Gold Futures Decline on U.S. Inflation Outlook; Silver Advances Gold fell as a decline in energy costs reduced demand for the precious metal as a hedge against inflation. Silver rose. Crude-oil futures declined for the first time in four sessions after jumping to a record last week and doubling in the past year. The Federal Reserve, which meets today on interest rates, may signal higher U.S. borrowing costs to curb inflation. Gold reached an all-time high of $1,033.90 an ounce in March as corn, gasoline and other commodities soared. "If we get continued weakness in crude, gold can retest the lows,'' said Frank McGhee, the head metals trader at Integrated Brokerage Services LLC in Chicago. "If gold doesn't have support from other markets, it's going to have a technical breakdown.''
Fed talking tough on the threat of inflation Fed likely to keep interest rates unchanged but employ tough talk about inflation threats Federal Reserve Chairman Ben Bernanke and his colleagues, concluding a two-day meeting, are expected to keep talking tough about inflation while stopping short of actually doing anything, at least right away. The Fed is widely expected at the conclusion of Wednesday's discussions to express more concerns about inflation and in that way signal that rate increases could be on the way later this year.
US Bankers talking on eggshells Fed statement likely to be fuzzy - How to be hawkish but not too hawkish This week's Federal Reserve policy statement will likely tread carefully around whether the central bank is more worried about a slowdown or higher inflation, as the Fed seeks to keep its options open and not encourage a nervous market to start betting that interest rate hikes are imminent. There are likely to be more "fuzzy" statements rather than decisive ones in the Fed statement on Wednesday following its closed-door meeting which begins Tuesday afternoon, said Wrightson ICAP in a note to clients. The statement is expected around 2:15 pm Eastern Wednesday. Congress Debates High Oil Prices While Corporations and Consumers Pick up the Tab The price of oil edged up again yesterday, before settling at $137 a barrel flat, as concerns about short-term supplies continues to overwhelm Saudi Arabia’s recent pledge to boost production. With Saudi Arabia offering some, albeit limited, cooperation, Congress has turned its ire on speculators and investment banks. First, demand from China and India was to blame for soaring oil prices. Then the weak dollar, the member nations of OPEC, Big Oil, and now investment banks take their turn in the rotation as politicians scramble to find a suitable scapegoat in an election year.
What's ahead, Who & Why Listen to what Lindsey Williams said last October about oil, who controls it and the politicians. Blame the IMF and the World Bank. . . . 75 minute video - The Non Energy Crisis
Volvo slashes 2,000 jobs Volvo is cutting about 2,000 jobs globally to cope with the weak US dollar, soaring raw material prices, and a sharp downturn in its business in the US. The Swedish carmaker, owned by Ford Motor, announced the cuts on Wednesday as part of a cost reduction programme which it said would reduce its overall cost level by SKr4bn (about $660m).
Exchange Says Efforts to Curb Speculation 'Foolish' Governments would be "foolish'' to limit participation in commodity markets and curb speculation because prices are based on supply and demand, London Metal Exchange Chief Executive Officer Martin Abbott said. Rising demand from emerging markets and a lack of investment by suppliers have created a "structural change'' in commodity markets, fueling higher prices, Abbott said yesterday in an interview in New York. Increasing regulation to limit speculative interest won't lower prices and may hamper the market's role in price discovery, he said. "There is in the commodity space as a whole something going on which cannot be ascribed to simply hot money coming through exchanges,'' said Abbott, who heads the world's largest marketplace for copper, aluminum and other base metals. "It would be very foolish of any government to stifle participation in markets.''
Texas Real Estate Slump > Mexicans to Take It Back More than a century and a half after Mexico lost Texas to the U.S., Virgilio Garza wants a piece of it back. A "Texas for Sale'' sign and cowgirls in boots and white hats greeted Garza at the Convex center in Monterrey, Mexico, earlier this month. A Monterrey developer and investor, Garza was in search of foreclosed U.S. property to buy. "Texas is like our home,'' said Garza, 45, who joined hundreds of Mexicans poring over lists of Texas properties at the four-day event. Garza, who owns manufacturing sites and other land in Mexico, said he and five partners may invest as much as $8 million in Texas. "We believe there can be some opportunities.''
New home sales and prices both drop in May May new home sales tumble 2.5 percent while median prices keep falling as housing woes deepen Sales of new homes tumbled for the sixth time in seven months in May while median prices kept plunging, underscoring the depth of the nation's housing woes. The Commerce Department reported Wednesday that new homes were sold at a seasonally adjusted annual rate of 512,000 units in May, down 2.5 percent from the April level. The median price of a new home sold last month fell to $231,000, down 5.7 percent from a year ago. The report on new home activity in May followed reports Tuesday that showed record home price drops in April, indicating the nation's housing slump is not only deepening but also widening to include previously untouched parts of the country.
Illinois sues Countrywide The Illinois attorney general is suing Countrywide Financial, the troubled mortgage lender, and Angelo Mozilo, its chief executive, contending that the company and its executives defrauded borrowers in the state by selling them costly and defective loans that quickly went into foreclosure. The lawsuit, which is expected to be filed on Wednesday in Illinois state court, accused Countrywide and Mozilo of relaxing underwriting standards, structuring loans with risky features, and misleading consumers with hidden fees and fake marketing claims, like its heavily advertised "no closing costs loan." Countrywide also created incentives for its employees and brokers to sell questionable loans by paying them more on such sales, the complaint said. In reviewing one Illinois mortgage broker's sales of Countrywide loans, the complaint said the "vast majority of the loans had inflated income, almost all without the borrower's knowledge."
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