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Euro Falls but Gold Bounces Back Euro Falls but Gold Bounces Back

April 16, 2013 - On Tuesday, the Euro was down at the start of trading in Europe following economic sentiment that was downbeat from Germany. Stocks extended their declines and oil futures remained down despite the price of gold recovering.

Economic expectations from Germany deteriorated during April, falling for only the first time in the past five months, according to a survey compiled by ZEW.

After the results of the survey were revealed, the euro dropped to $1.302 versus the dollar, a low for today’s session. One analyst said the new survey highlights the fears investors have that the recovery in Germany will not last long.

Confirmation that consumer price inflation in the eurozone dropped to 1.7% a low of 31-months during March indicates that the Central bank in Europe has room to lower interest rates even more. Inflation in the UK remained steady at 2.8% between February and March, while Sterling and the Bund remained steady.

In Spain, the government’s funding costs fell sharply on Tuesday at an auction of its Treasury bills. The Treasury in Spain sold $6.63 billion of six and 12-month notes, which topped the target. At the same time, Greece sold nearly 2.14 billion in Treasury bills that were 13-weeks.

Gold jumped off its low of two years Tuesday having been hit hard over the past two trading session. Spot gold hit $1,382.60 per troy ounce up over $35 from Monday’s close. Since April 12, the precious metal lost close to 13% of its value.

Oil futures continued to struggle as Brent crude for June delivery was just below the $100 per barrel price.

Futures on the U.S. market were higher, which indicates a higher start to the day on Wall Street.

Dish Makes Bid of $25.5 Billion for Sprint Dish Makes Bid of $25.5 Billion for Sprint

April 15, 2013 - Dish Network Corp. the TV provider has made a bid of $25.5 billion to acquire Sprint Nextel Corp. in an effort to stop the wireless carrier from being acquired by Softbank Corp. of Japan.

Sprint is the No. 3 wireless carrier in the U.S. and on Monday Dish said it was offering $4.76 in cash along with $2.24 in stock from Dish, based on the closing price on Friday, for each Sprint share of stock.

On Friday, shares of Sprint closed for the week at $6.22. Dish says the deal represents a premium of 13% to the complicated proposal from Softbank to purchase 70% of Sprint at a cost of $20.1 billion.

Control of a Sprint and Dish company would be in the hands of shareholders of Dish, with the largest shareholder being Charles Ergen the Chairman of Dish.

A spokesperson from Dish said it was too early during the process to know all the specifics including who would be the person leading the new company and if Ergen would serve as the board’s chairman.

No comment on the Dish bid was released by either Sprint or Softbank.

Ergen’s unsolicited offer is an audacious shift from the slow growing business of pay television into the wireless industry that is rapidly evolving. The pioneer of satellite TV entered the industry by accumulating spectrum and gaining approval from federal regulators in 2012 to use it for use in land-based mobile telephone service.

However, Ergen does not have many other parts of the operation, including a network for cell phones, which would be time-consuming and very costly to build.

A Sprint Dish combination would help Dish to provide high-speed Internet, video and voice service throughout the U.S. in a single package whether subscribers were at home or not, said Ergen.

Oil Drops to Low of One Month Oil Drops to Low of One Month

April 14, 2013- Crude dropped to a low of one-month after a report was released showing retail sales in the U.S. and consumer confidence had fallen, which signaled a lower demand for fuel.

Oil futures were down by 2.4% as the U.S. Commerce Department released figures that showed retail sales had fallen by 0.4% in March, which was the biggest drop since last June. A gauge that shows consumer sentiment in the U.S. also fell to a low of nine months.

One analyst said that until figures become stronger signaling better economic growth, the prices of oil would move even lower. The numbers, said the analyst, are not what is expected, but are much lower.

May deliver crude oil fell by $2.22 to close at $91.29 on Friday, the lowest price since March 6. During the week, the price was off by 1.5% and is down by 0.6% for 2013.

Electronics dealers and department stores were amongst the different retail establishments with the weakest results according to Department of Commerce figure from Washington. Analysts had called for retail sales to remain stagnant for March.

Confidence amongst people in the U.S. also fell, which could point to consumer spending falling. The consumer sentiment index’s preliminary reading fell from 78.6 last month to 72.3 in April. This month’s figure was lower than what had been estimated by analysts who called for there to be not change.

OPEC, the U.S. Energy Information Administration and the International Energy Agency slashed their forecasts for demand for oil in 2013 last week. Consumption the groups said would increase by 795,000 barrels per day, an increase of about 0.9% to 90.5 million barrels daily. That is about 45,000 barrels per day down from the forecast made in March.

