Friday, 29 July 2011

Apple holding more cash than USA

Apple now has more cash to spend than the United States government.

Latest figures from the US Treasury Department show that the country has an operating cash balance of $73.7bn (£45.3bn).

Apple's most recent financial results put its reserves at $76.4bn (£46.9bn).

The US House of Representatives is due to vote on a bill to raise the country's debt ceiling, allowing it to borrow more money to cover spending commitments.

US President Barack Obama is known to be an iPad owner, along with 28 million other people

If it fails to extend the current limit of $14.3 trillion (£8.7tn) dollars, the federal government could find itself struggling to make payments, and risks the loss of its AAA credit rating.

The United States is currently spending around $200bn (£122bn) more than it collects in revenue every month.

Apple, on the other hand, is making money hand over fist, according to its financial results.

In the three months ending 25 June, net income was 125% higher than a year earlier at $7.31bn (£4.6bn).
Spending spree

With more than $75bn (£35.8bn) either sitting in the bank or in easily accessible assets, there has been enormous speculation about what the company will do with the money.

"Apple keeps its cards close to its chest," said Daniel Ashdown, an analyst at Juniper Research.

Industry watchers believe that it is building up a war chest to be used for strategic acquisitions of other businesses, and to secure technology patents.

Bookstore Barnes and Noble and the online movie site Netflix have both been tipped as possible targets, said Mr Ashdown.

The company may also have its eye on smaller firms that develop systems Apple might want to add to its devices, such as voice recognition.

Apple dipped into some of its reserves recently when it teamed-up with Microsoft to buy a batch of patents from defunct Canadian firm Nortel.

The bidding consortium shelled out $4.5bn (£2.8bn) for more than 6,000 patents.

AT&T's T-Mobile plan gets boost from states

AT&T Inc. CEO Randall Stephenson, (C) joined by Jim Cicconi, senior executive vice president-external and legislative affairs for AT&T and Wayne Watts, (R) Senior Executive Vice President and ATT&T General Counsel, speaks at a news conference to announce the company's proposal to buy T-Mobile USA from Deutsche Telekom in New York, March 21, 2011.

By Jasmin Melvin

WASHINGTON | Thu Jul 28, 2011 12:21am BST

WASHINGTON (Reuters) - AT&T Inc's (T.N) $39 billion plan to acquire Deutsche Telekom AG's (DTEGn.DE) T-Mobile unit got support from a Louisiana regulator and 11 state attorneys general on Wednesday.

The Louisiana Public Service Commission, which regulates public utilities and transportation in the state, said it voted 4-1 to approve the merger, after staff found nothing to suggest the wireless deal was contrary to the public interest.

Separately, 11 state attorneys general wrote to the U.S. Justice Department and the Federal Communications Commission in support of the transaction that would vault the combined companies ahead of current market leader Verizon Wireless.

Attorneys general from Arkansas, Utah, Alabama, Georgia, Kentucky, Michigan, Mississippi, North Dakota, South Dakota, West Virginia and Wyoming said they believed the merger would bring better service and faster data speeds.

They asked for merger-specific conditions to protect competition and the public interest without delaying the merger, according to a news release from the Arkansas AG's office.

A statement by the Utah attorney general said the merger may raise competitive concerns in some discrete local markets and the AGs asked for targeted remedies in those cases.

The ultimate decision on the deal rests with the Justice Department, that is conducting an antitrust review, and the FCC, which is weighing whether the transaction is in the public interest.

The merger would concentrate 80 percent of the U.S. wireless market in just two companies -- AT&T/T-Mobile and Verizon Wireless, a venture of Verizon Communications (VZ.N) and Vodafone Group Plc (VOD.L).

AT&T argues that the purchase of T-Mobile will help it expand faster service to more customers.

Critics charge that less competition will increase prices and limit consumer choice.

AT&T's top lawyer welcomed the position of the 11 state attorneys general.

"Their call for federal regulators to expeditiously review and approve the merger further builds on our unprecedented nationwide support from federal, state and local elected officials, national unions, non-profit organizations, and high-tech and venture capital firms," said Wayne Watts, AT&T's senior executive vice president and general counsel.

But some prominent U.S. lawmakers and competitors have come out against the deal, including Senator Herb Kohl, chairman of the U.S. Senate's antitrust subcommittee.

