German Ifo Business sentiment, US Housing and manufacturing data as well as the FOMC Statement and Canadian GDP are the major events this week, Here is an outlook on the main highlights on the coming days.

Last week US existing home salesticked down in December to 4.87 million compared to 4.90 million in the previous month, however total sales for 2013 were the strongest in seven years. Economists expected home re-sales to rise to 4.94 million however the sharp rise in mortgage interest rates and price increases together with weak income growth made home purchases less affordable for many buyers. Will this trend continue?

Let’s start,

 

1. German Ifo Business Climate: Monday, 9:00. German business sentiment edged up in December to 109.5 up from 109.3 in November, reaching its highest level since April 2012. The reading was broadly in line with market consensus. Analysts are optimistic concerning economic growth in 2014 unlike most of its neighbors in the Eurozone. Both domestic demand and exports are expected to further this year. German business climate is expected to reach 110.2.
2. US New Home Sales: Monday, 15:00. Sales of new single-family homes declined mildly in November to an adjusted annual rate of 464,000 units, down from a five-year high of 474,000 posted in October. Economists expected new home sales to fall lower to 449,000. However compared with November last year, sales increased 16.6%. Despite higher mortgage rates, the housing market is expected to expand further this year. New home sales is expected to decline to 457,000.
3. UK Prelim GDP: Tuesday, 9:30. Britain’s economy expanded to a three-year high of 0.8% in the third quarter, showing economic activity has increased across the board, a sign the country is on the right path to prosperity. Service sector activity edged up 75% climbing above its pre-recession peak, but production is still 12% lower. However this improvement gives further confirmation that the UK has shaken off years of economic stagnation. Another 0.8% gain is expected this time.
4. US Core Durable Goods Orders: Tuesday, 13:30. Orders for long-lasting products jumped 3.5% in November as demand increased. The increased was preceded by a 0.4% rise in October. Economists forecasted a lower increase of 0.9%. Meanwhile Core goods orders excluding the volatile transportation items surged 4.5% rebounding from two straight months of declines. The positive readings give further proof that US economic activity continues to strengthen. Durable Goods Orders is expected to climb 2.0% while core Durable Goods Orders is predicted to increase0.7%.
5. US CB Consumer Confidence: Tuesday, 15:00. US consumer sentiment improved at the close of 2013, reaching 78.1 from 72 in November, more optimistic about future job prospects as well as present situation, suggesting the US economic activity is on strong footing. Economists believe the housing market and the manufacturing sector will continue to expand this year. US consumer sentiment is expected to remain unchanged.
6. US FOMC Statement: Wednesday, 19:00. The Fed has decided to start tapering $10 billion from its asset purchases on December, leaving policy rates unchanged, stating the US job market is continuing to improve and economic growth is positive though still moderate. The Fed projected, economic activity will expand further boosting growth this year.
7. NZ rate decision: Wednesday, 20:00. Reserve Bank of New Zealand  kept its official cash rate at 2.5% since a 50-basis point cut in March 2011. Governor Wheeler, concerned with rising inflation stated the bank will raise rates in the first half of 2014 to keep inflation around 2.0%. Wheeler set limits on low-deposit mortgage lending in October to tackle rising house prices, and fuel demand for the dollar. The RBNZ forecasts growth will average 3% in 2014 before starting to slow raised its growth forecast for the year through March 2015 to 2.8% from 2.3%, saying NZ economic activity is gathering momentum. No change in rates is expected now.
8. Mark Carney speaks: Wednesday, 0:15. BOE Governor Mark Carney is scheduled to speak in  in Edinburgh. Market volatility is expected.
9. US Advance GDP: Thursday, 13:30. The U.S. economy advanced an annualized rate of 2.8% in the third quarter compared to a 2.5% climb in the previous quarter. The main reason for this expansion was a buildup of inventory among businesses. The debt ceiling issue and the partial shutdown weighed on manufacturer’s business investments and on domestic demand. However the housing recovery and the ongoing improvement in the job market and manufacturing sector are expected to push GDP up in the fourth quarter. U.S. economy is expected to expand 3.2% in the fourth quarter.
10. US Unemployment Claims: Thursday, 13:30. The number of Americans filing initial claims for unemployment benefits increased mildly by 1,000 last week to a seasonally adjusted 326,000, indicating steady job gains. The four-week average fell for the third straight week to 331,500 close to pre-recession levels. However 1.4 million people stopped receiving payments since an emergency program that prolonged benefits expired in Dec. 28. Analysts expect unemployment rate will fall due to the expired benefit program. Nevertheless, there are positive signs for economic growth with a rise in consumer confidence and retail sales as well as manufacturing output in the final quarter of 2013. A small rise of 331,000 is anticipated now.
11. US Pending Home Sales: Thursday, 15:00. Contracts to purchase existing U.S. homes climbed 0.2% in November, posting the first increase in six months. Economists expected a more substantial increase of 1.0%. However this climb may suggest the housing market is stabilizing after rising mortgage rates pushed existing home sales down. Nevertheless, continued growth in the US job market and improvement in manufacturing are good signs for a stronger growth in 2014. A decline of 0.1% is predicted now.
12. Canadian GDP: Friday, 13:30.  The Canadian economy expanded by 0.3% in October, posting the fourth consecutive month-to-month rise, following the same increase in the previous month. Growth in the manufacturing and services sectors picked up sustaining the growth trend in the Canadian economy. Canadian economy  is expected to expand 0.2% in November.

