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Today's Market WrapUp 11.12.2007 Mon Tue Wed Thu Fri Kirby Archive Prescient
Pronouncements For those of you who ascribe to the notion that hindsight really is 20/20, I offer you these words uttered by Richard W. Fisher, Chairman and CEO of the Federal Reserve Bank of Dallas, on June 14, 2006: “Faith is certainly the basis of your confidence in the Federal Reserve. I have spoken in previous speeches of our “faith-based currency,” a term I use only slightly tongue in cheek. The dollar—like the euro, the yen, the British pound and other currencies—is what economists call a fiat currency. It is backed only by the federal government’s power to raise the revenues needed to meet its obligations and by the rectitude of the U.S. central bank. If the market were to lose faith in either assumption, the dollar would be debased.” You see folks, from where I sit it appears that confidence in the U.S. Federal Reserve is on the wane [all but shot if we speak in truths]. Constant bleats that inflation is low and contained are now sounding more and more like the charlatan calls that the sub-prime / credit-crunch issues we are now facing were contained too. As Bill Fleckenstein reported: “Economist John Williams says real unemployment and inflation numbers -- figured the old-fashioned way -- may be two or three times what the government admits. Here’s why, and what it means for Social Security.” Additionally, it increasingly appears that the ability of the U.S. to raise unlimited amounts of capital from the rest of the world is a dubious proposition at best. As reported by Bill Buckler in the Privateer: “August was the turn of the tide. The latest US monthly net TIC (Treasury International Capital) flows include all non-market flows, short-term securities and changes in banks' US Dollar holdings. This measure of US net foreign capital outflow(!) was $US 163 Billion in August compared with an inflow of $US 94.3 Billion in July. This is a net turnaround in the money flows across US borders of $US 257 Billion!” Despite catcalls and hubris to the contrary, the dollar has clearly been debased:
Regarding the Dallas Fed’s Fisher, it was Gary Dorsch, editor Global Money Trends Magazine who reported back in 2006 that: On April 11th, Dallas Fed chief Richard Fischer said the central bank will do whatever it takes to maintain the integrity of the US dollar, and to insure inflation doesn't "raise its ugly head". "In addition to a faith-based currency, we are the currency of the world and we must maintain its integrity. I will spend every ounce of energy doing that. I have no doubt that my colleagues will do exactly the same." In case there are any of you scratching your heads wondering to yourselves just what “doing whatever it takes” entails? Here’s a little hint:
Are you a believer? Today's Market Overseas equity markets began the week on a sour note with Japan's Nikkei Index falling 386 points to 15,197. North American markets fared no better with the DOW off 55.40 to 12,987.50, the NASDAQ down 43.81 to 2,584.13 and the S & P off 14.50 to 1,439.20. NYMEX crude oil futures fell 2.53 to finish the day at 93.78 per barrel. Interest rates were 8 – 9 basis points higher across the curve with the benchmark 5 yr. bond ending the day at 3.84% while the 10 yr. finished at 4.31%. On foreign exchange markets the U.S. Dollar Index gained .70 to 76.09. Precious metals were lower across the board with COMEX gold futures hammered for 26.20 to close at 806.70 per ounce while COMEX silver futures were hit for .75 to end the day at 14.83 per ounce. The XAU plummeted 14.91 to 171.82 while the HUI was beaten-to-a-pulp to the tune of 33.80 to end the day at 408.12. On tap for tomorrow, at 10:00 a.m. Sept. Pending Home Sales data is due, expected – 2.0% vs. prior – 6.5%. Then at 2:00 p.m. Oct Treasury Budget data is due, expected – 53.0B vs. prior – 49.3B. Wishing you all a pleasant evening, lot of luck and happy investing! Rob Kirby Copyright © 2007 All rights reserved. Contact
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