The US dollar has hit a 14-year low against the Japanese yen with low interest rates in the US making the greenback less attractive to investors.

The dollar slipped to 86.5 yen, its lowest level since July 1995.

The US has indicated it is unconcerned about the dollar’s slide, and will not intervene to strengthen it.

Many traders are swapping dollar holdings for gold as a safer investment in the current uncertain economic climate.

The price of gold is currently at a record high of $1,194.5 an ounce.

Close watch

“This yen strengthening is caused by dollar selling rather than yen buying, so this is not something Japan can handle itself,” said Yutaka Miura at Mizuho Securities.

“This trend will continue unless the Japanese government takes action, in co-operation with the US.”

In the short term at least, analysts said such intervention was unlikely.

Finance Minister Hirohisa Fujii said that he was keeping “close tabs” on the yen and would take “appropriate measures” if exchange rates “moved abnormally”.

But his comments did little to ease worries among investors.

“He is finance minister, so of course he should be monitoring foreign exchange closely,” said Tsuyoshi Segawa at Mizuho Securities.

The strengthening yen relative to the dollar caused Japanese shares to fall, with the main Nikkei 225 index dragged lower by major exporters, whose products become more expensive in the US as the yen strengthens.

The dollar has also fallen significantly against the pound and the euro this year.

Another bubble that was caused by government intervention in the market economy is going “pop”:

Dubai woes roil financial markets
Stocks fall and government bonds rise on flight to quality
By William L. Watts, MarketWatch

LONDON (MarketWatch) — Fears of a potential default in Dubai sent shock waves through financial markets Thursday, weighing on European and Asian equities, lifting government bond prices and pulling the U.S. dollar off of recent lows as investors sought out safe havens.

Dubai late Wednesday said it would restructure Dubai World and announced a six-month “standstill” on repayments of the state-run wide-ranging conglomerate’s debt. Ports operator DP World and its debt is excluded from the standstill plan. Read about Dubai World’s sprawling empire.

Analysts said Dubai’s woes were a blow to sentiment, serving as a reminder that potential trouble spots remain in the world economy.

“I don’t see this as a massive issue but it’s another warning to where the world got itself last year with loose monetary conditions [and] loose lending,” said Naeem Wahid, market strategist at Lloyds TSB. “And, in a few cases, the problems are still out there and we could continue to see these kinds of nasty surprises” in the future.

Government-owned Dubai World is a conglomerate with interests in real estate, ports and the leisure industry. The firm carries around $60 billion in liabilities. Credit agencies Moody’s Investors Service and Standard & Poor’s downgraded the debt of a range of government-related firms, including DP World, after the restructuring announcement, news reports said.

The developments sent the cost of insuring the emirate’s sovereign debt against default soaring for a second day.

The news also weighed on other emerging markets, boosting the cost of insurance against default against other Middle Eastern and emerging-market countries and undercutting Central and Eastern European currencies.

continue reading…

Everyone is an investor at some level.  We invest through traditional 401(k)s, Roth 401(k)s, mutual funds, individual stocks, REITs, gold stocks/funds, etc.  Recently, what has interested investors is commodities, as everything from oil, to gold, to copper, etc. has seen significant growth.

As we saw over the last 18 months, many investors plowed into oil as safe-haven, and a growth vehicle for returns.  Major brokerage houses discussed oil moving to $200+ per barrel, as far east countries (aka China) would drive prices “through the roof”, due to internal demand.  Oil is valued in U.S. dollars, which creates an interesting affect on the demand and price of oil.

A lower U.S. dollar supports (and drives) demand of commodities, as an alternative investment.  Per an article at Bloomberg.com, “The primary reason for higher oil prices is the falling dollar,” said Michael Fitzpatrick Vice President of Energy with MF Global in New York.

http://www.littleurl.net/d1da71

In addition to oil, gold trades in a similar manner to the U.S. dollar.  In particular, the falling U.S. dollar is one of the drivers for rising gold prices, which seems to set records weekly.

A falling dollar has other macroeconomic effects.  In particular, a weak U.S. dollar should conceivably drive U.S. consumers towards U.S. produced products and services, as the dollar-valued goods would be cheaper than imported products and services abroad.  In addition, U.S. goods and services would be in demand across the globe, driving export higher.  This would add to top-line growth of U.S. companies, spurring demand for their goods and services, depleting capital stockpiles, and driving employment opportunities to restock warehouses.  Unfortunately, this affect has been slow to materialize.

A side affect of the above scenario is rising inflation, which causes policy adjustments by the Federal Reserve.  Although, most economists in todays environment are hesitant to identify inflation as a near-term factor, which debt levels in this nation extremely high, and the propensity of consumers to make purchases is capped by available credit, and other household decisions.

Even Greenspan commented in his book ‘The Age of Turbulence’ that “… the U.S. (trade) imbalance must narrow, with the dollar likely having to decline in order to stimulate U.S. exports and dampen U.S. imports.”

