September 30, 2010 03:26 ET: MOODYS DOWNGRADES SPAIN from AAA to A1, 8 months after Fitch & S&P have both stripped Spain of its top rating. Moodys has consistently been behind the curve in its credit rating decisions. Most of the EUR losses focussed on EURJPY and EURGBP, while EURUSD pullback so far limited at $1.3550s as USD weakness remains the main theme on Fed QE and US Congressional bill. News that Anglo Irish will need as much as EUR 34 bln including a 67% haircut from NAMA. Technically, EURUSD has yet to regain $1.3850s on THE WEEKLY CHART, with $1.3520 now acting as key support (prev resistance). Watch USDCAD ahead of todays Jul GDP release, exp at -0.1%, which would be first negative monthly reading since August 2009. YEN STRENGTH STILL DOMINATES CHF as CHFJPY drifts near session lows at 85.11, suggesting EURJPY and CADJPY would be under more pressure especially in the event ahead of fresh worries from US jobless claims later today.
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By Nicholas Santiago on September 29th, 2010 3:07pm Eastern Time
I have been writing about the U.S. Dollar Index for ages now. Nearly everyday I point out the inverse relationship between the U.S. Dollar Index and the major stock market indexes. The current stock market reminds us of 2009 when the U.S. Dollar Index fell off a cliff and reached a low of $74.26 in late November 2009. Just realize that the U.S. Dollar Index has declined by more than 10.0 percent since June 7th, 2010. Think about about the residents of the United States losing 10 percent of there dollar wealth. It seems that the central banks are hell bet on destroying the U.S. Dollar Index. Yesterday and today are the first time I have seen CNBC actually report the weakness in the U.S. Dollar Index and explain how it trades inversely to the major stock market averages. All I can say is I am not surprised as to how late they are to the game but it sure is about time.
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By Nicholas Santiago on September 29th, 2010 10:19am Eastern Time
As we all know by now most Americans are sick and tired of the Democrats and the Republicans. Just look at President Obama's approval rating which is now around 46 percent. They are certainly not happy with him and the Congress approval rating is even lower. However, as bad as his approval rating is the former president and administration was just as poor and at times possibly even worst. Simply put the American people want to take back their country and believe that both parties are spending addicts on the back of the American individual that works and pays taxes. The United States has accumulated a $13.5 trillion debt. Who is going to pay for this?
The Tea party wants to pay down debt and cut spending which is the opposite of what the Democrats and the Republicans have done over the past 30 years. This is a movement that is growing exponentially among the working American public. The Tea Party is filled with former Republicans and Democrats. This movement knows that the current path the traditional two party system has taken America is unsustainable and will lead to the demise of the country. After all the S&P 500 Index is still around 27.0 percent below its 2000 and 2007 highs. Do the American people want another lost decade in the economy?
Here are the reasons why the Tea Party will spoil the current market rally:
The first reason is because the Tea Party will stop the printing of money by the Federal Reserve Bank. As the central bank continues to print money and floods the system will liquidity the U.S. Dollar Index declines. Therefore, even if stocks go up they are actually worth much less because they are denominated in U.S. Dollars. Why do you think gold is making new all time highs right now? Gold is a way of telling how much money is being printed. Gold is the only true currency in the world. Fiat money systems eventually all fail.
The second reason why the stock market will roll over is because the spending party in Washington by the Democrats and the Republicans will be over. The Tea Party will most likely stop all the special interest programs that currently seem to be so popular. At this time the spending is out of control and really cannot be calculated. The 2500 plus page laws that Congress writes are filled with so many different pork filled special items. For an example, new rules about gold being put in the health care bill. What does gold have to do with a health care bill? Has anyone ever read a 2500 page bill before it becomes a law? I seriously doubt it.
The next reason why the Tea Party will end the way America currently operates is because they will get rid of the too big to fail rule that is currently in place. Do you realize that these giant banks still have tons of toxic assets that have been shoved under the rug for the time being. Just because the country has now switched to Enron accounting this does not mean that this nuclear waste can stay hidden forever. Banks such as J.P. Morgan Chase & Co. (NYSE:JPM), Wells Fargo & Co. (NYSE:WFC), and Bank of America Corp. (NYSE:BAC) have actually become bigger than they were in 2008. Then when you consider that regional banks fail every week they actually have less competition. This will not be tolerated by the Tea Party. Nouriel Roubini says, "if the banks are too big to fail they are too big to exist." The Tea Party agrees. Please note that the banks have been lagging the rest of the stock market since the Labor Day rally began.
The Tea Party is a true breath of fresh air. As long as the Tea Party does not get corrupted and remains a movement, this country is about to reinvent itself. There will be pain. A mother is usually in agony for a short period before giving birth. However, that pain is forgotten when the child is born. This is what is happening now in America. Go Tea Party!
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