Month: October 2012

By Central Bank News

By MoneyMorning.com.au

Seeing as China and Japan are Australia’s two largest trading partners, you should cross your fingers, hoping that things go well for them. Except maybe at the Olympics or if they ever enter the cricket World Cup.

You definitely don’t want them to go to war with each other…

Wars are expensive for starters, even if it’s ‘only’ a trade war. You don’t need to tell Japanese businessmen that. According to the Wall Street Journal [WSJ], Japan’s top three car makers recorded a ‘steep’ drop in sales in the Chinese market last month.

This is entirely due to the recent ‘territorial spat’ between Japan and China over islands in the East China Sea. Japan’s move to buy the islands and shut out Chinese claims unleashed anti-Japanese rhetoric and protests inside China.

But here’s the thing: China is Japan’s largest trading partner. So the stakes are high.

The Japanese don’t appear to have retaliated to the same degree against Chinese companies in Japan yet. But we read that any reduction in Japanese exports will continue to hurt its trade deficit.

This is an important time for the Japanese economy. In 2011, Japan ran its first trade deficit in thirty years. This was mostly because of rising energy imports after it shut down its nuclear reactors in the wake of the Fukushima disaster.

But why is this important? As the same WSJ article noted, declining profits for Japanese companies erodes Japan’s current account surplus, leaving even less money to finance its debts. And with the Japanese federal debt over 200% of GDP, Japan needs to make sure it can pay its debts.

Ultimately, this suggests that the next major sovereign debt crisis might not be in Europe or the US, but rather in Japan. A scenario like that would have much bigger implications for Australia than the eurozone debt crisis.

This was on the mind of the world’s central planners when they met last week as part of the International Monetary Fund and World Bank annual general meetings in Tokyo. Also in attendance was the Bearded One, Ben Bernanke.

The Bearded One let loose on Sunday, defending his policy of cheap money and rejecting claims he was hurting the economies of emerging markets and, as the Financial Times reported, ‘that he has sparked a global “currency war”.’

In what was considered a veiled threat to China, he said the answer to the problem of US dollars flooding the world was simple:

‘Of course, an alternative strategy — one consistent with classical principles of international adjustment — is to refrain from intervening in foreign exchange markets, thereby allowing the currency to rise and helping insulate the financial system from external pressures.’

The currency war continues.

Callum Newman
Co-Editor, Scoops Lane

From the Port Phillip Publishing Library

Special Report: How to Make Money from the End of the Mining Boom

Daily Reckoning: Electric Cars and Platinum Mines

Money Morning: What South Africa’s Mining Turmoil Means for Investing in Gold

Pursuit of Happiness: Mainstream Media Wakes Up on Retirement Savings

The Territorial Spat Between Japan and China Putting Australia at Risk

By MoneyMorning.com.au

Economic data around the world continues to disappoint. It certainly doesn’t paint a picture of a recovering economy. Yet that’s the impression the stock market gives you. You need to remain cautious and very sceptical of what the stock market is saying.

As you may have heard, the International Monetary Fund (IMF) warned last week of the growing risks of a pronounced global slowdown. From Bloomberg:

‘A key issue is whether the global economy is just hitting another bout of turbulence in what was always expected to be a slow and bumpy recovery or whether the current slowdown has a more lasting component,” the IMF said in its World Economic Outlook report. “The answer depends on whether European and U.S. policy makers deal proactively with their major short-term economic challenges.’

The IMF, and most other global bodies like it, are usually completely ignorant of what’s going on. You don’t get to a top position in these bureaucracies by thinking outside the box and fretting about economic downturns. You get there by sticking with the herd and not making any mistakes or ‘chicken little’ forecasts.

So the fact that the IMF has warned on this suggests that the economic issues we face are acute.

I do take issue with the IMF’s notion that ‘the answer depends on whether European and US policymakers deal proactively with their major short-term economic challenges.’

No Short Term Fix for too Much Debt

So often, analysis by the experts suggests all that is required to ‘fix’ the world’s economic problems is for policymakers to be ‘proactive’ or to deal with the problem.