This debate is detailed, long, and has multiple sides to it.  What side are you on?

Here is an excellent interview with Dr. Richard Ebeling where he is defending the free market and why it is the only moral choice.  Charity = Compassion whereas Redistribution = Compulsion and the Loss if Liberty.

Radio Interview

The only opinion I would add is that even seemingly “necessary” government services such as “the protection of property” and “national defense” can be better provided by the free market where there is competition for your dollars.  In a free market you have the ability to withdraw your support if you are not satisfied with the services being offered forcing the provider to earn your business (see Chaos Theory by Dr. Robert Murphy).    A little bit of compulsion is like being a little bit pregnant.  Limited government often grows to unlimited government.

WASHINGTON — Suddenly the Federal Reserve is everybody’s punching bag.

Strip the Fed of its bank regulation powers, some in Congress are demanding. Get probing audits of its behind-the-scenes operations, others say.

The chairman of the Federal Reserve Board is always fair game for criticism and second-guessing, usually over interest rate actions. But this year the criticism is much broader as Congress responds to widespread public anger that the Fed bailed out Wall Street but not ordinary Americans, and with unemployment in double digits.

Former Fed chairman William McChesney Martin Jr. famously said that the central bank’s job was to yank away the punchbowl just when everybody is starting to party. And while Fed Chairman Ben Bernanke has signalled the Fed will keep interest rates low for now, a round of higher rates inevitably will come.

The Fed finds itself both the punchbowl keeper and the punching bag. Imagine the outcry when it does begin to crank up rates â?? perhaps just ahead of next year’s midterm elections.

Fireworks seem likely at Senate confirmation hearings early next month on President Barack Obama’s nomination of Bernanke to a second four-year term as chairman.

Many economists and Fed watchers say congressional efforts to rein in the Fed’s powers could interfere with the central bank’s ability to help guide the fragile economy to recovery.

The Fed’s very independence and its unique ability among U.S. institutions to create money out of thin air enabled it to act quickly to stabilize the nation’s financial system after it froze up last September after the bankruptcy of the Lehman Brothers investment house, Fed backers say.

“It might have been the Fed’s finest moment when it had to jump into the market,” said David M. Jones, a former Fed economist and president of DMJ Advisors, a Denver-based consulting firm. “We still have to wait to see how effective the Fed is in its exit strategy and whether it can keep inflation in check. But this badgering by Congress, even if there is populist sentiment, is inappropriate.”

The Fed’s aggressive intervention also set the stage for the current criticism. Many lawmakers question whether the Fed’s money machine has mainly benefited financial markets and not the broader economy. Lamakers are also peeved that the central bank acted without congressional involvement when it brokered the 2008 sale of failed investment bank Bear Stearns and engineered the rescue of insurer American International Group.

Bernanke, first appointed by President George W. Bush, has worked closely with both Treasury Secretary Timothy Geithner and Bush Treasury Secretary Henry Paulson in confronting the worst financial crisis in decades. Geithner also has gotten his share of congressional wrath, mainly for his administering of the $700 billion bank bailout fund.

“In the past, the Federal Reserve was held in very high esteem,” said Rep. Ron Paul, R-Texas, a libertarian who ran a quixotic third-party presidential campaign in 2008. Now, it’s “the source of our problem,” suggests Paul, author of the bestseller “End the Fed.”

Usually an outlier, Paul suddenly has found an army of at least 307 House colleagues and 30 senators marching behind his legislation to subject the Fed to intense scrutiny by Congress’ Government Accountability Office. The House Financial Services Committee endorsed Paul’s approach 43-26 last week over objections from its chairman, Rep. Barney Frank, D-Mass.

The bill would authorize Congress to audit not only the Fed’s lending programs but its basic decisions to set monetary policy by raising or lowering interest rates. Paul has been introducing a version every year since the early 1980s, but this is the first time it has garnered any serious attention.

Senate Banking Committee Chairman Chris Dodd, D-Conn., who will preside over Bernanke’s confirmation hearings, has proposed legislation that would strip the Fed of its bank-regulation authority and give the Senate a role in selecting the 12 regional Federal Reserve bank presidents.

Dodd says his measure would return the Fed to its core mission of setting monetary policy, claiming it proved itself “an abysmal failure” by not cracking down on risky lending practices that led to the financial meltdown.

Dodd is in an extremely tight battle for re-election, even though he has served in Congress for 35 years.

“I don’t think it ever hurts to have a member of Congress stand up and denounce the Fed. There is a lot of anger out there, and this is basically a therapeutic gesture,” said Ross Baker, a political scientist at Rutgers University.

Still, Baker said, it probably isn’t wise to tamper with the formula that makes the Fed “very much an anomaly in American government. It’s independent, it has to be. You don’t want the Fed to be under the control of the president. And it kind of sits out there — not in the executive branch, not in the legislative branch, not in the judicial branch. Sort of its own little element in the separation-of-powers constellation.”

