The label being applied to the Japanese nuclear crisis – after a full week of conflicting and speculative reports – unfortunately, still spells “g r a v e” as the latest information basically all but confirms a breach of the No. 3 Fukushima reactor core. Radiation from that containment vessel has now leaked to quite some distance from the plant and continues to alarm the millions living in Tokyo some 240 kilometers away. The death toll from the March 11 quake has surpassed 10,000 while another 17,000 persons remain unaccounted for.
Overnight, NATO agreed to take command of the UN-sanctioned allied military operation to oust Col. “Mad Dog” Gaddafi from power while France declared Libyan airspace as being “under control.” Amid such conditions, relatively calm conditions were observed in the street of Tripoli preceding customary Friday prayers. However, new reports have been alluding to certain “feelers” being extended by Gaddafi or his inner circle as to the possibility of “safe passage.”
Meanwhile, in Yemen, President Saleh told reporters that –following mass protests and worse – he is prepared to leave power, but…can’t. Finally, in Syria, government forces broke up yet another demonstration. No reports of any violence have been coming forth as yet.
Over in Europe, albeit the risk of the credit rot spreading is seen as quite low, especially as regards neighboring Spain, debt yields of the Portuguese variety hit new highs this morning. The euro, however, gained a bit of ground in early trading action as it apparently ignored a couple of debt downgrades and a suggestions by an EU official that a bailout of Portugal is basically unavoidable.
The Prime Minister of Luxembourg stated that “If Portugal asks for help, then it would be assumed that this would happened shortly, and in that case the rescue shield would be enough.” The euro also took reports that German business confidence fell for the first time in nine months, in stride. The EU summit that is expected to yield a draft document to deal with the issues that have plagued the union since about a year ago concludes in Brussels today. Everyone is tuned in.
As well, many an eye is being kept on U.S. economic developments. Fed policymaker Kocherlakota expressed her sentiment that any new and/or extended QE program would only see the light of day if “materially” different (than now) data required such steps. Well, the Commerce Department in DC did not have any such ‘material’ to offer in this morning’s US GDP report. Conclusion: stagflation, this is data is not reflecting, apparently. Odds of QE2.5 or 3 being on offer are shrinking faster than had been anticipated.
America’s domestic product grew at an upwardly revised 3.1% annualized rated during the final quarter of 2010. A key component of inflation measurement (that of personal consumption expenditure) was revised lower this morning as well. Moreover, Atlanta Fed President Lockhart assuaged inflation-oriented angst to an audience in Florida this morning by saying that the recent spike in the price of food and energy “will not persist.”
One thing that will persist –for the time being, anyway- is the uncertainty and volatility that the types of news flows such as the ones that the Ides of March (somehow, eerily, four days early this year, and lasting for nearly two weeks now) of 2011 have given rise to, all around the world and all around the markets.
Senior Analyst, Kitco Metals Inc.North America