Bernanke offers no new stimulus

The chairman of the U.S. Federal Reserve, Ben Bernanke, offered no new stimulus for the American economy Friday, disappointing analysts and economists who had been hoping for measures to counter a slowing in growth.

In a speech during the bank's annual meeting in the resort of Jackson Hole, Wyoming, Bernanke did hint that Congress may need to act to stimulate hiring and growth.

The Fed chairman agreed that deficit reduction is necessary in the long-term, but added that future economic health could be undermined if hiring and growth are not strengthened now.

"Fiscal policymakers should not ... disregard the fragility of the current economic recovery," he said.

Bernanke also was critical of Congress' handling of this summer's battle over raising the debt ceiling. He said it disrupted the economy, and another episode like that could have long-term negative consequences.

To promote growth, Bernanke said the government must pursue tax, trade, and regulatory policies that encourage economic health.

Congress, however, has been focused on reducing the national budget deficits and less occupied with new spending to try to energize the economy. A plan lawmakers passed this month means annual deficits are expected to be reduced by $3.3 trillion US over the next decade through spending cuts.

Analysts noted the lack of new proposals in Bernanke's speech.

"He essentially hit the ball over to fiscal authorities and said, `There's only so much we can do,'" said Aneta Markowska, senior U.S. economist at Société Générale.

Bernanke left open the possibility of future action by the Fed, saying it "is prepared to employ its tools as appropriate to promote a stronger economic recovery."

He announced its monetary policy committee will expand its meeting in September from one day to two in order to study and discuss options to for additional monetary stimulus.

Markowska said the extension of the Fed's September meeting might suggest something new could be unveiled.

"Maybe that's a subtle signal they might announce something," she said.

The Fed chairman said record low interest rates will promote growth over time but that the weak economy requires further help in the short run.

His speech followed the release of a government report that the economy grew at an annual rate of just one per cent this spring and 0.7 per cent for the first six months of the year.

The report predicted only slightly healthier expansion in the second half.

Bernanke said he's optimistic that the job market and the economy will return to full health in the long run.

Most U.S. stocks fell sharply after the speech but later recovered. Late in the morning, the Dow was up 0.4 per cent, the S&P 500 was higher by 0.7 per cent and the Nasdaq rose 1.6 per cent.

Bernanke's speech comes at a critical moment for the economy. Some economists worry that another recession might be near.

Consumer spending has slowed. Home prices are depressed. Workers' pay is barely rising. Household debt loads remain high.

All that, compounded by Europe's debt crisis, has spooked the stock markets and unnerved consumers. Congress is focused on shrinking deficits and seems unlikely to back any new spending to try to energize the economy.

The Fed already announced on August 9 that it would keep short-term interest rates near zero through mid-2013.

With files from The Associated Press Accessibility Links

View the original article here

Markets eye Bernanke, European crisis

North American stock markets traded lower Thursday as traders debated whether U.S. Federal Reserve chairman Ben Bernanke would announce new economic stimulus measures in a key speech on Friday and worried about the latest developments in Europe's debt crisis.

In Toronto, the S&P/TSX composite index closed down 59.50 points, or 0.48 per cent, at 12,284.31.

In New York, the Dow Jones industrial average fell 170.89 points, or 1.51 per cent, to 11,149.82. The S&P 500 was down 18.33 points, or 1.56 per cent, to 1,159.27 while the Nasdaq composite index lost 48.06 points, or 1.95 per cent, to 2,419.63.

Gold prices reversed recent steep losses. December bullion closed up $5.90 US at $1,763.20 US an ounce.

Investors looking for a safe haven had pushed up the price of gold over the last few weeks to above $1,900 as stock markets turned volatile on worries that the U.S. could slip back into recession.

But profit-taking and higher margin requirements at exchange operator CME Group have pushed gold down more than nine per cent below Monday's latest record close.

Concerns that a second bailout for Greece could fall apart pushed up Greek bond yields and a sudden drop in Germany's stock market late in the session in Europe also spooked markets in North America.

The Canadian dollar slipped 0.02 of a cent to 101.34 cents US.

October crude rose 14 cents to finish at $85.30 US per barrel in New York as traders wondered whether Hurricane Irene, now in the Caribbean, head towards the U.S. east coast.

Analyst Tom Bentz with BNP Paribas Commodity Futures in New York thinks Irene is pushing up oil because of the possible problems that coastal flooding could cause for refineries and shipping. Refineries in Delaware, New Jersey, Pennsylvania and Virginia produce nearly eight per cent of U.S. gasoline and diesel fuel.

Irene is forecast to affect a broad area, from North Carolina to Eastern Canada, with flooding and winds as high as 190 kilometres an hour. Some forecasters think Irene could be the worst hurricane to hit the U.S. Northeast in 50 years.

U.S. gasoline futures rose 4.59 cents to end at $2.8017 a gallon.

S&P/TSX 3-month chart

Bernanke will deliver a speech just after North American markets open at an economic conference in Jackson Hole, Wyo.

"If you're in Bernanke's shoes, on the one hand you sort of want to pacify the markets because that affects consumer confidence and the market is down quite a bit," said Luciano Orengo, portfolio manager at Manulife Asset Management.

"But at the same time, the economy, although it's slowing down, it is not that evident that we're in a recession or anything like that.

Germany's main index, the DAX, fell about 250 points in a matter of minutes to trade down more than four per cent before recovering somewhat. By the close it was down 1.7 per cent.

Analysts and traders could not immediately identify a reason for the slide. Thilo Mueller of MB Fund Advisory said there was no obvious news to send the market down so suddenly and that the drop came "like lightning out of a clear sky."

"No one has been able to give a rational explanation … I think this is not the last word, I am eager to see if there is a reasonable answer why so many shares plunged at the same time," Mueller told The Associated Press.

Other major markets followed the Dax's lead, with London's FTSE 100 index closing down 1.4 per cent and the Paris CAC 40 shedding 0.7 per cent.

Several European countries that banned short-selling have extended the prohibition until the end of September.

Dow Jones industrial 3-month chart

When concerns about European banks' exposure to Greek debt sent their stocks plummeting two weeks ago, market regulators in Belgium, France, Greece, Italy and Spain stepped in to prohibit traders from betting on the decline in a share's price.

On Thursday, the countries extended the ban and said they would reconsider it at the end of next month. Greece's ban expires in October.

Short-selling is a trade in which the investor borrows an asset and sells it in the hope of buying it back at a lower price to repay the loan, while pocketing the difference.

Before the German market went into reverse, American markets had jumped on news that Warren Buffett's Berkshire Hathaway will invest $5 billion US in Bank of America. The bank's shares closed up 66 cents, or 9.44 per cent, at $7.65 US, after gaining as much as $1.81 during the session.

Bank of America shares had fallen sharply recently as doubts rose about the bank's' capital position.

Shares in Apple Inc. closed down $2.46, or 0.65 per cent, at $373.72 US after Steve Jobs announced he was departing as the tech giant's CEO and passed the job to Tim Cook, the company's chief operating officer.

With files from The Canadian Press and The Associated Press Accessibility Links

View the original article here

Bernanke Suggests Chance Of QE3, Triggers Renewed Risk Trade

Jul. 13 2011 - 1:13 pm | 84 views | 0 recommendations | Image by Getty Images via @daylife

Federal Reserve Chairman Ben Bernanke told lawmakers that further stimulus may be necessary if the U.S. economy fails to gain momentum in Washington Wednesday, triggering a midmorning rally that had the major averages up better than 1%.

The chairman’s remarks showed no departure from the minutes of the Federal Open Market Committee’s June meeting released Tuesday, which showed that members discussed further stimulus, but also mulled an exit strategy from the Fed’s extremely accommodative policy. That two-pronged approach – understandable given the economy’s recent slowdown – was glossed over Wednesday as the market seized on the chance of QE3 and eased the sting of recent weakness.

