EUR

any one buying Euro's on this sell off?

http://www.morningstar.com/cover/videocenter.aspx?id=341052 (must see, you may find it helpful)


I think a lot of people are now looking to indicators that were perfect for predicting market bottoms and a little less useful in the middle of a recovery. Initial unemployment claims is one of those indicators that is now being overused and misinterpreted. Just 12 months into a recovery seems just a little too soon to be looking for a major downturn. A pause, yes, but a collapse, no.


While consumption expenditures have recovered everything they lost in the recovery plus a bit, industrial production has recovered less than half of what was lost this recession, even after a very strong May industrial production report. Inventories too are still at record lows in terms of days of sales on hand. It seems to me that there is still a lot of runway in front of us.


Recoveries typically end when real (inflation-adjusted) consumer incomes deteriorate, as inflation erodes the consumer's spending power and the economy approaches full capacity utilization. With hours worked and nominal wages all moving in the right direction and now news that price levels are down for two months running, it looks as though real income growth should improve in the months ahead, which is more consistent with a broad-based recovery than a downturn.

Like a rocket in space, once put in motion, the economy's momentum is tough to stop without some external force. The cycle of more spending leading to more production, more income, and even more spending is a difficult thing to halt. However, outside government policy decisions are the factor that could upset the apple cart.

This Week's Data, a Draw Between Bulls and Bears

As I suspected last week, housing starts were down meaningfully due to the expiration of the homebuyers' credit at the end of April. For some reason the market acted like this was a huge surprise. Inflation data for the week were more tame than expected, with both the Consumer Price and Producer Price Indexes showing sequential monthly declines. Industrial production was the positive surprise of the week, with monthly growth of over 1%. The more forward-looking regional purchasing managers' reports were mixed; the Empire State index remained strong, while the Philly Fed report was off meaningfully from recent highs but still in growth territory.

I Am Not Folding My Cards Just Yet I continue to stick to my bullish point of view

....because of a strong manufacturing sector that continues to improve, falling prices in several categories, especially energy, and continuing improvement in the auto sector. But this will be subjectively observed ahead as commodity prices remains volatile with Highs changing to Lows and Lows to recovery stance.

Inventories, too, are still way too low, in my opinion. I expect continued improvement in wage income, and I think dividend incomes could improve in the months ahead. We have been truly spoiled the past several months as almost every indicator has pointed in the same direction: up. Now with many indicators pointing in different directions, more economic judgment is required.
Recall, back in the summer of 2009, I wrote almost monthly about how every indicator can't go up at the same time and not to panic just because some indicators--especially employment--were still moving the wrong way. Now some of those early indicators are starting to take a pause, and I suspect even my ever-favored manufacturing indicators will likely take a breather in the months ahead.

Meanwhile, I believe some sections of the service economy that have yet to show much growth will begin to kick in and become more important in the growth outlook in the months ahead.

1.35 at the end of 2010.

ACB Buying EUR/USD

Reports Asian sovereign bought EUR/USD in recent trade. Not that theres much happening at present. We sit at 1.2316.

opps got pressed by mistake


cont*

cheaper labour, wider access route to west as China face sea route problem from mainland. And growth in Chinese economy is still waited to be seen how they incentivise their domestic policies for the furture. Many economist have refuted that there is bust coming to China, but that be a good thing dodger! consider price can being in new and solid range for years ahead. It cant just keep moving down can it, not when the world is dependant on you steady supply.