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For the first time since December of 2008, the US trade balance has moved beyond the psychological barrier of -$50B. The news has so far only added to pessimistic concerns that the August 2 deadline for an expansion of the debt limit will not be met in time; a sentiment that adds strength to investment shifts to safety and lower yielding assets. The first time this level of trade imbalance was seen in the US was in 2004 as the nation began to depend more heavily on imports as it undertook two significant military campaigns in the Middle East. The over-exposure to foreign markets, some say, weakened the US financial system to hasten the collapse of the housing market, and Wall Street along with it. The ability of Congress and President Barack Obama to reach a compromise on taxes and budgetary adjustments appears to have reached a nadir as both fight to define their boundaries. As the trade deficit widens, several analysts...

Pessimism continued to dominate global financial markets on Tuesday, where traders were still worried from the European debt crisis amid speculations Greece could still be forced to a selective default, in addition to fears that the debt crisis will spread to other nations in the Euro Zone including Italy and Spain. The pessimism had drove higher yielding assets to drop earlier today, where lower yielding assets including the U.S. dollar and the Japanese Yen gained against most major currencies, nonetheless, the U.S. dollar lost some of its momentum after the trade balance in the United States showed a larger than expected deficit, where the U.S. trade deficit widened to $50.2 billion, compared with the prior deficit of $43.6 billion and worse than the expected deficit of $44.1 billion, which weighed down on the U.S. dollar, and led other majors to trim their earlier losses. Stocks in the United States though fluctuated between gains and losses by opening on Tuesday, where the Dow...

  Contagion fears not only continue in Europe but have actually grown. The European debt crisis might spread from Greece, Ireland and Portugal to Italy and Spain. And combined with the poor jobs report from the U.S. and China's rising inflation, heavy selloffs were seen across the board. The European finance ministersfailed after their meeting in Brussels yesterday to ease the fears since no quick fix or clear commitmentwas shown. Meanwhile the new IMF chief added to the worries after saying that the IMF is not ready to discuss the second bailout for Greece. This ignited fears from a possible default by Greece and the markets started pricing such a scenario especially since Italy is now threatened by Greece's possible default and is on the edge of collapse. Thereby the euro extended its heavy losses as investors continue to avoid risk and look for safe heaven. The euro fell as of this writing to the lowest of 1.3835 from the highest today of 1.4061,...

The Eurozone debt and banking crisis is entering a new phase, with press reports suggesting that EU policymakers are reconsidering their approach to Greece, including allowing the possibility of a ‘selective default’. Since the debt crisis began, the response of EU policymakers has tended to be reactive, culminating in policy responses that have only deferred rather than resolved the underlying problem. Now there is the risk of a ‘disorderly’ Greek default taking place. Last Friday, Italian stock markets tumbled and the contagion is now spreading to the rest of the Eurozone. This morning, the 10-year Spanish-bund yield spread reached a record wide and the absolute level of Spanish 10-year yields reached its highest level since February 2000. Irish 2-year yields hit a record 16.95% and Greek 2-year yields reached 31.20%. Clearly, the bond markets are pricing in the risk of a ‘domino effect’ in which a scenario where Greece defaults (however defined by EU policymakers) could create similar defaults, especially for countries...

Pessimism continued to dominate investors with the start of the new week, where investors were still concerned over the outlook of the U.S. economy after the jobs report last Friday showed weak job growth in June, while jitters from the European debt crisis mounted with Italy now topping the headlines. Investors fear that the European debt crisis will spread to the Euro Zone’s third largest economy, where EU officials are meeting in Brussels to discuss the European debt crisis and Italy’s situation, where investors fear that Italy will be the latest victim of the EU debt crisis. Rising fears in markets increased demand for lower yielding and safe assets including the U.S. dollar, the Japanese Yen, and gold, while investors shunned risky assets including major currencies, equities, and commodities including crude oil. Stocks in the United States extended their losses by opening on Monday, where the Dow Jones Industrial Average was down by nearly 1.10% to trade around 12,517, while the S&P 500...

