Month: November 2011

As pressure mounts on British Prime Minister David Cameron to address growth concerns and recession concerns, comes word that the government is planning to introduce a “massive” credit easing initiative. In his speech today before the Confederation of British Industry, Cameron noted that British companies continue to find it difficult to arrange financing in order to expand operations.

“If we are to build a new model of growth, we need to give a massive boost to enterprise, entrepreneurship, and business creation. Put simply, Britain must become one of the best places to do business on the planet.”

The challenge facing Cameron and the entire coalition government, is how to continue to work towards balancing the budget, without stifling growth. Cameron’s approach to easing credit conditions involve selling Treasury bills and using the proceeds of the sale to purchase corporate bonds. This is expected to provide businesses seeking loans with alternative financing options than just the commercial banking system which continues to keep a tight reign on assets. Smaller business in particular are expected to benefit from this initiative.

Since winning the election a year and a half ago – but with only a minority – Cameron has managed to cobble together a coalition government with the support of Simon Clegg and the Liberal Democratic party. Central to Cameron’s campaign platform was his pledge to  implement a five-year program to reduce the country’s burgeoning deficit to 9 percent of the nation’s Gross Domestic Product. Naturally, critics felt the move to be too drastic claiming the pullback in government spending would be disastrous for the economy.

Indeed, growth in the UK has continued to disappoint growing by just 0.1 percent in the second quarter. The third quarter has recovered considerably, however, with GDP expanding by 0.5 percent. While the government suggests this is evidence of a turnaround, naysayers continue to predict that growth could turn negative heading into the new year.

In his address, Cameron did draw attention to the crisis in Europe highlighting concerns that the British economy could suffer if the Eurozone economy contracts further as many expect. In fact, Cameron uses this possibility as further evidence that the government must take bold action now to offset the potential for a Eurozone recession.

Chancellor of the Exchequer, George Osborne, is scheduled to address Parliament on November 29^th where it is expected he will provide further details regarding the timing, the amount to be committed to the program, and the guidelines for business participation.

Notable Lines From Cameron’s Address

“First, we are recovering from a debt crisis not a traditional recession. People who argue that traditional fiscal stimulus, extra spending funded by even more borrowing, is the right answer are not just wrong – but dangerously wrong.”

“Yes – there are some who seriously try to argue that additional spending and borrowing will actually lead to less debt in the end despite the fact that no evidence supports this assertion. These arguments are just a way of avoiding difficult decisions the kind of something for nothing economics that got us into this mess which is why no indebted European country is taking this path.”

Scott Boyd is a currency analyst and a regular contributor to the OANDA MarketPulse FX blog.

Philip Morris (NYSE: PM): A “Sin Stock” to Watch

by Jason Jenkins, Investment U Research
Monday, November 21, 2011

It seems as if every 24/7 news cycle bombards us with the political and economic woes of the entire planet. Market indices’ daily swings look like the skyline of the Rocky Mountains – and these changes happen for no apparent reason.

Doesn’t give us much hope, does it?

Let’s all take a deep breath and realize that this isn’t the first time we’ve been through this.

If we go back a few decades, we can see similar periods of volatility. I’m sure you remember the savings and loan crisis, Asia in the late 90s, the dot-com bubble of 2000 and the housing bubble of three years ago.

These ups and downs are the nature of the market. So, instead of sticking our heads in the sand and waiting for the Eurozone to finally get it together, we need to learn from past downturns and be smart about this…

What have we learned during these economic periods of decline? Some high yield stocks in certain industries tend to hold up better than others and some of these industries don’t come without their own controversy.

What is a “Sin Stock?”

You may not gamble, drink alcohol, or smoke. But from an investment standpoint, companies – or sin stocks – that produce and operate these products and services could add some beneficial diversification to your portfolio.

When you think about it, sin stocks should perform well during hard economic times. History shows that people don’t cut back on their bad habits in hard times but use them as a means of escapism.

One such sin stock is Philip Morris Company (NYSE: PM), which was spun off from Altria in 2008.

Philip Morris’ Outlook is Strong

Philip Morris is the world’s leading international tobacco company, with products in approximately 180 countries outside the United States and a 27.6-percent share of the international market (this excludes China where there’s a state-owned monopoly). Philip Morris is the owner of Marlboro, the world’s strongest tobacco brand. Last year it shipped 297.4 billion units of Marlboro, more than double the next two largest brands combined.

