Posts Tagged ‘credibility’
May 23, 2011
In an effort to stay abreast of news and markets while in Boston, the two most interesting items on the global financial stage are causing a push/pull in the market. The Spanish elections certainly impacted the markets. Weakness in the EURO began on Friday as Bloomberg ran a story about the sad state of municipal finances in Spain that would be revealed after the Socialists lost most previously held local governments. It seems that the Spanish authorities have been fudging their local municipal finances and this will put more pressure on Spain to enact austerity budgets even with an unemployment rate above 21%.
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Tags:Bob Rubin, CFTC, Christina Romer, commodity currencies, credibility, Dollar, elections, Euro, Europe, Fed, Gold, Greece, Hank Paulson, intransitory, Italy, Jean-Claude Juncker, John Snow, Larry Summers, Paul O'Neill, PIIGS, S&P, Spain, Tim Geithner, U.S., Zapatero
Posted in Currency, Europe, Italy, Spain, United States | 10 Comments »
April 13, 2011
Today’s headline in the Financial Times, “U.S. LACKS CREDIBILITY ON DEBT-SAY IMF.” I rarely agree with the IMF but on this issue as the readers of NOTES are aware, I can find common ground with the economists at the world’s commentator on global economics. It is easy to say the U.S. lacks credibility when the world is observing the budgetary circus that has visited Washington, D.C. for the past two weeks. The CREDIBILITY issue is not solely with the president and the legislature but also with the FEDERAL RESERVE. If the FED errs in its aggressive monetary easing it will be a horrendous blow to the U.S. and the global financial system. The FED has so much at stake because it has more than $2 trillion of DEBT INSTRUMENTS on its balance sheet and if the U.S. is deemed to be an unworthy borrower just what will the value of those assets be on the market.
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Tags:bonds, credibility, Debt, debt instruments, Dollar, exit strategy, Federal Reserve, GDP, Gold, hostage, IMF, interest on debt, interest rates, James Bullard, markets, oil, primary budget, QE2, retail sales, silver, U.S. budget
Posted in Commodities, Debt Market, Federal Reserve, United States | 3 Comments »
April 3, 2011
All was right with the markets as the unemployment data was released and for one of the few times in recent memory, the Wall Street analysts, ADP and others were right on target. Private sector job growth continued to improve, and the state and local governments were continuing layoffs to try to balance its budgets. The softest part of the employment data was the average hourly earnings, which were FLAT. This implies that employers are under no stress to lift wages with the unemployment rate at 8.8 percent. The markets took the data in stride as the DOLLAR was rallying on the positive data. With the previous day’s comments from various FED presidents, there appeared some need to lift some of the SHORT DOLLAR positions. The short-end of the yield curve was under pressure, aiding the DOLLAR RALLY and the selloff in the precious METALS. The equities seemed to be basking in the perfect storm for no WAGE GAINS, a mere threat of 1 percent FED FUNDS with an improving JOBS PICTURE doesn’t get any better for the EQUITIES.
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Tags:ADP, Bernanke, Bill Dudley, credibility, currencies, Dollar, dollar rally, dollar standard, doves, Equities, euro debt problem, Fed, flat, Gold, hawks, MBS, metals, PIIGS solvency, portfolio balance channel, QE, QE2, short dollar positions, sovereign debt issues, treasury securities, u.s. dollar haven status, unemployment, Volcker, wealth effect
Posted in Federal Reserve | 15 Comments »