Global Market Commentary, Analysis and Investments
Italy seems to have gone too far. Its 10-year bonds yields are back over 7%. It is “the beginning of the end” say analysts.
But the end of what?
When the going is good people have little patience for questions. They are too busy, earning and spending, buying and selling, and getting where they are going. But then comes a major turnaround, all of a sudden, and they develop the deep torments of a retarded poet in an unhappy marriage.
[Read more...]Yesterday morning I told you that with the day being the last of the month, we could very well see some currency weakness, as traders square their books, and close out short positions in the dollar. And that’s exactly what I think we saw yesterday… The bias switched from dumping dollars to buying them, but not at breakneck speed, just a gentle flow…
[Read more...]So hurricane Irene is over with, but it didn’t take long for economic commentators to make fools of themselves.
David Kotok is the chairman and chief investment officer of Cumberland Advisors. He was on the radio with Larry Kudlow, who asked him about the economic impact of Irene. Kudlow noted how Irene tracked over 1/10th of the nation’s economic output. Here is Kotok writing about it to his investors afterward about Cumberland’s response:
[Read more...]Gold turned the table around yesterday, and instead of being on the chopping block, it was being added to, as the shiny metal rallied. It was pretty incredible to watch, given that gold was down $50 when it turned around to post a $15 gain… It almost erased the previous day’s $77 drop… But the shiny metal is still down on the week, by a lot! I was stopped in the kitchen here, by the darling Danielle, who wanted my opinion on her gold holding… I asked her if she had bought gold as a “trading asset” or a “protection asset”… For if you want to “trade gold” you should buy the ETF… Otherwise, holding physical gold means you are looking to retain a store of wealth, and “corrections” like gold was going through, shouldn’t mean a hill of beans, unless of course, someone is looking to buy more at the new cheaper price! Satisfied, she went back to work, and so did I!
[Read more...]At one point yesterday, it looked as though the dollar was about to get a root canal, as the euro (EUR) climbed back to 1.45, the Aussie dollar (AUD) $1.05 and so on… The currencies were rallying so much that gold climbed into the back seat and let the currencies drive for a while… But, this morning… Gold is back in the driver’s seat, with the currencies backing off their charge against the dollar.
[Read more...]Good day… And a Wonderful Wednesday to you! Well… We had the Swiss National Bank (SNB) meet already this morning, and Bank of England (BOE) minutes released, so it’s been a busy morning overseas… Here on our trading desk, we’ve been swamped, but that’s all good, eh? I’m really busy and on top of that, have to step out this morning for a while… When it rains it pours, eh?
[Read more...]Today we entered uncharted territory. For first time, the U.S. suffered a credit downgrade and is no longer AAA, according to S&P. So now what?
Some will say it isn’t a big deal. What’s one notch to AA+? The problem with that thinking is that it assumes we don’t go lower than AA+. But the problems that brought us here aren’t solved, not by a long shot. In fact, they haven’t been addressed at all. So one has to reasonably assume the step to AA+ is just the first step in a long slide to greater depths. That is a big deal.
[Read more...]The agreement reached to raise the US government debt ceiling may mark the beginning of the kind of “deer in the headlights” policy freeze described in the last chapter of The Dollar Crisis. If that agreement is fully implemented, this depression is going to become considerably worse.
The following excerpts are taken from The Dollar Crisis, Chapter 20: Bernankeism, written in December 2004.
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Global Growth Hopes Fade
Right out of the starter blocks this morning, we have news from Germany that’s not good. In fact it’s downright awful… No it’s not a weak data print… And it’s not more Eurozone downgrades… What it is, is something I’ve had nightmares about happening here in the US! OK… With no further beating around the bush… Germany failed to get sufficient bids at their auction this morning for 10-year bunds. 35% of the maximum sales target of 6 billion euros went unsold! Uh-oh! What’s the problem? Ahhh grasshopper… Germany was attempting to auction these bunds at 1.98%… The markets simply said, “We need a higher yield to buy”…
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