Trade Deficit
This is a two day economyguy.
Stocks finished the week with the best gains in a long time. Everything is rosy and everyone thinks the rally will go on forever. In reality this is just a bear market correction, and will trap some happy bull thinkers.
Bonds moved sideways both days.
The dollar moved sideways too with a slight strengthening by the Euro, but not the Yen or Swiss Francs.
Oil and gasoline both moved up the past 2 days.
Gold continued its rallying comeback after its profit taking fall to below $900/ounce.
In the news today…..
The Trade Deficit was $36B in January which is a reduced trade deficit for each of the past 6 months. Here are some of the details for you to ponder:
- The oil price decline caused the biggest reduction in imports.
- Both imports and exports declined – so we are also selling less overseas – bad news for our factories.
- The Trade Deficit with China GREW 3.5% – and this was caused by less exports to China.
Only a zero Trade Deficit followed by Trade Surpluses could solve our long term economic problems. What is the chance this will happen?? Not too great as oil price imports will increase in coming months, and we’re doing nothing to pump US based oil to stop these massive dollar outlays.
China has told the US that they don’t want the US to devalue the Dollar – through “reckless spending.” China is concerned with the same thing I have been reporting as a big possibility – inflation in the US followed by reduced Dollar exchange rates. China is just talking about its own self interest. While it is maddening to have China lecture the US on its “reckless spending”, China’s advice is much more sound that all the words coming out of Congress right now. Hard to believe, isn’t it??
Here are the last numbers for the past 2 days (first delta is today/second delta was yesterday):
Dow Jones 30 Industrial – 7169 (up 54/239 points)
10 Year Treasury Bond – 2.91% (down 0.01%/0.01%)
Euro – $1.2928
Gold – $930 (up $6/13)
Oil – $44.56 (down $0.78/up $2.47)
Gasoline – $1.35 (up $0.01/$0.09)
China should be worried about their dangerous over investment in US Treasury obligations. Washington ’s long-term choice is either repudiation or monetization. For monetization to be effective, the depreciation in the dollar would have to be substantial and this in turn would dramatically raise prices of imports for American consumers which would mean a tremendous drop in foreign imports. Debt monetization would cause more disruption to exporting nations than selective repudiation of Treasury debt.
Washington has bailed out the banks, Wall Street & their Washington special interests and much of the cost is added to the national debt to by paid by this and future generations while real estate and investments continue to fall. Find out what a growing repudiate the debt movement could mean for treasury bonds, the dollar, gold and the stock market.
The Campaign to Cancel the Washington National Debt By 12/22/2013 Constitutional Amendment is starting now in the U.S. See: http://www.facebook.com/group.php?gid=67594690498&ref=ts
Thanks,
Ron Holland