October 08, 2010

Market Wrap: for the week ending 8-Oct-2010

• Australian dollar hit 0.9918, highest level since the currency was freely floated (Reuters)
• Brazilian Real closed Friday at its strongest level in more than two years (WSJ)
• Dow Jones Index closes above 11,000 for first time since May (AP)
• Bank of America halts foreclosures in 50 states amid growing furor over document errors (AP)
• US nonfarm payroll employment down by 95,000 in September (BLS)
• US unemployment rate was unchanged at 9.6%; U6 unemployment rate at 17.1% (Bloomberg)
• IMF predicts that the global economy would grow by 4.8% over the year as a whole (Economist)
• Gold price at yet another record briefly above $1360 on Thursday (Reuters)
• European Central Bank kept interest rates steady at 1.0% (Economy.com)
• Euro area GDP increased by 1.0% during the second quarter of 2010 (Eurostat)
• US 30-year mortgage rates fall to 4.27% lowest on records dating back to 1971 (AP)
• The Bank of Japan cut its overnight call rate target to a range of 0-0.1% from 0.1% (Bloomberg)
• The Reserve Bank of Australia kept its key cash rate unchanged at 4.5% (Reuters)

Weekly Market Barometers    
stock-2010-0108   fx-2010-0108

Chart Of The Week
The US Dollar continues to be the leader against other currencies in a race to the bottom.  Meanwhile, Gold has been picking up the pieces appreciating in value to make up for the perceived loss in purchasing power from the declining US Dollar – at least in part. The Gold bugs continue to cheer while ever more retail investors seem to develop a desire to jump on the running train. Before loading up and jumping on this train, take a look at the very colorful history of the most precious of all metals.  Please enjoy this fascinating chart.

(Click on the chart for a larger image)
source: http://www.onemint.com/2010/09/20/how-did-gold-progress-through-the-ages

Recommended Read 
Please consider this illuminating write-up on QE2 by Ed Yardeni:  Why QE Doesn’t Work

Here’s an interesting quote from the article:

Bernanke knew back in 1988 that quantitative easing doesn’t work. Yet, in recent years, he has been one of the biggest proponents of the notion that if all else fails to revive economic growth and avert deflation, QE will work.

Good luck and good investing!

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