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ECB cannot solve euro zone crisis, says Jens Weidmann, Bundesbank chief :

FRANCE: The European Central Bank cannot solve the euro zone crisis, Bundesbank chief Jens Weidmann told economists on Sunday, pressing the bloc's governments to get their economies in shape and tighten their fiscal rules.

Weidmann addressed an economists' conference in Aix-en-Provence, southern France, only three days after the ECB broke with precedent by declaring that it intended to keep interest rates at record lows for an extended period and may yet cut further.

"Monetary policy has already done a lot to absorb the economic consequences of the crisis, but it cannot solve the crisis," Weidmann said in his speech.

"This is the consensus of the Governing Council. The crisis has laid bare structural shortcomings. As such, they require structural solutions."

Weidmann, widely recognised to be the most hawkish member of the ECB's 23-man Governing Council, does not want the bank to intervene too strongly in tackling the bloc's economic crisis, thereby allowing governments to soft-pedal reforms

Buying Interest Wanes But Stocks Remain Mostly Positive - U.S. Commentary

Stocks remain mostly positive in mid-day trading on Monday, although buying interest has waned from earlier in the session. The gains on the day are extending the strong performance that was turned in by the markets last week.

While the Nasdaq has pulled back near the unchanged line, the major averages currently remain in positive territory. The Nasdaq is up 1.35 points or less than 0.1 percent at 3,480.73, while the Dow is up 81.78 points or 0.5 percent at 15,217.62 and the S&P 500 is up 8.31 points or 0.5 percent at 1,640.20.

The strength on Wall Street comes as traders have continued to react positively to last Friday's monthly jobs report, which showed stronger than expected job growth in the month of July.

The increased optimism about the economic outlook seemed to overshadow concerns that the data may lead the Federal Reserve to begin scaling back its stimulus program.

Nonetheless, trading activity has remained somewhat subdued, as some traders remain away from their desks following last week's Independence Day holiday.

Uncertainty about the upcoming earnings season is also keeping some traders on the sidelines, with Alcoa (AA) scheduled to release its second quarter results after the close of trading.

The release of quarterly results from Alcoa is seen as the unofficial start of earnings season, as the aluminum giant is traditionally the first Dow component to report its results.

Peter Boockvar of Morgan Stanley said, "With Q2 corporate earnings about to begin, S&P 500 earnings are expected to be up just 1.8% year-over-year and down by 1% ex financials."

"Revenue growth is expected to be up a modest 1.3% and 1.2% ex financials, which follows revenue growth in Q1 of just 0.6% and 0.3% ex financials," he added.

Sector News

Natural gas stocks are seeing considerable strength in mid-day trading, resulting in a 1.3 percent gain by the NYSE Arca Natural Gas Index. An increase by the price of natural gas is contributing to the strength in the sector, with natural gas for August delivery is climbing $0.11 to $3,727 per million BTUs.

Significant strength is also visible among oil service stocks, as reflected by the 1.1 percent gain being posted by the Philadelphia Oil Service Index. The strength in the oil service sector comes despite a decrease by the price of crude oil.

Retail stocks are also turning in a strong performance on the day, driving the Dow Jones Retail Index up by 1 percent. With the gain, the index has risen to its best intraday level in over a month.

Meanwhile, semiconductor stocks have shown a notable move to the downside, dragging the Philadelphia Semiconductor Index down by 1.6 percent. Intel (INTC) has helped to lead the sector lower following some disappointing analyst comments.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region came under pressure during trading on Monday. Japan's Nikkei 225 Index fell by 1.4 percent, while Hong Kong's Hang Seng Index ended the day down by 1.3 percent.

Meanwhile, the major European showed strong moves to the upside on the day. While the U.K.'s FTSE 100 Index rose by 1.2 percent, the French CAC 40 Index and the German DAX Index surged up by 1.9 percent and 2.1 percent, respectively.

In the bond market, treasuries are regaining some ground after falling sharply last Friday. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 5.1 basis points at 2.664 percent.

Hedge Fund Launches Plan B In Bid To Profit From Fannie And Freddie :


In recent months big and powerful hedge funds have descended on Washington, lobbying for Congress to revive Fannie Mae and Freddie Mac , the government-sponsored enterprises that have been operating out of conservatorship since the financial crisis. These hedge funds had purchased preferred shares of Fannie Mae and Freddie Mac in the hopes that their value would skyrocket under a privatization scheme of the two mortgage giants. Some of these hedge funds even bought up some of the even more speculative common shares of Fannie and Freddie, penny stocks that trade on the over the counter bulletin board.

