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Michael Pento continues:
“The Bernanke Fed has stated that additional monetary stimulation is warranted, soon, unless there is a ‘substantial and sustainable strengthening in the pace of the economic recovery.’ Fed Presidents, Charles Evans and Eric Rosengren, have both recently indicated that action would be taken when they said that the U.S. Central Bank needs to expand its balance sheet until more favorable targets are reached on the unemployment rate and nominal GDP.
But there is little doubt, unfortunately, that both the European and American economies will continue to falter....
Continue reading the Michael Pento piece below...
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“A composite index of Europe’s manufacturing and service sectors contracted for the seventh straight month in August. Meanwhile, U.S. capital goods orders fell 3.4% in July, which was the largest decline since November 20011, and the fourth decline in the last five months.
That can hardly be misconstrued as evidence of a substantial or sustainable economic recovery. Even the four-week moving average of initial jobless claims rose 3,750 last week, as the unemployment rate in the U.S. continues to rise. In addition, the EU 17’s unemployment rate now stands at a Euro-era record of 11.2%.
Therefore, there is now little doubt that more central bank money printing is coming in September. They are playing poker with the markets, but aren’t very good at hiding their cards. Promises and threats of more monetary intervention have already caused commodity and equity prices to rise in anticipation.
The 24 raw materials in the S&P GSCI are up 21% since June 21st and have just entered new bull market. Gold prices have increased over $100 an ounce and oil prices have soared 25% since mid-June. Even the S&P 500 index has risen 10% since the June low, and the Spanish IBEX has soared 21% since July 25th.
The problem now is that unless the official announcements of quantitative easing from the ECB and Fed are surprisingly massive, much of the move in equities may have already been priced in. And after we receive the September decisions on monetary policy from Mario Draghi and Ben Bernanke, there isn’t much to carry equity prices higher until the U.S. presidential election is concluded.
However, what could weigh on markets between then and November is the continued political paralysis in Washington over how to reduce America’s out of control deficits, and the likelihood of $200 per barrel oil resulting from an Israeli attack on Iran’s nuclear facilities.
Therefore, investors should pay close attention to what the ECB does on September 6th and what the Fed does on September 13th. Unless the QE plans are ‘significant and sustainable’, equity prices could be in for a sharp decline. However, gold and oil ETFs should provide the best protection if war breaks out in the Middle East or if central banks decide to launch another significant attack on fiat currencies.”
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There was a delay in publishing both the Michael Pento piece, and the Eric Sprott audio interview, due to internet problems within the US, but both have now been posted. You may have to clear your cookies/cache in order for the audio to show up in the broadcast section.
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Eric King
Fed & The ECB Are Involved In A Dangerous Game Of Poker
Today Michael Pento writes exclusively for King World News to put readers ahead of the curve on what is happening with central planners. Pento noted the struggle in Europe, “... the EU 17’s unemployment rate now stands at a Euro-era record of 11.2%.” Pento also warned, “... gold and oil ETFs should provide the best protection if war breaks out in the Middle East or if central banks decide to launch another significant attack on fiat currencies.”
Here is Pento’s piece: “The European Central Bank and the Federal Reserve have both telegraphed that another round of currency depreciation is in the offing. The ECB’s Mario Draghi has pledged to do ‘whatever it takes’ to save the Euro currency, by setting specific targets for Italian and Spanish bond yields.”
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
August 26, 2012
