The pound strengthened for a fourth year in 2012 against the euro as investors seeking a haven from Europe’s debt crisis pushed the currency higher, even as the Bank of England raised its so-called quantitative-easing target.
U.K. gilts advanced for a third year, pushing yields on British two-, five-, 10- and 30-year bonds to the lowest on record, as the financial turmoil in the euro area and the Bank of England’s asset-buying program boosted demand. The pound advanced for the first time in three years against the dollar and extended its longest run of annual gains against the euro since the 17-nation currency’s introduction in 1999.
“I don’t buy into the euro-positive story and ultimately sterling will be better placed against the euro,” said Neil Mellor, a foreign-exchange strategist at Bank of New York Mellon Corp. (BK) in London. “You can’t look at any euro-zone country and conclude that 2013 is going to be a positive year.”
The pound appreciated 0.3 percent to 81.52 pence per euro as of 1:41 p.m. London time yesterday, after climbing 0.5 percent on Dec. 28, the biggest increase since Dec. 6. It has gained 2.2 percent against the common currency in 2012. Sterling was little changed at $1.6176, having risen 4.3 percent in 2012.
The pound strengthened 1.6 percent last year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro declined 0.9 percent and the dollar fell 2.8 percent.
Gilts held their biggest weekly gain in a month yesterday as U.S. lawmakers debated ways to prevent automatic spending cuts and tax increases that risked triggering a recession. The pound strengthened for a second day against the euro after data showed U.K. executives’ confidence for 2013 improved last month, indicating the risk of a triple-dip recession may be receding.
A rising pound shows the challenges new Bank of England Governor Mark Carney, who takes over from Mervyn King in July, will face as he tries to boost an economy weighed down by recession in the euro region. The central bank increased bondpurchases to 375 billion pounds from 275 billion pounds last year, a move that usually debases a currency....
An epic lack of foresight, accuracy and rationale... https://www.tfmetalsreport.com/comment/170246#comment-170246
SEOUL - North Korean leader Kim Jong-un called for an end to confrontation between the two Koreas, technically still at war in the absence of a peace treaty to end their 1950-53 conflict, in a surprise New Year speech broadcast on state media. Full Article
9:43AM GMT 01 Jan 2013
They are tearing up the script, embracing the new creed of nominal GDP targeting (NGDP), a licence for yet more radical action.
The side-effects of this currency warfare -- or "beggar-thy-neighbour’ policy as it was known in the 1930s -- is an escalating leakage of monetary stimulus into the global system.
So don’t fight the Fed, and never fight the world’s central banks on multiple fronts.
Stock markets have already sensed this, up to a point, lifting Tokyo’s Nikkei by 23pc and Wall Street by 10pc since June.
The New Year ritual of predictions is a time for bravado, so let me hazzard that the S&P 500 index of stocks will break through its all time high of 1565 in early 2013 -- mindful though I am of flagging volume and a wicked 12-year triple top.
The Shanghai Composite will continue its explosive rally as China loosens the spigot again. The Politburo is reverting to its bad old ways of easy credit for state behemoths, and an infrastructure blitz, with $60bn of fiscal stimulus as well for good measure. Reform can wait.
Yes, we all know that China has added $14 trillion in extra credit since 2009, equal to the entire US banking system. It is trouble waiting to happen. But trouble can be deferred.
The more that investors come to think another cycle of global growth is safely under way, the riskier it will be to hold corporate bonds, $8 trillion in the US alone. With yields priced for deflation, that bubble is dangerous to own on 10-year maturities. The money will rotate into equities and bullion, with China’s central bank driving gold through $2,000 at last.
As a polar bear, I doubt that such a happy cycle is upon us. We merely have a rally within a structural trade depression....
Investment in US hits record level for Chinese
Updated: 2013-01-01 02:50
By Chen Weihua in New York (China Daily
Chinese foreign direct investment in the United States hit record levels in 2012 and shows little sign of slowing, despite lingering worries among some that the inflow of Chinese money presents a growing security risk to the country.
Chinese companies concluded deals worth $6.5 billion in 2012, an increase of 12 percent from the record $5.8 billion in 2010, according to a new report by New York-based Rhodium Group, which tracks Chinese FDI.
Thilo Hanemann, Rhodium's research director, said he believes the result reflected both the growing determination of Chinese firms to expand overseas, and the attractiveness of US markets and assets to investors.
The most appealing US sectors to Chinese investors were oil and gas exploration, advanced manufacturing that helps Chinese firms move up the value chain, and assets that allow investors to gain solid returns such as utilities, real estate and hospitality, according to the report.
Headlining the year's activities were Dalian Wanda Group's $2.6 billion acquisition of AMC Entertainment, the second largest US theater operator, Sinopec Corp's $2.5 billion investment in a third of Devon Energy's five shale gas assets in the US, and auto parts maker Wanxiang Group's $420 million investment in GreatPoint Energy, a company based in Cambridge, Massachusetts, that converts coal into cleaner-burning natural gas.
