FXIS Market Insights

Here is our latest issue of market insights. Enjoy!

In This Week's Issue
• Weekly Snapshot
• Weekly Barometers
• Weekly Chart
• Recommended Read
• Recommended Video

Weekly Snapshot
• Spot gold touched an all-time peak of $1,632.16 a troy ounce on Friday (Reuters)
• U.S. real GDP grew at an annual rate of 1.3% in the second quarter of 2011 (ESA)
• The Dollar fell to a new record low of 0.7850 against the Swiss Franc (Reuters)
• Eurozone inflation unexpectedly fell to +2.5% in July from +2.7% in June (WSJ)
• Brazil imposed a 1% transaction tax on currency derivatives; Brazilian Real tumbles (FT)
• Australian Dollar surged to a 29 year high against the U.S. Dollar (Reuters)
• Insurance cost against U.S. default rose to a record; CDS trading picks up (FT)
• U.S. durable goods orders in June 2011 decreased 2.1% to $192.0 billion (ESA)
• India's central bank raised its benchmark interest rate by 0.5% to 8% (Economist)
• Moody's has cut Greece's ratings three notches to just one notch above default (AP)
• U.S. home prices were unchanged in May but still down 4.5% from a year earlier (Reuters)
• U.S. consumer confidence improved slightly to 59.5, up from 57.6 in June (Conference Board)

Weekly Barometers

Weekly Chart
As the negotiations about the U.S. debt ceiling approach their final hours U.S. treasuries seem to show no reaction to the prospect of a potential downgrade of the highly coveted AAA rating.  While the U.S. “still” enjoys being a member of this exclusive triple-A debt club one would think that something has got to give by now.  Hearing phrases like “the clowns in Washington” does not exactly sound encouraging to someone lending money to the US government for 10 years at a meagerly rate of 2.8%. And yet, Treasuries are still being bought perhaps as a way of parking cash for the time being.

Having said that, the flight to safety has taken a slightly different format as well.  Gold, Japanese Yen, Swiss Franc, Singapore $, Australian$, New Zealand $ and a few other currencies have all been at or near all-time records against the US Dollar.   In times of uncertainty cash is king.  These days however, cash is not limited to the green back.

Countries with AAA Debt Rating

Source: money.cnn.com

Recommended Read 
Notwithstanding its somewhat gloomy tone, give “This Country Defaulted Long Ago” a quick read anyway. While the author is not stingy in terms of assigning blame, one should also consider that demographic trends have been playing a major factor in rendering various government programs economically unviable.  One way or another, economic necessities will at some point determine an increasingly narrower choice of solutions.

Recommended Video
How very refreshing to see a plain talking economist.  Please consider Daniel Gross' interview with John Tamny.

Good luck and good investing!

Disclaimer
Neither the information nor any opinion contained in this communication constitutes a solicitation or offer by us to buy or to sell any securities, futures, options or other financial instruments or to provide any investment advice or service. Each decision by you to do any investment transactions and each decision whether a particular investment is appropriate or proper for you is an independent decision to be taken by you. In no event should the content of this communication be construed as an express or an implied promise, guarantee or implication by or from us that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Please note that there is no requirement and no commitment to make any payments to FX Investment Strategies LLC in order to access our published information be it via email or via website publication. All information is publicly available without any required monetary consideration.  Any payments or donations made by you are deemed to be voluntary and cannot be considered as payments for investment advice given to you.

Here is our latest issue of market insights. Enjoy!

