Tag Archive | "Debt Ceiling"

Tags: , , , , , , , , , , , , , , , , , , ,

USD Confidence Falls: UK Hits Highs


US equity and currency markets turned lower overnight in the face of political bickering about whether the US government should pay its bills. All three major equity markets turned down at the open on Friday and were poised to give back Thursday’s gains by 10:00 a.m. The dollar also gave ground against a number of currencies despite weakening banking news in Europe and uneasiness in Japan.

In the US, Senators Ted Cruz and Mike Lee continued their stall tactics, defying Republican leadership, and slowed the vote on the debt ceiling-Obamacare defunding bill forwarded by the House. This, in turn, will slow appropriate revisions to be returned to the House that would keep the government open. The delay tactic increased the likelihood of a government shutdown and put the debt ceiling, which will expire on October 17th, into crisis mode.

Investors are not amused. After good employment news on Thursday, The Consumer Confidence Index missed expectations on Friday coming in at 77.5, the lowest level since April 2013. Meanwhile, consumer confidence in the UK was at its highest level since 2007 and even uneasiness in the European banking sector kept consumer confidence in the euro zone higher than in the US.

In early morning trading, the Dow was off 95.05. The S&P 50  was down 9.86 and Nasdaq was 16.33 points lower.

Discord Over European Bank Stress Tests

The euro zone intends to submit its banks to controversial stress tests as a first step in solidifying the region’s banking sector. Capital infusions enabled US banks to reboot their capital reserves but in Europe there is no backstop to ensure that banks are adequately capitalized. This has caused a general tightening of credit markets in the euro zone’s more tenuous economies.

Credit markets in Greece, Italy, Portugal and Spain are frozen. As a result there is virtually no growth in these countries and unemployment remains at record highs.

The stress tests are regarded as important to stabilize international markets and currencies. However, after the stress tests are performed, there is no plan in place to remedy shortfalls. Many banks in the region have insufficient reserves. The net effect of the stress tests will be to highlight weaknesses in the banking sector with no plan to remedy the reserve shortfalls.

The tests administered by the ECB, the European Banking Authority (EBA) and the EU will reportedly be stringent. The ECB will be focused on the euro zone’s biggest banks. The model will be used by the EBA to test the remaining banks in the euro zone through a program known as the Asset Quality Review.

Europe’s top 42 banks are 70 billion euros below new international capital norms. However, analysts suspect that the problems are much bigger ion the euro zone’s smaller banks.

Euro zone purse strings are controlled by Germany who is opposed to the construction on a region-wide re-capitalization plan. Without such a plan, the stress tests will put pressure on governments in the area to boost the banks.

The prognosis is that the absence of testing gives the banks a grace period but the day of reckoning is on the horizon.

Currencies

The USD was down 0.1 percent against a basket of currencies. After gaining 0.3 percent on Thursday.

The biggest move of the day came from the UK where British sterling was up 0.4 percent at $1.6096. The UK recovery appears to be gaining momentum.

The dollar did not fare well against the euro ($1.3558) or the yen 98.280.

Yield on the 10-year Treasury continued its trend toward 2.5 percent and was at 2.62 percent early Friday.

Forex Trading Articles by Forex Blog & Online Forex Trading

Posted in Forex Trading NewsComments Off on USD Confidence Falls: UK Hits Highs

Tags: , , , , , , , , , , , , , , , , , , ,

No Cruz Control: Markets Nervous


Texas Tea Party Senator Ted Cruz finally ended his 21-hour-19 minute self-promotion at the expense of the US taxpayer and global markets on Wednesday at noon. His nonsensical attempt to establish himself as a Tea Party Presidential candidate most likely eliminated any chance Cruz has for being regarded as a serious candidate in 2016.

Cruz’s stalling tactics on the Senate floor included such lofty pursuits as improving his ability to read Dr. Seuss. American taxpayers and global investors were left shaking their heads at the ludicrousness. Once again the contrarian and obstructionist policies of the radical right wing Tea Party came at the expense of the public good and the GOP brand.

With a possible closure of the government in the balance, Cruz first encouraged House Republicans to pass a bill that would defund Obamacare and later acknowledged that the legislation was doomed from the beginning. In efforts to save face and assert himself as a Tea Party favorite, Cruz launched his 21-hour self-serving initiative.

