If you think all the game-changing decisions to be made on November 2 will be by voters at the ballot boxes, think again!
In his latest online presentation, Monty Agarwal reminds us that, on that very same Tuesday, Fed Chairman Ben Bernanke will …
corral together the other voting members of the Federal Open Market Committee …
send any dissenters off to the shearing shed, and …
before the following day, close the deal on QE2 — the next major round of mass money printing.
How ironic the twists and turns of history can be!
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By Nicholas Santiago on October 19th, 2010 10:10am Eastern Time
This morning most commodity stocks are selling off sharply after China raised interest rates by 25 basis points. While this move by the Chinese could slow down their economy it will certainly effect many commodity stocks. Commodity stocks will usually trade higher when the Chinese government continues to post positive economic news. This move by the Chinese is also likely to have caused the U.S. Dollar Index to spike higher. The U.S. Dollar Index is now trading higher $1.01 to $77.94. This is a lot of meat and potatoes in the currency world.
Stocks such as Cliffs Natural Resources Inc.(NYSE:CLF), Freeport McMoRan Copper & Gold Inc.(NYSE:FCX), and Southern Copper Corp.(NYSE:SCCO) are all trading sharply lower this morning. These stocks are directly impacted by the Chinese rate hike and the stronger U.S. Dollar Index.
Gold and silver are both trading sharply lower this morning on the back of the stronger U.S. Dollar Index. Since late July gold has rallied higher by 20.0 percent and was really due for a technical pullback or possible correction. Silver has actually outperformed gold recently by climbing higher by 30.0 percent since late August. Silver was also short term extended and overbought. Therefore, any real move higher in the U.S. Dollar Index should put pressure on the precious metals.
Spot crude is also declining sharply today. Crude is trading lower by $2.05 to $81.05. Recently crude has rallied higher by over 17.0 percent since last August. Often when crude trades above the $80.00 level it will become a direct tax on the U.S. consumer.
When the U.S. Dollar index rallies the stock market indexes will deflate and trade lower. This rate hike by the Chinese has helped to lift the U.S. Dollar Index today which will directly put pressure on most commodities.
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By Gareth Soloway on October 19th, 2010 11:34am Eastern Time
China struck back today, raising interest rates in a surprise action that shocked the world. The real reason behind this was most likely to strike back and the United States officials like Tim Geithner who have been calling more harshly than ever for China to let their currency float against the U.S Dollar. Treasury Secretary Tim Geithner has been calling China a major currency manipulator. This move by China smacked the Federal Reserve and Government policy of a weak U.S. Dollar right in the face. The Dollar soared today on the back of this China move. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) jumped dramatically today, trading at $22.64, +0.32 (+1.43%).
The big question must be asked. Who is really manipulating their currency? Yes, China ties their currency to the U.S. Dollar to artificially keep it low. However, the policy of the Federal Reserve is to drop the Dollar dramatically, printing money by the trillions and creating a false wealth effect. In reality, it can be argued that the United States is as big a manipulator of its own currency as China. This action by China was a clear shot across the bow of the United States ship. Essentially telling the U.S to back off and watch themselves while proclaiming themselves a big mega power like the U.S.
The SPDR S&P 500 ETF (NYSE:SPY) are trading at $117.38, -1.16 (-0.98%). The Dollars dramatic rise is the only reason the markets are lower. Many in the media will point to International Business Machines Corp. (NYSE:IBM) and Apple Inc. (NASDAQ:AAPL) earnings which were not quite as good as Wall Street had hoped. However, if you look at the futures overnight, they were trading positive, setting up for a flat to slightly higher day on Wall Street until China raised interest rates. The markets are purely a play on the currency right now. The Federal Reserve pushes the Dollar down to keep the markets up but cannot compete with China, at least not today. To gain more guidance, analysis, swing trades and education, join the Research Center.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
#1 Rated
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In addition to showing how overpriced the market was in 1999/2000, it suggests an SPX peak relative to current ( estimate of a near term peak) his earnings.
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