Thursday, March 13, 2008

Retail Sales Fall -0.6%, And That Is The GOOD News

Retail sales fell below the consensus range of 0.2% last month to -0.6%. This was no surprise to me as I continue to expect big box retailers to suffer as the USD continues to fall and consumers spend more of what used to be discretionary income on gasoline and food.

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In the overnight forex market, the yen hit 99.75 yen/1 USD. Some are predicting 95 yen/1 USD, I am not sure where the dollars decline will stop, especially with the fed continuing to inflate faster than a hot air balloon.


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GOLD HITS $999.4/oz and will hit 1100-1200 in the next few months. Gold is set to take on the psychological barrier of $1,000/oz in the next few days. Once it holds that level, it is once again off to the races on the back of the falling USD.


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Indeed, things look grim for the U.S. economy. In terms of the stock market. Things are about to get worse as the next wave of earnings will ALL surely be dissapointing, playing out perfectly, George Soros's theory of reflexivity .

Thursday, March 6, 2008

Bull Markets in Gold, Oil, and the Grains are fueled by U.S. inflation.

I started this blog unaware of how quick things could go from relatively ok to a torrent of financial distress. The YEN/USD currently stands at 102.820. 100 YEN/USD is now a certainty. Gold at $1,000/oz is now a certainty. The only questions I have now are where the U.S. stock market will bottom and how long, and also where the dollar will bottom and how long that will take. Today was a wreck in the stock market, but there are many very important underlying factors which are being overlooked, or all together ignored.

Factor #1 :

Sub prime bonds made it into the single digits today a 92% decline as homeowners continue to "walk away" from declining home values:


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Factor #2

The yield on the T-bill continues to plummet. This is putting severe stress on banks holding money in the overnight market. This also is a result of people looking for a safe place to put money in order to weather the current financial storm/tornado/Cat 5 hurricane.

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Factor #3: The US Dollar/Chinese Remnimbi peg is in jeopardy. As if the USD can handle any more blows. The current traders in the Chinese currency markets are saying that the Chinese need to get rid of the peg. The current peg is at 7.8 Chinese Yuan/ 1 USD, but it is currently trading at 7.78. In the grand scheme of things .02 is not very much, but the point that needs to be made here is that the Chinese can not keep it at 7.80. If it trades at 7.78, under significant stress, it could trade lower. Not to mention that the last time the peg moved, the traders had advanced notice. The ultimate effect is increased cost of Chinese goods on an all ready stressed U.S. consumer.

Factor 4: Where is gold going?

You'll have to read what Jim Rogers says to find out.

I will put it this way, only someone who understands bull markets the way Jim Rogers does can make that kind of prediction.


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