But these hedge funds found the reception on Capitol Hill to be pretty cold. Instead, a bipartisan group of senators in late June put forward new legislation aimed at getting rid of the role Fannie Mae and Freddie Mac play in the housing market by purchasing and guaranteeing mortgages. Senators Bob Corker and Mark Warner want to replace Fannie Mae and Freddie Mac with a new Federal Mortgage Insurance Corporation, a government reinsurer of mortgage securities that would backstop private capital investment in mortgages. The legislative proposal sent both the common and preferred shares of Fannie Mae and Freddie Mac into a tailspin.

Traders Pay for an Early Peek at Key Data

On the morning of March 15, stocks stumbled on news that a key reading of consumer confidence was unexpectedly low.

One group of investors already knew that. They got the University of Michigan's consumer report two seconds before everyone else.

Infinium Capital Management, a high-speed trading firm in Chicago, used the information to launch a wave of trading in futures contracts, in just one example of the activity that followed. In a single second, according to a Wall Street Journal analysis, traders from various firms bet nearly seven million shares that equity markets would decline—which was exactly what happened when news of the survey became widely known.

Economic reports from public universities, trade groups and other nongovernmental organizations can move markets as surely as official data from the U.S. government. But unlike government reports, where pains are taken to make certain no one gets them ahead of time, few rules control release of nongovernmental economic reports. Unknown to many investors, selling early access is routine.

This is a "blind spot" in U.S. law, said Richard Painter, a former Republican White House ethics lawyer. Groups, he said, should "not be allowed to selectively disclose market-moving data to people who pay more money—that is not right."

But it is legal, and so is trading on the advance peeks. Even as securities rules bar companies from selective data disclosure, and as authorities vigorously pursue insider trading in all its forms, no law prevents investors from trading on nonpublic information they have legally purchased from other private entities. Trading would be illegal only if the information was passed through a breach of trust, said securities lawyers.

"If someone gives you permission to use the information, then there is no problem," said Steve Crimmins, a former Securities and Exchange Commission enforcement official now at law firm K&L Gates LLP.

Gold Rises Following FOMC Meeting Minutes, Stays In Range :

Gold prices rose in after-hours trade Wednesday following the release of minutes from the June Federal Open Market Committee meeting, where the participants discussed the Fed’s plan for ending stimulus, among other subjects.

The minutes were released at 2 p.m. EDT after the Comex pit closed. Prices for the most-active August contract settled at $1,247.40 an ounce and rose as high $1,262.4 as of 2:22 p.m. EDT, near the day session’s high of $1,264.50, before backtracking slightly.

“We got a little bit of a bid after the FOMC meeting minutes,” said Sterling Smith, futures specialist, commodity research, Citibank Institutional Client Group.

Smith said the FOMC minutes “give the dissenters a chance to discuss their views,” particularly those who wanted to delay tapering of the Fed’s quantitative-easing program. The gold market may have drawn some strength from that, he said.

Yet Smith doesn’t see the gains holding for long. “There are too many bearish events out there for gold and we will see some sort of tapering by the end of the year,” he said.

The Fed meeting minutes helped gold to rally, but “continued worries keep rally muted,” said George Gero, vice president with RBC Capital Markets Global Futures and a precious metals strategist.

Peter Buchanan, analyst at CIBC World Market, said there weren’t many surprises overall. “The committee also discussed the need to differentiate between the tapering of QE and actual rates hikes, once again emphasizing that there will likely be a considerable time between the end of QE and the first increase in target yields,” he said.

Wall St. climbs on Bernanke, S&P 500 passes record :

(Reuters) - Stocks jumped on Thursday, with the S&P 500 index climbing above its all-time closing high, after Federal Reserve Chairman Ben Bernanke reasserted that monetary policy will remain accommodative for some time.

More than 80 percent of shares on the New York Stock Exchange were higher on Thursday and all 10 S&P 500 industry sectors advanced, led by gains in materials and technology shares.

Bernanke sparked a rally in equity futures Wednesday night after he said the U.S. unemployment rate of 7.6 percent overstated the health of the job market. "A highly accommodative policy is needed for the foreseeable future," he said.

"Rather than being hawkish, Bernanke is saying the right thing that the market wants to hear," said Yu-Dee Chang, chief trader of ACE Investments in McLean, Virginia.

The market has rebounded from a selloff begun in late May after Bernanke first raised the prospect of reductions in the Fed's bond-buying program. By the June 24 close, the S&P 500 .SPX had fallen 5.8 percent from its May 21 all-time closing high of 1,669.16.