Third-ranked U.S. wireless carrier Sprint Nextel (S.N) has said AT&T should use the money it plans to pay for T-Mobile to improve its network without removing a national competitor.

Sprint spokesman John Taylor said the Louisiana commission's decision was simply not to oppose AT&T's takeover and to instead defer to the FCC -- "far from the ringing endorsement AT&T sought."

(Reporting by Jasmin Melvin; Editing by Tim Dobbyn)

‘Great Recession’ even deeper than thought

Greg Robb

WASHINGTON (MarketWatch) — The U.S. recession was even deeper than previously thought, a new government report showed on Friday.

As part of an annual revision of data on U.S. gross domestic product, the Commerce Department said that the economy contracted by 5.1% between the fourth quarter of 2007 and the second quarter of 2009, more than the 4.1% previously estimated.

It ranks as the most severe recession in the post-World War II era.

As a result of the revision, GDP is now still below the pre-recession peak, economists said.

Nigel Gault, chief economist at IHS Global Insight, said the revised data helps explain the weak labor market.

Before the revision, it was hard to square an unemployment rate above 9% with the economy’s growth rate.

The data about the depth of the recession were included in the government’s preliminary estimate of GDP growth for the three months through June.

The government reported that growth accelerated to a 1.3% rate in the second quarter, from a sharply -downwardly-revised 0.4% increase in the first quarter.

Weaker consumer spending and business investment were the main drivers of the downward revisions, according to government analysts.

The revisions incorporate updated data including retail sales from the Census Bureau.

Under the revised data, the U.S. economy declined 0.3% in 2008, weaker than the prior estimate of a flat reading.

The contraction in GDP for 2009 was revised to 3.5%, much weaker than the previous estimate of a 2.6% decline.

The economy grew a little faster in 2010 than previously estimated, rising 3% compared with the prior estimate of 2.9%.

The data show that President Barack Obama won the 2008 election as the economy was in a freefall.

The economy declined at an 8.9% annual rate in the three months around the election. This was following by a drop of 6.7% in the first quarter of 2009.

Greg Robb is a senior reporter for MarketWatch in Washington.

Tuesday, 26 July 2011

Amazon expected to show earnings drop

By Dan Gallagher, MarketWatch

SAN FRANCISCO (MarketWatch) — is expected to report strong sales growth but a decline in earnings for the second quarter as the company continues to invest in its distribution network as well the development of new products — including, according to analysts, a widely expected tablet device.
Amazon AMZN -0.72% is slated to issue its second-quarter report after Tuesday’s closing bell.

Wall Street currently expects strong top-line growth, with sales surging more than 42% to $9.37 billion, according to consensus estimates from FactSet Research.

Earnings are expected to fall to 35 cents a share from 45 cents a share in the same period last year. Operating income is expected to slide to about $196 million from $270 million last year.
Earnings are likely to be “constrained by continued investments” in order-fulfillment centers, technology and content, as well as a “step-up in marketing spend,” wrote Dan Geiman of McAdams Wright Ragen in a note to clients Monday.

Amazon’s operating margins are a closely watched metric. The company guided to a wide range during its last earnings report in April, predicting a margin range of 1% to 2.5% for the period. Wall Street is predicting a strong improvement for the third quarter, with consensus estimates baking in an operating margin of about 4%.

The margin forecast could be a catalyst for the stock, which is up more than 18% from the first of the year, though Amazon’s valuation remains pricey at more than 75 times estimated earnings for the next four quarters.

While Amazon rarely delves into upcoming products and services during its earnings announcements, Ben Schachter of MacQuarie said he expects analysts to inquire about the company’s much-rumored tablet device, which is expected to launch within the next couple of months.

“Tablets will clearly be a focus area for the call, and we expect a lot of questions and few answers from the company,” Schachter wrote in a note to clients.

A tablet would add to the company’s Kindle line of e-readers as a branded device designed to showcase the company’s growing library of digital content.

Along with e-books, Amazon has been building out its online music, movie and videogame stores, along with its “Cloud Drive,” which is a cloud-based digital locker service that can store media files and allow users to play them from any Internet-connected PC.

One risk to the tablet strategy is the low prices the company will likely have to carry in order to effectively compete with the popular iPad from Apple Inc. AAPL +1.20% . Collin Gillis of BGC Partners said such a move is likely to weigh even heavier on Amazon margins.

