The Japanese quakes are the worst in decades and serious. The Nikkei 225 dropped from 10,500 to a low of 8,200 Tuesday, or by 22% in two days. It crashed over 1,000 points after a recovery from a low point of 1,400 points down. As the world’s third biggest economy with close ties to China and our own economy, we will all suffer the consequences.
Japan's market opened under pressure, and when prime minister Kan suggested that the radiation problem was not contained, all hell broke loose. The Tokyo Stock Exchange has various kinds of circuit breakers and, as a consequence, that market quickly reached the point where it was not trading, with all the action spilling over into the futures market in Singapore
RHODIUM TRADING THOUGHTS is about timely and profitable trading of precious metals. We do not believe every turn in the market can be called. Our goal is that our recommendations should be profitable. Profits are the goals, not trades. Do not expect all recommendations to be profitable. No system can achieve that lofty goal. Our goal is simply to state whether conditions for a metal are favorable or not.
Living in Chile, I experienced the February 2010 earthquake. That puppy measured 8.8 on the Richter scale at its epicenter. In Santiago, the earthquake registered about an 8.2—and I was on a 15th floor when it happened. Believe me, it was quite the experience. I wrote a first person account of the earthquake here.
When nothing changes, nothing changes!
As global oil prices surge above $100, consumers are once again reminded of the fact that oil prices are subject to the whims of geopolitics, weather, and growing demand. And unfortunately little is still being done to eliminate dependence on fossil fuels.
Banking crises unleash powerful deflationary forces of deleveraging and falling monetary velocity. In this environment, people, corporations, and eventually governments are unable to pay their debts and default. Government defaults typically lead foreigners to sell the local currency, and you get a currency devaluation. A devaluation makes prices for imported goods more expensive and leads to inflation. At the same time, governments and central banks fight the downturn with more expansive monetary policies, which leads to higher inflation.
It seems that most everyone is again focused on commodities and I continue to hear talk of $5.00 per gallon gasoline. I obviously can’t deny the fact that commodities have been in an uptrend. In fact, there is a longer-term cycle that averages some 3-years in the CRB Index.
The title above is a phrase coined by John Mauldin to describe Japan's financial condition, a subject upon which he expands further in his new book, written with Jonathan Tepper, Endgame: The End of the Debt SuperCycle and How It Changes Everything.