Monday, April 18, 2011

S&P lowers outlook on US debt to negative

Well this answers my question of 5 mins ago of "why did the Gold & Silver markets just go vertical?"

NEW YORK (AP) -- Standard & Poor's Ratings Service has lowered its long-term outlook for the United States' sovereign debt to "Negative" from "Stable" due to risks from the country's growing deficit.

But the agency also reaffirmed the investment-grade credit ratings on country's long-term and short-term debt.

S&P says the U.S. has a high-income, diversified and flexible economy that has helped it to encourage growth while containing inflation. But the country's ballooning deficit could offset those positives over the next two years.

The agency noted that the deficit grew to 11 percent of gross domestic income in 2009. That is much higher than the average of 2 percent to 5 percent in the previous six years.

Moody's downgrades Irish banks to junk status

From Finfacts:

Moody's Investors Service on Monday cut its ratings on five Irish banks to junk status following its downgrade of Irish sovereign debt last week.

The rating agency said the cut reflected the reduction in the level of systemic support embedded in the deposit ratings following the downgrade of the sovereign rating.

The long-term bank deposit ratings of Allied Irish Banks (AIB), Bank of Ireland (BoI), EBS Building Society (EBS) and Irish Life & Permanent (IL&P) was lowered by two notches, while that of ICS Building Society (ICS) was cut by one notch.

Also, the unguaranteed senior unsecured debt ratings of AIB, EBS and IL&P was downgraded by one notch to Ba3 and that of Bank of Ireland to Ba2.

The outlook on the long-term bank deposit and unguaranteed senior unsecured debt ratings of these institutions is negative, the agency said.

Last week, Moody's downgraded Ireland's sovereign ratings by two notches, citing weakening financial position of the government amid subdued economic activity. The outlook on the ratings remains negative.

The downgrade means some investors will no longer be allowed to buy Irish bank under the terms of their investment mandate. It will also hit corporate deposits.

Silver and Gold Markets get a shot of viagra

There seems to be extremely strong buying support at $1482 for gold, as gold spikes to an all time high of $1495. Buying support for silver is kicking at the $42.60 level. This NY session is going to very interesting. Will gold take out the famed $1,500/oz level today?

Japan nuclear update - Workers cannot approach reactor buildings

From NHK World:

At the Fukushima Daiichi nuclear plant, high levels of radiation have kept workers from approaching the buildings housing the first 3 reactors, which lost their cooling functions in the March 11th earthquake and tsunami.

On Friday, the highest radiation level measured outside the double-entry doors of the Number 1 to 3 reactor buildings was 2 to 4 millisieverts per hour.

Radiation levels measured between the double doors of those reactor buildings was 270 millisieverts in the Number One reactor, 12 in Number 2, and 10 in Number 3.
The radiation level detected at the Number One reactor exceeds the national exposure limit of 250 millisieverts for nuclear contract workers.

Tokyo Electric Power Company, TEPCO, has started using a remote-controlled robot inside the reactor buildings.

But issues remain as radioactive water has been found in turbine buildings and the utility tunnel outside the reactors.

At the Number 2 reactor, the level of highly contaminated water in the tunnel is still rising. To prevent overflow, TEPCO is stepping up the inspection of the nuclear waste processing facility, to which it aims to transfer contaminated water.

Underground water at the plant is also contaminated.
On Wednesday, the level of radioactive substances sharply increased at facilities where underground water from the Number 1 and 2 reactors is collected.

Inside Story: UK march for an alternative

From: AlJazeeraEnglish | Mar 29, 2011

In an event dubbed the march for the alternative, hundreds of thousands gathered in London - protesting against the coalition's planned spending cuts - the largest cut-backs since the Great Depression.

Organised by the Trade Union Congress, the protests remained largely peaceful. However events were overshadowed by violence that later erupted.

But as Europe is still struggling to avoid another financial crisis, would such measures have any impact? And what are the social and political implications?

Inside Story, with presenter Ghida Fakhry, discusses with: Jeremy Batstone-Carr, head of research at Charles Stanley stockbrokers; Max Keiser, financial analyst and renowned banking critic and Tom Clougherty, executive director of the Adam Smith Institute, a U.K.-based think tank dedicated to free market policies.

This episode of Inside Story aired from Monday, March 27, 2011.

Have China’s Property Curbs Changed Investment Behavior?

From JP Morgan:

With residential property transaction volumes having tapered off and a series of cooling measures and purchase restrictions raising barriers to investment in China’s housing sector, an increasingly frequent question being asked is “what are China’s would-be property investors doing with their money?” This report examines this question and draws the following conclusions:

Property tightening measures should be supportive of a gradual investment rotation into the A-share market.

The “mass-affluent” segment of society has seen its investment options sharply affected by restrictive housing measures, since these households possess sufficient capital to purchase investment property, but do not have the same degree of access to investment vehicles such as private equity funds and retail property available to those in the highest echelons of wealth.With growth in household deposits moderating, the most obvious expectation is that funds should be channeled towards equity investments.Managed fund subscriptions have risen thus far in 2011 and the creation of new securities accounts has steadily picked up since mid-February (on a 5-week moving average basis: 393,912 accounts during the week ending Apr1, compared to 159,494 accounts during the week ending Feb 11); the proportion of active securities accounts has picked up from 11.3% in early-Feb to 33.7% in early-April – roughly midway in the range observed over thepast three years. Inexpensive valuations and relatively strong earningsgrowth should encourage greater asset allocation into the A-share market,especially if inflation concerns ease towards mid-year. Although the equityposition of domestic mutual funds is relatively elevated at ~80%, retailinvestors account for roughly 60% of the A-share market.

China’s gold demand has surged

Demand for physical gold and gold-related investments has been growing at a rapid pace as precious metals represent a good hedge against inflation. Chinese demand for gold jewelry increased 13.5% YoY in 2010, while demand for bars & coins rose 70.5%.Most market participants expect that China’s gold demand could grow at a still-stronger pace in 2011. Total consumer demand in 2010 was equivalent to a total value of RMB 150.8 billion, representing between 1.1-3.6% of the increase in household cash holdings during 2010 (depending on whether jewelry purchases are classified as investments) in full