Euro Lowest Level Since September 2010

The U.S. dollar turned up Wednesday, pushing the euro to its lowest level since September 2010, as U.S. stocks extended losses after the European Central Bank released more data on its lending operations.

The euro saw little benefit earlier following Italy’s latest auction of short-term debt.

The U.S. dollar index , a measure of the greenback’s performance against six major currencies, rose to 80.526 from 79.792.

The euro fell to $1.2938, down from $1.3074 in North America late on Tuesday.

The shared currency dropped as low as $1.2910, its weakest level on a closing basis since September 2010, according to FactSet Research.

Boris Schlossberg, director of currency research at GFT, cautioned that trading volume has been very think which could exaggerate the markets’ reaction to news.

Against the Japanese yen, the greenback turned up to ¥77.95, from ¥77.85.

The euro also fell about 0.9% against the yen to ¥100.83, having touching its lowest level since 2001.

It also turned 0.5% higher against the Canadian dollar , which factors into the dollar index.

The British pound bought $1.5455, falling further from $1.5663.

David Song, currency analyst at DailyFX, said earlier it “seems as though market participants are scaling back on risk-taking behavior, and we may see the reserve currency extend the advance from earlier this month as it continues to benefit from safe-haven flows.”

The Standard & Poor’s 500 Index lost about 1.12% in afternoon U.S. trading.

For much of the year, gains in stocks have often meant a lower dollar, as traders become more confident about moving into riskier assets and feel less of a need for the relative safe-haven status of the greenback.

Analysts noted a release from the European Central Bank showing its balance sheet rose to a record 2.73 trillion euros, as lending to banks jumped from €214 billion to €879 billion in just one week, according to Kathleen Brooks, research director at Forex.com

Earlier, the euro showed little reaction after the Italian government sold €9 billion ($11.8 billion) of six-month bills in an auction on Wednesday.

The sale produced an average yield of 3.25%, down from more than 6.5% at a sale of six-month bills in late November. Bids exceeded demand 1.7 times versus 1.5 times at the November sale.

Strategists at Brown Brothers Harriman said the results indicate that Rome’s austerity measures and the European Central Bank’s long-term lending operations last week have helped ease strains in the peripheral bond market


Roger Nightingale's view: Bear on economy

The world’s largest economy appears to have taken its medicine and quite well too. Positive economic data out of the US as well as the European Central Bank making efforts to bring down sovereign bond yields led to market confidence getting a boost.

Roger Nightingale of Roger Nightingale & Associates says with the new year looming, a recession in the new year is inevitable. “It’s not inconceivable that that recession turns into a long-term depression.”

While global macro news hasn’t buoyed markets so far, he is optimistic that they will go up. He, however, continues to hold a bearish view on the economy

The ECB have a long track record of making favourable statements which aren’t justified. We have had about 25 meetings or so in the last several months and trying to resolve the European economic problems. None has been at all successful. In fact after each meeting there have been optimistic statements and none of them have come to be justified.

The reality is that the economic situation around the world as a whole is deteriorating rapidly. We are heading for a serious recession in 2012. It’s not inconceivable that that recession turns into a long-term depression. We ought to be extremely worried about the economic situation because the federal bankers have no capacity to ease the situation. Interest rates are already in most countries at very low levels.

They have already got money policy at extremely accommodative levels and so there is very little capacity for the central banks to help. What's more, the central banks are no longer trusted by the people or the industrialists. They say things and it’s quite clear that the statements they make don’t have credibility.

I would be very worried about the economy, but I do actually think the markets will do well. The liquidity that’s in the system is very substantial. It’s looking for a home and its bidding up security prices in the process. So, I am the bear on the economy and bull on the markets.

It depends of course if the Euro stays in existence. There is a rising possibility that the Euro disintegrates and come by the end of March next year it no longer exists. It’s certainly possible that a number of countries, Greece most obviously, Portugal, Italy and so on leave the Euro.

If some weak members of the Euro were to leave then the remaining countries in the Euro would look stronger. It’s possible that the Euro as a whole would strengthen. The Euro even more dominated by Germany would rise. But I suspect that actually that’s not going to happen in the time that we are talking about. It will take much longer than that. In consequence I would expect the euro as a currency to decline over the next three months.


European stock gains- Why This Time...?

