- Contagion Strikes Italy as Ireland Bail-out Fails to Calm Markets
- Chinese Selloff Intensifies As Traders Expect Imminent Rate Hike
- Debt Crisis New Phase Striking Now! Despite Bailouts!
- Monday Market Movement – “Like Moths to a Flame!”
- Currency Manipulation: Two Sides to Every Coin
- Gold Prices Pop on Safe-Haven Buying
- GM Hires 1,000 Engineers in Michigan to Expand Electric Vehicle Offerings
- Greenpeace Sues Chemical Makers, Alleging Spy Effort
The euro fell sharply to a two-month low of €1.3064 against the dollar, while bourses slid across the world. The FTSE 100 fell almost 118 points to 5,550, while the Dow was off 120 points in early trading. “The crisis is intensifying and worsening,” said Nick Matthews, a credit expert at RBS. “Bond purchases by the European Central Bank are the only anti-contagion weapon left. It needs to act much more aggressively.”
In a surprising reversal, the Shanghai Composite has dropped 3% in early trading following a statement by the China State Council which on Monday said it will revise penalties to crack down on price violations to tackle inflation, which has been interpreted by traders as an imminent December rate hike. Per Dow Jones: “Shanghai Composite Index down 2.5%3.0% at 2793.95, faces immediate support at 2750 level. “There has been heightened expectations for an interest rate hike soon, which exacerbated earlier weakness in the index from sovereign debt concerns from Europe as well as a stronger U.S. dollar,” says Wang Junqing, analyst from Guosen Securities.” More importantly key stat arb pairs such as the AUDJPY and the ESZ/NDZ are being dragged below the surface. On an indexed basis, the ES will soon take out the intraday lows per the AUDJPY. For Brian Sack’s sake, we hope the Fed has its midnight crew in tow as this could get ugly fast. We will be following.
Sadly, though, even while most Americans were enjoying the holiday or hitting the malls, much of Europe was sinking deeper into a new, more severe phase of its sovereign debt crisis. This crisis is unfolding despite Herculean rescues by the European Union, the International Monetary Fund and the U.S. Federal Reserve. It’s striking right now. And it’s threatening to spread to all of the world’s big debtor nations, including the biggest of all — the United States.
There was no escape for Ireland this weekend as the IMF and EU pinned the country down and forced them to swallow a $130Bn aid package at (get this!) 6.7%. $17.5Bn of this money is to come out of Irish pension funds all just to make sure Bill Gross doesn’t lose any of the money he lent to Ireland! I honestly cannot tell you who is the more vile, despicable villain in this debacle. Is it the banks, who started this mess with their idiotic lending practices? Is it the lobbyists and lawmakers, who turned Ireland into a tax haven for EU Corporations and destroyed the economy by funneling tax breaks to the wealthy? Is it the Irish Government, who stupidly bailed out the failing banks with guarantees that put the nation on the hook for more money than their entire GDP. Is it the bondholders, who drove up the cost of financing Ireland’s new-found debt to levels that threatened to break the National Bank or is it the EU & IMF, who are effectively playing the role of loan sharks, borrowing $100Bn at 2.5% and forcing Ireland to borrow it back from them at $5.8%.
Recently, currency manipulation has garnered headline attention. We have been constantly bombarded with rhetoric out of Washington: “China isn’t allowing its currency to appreciate fast enough”; “China’s exchange rate policies are stealing jobs from America”; “We’re playing fair, why can’t China?” More often than not, the more vociferous proponents come from politicians who, in our opinion, are simply posturing for votes; attempting to provide catchy sound bites they believe will resonate with their constituents, without fully grasping the underlying fundamentals at play. The situation itself is truly paradoxical – akin to a major corporation thanking its largest creditor by insulting them. The currency debate, just as every coin, has two sides. Let’s address each of the above concerns in turn, and what it means for you as an investor.
Gold for February delivery, now the most actively traded contract, was up $14.50 to $1,382 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Tuesday has traded as high as $1,382 and as low as $1,364. The U.S. dollar index was adding 0.73% to $81.43, a 10-week high, while the euro lost another 1.13% to $1.29 vs. the dollar. The spot gold price Tuesday was rising $17.20, according to Kitco’s gold index.
The hiring will increase GM’s workforce of electric-vehicle engineers by 50 percent to about 3,000, said Rob Peterson, a spokesman for the Detroit-based company. GM, which plans to sell 10,000 Volts next year and 45,000 in 2012, is hosting a media event today to mark the start of production of the $41,000 car. The Volt, begun under former Chief Executive Officer Rick Wagoner, is the centerpiece of GM’s effort to position the company as innovative and environmentally friendly. Dan Akerson, who took over as CEO in September, has said he wants GM to be “at the forefront” of electric-car development.
Contractors working for Dow Chemical and Sasol North America, a chemical manufacturer, hired private investigators to conduct a two-year corporate espionage campaign against the environmental group Greenpeace, according to a lawsuit filed on Monday in federal district court in Washington. The investigators stole documents from locked trash bins, tapped phones and hacked into computer networks, and operatives posing as activists infiltrated Greenpeace offices and meetings, the suit claims.
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