The Global Death Cross Just Got Deathier

In the immortal words of Cher - "Do you believe in life after QE; I can feel something inside me say, "I really don't think you're strong enough, Now."

How does this end well?

Don't Get Bullish on Copper Yet

The Decline Appears Far From OVER.

Many traders have noted that copper  has found some support after its downward break out of the 2011-2012 triangle formation. Some have even begun taking the position that copper is ready to rally. To those traders we advise caution, as we believe the bearish course is likely to persist for another year or longer.

It makes sense that price acknowledged support around the 2.92 level, since that is the Fibonacci 0.618 multiple of the "crash" decline of 2008. However, note how well price has behaved with regard to the declining Schiff channel shown on the monthly chart below. We expect the channel boundary to continue to provide resistance, and another test of the support level is probably due soon. Either the channel resistance or the Fibonacci support must yield, and we believe a downward break is likely. (A decisive break and close above the monthly channel would have us reassess the Elliott wave count described in this article, although it would not necessarily be a long-term bullish development.)

The long-term price target of 1.78 for the completion of big wave C also is based on a Fibonacci multiple of the 2008 decline.

A different Schiff channel on the weekly chart helps illuminate the wave structure. We believe price has traced the component waves [i] and [ii] of the big C-wave break out of the triangle. Now it is in the process of moving through the internal waves within [iii]. Thus, we believe price is on the verge of a powerful declining wave (iii) inside wave [iii].

The target levels shown on the weekly chart are speculative, since we don't yet know where wave (ii) actually ends. Assuming that a downturn begins soon, then the upper support levels at 2.67 and 2.52 are likely regions for the internal wave (iii) to finish, and the next lower support around 2.34 is a likely area for the larger wave [iii] to halt. After that, we would expect several months of corrective activity before an eventual move down into the 1.78 region shown on the monthly chart.

Again, it is important to see whether price stays within the channel in the near term, and an upward break above the channel would cause us to reassess the scenario described here. For the week of June 2, the channel will pass near 3.20.

Note also that Wave59's Adaptive CCI indicator is testing the zero line on the weekly chart, which often indicates the market is at a decision area. It can either reverse course and send the indicator back downward (our scenario), or it can cross over while price rallies. A daily chart with a proposed wave count can be found at our website.

 

Chile’s Codelco Output slips slightly in first quarter

Chile’s Codelco, the world’s top copper producer, said Friday (in Spanish) output dropped slightly in the first quarter and its profit dived as metal prices fell and ore grades deteriorated.

The company posted a 0.3%$ drop to 383,000 metric tonnes, and said its pre-tax profit tumbled 38% to $539 million.

The miner said efforts to reduce production costs partially helped to offset the sharp drop in revenue, as copper prices averaged $3.194 a pound in the first three months of the year, a value that is 11% lower than in the same period of 2013.

Codelco's Finance and Administration vice-president, Ivan Arriagada.

Finance and Administration vice-president, Ivan Arriagada, said that despite the slight output fall, Codelco is dealing with prices well above the average registered in the company’s history. However, he acknowledged the firm needed to continue efforts to reduce costs and increase productivity.

Codelco has seven mining divisions. Radomiro Tomic, Chuquicamata, Gabriela Mistral, Salvador, Andina, El Teniente and the new Ministro Hales mine, which began production in the last quarter of 2013 and it is set to reach its full capacity this years.

The state-owned miner also owns the Ventanas copper smelter and refinery, has a 49% stake in El Abra, a joint venture with US-based Freeport-McMoRan Copper & Gold, and —since 2012— owns 20% of Anglo American Sur.

Chile expects mining investment to reach $112 billion by 2021, figure that includes the $27bn planned by Codelco. By the same year, the country’s total copper production is projected to reach an annual 8.1 million metric tons.

The red metal accounts for 60% of Chile's exports and 15% of gross domestic product.

Big Positive News Flow for Stock Market in Next 90 DAYS - Finance Ministry Source

REFORMS PIPELINE

* ECBs: Foreign borrowing norms likely to be liberalised

* PERMANENT ESTABLISHMENTS: Global income of India-based establishments might not be taxed

* DEPOSITORY RECEIPTS: Unlisted companies’ sale of receipts against debt could be allowed

* CAPITAL CONTROLS: Outward remittance limit might be restored to $200,000 from $75,000 at present

* EUROCLEAR: To enable cross-border settlement of locally-issued government bonds

* ROAD SHOWS: Finance Minister Arun Jaitley to sell the India story in London, Tokyo, Hong Kong, Singapore, New York

* RETAIL PARTICIPATION: Tax sops to encourage retail investors’ participation in equityThe finance ministry is set to push through major reforms in equity and debt markets to be implemented in the next three months. According to the plan, the foreign borrowing norms are to be liberalised and the capital controls imposed by the Reserve Bank of India last year rolled back. The ministry is also considering replacing short-term capital gains tax with a higher securities transaction tax (STT).

