Rising Unemployment Gives Fed Reason to Stay with Easy-Money Policies (Bloomberg)
The Federal Reserve is unlikely to reduce its asset purchases after the Labor Department reported that unemployment rate climbed to 7.6% in May from a four-year low, said Bill Gross, manager of the world’s biggest bond fund. “I don’t think today’s report says anything about tapering at all with unemployment going higher and metrics in terms of the work week and wages being very” dire, Pacific Investment Management Co.’s founder Gross said in an interview on “Bloomberg Surveillance.” Fed Chairman Ben S. Bernanke “won’t taper. But I think ultimately in order to get a more normal economy, the Fed has got to move interest rates up to more normal levels.” Payrolls rose 175,000 last month after a revised 149,000 increase in April that was smaller than first estimated, Labor Department figures showed. The median forecast in a Bloomberg survey called for a 163,000 gain. The unemployment rate rose to 7.6 percent from 7.5 percent. The rising unemployment rate actually lifted the markets today, as invesors viewed it as a sign that the Fed would continue its easy-money policies.
Seek Profits in Eastern Europe (CNBC)
Investors should look at Eastern Europe for the next round of oversized profits, said Templeton Group’s Emerging Markets superstar Mark Mobius. Despite the European Union’s ongoing attempts to slay its recession dragon, Mobius said, “Frontier markets, which include some East European countries like Romania… are very interesting from a frontier market standpoint.” Mobius went on to say that Africa, due to its massive growth potential, and Russia — for value investors — were enticing as well. Clearly, Mobius’ frontier focus allows for a ton of upside.
Is the Gold about to Rise Again? (Bloomberg)
According to a survey conducted by Bloomberg, analysts expect gold prices to begin rebounding next week. Their consensus seems to fly in the face of the weekly sales of gold held via exchanged-traded products, which probably will hit the second-lowest level since mid-March. The value of these holdings has lost some $45 billion so far this year. However, that reduction has been more than offset by a surge in demand for coins and jewelry. In fact, the U.S. mint announced that 2013 could be a record sales year. Gold may shine again soon.