In This Week's Issue
• Weekly Snapshot
• Weekly Barometers
• Weekly Chart
• Recommended Read
• Recommended Video

Weekly Snapshot
• The U.S. Consumer Financial Protection Bureau is open for business (AP)
• Dodd-Frank regulatory reform bill has its first anniversary (FT)
• Industrial new orders in May 2011 were up by 3.6% in Euro area (Eurostat)
• European leaders have agreed a new €109bn bail-out of Greece (FT)
• U.S. leading economic index increased 0.3% in June to 115.3 (Conference Board)
• The Fed and the U.S. Treasury have been preparing for a possible default (Reuters)
• The Swiss franc reached an all-time high of 1.1360 against the Euro (Reuters)
• Yields on ten-year German Bunds dropped to an eight-month low of 2.6% (Economist)
• U.S. existing-home sales declined 0.8% in June - seasonally adjusted (Realtor.org)
• Housing starts were up 14.6% from the prior month, and up 16.7% from the prior year (ESA)
• Former Ohio AG Richard Cordray to head the new Consumer Financial Protection Bureau (AP)
• The price of Gold rose above $1,600 per ounce for the first time in history (AP)

Weekly Barometers

Weekly Chart
The Dodd-Frank regulatory overhaul bill had its first anniversary this week.  The bill created, among other things, the Consumer Financial Protection Bureau which started operating this week as well.  Critics of the Dodd-Frank bill gave it a rather devastating report card suggesting that it failed on many of its promises so far. While the debate about the effectiveness of Dodd-Frank and its consumer watchdogs continues, we must wonder what all the other regulatory agencies have been doing all along?  With all these agencies watching the banks, how could the financial crisis ever have happened? Was it simply a case of too many cooks in the kitchen?  Having added even more cooks to be in charge of the financial oversight menu now, can we be confident that their “food” is going to be palatable?

Source: www.thefiscaltimes.com

Recommended Read
The debate about financial regulation and regulatory “oversight” won’t go away anytime soon.  Please consider “Regulatory reform: A disappearing act?” to get a sense of what we are up against.

Recommended Video
We may not all agree with some of his political views but the very outspoken Howard Davidowitz manages to leave you straddling between laughter and crying each time he appears in front of a camera.  His dictum “everything in business is confidence” cannot be underestimated. Enjoy this entertaining video!

 Good luck and good investing!

Disclaimer
Neither the information nor any opinion contained in this communication constitutes a solicitation or offer by us to buy or to sell any securities, futures, options or other financial instruments or to provide any investment advice or service. Each decision by you to do any investment transactions and each decision whether a particular investment is appropriate or proper for you is an independent decision to be taken by you. In no event should the content of this communication be construed as an express or an implied promise, guarantee or implication by or from us that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Please note that there is no requirement and no commitment to make any payments to FX Investment Strategies LLC in order to access our published information be it via email or via website publication. All information is publicly available without any required monetary consideration.  Any payments or donations made by you are deemed to be voluntary and cannot be considered as payments for investment advice given to you.

Here is our latest issue of market insights. Enjoy!

In This Week's Issue
• Weekly Snapshot
• Weekly Barometers
• Weekly Chart
• Recommended Read
• Recommended Video

Weekly Snapshot
• U.S. consumer prices decreased 0.2% in June on a seasonally adjusted basis (BLS)
• S&P says there is 50% chance it will cut the U.S. AAA rating within three months (WSJ)
• Euro area annual inflation was 2.7% in June, unchanged compared to May (Eurostat)
• Moody's said it was placing U.S. debt on review for a potential downgrade (WSJ)
• Italy approved austerity budget worth nearly €48 billion on Thursday (AP)
• The Swiss Franc reached another record high against the Dollar at 0.8080 (eSignal)
• Spot gold extended its record highs and hit a fresh record of $1,594.16 (Reuters)
• Ben Bernanke: Fed is ready to ease monetary policy if the economy flags (Reuters)
• PIMCO, the world’s largest bond fund scales back bets against US Treasuries (FT)
• Saudi Arabia increased its oil production in June to 9.7m barrels a day (IEA)
• China's GDP expanded 9.5% in the 2nd quarter from the same period a year ago (WSJ)
• Bank of Japan kept monetary policy on hold and upgrades view on the economy (Reuters)
• The U.S. trade deficit in May increased 15.1% to $50.2 billion (ESA)