While the Fed is subject to some congressional oversight, its decisions don’t have to be ratified by the president or Congress. Fed officials are not paid with money appropriated by Congress.

Should Bernanke be worried?

“Not only should he be worried, he’s clearly ratcheted up his game in terms of his communications with Congress,” said Norman Ornstein, a senior fellow at the American Enterprise Institute.

Ornstein said the Fed bashing this time is different from before, with “a broader base of support. And it’s coming from people who in the past would not have hit the Fed. There’s a lot of populist anger out there — on the left, in the center, and on the right. And politicians are responsive to that.”

Gold Anti-Trust Action Committee

Monday, November 23, 2009 1:51 PM

A page one, top-of-the-fold New York Times report Monday warns that U.S. debt is rising so fast that the federal government is careening toward a “payment shock” in the not-too-distant future.

The Times lead headline read: “Federal Government Faces Balloon in Debt Payments: At $700 Billion a Year, Cost Will Top Budgets for 2 Wars, Education, Energy.”

The Times headline appears eerie just as the Senate moves to push forward on a radical healthcare reform — with CBO estimates for a final bill costing nearly $1 trillion dollars over the next year.

The national debt now stands at over $12 trillion and the White House estimates that the cost of servicing the debt will rise to more than $700 billion a year in 2019, up from $202 billion this year. The Times suggests that $700 billion annual payment cost may be conservative.

The additional $500 billion a year in interest payments would surpass the combined budgets this year for education, energy, homeland security, plus the wars in Iraq and Afghanistan, the Times observes.

Treasury officials face not only huge new debts incurred in response to the economic meltdown but a balloon of short-term borrowings coming due in the months ahead, and interest rates that are certain to return to normal levels when the Federal Reserve concludes that the fiscal emergency has passed.

Link to Article

If you are a fiduciary for your employer’s retirement savings plan, you already know that life isn’t getting any simpler. Lawsuits against plan fiduciaries are on the upswing, and some fiduciaries have been found personally liable for plan losses under ERISA, the Employee Retirement Income Security Act of 1974.

What you may not know is that neither your company’s directors’ and officers’ (D&O) insurance nor the bond that all retirement plan sponsors are required by law to carry will indemnify you for claims involving benefit plans. The former excludes such claims; the latter covers only plans themselves. Instead, you need fiduciary-liability insurance, and if you don’t know whether you have it, you should find out.

This wasn’t such an urgent issue a decade ago. But the litigation landscape began to change in 2004 when 10 former outside directors of Enron Corp. were together forced to cough up $1.5 million of their own money, without recourse to insurance or indemnification, to settle a lawsuit filed by the U.S. Department of Labor. The suit alleged mismanagement of employee retirement funds, which were heavily invested in Enron stock that became worthless after the company imploded in an accounting scandal. Prior to that time, the idea that corporate officers or directors might have to open their own wallets to settle such a case was virtually unthinkable.

Since then, the floodgates have opened, with plaintiffs’ lawyers filing dozens of lawsuits against retirement plan sponsors and their executives who, they claim, committed a variety of fiduciary mistakes, from countenancing exorbitant vendor fees to stocking their plans with inappropriate investment options. Some of the cases have been dismissed, but many continue to grind their way through the court system. All the while, defense costs are accruing.

Link to Article

By Jeff Clark
Stowe, Vermont

“There’s no doubt in my mind that we’ll have a mania in gold. And because the gold and especially silver markets are so tiny, the rush into them will be like trying to push the contents of Hoover Dam through a garden hose. Our positions will go absolutely ballistic.” – Doug Casey, September 2009

There’s certain to be a rush into gold and silver, and buying before Main Street catches gold fever is the only way to play this trend. Because when Midas fever hits, prices will explode to the upside, for both the metals and the stocks. How do we know that?

First, let’s look at gold. If we added up all the gold ever mined on the planet, its total value would equal no more than $5 trillion at today’s prices. Yet, look at how this compares to the debt and bailouts and other monetary mischief of current governments…

Let’s make this chart very clear. Of the $5 trillion in gold ever mined…

• The US government has thrown over twice as much at the economy in the past 12 months.
• The US debt is more than double this amount so far this year.
• Total global government bailouts are almost four times larger (and this is a conservative figure; one estimate puts it at $24 trillion).

I intended to include annual gold production as one of the comparisons, but the chart isn’t big enough and neither is your monitor: 2008’s global gold production equaled about $73 billion, and to make that figure discernable on the chart would require the Global Bailouts bar to hit the ceiling above your head. That’s how small the gold market is.

The implications are undeniable: when the greater public rushes into gold – whether in response to inflation, dollar woes, war, whatever – the price will be forced up by an order of magnitude.

While physical gold will protect our wealth, it’s the gold stocks that can potentially make us wealthy.

