Market News

Our story, as you know, is not a positive one when it concerns the future of the euro. But, that is our story, and it may at times have little to do with the true story–price action! Mr. Price Action is always the final arbiter.

I threw in the Lewitt quote above as a sort of extension to Jack’s Currency Currents missive yesterday. As much as we’re told we need a quick-fix to get the American economy back on its feet, that idea is wrong.

If you have been following this morning missive for awhile you know we’ve been expecting export models to be crushed on the major secular theme of global imbalances starting to balance i.e. overconsumption in the West being balanced against overproduction in the East.

This is that time when we try to evaluate the expectations about the expectations, i.e. will the jobless number guess prove too low, high, or be about right. This morning it seems the number is supposed to come in worse than expected.

US Dollar Index yesterday touched its highest level in nearly three years. Not since April of 2006 have we seen the buck this strong versus this particular basket of currencies.

Another head shaker it seems. Just when we were warming to the idea of gold and the US$ moving arm in arm, the correlation breaks down or maybe pauses or maybe never was; either way we are now back to the old game of higher dollar and lower gold

The writing seems to have been on the wall. The bailout of AIG could lead to the belief that bad corporate performance by AIG was on the cards. AIG’s largest ever declaration of a quarterly loss in corporate history seems to have triggered a massive sell of stocks across America and Asia.

Worried about your countries currency? The easy solution to your worries: don’t cut rates when the market expects it.

Do we have a dollar breakout or fake out in the making? It depends on the euro here. The European currencies are lower against the dollar this morning on news that Germany didn’t want to throw its hard earned Treasury at central and eastern European problems. 

China bulls don’t worry, be happy, because China is going to be the sole winner in this race to the bottom–don’t you know. 

Inflation is back … but this time it’s a bit different. I’m not talking about the inflation of prices; I’m talking about the inflation of lungs.

The Yen as we all know has served as a safe haven currency along with the US dollar. In times of economic turmoil, the Yen has tended to act as a hedge and as investors take shelter in its safe haven status, they drive up its value

Though it is fashion to blame the US for all the ills now flowing into the global economy, we don’t think it’s quite that simple.

Gold did the deed, closing over the $1,000 mark on Friday as the dollar was sideswiped by Senate Banking Committee Chairman Chris Dodd. Mr. Dodd, a man who pontificates on any and every subject under the sun

Japan needs to help ensure exchange rates are stable for its economy to recover, its new finance minister said, as slumping global demand batters exports and pushes the nation deeper into recession.

The US$ Index tested its old high yesterday. The heightened bad news concerning the Eurozone banking system had dollar bulls (like us) looking for a breakout in Mr. Greenie. But, as they say, close but no cigar!

At some point in our lives, we have imagined the feeling of a freefall…..it is discomforting. And now, we have the world’s second largest economy in the state of a freefall. So let’s all brace for the thud, before we hear the big ouch!

The great thing about investing is that you can always find a good story to fit the facts and often your own opinion. And when you add the gift of hindsight you can really weave a good one.

There was a story in Bloomberg last week regarding the potential for China’s economic recovery to have already begun. I believe the evidence rested simply on the effects of the Chinese’s stimulus plan.

It’s not that we have any interest to defend our newly appointed Treasury Secretary, as it’s too late for that anyway. He was summarily savaged by the financial press after his presentation of a “solution” to the financial crisis.