The Dow Jones Industrial Average .DJI was up 131.77 points, or 0.86 percent, at 15,423.43. The Standard & Poor's 500 Index .SPX was up 16.37 points, or 0.99 percent, at 1,668.98 after rising as high as 1,671.03. The Nasdaq Composite Index .IXIC was up 42.84 points, or 1.22 percent, at 3,563.60.

"Psychologically, being so close to a new closing high, you can feel that's where the traders want to push it to," Chang said.

Advanced Micro Devices Inc (AMD.N) jumped 10.6 percent to $4.40 and was the S&P 500's top performer after Bank of America Merrill Lynch upgraded the stock. The PHLX semiconductor index .SOX rose 1.7 percent.

The benchmark S&P 500 is up 3.3 percent since July 2. Should it close higher on Thursday, the index's string of six days closing higher would be the longest stretch since early March. Gains have come on optimism over improving economic data, anticipation of a better-than-expected earnings season and reduced concern about cuts to the Fed's $85 billion in monthly bond purchases.

Data from Thomson Reuters showed that analysts expect S&P 500 companies' second-quarter earnings to have grown 2.5 percent from a year ago, with revenue up 1.5 percent.

Earnings reports are expected on Friday from JPMorgan Chase & Co (JPM.N) and Wells Fargo (WFC.N).

Celgene Corp (CELG.O), up 6.7 percent to $133.48, was among the top performers for both the S&P 500 and the Nasdaq 100 .NDX after the company said a late-stage trial of its cancer drug, Revlimid, met the main goal of improving survival in newly diagnosed blood cancer patients.

Microsoft Corp (MSFT.O) rose 1.7 percent to $35.30 after the company announced a reorganization designed to streamline the software company's operations.

US Producer Price Index – Current & Historical Data :

Previous Reading: 0.5% (MoM), 1.7% (YoY)

Analysts Expect: 0.5% (MoM), 2.1% (YoY)

Release Date & Time: Friday, July 12, 12:30 GMT (Released monthly,about 15 days after the reporting month ends.)

Source of Report: Bureau of Labor Statistics, U.S. Department of Labor

Release URL: Producer Price Index News Release text

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Upcoming Release Commentary:

U.S. producer price index gained 0.5 percent in May after falling 0.7 percent in the prior month. The core rate, which excludes volatile items like food and energy, increased 0.1 percent, to record the seventh straight monthly gain. Food prices rebounded from the 0.8 percent decline in April, gaining 0.6 percent. Energy prices climbed 1.3 percent, following a drop of 2.5 percent. Gasoline prices rose 1.5 percent after dipping 6.0 percent in April.

For June, analysts expect a 0.5 percent increase in the top line producer price index, while core PPI should report a modest 0.1 percent increase. Gasoline and food prices likely witnessed a small gain last month. Inflationary pressures remain muted, and the moderate domestic demand makes it extremely difficult for producers to pass on the increased costs to consumers.

U.S. Producer Price Index vs. Core Producer Price Index:





How it impacts the U.S. Dollar:

Since Producer Price Index measures prices at the producer level before they are passed on to the consumers, it is an early indicator of inflation. A rising PPI signals an increase in inflationary pressures, which could force the Federal Reserve to raise interest rates. Similarly, a declining PPI is indicative of falling prices, and may suggest an economic slowdown, which could compel the Fed to slash rates. Since interest rates are the primary factor in currency valuation, a high PPI reading is generally seen as positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish) for the currency. Due to sharp volatility in food and energy prices, which constitute nearly one-quarter of the PPI, analysts and economists prefer monitoring the PPI excluding food and energy, also called the “core” PPI, to get a better picture of the prevailing trend.

Understanding Producer Price Index:

Producer Price Index is a family of indexes that measure the change in the price of finished goods and services sold by producers. The headline figure is expressed as the percentage change in producer price from the prior period. The Producer Price Index comes in three variants:

1. PPI Commodity Index (crude): Represents the average monthly price change for commodities such as crude oil, coal and steel.
2. PPI Stage of Processing Index (intermediate): Measures price change in goods that have been manufactured at some level but will be sold to further manufacturers to create the finished good. Examples include lumber, steel and cotton.
3. PPI Industry Index (finished): Covers finished products bought from producers by businesses to sell to consumers or to use for capital equipment.The finished goods PPI is the source of the core PPI.

The Producer Price Index is considered a major precursor of both consumer price inflation and profits, and is very useful for analyzing potential sales and earnings trends.

Stocks head for best week in 8 months, dollar steadies :



By Marc Jones
LONDON | Fri Jul 12, 2013 3:43am EDT

(Reuters) - European shares squeezed out small early gains on Friday and the dollar steadied, as this week's soothing talk of careful support from the world's major central banks left world stocks heading for their best week in almost eight months.