An hour after noon the Dow Jones industrial average was up 133 points to 12,580, the S&P 500 14 points to 1,328 and the Nasdaq 39 points to 2,821. Financial stocks were able participants in the march higher, with JPMorgan Chase and Citigroup up better than 2% apiece. The pair report earnings Thursday and Friday, respectively.

To John Richards, head of Americas strategy at RBS, QE3 is still unlikely even after a dismal June jobs report, but that can change. The economy needs “an immediate reversal in momentum,” to move further stimulus from the Fed off the table, says Richards, who still expects a more robust second half but is keeping an eye on data like gauges of manufacturing and auto production for signals on which direction the scale is tilting.

All Bernanke did Wednesday was leave the door open  to the possibility of QE3, and the market responded with “so you’re saying there’s a chance.” Where have we heard that before?

View the original article here

Gold Hits All-Time Highs After Bernanke Comments On Stimulus

Jul. 13 2011 - 2:21 pm | 0 views | 0 recommendations |

(Kitco News) – The Federal Reserve has indicated for the second day in a row that further stimulus measures are possible to help jump-start the U.S. economy, propelling gold to an all-time high.

The Fed has not actually announced any new measures and is still monitoring the economy to see whether they are even necessary. But for now, the gold market is factoring in further debasement of the U.S. dollar, analysts said.

News that the Fed is at least thinking about further stimulus comes at a time when the yellow metal is already underpinned by European debt issues and political deadlock in the U.S. on raising the debt ceiling ahead of an early-August target to avoid a default.

August gold has peaked so far Wednesday at $1,588.70 an ounce on the Comex division of the New York Mercantile Exchange, a record for a most-active contract. As of 1:08 p.m. EDT, it was up $23.10, or 1.5%, to $1,585.40 an ounce. Spot gold was $18.60 higher at $1,585.90 an ounce.

The next obvious target for the market is the next big round number of $1,600 an ounce.

“The way we’ve been trading the last couple of days, we (could be) five minutes away,” said Mike Daly, gold and silver specialist with PFGBEST.

The Fed last month said that it was not embarking upon a third round of purchases of Treasury securities in a move to push down long-term yields, referred to as quantitative easing. The second round of QE ended June 30. However, minutes of the June 21-22 meeting of the FOMC, released Tuesday afternoon, showed that a minority is at least considering further action.

Then in congressional testimony Wednesday morning, Federal Reserve Chairman Ben Bernanke in essence confirmed that policy-makers are considering more easing. He said economic weakness may be more persistent than expected, “implying a need for additional policy support.” He also said the Fed is contemplating several “untested” steps to revive the economy.

Thus, markets went from thinking not long ago there would be no further stimulus to now thinking there very well may be, Daly said.

“It’s called many things, but any form of printing of money is obviously dilutive of the dollar, and that’s obviously good for gold,” said Jeff Clark, precious-metals analyst with Casey Research. “That’s the primary reason why gold is moving.”

Of course, the Fed has not embarked upon further stimulus yet. Time will tell whether it happens.

“But there is an obvious indication they are contemplating it. Let’s put it that way,” Clark said. He later added: “The markets are interpreting that as they likely will. And therefore, gold is up.”

Not only is gold up and the dollar down, but the Dow Jones Industrial Average is around 120 points higher on the prospects for more stimulus measures.

Any further easing also adds to worries about inflation, said Daly and George Gero, vice president with RBC Capital Markets Global Futures. Already, China is trying to contain inflation fueled in part by high commodity prices, Daly added.

Mark Johnson, portfolio co-manager with the USAA Precious Metals and Minerals Fund, pointed out that the FOMC minutes released Tuesday left the door open for the Fed to either loosen or tighten policy down the road. Policy-makers have given themselves considerable flexibility, he suggested.

“I think you have to look beyond the statements at the underlying conditions,” he said. “And the underlying economic conditions would basically argue there is going to be no tightening any time soon.”

This implies continued negative real interest rates, which in turn debases the dollar and creates a favorable environment for gold, he said.

“If you couple that with the continued deterioration of the sovereign-debt issues in Europe, you’ve got another driver for gold, as people continue to question the long-term viability of the euro,” Johnson said.