Weekly Barometers

Weekly Chart
In the midst of the current U.S. debt ceiling debate, Ben Bernanke’s comments about the possibility of another round of quantitative easing (QE3) gave a clear market signal. Bond prices shot up again bringing the yield on the 10-year T-note safely below 3% this week.  Meanwhile, the price of Gold shot up to yet another all-time record finishing the week just a tad below $1,600.  The gold rally clearly isn’t over yet and the debate about the next realistic target has been revised upward to $2,000 (to most traders, the $1,600 level is just a matter of time, perhaps only days away).  The more relevant question though, what happens next?  Will the markets cool down before $2,000 is reached or is nirvana in sight for those who claim to see gold prices of up to $5,000 an ounce?

Recommended Read
Please consider School Daze, School Daze Good Old Golden Rule Days, another excellent piece by the bond-Guru Mr. Bill Gross. Very timely considering the current budget ceiling debate and the increase of tuition fees at many universities, particularly in California. 

Recommended Video 
Please consider Why Italy, a discussion between John Authors and Vincent Boland about a possible contagion of the Greek crisis to Italy and other European countries.  Notable comments: Time to say to the banks:  tough luck, time to take your "hair-cut."  

Good luck and good investing!

Disclaimer
Neither the information nor any opinion contained in this communication constitutes a solicitation or offer by us to buy or to sell any securities, futures, options or other financial instruments or to provide any investment advice or service. Each decision by you to do any investment transactions and each decision whether a particular investment is appropriate or proper for you is an independent decision to be taken by you. In no event should the content of this communication be construed as an express or an implied promise, guarantee or implication by or from us that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Please note that there is no requirement and no commitment to make any payments to FX Investment Strategies LLC in order to access our published information be it via email or via website publication. All information is publicly available without any required monetary consideration.  Any payments or donations made by you are deemed to be voluntary and cannot be considered as payments for investment advice given to you.

Here is our latest issue of market insights. Enjoy!

In This Week's Issue
• Weekly Snapshot
• Weekly Barometers
• Weekly Chart
• Words Of Wisdom
• Recommended Read
• Recommended Video

Weekly Snapshot
• U.S. consumer borrowing rose $5.1bn in May after a revised gain of $5.7bn in April (AP)
• U.S. nonfarm payroll employment was essentially unchanged in June +18,000 (BLS)
• U.S. unemployment rate was little changed at 9.2% versus 9.1% in May (BLS)
• The Bank of England’s keeps interest rates at their record low of 0.5% (FT)
• The ECB increased its benchmark rate by 25 basis points to 1.5% (Bloomberg)
• Australia kept interest rates on hold; the cash rate remains at 4.75% (Economy.com)
• Industrial producer prices in Euro area were down by 0.2% from April to May (Eurostat)
• John Paulson's hedge fund made $550M from bonds it bought in Lehman Brothers (FT)
• Moody's became the first rating agency to cut Portugal's rating to junk status (Reuters)
• China raised rates for the 5th time in eight months; one-year lending rate is now 6.56%  (WSJ)

Weekly Barometers

Weekly Chart
U.S. employment numbers were disappointing showing only a meager 18,000 new jobs that were created in the non-farm sector.  That number was far below projections and also well below the weekly estimates from several private job surveys.  Stock markets were caught off guard opening about 1% lower from the previous day. The unemployment rate went up just slightly to 9.2% which is a concern of course as it remains stubbornly high.  More concerning though are the implications for the long-term unemployed.  While companies are sitting on huge piles of cash, they have essentially been in a buyer's market for talent since the recent recession picking only the most qualified of workers to slowly fill new positions as they come available.  Job creation remains one of the big missing pieces of the giant economic recovery puzzle.  Please consider the weekly chart below, courtesy of Calculated Risk.

Words Of Wisdom
It never fails. Warren Buffett sure has a way of suggesting seemingly easy solutions to some of the most complex economic and financial dilemmas. In an interview with CNBC, Warren Buffett claimed: “I can end the deficit in five minutes.”

