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Spain Bond Sale Success
Research for Online Investors

4/19/12

Spain’s bond sale was successful this morning, with good demand.  Interest rates were higher than on April 4 at 5.7% on the ten-year, but a collective sigh of relief could be seen in the stock futures before our market opened.  Spain paid 5.743% on the 10-year (under the 6% threshold) and 3.463% on the 2-year offering.

Initial Jobless Claims came out this morning before the market opened at 386,000 up from last week’s 380,000 that surprised the market.  The bureaucrats “fixed” the problem though.  They revised last week’s number up to 388,000 so talking heads on TV could say the number was actually 2,000 lower than last week’s report.  Wow, Initial Jobless Claims actually declined from last week!

Last week, the market expected 355,000 and was surprised at the 380k, now we know it was actually, maybe, higher.  It looks like we are setting the stage for lower numbers which may bring the Federal Reserve out of retirement to save the day with more quantitative easing.

French Presidential Candidate Francois Hollande, the probable winner in the election against Nicolas Sarkozy, has signaled his administration would withdraw support of the U.S. plan to release crude oil from France’s strategic petroleum reserve.  President Obama discussed a release last month with French and British leaders.  At the time, they announced a release could come within weeks.

The plan caused a hesitation in the upward price of oil.  The U.S., Britain and France are considering releasing crude oil from their strategic reserves to lower the price of crude and gasoline.  Hollande’s energy advisor told Reuter’s “Strategic stocks are here in case of a major supply crisis.  Francois Brotts said that Hollande was concerned a drawdown could leave France in a vulnerable state in case of a supply emergency.

Brotts said Hollande’s policy will be to freeze retail prices of fuel for three months then begin reducing taxes as gasoline rises or increase taxes if gasoline falls in price.  He will us the gasoline tax to stabilize retail fuel prices.

Yesterday, Chairman Kent Conrad (D-N. Dakota) held a meeting to mark up the 2012 Senate Budget Bill he hopes to introduce later this year.  He was the only democrat that showed up for the meeting.

Senate Budget Meeting Apr. 18, 2012

Some of the eleven missing democratic Senators stopped by to say hello, or drop off remarks to be included in the record, but didn’t stick around.  It has been 1086 days without a Senate budget (as required by the constitution).

You may not believe the Chinese RMB (yuan) will ever challenge the U.S. dollar as the world’s reserve currency.  We have written about their central bank's gold purchases.  Add another piece of information to the puzzle, the London Metal Exchange (LME) asked its members on Tuesday if they would like to settle contracts in Chinese yuan currency.

At present, all contracts are settled in U.S. dollars or British pounds.  One LME member said he couldn’t remember the last time a contract was settled in pounds.  Rumor is that the pound would be dropped if the yuan is adapted.

The march continues.  China announced on Monday the RMB would be allowed to fluctuate up to one-percent daily against other currencies.  Syria is rumored to be shopping their sovereign gold stash at a discount to anyone who will break sanctions to buy it for cold…hard…cash.  It seems Assad needs money to wage war on his citizens.  Will the payment be in dollars or yuan?

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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