Meanwhile, a number of major Chinese FDI deals are still awaiting regulatory approval in the US, signaling that the growth is expected to continue into 2013.
For example, a group of Chinese investors has agreed to buy an 80.1 percent stake in American International Group's aircraft leasing unit for $4.2 billion, and Wanxiang has already been announced as the winner of a bid for battery producer A123 Systems, in a bankruptcy auction...
Iranian forces warn off 30 spy drones in drill: Iran cmdr.
Tue Jan 1, 2013 3:8PM GMT
On the fifth day of the military maneuvers on Tuesday, the spokesman for the Velayat 91 naval drills Rear Admiral Amir Rastegari noted that Iranian forces have so far stopped 30 intrusion attempts by foreign spy drones and reconnaissance aircraft into the maneuver zone.
“Different types of reconnaissance and spy aircraft that were attempting to enter the maneuver zone to spy and gather information, faced warnings from the Navy surface units and Khatam al-Anbiya Air Defense Base,” the commander added.
Rastegari stated that Iranian forces have on several occasions also issued warnings to transregional vessels that were attempting to get close to the exercise zone.
Iran’s Navy launched the six-day naval maneuvers codenamed Velayat 91 on December 28, 2012, in order to display the country’s capabilities in defending its maritime borders.
The specialized maritime maneuver covers an area from east of the Strait of Hormuz in the Sea of Oman to north of the Indian Ocean as far as the 18th parallel north.
Over the past few years, Iran has held several military drills to enhance the defensive capabilities of its armed forces and to test modern military tactics and equipment.
The Islamic Republic has repeatedly assured other nations, especially its neighbors, that its military might poses no threat to other countries, stating that its defense doctrine is based on deterrence.
Flight data recorders, commonly known as “black boxes,” have been a standard feature in airliners since the early 1960s. More recently, various companies have started offering apps and dedicated devices that essentially serve as black boxes for cars, keeping a record of the vehicle’s parameters and location when involved in an accident. Now, the U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) is proposing that similar devices become mandatory in all new light passenger vehicles sold in the U.S. by September 1st, 2014.
Shifting its military power to the Asia-Pacific region, the United States has started a five-year process of deploying its three types of stealth warplanes to bases near China.
Air Force F-22s and B-2s and Marine Corps F-35s will be stationed at bases around China as Beijing tests its own radar-evading jet fighters. U.S. President Barack Obama’s administration unveiled a new defense strategy that envisages a shift of focus from Iraq and Afghanistan toward the Pacific while addressing the increasing threats from China
Russian involvement in natural gas developments in the eastern Mediterranean is motivated by more than a desire for profit or the pursuit of political ends. It is also a defensive action to protect Russia’s national income from competitive supplies of natural gas from new prospective exporters into Europe.
Russia depends on oil and natural gas revenues for at least 70% and perhaps 80% of its federal budget. This causes the Russian government to be vulnerable to declines in international oil and gas prices, to international competition for oil and gas sales, and to disruptions or complications relating to its domestic production and processing.
The expert claims the real state of thins is that US has been unfriendly to Russia for the past 20 years, of which “NATO advancing toward Russia’s borders” and frequent interference “in Russia’s internal politics” speaks clearly, according to the scholar.
Cohen describes the Magnitsky Act as the inevitable stage of the plunging process and says the US has to admit that the act and the Russia’s reaction that followed – “when virtually every deputy [in the Russian Duma and in the Federal Assembly] voted in favor of the ban on American adoption, which was just signed by Putin” – was the result of “the policies it [Washington] pursued towards Moscow.”
Submitted by Tyler Durden on 01/01/2013 - 10:27
Submitted by Tyler Durden on 01/01/2013 - 09:49
We greet the new year with an America that has a Fiscal Cliff deal. Actually no, it doesn't - not even close. What it does have is an agreement, so far only at the Senate level which voted a little after 2 AM eastern in an 89-8 vote (Nays from Democrats Bennet, Cardin, Harkin, and Republicans - Lee, Paul, Grassley, Rubio and Shelby), to delay the all-important spending side of the Fiscal Cliff "deal" which "can is kicked" in the form of a 60 day extension to the sequester, to be taken up "eventually", but hopefully not on day 59 at the 11th hour, the same as fate of the all important US debt ceiling, which remains in limbo, and which now effectively prohibits America from incurring any new gross debt as the $16.4 trillion debt ceiling was breached yesterday... What did happen last night was merely the legislating of the inevitable tax hike on the 1%, which was assured the night Obama won the presidential election, something not even the most rabid Norquist pledge signatories had hope of avoiding. This was the first income tax hike in nearly two decades. A tax hike which, regardless of how it is spun, will result in a drag in consumption. It was also the brand new definition of rich, with the "$250,000" income threshold now left in the dust, and $400,000 for individuals ($450,000 for joint filers) taking its place. Who knew that New Normal would also bring us the New Rich definition. What is generally known is that the Senate bill boils down to the folllowing: $620 billion in tax hikes over the next decade offset by $15 billion in spending cuts now. Hardly "fair and balanced." Anyone who, therefore, thinks this bill is a slam dunk in the House is a brave gambling man.