Such rhetoric is flimsy, throwaway rubbish. And to suggest these are ‘short-term economic challenges’ is ridiculous. They are the result of a credit/debt system that has grown out of control.

As you no doubt know, the world’s economic problems are the result of too much debt. By this I mean the level of global debt overshadows the world’s stock of productive assets.

In one way or another, these productive assets provide the income to service the debt and create sustainable economic growth. If income growth is strong, things like a country’s debt-to-GDP ratio remains under control.

But in most of the world’s large economies debt-to-GDP ratios are getting worse. This means debt growth is higher than economic growth. In other words, the injection of additional debt does not produce much in the way of additional income. The debt is becoming increasingly unproductive.

This is not surprising, considering a very large portion of the world’s debt growth comes from government spending. Government spending (financed by borrowing) is the least productive form of spending. That’s because much of it is ‘consumed’ via welfare payments to maintain social cohesion.

Very little government spending these days goes into genuine productivity enhancing infrastructure projects (Australia’s National Broadband Network is the exception, but the potential productivity benefits are a long way off).

So injections of government spending provide a very short term (consumption led) boost to GDP, but once the stimulus wears off, the ‘recovery’ falters and calls for more spending grow louder. Meanwhile, the stock of government debt continues to grow and the economy must continue to service that debt with its smaller percentage of productive assets.

Knowledge is Power in this Economy

Can you see where this is going? With each new round of government spending or debt monetisation the ratio or proportion of healthy and productive assets diminishes.

This type of fiscal and monetary policy stimulus has been the cornerstone of the Western World’s economic policy for years now. In their desperation to avoid economic slowdowns or recessions, policymakers have created an incredibly fragile economic structure.

What I mean by that is that global debt levels are now so high, and the economic structure is so fragile (because it relies on continuing, unproductive government spending to keep its head above water), that a seemingly minor economic slowdown could morph into something far more drastic.

It’s like what hedge fund manager Ray Dalio mentioned in an interview recently. He said words to the effect that he was more worried about a depression than a recession. I think that concern is due to the fragility of the global economic structure.

And the IMF flippantly suggests policymakers just need to be proactive to deal with ‘major short-term economic challenges’?

They are seriously kidding themselves. When you have the world’s economic policeman spouting such nonsense, you know there’s not much hope for realistic policy prescriptions.

That’s because realistic policy prescriptions are not politically feasible. So instead we get coordinated stimulus…more government spending, more central bank debt monetisation and more liquidity injections.

This provides a short term boost to markets, as you’ve seen in recent months. But the reality is that the underlying structure of the financial system and the real economy, which provides fundamental support to markets and asset prices, becomes weaker with each round of stimulus.

Knowledge is the most powerful asset you can have in dealing with these treacherous markets. If you simply listen to the daily output of the mainstream financial media, you’d think things are fine.

Greg Canavan
Editor, Sound Money. Sound Investments

From the Archives…

The Biggest Graphite Find in Decades Comes With a Catch
12-10-2012 – Dr. Alex Cowie

Don’t be Fooled by Banker’s Remorse
11-10-2012 – Kris Sayce

Why the Australian Stock Market Could Fall 400 Points in ‘Weeks’
10-10-2012 – Murray Dawes

Why the Hunt for Strategic Minerals took me to Holden in Port Melbourne
09-10-2012 – Dr. Alex Cowie

What’s so Important about Gold?
08-10-2012 – John Stepek

Debt and Government Spending Means You Should Be Wary of this Stock Market

By MoneyMorning.com.au

People often say I’m a doom and gloom merchant.

But it’s not just me. It’s a label attached to most contrarian investors. Or anyone who believes there’s something wrong with the state of the global economy.

Heck, one of the most famous contrarian investors, Dr Marc Faber, writes a monthly newsletter called the Gloom, Boom and Doom Report.

And every year my pals at the Daily Reckoning hold a Doomers’ Ball. That’s where economic realists can meet, chat, drink, and listen to the latest contrarian investment ideas.

