Daily Reading – Tuesday, May 3, 2011

Gavyn Davies: Anglo Saxon GDP not as weak as it appears

The past week has seen the publication of disappointing Q1 GDP data for both the US and the UK. On the surface, this seems worrying, since these two economies have always been the most vulnerable to double dip recessions, because of their exposure to housing and their bloated financial sectors. In both economies, the slowing GDP figures have led to calls for further fiscal or monetary stimulus. However, the official GDP statistics are probably exaggerating the extent to which the economies have in fact slowed down since the beginning of 2011.

The Big Picture: When Will S&P500 Regain All Its 2007-09 Losses?

If history is any guide, the S&P 500 Index is heading for new highs early next year. That is according to Thomas J. Lee, the chief U.S. equity strategist for JPMorgan (via Bloomberg’s Chart of the Day).

FT Alphaville: Volatile silver

As Dow Jones noted, two weeks of gains for the precious metal were erased in only 11 minutes as markets opened for electronic trading in Asia on Monday, with prices falling as much as 12 per cent in the session.

JESSE’S CAFÉ AMÉRICAIN: Gold Daily and Silver Weekly Charts – Fool Me Once Shame On You…

One cannot help but notice that the bear raids in the precious metals sector are coming in thin trading and are notable for their lighter volumes as compared to buying. They are also coordinated across a variety of related products including mining stocks etc. which are likely used to hedge losses on the futures contracts.

JESSE’S CAFÉ AMÉRICAIN: CME Announces Third Margin Increase For Silver in a Week – Karma? Ain’t It a Bitch.

Some instant pundits were citing ‘exhaustion’ which they had seen in the silver market as a cause for the recent declines.

Only someone talking their book, or in complete ignorance of market dynamics, would cite ‘buyer exhaustion’ for such a precipitous decline when the exchange continues to raise margins, and the bears hit the price repeatedly in the off hours trade.

BeyondBRICs: Brazil’s misleading trade surplus

Take a look at Brazil’s trade balance and you might be surprised.

This is the country with one of the world’s most overvalued currencies, a currency which is now so strong that it is supposedly crippling exporters and flooding the country with cheap imports.

However, Brazil’s trade surplus actually widened for the third consecutive month in April and reached a record for the year, data showed on Monday.


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