“It is also very reasonable that the company produces a tablet product to complement its recent music-locker service and movie-streaming service — and we expect that the company maintains aggressive pricing that could result in the hardware being sold for no profit,” Gillis wrote Monday.

Anthony DiClemente of Barclays countered that an Amazon tablet could drive adoption of the company’s digital content, writing that “a tablet should help offset future declines in the physical media business as media shifts from physical to digital.”

Media, he noted, represented 40% of Amazon’s sales in the first quarter of this year.

Dan Gallagher is MarketWatch's technology editor, based in San Francisco.

BP fails to convince investors on strategy

BP Chief Executive,Bob Dudley
By Tom Bergin

LONDON | Tue Jul 26, 2011 2:13pm BST

(Reuters) - BP (BP.L) Chief Executive Bob Dudley's promise of strong long-term growth failed to convince investors concerned about the company's post oil-spill strategy.

A year after BP, Europe's second-largest oil company by market capitalisation, staunched the massive leak at its Gulf of Mexico well, investors say Dudley has still not set the company on the road to recovery.

On Tuesday he sought to address that concern, saying deals to secure new reserves this year would help drive performance in 2012, 2013 and beyond. But some analysts were unimpressed.

"Other companies have clearly re-defined their strategies over the last 12 to 24 months .. ExxonMobil (XOM.N) continues to build its shale gas business in the U.S. and Shell (RDSa.L) is focussed on mega gas projects. But what is BP doing?" Dougie Youngson, oil analyst at Arbuthnot, said in an email to clients.

BP shares were down 2 percent at 1:22 p.m., one of the biggest fallers on the FTSE 100 index .FTSE of blue-chip stocks. The STOXX Europe 600 Oil and Gas index .SXEP was down 0.3 percent.

Investors are frustrated at the share price which has failed to recover materially in the past nine months, despite some progress in oil spill lawsuits and indications the final cost to the company will be less than many had feared. The dividend is also currently only half the pre-spill level.

On top of that, a failed $16 billion (9.8 billion pound) share swap and Arctic exploration deal with Russia's Rosneft has left investors questioning whether the company has a credible plan to access new resources.

Dudley acknowledged the disappointment.

"We feel a great sense of urgency around where our share price is .. Shareholders, I think, also are impatient," he told a press conference.

However, he reiterated that BP's priority this year was to consolidate its financial and operational position, namely by settling legal and judicial claims related to the spill.

"It is important for us to continue to reduce the uncertainties the company faces, particularly in the U.S., before we would be in a position to increase the dividend," he added.

Some analysts, bankers and investors are beginning to ask whether the best way for BP to address its valuation discount is to break itself up.

U.S. rivals ConocoPhillips (COP.N), Marathon Oil (MRO.N) and Murphy Oil (MUR.N) have followed strategies of spinning off their oil refining and fuel retail units.

Dudley downplayed the chances of an upstream-downstream breakup, while refining boss Iain Conn defended BP's integrated business model to reporters: "This type of company has an offer to the world."

Nonetheless, the company is selling half its U.S. refining capacity and said it was making progress on the sale of its Texas City and Carson, California plants.

Some bankers and analysts have also suggested BP sell off its Russian and U.S. assets to focus on high-growth international oil and gas production.

BP's underlying second-quarter results fell short of analysts' forecasts and benefited less than rivals such as Exxon Mobil (XOM.N) and Royal Dutch Shell Plc are expected to from a 50 percent rise in crude prices from a year ago.

Excluding one-offs, the replacement cost net income was up 13 percent to $5.61 billion, below an average forecast of $6.02 billion from a Reuters poll of 12 analysts.

Rivals Exxon and Shell are both expected to post a 50 percent rise in underlying net income.

"For the Bulls on BP there is little in today's results to get excited about," analysts at Bernstein said in a research note.

The London-based company said maintenance work in the North Sea and Angola and continued outages in the Gulf of Mexico had weighed on results in the quarter and would continue to impact performance in the second half of the year.

BP said oil and gas production fell by 11 percent in the quarter to 3.43 million barrels of oil equivalent per day, with sales of fields to pay for the spill accounting for a third of the drop.

The company again increased its estimate for the cost of dealing with the spill, adding around $500 million to the bill, although contributions of $1.1. billion from partners allowed the total charge taken by BP to be reduced.

