The Brazilian currency, the real, got another boost from the 50 basis point (0.5%) hike in the central bank’s target interest rate on June 4, making Brazil treasury bonds an attractive component of a multi-currency investment portfolio.
Chuck Butler anticipated the rate move in The Daily Reckoning earlier this week…
Inflation in India reached a four-year high of 8.24% for the week ending May 24, with major banks forecasting further rises ahead as the government hiked the price of discounted fuel.
“Soaring oil prices have forced Indian authorities to raise subsidized fuel prices and risk propelling inflation that is already running at a three-year high,” says Jason Simpkins in Money Morning.
Crude oil prices spiked $10 today to reach a new record above $139, as disappointing US unemployment data, a weak US dollar, and a comment by the Israeli transport minister that an attack by Israeli forces on Iranian nuclear sites was “unavoidable” sent prices spiraling.
A Morgan Stanley forecast of crude oil prices at $150 within the month added further support to oil’s climb.
“I can’t think of a sector more vulnerable to soaring oil prices than the airlines,” writes Andrew Gordon in Investor’s Daily Edge.
The US unemployment rate rose to 5.5% in May, the biggest jump since 1986.
The picture would be even bleaker were it not for controversial changes in statistical methodology at the US Department of Labor, says Dave Gonigam in The Daily Reckoning.
Slowly but surely, awareness is growing that government economic figures are being cooked.
With the housing crisis in full swing Americans are frantically searching the internet for foreclosure predictions.
Foreclosure predictions, of course, have a nasty habit of turning out wrong.
According to AP, although the foreclosure rate in the US began to accelerate in 2006, “people lost their homes at the highest rate on record in the first three months of this year, and late payments soared to a new high, too – an alarming sign that the housing crisis and its damage to the national economy may only get worse.”
The European Central Bank has hinted that it may toughen its stance against inflation with higher interest rates from next month, reversing recent US dollar gains and causing a $5 jump in the price of oil, reports Bloomberg.
“Europe’s central banks have clearly made inflation their priority, a stark contrast to the U.S. Federal Reserve’s aggressive rate-cutting campaign.” says Jennifer Yousfi in Money Morning.
Despite Ben Bernanke’s assertion yesterday at Harvard University that the US economy is not returning to the stagflation of the 1970s, slower growth and rising inflation have many wondering what is a good investment during stagflation should the Fed chief’s bravado prove to be wrong.
Bill Bonner says it took Paul Volcker’s leadership, along with a crippling recession, to end stagflation in the 1970s:
As the credit crisis, a weakened dollar and rising US inflation continue to favor precious metals, more and more savvy investors are considing investing in a silver ETF as a way to play the situation.
However, Ben Bernanke’s newfound concern about the strength of the US dollar this week has hit gold and silver prices, and according to Kitco Casey’s Daily Resource, prices could tread water in the coming months.
Money Week, however, remains bullish about precious metals, despite the recent slide in prices.
Nuclear energy is back on the agenda in Britain – and uranium stocks will feel the benefit. The BBC reports that up to 14 new power plants could be commissioned, while 23 existing plants are to be replaced.
In Taipan Daily, Irwin Greenstein examines another country looking to uranium as a source of clean energy, with potentially significant implications for the market:
