Will Equities continue the March to year end

The Equities have been out performing the other markets in last 3 months and have taken many aback. The Left outs have been sort of blaming on ' Liquidity Tap' in US and European Banks and faulting markets for playing this ' CLiff Hanger'.
While, Commodities and particularly Oil has fully recovered the ' Paralysis ' Much faster than thought by any one. Gold and Silver not falling in sympathy, While ' Equities' running ' blind Fold' action. The USD still remains a suspect. And, lastly bonds in US and Europe are ' dead wood'
Indian markets struggling from the brink and remains as suspect.

Will this ' contrariness ' sustain itself..? Many think Yes and more think and lurk on the background to enter.
However, the discipline investor should wait for the last episode of this Play and keep waiting for the next day till .. Markets scale a new peak. Markets are going up for end of ' selling ' season in June and likely to test the virtue of being patient But, the upcoming FOMC meeting shall be the end of the ' Game of Waiting' and shall be the decider. 

OIL/Euro Sink, rating firms leaked, FED's Twist

OIL and Euro sink at the close of the Quarter 


 The New York Federal Reserve Bank of New York said Friday that it would begin Treasury purchases and sales on Monday as part of the program dubbed "Operation Twist" announced by policy makers earlier this month. 
The Fed will buy long-term debt on Monday, Tuesday and Friday and inflation-linked debt on Wednesday. 
It will sell one-year debt on Thursday, the Fed said on its schedule posted on its web site














Rating Firms the Leaking Jar..?


In a report issued Friday on the performance of the big ratings firms, the Securities and Exchange Commission said that despite changes to their operations, it still "identified concerns" at all of them. Among the problems, the SEC said, are "apparent failures in some instances to follow ratings methodologies and procedures [and] to make timely and accurate disclosures. It also criticized the firms for not being able to "establish effective internal control structures for the rating process and to adequately manage conflicts of interest." SEC staff looked at 10 of the biggest operators in the industry, including Fitch, Moody's and Standard & Poor's.


US Economy in recession .


The U.S. economy is headed for a new recession that government intervention cannot prevent, the Economic Cycle Research Institute said Friday. "Cyclical weakness is spreading widely from economic indicator to indicator in telltale recessionary fashion," ECRI said in a published report. The ECRI's Weekly Leading Index (WLI) growth indicator, reported Friday, showed economic growth at negative 7.2% for the week ended Sept. 23, continuing a trend that began in August. U.S. economic strength has been declining since May, according to the WLI.

Gaddfi war cry and attacks oil terminal at Ras Lanouf

TRIPOLI, Libya (AP) — Fugitive leader Moammar Gadhafi accused revolutionary forces of surrendering Libya to foreign influence and vowed to press ahead with his resistance in a message Monday issued just hours after a twin attack on a key oil facility by loyalist fighters. At least 15 attackers were killed, an anti-Gadhafi commander said.

"We will not be ruled after we were the masters," said the brief statement attributed to Gadhafi that was read on Syria's Al-Rai TV by its owner Mishan al-Jabouri, a former Iraqi lawmaker and Gadhafi supporter.

The message described the opposition forces as "traitors" who are willing to turn over Libya's oil riches to foreign interests.

"We will not hand Libya to colonialism, once again, as the traitors want," said the statement, which pledged to fight against the "coup."

The firebrand words by Gadhafi contrast sharply with the staggering losses for his regime in recent weeks, including being driven from the capital Tripoli and left with only a handful of strongholds that are surrounded by former rebel forces.

Gadhafi's whereabouts are unknown, but his followers claim he is still in Libya. Some of his family members have fled to neighboring Niger, most recently his son al-Saadi.

Although Gadhafi's opponents now hold sway over most of Libya — and remain backed by NATO airstrikes — there are signs that the Libyan strongman's backers can still strike back.

At the important oil terminal at Ras Lanouf, suspected loyalist staged back-to-back attacks that began with saboteurs setting fires and then shifted to a convoy of gunmen riding in from the desert.

Col. Hamid al-Hasi, the commander for anti-Gadhafi forces in eastern Libya, said a group of 15 employees set fire to the facility, located on the Mediterranean coast about 380 miles (615 kilometers) southeast of Tripoli. He said five of the saboteurs were killed and the rest arrested.

In a possibly coordinated attack, the port was then targeted by a convoy of armed men apparently based in a refugee camp about 18 miles (30 kilometers) south of Ras Lanouf. One revolutionary commander, Fadl-Allah Haroun, said a total of 15 people were killed in both attacks.

The size of the ground assault force was unclear, but Haroun said it may have been as big as 40 vehicles.

Former rebels, meanwhile, have been facing stiff resistance from Gadhafi supporters in Bani Walid since last week and have captured most of the northern half of the town, which is one of three significant remaining bastions of Gadhafi's loyalists.

