But look closer and you’ll see that things aren’t going as planned. European bonds suffered a steep selloff earlier this month. And the euro was supposed to weaken to help boost European exports. Instead, it has rebounded against the dollar.
Europe’s banks are bleeding. A rumor is going around that rating agency Fitch is going to downgrade dozens of European banks. Worse, Greece says it will default on June 5. If it does, prepare for a financial earthquake.
The ECB is trying to paper over these problems. It just announced that it will speed up its QE bond purchases in May and June. Of course, it’s not the only central bank that’s trying to weaken its currency. Over a dozen central banks have eased their monetary policies in 2015 so far.
That includes China, where economic momentum has collapsed so fast that the Chinese central bank cut rates three times in six months.
As Jim Rickards wrote in his book Currency Wars, history shows that these beggar-thy-neighbor policies lead to inflation, recession, and even revolution. Rickards thinks that we’re in for an even worse financial crisis than the last one.
The good news? You can still generate huge returns using Rickards’ IMPACT system.
A European Central Banker Gave Hedge Funds Inside Information
Last Friday, hedge funders were dining in London with ECB executive board member Benoît Cœuré. Cœuré told them about the ECB’s plan to accelerate its bond buying… before the information was released to the public.
Naturally, the hedge funders did what anyone with an iPhone and some inside information would do. They placed their bets before the rest of the world found out about the ECB’s plans.
That’s called insider trading, and it’s usually illegal. If the tipster had been a private individual, he would be in big trouble. However, the rules don’t apply to central bankers.
We’ve seen this movie before. In 2008, over sandwiches and pasta salad, Treasury Secretary Hank Paulson gave a group of hedge fund managers advance warning of the impending rescue of Fannie Mae and Freddie Mac.
Hedge funders and central bankers are in bed together. We already knew that. But pay attention to what happens to European stocks next. The US stock market bottomed and then took off soon after Paulson tipped off the hedge funders in 2008. Knowing that Paulson and the US government had their backs gave the hedge funders courage to jump back in to the market. We wouldn’t be surprised if European stocks rally in the coming weeks.
A Gold Bull Market Is Fast Approaching
Gold is near its three-month highs. And with investors getting nervous that the stock market is topping, the next gold bull market could be around the corner.
Decisive bull markets have followed every bear market in precious metals, says Jeff Clark. Jeff has a long list of black swans that could ignite a gold bull any day. They include a stock market reversal, currency wars, a US dollar reversal, and bond-market turmoil.
Jeff isn’t the only analyst with bullish expectations for gold. One of the biggest online brokerages in Europe expects gold to rise to $1,450 an ounce this year. It also thinks China may pull its foreign currency reserves out of the US and Europe to fund its Silk Road project. That could send interest rates higher and create problems for the bond market.
Blips & Bogeys
Jim Rickards talks financial war and more (MP3 file).
Foreign investors are abandoning US stocks faster than at any time in the last seven years.
US manufacturing confidence has fallen to its lowest level since January 2014. It’s adding to fears that the strong dollar will hurt corporate earnings. How long before the Fed resorts to a fourth round of money printing?
Germany’s stock market has surged in the past few months. Yet traders are paying through the nose to buy downside protection on German stocks. They’re probably worried about Germany’s slowing manufacturing growth.
Former CEO of Lehman Brothers and villain of the financial crisis Dick Fuld is trying to make a comeback.
Apocalypse New Jersey: a portrait of a failed community.
Friday funny: Greece accounts for just 2% of the eurozone’s GDP. But as we heard someone quip, “a bath plug is only 2% of the surface area of a bath.”