That’s it for the major events this week. Stay tuned for coverage on specific currencies

Lew'da thought it: Debt Ceiling back on the agenda

US stocks finished mixed - DOW ends the day lower (IBM) while the S&P managed to end the day slightly higher as investors continued to react to the uneven earnings reports (COH, NFLX, AMD, EBAY) while contemplating what may come out of next week’s FOMC meeting. The FED is testing the anxiety level of the mkt by suggesting that a further $10 bil/month -( taking it to $20 bil/mo) will be withdrawn. Is the mkt really ready for further tightening or does it need to see more data?

It was only last month that they announced the beginning of withdrawal - we have not even had one solid month of data since....so while they are ringing the bell - I do not believe that further tightening is in the cards this month....The mini taper satisfied the urge to do something, but my sense is that any further tightening is premature - particularly given the news that Treasury Secretary Lew is also sounding the 'fire alarm'.......

Yesterday - Lew WARNS congress that the debt ceiling debate has NOT gone away...reminding them that the gov't will run out of money or as he put it - "exhaust its borrowing powers WITHOUT action by Congress":

"It would be best if Congress raises the $16.7 trillion debt limit by Feb. 7, If it doesn't, the Treasury Department could use "extraordinary measures" for a couple of weeks to finance the government, but it likely will "exhaust those measures in late February,"

Republicans gather 'round....which issues will you toy with this time in the ongoing saga of another debt ceiling fight? Will they stick their heels in the ground until the 11th hour yet again? Will the FED in fact announce more tightening in light of this commentary or will they settle in and see how it unfolds on the national stage?

Yesterday - the FED added some $2.8 bil to the system and remember - even though they are withdrawing QE at the rate of $10 bil/month - they can continue to 'adjust' policy with the use of REPO's and REVERSE REPOS.

(Repurchase Agreements (REPOS) is when the FED makes collateralized loans to the primary dealer banks - adding liquidity - and Reverse Repurchase Agreements is when the FED borrows money back from those same banks....essentially subtracting liquidity from the system - separate from the current QE policy objectives.)

That being said - there is no doubt that they will turn up the heat a little to test the reaction.....but in reality - I think they still painted themselves into a corner as the wild card remains - What will happen to rates? The spring housing 'selling season' is only weeks away - and the last thing they want to see right now is a spike in the mortgage mkt - my bet says that the FED will choose the path of least destruction.

All of this talk continues to play havoc with the gold mkt.....has gold found a floor?
In 2013 - we saw gold go from $1600/oz to $1250/oz and so far this year - it has remained in a tight range...testing $1200 and moving to $1260.... as it tries to stabilize.... but prices have since fallen back, driven by speculation I think that the Fed will continue to withdraw.....and this concern will continue to hang over gold. Trader type money does appear to be playing here - but is that due to the severe decline or is there something else brewing? What about the Chinese? Will they continue to be big buyers of the metal? Will they stand still at a price thus underpinning demand? This morning Gold is +$8 trading at $1246/oz remaining within the $1200/$1260 range.

Over in Davos - the conversations continue....interview after interview with global leaders - makes for interesting TV - but will that really impact how investors react? Today we will get earnings from Southwest Air, Janus Capital Group, Alaska Air, Lockheed Martin, Keycorp, Fifth Third Bancorp, MCD and more....