European stock markets moved mostly higher on Tuesday, shaking off earlier losses after a German business-sentiment survey surpassed expectations

We Know That problem in other countries not in Germany then why other European market trade higher not understand

We know that in Germany their is no Problem About Economy , so data from Germany will come positive .

So no need to Bullish From Germany data

So Be cautious

Troubled European Countries- Start selling Gold

Few people realize it, but Italy holds the world’s fourth biggest stockpile of gold, at 2,452 tonnes. That’s even more than France, and more than twice as much as China.

Only the U.S., Germany and the International Monetary Fund hold more.

The question here is whether some of the troubled European countries — such as Italy and France — are going to have to start selling off the national gold pile to meet their bills.

Some wonder if they already have.

Italy’s gold has a street value of about $123 billion — easily enough to cover this year’s $80 billion budget shortfall. Portugal’s $19 billion in bullion more than covers its $13 billion deficit. France has $122 billion worth of bullion, enough to make a massive dent in its $150 billion deficit.

Meanwhile, look at the people who actually have a lot of money — namely, the Chinese. I continue to suspect that, sooner or later, China is going to move some of its massive $3 trillion-plus reserves into gold, the only currency that no other country controls. At the moment, the richest Western countries, including the United States, Germany, Italy, and the Netherlands, hold between 60% and 80% of their entire reserves in gold.

The figure for China: Less than 2%. No, that isn’t a misprint.

When that bullion changes hands, it may be the moment when power shifts from the rulers of yesterday to the rulers of tomorrow. This is what happened a century ago, when plenty of that French, German and British gold ended up in the hands of the United States.

In the very short term, this may keep downward pressure on gold. The people who hold the world’s gold at the moment need cash, and may have to sell.

In the medium to longer term, it ought to be bullish.

Many people have been puzzled over the last few months by gold’s behavior. It has tumbled since the start of September from around $1,900 an ounce to below $1,600. This has happened even while a financial crisis has erupted in Europe which, says traditional analysis, should be bullish for gold.

But there are a couple of other factors at play.

First: Gold hasn’t fallen as far as it looks. The gold price is typically quoted in U.S. dollars. Yet in the past four months the dollar has rallied.

At the start of September, when gold touched $1,900 an ounce, the dollar was $1.45 to the euro. Since then the euro has slumped to $1.30.

Net result? Gold, which traded at around 1,300 euros per ounce back then, has declined to 1,200 euros per ounce now.

The second factor: Sentiment.

Four months ago, sentiment was massively bullish on gold. It had just skyrocketed, in the wake of the U.S. debt ceiling debacle. According to data published by the Commodities and Futures Trading Commission, speculators and traders had taken nearly record speculative bets that it would rise further.

This usually precedes a backlash, and so it has been.

Today? Sentiment is pretty bearish. The CFTC says the number of speculative bets on higher gold have collapsed by more than a third.

Last week Reuters polled 20 hedge fund managers, traders and economists, and found them very bearish. Most expect gold to fall below $1,500 next quarter.

Generally speaking, in the markets, you are better off betting against the consensus than with it. Four months ago everyone was bullish on gold, at $1,900 an ounce or more. Now they are bearish at $1,560. Do the math.


U.S. down after Draghi comments

Draghi stressed the importance of a tighter fiscal union among European nations. But he also undercut hopes that the central bank would be more aggressive in helping struggling countries by expanding its bond purchases. What’s more, Draghi called the economic outlook highly uncertain, according to media reports.

Wall Street‘s benchmark indexes ended more than 2% lower for the five-day period last week, as investors characterized the most recent European Union summit — a highly anticipated Dec. 9 event that resulted in an agreement to forge a tighter fiscal union — as doing too little to help debt-burdened euro-zone members in the short term.

On Friday, early gains evaporated after Fitch Ratings cut France’s outlook to negative and warned of possible downgrades for six European countries.

“The U.S. stock market remains highly correlated with the direction of European news flow,” said Fred Dickson, chief investment strategist at Davidson Cos.

Investors awaited word about a conference call that European Union finance ministers had scheduled to catch up on progress since the recent leader summit; any reports from that call, such as what entity could supply more aid, could ripple through global markets


Asia markets slumped Monday after reports of the death of North Korea’s Kim Jong-il. The region is likely to see increased focus in coming days and weeks amid concerns about stability in the country and region.