Mubarak al-Saleh, an opposition political envoy from Bani Walid, claimed Gadhafi's son Seif al-Islam is leading loyalist forces massed in the town, about 90 miles (140 kilometers) southeast of Tripoli.

"The forces are not from Bani Walid but from all over Libya," he said. "We lost many people in the battle."

Dozens of cars loaded with Libyan families and personal belongings streamed out of the town in anticipation of a fresh assault.

"The fighting will be very bad," said Fadila Salim as she drove out of Bani Walid. Her husband, Mohammed Ibrahim, said there is no electricity, no water and shops are running out of food. He says many are "stuck in their houses and afraid to leave."

Khairiyah al-Mahdi, a 40-year-old housewife, was fleeing the town along with her husband, six daughters and two sons.

She said her house was among the first to fly the revolution's tricolor flag when Libyan fighters pushed into Bani Walid over the weekend. But deteriorating living conditions, threats from Gadhafi supporters and heavy clashes in the town prompted her family to flee.

"We left Bani Walid because Gadhafi loyalists in control of the local radio announced through airwaves that anyone helping the rebels or part of them will be killed," she said. "A lot of people are scared and now leaving."

The main battle front in Bani Walid is now a bridge that links the town with the port city of Misrata to the northwest. Gadhafi loyalists have covered the pavement with oil slicks and fuel spills to hinder vehicles trying to cross into the city center.

A rebel commander, Abu Ouejeila al-Hbeishi, said Gadhafi snipers have taken up positions on roof tops, including on a hotel, an ancient castle and an administrative building in the town center. Loyalist forces also fired Grad rockets and mortars at revolutionary fighters on the northern edge of Bani Walid, where al-Hawaishi said some 2,000 former rebels have gathered.

NATO, which has played a key role in crippling Gadhafi's military forces since intervening in Libya's civil war in late March, has kept up its attacks on remaining pro-Gadhafi sites. The military alliance said its warplanes hit targets Sunday in Gadhafi's hometown of Sirte, including a military logistics facility and three surface-to-air missile systems.

The Misrata Military Council said clashes inside Sirte between Gadhafi loyalists and opposition backers has left at least three people dead.

___

Al-Shalchi reported from Wadi Dinar, Libya.

Hurricane warning gives 45% chance of Oil disruption

 Colorado State University's forecasting team on Wednesday maintained its 2011 Atlantic storm season forecast at nine hurricanes, with five of them expected to be major.

The research team, founded by hurricane forecast pioneer William Gray, said the six-month hurricane season which started on June 1 would see 16 tropical storms. That was unchanged from its June 1 projection.

There have been five tropical storms but no hurricanes so far this season, which is now approaching its traditional busy phase from mid-August to October.

"Major" storms are Category 3 or above on the five-step Saffir-Simpson scale of intensity and have top winds of more than 110 miles per hour (177 km per hour).

The CSU team gave a 70 percent probability of a major hurricane making landfall along the U.S. coastline.

There was a 45 percent chance that a major hurricane would make landfall along the U.S. coast of the Gulf of Mexico, where major oil and gas facilities are located, according to the team.

Core 08 Industries index show only 5.1% growth Y-o-Y

The Industrial Production nos have co relation to the I.I.P nos. The June Data show some industries having good demand like steel and Crude Oil. While, Coal and Natural Gas carrying worst nos. The impending slow down in Thermal and Non-thermal power plants, is lagging indicators of slowing Industrial Demand. The some of the factors may be seasonal and time being data. The Steel & Cement mop up possibly indicate Inventory mopping and export demand

Indian core Industry data Stagnates in June 2011

  
Ministry of Commerce & Industry29-July, 2011 18:02 IST
Index of Eight Core Industries (Base: 2004-05=100) June 2011
The Index of Eight core industries having a combined weight of 37.90 per cent in the Index of Industrial Production (IIP) with base 2004-05 stood at 138.98 in June 2011 and registered a growth of 5.2% compared to 4.4% registered in June 2010. During April-June 2011-12, eight core industries registered a growth of 5.0% as against 6.8% during the corresponding period of the previous year 2010-11.
Coal
Coal production (weight of 4.38% in the IIP) registered a growth of (-) 3.3% in June2011 compared to growth of 0.8% in June2010. Coal production grew by 0.2% during April-June 2011-12 compared to an increase of (-) 0.6 during the same period of 2010-11.
Crude Oil
Crude Oil production (weight of 5.22% in the IIP) registered a growth of 7.7 % in June2011 compared to a growth of 6.8% in June2010. The Crude Oil production registered a growth of 9.5% during April-June 2011-12 compared to 5.9% during the same period of 2010-11.
Natural Gas
Natural Gas production (weight of 1.71% in the IIP) registered a growth of (-) 11.7% inJune 2011 compared to growth of 25.4% inJune 2010. The Natural Gas production registered a growth of (-) 10.2% during April-June 2011-12 compared to 37.0% during the same period of 2010-11.
Petroleum Refinery Products
Petroleum refinery production (weight of 5.94% in the IIP) registered a growth of 4.7% in June 2011 compared to growth of 2.9% inJune 2010. The Petroleum refinery production registered a growth of 5.3% during April-June 2011-12 compared to 5.3% during the same period of 2010-11.
Fertilizers
Fertilizer production (weight of 1.25% in the IIP) registered a growth of (-) 2.4% inJune 2011 compared to (-) 6.7% in June2010.Fertilizer production grew by 1.1%during April-June 2011-12 compared to an increase of (-) 2.6% during the same period of 2010-11.
Steel
Steel production (weight of 6.68% in the IIP) registered a growth of 12.5% in June2011 compared to 4.3% in June 2010. Steel production grew by 7.8% during April-June2011-12 compared to an increase of 8.6% during the same period of 2010-11.
Cement
Cement production (weight of 2.41% in the IIP) registered a growth of (-) 0.8% in June2011 compared to 3.7% in June 2010. Cement Production grew by (-) 0.9% during April-June 2011-12 compared to an increase of 7.0% during the same period of 2010-11.
Electricity
Electricity generation (weight of 10.32% in the IIP) registered a growth of 8.2% in June2011 compared to a growth of 3.8% in June2010. Electricity generation grew by 8.3% during April-June 2011-12 compared to 5.7% during the same period of 2010-11.
N.B: Data are provisional. Revision has been made based on revised data obtained.

