While I don’t generally make it a habit to read the paper, there are times when they put out an editorial that reflects the mood of the nation. Here’s the headline, “Our view on federal spending: In Congress, ‘emergency’ is what you don’t want to pay for”. “Memo to congressional Democrats: It’s not 2008 or 2009 anymore. Then, when the nation was facing financial catastrophe, it made sense to borrow as much as necessary to stave off economic depression.” Who knew USA Today was in support of the Tea Party? The point is that the level of spending that Congress … …READ MORE
Monthly Archives: May 2010
Risk Aversion Dominates
The theme of risk aversion continues to build back up after Friday’s temporary respite. The latest trend reinforcing bad news is the South Korea-North Korea conflict; the European bank contagion with Spanish banks in the spotlight, and US growth slowing.
The LOIS spread continues to climb and reflect a reversion away from European banks and a heightened demand for US dollar funding. Three month libor was fixed at 0.536% and the LOIS spread jumped 3 points today to 31.625. Both are at their highest levels since last July. European equities have fallen to their lowest levels since September.
Currency markets … …READ MORE
Posted in Front Page Tagged China, European debt, North Korea, risk aversion, South Korea Leave a comment
Media Appearance This AM!
Today at 11:10 AM ET, I’ll be appearing on CNBC’s the Call discussing the US-China Strategic Economic Dialogue talks.… …READ MORE
Media Appearance Tonight
Tonight at 7PM ET, I’ll be appearing on CNBC’s Kudlow Report discussing financial regulatory reform and the American Jobs Act of 2010.… …READ MORE
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ECB Is Not the Fed
The calamitous actions and inactions by European officials continue to drive uncertainty throughout the financial markets. Overlaid on this, we’ve had fears generated from Australia’s commodity tax, China’s warnings on inflation, weaker than expected US inflation and economic data, the US financial regulatory reform legislation, and finally the retail pullback ($12 billion out) from equities generated from the Flash Crash. It’s a revisit of the sequential bad news that came out in early 2009. A conspiracy of bad things happening quickly.
There is one major difference and it has to do with central banks. The US and UK central banks … …READ MORE
Merkelized Markets
Just when it looked like the Euro was stabilizing and volatility dropping, the German government stepped in and created more uncertainty and anxiety over the currency. By their nature, politicians engage in a time tested activity known as “Ready, Fire, Aim” or RFA when they want to show their voters that they can act decisively in the face of a storm. They prefer to play the RFA and attempt to kill whatever ails them.
They usually shoot themselves in the foot. Yesterday is a wonderful example of this practice and Merkel is missing a few toes today.
The storm on … …READ MORE
UK Puts On a Toga
A new government is formed in Europe and problems ensue. They check the books from the outgoing administration and discover things are worse than they knew. If this sounds familiar, it should as this is what happened in Greece. It is now occurring in the United Kingdom.
The new coalition government in the UK has called for independent auditors to review the UK’s finances to establish the true scale of the official deficit and debts. The Office for Budget Responsibility will start tomorrow on the project. Keep a keen eye out for when they will deliver their report as it … …READ MORE
The Case against the Euro
The Euro and Gold remain the top two stories in the financial markets as former losses ground while the latter puts in new all time highs. This is the exact opposite of what was occurring during the US financial crisis. This leads me to the simple conclusion that whatever area of the world that is in crisis will see its currency lose value to gold. This relationship is strengthened if the crisis center begins quantitative easing. In the case of the Euro, there are a few more dynamics at play that are driving the Euro-gold move.
During the greenback’s recent … …READ MORE
Cleggmaker
The UK election just got a lot more interesting in a big negative way for the British pound. As most of you know, the election ended without a clear majority for any party. The Conservatives or Tories won the most seats and votes, but would need to create a coalition with the Liberal Democrats to reach a majority. The same holds true for the Labour Party. The Lib Dems had been working with the Tories to hammer out an agreement by which a coalition would be formed. The Lib Dem leader Nick Clegg was attempting to get the Tories to … …READ MORE
