Market News

Bad news, bad news and bad news is all that has being heard about the US economy! Employment has fallen, consumption is down, and exports have been hit. But, the US dollar seems to be ignoring all this and quietly strengthened early this week.

A while back we started talking about the risk to breakup of the European Exchange Rate Mechanism (ERM). Of course the usual howls of disbelief we usually get when we look in the opposite direction of the consensus.

I got another email – this time from a random email contact that doesn’t follow the markets and has no idea that I do follow the markets – regarding the secretly soon-to-be released Amero currency.

Gold bugs call your office! As gold goes so goes the dollar in the opposite direction? That is what we’ve been seeing lately.

Jobs Friday: Let’s get ready to rumble Get ready for the buffer to fill, as Mr. Mandelbrot calls it.

Is it over yet? Has the Bank of England reached a bottom with their rate cuts?

There seems to be no respite for the ailing US economy as unemployment rises and housing prices continue their downward march.

So was it Obama yesterday? Was it his words that sent the US dollar chugging higher? Did stocks rally sharply on Friday in anticipation of Obama?

Do you remember what economists used to tell us about the global economy? If not, let me remind you.

A lot can be argued to the point that the true meaning of Christmas is slowly slipping by us; because many people instead focus on seemingly more-important facets of this gift-giving holiday, or so it goes.

The volatility has been humongous in currencies, you might have noticed. The huge run in the euro recently seems to have a lot of Johnny Come Lately dollar bulls changing their tunes, and now suggesting the dollar move is done.

Sometimes we are a bit absurd in this morning missive in an attempt to make a point. Looking back at a recent issue, from the 2nd of December, titled “Can you say 1% Treasury Bond Yield?” we noticed the 30-year bond futures price has risen a bit since then; yields have fallen. Yes, yields have plunged faster than expected–by us, and I imagine by many others.

The US Fed appears to have done the unthinkable – bring interest rates close to zero. Its actions seem to be aimed at kickboxing the economy out of doldrums. Monetary easing can be an effective tool to change the trajectory of economic growth, but such low levels of interest can prove dangerous.

You’re probably kicking yourself for holding on to those hryvnia for a couple days too many.

The dollar was blasted yesterday by Ben’s Quantitative Easing cannons. It’s game over for the buck, right? Well, maybe…

Interest rate decision out of the FOMC today – Mr. Ben Bernanke and his busy policy-makers announce their latest decision on interest rates this afternoon in the US. Will Ben schmooze the media like Trichet? Doubtful. Estimates say rates will drop another 50 basis points, down to 0.50% from 1%.

We don’t think so–at least over the longer term. But no matter what we think near- or long-term, the market likes euro compared to the other players. The euro has bounced strongly against the US dollar. Also, you can see euro’s relative strength in the Euro – British pound cross (at an all-time high) and the Euro – Swiss franc cross (wasn’t Swiss supposed to be the safe haven)?

The world’s fastest growing economy and its engine of growth appears to be headed for a substantial slowdown as per latest data released by the World Bank. China’s exports have started shrinking and even its imports have been marked by a severe contraction.

We’ve told our story as to why the US dollar has possibly entered a multi-year bull market. And depending on where else you dig for investment advice, you may have also heard why the US dollar has not entered such a bull market … why this is only a correction in the major long-term downtrend.

Ouch! Another seeming dollar correction is off the rails so far this morning, as it is sharply higher against all comers (yen the exception). Watching the dollar move sideways since November 21st is like watching an episode of the Twilight Zone–all kinds of game changing global macro events everyday and the world’s major currency just ranges. Let’s call it the “chop zone,” because that is what it can do to one’s short-term trading account–chop it up into small little pieces: