USDJPY continued its downward movement, and the fall extended to as low as 76.70. Further fall to test 76.29 previous low support could be seen later today, a breakdown below this level will indicate that the long term downtrend has resumed, then next target would be at 74.00 zone, however, rebound is possible before breaking below 76.29 support.
Aug. 9 (Bloomberg) — Hayden Atkins, an analyst at Macquarie Group Ltd., talks about the outlook for gold and silver prices. He speaks with Maryam Nemazee on Bloomberg Television’s “The Pulse.” (Source: Bloomberg)
The US Federal Open Market Committee (FOMC) held the fed funds rate unchanged at 0 to 0.25 percent, and made no changes in regards to its completed quantitative easing programs. The Fed noted: “The Committee currently anticipates that economic conditions–including low rates of resource utilization and a subdued outlook for inflation over the medium run–are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.” – dropping the “extended period” comment and instead expecting to hold the rate until 2013.
Aug. 9 (Bloomberg) — Bloomberg’s Margaret Conley reports from Shanghai on the impact of inflation on China’s pork market. China’s inflation accelerated to the fastest pace in three years in July, limiting the scope for monetary easing to support growth as plunging stock markets signal the global recovery is weakening. Food costs climbed 14.8 percent and non-food inflation was 2.9 percent. Pork jumped 57 percent. (Source: Bloomberg)
The Central Bank of the Republic of Turkey announced a 100 basis point cut in the US dollar lending rate to 4.50% from 5.50%, and the Euro to 5.50% from 6.50%. The interest rate changes apply to foreign exchange transactions which the Central Bank is a party to, and come into effect as of 9 August 2011. The Bank commented: “In the upcoming period, developments regarding the foreign exchange markets will be closely monitored and necessary measures will be taken in a timely fashion.” The move comes after the central bank cut its benchmark 1-week repo rate last week by 50 basis points to 5.75% after holding an emergency meeting.
Previously the Turkish central bank held its benchmark interest rate unchanged during its July meeting this year, while the bank last cut its benchmark interest rate by 25 basis points to 6.25% in January this year. The Turkish central bank also adjusted required reserves in late July. Turkey reported annual consumer price inflation of 6.2% in June, off from 7.2% in May, but up from 4.26% in April, and 3.99% in March, and above the Bank’s full year inflation target of 5.5%. The Turkish Lira last traded around 1.775 against the US dollar.
FX Analyst Kristian Foged Schmidt on the short and longterm outlook for CHF.
Video courtesy of en.jyskebank.tv
Over the past year we’ve spent a great deal of time pointing out the lies, called “revisions,” from President Obama and our Fed Chief, Big Ben Bernanke. We take no joy in calling your attention to the massive deficit of action from these two.
But when you’re right… you’re right. In the past two weeks alone:
The truth is, our economy is still a disaster.
Now we’ve been treated to the grandest revision of them all: Friday afternoon Standard & Poor’s lowered the U.S. credit rating to AA+. Of course, I’m no fan of S&P. I’ve written pretty extensively about my feelings on the three ratings agencies. They provide little useful information and never in a timely manner.
While the downgrade caught the rest of the world by surprise, it didn’t surprise our readers. That’s because we’ve written about it for more than a year and have taken full advantage of it.
Sometimes it’s a difficult call. Others times, like when a politician stands up and adamantly denies or proclaims anything, rest assured it’s probably already happened.
One of the earliest signs the U.S. debt was in serious trouble came on February 7, 2010, in a news interview on ABC’s This Week, when none other than U.S. Treasury Secretary Timothy Geithner was asked if the U.S. would lose our Triple-A rating. He responded:
“Absolutely not. And that will never happen to this country.”
When a politician says anything is an absolute, take the other side of the bet. (Think Monica Lewinski and Clinton’s infamous quote, “I never had sexual relations with that women,” if you’re looking for an obvious example.)
Mr. Geithner probably should have been reading our publications. If so, he would have had advance knowledge that this downgrade was coming.
You see, Taipan readers were told a year ago that Dagong Global Credit Rating Company announced they were getting into the sovereign debt evaluation game:
“China’s leading credit rating agency,” the U.K.’s Telegraph reports, “has stripped America, Britain, Germany and France of their AAA ratings, accusing Anglo-Saxon competitors of ideological bias in [favor] of the West.”
— Justice Litle, Taipan Daily, July 2010
The Chinese aren’t the only ones who spotted the obvious and wrote about it.
The Financial Times reported on July 18, 2011, that
Egan-Jones has become the first U.S. rating agency to downgrade the country’s sovereign credit rating from triple A to double A plus as it focuses on the rapid rise in outstanding debt over the past five years.
I’m guessing you’ve never heard of Egan-Jones.
There’s good reason. This little research company is private. In other words, it doesn’t have the U.S. seal of approval as do the S&P, Fitch and Moody’s.
Egan-Jones is paid to perform and doesn’t have the government sponsorship the other three enjoy. Institutions pay Egan-Jones to anticipate what will happen in advance of market actions, the other three tell you what you already know.
You tell me — which is more useful?
Now I would like to give credit where due, and S&P has performed a real service if their actions stir any positive steps in Washington. I’m not holding my breath, but at least the media is reporting it, unlike the Egan-Jones’ or Dagong’s downgrades.
Of course, Timmy G. tells us S&P is wrong. He said that S&P’s math was inaccurate by a couple trillion dollars. In the same breath he acknowledged the U.S. deficit is unsustainable.
Timmy G. went so far as to say the actions showed “terrible judgment” and “a stunning lack of knowledge about the basic U.S. fiscal budget math.”
For an Obama insider to accuse anyone of poor judgment and lack of knowledge of basic math is the ultimate in hypocrisy. Washington is the very definition of these qualities.
And as Rome burns, not even a note from the fiddle of President Obama.
As I write, Treasury bonds are rallying, markets are swinging wildly, and the media and politicians are blaming the Tea Party for asking the U.S. to stop borrowing and spending.
Unfortunately, we’ll hear nothing from our presidential hopefuls. This speaks volume to their leadership character, or lack thereof. I will have to exclude Tea Party favorite Ron Paul, who may have been the only one warning of this longer than the writers here.
P.S. One unintended consequence may be a flood of municipal bonds entering the market if their triple-A ratings are tied to Treasuries. If this happens, prices for munis may get cheap and worthy of consideration.
Written by Joseph McBrennan for Taipan Publishing Group. Additional valuable content can be syndicated via our RSS feed. Check us out on http://www.facebook.com/TaipanGroup or follow us on http://twitter.com/ under Taipan_Trader. Republish without charge. Required: Author attribution, links back to original content or www.taipanpublishinggroup.com.
Aug. 9 (Bloomberg) — Tao Wang, head of China economic research at UBS AG, talks about the outlook for the nation’s economy and central bank monetary policy. China’s inflation accelerated to the fastest pace in three years in July, limiting the scope for monetary easing as risks to the global economy mount. Wang also discusses Standard & Poor’s decision to downgrade U.S. debt, China’s currency policy and Treasuries holdings. She speaks in Hong Kong with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)
Aug. 9 (Bloomberg) — Peter Lewis, head of Asian equities and equity derivatives at MF Global Hong Kong Ltd., talks about the global rout in equities and the outlook for economies. Lewis also discusses Federal Reserve monetary policy. He speaks with Rishaad Salamat on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)
Aug. 9 (Bloomberg) — New Zealand Finance Minister Bill English talks about the nation’s economy and currency. English said the economy is in “reasonable shape” and a growth rate of 2 to 3 percent over the next few years was attainable. He speaks from Wellington with Rishaad Salamat on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)