With many senior Republicans opposed to Cruz’s stall tactics, the Republican party appeared more divided than in the past, suggesting that the only way to get meaningful legislation in Washington was for centrists from both sides of the aisle to bond. Bystanders had to question Cruz’s motives. Many Independents and Democrats believe that what conservatives fear is that Obamacare may in fact trim the cost of healthcare and be a successful program.

What makes Cruz’s childish performance more puzzling is the fact that he represents a state with the highest number of persons without health insurance. It is clear that Cruz’s presidential aspirations surpass his willingness to represent the best interests of his constituents. Instead, Cruz is following the big money that Tea Party supporters pile into American politics.

Global Equities Nervous        

The debt ceiling increase has global markets on edge and Cruz’s grandstanding did nothing to calm US or international markets. US equities lost ground for the fourth consecutive day as investors considered the possibility of a government shutdown and default.

Republicans deployed the same strategy in 2011, causing a downgrade of the nation’s credit and billions of dollars in increased borrowing rates. The 2011 debt ceiling strategy unnerved consumers and investors alike.

Treasury Secretary Jack Lew advised Congress that the government would not be able to borrow funds after October 17, when government coiffures would only have about $30 billion. If the debt ceiling is not raised, several important government agencies will not be open for business on October 1.

On Thursday, conversation pointed toward a short-term extension of the ceiling while the House and Senate try to hammer out a longer term deal. It is expected that the Senate will strip the defunding of Obamacare provision and send the debt ceiling increase back to the House on Saturday, giving House Majority leader the opportunity to put the stripped down version to a vote.

However, Boehner may or may not bring the Senate’s bill to the floor. House Republicans are meeting Thursday to strategize. Weakened by Cruz’s performance, most analysts expect the House to pass a temporary quickly but American taxpayers have learned that their government is paralyzed by the most dysfunctional Congress in the history of the nation.

According to a New York Time poll, 80 percent of Americans say it is unacceptable for Congress or the president to threaten shutdowns during fiscal negotiations.

Investors and Taxpayers Uncomfortable

Secretary Lew emphasized that if the government becomes unable to pay its bills, the consequences would be catastrophic. Historically, debt ceiling negotiations have a negative effect on equity markets.

On Thursday, the FTSE 100, Germany’s DAX and France’s CAC 40 all opened lower. Equities in Shanghai and Singapore also opened lower.

On Wednesday, the DOW was off 0.4 percent, the fourth consecutive down day. The S&P 500 lost 0.267 percent, its fifth straight losing day.

The dollar posted modest gains against the yen (98.92), euro ($1.352) and British Sterling ($1.6027). Yields on the 10-year Treasury hovered around 2.64 percent.

Forex Trading Articles by Forex Blog & Online Forex Trading

Posted in Forex Trading NewsComments Off on No Cruz Control: Markets Nervous

Tags: , , , , , , , , , , , , , , , , , , ,

Summers Out, Wall Street Up


Faced with a grueling confirmation process that appeared likely to come up short, Lawrence Summers bowed out of the race for the Chairmanship of the Federal Reserve. With Chairman Ben Bernanke’s tenure set to expire in January, the new frontrunner for the post is Janet Yellen, considered a stimulus tapering dove by most observers.

Wall Street greeted the Summers withdrawal with enthusiasm pushing early morning markets to robust highs before settling in the wake of the Navy Yard shootings in Washington. Markets were lukewarm to Summers, thought to be a hawk or more aggressive about tapering.

In the wake of the announcement, equities climbed and the dollar slumped as CME Group’s Fed Watch projected A 55 percent probability rating that the first rate hike would be in December 2014. January 2015 had a 68 percent probability rating. Before Summers’ withdrawal, traders indicated that the first tapering would take place in October of this year.

Summers was most likely guided by an announcement after trading hours on Friday that four Democratic Senators on the Senate Banking Committee would be voting against his confirmation. When Montana Senator Jon Tester stated his opposition, the die was cast.

Obama Addresses Upcoming Debt Ceiling Talks

President Obama told the public that he will not negotiate with Congress regarding the upcoming debt ceiling increase that could expire as of October 15, 2103. Republicans in Congress have used the debt ceiling to extract a heavy price in the past but with an election year coming up, the President appeared unlikely to give in to Republican demands.

If the extension is not passed and if the President does not bend, the government will be shut down. If the public perceives Republicans are to blame, the precedent of the mid-90’s would favor Democrats in the 2014 elections.

The current debt ceiling limit is $16.7 trillion. Republicans continue to want to include revisions to Obamacare as part of an extension.

