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More downbeat economic news from
Europe yesterday sent the euro down to $1.2790. As The Wall Street Journal points out, this is the single
currency’s lowest level against the US dollar since September 2010, following the initial turmoil in
European sovereign debt during the spring and summer of 2010. Sentiment
remains uniformly bearish on the euro, which is often a decent contrarian
indicator. In the words of hedge fund manager Gravelle
Pierre (quoted in the Journal): "A lot of people are
short euros," he says. "As much as I think the euro is going down
to $1.20, everyone else is thinking the same thing and that scares me."
In a break from recent market
patterns, euro weakness coincided with gains in US equities. The latter moved
higher on news that America added 325,000 private sector jobs in December
– considerably more than the 125,000-230,000 analysts had been
expecting. One should be wary of such numbers, however, as they tell us
nothing about the quality of the jobs gained on net.
13.30GMT
sees the release of US nonfarm payroll and unemployment figures for December. Consensus estimates for payrolls are
for 150,000 gains, with the consensus for unemployment at 8.7%. If the trend
for above average gains in American economic statistics continues, however,
we are likely to see the numbers come in better than expected. This
column’s prediction? Job gains north of 175,000 and an unemployment
rate of below 8.7%.
But while these stats my be
getting better, the US Treasury’s balance sheet gets ever-redder: as ZeroHedge reports, Uncle Sam is
now just $25 million away from hitting his debt ceiling. Yet another reminder – as if it
were needed – of one of the major problems affecting the US
economy.
James Turk
has also done a new interview with King World News, that
talks about “silver as the next Apple” – Apple, as in the computer
company Apple, whose stock has increased 70-fold over the last decade. Check
out this article to see James’s argument in full, as well as his
long-term price target for silver.
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