. “That strategy will not change.”

The wealthiest 1 percent of U.S. households are saving 30 percent of their take-home pay, triple what they were saving in 2008, according to a July report from American Express Publishing and Harrison Group, a research firm.

After years of saving more and shedding debt, the good news is that many people have repaired their personal finances.

Americans have slashed their credit card debt to 2002 levels. In the U.K., personal bank loans, not including mortgages, are no larger than they were in 1999. In addition, home prices in some countries are rising.

So more people have the capacity to borrow, spend and invest more. But will they?

Sahoko Tanabe of Tokyo, 63, lost money in Japan’s stock market crash more than two decades ago, but she’s buying again. “Abenomics,” a mix of fiscal and monetary stimulus named for Japan’s new prime minister, has ignited Japanese stocks, and she doesn’t want to miss out. “You’re bound to fail if you have a pessimistic attitude,” she says.

But for every Tanabe, there seem to be more people like Madeleine Bosco, the Californian who ditched many of her credit cards. “All of a sudden you look at all these things you’re buying that you don’t need,” she says.

Attitudes like Bosco’s will make for a better economy eventually – safer and more stable – but won’t trigger the jobs and wage gains that are needed to make economies healthy now.

“The further you get away from the carnage in `08-’09, the memories fade,” says Stephen Roach, former chief economist at investment bank Morgan Stanley, who now teaches at Yale. “But does it return to the leverage and consumer demand we had in the past and make things hunky dory? The answer is no.”

(Source : GARP)

Yellen is Obama choice to succeed Bernanke at Fed

10 Oct

Capping a lengthy and politically charged search, President Barack Obama will nominate Janet Yellen, the Federal Reserve’s vice chair, to be chairman of the nation’s powerful central bank, succeeding Ben Bernanke at a pivotal time for the economy and the Fed’s monetary policies.

If confirmed by the Senate, Yellen would be the first woman to head a major central bank anywhere in the world. She also would be the first Democrat chosen to lead the Fed since Paul Volcker was picked by President Jimmy Carter in 1979.

Obama was scheduled to make the announcement Wednesday with Yellen and Bernanke at his side in the White House’s ornate East Room.

Bernanke, 59, will serve until his term ends Jan. 31, completing a remarkable eight-year tenure in which he helped pull the U.S. economy out of the worst financial crisis and recession since the 1930s.

Under Bernanke’s leadership, the Fed created extraordinary programs that are credited with helping save the U.S. banking system after the financial crisis erupted in 2008. The Fed lent money to banks after credit markets froze, cut its key short-term interest rate to near zero and bought trillions in bonds to lower long-term borrowing rates.

Yellen, 67, emerged as the top candidate after Lawrence Summers, a former Treasury secretary and White House favorite for the job, withdrew from consideration last month in the face of rising opposition.

A close ally of the chairman, Yellen has been a key architect of the Fed’s efforts under Bernanke to keep interest rates near record lows to support the economy, and she likely would continue steering Fed policy in the same direction as Bernanke.

Her nomination could face resistance from congressional critics who argue that the Fed’s low-rate policies have raised the risk of high inflation and might be breeding dangerous bubbles in assets like stocks or real estate.

Sen. Tim Johnson, D-S.D., who heads the Senate Banking Committee, which must approve Yellen’s nomination, said he would work with the panel’s members to advance her confirmation quickly.

“She has a depth of experience that is second to none, and I have no doubt she will be an excellent Federal Reserve chairman,” Johnson said in a statement.

The White House announcement comes in the midst of a confrontation between Obama and congressional Republicans, particularly those in the House, over the partial government shutdown and the looming decision on increasing the nation’s $16.7 trillion borrowing limit. Obama has been harshly critical of Republicans for demanding either changes in health care or spending policies in exchange for paying for government operations and raising the debt ceiling.

Mark Zandi, chief economist at Moody’s Analytics, said the administration probably decided to go ahead with the announcement to send a signal of policy stability to financial markets, where investors are growing increasingly nervous over the shutdown and the possibility of default.

“Markets are very unsettled and they are likely to become even more unsettled in coming days,” Zandi said. “Providing some clarity around who will be the next Fed chairman should help at least at the margin.”

The search for a successor to Bernanke grew unusually public when Summers and Yellen emerged as the top two contenders. Through August and into September, Yellen and Summers themselves kept a low profile but their warring camps waged a fight that stirred up Congress, spawned opinion columns and letters from Congress, and triggered commentary from notables both inside and outside the economics profession.

Yellen drew outspoken support from Senate Democrats, a third of whom signed a letter this summer urging Obama to choose her. This month, more than 350 economists signed a letter to Obama urging him to nominate Yellen.

Obama’s choice of Yellen coincides with a key turning point for the Fed. Within the next several months, the Fed is expected to start slowing the pace of its Treasury and mortgage bond purchases if the economy strengthens. The Fed’s purchases have been intended to keep loan rates low to encourage borrowing and spending.

While economists saw Obama’s choice of Yellen as a strong signal of continuity at the Fed, analysts said the difficult job of unwinding all of the Fed’s support without causing major financial market upheavals would fall to Yellen.

“Yellen is not going to rock the boat in terms of her approach to monetary policy,” said David Jones, chief economist at DMJ Advisors. “But it will be her challenge to reverse this prolonged and unprecedented period of monetary ease.”

Yet even after the Fed scales back its bond buying, its policies will remain geared toward keeping borrowing rates low to try to accelerate growth and lower unemployment. The national unemployment rate is a still-high 7.3 percent. Few expect the Fed to start raising the short-term rate it controls before 2015 at the earliest.

At the Fed, Yellen has built a reputation as a “dove” – someone who is typically more concerned about keeping interest rates low to reduce unemployment than about raising them to avert high inflation.

Sen. Bob Corker, R-Tenn., member of the Senate Banking Committee, said he voted against her for vice chair in 2010 because of her dovish policies. “I am not aware of anything that demonstrates her views have changed,” he said.

Still, Yellen has said that when the economy finally begins growing faster and rates will need to be raised to prevent high inflation, she will move in that direction.

(Source : GARP)

Economic Confidence Index

8 Oct

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(Source : Zero Hedge)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jim Rogers on Gold

7 Oct

Watch the video below:

Jim Rogers on Gold