On Monday, Obama said; “Let’s stop the threats. Let’s stop the political posturing. Let’s keep our government open. Let’s pay our bills on time. Let’s pass a budget. I will not negotiate over whether or not America keeps its word and meets its obligations. I will not negotiate over the full faith and credit of the United States.”

Currency Markets Move

The dollar index slipped 0.2 percent against six major currencies to 81.273.

The dollar lost 0.2 percent against the yen to 99.12 after rallying from the low of the day 98.48. The dollar hit its lowest level against the yen since September 6, 2013.

The euro climbed to $1.3336 after reaching a three week high of $1.3385 earlier in the session.

The strongest currency against the USD was the South African rand which jumped 1.8 percent against the greenback.

Speculation prevailed that the first round of easing under a Yellen leadership would be $10 billion per month.

Forex Trading Articles by Forex Blog & Online Forex Trading

Posted in Forex Trading NewsComments Off on Summers Out, Wall Street Up

Tags: , , , , , , , , , , , , , , , , , , ,

Bonds Rise, Equities and Dollar Blink


Investors reflected the tension of another week of possible air and missile strikes against Syria and a disappointing US jobs report that conflicted with big strides by the auto industry posted earlier in the week. The American consumer seems to be bucking the odds. The Fed’s unclear policy regarding tapering of its $85 billion per month bond purchasing initiative posed a muddled backdrop for the instability of important legislative actions that should soon be addressed.

The return of the country’s most ineffective and most unpopular Congress is likely to push the nervous investor to the sidelines. The House and Senate are due to not only deal with the Syrian crises but must also address the debt ceiling. How Congress will resolve the nation’s debt will certainly keep nervous investors on the sideline until some resolution is reached. The way this Congress malfunctions makes it hard to say what the outcome of the debt ceiling debate might be.

The Fed’s tapering policy is another unsettling factor. Most investors believe the Fed Reserve will pare spending by between $10 billion and $15 billion per month effective later this month. The Fed will meet on September 17th and 18th. This reduction should add strength to the dollar but may undermine equities.

What is clear is that third quarter employment lacks the strength that analysts has expected. Some analysts cite Obamacare and the congressionally enforced sequestration as contributors to sagging employment. The third quarter was expected to be strong after a lackluster 2nd quarter.

US Labor Department’s Non-Farm Payroll Report

A day after the ADP employment report indicated job growth in the private sector during August of 176,000 jobs, most economists predicted that the non-farm payroll report would surpass those expectations adding about 190,000 jobs. Instead the non-farm payroll report for August indicated gains of 169,000 new workers.

The biggest disappointment came from revisions to June and July reported data. Downward revisions subtracted 74,000 jobs from the two monthly reports. Disappointing new construction statistics caused significant declines in new construction employment. Auto employment also was lower than expected.

The most consistent theme to the non-farm payroll report is the ongoing paring of jobs in the public sector. Local, state and national government employment continues to reflect ongoing trimming. Government employment has shed more than 2 million jobs since the outbreak of the recession.  Yet, in August, a rash of teacher hirings pushed government employment up by 17,000 jobs.

The August non-farm payroll report caused the unemployment rate to fall one-tenth of one point to 7.3 percent, the lowest rate since December 2008. The participation rate struck its lowest mark since August 1978. The participation rate for men hit an all-time low.

After upward revisions, GDP grew 2.5 percent in the second quarter. The third and fourth quarters were expected to be even stronger. Now, it appears economists will be sharpening their pencils for the remained of the year.

The jobs report had elements of gain. August average hourly earnings improved over July. Earnings rose five cents making the gain over the past year a 2.2 percent gain.

The length of the average workweek also improved. The average workweek nudged ahead to 34.5 after hitting a six-month low of 34.4 in July.

Equities, Treasuries and The Dollar

The Dow Jones slipped in late Friday trading. The S&P 500 posted a nominal gain as did the Nasdaq. The MSCI’s World Index, which gauges 45 countries, rose 0.6 percent as the FTSEurofirst 300 also climbed 0.5 percent.

Equity markets fluctuated after mixed messages from Russia’s president Vladimir Putin who said Russia would support Syria if the US struck. Later, Putin clarified his remarks to indicate that Russia would not intervene but would continue to ship weapons to the besieged nation.

As Congress debates the proposed attacks, the decision by the President to send the final decision to Congress appears a heady political maneuver. Polling indicates that the citizens oppose US involvement in any capacity. Congressmen who vote for the strikes may pay a steep political price in the next election.

