Commodities slump as ‘death bell’ rings; stocks slip from record

Cyprus Gold

The head of Cyprus’s central bank said the government is attacking his institution’s independence and doesn’t have the right to sell the nation’s gold reserves without the central bank’s consent. The central bank is at loggerheads with the government of President Nicos Anastasiades as Cyprus finalizes a 17-billion-euro ($22 billion) bailout agreement that will shrink its banking sector and tax deposits of more than 100,000 euros.

“The independence of the central bank of Cyprus is being attacked at this time,” Panicos Demetriades, who is also a member of the European Central Bank’s Governing Council, said in an interview in Dublin today. “The government seems to have committed to a sale of state gold without consulting the central bank,” Demetriades said.

Gold ETF

Holdings in the SPDR Gold Trust, the top exchange-traded fund backed by bullion, reached 1,181.4 metric tons yesterday, the lowest in almost three years. Through yesterday, prices slumped 6.6% in 2013 as global economies improved.

Minutes of the Federal Reserve’s March meeting released April 10 showed several members were in favor of pulling back on its $85 billion monthly debt-buying program this year. The metal climbed for 12 straight years through 2012 partly as central banks expanded their balance sheets.

The Fed’s unprecedented bond purchases and three straight years of profit growth helped send the S&P 500 up almost 136% from its bear-market low in 2009. The benchmark index closed yesterday at a record 1,593.37. Short covering and new investments by money managers also helped keep U.S. stocks at record highs. A basket of S&P 500 stocks with the most bearish bets rose 4.8% this week, according to Goldman Sachs Group Inc. data.

Analysts forecast S&P 500 earnings fell last quarter for the first time since 2009, projecting a 1.4% decrease from the first quarter of 2012, according to data compiled by Bloomberg. Profit growth is projected to return later in the year, with full-year earnings forecast to increase 7.3%, the data show.

Economic Data

The 0.4% decrease in retail sales, the biggest since June, followed a 1% gain in February, according to the Commerce Department. The median forecast of 85 economists surveyed by Bloomberg called for an unchanged reading in March. Department stores and electronics dealers were among the weakest showings. The Reuters/Michigan consumer-confidence index fell to 72.3 in April, below all 69 estimates in a Bloomberg survey of economists.

“The first quarter really ended up on a weak note,” David Chalupnik, head of equities at Nuveen Asset Management in Minneapolis, said in a phone interview. His firm manages $120 billion. “We’re concerned that with the economy ending on a weak note, the commentary from companies as they report might be a bit negative compared with what people are expecting and that could put pressure on the market.”

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