Juggling Dynamite

Danielle was a guest today with Phil Mackesy on Talk Digital Network discussing recent trends in the global economy and markets.  You can listen to an audio clip here.

Two long years ago in August 2010, the US Federal Reserve announced plans for wide scale asset market manipulation at the annual Jackson Hole Conference in Wyoming starting with the now infamous “QE2” program. Other central banks joined the master plan thereafter with wave after wave of “stimulus”, intervention and bank rescues on taxpayer tabs. The below chart of the Euro tells this story. A currency that was highly over-valued 2 years ago, was pumped back up with global speculation and liquidity only to recently succumb once more to the natural forces of mean reversion. In this sense the Euro has become the very face of the risk trade and begs the question– what next oh great monetary magicians?

Source: Cory Venable, CMT, Venable Park Investment Counsel Inc.

The renewed plummet in the Euro casts a foreboding shadow on stock and commodity markets which have yet to fully follow suit. The S&P remains some 35% above its level of summer 2010. As the global economy sinks further into recession, stocks rebound today on Euro short-covering going into the weekend. A crucial distinction in all of this is that in the summer of 2010 the world was widely believed to be coming out of recession and thus there was great hope in the power of monetary policy. Today we have the opposite reality.

Not only have monetary bullets now been spent, but the weight of the extra (reckless) debt piled on the past 2 years is now compounding to pull the world economy down even faster.  The disconnect between plummeting global demand and still inflated stock markets is further captured in this updated chart of heavy equipment maker Caterpillar stock (CAT) vs. the Dow 30 Index.

Source: Cory Venable, CMT, Venable Park Investment Counsel Inc.

Dr. Sanjay Gupta reports on new research showing that beyond weight gain, sugar can take a serious toll on your health, worsening conditions ranging from heart disease to cancer.

Here is a direct link.