Gold and silver prices remained close to record levels as the powerful brew of trouble bubbling up in various parts of the globe kept safe-haven seekers on an active footing for yet another day. In the MENA region, the allied forces intensified their military campaign by sending a fresh supply of bombs in the direction of Gaddafi-loyal forces. The sixth night of such pounding was estimated as having been the most intense one in Tripoli yet.
Amid all this, “The Colonel” remained as defiant as ever and used Saddam Hussein-originated rhetorical scripts to declare that the military action against Libya will be relegated to the “dustbin of history.” Said “dustbin” may have to remain empty for several more weeks (the estimated time it might take to neutralize Mr. G) and may yet be filled with tales of the Gaddafi regime era.
Also in the MENA region, the death toll resulting from on-going Syrian unrest continued to climb, as reports surfaced that at least 25 more protesters’ bodies have been received at a hospital in the city of Deraa. In neighboring Israel there was little in the way of calm following yesterday’s bombing of a Jerusalem bus that has killed one person and injured 30 others. The attack was linked to Palestinian militants and is threatening to upend the two years of tense calm that had given scope for peace hopes to local and regional authorities.
Over in Europe, the region’s common currency traded somewhat higher against the US dollar despite the stepping down of Portuguese PM Jose Socrates whose government’s proposed austerity programs were rejected by the parliament. The failure to bring about the belt-tightening plans is seen as possibly resulting in the eventual request by Portugal of a bailout package possibly as large as $99 billion from the EU/IMF. Sharply higher Portuguese borrowing costs reflected those odds quite eloquently this morning. The EU is still lacking effective ‘carrot and/or stick’ measures with which to tackle the plight of its debt-laden ‘peripheral’ members. Would-be creditors, therefore, are showing stern faces while other investors continue to shudder.
Moving over to the States, the Commerce Department advised that US durable goods orders took their largest hit in four months, posting a 0.9% decline in February. The drop was blamed on a shrinking of orders for machinery and for defense-related items. The figure took most economists by surprise (isn’t that their ‘normal’ role?) as they had anticipated durables to exhibit gains of from 1.5 to 2.5 percent this morning.
The durables data placed the US dollar under some selling pressure as it could portend a not-so-hot GDP report in the near future, but that was partially offset by a Labor Department report showing that initial jobless claims filings fell by 5,000 last week and that the four-week moving average of such claims has remained below the pivotal 400,000 level for five out of the seven most recent reporting periods. Most of the above durable goods-induced jitters did not seem to faze the equity-oriented crowd, as its buyers waded into the market’s waters and lifted the Dow to near 12,100 this morning. Crude oil still near $106 appeared a tad tired but continued to receive support from the still-fluid MENA situation.
Spotty and tentative as the US, or European recoveries might appear, there is cause for optimism when taking into account the global economic picture. In fact, the global recovery continued to exhibit a strong March…march, as service sectors in Europe, and Purchasing Managers’ Indices in Europe as well as in China revealed on-going growth patterns. In previous weeks, the reports related to US manufacturing activity have shown equally bright results and have lifted optimism levels for future reports of a similar nature.
As we go to print, well, the world continues to be an uneasy place to live in. Not much of a choice, however. Thus, we will have to continue to contend with anxiety-inducing headlines about a just-occurred 7.0 quake in Myanmar (those quake cluster theories are apparently being dusted off an being brought to the table) and about the air traffic controller who dozed off and let the blips representing dozens of lives on planes coming into the DC’s Reagan Airport bounce around on the radar screen like so many “Pong” sprites in that ancient videogame.
Jon Nadler is a Senior Analyst at Kitco Metals Inc. North America