How?  You just pass a law that says that any time there's a deficit of more than 3 percent of GDP, all sitting members of Congress are ineligible for re-election.

Could it really be that easy?  Please enjoy this illuminating interview.

Recommended Read
We’re back to the theme of “currency wars” first brought to light in the fall of 2010 by Guido Mantega, Brazil’s finance minister. Please consider:  Currency wars not over, says Brazil - By Chris Giles and John Paul Rathbone.

Recommended Video
Never shy of throwing the odd curveball, James Altucher has a history of coming up with unusual assessments of markets.  This time is no different. Please consider Four Growing Industries With No Future.  Among several other controversial and counter-intuitive predictions, Altucher also maintains:

"Gas prices will fall to less than $1 a gallon and that basically puts solar, wind, ethanol and any other alternative energy out of business."

I can barely begin to imagine what $1/gallon gasoline prices would do the economy as a whole. How would that impact consumer prices, inflation and interest rates?  A nirvana for consumers or a preview of Japan?

Good luck and good investing!

Disclaimer
Neither the information nor any opinion contained in this communication constitutes a solicitation or offer by us to buy or to sell any securities, futures, options or other financial instruments or to provide any investment advice or service. Each decision by you to do any investment transactions and each decision whether a particular investment is appropriate or proper for you is an independent decision to be taken by you. In no event should the content of this communication be construed as an express or an implied promise, guarantee or implication by or from us that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Please note that there is no requirement and no commitment to make any payments to FX Investment Strategies LLC in order to access our published information be it via email or via website publication. All information is publicly available without any required monetary consideration.  Any payments or donations made by you are deemed to be voluntary and cannot be considered as payments for investment advice given to you.

In view of the upcoming 4th of July holiday, here is a light version of market insights. Enjoy!

In This Week's Issue
• Weekly Snapshot
• Weekly Barometers
• Halftime Reports
• Recommended Read/Audio

Weekly Snapshot
• Euro area seasonally-adjusted unemployment rate was 9.9% in May (Eurostat)
• Purchasing managers' indexes in Asia and Europe at multi-month lows (Reuters)
• Japan's Tankan survey shows sentiment worsened sharply after quake (WSJ)
• U.S. corn futures have suffered their steepest fall in 15 years (FT)
• The Fed ended its $600 billion bond-buying program (QE2) on June 30th (Reuters)
• The European Central Bank signaled rate hikes as inflation stays high (Reuters)
• Euro area inflation is estimated at 2.7% in June 2011 (Eurostat)
• BofA to pay $8.5bn to settle claims over mortgage-backed securities (WSJ)
• Greece passed an unpopular austerity plan critical to avoiding a debt default (Reuters)
• Christine Lagarde was named the new head of the International Monetary Fund (AP)

Weekly Barometers

Halftime Reports   
Time flies they say.  Yes, the first half of 2011 is already over.  This calls for a mini-review of how the markets faired during the first six months of this year.  Please find the charts below indicating the performance of the major stock markets as well as the returns of the major currencies and commodities. It has been an interesting and choppy first half so far.  The curious investor’s mind is waiting to see what’s next…

Recommended Read/Audio
Here’s an interesting take on the inflation debate. Please consider: Recalculating the Consumer Price Index by David Gura.  

Best wishes for a wonderful 4th of July week-end!

Disclaimer
Neither the information nor any opinion contained in this communication constitutes a solicitation or offer by us to buy or to sell any securities, futures, options or other financial instruments or to provide any investment advice or service. Each decision by you to do any investment transactions and each decision whether a particular investment is appropriate or proper for you is an independent decision to be taken by you. In no event should the content of this communication be construed as an express or an implied promise, guarantee or implication by or from us that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Please note that there is no requirement and no commitment to make any payments to FX Investment Strategies LLC in order to access our published information be it via email or via website publication. All information is publicly available without any required monetary consideration.  Any payments or donations made by you are deemed to be voluntary and cannot be considered as payments for investment advice given to you.