Once again, to get a sense of the Lilliputian size of the gold industry, I compared it to several other leading industries and stocks.

The value, as measured by market capitalization, of all gold producers around the world is less than Wal-Mart’s. Every gold stock would need to nearly double just for the industry to match ExxonMobil. The oil and gas industry is about 12 times bigger.

When your neighbors and relatives and co-workers and friends all start clamoring to buy gold stocks, the pressure on prices will be enormous, rocketing our positions upwards.

Meanwhile – and admitting we’re first and foremost gold bugs – the picture for silver is even more dramatic. The potential for silver stocks is jaw dropping.

If the gold industry is tiny, then silver’s $9 billion market cap makes it a nano industry. The entire silver industry is over 21 times smaller than gold’s! If gold explodes, silver will go supernova.

Consider these macro-facts about a micro-market and what they reveal about silver’s enormous potential:

• There are over 200 companies in the S&P 500 with a market cap larger than the entire market of silver producers.
• There are five times more gold stocks than silver.
• Total silver production in 2008 was valued around $10.3 billion (at today’s prices). That represents just 1.5% of the $700 billion bailout last year, and 0.006% of the current US monetary base.
• Of the 20 largest silver producers, only five actually call themselves a “silver” company, due to the fact that about 73% of all silver mined is a byproduct of other metals mining.

Any flood into the silver market would overwhelm it. In other words, the rise will be stunning. While it’s not going to happen tomorrow, I strongly suggest you get on board before that rocket ship takes off.

Just putting these charts together stirred my feelings of restlessness, making me anxious for the mania in precious metals to arrive. But the timing is not up to us. Be patient, because if you’re invested in gold and silver and the respective, high-quality stocks, you’re on the right side of this trend.

Regards,

Jeff Clark
Senior Editor, Casey’s Gold & Resource Report
for The Daily Reckoning
By Jeff Clark
Stowe, Vermont

“There’s no doubt in my mind that we’ll have a mania in gold. And because the gold and especially silver markets are so tiny, the rush into them will be like trying to push the contents of Hoover Dam through a garden hose. Our positions will go absolutely ballistic.” – Doug Casey, September 2009

There’s certain to be a rush into gold and silver, and buying before Main Street catches gold fever is the only way to play this trend. Because when Midas fever hits, prices will explode to the upside, for both the metals and the stocks. How do we know that?

First, let’s look at gold. If we added up all the gold ever mined on the planet, its total value would equal no more than $5 trillion at today’s prices. Yet, look at how this compares to the debt and bailouts and other monetary mischief of current governments…

Let’s make this chart very clear. Of the $5 trillion in gold ever mined…

• The US government has thrown over twice as much at the economy in the past 12 months.
• The US debt is more than double this amount so far this year.
• Total global government bailouts are almost four times larger (and this is a conservative figure; one estimate puts it at $24 trillion).

I intended to include annual gold production as one of the comparisons, but the chart isn’t big enough and neither is your monitor: 2008’s global gold production equaled about $73 billion, and to make that figure discernable on the chart would require the Global Bailouts bar to hit the ceiling above your head. That’s how small the gold market is.

The implications are undeniable: when the greater public rushes into gold – whether in response to inflation, dollar woes, war, whatever – the price will be forced up by an order of magnitude.

While physical gold will protect our wealth, it’s the gold stocks that can potentially make us wealthy.

Once again, to get a sense of the Lilliputian size of the gold industry, I compared it to several other leading industries and stocks.

The value, as measured by market capitalization, of all gold producers around the world is less than Wal-Mart’s. Every gold stock would need to nearly double just for the industry to match ExxonMobil. The oil and gas industry is about 12 times bigger.

When your neighbors and relatives and co-workers and friends all start clamoring to buy gold stocks, the pressure on prices will be enormous, rocketing our positions upwards.

Meanwhile – and admitting we’re first and foremost gold bugs – the picture for silver is even more dramatic. The potential for silver stocks is jaw dropping.

If the gold industry is tiny, then silver’s $9 billion market cap makes it a nano industry. The entire silver industry is over 21 times smaller than gold’s! If gold explodes, silver will go supernova.

Consider these macro-facts about a micro-market and what they reveal about silver’s enormous potential:

• There are over 200 companies in the S&P 500 with a market cap larger than the entire market of silver producers.
• There are five times more gold stocks than silver.
• Total silver production in 2008 was valued around $10.3 billion (at today’s prices). That represents just 1.5% of the $700 billion bailout last year, and 0.006% of the current US monetary base.
• Of the 20 largest silver producers, only five actually call themselves a “silver” company, due to the fact that about 73% of all silver mined is a byproduct of other metals mining.

Any flood into the silver market would overwhelm it. In other words, the rise will be stunning. While it’s not going to happen tomorrow, I strongly suggest you get on board before that rocket ship takes off.

