Holiday Greetings From Ben Bernanke

The only thing missing from the cartoon below is there is a minimum net worth requirement for "free money" eligibility.

Marc Faber's 2014 Predictions

Marc Faber has 3 very contrarian predictions for 2014 that we are sure will have the yammering yay-bobs screaming. While "everyone thinks stocks can continue to rise," Faber sees "the US market as expensive," and will return very little over the next few years. Furthermore, he adds, while "some stocks are not terribly expensive; but just like in the year 2000, [social media] stocks are grossly over-valued," and a short basket in the most egregious will return at least 30% next year. Lastly, Faber exclaims, "given all the money printing that is going on globally... physical gold is a good insurance."

 Faber offers what he thinks is next for the world in 2014:

1. The market will decline from current levels

Faber says: "My sense is that at the present time, the US market is relatively expensive compared to foreign markets, especially to European markets and to emerging markets. On a cyclically-adjusted P/E [price-to-earnings] basis, it is actually going to return very little over the next seven to 10 years.

2. Best shorts for 2014: Facebook, Tesla, Twitter, Netflix, and Veeva Systems

Faber says: "If you look at the entire market, some stocks are not terribly expensive and some stocks are very expensive. It's like in year 2000, not every stock was overpriced. At that time, the NASDAQ was grossly overvalued but, say, resource shares and so-called 'old economy' companies were relatively inexpensive or absolutely cheap. In the present instance, I think that stocks like Facebook, Tesla, Twitter, Netflix, [and] Veeva Systems are grossly overvalued and that the basket of shorts in these stocks will return you at least 30% next year."

3. Best longs for 2014: Gold, gold shares, and Vietnamese stocks

Faber says: "Given all the money printing that is going on globally – and not just in the US – and given that the total credit as a percent of the advanced economies is now 30% higher than in 2007 before the crisis hit, I think that gold is a good insurance."

"I'd rather buy something that is reasonably priced. And, I think gold shares are very inexpensive. So a basket of gold shares I think next year could easily appreciate 30%."

"I think the Vietnamese stock market, which this year was up 22% [and] which is not bad for an emerging market, will continue to go up."

Govt allows deduction of CTT as part of business income.

In a relief to commodity exchanges, the government has allowed deduction of Commodity Transaction Tax (CTT) to traders as it forms part of their business income.

The move will benefit Multi Commodity Exchange of India (MCX), National Commodity and Derivatives Exchange (NCDEX), and Universal Commodity Exchange (UCX). The government may withdraw the recognition of these exchanges if found violating specified income tax norms.

This notification will remain in force until the approval granted by the commodity markets regulator Forward Markets Commission is withdrawn or expires.

Reacting on the development MCX said: "Trading on Exchange will get tax benefit deduction under Section 43(5) of the Income Tax Act". This will instill confidence in the market, increase hedgers' participation and put commodity futures trading at par with other exchange-traded asset classes, it said.

CTT of 0.01%, imposed on both buyer and seller of commodity on exchange platform came into effect on July 1. It is applicable on non-agricultural commodities and 11 processed foods. The tax imposed has dampened the business of these exchanges and their turnover has come down by 32% to Rs 74.16 lakh crore so far this fiscal.

Commodity Volumes

India is an elastic market, key fundamental data and announcements can have drastic effects on trading activity. Earlier this year, India’s government put new measures in place to tax commodity trading, the Commodity Transaction Tax (CTT) was implemented despite protest from the chiefs of all major commodity trading venues. As expected, trading volumes slumped with activity believed to be 40% to 50% lower.

Amar Ambani, Head of Research at IIFL, an Indian regulated broker explained to Forex Magnates in a statement: “Levy of 0.01% CTT has definitely dampened the volumes on the commodity bourses, with MCX average daily turnover down by drastic 40%. This can be explained by the fact that jobbers (speculators) which contributed 40-50% of the MCX volumes are out of the business. Jobbers survived on wafer thin margins and proportionately paid very low transaction costs. After the advent of CTT, the costs have dramatically increased, which has made it difficult for the price sensitive jobbers to sustain.”

2014 will be an interesting year for India as the 1.2 billion nation goes to vote. The right-wing BJP is in pole position to overthrow a controversial Congress Government. Asad Hussain a Mumbai-based analyst explained to Forex Magnates: “The BJP is a favourite among India’s business community, polls carried out by Team Cvoter show that BJP could win 162 seats next year.”

Data for the week 28-Dec-13 to 03-Jan-14

Exp.:	Expected or Anticipated value calculated from the recent survey conducted.
Prior:	Represents the last actual for each indicator. In case there is a revision to the last actual, the prior column reflects the prior figure as revised.
Exp. change today:	Exp. - Prior
Avg. change of last 1 year:	Average Change in Actual data calculated for last 1 year.
Expected impact on price:	This indicator shows the effect of the anticipation of data on the prices of related country’s major indices. We have categorized it as below: Very Good Good Neutral Bad Very Bad
Actual:	Refers to the actual/latest figures after its release.