Sentiment in Europe was underpinned by Wall Street closing at record highs on Thursday.

The broad FTSEurofirst 300 index .FTEU3 opened up 0.2 as it eyed a fifth day of gains, while a steady end in Asia left MSCI's world stock index .MIWO00000PUS, which tracks markets in 45 countries, on track for its best week since November.

This week's rally in financial markets has spread across stocks and bonds to oil and metals and been driven by hints from the U.S. Federal Reserve that it may not be as eager to phase out its support as markets had started to believe.

"Markets have been reassured by the mention (by the Fed) of financial conditions and the weakness of inflation," Guy Foster, head of portfolio strategy at Brewin Dolphin, said.

"There remains little reason for the Fed to tighten policy although given their comments to date we assume a modest reduction in purchases in September," he added.

Currency markets were steadier following a breathtaking selloff in the dollar on Thursday as investors cut bullish positions on the reassessment of the Fed's view.

The dollar index .DXY, which tracks the greenback's performance against a basket of major currencies, edged off 2-1/2 week lows, having slumped more than 2 percent. That was the steepest fall in four years, normally seen only during financial crises.

After an early dip, the euro had set up camp at $1.3065 having jumped as far as $1.3208 on Thursday to be well off this week's trough of $1.2755.

Gold eased after four days of gains but was on track for its biggest weekly gain in nearly two years as easing concerns about an early end to U.S. monetary stimulus boosted bullion's appeal as a hedge against inflation again.

Copper was on course for its best week in two months as it dipped back below $7,000 a ton, while Brent oil was steady at $108 a barrel having hit a three-month high on Thursday

Dollar gains after selloff; stocks nearly flat :

(Reuters) - The dollar bounced back from a steep selloff on Friday while world stock indexes were nearly flat as investors' focus shifted to mixed U.S. corporate earnings.
Gold dipped as the dollar rebounded and investors booked profits after four days of gains, but was on track for its biggest weekly advance in nearly two years.
Stocks, bond prices and commodities have rallied this week while the dollar tumbled on hints from Federal Reserve Chairman Ben Bernanke that the U.S. central bank was unlikely to phase out its stimulative bond buying before the unemployment rate improved further.
U.S. stocks were little changed, a day after the Dow and S&P 500 hit all-time closing highs. However, the S&P 500 was on track to end the week up 2.5 percent, its best weekly performance since January.

...

GOLD EASES, OIL CLIMBS

Commodity markets have also enjoyed a strong run this week as talk of continued central bank support has bolstered hopes of a pickup in global growth.

Spot gold was trading down 0.4 percent at $1,279.80 on ounce, having cut some losses. Bullion was on course for its biggest weekly gain in nearly two years on easing fears of an early end to Fed stimulus.

Brent oil extended gains and was at session highs in afternoon trading. Brent was last up 97 cents at $108.70 while U.S. crude oil was up 76 cents at $105.67 a barrel.

Gold Decline Pares Best Week Since 2011 as Dollar Strengthens :

Gold fell as a stronger dollar curbed demand for an alternative investment, narrowing the biggest weekly gain since October 2011 after Federal Reserve Chairman Ben S. Bernanke called for maintaining stimulus.

Bullion jumped 5.5 percent in the previous four days, the best run since March. On July 10, Bernanke said that the U.S. needs “highly accommodative monetary policy for the foreseeable future.” The Bloomberg Dollar Index, which tracks the greenback against 10 major trading partners, rose as much as 0.6 percent. Gold slumped 23 percent last quarter.

“The dollar is pushing gold down,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “The overall trend remains weak.”

Gold futures for August delivery slipped 0.2 percent to settle at $1,277.60 an ounce at 1:43 p.m. on the Comex in New York. It reached $1,297.20 yesterday, the highest since June 24, and advanced 5.4 percent this week.

Gold has tumbled 24 percent this year, wiping $60.4 billion from the value of gold exchange-traded product holdings, after some investors lost faith in the metal as a store of value and amid speculation that the Federal Reserve will end its stimulus program.

Silver futures for September delivery fell 0.8 percent to $19.792 an ounce in New York, cutting the weekly gain to 5.6 percent, still the most since November. It’s the worst performer in the Standard & Poor’s GSCI Spot Index of 24 commodities this year.

On the New York Mercantile Exchange, platinum futures for October delivery slipped less than 0.1 percent to $1,406.90 an ounce. Palladium futures for September delivery gained 0.7 percent to $722.90 an ounce.