Eco data includes - Initial Jobless Claims exp of 330k, Cont Claims of 2.92mil, Markit Prelim PMI of 55, Existing Home sales of 4.93 mil (annualized) or + 0.6% m/m.

US futures are DOWN 8 pts this morning as we await today's data and continue to digest the recently released data points. Weakness in some industrial bellwethers (real economic indicators) continues to cause investors to be cautious as they contemplate the next FED move. I suspect that a test of 1825 is in the works and a breach of that will once again allow a test of 1810 (the 50 DMA) on the S&P.

This morning we see that the pressure is off of Jamie Dimon for a while as the focus shifts to Lloyd Blankfein (GS) as Libya is suing GS over significant losses suffered from 'soured trades' during the financial crisis...as they take this to court in London noting that :

"GS abused the relationship of trust and confidence with the sovereign wealth fund of the Libyan people..."

Amount in question? $1 bil +...so small change for Lloyd - but it is the negative publicity that he wants to avoid.

Next - a surge in NFLX in early trading (+16%) after they announced a 5 fold increase in profits - but just a side question - Is NFLX a company that really translates into signs of a 'stronger economy'. I mean - it's all good that they sign up new subscribers to watch TV - but how exactly does that help create jobs or stimulate growth in the economy?

Lemon Roasted Feta Chicken

Start with thighs and legs - I make some skinless and leave the skin on others so that I get some of the juice from the skin....but either way is fine...whatever you prefer.........take note:

Start with 6 pieces of chicken, 2 cloves crushed garlic, 1 lg sliced onion and 3 potatoes that you have either cubed, or quartered or sliced...whichever way you prefer works just fine....

Place chicken, garlic, onion and potatoes in a glass baking dish....season with S&P.

Preheat oven to 400 degrees.

Next whisk together: 1 cup of chicken broth, 1/8 cup of olive oil, about 1/4 cup fresh lemon juice and some dried oregano. Pour over the chicken, cover tightly and let marinate for 20 mins.

Place in oven and roast for about 30mins - then remove cover and roast for 20 more mins ....basting occasionally with the pan juices. Now turn on broiler and ...Broil the chicken on each side until nice and golden brown. Careful not to burn the potatoes.

After broiling - add crumbled feta cheese over the chicken and potatoes and return to the broiler for a couple of mins- just so the cheese softens really. Once completed serve on a warmed platter with Chicken in the center surrounded by the potatoes - serve juice on side. Enjoy this dish with a steamed green vegetable- like asparagus, or broccoli. Season with S&P and a dab of butter.

 

 Thu, Jan 23 2014, 12:42 GMT
by Kenny Polcari | KennyPolcari.com

• Attack of nerves
• Yesterday was a day when markets were clearly on the defensive, with the trigger (the fall in China PMI) in some ways not justifying the moves, but nevertheless highlighting the fact that markets were perhaps becoming a little too complacent. As such, we saw stocks sell off, with US indices closing around 1% lower, but in FX the moves were also indicating a more conservative approach. Once again yen bears were frustrated as risk aversion took hold and further underlining our view that further yen weakness is going to be difficult to see without concerted action from the Japanese authorities. The pain was most felt in the Aussie, which has followed through in Asia trade to push below the 0.87. We’ve said before that the Aussie is becoming less linked with the fortunes of China and that remains true, but its trade dependence remains high and the losses reflect the fact that investors were reacting to the consequences of a China slowdown, which in a relative sense will still affect Australia the most.
• The other standout from yesterday was the UK and the Bank of England governor’s reaction to the latest employment data see on Wednesday, the unemployment rate having moved decisively towards the Bank’s 7.0% ‘intermediate target’ which was introduced in August last year and was seen taking nearly 3 years to hit (now looking like 6 months). He undermined his own forward guidance policy by suggesting that there was “no immediate need” to increase rates. Nevertheless, sterling has remained firm, managing further highs vs. the dollar for the year above the 1.6650 level. For now, markets are not quite believing him, pricing in a rate hike by the early part of next year.

Published On Fri, Jan 24 2014, 08:58 GMT

Carney and Draghi both scheduled to speak at the WEF in Davos

 

Today’s UK opening call provides an update on:

• Investors down in the dumps following yesterday’s Chinese data;
• Quiet day for economic data, focus remains on earnings;
• Carney and Draghi both scheduled to speak at the WEF in Davos.

Investor sentiment is continuing to decline as we approach the end of the week. US and Asian indices both posted losses across the board over night and that negativity is now flowing into Europe, with futures pointing to a lower open this morning.