European finance officials have been providing bailout loans while encouraging troubled nations to undertake austerity measures. Analysts often describe the net effect as “kicking the can down the road,” since countries are in essence borrowing money to meet debt obligations.

“They continue to kick the can down the road, but the can is getting bigger and heavier,” Johnson said. “At some point when they kick it, they are going to break their feet.”

Meanwhile, Daly said, the market is only a month or two from the period when it tends to draw seasonal support from gift-giving holidays. A number of important holidays occur in autumn in India, a significant gold consumer, followed by the Christmas season in Western nations.

The buying is accelerating on technical chart factors, Gero said.

“It looks like we’re just off to the races,” he said. “The Bernanke remarks are playing a role in getting both the technical traders and fundamental traders involved.”

The most recent FOMC developments are bullish for gold in both the short and long term, Clark said. But “that doesn’t mean it’s going to be a straight line up,” he added.

He and Johnson said whenever Washington finally reaches an agreement on the debt ceiling, the metal will probably dip. “Any time you take a risk factor of the table, you would expect gold to soften,” Johnson said. Still, he and Clark said this is likely to be only a temporary setback.

“That won’t solve our structural debt, deficit and money-printing problems,” Clark said. “So in the long term, this is nothing but positive for gold.”

By Allen Sykora of Kitco News; asykora@kitco.com

http://www.kitco.com/

View the original article here

Bernanke Fights Ron Paul In Congress: Gold Isn't Money

Jul. 13 2011 - 11:26 am | 149,605 views | 1 recommendation | Bernanke faced Ron Paul in Congress - H4cblog

Chairman Ben Bernanke faced-off with Fed-hating Representative Ron Paul during his monetary policy report to Congress on Wednesday.  The head of the Fed was forced to respond to accusations of enriching already rich corporations while failing to help Main Street, while he was pushed on his views on gold.  When asked whether gold is money, Bernanke flatly responded “No.” (See video below).

While most of Bernanke’s reports to Congress serve politicians to pursue their own agendas by gearing the Chairman towards their issues, with Republican Rep. Bacchus talking of the unsustainability of Medicaid and Rep. Frank (D, Mass.) asking about the need to raise the debt limit without cutting spending, it was a stand-off between Bernanke and Ron Paul that took all the attention. (Read Apocalyptic Bernanke: Raise The Debt Ceiling Or Else).

Rep. Ron Paul, Republican for Texas, asked Bernanke why a capital injection of more than $5 trillion “hasn’t done much” to help the consumer, who makes up about two-thirds of GDP in the U.S., and prop up the economy, while it helped boost corporate profits.  “You could’ve given $17,000 to each citizen,” Ron Paul claimed.

Gallery: The Five Stages of Greece’s Financial Woes

Bernanke, clearly on the defensive, told Rep. Ron Paul that his institution hadn’t spent a single dollar, rather, the Fed has been a “profit center” according to the Chairman, returning profits to the federal government.  As Bernanke began to sermon Rep. Paul on the history of the Fed (“we are here to provide liquidity [in abnormal situations],” the Chairman said), he was interrupted.

“When you wake up in the morning, do you think about the price of gold,” Rep. Paul asked.  After pausing for a second, Bernanke responded, clearly uncomfortable. that he paid much attention to the price of gold, only to be interrupted once again.

“Gold’s at about $1,580 [an ounce] this morning, what do you think of the price of gold?” asked Rep. Paul.  A stern-faced Bernanke responded people bought it for protection and was once again cut-off, with Ron Paul once again on the offensive.

“Is gold money?” he asked.  Clearly bothered, Bernanke told the representative, “No. It’s a precious metal.”

After Paul interrupted him to note the long history of gold being used as money, Bernanke continued,”It’s an asset.  Would you say Treasury bills are money? I don’t think they’re money either but they’re a financial asset.”

Pages: 1 2

View the original article here

Bernanke hits chance QE3, risk renewed trade triggers

Jul 13 2011-1: 13 pm | 84 Views | 0 Recommendations |  Image by Getty Images via @ Daylife

Federal Reserve Chairman Ben Bernanke told lawmakers, that further impetus may be required, if the US economy to win not dynamic in Washington, Wednesday, triggering a morning rally, the most important indexes to better than 1% was.

