Why Wall Street Should Keep an Eye on the Indian Wedding Season Written By: Eben Esterhuizen 2008-08-13 02:46:02
There is a growing consensus that it's going to be the rest of the world that will drag the U.S. into a recession at the start of 2009. Tuesday's U.S. exports data surprised to the upside, but you have to wonder how sustainable this kind of export growth is. Adam Carr at ICAP Australia pointed out that shipments to Italy, the UK and Germany - whose own outlooks aren't great - were what drove U.S. exports higher during June. The resilience of U.S. exports has been providing some support to the stock market, but we have to wonder if demand for U.S. exports will remain strong.
Will Bernanke Ignore Rising Shoe Prices Too? Written By: Deborah Evans 2008-05-13 20:13:36 Forget Iron Man and Superman. A new super hero has emerged; spawn of the creature from Jekyll Island–Fed Chairman Ben Bernanke!
Will High Oil Prices Regulate the U.S. Economy? Written By: Eben Esterhuizen 2008-05-28 00:09:20 "In the U.S., the Euro Area and the U.K., the track record of inflation during the past few years has deteriorated to the point that a material loss of credibility may well be imminent for all three central banks involved - the Fed, the ECB and the Bank of England," wrote Willem Buiter in a recent piece published by the Financial Times.
"Not surprisingly, mean inflation expectation one year ahead (according to the University of Michigan survey) now stand at 5.7 percent. Mean inflation expectations 5 to 10 years ahead are 3.5 percent. Loss of credibility in the Fed’s willingness and/or ability to maintain price stability is a fact - not surprising, given the institution’s willingness to cut rates massively and swiftly when the real economy turned down, despite continuing high inflation."
The common belief is that there is a negative correlation between the U.S. dollar and oil, a result of oil being priced in dollars. "As the dollar declines in value, so does the price of oil in non-dollar terms," explains Michael Woolfolk at the Bank of New York Mellon. "Consequently, foreigners bid up the price of oil and other dollar-denominated commodities. The result is that the price of crude oil and other commodities rise in dollar terms as the dollar falls in value against other currencies."
If, on the other hand, the dollar gains in value, so does the price of oil in non-dollar terms. The traditional argument is that a higher non-dollar price of oil reduces the demand from foreigners, sending oil prices lower.