There’s a number of reasons why investors are feeling a little down in the dumps at the moment. The Fed is no longer willing to support the economy on its own and has already starting to scale back its asset purchases, and another reduction will probably be announce next week.

Corporate earnings season has been mixed from an investor standpoint and disappointing from an economic one. Companies have continued to focus on bottom line growth driven by cost-cutting rather than investment and stronger revenues, which is what we’ll need to see if the recovery is going to gather pace this year.

The economic data has been relatively encouraging so far this year, there’s just been a real lack of it over the last couple of weeks. There was a significant increase in the number of releases yesterday but things got off to a bad start as the Chinese manufacturing PMI fell back into contraction territory. Markets never really recovered from this disappointing start, despite some encouraging data from both the eurozone and the US, and that even appears to be carrying over into today.

The only problem now is that there’s a real lack of economic data being released on Friday which means sentiment is going to be driven predominantly by earnings season, which doesn’t fill me with much hope. Once again there’s very few European companies reporting today, although we will get interim results from Royal Mail which I’m sure many will follow closely following its IPO last year.

The World Economic Forum in Davos will continue today so there’ll probably be a lot of noise coming from that which can sometimes have an impact on the markets. Especially when the noise is coming from central bankers, such as Mark Carney and Mario Draghi, both of whom are scheduled speak.

Ahead of the open we expect to see the FTSE up 6 point, the CAC down 3 points and the DAX up 2 points.

Published On Fri, Jan 24 2014, 07:46 GMT

http://sakfxanalysis.blogspot.com

How Much Cash on Hand Is Too Much? And What Should I Do With It?

Read more: http://www.entrepreneur.com/article/230204#ixzz2rEPwXWcaAre congratulations in order? Or perhaps you're just thinking positively--I like it! If you're in the enviable position of having an excess of cash on hand, you have the power to take advantage of opportunities to invest in your business. But before we get to that fun topic, let me answer your first question.

Conventional wisdom holds that a business should have liquid assets (cash in bank accounts and very liquid investments) equal to three to six months of operating expenses. That's a nice rule of thumb, but I like to separate cash into a monthly operating account and a contingency fund. Put simply, the operating account should carry a sufficient balance to cover the lowest cash-inflow month of the year for your business. (Seasonal businesses should have enough cushion to last through both their busy and slow seasons.) It's your contingency fund that should equal three to six months of operating cash.

Here's how to calculate both.

Analyze the last 12 months of costs, broken down into production costs (otherwise known as cost of goods sold in manufacturing or distribution businesses or cost of sales in service businesses), and overhead costs that are spent every month, regardless of sales volume.

Take your current assets (bank balances, outstanding accounts receivable, inventory value) and subtract your annual liabilities (taxes due, accounts payable, loans payable in the short term), then divide by 365 to come up with your daily operating capital. Multiply this by the number of days to arrive at a contingency amount you're comfortable with.

Bonus baby

Contingency fund? Check. Expanded operations? Check. Still have money left over? This is when you start budgeting for the next three to five years. Think about where you want to be by that time and what it'll take to get there. And if you still believe you have cash to spare, only then should you pull it out of the business for yourself. Just make sure to consult with your CPA and financial planner to determine the best way to distribute and invest the funds.

Still not sure what's comfortable for you? Run cash-flow forecast scenarios covering various possibilities: average expected operations, a worst-case scenario, a best-case/high-growth scenario. For your worst-case scenario, consider what would happen if you lost your best customer or top salesperson, if there were a fire or natural disaster, etc. (When I was with a coal-mining machinery and services company, we lost $1 million in cash in six weeks when the coal miners' union went on strike, and all of our customers stopped buying. To survive we had to take draconian measures with our own suppliers.)

Figure out a contingency number that won't starve your current operation but will keep the business alive in case something goes south. Park this amount in a separate bank account or a short-term investment such as a money-market fund, and use it to secure a line of credit with your bank.

Now, for your second question. If you find yourself in the wonderful position of having more than enough dough on hand to cover both current operations and your contingency fund, use the extra cash to grow your business. Upgrade your equipment to boost capacity or efficiency, bring on additional sales staff or consider an acquisition. Whatever you do, don't sit on your money. To reach this point, you've been doing something right, and you'd be a fool not to take advantage of your business's time in the spotlight

Read more: http://www.entrepreneur.com/article/230204#ixzz2rEPpyfk3

How to Be Smart About Your Spending in 2014

Read more: http://www.entrepreneur.com/article/230988#ixzz2rEOHsfjSBusinesses must spend money to grow, but ponying up your hard-earned cash without a plan probably won't do your startup any good. To really grow your business this year, you'll need a smart, organized and strategic investment plan.