(In true contrarian style, the Daily Reckoning guys have decided not to hold the annual event this year!)

So in a way I get it when the mainstream call us doom and gloomers.

But that could make you think my colleagues and I walk around with rain clouds over our heads. Or that we use a piece of string to hold up our trousers and mutter to ourselves through a beard.

The thing is that’s not true (although Dan Denning does occasionally sport a beard).

In fact, I’d argue that because we know the real story about the world economy and politics, we can prepare for it, and protect ourselves against the worst.

That’s why you should be far happier than the drones who won’t know what’s happening until it whacks them in the back of the head.

After the first issue of the Pursuit of Happiness, in which I covered the sociopathic and psychopathic war-tendencies of politicians, I’ll change tack slightly today. I’ll focus on how the government wants to restrict your pursuit of happiness.

Rather than trying to kill you by sending you to fight their live-ammo war games, they’re trying to kill your mind too.

Their aim is to create an obedient race of humans. They want drones. They want you to say and do whatever they tell you.

I call these control freaks the ‘Fun Police’. It sounds like a glib throw-away line, right? It is, but it hides a deeply serious side to government meddling…

You may have seen these two news stories over the weekend:

‘City of Glen Eira demands $120 permit for throwing a frisbee’ – Herald Sun

‘Industry revolts as federal health agency proposes ban on discount booze’ – News.com.au

The first story is just dumb. We won’t waste any time on it. It’s a classic example of Little Napoleons bossing people about. Once they’ve finished at the council level they’ll head to Spring Street or Canberra.

The second story covered a proposal by the Australian National Preventive Health Agency (ANPHA). It wants the government to set a minimum price for alcohol. This is all part of the ANPHA’s mandate to support:

‘…the development and implementation of evidence-based approaches to preventive health initiatives. Its initial focus, as requested by Health Ministers, is to target obesity (including physical inactivity), harmful alcohol consumption and tobacco.’

If like me you think it’s none of the government’s business how much you eat, drink, and smoke (or gamble), you should be concerned that the government looks set to introduce price controls on alcohol.

It would mean the end of cheap grog.

But where would Jimmy Barnes be today if he couldn’t sing about ‘cheap wine’? We can’t imagine changing the lyrics to ‘reasonably priced wine’, or ‘a not-inexpensively appraised vin ordinaire’.

Aside from the attack on freedom of choice, this is an attack on Jimmy Barnes. This must stop!

The Government Doesn’t Really Care
About Lungs and Livers

But seriously, as I see it the government has no legal or moral right to set a price for alcohol. Of course, whenever a government doesn’t have the legal right to do something it does what all governments do…it changes the law to make it legal.

It will argue that it’s only doing it to protect people from themselves. Whenever you hear that argument, beware. It’s the argument governments always use when it’s about to take away your freedom.

It used the same argument with tobacco advertising. It now forces companies to print warnings and unpleasant images on cigarette packets. But how’s that a limit on rights?

Well, it’s the right for smokers not to have the government preaching at them. It’s the right to not have to look at those images just because they decide to take part in the legal activity of smoking.

It would be the equivalent of forcing car companies to print pictures of hideous car accidents on the bonnet of your car…or forcing restaurants to put a photo on the top of every meal of fat people dying of obesity.

Maybe the next stage is plain packaging of beer and wine with pictures of a dead boozer’s liver on the side. [Publisher’s note: Kris, don’t give them ideas.]

While I’m on the subject of tobacco advertising, I prefer the US Appeals Court decision on the subject. The US Federal Drug Administration (FDA) planned to follow the Aussie lead by forcing tobacco companies to print graphic images on cigarette packs.

The Appeals Court wasn’t having any of it. The court noted:

‘The First Amendment requires the government not only to state a substantial interest justifying a regulation on commercial speech, but also to show that its regulation directly advances that goal. FDA failed to present any data — much less the substantial evidence required under the federal law — showing that enacting their proposed graphic warnings will accomplish the agency’s stated objective of reducing smoking rates. The rule thus cannot pass muster.’