US Debt is Gold Standard ...? Asks Neel Kashkari.

 ( PIMCO, the biggest Debt fund Managing company, has many ' super Brains'  one of its catch is Neel Kashkeri, son of Indian Kashmiri Immigrants to US.    The Blue eyed Boy, profile on P.I.M.C.O: (Mr. Kashkari is a managing director and head of new investment initiatives in the Newport Beach office. Prior to joining PIMCO in 2009, Mr. Kashkari served in the U.S. Treasury Department from 2006-2009, first as senior advisor to Secretary Henry Paulson and then as Assistant Secretary of the Treasury. In the latter role, he established and led the Office of Financial Stability and oversaw the Troubled Assets Relief Program (TARP). Before joining the Treasury Department, Mr. Kashkari was a vice president at Goldman Sachs in San Francisco, advising technology companies on financings and mergers and acquisitions. Previously, he was an aerospace engineer at TRW Corporation. He holds both bachelor's and master's degrees in engineering from the University of Illinois at Urbana-Champaign and an MBA from the Wharton School at the University of Pennsylvania)

Neel, has raised the basic question, Whether value lies in the Hands of Beholder..?

Surely, Gold is Gold, because all call it Gold and are ready to pay for it. 

The removal Gold Standard in 1972.

When President Nixon, removed Gold standard and Forced $ in.1972 .  World was put to test, by explosion in Crude prices, The $ became entrenched in international trade, as a corridor and US Bonds the prize.  The International development heaved on Crude, which remained undervalued through out 80-90's. The 'Camp David',  agreement in 1979, between Israel and Egypt cemented the ' Crude' revolt. Simultaneously, the OIL Producing nation were galvanized under the umbrella of O.P.E.C.and Monarchy's were set up in Egypt, Syria, Libya, Iraq.to counter the threat of Khomeni in Iran and also as Allies against USSR. NOW the whole Edifice is crumbling across the Middle East and Libya. The recent OPEC meeting showed the deep fissures, and soon OPEC may will have its count.

 Does all this politics have further bearing on 'Fall Of $' and vis a vis.?

Could a U.S. debt downgrade trigger a financial crisis?

We approach Treasury’s debt-ceiling deadline, attention has shifted from the risks of a default on Treasury debt to the risk of a downgrade of U.S. credit. Many are asking whether a downgrade could itself lead to a financial crisis. With the example of 2008 still fresh in many minds, the question has become: Would it be as bad as the Lehman Bros. bankruptcy?

Some market observers speculate that a downgrade would be a non-event: Japan, for example, went from a rating of AAA to AA without much drama. Others suggest that a downgrade would increase Treasury’s borrowing costs by $100 billion a year or more, making our already unsustainable deficit trajectory even worse.

There are no rules to define what is systemic and what isn’t — or to accurately predict the consequences of an economic shock. Each crisis is unique. How exactly it will affect financial markets, companies and our economy is impossible to know. Nonetheless, recent examples offer guidance.

In 2008, a number of once-cherished beliefs were turned upside down: (1) that home prices in America would never fall; (2) that AAA-rated subprime securities are sound; (3) that a major investment bank would never fail. Consumers, investors and companies allocated capital according to these truths. When the beliefs were revealed to be false, massive shocks were inflicted on the economy as financial markets rapidly adjusted to account for these new risks.

Banks had to reduce their leverage and rein in lending. Companies froze investment. Consumers cut spending and started saving. As a result, the economy plunged into recession, and millions of jobs were lost.Unemployment shot to 10 percent.