Many small-businesses have indicated that they are going to spend more in 2014, from putting more money into online advertising to increasing product offerings, hiring additional employees or hitting the road to meet with clients and potential customers face to face. And that's all good news for the economy.

But before you double down your spending, make sure you have a plan for how much you are going to spend and on what, says Bellevue, Wash.-based business-expense management company Concur. Keep a record of how much you spend on what, and also make sure you keep some money heading into your savings account, Concur recommends.

Related: Crowdfunding Seen Providing $65 Billion Boost to the Global Economy in 2014 (Infographic)

Have a look at the infographic from Concur to see what your fellow business owners are spending on in 2014, and how best to keep your own expenses on track if you intend to make financial outlays this year.

Read more: http://www.entrepreneur.com/article/230988#ixzz2rEOCtlSl

Over the last five years, my firm Red Rocket Ventures has consulted or mentored more than 500 startups -- nearly all of them suffering from the same problem. They are typically so focused on building their product, they don't raise enough capital to cover essential sales and marketing activities that will allow them to better attract additional venture capital down the road. As a result, many startups run out of money soon after launch, stalling out before they reasonably had a fighting chance.

The root of the problem really comes down to better education. Entrepreneurs need to learn early on that you can't launch a startup unless you have raised enough capital for both your product development and your initial sales and marketing activities. They must learn the essentials that all investors look for: rapid user growth, proven customer acquisition metrics from previously tested sales and marketing channels and knowing the best, most cost-effective sales and marketing tactics to stretch their limited budgets.

Related: Why You Should Ditch Your 'Go Big or Go Home' Mentality

By focusing on this education problem, I was originally thinking about building a startup curriculum in a university-style setting. But, given how quickly technologies and marketing tactics are evolving, I was worried about having the curriculum go stale the minute it was finished. Then, I thought some of this could be taught through startup incubator or accelerator programs, but that was only available to the small percentage of applicants that get accepted and only for the short period of time they were in the program.

I wanted a solution that would appeal to all companies that had the interest and the resources; a program that would grow with them through all stages of their growth -- from freshman year through senior year, using the education analogy.

I realized it was the agencies who had their finger on the pulse of all the rapid changes in technologies and digital marketing tactics. But, not the large agencies that are jacks-of-all-trades and masters of none. The boutique, niche agencies are the deep domain experts in their particular field, for example, search engines or social media.

And, more importantly, these boutique agencies that are smaller in size are also entrepreneurial and have first-hand knowledge of how to stretch startup marketing pennies into revenue dollars. By rolling up these services into a one-stop shop, managed by one person from the team, the startup “excubator” model was born in Chicago with the launch of Ensemble in August 2013, of which Red Rocket is a member company.

Why Too Many Startups Run Out of Money Too Fast

Read more: http://www.entrepreneur.com/article/229785#ixzz2rENYpwZJ

Related: Richard Branson on Studying Entrepreneurship in College

But, to really appeal to the startup community, we understood we needed a more attractive pricing plan that was more affordable to startups -- one where 20 to 40 percent discounts would apply for bundling your services needs into one “digital services suite” of expert vendors. In this model, the excubator would also consider taking an equity position in these businesses, so it actually had a vested interest to help these businesses succeed, as partners with entrepreneurs over the long term. This evolves the excubator members’ revenue models from the normal “short term fee driven” model to a more logical “long term venture capital return” model, which if done correctly, should improve the a typical startup’s odds of success from 10 percent to closer to 30 percent in the process.

It is too early to tell if this excubator model will work or not. A current flaw in the model is it still requires the startups to go cash out-of-pocket, even with deeply discounted rates, which they may or may not have the money to pay for. In a perfect world, an excubator model would have raised its own venture fund, or would partner with existing seed-stage venture funds, to help fund these early stage entrepreneurs who may have a great idea, but not the capital to afford the collective services which are required to launch the startup with maximum odds for success.

If excubators have done anything, they have creatively brainstormed how to help more startups over the long run.

Read more: http://www.entrepreneur.com/article/229785#ixzz2rENQEShI