Down goes Summers. Down goes Summers. And just like that one of the top contenders for the heavyweight championship has been eliminated. Still standing in the other corner is the “Great Female Hope’ Janet Yellen. The problem for Yellen apparently has been that she has NOT been the chosen one via the Obama administration. But that may be changing now that Larry Summers has seen the handwriting on the wall with the realization that the Federal Reserve Chairman position has become overtly polarized and political. Having shown that he does not even have Democratic support in his back pocket anymore, President Obama may have hinted to Summers early this weekend that a bloody fight within Congress would do no one any favors. And with that, exit doors were agreed upon and President Obama has been left to decide on a new favorite.
On the news that Summers has withdrawn his name from consideration the EUR, GBP, JPY, and AUD all gathered steam in early trading against the USD. The gaps seen in early trading put an exclamation point on the notion that investors and financial institutions continue to seek easy money along with many governments as they collectively seek ‘dovish’ monetary policy. In other words many market participants have a hankering for the ‘cheap money’ that has kept the system afloat and like drug addicts want to make sure their suppliers continues to give them their ‘fix’.
Gold as of this writing continues to move lower and test critical support levels. The precious metal is near 1310.00 USD now.
Economic data from the U.S. proved disappointing again on Friday. The Consumer Sentiment via the Preliminary University of Michigan reading missed its estimate badly. Retail Sales also failed to attain their lackluster forecasts, meaning that the rumors of bad pre-school purchases in fact were true. It should be noted that historically poor pre-school buying signals that a lackluster holiday shopping season is in the cards too. With the FOMC set to announce their monetary policy decision on Wednesday led by Ben Bernanke, some economists are starting to predict that the Fed now finds itself in a situation in which they have accounted for economic growth that will not meet the optimistic expectations sung aloud only a couple of months ago. The un-tapering of tapering may have to be thought out.
The Empire State Manufacturing Index was just released with a reading of 6.3, missing its estimate of 9.2. Tomorrow the German ZEW Economic Sentiment marks will be brought forth.