The question now is whether U.S. Treasury bonds, which anchor the global economy, really are the gold standard, the risk-free financial instruments they have been trusted to be. What will happen if that truth is revealed to be false?

Four factors in particular can help assess the magnitude of the financial impact from an undermined truth:

(1) How strongly is the belief held?

In 2008, investors around the world generally believed that major U.S. investment banks were so large they would never be allowed to fail. In the six months leading up to Lehman’s bankruptcy, however, it came under increased funding pressure and its stock price slowly collapsed. Markets were not completely convinced that the government would have the will or the ability to save Lehman; otherwise investors would have continued lending to it, as they did to Fannie Mae and Freddie Mac, which had no trouble borrowing money before they were rescued only days ahead of the Lehman bankruptcy.

By comparison, U.S. Treasurys have been defined for decades as the risk-free financial instrument throughout global financial markets. Faith in Treasurys is far stronger than it ever was in Lehman Bros. This suggests a far bigger shock than Lehman if this truth is proven false.

(2) How big an asset class does the belief support?

U.S. Treasurys are a $14 trillion market — the single biggest security market in the global economy. In comparison, Lehman had approximately $600 billion of liabilities before it failed, less than 5 percent of the size of the Treasury market. Treasurys are held by virtually all 8,000 banks in America and nearly all insurance companies, corporations, pension plans and millions of individuals’ 401(k)s. This scale suggests a far larger shock than Lehman.

(3) How wrong was the belief?

Here, Treasurys are not as bad as Lehman. Even if the U.S. credit rating is downgraded, almost no one believes we will actually default on our debt. The United States is not entering bankruptcy, and its debt is not junk. Lehman debt ultimately proved to be worth a fraction of its face value. To some, this suggests a U.S. downgrade would produce a more modest shock than Lehman. But a small deviation from a cherished belief can be as shocking as a large deviation from a weaker belief.

(4) What is the economic context in which the shock is taking place?

Although the United States is technically no longer in recession, the U.S. economy is growing slowly. Unemployment remains at 9.2 percent. Europe is awash in its own fiscal crisis, and much of the developed world is struggling. When Lehman collapsed, U.S. unemployment was at 6 percent, but the economy was contracting and housing markets were plummeting. The global economic context in September 2008 was probably worse than today, but our economy remains vulnerable.

These factors suggest that a U.S. downgrade has the potential to be as bad or perhaps worse than the Lehman shock. The more strongly held a belief, and the larger the asset class it supports, the greater the potential damage to the economy when the belief is turned upside down. We may not be certain what will happen if U.S. credit is downgraded, but there is no upside to finding out.

 ( Tip : What is a Gold Standard : The gold standard is a monetary system in which the standard economic unit of account is a fixed mass of gold.-- wikipeadia.

 2) The U.S. used a gold standard from its inception in 1789 until 1971, a stretch of 182 years. In 1965--not that long ago--all major countries in the world participated in the worldwide gold standard system known as the Bretton Woods arrangement.)

Crude Oil Uncertain and I.E.A. not to flood oil in Market ....

The IEA Secretariat has completed its 30-day review of the Libya Collective Action launched on 23 June. The review concludes that the Action served a market need by adding liquidity and bridging the gap to additional supplies from OPEC countries. The Secretariat continues to closely monitor market conditions, and the IEA stands ready to augment the Libya Collective Action if market conditions again warrant. While we are not now seeking the release of additional stocks, the Action is not yet complete as stocks are still entering the market. To date, the Libya Collective Action involves just over 2.5% of public and industry obligated stocks. On 23 June, the IEA announced a release of 60 million barrels of oil in response to the ongoing supply disruption of Libyan light sweet crude, an anticipated oil demand increase in the third quarter, and to act as a bridge to incremental supplies from major producers. Market appetite for the government stocks made available has been greater than during the Hurricane Katrina Collective Action in 2005, and the measure has largely achieved its aims to date. The provision of extra supplies of crude, notably light-sweet crude from the US Strategic Petroleum Reserve, and products has had a number of beneficial impacts in the market. Sweet-sour crude differentials have narrowed overall, rendering light-sweet crudes more economic for refiners at a time of peak transport fuel demand. Tightness in prompt supply for light sweet crudes has diminished. Refining margins, notably upgrading margins, have improved, thus reducing the danger that suppressed refinery activity levels over the summer would lead to a products-driven supply crunch later in the year. The IEA also notes a sharp rise in OPEC oil production. IEA estimates put June OPEC crude production at 30.03 mb/d, a rise of 840 kb/d from May, and a possible further rise of 150 – 200 kb/d in July. The IEA estimates that higher OPEC production and the Libya Collective Action should substantially cover the expected 1.3 mb/d increase in the 3Q11 ‘call on OPEC crude and stock change’. However, a number of uncertainties remain which demand vigilance, notably the duration of the Libyan disruption, the future evolution of OPEC supply as well as the final impact of the stock release itself; much of the oil is only now entering the physical market. The Secretariat has encouraged member governments to allow industry the maximum of flexibility in replenishing stocks, preferably waiting until year-end or beyond. Given that the action has not required any country to drop below the 90-day net-import requirement, the timing and pace of any replenishment are unlikely to be disruptive to the market.