The Aussie fell against the U.S. dollar on Monday as more signs point to the overheating of China's economy. At around 5:50 am GMT, the greenback continued its march towards parity with the Aussie, rising 0.42% to trade around 0.9337. The Aussie has been hurt by a string of disappointing data from China over the weekend. The Asian Dragon is still struggling to control its inflation, which rose to 6.4% in June (month-over-month), its highest level in the last three years. It seems that more rounds of monetary tightening are on their way in China. The recent rounds of monetary tightening seem to start to take their effects on the Chinese economy, however, as the Chinese economy reported signs of a slowdown in its economic activity. The latest trade balance data showed China's imports grew by 19.3% in June, a sharp slowdown from 28.4% in May. At the same time, exports increased by 17.9% in June, slightly down from 19.4% in May. China...

    Since contagion fears are growing in Europe determining the European officials to hold an emergency meeting in Brussels today, confidence has evaporated from the markets and the safe heaven dollar has been pushed aggressively to the upside alongside the yen. The European and Asian stock markets fell today while the euro slid to a two weeks low on fears the European debt crisis might spread to Italy, where there is a disagreement between the Italian Prime Minister and the Finance Minister which could threaten the passage of a 40-billion euro deficit-reduction plan. The Euro Zone debt crisis contagion and the global economic slowdown fears hurt investors' appetite for risk, thereby the euro was driven aggressively to the downside hitting the lowest of 1.4115 as of this writing while the pound is trading around the lowest of the day at 1.5944. The dollar index is trading above the 75.60 level as of this writing while the yen is consolidating around the 80.70 level. Fears from...

Bull Market or Blow Off Top for Stocks and ETFs? Recent stock market action has been remarkable, to say the least, confounding bulls and bears alike.  The former say it’s a new leg higher while the latter say the end of the world is nigh. Can the stock market and ETFs go higher or is this a blow off top like so many others that have preceded significant declines? Our view is that both the fundamental and technical picture point to significant downside risk for investors ahead. On My Wall Street Radar Below are two charts of the S&P 500 (SPY) with varying views and time frames.    Chart courtesy of www.stockcharts.com The above chart is a year to date view comparing three strong advances that were followed by significant downturns and you can also see how the 50 Day Moving Average has curled over from its previous upward trend. Chart courtesy of www.stockcharts.com This chart goes back to the March, 2009, lows and shows the uptrend that was just...

A huge wave of pessimism dominated global markets on Friday after a disappointing jobs report from the United States showed job growth remained weak in June, while unemployment rose unexpectedly above expectations, which forced investors to shun risky assets and target lower yielding and more safe assets. The U.S. jobs report for June showed that Non-farm payrolls increased only 18,000 jobs well below forecasts of 105,000 added jobs, and following a revised 25,000 added jobs back in May, while unemployment rose to 9.2% from 9.1%. Investors were feeling optimistic ahead of the jobs report, since the ADP employment report released on Thursday suggested that private employers in the United States added 157,000, nonetheless, the jobs report showed that private payrolls increased by 57,000 jobs in June well below forecasts of 132,000 added jobs. Stocks in the United States fell heavily by opening on Friday after the huge disappointing Jobs report, where the Dow Jones Industrial Average was down by nearly 1.10% to trade...

  Markets are focused today on the U.S. jobs report, and since the U.S. is expected to add more jobs in June than the previous month, gains where seen within the Asian and European stock markets on Friday. The strong ADP employment report yesterday sparked optimism among traders for today's infamous jobs report which is expected to show that the U.S. economy added 105,000 jobs in June from 54,000 in May. A strong Non-farm payrolls number will most likely support confidence in markets and boost demand for high yielding assets, lowering demand on safe heaven, including gold which fell as of this writing to the lowest $1525.10. Yesterday the ECB delivered the a rate hike while BoE maintained its monetary policy firmly in place. As expected Trichet refrained from signaling an August rate increase yet he confirmed the ECB will suspend the collateral rules for Portugal. Markets will continues to trade with a mixed sentiment awaiting the U.S. report, where the dollar index is consolidating...