Trichet Calls for Single Euro Finance Ministry as Crisis Deepens - This article by Christian Vits and Gabi Thesing for Bloomberg may be of interest to subscribers. Here is a section:
While any single finance ministry would "not necessarily" administer "a large federal budget," it would "exert direct responsibilities in at least three domains," said Trichet, whose eight-year term ends in October.
They would include "first, the surveillance of both fiscal policies and competitiveness policies" and "direct responsibilities" for countries in fiscal distress, he said.
It would also carry out "all the typical responsibilities of the executive branches as regards the union's integrated financial sector, so as to accompany the full integration of financial services, and third, the representation of the union confederation in international financial institutions."
My view - The Euro has been called a Frankenstein currency by skeptics because it has elements of a currency union in monetary affairs which are inadequately counter balanced with a wide degree of latitude in fiscal affairs for constituent countries. This has changed somewhat as the peripheral debt crisis has thrown into sharp relief the failure of an "honour system" with regard to fiscal rectitude. However, the areas of taxes, spending, borrowing etc. remain as thorny as ever particularly for those who value national sovereignty.
The absence of a central fiscal authority is the Euro's greatest Achilles heel and is where voter and investor concern is most acute. The agonizing over funding a bailout mechanism for Greece, Ireland and Portugal would be inconsequential if the EU had the power to levy taxes on a regional basis. Mr. Trichet is now only a few months from retirement so it costs him little to point out the glaringly obvious, but politically unpalatable truth, that a currency union without central fiscal authority is an unsatisfactory structure.
This section continues in the Subcsriber's Area.
Eoin's personal portfolio: currency long opened - This section continues in the Subcsriber's Area.
Australian Retail Sales Rise Most in 17 Months; Currency Gains - This article by Michael Heath for Bloomberg may be of interest to subscribers. Here is a section:
Australian retail sales rose in April by the most in 17 months as the economy recovered from its worst quarterly contraction in two decades, sending the nation's currency higher.
Sales advanced 1.1 percent from a month earlier, when they declined a revised 0.3 percent, the Bureau of Statistics said in Sydney today. That was the biggest jump since November 2009 and almost three times more than the median forecast in a Bloomberg News survey of 25 economists for a 0.4 percent increase.
The report boosted the local dollar as the surge in retail sales supported the central bank's forecast for the economy to accelerate after floods caused a 1.2 percent first-quarter contraction. Reserve Bank of Australia Governor Glenn Stevens convenes a meeting June 7 to weigh an increase in the benchmark interest rate of 4.75 percent, the highest in the developed world.
My view - By late last year, Australian short-term interest rates had risen from 3% to 4.75% and are now equal to what had previously been considered highly accommodative in previous cycles. However in the current environment, the relative position of the rate rather than the absolute level is probably a better measure of how much monetary tightening has occurred.
Interest rate differentials between the Australian Dollar and the US Dollar, Canadian Dollar, British Pound, Euro and Swiss Franc have expanded to levels similar to those available prior to the financial crisis. This helps to explain the Australian Dollar's relative strength and supports the argument for it being able to hold some of the highest levels seen against the US Dollar for decades.
This section continues in the Subscriber's Area.
Email of the day - on resources focused funds and investment trusts:
"How are you?
"Eoin, some time ago a subscriber posed a question in relation to the 200 MA, which I am unable to find after a little searching on the site. Namely, can you apply the "buy on pullback" idea to a fund that comprises a number of equities, among other asset classes.
"I would guess you can as the majority of the constituent parts are from the same sector and commonality would dictate that more than one equity would pullback, and thus the fund as a whole would do likewise, and therefore present one with a buying opportunity.
"I ask this as I am looking to invest in some of the mining related open ended funds that David has mentioned in the past and these funds are currently skirting their 200 MAs. As you and David have alluded to in the audios gold could be close to entering the 'mania' phase of its bull run and the mining companies would therefore start playing catchup. I'd like to have some exposure to that and think now is a good time to jump on.
"I hope your seminars are going well for you. The general response does seem very positive and it's not at all surprising when I look back at my sole visit a little while back. One thing that did stand out, and was very encouraging for me, a beginning private investor, was the number of people with a similar profile to me. I half expected the 'class' to comprise mostly of large hedge fund managers and high net worth individuals, and while those people were present, there were also a number who were just stating out in the world of investing and that was very nice to see. I still very much consider myself a beginner and I've made all the mistakes beginners make (certainly in relation to spread-betting!) but it's comforting to know I'm not the only greenhorn around here. I am enjoying it.
My comment - Thank you for your kind words and I am delighted you enjoyed the Chart Seminar which continues to attract delegates with varying degrees of experience; from the novice to the most seasoned. I agree that funds focused on a particular sector are suitable vehicles to apply behavioural technical analysis to. In fact the only time our analysis might not work on a fund is when it is compiled of a mix of different asset classes such as property, bonds and equities.
This section continues in the Subcsriber's Area.
The Chart Seminar 2011 - The November dates for The Chart Seminar are filling steadily following a sell-out tour to Sydney & Singapore and a successful start to our London series last week.
Anyone interested in securing a place at any of our events should contact Sarah Barnes at [email protected].
The full rate is £950 + VAT. The early booking rate of £875 for non-subscribers expires on September 30th. Paid-up Fullermoney subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.
The date and venue for my remaining seminar in 2011 is:
London - November 3rd & 4th at the Radisson Edwardian Hampshire.
Please note - David is currently on holiday and will return on June 6th.