There’s some smoke coming from Fannie Mae and Freddie Mac, says Chuck Butler. Fannie and Freddie were rumored to announce bailouts yesterday. These never materialized. There’s smoke but is there fire?
Washington’s military spending spree continues apace. And it’s a major contributor to the US economies woes, says Bill Bonner in The Daily Reckoning.
The US dollar showed further weakness today, as the New York Manufacturing index plunged to minus 8.7 in June — a bigger decrease than forecast.
The greenback was already under pressure as soaring eurozone inflation boosted expectations of an imminent rate hike by the European Central Bank.
As market uncertainty feeds into exchange rate volatility, currency expert Sean Hyman suggests two safe havens in The Offshore A-Letter…
Eurozone inflation measured 3.7% year-on-year in May, the highest rate for 16 years, reports Bloomberg. This increases the likelihood of an interest rate hike by the ECB in July, putting more downward pressure on the US dollar.
Money Morning’s William Patalon III discusses how rising inflation is dominating the news on both sides of the Atlantic:
Undoubtedly, a universal theme is emerging at the Fed and other world central banks: Inflation, Inflation, Inflation.
With commodity prices through the roof, governments and businesses see investing in resource-rich Africa as an increasingly attractive proposition.
Chris Mayer explains in The Daily Reckoning why investing in Africa holds such potential for profit:
Africa increasingly is right in the middle of the global quest for natural resources. It has the highest ratio of light and sweet crude in the world – the best-quality stuff you can find. And most of its oil – some 83% – comes from large fields that produce at least 100 million barrels per day.
Presidential hopefuls Barack Obama and John McCain have clashed over the issue of tax reform.
Obama has pledged to introduce a windfall profit tax on oil companies and raise income tax for those earning over $250,000 a year if he wins the White House. McCain favors a lower corporate tax rate (from 35% to 25%) and suspension of fuel taxes during summer. Both seek tax cuts for the middle class.
“Investors should focus their minds around one uncomfortable fact,” says Martin Hutchinson in Money Morning.
Data released this week show that China is still flying in the face the global economic slowdown. Retail sales there soared 21.6% year on year in May, despite a devastating earthquake and stock market slump. Exports for the same month surged 28.1%, even as demand in major western markets faltered.
“The export statistics are serving as evidence of an economic theory known as ‘decoupling,’”, writes Jason Simpkins in Money Morning, “in which emerging markets in Asia and Europe have developed enough market place muscle to no longer be dependent on the U.S. economy for growth”.
Foreclosure filings in the US rose 48% on the previous year in May, providing further evidence of a deepening housing market slump.
“While the U.S. housing market is still searching for its bottom, the situation is much livelier just south of the border.” says Sara Nunnally in Taipan Daily. “Mexico’s housing sector is seeing a strong resurgence.”
US gas prices have reached a record of $4.05 and energy wonks now say that US gas prices could rise to a national average of $4.25 a gallon by the Fourth of July and are unlikely to fall as long as oil prices keep surging.
Jennifer Yousfi explains how US gas prices could keep on rising…
If oil stays near $140 per barrel, gas prices could easily top $4.75 a gallon by the Fourth of July holiday, Mark Zandi, chief economist at Moody’s Economy.com (MCO), said in a recent research note.