Belgium’s Rating Reduced by Moody’s

Belgium’s credit rating was cut two levels to Aa3 by Moody’s Investors Service, which said rising borrowing costs, slowing growth and liabilities arising from Dexia SA’s breakup threaten to inflate the euro area’s fifth- highest debt load.


Moody’s lowered Belgium’s debt rating to the fourth-highest investment grade, from Aa1, with a negative outlook, the ratings company said today in a statement. The action follows Standard & Poor’s one-step downgrade of Belgium to AA on Nov. 25. Fitch Ratings put Belgium’s AA+ on review for a downgrade today.


Belgium’s downgrade comes a week after European Union, in their fifth attempt to end the debt crisis now in its third year, agreed to forge a tighter fiscal union as the main thrust of their efforts, even as the European Central Bank resisted investor calls to step up its bond-buying program. Fitch also lowered France’s rating outlook today and put the grades of nations including Spain and Italy on review, citing Europe’s failure to find a “comprehensive solution” to the debt crisis.


“The funding environment is an additional risk that we have in this environment,” Alexander Kockerbeck, a senior credit officer at Moody’s, said in a telephone interview from Frankfurt. “The risk is that things can change relatively quickly in the funding market as we have seen in the recent past. The shift in market sentiment can change quickly in this environment.”


Fitch Downgrades France AAA Rating ..

U.S. stocks finished mixed to lower on Friday after Fitch Ratings said it was sticking with its AAA rating for France but revising its outlook down while warning that downgrades were possible for six other eurozone countries.

The Dow Jones Industrial Average closed down 0.02%, while the S&P 500 index was up 0.32% and the Nasdaq Composite index gained 0.56% on Friday.

In the U.S. on Friday, the government reported that November inflation came in flat from October, off from a forecast for a 0.1% gain.

Neural inflation data coupled with fears the European jitters would subside for now sent stock prices climbing in earlier trading.

Gains continued until Fitch Ratings said it was sticking with its AAA rating for France, but revised the outlook to suggest a downgrade was possible within 18 months.

Fitch also said downgrades were possible for Italy, Spain, Ireland, Belgium, Slovenia and Cyprus.

The move wiped out hopesthat the U.S. was finally decoupling from the European debt crisis.

"I think it is wrong, but there is a false sense of security about the U.S. economy and optimism that the recent spate of reasonably OK economic data will allow us to avoid a recession here," said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania, according to Reuters.

Aside from inflation data, initial jobless claims in the U.S. came to 366,000 during the last week, below forecasts for a 390,000 figure, the government reported on Thursday.

Leading losers included IBM, which was down 2.02%, United Technologies, down 1.59% and Bank of America, down 1.33%.

Leading gainers included Home Depot, up 2.59%, Microsoft, up 1.60% and General Electric, up 1.19%.

Hopes for an break in the European debt crisis buoyed stock indices in Europe, although gains were mixed.

France's CAC 40 fell 0.88%, Germany's DAX fell 0.50%, while Britain's FTSE 100 rose 0.06%.
Markets may be quiet ahead of the holiday season although talk of downgrades in Europe will rattle equities markets.

On Sunday, the U.K. will unveil its Rightmove House Price Index, which measures changes in asking prices of homes for sale.

”The Long Depression: The Slump of 2008 to 2031.”

it wasn’t hard to see that the markets were becoming dangerously unstable. Germany had just adopted a new monetary system, and Europe was being flooded with cheap German money. Greece had signed up to a monetary union with Italy and France but was struggling to hold it together.

Financial markets had been deregulated. New technologies were transforming production and communications, allowing money to move across borders at lightening speed.

And a massive new industrial power was flooding the world with cheap manufactured goods, blowing apart old industries.

When it all fell apart in an almighty crash, it was only to be expected.

A prophesy for London, New York or Berlin in 2012? Not exactly. It is a description of Vienna in 1873. In that year, in one of the great crashes of all time, the Austrian markets triggered collapses across Europe, swiftly followed by an equally spectacular collapse in New York. It was the start of what economic historians call the Long Depression, a prolonged period of volatility, unemployment and slumps that lasted an epic 23 years, only coming to an end in 1896.

