Actually, we're not talking about the markets over the past two weeks, although a currency trader might be excused for thinking that we were. We're talking about the marvellous weather we've been having in southeast Queensland, Australia. First we had a lightning bolt that fried one of our computers. Then we had another one that fried the phone lines from the exchange, literally melted them into a lump. And then we had a "near cyclone" with 150-200mm (6-8 inches) of rain and winds of 100-120 kph (60-75 mph). Late summer in Queensland can be fun!
Anyhow, the phone lines are fixed, the computers are fixed, the floods have dispersed from our neck of the woods, and we are back up and running after the longest time we have been offline since we started the website back in 1995.
An auspicious day to resume updating too, what with Comex Gold up $US 8.40 on March 5 to poke its nose above the $US 400 level again and with Silver now hovering just below the $US 7.00 level (spot future closing price) after having risen $US 0.22 on the same day.
One very interesting feature of the past couple of weeks is that we have re-acquainted ourselves with getting the "news" from the mass print and tv/radio media. SHUDDER!! No wonder so many people are so uninformed/misinformed about the situation out there in financial land. If you haven't tried that for a while, give it a go. You will find it a sobering experience. And, if you were starting to take the internet for granted, it will give you a greatly refreshed appreciation of what a valuable resource it has become for finding out what is REALLY going on.
On the surface over the past two weeks, the $US has "recovered", powering rapidly skyward against the Euro and especially the Yen. Japanese investors are elated - the Yen has fallen from 105 to 111.5 to the $US, ostensibly boosting the export competitiveness of their companies, and the Nikkei reflects this. Even on March 5, when the $US index fell a full point (down 0.99 to 88.23), the Yen still managed to hang onto its losses.
The Euro has not been so "lucky". The ECB met and decided not to lower their rates on March 4, prompting the English-speaking media in the US and UK to claim that: "we never really expected them to anyway". The problem is that no matter how hard the press conference which accompanied the ECB's decision was examined/dissected, no hints that the ECB might be planning such a rate cut in the "foreseeable future" could be discovered.
Sure, nobody expected the ECB to lower rates. That's why the $US fell 2 Euros the day after they decided not to, right?
For just over two weeks, since it hit its 2004 low of 85.12 on February 17, the $US index has been "powering ahead", mostly on the back of frantic short covering. That rebound peaked (so far?) at 89.22 on March 4 before a relapse of 0.99 points hit on March 5. This is not definitive yet, after all, the $US index fell back 0.94 points on February 24, the last time before March 5 that the spot future Comex Gold price closed above $US 400. However, it is ominous, especially given the quantum leap (in relative terms) of the $US Gold and Silver price on the same day.
Something else happened on March 5 which threw a quick ray of light on the REAL financial situation within the US. The US Department of Commerce announced that their Producer Price Index (PPI) figure for February, which was due to be announced on Friday, March 12, would be "delayed".
On the surface, that might not be too big a deal. But when one takes into account the fact that the US PPI for January, due to be announced on February 19, has STILL not seen the light of day, the plot does tend to thicken. The Department of Labor is saying that they are having difficulties in updating seasonal adjustment factors and further difficulties in their conversion to a new "statistical system". Oh, well, that explains it, right?
Given the quantum leaps in the cost of practically every raw resource and basic commodity on the planet which has taken place in $US terms over the past six weeks, one can hardly refrain from contemplating the nature of the problem. Here we have a bunch of goggle-eyed bureaucrats and statisticians who, no matter how they try to bend, fold, spindle, mutilate, and otherwise manipulate the data, cannot get a number which they dare let see the light of day.
Contemplate, if you will, an "honest" measure of US "price inflation" - of either the producer or consumer variety - being announced. The shock would shake the heavens asunder. Contemplate further the Fed's present 1.00% official interest rate, the one they are displaying such laudable "patience" about raising. How long would that rate last in the face of honest data about price rises in the US. Conversely, how low would the Dollar fall if the Fed kept their Funds Rate at 1.00% in the face of this data?
Econometricians are prone to bewail what they call "exogenous variables". These are pesky facts which don't fit into their gravid equations which "measure" how an economy is functioning. Unfortunately, for those who would convince us that "inflation is not a problem", these exogenous variables are multiplying like rabbits in the outback.
So, the Dollar has had another hiccup. Gold is back above $US 400 - and has fairly rocketed by recent standards against other major currencies. The US is wrestling with economic data which is even harder to bend into shape than was the "evidence" of WMDs in Iraq. The pot is simmering. It won't take much to blow the lid right off.
It's nice to be back. Sorry for the delay. Stay tuned, the longer 2004 lasts, the more interesting it's going to get.