Also, the fact that Philip Morris operates outside the United States provides the company and investors with a few important advantages.

1. First, it’s exposed to less litigation risk than its former parent Altria (NYSE: MO), which operates only in the United States.

2. There’ s the opportunity for growth, as tobacco use internationally is still expanding.

But what’s really important is Philip Morris’ policy of rewarding shareholders with both dividends and share repurchases, which are major factors in making the stock a solid investment in this climate. We have been advocating dividend income in this volatile market.

Since its spin-off, Philip Morris has increased its dividend 67.4 percent. The payout gives it a current yield of 4.3 percent. Analysts expect nearly a 12-percent increase for 2011 and to top that mark next year.

With this growth forecast, one can see why the dividend was increased. The future outlook for Philip Morris is strong.

Good investing,

Jason Jenkins

Article by Investment U

Warren Buffett Just Said “Buy!”

by Alexander Green, Investment U Chief Investment Strategist
Monday, November 21, 2011: Issue #1647

If you needed heart surgery, you’d try to find the most talented heart surgeon around.

If you were about to be subjected to a full audit by the IRS, you’d hire the most capable tax advisor you could find.

And if you needed investment advice? I hope you’re not one of them, but I know some folks who would read financial blogs by complete unknowns, take hot tips from friends and colleagues, or listen to a sales pitch from someone selling insurance or other financial products.

Big mistake. It makes a lot more sense to listen to the world’s smartest investors, instead. And one of the very best – if not the best – is Berkshire Hathaway Chairman Warren Buffett. (Ten thousand dollars invested in Berkshire Hathaway when Buffett took the helm in 1965 is worth well over $65 million today.)

And thanks to disclosures last week, we now know what Buffett has been doing during the last few months of crazy market activity. He’s been buying.

Specifically, Buffett has plowed $10.7 billion into IBM. He has increased his stake in Wells Fargo from 361.4 million shares to 352.3 million shares. He has boosted his Dollar General stake to 4.5 million shares from 1.5 million. And he has increased his holdings in insurer Torchmark to 4.2 million shares from 2.8 million.

There are a few interesting things to note here. The first is that while most investors have been either running to cash or nervously sitting on their hands lately, Buffett has been actively capitalizing on fresh opportunities. You should be doing the same.

Second, it’s worth mentioning that Buffett has generally avoided technology stocks like IBM. But upon reading not some super-secret briefing but rather the firm’s annual report, he learned that IBM enjoys an entrenched position providing technology services to major businesses.

Buffett likes companies with a “moat” like this and has famously said that his favorite holding period is “forever.” Indeed, he recently told The Washington Post that “IBM fits all my principles … it’s something we’d like to own indefinitely.”

Then there’s the price he paid for IBM. I often get emails from readers who are baffled that I sometimes recommend companies trading at or near their highs. Buffett bought IBM as it hit new highs – even as the broad market was cratering. Indeed, the stock has more than doubled since the depth of the 2008 recession.

Buffett’s response? He says the fact that IBM has doubled doesn’t bother him. Indeed, over the years he could have bought the firm at a tiny fraction of its current price. “What matters is what the company does in the future,” says Buffett.

There are a number of important lessons here:

1. As Buffett often points out, you should be greedy when other investors are fearful.

2. You shouldn’t be reluctant to modify your investment approach a bit (as Buffett has with one of his first significant forays into technology).

3. You shouldn’t fret about how much cheaper a stock was in the past if the business is sound and growing today.

And when it comes to investment advice, history shows it pays to listen to the best of the best. That’s one reason we’ve owned Berkshire Hathaway in our Oxford All-Star Portfolio for well over a decade.

Good investing,

Alexander Green

Article by Investment U

January Crude Oil futures succumbed to selling pressure last week, reaching a high at $103.37 and forming a closing price reversal top. Once confirmed, this pattern often leads to a minimum 50% correction of the most recent rally. Although a sell-off is likely, it doesn’t mean the trend has changed to down. What this pattern may be doing is giving long traders a reason to take profits before a correction takes place. Aggressive counter-trend traders may be interested in the short-side.

Based on the main range from the May top at $115.22 to the October bottom at $75.36, crude oil exceeded a major retracement zone at $95.29 to $99.99. Selling pressure, however, was strong enough to push the market back inside of this zone, re-establishing its importance as a potential resistance zone. In addition, downtrending Gann angle resistance and uptrending Gann angle support formed a cluster of prices with the retracement zone to identify a possible topping area.

