Over the weekend, the bad news has returned with the volume turned up to a Spin Tap level of 11. This has shaken the equity markets hard. This is what I was concerned about last week and why I thought we’d trade ranges. To recap, my call was: “We’re going to need to spend time bouncing around in ranges from the S&P 500 (780-840) to the 10 year note (2.5% to 2.9%) to the US dollar (82-87) before we can gain certainty that the worst is over and that our past isn’t going to catch up to us.” Well, the … …READ MORE
Monthly Archives: March 2009
Today at 4:40 PM ET, I'll be appearing on CNBC's the Closing Bell with Maria Bartiromo discussing the upcoming G20 meetings and the impact on the markets.
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Earnings, Nothing But Earnings….
With huge equity rallies from the lows across Japan, US, and China, markets are trying to decide if this is anticipation of growth or if it’s the euphoria from surviving a near economic-death experience. Unfortunately with retail sales and industrial production collapsing around the globe, it should come as no surprise that earnings for companies worldwide are a disaster.
The canaries in the global trade mine are China and Japan. Chinese growth is expected to slip to 6% this quarter as the global economy has seen a massive drop in demand for their exports. Japan is experiencing a similar situation. … …READ MORE
Rookies Making Rookie Mistakes
Yesterday, we had some questionable reporting on US Treasury Secretary Geithner’s comments on the US dollar. Geithner was commenting on a Chinese proposal to develop a new world reserve currency. Appearing in Congress on Tuesday, Geithner said he didn’t think it was a good idea to replace the US dollar as a reserve currency. Both Ben Bernanke and Barack Obama said the same thing. Yesterday, Geithner said he was quite open to China’s suggestion of moving toward a SDR-linked currency system. He added that the dollar’s role in global financial system depends on establishing sustainable fiscal position.
The US dollar … …READ MORE
Today at 11:20 AM ET, I'll be appearing on CNBC's the Call discussing China's call for a new world currency and what it means for their investments into the United States.
Quiz Time!
Which of the following has helped make stock prices go up over the last two weeks?
1. Positive economic data
2. Positive bank earnings comments
3. Ben Bernanke: no failure of major bank
4. Fed QE program
5. Tsy Toxic asset plan details
6. Positive housing sales and prices
7. ? on suspending MtM and reinstalling uptick rule.
8. Bonus claw back bill stalling.
9. Soaring mortgage applications
10. Stalling of Obama budget
11. All of the above
Answer below….
With better than expected US mortgage applications, US durable goods, and an ECB member saying they can cut … …READ MORE
China and the New US Treasury Nominee
In an essay released Monday in Beijing, Chinese central bank governor Zhou Xiaochuan called for a creation of a new currency to eventually replace the US dollar as the main global reserve currency. This joins Russia in making a call to shift the global economic fulcrum away from the policies of the United States and wealthy nations. The currency impact was immediate as the Chinese Yuan dramatically strengthened in off-shore (NDF) trading.
As the world’s largest holder of US dollars as a reserve currency and US Treasury securities, China appears to be growing more and more assertive over it’s rights. … …READ MORE
CNBC TONIGHT AT 7PM ET
I’ll be appearing on CNBC’s Kudlow Report discussing the details of the US Treasury’s bank rescue plan.… …READ MORE
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Geithner/Obama Toxic Asset Plan: Nothing Happens Until The Fall….
US Treasury Secretary Tim Geithner leaked out the details of his bank recovery program over the weekend and had a early morning press conference to discuss the details of the plan. It’s complicated, it has a lot of moving parts, it attempts to involve the private sector, and no one is sure whether banks will sell these assets to create the program. Other than that, the markets are loving it early.
From the US Treasury Department, the details are as follows:
Three Basic Principles: Using $75 to $100 billion in TARP capital and capital from private investors, the Public-Private Investment … …READ MORE
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Great points Ray!
Ray,
I think the Chinese are just concerned over the size of the spending and what it’ll do to US Treasury bonds. They could also be concerned about the potential negative implications for the US dollar as well. With the Federal Reserve printing money at an unbelievable clip, investors in US dollars may begin to get very nervous.
The question you may also be hinting at is this: will the Chinese exert influence over foreign policy as well as domestic policy due to their holdings of US debt……I hope not or we’re all in trouble.… …READ MORE
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