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Euro crashes after Moody's decision
Traders didn’t have the chance to take a breather and rejoice after it was possible that Greece will avoid bankruptcy, until fears that Greece is just postponing its bankruptcy but not getting rid of it, dominated financial markets.
The shock came yesterday when Moody’s downgraded the credit rating for Portugal’s debt by four points from Baa1 to Ba2, which caused a wave of panic in the financial markets and gave traders a reason to believe that the sovereign debt crisis is much deeper than anyone might think and seriously dangerous.
Despite the positive fundamentals from Germany today which showed an increase in the factory orders, which was better than expectations, Moody’s pressure was bigger on the euro.
The euro fell sharply against the dollar for the second day in a row, declining ...
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Services Activities Ease in June as Recovery Remains Weak
The U.S. economy seemingly remained weak through the month of June, as despite the expansion we witnessed in manufacturing activities, the ISM services index was released for June on Wednesday to show that services activities eased to raise concerns over the outlook of economic growth.
The Institute for Supply Management released the services index for June, where the ISM services index eased to 53.3, compared with the prior estimate of 54.6 in May and below median estimates of 53.7.
The business activity index slightly eased in June to 53.4 from 53.6, while the prices paid index also eased to 60.9 from 69.6, new orders also eased to 53.6 from 56.8, and supplier deliveries eased to 52.0 from 54.0, the inventory change index eased to 53.5 from 55.0, while the employment index rose ...
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The Day QE2 Ended
Americans had something to celebrate this Independence Day. QE2 – the Feds’ $600 billion money-printing program – ended on Friday. And guess what? The world didn’t end with it.
Instead, the stock market gave a loud ‘yahoo!’ The Dow rose 168 points. If QE2 is going to be the death of the US economy, the stock market doesn’t see it.
Not that stock market investors always have 20/20 vision. These were the same people who were buying Lehman Bros. and mortgage lenders stock just before the company collapsed.
So, we’re not saying that today’s prices will necessarily be the same as tomorrow’s. The market may know the price of everything at every moment. But it doesn’t know the value. So, as it discovers value, it changes its mind about the price.
Still, we find it mildly disturbing that the ...
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The Uni. Of Michigan Confidence shed this month
The Uni. Of Michigan Confidence shed this month while that manufacturing activities remain on expanding gradually
As a big picture, the world's leading economy recent economic conditions weakened this period but not all sectors activities are deeply corroded and therefore the Uni. Of Michigan confidence shed slightly this month while that manufacturing conditions continue on expanding this month as well but Americans fear what is coming and remain quite of pessimistic.
Accordingly we watch the final reading of this month University of Michigan Confidence falling gloomily and slightly to 71.5; worse than the market forecasts of 72.0 and prior reading of 71.8, indicating quite clearly that the consumer confidence regarding personal finances, business conditions and purchasing power has ...
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Why Greece Should Default and Go Broke With Dignity
First, the market news.
Yesterday, stocks went up. Gold went up. And bonds went down.
It was a ‘risk on’ day…but not so much of one that you could draw any conclusion from it.
Investors still had the Greek debt crisis on their minds. But they seemed to have gotten tired of worrying about it. All the financial sweepers in Europe are working around the clock, trying to get the mess under the carpet or out the door. By the looks of the markets, they were succeeding.
But it’s not over yet. You’ll remember that we gave some advice to the financial officials who are in charge of bailing out Greece? We told them to take a page out of Gerald Ford’s book. Just tell the Greeks to “drop dead.”
Today, we give advice to the Greeks. Tell the bankers to ‘drop dead.’
A vote is expected today…which ...
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As QE2 ends, market debates Fed's next move
(Reuters) - The Federal Reserve ends its $600 billion bond-buying program, known as QE2, on Thursday and has yet to offer any hints of more monetary easing to come.
That hasn't stopped investors from wondering what new tricks the central bank may have in its repertoire should the U.S. economy's struggles continue in the second half of 2011.
Bill Gross, manager of PIMCO, the world's largest bond fund, said last week the Fed may signal as soon as August that it stands ready to print more money if the economy worsens and recession starts looking like a real possibility.
"I'm surprised at how quickly talk has turned to QE3. It began even before QE2 had ended," said Gregory Whiteley, who manages the government debt portfolio at DoubleLine Capital, a Los Angeles-based fund with some $12 ...
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Money Market Funds No Longer the World’s Safest Investments
“The world is full of banana peels, that goes without saying,” the insightful financial writer, James Grant, observed last week. “The difference today, across a range of markets, is you’re not getting compensated for the risks you face.”
Without knowing the context of Grant’s observation, most investors might imagine he was referring first and foremost to the stock market. But he wasn’t. He was referring to money-market mutual funds, or what most folks consider “cash.”
To be sure, Grant is no fan of the volatile, richly priced stock market; nor the bouncy, low-yielding bond market. But it is the utterly placid, zero-yielding “cash market” that seems to concern him the most. The world’s “safest” investments are, suddenly, among the world’s riskiest.
Money market funds have always been ...
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Franc Posts New Record vs. Dollar on Private Consumption
The Swiss franc jumped today, reaching new all-time record against the US dollar, as the Swiss consumer demand improved last month. The optimism for Greece allowed the euro to outperform the Swiss currency, though.
The UBS consumption indicator advanced by 0.34 points to 1.91 in May, the highest level since August 2010. The main contributor to the increase was the new car registrations. The retail sales were also responsible for the rise of the consumer demand. The report said that “consumption is supported by low interest rates, consistently high immigration and falling unemployment”.
Daragh Maher, the deputy head of global foreign exchange strategy at Credit Agricole CIB, commented on the reaction of the franc to the report:
It seems that the Swiss economy continued to do well. ...
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Greece Parliament to Vote on Austerity Budget Today
With the Greece parliament voting on its newly proposed austerity budget today, most traders will be fixated on the outcomes in order to adjust their investment portfolios accordingly.
Economic News
USD - USD Trading Higher as Greece Austerity Vote Approaches
The US dollar experienced broad bullishness yesterday as traders began to seek shelter in expectations of heightened risk aversion surrounding today's vote in the Greek parliament over its austerity budget. The EUR/USD was seen moving towards 1.4305 yesterday evening, however, before settling below this mark at day's close and moving bearishly upon the opening of the early Asian sessions.
Yesterday's bearish consumer confidence data out of the American economy has so far helped to lift the value of safe-haven assets as investors ...
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