Posts filed under “Economy”

The Fading yet Dominant Dollar


"The dollar’s dominance as the world’s premier currency
isn’t likely to end anytime soon, but it is seeing some of its status
chipped away."

Wsj_global12092004192530_1So says the WSJ, observing that "For most of the last century, the dollar has enjoyed an unparalleled position, beloved by central banks and big companies as the most solid and convenient way to hold money. That has provided enormous benefits to the U.S. Recently, though, the U.S. currency has at least seen its untouchable reputation questioned as some central banks lighten up their dollar holdings in favor of Europe’s upstart currency, the euro."

More important than the Euro is whether Asia’s big buyers of US Treasuries — Japan & China — will maintain doing so. There is evidence of a slowdown in U.S. Treasury  accumulation:

"Analysts also point out that China’s holdings of U.S. government securities, their main way of holding dollar-denominated assets, hasn’t kept pace this year with the growth in its total foreign-exchange reserves, which equal $515 billion. That implies it is building up reserves in other currencies. Indeed, since its launch in 1999, the euro’s share of central-bank reserves has grown to 19.7% from 13.5%."

What else accounts for the dollar’s preeminence?

"America’s "strong and sustainable economy, its "transparent policy-making process," its democratic political system anchored in the rule of law, and strong military, says Stephen Jen, head of currency research at Morgan Stanley.

As long as the dollar remains the dominant currency, it confers political and economic benefits to the U.S. 

Its hard to imagine what the US economy would look like  if the Euro, for example, replaced the dollar as the global currency staandard. Slower growth, higher taxes, lower employment —

Kinda like Europe . . .


Dollar, Losing Luster, Keeps Premier Status
Euro Makes Some Gains, But U.S. Currency Is Likely To Continue Dominance
WSJ, December 9, 2004; Page C14,,SB110254210992294803,00.html

Category: Economy

Upside surprise on New Unemployment Claims

Category: Economy

Layoffs Increase

Category: Economy

Chart of the Week: Correlation Coefficient U.S. Dollar versus Equities

Category: Economy

Season’s Subtotal


Here’s yet another online-only WSJ column:  Season’s Subtotal. The WSJ will take a "regular look at how the holiday season is progressing at retailers, rounding up the latest takes from Wall Street, market-research firms and news reports."

I’ll point to it when I catch the updates; Here’s an excerpt:

And, they’re off! Retail-tracking firm ShopperTrak estimated that retail sales for Black Friday, so called because it marks a shift to profitability for many retailers, rose 11% from last year to about $8 billion. Saturday, however, "was weak and disappointing, so together it was only a modest two-day performance,” said Michael P. Niemira, chief economist at International Council of Shopping Centers.

Mall cornerstones J.C. Penney and Sears Roebuck reported solid sales, but a lack of deep discounts at Wal-Mart meant fewer rings of the retail giant’s cash registers. Analysts say discounters are likely to have a hard time this holiday season because lower-income customers have been hardest hit by soaring gasoline prices. Still, Mr. Niemira expects chain-store sales will grow 3% to 4% this holiday season from last year.

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Category: Economy

Rationalizations from the Dismal Set

Category: Economy

Nonfarm Payrolls: +112,000 Jobs

Category: Economy

even more Accelerated Depreciation of Capital Spending

Category: Economy

What If . . . ?

Category: Economy

An Energy Illusion of the Highest Order


"We are living with an energy illusion of the highest order,"

So warns oil banker Matt Simmons, 61, whose "bold and often prescient pronouncements have won him followers — and detractors — in the course of his 30-year career."

According to Simmons, whether the Saudis have overestimated their crude reserves or not is the key question for energy prices the next decade or so.

In an interview with Barron’s, Simmons lays out the Bull case for Oil:

"With global demand for oil on the rise, and prices hovering near $50 a barrel, the Saudis’ production profile is more than academic. The No. 1 oil producer, Saudi Arabia pumps 13% of the world’s oil and boasts 23% of its oil reserves. Moreover, the Saudis alone claim to have excess production capacity and the ability to increase output if demand continues to rise.

Barrons_oil_11262004_1 Simmons’ conclusions are based largely on his analysis of the high water content and other signs of aging of Saudi oil fields. Not surprisingly, they have caught the attention of Saudi Aramco, the kingdom’s national oil company, which has dismissed his views and remains committed to previously published numbers of the size of Saudi reserves.

Because the Saudi oil industry is state-run, and there is no independent auditor of national reserves, it is impossible to determine just how large — or small — the Saudis’ are.

If the Saudis’ numbers are correct, the kingdom could continue to produce at current levels of about 10 billion barrels a day for the next 50 years, or more. That would give the industrial world time to develop alternative energy sources and prepare for a graceful transition.
If Simmons is right, however, the world could face a dangerous imbalance between rising oil demand and diminishing supply, perhaps within the next 10 years. Oil prices could soar, economies could suffer, and oil-dependent nations, such as the U.S., China and Japan, would be forced to scramble for additional energy sources."

Consistent with my long term view on this sector, Simmons may not be that far off.

Field Theories
Barron’s, NOVEMBER 29, 2004

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Category: Economy