This week the retracement zone stays intact, but one Gann angle drops down to $100.72 and the other moves up to $103.36. Since the contract closed under both of these angles, it begins the week in a weak position. In addition, taking out $96.70 will confirm the weekly top and a trade through $95.29 will put the market on the bearish side of the retracement zone.

Going forward, the short-term range is $75.36 to $103.37. This range formed a retracement zone at $89.37 to $86.06. Uptrending Gann angle support from the recent bottom moves up to $89.36. This creates a support cluster and possible downside target at $89.37 to $89.36. If the closing price reversal is confirmed then traders should look for a possible break into this support cluster over the near-term.

After weeks of trading on bullish supply issues, crude oil finally fell victim to the weaker Euro and stronger Dollar and closed lower. At this time one could build a case that the weakness looks more like profit-taking after the market reached a 15-week top. I think it’s safe to say that a combination of factors probably gave nervous long traders a reason to take a little off the top.

The problem developing with the Euro is not only a stronger Dollar. As you probably know when the Dollar goes up, commodities such as crude oil priced in dollars tends to get weaker. After the past year or two this correlation worked well except for times of tight supplies when crude oil took off higher on its own. The current rally in crude oil was one of those cases where the market rallied despite a weaker Euro and stronger Dollar.

This week’s sell-off in conjunction with the stronger Dollar suggests that perhaps traders are once again ready to lean on the correlation between crude oil and the Dollar. Besides the short-term factors regarding sovereign debt problems in Italy and Spain, some crude oil traders may be pricing in the possibility of a recession in Europe and the subsequent spread of this economic weakness around the world.

Despite the recent slew of decent U.S. economic numbers recently, it isn’t going to take much for the situation in Europe to escalate to the point where it begins to experience slow or negative growth. The Federal Reserve as well as the Bank of England is already bracing for slower growth, but even if this is already factored into crude oil prices, Europe and China could still trigger even more weakness if their economies weaken more than expected.

With crude oil falling on Friday despite an improvement in U.S. leading economic indicators in October, trader sentiment may be shifting back toward aversion to riskier assets especially since the turmoil in Europe is expected to continue. Technically, the weekly closing price reversal top suggests that crude oil may be ripe for a near-term correction of at least 50% of its six-week rally. It is suggested that you keep an eye on the Euro if you are going to speculate in crude oil futures this week.

Factors Affecting Crude Oil This Week:

Supply and Demand: Tight supplies led the crude oil market higher over the past several weeks, and it may be the reason why it tops out. On Wednesday, the U.S. EIA report showed that crude oil stockpiles declined by 1.1 million barrels for the week-ended November 11. Traders were looking for a decline of 1.5 million barrels. Although the market rallied initially, by the end of the week the market had given up all of its post-report gains. This could be a sign that perhaps demand may wane over the next few weeks. There are no new estimates for this Wednesday’s report yet, but overshooting the stockpile figure may mean that analysts may have to curtail their demand outlook.

European Sovereign Debt: The European sovereign debt problems are not going to go away over the near-term and probably will still be around well into 2012 also. The question that traders are asking themselves is why is the Euro still holding above 1.30? With pressure continuing to mount on the single-currency, it seems almost inevitable that it is going to continue to weaken to a more reasonable value area. The charts indicate somewhere near 1.18 is likely. Not only is contagion a real possibility, but the possible demise of the Euro is also being tossed about by traders. All of this negativity seems to point toward a lower Euro, a stronger Dollar and weaker crude oil prices.

U.S. Economy: This week is a holiday shortened week meaning trading could be light and volatile because of low volume. Monday the existing home sales figure will be released. This is expected to be steady to lower and not really an influence on crude oil prices. Tuesday’s preliminary GDP figure could be a market mover if it comes out either side of the 2.5% guess. Anything below will be bearish for crude oil. Durable goods is called lower and negative. This will not be a good sign for the economy. Personal Spending is called positive but lower. Personal Income is estimated to be positive and higher.

Iran Sanctions: The Obama administration is expected to announce plans to impose a new round of sanctions against Iran’s petrochemical industry on Monday. European nations are expected to follow suit. If I know this then the major players in the crude oil markets know this too. I believe this has already been priced into a barrel of crude oil so don’t expect much more than a knee-jerk reaction to the upside.