The USD weakened on Friday. The euro was up 0.4 percent to $1.3168. The dollar was off against the yen, settling at 98.89 yen. The dollar index .DXY settled at 82.1884, down 0.5 percent.

Forex Trading Articles by Forex Blog & Online Forex Trading

Posted in Forex Trading NewsComments Off on Bonds Rise, Equities and Dollar Blink

Tags: , , , , , , , , , , , , , , , , , , ,

US Equities, USD Sagging


US Equity markets looked to post solid losses on Friday as the USD gave ground to a stronger yen and a stronger euro. Trading is typically light in August and Friday was no exception but an emerging trend is that as the yen gains strength, US equities pay the price by sinking values.

The US economy, which has been projected to grow by a better-than-expected 1.7 percent in the second quarter will come under scrutiny after new data from the US Commerce Department. On Friday, the agency reported that US inventories fell for the second consecutive month. After a sharp decline of 0.6 percent in May, wholesale inventories were expected to bounce back at 4 percent but instead shed another 2 percent. This is likely to give economists concerns about their second quarter projections.

However, trade data released on Thursday revealed a much narrower deficit than was expected. This data suggested that GDP might be stronger than anticipated. Some experts had projected second quarter growth of 2.5 percent.

A breakdown of inventories, excluding automobiles, was flat. In June, sales would have cleared the shelves in 1.17 months compared to 1.18 months in May. June sales increased a modest 0.4 percent after a nice 1.5 percent gain in May.

The Federal Reserve

Mixed statements from Federal Reserve Presidents have unnerved investors and weakened the dollar. At question is when  the Federal Reserve will begin its tapering of the $85 billion monthly bond buying initiative. At the core of the dilemma about slowing the bond purchases, is the true strength of the US economy. The bond buying has created an economy reliant upon this initiative and has strengthened US businesses without creating significant growth.

Meanwhile, a totally ineffective US Congress is on vacation but will soon return to debate a number of important economic issues, including the extension of the country’s debt ceiling. In recent years, this debate has been a political football and there is so little harmony in Washington that the outcome of these debates is sure to cause another media fiasco that drains the consumer and discourages business.

China Bounces Back

China is in the midst of trying to reverse an economy that has slowed in nine of the last ten quarters. Factory output, in China in July, increased by 9.7 percent, well ahead of projections. Retail sales grew a strong 13.2 percent while inflation remained flat.

Equally important, China’s exports, released Thursday, pointed to solid gains in the country’s export trade. This reverses weak numbers from each of the past five quarters.

The improved data from China helped to push oil prices to $107 per barrel. On Thursday, prices touched their lowest levels since July.

The USD, The Euro and Canadian Dollar

The surprising euro continues to rise in the wake of the Federal Reserve’s unclear position. Investors have been buoyed by improved data from Germany and from other Eastern European partners. The euro hit a seven week high against the dollar at $1.3380. The dollar fell to its lowest level in two months against a basket of currencies.

The 10-year Treasury was yielding 2.58 percent on Friday. That marks the lowest yield this month.

In Canada, the domestic employment data indicated high unemployment and few job opportunities during what is usually a strong employment period. The economy shed 39,400 net jobs in July.

The Canadian dollar fell to 96.91 cents against the greenback. The Canadian two-year bond was yielding 1.129 percent while the ten-year rose to yield 2.490 percent. However, investors feel Canada faces a myriad of challenges including the determination by the Federal Reserve. The strength of the tourist industry appears to be disappointing this year and plays an important part of the Canadian Gross Domestic Product.

Forex Trading Articles by Forex Blog & Online Forex Trading

Posted in Forex Trading NewsComments Off on US Equities, USD Sagging

Tags: , , , , , , , , , , , , , , , , , , ,

Euro Slides, Dollar Rises, Italy Plays With Fire


On Friday, the euro fell to its lowest rate against the USD since January 10 and to its lowest point against the yen in three weeks. A number of factors came together to keep the euro in a steady slide and the yen on a steady rise.

In Europe, the euro zone’s 17-member nations released economic information that painted a bleak picture for the region during 2013. Only Germany seemed to discount the overwhelming evidence of another recession. The German confidence index climbed for the fourth straight month, despite a dismal finish to 2012 and data suggesting manufacturing in the country and the region was dialing down.

The euro fell to $1.3166, well below the 15-month peak of $1,3711

The euro fell to 122.23 yen, down  1.4 percent

The dollar index struck a five-month high at 81.508.