The Chairman comments showed no deviation of the Federal open market Committee June minutes Tuesday, which showed that members discussed further stimulus, but also an exit strategy from extremely accommodative fed policy published mulled wine. This two-pronged approach - understandable given the recent slowdown of the economy - was glossed over Wednesday as the market at the chance, QE3 seized and facilitates the sting of the recent weakness.

An hour after noon was the Dow Jones industrial average up 133 points to 12,580 that 14 points to 1,328 and the NASDAQ 39 points S & P 500 on 2,821. Financials were able, participants in the March with JPMorgan Chase and Citigroup to better than 2% higher per piece. The pair currency option transactions result Thursday and Friday, respectively.

John Richards, head of Americas strategy at RBS, QE3 is also after a dreary June jobs report still unlikely, but that can change. The economy needs to move further boost by the fed off the table, "an immediate reversal in momentum," says Richards, which still a robust second half expected is an eye on data as instruments of production and automatic production for signals on the direction tilt the scale.

All Bernanke has on Wednesday, the door was left open the possibility the QE3 and the market is reacting with "So you say, there is a chance." Where have we heard that before?

View the original article here

Bernanke Ron Paul fights in Congress: Gold is not money

Jul 13 2011-11: 26 pm | 149,605 Views | 1 Recommendation |  Bernanke faced Ron Paul in Congress - H4cblog

Chief Ben Bernanke faced - off with fed hating Representative Ron Paul during his monetary policy report to Congress on Wednesday.  The head of the Fed was forced, to respond to the allegations while failed to help main while he was pushed on his views on Gold Street, enrich already rich corporations.  The question of whether Gold is money, responded bluntly "no," Bernanke. (See video below).

Serve as the most Bernanke's call for of non sustainability Medicaid and Republic Frank (D mass.) reports to the Congress politician, to pursue their own agenda, is the Chairman of their issues with Republican Republic Bacchus talk focusing on the need to raise debt without issues, it was a stand-off between Bernanke and Ron Paul, who took all the attention. (Read apocalyptic Bernanke: the debt increase ceiling or otherwise).

Republic of Ron Paul, Republican for Texas, asked why a capital injection of more than $5 trillion "did not much" to help the consumer, in which about two-thirds of GDP in the United States, and which support economy, while it helped boost profits Bernanke.  "You $17,000 every citizen may have been," said Ron Paul.

Gallery: The five stages of the Greek financial guarantee

Bernanke, no single dollar spent on the defensive, told Republic of Ron Paul, that his institution had the Fed was the Chairman, again gains to the Government rather "Profit centre" according to.  When Bernanke Republic Paul about the history of the Fed began preaching ("We are here to liquidity [in abnormal situations]," said the Chairman), it was interrupted.

Republic Paul asked "When you wake in the morning up, do you think about the price of gold".  After stopping the for a second, Bernanke responded, clearly uncomfortable. that much on the price of gold attention, only to be interrupted again.

"Gold's at about $1,580 [an ounce] this morning, what you think of the price of gold?" asked Paul Republic.  A stern-faced Bernanke replied people bought it for protection and was once again cut off with Ron Paul again on the offensive.

"Gold is money?" he asked.  Clearly disturbed, Bernanke said representatives of the "No." "It is a precious metal."

After Paul, interrupted to note the long history of gold as money, Bernanke drove him continued: "It is an asset."  Would you say bills are money? I don't think that they are either money, but they are a financial asset. "

Pages: 1 2

View the original article here

Gold hits all-time highs after Bernanke comments on stimulus

Jul 13 2011-2: 21 pm | 0 views | 0 Recommendations |

(Kitco News) - The Federal Reserve has indicated for the second day in a row, that further measures to stimulate the possible to help assist with the US economy are driving gold to an all-time high.