Source: http://oilprice.com/Energy/Oil-Prices/Crude-Oil-Analysis-for-the-Week-of-November-21-2011.html

By. http://oilprice.com

By CountingPips.com

The latest Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures speculators raised their bullish bets in favor of the US dollar and increased their bearish positions for the euro and the British pound sterling. Speculative positions have now totaled an overall bullish dollar bias for a 10th consecutive week.

Non-commercial futures traders, usually hedge funds and large speculators, increased their US dollar positions against the euro, British pound sterling, Australian dollar, New Zealand dollar, Canadian dollar and the Swiss franc, according to the CFTC COT data reported as of November 15th. Meanwhile, the Japanese yen and Mexican peso saw increased positions directly against the dollar for the week.

EuroFX: Currency speculators raised their short bets for the euro against the U.S. dollar as of November 15th to a total of 76,147 net short contracts from the previous week’s total of 54,257 net short contracts that were reported as of November 8th. The change in euro positions breaks a string of three consecutive weeks of improvement for euro positions.

The COT report is published every Friday by the Commodity Futures Trading Commission (CFTC) and shows futures positions as of the previous Tuesday. It can be a useful tool for traders to gauge investor sentiment and to look for potential changes in the direction of a currency or commodity. Each currency contract is a quote for that currency directly against the U.S. dollar, where as a net short amount of contracts means that more speculators are betting that currency to fall against the dollar and net long position expect that currency to rise versus the dollar. The graphs overlay the forex spot closing price of each Tuesday when COT trader positions are reported for each corresponding spot currency pair.

GBP: Currency speculators increased their bearish bets against the British pound sterling as of November 15th. British pound positions fell to a total of 32,864 short positions following a total of 29,122 short positions registered on November 8th. The rise in GBP short positions follows five consecutive weeks of declining short positions and improvement for the pound sterling.

JPY: The Japanese yen net long speculative contracts edged higher last week to gain for a second consecutive week. Yen long positions increased to a total of 33,680 net long contracts reported on November 15th following a total of 28,077 net long contracts that were reported on November 8th.

CHF: Swiss franc long positions fell back over to the short side last week after gaining a showing improvement the previous week. Speculator positions for the Swiss currency futures edged down to a total of 1,904 long net short contracts following a total of 2,162 net short contracts as of November 8th. The Swiss currency, a popular safe haven currency, has continued to see subdued movement in Forex trading since the Swiss National Bank initiated a policy to peg franc against the euro at the 1.20 level.

CAD: Canadian dollar positions edged lower for a second straight week as of November 15th. CAD net contracts decreased to a total of 17,215 short contracts as of November 15th following a total of 15,568 short contracts reported on November 8th. CAD positions are floating near the lowest level of the year which was reached on October 11th when net short positions reached 21,913.

AUD: The Australian dollar long positions decreased for the first time in five weeks as of November 15th. Australian dollar positions fell to a total net amount of 24,330 long contracts following a total of 27,016 net long contracts reported as of November 8th. The AUD speculative positions had gained four consecutive weeks before the latest data.

NZD: New Zealand dollar futures speculator positions declined last week after five straight weeks of gains. NZD contracts dipped to a total of 10,614 net long contracts as of November 15th following a total of 11,550 net long contracts registered on November 8th.

MXN: Mexican peso contracts showed improvement for a third consecutive week as of November 15th and increased to their highest level since early September. Peso positions edged up to a total of 15,021 net short speculative positions as of November 15th following a total of 18,067 short contracts that were reported on November 8th.

COT Currency Data Summary as of November 15, 2011
Large Speculators Net Positions vs. the US Dollar

EUR -76147
GBP -32864
JPY +33680
CHF -1904
CAD -17215
AUD +24330
NZD +10614
MXN -15021

Nov. 21 (Bloomberg) — Russell Jones, global head of fixed-income strategy at Westpac Banking Corp., discusses factors which may prompt the European Central Bank to purchase bonds of euro-zone members in a “more aggressive” way. He speaks from Sydney with Owen Thomas on Bloomberg Television’s “First Look.”