In addition to projections that euro zone unemployment would remain in the 12 percent range for 2013 and that Spain’s unemployment rate would stay at 20 percent, there were other factors that are too unsettling to overlook. The ECB had anticipated banks would  pay back 131 billion euro of borrowed funding but fell far short of the mark, repaying just 61 billion euros on Thursday.

Spain announced the country would fall far short of its debt reduction goals in 2012 and well below euro zone requirements. The events in Spain and Italy should be observed by US politicians as examples of what happens when politics and economic concerns face off against each other.

Recent production numbers from the US indicate that businesses are uneasy about how politicians will handle the sequestration due to fall off the March 1st cliff on Friday, March 1, 2013. Coupling this event with the upcoming debt ceiling expiration, the stage is set for a perfect storm that will leave the middle class crippled and the country mired in what will surely become another recession.

And, the political rhetoric in Washington marches on.

On Thursday, minutes from the Federal Reserve’s January meeting were released. The possibility that the Fed will raise interest rates earlier than expected strengthened the dollar against the declining euro.

In addition to the economic woes in Europe, the political theater is unnerving economies outside the region. The amazing but disturbing popularity of Italian bad boy and financial nightmare Silvio Berlusconi have shaken confidence in Italy’s future and thus the future of the euro zone.

Is it possible that the regions third largest economy could turn a blind eye to the unscrupulous Berlusconi? Apparently so as the former Prime Minister is locked in a three way run between himself, current prime minister Mario Monte and Luigi Bersani.

Many economists hold Berlusconi responsible for the lax financial oversight that sank the nation’s economy. However, Italians seem to prefer the wayward ways to the disciplined approach to correction that Monti has advocated.

The euro zone produces 20 percent of the global output. The European Commission said that the euro zone will not return to growth until 2014, dimming hopes of China and the US for their export markets.

Across the region, consumer inflation could deal another blow to the economy. Projection call for an inflation rate increase to 1.8 percent in 2013.

In Washington, Congress returned and seemed undisturbed by the pending negotiations that could set the country back into recession in a very short time. The inability of Congress to put their political rhetoric aside and act responsibly has been repressing the economy since the fourth quarter 2012.

On Thursday, new unemployment claims surpassed analyst expectations as signs of the political weight on the economy continue to mount.

It appears President Obama will stick to his word on reducing spending and increasing taxes. Republicans can move to the middle or cause another economic collapse. If so, it may be 2014 before Democrats regain the house and finally accomplish meaningful legislation about jobs, guns and immigration.

 

 

 

 

 

 

Forex Trading Articles by Forex Blog & Online Forex Trading

Posted in Forex Trading NewsComments Off on Euro Slides, Dollar Rises, Italy Plays With Fire

Tags: , , , , , , , , , , , , , , , , , , ,

Fiscal Cliff Stalemate


Please forgive my political ignorance, but why do we not have a solution to the fiscal cliff? Just about every CEO in the country is pushing for a balanced resolution. The President returned to the White House with a clear mandate to raise taxes for 2 percent of the country. This concept is approved by more than 60 percent of the population, a larger percentage of the population than voted for the President.

John Boehner knows a compromise is needed and that failure will turn from the majority party in the house to the minority in the two-year House elections. Senate Minority Leader Mitch McConnell begrudgingly admits the Republican stance is too conservative. In fact, Boehner’s and McConnell’s jobs are reportedly on the line. The Tea Party is on trial and will render itself extinct if Republicans do not free up the economy.

For some reason, a group of Tea Party and Norquist Pledge supporters are still placing the welfare of the country ahead of their commitment to the people. I believe in the two party system but we should realize that there are three parties in Washington. The least effective lobby is the centrist Republicans. It will take these Republicans to pass the existing legislation that the Senate has passed and Republicans in the House refuse to bring to a vote.

Over the weekend, talk show television has been filled with discussion about the President’s proposed solution to the Fiscal cliff. Mainly, increasing the taxes on the country’s wealthiest 2 percent, about $400 billion in budget cuts, a request for $50 billion in job stimulus funding and that the debt ceiling limit not require congressional approval.

This is a framework that taxpayers at all levels understand and approve. It leaves social security, Medicaid and Medicare untouched, which is a legitimate problem for Republicans. McConnell threw in a few suggestions for these programs that make sense. He suggests raising the benefit age for social security and Medicare. McConnell also suggests higher Medicare and social security payments by the wealthy. And, he talks about cleansing the Medicaid and Medicare systems. These are valid points and while Obama won the Presidential election, he did admit that these programs need reform.

