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EconMatters - Global Economic and Market Analysis That Matters

Gadhafi and The Hidden Pot of Gold in Libya

March 22, 2011 by EconMatters   Comments (0)

By Dian L. Chu, EconMatters Speaking through a telephone call to state television, Libyan leader Moammar Gadhafi delivered quite a defiant tirade on Sunday, March 20 vowing a 'long war to victory' and pledged retaliation against the international military action descended upon Libya.  Many military experts have suggested that the number of troops loyal to Gadhafi could be fewer than 10,000, and argued that Gadhafi will not last long at all. Moreover, US and European governments have imposed sanctions and frozen Libyan assets worth billions of dollars,...

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Japanese Yen: G7 Intervention vs Laissez-faire

March 20, 2011 by EconMatters   Comments (0)

By Dian L. Chu, EconMatters The world's fifth-largest 9.0 magnitude quake and the resulted tsunami not only devastated Japan, but also wreak havoc in the Japanese stock market. The worst two-day rout in 40 years caused a 6.2% drop in Nikkei share index, wiping £90 billion (roughly $145.45 billion) off stocks and shares traded there, reported The Telegraph. Separately, Financial Times quoted EPFR, a data provider, that Investors pulled $8.2 billion from equity funds, and $4.3 billion from money market funds, in the week to Wednesday, March 16. That in turn dragged share prices to a...

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Crude Oil and Gasoline Could Spike from Gadhafi's 'Long War' in Libya (Guest Post)

March 20, 2011 by EconMatters   Comments (0)

By Bob van der Valk The other shoe will drop in world oil markets this week after coalition forces headed by England, France, Canada and the U.S. attacked Libya over the weekend in an attempt to topple the Quaddafi regime. Crude oil prices may increase $10 a barrel and fuel prices by 25 cents per gallon. This is based on the possibilities Moammar Quaddafi vows 'a long war' and will avenge the bombings with retaliatory terrorist acts on other countries’ oil fields. The price of gasoline and diesel per the AAA Daily Fuel Gauge Report is: The average price of $4 per gallon...

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ECB Peripheral Divergence & EURUSD (Guest Post)

March 18, 2011 by EconMatters   Comments (0)

By Ashraf Laidi, March 16, 2011 The primary reason for the currency's stabilization earlier this year and the subsequent 10% rally from early Jan was the ECB's hawkish rhetoric in the face of rising inflation. 2.4% annual inflation was a sufficiently good reason for the ECB to make a hawkish twist, especially as it underwent the awkward task of having to buy Irish and Portuguese bonds, while preaching monetary discipline and price stability. Bernanke's constant reiterations to maintain QE2 into June did not help the US dollar and neither did the low-volume surge in global equities to...

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Get Ready For The Coming Stock Price Tsunami (Guest Post)

March 15, 2011 by EconMatters   Comments (0)

By Vitaliy N. Katsenelson, CFA Profit margins are a tick away from all-time highs and are creating the impression of cheap equity valuations. But that impression is a mirage, because today’s generous margins are destined to shrink. I first wrote about this in January 2008.  Stocks are allegedly cheap now, at 15.7 times 2010 earnings. And they are cheap by historical standards. Only 10 years ago, their price/earnings ratios were double today’s; they are even cheaper if you compare their forward (2011) earnings yield of 7.3% to the 10-year Treasury yield of 3.40%. They are...

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