While tax incentives are being considered for retail investors and permanent establishments managing global funds in India, measures are in the offing to deepen corporate bond markets, strengthen retail participation in equities, comprehensively revamp depository receipts and join Euroclear, the world’s largest securities settlement system.

To sell the Indian reform story to foreign investors, Finance Minister Arun Jaitley is planning to go to London, Tokyo, Hong Kong, Singapore and New York for road shows.

“We are looking at a three-month time-frame to roll out many of these measures. Some that require legislative amendment might come in the Union Budget. The restrictions imposed by RBI in July last year will also be lifted,” a finance ministry official, asking not to be named

Budget measures might include abolishing short-term capital gains tax and, instead, levying a higher securities transaction tax (as suggested by the Parthasarathi Shome committee), exempting global income of India-based permanent establishments from tax, and offering tax sops to encourage retail investors’ participation in equity markets.

The finance ministry wants to take measures to boost investments by domestic players, especially the retail ones, as the market rally in recent times has mainly been driven by inflows from foreign investors. “Participation of retail investors is a big concern. We have to push this in a big way,” another official said.

The ministry will also try to widen the scope of both American and global depository receipts (DRs). Currently, only listed companies are allowed to sell DRs (that too only against underlying equity shares). The M S Sahoo committee had proposed DRs for debt and unlisted companies as well. These would give easy access to foreign investors who don’t wish to invest directly in Indian companies.

The finance ministry also wants to relax the external commercial borrowing (ECB) norms and enable companies to fully hedge against foreign currencies. “We want to let borrowers decide how much they want to raise. If you hedge it, the cost of borrowing goes up. So, naturally, they will be cautious,” said the second official quoted earlier.

Experts said ECBs should, in fact, be liberalised generally, with control only for certain sectors. “Refinancing of ECBs should be allowed on a wholesale basis. They should ease end-use of ECBs because international markets provide cheaper funds. Its use should be expanded significantly, while there should be control for certain sectors,” said Abizer Diwanji, partner and national leader (financial services), EY.

In a step towards internationalising debt, the government is also planning to join Brussels-based Euroclear bank.

This will facilitate cross-border settlement of locally-issued government bonds. Officials said this would bring down borrowing cost for Indian companies. The ministry is getting legal opinion on whether this would require amendment to the Sebi Act. It is awaiting a formal view from RBI on the issue.

The government is also trying to liberalise the rupee-denominated corporate bond market. So far, its efforts to deepen this have yielded little result.

“If banks are ready to lend at cheaper rates, who would go for corporate bonds? Unlike the US, our economy is dependent on bank debt,” the official explained.

LME Will Delay Start to Position Reports Until August

The London Metal Exchange, the world’s largest metals bourse, delayed starting commitment of traders reports until August to allow more time for members to classify positions.

The reports will be published weekly starting Aug. 5, it said in a notice to members today. The first report was initially scheduled for July 1 after ending a one-month market consultation on May 23. The extension will enable members enough time to submit information on positions.

“The LME acknowledges member feedback in respect of the timeline proposed by the LME for classification of predominant business activity,” the bourse said in the notice. The LME designed the reports to be consistent with other markets and will continue to keep its format under “active review.”

The 137-year-old bourse is joining NYSE Liffe and ICE Futures Europe in reporting trader positions similar to those issued by the U.S. Commodity Futures Trading Commission. Consumers and producers of metals asked the bourse to increase information about the market. The exchange started this month publishing reports disclosing metal wait times and inventories held by individual warehouse companies.

Category one to four members are required to classify their positions and those of their clients into types of activity. The reports will break down market open interest by category of participant, similar to the CFTC, including producer, merchant, processor or user; broker dealer or index trader; money manager; other reportables and those not defined.

More Transparency

“While a COT report will be helpful in terms of increasing apparent transparency (albeit backwards looking owing to the weekly nature of the report), the misclassification of a few major market players will have a significant impact in terms of how the report can be interpreted,” Leon Westgate, an analyst at Standard Bank Plc in London, said in a report today.

The CFTC releases weekly reports on positions by type and NYSE Liffe, the derivatives arm of NYSE Euronext, began giving similar information for agricultural products in 2011. ICE Futures Europe started publishing Commitments of Traders Reports in Europe for Brent and gasoil in 2011.

Marine product exports zoom to record $5 billion

Exports of marine products touched a record $5.007 billion during 2013-14.

At a news conferenceLeena Nair, chairperson of the Marine Products Export Development Authority (MPEDA), said the total export earnings were $5.007 billion (₹30,213 crore.) In rupee terms, the growth was a whopping 60 per cent over the previous year, though in dollar terms this was 42.60 per cent. In the previous year, the earnings were $3,512 million.