So, why can an agreement not be put in place immediately? Why do politicians feel it is necessary to drag things out to the last minute? Do we have to suffer this political theater at every turn? Is Washington so sheltered that they do not understand the problem or do our elected officials lack the courage to do what is right for the country? For the majority of House Republicans, embracing a balanced solution means reneging on the Norquist Pledge.

On Meet The Press, Senator Claire McCaskell asked, “who is Grover Norquist?” How could a person who is not an elected official have a death grip on the Republican Party and the nation. For two years, the 112th Congress, the least effective Congress in the history of the Republic, has held the American people hostage to their whimsical pledges.  It is time to own up to a failed agenda and get this country moving. The way our Congress acts is an embarrassment to democracy and the world. Who, in their right mind, would invest in a country that is who economy is handcuffed buy government?

Like it or not, President Barack Obama was re-elected. He is not going to be swayed from his campaign promise or from Boehner, whose credibility is already a hindrance, misleading and conflicting statements. The fact is Boehner cannot deliver his party to a meaningful compromise. Mrs. Boehner, Cantor, Mitchell and Ryan may well be burying their political aspirations because of cliff negotiations fail, they will be held accountable for the upcoming recession.

Forex Trading Articles by Forex Blog & Online Forex Trading

Posted in Forex Trading NewsComments Off on Fiscal Cliff Stalemate

Tags: , , , , , , , , , , , , , , , , , , ,

Danger Ahead For Media Driven Markets


On both sides of the pond, troubling economic news and disturbing political action and inaction continue to keep global equity, commodity and currency markets swirling in the makings of a perfect storm.  In these times of financial unrest, there are no corners of the globe that are not failing economically.

In The USA Today

The Greece debt crisis and the abundance of misleading and essentially meaningless rhetoric originating in the Euro Zone are taking a toll on every marketplace.  Today, the Euro Zone took on the look of the Lehman Brothers collapse as Belgium’s Dexia SA Bank said it did not have enough cash to continue operations.  This prompted the first official bank bailout in the region since Dexia needed capital in 2008.  The condition underscored a variety of potential collapses in the Belgian – French banking sectors.

The bank holds the equivalent of 3.3 billion pounds in Greek debt.  This revelation has shaken the Euro Zone as banks are becoming increasingly hesitant to lend to each other.  This condition has left finance ministers throughout the region gasping for air and unable to resolve the heavy financial and political repercussions.

Italy Credit Rating Falls 3-Levels

As European finance ministers met in Luxembourg to develop safeguards for their banks, Moody’s cut Italy’s credit rating by 3 tiers.  The credit ratings agency described the recent bond sales as a “material increase” in the finding conditions of debt-ridden Euro Zone members.

Coupled with the announcement by Dexia, the euro fell to a nine month low before a brief rally after the finance ministers revealed they were dealing with the banking crisis.  The debt ceiling has always been a banking crisis but now the cat is officially out of the bag.  Shares of Dexia fell 22 percent.

German Finance Minister Wolfgang Schaeuble issued this statement, “Everyone said the big concern is that worrying developments on the financial markets will escalate into a banking crisis.” Schaeuble added that countries agreed to produce reports about each nation’s banking situation.  This is information that should have been provided by the stress tests throughout the EU.  This is the second time the region’s banking stress tests have been misleading.

Greece 2011 Debt Level Released

On the brink of financial and economic failure, Greece released a report detailing its projections about the country’s 2011 debt.  The report offered little relief for concerned markets.  Greece’s debt is expected to amount to 8.5 percent of Greece’s GDP.

The country had previously agreed to cuts to trim the deficit to 7.6 percent of GDP.  Meanwhile, the country is rife with labor strikes and public unrest.  Unemployment is staggering.  Household income is at lowest levels in years and revenue is down.

Public debt is now projected to be 161 percent of GDP.   

As the complicated Euro Zone now stands, Greece is set to default in Mid-November unless the finance ministers and politicians can come together on a reasonable bailout plan.

The EFSF rescue fund is expected to broaden its powers and its spectrum by mid-October.  The EU is awaiting final approval by all the region’s parliaments to consider leveraging the fund and to consider issuance of Euro Zone bonds.   

However, the decisions and actions of the next 30 days may well seal the fate of the Euro Zone itself and the banking sector of the region.

