There are several events that seem to be merging over the next two weeks that point to the world economy teetering over the edge. Last article I posted a clearly illustrated piece that the world’s major governments are printing money willy-nilly. This can do nothing but push hyperinflation, or one would think. Indeed world food prices are skyrocketing.
Then we hear that Bernanke et all have announced QE3. This is another push to hyperinflation. However, the most dangerous events unfolding are related to world’s oil prices, which are pushing $115.00/Barrel.
Lastly, the Federal Government, although they kicked the can down the road for two weeks, will face the harsh realities related to the Federal Government’s budget and deficit. All these elements coming together within the next two weeks are the ingredients for the perfect storm in currency markets.
According to Gonzalo Lira today—Wednesday, March 2, 2011—is a key date: Over the next eight trading days, we will see if the dollar rebounds above 77 on the index, or if it bounces back up. If it bounces back up, we’ve kicked the can down the road a bit. But if it breaks lower, then this is the beginning of the death-slide of the dollar.
These events are not factored by the obvious natural incidents that are occurring in the US, Australia, Bangladesh, and New Zealand, just to name a few. These add up to billions of dollars of damages that governments did not factor at all in their budgets.
Also not factored is the number of planned job cuts announced by U.S.-based companies increased for the second consecutive month in February, rising to 50,702, the highest total since March 2010, according to the latest report on monthly job cuts released Wednesday by global outplacement consultancy Challenger, Gray & Christmas, Inc. The 50,702 job cuts announced last month was up 32 percent from January’s 38,519. It was 20 percent higher than the 42,090 planned layoffs announced in February 2010.
Those of you in large market positions better pay attention on an hourly basis for the next 14 days. The rest of us poor smucks just have to figure out how we get to work for the week when gas hits $5 bucks a gallon and it will within the next 45 days. Sooner, if things go to hell in a hand basket in the ME. So far, The Saudi’s have stepped production to try and keep a cap on oil prices, but if the planned demonstrations go off in Saudi next week as rumors have it, then all bets are off as to how high oil prices could go.
So check the supplies one more time and let’s hope I am absolutely screwed up and too pessimistic. However, like the farmer, I smell a bad storm acoming.