Just putting these charts together stirred my feelings of restlessness, making me anxious for the mania in precious metals to arrive. But the timing is not up to us. Be patient, because if you’re invested in gold and silver and the respective, high-quality stocks, you’re on the right side of this trend.

Regards,

Jeff Clark
Senior Editor, Casey’s Gold & Resource Report
for The Daily Reckoning

By Stephen C. Webster
Tuesday, November 24th, 2009 — 9:50 pm

As the number of problem U.S. banks swells to the hundreds, the Federal Deposit Insurance Corporation is increasingly hard-pressed to fill in the gaps where institutions have put depositor’s funds at risk.

Unfortunately, a dire prediction made by government officials in early 2009 has come true: the FDIC’s deposit insurance fund is now broke, according to published reports.

“The deposit insurance fund dropped by $18.6 billion during the third quarter of 2009 to negative $8.2 billion, as the Federal Deposit Insurance Corp. set aside $21.7 billion in provisions for additional bank failures,” The Wall Street Journal reported. “This is the second time in the agency’s history that the balance has fallen into negative territory.”

In March the FDIC took steps to stave off the possibility that its insurance fund would run dry, instituting new fees on banks, forcing them to pay to protect consumers.

The head of the Federal Deposit Insurance Corporation, Sheila Bair, wrote to bank leaders declaring that “without these assessments, the deposit insurance fund could become insolvent this year.”

According to the FDIC’s most recent quarterly report, there were 552 “problem” banking institutions in the U.S., the most since the end of 1993.

“In its state of the industry report, the F.D.I.C. reported that banks posted a $2.8 billion gain in the third quarter, after a $4.3 billion loss in the previous period,” The New York Times reported. “The number of bad loans of nearly every stripe — credit cards, mortgages, small business and commercial real estate — continue to grow, albeit at a slower pace.”

BizJournals added: “Fifty institutions failed during the third quarter, bringing the total number of failures in the first nine months of 2009 to 95. As of Nov. 21, 124 banks have failed nationwide.”

“The FDIC has not yet accessed a temporary $500 billion fund of capital it has available to it from Treasury for the insurance fund,” Marketwatch notd. “The FDIC estimates that bank failures will cost the agency as much as $100 billion over the next five years, with the majority of the losses taking place in 2009 and 2010. The agency may require banks to pay additional assessments to cover losses to the fund if bank failures expand in greater numbers than anticipated by the agency.”

When banks insured by the FDIC are seized or declare bankruptcy, the agency returns depositors’ funds up to $250,000.

Read the FDIC’s full Q3 2009 report [PDF link].

With AFP.

An earlier version of this report said the FDIC insures depositors’ funds up to $100,000. The government-run agency expanded its coverage for consumers from $100,000 to $250,000 in 2008. President Obama further extended the additional cushion until the end of 2013.

Revue de presse interactive du mercredi 25 novembre 2009 avec Pierre Jovanovic autour de l��conomie et de la crise financi�re.

Partie 1

Partie 2

Partie 3

Partie 4

Partie 5

Tous les mercredi de 14h � 16h00 sur Radio Ici Et Maintenant :

http://icietmaintenant.info/

Blog de Pierre Jovanovic :

http://www.jovanovic.com/blog.htm

Partie 6

Partie 7

Partie 8

China Overcapacity Wreaks Global Harm, EU Group Says (Update1)

via China Overcapacity Wreaks Global Harm, EU Group Says (Update1) – Bloomberg.com.

L'euro sur la barre de 1,51 dollar

via L’euro sur la barre de 1,51 dollar.

• EUR/USD down from 1.5145 year high to 1.5060

• Asian markets drop as dollar tumbles to 14-year low

• Gold hits another new high on the back of dollar weakness

• Euro surges past USD 1.51 level

• UK GDP shrinks for a sixth consecutive quarter

US Dollar: The US dollar has hit a 14 year low against the yen with low interest rates in the US making the greenback less attractive to investors. The dollar slipped to 86.5 yen, it’s lowest level since July 1995. The US has indicated it is unconcerned about the dollars slide and will not intervene to strengthen it. Many traders are swapping dollar holdings for gold as a safer investment in the current uncertain economic climate. The dollar has also fallen significantly against the pound and the euro this year. Fed officials said in minutes of their November 3-4 meeting released on November 24th that the dollar’s decline has been orderly and that they would watch for any signs that the depreciation is pushing up people’s expectations for inflation. DATA : No major data to be released today. US markets closed due to Thanksgiving Day—No same days trade possible!