The U.S. Gridlock Continues

On Wednesday the protestors are expected to hit New York City and Wall Street en masse.  The question is whether or not they are hitting the places?

The movement is inspired by persons form all walks of life and of all ages.  Their focus is clearly a protest of the financial activities that have driven the country to the nation’s worst economic crisis since 1929.  However, Tea Party activists are among the many protestors and there seems confusion about why these champions of free enterprise would assault Wall Street.

The President is out stumping his jobs bill as Republicans in the House refuse to bring it to the floor.  In the Senate, the usual bickering and inaction is underway as nothing gets accomplished.

Meanwhile, the brightest minds in the House and Senate that comprise then Gang of 12 will certainly fail to accomplish their financial cuts by mid-November.  This failure will trigger a round of cuts that could turn the economy from a mild recovery to a deep recession.

The Republicans cannot even agree on a Presidential candidate and one can only wonder how the Party will react to Mitt Romney or Herman Cain, who have not signed the volatile Norquist Agreement. 

Some GOP leaders are now jumping on the anti-Norquist pledges made by many Republicans who did not consult their constituents.  There is nothing more stifling in the gridlock process than the Norquist Agreement.  

The protest movement is expected to gain momentum. Perhaps as they grow, the movement will land in Washington on the steps on Congress.  As nothing else is being accomplished by the sanctimonious politicians, who call the hallowed halls their workplace, the protest movement will likely go unnoticed by Washingtonians.

In addition to the depths of poverty now swelling through every U.S. community and affecting a large number of innocent children, Congress refuses to act.  Politicians refuse to address the deepening caste system that was created and has been sustained by Republicans and ineffective Democratic leadership.

Forex Trading Articles by Forex Blog & Online Forex Trading

Posted in Forex Trading NewsComments Off on Danger Ahead For Media Driven Markets

Tags: , , , , , , , , , , , , , , , , , , ,

Consumer Confidence Shaken By Congress


The U.S. Consumer saw how Congress handled the debt ceiling and budget hassle and has turned its back on Washington and especially the Republicans who caused the lowering of the U.S. credit rating.  With Republicans already threatening to hold the taxpayers hostage over Hurricane Irene, the outlook is not promising.  Today, Republicans announced that no funding for repairs caused by the hurricane would be forthcoming unless dollar for dollar spending cuts were included.

Betrayed taxpayers feel the Republicans overstepped their bounds by agreeing to and signing the Norquist agreement opposing all tax increases.  Today’s Republicans illustrate further the gap between Washington and Main Street who is under the impression that government exists to serve the people and not the needs of special interest groups and the wealthy.

The time has come for Main Street to stand up and fight back.  This is, after all, taxpayer money Congress is arguing about.  That is the same money that provides Congressional members with unparalleled health benefits, state-of-the-art exercise equipment, oversized staffs, way too many vacation days and millions of dollars in other stipends.

If Congress is really serious about reducing spending, they could start with trimming their own hair and pockets.  They should decline meetings with special interest groups lobbyists and lead by example.  What is good for the goose is good for the gander.

Apparently taxpayers are not spending enough on a Congress with a 12 percent approval rating.  At least two Republicans charged their constituents an entrance fee at local town hall meetings.  Are you serious Paul Ryan? 

And, here Main Street was foolish enough to think these self- inflated egomaniacs were working for them.

Consumer Confidence Downward Spiral

It should be no surprise to anyone in Washington that consumer confidence plunged to its lowest levels since the recession supposedly ended.  Americans have been shaken by Congressional behavior.

The Conference Board reported today the consumer confidence index fell plunged to 44.5, the lowest level since April 2009.  In July the index was 59.2.  As Tom Porcelli, an economist at RBC Capital Markets said, “What we are effectively going through is a crisis of confidence.”

The Labor Department is due to release their official non-farm payroll report on Friday.  If that number rises above 9.1 percent, grab hold of your equities and run for the door. 

With President Obama fine-tuning his jobs bill, to be delivered in early September, the rhetoric has already begun. The frustration is showing on the President’s delivery and his appearance.  The frustration is well founded because most Americans feel that no matter what Obama puts on the table, it will be denied by the House.

Main Street wants the President to put a jobs bill on the table and, if needed, include revenue increases. We then want the President of the People and for the People to stand firm and let the Republicans show their disdain for Main Street.  This may just the formula we need to effectively re-elect Obama and get a larger majority in the Senate and close the gap in the House.

