Monday, April 11, 2011

April of 2011

After Greece and Ireland, Portugal has asked for a bailout of USD ~120 Bn.
Prophecies of Euro dominance (as a secondary world reserve) have faded away.

China recorded its first quarterly trade deficit since 2004 - USD 1 Bn. Small drop, but for an entire quarter, one begs to ask whether this is a new trend.
I think not. Higher import commodity prices would fuel a larger import bill. When this supply side inflation ebbs, China ought to get back to its ruinous trade surplus ways.

The US is on its way towards the end of QE2 in June. The Fed has indicated that it will not fuel one more round of easing; skeptics think otherwise. Monetary easing is essential and USA's new debt issuances will require a large supportive buyer (Fed).

Brent is hovering around the USD 120-125 / barrel mark due to Libya and other African/ Middle East turmoil. Hot money combined with food and energy commodity supply constraints is fueling inflation everywhere which makes one wonder why the US is still alright with its inflation numbers...

Nonetheless, I'm pretty sure that the working American is feeling the pinch in food and energy bills.

I foresee a huge wind-down in commodity positions which would, of course, drive down prices. This would only be after China declares that GDP growth numbers are quite below par and that NPAs are above :|

A person I spoke to said it well, high inflation possible, deflation possible, another recession quite imminent.

We wait again.

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