As demand eases, US gold stocks rise to 7-month high
Learn more… Print With the Senate having changed its rules to allow confirmation of Presidential appointees to require a simple majority of 51 votes the Yellen era is now fait accompli. Janet Yellen will succeed Ben Bernanke as Chairperson of the Federal Reserve with or without Republican support. In the attached clip, David Kotok of Cumberland Advisors says Yellens basic ideology is as clear as her confirmation itself. Clearly Yellen is saying Im not going to shock the world. Im not going to come in here with a club and turn things upside down. As far as stocks are concerned thats both good and bad. On the one hand it means a gradual, at best, move towards the reduction of QE3, a program under which stocks have thrived at the expense of other asset classes. More distressingly for stocks, sticking to the plan also implies there will in fact be a move towards reducing the “pedal to the metal” stimulus at some point. No one knows what that means and stocks typically dont deal well with uncertainty. Kotoks best guess is that stocks and the economy will take the a slow withdrawal by the Fed in stride. If nothing else a reduction of stimulus will restore economic balance to an economy heavily skewed in favor of the rich and corporations.
Besides data, interest rates will be a focus and traders will keep their eye on the 10-year Treasury. The yield was at 2.75 percent Friday but had risen above 2.83 percent earlier in the week after the Fed’s October meeting minutes signaled a tapering back of its $85 billion-a-month bond-buying program could be decided within a few months. There also continues to be the overhang from another round in the congressional budget and debt ceiling debates, starting again in January. “I think velocity is going to turn up. When that becomes obvious next year, it will force the Fed to taper,” said James Paulsen, chief investment strategist at Wells Capital Management.
Emerging Stocks Rise on German Confidence as Real Climbs
In India, gold excise tax hikes and import restrictions sharply undermined the country’s gold demand, even though premiums remained lofty there due to the supply crunch. India is set to lose its top-gold-consumer status to China this year. Meanwhile, reduced trading interest Hot stocks to but now? among funds and institutional investors, combined with long liquidation since April, sent registered stocks to a 15-year low. “Gold was in the middle of a bear market in the 1990s last time registered stocks were trading at these levels,” said Jeffrey Christian, a veteran gold analyst and founder of commodities consultant CPM Group.
Stocks enter holiday season with a tailwind
The Borsa Istanbul National 100 Index gained 1.3 percent, led by Turkiye Garanti Bankasi AS. Russias Micex Index extended its weekly advance as RusHydro jumped 3.2 percent. Stock gauges in the Czech Republic and Poland also rose. The benchmark index for Chinese stocks in Hong Kong capped its biggest weekly gain since December 2011 as insurers climbed, widening a premium over Shanghai shares.