Danger Of Bad News

Fundamental Analysis EUR "Yes, the economy avoided falling off the cliff, but it is still flirting with recession" - Carsten Brzeski, senior economist at ING Group An index of German investor confidence unexpectedly rose to 23.4 in April from 22.3 in March, said the ZEW Centre for European Economic Research on Tuesday. USD "Housing continues to bump along the bottom”" - Jacob Oubina, a senior U.S. economist at RBC Capital Markets LLC U.S. housing starts fell in March but building permits rose to highest level since 2009, Commerce Department data showed on Tuesday. Groundbreakings declined to an annual rate of 0.65 million, while permits advanced to 0.75 million. GBP "There seems to be a little bit of payback from the previous couple of months’ brisker growth" - Philip Rush, an ...

2012 is proving to be the ‘Year of the Central Bank’. It is an exciting celebration of all the wonderful maneuvers central banks can employ to keep the system from falling apart. Western central banks have gone into complete overdrive since last November, convening, colluding and printing their way out of the mess that is the Eurozone. The scale and frequency of their maneuvering seems to increase with every passing week, and speaks to the desperate fragility that continues to define much of the financial system today. The first major maneuver took place on November 30, 2011, when the world’s G6 central banks (the Federal Reserve, the Bank of England, the Bank of Japan, the European Central Bank , the Swiss National Bank, and the Bank of Canada) announced “coordinated actions to enhance ...

Where we part company with Warren Buffet… Here’s the Sage of Omaha, explaining, in Fortune Magazine, why bonds are dangerous: Investments that are denominated in a given currency include money-market funds, bonds, mortgages, bank deposits, and other instruments. Most of these currency-based investments are thought of as “safe.” In truth they are among the most dangerous of assets. Their beta may be zero, but their risk is huge. Over the past century these instruments have destroyed the purchasing power of investors in many countries, even as these holders continued to receive timely payments of interest and principal. This ugly result, moreover, will forever recur. Governments determine the ultimate value of money, and systemic forces will sometimes cause them to gravitate to policies ...

The price of gold shot up yesterday. Reports said investors were betting on another round of “quantitative easing,” aka money printing. But are gold buyers making a big mistake? Is history repeating itself? The New York Times suggests it is: As it was in 1980, could it be again in 2012? The 1980 presidential election was fought by a Democratic incumbent weakened by a poor economy amid worries that the United States had lost its ability to compete in the world. Gold prices had risen to unprecedented levels as the election approached, and the Republican nominee hinted he might propose a return to a gold standard. That Republican, Ronald Reagan, won the election and soon appointed a commission to study the role of gold in monetary systems. To gold bugs, it appeared to be the best chance ...

Tutto va bene… That was what the crew told passengers on the Costa Concordia just before it sank. And it was what the crew of the USS America — the biggest cruise ship of all — were telling passengers last week. Tutto va bene. Trouble was, tutto was not going as bene as they claimed. Instead, the ship is sinking. Stocks sank on Friday. Oil slipped below $100. And the yield on a 10-year T-note dropped to 1.89%. Gold kept going up. None of these are signs that the voyage is going well. The US economy has come back to output levels of ’07. But this feeble rebound not only holds the title of “weakest post-war recovery ever,” it also shows that something else is going on. Most economists have no idea what. So, they just think this “recovery” is unusually slow. Ben Bernanke, for example, ...

Last week, Spain and Italy were able to offload 22 billion euros worth of debt. This quieted investors’ fears. Newspapers reported that calm and confidence had returned to the markets. Lenders and borrowers breathed more easily. Bankers put their feet up. Apparently, no major bank in Europe was so far underwater that the European Central Bank couldn’t bring it to the surface. None had its lungs so full of bad debt that the ECB cannot breathe life into it. Then, on Friday, S&P downgraded several European nations’ debt. This brought the debt of Europe’s stabilization fund, the EFSF, into doubt too. Suddenly, Europe was gurgling again. Mario Draghi, head of the European Central Bank, wondered on Tuesday if the ratings had any value. After all, he had given the banks 489 billion euros in ...

Brent crude oil rose above $111 on Thursday as risk appetite improved on hopes the euro zone debt crisis was slowly being resolved and on signs of steadier global economic growth. European shares .FTEU3 rose for a fourth straight session towards 5-1/2-month highs on signs Greece would agree a crucial bond swap deal with private creditors. Global stocks as measured by the MSCI index .MIWD00000PUS were up more than 0.6 percent, their highest since October 31. .EU U.S. stocks also edged higher after Bank of America (BAC.N) and Morgan Stanley (MS.N) reported earnings. .N Stock markets have been performing well since the start of the year, bolstered by good economic numbers from the United States and plentiful liquidity given central banks around the world have been pumping in funds. News ...

Prepare for the worst; hope for the best… Gold, stocks, oil…little movement yesterday. Michelle Bachman decided to drop out of the race for the White House. Pundits, pollsters, and gamblers predict that Romney will be the Republican’s man. Iran told the US to get out of the Strait of Hormuz. “And don’t come back,” it added. Apparently, investors are betting that the threat wasn’t serious. But that’s the problem with predictions and forecasts, too. You never know which ones will come to pass. For all we know, Romney could be charged with pedophilia in New Hampshire tomorrow…and all Hell could break loose in the Mideast. “Prepare for the worst; hope for the best,” was always good advice. And here at The Daily Reckoning it is the foundation of our investment approach. We never know what ...

www.sunbirdfx.com Year 2011 has ended and the investors will probably want to put this year behind and hope for better times. Geopolitical crisis, wars and earthquakes shook the financial markets and cost fortune. In Wall Street, the direction of the stocks changed constantly by the various global events and eventually the Dow-Jones was the only index among the three majors that finished in the green territory. The NASDAQ shed 1.8% and the S&P 500 closed almost without a change with 0.02% down. The direction of the stocks had a very strong correlation with the USD and it might be the same during 2012. The low volumes from the last week of 2011 might continue during the first days of 2012, so the markets might be dangerous than usual until the professionals are back from the holiday. ...