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­­Our Two Cents – Week of 1/30/12

As January flips to February this week, U.S. economic optimism continues prevailing, while Europe strides toward economic reform.

Focusing on the economy, President Barack Obama delivered his State of the Union address, outlining a path to constructing “an economy built to last.” On the heels of the president’s speech, The Wall Street Journal and NBC released a poll showing that Americans view the economy a bit brighter. According to results, 37 percent of respondents said the economy will get better in the next 12 months. One sign of economic restoration is consumer confidence. The U.S. Consumer Confidence Index climbed to 75 from 69.9 at the end of December—the highest level in almost a year. Experts said an improving jobs market and higher stock prices helped fuel the increase. Additionally, about two-thirds of economists who participated in the National Association for Business Economic survey believe the nation’s gross domestic product will bump to a rate of more than 2 percent. The week ended with the economy growing at an annual pace of nearly 3 percent in Q4 of 2011.

While the U.S. received economic assurance, Europe remained focus on its fiscal matters. At the Jan. 30 summit, European Union leaders agreed to a permanent rescue fund for the euro zone. Leaders will sign a treaty establishing the European Stability Mechanism (ESM), “a 500-billion-euro permanent bailout fund that is due to become operational in July, a year earlier than first planned.” Summit participants also discussed ways to create more job opportunities and financial growth. Aside from the treaty, Spain still faces recession as tourism is expected to remain low in the winter. Factors such as austerity measures and higher taxes also might bruise the country.

• EU leaders to agree on permanent bailout fund, balanced budget, Reuters, Jan. 30, 2012
• European Cliff Hanger – Spain, Forex Crunch, Jan. 30, 2012
• U.S. Michigan Consumer Sentiment Rises, Bloomberg, Jan. 27, 2012
• US Economy Grew by 2.8% in Q4 2011 – Dollar Rises, Forex Crunch, Jan. 27, 2012
• WSJ/NBC Poll: A (Bit) Brighter View of the Economy, Wall Street Journal, Jan. 26, 2012
• Obama outlines path to ‘an economy built to last’, USA Today, Jan. 25, 2012
• Survey: Economists see modest pickup in growth for 2012, little change in job market, Associated Press, Jan. 23, 2012

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

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As we mark its 10th anniversary, it’s clear that Sept. 11, 2001, continues to impact our country’s financial infrastructure. Here’s some perspective as well as our check-in on this week’s headlines:

The destruction of the World Trade Center back on that frightening Tuesday morning halted the markets, closing the New York Stock Exchange for four days. At the time, the U.S. was sliding off the bubble burst and was battling a recession from March 2001 to November 2001. Fast forward some years to the economic downturn of 2008 and the current crisis stamped by Standard & Poor’s downgrade of the nation’s AAA credit rating. The past decade’s fiscal rollercoaster has cranked to a higher level as jobs thwarted downhill. President Barack Obama took to the national airwaves on Sept. 8 in a televised speech, challenging U.S. lawmakers to enact a $447 billion package of tax cuts and new government spending that aims to stimulate a stagnant economy. As jobs have been butchered, so have hedge funds, especially as the worldwide economic chaos broils. Experts say several big hedge funds such as MLM Marco Fund are poised to face steeper losses before 2011 turns 2012. The Dow Jones Credit Suisse Core Hedge Fund Index dropped 3.76 percent as of Aug. 31 compared to a 3.1-percent dip in the S&P 500 index. Beyond our nation’s borders, the euro/dollar has slide into a six-month low, catalyzed by Greece’s slumping finances. The country last week faced a chance that it would run out of money in October when expected to fall short of 1.5 billion euros without the next round of help. What’s next?

• Market Moments Since 9/11, Forbes, Sept. 9, 2011
• EUR/USD Dips Into 6 Month Lows as Greece Faces Payment Freeze, Forex Crunch, Sept. 9, 2011
• Obama Challenges Congress on Job Plan, The New York Times, Sept. 8, 2011
• Forex Trading Volumes Near Record Levels, The Wall Street Journal, Sept. 7, 2011
• Big hedge funds are getting slaughtered, CNNMoney, Sept. 7, 2011
• U.S. Job Creation On Downward Trajectory, Business Insider, Sept. 6, 2011

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

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It’s hard to believe that we’ve already hit August. While summer is usually a quiet time to relax, the world of news media certainly hasn’t this past week. We kept a watchful eye on the outcome of the U.S. debt ceiling, but we also read headlines from around the world.

Here in the U.S., we’re all glued to the debt ceiling discussions as lawmakers continue debating on the heels of the Aug. 2 deadline. For traders, this event can be tricky to trade, but economists have pointed out some “winners” of the crisis including the Swiss franc, which appears to be a safe bet for investors due to its recent rise in value. Interestingly, President Barack Obama has called on U.S. citizens to tweet to lawmakers about raising the debt ceiling, believing that putting thoughts into tweets could put pressure on officials. According to a July 29 Commerce Department report, the U.S. economy is still showing signs of slowness as the gross domestic product grew 1.3 percent in the second quarter. Economists called the report “shocking,” saying slow growth, higher inflation and almost no consumer spending aren’t good-news indicators for the country. A weaker dollar also has been fueling sales, helping to increase U.S. companies’ second-quarter results despite having to pay for more expensive commodities such as raw materials. Abroad, Greece will default on debt after European officials approve a plan that will see bondholders foot part of the bill of a second bailout.

• Greece Will Default on Debt After EU Plan: S&P, Bloomberg, July 27, 2011
• Weaker Dollar Fuels Sales, Wall Street Journal, July 28, 2011
• Recovery Still Slow as New Data Show Little Growth, New York Times, July 29, 2011
• President Obama Calls On U.S. Citizens To ‘Tweet’ To Lawmakers About Raising Debt Ceiling, TechCrunch, July 29, 2011
• Five winners of the debt ceiling crisis, CNNMoney, July 29, 2011
• Debt ceiling: What they’ll be voting on, CNNMoney, Aug. 1, 2011

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.