Archive for May, 2023

Double Dip Recession?

After a very profitable quarter for many companies and positive economic expansion for most countries, there is much concern among investors and economists that the United States will experience a either a recession or correction.  It is human nature to expect quick fixes for problems.  The recession of 2008 is no exception to this mentality.  Despite reeling debt problems that have reached the trillions of dollars, politicians still have difficulty stimulating the American economy enough to see jobless number significantly decrease.  With gas prices almost reaching records highs, demand destruction is imminent, if not already present.  This will make the US recovery sputter, if not completely falter.  

As predicted, the USD has strengthened against other global currencies after global reports indicate a worldwide slow down.  Additionally, commodity prices have tumbled in movement and in volume not seen since the market crash of 2008.  People are also questioning the sustainability of the Euro, after reports of ways to ween Greece off the Euro.  The Japanese Yen has also weakened against the dollar due largely to the Central Bank of Japan's decision to loosen the money supply.  The decision was made largely due to the aftermath of the horrible earthquake, tsunami, and nuclear accident that impacted GDP output.  


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Commodities Correction

As predicted by the Forex Robot team in earlier posts, after several months of impressive gains within the commodities sector since mid-February, a significant pull-back took place over this past week.  A combination of several factors were responsible for this massive correction, especially for silver prices.  After months of economic expansion and consistent job growth within the United States, investors and large funds managers began pouring their money into the commodities sector as a strategy to hedge against anticipated inflation.  Additionally, instability in the oil-rich Middle East and Nigeria caused many to believe that oil prices would rise indefinately.  

Investor sentiment began to change rapidly when the United States unemployment rate unexpectedly rose to 9% despite solid job creation.  Another factor that contributed to this sentiment was that housing prices continue to fall to levels below what they were prior to the onset of the "Great Recession" in 2008.  Oil prices also fell rapidly after it was reported that there was a huge build-up of crude oil in the U.S., which surprised analysts, who anticipated a draw-down.  With these bearish indicators in place, investors quickly took profit after months of commodities rallying.  

Silver, which nearly reached $50 an ounce, retreated to almost $35 an ounce.  Many agricultural commodities, such as corn, wheat, soybean, and sugar, also had lower prices. Gold had a modest price retreat to below $1,500.  Oil prices went from nearly $113 a barrel to $97 barrel.  Jim Rogers, the commodities guru, was recently interviewed on CNBC.  He believes that a pull back in silver was appropriate, while he emphatically explained to the TV hosts that oil prices will continue to rise over the long-term.  While he explained that consolidations often occur within the commodities market, which he believes is natural and important, oil prices will rise simply because of the world's insatiable demand for energy.  

The Robot Forex team believes that the recent spike in food and energy prices will cause the recent U.S. economic recovery to sputter.  However, this period of limited or minimal expansion will be short-lived, as many Americans have renewed confidence in their country's economy, especially after one of the best stock market rallies on record.  Oil prices will have a temporary price decline over the next few weeks, but are expected to rise again.  Goldman Sachs recently reported that even though a recent consolidation and price correction took place in the oil market, prices are forecasted to reach near-term highs by late 2011 or early 2012.   


Bin Laden is DEAD!

Bin Laden is Dead! 

After strong intelligence reports, President Barack Obama authorized US special operation commandos to conduct a deep and pinpointed raid against a well fortified and lavish compound deep in Pakistan.  The large compound is located in Abbottabad, a mid-size city in the northern part of the conservative Islamic country.  The affluent city has a population of over 100,00 and contains Pakistan's prestigious military academy.  According to media outlets, the American intelligence community is having difficulty accepting Pakistani claims that an expensive compound with barbed wire, high walls, and cameras did not raise red flags or suspicion.  

According to reports, special operation commandos were airlifted via helicopter to an area not far from the compound.  While details of the actual encounter are limited, it was reported that a fierce firefight took place between Osama Bin Laden, his body guards and US special forces.  Ultimately, Bin Laden was killed in the encounter, and his blood taken for DNA analysis to confirm his identity.  When this generation's leading terrorist had his body positively identified, his remains were taken to sea to prevent his burial place from being used as a place for martyrdom. 

President Obama decided personally to inform the American people of the events in a a breaking news presidential address.  His delivered his speech well, and chose his words delicately.  He made it clear to the people of the United States and the world that Al Qaeda remains a threat, and that many Muslims from around the world were impacted negatively by Bin Laden's murderous organization over the last fifteen year.  Most importantly, he emphasized the point that the United States is not at war with Islam, and is strictly interested in protecting its citizens from organizations that feel religiously compelled to kill men, women and children. 

Global markets responded positively to the news of Bin Laden's death, and the US dollar even rose in early trading.  However, the Forex Robot team does not believe that this important security event will have any serious long-term influences on currency price valuations.  In fact, some security analysts are warning that individuals or terrorist cells with some affiliation to Al Qaeda will conduct terrorist attacks against the United States and her allies.  Many in the Muslim world are skeptical of the United States, and might respond with fury over the alleged "mistreatment" of Bin Laden's remains whose burial was not conducted in accordance with Islamic law. 


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