Replacement cost net income was $5.31 billion, compared with a loss of $16.97 billion in the same period last year that included the cost of tackling the spill.

(Editing by Erica Billingham)

Friday, 22 July 2011

Bomb rocks government offices in Oslo, two said dead

By Walter Gibbs and Alister Doyle

OSLO, July 22 | Fri Jul 22, 2011 11:25am EDT

Debris is seen on the street after a powerful explosion rocked central Oslo, July 22, 2011.
REUTERS/Holm Morten/Scanpix

OSLO, July 22 (Reuters) - A massive bomb shattered Norway's main government building in Oslo Friday, killing two people police were quoted as saying by local news agency NTB.

There was no claim of responsibility, though NATO member Norway has been the target of threats, if not bombs, before, notably over its involvement in conflicts in Afghanistan and Libya. Prime Minister Jens Stoltenberg was safe, NTB said.

NRK radio said at least two people were killed in an attack that may have brought global political violence to the quiet Scandinavian city.

"It exploded -- it must have been a bomb. People ran in panic and ran. I counted at least 10 injured people," said bystander Kjersti Vedun, who was leaving the area.

A Reuters reporter at the scene said the blast scattered debris across the streets and shook the entire city center around 3:30 p.m. (9:30 a.m. EDT). He saw eight people injured, one covered in a sheet and apparently dead.

"So far I can confirm that we have received seven people at Oslo University Hospital," a press officer at the clinic said.

"I don't know how seriously wounded they are."

The explosion blew out most of the windows of the 17-storey central government building, cast a huge pall of smoke over the city and scattered shards of metal and other debris for hundreds of meters.

Nearby ministries were also hit, including the oil ministry, which was on fire. Heavy debris littered the streets.

John Drake, senior risk consultant, at London-based consultancy AKE said: "It may not be too dissimilar to the terrorist attack in Stockholm in December which saw a car bomb and secondary explosion shortly after in the downtown area.

"That attack was later claimed as reprisal for Sweden's contribution to the efforts in Afghanistan."

The Reuters correspondent said the streets had been fairly quiet in mid-afternoon on a Friday in high summer, when many Oslo residents take vacation or leave for weekend breaks.

The tangled wreckage of a car was outside one building, as well as the damage to the buildings, appeared consistent to witnesses with that from car bombs.


NATO member Norway has sometimes in the past been threatened by leaders of al Qaeda for its involvement in Afghanistan. But political violence is virtually unknown in a country known for sponsoring the Nobel Peace Prize and mediating in international conflicts, including in the Middle East and Sri Lanka.

It has also taken part the NATO bombing of Libya, where Muammar Gaddafi has threatened to strike back in Europe.

David Lea, Western Europe analyst, at Control Risks said: "There certainly aren't any domestic Norwegian terrorist groups although there have been some al Qaeda-linked arrests from time to time. They are in Afghanistan and were involved in Libya, but it's far too soon to draw any conclusions."

(Additional reporting by Gwladys Fouche in Oslo and Peter Apps and William Maclean in London; Writing by Alister Doyle; Editing by Alastair Macdonald)

Forex: AUD/USD backs away from 10-week highs

Fri, Jul 22 2011, 14:19 GMT (Córdoba) - The Aussie has moved off its 10-week high reached earlier at 1.0873 against the Greenback as risk appetite is easing on Friday after the spike the markets enjoyed yesterday. AUD/USD fell around 35 pips from highs to the 1.0835 area where the correction was contained by the 20-hour SMA.

Despite the bearish correction, the Aussie is holding pretty well, supported by gold prices' sharp rise. At time of writing, AUD/USD is trading at the 1.0845/50 area, still 0.10% above its opening price.

"The overall bullish outlook remains intact for a rise to 1.10+ levels. Resistance-turned-Support is seen at 1.0800 and then significant Support is seen near 1.0730", comments the Kshitij Consultancy Services team. "A dip to 1.0750-30 if seen can attract fresh buying in the market. As mentioned in the morning, Aussie is gearing up for a rally to 1.10 or even higher in the coming days/weeks".

Wednesday, 20 July 2011

Anadarko-BP settlement deal not imminent -source

* BP shares firmer on rumor
* Anadarko declines comment

(Reuters) - A settlement between BP Plc and Anadarko Petroleum concerning liability around last year's Gulf of Mexico oil spill is not imminent, a source familiar with the dispute said.

