All day the talk has been IRELAND IRELAND IRELAND and how uncertainty surround the nearly-bankrupt country is what’s causing the market to get slammed today.
The real story is out of Asia, where Korea is hiking rates, and fears of ridiculously hot Chinese inflation are causing tightening fears there, too. Shanghai was down over 4% last night.
You can draw a straight line between a cool-down in Asia and the collapse in commodities today since a) Asia is the big driver of commodity demand, and b) it was Asian loosening this summer that got the whole rally going.
What’s more, there’s not much evidence that the Ireland fears are that significant. Show your hands if you think there’s not going to be a bailout. Anyone, anyone?
And the euro has really not taken much of a beating. It’s actually up when priced against gold today. Imagine that! This currency that’s supposedly on the verge of breaking apart is more desirable than the ONE TRUE CURRENCY today. Even Irish yields aren’t to where they were on Friday.
This morning Wal-Mart reported earnings, and they were fine, but it was all Asia growth. The US is glum still. If Asia slows, US stocks hit the wall. And again, there’s really NO reason to think that the Ireland silliness would be slamming commodities like oil and copper today. That’s all Asia.
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