This may also be the impetus to end the ridiculous presidential runs by Tea Party glad-handers, Perry and Backmann.  What a shame! 

House Prices Fall Again   

The S&P Case-Shiller composite index of 20 metropolitan areas slipped another 1 percent form the previous month.  Factors contributing to the deterioration of Main Street include ongoing foreclosures, an excess inventory of existing homes, a tough credit standards and weak demand.

As June is regarded as one of the most active months for National Association of Realtors transactions, the stagnant move undermines any growth in GDP.

Forex Trading Articles by Forex Blog & Online Forex Trading

Posted in Forex Trading NewsComments Off on Consumer Confidence Shaken By Congress

Tags: , , , , , , , , , , , , , , , , , , ,

Look Back To See The Future


An announced merger between two of Greece’s largest banks was greeted with enthusiasm across global equity markets.  In the U.S. the S&P 500 jumped 2 percent.  Last Friday, Fed Chairman Ben Bernanke delivered a straightforward statement that pressures the private sector and government to come together on job development initiatives.

However, soon the Republican members of the House and their Democratic counterparts will return from an undeserved vacation.  The political posturing and spin has already begun and it does not sound good for the taxpayer, who is far down on the political food chain.

President Obama is due to release his initiative for a comprehensive jobs bill that will assist the recovery and lower the unemployment rate.  Anything the president suggests will be met with stubborn resistance and the same quagmire that caused the reduction of the country’s credit rating will rise to the fore.

Brave Congressman went home to town hall meetings that were filled with angry and frustrated taxpayers and voters.  One of the more memorable confrontations occurred when a member of the audience questioned his Republican Congressman asking, “Are there any other agreements like the Norquist agreement that your have endorsed on our behalf?” The questioner should have added “and without our permission.” 

It was a telling question to a Republican House that has not provided any jobs plan and is now threatening to deny millions of Americans extended unemployment benefits.  As Eric Cantor expressed, “these people don’t want unemployment, they want jobs.”  That is true, but his willingness to do develop a jobs program is non-existent.  As the Leader of the House admits, he is more interested in denying Obama a second term than he is about providing jobs to a needy economy.

The tone of the Congressional hearings about the increase of the debt ceiling has tarnished America’s image and our standing in the world.  Boehner and Cantor are two big reasons for the collapse of the dollar and for the disastrous credit rating fiasco.  Unfortunately, these ideologists will be back representing their unscrupulous party.  The most recent MSNBC and NY Times survey released today shows that Congress has a 12 percent approval rating; just what we need in our darkest hour.

It is not in the composition of this Congress to do anything more than blatantly display and spread their dysfunctional nature.

After Bernanke’s most recent address, the dollar continued its trend southward.  As expected, Bernanke said that a stimulus program (QE3) was not merited at this time.  The topic has been a source of disagreement between Federal Reserve Board members.

Last week the Swizz franc had the largest drop of any currency compared to the euro.  Is that possible?  The Swiss franc has been a standard of safety for more than a year and prior to Monday’s news, the euro appears on life support, which includes a ban on short sales. 

The dollar fell for a second straight week against the 17-nation euro.  In fact, the dollar fell against 10 of its 16 major counterparts, dropping 0.7 percent against the euro.  New Zealand’s currency rates jumped 1.7 percent against the dollar, while the Canadian currency jumped 0.9 percent for its first increase in five weeks against the USD. 

Remarkably, the euro has appreciated by 0.6 percent over the past three months.  While the euro zone is far from resolving the PIIGS crisis, at least there appears a spirit of cooperation.  That spirit may cost German Chancellor Angela Merkel her job but she has shown courage in hard times; courage that Republicans need to muster.

The dollar’s fall is attributed to slower than expected growth.  How any growth could be realized under the current Tea Party controlled Congress is a serious dilemma. 

Franklin Delano Roosevelt once said, “The country needs and, unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it: If it fails, admit it frankly and try another. But above all, try something. The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach.”

The United States needs to learn from FDR’s statement.  It is now time to make your voice heard.  Call your Congressman and raise a protest and demand straight answers.  If those answers are not sufficient, we shall soon be storming the streets as our counrtuy collapses around us. 

It is comnfortiung to know that lobbyists are already courting the group of 12 that is mandated to trim $1.7 trillion in spending cuts.  Frankly, if the lobbysists left town for a couple months, we might get something done in Washington.

Forex Trading Articles by Forex Blog & Online Forex Trading

Posted in Forex Trading NewsComments Off on Look Back To See The Future