Archive - Feb 18, 2010 - Blog entry

For all you skeptics out there, let there be no doubt that the U.S. recovery is more than just fluff. Strength in manufacturing is picking up steam and services (66% of the economy) are expanding. And even after the Fed's latest move, policy remains far too accommodating...

Scott Rasmussen [President of Rasmussen Reports] observes that the American people are “united in the belief that our political system is broken, that politicians are corrupt, and that neither major political party has the answers.” He adds that “the gap between Americans who want to govern themselves and the politicians who want to rule over them may be as big today as the gap between the colonies and England during the 18th century.”

China recently raised the Reserve Requirement Ratio by 50 bps to 16.5% for its domestic banks. This is the second hike in the past month and certainly not the last as China’s economy is still sprinting ahead. While equity markets have begun to price in the risk of “global exit strategies,” currency markets have yet to consider the implications of continued strong underlying growth in China. It is likely that additional Chinese monetary tightening will be accompanied by pressure to revalue the yuan.

Ben Bernanke knows that the Fed's exit strategy is flawed, so he keeps thinking up new schemes to sop up "excess reserves" from the banking system. The latest is to allow money market funds by Treasuries directly from the Fed. Will this idea work? Will it positively impact the dollar? Will the Fed start draining the pond soon?

So what happens when employment and asset prices go down while input prices go up?

The outperformance will continue. A recovering auto industry needs a lot of catalytic converters. 80% of the world’s production comes from Russia and South Africa, dubious sources on the best of days. A free call on political instability. Meet the “poor man’s platinum.”

The question of the day, "Does the Mainstream Media Take the Blogoshpere Seriously as a Credible Distribution Outlet for News and Opinion?" While the answer should be a resounding yes, the reality of the situation is probably "no". The media probably does consider blogs a threat to revenue and eyeballs, though. This is an interesting story presented to me from Aaron Krowne from Implode-a-Meter...

5 charts of S&P 500 Futures (ES E-mini) ... [1] Kase Bar 3 Point Range ... [2] Kase Bar 8 Point Range ... [3] Daily, 610 Simple Moving Average (SMA) ... [4] Monthly, Simple Moving Averages (SMA) ... [5] Monthly, Exponential Moving Averages (EMA)

The recently announced IMF sale of 191.3 tonnes of their gold reserves, though it caused an immediate sharp knee-jerk reaction in gold futures markets, will have a negligible effect on the long-term price of gold. There will come a time when the prices for real physical gold and real physical silver completely sever the already tenuous umbilical cord they maintain to the suppressed prices of gold and silver established by the agent bullion banks of the US Federal Reserve and the Bank of England in futures markets.