If you want to smoke, then smoke. You don’t need the government preaching at you each time you take a puff.

Another area where the government uses the ‘protecting the public’ argument is the Internet…

By Order of the Government:
Wear Red Underpants on Your Head

The government insists it has to know what you’re doing, where you’re doing it, when you’re doing it, and whom you’re doing it with. Just so it can protect you from the terrible harm you could do yourself.

But again, it’s not really about protecting you from yourself. It’s about taking freedom, power and control from you and putting it into the hands of the government’s Internet Tsar — Senator Stephen Conroy.

To show you what I mean, watch this video of Aussie communications minister Senator Conroy. I was stunned when I first saw this video. I can’t repeat hear some of the words I used…but I figure you can guess.

Senator Conroy was speaking at the Columbia Institute for TeleInformation, in New York:

If you can’t watch the video, here’s a transcript of what the Senator said:

‘I’m in charge of spectrum auctions. And if I say to you, everyone in this room, if you want to bid next week in our spectrum auctions you better wear red underpants on your head, I’ve got some news for you, you’ll be wearing them on your head. I have unfettered legal power.’

Had Senator Conroy been on the cheap grog before he gave that presentation? Of course not, he’s simply stating a fact about the power of the Aussie government to do as it wishes.

In another sign of Aussies getting their priorities wrong, this YouTube video has amassed just 4,488 viewers (as I write).

Contrast that with the video of Prime Minister, Julia Gillard speaking in support of the Speaker of the Australian House of Representatives (a man who resigned a day later for sending sexists text messages). It has amassed over 137,000 views.

But back to Conroy. There’s something distasteful about someone drunk on their own power. Perhaps the ANPHA could add politicians to their list of concerns, and slap a ban on Senators saying stupid things.

That won’t happen, because it’s all part of the government’s plan to deny you and all Aussies of freedom. The more the government can control you and shape you, the move power they have. So I’m sure they were delighted by the following news in today’s Age:

‘One in eight Australians lives below the poverty line, according to a national analysis by a leading welfare group.

‘The unemployed, singles over 65, lone-parent families and households reliant on social security were among those most at risk, according to the Poverty in Australia report, released yesterday by the Australian Council of Social Service.’

The more people need government support, the more the government has power over them.

Governments are Set on Controlling
the Economy and Your Mind

But remember, Australia hasn’t had an official recession in over 20 years. Australia has had a 10-year resources boom that’s earned millions for investors…and yet one in eight Aussies lives in poverty. How can that be right?

Given the extent of government meddling in the economy it can only be because the government has planned it that way. It’s either that or because the government has meddled so much it has led to the distortions that create poverty.

The one thing we do know is that it’s not the fault of the free market, capitalism, or people trying to live their lives without government meddling.

So which is it? Is it a deliberate plan or a consequence of government stupidity? To be honest, it could be either, or a mix of both.

You know the government gains power by denying power to others, so what better way to deny power and exert control than by driving people into poverty and forcing them to accept welfare?

Put another way, it’s social engineering. Or you could say it’s the first step in the eugenics movement’s attempt to design the population in a way they find acceptable. That means separating the weak from the strong.

If you think I’m talking rubbish, just look at some of the biggest names behind the eugenics movement. As this note from Wikipedia says:

‘In the United Kingdom, eugenics never received significant state funding, but it was supported by many prominent figures of different political persuasions before World War I, including: Liberal economists William Beveridge and John Maynard Keynes; Fabian socialists such as Irish author George Bernard Shaw, H. G. Wells and Sidney Webb; and Conservatives such as the future Prime Minister Winston Churchill and Arthur Balfour. The influential economist John Maynard Keynes was a prominent supporter of Eugenics, serving as Director of the British Eugenics Society…’

Seeing as the world’s leaders have fallen over themselves to embrace Keynes’ economic theories, it isn’t a stretch to say they embrace his social theories too.