Shares in BP had risen on market speculation that Anadarko Petroleum Corp will bring forward a settlement with the major British oil company.

The source familiar with the dispute said a settlement between BP and Anadarko was not imminent, and attributed the chatter about a potential deal to the release of the U.S. company's earnings, even though that release date had been set months earlier.

Anadarko declined to comment on the issue, citing its policy of not discussing market rumors. Its shares were up 1 percent at $83.13 on Wednesday morning. BP shares were up 2.8 percent in London.

Anadarko is scheduled to release second-quarter earnings on Monday after the market close.

Anadarko has maintained that it has a strong legal position and should face no liability in last year's spill, but Jim Hackett, the company's CEO, said in May that the company would discuss the issue with BP under the right circumstances.

A BP spokeswoman said: "We've always said that we expect our partners to pay their contribution and that's all we can say."

U.S. District Judge Carl Barbier in New Orleans on Monday put Anadarko's claims against BP on hold, citing a provision in the companies' operating agreement for the Macondo well that disputes be arbitrated.

Anadarko owned a 25 percent stake in the blown-out Macondo well. BP had asked Anadarko to help pay for some of the cleanup and recovery costs, but the company has refused. Anadarko then filed a lawsuit in April, claiming it was not at fault for the explosion and spill.

(Reporting by Matt Daily, editing by Matthew Lewis)

Monday, 18 July 2011

Gold futures rise above $1,600 an ounce

Worries over euro-zone crisis and U.S. debt ceiling boost gold
By Polya Lesova and Virginia Harrison, MarketWatch

LONDON (MarketWatch) — Gold futures rallied above $1,600 an ounce in electronic trading on Monday, as concerns about the euro-zone debt crisis and the lack of agreement on raising the U.S. debt ceiling prompted investors to seek a safe haven in the precious metal.

Gold for August delivery rose $7.90, or 0.5%, to $1,598 an ounce on the Comex division of the New York Mercantile Exchange in very early morning U.S. trading. Earlier in the day, the contract surged as high as $1,601.20 an ounce, according to data from FactSet.

Gold futures finished last week at a record nominal settlement price of $1,590.10 an ounce.

“European sovereign fears, combined with wrangling over raising the debt ceiling, have boosted safe havens,“ said Kathleen Brooks, an analyst at, in a note.

“Recently gold has outpaced silver; however, with gold reaching a record $1,600 per ounce this morning, we think that silver may play catch up,“ she said.

In Europe, Italian and Spanish government bond yields rose sharply, as investors were spooked by the ongoing uncertainty over the ability of European officials to agree on a second aid program for Greece and stop contagion from Greece’s troubles to other countries such as Spain and Italy.

Investors tend to buy gold as a store of value during times of financial turmoil. Meanwhile, worries about rising inflation — enhanced by the possibility of the injection of further stimulus into the U.S. economy — have also supported gold, which is seen as an inflation hedge.

The impasse in U.S. debt ceiling talks has further added to gold’s appeal, as the Aug. 2 deadline for Congress to pass legislation to prevent a default loomed. Read the latest on debt-ceiling negotiations in Washington.
Silver rises

Silver for September delivery rose 82 cents, or 2.1%, to $39.90 an ounce on the Nymex.

Silver was the worst performer among precious metals in the second quarter, but it could outperform gold toward the end of the summer, according to Anne-Laure Tremblay of BNP Paribas.

“If current uncertainties about the debt deal in the U.S. and risks of contagion of the fiscal crisis in the euro zone subside, then the gold price, to which silver is tied, may be range-bound during the summer,” Tremblay said in a note.

“Silver could outperform gold once more toward the end of summer, and we would expect the gold-silver ratio to start declining once more as a result,” she said.

In other metals trading, copper for September delivery was unchanged at $4.41 a pound.

Meanwhile, the dollar index , which tracks the U.S. unit’s performance against a basket of six rival currencies, rose to 75.539, up from 75.148 in North American trade late Friday.

Polya Lesova is chief of MarketWatch’s London bureau. Virginia Harrison is a MarketWatch reporter based in Sydney.

Thursday, 7 July 2011

ECB signals more rate rises to come, helps Portugal

By Paul Carrel

FRANKFURT | Thu Jul 7, 2011 3:07pm BST

(Reuters) - The European Central Bank raised interest rates for the second time this year on Thursday and signalled further policy tightening to come to tackle inflation despite the euro zone's intensifying debt crisis.