”The Long Depression: The Slump of 2008 to 2031.” The parallels with our own time are fascinating. German unification, and the adoption of the gold standard, had led to a boom in that country, and cheap German money had flooded Europe. Greece had just joined the Latin Currency Union, an ill-fated attempt to merge currencies across Europe. Banking had been deregulated, which was partly why so much German money was invested on the Vienna bourse. The telegraph created instant communications, allowing the European crash to spread to New York. The U.S. was industrializing, transforming the global economy as much as China has transformed the present era’s economy in the past decade.

All those factors came together to create an almighty bubble, followed by an even worse crash. The slump that followed — although it is hard to measure these things precisely — lasted more than two decades. If the slump following the crash of 2008 is anything like that one, then this one is going to last until 2031.

True, historical parallels are never precise. We won’t replay the Long Depression of 1873 to 1896 exactly, nor will this slump necessarily last as long. It is, however, a far more instructive episode than the Great Depression of the 1930s. And there are five key lessons we should learn from it.

First, depressions can last a very long time, and when their origins are in a debt bubble they should be measured in decades not years. For a century or more, depressions have been relatively short, sharp episodes. They are like having a tooth pulled, rather than a chronic sickness — painful, but over quite quickly. But it doesn’t have to be that way. In the U.K., for example, this is already the longest recession since records began — in the sense that output is still below its 2008 peak. It is more enduring than the depression of the 1930s. That is true of many other countries, as well. If, as seems likely, Europe, and perhaps the U.S., slips back into recession in 2012, it will be clear to everyone we are witnessing something far longer than the conventional economic textbooks allow for.

Second, this depression is structural. The Long Depression of the 19th century had its roots in financial speculation, technological change, and the arrival of a massive new player in the global economy. Our current depression likewise has its roots in three huge crises coming together at the same time. We have a debt bubble that had been building up over three decade and which burst spectacularly in 2008. The dollar is in long-term decline as a reserve currency, and as the anchor for the global monetary system, but there is still not much sign of what will replace it. And in the euro, the biggest single economic bloc has created the most dysfunctional monetary system in human history, threatening financial collapses on an unprecedented scale. Think of it as the world economy’s suffering a heart attack, then a stroke, then getting picked up by an ambulance that crashes on the way to the hospital — it is hardly surprising the patient isn’t in good shape.

Three, it’s uneven. The Long Depression of the 19th century was a sustained period of lower growth compared with what came before and what came afterward. Germany, for example, grew 4.3% annually between 1850 and 1873 and then at 4.1% between 1896 and 1913. But in the Long Depression years, it only managed a growth rate of just over 2% a year. It was similar in other countries. The markets remained volatile, with repeated booms and busts, regularly collapsing back into recession. They did grow occasionally, just as Japan has sometimes grown in what is now its second decade of slump. But the growth is never sustained.

Four, good things are still happening. It isn’t all doom and gloom. In the Long Depression, some countries were largely unscathed. New technologies and industries were being created. The telephone was invented, and the foundations of new industries based on the petrol engine and electricity were put into place. The people who got it right still made huge fortunes, and the workers in the right industries prospered. Overall, however, times were hard. And you had to position yourself carefully.

Five, it won’t be fixed easily. The parallel with the 1930s is dangerous, because it has convinced bankers and policy makers that if you can just pump up demand, everything will be OK. It won’t.

Sure, demand is important — there is no point in letting it collapse. But this won’t be over until all three structural problems get fixed. Debt needs to be paid down to manageable levels, a new reserve currency needs to be created, and the euro needs to be put out of its misery. None of these are simple tasks, and none will be done quickly.

The global economy will eventually get back to normal growth. But the truth is, it is going to be a long, hard haul — and a lot of work needs to be done it get back on track.

Merkel vs. Markets

Dominic White, European economist at Absolute Strategy Research, a London advisory firm, doesn’t expect the conflict between “short-termism” of the financial markets and the gradual approach favored by politicians to be resolved any time soon.

“Given that Germany is leading the political response, that tells us there is very low likelihood of seeing a ‘big bang’ type resolution of the crisis,” he said.

Nicholas Spiro, managing director of Spiro Sovereign Strategy, a consulting firm, sees the conflict as a battle between market participants’ desire for an immediate backstop for government debt and Berlin’s insistence that help be accompanied by austerity and stronger fiscal rules.