London Gold Market Report
from Ben Traynor
BullionVault
Monday 21 November, 08:30 EST

SPOT MARKET gold prices continued falling Monday morning in London, touching $1701 per ounce – 1.3% down on Friday’s close – as the US Dollar rallied, despite reports of failure by the congressional ‘super committee’ to agree on how to tackle the US deficit.

“[Gold] Prices didn’t correct enough [last week],” says one dealer in Singapore, adding that gold prices “need to go below $1700 and stay, otherwise people won’t buy”.

Commerzbank however say they expect to see gold trading at $1800 and ounce by the end of the year, while Deutsche Bank say in their weekly commodities report they expect periods of risk aversion to remain through 2012 and their strongest conviction trade remains long precious metals and specifically gold.

“In an environment where real interest rates are negative and the US equity risk premium is high we expect this will sustain strong private and public sector demand for gold. However, this week has shown that gold has become more vulnerable to environments where the US dollar is strengthening,” DB say, adding that gold would need to rise beyond $2,170/oz to enter bubble-territory.

Silver prices also fell, hitting $31.00 – 4.3% down on last week’s close.

Stock and commodity markets sold off too – with Germany’s DAX down 2.5% by lunchtime.

On the currency markets, the US Dollar gained against the Euro Sterling and Yen as investors piled into US Treasury bonds – pushing the yield on 10-Year Treasuries below 2%.

Over in Washington, the bipartisan congressional  ‘super committee’ – tasked with agreeing measures to reduce the US deficit by $1.2 trillion over the next ten years – was reported Monday morning to be close to announcing its failure.

“The likely outcome is no agreement will be reached,” one anonymous Democratic aide told CNN on Sunday.

“I’ll tell you one of the problems,” said Democrat senator Patty Murray – who co-chairs the committee.

“A pledge that too many Republicans took to a Republican wealthy lobbyist by the name of Grover Norquist, whose name has come up in meetings time and time again.”

Norquist is president of lobby group Americans for Tax Reform. More than 270 Republican lawmakers are said to have signed his pledge promising not to vote for tax increases.

“In Washington, there are folks who won’t cut a Dollar unless we raise taxes,” countered Republican senator John Kyl.

“If you want to get serious about the deficit, our country has to grow economically…you can’t grow, if you raise taxes in the middle of a recession.”

The super committee was set up in the wake of the summer’s debt ceiling debate – which saw the US come within hours of hitting its federal borrowing limit before it was raised. Later the same week, on August 5, ratings agency Standard & Poor’s lowered its sovereign credit rating for the US from AAA to AA+.

“The downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened,” said an S&P statement explaining the August downgrade.

Moody’s and Fitch – the two other major ratings agencies – have both maintained their triple-A US ratings. However, “anything that dilutes the deficit reduction that we’re now expecting would certainly be a negative in our thinking about the rating,” says Moody’s vice president Steven Hess.

“As is the case with policymakers in Europe,” argues Michael Gapen, senior US economist at Barclays Capital, “US politicians need to be doing more than investors expect, not less.”

A failure of the super committee to agree a deficit-cutting plan risks triggering automatic spending cuts of $1.2 trillion. These cuts would start in 2013 and would include spending on defense, education, energy and housing.

“If the automatic cuts are activated then the US will be going through the same austerity that has not proved particularly successful so far in Europe with regards to growth,” says Jim Reid, head of global fundamental credit strategy at Deutsche Bank in London.

Here in Europe, Spain’s center-right Popular Party won Sunday’s general election, defeating the incumbent Socialist Party.

“Hard times lie ahead,” Spain’s new prime minister Mariano Rajoy said after his victory.
“We are going to govern in the most delicate situation Spain has faced in 30 years.”

Yields on Spanish 10-Year government bonds climbed to over 6.5% Monday morning.

Elsewhere in Europe, Moody’s has indicated that it may consider changing its outlook for France’s credit rating from ‘stable’ to ‘negative’.

“Elevated borrowing costs persisting for an extended period would amplify the fiscal challenges the French government faces amid a deteriorating growth outlook, with negative credit implications,” Senior Credit Officer Alexander Kockerbeck said in Moody’s Weekly Credit Outlook dated November 21.

“As we noted in recent publications, the deterioration in debt metrics and the potential for further liabilities to emerge are exerting pressure on France’s creditworthiness and the stable outlook (though not at this stage the level) of the government’s Aaa debt rating,” the Moody’s note read.