Pound: The UK Gross Domestic Product figures shrank for a sixth consecutive quarter in the three months to September but at a slower pace than previously reported, keeping alive expectations of a return to growth before the end of the year. The Office for National Statistics said GDP fell by 0.3 percent in the third quarter, less than the 0.4 percent fall reported last month. Analysts had been shocked by the weakness of the initial reading after survey indicators suggested the economy was on the road to recovery. Some in the market had expected an even bigger upward revision and the pound slipped almost half a cent against the dollar and gilt futures rose to a six-week high on the figures. The pound fell on the weak GDP numbers and cable dropped over a cent to hit the $1.66 level. There was also more weakness posted against a rallying euro and we have now seen GBP/EUR fall under the 1.10 mark. DATA : UK CBI Quarterly Distributive Trades

Euro: Euro rally from Nov 24 low at 1.4885 extended during Wednesday’s U.S. session to a fresh 15-month high at 1.5145, and the Euro has gone through a downward correction, dropping during Asian sessions to 1.5060. At the moment, the Euro trades at 1.5080, with next resistance level at 1.5095, ad above here, 1.5120 and then 1.5145 (Nov 25 high). On the downside, support levels lie at 1.5035, and below here, 1.4990/00 (Nov 23 and 24 high) and 1.4955 (Nov 25 low). EUR/GBP bounced on Wednesday at 0.8975 session low, and the pair has continued appreciating during Asian session to break through 0.9060/65 resistance area hitting a fresh 4-week high at 0.9095. Resistance levels lie at 0.9120 and 0.9135. Support levels are 0.9035 and 0.9010/00. DATA : German consumer price index

General:
Spot gold hit another record in Asian trading Thursday of $1,195.10 a troy ounce, extending gains from strong buying late in the U.S. session and after news of another central bank buying gold–and a weaker dollar.

Mid-prices

GBP/USD 1.6551
GBP/EUR 1.0968
EUR/USD 1.5086
GBP/JPY 143.71
GBP/AUD 1.7954
GBP/NZD 2.2888
GBP/ZAR 12.2068
GBP/CHF 1.6562
GBP/CAD 1.7396
GBP/SGD 2..2862
GBP/THB 54.63
GBP/HKD 12.8300

Voltrex

BBC News: Click Here

“The US dollar has hit a 14-year low against the Japanese yen with low interest rates in the US making the greenback less attractive to investors.”

According to BBC News, the US dollar has slipped to 86.5 yen. It seemed to have lost its name as ‘world currency.’ With low interest rates and unstable economy within the US, the investors are ditching the US dollars and finidng an alternative (such as Euro, Yen, or gold). This has significantly affected the US dollar to fall. Investors wanted safe, high-profit currency; not low-profit, unstable US Dollar.

While the US Dollar slipped to 86.5 yen, other currencies such as Euro, Yen, or gold have increased dramatically. The price of gold was especially surprising. The price of gold was steadly rising for last 5 years! This significantly increased especially during the last 2 years when there was a global economic recession. Investors wanted more safe investments. So they chose gold.

Yet, I do not think the fall in US dollar is a bad news for US automobile companies or export companies. As the value of US dollar compared to other major currencies has fallen, the exporting companies have gained price advantage over other companies in the country with high currency. Also this will allow companies in the US to gain more control of the domestic market as other companies based on the country with high currency compared to the US dollar will lose a price advantage.

<A terrified Japanese man reluctantly trading US dollars for Japanese Yen>

Japanese exporting companies would be seriously concerned about this situation. As 40% of its economy is based on exporting, it is a serious matter related to the recovery of economic downfall in Japan.

• Euro breaks higher against US dollar

• Yen on the rampage

Good morning. Paul Bennett, professional standards director for Boots the chemist, has stirred up a hornets’ nest with his evidence to the House of Commons Science and Technology Committee yesterday. The committee is investigating the scientific evidence behind homeopathy. Dr Bennett said that, as far as he was concerned, there was none; ‘It is about consumer choice for us and a large number of our customers think they work.’ The media seem to think this is in some way dishonest, selling products simply because people think they will make them better. Do they have the same misgivings about the stuff people buy because they think it will make them look better? Or is the advertising revenue from the cosmetics sector too important?

No such cynicism could be attached to those selling the US currency yesterday. They were selling dollars not because there was a demand for them but because there was no demand. The dollar touched a trade-weighted 15-month low, collecting on the way a record low against gold, a 15-month low against the euro and a 14-year low against the yen. Once again the selling was driven more by sentiment than by the day’s ecostats. The figures were in fact perfectly tolerable. Initial jobless claims dropped below the half million mark. Personal consumption expenditure more than reversed last month’s slippage. New home sales jumped by more than 6% on the month. Consumer sentiment was revised slightly higher to 67.4. The only fly in the ointment was a -0.6% fall in the erratic durable goods orders.

But the dollar was on the retreat well before any of those data saw the light of day. Partly to blame was a comment in the Federal Open Market Committee minutes that the dollar’s recent decline has been ‘orderly’. The inference is that the Fed is relaxed about a weakening dollar and the market is willing to oblige, just as it was after the Bank of England said similar things about sterling. It did not help when the Russian central bank said it would in future hold some of its reserves in Canadian dollars. The US dollar’s fate was sealed in the late morning when the euro broke above the technical and psychological resistance that had been sitting on it for the last two weeks. Subsequent price action suggests consolidation in preparation for the next big push to the record highs of last summer.