“Bridging the gap between these two distinct views of the crisis — conditionality versus unconditional support — will be a slow, painful and politically fraught process,” he said.

Neither Spiro nor White expect the euro to splinter.

There are plenty of observers who do. And many analysts who don’t expect a breakup acknowledge that the risk of one or more countries exiting European economic and monetary union have risen.

Capital Economics has long maintained a euro-zone breakup is the likely end result of the crisis. They see Greece likely leaving the euro-zone next year, potentially followed by other members in 2013.

That’s partly because policy makers may not be able to outrun the markets.

It’s unlikely that treaty changes or the eventual introduction of euro-zone bonds can be implemented quickly enough to prevent an escalation of the crisis,” argued John Higgins, market economist at Capital Economics, in a recent research note, adding that such measures fail to address the underlying fundamental causes of the euro-zone’s debt woes.

“If we’re right, then any optimism could soon give way to pessimism, putting renewed pressure on euro-zone government bonds and more pressure on the euro as investors took fright once again from the prospect of a break-up of EMU,” he said.

Historians may look back at 2011 as the year that the unthinkable became thinkable.

While a few economists warned in 2010 that the crisis could eventually sink the euro, it was the acceleration of the crisis and the repeated failure of European leaders to get a grip on the situation that pushed the idea of a euro breakup toward the mainstream.

Investment houses worked out the potential costs of breaking up the euro (it would be very expensive for everyone involved). Some businesses began making plans for a split, while clearing house operators made dry runs to ensure their systems could handle the re-emergence of national currencies or other contingencies.


Future of Euro crisis in 2012

hink 2012 will be the year when investors learn once and for all whether Europe’s leaders can come up with a plan to once and for all address the euro-zone debt crisis?

The volatility and market turmoil that accompanied the 2011 realization that the euro could conceivably come apart is unlikely to be fully dispelled. Instead, top politicians and policy makers appear likely to continue relying on the potential for imminent disaster to push through otherwise politically unpalatable changes, economists said.

After all, it was Europe’s most powerful politician, German Chancellor Angela Merkel, who warned Germany’s parliament earlier this month that the crisis would never be solved in one fell swoop. Instead, she likened the process to a marathon, and hinted that the runners had barely cleared the starting line.

Indeed, the recent agreement between nearly all EU members to move forward with closer fiscal and economic links is likely to take months or even years to come to fruition, all but ensuring uncertainty and volatility remain a staple of European markets and politics.



This bearish trend will be further reinforced if Dow Industrials closes & stays below 11760.

Euro woes are weighing on all of the global stock markets. Most of the U.S. stock indices are technically bearish, and so are the international stock markets. This bearish trend will be further reinforced if the Dow Industrials closes and stays below 11760. Currently, risk is high and we still recommend that you stay on the sidelines.”

This applies even to the hard assets upon which the Adens usually fall back.

“…Oil declined from its highs, which was the last standout. It’s now vulnerable below $99, and copper is weak below $3.50. Stay out of resource and energy stocks until the dust settles.”


“If gold tests its 65 week moving average near $1525, it would be a 20% decline… We know this decline is unnerving but keep focused on the big picture and hold your open positions. This is still the time to be buying and accumulating during weakness.”

When I last looked at Dow Theory Letters’ Richard Russell and Stealth Stocks Daily’s Dennis Slothower, both of whom heroically write every day after the market close, both were stoically unbudged bears despite what had been a strong week.

As it turned out, stocks were then at about their high for the month. And both editors are now even more bearish. Russell writes:

“I am warning all my subscribers again that we are back in the grip of a vicious and ruthless bear. The bear has been held back for almost two years, due to the so-called quantitative easing of an anxious and ignorant Fed. There’s no bear angrier than a frustrated bear. As a result, I believe we’re going to see a brutal stock market that will shock the Fed and the bulls and the public — and all who insist on remaining in this bear market… Remember, the KEY number for the Dow is 10,000. Below 10,000, the bear really takes over.”

On gold, he writes:

“I think we’ll see selling of gold to cover losses (particularly losses by the short sellers), but ultimately gold will be the last man standing… Gold holding above $1500 is bullish action.”