Stock release review – July 21, 2011

Frequently asked questions

Q: A month in to the IEA stock release, with crude prices above pre-release levels, how would you evaluate the success of that action? A: The action aimed to add short-term liquidity to a global market which has lost nearly 1.5 mb/d of Libyan supply and faces a seasonal rise in demand in the third quarter. The release from the US SPR has allowed alternative light-sweet cargoes to divert to demand centres in Europe and Asia. Refining margins, though still volatile and weak on an historical basis, have nonetheless strengthened. And market structure is more conducive to normal 3Q industry stockbuilds than it was prior to the action. Finally, it should be noted that market appetite for the government stocks made available has been greater than during the Hurricane Katrina Collective Action in 2005, and the measure has largely achieved its aims to date. Q: Last week the OMR projected even greater tightening in the third quarter. Wouldn’t this argue in favour of extending the stock release for another 30 days? The OMR of last week indeed foresaw an increased ‘call on OPEC crude and stock change’ for 3Q11 compared to previous issues. Gratifyingly, however, there were already signs in June that key OPEC producers are raising production significantly to help meet that rising ‘call’. In addition, the OMR reviewed industry stock levels at the end of June. As the action was announced on 23 June, none of the government stocks had entered the market yet. These stocks, some 38 mb, or 610 kb/d, will augment  July and notably August supplies from other sources,  and reducing the potential for a further tightening of the market. Q: Why has it taken so long for oil from the release, notably in the US, to be made available to the market? A: There are different stages in a release process, starting from the publication of tender documents (in the US on the very day of the announced action) to the actual delivery of the oil at a pipeline or ship a few weeks later. For the market the most important moment is the awarding of the bids, as from then on companies can schedule these deliveries into their supplies. In the US the awarding of bids started on Friday 1 July. These supplies are available close to trading and refining hubs and don’t need to be shipped over long distances. Q: What is the envisaged time line for replenishing stocks after the release? A: That is very much up to the provisions for replenishment legislated for individual member countries. With that said, the Secretariat has recommended to member governments to allow industry the maximum of flexibility in replenishing stocks, preferably waiting until the end of the year or beyond. Given that the action has not required any country to drop below the 90-day net-import requirement, the timing and pace of any replenishment are unlikely to be disruptive to the market. Q: Brent has flipped back in to backwardation recently. Is that indicative of a successful stock release? A: Despite recent developments, the prompt premium in the market has nonetheless weakened from where it was earlier in June. Rather than focusing on day-to-day or week-to-week fluctuations in prices, the IEA collective action will be judged ultimately by whether or not it gave refiners and market participants flexibility and added liquidity early in 3Q. We are encouraged to see incremental OPEC supplies now being made available and the IEA stock release needs to be seen in concert with that in helping ensure adequately supplied markets. Q: Is it true that the IEA did not extend the release because member countries were opposed? A: No, the decision not to seek an additional release for now was based on an updated assessment of current market fundamentals and the extent to which already committed increases in supply will play out over the coming months. So the premise of the question is not correct. As part of the Collective Action process that was launched on 23 June, the Secretariat undertook a review of the action and assessed its market impact. The Secretariat concluded that the Action served a market need by adding liquidity and bridging the gap to additional supplies from OPEC countries. However, we also pointed out that there are a number of uncertainties in the current market situation requiring vigilance. This conclusion was communicated to member countries on 20 July and no country asked for an additional collective release. The Secretariat continues to closely monitor market conditions, and the IEA stands ready to augment the Libya Collective Action if market conditions again warrant.

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Inter-National Data Summary: US, Europe, Asia-Pacific

U.S.