Data for the week 28-Dec-13 to 03-Jan-14

Date	Time (IST)	Country	Data	Exp.	Prior	Exp. chg today	Avg. chg of last 1 year	Exp. Impact on Price
31-Dec-2013	08-30 PM	United States	Consumer Confidence	76.3	70.4	5.90	4.00	Good
01-Jan-2014	06-30 AM	China	NBS Manufacturing PMI	51.2	51.4	-0.20	0.77	Neutral
02-Jan-2014	07-15 AM	China	HSBC Manufacturing PMI	50.5	50.8	-0.30	0.97	Neutral
02-Jan-2014	02-30 PM	European Monetary Union	Markit Manufacturing PMI	52.7	52.7	0.00	0.80	Neutral
02-Jan-2014	08-30 PM	United States	ISM Manufacturing PMI	56.9	57.3	-0.40	1.35	Neutral
03-Jan-2014	12-30 PM	United Kingdom	Nationwide Housing Prices s.a (MoM)	0.7%	0.6%	0.10%	0.87	Neutral
03-Jan-2014	02-30 PM	European Monetary Union	M3 Money Supply (3m)	1.7%	1.9%	-0.20%	0.18	Neutral
03-Jan-2013	09-00 PM	United States	EIA Natural Gas Storage change		-177		33.60
03-Jan-2014	09-30 PM	United States	EIA Crude Oil Stocks change		-4.731M		3.45
04-Jan-2014	01:00:00	United States	Fed's Bernanke Speaks at Economics Conference in Philadelphia

Technicals MCX Metals And Energy.

Gold (Rs 28,564)

The year-end holiday season has put the market in silent mode. The MCX gold futures contract stayed flat after declining below its 200-day moving average. For the short-term, Rs 28,200 will be an important support. Failure to decline below this level in the coming weeks can keep the contract in a sideways range between Rs 28,200 and Rs 31,000. Traders with a high risk appetite can go long with a tight stop-loss at Rs 27,950. However, the medium-term trend is down. Rally to Rs 31,000 will be a good opportunity to enter into fresh short positions. The contract can fall to Rs 25,500 in the medium-term. Only a strong rise above Rs 31,000 will turn the outlook bullish.

Silver (Rs 45,154)

The MCX silver contract is trading flat. Its 200-day moving average resistance is currently at Rs 45,680. A break above this resistance can take the contract to Rs 48,500 in the coming weeks. On the other hand, if the contract declines below Rs 43,500, it can fall to Rs 41,000. Traders have to wait for a breakout on either side of Rs 43,500-45,680 to trade on the contract. For the medium-term, Rs 40,000 will be a crucial support. The probability of the contract testing this support remains high till price is below Rs 48,500.

Copper (Rs 468.2)

The MCX copper contract has risen sharply as indicated last week. The short-term bullish outlook remains intact. But a dip to Rs 463-460 cannot be ruled out. Supports are at Rs 462 and at Rs 455. Traders can take fresh long positions now and accumulate more longs on dips to Rs 462 and Rs 455.

Intermediate resistance is at Rs 470. A breach of this resistance will open doors for a rise to Rs 510 in the coming weeks. For the medium-term, Rs 510 is a key resistance level which can halt the current rally. A reversal from here can see the contract declining again.

Crude oil (Rs 6,261)

The MCX crude oil contract closed the week making moderate gains. Traders can hold their long positions taken near Rs 6,100 and retain the stop-loss at Rs 6,040. Supports are at Rs 6,100 and Rs 6,000. But caution is required as the contract is nearing its crucial 21-week moving average resistance at Rs 6,354. Exit longs if there is a reversal after hitting this resistance.

A break above Rs 6,354 can, however, take the contract to Rs 6,500. Failure to breach Rs 6,500 will keep the medium-term downtrend intact and the contract can fall to Rs 5,500. But if the contract manages to break above Rs 6,500 decisively, then it will signal a trend reversal.

Natural gas (Rs 273.4)

The MCX natural gas contract was oscillating between Rs 271 and Rs 281 last week. The previous high of Rs 281.6 recorded in January 2010 will be an important resistance level to watch. Failure to breach this level can take it down to Rs 255 in the coming weeks.

However, if it breaks above Rs 281.6, the contract can target Rs 310 in the short-term. The medium-term trend is up with strong supports are at Rs 240 and Rs 220.

Gold & Silver Are Jumping And WTI Crude Breaks $100

As the 10Y broke solidly through 3.00% so precious metals began to move and after testing $20 in Silver overnight a few times, both gold and silver have just run stops through key levels and are jumping like Twitter (or Bitcoin) for a few minutes. WTI Crude has also just broke $100.