Over in New York, the number of bullish minus bearish contracts held by noncommercial gold futures and options traders on the Comex exchange – the so-called speculative net long – rose for the fourth week running in the week ended November 15 – though at a slower pace than the previous week – according to data published Friday by the Commodity Futures Trading Commission.

The spec long rose 1.4%% to the equivalent of 625.1 tonnes of gold bullion.

Over, the same period, the volume of gold held to back shares in the SPDR Gold Trust (ticker GLD) – the world’s largest gold ETF –grew by 0.3%. However, by Friday last week, the GLD had seen its gold volume grow by nearly 2% from where it stood on Tuesday – during which time gold prices fell by more than 3%.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics.

(c) BullionVault 2011

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

The dept crisis continues and the marked will not be satisfied before the ECB intervenes. That however seems unlikely and the week will be negative says the Seniorstrategist Ib Fredslund Madsen.

In the US the super committee will not reach an agreement rumours says and this sends another bad message to the markets: Neither the European nor the American politicians are willing to take the necessary measures to solve the current problems.

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Stock Market Volatility: No End in Sight

by Jeannette Di Louie, Investment U Research
Tuesday, November 15, 2011

The Dow has done some crazy things in the first 11 days of November.

After finishing a strong October at 11,995, it took a sharp 300-point drop on November 1. But by the end of the week, it was back around where it started. The next week, it was up again, only to fall another 400 points on Wednesday, November 9.

Here we are again, up on Friday, but how long will that last?

There used to be a time when that kind of drop was unexpected, yet these days, single day, triple-digit moves seem to be something of the norm. Whenever the market shoots up, you can bet your bottom dollar that, given a few days, it will slide right back down again.

To call the Dow – and just about every other U.S. and global index – volatile is like calling Black Friday just another shopping day. The constant ups and downs of each trading week are nothing short of disorienting… not to mention exhausting.

Not A Healthy Market

Technically, we’re up in 2011. The Dow started out at 11,691 and, as of November 7, was up over 12,050. But that’s still significantly below the year’s overall high of 12,807, which it hit on May 2.

And in between then and now, we also saw such lowly figures as 10,809 on August 8, 10,719 on August 10, and a miserable low of 10,655 just last month.

Clearly, this isn’t a healthy market.

With markets still fragile from the financial crisis of 2008 that never really got resolved in the first place, this kind of back and forth is enough to make many investors run for the hills, their 401(k)s, personal savings, hopes and dreams all safely tucked under their arm… and out of stocks.

It’s important to note that, while this may seem like a fail-proof method for dealing with the volatility, it really isn’t. The Oxford Club, for instance, has four portfolios filled with profitable positions to prove that it still pays to put your money into the market… with the right guidance, of course.

That’s a really good thing, considering how the market isn’t likely to right itself any time soon. There’s simply too much going on in the United States and around the world, and much of it is negative.

No End in Sight

The continuing turmoil of the Eurozone’s PIIGS (Portugal, Italy, Ireland, Greece and Spain) is currently the most prominent factor in market volatility. In an effort to prolong the inevitable, European leaders keep throwing more money at the problematic countries with their problematic policies, politicians and constituents.

Since everyone involved seems dead-set against dirtying their hands right now, don’t expect the economic union’s financial woes to get any better soon. And even if they do suddenly start handling the situation appropriately, the short- and mid-term results will be painful on global markets.

The United States isn’t in much better shape, and some would argue that it’s doing even worse (though that’s debatable). Just a few days ago, Fannie Mae asked the federal government for $7.8 billion in aid to cover its gigantic second-quarter losses.

This doesn’t bode well for businesses or consumers, who will have to pick up the bailout bills in the end, quite possibly through higher taxes, which leads to less money for new hires and the kinds of purchases that fuel national growth.

It also doesn’t say much for the housing market, a major driving force in the U.S. economy.

So far, U.S. politicians seem just about as skilled as their European counterparts (i.e. not at all). So these problems are likely to drag out to… and therefore so will volatility

It would be great if somebody could step in and miraculously soothe the markets. But it took major markets a long time to get into this mess, so logic dictates it’s going to take a while to get out of it all.

Good investing,

Jeannette Di Louie

Article by Investment U

The markets have reacted positively on the news of new governments in both Italy and Greece. This week we will also hear news of new debt problems in the united states.

Senior Strategist Ib Fredslund Madsen comments on the situation on the financial markets.

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