The Fed has announced not actually no new action and is still monitoring the economy, whether they are even necessary. But at the moment, the gold market is factoring in further humiliation of the US dollar, analysts said.

Messages that is thought the fed at least of more stimulus comes at a time when the yellow metal debt and political gridlock in the United States on the increase of the debt is reinforced ceiling already by European before of a beginning August target to avoid a default.

August gold has so far Wednesday at $1,588.70 an ounce on the COMEX Division of the New York Mercantile Exchange, a record for the most active contract reached. 1:08 Am EDT it was up to $23.10 or 1.5% to $1,585.40 an ounce. $18.60 Spot gold was higher at $1,585.90 an ounce.

The next obvious target for the market is oz the strong round of $1600.

"How have we been trade in the last few days, we (could be) five minutes," said Mike Daly, gold and silver specialist with PFGBEST.

The Fed said last month that it not on a third round of the purchases of government bonds in a move restrict long-term income, called quantitative easing which has been taken. The second round of QE June 30 ended. Minutes of the meeting of June 21-22 of the FOMC, published in the Tuesday afternoon, showed however that a minority is considering at least further action.

Then testimony confirmed Wednesday morning Federal Reserve Chairman Ben Bernanke primarily in Congress, that policy makers are considering more relaxation. He said that economic weakness may be more persistent than expected "implies a need for additional policy support.", he also said that the Fed is to look at several "untested" steps to revive the economy.

Markets went from think not not long ago it said further momentum so far very well it can think would Daly.

"It's called many things, but every form of printing money is obviously dilutive of the dollar and this is of course good for gold,", said Jeff Clark, precious metals analyst at Casey Research. "This is the main reason why gold is moved."

Of course the Fed has embarked on yet further impetus. Time will tell whether it is done.

"But an obvious indication that they are to look at it there." Let us say so, "Clark said. Later he added: "the markets are interpret as she probably will." "And that is why gold is up."

Not only gold is up and the dollar down, but the Dow Jones industrial average is around 120 points higher on the prospects for more stimulus measures.

Any further easing also added worry about inflation, said Daly and George Gero, Vice President at RBC capital markets global futures. Already, China tries the inflation fueled in part by high commodity prices added included Daly.

Mark Johnson, portfolio co-manager who dismissed USAA precious metals and minerals Fund, pointed out that the FOMC minutes Tuesday left the door released open for the fed to loosen or to tighten up policy on the road. Policy makers are considerable flexibility gave, he hit.

"I think you have the instructions for the underlying conditions to look,", he said. "And the business environment would claim basically will there be no tightening anytime soon."

This implies negative real interest rates further, which debases the dollar and created a favourable environment for gold, he said.

"If you, with the continued deterioration of the sovereign debt link problems in Europe, you have another driver for gold, since further to ensure the long-term viability of the euro in question people", said Johnson.

European financial officials who offers bailout loans while encouraging troubled Nations to carry out austerity measures. Analysts often describe on the net as "can occur on the road, the" effect, as countries are in the main bond money debt obligations to meet.

"she continue to the can on the street kick, but the can is getting bigger and heavier," said Johnson. "At some point if they it kick, they go to their feet to break."

Meanwhile, Daly said the market is from only a month or two of the time when it tends to draw seasonal gift holiday support. A number of important holidays occur in autumn in India, a major gold consumers followed by the Christmas season in Western countries.

The purchase of technical chart factors is acceleration, Gero said.

"It looks like we are before the race," he said. "The Bernanke comments play a role in getting the technical dealer and basic dealer involved."

The latest FOMC developments in the short and long term are bullish for gold, Clark said. But ", this does not mean that it is a straight line up to be," he added.

He and Johnson the metal said diving when Washington finally becomes an agreement on the debt reached ceiling, probably. "Every time if you take a risk factor of the table to mitigate gold would expect," said Johnson. Still, he and Clark said that this will be only a temporary setback.

"That will solve our structural debt, deficit and money printing problems is not," Clark said. "So in the long run this is nothing but positive for gold."

By Allen Sykora by Kitco news; asykora@Kitco.com

http://www.Kitco.com /.

View the original article here