After all, this is a movement that answers the question, ‘Is there something inherently bad about having a low IQ?’ with the answer:

‘Yes! From the standpoint of our whole society, it’s very, very bad. I personally have known people with low IQs whom I loved and respected. But collectively, in terms of society, they constitute a tremendous liability. Low IQ people are much more likely to be criminals, chronically dependent on welfare, unemployed, illiterate — in fact, they’re way over-represented in every category of social problems. They cost taxpayers billions of dollars annually.’

This is the same movement that believes in forced sterilisation of women to ensure low IQ individuals don’t weaken the gene pool…for their own and society’s benefit of course.

I know what you’re thinking. This is a big leap from Frisbees and cheap grog to systematic social engineering and central planning. And you’re probably also wondering what happened to the ‘fun’ I mentioned at the start of this letter…

Government Aims to Deny You the Right to Opportunity

The point I’m making is that as Thomas Jefferson wrote in the US Declaration of Independence, natural human rights are about ‘life, liberty and the pursuit of happiness’.

As an individual it’s your right to have the opportunity to achieve those things. It doesn’t mean you will achieve them, only that you have the right to try to achieve them.

The interference by government prevents this.

It stops you from keeping your earned wages. It makes it more expensive for you to smoke cigarettes or buy cheap booze. And it prevents you from watching or reading what you want on the Internet.

But despite everything the government does to prevent your pursuit of happiness, it shouldn’t stop you trying. And it doesn’t mean you have to walk around under a rain cloud either.

Keep reading newsletters like this, and our sibling publications, Money Morning and the Daily Reckoning. This will help make sure you’re up to speed on what’s going on in the world.

But do more than that. Broaden your reading so you can learn from history. (I suggest you buy a Kindle from Amazon.com, because from time to time I’ll give you tips on the books you should add to your ‘eLibrary’ or your physical library.)

But most of all don’t let people pigeon-hole you as a doom and gloomer, because you’re not. You’re simply someone who recognises what successive governments have done (and are still doing) to your freedom and wealth.

You shouldn’t feel guilty about fighting back and trying to do something about it. And if that means educating yourself, smoking cigarettes, drinking cheap wine or throwing a Frisbee in a park, then go for it.

And don’t let the government stop you…because they will if you let them.

Cheers,

Kris Sayce
Editor, The Pursuit of Happiness

Ed Note: This article first appeared in The Pursuit of Happiness – an eletter that’s all about helping you achieve your goal of living a happy, healthy and wealthy life.

You can subscribe now by clicking here.

From the Archives…

The Biggest Graphite Find in Decades Comes With a Catch
12-10-2012 – Dr. Alex Cowie

Don’t be Fooled by Banker’s Remorse
11-10-2012 – Kris Sayce

Why the Australian Stock Market Could Fall 400 Points in ‘Weeks’
10-10-2012 – Murray Dawes

Why the Hunt for Strategic Minerals took me to Holden in Port Melbourne
09-10-2012 – Dr. Alex Cowie

What’s so Important about Gold?
08-10-2012 – John Stepek

Why the Government Won’t Let You Smoke, Drink and Play Frisbee

EURUSD continues its sideways movement in a range between 1.2803 and 1.3071. Support is at 1.2803, as long as this level holds, the price action from 1.3171 is treated as consolidation of the uptrend from 1.2042, one more rise towards 1.3500 could be expected after consolidation. Resistance is at 1.3071, a break above this level could signal resumption of the uptrend. On the downside, as long as 1.3071 resistance holds, the price action from 1.2803 could possibly be consolidation of the downtrend from 1.3171, another fall to 1.2700 area is possible.

Forex Signals

By MoneyMorning.com.au

Is it possible to have up to $100 million and not have a penny to spend?

Actually, yes. We’ll show you how shortly — and why you wouldn’t want to spend any of the family fortune anyway. Talk about NOT spoiling the grandkids.

But first…

Goldman Sachs and the Trade of the Century

Just as arms firms make a lot of money from conventional warfare, there are firms that make a lot of money from currency warfare. One of those firms is Goldman Sachs.