Sterling began the day looking good but it cast a shoe when the revised figures for third quarter gross domestic product came out. Officially, everyone expected an improvement from -0.4% to -0.3%. Secretly, they all thought the initial -0.4% estimate had been way too low and they were hoping for something a lot closer to zero. When all they got was -0.3% as promised they were downcast and so was the pound. Later in the morning the pound took collateral damage when it was left behind as euro/dollar jumped ahead.

This morning the yen has been monopolising the headlines. The minutes of the Bank of Japan monetary policy meeting reveal it is clearing the way for another round of emergency asset purchases. Left unclear was whether the BoJ really intends to go ahead with the programme or if it is just paying lip service to the government’s demands that it do something about deflation. For the government itself, cabinet secretary Hirano and finance minister Fujii both said they were watching the value of the yen ‘very closely’, Tokyo-speak for ‘very nervously’. Fujii San also said he would ‘take appropriate action against abnormal movements’ but the market seems not to be taking him seriously as long as dollar/yen remains above 85.

The thanksgiving holiday and the de facto long weekend that it brings should make for quiet afternoons today and tomorrow. There are no US data between now and Monday and only one – today’s CBI distributive trades survey – from the UK. Overnight we have seen a five-point fall in New Zealand business confidence and a 4% quarterly fall in Australian private capital expenditure which help to explain why the antipodean dollars are looking less perky today. Other than that, all that remains on the agenda is Euroland money supply and German inflation.

MoneyCorp

With the US traders away from their desks for the next two days I was expecting few trading opportunities due to the reduced volume. Oh how wrong was I, trade what you see and not what you think was spot on today.

Overnight the Japanese Yen pairs had put in some big moves, GBPJPY and EURJPY both falling 200 points and USDJPY falling 100 points. Noticed at 6am on the 5 min chart a double bottom forming on the JPY pairs and quickly placed a trade on USDJPY. Price action ran into the big number of 87.00 and started to roll over, so closed the trade for 30 pips profit.

The 7am trade on GBPUSD was then next thing on my radar, but with the two big seller candles just before 7am I was THINKING that the move had already started. But then we had some buyers entering the market giving a temporary lift to the price, but with the sellers still winning the battle of this candle, it left a gravestone doji indicating some more downward pressure ahead. So the trade was entered on the break of this candle and it fell quickly to the 20 pip target level.

The GBPUSD started to consolidate on the 5 min chart, offering another trading opportunity. Waited for the candle to close below the support level and entered the trade. Price quickly fell through my target of the big number at 1.6600 and closed the trade for 30 pips of profit.

7:35 my daily target hit and I am done for the day.

Learning Points

1: Trade what you see and not what you think.

2: The price action is the most up to date information available to traders.

Quote of the day from Warren Buffett

Wall Street is the only place that people ride to in a Rolls Royse to get advice from those who take the subway.

The Dollar Bubble starring Peter Schiff, Ron Paul, Marc Faber, Gerald Celente, Jim Rogers, and others.

Hello Friends here we come up with the Latest Agri Commodities updates from various parts of the globe.

Bull run in commodities may continue

Bull run in commodities may continue:

Spurt in prices to be driven by dollar weakness, rise in demand and low supplies.

The global bull run in commodities is likely to continue through next year due to dollar weakness, supply restraint and, eventually, a pickup in demand.

Crude oil prices are also up 74 per cent, but the energy complex as a whole is down, as natural gas prices are weighed down by massive oversupply.

Precious metals have also risen 37 per cent.

The base metals complex has performed well this year, driven by the rebound in growth in China, although some of the increased demand has gone into inventory.

Sugar and soybeans have been the exception in 2009, rising sharply while the rest of the agricultural complex underperformed.

This was largely on supply issues; improved crops in 2009-10 are expected to flood the market, dampening prices.

In Other major Commodities Updates we can read about Govt estimation about the Edible oil output which says that Edible oil output may dip 7.4% in 2009-10.

Edible oil output may dip 7.4% in 2009-10:

The government today said edible oil output is likely to decline 7.4 per cent to 7.96 million tonnes in the 2009-10.

Edible oil production, last year, stood at 8.6 million tonnes.

Oil season runs from November to October.

Production/net availability of edible oil from all domestic sources is estimated to be 7.96 million tonnes in the 2009-10,” Minister of State for Agriculture K V Thomas said.

The demand of edible oil in the country is estimated to have increased to 17.79 million tones this year, he said.

The domestic edible oil production is likely to decline following a dip in oilseeds production, which is estimated to be 15.23 million tonnes in the kharif season against 17.88 million tonnes in the last season, the official data showed.

Thomas said, “There is a wide gap in the production and demand of edible oil in the country and imports are resorted to bridge the gap.”

