Pinnacle Activity Ticker
ECB Role May Be Pushing Legal Boundaries
Pinnacle Digest writes: You’ll be shocked to learn that European leader’s are once again meeting in Brussels to discuss the ECB’s bank supervision and whether or not it is even legal. It seems every couple of weeks the EU leaders decide to meet again, typically solving nothing and wasting a whole lot of tax payer money. In anticipation of this meeting, the gold market has sold off. As Ben Traynor of bullionvault.com stated “Institutions are losing enthusiasm for gold”.
According to Scotia Mocatta, so long as gold doesn’t break through $1758 an ounce, the risk is to the downside.
On a positive note, China’s economy grew by 7.4% in the third quarter. This is down from 7.6% in Q2, but better than what analysts were expecting.
"The economic situation in the third quarter is relatively good and we have the confidence to say that the Chinese economy is showing signs of stabilizing and will continue to show positive changes," Chinese premier Wen Jiabao said Wednesday ahead of the release.
It’s always important to take the Chinese economic data with a grain of salt, much like it is with the US data sadly, but improved economic activity in the country is a welcomed site for commodity investors.
Wen stated that China faces many challenges in the fourth quarter because the demand from the rest of the world is weak. He said that was something they couldn’t always control. However, he made clear that China’s resolve to keep their economy growing is firm. If China’s export market does not pick up soon, expect for stimulus programs from the government - which is great for commodities.
"It might take another couple of quarters for growth to significantly recover, "says Bank of America Merrill Lynch economist Lu Ting, "but we believe the risk for a hard landing is getting increasingly smaller."
Europe remains in complete disaster. As mentioned, leaders of EU nations are meeting in Brussels for two days, starting tomorrow, to discuss the legalities of the ECB taking on supervision of all Eurozone financial institutions.
The EU lawyers' conclusion, the Financial Times reports, is that "without altering EU treaties it would be impossible to give a bank supervision board within the ECB any formal decision-making powers".
As we all know by now, the EU does nothing quickly. Expect this to be a long and drawn out process that when/if implemented will fall short of what is needed.
Click here to read Ben Traynor’s full report.