But it offered help to hard-pressed Portugal after ratings agency Moody's downgraded its debt to junk status this week, committing to keep providing it with liquidity.

"We will continue to monitor very closely all developments with respect to upside risks to price stability," Trichet told a news conference after the bank raised interest rates by 25 basis points to 1.5 percent.

Economists said before the news conference that use of that phrase would signal a further rate rise in 2011, likely to be in the last three months of the year.

Euro zone inflation held at 2.7 percent in June, well above the ECB's target of just under 2 percent. Trichet said monetary policy remained accommodative even after Thursday's increase.

The rise in the ECB's benchmark interest rate to 1.5 percent was widely expected after the bank's recent reiterations that it was in "strong vigilance" mode -- code traditionally used to signal a hike.

"No surprise at all," Berenberg economist Holger Schmieding said of Thursday's quarter-point rise.

The ECB raised its subsidiary overnight deposit and borrowing rates in unison, opting not to re-widen its so-called rate 'corridor' this time around.

Recent euro zone data has generally disappointed. The latest industrial orders rose less than expected, while growth in the bloc's dominant service sector has also slowed sharply.

A Reuters poll found economists have softened their rate hike view as the euro zone debt crisis has escalated over the last month.

The ECB's key rate is expected to rise just once more this year, to 1.75 percent, with only two quarter-point increases forecast to follow for all of next year.

In contrast, the Bank of England kept rates on hold on Thursday.


The downgrading of recently bailed-out Portugal's credit rating to junk rattled financial markets on Wednesday and cast new doubt on European efforts to rescue distressed euro zone states without debt restructuring.

The ECB has pledged to keep liquidity flowing to euro zone banks that need it, and Trichet said Portuguese debt would be accepted by the ECB as collateral for now, come what may.

"We have decided to suspend the application of the minimum credit rating threshold ... for the purpose of Eurosystem credit operations in the case of marketable debt instruments issued or guaranteed by the Portuguese government," he said.

"This suspension will be maintained until further notice."

The ECB has proved a major stumbling block in agreeing a second rescue plan for Greece as it has threatened to refuse restructured Greek bonds as collateral in its lending operations in the event of a default or a "restricted default," which ratings agencies are threatening to impose.

"We say no to selective default," Trichet said.

Refusing to accept Greek bonds as collateral would deprive Greek banks of the funds on which they rely, crippling the Greek economy and risking contagion to other euro zone economies. Most economists expect the ECB to baulk at that and keep banks afloat somehow.

(Editing by Mike Peacock)

Wednesday, 6 July 2011

Gold futures gain more than $20 an ounce

Silver tracks gold higher, but copper, platinum, palladium prices slip

SAN FRANCISCO (MarketWatch) — Gold futures gained more than $20 an ounce Wednesday, extending sharp gains made the previous day in New York, with global-debt troubles back on center stage.

Gold for August delivery was up $20.10, or 1.3%, at $1,532.80 an ounce on the Comex division of the New York Mercantile Exchange. The contract, which earlier touched a high of $1,534.50, hasn’t traded at levels this high since June 22.
Prices for the precious metal jumped more than $30 an ounce in regular trading on Tuesday, buoyed by safe-haven buying as Europe’s debt issues reemerged as a concern for investors.

“The persistent debt problems in both Europe and the U.S. are a big part of gold’s gains this week,” said Peter Grant, senior metals analyst at USAGold-Centennial Precious Metals Inc.

“It’s quickly becoming a question of credibility,” he said. “As the troika flails about trying to mitigate the Greek crisis without creating a default, they erode market confidence. That waning confidence in the troika has resulted in contagion to Portugal in the wake of yesterday’s downgrade.”

On Monday, the Standard & Poor’s credit-rating firm signaled that a plan to roll over Greek-government debt would constitute a “selective default.” Then on Tuesday, Moody’s Investors Services downgraded Portugal’s credit rating by four notches to speculative grade.

Also contributing to gains in gold is the local-government-debt story in China, said Grant: “Investors are worried that if China turns inward to address their own debt woes, it may be at the expense of Europe and America.”

The People’s Bank of China lifted lending and deposit rates 0.25 percentage point on Wednesday, marking the third such adjustment this year.

