Japan's huge budget gamble will push up global interest rates
It’s a desperate gamble but Japan’s Democratic Party government, headed by Prime Minister Yukio Hatoyama, doesn’t have much choice. To break the hold of deflation on the Japanese economy, the country has to spend money—lots of money—it doesn’t have to stimulate an...Deflation's back in Japan–and why investors should care
Deflation has returned with a vengeance in Japan. And we’re not talking about some short-term dip in prices either. The Bank of Japan is forecasting that prices in Japan will fall by 1.5% this year, by 1% in 2010, and by 0.7% in 2011. So much for any recovery in the...Greece is the word in today's selling
This shouldn’t have come as a surprise, but apparently enough investors were still not expecting it so that Standard & Poor’s downgrade of its credit rating on Greece has pushed down global stock markets. Today, December 17, S&P cut Greece’s credit rating one...A rising dollar stalls all boats (so far)
The rising dollar (and the falling euro and yen) has been enough to stall the emerging economy stock markets that have outperformed the U.S. Standard & Poor’s 500 stock index since this huge rally began on March 9. The “stall” is just that. Emerging economy stock...The euro crisis just keeps getting worse
In the global ranking for economic acronyms countries want to be a BRIC. The group of Brazil, Russia, India, and China is seen as the world’s most vibrant economies and engines of global growth. And countries don’t want to be one of the PIIGS. The group of Portugal,...The yen looks headed to replacing the dollar as the world's weak currency of choice
Trying to figure out whether the dollar is headed up or down over the next six months? That’s not exactly a purely academic exercise since a rising dollar has been linked lately to falling stock and commodity prices and a falling dollar has corresponded to rallies in...China's economy takes another step toward business as usual–and that's good news for the rest of the world
China moved another step toward normal, according to economic data for November released on December 11. Not close enough to normal, yet, for China to remove the dollar peg that has kept the renminbi at 6.8 to the dollar since July 2008. But the statistics show that...Watch tomorrow's initial claims for unemployment number for signs that the economy is strong?/weaker? than expected
Time to torture the data! Wall Street will have the red-hot irons and the Spanish boots out in full force tomorrow morning trying to extract the last bit of information out of the initial claims for unemployment number that will be released at 8:30 a.m. ET. The hope...Short-term stock market momentum falters; watch for signs of a further breakdown
So far—as of yesterday, that is—the dollar rally has been just a bounce. But a rising dollar has now pushed the euro, the Australian and Canadian dollar, and the Brazilian real down to a critical level. Same is true for gold, oil, and other commodities that have...Up for the dollar and down for almost everything else
So far this morning looks a lot like Friday afternoon. The dollar is up against the euro to its highest level in a month as traders continue to bet that the smaller than expected job loss announced by the Bureau of Labor Statistics on Friday is a sign that the U.S....Good news on jobs hurts Treasuries, oil, stocks; crushes gold
All it took was an unexpectedly strong unemployment report. Following the Bureau of Labor Statistics release of numbers showing the economy lost just 11,000 jobs in November rather than the expected 125,000, the Dollar Index broke above its 2009 trend line and the...Looking for profits from the end of the energy log-jam
The news yesterday from Progress Energy (PGN) that it would shut 11 of its coal-fired plants by 2017 and replace them with natural gas and nuclear power plants shows how the lack of climate-change legislation from Congress is creating a huge backlog of energy...Danger in Dubai–and perhaps opportunity
U.S. investors should feel very familiar with the financial crisis that broke out in Dubai last week. The names are different but the story is striking similar to the U.S. mortgage crisis. And if you’re trying to figure out the dangers and the opportunities in this...Everyone agrees that the dollar will keep falling; the dispute is over how long
Unemployment. Consumer spending. New home sales. End of the year profit-taking. End of the year portfolio window dressing. All those drive the stock market day to day. But none pack the wallop that the rising and falling (mostly falling recently) price of the U.S....The dollar strikes again: Dollar up today; gold and stocks down
