It may look like China is acting civil in responding to the rest of the world’s fingers pointed squarely their lead role in an imbalanced global economy. After all, the yuan has strengthened versus the dollar in the last couple days; China has been hiking bank reserve requirements and raising interest rates ... with unusual frequency.
The fun has begun and fiscal conservatives have taken back control of the US House. The rally in US stocks over the last couple months has been credited in part to this expectation that a shift in power within the US House of Representatives will help ease the burden of potential taxes and regulations that have heretofore been among the biggest reasons corporations have held back from hiring and investing.
There seem a handful of things in play today that are influencing rather mixed price action. Here¡¦s a quick update on how things are going so far today.
- Aussie powered to a new high on a rate hike by the Reserve Bank of Australia the consensus was not expecting. The Aussie is now trading above par against the buck.
- Euro following Aussie higher on better than expected Purchasing Managers reports from the eurozone--the reason given for the move today.
We loved this headline from the Bloomberg.com website today:
“Gold Will Outlive Dollar Once Slaughter Comes”
We don’t disagree gold will be left standing when paper currencies finally take the celestial dirt nap. But the headline begs the question: just when will said top-dog paper currency take that dirt nap?
US jobless claims came in surprisingly positive, helping to buoy risk appetite today ...
So let’s keep it simple and look at a list of items that might mark an end to the current trend of risk-taking we’ve been witnessing.
1. QE2 Let-Down: expectations on its size, and certainly its effectiveness, have been blown severely out of proportion. Signs point to any additional QE as being largely ineffective at achieving the stated goal of stimulating growth and job creation.