In quantity terms, 9,83,756 tonnes were exported, an increase of around 6 per cent. Fish items were the largest chunk in terms of quantity, though when it came to value, frozen shrimp was the biggest money earner. More than three lakh tonnes of shrimp were exported, of which 73 per cent was cultured. There was also a 35 per cent increase in unit value – black tiger shrimp secured the highest value.

Among regions, South-East Asia continued to be the largest buyer of Indian marine products with a share of 26.38 per cent, followed by the US with a share of 25.68 per cent. The European Union is the third largest buyer with 20.24 per cent share, followed by Japan at 8.21 per cent, other countries 8.20 per cent, China 5.85 per cent and West Asia 5.45 per cent.

One reason for the higher exports is increased production of L. Vannamei shrimp, whose exports to the US market jumped to 59.63 per cent. Export of frozen shrimp rose by 7.38 per cent in quantity terms and 28.23 per cent in dollar terms.

Nair said lower exports from Thailand and other prawn-producing countries because of a disease that had afflicted their aquaculture. On the other hand, depreciation of the rupee against the dollar and increased production of vannamei in Andhra Pradesh and other States helped in higher earnings from prawns. The quality of Indian prawns and other marine products had improved remarkably – contributing significantl to the rise in unit price. Participation in major global seafood fairs also had helped.

It's Morning in India: Narendra Modi's Pro-Business Policies Point to Strong Sectors Growth

As some of you might recall, Ronald Reagan's now-famous 1984 presidential campaign, "Morning in America," renewed many Americans' confidence in this country's financial future. Likewise, the May 16 election of Narendra Modi--whose campaign slogan, "Good times ahead," taps into the same sense of optimism--couldn't come at a better time for India and the surrounding region.

Sworn in on Tuesday, Modi's pro-business, small-government policies have already prompted many citizens of the world to liken him to such transformative leaders as Reagan and Margaret Thatcher. Because he has vowed to widen India's doors to foreign investment, rehabilitate its crumbling--or, in many regions, nonexistent--infrastructure, deregulate the retail industry and loosen the red tape that has halted domestic coal production, investor confidence in the South Asian country has surged like never before.

For the past six months, foreign investors have bought up more than $16 billion in Indian stocks and bonds in anticipation of Modi's win and hold approximately 22 percent of Mumbai-listed equities, valued at nearly $280 billion. Since the election, the Indian markets have been bullish, with the rupee crossing 59 levels against the dollar. These activities have made the world's largest democracy the top performer this year among the four BRIC economies.

"We want more strength for the wellbeing of the country," Modi said after declaring victory. "I see a glorious and prosperous India."

Modi has a proven track record of turning economies around.

As head of the state of Gujarat, a position he held prior to being elected prime minister, he oversaw annual economic growth of 10 percent. He is also credited for bringing electricity to all 60.4 million Gujarat residents--a first for India.

One of his loftier goals is to do the same for all 1.2 billion Indians using clean power generation such as wind and solar. Currently, 400 million citizens--more than the combined populations of the U.S. and Canada--are without power. The plan is that by 2019, every home will be able to run at least two light bulbs, a cooker and a television.

Such a colossal undertaking as bringing power to every home will require the import and production of untold amounts of metals such as copper and steel, not to mention the construction and rehabilitation of the nation's poor infrastructure, which is decades behind China's.

According to Ajay Piramal, Chairman of the Piramal Group, one of the roads to India's prosperity is "infrastructure development. Reviving infrastructure projects by streamlining approval and decision-making processes will be critical. By 2019, the structural growth rate of India should be at 8 percent or higher."

Under the new prime minister's watch, the growth of industrials and materials is very promising.

India is already the fourth-largest steelmaker in the world, having produced 7.25 million tonnesin March alone. But with the implementation of new infrastructure and energy projects, steel production has the potential to explode.

The same can be said of coal. Even though India, the world's second-most populous country, is rich in coal, mining has historically been stymied as a result of tortuous bureaucracy and stateism. To facilitate foreign investment in the resource and boost product output, Modi is considering breaking up Coal India Ltd., India's state-controlled mining company.

With more jobs up for grabs, more Indians will be able to afford the sort of lifestyle and consumption habits that many Americans enjoy. As I've previously discussed, gold is a prime gift to give and receive in India during religious holidays and celebrations. A robust working class will ensure that gold continues its trend as a desired and accessible commodity.

It's too early to tell if morning has indeed arrived in India. To be sure, the nation faces many challenges that block its path to prosperity, including debilitating bureaucracy, an inefficient agricultural sector, low literacy rate and widespread poverty. But as I often say, government policy is a precursor to change, and with Modi at the helm, "good times ahead" sounds like more than an empty promise. Provided his administration can make good on his many ambitious plans, investment in the energy, industrials, materials and utilities sectors could conceivably see fair returns.