You’re probably tired of reading this. I’m certainly tired of writing this. It’s all about the U.S. dollar. The moves of the dollar trump everything else when it comes to deciding whether stocks will go up or down on any particular day. So ignore the headlines...My guide to how to worry: Know what to worry about and when if you don't want to get spooked out of a rally–or get killed in a correction
(Originally posted on October 14 but several readers have asked me to repost.) What me worry? On a day when the Dow Jones Industrial Average closes above 10,000 for the first time in a year and when the Standard & Poor’s 500 stock index closes within kissing...An undervalued Chinese currency is bad for the world but could be profitable for you
Friends, readers, and countrymen, lend me your eyeballs. I come not to bury the fixed dollar-renminbi peg but to praise it. (Yeah, it doesn’t roll off the tongue but have you ever seen Shakespeare’s first draft of Anthony’s speech?) If you’re running the global...Dollar carry trade + Obama in China = Volatility ahead
Stocks will be volatile next week. On November 16 through 18 U.S. President Barack Obama will meet with Chinese president Hu Jintao and other Chinese leaders. The currency markets will study every word and rumor out of those meetings in Beijing for clues on when China...Talk is cheap especially at 6.8 renminbi to the dollar. But a re-valuation of China's currency is coming
On November 11, the People’s Bank of China, the country’s central bank, said that there might be a case for letting the renminbi appreciate against the U.S. dollar. China’s currency has been pegged to the U.S. dollar since July 2008 at roughly 6.83 renminbi to the...Will rising state taxes sink the recovery in 2010?
The taxman cometh. That’s not only going to be individually painful in 2010 but the collective hit to consumers could be enough to stall the economic recovery. 2010, though is the short-term. The International Monetary Fund, in a burst of pre-holiday cheer, warned on...Inflation or deflation danger ahead? The markets say, Yes, but not which
Call it the great inflation vs. deflation battle. On the one side, the U.S. TIPS market. In the last few months demand for Treasury Inflation-Protected Securities from investors worried about a resurgence of inflation has reduced supplies of the bonds at Wall Street...The dollar turns from earnings headwind to tailwind in the fourth quarter
The weak dollar will finally start showing up as a plus in company earnings in the fourth quarter. It’s been one of the puzzles of recent quarters how a falling dollar could hurt earnings at U.S. companies with big overseas sales such as McDonald’s (MCD), PepsiCo...Dollar up and stocks down–don't expect that to continue
I can’t tell you where stocks are headed in the short term but it does look like the days of the dollar rally are numbered. Why do I think that? The central bank of India tells me so. And if the recent relationship between the U.S. dollar and global equities...Why all the hub-bub, bub?
As of yesterday’s close, stocks were down on four of the last five days. The Dow Jones Industrial Average is criss-crossing the 10,000 mark like a drunk trying to walk a straight line for an impatient highway cop. The Standard and Poor’s 500 stock index is...The weak dollar/strong stocks feedback loop is still alive and well
The U.S. dollar traded to another low and stocks rallied. What else is new? This feedback loop has been locked into place for months and it’s showing no signs of taking a vacation. Here’s how it works. A falling dollar leads to increases in the price of...The sky isn't falling and the dollar isn't going to zero. Yes, the dollar is in a slow and long-term decline but don't buy what the panic mongers are selling
Elisabeth Kubler-Ross laid out the five stages of grief in her 1969 book On Death and Dying. There’s denial, anger, bargaining, depression, and finally acceptance. The financial markets when confronting a strong trend work through their own five stages. Not of grief....Go figure: Demand for U.S. Treasuries soars
They pay almost nothing. They’re denominated in a currency that is losing value every day. And yet investors keep loading up on U.S. Treasuries. Overseas buyers increased their holdings for a fourth consecutive month in August, to an all-time high of $3.45...Everybody knows China is manipulating its currency but nobody expected the U.S. to say so. And it didn't
Surprise, surprise. The U.S. Treasury Department criticized China for a“lack of flexibility” on currency exchange rates but didn’t dare come out and say that the country is keeping the renminbi artificially cheap. You don’t get to say that, I guess, if you...Expect the dollar to keep falling–traders are betting on it
It’s a trade that will stay on until Asia’s exporting economies cave in. Currency traders are betting that the dollar will keep falling–on the huge U.S. debt, on U.S. economic recovery that’s lagging Asian economies, and, not least, on their...Jim’s Daily Email Alerts:
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