On a related happening, the Dow Jones Wilshire 5000 Composite Index recorded for the first time a paper loss of US$1-trillion across the market for the day.
On a related happening, the Dow Jones Wilshire 5000 Composite Index recorded for the first time a paper loss of US$1-trillion across the market for the day.
Thus, Fireman Ben and his Fed department are now working double time to extinguish the market wildfire and prevent it from further spreading, lest it might reach White House and cause never-before-seen worldwide chaos and panic.
After that announcement, he told everybody to go home already as the management decided to halt trading for that day. But before he called for the adjournment of the meeting, he led the closing prayer reciting "The Lord's Prayer", to our surprise, since he usually assigned it to his executive secretary. Perhaps, it is one way of showing that the management had sympathized with the terror victims. That was the common assumption. But it could have been a thanksgiving prayer too. We learned that our company partake a good slice in the big market opportunity that was transpired during that mournful day.
The chart below is a bird's eye view of a very bearish Russian ETF. The Templeton Russia Fund (TRF) is a basket of Russian stocks, which is down 40% since June.
With this latest development, I will still maintain my wait-and-see stance if I am a long-term investor in the US. Feel the market tone if the bailout issue could really shore up confidence in the mortgage sector. The stock market's positive performance last Monday might just have been a result of speculation by short-term traders.
Likewise, the kiwi eased against the euro and yen; but, was up against the Australian dollar.
The kiwi went down from 0.4780 euro last week to 0.4764 euro during the New Zealand market opening, and was also down to 75.94 yen from 76.85 yen. However, against the aussie, the kiwi was trading at 0.8170 level from 0.8145 level.
The situation is like a reminisce of the capital flight seen in the 1997 Asian financial crisis when the won lost half of its value against the US dollar, which had led the country into a full-blown currency crisis.
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There is this industry belief that no asset goes to the moon without a few big declines to scare everyone.
The precious metal is on an uptrend since 2001. It trotted from US$250 per ounce to US$450 per ounce in 2005. It doubled in just over two years to breach US$1,000-per-ounce level.
The Economist magazine's Big Mac Index suggests that a McDonald's Big Mac hamburger in Europe is now 50% more expensive than in the United States. This is because of the continuing appreciation of the euro as against the greenback. Currently, the EUR/USD pair trades between the range of 1.5250 and 1.5750.
The Big Mac Index, which is based on the theory of purchasing-power parity (PPP), is a useful gauge of ascertaining which currencies are cheap and which are expensive by simply comparing the price of a McDonald's Big Mac in all the major currencies of the world. The theory goes that countries with similar levels of development should have similarly priced Big Mac hamburgers.
The trend is still bullish in favor of the euro. But as the chart suggests, the euro "rubber band" is stretched as far as it's ever been stretched. And we all know that a rubber band returns to its original state once stretching has stopped. Thus, we may expect that the EUR/USD pair will return to its "equilibrium" state of value anytime soon especially so that some European central banks are beginning to worry about inflation.
Just when and how soon is the question.
Aluminum hit a succession of all-time price highs this month despite a weak demand. A commodity broker pointed out: "When you hear producers in China are shutting production because demand is weak, that's normally bearish, yet the market saw insane price moves." On July 7, the price climbed to a record peak of US$3,327 per metric ton in the London Metal Exchange (LME), breaking previous high of US$3,260 per metric ton that was recorded about 10 years ago. Then on July 10, it soared to a fresh all-time high at US$3,380 per metric ton. A London-based trader said the July 7 price move must not have been due to Chinese power / production issues, but the move was due to a market exercise.
*Download podcast: Power shortages drive aluminum price rises |
Standard Contract Terms
The Liv-ex 100 Fine Wine Index, is touted to be the world's version of the S&P-500. It is widely acknowledged as the fine wine industry’s leading benchmark. The majority of the index consists of Bordeaux wines – a reflection of the overall market – although wines from Burgundy, the Rhone, Champagne and Italy are also included.
On the other hand, the Liv-ex Champagne 25 Index tracks the price of 25 of the world's most sought-after Champagnes.
Current Market Conditions
Currently, the Liv-ex 100 Index and the Liv-ex Champagne 25 Index have risen 8% and 27%, respectively in the 12 months ending in June. That's against a 14.8% drop in the FTSE-100 during the same period.
"It's a simple case of demand outstripping supply. People are quick to glug Champagne as soon as they buy it".
"While top Bordeaux reds are typically laid down for 20 years, Champagne is ready to drink as soon as it lines store shelves."
Driven by this demand, the price of Champagnes such as Krug, Dom Perignon and Louis Roederer Cristal have soared over the past year, overtaking the big names of Bordeaux as an investment, at least for the time being.
About a year ago, a case of Krug 1996 would have set you back just under US$3,000 on the auction market, but now it's worth US$4,713.40 (₤2,350). Louis Roederer Cristal 1989 is now worth 39.1% more than in 2007, bringing in $6,417.90 per case.
On the other hand, Bordeaux prices skyrocketed from the strong vintage in 2005 and then held steady on the 2006 wines. The 2007 vintage is considered a weak one by market analysts as some interests turned to Champagne instead. Still, it's not enough to lure leading wine funds away from their traditional staple investment of claret (the British term for Bordeaux red wine).
While Champagne valuations may be driven up by consumption, the price of fine Bordeaux red is driven only in part by the scarcity of supply.