Note : For More Latest Industry, Stock Market and Economy News and Updates, please Click Here

Big Trouble In Big China

Courtesy of Karl Denninger at The Market Ticker

Gee, you just figured it out?

“Capital losses — let alone obtaining decent returns — seem inevitable,” said Yu, a member of the Chinese Academy of Social Sciences. “There is no question whatsoever that the U.S. dollar will go south, which started in April 2002 and, after a short interval, restarted in March 2009.”

Yep.  How big a loss?

A 10 percent slide in the greenback would cut the value of China’s dollar-denominated assets by about 1.5 trillion yuan ($220 billion), exceeding Chinese central government spending under the nation’s $586 billion stimulus plan, Yu said Oct. 28 at a forum in Beijing.

Eek.  That’s not going to be tolerated.

Uh Ben?  Oh Mr. Bernanke!  You know those zero interest rates?

Yeah, those.

Gee, you think that – and provoking Treasury into issuing oodles of debt into them – might have anything to do with this?

"I like to be kissed before you do sex to me!"

Anyone care to guess what China’s willingness to continue to buy US Treasury Debt might look like?

That’s what I thought.

Macro

The Real War on Terror

Message from the Fed to the W-Shaped Evil-doers and Devilish Deflation-mongerers (courtesy of Winston Churchill):

We shall go on to the end, we shall fight in France,
we shall fight on the seas and oceans,
we shall fight with growing confidence and growing strength in the air, we shall defend our Island, whatever the cost may be,
we shall fight on the beaches,
we shall fight on the landing grounds,
we shall fight in the fields and in the streets,
we shall fight in the hills;
we shall never surrender… 

Now, that’s fighting talk! It might as well have been the Bank of England’s Mantra on Deflation.

That’s all very well but is it just me or is there a worryingly ominous deflationary creep encroaching into our investment psyche?

• The “Depressionists” are back in vogue.
• Auto Sales fell off a cliff after the cash for clunkers program expired.
• The Japanese economy once again failed to reach the, now seemingly mythical, escape velocity and once more slips back into deflation.
• US GDP growth was revised down at +2.8% this week, much lower than the +3.5% originally reported. David Rosenberg thinks that this number would actually have been negative were it not for the carpet-bombing of cash and spending administered by the Government and Fed. “Is that all I get for my money?” he scoffs, quoting a Billy Idol Lyric.
• Meredith Whitney says that she has “never been this bearish in over a year” and (more significantly) that she “has never seen this level of credit contraction”.
• Mervin King unveiled the startling revelation that the BoE actually secretly bailed out two of Britain’s largest banks.
• US initial jobless claims have only just managed to breach less than half a million joblosses a week and chatter over Wage Deflation has resurfaced.
• Mauldin muses the over-crowded “sell treasuries” trade – a yield curve which this week yielded negative at the short end, and even entertains the notion of “value” in a market where 5 year US government bonds which yield less than 2.5%. I can’t help feeling reminded of the old Japanese government bond traders’ motto at the height of their deflationary despondence: “Never go home short government bonds”.
• Bankruptcy Filings are up 34% YoY.
• BNP US Economist talks about slack in the economy drowning out any notion of an inflationary tailwind:  deflation is their immediate forecast. While Asia did not decouple coming into the crisis, the French bank’s Chief Economist admits it is almost inevitable that Asia (in particular China) will decouple coming out of the crisis, leaving the rest of the World to languish in depression and muted growth.

Despite the heaviest artillery since Adolf Hilter rolled out the Bismarck, there is doubt as to whether the Fed’s Naval Fleet has the arsenal to blast the terrifying and disturbingly immovable object of looming deflation. The Rumsfeld-esque “Shock and Awe” guerilla raids on the Monetary Base and mezmerizing propaganda from the body politic go only so far before the awe is no longer awesome and the shock ceases to be shocking. That  may be flooding the engine and drowning in liquidity.

Inflation-ites beware; the Mission is NOT yet accomplished. We fight an elusive enemy which lurks in caves and the dark shadows of your consciousness, the Jury is still out as to whether “The War on Deflation” is actually over.

Macro Data to Watch

• Happy Thanksgiving!
• German CPI

Markets

Oh dear me. The Dollar got spanked overnight, the Euro traded above 1.50 again and the DXY dollar index hit a new low capitulating through 75 (see chart of the day below).

Source: Bloomberg

The Dollar-Yen waltzed through 88 then susequently plummeted to its lowest level against the Japanese Currency since 1995.

The Swiss Franc broke parity (1.00) on the Dollar – a Dollar bill now will not even get you a single, solitary Swiss Franc… if the Greenback breaks 0.98 it will be the lowest level against the Swiss currency since… … wait a minute, since the beginning of time!

Global Stocks to Watch

• Chinese B-shares bounced last night – but the volatility remains.
• Asahi Glass comes out with $1billion convertible bond issue – CB investors are getting skittish into year end, this deal will have to be priced cheap!