Thursday, October 04, 2007

Another week closer to meltdown

We had a great metals week followed by a bad metals week which is to be expected as profit taking and a U.S. dollar bounce back were bound to eat away some of the gains. Does this mean it’s over? Hell no it’s just normal market action and it’s doubtful we will see a massive correction of recent gains considering nothing has changed to make things suddenly better.

The end of last week was a momentous occasion a real bank Failure! We’ve seen many non bank lenders close doors, go bankrupt or get bought in the last year but an announcement that NetBank had filed for bankruptcy was the first failure of a real bank in several decades and definitely a sign that problems are progressing up the food chain.

There are claims that the failure the failure of NetBank is a sign of the instability of the Net banking format and that the “branchless” bank business model is a failure. Is it a good sign or a bad sign that ING another bank of the same model is buying some of NetBank’s assets? The article claims ING is not a good performer compared to its peers and the business model as a whole is not a good performer.

On the U.S. economic front, today’s unemployment report shows the biggest jump of new claims in 4 months signaling further employment weakness.

In other relevant news Vietnam will refrain from buying anymore U.S. dollars in their attempt to keep the greenback strong. They claim the practice has been fuelling local inflation but the haircut they've been taking on the dollars value is just as likely a cause, Qatar move to divested itself of 59% of its dollar holdings in it’s $50 billion sovereign fund is another hit against the dollar

These moves cannot be good for the dollar's value and risks pushing other large dollar holders to follow their lead. A dollar run looks more possible every week, so don’t be fooled by this weeks dollar strengthening, the trend is and will remain downward.
Metals trend continues upward as will energy’s.

In fact, in the time it took me to write this the U.S. dollar has turned back down likely on the employment stats and metals regained their early losses and a bit extra. Don't worry, nothings changed.

The gold sovereign picture signifies nothing other than I think they are pretty and I'd like a bag of them.


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