• Housing starts jumped 14.6% over May to an annualized 629,000 units in June, the highest level since January. Housing starts are up 16.7% over last June. The reading was much stronger than the consensus expectation of 575,000, though after May starts were downwardly revised to 549,000 (previously 560,000 units). Multifamily starts surged 31.8% over May to 170,000 units. Single-family starts were up 9.4% to 453,000 units. Building permits, a leading indicator for future construction activity, were up 2.5% to 624,000 in June.
• U.S. existing home sales fell for the third straight month by 0.8% month over month to an annualized 4.77 million units in June, weaker than consensus expectations of an increase to 4.9 million. The 7.0% month-over-month drop in condo/co-op sales to 530,000 units largely explains the overall decline. Single-family sales were flat for the month. Condo/co-op sales are down 18% year over year while single family home sales are down 7.4% year over year. The months' supply of unsold homes rose to 9.5 from 9.1 in May and is still above the six-month historic average. The sales price jumped to $184,300 from $169,300 in May and is up 0.8% over last June.
• The S&P/Experian consumer credit default rates decreased in June to 2.14% from 2.23% in May and 3.44% a year ago. All loan types saw declines.
• Industrial production edged up 0.2% month over month in June, which is the first rise seen in two months, offsetting the 0.1% decline in May (previous 0.1% gain). Auto production remained weak again, down 2.0% in June after dropping 1.5% the month before because of continued Japan-related weakness. Manufacturing capacity utilization remained at its May level of 74.4%, and it is still less than the 80-point benchmark rate.
• Consumer prices (CPI) fell by 0.2% month over month in June, which was a larger drop than the 0.1% decline that the consensus expected, after a 0.2% month-over-month increase was seen in May. Core CPI, excluding food and fuel, was up 0.3% over May, the same rate as in May, though stronger than the 0.2% increase that the consensus expected. On a year-over-year basis, overall CPI is up 3.7%. Core CPI is up 1.6% over last year and is still within the Fed's implicit 1% to 2% comfort zone. Energy prices fell 4.4% month over month but are up 20.1% over last June.
• The New York Fed Empire State index climbed four points to a disappointing negative 3.8 reading in July, partially offsetting the near 20-point drop to negative 7.8 in June, and still less than zero, indicating contraction, for a second time. New orders edged down to negative 5.6 after plummeting to less than zero (negative 3.6) in June. The employment index dropped again in July to 1.1 from its 14-point plunge to 10.2 the month before. The price readings also weakened.
• The initial jobless claims fell 22,000 to 405,000 in the week ended July 9 from an upwardly revised 427,000 the week before (was 418,000). Continuing claims climbed 15,000 to 3.727 million for the week ended July 2, though after the week before was upwardly revised to 3.712 million (previously 3.681 million).
• The U.S. Treasury budget deficit was $43.1 billion in June and narrower than the $68.4 billion deficit seen in June 2010 and the consensus expectation of $65.5 billion. Receipts edged down 0.6% over last June to $249.7 billion, Outlays fell 8.4% year over year to $292.7 billion. The deficit now stands at $970.5 billion for the first nine months of the fiscal year, narrower than the $1.004 trillion deficit for the same period in fiscal year 2010.
• Oil prices increased to $100 per barrel on (Thursday- midday) from $97.37 per barrel the previous week on rising speculation that debt problems on both sides of the Atlantic would be resolved soon and signs that crude stocks and Natural Gas are shrinking in U.S. The Energy Information Administration (EIA) inventory data showed a 3.7 million-barrel fall in crude stocks, which was larger than the 1.5 million-barrel drop that markets expected. Total product demand was up 1.6% year over year.
• U.S. bond yields edged down two basis points (bps) to 2.93% on Wednesday (midday), after a disappointing existing home sales report increased worries that the recovery is losing steam. Mortgage rates slipped marginally to 4.54%. Mortgage applications increased to 15.5% during the week ended July 15 following a drop of 5.1% the previous week. The refi index increased by 23.1% from a 6.2% drop the previous week. The purchase index decreased by 0.1% this week, following a decline of 2.6% the previous week.
• The dollar weakened against most trading partners this week as signs of progress on a U.S. budget deal prompted a rise in risk tolerance. The euro rose to $1.422/€ on Wednesday (midday) from $1.404/€. The yen rose to ¥78.77/$ from ¥79.31/$.
• LEI rose by 0.03% Month over Month ( see the separate post giving the Details, Dow trading @12735 and Nasdaq@ 2838, S&P 500 @1345   
• In The Anvil :
  •  S&P/Case-Shiller Home Price Index (July 26; negative 4.2). Consumer confidence (July 26; 57.0). New home sales (July 26; 0.31 million). Durable orders (July 27; 0.5). Beige Book for FOMC Meeting (July 27). Initial claims (July 28). Advance second-quarter GDP (July 29; 1.7%). Employment cost index (July 29; 0.6). Chicago ISM (July 29; 60.0). Consumer sentiment (July 29; 64.0).

                                                                            Europe :

