WOW! More drama as the DOW picked up 150 points this morning!
Interestingly: the bonds are hanging on. FNMA 4.5% is ONLY down 3 basis points as of now. Money is obviously flowing into equities from somewhere. Watch for more action this afternoon as the auctions continue.
GOLD is trading at $1040 an OUNCE with weakness in the dollar.
Australia RAISED its key interest rate from 3% to 3.25% Why do we care? This is suggesting that they are DONE trying to GIVE stimulus to their economy...and are beginning to taper that off. This tells the world that they are now at a place of CONFIDENCE in their economy. Their unemployment rate at 5.8% is still WELL below their 30 year average at 7.2%.
Contrast that with ours at near 10%. Also bear in mind that we are at MAX giving with our key rate at the "zero-1/4 point". With LOWER RATES money is cheaper to get a hold of...so the theory is that people will get a hold of it and pour it into our economy in the form of business venture etc. Because we are very obviously in no position to raise our rates yet: the world sees our currency as over valued. The dollar tanked this morning...and as above: GOLD is flying high.
What is currency though? In the US our currency is backed with nothing more than our promise and the strength of our economy. We hear more and more about the coming forth of a "super sovereign currency" that will not be as fragile as the currency systems we have now. I have thoughts about that...and if you are interested: feel free to call or email.
