June 06, 2013

June 06, 2013

U.S. Dollar Dominates World Currencies; U.S. and Japan Dominate World Stock Markets

Buy U.S. Stocks On Dips

Reviewing world markets for the last few months, we see that the obvious message is that the U.S. dollar has been king.

All major currency groups except the Chinese yuan have fallen versus the U.S. dollar.  The yen, euro, Swiss franc, Australian and Canadian dollars, British pound, Brazilian real and Norwegian krone, among others, have fallen against the U.S. currency.  The Japanese and U.S. stock markets have been the best — especially when you consider that the U.S. dollar has risen against almost all other currencies…

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Japan Economics and Politics

Japan’s economy picked up in the first quarter of 2013.  GDP expanded at a 3.5 percent annualized pace.  This pace is welcome after declines in Japanese GDP in Q2 and Q3 2012, and tiny improvement in Q4 2012.

Export growth, which was negative in the second half of 2012, rose in the second quarter of 2013, as did consumer spending

The Japanese Business Picture Brightens

Business investment, which is a lagging indicator, continued to contract, while residential and public investment rose.

Business inventories declined, highlighting strong consumer demand.  Surveys such as the Tankan Survey which measure business and consumer psychology, saw increasing optimism…

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The Future of Austerity in Europe

Last Wednesday, the European Commission, the executive body of the EU, published a communication titled “Moving Europe Beyond the Crisis.”  It gives a break to a number of European countries who are struggling to meet their required fiscal targets of budget deficits of less-than-3 percent of GDP — Spain, France, the Netherlands, Poland, Slovenia, and Portugal.  Their deadlines will be extended by various periods, to 2014, 2015, and 2016.

In return, the Commission is pressing the six governments to engage in longer-term fiscal and market reforms — particularly tax, social benefit, and labor market reforms.  The last is deemed especially important by the Commission, which holds up Germany as an example of an economy that did painful reforms a decade ago and has since benefitted from them in competitiveness and growth.  The Commission says:

Structural reforms are essential to kick-start growth and serve the dual goal of reducing unemployment and restoring the sustainability of public finances.  Restoring competitiveness at home is also key to seizing growth opportunities world-wide.

France receives particular criticism for its employer contributions to social benefits, its recently enacted minimum-wage hike, and an unemployment benefit regime that does not “ensure adequate incentives to work.”  French authorities have expressed general approval of the Commission’s observations and recommendations.  (Electorate be damned: François Hollande doesn’t have much to lose in public approval at this point anyway.)…

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Shale Gas and Oil Updates

Debate On LNG Exports Continues As Facilities Await Approval

Twenty-one liquefied natural gas (LNG) projects are awaiting approval from the U.S. Department of Energy.  If all were granted, their permitted exports of some 28.3 billion cubic feet of gas per day would account for 41 percent of last year’s U.S. gas production.  So far, only two — Cheniere Energy’s Sabine Pass facility and Freeport LNG Development’s Quintana Island facility — have been granted approval for broad exports to countries with whom the U.S. does not have a free-trade agreement.  (Approval for exports to countries with free-trade agreements is easy to come by, but South Korea is the only large LNG import market that falls in that category.)

A political debate continues between proponents and opponents of LNG exports.  On the anti side is a coalition of chemical and steel companies and environmentalists.  The chemical companies benefit from rock-bottom prices for natural-gas energy and chemical feedstocks.  Environmentalists are concerned on the one hand about environmental damage from fracking, and on the other hand about the consumption of any hydrocarbon-derived energy.  (Our research has suggested to us that fears about fracking’s environmental impact are often groundless or exaggerated, and we think that natural gas is a cleaner energy option than many others.)  Under the umbrella of a lobbying group called “America’s Energy Advantage,” the corporate opponents of exports make the case that greater overall economic rewards will be reaped by treating natural gas as a “strategic resource” and restricting its export…


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Guild Basic Needs IndexTM

Track your basic needs at www.gbni.info

Our GBNI showed a continued trend towards higher prices for basic, essential needs in April.

In this week’s Premium Global Market Commentary available to Gold Subscribers, we features:

  • Glass: Google Brings Brand Clout and Deep Pockets to Wearable Tech

    The imminent arrival of Google Glass may be the tipping point for “wearable tech.”  Mobile devices with micro-displays (think Glass or the fabled and elusive iWatch) face challenges on a number of fronts, both social and technical.  Google is almost uniquely positioned as a brand and as a heavy-hitter with abundant financial, technical, and intangible social capital to catalyze the emergence of new applications of this technology…

    What is Google Glass?

  • Newly Implemented Executive Summary

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