• Italy's lower house of parliament approved a EUR48 billion austerity package on July 15, 2011, in record time to calm the increasing contagion fears spreading from the Greek debt crisis. The mix of spending cuts and tax measures is aimed at ensuring the government reaches its target of balancing the budget by 2014.
• The minutes of the July 6 - 7 meeting of the Bank of England's Monetary Policy Committee (MPC) revealed a more dovish tone, indicating that any rises in interest rates are being put off into the future.
• Germany's ZEW index of economic sentiment slipped for the fifth consecutive month to negative 15.1 in July, its lowest level since January 2009, from negative 9.0 in June. Europe's government debt crisis weighed on optimism despite the continuing strength of the German economy.
• Russian industrial production increased by 5.7% year over year in June. The manufacturing sector, which grew 7.1% year over year during the period, led the growth.
• The eurozone trade deficit declined to EUR0.6 billion from EUR2.5 billion in April. Exports grew 1.5% month over month in May, faster than April's rise of 0.2%. Meanwhile, import growth slowed to 0.2% from 0.8%.
• The eurozone inflation rate remained steady at 2.7% in June but continues to remain at more than the target that the European Central Bank set.
• European Data update is being done separately. Greece Talks are being viewed ... European Markets Closed +ve  cac 3816.25, Dax 7290.14  , FTSE: 5899.89
•  Flash PMI's from Markit tomorrow and 
  •  EMU industrial orders (July 22). Germany Ifo expectations (July 22). France production outlook (July 22). Italy retail sales (July 22). Germany retail sales (July 25). Germany consumer confidence (July 26). U.K. GDP (July 26). Hometrack house prices (July 26). Germany import price index (July 27). CPI (July 27). Switzerland leading indicator (July 27). U.K. total orders (July 27). Germany unemployment rate (July 28). EMU, U.K. consumer confidence (July 28). U.K. nationwide house prices (July 29). France consumer spending (July 29). PPI (July 29). Spain, EMU CPI (July 29). U.K. consumer credit (July 29). France, Germany, EMU PMI manufacturing (Aug. 1). EMU unemployment rate (Aug. 1). EMU PPI (Aug. 2). France, Germany, EMU PMI services (Aug. 3). EMU PMI composite (Aug. 3). Retail sales (Aug. 3).

                                                                  Japan And Other Asia-Pacific

• South Korea's central bank left its key interest rate unchanged at 3.25% in its policy meeting held on July 13 because of rising uncertainty on the global economic recovery, including the eurozone debt crisis.
• New Zealand's economy rose by 0.8% quarter over quarter in the March quarter, stronger than the 0.5% quarter-over-quarter growth in the last quarter of 2010 and consensus expectations of just 0.4% quarter over quarter, owing to the February Christchurch earthquake. The increase was the fastest quarterly expansion since the December 2009 quarter.
• Singapore's economy contracted 7.8% quarter over quarter in the second quarter, after a 27.2% jump in the first quarter. On a year-over-year basis, the pace of economic growth slowed to a mere 0.4% in the second quarter. The manufacturing sector, where output contracted by 5.5% year over year after a 16.4% year-over-year jump in the previous quarter, led the deceleration.
• New Zealand consumer prices (CPI) rose 1% during the second quarter, increasing year-over-year inflation to 5.3%. The reading was much stronger than the consensus forecast of an increase of just 0.7% quarter over quarter and 5.1% year over year.
• India's wholesale price index (WPI) rose by 9.4% year over year in June 2011, up from 9.06% in May.
• Coming releases:  Retail sales (July 27). Trade balance (July 27). CPI (July 28). Unemployment rate (July 28). Personal income (July 28). PCE (July 28). Industrial production (July 28). Shipments (July 28). PMI (July 28). Housing starts (July 29). Auto sales (Aug. 1). Trade balance (Aug. 4). Leading index (Aug. 5). Current account (Aug. 7). Consumer confidence (Aug. 9).

Oil Hit : Iran Losses Patience, India payment delays

Iran warned India it would stop supplying oil from August 1 if a payments dispute is not resolved, the semi-official Fars news agency reported, a move likely to harm the two countries' annual USD 12 billion trade.

"Iran might stop giving permission to export its oil to India from August 1 if the dispute over receiving payments from India is not resolved," an unnamed oil official told Fars on Monday.

Iran, facing increased isolation internationally, and energy-hungry India have been trying to resolve an impasse triggered in December, when the Reserve Bank of India ended a regional clearing mechanism under US pressure.

Iran says India owes it USD 5 billion for oil imports in recent months.

"NIOC (National Iranian Oil Co) has not yet issued a permission for oil exports to India for the month of August ... Iran's contracts with Indian refineries is for a year, and without permission these contracts will be halted," the official was reported as saying.

NIOC, the state oil firm that supplies around 12% of India's oil imports, set the deadline in a letter dated June 27 to Indian refiners, sources told Reuters in early July.

The official told Fars that the letter was not sent officially by NIOC.

"The (previous) warning was not sent by NIOC officially, and it was not a warning over stopping exports to India completely," the official told Fars.

"Indian refineries should start looking for other countries and sources for their crude needs if a payment solution is not found."

Analysts say Iran is putting pressure on India to accelerate the resolution of the payments mechanism dispute.

Earlier this year, Germany allowed India to pay for the oil via Hamburg-based EIH bank, which handles international trade for Iranian companies.

But India halted that conduit in early April after discussions with German Chancellor Angela Merkel, and EIH has since come under EU sanctions.

Be Nimble and make Money

                                   The debt crisis is for Sure as US is unlikely to create and agree for any Credible Plan.

Till, rating agencies Act, have fun with the Results.

Be Nimble to Make Money.

E.C.B. bank Testing is uniform and Unstable Model.

Be Nimble to Make Money.                                                                 

Semiannual Monetary Policy Report to the Congress Chairman Ben S. Bernanke

 

Before the Committee on Financial Services, U.S. House of Representatives, Washington, D.C.

July 13, 2011

Chairman Bachus, Ranking Member Frank, and other members of the Committee, I am pleased to present the Federal Reserve's semiannual Monetary Policy Report to the Congress (PDF). I will begin with a discussion of current economic conditions and the outlook and then turn to monetary policy.

The Economic Outlook
The U.S. economy has continued to recover, but the pace of the expansion so far this year has been modest. After increasing at an annual rate of 2-3/4 percent in the second half of 2010, real gross domestic product (GDP) rose at about a 2 percent rate in the first quarter of this year, and incoming data suggest that the pace of recovery remained soft in the spring. At the same time, the unemployment rate, which had appeared to be on a downward trajectory at the turn of the year, has moved back above 9 percent.

In part, the recent weaker-than-expected economic performance appears to have been the result of several factors that are likely to be temporary. Notably, the run-up in prices of energy, especially gasoline, and food has reduced consumer purchasing power. In addition, the supply chain disruptions that occurred following the earthquake in Japan caused U.S. motor vehicle producers to sharply curtail assemblies and limited the availability of some models. Looking forward, however, the apparent stabilization in the prices of oil and other commodities should ease the pressure on household budgets, and vehicle manufacturers report that they are making significant progress in overcoming the parts shortages and expect to increase production substantially this summer.

In light of these developments, the most recent projections by members of the Federal Reserve Board and presidents of the Federal Reserve Banks, prepared in conjunction with the Federal Open Market Committee (FOMC) meeting in late June, reflected their assessment that the pace of the economic recovery will pick up in coming quarters. Specifically, participants' projections for the increase in real GDP have a central tendency of 2.7 to 2.9 percent for 2011, inclusive of the weak first half, and 3.3 to 3.7 percent in 2012--projections that, if realized, would constitute a notably better performance than we have seen so far this year.¹

FOMC participants continued to see the economic recovery strengthening over the medium term, with the central tendency of their projections for the increase in real GDP picking up to 3.5 to 4.2 percent in 2013. At the same time, the central tendencies of the projections of real GDP growth in 2011 and 2012 were marked down nearly 1/2 percentage point compared with those reported in April, suggesting that FOMC participants saw at least some part of the first-half slowdown as persisting for a while. Among the headwinds facing the economy are the slow growth in consumer spending, even after accounting for the effects of higher food and energy prices; the continuing depressed condition of the housing sector; still-limited access to credit for some households and small businesses; and fiscal tightening at all levels of government. Consistent with projected growth in real output modestly above its trend rate, FOMC participants expected that, over time, the jobless rate will decline--albeit only slowly--toward its longer-term normal level. The central tendencies of participants' forecasts for the unemployment rate were 8.6 to 8.9 percent for the fourth quarter of this year, 7.8 to 8.2 percent at the end of 2012, and 7.0 to 7.5 percent at the end of 2013.

The most recent data attest to the continuing weakness of the labor market: The unemployment rate increased to 9.2 percent in June, and gains in nonfarm payroll employment were below expectations for a second month. To date, of the more than 8-1/2 million jobs lost in the recession, 1-3/4 million have been regained. Of those employed, about 6 percent--8.6 million workers--report that they would like to be working full time but can only obtain part-time work. Importantly, nearly half of those currently unemployed have been out of work for more than six months, by far the highest ratio in the post-World War II period. Long-term unemployment imposes severe economic hardships on the unemployed and their families, and, by leading to an erosion of skills of those without work, it both impairs their lifetime employment prospects and reduces the productive potential of our economy as a whole.

Much of the slowdown in aggregate demand this year has been centered in the household sector, and the ability and willingness of consumers to spend will be an important determinant of the pace of the recovery in coming quarters. Real disposable personal income over the first five months of 2011 was boosted by the reduction in payroll taxes, but those gains were largely offset by higher prices for gasoline and other commodities. Households report that they have little confidence in the durability of the recovery and about their own income prospects. Moreover, the ongoing weakness in home values is holding down household wealth and weighing on consumer sentiment. On the positive side, household debt burdens are declining, delinquency rates on credit card and auto loans are down significantly, and the number of homeowners missing a mortgage payment for the first time is decreasing. The anticipated pickups in economic activity and job creation, together with the expected easing of price pressures, should bolster real household income, confidence, and spending in the medium run.

Residential construction activity remains at an extremely low level. The demand for homes has been depressed by many of the same factors that have held down consumer spending more generally, including the slowness of the recovery in jobs and income as well as poor consumer sentiment. Mortgage interest rates are near record lows, but access to mortgage credit continues to be constrained. Also, many potential homebuyers remain concerned about buying into a falling market, as weak demand for homes, the substantial backlog of vacant properties for sale, and the high proportion of distressed sales are keeping downward pressure on house prices.