Market News

Soaring unemployment in Europe, with still huge banking exposure, rising political tensions, fiscal concerns among the PIGS, a little country called Latvia that may be the canary in the coal mine for its Eastern European neighbors so similarly afflicted

The numbers are staggering…really incomprehensible…it’s the kind of stuff that if you made it up no one would believe you…I’m talking about the amount of money both the US and European Union have committed to this crisis:

All this political mumbo jumbo has given the pound a headache. One minute it’s soaring in the sky, and the next minute it’s jumping off the cliff into the English Channel. Where is the pound really heading? Will it rise to levels prior to the recession? Or will the political turmoil drag the pound down along with it?

The US dollar seems to have undergone several ups and downs with the advent of the global financial crisis. It appreciated when the US economy was in the dumps defying usual laws of economics.

Imagination inflation – a.k.a. imagiflation — is what’s needed in order to understand price action these days.

We were very much warming to the idea that most of the bad news seemed to be in the dollar–much of the key points posted above i.e. if we know it and you know it then it should already be in the price.

I was putting air into my bicycle tires the other day just to make sure I’d have a nice smooth ride when I hopped on.

What if: 1. The world will be struggling with deflation instead of inflation? 2.US employment and housing experience another leg down? 3. China disappoints? 4. An Eastern European country defaults? 5. 5) The US is on track to at least muddle through better than Europe?

We’ve seen a trend of positive data lately, as economic reports are showing some improvements. Stock markets are rising globally, up 30% since last March. We are seeing money flow out of the yen and the dollar – and going into commodity currencies!

It seems a lot is riding on this opportunity for more “green shoots” this morning. Most expect the dollar to tank on better than expected jobs news; but few seem to be thinking the dollar will rally on worse than expected news

Though I don’t spend too much time worrying about it, I often wonder where our esteemed leaders – financial and political – have their money hidden away. Where are their investments?

These are no longer Chinese Whispers, but Chinese jitters resulting from a weakening US dollar. The markets may have been happier if these were Chinese Whispers, which essentially is a distortion of a message, when whispered from ear to ear amongst a chain of people.

The Chinese leadership said so yesterday, despite their previous intermittent cat-calls for a new currency.

Ok, we’ve mentioned this once or twice already, but mostly we’ve just been joking. Now we’re starting to wonder if we should take this idea more seriously. Apparently a whole bunch of others are.

Stocks are climbing the proverbial wall of worry indeed, evidenced by this piece in the Financial Times this morning

All this while, with the focus on recession in the US, Euro area troubles had not received much attention. However, Euro problems seem to have made a big bang appearance with Germany announcing an up to 6% negative growth in its GDP this year on the back of a 3.8% negative real GDP growth in the first quarter of this year.

I always liked this quote attributed to John Maynard Keynes: “The market can stay irrational longer than you can stay solvent.” We know it’s true. The problem is that practical application of this is not always easy unless one has a very long investment time frame–and very deep pockets.

“Markets are going to increasingly demand that there be some real green shoots” of an economic recovery, said Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. in New York. “They are going to have to step in at some point and put some more easing in.”

Credit is the life blood of the American economy. It gives those who previously could not afford fast cars, big houses, and some bling-bling a chance at the American dream. This credit is made possible through consumer loans, mortgages, and credit cards.

Global healing a lat the credit market…it’s a beautiful thing… Global healing al la the stock market…it’s a beautiful thing… Global healing al la a new 2009 high in oil prices…it’s a beautiful thing…