Margins Are Beginning To Come

(Reuters) - U.S. President Barack Obama's bid to dampen the influence of oil speculators by having regulators set trading margins could backfire, potentially making prices even more volatile and leaving crude dominated only by those with the deepest pockets. Under Obama's request to Congress, the Commodity Futures Trading Commission (CFTC) would determine how much speculators need to pay to trade U.S. crude oil futures, in theory increasing the amount when prices move too far, too fast. But economists and traders cautioned that pushing smaller investors out of markets would only hand greater influence to the largest hedge funds and Wall Street banks. Ultimately, there may not be enough traders left to do business with oil producers and consumers looking to hedge their needs. "Reduced ...

(Reuters) - Bank executives face great expectations from investors when they report first-quarter results beginning Friday. Bank stocks have shot up 24 percent this year, as measured by the KBW Banks index, in their steepest ascent in any quarter since the end of September 2009. Now investors want to know if they should stick with their bets that the economy will strengthen and lift bank lending margins and profits, or take their gains and get out. "Investors are out on a limb," said Jack Ablin, chief investment officer at Harris Private Bank. They won't get much help from the earnings, which are expected to be murky this quarter and confused by accounting items. Investors may have to rely on their own hunches to sort conflicting numbers and comments from bank executives about the ...

Weekly Economic and Financial Commentary U.S. Review Week Two Brings a Little Less Enthusiasm Some of the optimism about housing, consumer spending and the broader economy eased back a bit this week, amid a smattering of softer economic reports. Retail sales rose just 0.1 percent in December and core retail sales fell by the same amount. Holiday sales came in right in line with our expectations, rising 5.1 percent. Weekly first-time jobless claims spiked up to 399,000 and job openings listed in the JOLTs survey fell slightly. Data on international trade and inventories also point to a more modest gain in 2011 Q4 real GDP growth. Optimism Already Appears to be Fading The New Year always seems to usher in an air of optimism and this year has been no exception. Better ...

Yesterday’s trading revealed nothing of importance. Small moves in stocks and gold. And oil dipped below $100. But the news has been generally “good” ever since the European Central Bank made it clear that it will print money rather than see major banks or minor nations get what is coming to them. Like its US counterpart, the ECB will not permit a major bank or sovereign debtor to go bust. “ECB sees signs of let-up in debt crisis,” is today’s headline in The Financial Times. Let’s see…the news report goes on to tell us that Spain and Italy were able to sell 22 billion euros of debt yesterday, proving that they can still finance their deficits…and that, therefore, we have nothing to worry about. To whom did they sell their bonds? We don’t know, but we presume the buyers were banks who ...

(Reuters) - Grain prices are near their lowest in a year and global stockpiles are on the rise -- so meat, dairy and pasta prices are poised for a fall, right? Not so fast. Food companies from Coca-Cola to General Mills Inc to Sara Lee Corp, which fought hard to push through price increases earlier this year, are unlikely to give them all back right away. Beyond the practicalities that typically delay the pass-through impact of commodity costs through food producers, the fact is that companies are still in the process of recovering the profit margins they lost when prices spiked to record highs earlier this year. And even with U.S. consumers fretting over recession, they tend to get used to higher prices over time, giving companies the confidence to maintain margin rather than grab for ...

Weekly Economic and Financial Commentary U.S. Review The Economy Continues to Grow at a Snail's Pace Much of the economic data released during the week continued to show sluggish economic growth. Real GDP was revised down to a 1.0 percent pace in the second quarter from the initially reported 1.3 percent rate. While growth has slowed significantly, it is growth nonetheless. Durable goods orders rose a more-than-expected 4.0 percent in July, which was double the consensus. Non-defense capital goods excluding aircraft fell 1.5 percent on the month, which may suggest weaker growth in business investment in the coming quarter. Searching for Clues of a Looming Downturn Much of the economic data released during the week continued to show sluggish economic growth. In fact, real GDP ...

When you hear the term “precious metals,” you likely think of gold and silver. That’s what the Spanish conquistadors had in mind, of course, when in the 15th and 16th centuries they trekked inland from their beachheads on the sands of the New World. But there are other metals of great value besides gold and silver. In the two centuries after Christopher Columbus landed in the New World, the Spaniards seized the gold of the Aztecs in what’s now Mexico, and took that of the Incas, as well, further south in the Andes Mountains. But this was just the beginning, because the men from Iberia had developed a bad case of gold fever. They wanted more. High in the mountain streams of New Granada – modern-day Colombia – the Spaniards panned for gold and found plenty. They followed the shows and ...

(Reuters) - The U.S. economy is poised to grow at an "accelerating clip" thanks to the Federal Reserve's super-easy monetary policy, and there is no call for the central bank to do more, a top Fed official said on Wednesday. "I will not support further monetary accommodation," Dallas Federal Reserve Bank President Richard Fisher told reporters after a speech at the Rotary Club of Dallas. "I do not personally see the benefit of more monetary accommodation even if the economy weakens further. Because again, there's so much liquidity out there, what's the trigger to put it to work?" Fisher's comments put him at odds with Fed Chairman Ben Bernanke, who on Wednesday said he was prepared to do more if the economy worsens. The Fed completed its latest round of stimulus last month, and recent ...

Nothing is cheap in today’s investment world. Because of the trillions of currency units that governments all over the world have created – and are continuing to create – financial assets are grossly overpriced. Stocks, bonds, property, commodities and cash are no bargains. Meanwhile, real wages are slipping rapidly among those who are working, and a large portion of the population is unemployed or underemployed. The next chapter in this sad drama will include a rapid rise in consumer prices. At the beginning of this year, we saw the grains – wheat, corn, soybeans and oats – go up an average of 36% within one month. In the same time frame, hogs were up 30.7%. Copper was up 29.1%. Oil was up 14%. Cotton was up 118%. Raw commodities are the first things to move in an inflationary boom, ...