Seasonal surge

The focus, however, remains on debt problems in Europe and the U.S.

“Gold’s current strength signals that something’s very seriously amiss on both sides of the Atlantic,” said Adrian Ash, head of research at, an online service for gold-bullion trading and ownership.

He points out that gold bulls typically take a holiday in July through September, thanks primarily to the seasonal lull in Indian demand but also thanks to the broader “sell in May” drop-off in all financial trading.

“But if Greece, Portugal and the U.S. debt-ceiling ruckus don’t allow that typical pullback to come through, gold prices could run straight onto their very typical autumnal surge,” said Ash. “India’s festive demand will then return, running straight onto China’s heavy New Year gold buying in January/February.”

For now, U.S. and euro-zone debt looks likely to dominate traders’ views in the coming days, but players will also be paying close attention to key U.S. jobs data this week, and to Thursday’s rate meetings by the European Central Bank and Bank of England, said James Moore, analyst at, in a note to clients Wednesday.

Weekly filings for unemployment benefits are due out from the Labor Department on Thursday, followed by figures on U.S. joblessness and growth in nonfarm payrolls for June on Friday.

Gold prices gained more ground shortly after the Institute for Supply Management said its U.S. services-sector index for June fell to 53.3% from 54.6% in May. Economists surveyed by MarketWatch had expected a dip to 54%; a reading over 50% indicates that more firms in the survey are expanding than contracting.

In other metals action on Wednesday, September silver rallied 71 cents to $36.12 an ounce, while September copper declined 0.6 cent to $4.34 per pound.

September palladium traded flat at $775.65 an ounce, while October platinum declined $3.40 to stand at $1,738.70 an ounce.

Myra Saefong is a MarketWatch reporter based in San Francisco. Sarah Turner is MarketWatch's bureau chief in Sydney.

Tuesday, 5 July 2011

The Week That Was ;BP Plc, Deutsche Tel, Banco Popolare, Copper

It has been a slow 7 days as the 2nd quarter came to an end without too many headlines apart from the Dow Jones Industrial Index (DJIA) shooting above its 1200 points resistance. The ugly Greece debt crisis also came within manageability this week.
The Blue Chips 2011 Portfolio
Bp Plc is finally in the green after the stock rose 1% above the opening price of 455.60p.This stock has been boosted by the easing of the Eurozone debt crisis. Also ,the compensation fund for the Mexican Gulf oil spill is being boosted by the chipping in of associates such as Mitsui. Oil price volatility has also eased due to the IAEA intervention to boost oil supply of which BP is part of the oil bigs bidding for this extra supply.
Deutsche Tel has improved its position riding on the back of the Euro stocks’ resurgence after Greece approved austerity measures to deal with its debt crisis. This means that some of our long positions are now in the green. It also stands to gain even if the US FCC (Federal Commission of Communication) and the Department of Justice stop its sale of T-Mobile since the acquirer, AT & T has agreed to pay Deutsche Tel $6 billion if the deal falls through.
However, if the deal is passed, Deutsche Tel is in line for a $39 billion payoff which means the share price should ride an upward trend till the deal is sealed next spring. The stock is currently trading at €10.6.
Banco Popolare Societa Cooperativa
We closed the Banco Popolare trade on Tuesday 29th June at €1.52 yielding a return of 22%.We are now contemplating going long into it as its fortunes look to be better. Its management have just given a very positive earnings forecast arising from its restructuring. They anticipate job cuts in the near future but a return to profit growth in the next 12 months. The stock is currently trading at €1.62.
Blue Chips has also gone long into its first metal this year-copper at an opening price of$4.2568. This shows that the portfolio is healthy enough to withstand the volatility that comes with commodity markets. Copper is actually less volatile than gold in the market which has come from highs of $1571 in May to a low of $1482/oz attributable to the resolution of the Greek crisis. This may change however as the overall Eurozone debt issue is far from settled as Portugal, Spain & now Italy remain in the spotlight.
The issue is also bound to affect the Blue Chips portfolio if we decide to go long into Banco Popolare due to Moody’s threat of downgrading Italy’s debt.2 Italian stocks-Intesa & UniCredit- recently suffered a ‘flash crash’ recently in relation to this threat.
Whether or not Blue Chips extends its stay in Europe, a very exciting trading week lies ahead of us.
James Mwangi