Good Morning America, How Are You?
A jolly Thursday to you, wherever you are in the
world.
Yesterday, I started cleaning out the grass around my
underground sprinkler heads. I have 120
heads to clean out. I bought a 7"
Donut tool from Orbit. That works very
well indeed. 7" is too large
really, but I should not have to clean the sprinklers out again this year, and
next year should be easier.
I'm still thinking how to mow my lawns so that I do not run
over the sprinkler heads with my tires.
Yesterday was hard physical labor for me until I stopped at
6:30 PM PDT last night. I'm pretty sore
this morning. I was turning my compost
piles, and making new planting soil for my vegetable garden.
The later peonies are showing signs of blooming. I so hope we do not get another hail storm
this time.
Have a great day.
Enjoy your food, wine and your family.
Summary: JUNE 5 - The EURO Show - its over...
1.
Today is the Super Mario show at the ECB in
Europe. Expectations are high, and
speculation on what will happen is all over the map; except there seems to be a
consensus that whatever happens will be good for the equity markets. Personally, I think the expectation are too
high, and investors and traders will find it a oh-hum moment.
a.
An ECB rate cut tomorrow will not be the central
bank's last move. It is battling a
prolonged period of low inflation.
Reportedly, ECB is debating a cut of 10-15 basis point in both the benchmark
lending and deposit rates. For deposit
rates, this would take the rate into negative territory.
b.
Many expect the ECB to lower its inflation
forecast from the 1% in March. May data
indicates inflation slowed to its lowest levels in four years.
2.
Incoming breaking news: ECB cuts rates and
lowers mortgage rates. At 5:45 AM PDT,
the futures market in the S&P 500 is setting record highs. Nothing has changed. No matter how weak the economic news, the
stock market is going up. The Politicos
and Bankers are in their sixth year of success in driving the stock market
higher giving the citizens hope that things will work out. In the set of all USA citizens, who benefits
from this facade of wealth? Is it big
Corporations? It certainly appears that
way, but they are not raising wages, nor are they hiring as noted by this
morning's unemployment report (initial claims jobless claims climb to 312,000). Is it the TBTF (too big to fail) banks? Well, certainly the executives are
experiencing historically high pay and bonuses.
Overall in every market, there appears to be a disconnect with
reality.
3.
Nothing else matters today except the ECB. You and I will have to remain optimistic the
market will rise when NY trading opens at 6:30 AM PDT.
4.
Have you thought about the value of the dollar
recently? What happens to the dollar's
value when the ECB reduces interest rates?
We have the US and Japan devaluing the currency, and now that the ECB
has joined in, will the Euro rally or decline?
Well, Japan's efforts have not weakened the Yen for long. My point is, that when central banks all
print money, then the competitive position does not change. Nothing is helped for the people when
everyone is racing to be last (in terms of value of their currency). The only country (or countries) that are
helped, are those with little debt and moderate growth. That describes Norway (and a few
others). Basically, don't you think that
the US is going to have to do something to weaken the value of the dollar? Then Japan will have to respond to just keep
where they are? Then after all that
isn't the Euro going to appreciate (after a short down trend), and the ECB will
be right back where it was in terms of the EURO against the Dollar? In order for the Feds to manage the US dollar
down, won't they have to implement another QE type program? How else will they make sure the $$$ does not
get too expensive?
5.
China weakened the Renminbi / Yuan overnight
after letting it appreciate for the day before.
Ah, the power of a huge economy with trade surplus and lots of
GOLD.
6.
Gold should be volatile today as traders, big
banks, and hedge funds digest the ECB announcement.
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