Wednesday, July 31, 2013

Market Update from Mike Kuta " The Squawk Trader"

July 31, 2013
Germany Boosts Energy Research Funding to $938 Million.
Germany increased spending on energy research 77 percent in the past seven years, benefiting mainly efficiency and renewable energy research projects as the country shuts its nuclear reactors. Germany’s government spent 708 million euros ($938 million) on research and development of energy technologies last year, up from 399 million euros in 2006, the Economy Ministry said today in an e-mailed statement, citing its new study. Projects included reducing noise of wind-power units, making buildings more energy-efficient and advancing electro-chemical storage units, the study shows. “Research and development of modern energy technologies are an important condition for the success of the energy switch,” Economy Minister Philipp Roesler said in the statement. Energy efficiency and renewable projects accounted for about 500 million euros of the funding last year, the ministry said. German Chancellor Angela Merkel is attempting to lead the biggest transition to renewables of any developed country in history, seeking to more than triple the share of renewable power by 2050 to 80 percent of the nation’s consumption. The renewables are to help replace nuclear reactors to be shuttered by 2022.
Investors on edge as central bank decisions, data loom.
Caution before potentially game-changing central bank policy decisions and data undermined stock and oil prices today, overshadowing figures that offered hope Europe’s economy might pick up soon. A U.S. Federal Reserve statement today will be scoured for clues on when it will curb its bond-buying stimulus program that has supported global markets. On Thursday, attention will switch to European Central Bank and Bank of England policy meetings and data on global manufacturing activity, followed by the always keenly awaited U.S. employment report on Friday. Signs the developed world’s central banks will keep monetary policy loose for a long time to support a tentative economic recovery have put many equity and commodities markets on course for their best month of the year in July.
But strategists say the gains, which could see the MSCI World Equity index post its best monthly rise since February 2012, have increased the risk that investors could find reasons over the next few days to cash out. “At the least what we expect is a lot more volatility and we think the volatility comes with a bit more downside risk than upside potential,” said Wouter Sturkenboom, investment strategist at Russell Investments. Any hints of imminent “tapering” of Fed bond buying could hit stocks and gold but push the dollar higher, but few expect a clear-cut signal. Before the Fed decision the focus will be on U.S. second quarter growth figures at 1230 GMT and a private sector employment report, that could give hints on the strength of the economic recovery.
In Europe, modest stock market gains were underpinned by data showing the number of people out of a job in the euro zone fell for the first time in more than two years in June. Europe’s broad FTSEurofirst 300 index, set to make July its best month in over a year, rose 0.1 percent today. Caution before the Fed statement left the dollar trading flat against a basket of major currencies, though not far from a five-week low of hit on Monday. The dollar has lost ground in recent weeks as the Fed sought to reassure markets that interest rates would stay low. “If there’s any suggestion the Fed is going to taper the current bond buying program as soon as September, then that’s U.S. dollar positive,” said Ben Le Brun, an analyst at OptionsXpress.
Earlier in Asian trading, MSCI’s Asia-Pacific ex-Japan share index <.miapj0000pus> slipped 0.6 percent taking its losses so far this year to 5 percent as the region’s markets suffer from fears that China’s giant economy is slowing rapidly. A reading on manufacturing activity in the world’s second-largest economy due on Thursday is expected to add to those fears by showing a contraction in July for the first time in 10 months, according to a Reuters poll. A recent run of weak Chinese data, which prompted a pledge from Beijing on Wednesday to keep growth stable in the second half of 2013, has also undermined commodities though many of these are set for a strong July thanks to the weaker dollar. Brent crude prices eased 0.6 percent to around $106.20 a barrel, extending a 0.6 percent decline on Tuesday, but remain up 4.5 percent this month and on course for their best monthly gain since August last year. Gold gained 0.5 percent at $1,332.86 an ounce. It is up 8.2 percent so far this month, on track to snap a three-month losing run and mark its biggest monthly rise since January 2012, though it is down 20 percent since the beginning of 2013.
Companies in U.S. Added More Workers in July Than Forecast.
Companies in the U.S. boosted payrolls in July by the most this year as employers grew more optimistic demand will pick up in the second half of the year. The 200,000 increase in employment was more than projected and followed a revised 198,000 gain in June that was higher than initially estimated, according to data today from the ADP Research Institute in Roseland, New Jersey. The median forecast of 40 economists surveyed by Bloomberg called for a July advance of 180,000. Job gains, higher stock prices and rising home values are shoring up Americans’ confidence, helping counter the effects of this year’s government spending cuts and giving a boost to U.S. growth. Federal Reserve policy makers, wrapping up a two-day meeting today, are evaluating progress on growth and employment as they consider whether to trim their record monetary stimulus. “The job market has admirably weathered the fiscal headwinds, tax increases and government spending cuts,” Mark Zandi, chief economist at Moody’s Analytics Inc., in West Chester, Pennsylvania, said in a statement. Moody’s produces the figures with ADP. “This bodes well for the next year when those headwinds are set to fade.” Stock-index futures fluctuated as investors awaited the Fed’s policy announcement. Estimates in the Bloomberg survey ranged from gains of 140,000 to 215,000. June’s figure was revised from a previously reported increase of 188,000. 

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