So we wondered what Goldman Sachs makes of it. Last week Goldman Sachs published a note saying, ‘One of the best long term trades out there at the moment is long euro versus short Aussie.’ The big banking firm is so keen on this trade the Wall Street Journal reported someone there tagged it ‘the trade of the century’.

That got Dan Denning over at the The Denning Report thinking. He posed this question to his readers last week:

‘How could this turn into the trade of the century?

‘A fall in the Aussie dollar by 50% (against the US dollar, the euro, or both) would do the trick. You’d see the Aussie gold price catch up with the US price. But the currency story would really be a reaction and not the catalyst.

‘The catalyst would be weaker iron ore prices, a falling terms of trade, bigger federal budget deficits, and no other sector of the economy capable of compensating for the end of the mining boom. Australian financial assets would be repriced for the ‘new normal’ I’ve spoken about.’

We hope the new normal for Australia is a bit rosier than that.

But in investing it pays to at least consider the worst case scenario. One way is to consider Dan’s strategy in the face of the current economy. This strategy can play a key part in another investing strategy: building family wealth.

Your editor spent the weekend reading Bill and Will Bonner’s book Family Fortunes: How to Build Family Wealth and Hold On to It for 100 Years.

This brings us back to the $100 million you can’t spend. The reason you can’t spend it is you must do everything you can to protect your capital if you want to pass on your wealth to your children and grandchildren.

Now, $100 million is a lot. And it was just an example from the book. But believe it or not, the Bonners show that once you factor in inflation, taxes and an average return, there’s not much income left over from $100 million if you’re trying to grow that wealth in real terms for the next generation.

It sounds like a bummer at first. So does that leave any hope for the rest of us? Those of us just short of $100 million! Yes. The gist is to change the way you think about your retirement and family wealth.

But why would you do that?

Because the best way to survive a government debt crisis is not to depend on the State.

You can only get free of the State if you have your own independent wealth to back you up. And the great thing is that even a modest amount of capital can free you to follow dreams or to help your family in dozens of different ways.

Family Fortunes has plenty of ideas. We’ll share some of them on Saturday in Money Weekend. Stay tuned.

Callum Newman
Co-Editor, Scoops Lane

From the Port Phillip Publishing Library

Special Report: How to Make Money from the End of the Mining Boom

Daily Reckoning: Electric Cars and Platinum Mines

Money Morning: What South Africa’s Mining Turmoil Means for Investing in Gold

Pursuit of Happiness: Mainstream Media Wakes Up on Retirement Savings

Goldman Sachs Declares War on the Australian Dollar

The size of the wave will surprise most everyone
October, 2012

By Elliott Wave International

If you’re a passenger aboard a ship in deep water, you can’t detect a tsunami; the swells are indistinguishable from regular ocean waves. Wave lengths can be hundreds of miles long, but only when this energy reaches shallow water does the mammoth tsunami wall form — and can wash over anything in its path.

So when forecasters warn “Move to higher ground!” it’s not wise to think, “Until I see the tsunami, I won’t believe it’s coming.” Once it’s visible, it’s probably too late.

It’s equally unwise to ignore signs of a financial tsunami.

Investors who wait … before acting will be too late. We have to anticipate developments, and the only way we can do that is to use tools that reveal signs of approaching trend change.

The Elliott Wave Theorist, March 2012

The most famous financial tsunami in modern history occurred in 1929-32. Almost no one saw it coming. For example, the observation below was made shortly before the 1929 Crash.

Stock prices have reached what looks like a permanently high plateau.

Yale Professor Irving Fisher, Oct. 1929

Other prominent people did not see the signs of economic trend change that led to the 1929-32 deflationary crash.

Fast forward to this July 18, 2012, CNBC headline:

Fed’s Bernanke: ‘We Don’t See a Double-Dip Recession’

When reading such comments, one might ask, “Is history repeating itself?”

Elliott Wave International believes only a relative few suspect the magnitude of the approaching economic wave, including the world’s financial authorities.

This largely undetected financial tsunami has been silently traveling for at least 80 years. Once ashore, the outcome may rival 1929-32.

