Analysis and Charts of Global Markets

written by Gary Dorsch, Editor and Publisher

The Fed Flashes the Nuclear QE Trump Card

Jul 29, 2010

Of ten people who hear the same story or speech, each one might understand it differently. Perhaps, only one of them will understand it correctly. Bernanke acknowledged that the US-economy faces an “unusually uncertain time,” but if necessary, he hinted the central bank would resort to “Quantitative Easing,” (QE), or printing vast quantities of US-dollars, in order to prevent a deflationary spiral.

How the ECB Engineered the Euro´s Recovery

Jul 14, 2010

The hysteria over the solvency of the Club-Med countries, - Greece, Portugal and Spain, was whipped into a frenzy, with questions being asked about the long-term viability of the Euro itself. But now, Euro-zone politicians are trying to refurbish the Euro’s stature, by adopting fiscal austerity measures to reduce their bloated budget deficits. At the same time, the ECB has begun to tweak its monetary policy, by jigging-up German schatz rates, and sterilizing its debt purchases. Looking ahead, the Euro could look less ugly compared to the US-dollar, if the Fed cranks-up its money printing operations.

The Psychology of the Copper Market

Jun 16, 2010

Copper has been on a wild rollercoaster ride, famous for its “boom-and-bust” cycles. Gambling on copper’s next major move is always a high stakes bet. Last year, copper dealers found it profitable to focus solely on the demand side, while largely ignoring the supply side of the equation. After-all, “the market value of any commodity is only worth, what the highest bidder is willing to pay.”

Radio Interview on Global Markets - May 27, 2010

Jun 4, 2010

Listen to a 15-minute Interview, with Global Money Trends editor, Gary Dorsch, and the host of the Financial Sense radio show, - Jim Puplava, - discussing the outlook for the global stock markets, the Euro-zone debt crisis, and Gold.

Euro-zone Credit Crunch & Shanghai Shakeout

Jun 3, 2010

Few traders know much about the credit default swap (CDS) markets. They’re traded on an unregulated, over-the-counter market, and far from the public’s view. Yet nowadays, the CDS market has become a major battleground, with the fate of the Euro currency hanging in the balance. Meanwhile, the People’s Bank of China is removing a large chunk of the stimulus from the Shanghai money markets, wrecking havoc on Asian stock markets and industrial commodities.

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Climbing climbing on weaker US$, Shrinking Stockpiles

Updated 3:42 PM, Jul-29, Thu

Another beneficiary of the Euro’s recovery to as high as $1.300 was the copper market, which has rebounded by 12% so far in the month of July, towards $7,200 /ton in London. -------------------------------- Freeport-McMoRan Copper & Gold (FCX.N) chief Richard Adkerson said copper markets were healthy enough for the world’s second largest copper miner, to bring back production at mines it had idled during the recession. "The physical markets really are stronger than economic indicators in the US. We see our order books filling more strongly than we have in some time,” he said. ------------------------------------------------- Copper recovery coincided with an 11% rally for the Shanghai red-chip index in July to the 2635-level. Copper stockpiles at the London Metal Exchange have also dropped 18% this year to 411,425-tons, signaling global demand is exceeding supply. In Shanghai, copper inventories have also been whittled down by nearly 40% over the past two months, to as little as 114,000-tons. In 2009, China bought about 35% of the global copper supply.

Archived Comments:
Climbing climbing on weaker US$, Shrinking Stockpiles

Aussie Dollar - a symbol of Global Risk Appetite

Updated 3:45 PM, Jul-29, Thu

The Australian Dollar has become a barometer of global risk appetite. The Aussie dollar risk penetrated the psychological 90-US-cents barrier this week, as a combination of several events swung in its favor. Risk aversion began to ebb in the Greek CDS market, and Bernanke’s implied threat to play the QE trump card gave the Aussie a big boost. With ultra-low interest rates in the Japanese the US Treasury markets, the Aussie dollar is attracting foreign capital to its higher interest rates, compared to the rest of the industrialized world. ------------------------------------- It’s also been fueled upward by growing trade surpluses earned from sales of coking coal, and iron-ore, Australia’s top two exports, which earn a quarter of last year’s A$250-billion export revenue. A brisk rally in base metals, such as copper, aluminum, nickel, and iron-ore, combined with a rebound in Shanghai red-chips, helped to create the perfect storm for the Aussie dollar. ----------------------------------- The Aussie dollar’s rebound began shortly after July 2nd, at around 84-US-cents, when Canberra finally ended a damaging dispute with global miners BHP Billiton, Rio Tinto and Xstrata, by dumping its 40% super profits tax for a lower resources rent tax backed by key global miners. The new resources rent tax won’t apply until July 1, 2012, and will be at a lower rate of 30 percent. The government’s compromise means it will receive A$1.5 billion less revenue than under its planned “super profits” tax, which was suppose to raise around A$12 billion.

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Aussie Dollar - a symbol of Global Risk Appetite

Gold Tumbles as Greek debt fears Subside

Updated 3:49 PM, Jul-29, Thu

Despite Mr Bernanke’s threat to brandish the nuclear QE-weapon, implying massive new waves of money printing, the price of gold has tumbled 15% since hitting its all-time high in Europe on June 7th, to around 890-euros /oz today. Instead, subsiding fears about a Greek debt default, as measured by a sharp slide in Greek CDS rates, and a narrowing of Greek, Portuguese, and Spanish bond yield spreads with German bunds, have conspired to weaken the gold market. ------------------------------------------- With the gold market’s preoccupation with the Euro-zone debt crisis fading slowly into the background, the focus could suddenly switch to the anemic growth of the Euro M3 money supply, which was barely growing at an annualized +0.2% rate in June. The growth rate of Euro M3 has been essentially flat for the past six-months, despite ultra-low borrowing rates, with bank lending at a virtual standstill. ----------------------------------------- Long periods of anemic money supply growth, could lead a Japanese style pattern of price deflation that could plague the Euro-zone and the US-economies, and is adding to selling pressure on precious metals, such as gold and silver. Mr Bernanke is praying that he won’t need to play the nuclear QE-trump card again, so the Fed can keep its gunpowder dry for another day. Gold and silver are famous for wicked corrections, within the context of longer-term bull markets. Selling pressure might continue until the Fed pulls the trigger, and unleashes a new round of QE.

Archived Comments:
Gold Tumbles as Greek debt fears Subside

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Analysis and Charts of Global Markets

Global Money Trends Audio Broadcasts Audio Broadcasts are uploaded Monday and Wednesday evenings, to our subscriber section, with the latest news and analysis moving markets

Global Money Trends
Audio Broadcasts

Audio Broadcasts are uploaded Monday and Wednesday evenings, to our subscriber section, with the latest news and analysis moving markets