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A Day in the Life of the Market~ Significant Implications for All
Euro President Trichet said Debts on both sides of the Atlantic are unsustainable.
The next significant item to report today is that although the Big4 are currently short the US Dollar, commercials have been covering their shorts.
A short-lived dollar carry trade (borrow dollars close to zero percent to buy stronger currencies or riskier assets in emerging markets) may be reverting to the Japanese yen, which after two lost decades, is beginning to be hit by falling trade and budget surpluses.
The seven-year Treasury auction today closed at 3.127%, higher interest rates competing with big tech stocks.
In related vital credit solvency news, Standard and Poor’s today stated We No Longer Classify The U.K. Among The Most Stable And Low-Risk Banking Systems.
S&P cited the country’s weak economic environment, the reputational damage we believe has been experienced by the banking industry, and what we see as the high dependence on state-support programs of a significant proportion of the industry. After declining bonds, real estate and stocks on both sides of the Pond, can America be far behind?
Nobel Laureate Economist Joe Stiglitz commented today on the State of the Union address citing the end of government stimulus. He noted banks on welfare without requirements to lend had a zero if not negative return. Dr Stiglitz noted banks borrowed at close to zero rates to invest overseas in emerging markets, further damaging the American economy and jobs. Of course we like the idea of centrally planned economies less than most, noting their poverty enhancing results in East Germany, Japan, North Korea, the Soviet Union, and the People’s Republic of China before it became a Rockefeller Trilateral ward at the expense of the American State.
Of particular interest as the NYSE reported price data outages for several hours, meaning stale quotes. The market discounts uncertainty, usually lowering prices to increase returns.
The media time to sell a home increased 50% over last year to a record 13.9 months. Meanwhile, initial claims for unemployment, a leading indicator, hit a record high in California, itself the 8th largest economy in the world, a leading indicator for the rest of America, if not the world.