Japan Warned by U.S. over Yen Japan Warned by U.S. over Yen

April 13, 2013 - The U.S. Treasury Department said that policies over the valuation of currency need to be geared toward growth and not having a competitive advantage.

The White House administration used new and direct language in a warning to Japan to not hold the value of its currency down to gain an advantage across world markets, as Tokyo’s new government pursues an aggressive policy aimed at recharging its growth.

The U.S. Treasury, in its global exchange rates reports given semi annually also criticized China for holding down its currency’s value through large scale interventions in the market. The Treasury called it troubling, but stopped start of saying China manipulated currency, to avoid a designation that might disrupt the relations between the first and second largest world economies.

A government official in Japan said on Saturday in Tokyo that the government there would continue to abide by the commitments give by global financial policy heads to avoid intentional devaluation of currency.

The report by the Treasury appears as if it is part of strategy by the White House administration that is much broader in response to sharp economic policy shifts in Japan under Shinzo Abe the new Prime Minister.

Hours prior to the currency warning, White House officials said they had accepted Abe’s request to enter into negotiations to establish a free trade zone for pan-Pacific. This is despite objections from the auto industry in the U.S. and other domestic sectors that worry about Japan producing new competition.

The latest fall in the value of the yen came thanks to the Bank of Japan, when it shocked the markets during trading last week by announcing its plans to increase the money supply with a large injection of new money.

Over the past week, the dollar has gained value on the yen by almost 7% and is up nearly 15% since Abe took over the Prime Minister job in December of 2012.

 

Pro Athletes Scammed by Brokerage Pro Athletes Scammed by Brokerage

April 12, 2013 - A regulator on Wall Street announced on Thursday it had charged an online brokerage firm based in Washington with civil fraud. The charge is related to the brokerage’s sale of promissory notes to nearly 60 investors, some of which included former and current professional football and basketball players.

FINRA – the Financial Industry Regulatory Authority, a watchdog funded by the industry, has alleged that Success Trade Securities and Fuad Ahmed its CEO misrepresented that they were going to raise $5 million from the sale the promissory notes.

The complaint said Success continued selling the notes even though its sales were above the original offering by over 300%. No athletes’ names were listed by FINRA in the complaint. Success and Ahmed said they would defend themselves against the complaint made by FINRA at a scheduled hearing. The securities company said it was still operating and none of its investors had lost their money.

The majority of notes promised to pay interest at a rate of 12.5% in monthly payments over a period of three years. Some notes even promised to pay as much as 26% interest, said FINRA.

The watchdog says Success and Ahmed did not disclose how much of existing debt it had with investors and that it could not make interest payments in the future to them if more money was not raised from new investors.

It has also been alleged that investors were not told that the CEO had intentions to use the proceeds from the note sales to pay over $4 million of interest to note holders and a per month lease of $1,300 on his vehicle, a Range Rover.

Proceeds were also allegedly used to finances Ahmed’s personal expenses like clothes and travel through loans that were undocumented and interest free.

 

Honda, Nissan and Toyota Recalling Millions of Cars Honda, Nissan and Toyota Recalling Millions of Cars

April 11, 2013 - The three big carmakers in Japan announced on Thursday that they were recalling over 3 million vehicles across the globe due to defects with the cars’ air bags on the car’s passenger side.

Takata Corp from Japan is the manufacturer of the air bags in question for all three of the automakers Nissan Motor, Honda Motor and Toyota Motor. More than 1.7 million vehicles are being recalled by Toyota Motor. That includes more than 580,000 being recalled in North America, more than 490,000 in the European market and as many as 320,000 in their home market of Japan.

Models that are affected by the recall for Toyota are the Tundra, Corolla and the Lexus SC. The vehicles being recalled were produced from November of 2000 through March of 2004.

Honda’s recall totals just over 1.1 million vehicles. Close to 680,000 are in the North American market, while only 64,000 are in Europe and another 270,000 are being recalled in Japan. Honda’s recall includes the Odyssey and the Civic.

Nissan recalled close to 480,000 vehicles throughout the world with over 137,000 in Japan and the others scattered over a handful of countries.

Mazda has also apparently had to recall vehicles. The unconfirmed number of recalls for Mazda was 45,000 but company officials would not comment on the situation.

A spokesman for Toyota said that an inflator that could malfunction and inadvertently deploy the air bags in the front seat or activate the cars’ automatic seatbelts was the cause of the recall.

Toyota, over the past few years, has been hit hard by the number of recalls. Millions of its vehicles were recalled across the globe recently for floor mats and sticky accelerators.

One Honda spokesperson said that human error caused the problem as parts and the final product was not stored correctly allowing the bags and the inflator to be exposed to excess humidity.

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