The Fed's latest policy statement suggested that it is most likely to complete the second round of quantitative easing (QE2) by June 2011. Discussions are underway about the status of financial markets after the termination of QE2 and if additional support will be necessary for self-sustained economic growth.
When the wonderful CFO’s of this world speak, it usually pays to listen. And they have spoken, at least as per the 1Q Duke/CFO survey that hit the tape last Thursday. Let’s listen in very quickly as there are a number of what we believe to be important messages.
Thankfully the news out of Japan regarding the potential for nuclear meltdowns has subsided, and global stock markets have rallied for two days in relief. Many on Wall Street are claiming the correction in global stock markets is therefore over, and it’s a buying opportunity.
After the earthquake and Tsunami wreaked horrendous damage in Japan and was blamed for huge drops in equity and other markets, extreme volatility was the best description of most global markets for this last week. The media even blamed the nuclear threat in Japan for the fall in the Dow Jones in the U.S. Clearly, this was not the case, but the extreme nature of the volatility has raised large questions as to what really is going on globally. To see why there is such high volatility over global markets we have to stand back so as to see the full picture.
The Japan quake is a game changer and tipping point. I can’t see how news networks can compare this to Kobe’s 1995 incident. For Japan, the classic measure of interest expense (red line) is rapidly pushing up to the 30% debt trap demarcation line, versus 22% in 1995.
So I was out of touch for seven hours or so. I check in with the news sources just now on all the stories that matter. Unbelievable how much things have changed in a third of a day. Even more unbelievable is that all of the news is good.
The "permanent Bull market" engineered by the constant intervention of banking and political authorities has a problem: the duration of each cycle is getting shorter.
As we all know, the central banks of the world have decided that in lieu of actual prosperity, they will provide the illusion of prosperity via a "permanent Bull market" in stocks.
The Prime Minister of Japan recently stated that his nation was facing its worst crisis since World War II. While most of the world is focused on tragic images of floodwater and rubble, and fixated on radiation levels, there is a bigger picture to be examined – one that also includes energy, coal and the Strait of Hormuz.
The code of chivalry said, "Thou shalt never lie, and shall remain faithful to thy pledged word." But a founding father of modern political science, Niccolo Machiavelli, said: "princes who have achieved great things have been those who have given their word lightly, who have known how to trick men with their cunning, and who, in the end, have overcome those abiding by honest principles."
Few sectors have been hit harder by the Japan disaster than uranium mining. Many of the smallest stocks have halved in value, and even major players have seen their share prices dive. Dominic Frisby asks: is now the time to buy, or is it still too risky?