Gold averaged a record $1,669 this year even as it slid 6 percent since September, set for the biggest quarterly drop since 2004.
Gold rose, capping the longest annual gain since at least 1920, on renewed concern that central banks from Europe to China will take steps to spur economic growth and as U.S. leaders near a budget deal.
Gold futures for February delivery gained 1.2 percent to settle at $1,675.80 at 1:41 p.m. on the Comex in New York, while prices for immediate delivery jumped as much as 1.5 percent. Through Dec. 28, the metal had slumped for five straight weeks as the deadline for the so-called fiscal cliff of automatic tax increases and spending cuts due to take effect tomorrow loomed. President Obama said today at a White House event that an agreement was “within sight.”
Investors from John Paulson to George Soros have a $140.6 billion bet via near-record holdings in gold-backed exchange- traded products after the Federal Reserve said Dec. 12 it would buy $45 billion of Treasury securities a month as of January, adding to $40 billion a month of mortgage-debt purchases. Gold will probably peak in 2013 because of improving U.S. growth, even as the Fed expands stimulus, Goldman Sachs Group Inc. said Dec. 5. Morgan Stanley said a day later bullion will be among next year’s best-performing commodities.
“All that money printing across the globe put a bid under gold,” Matt Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “There is overall optimism about the fiscal deal so we are seeing buying across the counter.”
The metal averaged a record $1,670.71 this year in New York even as it slid 6 percent since September, the biggest quarterly drop since 2004. The run of annual gains in the immediate delivery market is the longest since at least 1920. The Standard & Poor’s GSCI gauge of 24 commodities gained 0.3 percent this year, while the MSCI All-Country World Index of equities climbed 13 percent. Treasuries returned 2.3 percent, a Bank of America Corp. index (MXWD) shows.
This year, bullion gained 7 percent on the Comex, where floor trading will be closed tomorrow for New Year’s Day. Platinum futures rallied 9.8 percent this year in New York and palladium gained 7.2 percent as labor unrest in South Africa helped curb supply. Silver increased 8.3 percent...
Submitted by Tyler Durden on 01/01/2013 - 12:06
Authored by Andrew McKillop,
The Sickly Giant
Japan has the the world's third-biggest economy and was only recently pushed into this third place by China - but it remains world No 1, and by far, as measured by its sovereign debt-to-GNP ratio. Its new Liberal Democratic Party-LDP government, no different from LDP governments which have almost exclusively ruled since 1955, is setting out with a proud (in fact desperate) task: to end deflation by pushing down the world value of the JPY (yen) to a theoretical point where "inflation of 2% or 3% a year" will be possible.
The return of inflation, in official Japanese liberal newspeak, will make the economy less sickly even if the strategy "has risks". One of these is war with China, if only as a (Japanese) crowd pleaser, and another is selling off Japan's over-one-trillion dollar holding of US Federal debt at exactly the right psychological moment to implode the US economy, already teetering on the brink of its fiscal cliff.
The sickly Japanese economy can look quite healthy on cursory first glance. Probing deeper shows it is much, much worse than most Japanese either know or non-Japanese want to know. One reason that "nobody wants to know" is because Japan is the world leader in Neoliberal economic decline, having run the gamut of New Economy fads and foibles over more than 20 years. It has blown them up one by one, and slumpedever further into permanent and probably terminal decline....
Submitted by Tyler Durden on 01/01/2013 - 14:09
First - it is no longer the "Bush (temporary) tax cut" - it is now the "Obama (permanent) tax cut", with a loophole for the 1%ers (whose big picture "impact" we showed previously)
Second - according to the just released scoring by the CBO, the total impact to the US budget deficit of said permanent tax cuts, will be a $4 trillion increase in the deficit over the next decade. In reality, due to the CBO's perpetual optimistic bias, this number will likely be orders of magnitude lower than what it ends up being.
Maybe the US can just increase the taxes on the uber wealthy some more, and pray that unlike Obelix, they have never heard of Belgium.
Speaking to a select group of journalists at the Defence Ministry, the defence secretary said Pakistan had complete information about the CIA agents working in the country. He said Pakistan has been informed by the US regarding presence of the CIA agents.
He added that no country was allowed to work undercover in the country. “The CIA also uses the agencies of other countries.” He said the US and Britain are against the nuclear assets of Pakistan, adding that America is using agencies of other countries against the country.
After a long year of revolution in Yemen, former President Ali Abdullah Saleh was “toppled” and replaced by President Abd-Rabbu Mansour Hadi on February 27, 2012, through a one-man-election. Nevertheless, Yemen witnessed a year of instability and violence. The year 2012 was a year of unprecedented numbers of suicide bombs, explosive cars, targeted killings, explosions of gas pipelines and electricity cables, besides the constant and frequent US drone attacks.