A detailed description of that wave and its expected effects is in the bestseller, Conquer the Crash, now in its second edition.

Moreover, the book tells you how to be prepared. For a limited time, you can get part of Conquer the Crash for free. See below for more details.

8 Chapters of Conquer the Crash — FREEThis free, 42-page report can help you prepare for your financial future. You’ll get valuable lessons on what to do with your pension plan, what to do if you run a business, how to handle calling in loans and paying off debt and so much more. Get Your FREE 8-Lesson “Conquer the Crash Collection” Now >>

By TraderVox.com

Tradervox.com (Dublin) – Stanley Fischer, the Bank of Israel Governor, has expressed his support for the Federal Reserve decision to start a third round of quantitative easing program, saying that the world is on the verge of recession and program like that will help improve global economy. He indicated that the quantitative easing program has strengthened the credibility of the Federal Open Market Committee which deals with policy making. Fischer has indicated that despite the progress made in combating the global recession, the impact has not materialized and continued commitment is required to ensure results are felt.

Fischer, who was talking at an interview in Tokyo, indicated that by deciding to embark on an open ended program, the Fed has eased worries that it might “run out of ammunition” for fighting the unemployment before achieving its goals. These comments by Fischer have increased concerns about global economic growth, which has been precipitated by the International Monetary Fund projection of economic growth. The organization cut its projection on October 9, warning that unless U.S and Europe deal with their economic crisis, the world might plunge into a recession.

After the interview, the stocks in Asia remained unchanged, with MSCI Asia Pacific Index dropping marginally by 0.1 percent at 1115hrs in Tokyo. The index dropped sharply last week, making it the sharpest weekly drop since June. The drop came as a result of IMF’s concerns over the global economy. Fischer, noted that the euro region is making headway with plans for fiscal expenditure while the US has improved considerably. He indicated that sentiment in the market have improved considerably, but added that it is still too early to be certain.

His comments have come at a time when Spain is experiencing pressure from EU and global leaders to request for bailout. The EU leaders meet on Thursday where they are expected to discuss Spain and Greece.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

By TraderVox.com

Tradervox.com (Dublin) – The 17-nation currency dropped against the dollar for the first time in three days as the concern about the region’s growth overshadowed the optimism of the upcoming EU Summit. The euro also dropped against most of its major peers as investors wait to hear when Spain will request for bailout. The drop also came prior to a report from Germany expected to show that consumer confidence is still low in the country and the region. Investors are also waiting to see the performance of the 10-year benchmark bonds in a Spanish bond auction later this week.

According to Marito Ueda, the Senior Managing Director at FXPrime Corp. in Tokyo, the economic data from the euro zone are showing some weaknesses in economic growth, which is weighing on the euro. Ueda expressed hopes that Spain will request bailout, while pointing out that this is yet to be clear. According to a market survey, the ZEW Center for European Economic Research will probably show that economic expectation in the euro area remained weak, coming in at -14.9 from negative 18.2 registered in September. Global economic slowdown has also resulted to decline on the euro, as a report from China showed that its exports to the EU fell by 107 percent in September. In addition Stanley Fischer, who is the Bank of Israel Governor, said that the world is on the verge of a recession.

The 17-nation currency has weakened by 5.4 percent in the past one year, making it the worst performer among the top ten currencies in the world. The yen has dropped by 1.8 percent while the dollar has increased by 1.9 percent in the same period. The euro has started the week with a 0.2 percent drop against the dollar to trade at $1.2928 at the start of trading in London. The single currency had appreciated by 0.6 percent in the past two trading days, despite closing the week on the low. It was little changed against the yen, trading at 101.67 yen. The dollar strengthened against the yen by 0.2 percent to trade at 78.57 yen.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

Perhaps this weeks release of heavy economic data from China and more US earnings reports combined with the EU summit Thursday and Friday can make the equity market break out of its current range trading mode.

Jyske Bank Senior Strategist Ib Fredslund Madsen outlines the financial week ahead

Legal information

Video by en.jyskebank.tv