Slothower is 100% in cash, but in the short run is more cautious. He writes:

“What I see here is a chart pattern that is going nowhere — mostly chop. We are in a downward pattern with this index but there is no ‘persistency’ of the primary trend.

“There is no bull market here and not much of a bear market either.”

However, Slothower says he sees other technical signs of weakness, and adds: “This wedge pattern has to resolve itself soon, as both the bulls and bears can’t both be right for very long.”

On gold, he is even more cautious, writing:

“Gold broke the 200-day Smoothed Moving Average at $1,622, which puts into question a continuing bull market in gold… Gold is now testing a very crucial trend line which must hold or all kinds of stop loss limits will be triggered here. Given what is happening in Europe and in Asia we have no idea the magnitude of the dominoes that could start to fall here, but gold breaking down suggests the market is expecting ‘deflation’


Downbeat on Global Economy

Developed economies around the world have shown their inability to solve structural economic problems, Gao Xiqing, President of China Investment Corp., the country's $410 billion sovereign wealth fund, said Thursday.

Meanwhile, developing economies are in no better shape, as their economies typically fall along with developed economies and fluctuate to a greater degree, he said at a conference.

China looks to be an extraordinary case due to the strong central government control of its economy, but this isn't necessarily a good thing, he said.

China can use government policies to stimulate and shape the economy in the short term, "but in the long run, you can't beat market forces."

Gao added that CIC sees opportunities to invest in infrastructure in the U.S., the U.K. and Canada.



ECB still not Singnaled its opinion

The European Central Bank still has not signaled its opinion on the fiscal

summit plan reached last week

20-year secular bear market till 2020

1949-1968: 19-year secular bull market

The great Post-WWII expansion: “The 1949-1968 secular bull market was driven by postwar economic growth, fading deflation fears, low inflation, the institutionalization of equity and the resulting leap in P/Es.” For me a great time: high school, Marines, Korea, plus a great education on the GI Bill.

1968-1982: 14-year secular bear market

Shilling says “inflation caused by huge Vietnam and Great Society spending dominated the 1968-1982 secular bear market as it pushed interest rates up and P/Es and productivity down.” Remember the oil crisis, recession and a long sideways stock market for over a decade. I was on Wall Street with Morgan Stanley working on troubled banks, corporate and developer restructurings. Evaluated the collapse of the Federal New Towns Development Program for HUD. Long recession. No fun for most investors

1982-2000: 18-year secular bull market

With Reaganomics: “The unwinding of inflation generated the 1982-2000 secular bull market, aided by the consumer spending spree and, finally, dot-com speculation,” says Shilling. And oh how we loved stocks with 30%-plus returns, some even posting 300% annual returns. We went crazy. “This time it was different.” Barbers offered investment advice and neighborhood barbecues were abuzz with early retirement plans.

2000-2020: Yes, a 20-year secular bear market till 2020

“the speculative investment climate spawned by the dot-com nonsense survived. It simply shifted from stocks.” Our retirement, “pension and endowment funds have been increasing their exposure to alternative investments such as commodities, foreign currencies, hedge funds, private equity, emerging-market equity and debt and real estate” in recent years. Yes, the ‘90s insanity did survive, like Frankenstein, transplanted in a new body by the White House, Treasury, the Fed, Wall Street, and our dogmatic, self-destructive conservative politicians obsessed about tax-cuts-for-the-very-rich.

“a secular bear market really started in 2000 and may persist for a decade as a result of slower GDP growth,” yes, persist till 2020 “with 2% to 3% deflation.” He warns: “Nominal GDP might not gain at all,” like recent flat-lining. Which coincides with the expectations of America’s professional financial advisers.

So where do you put your money for a decade-long risky secular bear market? Expect our “faltering economy will put more pressure on profits and stocks, and initiate chronic deflation, supporting current low Treasury yields … the dollar is rallying as economic weakness spreads abroad.”

Unfavorable investments include: major bank stocks, consumers and other lenders, domestic stocks, conventional home builders, consumer-spending sectors and risky, speculative investments. Challenges to all sectors.

And on the plus side: The U.S. dollar, and for the long-term, dividend-paying stocks, asset managers, Treasurys, North American energy, apartment REITs and factory-built homes.

One final piece of advice, stop listening to Wall Street’s self-serving ship of fools