In day one of the world held hostage, the FED‘s QE2 program proved a great success. The dollar declined. Commodities soared. Metals shined. The equity markets took its newfound wealth effect in full stride. And the Treasury market rallied. Even though the 30-year bond is not a major component of the FED‘s purchasing program, it too rallied strongly as the sub 2.5 percent yield on the 10-year note sent investors further down the curve looking for a little more yield. The FED got all the bang out of the “wealth effect” that it could as investors around the world have realized that their “cash was nothing but trash”–exactly the outcome the FED is looking to achieve.
Posts Tagged ‘Lula’
Notes From Underground: U.S. and Japan look to new sources of Rare Earth as they” Get Ready ” to China’s I am “Losing You”
November 1, 2010The weekend news brought further acrimony between China and the developed nations as the Chinese have threatened to curtail the export of several import elements that are needed to manufacture high-tech products. The Chinese export 97 percent of the rare earth elements that go into military and electronic equipment. It will take some time for the world to find alternative locals and substitutes so China is able to flex its muscles and show how important it is to the developed world.
Notes From Underground: Did Dudley DO RIGHT on his mounting a possible expansion of monetary easing?
October 4, 2010First things first. The Financial Times ran a weekend front-page story revealing that Sarkozy and the Chinese have been holding secret meetings for the last year on the issue of global currency stability. It was unclear what efforts Sarkozy was pursuing but he was looking to get Chinese support for whatever he is going to try to accomplish when he gets the leadership post of the G-20. The French have been trying to replace the U.S. DOLLAR as the world’s reserve currency since the days of DeGaulle and Jacques Rueff. We have warned that Sarkozy is desperate to make a grand play on the international stage as his political support in France has badly eroded. Wen Jiabao is in Europe this week for talks with the EU on many issues.